San Andreas Dam. San Andreas Dam, built between 1870 and modified in 1875, is a 105-foot high earthfill dam which impounds a 19,000 acre -foot reservoir in San Mateo County. A recent spillway condition assessment mandated by DSOD and completed in 2019 revealed deficiencies that need to be addressed through upgrades or a spillway replacement. The embankment dam needs to be assessed for potential liquefaction of alluvium underneath the embankment. Construction of the emergency drawdown outlets will precede any potential upgrades to the spillway and/or embankment. The San Andreas Dam Facility Improvements Project will address improvements and upgrades to the embankment, emergency release facilities, and spillway. Pre-construction for the new spillway is scheduled for 2020 to 2023 with construction from 2024 to 2026. Pre -construction for improvements to the dam embankment and emergency release facilities is scheduled for 2023 to 2028 with construction from 2029 to 2032 (project is funded through 2030).
Turner Dam. Turner Dam, a 195-foot high earthfill dam constructed in 1965, impounds the 50,500 acre-foot San Antonio Reservoir in Alameda County. A project is planned to address recommendations in the Turner D am Spillway Condition Assessment Report as well as a seismic stability analysis that were completed in 2019. The Turner Dam and Reservoir Improvements Project funds upgrades to the spillway (construction planned in 2021) and a condition assessment of the dam and outlet structures to be performed from 202 0 to 2024. A potential future project (which is not currently funded) to upgrade the dam and outlet structures, if needed, is preliminarily scheduled for pre- construction from 2025 to 2031 with construction from 2032 to 2034.
Calaveras Dam Expansion. The newly constructed Calaveras Dam holds a capacity of 96,800 acre -feet of water, and was designed such that it may be enlarged in the future. This potential future project envisions the expansion of Calaveras Reservoir up to an additional 289,000 acre-feet of storage for Regional Water System supplies or other sources of water in years with average and higher than average water supply (“normal” and “wet” years). The proposed project would raise the dam, increase the capacity of the outlet structures and spillway, and add any transmission and pumping facilities needed to transport the additional water to Calaveras Reservoir. The project is funded for evaluations only at this time; construction of any expansion project would likely occur after 2035.
Summit Reservoir. Summit Reservoir is a 14 million -gallon (43 acre -feet) capacity potable water storage reservoir on Twin Peaks in San Francisco that was built during the 1950s. Based on the as-built drawings, the original inlet/outlet structure appeared to be backfilled with compacted fill, whereas the majority of the reservoir is constructed on bedrock. Following the WSIP seismic improvements, roof strengthening, and installation of new inlet/outlet structure that was completed in 2012, DSOD reviewed the reservoir improvements and concluded that the reservoir met the criteria to be under their jurisdiction as a “dam” due to the original outlet structure embankment. In 2017, at the request of DSOD, an engineering evaluation was performed in order to analyze the subsurface conditions and confirm that the seismic improvements performed under the WSIP were adequate, particularly in the area of embankment fill where the original inlet-outlet facilities were constructed. In 2019 a geotechnical investigation report was submitted to DSOD that provided additional test results and information about the subsurface materials and conditions, and concluded that the ground and the embankment appear to be stable. While no project is anticipated
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for further improvements, the SFPUC has allocated funding to respond to DSOD recommendations, and further funding would be allocated to construct improvements if needed.
Stanford Heights Reservoir . Stanford Heights R eservoir, a potable water storage reservoir located within San Francisco, is impounded by a 31- foot high earthfill dam constructed in 1928. The SFPUC performed a stability analysis in 1993, and an updated seismic stability and deformation analysis check of the embankment in 1997. Further geotechnical and seismic stability investigations are needed to determine if improvements may be necessary Further investigations and pre-construction activities are planned for 2026 to 2027, with potential construction (which is not currently funded) in 2028 to 2030.
Sunset Reservoir South Basin. In a 1996 study, the SFPUC recommended seismic strengthening of the roof structure and other associated reservoir structural elements at the Sunset Reservoir South Basin which is formed with a 34-foot high earthfill dam within San Francisco. However, due to funding considerations, the WSIP only funded improvements at the Sunset Reservoir North Basin since the embankment was considerably larger and potentially less stable, and the improvements to the South Basin were deferred. In 2018, a structural and seismic performance review of the Sunset South Basin recommended updating the seismic evaluation of the roof structure and structural elements prior to performing a structural improvement project. In addition, an updated embankment analysis is needed to better characterize the embankment fill, foundation materials, and piezometric conditions. A project to potentially strengthen the embankment, reservoir roof structure, and other structural components if needed is scheduled for pre-construction in 2026 to 2027 with construction from 2028 to 2030.
University Mound South Ba sin. In a 1996 study, the SFPUC recommended seismic strengthening of the roof structure and other associated reservoir structural elements at the University Mound South Basin which is formed with a 17-foot high earthfill dam within San Francisco. However, due to funding considerations, WSIP improvements were performed only at the University Mound North Basin. A seismic stability and deformation analysis of the embankment conducted by DSOD in 2006 showed acceptable seismic performance of the embankment. T hus, it is anticipated that the improvement project will only be needed to seismically strengthen roof structure and structural components of the reservoir. Pre -construction including planning is scheduled for 2028 to 2029, with improvements constructed by 2035 (construction is currently not funded).
Hazardous Material Management
The handling of hazardous materials is subject to a variety of federal and State regulations. The SFPUC currently complies with regulations regarding hazardous material safety with respect to hazardous material disposal and employee safety.
Endangered Species
Various aquatic species (including native fishes) present in the Tuolumne River and Bay Area streams (e.g., Alameda, San Mateo and Pilarcitos Creeks) are either listed or candi dates for listing under the State or federal endangered species acts. New listings and future enforcement actions under the acts, or conditions placed in permits to undertake construction for certain capital projects, could potentially directly affect water supplies available to the Regional Water System. The SFPUC is working with the responsible State and federal agencies to obtain permits under the acts, which would avoid regulatory uncertainty and ensure water supply reliability for the Regional Water System. In addition, future enforcement actions involving the Bay Delta or Bay Delta tributaries could further affect the availability of supplies to the State Water Project and the Central Valley Project, reducing SFPUC customers’ alternate water supplies and increasing their need for additional Regional Water System deliveries.
Required Instream Flow Schedules from Regional Water System Dams In order to comply with federal and State permit requirements in connection with dam and reservoir improvements to be carried out as part of the WSIP, the SFPUC has implemented schedules of instream flow releases from Lower Crystal Springs Reservoir to San Mateo Creek, from Calaveras Reservoir to Calaveras Creek/Alameda Creek, and from the Upper Alameda Creek Diversion Dam to Alameda Creek to enhance habitat for native species.
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The SFPUC is constructing the Alameda Creek Recapture Project to recover a portion of the loss of water supply associated with Calaveras Dam releases and bypasses. The SFPUC has a water supply pro gram underway to identify and implement water supply projects to make up the water supply loss associated with existing and potential future required instream flow schedules.
CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS
The activities of the SFPUC and the Water Enterprise, including, without limitation, the establishment of rates for water service and the issuance of Bonds, are subject to a number of limitations under both State and local law. Certain of such limitations are summarized below. Additionally, such limitations may be revised, enhanced, expanded, or otherwise altered as provided under State and local law, including in certain instances by legislation adopted by State, regional or local authorities, including the State Legislature or the Board of Supervisors, or by the voters of the State or the City themselves through the power of initiative or referendum, by voting in favor of amendments to the Charter, or in any other lawful manner.
State Law Limitations
Tax and Spending Limitation s. The taxing powers of public agencies in the State are limited by Article XIIIA of the California Constitution, added by an initiative amendment approved by the voters on June 6, 1978, and commonly known as Proposition 13.
Article XIIIA limits the maximu m ad valorem tax on real property to 1% of “full cash value,” which is defined as “the County Assessor’s valuation of real property as shown on the Fiscal Year 1975- 76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property wh en purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or reduction in the consumer price index or comparable local data, or declining property value caused by damage, destruction, or other factors.
The tax rate limitation referred to above does not apply to ad valorem taxes to pay the debt service on any indebtedness approved by the voters before July 1, 1978, or on any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of the votes cast by the voters voting on the proposition.
Under the terms of Article XIIIA and pursuant to an allocation system created by implementing legislation, each county is required to levy the maximum ad valorem tax permitted by Article XIIIA and to distribute the proceeds to local agencies.
Assessed valuation growth allowed under Article XIIIA (new construction, change of ownership and up to 2% annual value growth) is allocated among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools share the growth of base revenues from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year. The availability of revenues from tax bases to such entities may be affected by the existence of certain successor agencies to former redevelopment agencies that, under certain circumstances, may be entitled to such revenues resulting from the upgrading of certain property values.
Under State law, any fee that exceeds the reasonable cost of providing the service for which the fee is charged may be considered a “special tax” that must be authorized by a two -thirds vote of the electorate. Accordingly, if a portion of the SFPUC’s water user rates or capacity charges were determined by a court to exceed the reasonable cost of providing service, the SFPUC might not be permitted to continue to collect that portion unless i t were authorized to do so by a two-thirds majority of the votes cast in an election to authorize the collection of that portion of the rates or fees. If the SFPUC were unable to obtain such a two -thirds majority vote and were unable to reduce costs, such failure could adversely affect the SFPUC’s ability to pay the debt service on the 2022ABCD Bonds . However, the reasonable cost of providing water services has been determined by the State Controller to include depreciation and allowance for the cost of capital improvements. In addition, State courts have determined that fees such as capacity charges will not be special taxes if they approximate the reasonable cost of constructing the water system improvements contemplated by the local agency imposing the fee.
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The United States Supreme Court has upheld Article XIIIA against a challenge alleging violation of equal protection under the Fourteenth Amendment to the United States Constitution.
Proposition 218. Proposition 218, a State ballot initiative known as the “Right to Vote on Taxes Act,” was approved by the voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the California Constitution, creating additional requirements for the imposition by most local governments of “general taxes,” “special taxes,” “assessments,” “fees,” and “charges.” Articles XIIIC and XIIID became effective, pursuant to their terms, as of November 6, 1996, although compliance with some of the provisions was deferred until July 1, 1997, and certain of the provisions purport to apply to any tax imposed for general governmental purposes (i.e., “general taxes”) imposed, extended or increased on or after January 1, 1995 and prior to November 6, 1996.
Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any “fee” or “charge” subject to its provisions. A “fee” or “charge” subject to Article XIIID includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be imposed. Except for fees and charges for water, sewer and refuse collection services, the approval of a majority of the property owners subject to the fee or charge, or at the option of the agency, by a two -thirds vote of the electorate residing in the affected area, is required not less than 45 days following the public hearing on any such proposed new or increased fee or charge. In the view of the SFPUC, rates for water usage charged by the SFPUC to the Wholesale Customers are not fees or charges under Article XIIID, although no assurance may be given by the SFPUC that a court would not determine otherwise.
The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Cal. 4th 409 (2004) (“Richmond”), and Bighorn- Desert View Water Agency v. Verjil , 39 Cal. 4th 206 (2006) (“ Bighorn”) have clarified uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvements to the water system and a fire suppression charge. The Court held that both the capacity charge and the fire suppression charge were not subject to Article XIIID because a water connection fee is not a property-related fee or charge because it results from the property owner’s voluntary decision to apply for t he connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed “as an incident of property ownership” within the meaning of Article XIIID, rejecting, in Bighorn, the water agency’s argument that consumption- based water charges are not imposed “as an incident of property ownership” but as a result of the voluntary decisions of customers as to how much water to use.
The SFPUC provides public notice of proposed water rate increases in accordance with the requirements of Article XIIID through means that include, among others, holding informational presentations at community group meetings, mailings to residential and commercial customers of public hearings on rate increases, and press releases and media campaigns regarding rate increases, followed by public hearings conducted by the SFPUC’s Rate Fairness Board and by the SFPUC itself. The SFPUC also develops and adopts retail utility user rates and fees in accordance with the requirements of Article XIIID(6)(b) that limit property-related fees and charges.
Article XIIIC extends the people’s initiative power to reduce or repeal previously authorized local taxes, assessments, fees and charges. This extension of the initiative powe r is not limited by the terms of Article XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public agency’s water rates and delivery charges. The Court noted, however, that it was not holding that the authorized initiative power is free of all limitations, stating that it was not determining whether the electorate’s initiative power is subject to the public agency’s statutory obligation to set water service charges at a level that will “pay the operating expenses of the agency, … provide for repairs and depreciation of works, provide a reasonable surplus for improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due.”
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The courts have not fully interpreted the provisions of Proposition 218. The SFPUC is unable to predict how courts will further interpret Article XIIIC and Article XIIID, and what, if any, further implementing legislation will be enacted. Under the Bighorn case, City voters could adopt an initiative measure that reduces or repeals the SFPUC’s water rates and charges, though it is not clear whether (and courts have not decided whether) any such reduction or repeal by initiative would be enforceable in a situation in which such rates and charges are pledged to the repayment of bonded indebtedness. There can be no assurance that the courts will not further interpret, or the voters will not amend, Article XIIIC and Article XIIID to limit the ability of the SFPUC to impose, levy, charge and collect increased fees and charges for the Water Enterprise, or to call into question water rate increases previously adopted by the SFPUC. No assurance may be given that Articles XIIIC and XIIID will not have a material adverse impact on Revenues.
A Complaint for Damages and Equitable Relief and Petition for Writ of Mandate was filed in the Superior Court of the State of California for Santa Clara County on February 17, 2020, and subsequently amended on March 16, 2022 (collectively, the “ Complaint”), as a purported class action suit against approximately 80 water agencies, including the SFPUC. The principal claim of the Complaint is that the defendants have violated Proposition 218 by imposing rates that exceed the costs of service. The matter is currently stayed, and no motions or responsive pleadings have been filed. The SFPUC cannot predict the outcome of the case, however the SFPUC believes that its rate structure has been developed in compliance with all applicable laws in all material respect s.
Proposition 26. Proposition 26, which amended Article XIIIA and XIIIC of the California Constitution, was approved by the electorate at the November 2, 2010 election. Proposition 26 imposes a two- thirds voter approval requirement for the imposition of fees and charges by the State. It also imposes a majority voter approval requirement on local governments with respect to fees and charges for general purposes, and a two- thirds voter approval requirement with respect to fees and charges for special purposes. According to its supporters, Proposition 26 was designed to prevent the circumvention of tax limitations imposed by the voters pursuant to Proposition 13, approved in 1978, Proposition 218, and other measures through the use of non- tax fees and charges.
Proposition 26 expressly excludes from its scope “a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the governmental entity of providing the service or product to the payor” and “assessments and property-related fees imposed in accordance with the provisions of Article XIIID.” The California Supreme Court has held that a fee for ongoing water service through an existing connection is imposed “as an incident of property ownership” within the meaning of Article XIIID. See “– Proposition 218.” The SFPUC believes that the initiative is not intended to, and would not, apply to fees for water deliveries and services charged by the SFPUC. The SFPUC, however, is unable to predict how Proposition 26 will be interpreted by the courts to apply to the provision of water services by local governments such as the SFPUC.
Initiative and Referendum
Article XIIIA and Articles XIIIC and XIIID o f the California Constitution were adopted pursuant to the State’s constitutional initiative process. From time to time other initiative measures could be adopted by State voters, or by voters of the City, placing additional limitations on the ability of the SFPUC to increase revenues.
Charter Limitations
The Charter requires that bonds (such as the Bonds) secured by revenues, other than refunding bonds, may be issued only with the assent of a majority of voters. However, under the Charter amendments enacted by the voters in November 2002 (Proposition E), the SFPUC may issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors, for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities or wastewater facilities or combinations of water and wastewater facilities under the jurisdiction of the SFPUC (and subject to the further conditions contained in Proposition E). See “OBLIGATIONS PAYABLE FROM REVENUES – Authority for Issuance of Revenue Bonds and Other Obligations Payable from Revenues.” In June 1998, the electorate of the City approved Proposition H which, subject to certain exceptions, including a limited exception to raise rates to pay debt service on voter- approved debt, froze the SFPUC’s water rates through
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July 1, 2006. The SFPUC can give no assurance that the electorate will not seek in the future to freeze or limit rate increases.
Future Charter Amendments
Voters in the City could adopt additional Charter amendments in the future which would limit the ability of the SFPUC to issue debt or to enact rate increases, affect the operation of the Water Enterprise or implement other changes affecting the SFPUC and the Water Enterprise. See “RISK FACTORS – Initiative, Referendum , Charter Amendments and Future Legislation.”
LITIGATION
The SFPUC is not aware of any litigation pending or threatened questioning the political existence of the City or the SFPUC or contesting the SFPUC’s power to fix Water Enterprise rates and charges, or in any way questioning or affecting:
(i) the proceedings under which the 2022ABCD Bonds are to be issued, (ii) the validity of any provision of the 2022ABCD Bonds or the Indenture, (iii) the pledge of Revenues by the SFPUC under the Indenture, or (iv) the titles to office of the present members of the Board of Supervisors and the Commission.
There are a number of suits and claims pending against the City and the SFPUC impacting the Water Enterprise, which may include personal injury, wrongful death and other suits and claims against which the City may self-insure. The aggregate amount of the self- insured liabilities of the City and the SFPUC which may result from such suits and claims will not, in the opinion of the City Attorney, materially impair the ability of the SFPUC to pay principal of or interest on the 2022ABCD Bonds as they become due. Other than as disclosed elsewhere in this Official Statement, there is no litigation pending, with service of process having been accomplished, against the City or the SFPUC which if determined adversely to the City or the SFPUC would, in the opinion of the City Attorney, materially impair the ability of the SFPUC to pay principal of and interest on the 2022ABCD Bonds as they become due. See also “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS – State Law Limitations – Proposition 218.”
TAX MATTERS
General. The issuance and delivery of the 2022ABCD Bonds is subject to delivery of the opinion of Co- Bond Counsel that under existing State of California law, that interest on the 2022ABCD Bonds is exempt from personal income taxes imposed by the State of California.
The following is a general summary of the United States federal income tax consequences of the purchase and ownership of the 2022ABCD Bonds. The discussion is based upon laws, Treasury Regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly with retroactive effect) or possibly differing interpretations. No assurance can be given that future changes in the law will not alter the conclusions reached herein. The discussion below does not purport to deal with United States federal income tax consequences applicable to all categories of investors. Further, this summary does not discuss all aspects of United States federal income taxation that may be relev ant to a particular investor in the 2022ABCD Bonds in light of the investor’s particular personal investment circumstances or to certain types of investors subject to special treatment under United States federal income tax laws (including insurance companies, tax -exempt organizations, financial institutions, broker-dealers and persons who have hedged the risk of owning the 2022ABCD Bonds). This summary is therefore limited to certain issues relating to initial investors who will hold the 2022ABCD Bonds as “capital assets” within the meaning of Section 1221 of the Code, and who acquire such 2022ABCD Bonds for investment and not as a dealer or for resale. Except as specifically discussed below, the discussion below addresses the United States federal income tax consequences applicable only to beneficial owners of the 2022ABCD Bonds who are “United States persons”
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within the meaning of Section 7701(a)(30) of the Code (“United States persons”) and does not address any consequence to persons other than United States persons. Prospective investors should note that no rulings have been or will be sought from the IRS with respect to any of the U.S. federal income tax consequences discussed herein, and no assurance can be given that the IRS will not take contrary positions. A form of Co- Bond Counsel’s anticipated opinion is included as Appendix D.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMINING
THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE 2022ABCD Bonds.
Payments of Stated Interest on the 2022ABCD Bonds . The stated interest paid on the 2022ABCD Bonds will be included in the gross income, as defined in Section 61 of the Code, of the beneficial owners thereof, and will be subject to U.S. federal income taxation when received or accrued, depending on the tax accounting method used by the beneficial owners thereof.
Original Issue Discount . If a substantial amount of the 2022ABCD Bonds of any stated maturity is purchased at original issuance for a purchase price (the “Issue Price”) that is less than their face amount by more than one quarter of one percent times the number of complete years to maturity, the 2022ABCD Bonds of such maturity will be treated as being issued with “original issue discount.” The amount of the original issue discount will equal the excess of the principal amount payable on such 2022ABCD Bonds at maturity over the Issue Price of such 2022ABCD Bonds, and the amount of the original issue discount on the 2022ABCD Bonds will be amortized over the life of the 2022ABCD Bonds using the “constant yield method” provided in the Treasury Regulations. As the original issue discount accrues under the constant yield method, the beneficial owners of the 2022ABCD Bonds, regardless of their regular method of accounting, will be required to include such accrued amount in their gross income as interest. This can result in taxable income to the beneficial owners of the 2022ABCD Bonds that exceeds actual cash distributions to the beneficial owners in a taxable year.
The amount of the original issue discount that accrues on the 2022ABCD Bonds each taxable year will be reported annually to the IRS and to the beneficial owners. The portion of the original issue discount included in each beneficial owner’s gross income while the beneficial owner holds the 2022ABCD Bonds will increase the adjusted tax basis of the 2022ABCD Bonds in the hands of such beneficial owner.
Premium. If a beneficial owner purchases a 2022ABCD Bond for an amount that is greater than its stated redemption price at maturity, such beneficial owner will be considered to have purchased the 2022ABCD Bond with “amortizable bond premium” equal in amount to such excess. A beneficial owner may elect to amortize such premium using a constant yield method over the remaining term of the 2022ABCD Bond and may offset interest otherwise required to be included in respect of the 2022ABCD Bond during any taxable year by the amortized amount of such premium for the taxable year. Bond premium on a 2022ABCD Bond held by a beneficial owner who does not make such an election will decrease the amount of gain or increase the amount of loss otherwise recognized on the sale, exchange, redemption or retirement of a 2022ABCD Bond. However, if the 2022ABCD Bond may be optionally redeemed after the beneficial owner acquires it at a price in excess of its stated redemption price at maturity, special rules would apply under the Treasury Regulations which could result in a deferral of the amortization of some bond premium until later in the term of the 2022ABCD Bond. Any election to amortize bond premium applies to all taxable debt instruments held by the beneficial owner on or after the first day of the first taxable year to which such election applies, and may be revoked only with the consent of the IRS.
Medicare Contribution Tax. Pursuant to Section 1411 of the Code, as enacted by the Health Care and Education Reconciliation Act of 2010, an additional tax is imposed on individuals beginning January 1, 2013. The additional tax is 3.8% of the lesser of (i) net investment income (defined as gross income from interest, dividends, net gain from disposition of property not used in a trade or business and certain other listed items of gross income), or (ii) the excess of “modified adjusted gross income” of the individual over $200,000 for unmarried individuals ($250,000 for married couples filing a joint return and a surviving spouse). Holders of the 2022ABCD Bonds should consult with their tax advisors concerning this additional tax, as it may apply to interest earned with respect to the 2022ABCD Bonds as well as gain on the sale of a 2022ABCD Bond.
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Disposition of 2022ABCD Bonds and Market Discount . A beneficial owner of 2022ABCD Bonds will generally recognize gain or loss on the redemption, sale or exchange of a 2022ABCD Bond equal to the difference between the redemption or sales price (exclusive of the amount paid for accrued interest) and the beneficial owner’s adjusted tax basis in the 2022ABCD Bonds. Generally, the beneficial owner’s adjusted tax basis in the 2022ABCD Bonds will be the beneficial owner’s initial cost, increased by the original issue discount previously included in the beneficial owner’s income to the date o f disposition. Any gain or loss generally will be capital gain or loss and will be long-term or short-term, depending on the beneficial owner’s holding period for the 2022ABCD Bonds.
Under current law, a purchaser of 2022ABCD Bonds who did not purchase the 2022ABCD Bonds in the initial public offering (a “subsequent purchaser”) generally will be required, on the disposition (or earlier partial principal payment) of the 2022ABCD Bonds, to recognize as ordinary income a portion of the gain, if any, to the extent of the accrued “market discount.” In general, market discount is the amount by which the price paid for the 2022ABCD Bonds by a subsequent purchaser is less than the sum of Issue Price and the amount of original issue discount previously accrued on the 2022ABCD Bonds. The Code also limits the deductibility of interest incurred by a subsequent purchaser on funds borrowed to acquire 2022ABCD Bonds with market discount. As an alternative to the inclusion of market discount in income upon disposition, a subsequent purchaser may elect to include market discount in income currently as it accrues on all market discount instruments acquired by the subsequent purchaser in that taxable year or thereafter, in which case the interest deferral rule will not apply . The re-characterization of gain as ordinary income on a subsequent disposition of 2022ABCD Bonds could have a material effect on the market value of the 2022ABCD Bonds.
Legal Defeasance. If the SFPUC elects to defease the 2022ABCD Bonds by depositing in escrow sufficient cash and/or obligations to pay when due outstanding 2022ABCD Bonds (a “legal defeasance”), under current tax law, a beneficial owner of 2022ABCD Bonds may be deemed to have sold or exchanged its 2022ABCD Bonds. In the event of such a legal defeasance, a beneficial owner of 2022ABCD Bonds generally would recognize gain or loss in the manner described above. Ownership of the 2022ABCD Bonds after a deemed sale or exchange as a result of a legal defeasance may have tax consequences different from those described above, and each beneficial owner should consult its own tax advisor regarding the consequences to such beneficial owner of a legal defeasance of the 2022ABCD Bonds.
Backup Withholding. Under Section 3406 of the Code, a beneficial owner of the 2022ABCD Bonds who is a United States person may, under certain circumstances, be subject to “backup withholding” on payments of current or accrued interest on the 2022ABCD Bonds or with respect to proceeds received from the disposition of the 2022ABCD Bonds. This withholding applies if such beneficial owner of 2022ABCD Bonds: (i) fails to furnish to the payor such beneficial owner’s social security number or other taxpayer identification number (“TIN”); (ii) furnishes the payor an incorrect TIN; (iii) fails to properly report interest, dividends or other “reportable payments” as defined in the Code; or (iv) under certain circumstances, fails to provide the payor with a certified statement, signed under penalty of perjury, that the TIN provided to the payor is correct and that such beneficial owner is not subject to backup withholding.
Backup withholding will not apply, however, with respect to payments made to certain beneficial owners of the 2022ABCD Bonds. Beneficial owners of the 2022ABCD Bonds should consult their own tax advisors regarding their qualification for exemption from backup withholding and the procedures for obtaining such exemption.
Withholding on Payments to Nonresident Alien Individuals and Foreign Corporations . Under Section s 1441 and 1442 of the Code, nonresident alien individuals and foreign corporations are generally subject to withholding at the rate of 30% on periodic income items arising from sources within the United States, provided that such income is not “effectivel y connected” with the conduct of a United States trade or business, within the meaning of Section 864 of the Code. Assuming the interest received by the beneficial owners of the 2022ABCD Bonds is not treated as effectively connected income, such interest will be subject to 30% withholding, or any lower rate specified in an income tax treaty, unless such income is treated as “portfolio interest” within the meaning of Sections 871 and 881 of the Code. Interest will be treated as portfolio interest under such sections if: (i) the beneficial owner provides a statement to the payor certifying, under penalties of perjury, that such beneficial owner is not a United States person and providing the name and address of such beneficial owner; (ii) such interest is treated as not effectively connected with the beneficial owner’s United States trade or business; (iii) interest payments are not made to a person within a foreign country that the IRS has included on a list of countries having provisions inadequate to prevent United States
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tax evasion; (iv) interest payable with respect to the 2022ABCD Bonds is not deemed contingent interest within the meaning of the portfolio debt provision; (v) such beneficial owner is not a controlled foreign corporation, within the meaning of Section 957 of the Code; and (vi) such beneficial owner is not a bank receiving interest with respect to the 2022ABCD Bonds pursuant to a loan agreement entered into in the ordinary course of the bank’s trade or business.
Assuming payments with respect to the 2022ABCD Bonds are treated as portfolio interest within the meaning of Sections 871 and 881 of the Code, then no backup withholding under Section 1441 and 1442 of the Code and no backup withholding under Section 3406 of the Code are required wit h respect to beneficial owners or intermediaries who have furnished Form W-8BEN, Form W-8BEN-E, Form W-8EXP or Form W-8IMY, as applicable, provided the payor does not have actual knowledge or reason to know that such person is a United States person.
Foreign Account Tax Compliance Act. Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to a foreign financial institution, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain United States persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, the Foreign Account Tax Compliance Act (“FATCA”) imposes a 30% withholding tax on the same types of payments to a non- financial foreign entity unless the entity certifies that it does not have any substantial United States owners or the entity furnishes identifying information regarding each substantial U.S. owner. Failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of interest and principal under the 2022ABCD Bonds and sales proceeds of 2022ABCD Bonds held by or through a foreign entity. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and will apply to “foreign passthru payments” but no earlier than two years after the date of publication of final regulations defining the term “foreign passthru payment.” Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.
Reporting of Interest Payments. Subject to certain exceptions, interest payments made to beneficial owners of the 2022ABCD Bonds will be reported to the IRS. Such information will be filed each year with the IRS on Form 1099-INT (or other appropriate reporting form), which will reflect the name, address and TIN of the beneficial owner.
A copy of Form 1099 will be sent to each beneficial owner of a 2022ABCD Bond for U.S. federal income tax purposes.
The preceding discussion of certain United States federal income tax consequences is for general information only and is not tax advice. Accordingly, each investor should consult with its own tax advisor as to particular tax consequences to it of purchasing, owning, and disposing of the 2022ABCD Bonds, including the applicability and effect of any state, local or foreign tax law, and of any proposed change in applicable law
CERTAIN LEGAL MATTERS
Certain legal matters incident to the authorization, sale and delivery of the 2022ABCD Bonds are subject to the approval of Norton Rose Fulbright US LLP, San Francisco, California, and The Law Office of Monica M.
Baranovsky, Novato, California, Co-Bond Counsel to the SFPUC. Certain legal matters are being passed upon for the SFPUC by the City Attorney and by Orrick, Herrington & Sutcliffe LLP , San Francisco, California, Disclosure Counsel. Certain legal matters are being passed upon for the Underwriters by Nixon Peabody LLP, San Francisco , California. Co-Bond Counsel and Disclosure Counsel will receive compensation that is contingent upon the sale and delivery of the 2022ABCD Bonds.
The form of approving opinion of Co -Bond Counsel is set forth in Appendix D, and will be available at the time of delivery of the 2022ABCD Bonds. Co-Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.
Orrick, Herrington & Sutcliffe LLP has served as Disclosure Counsel to the SFPUC and in such capacity has advised the SFPUC with respect to the requirements of applicable securities laws and participated with responsible SFPUC officials and staff in conferences and meetings where information contained in this Official Statement was reviewed for accuracy and completeness. Disclosure Counsel is not responsible for the accuracy or completeness of the information presented in this Official Statement and has not undertaken to independently verify any of such
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information. Rather, the SFPUC is solely responsible for the accuracy and completeness of the information contained in this Official Statement. Upon the issuance of the 2022ABCD Bonds , Orrick, Herrington & Sutcliffe LLP will deliver a letter to the SFPUC concerning certain matters with respect to the Official Statement. No purchaser or holder of the 2022ABCD Bonds, or other person or party other than the SFPUC, will be entitled to rely on such letter or on the fact that Orrick, Herrington & Sutcliffe LLP has acted as Disclosure Counsel to the SFPUC.
RATINGS
Moody’s Investors Service (“Moody’s”) has assigned its municipal bond rating of “___” to the 2022ABCD Bonds, and S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“ S&P”), has assigned its municipal bond rating of “___” to the 2022ABCD Bonds.
The ratings assigned by Moody’s and S&P express only the views of the respective rating agencies. The explanation of the significance of these ratings, and any outlook associated with these ratings, may be obtained from Moody’s and S&P, respectively. Each rating agency generally bases its rating on its own investigations, studies, and assumptions. The SFPUC has provided certain additional information and materials to the rating agencies (some of which does not appear in this Official Statement).
A securities rating is not a recommendation to buy, sell o r hold securities and may be subject to revision or withdrawal at any time. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2022ABCD Bonds. The SFPUC undertakes no responsibility to maintain its current ratings on the 2022ABCD Bonds or to oppose any such downward revision, suspension or withdrawal.
UNDERWRITING
The 2022ABCD Bonds are being purchased by Morgan Stanley & Co. LLC , as representative on behalf of itself and Siebert Williams Shank & Co. , LLC, Jefferies LLC, RBC Capital Markets LLC and Wells Fargo Bank, National Association (collectively, the “Underwriters”).
The Underwriters have agreed to purchase from the SFPUC the 2022A Green Bonds at a purchase price of $________ (consisting of $________ aggregate principal amount of the 2022A Green Bonds , less an underwriter’s discount of $________) , the 2022B Bonds at a purchase price of $ ________ (consisting of $ ________ aggregate principal amount of the 2022B Bonds, less an underwriter’s discount of $________), the 2022C Bonds at a purchase price of $________ (consisting of $________ aggregate principal amount of the 2022C Bonds , less an underwriter’s discount of $________), and the 2022D Bonds at a purchase price of $________ (consisting of $________ aggregate principal amount of the 2022D Bonds, less an underwriter’s discount of $________). Under the bond purchase contract to be entered into in connection with the purchase of the 2022ABCD Bonds , the Underwriter s will be obligated to purchase all of the 2022ABCD Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions to be satisfied by the SFPUC.
The Underwriters have certified the reoffering prices or yields set forth on th e inside cover pages of this Official Statement for the 2022ABCD Bonds. The SFPUC takes no responsibility for the accuracy of these prices or yields. The Underwriters may offer and sell the 2022A Green Bonds, 2022B Bonds or 2022C Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover pages. The offering prices may be changed from time to time by the Underwriters.
The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the SFPUC for which they received or will receive customary fees.
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In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments.
Such investment and securities activities may involve securities and instruments of the SFPUC.
Morgan Stanley & Co. LLC, an underwriter of the 2022ABCD Bonds, has entered into a retail distribution arrangement with its affiliate Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the 2022ABCD Bonds.
FINANCIAL STATEMENTS
Attached as Appendix C are the audited financial statements of the Water Enterprise (the “Financial Statements”) for Fiscal Years 2019-20 and 2020-21, prepared by the SFPUC and audited by KPMG LLP, independent certified public accountants, San Francisco , California (the “ Auditor”). The financial statements are included for convenience.
The audited financial statements of the SFPUC are public documents and the SFPUC has not requested nor did the SFPUC obtain permission from the Auditor to include the audited financial statements as an Appendix to this Official Statement. Accordingly, the Auditor has made no representation in connection with inclusion of the audits herein that there has been no material change in the financial condition of the SFPUC since the most recent audit was concluded. The Auditor has not been engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. The Auditor also has not performed any procedures relating to this Official Statement.
CONTINUING DISCLOSURE
The SFPUC has covenanted for the benefit of the Owners and Beneficial Owners of the 2022ABCD Bonds , under a Continuing Disclosure Certificate dated as of the Closing Date, to provide certain financial information and operating data (the “Annual Report”) not later than nine months following the end of its Fiscal Year (presently June 30), beginning on March 31, 2023 , with the report for Fiscal Year 20 21-22, and to promptly provide noti ces of the occurrence of certain enumerated events set forth in the Continuing Disclosure Certificate (“ Listed Events”).
The SFPUC will file the Annual Report and any notice of Listed Events as described in the Continuing Disclosure Certificate. The specific nature of the information to be contained in the Annual Report or the notices of Listed Events is set forth in the Continuing Disclosure Certificate. These covenants have been made in order to assist the Underwriters in complying with the Rule. The form of the Continuing Disclosure Certificate is attached to this Official Statement as Appendix E.
CO-MUNICIPAL ADVISORS
Backstrom McCarley Berry & Co., LLC, San Francisco, California, and Montague DeRose and Associates, LLC, Walnut Creek, California (the “Co- Municipal Advisors”), are acting as co -municipal advisors to the SFPUC with respect to the 2022ABCD Bonds. The Co-Municipal Advisors have assisted the SFPUC in the preparation of this Official Statement and in other matters relating to the planning, structuring, execution and delivery of the 2022ABCD Bonds. The Co Municipal Advisors have not independently verified any of the data contained herein or conducted a detailed investigation of the affairs of the SFPUC to determine the accuracy or completeness of this Official Statement.
Because of its limited participation, the Co -Municipal Advisors assume no responsibility for the accuracy or completeness of any of the information contained herein. The Co- Municipal Advisors will not purchase or make a market in any of the 2022ABCD Bonds.
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The compensation to be received by the Co- Municipal Advisors from the SFPUC for services provided in connection with the planning, structuring, execution and delivery of the 2022ABCD Bonds is contingent upon the sale and delivery of the 2022ABCD Bonds.
VERIFICATION OF MATHEMATICAL ACCURACY
Upon delivery of the 2022ABCD Bonds, __________, __________, will deliver a report on the mathematical accuracy of certain computations, contained in schedules provided to them on behalf of the SFPUC, relating to the sufficiency of the anticipated receipts from the cash deposited in the Escrow Fund to prepay the Refunded Bonds in full.
MISCELLANEOUS
References made in this Official Statement to certain documents and reports are brief summaries thereof that do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof.
The appendices to this Official Statement are integral parts of this Official Statement. Investors must read the entire Official Statement, including the appendices, to obtain information essential to making an informed investment decision.
(Remainder of Page Intentionally Left Blank)
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APPROVAL AND DELIVERY
This Official Statement has been duly approved, executed and delivered by the SFPUC.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
General Manager
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APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
This Appendix contains summaries of certain provisions of the Indenture, which are in addition and complementary to the summaries found in the Official Statement under the captions “INTRODUCTION,” “THE 2022ABCD Bonds” and “SECURITY FOR THE BONDS.” The following summaries are qualified in their entirety by reference to the Indenture, a copy of which can be obtained from the SFPUC .
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APPENDIX B
SUMMARY OF CERTAIN PROVISIONS OF THE WATER SUPPLY AGREEMENT The following brief summary of certain provisions of the Water Supply Agreement is subject in all respects to all of the provisions of such document. This brief summary does not purport to be a complete statement of said provisions and prospective purchasers of the 2022ABCD Bonds are referred to the complete text of said document.
Definitions
“1984 Agreement” refers to the 1984 Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County, which expired on June 30, 2009.
“Act” refers to the Raker Act, 38 Stat. 242, the Act of Congress, enacted in 1913, that authorized the construction of the Hetch Hetchy system on federal lands. “Adjusted Proportional Annual Use” means the respective percentages of annual water use, as adjusted to reflect deliveries of water by the Hetch Hetchy Water & Power Project to outside City Retail Customers. “Agreement” refers to the Water Supply Agreement, by and among San Francisco and the Wholesale Customers who approve the Agreement.
“BAWSCA” refers to the Bay Area Water Supply and Conservation Agency established pursuant to Division 31 of the California Water Code (Water Code §§81300-81461) or its successor and permitted assigns. “CEQA” refers to the California Environmental Quality Act found at §§21000 et seq. of the Public Resources Code and the Guidelines for the California Environmental Quality Act found at §§15000 et seq. of Title 14 of the California Code of Regulations, as amended from time to time. “Commission” means the governing board of the SFPUC.
“Debt Service” means principal and interest paid during a fiscal year on Indebtedness incurred by the SFPUC for the 2006 Revenue Bonds, Series A, and subsequently issued Indebtedness (exclusive of 2006 Revenue Bonds, Series B and C), the proceeds of which are used or are scheduled to be used for the acquisition or construction of New Regional Assets or to refund such Indebtedness.
“Direct Retail ” refers to Regional Water System capital or operating expenditures that are incurred to provide water service solely to Retail Customers.
“Direct Wholesale” refers to Regional Water System capital or operating expenditures that are incurred to provide water service solely to one or more Wholesale Customers. “Drought” means a water shortage caused by lack of precipitation, as reflected in resolutions of the Commission calling for voluntary or mandatory water rationing based on evaluation of water stored or otherwise available to the Regional Water System, whether or not the Commission declares a water shortage emergency pursuant to Water Code §§ 350 et seq., as amended from time to time. “Emergency” means a sudden, non-drought event, such as an earthquake, failure of Regional Water System infrastructure or other catastrophic event or natural disaster that results in an insufficient supply of water available to the Retail or Wholesale Service Areas for basic human consumption, firefighting, sanitation, and fire protection. “Encumbrance” or “Encumber” refers to the process by which the City Controller certifies the availability of amounts previously appropriated by the Commission for specifically identified SFPUC capital proj ects performed either by third parties or through work orders to other San Francisco departments.
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“Environmental Enhancement Surcharge ” means the surcharge to be imposed by the SFPUC on individual parties to the Agreement whose use exceeds their Interim Supply Allocation when the collective use of water by all parties to the Agreement is in excess of the Interim Supply Limitation. “Excess Use Charges” are monthly charges set by the SFPUC, in the form of multipliers, that are applied to the Wholesale Customer water rates during times of mandatory rationing if a Wholesale Customer’s water usage is greater than its shortage allocation.
“Fundamental Rights” of Wholesale Customers are their status as parties to the Agreement, their allocation of water recognized in the Agreement, their protection against arbitrary, unreasonable, or unjustly discriminatory rates and any other specific rights described in the Agreement. “Hetch Hetchy Enterprise” refers to Hetch Hetchy Water and Power Enterprise, a SFPUC operating department.
“Indebtedness” includes revenue bonds, bond anticipation notes, certificates of participation (excluding certificates of participation towards which SFPUC contributes debt service as an operating expense), and commercial paper.
“Individual Water Sales Contract ” refers to the contracts between each Wholesale Customer and San Francisco that details customer-specific matters such as location of service connections, service area maps and other matters specific to that customer.
“Individual Supply Guarantee” refers to each Wholesale Customer’s share of the Supply Assurance. “Interim Supply Allocation” refers to each Wholesale Customer’s share, to be established by the SFPUC of the Interim Supply Limitation.
“Interim Supply Limitation” refers to the 265 MGD annual average limitation on water deliveries until December 31, 2018 from Regional Water System watersheds imposed by the SFPUC in its approval of the WSIP in Resolution Number 08-0200 dated October 30, 2008.
“Joint,” when used in connection with Hetc h Hetchy Enterprise assets or expenses, refers to assets used or expenses incurred in providing both water supply (“Water -Related”) and in the generation and transmission of electrical energy (“Power-Related”).
“Local System Water” refers to Regional Water System water supplies developed in San Mateo, Alameda and Santa Clara Counties or otherwise not produced by the Hetch Hetchy Enterprise under rights of way granted by the Act.
“MGD” refers to an average flow rate of one million gallons per day over a specific time period, often a year.
For example, one MGD is equal to 365 million gallons per year or 1,120 acre feet per year. “Net Annual Debt Service” refers to debt service less payments made from proceeds of Indebtedness (e.g., capitalized interest), earni ngs on bond proceeds (e.g., reserve fund earnings) used to pay Debt Service, and interest paid from renewed commercial paper, or from reserve fund liquidation. “New Assets” refers to Regional and Hetch Hetchy Water -Only and Water -Related capital assets add ed to Regional Water System plant in service after June 30, 2009. “New Regional Assets ” refers to New Assets placed in service on or after July 1, 2009 that are used and useful in delivering water to Wholesale Customers. The following four categories comprise New Regional Assets:
1. Water Enterprise Regional Assets
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2. Water Enterprise Direct Wholesale Assets
3. Hetch Hetchy Water Only Assets
4. Water-Related portion (45 percent) of Hetch Hetchy Joint Assets “Power-Only,” when used with reference to Hetch Hetchy Enterprise capital costs and operating and maintenance expenses, means capital costs and expenses that are incurred solely for the construction and operation of assets used to generate and transmit electrical energy. “Power-Related” refers to the power related portion (55%) of Joint Hetch Hetchy Enterprise assets or expenses.
“Proportional Annual Use” means the shares of deliveries from the Regional Water System used by City Retail Customers and by the Wholesale Customers in a fiscal year, expressed as a percentage. “Proportional Water Use” refers the general principle of allocating Regional Water System costs based on the relative purchases of water by Retail and Wholesale Customers. “Regional,” when used with reference to Water Enterprise capital assets and operating expenses, refers to assets and expenses that benefit Wholesale and Regional Customers. “Regional Water System ” means the water storage, transmission and treatment system operated by the SFPUC in Tuolumne, Stanislaus, San Joaquin, A lameda, Santa Clara, San Mateo and San Francisco counties, including projects constructed under the WSIP, but excluding Direct Retail and Direct Wholesale assets. “Retail Customers” means any customer that purchases water from San Francisco that is not a W holesale Customer, whether located inside or outside of San Francisco. “Retail Service Area” means the areas where SFPUC sells water to Retail Customers. “Retail Water” means water sold by the SFPUC to its Retail Customers within and outside San Francisco. “San Francisco” refers to the City and County of San Francisco. “SFPUC” refers to the San Francisco Public Utilities Commission as an operating department of San Francisco, the General Manager of which reports to the Commission. “Substantially Expended,” when used with respect to a specific bond issue, means 98% of the proceeds from that bond issue and investment earnings contributed to the project fund have been expended. “Supply Assurance” means the 184 MGD maximum annual average metered supply of water dedicated by San Francisco to public use in the Wholesale Service Area (not including San Jose and Santa Clara). “Term” means the 25 -year term of the Agreement commencing July 1, 2009, including one or both 5- year extensions authorized by the Agreement.
“Tier 1 Shortage Plan ” refers to the Water Shortage Allocation Plan, adopted by the SFPUC and the Wholesale Customers in conjunction with the Agreement describing the method for allocating water between the SFPUC and the Wholesale Customers collectively for shortages of up to 20% of deliveries from the Regional Water System, as amended from time-to-time.
“Water Enterprise” refers to the San Francisco Water Department (SFWD), an SFPUC Operating Department.
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“Water Management Charge” ref ers to the charge collected by San Francisco on behalf of BAWSCA for local water resource development in the Wholesale Service Area. “Water-Only,” when used with reference to Hetch Hetchy Enterprise capital costs and operating and maintenance expenses, means capital costs and expenses that are incurred solely for the construction and operation of assets used to protect water quality or to provide for the delivery of water for consumptive purposes. “Water-Related” refers to the water related portion (45%) of Joint Hetch Hetchy Enterprise assets or expenses.
“Wheeling Statute” refers to Article 4 of Chapter 11 of the California Water Code, as amended from time to time.
“Wholesale Capital Fund” is the account established by the SFPUC for deposit of Wholesale Customer revenue that is used to fund the wholesale share of revenue-funded New Regional Assets. “Wholesale Customer” or “Customers” means one or more of the 27 water customers that are contracting for purchase of water from San Francisco pursuant to the Agreement. “Wholesale Revenue Coverage” refers to the additional dollar amount included in wholesale rates each fiscal year that is charged to Wholesale Customers by the SFPUC for their proportionate share of Debt Service coverage.
“Wholesale Revenue Coverage Reserve” refers to the account established by the SFPUC for deposit of Wholesale Revenue Coverage.
“Wholesale Revenue Requirement” means the calculated Wholesale Customer portion of SFPUC Regional Water System capital and operating costs.
“Wholesale Service Area” means the combined service areas of the Wholesale Customers, as delineated on the service area maps attached to each Individual Water Sales Contract. “WSIP” refers to the Water System Improvement Program approved by the Commission in Resolution No. 08-0200 on October 30, 2008, as amended from time to time.
Term
The Term of the Agreement is twenty-five (25) years. The Term began on July 1, 2009 and ends on June 30, 2034.
In December 2031, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the Term of the Agreement. Between January 1, 2032 and June 30, 2032, any Wholesale Customer may accept the SFPUC’s offer to extend the Term by providing a written notice of extension to the SFPUC. If such notices of extension are received from Wholesale Customers representing at least two- thirds in number as of June 30, 2032 and seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale Customers during fiscal year 2030-31, the Term shall be extended for another five (5) years (“First Extension Term”), through June 30, 2039.
No party to the Agreement which does not wish to remain a party during the Extension Term shall be compelled to do so by the actions of other parties.
In December 2036, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the Term of the Agreement. Between January 1, 2037 and June 30, 2037, any Wholesale Customer may accept the SFPUC’s offer to extend the Term by providing a written notice of extension to the SFPUC. If such notices of extension are received from Wholesale Customers representing at least two- thirds in number as of June 30, 2037 and seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale Customers during fiscal year 2035-36, the Term shall be extended for another five (5) years (“Second Extension Term”), through June 30,
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2044. No party to the Agreement which does not wish to remain a party during the Extension Term shall be compelled to do so by the actions of other parties.
Amendments to Agreement
The Agreement may be amended with the written consent of San Francisco and of Wholesale Customers representing at least two -thirds in number and seventy five percent (75%) of the quantity of water delivered by San Francisco to all Wholesale Customers during the fiscal year immediately preceding the amendment.
No amendment which adversely affects a Fundamental Right of a Wholesale Customer may be made without the written consent of that customer.
Supply Assurance
San Francisco agrees to deliver water to the Wholesale Customers up to the amount of the Supply Assurance.
Water delivered by San Francisco to Retail Customers shall not be included in the Supply Assurance. Until December 31, 2018, such commitment is subject to the Interim Supply Limitation provisions in the Agreement.
Both the Supply Assurance and the Individual Supply Guarantees identified are expressed in terms of daily deliveries on an annual average basis and do not themselves constitute a guarantee by San Francisco to meet peak daily or hourly demands of the Wholesale Customers, irrespective of what those peak demands may be. The parties acknowledge, however, that the Regional Water System has been designed and const ructed to meet peak daily and hourly demands and that its capacity to do so has not yet been reached. San Francisco agrees to operate the Regional Water System to meet peak requirements of the Wholesale Customers to the extent possible without adversely affecting its ability to meet peak demands of Retail Customers. The Agreement shall not preclude San Francisco from undertaking to meet specific peak demand requirements of individual Wholesale Customers in their Individual Water Sales Contracts.
The Supply Assurance is perpetual and shall survive the expiration or earlier termination of the Agreement.
Similarly, the Individual Supply Guarantees and/or the Individual Water Sales Contracts are perpetual and shall survive the expiration or earlier termination of the Agreement or the Individual Water Sales Contracts.
The amount of water made available by San Francisco to the Wholesale Customers is subject to reduction, to the extent and for the period made necessary by reason of water shortage, Drought, Emergenci es, or by malfunctioning or rehabilitation of facilities in the Regional Water System. The amount of water made available to the Wholesale Customers may not be reduced, however, merely because the water recycling and groundwater projects which WSIP envisions to be constructed within San Francisco, or the conservation programs intended to reduce water use by Retail Customers that are included in the WSIP, do not generate the yield or savings (10 MGD combined) anticipated by San Francisco.
Allocation of Supply Assurance
A portion of the Supply Assurance has been allocated among 24 of the 27 Wholesale Customers. Three Wholesale Customers do not have Individual Supply Guarantees. The cities of San Jose and Santa Clara do not have an Individual Supply Guarantee because San Francisco has provided water to them on a temporary and interruptible basis. The City of Hayward does not have an Individual Supply Guarantee because of the terms of the 1962 contract between it and San Francisco.
If the total amount of water de livered by San Francisco to Hayward and to the Wholesale Customers with Individual Supply Guarantees exceeds 184 MGD over a period of three consecutive fiscal years (i.e., July 1 through June 30), then the Individual Supply Guarantees of those Wholesale Customers shall be reduced pro rata so that their combined entitlement and the sustained use by Hayward does not exceed 184 MGD.
It is the responsibility of each Wholesale Customer to limit its purchases of water from San Francisco so as to remain within its Individual Supply Guarantee. San Francisco is not liable to any Wholesale Customer or obligated
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to supply more water to any Wholesale Customer individually or to the Wholesale Customers collectively than the amount to which it or they are otherwise entitled under the Agreement due to the use by any Wholesale Customer of more water than the amount to which it is entitled under the Agreement.
San Francisco installs such new connections between the Regional Water System and the distribution system of any Wholesale Customer that are necessary to deliver the quantities of water to which the Wholesale Customer is entitled under the Agreement. San Francisco has the right to determine the location of such connections, in light of the need to maintain the structural integrity of the Regional Water System and, where applicable, the need to limit peaking directly off of Regional Water System pipelines by a Wholesale Customer’s individual retail customers, the need to ensure that a Wholesale Customer’s individual retail customers have access to alternative sources of water in the event of a reduction in San Francisco’s ability to provide them with water, and other factors which may affect the desirability or undesirability of a particular location.
Wholesale Customer Service Areas
A Wholesale Customer may not deliver water furnished to it by San Francisco outside the boundary of its service area without the prior written consent of San Francisco, except for deliveries to another Wholesale Customer on an emergency and temporary basis. San Francisco may refuse a Wholesale Customer’s request to expand its service area on any reasonable basis.
If two or more Wholesale Customers agree to adjust the boundaries of their respective service areas so that one assumes an obligation to serve customers in an area that was previously within the service area of another Wholesale Customer, they may also correspondingly adjust their respective Individual Supply Guarantees.
San Francisco acknowledges that it has heretofore consented in writing to deliveries of water by individual Wholesale Customers outside their service area boundaries and agrees that nothing in the Agreement is intended to affect such prior authorizations, which remain in full force and effect according to their terms.
Permanent Transfers of Individual Supply Guarantees
A Wholesale Customer that has an Individual Supply Guarantee may transfer a portion of it to one or more other Wholesale Customers; transfers of a portion of an Individual Supply Guarantee must be permanent; and transfers of portions of Individual Supply Guarantees are subject to approval by the SFPUC. SFPUC review is limited to (1) whether a proposed transfer complies with the Act, and (2) whether the affected facilities in the Regional Water System have sufficient capacity to accommodate delivery of the increased amount of water to the proposed transferee.
Restrictions on Resale
Each Wholesale Customer agrees that it will not sell any water purchased from San Francisco to a private party for resale by such private party to others in violation of the Act.
Each Wholesale Customer also agrees that it will not sell water purchased from San Francisco to another Wholesale Customer without prior written approval of the SFPUC, except on a temporary and emergency basis . The SFPUC agrees that it will not unreasonably withhold its consent to a request by a Wholesale Customer to deliver water to another Wholesale Customer for resale.
Conservation; Use of Local Sources
Each Wholesale Customer shall take all actions within its legal authority related to water conservation that are necessary to insure that the SFPUC (a) remains eligible for (i) state and federal grants and (ii) access to the Drought Water Bank operated by the California Department of Water Resources, as well a s other Drought -related water purchase or transfer programs, and (b) complies with future legal requirements imposed on the Regional Water System by the federal government, the State, or any other third party as conditions for receiving funding or water supply.
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San Francisco and each Wholesale Customer agree that they will diligently apply their best efforts to use both surface water and groundwater sources located within their respective service areas and available recycled water to the maximum feasible extent, taking into account the environmental impacts, the public health effects and the effects on supply reliability of such use, as well as the cost of developing such sources.
Restrictions on Purchases of Water from Others; Minimum Annual Purchases Each Wholesale Customer (except for Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale) agrees that it will not contract for, purchase or receive, with or without compensation, directly or indirectly, from any person, corporation, governmental agency or other entity, any water for delivery or use within its service area without the prior written consent of San Francisco.
The prohibition in the preceding sentence does not apply to:
1. recycled water;
2. water necessar y on an emergency and temporary basis, provided that the Wholesale Customer promptly gives San Francisco notice of the nature of the emergency, the amount of water that has been or is to be purchased, and the expected duration of the emergency; or
3. water in excess of a Wholesale Customer’s Individual Supply Guarantee.
Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale may purchase water from sources other than San Francisco, provided that San Francisco shall require that each purchase a minimum annual quantity of water from San Francisco.
Water Quality
San Francisco shall deliver treated water to Wholesale Customers (except Coastside County Water District, which receives untreated water from Crystal Springs and Pilarcitos Reservoirs) that complies with primary maximum contaminant level and treatment technique standards at the regulatory entry points designated in the San Francisco Regional Water System Domestic Water Supply Permit (currently Permit No. 02-04-04P3810001) issued by the California Department of Public Health.
Regional Water System Repair, Maintenance and Operation San Francisco will keep the Regional Water System in good working order and repair consistent with prudent utility practice.
San Francisco will con tinue to operate its reservoirs in a manner that assigns higher priority to the delivery of water to the Bay Area and the environment than to the generation of electric power. The SFPUC, as the Regional Water System operator, is solely responsible for making day-to-day operational decisions.
Shortages
Notwithstanding San Francisco’s obligations to deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply Guarantees to Wholesale Customers individually, San Francisco may r educe the amount of water available or interrupt water deliveries to specific geographical areas within the Regional Water System service area to the extent that such reductions are necessary due to Emergencies, or in order to install, repair, rehabilitate, replace, investigate or inspect equipment in, or perform other maintenance work on, the Regional Water System. Such reductions or interruptions may be imposed by San Francisco without corresponding reductions or interruptions in the amount of water avail able to SFPUC water users outside the specific geographical area where reductions or interruptions are necessary, if the system’s ability to supply water outside the specific geographical area has not been impaired. In the event of such a reduction or interruption, San Francisco will restore the supply of water to the specific geographical area as soon as is possible.
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Following a major system emergency event, the SFPUC will work closely with its Wholesale Customers to monitor customer demand, including the demand source. In the event that any individual Wholesale Service Area or Retail Service Area customer’s uncontrolled distribution system leaks could result in major water waste and endanger the supply provided by the Regional Water System as a whole, flow through some customer connections may need to be temporarily reduced or terminated. SFPUC will work closely with customers to assess the nature of the demand (e.g. fire-fighting versus leakage), so that public health and safety protection can be given top priority.
1. All emergencies that require use of non -potable source water will require use of chlorine, or other suitable disinfectant, if feasible.
2. San Francisco will use its best efforts to meet the seismic reliability and delivery reliability level of service goals adopted by the Commission in conjunction with the WSIP. San Francisco will distribute water on an equitable basis throughout the Regional Water System service area following a regional Emergency, subject to physical limitations caused by damage to the Regional Water System.
Notwithstanding San Francisco’s obligations to deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply Guarantees to Wholesale Customers individually, San Francisco may reduce the amount of water available to the Wholesale Customers in response to Drought.
1. The Tier 1 Shortage Plan set forth in the Agreement will continue to be used to allocate water from the Regional Water System between Retail and Wholesale Customers during syste m-wide shortages of 20% or less.
2. San Francisco and the Wholesale Customers may negotiate in good faith revisions to the Tier 1 Shortage Plan to adjust for and accommodate anticipated changes due to demand hardening in the SFPUC’s Wholesale and Retail Service Areas. Until agreement is reached, the current Tier 1 Shortage Plan will remain in effect.
3. The SFPUC will honor allocations of water among the Wholesale Customers (“Tier 2 Allocations”) provided by BAWSCA or if unanimously agreed to by all Wholesa le Customers. If BAWSCA or all Wholesale Customers do not provide the SFPUC with Tier 2 Allocations, then the SFPUC may make a final allocation decision after first meeting and discussing allocations with BAWSCA and the Wholesale Customers. For Regional Wa ter System shortages in excess of 20%, San Francisco shall (a) follow the Tier 1 Shortage Plan allocations up to the 20% reduction, (b) meet and discuss how to implement incremental reductions above 20% with the Wholesale Customers, and (c) make a final determination of allocations above the 20% reduction. After the SFPUC has made the final allocation decision, the Wholesale Customers shall be free to challenge the allocation on any applicable legal or equitable basis.
4. San Francisco will use its best eff orts to identify potential sources of dry year water supplies and establish the contractual and other means to access and deliver those supplies in sufficient quantity to meet a goal of not more than 20% system-wide shortage in any year of the design drought.
Wheeling of Water from Outside SFPUC System
Subject to the Wheeling Statute, the SFPUC will not deny use of Regional Water System unused capacity for wheeling when such capacity is available for wheeling purposes during periods when the SFPUC has decla red a water shortage emergency under Water Code Section 350 if the following conditions are met:
A. The transferor pays reasonable charges incurred by the SFPUC as a result of the wheeling, including capital, operation, maintenance, administrative and replacement costs (as such are defined in the Wheeling Statute).
B. Wheeled water that is stored in the Regional Water System spills first.
C. Wheeled water will not unreasonably: (1) impact fish and wildlife resources in Regional Water System reservoirs; (2) diminish the quality of water delivered for consumptive uses; or (3) increase the risk of exotic species impairing Regional Water System operations. The transferor may at its own expense provide for treatment to mitigate these effects.
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D. P riority will be given to wheeling by Wholesale Customers or BAWSCA over arrangements for third-party public entities.
Limits on New Customers
Until December 31, 2028, San Francisco will not enter into contracts to supply water to any entity other than a Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:
1. It completes any necessary environmental review under CEQA of the proposed new wholesale water service obligations;
2. It concurrently completes any necessary environmental review under CEQA and commits to make both San Jose and Santa Clara permanent customers with Individual Supply Guarantees equal to at least 9 MGD; and
3. The Agreement is amended to incorporate any commitments to proposed new wholesale customers and to San Jose and Santa Clara, and to address the effects, if any, of the new customer(s) on water supply reliability, water quality and cost to existing customers of the Regional Water System.
As of January 1, 2029, San Francisco will not enter into contracts to supply water to any entity other than a Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:
1. It completes any necessary environmental review under CEQA of the proposed new wholesale water service obligations;
2. It concurrently completes any necessary environmental review under CEQA and commits to make both San Jose and Santa Clara permanent customers with Individual Supply Guarantees equal to at least 9 MGD;
3. Doing so increases the reliability of the Regional Water System; and
4. The Agreement is concurrently amended (a) to reflect that increased reliability by means of an increased commitment by San Francisco to deliver water during Droughts and (b) to address the effects, if any, of the new customer(s) on water supply, water quality and cost to existing customers of the Regional Water System.
San Francisco may enter into new retail water service obligations outside of the City and County of San Francisco:
1. Only in Alameda, San Mateo, Santa Clara, San Joaquin and Tuolumne Counties;
2. That are within or immediately adjacent to areas in which it currently serves other Retail Customers; and
3. Until the aggregate additional demand represented by the new retail customers reaches 0.5 MGD.
The limitations on serving new Retail Customers described in this subsection do not apply to historical obligations to supply water that may be contained in prior agreements between the SFPUC or its predecessor the Spring Valley Water Company, and individual users or property owners located adjacent to Regional Water System transmission pipelines.
Subject to completion of necessary environmental review under CEQA, San Francisco may at any time enter into water exchanges or cost sharing agreements with other water suppliers to enhance dry year or normal year water deliveries, provided that San Francisco cannot incur new water service obligations to such other water suppliers unless the requirements for taking on new wholesale customers are met.
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New Sources of Water Supply to Maintain Supply Assurance Sudden and unanticipated events may require San Francisco to act promptly to protect the health, safety and economic well -being of its Retail and Wholesale Customers. Such sudden events include, but are not limited to drought, earthquakes, terrorist acts, catastrophic failures of facilities owned and operated by San Francisco, and other natural or man-made events. If such events diminish San Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the Wholesale Revenue Require ment to pay for planning, evaluation and implementation of replacement sources of supply when such needs arise and without the prior approval of the Wholesale Customers.
Climate change, regulatory actions and other events may impact San Francisco’s ability to maintain the Supply Assurance from its existing surface water supplies, but on timescales long enough to permit San Francisco to collaborate with its Wholesale Customers on how best to address possible impacts to water supply. If such events diminish S an Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the Wholesale Revenue Requirement to pay for planning, evaluation and implementation of replacement sources of supply when such needs arise and without the prior approval of the Wholesale Customers.
New Sources of Water Supply to Increase Supply Assurance The Commission action in SFPUC Resolution Number 08- 0200, adopted October 30, 2008 requires certain decisions by San Francisco regarding whether to supply more than 265 MGD from its watersheds following 2018.
Such decisions are to be made by December 31, 2018, subject to the exercise of San Francisco’s retained CEQA discretion. San Francisco’s future decisions may include an offer to increase the Supply Assurance at the request of some or all of its Wholesale Customers. Costs associated with providing additional water from its existing water supplies in San Mateo, Santa Clara, Alameda, Tuolumne, and Stanislaus Counties shall be allocated to Wholesale and Retail Customers as described in the Agreement.
If San Francisco seeks to develop additional water supplies from new sources to increase the Supply Assurance available to Wholesale Customers, studies and resulting water supply projects will be conducted jointly with BAWSCA under separate agreement(s) specifying the purpose of the projects, the anticipated regional benefits and how costs of studies and implementation will be allocated and charged. Nothing in the Agreement shall serve as precedent for the allocation of such new s upply capital costs between Retail and Wholesale Customers or associated operational expenses, which shall only occur following approval of both parties and amendment of the Agreement, if necessary.
Interim Supply Limitation Imposed by SFPUC
In adopting the WSIP in Res. No. 08 -0200, the Commission included full implementation of all proposed WSIP capital improvement projects to achieve level of service goals relating to public health, seismic safety, and delivery reliability, but decided to adopt a water supply element that includes the Interim Supply Limitation. Between the effective date of the Agreement and December 31, 2028, the Interim Supply Limitation is allocated as follows between Retail and Wholesale Customers:
Retail Customers’ allocation: 81 MGD
Wholesale Customers’ allocation: 184 MGD
The Wholesale Customers’ collective allocation of 184 MGD under the Interim Supply Limitation includes the demand of the cities of San Jose and Santa Clara, whose demand is not included in the Supply Assurance.
Transfers of Interim Supply Allocations
Any Wholesale Customer, including Hayward, may transfer a portion of its Interim Supply Allocation to one or more other Wholesale Customers. All Wholesale Customers are also eligible transferees, including California Water Service Company up to its Individual Supply Guarantee. Transfers of a portion of an Interim Supply Allocation must be prospective. The duration of a transfer cannot be less than the balance of the fiscal year. Transfers of portions of Interim Supply Allocations are subject to approval by the SFPUC. SFPUC review is limited to determining (1) whether
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a proposed transfer complies with the Act, and (2) whether the affected facilities in the Regional Water System have sufficient capacity to accommodate delivery of the increased amount of water to the proposed transferee. The SFPUC will not unreasonably withhold or delay its approval. Transfers of Interim Supply Allocations shall continue in effect until the earlier of (1) delivery of written notice to the SFPUC by the transfer participants that the transfer has been rescinded or (2) December 31, 2028.
Maintenance of Condition of Hetch Hetchy Reservoir
San Francisco may not change the existing condition of the Hetch Hetchy Reservoir by:
1. Abandoning or decommissioning O’Shaughnessy Dam; or
2. Draining Hetch Hetchy Reservoir, except for purposes of (i) repair, rehabilitation, maintenance, improvement, or reconstruction of O’Shaughnessy Dam or appurtenances, (ii) supplying water to the Bay Area during drought, or (iii) meeting water release requirements under the Raker Act, or federal or state law unless the parties enter into an amendment to the Water Supply Agreement.
Environmental Enhancement Surcharge
Beginning with wholesale water rates for fiscal year 2011 -12, and continuing for the duration of the Interim Supply Limitation, the Commission will establish the Environmental Enhancement Surcharge concurrently with the budget-coordinated rate process set forth in the Agreement. The monetary amount of the Environmental Enhancement Surcharge per volume of water, such as dollars per acre -foot, will be equivalent for Retail Customer use in excess of 81 MGD and Wholesale Customer use in excess of 184 MGD.
Beginning in fiscal year 2011-12, the Environmental Enhancement Surcharge will be levied only if and when combined Retail Customer and Wholesale Customer purchases exceed the Interim Supply Limitation of 265 MGD and if the fund described below has been established by the San Francisco Board of Supervisors. In that event, the Environmental Enhancement Surcharge will apply to Retail Customers for use in excess of 81 MGD and to individual Wholesale Customers for use in excess of their Interim Supply Allocations established by the Commission.
1. Environmental Enhancement Surcharges related to the Retail Customers’ use in excess of their 81 MGD Retail Customer Allocation will be paid by the SFPUC, and no portion of such surcharges may be allocated to Wholesale Customers. The method of recovering the Environment al Enhancement Surcharges imposed upon Retail Customers shall be within the sole discretion of the SFPUC.
2. Environmental Enhancement Surcharges related to the individual Wholesale Customers’ use in excess of their respective Interim Supply Allocations will be paid to the SFPUC by individual Wholesale Customers.
Environmental Enhancement Surcharges paid by the SFPUC and by Wholesale Customers will be placed into a restricted reserve fund. The SFPUC will request the San Francisco Board of Supervisors to establish this fund by ordinance and, if adopted, the fund will be subject to the following restrictions:
1. Interest earnings will stay in the reserve fund.
2. The reserve fund shall (a) be subject to automatic appropriation; (b) require unexpended and unencumbered fund balances to be carried forward from year to year; and (c) not be transferred to the San Francisco General Fund.
3. The reserve fund may be used only for specific environmental restoration and enhancement measures for the Sierra and local watersheds, such as those included in the Watershed Environmental Improvement Program.
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4. Environmental Enhancement Surcharge proceeds shall be expended in an expeditious manner. Any Environmental Enhancement Surcharge proceeds that remain in the reserve fund as of December 31, 2018 shall be used to complete projects previously approved. Upon completion of the identified projects, the balance of any unexpended sums in the reserve fund shall be distributed to BAWSCA and the SFPUC in proportion to the total amount of surcharges assessed to the Wholesale and Retail Customers, respectively.
Specific uses of Environmental Enhancement Surcharges will be decided by the SFPUC and BAWSCA General Managers following input from environmental stakeholders and other interested members of the public. If parties are unable to agree, then they will jointly select a third person to participate in making the decision.
San Jose/Santa Clara Interim Supply Allocation and Process for Reduction/ Termination .
San Francisco will supply a combined annual average of 9 MGD to the cities of San Jose and Santa Clara through 2028. Water supplied by San Francisco may only be used in the existing defined service areas in the northern portions of San Jose and Santa Clara. San Francisco may reduce the quantity of water specified in this section when it establishes the Interim Supply Allocations for Wholesale Customers. The establishment of Interim Supply Allocations for San Jose and Santa Clara shall not be considered a reduction of supply, provided that the Inte rim Supply Allocations assigned to San Jose and Santa Clara do not effect a reduction greater than the aggregate average reduction in Individual Supply Guarantees for Wholesale Customers that have such guarantees.
San Francisco Decisions in 2028 Regarding Future Water Supply By December 31, 20 28, San Francisco will have completed any necessary CEQA review that is relevant to making San Jose and Santa Clara permanent customers of the Regional Water System and will decide whether or not to make San Jose and Santa Clara permanent customers of the Regional Water System. San Francisco will make San Jose and Santa Clara permanent customers only if, and to the extent that, San Francisco determines that Regional Water System long term water supplies are available. In the event that San Francisco decides to afford permanent status to San Jose and Santa Clara, the Agreement will be amended.
By December 31, 2028, San Francisco will have completed any necessary CEQA review and will decide how much water if any, in excess of the Supply Assurance it will supply to Wholesale Customers from the Regional Water System to meet their projected future water demands until the year 2040, and whether to offer a corresponding increase in the Supply Assurance as a result of its determination.
Retained Discretion of SFPUC and Wholesale Customers
The Agreement contemplates discretionary actions that the SFPUC and the Wholesale Customers may choose to take in the future that could result in physical changes to the environment (“Discretionary Actions”). The Discretionary Actions include decisions to:
1. Develop additional or alternate water resources by the SFPUC or one or more Wholesale Customers;
2. Implement the physical facilities comprising the WSIP by December 30, 2021;
3. Approve wheeling proposals by Wholesale Customers;
4. Approve new wholesale customers and water exchange or cost sharing agreements with other water suppliers;
5. Provide additional water to San Jose and/or Santa Clara;
6. Offer permanent status to San Jose and/or Santa Clara;
7. Reduce or terminate supply to San Jose and/or Santa Clara;
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8. Provide additional water to Wholesale Customers in excess of the Supply Assurance to meet their projected future water demands;
9. Offer a corresponding volumetric increase in the Supply Assurance; and
10. Implement Hetch Hetchy Water and Power projects listed in the Agreement.
Wholesale Revenue Requirement
The Agreement shall be applicable only to the water rates charged by San Francisco to the Wholesale Customers. Nothing contained in the Agreement shall limit, constrain, or in any way affect the rates which San Francisco may charge for water sold to Retail Customers or the methodology by which such rates are determined.
The Agreement sets forth the method by which the Wholesale Customers’ collective share of expenses incurred by the SFPUC in delivering water to them will be determined.
The Agreement implements two general principles as follows: (1) the Wholesale Customers should not pay for expenses of SFPUC operations from which they receive no benefit and (2) the Wholesale Customers should pay their share of expenses incurred by the SFPUC in delivering water to them on the basis of Proportional Annual Use unless otherwise explicitly provided in the Agreement.
To implement these general principles, the Wholesale Revenue Requirement will consist of, and be limited to the Wholesale Customers’ shares of the following categories of expense:
1. Contribution to the capital cost of Water Enterprise New Regional Assets.
2. Water Enterprise operation and maintenance expenses, including power purchased from the Hetch Hetchy Enterprise that is used in the operation of the Water Enterprise.
3. Water Enterprise administrative and general expenses.
4. Water Enterprise property taxes.
5. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s operation and maintenance, administrative and general, and property tax expenses.
6. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s capital cost of New Assets classified as Water-Only and the Water-Related portion of Joint Assets.
In each of these cost categories, Direct Retail Expenses will be allocated entirely to Retail Customers. Direct Wholesale Expenses will be allocated entirely to the Wholesale Customers. Regional Expenses will be allocated between Retail Customers and Wholesale Customers.
For purposes of establishing the rates to be charged Wholesale Customers, expenses will be based on the budget for, and estimates of water purchases in, the following fiscal year. For purposes of accounting, the Wholesale Revenue Requirement will be determined on the basis of actual expenses incurred and actual water use.
In addition, rates charged to Wholesale Customers may include the Wholesale Customers’ contribution to a Wholesale Revenue Coverage Reserve, which is not included in the Wholesale Revenue Requirement itself.
Capital Cost Contribution – New Regional Assets
The Wholesale Customers shall pay the wholesale share of Net Annual Debt Service for new Regional Assets.
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1. The amount of Net Annual Debt Service for New Regional Assets will be determined for each series of Indebtedness issued. Until the proceeds of a particular series are Substantially Expended, the amount attributable to specific projects will be based on the expected use of proceeds shown in the “Certificate Regarding Use of Proceeds” executed by the SFPUC General Manager on behalf of the Commission in connection with the sale of the Indebtedness.
2. After the proceeds of a series are Substantially Expended, the SFPUC General Manager will prepare and execute a certificate showing the actual expenditure of proceeds at an allocation of Net Debt Service to New Regional Assets for a series of bonds will be used in the fiscal year in which the proceeds have been Substantially Expended and thereafter.
3. The Wholesale Customers’ share of Net Annual Debt Service for the New Regional Assets that are categorized as Direct Wholesale will be 100 percent. (None of the projects in the WSIP are categorized as Direct Wholesale.) The Wholesale Customers’ share of Net Annual Debt Service for all other New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use.
4. If Indebtedness is issued by the SFPUC to refund the 2006 Revenue Bonds, Series A or to refund any other long-term Indebtedness issued after July 1, 2009, the Net Annual Debt Service attributable to proceeds used for refunding will be allocated on the same basis as the Indebtedness being refunded.
5. In addition to Net Debt Service, Wholesale Customers will pay a proportionat e share of annual administrative costs associated with Indebtedness, such as bond trustee fees, credit rating agency fees, letter of credit issuer fees, San Francisco Revenue Bond Oversight Committee fees, etc., but only to the extent such fees are neither paid from proceeds of Indebtedness nor included in SFPUC operation and maintenance or administrative and general expenses.
The Wholesale Customers shall pay the wholesale share of the appropriation contained in the SFPUC annual budget for each year to be used to acquire or construct New Regional Assets.
The Wholesale Customers’ share of the annual appropriation for revenue -funded New Regional Assets that are categorized as Direct Wholesale will be 100 percent. The Wholesale Customers’ share of the annual appropriation for all other revenue -funded New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use in each fiscal year. The amount appropriated in each fiscal year for the wholesale share of New Regional Assets shall be contributed to the Wholesale Capital Fund.
Hetch Hetchy Enterprise Expenses
There are two steps involved in determining the amount of the Wholesale Customers’ share of Hetch Hetchy Enterprise expenses.
1. The first step is to determine the Water Enterprise’s share of Hetch Hetchy Enterprise operation expenses, maintenance expenses, administrative and general expenses, and property taxes.
2. The second step is to determine the Wholesale Customers’ share of expenses allocable to the Water Enterprise.
The Water Enterprise’s share of Hetch Hetchy Enterprise expenses consist of 100 percent of Water -Only expenses and the Water-Related portion (45%) of Joint expenses.
The Wholesale Customers’ share of the sum of the Water Enterprise’s share of H etch Hetchy Enterprise expenses shall be calculated by multiplying that dollar amount by Adjusted Proportional Annual Use.
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Wholesale Customers are also allocated a share of Hetch Hetchy Enterprise capital costs. The components of Hetch Hetchy Enterprise capital costs are as follows:
1. The Water Enterprise will be assigned 100 percent of Net Annual Debt Service attributable to acquisition and construction of New Hetch Hetchy Enterprise assets that are Water -Only and the Water-Related portion (45 percent) of Net Annual Debt Service on New Hetch Hetchy Enterprise Joint assets.
2. The Water Enterprise will be assigned 100 percent of capital expenditures from revenues for New Hetch Hetchy Enterprise assets that are Water- Only and the Water-Related portion (45 percent) of such expenditures for new Hetch Hetchy Enterprise Joint assets.
The Wholesale Customers’ share of the Net Annual Debt Service and revenue funded capital expenditures shall be calculated by multiplying that dollar amount by Adjusted Propor tional Annual Use.
Additional Agreements Related to Financial Issues
The Wholesale Customers have no entitlement to any of the following sources of revenue to the SFPUC.
1. Revenues from leases or sales of SFPUC real property.
2. Revenues from other utility services such as the sale of electric power, natural gas and steam.
3. Revenues from the sale of water to customers and entities other than the Wholesale Customers.
4. Revenues earned from the investment of SFPUC funds other than funds contributed by the Wholesale Customers to the Wholesale Revenue Coverage Reserve or the Wholesale Capital Fund.
Wholesale Customers are also entitled to the benefit of earnings on proceeds of Indebtedness (through expenditure on New Regional Assets and /or application to Debt Service) and to interest on the Balancing Account.
5. Revenues not related to the sale of water.
The Wholesale Customers will not be charged with any of the following expenses:
1. Capital costs for assets constructed or acquired prior to July 1, 1984.
2. Expenses incurred by the SFPUC for generation and distribution of electric power, including Hetch Hetchy Enterprise Power -Only expenses and the Power -Related share of Hetch Hetchy Enterprise Joint expenses. An exception to this is Regional energy costs incurred by the Water Enterprise, for which Wholesale Customers are charged on the basis of Proportional Annual Use.
3. Expenses incurred by SFPUC in providing water to Retail Customers.
4. Expenses associated with the SFPUC’s accruals or allocations for uncollectible Retail Water accounts.
5. Attorneys’ fees and costs incurred by the Wholesale Customers that a court of competent jurisdiction orders San Francisco to pay as part of a final, binding judgment against San Francisco.
6. Any expenses associated with funding any reserves (other than the required Wholesale Revenue Coverage Reserve) accrued and not anticipated to be paid within one year unless such reserve is established by mutual agreement of the SFPUC and BAWSCA.
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7. Any expenses accrued in respect to pending or threatened litigation, damage or personal injury claims or other loss contingencies unless projected to be paid within one year. Otherwise, such expenses will be charged to the Wholesale Customers when actually paid.
8. Any expenses associated with installing, relocating, enlarging, removing or modifying meters and service connections at the request of an individual Wholesale Customer.
9. The Retail Customers’ portion of any Environmental Enhancement Surcharges imposed to enforce the Interim Supply Limitation.
The following payments by Wholesale Customers, individually or collectively, are not credited as Wholesale revenues.
1. Payments by individual Wholesale Customers of the Environmental Enhancement Surcharge imposed to enforce the Interim Supply Limitation.
2. Payments of attorneys’ fees and costs incurred by San Francisco that a court of competent jurisdiction orders the Wholesale Customers to pay as part of a final, binding judgment against the Wholesale Customers.
3. Payments by individual Wholesale Customers for installation, relocation, enlargement, removal or modification of meters and service connections requested by, and charged to, a Wholesale Customer.
4. Payments applied to the amortization of the ending balance in the balancing account under the 1984 Agreement.
5. Payments of the Water Management Charge which are delivered to BAWSCA.
6. Payments directed to the Wholesale Revenue Coverage Reserve.
7. Prepayments of certain capital and revenues payment.
The Wholesale Customers will receive a proportional benefit from funds received by the SFPUC from (a) governmental grants, rebates, reimbursements or other subventions, (b) private-sector grants for Regional capital or operating purposes of the Water Enterprise and the Water -Only and Water-related portion of Joint Hetch Hetchy Water Enterprise expenses, or (c) a SFPUC use of taxable bonds.
The Wholesale Customers will receive a proportionate benefit from recovery of damages, including liquidated damages, by SFPUC from judgments against or settlements with contractors, suppliers, sureties, etc., related to Regional Water System projects and the Water -Only and Water-Related portion of Joint Hetch Hetchy Enterprise projects.
The SFPUC will continue to charge Wholesale Customers for assets acquired or constructed with proceeds of Indebtedness on which Wholesale Customers paid Debt Service during the Term of the Agreement on the “cash” basis (as opposed to the “utility” basis) after the expiration or earlier termination of the Agreement.
Rate Adjustments
Adjustments to the rates applicable to the Wholesale Customers, other than emergency rate increases and drought rate increases, shall be coordinated with the budget development process described in the Agreement.
The Commission may adjust the Wholesale Customers’ rates in response to an Emer gency that damages the Regional Water System and disrupts San Francisco’s ability to maintain normal deliveries of water to Retail and Wholesale Customers. In such an Emergency, the Commission may adopt an emergency rate surcharge applicable to
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Wholesale Customers without following the budgeting procedures set forth in the Agreement, provided that any such rates surcharge imposed by the Commission shall be applicable to both Retail and Wholesale Customers and incorporate the same percentage increase for all customers. Any emergency rate surcharge adopted by the Commission shall remain in effect only until the next-budget coordinated rate-setting cycle.
If the Commission declares a water shortage emergency under Water Code Section 350, implements the Tier 1 Shortage Plan and imposes drought rates on Retail Customers, it may concurrently adjust wholesale rates independently of coordination with the annual budget process. Those adjustments may be designed to encourage water conservation and may constitute changes to the structure of the rates. Drought Rate payments and payments of excess use charges levied in accordance with the Tier 1 Shortage Plan constitute Wholesale Customer Revenue and count towards the Wholesale Revenue Requirement. The SFPUC may use these revenues to purchase additional water for the Wholesale Customers from the State Drought Water Bank or other willing seller.
Rate Structure
The Agreement is not intended and shall not be construed to limit the Commission’s right (a) to adjust the structure of the rate schedule applicable to the Wholesale Customers (i.e., the relationship among the several charges set out therein) or (b) to add, delete, or change the various charges which make up the rate schedule, provided that neither such charges nor the structure of the rate schedule(s) applicable to the Wholesale Customers shall be arbitrary, unreasonable, or unjustly discriminatory as among said customers. The SFPUC will give careful consideration to proposals for changes in the rate schedule made jointly by the Wholesale Customers but, subject to the limitations set out above, shall retain the sole and exclusive right to determine the structure of the rate schedule.
The SFPUC may recommend, and the Commission may adopt, changes in the structure of wholesale rates at any time. However, the new rate schedule implementing these changes will become effective at the beginning of the following fiscal year.
Balancing Account
After the close of each fiscal year, the SFPUC will compute the costs allocable to the Wholesale Customers for that fiscal year based on actual costs incurred by the SFPUC and actual amounts of water used by the Wholesale Customers and the Retail Customers. That amount will be compared to the amounts billed to the Wholesale Customers for that fiscal year (including any Excess Use Charges, but excluding revenues not credited to the Wholesale Revenue Requirement). The difference will be posted to a “balancing account” as a credit to, or charge against, the Wholesale Customers. Interest shall also be posted to the balancing account calculated by multiplying the amount of the opening balance by the average net interest rate, certified by the Controller as earned in the San Francisco Treasury for the previous fiscal year on the San Francisco County Pooled Investment Account. Interest, when posted, will carry the same mathematical sign (whether positive or negative) as carried by the opening balance. The amount posted to the balancing account in each year shall be added to, or subtracted from, the balance in the account from previous years.
If the amount in the balancing account is owed to the Wholesale Customers (a positive balance), the SFPUC shall take it into consideration in establishing wholesale rates. However, the SFPUC need not apply the entire amount to reduce wholesale rates for the immediately ensuing year. Instead, the SFPUC may prorate a positive ending balance over a period of up to three successive years in order to avoid fluctuating decreases and increases in wholesale rates.
If the amount in the balancing account is owed to the SFPUC (a negative balance), the SFPUC shall not be obligated to apply all or any part of the negative balance in establishing wholesale rates for the immediately ensuring year. Instead, the SFPUC may prorate the negative balance in whole or in part over multiple years in order to avoid fluctuating increases and decreases in wholesale rates.
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Wholesale Revenue Coverage Reserve
The SFPUC may include in wholesale rates for any fiscal year an additional dollar amount (“Wholesale Revenue Coverage”), which for any fiscal year shall equal the following:
1. The lesser of (i) 25% of the Wholesale Customers’ share of Net Annual Debt Service for that fiscal year, or (ii) the amount necessary to meet the Wholesale Customers’ proportionate share of Debt Service coverage required by then-current Indebtedness for that fiscal year, minus
2. A credit for (i) the actual amount previously deposited in the “Wholesale Revenue Coverage Reserve,” (ii) accrued interest on the amounts on deposit in the Wholesale Revenue Coverage Reserve, and (iii) an amount equal to any additional interest that would have accrued on the actual amounts previously deposited in the Wholesale Revenue Coverage Reserve assuming no withdrawals had been made therefrom.
During each fiscal year, the SFPUC will set aside and deposit that portion of revenue equal to Wholesale Revenue Coverage into a separate account that the SFPUC will establish and maintain, to be known as the “Wholesale Revenue Coverage Reserve.” Deposits into the Wholesale Revenue Coverage Reserve shall be made no less frequently than monthly. The Wholesale Revenue Coverage Reserve shall be credited with interest. The SFPUC may use amounts in the Wholesale Revenue Coverage Reserve for any lawful purpose. Any balance in the Wholesale Revenue Coverage Reserve in excess of the Wholesale Revenue Coverage amount as of the end of any fiscal year shall be applied as a credit against wholesale rates in the immediately following fiscal year unless otherwise directed b y BAWSCA.
Conditions in the municipal bond market may change from those prevailing in 2009. If, prior to expiration of the Term, the SFPUC determines that it would be in the best financial interest of both Retail Customers and Wholesale Customers of the Regional Water System for the Debt Service coverage requirement to be increased in one or more series of proposed new Indebtedness above 125%, or for the coverage covenant to be strengthened in other ways, it will provide a written report to BAWSCA. The report will contain (1) a description of proposed covenant(s) in the bond indenture; (2) an explanation of how savings are expected to be achieved (e.g., increase in the SFPUC’s credit rating over the then-current level; ability to obtain credit enhancement, etc.); (3) the estimated all-in true interest cost savings; (4) a comparison of the Wholesale Revenue Requirements using the Debt Service coverage limitation and under the proposed methodology; and (5) a comparison of the respective monetary benefits expected to be received by both Retail and Wholesale Customers. The SFPUC and BAWSCA agree to meet and confer in good faith about the proposed changes.
Any increase in Debt Service coverage proposed by the SFPUC shall be commensurate with Proportional Water Use by Retail and Wholesale Customers. If the SFPUC demonstrates that an increase in Debt Service coverage will result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, BAWSCA may agree to a modification of the Wholesale Revenue Coverage requirement. If BAWSCA does not agree to a proposed modification in coverage requirements in the covenants for new Indebtedness, SFPUC may nevertheless proceed with the modification and the issuance of new Indebtedness. Any Wholesale Customer, or BAWSCA, may challenge an increase in the Wholesale Revenue Requirement resulting from the modification in Debt Service coverage through arbitration. If the arbitrator finds that the increase in Debt Service coverage (1) did not and will not result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, or (2) was not commensurate with Proportional Water Use, the arbitrator may order the Wholesale Revenue Requirement to be recalculated both retrospectively and prospectively to eliminate the differential impact to Wholesale or Retail Customers.
Working Capital Requirement
The SFPUC maintains working capital in the form of unappropriated reserves for the purpose of bridging the gap between when the SFPUC incurs operating expenses required to provide service and when it receives revenues from its Retail and Wholesale Customers. The Wholesale Customers shall fund their share of working capital as part of the annual Wholesale Revenue Requirement calculation. The amount of wholesale working capital for which the Wholesale Customers will be responsible will be determined using the 60-day standard formula approach.
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Applying this approach, annual wholesale working capital equals one -sixth of the wholesale allocation of operation and maintenance, administrative and general, and property tax expenses for the Water and Hetch Hetchy Enterprises. Wholesale working capital shall be calculated separately for the Water and Hetch Hetchy Enterprises.
Wholesale Capital Fund
The SFPUC shall establish a comparable Wholesale Revenue-Funded Capital Fund (Wholesale Capital Fund) to enable the Wholesale Customers to fund the wholesale share of revenue-funded New Regional Assets. The SFPUC may include in wholesale rates for any fiscal year an amount equal to the wholesale share of the SFPUC’s appropriation for revenue funded New Regional Ass ets for that year, which sum will be credited to the Wholesale Capital Fund. The wholesale share of other sources of funding, where legally permitted and appropriately accounted for under GAAP, will also be credited to the Wholesale Capital Fund, together with interest earnings on the Wholesale Capital Fund balance.
The SFPUC will expend revenues appropriated and transferred to the Wholesale Capital Fund only on New Regional Assets.
In order to prevent the accumulation of an excessive unexpended and unencumbered surplus in the Wholesale Capital Fund, any excess fund balance (i.e., an accumulated unexpended, unencumbered amount in excess of 10% of the wholesale share of total capital appropriations for New Regional Assets during the five preceding years) will be transferred for the credit of the Wholesale Customers to the Balancing Account.
Arbitration and Judicial Review
All questions or disputes arising under the following subject areas shall be subject to mandatory, binding arbitration and shall not be subject to judicial determination:
1. the determination of the Wholesale Revenue Requirement, which shall include both the calculations used in the determination and the variables used in those calculations;
2. the SFPUC’s adherence to accounting practices and conduct of the compliance audit; and
3. the SFPUC’s classification of new assets for purposes of determining the Wholesale Revenue Requirement.
All other questions or disputes arising under this Agreement shall be subject to judicial determination.
Disputes about the scope of arbitrability shall be resolved by the courts.
Preservation of Water Rights; Notice of Water Rights Proceedings It is the intention of San Francisco to preserve all of its water rights, irrespective of whether the water held under such water rights is allocated under the Agreement. Nothing in the Agreement shall be construed as an abandonment, or evidence of an intent to abandon, any of the water rights that San Francisco presently possesses.
Reservations of, and Limitations on, Claims
The 1984 Agreement resolved a civil action brought against San Francisco by certain of the Wholesale Customers. Plaintiffs in that action contended that they, and other Wholesale Customers that are municipalities or special districts, were “co -grantees” within the meaning of Section 8 of the Act and were entitled to certain rights, benefits and privileges by virtue of that status. San Francisco disputed those claims.
Nothing in the Agreement, or in the Individual Water Sales Contracts, shall be construed or interpr eted in any way to affect the ultimate resolution of the controversy between the Parties concerning whether any of the Wholesale Customers are “co -grantees” under the Act and, if so, what rights, benefits and privileges accrue to them by reason of that claimed status.
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The following claims, which San Francisco disputes, are reserved but may not be asserted during the Term (or portions thereof, as indicated):
1. The Wholesale Customers’ claim that the Act entitles them to water at cost.
2. The Wholesale Customers’ claim that San Francisco is obligated under the Act or state law to supply them with additional water in excess of the Supply Assurance. This claim may not be asserted unless and until San Francisco decides not to meet projected water demands of Wholesale Customers in excess of the Supply Assurance.
3. The claim by San Jose and Santa Clara that they are entitled under the Act, or any other federal or state law, to permanent, non -interruptible status and to be charged rates identical to those charged other Wholesale Customers. This claim may not be asserted unless and until San Francisco notifies San Jose or Santa Clara that it intends to interrupt or terminate water deliveries.
4. The Wholesale Customers’ claim that the SFPUC is not entitled to impose a surcharge for lost power generation revenues attributable to furnishing water in excess of the Supply Assurance. This claim may not be asserted unless and until SFPUC furnishes water in excess of the Supply Assurance during the Term and also includes such a surcharge in the price of such water.
5. Claims by Wholesale Customers (other than San Jose and Santa Clara, whose service areas are fixed) that SFPUC is obligated under the Act or state law to furnish water, within their Individual Supply Guarantee, for delivery to customers outside their existing service area and that Wholesale Customers are entitled to enlarge their service areas to supply those customers. Such claims may be asserted only after SFPUC’s denial of, or failure for six months to act on, a written reque st by a Wholesale Customer to expand its service area.
The Wholesale Customers (and the SFPUC, where specified) will refrain from the following activities during the Term (or portions thereof, as specified):
1. The Wholesale Customers and the SFPUC will not contend before any court, administrative agency or legislative body or committee that the methodology for determining the Wholesale Revenue Requirement (or the requirements for (a) amortization of the ending balance under the 1984 Agreement, or (b) contribution to the Wholesale Revenue Coverage) determined in accordance with the Agreement violates the Act or any other provision of federal law, state law, or San Francisco’s City Charter, or is unfair, unreasonable or unlawful.
2. The Wholesale Customers wil l not challenge the transfer of funds by the SFPUC to any other San Francisco City department or fund, provided such transfer complies with the San Francisco City Charter. The transfer of its funds, whether or not permitted by the City Charter, will not ex cuse the SFPUC from its failure to perform any obligation imposed by the Agreement.
3. The Wholesale Customers and the SFPUC will not assert monetary claims against one another based on the 1984 Agreement other than otherwise arbitral claims arising from the three fiscal years immediately preceding the start of the Term (i.e., Fiscal Years 2006-07, 2007-08 and 2008-09).
The Wholesale Customers do not, by executing the Agreement, concede the legality of the SFPUC’s establishing Interim Supply Allocations or imposing Environmental Enhancement Surcharges on water use in excess of such allocations. Any Wholesale Customer may challenge such allocation when imposed and/or such surcharges if and when levied, in any court of competent jurisdiction.
The furnishing of water in excess of the Supply Assurance by San Francisco to the Wholesale Customers shall not be deemed or construed to be a waiver by San Francisco of its claim that it has no obligation under any provision of law to supply such water to the Wholesale Customers, nor shall it constitute a dedication by San Francisco to the Wholesale Customers of such water.
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Prohibition of Assignment
The Agreement shall be binding on, and shall inure to the benefit of, the Wholesale Customers and San Francisco, and their respective successors and permitted assigns. Each Wholesale Customer agrees that it will not transfer or assign any rights or privileges under the Agreement, either in whole or in part, or make any transfer of all or any part of its water system or allow the use thereof in any manner whereby any provision of the Agreement will not continue to be binding on it, its assignee or transferee, or such use of the system. Any assignment or transfer in violation of this covenant, and any assignment or transfer that would result in the supply of water in violation of the Act, shall be void.
Nothing shall prevent any Wholesale Customer (except the California Water Service Company and Stanford) from entering into a joint powers agreement or a municipal or multi -party water d istrict with any other Wholesale Customer (except the two listed above) to exercise the rights and obligations granted to and imposed upon the Wholesale Customers hereunder, nor shall this section prevent any Wholesale Customer (except the two listed above) from succeeding to the rights and obligations of another Wholesale Customer hereunder as long as the Wholesale Service Area served by the Wholesale Customers involved in the succession is not thereby enlarged.
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APPENDIX C
SFPUC WATER ENTERPRISE FINANCIAL STATEMENTS
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APPENDIX D
PROPOSED FORM OF OPINION OF CO-BOND COUNSEL
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$__________*
Public Utilities Commission
of the City and County of San Francisco
San Francisco Water Revenue Bonds,
2022 Series ABCD
$________*
2022 Sub-Series A Bonds
(Refunding – Federally
Taxable)
(WSIP) (Green Bonds)
$________*
2022 Sub-Series B Bonds
(Refunding – Federally
Taxable)
(Regional Water)
$________*
2022 Sub-Series C Bonds
(Refunding – Federally
Taxable)
(Hetch Hetchy Water)
$__________*
2022 Sub-Series D Bonds
(Refunding – Federally
Taxable)
(Non-WSIP)
[Closing Date]
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Public Utilities Commission of the City and County of San Francisco (the “ SFPUC”) in connection with the issuance of the water revenue bonds captioned above (the “ 2022ABCD Bonds”). The 2022ABCD Bonds are being issued pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the SFPUC and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as amended and supplemented, including as amended and supplemented by a Forty-Third Supplemental Indenture, a Forty-Fourth Supplemental Indenture , a Forty -Fifth Supplemental Indenture, and a Forty-Sixth Supplemental Indenture, each dated as of April 1, 2022, by and between the SFPUC and the Trustee (collectively, the “Indenture”).
The SFPUC covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the SFPUC for the benefit of the Holders and Beneficial Owners of the 2022ABCD Bonds and in order to assist the Participating Underwriters in comp lying with Securities and Exchange Commission (the “ S.E.C.”) Rule 15c2-12(b)(5).
SECTION 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 2, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the SFPUC pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person that: (a) has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any 2022ABCD Bonds (including persons holding 2022ABCD Bonds through nominees, depositories or other intermediaries) including, but not limited to, the power to vote or consent with respect to any 2022ABCD Bonds or to dispose of ownership of any 2022ABCD Bonds ; or (b) is treated as the owner of any 2022ABCD Bonds for federal income tax purposes. “Dissemination Agent ” shall mean the SFPUC, acting in its capacity as Dissemination Agent under this Disclosure Certificate, or any successor Dissemination Agent designated in writing by the SFPUC and which has filed with the SFPUC a written acceptance of such designation. “Financial Obligation” means, for purposes of the Listed Events set out in Section 5(a)(10) and Section (5)(b)(8), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial
* Preliminary, subject to change.
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Obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. “Holder” shall mean either the registered owners of the 2022ABCD Bonds, or, if the 2022ABCD Bonds are registered in the name of The Depository Trust Company or another recognized depository, any applicable participant in such depository system.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive continuing disclosure filings pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB currently located at http://emma.msrb.org.
“Official Statement” shall mean the final Official Statement, dated April __, 2022, prepared in connection with the sale and offering of the 2022ABCD Bonds.
“Participating Underwriters” shall mean any of the original underwriters or purchasers of the 2022ABCD Bonds required to comply with the Rule in connection with the offering of the 2022ABCD Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the S.E.C. under the Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Reports.
(a) The SFPUC shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the SFPUC’s fiscal year (which currently ends June 30), commencing March 31, 2023, with the report for Fiscal Year 2021-22, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is not the SFPUC, the SFPUC shall provide the Annual Report to the Dissemination Agent not later than 15 days prior to said date.
The Annual Report must be submitted in electronic format and accompanied by such identifying information as is prescribed by the MSRB, and may cross -reference other information as provided in Section 4 of this Disclosure Certificate. However, if the audited financial statements of the SFPUC are not available by the date required above for the filing of the Annual Report, the SFPUC shall submit unaudited financial statements and submit the audited financial statements as soon as they are available. If the SFPUC’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) If the SFPUC is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the SFPUC shall send a notice to the MSRB in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the SFPUC), file a report with the SFPUC certifying the date that the Annual Report was provided to the MSRB pursuant to this Disclosure Certificate.
SECTION 4. Content of Annual Reports. The SFPUC’s Annual Report shall contain or incorporate by reference the following information:
(a) Audited Financial Statements of the municipal water supply, storage and distribution system of the SFPUC for the prior fiscal year, prepared in accordance with generally accepted accounting principles applicable to the SFPUC from time to time. If the SFPUC’s audited financial statements are not available by the date the Annual Report is required to be filed, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available;
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(b) An update for the prior fiscal year of the table in the Official Statement en titled “TABLE 11, HISTORIC WHOLESALE AND RETAIL WATER SALES”;
(c) An update for the prior fiscal year of the table in the Official Statement entitled “TABLE 18, HISTORICAL PERCENTAGE INCREASES (DECREASES) IN WHOLESALE WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior fiscal year;
(d) An update for the prior fiscal year of the table in the Official Statement entitled “TABLE 21, HISTORICAL PERCENTAGE INCREASES (DECREASES) IN RETAIL WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior fiscal year; (e) An update for the prior fiscal year of the table in the Official Statement in the section entitled “OBLIGATIONS PAYABLE FROM REVENUES – Outstanding Parity Revenue Bonds” showing all bonds of the SFPUC secured by Revenues; and (f) An update for the prior fiscal year of the table in the Official Statement entitled “TABLE 26, HISTORICAL REVENUES, OPERATING & MAINTENANCE EXPENSES AND DEBT SERVICE COVERAGE.”
Any or all of the items listed above may be set forth in a document or set of documents, or may be included by specific reference to other documents, including official statements of debt issues of the SFPUC or related public entities, which are available to the public on the MSRB website. If the document included by reference is a final official statement, it must be available from the MSRB. The SFPUC shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) The SFPUC shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 2022ABCD Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the 2022ABCD Bonds , or other material events affecting the tax status of the 2022ABCD Bonds;
7. Modifications to rights of Holders, if material;
8. Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the 2022ABCD Bonds , if material;
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11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the SFPUC;
13. The consummation of a merger, consolidation, or acquisition involving the SFPUC or the sale of all or substantially all of the assets of the SFPUC, 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 pur suant to its terms, if material;
14. Appointment of a successor or additional trustee or the change of name of a trustee, if material;
15. Incurrence of a Financial Obligation of the SFPUC, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the SFPUC, any of which affect Holders; and
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) Whenever the SFPUC obtains knowledge of the occurrence of a Listed Event, and, if the Listed Event is described in subsections (a)(2), (a)(6) (other than an adverse tax opinion, the issuance by the IRS of a proposed or final determination of taxability, or a Notice of Proposed Issue (IRS Form 5701-TEB)), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13) or (a)(14) above, the SFPUC determines that knowledge of the occurrence of that Listed Event would be material under applicable federal securities law, the SFPUC shall, or sh all cause the Dissemination Agent (if not the SFPUC) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2022ABCD Bonds under the Indenture.
(c) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the SFPUC in a proceeding under the United States 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 SFPUC, or if such jurisdiction has been assumed by leaving the existing governing 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 said party. (d) The SFPUC shall give, or cause to be given, notice of the occurrence of the receipt by the SFPUC of a written statement by the Climate Standards Board to the effect that the Public Utilities Commission of the City and County of San Francisco San Francisco Water Revenue Bonds, 2022 Series ABCD, 2022 Sub-Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds) are no longer “Climate Bond Certified.” The SFPUC shall, or shall cause the Dissemination Agent (if not the SFPUC) to, file a notice of such occurrence with the MSRB, in electronic format as prescribed by the MSRB, in a timely manner not in excess of 30 days after the receipt by the SFPUC of such written statement. (e) The SFPUC intends to comply with the Listed Events described in Section 5(a)(15) and Section 5(a)(16), and the definition of “Financial Obligation” in Section 2 , with reference to the Rule, any other applicable federal securities laws and the guidance provided by the S.E.C. in Release No. 34 -83885
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dated August 20, 2018 (the “ 2018 Release”), and any further amendments or written guidance provided by the S.E.C. or its staff with respect to the amendments to the Rule effected by the 2018 Release.
SECTION 6. Termination of Reporting Obligation . The SFPUC’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or paym ent in full of all of the 2022ABCD Bonds. If such termination occurs prior to the final maturity of the 2022ABCD Bonds , the SFPUC shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
SECTION 7. Dissemination Ag ent. The SFPUC may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the SFPUC may amend or waive this Disclosure Certificate or any provision of this Disclosure Certificate, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 3(b), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the 2022ABCD Bonds or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of the City Attorney or nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the 2022ABCD Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the owners of a majority in aggregate principal amount of the 2022ABCD Bonds or (ii) does not, in the opinion of the City Attorney or nationally recognized bond counsel, materially impair the interests of the Holders.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the SFPUC shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the SFPUC. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5; and (ii) the Annual Repor t for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the SFPUC 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 Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the SFPUC chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the SFPUC shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the SFPUC to comply with any provision of this Disclosure Certificate, any Participating Underwriters, Holder or Beneficial Own er of the 2022ABCD Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the SFPUC to comply with its obligations under this Disclosure Certificate; provided that any suc h action may be instituted only in a federal or State court located in the City and County of San Francisco, State of
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California. Failure by the SFPUC to comply with any provision of 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 SFPUC to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the SFPUC, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the 2022ABCD Bonds, and shall create no rights in any other person or entity.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
General Manager
Approved as to Form:
DAVI
D CHIU
CITY ATTORNEY
By:
Deputy City Attorney
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CONTINUING DISCLOSURE CERTIFICATE EXHIBIT A
FORM OF NOTICE TO THE
MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Public Utilities Commission of the City and County of San Francisco Name of Issue: San Francisco Water Revenue Bonds,
2022 Sub-Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), 2022 Sub-Series B Bonds (Refunding – Federally Taxable) (Regional Water), and 2022 Sub-Series C Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water) 2022 Sub-Series D Bonds (Refunding – Federally Taxable) (Non-WSIP)
Date of Issuance: __________, 2022
NOTICE IS HEREBY GIVEN that the SFPUC has not provided an Annual Report with respect to the above -named Bonds as required by Section 3 of the Continuing Disclosure Certificate of the Public Utilities Commission of the City and County of San Francisco, dated __________, 2022. The SFPUC anticipates that the Annual Report will be filed by _____________.
Dated: _______________
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By:
[to be signed only if filed]
Title:
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APPENDIX F
INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM
AND GLOBAL CLEARANCE PROCEDURES
Introduction
The information in this Appendix F concerning, respectively, The Depository Trust Company (“DTC”), Euroclear Bank S.A./N.V. as operator of the Euroclear System (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg (“Clearstream Banking”) (DTC, Euroclear and Clearstream Banking together, the “Clearing Systems”), and DTC’s book- entry-only system has been provided by DTC, Euroclear and Clearstream Banking for use in disclosure documents such as this Official Statement. None of the SFP UC, the Trustee or the Underwriters of the 2022ABCD Bonds make any representation as to its accuracy or completeness.
DTC will act as the initial securities depository for the 2022ABCD Bonds . Euroclear and Clearstream Banking are participants of DTC and f acilitate the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders.
The information set forth below in this Appendix F is subject to any change in or reinterpretation of the rules, regulations and procedures of the Clearing Systems currently in effect and the SFPUC expressly disclaims any responsibility to update this Official Statement to reflect any such changes. The information herein concerning the Clearing Systems has been obtained from sources that the SFPUC believes to be reliable, but none of the SFPUC, the Trustee or the Underwriters take any responsibility for the accuracy or completeness of the information set forth herein. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. The SFPUC will have no responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the 2022ABCD Bonds held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
The Beneficial Owners should confirm the following information with DTC or the DTC Participants.
So long as Cede & Co. is the registered holder of the 2022ABCD Bonds , as nominee of DTC, references in the Official Statement, including the Appendices thereto, to the Holders of the 2022ABCD Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2022ABCD Bonds.
THE SFPUC AND THE TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, TO INDIRECT PARTICIPANTS, OR ANY BENEFICIAL OWNER, WITH RESPECT TO:
(I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (II) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL AND INTEREST DUE ON THE 2022ABCD BONDS; (III) THE DELIVERY OF ANY NOTICE THAT IS PERMITTED OR REQUIRED TO BE GIVEN TO THE HOLDERS OF THE 2022ABCD BONDS UNDER THE INDENTURE; (IV) THE SELECTION BY DTC OR ANY
DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE 2022ABCD BONDS; (V) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER OF THE 2022ABCD BONDS; OR (VI) ANY OTHER MATTER.
THE TRUSTEE, AS LONG AS THE BOOK -ENTRY ONLY SYSTEM IS USED FOR THE 2022ABCD BONDS, WILL SEND ANY NOTICE OF REDEMPTION AND ANY OTHER NOTICES ONLY TO DTC. ANY
FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY
ANY BENEFICIAL OW NER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF 2022ABCD BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE .
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Book Entry-Only System
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2022ABCD Bonds. The 2022ABCD Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC.
One fully-registered bond will be issued for each maturity of the 2022ABCD Bonds , each in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at
Purchases of 2022ABCD Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 20 22ABCD Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2022ABCD Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2022ABCD Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their ownership interests in 2022ABCD Bonds, except in the event that use of the book- entry system for the 2022ABCD Bonds is discontinued.
To facilitate subsequent transfers, all 2022ABCD Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2022ABCD Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2022ABCD Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 2022ABCD Bonds are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of 2022ABCD Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2022ABCD Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2022ABCD Bond documents. For example, Beneficial Owners of 2022ABCD Bonds may wish to ascertain that the nominee holding the 2022ABCD Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
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Redemption notices shall be sent to DTC. If less than all of the 2022ABCD Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2022ABCD Bonds unless authorized by a Direct Participant in accor dance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the SFPUC as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts 2022ABCD Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the 2022ABCD Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the SFPUC or the Trustee, on payment date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the SFPUC, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its 2022ABCD Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such 2022ABCD Bonds by causing the Direct Participant to transfer the Participant’s interest in the 2022ABCD Bonds , on DTC’s records, to the Trustee. The requirement for physical delivery of 2022ABCD Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the 2022ABCD Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered 2022ABCD Bonds to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the 2022ABCD Bonds at any time by giving reasonable notice to the SFPUC or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical 2022ABCD Bonds are required to be printed and delivered.
The SFPUC may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, physical 2022ABCD Bonds will be printed and delivered.
The information in this section concerning DTC and DTC’s book- entry system has been obtained from sources that the SFPUC believes to be reliable, but the SFPUC takes no responsibility for the accuracy thereof.
Euroclear and Clearstream Banking
Euroclear and Clearstream Banking have advised the SFPUC as follows:
Euroclear and Clearstream Banking each hold securities for their customers and facilitate the clearance and settlement of securities transactions by electronic book -entry transfer between their respective account holders.
Euroclear and Clearstream Banking provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream Banking also deal with domestic securities markets in several countries through established depositary and custodial relationships. Euroclear and Clearstream Banking have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.
Euroclear and Clearstream Banking customers are worldwide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Eurocle ar and Clearstream Banking is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system, either directly or indirectly.
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Clearing and Settlement Procedures . Any 2022ABCD Bonds sold in offshore transactions will be initially issued to investors through the book- entry facilities of DTC, for the account of its participants, including but not limited to Euroclear and Clearstream Banking. If the investors are participants in Clearstream Banking and Euroclear in Europe, or indirectly through organizations that are participants in the Clearing Systems, Clearstream Banking and Euroclear will hold omnibus positions on behalf of their participants through customers’ securities accounts in Clearstream Banking’s and Euroclear’s names on the books of their respective depositories. In all cases, the record holder of the 2022ABCD Bonds will be DTC’s nominee and not Euroclear or Clearstream Banking. The depositories, in turn, will hold positions in customers’ securities accounts in the depositories’ names on the books of DTC. Because of time zone differences, the securities account of a Clearstream Banking or Euroclear participant as a result of a transaction with a participant, other than a depository holding on behalf of Clearstream Banking or Euroclear, will be credited during the securities settlement processing day, which must be a business day for Clearstream Banking or Euroclear, as the case may be, immediately following the DTC settlement date. These credits or any transactions in the securities settled during the processing will be reported to the relevant Euroclear participant or Clearstream Banking participant on that business day. Cash received in Clearstream Banking or Euroclear as a r esult of sales of securities by or through a Clearstream Banking participant or Euroclear participant to a DTC Participant, other than the depository for Clearstream Banking or Euroclear, will be received with value on the DTC settlement date but will be available in the relevant Clearstream Banking or Euroclear cash account only as of the business day following settlement in DTC.
Transfers between participants will occur in accordance with DTC rules. Transfers between Clearstream B
anking participants or Euroclear participants will occur in accordance with their respective rules and operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream Banking participants or Euroclear participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by the relevant depositories; however, cross -market transactions will require deliver y of instructions to the relevant European international clearing system by the counterparty in the system in accordance with its rules and procedures and within its established deadlines in European time. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depository to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same day funds settlement applicable to DTC. Clearstream Banking participants or Euroclear participants may not deliver instructions directly to the depositories.
The SFPUC will not impose any fees in respect of holding the 2022ABCD Bonds; however, holders of book- entry interests in the 2022ABCD Bonds may incur fees normally payable in respect of the maintenance and operation of accounts in the Clearing Systems.
Initial Settlement. Interests in the 2022ABCD Bonds w
ill be in uncertified b ook-entry form. Purchasers
electing to hold book-entry interests in the 2022ABCD Bonds through Euroclear and Clearstream Banking accounts will follow the settlement procedures applicable thereto and applicable to DTC. Book -entry interests in the 2022ABCD Bonds will be credited by DTC to Euroclear and Clearstream Banking participants’ securities clearance accounts on the business day following the date of delivery of the 2022ABCD Bonds against payment (value as on the date of delivery of the 2022ABCD Bonds). DTC participants acting on behalf of purchasers electing to hold book- entry interests in the 2022ABCD Bonds through DTC will follow the delivery practices applicable to securities eligible for DTC’s Same Day Funds Settlement system. DTC participants’ securities accounts will be credited with book-entry interests in the 2022ABCD Bonds following confirmation of receipt of payment to the SFPUC on the date of delivery of the 2022ABCD Bonds.
Secondary Market Trading. S econdary market trades in the 2022ABCD Bonds will be settled by transfer of title to book-entry interests in the Clearing Systems. Title to such book -entry interests will pass by registration of the transfer within the records of Euroclear, Clearstream Banking or DTC, as the case may be, in accorda nce with their respective procedures. Book-entry interests in the 2022ABCD Bonds may be transferred within Euroclear and within Clearstream Banking and between Euroclear and Clearstream Banking in accordance with procedures established for these purposes by Euroclear and Clearstream Banking. Book -entry interests in the 2022ABCD Bonds may be transferred within DTC in accordance with procedures established for this purpose by DTC. Transfer of book- entry interests in the 2022ABCD Bonds between Euroclear or Clearstream Banking and DTC shall be effected in accordance with procedures established for this purpose by Euroclear, Clearstream Banking and DTC.
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Special Timing Considerations
Investors should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the 2022ABCD Bonds through Euroclear or Clearstream Banking on days when those systems are open for business. In addition, because of time -zone differences, there may be complications with completing transactions involving Clearstream Banking and/or Euroclear on the same business day as in the United States. U.S. investors who wish to transfer their interests in the Bonds, or to receive or make a payment or delivery of 2022ABCD Bonds, on a particular day , may find that the transactions will not be performed until the next business day in Luxembourg if Clearstream Banking is used, or Brussels if Euroclear is used.
Clearing Information
The SFPUC and the Underwriters expect that the 2022ABCD Bonds will be accepted for clearance through the facilities of Euroclear and Clearstream Banking. The CUSIP numbers for the Bonds are set out on the cover page of this Official Statement.
Limitations
For so long as the 2022ABCD Bonds are registered in the name of DTC or its nominee, Cede & Co., the SFPUC and the Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the 2022ABCD Bonds for all purposes, including payments, notices and voting. So long as Cede & Co. is the registered owner of the 2022ABCD Bonds, references in this Official Statement to registered owners of the 2022ABCD Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2022ABCD Bonds.
Because DTC is treated as the owner of the 2022ABCD Bonds for substantially all purposes, Beneficial Owners may have a restricted ability to influence in a timely fashion remedial action or the giving or withholding of requested consents or other directions. In addition, because the identity of Beneficial Owners is unknown to the SFPUC or DTC, it may be difficult to transmit information of potential interest to Beneficial Owners in an effective and timely manner. Beneficial Owners should make appropriate arrangements with their broker or dealer regarding distribution of information regarding the 2022ABCD Bonds that may be transmitted by or through DTC.
The SFPUC will have no responsibility or obligation with respect to:
• the accuracy of the records of DTC, its nominee or any Direct Participant or Indirect Participant with respect to any Beneficial Ownership interest in any 2022ABCD Bonds; • the delivery to any Direct Participant or Indirect Participant or any other person, other than a registered owner as shown in the bond register kept by the Trustee, of any notice with respect to any 2022ABCD Bonds including, without limitation, any notice of redemption with respect to any 2022ABCD Bonds;
• the payment to any Direct Participant or Indirect Participant or any other person, other than a registered owner as shown in the bond register kept by the Trustee, of any amount with respect to the principal of, premium, if any, or interest on, any 2022ABCD Bonds; or • any consent given by DTC or its nominee as registered owner.
Prior to any discontinuation of the book entry only system hereinabove described, the SFPUC and the Trustee may treat Cede & Co. (or such other nominee of DTC) as, and deem Cede & Co. (or such other nominee) to be, the absolute registered owner of the 2022ABCD Bonds for all purposes whatsoever, including, without limitation:
• the payment of principal, premium, if any, and interest on the 2022ABCD Bonds ; • giving notices of redemption and other matters with respect to the 2022ABCD Bonds ;
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• registering transfers with respect to the 2022ABCD Bonds; and • the selection of 2022ABCD Bonds for redemption.
General
None of Euroclear, Clearstream Banking or DTC is under any obligation to perform or continue to perform the procedures referred to above, and such procedures may be discontinued at any time.
None of the SFPUC, the Underwriters nor any of their agents will have any responsibility for the performance by Euroclear, Clearstream Banking or DTC or their respective direct or indirect participants or account holders of their respective obligations under the rules and procedures governing their operations or the arrangements referred to above.
Norton Rose Fulbright US LLP draft 3/__/22
104717355.4
FORTY-THIRD SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of _______ 1, 2022
AUTHORIZING THE ISSUANCE OF
$[PAR AMOUNT] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2022 SERIES ABCD
2022 SUB-SERIES A (REFUNDING-FEDERALLY TAXABLE)
(WSIP) (GREEN BONDS)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
104717355.4 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 185.01 Definitions ........................................................................................................2
PROVISIONS RELATING TO 2022 SUB-SERIES A BONDS
SECTION 186.01 Authorization and Terms of 2022 Sub-Series A Bonds ...................................5 SECTION 186.02 Terms of Redemption .......................................................................................6 SECTION 186.03 Form of 2022 Sub-Series A Bonds ...................................................................7 SECTION 186.04 Use of Depository .............................................................................................7 SECTION 186.05 Issuance of 2022 Sub-Series A Bonds ..............................................................9 SECTION 186.06 Application of Proceeds of 2022 Sub-Series A Bonds .....................................9 SECTION 186.07 2022 Sub-Series A Sinking Fund Account .....................................................10 SECTION 186.08 Continuing Disclosure ....................................................................................12
AMENDMENTS TO INDENTURE
SECTION 187.01 Effectiveness of Amendments under this Article ...........................................13 SECTION 187.02 Amendments to Section 1.01 of the Indenture and Definitions ......................13 SECTION 187.03 Amendment to Section 3.05(c) of the Indenture ............................................16 SECTION 187.04 Amendment to Section 3.05(e) of the Indenture ............................................16 SECTION 187.05 Amendment to Section 3.06(c)(1) of the Indenture ........................................17 SECTION 187.06 Amendment to Section 3.07 of the Indenture .................................................17 SECTION 187.07 Amendment to Section 6.07(b) of the Indenture ............................................18 SECTION 187.08 Amendment to Section 6.13(a) of the Indenture ............................................18 SECTION 187.09 Amendment to Section 6.13(b) of the Indenture ............................................18 SECTION 187.10 Amendment to Section 6.13 of the Indenture .................................................19
MISCELLANEOUS
SECTION 188.01 Terms of 2022 Sub-Series A Bonds Subject to the Indenture ........................19 SECTION 188.02 Effective Date of Forty-Third Supplemental Indenture ..................................19 SECTION 188.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................19 SECTION 188.04 Execution in Counterparts; No Seal Required for Execution .........................19 104717355.4 ii
ADDITIONAL CITY REQUIREMENTS
SECTION 189.01 Conflict of Interest ..........................................................................................20 SECTION 189.02 Proprietary or Confidential Information of the City .......................................20 SECTION 189.03 Local Business Enterprise Utilization; Liquidated Damages .........................20 SECTION 189.04 Nondiscrimination; Penalties ..........................................................................21 SECTION 189.05 MacBride Principles—Northern Ireland ..........................................................22 SECTION 189.06 Tropical Hardwood and Virgin Redwood Ban ................................................22 SECTION 189.07 Drug-Free Workplace Policy ..........................................................................23 SECTION 189.08 Resource Conservation.....................................................................................23 SECTION 189.09 Compliance with Americans with Disabilities Act ........................................23 SECTION 189.10 Sunshine Ordinance ........................................................................................23 SECTION 189.11 Limitations on Contributions ..........................................................................23 SECTION 189.12 Requiring Minimum Compensation for Covered Employees ........................24 SECTION 189.13 Requiring Health Benefits for Covered Employees .......................................25 SECTION 189.14 Prohibition on Political Activity with City Funds ..........................................27 SECTION 189.15 Preservative-treated Wood Containing Arsenic .............................................27 SECTION 189.16 Compliance with Laws ...................................................................................27 SECTION 189.17 Protection of Private Information ...................................................................28 SECTION 189.18 Food Service Waste Reduction Requirements ...............................................28 SECTION 189.19 Submitting False Claims; Monetary Penalties ................................................28 SECTION 189.20 Sugar-Sweetened Beverage Prohibition .........................................................28 SECTION 189.21 Agreement Made in California; Venue ............................................................29 SECTION 189.22 Ownership of Results ......................................................................................29 SECTION 189.23 Audit and Inspection of Records ....................................................................29 SECTION 189.24 Subcontracting ................................................................................................29 SECTION 189.25 Assignment .....................................................................................................29 SECTION 189.26 Non-Waiver of Rights .....................................................................................29 SECTION 189.27 City a Third Party Beneficiary ........................................................................30 Exhibit AT-1 – Form of 2022 Sub-Series A Bond
104717355.4
FORTY-THIRD SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[PAR AMOUNT] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2022 Series ABCD
2022 Sub-Series A (Refunding-Federally Taxable)
(WSIP) (Green Bonds)
This Forty-Third Supplemental Indenture, dated as of _______ 1, 2022 (this “ Forty-Third Supplemental Indenture ”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “ Trustee”), and the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “ Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Forty- Third Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of _________, 2022, there are outstanding $_______ aggregate principal amount of Bonds issued pursuant to this Indenture;
WHEREAS, the 2010 Sub-Series B Bonds, the 2010 Sub-Series E Bonds, the 2010 Sub- Series G Bonds, the 2011 Sub-Series B Bonds, the 2011 Sub- Series C Bonds, the 2015 Series A Bonds, the 2016 Series AB Bonds, the 2016 Series C Bonds, the 2017 Series ABC Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds, the 2020 Series ABCD Bonds and the 2020 Series EFGH Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty-Third Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series A (Refunding- Federally Taxable) (WSIP) (Green Bonds) ” (the “2022 Sub- Series A Bonds ”) in the aggregate original principal amount of $[PAR AMOUNT] to defease and refund all or a portion of the outstanding _________ Bonds; 104717355.4 2
WHEREAS, simultaneous with the issuance of the 2022 Sub- Series A Bonds, the Commission has determined to issue (i) pursuant to a Forty- Fourth Supplemental Indenture a sub-series of Bonds designated “ San Francisco Water Revenue Bonds, 2022 Sub- Series B (Refunding-Federally Taxable) (Regional Water) ” (the “2022 Sub- Series B Bonds ”) in the aggregate principal amount of $_______ to defease and refund all or a portion of the outstanding _________ Bonds, (ii) pursuant to a Forty- Fifth Supplemental Indenture a sub- series of Bonds designated “ San Francisco Water Revenue Bonds, 2022 Sub- Series C (Refunding- Federally Taxable) (Hetch Hetchy Water) ” (the “2022 Sub- Series C Bonds ”) in the aggregate principal amount of $_______ to defease and refund all or a portion of the outstanding _________ Bonds and (iii) pursuant to a Forty-Sixth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2022 S ub-Series D (Refunding -Federally Taxable) (Non - WSIP)” (the “2022 Sub-Series D Bonds,” and together with the 2022 Sub- Series A Bonds, the 2022 Sub-Series B Bonds and the Sub- Series C Bonds, the “ 2022 Series ABCD Bonds” ) in the aggregate principal amount of $________ to defease and refund all or a portion of the outstanding _________ Bonds;
WHEREAS, the 2022 Series ABCD Bonds (and each sub -series thereof) will be issued by the Commission under the Indenture payable on a parity with the other Outstanding Seri es of Bonds and any Parity State Loans;
WHEREAS, the conditions and limitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2022 Series ABCD Bonds; WHEREAS, in order to provide for the issuance of the 2022 Sub- Series A Bonds, to establish and declare the terms and conditions upon which the 2022 Sub- Series A Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty- Third Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Forty -Third Supplemental Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Forty-Third Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 185.01 Definitions. The terms defined in this section shall, for all purposes of this Forty- Third Supplemental Indenture, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined.
Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
104717355.4 3
Blended Treasury Yield
The term “Blended Treasury Yield ” means, with respect to a maturity of the 2022 Sub- Series A Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series A Bonds maturity to be redeemed. T he second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Tr easury constant maturity with the maturity closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub-Series A Bonds maturity to be redeemed.
Calculation Agent
The term “ Calculation Agent” means a municipal advisor or other agent selected by the Commission to perform the calculations required in connection with the redemption of any 2022 Sub-Series A Bonds pursuant to Section 186.02(a) of the Indenture.
Discount Yield
The term “Discount Yi eld” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent with respect to the 2022 Sub- Series A Bonds maturity to be redeemed:
(i) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
Discounted Val ue
The term “ Discounted Value ” means, with respect to each outstanding maturity of the 2022 Sub- Series A Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months) equal to the applicable Discount Yield.
104717355.4 4
DTC
The term “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 a s Securities Depository for the 2022 Sub-Series A Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “ Escrow Agreement ” means that certain Escrow Agreement, dated as of _______ 1, 2022, by and between the Commission and the Escrow Agent.
Market Treasury Yield
The term “Market Treasury Yield” means that yield, as determined by the Commission or the Calculation Agent, assuming semi -annual compounding based upon a 360- day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “ Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
Valuation
Date
The term “Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
104717355.4 5
PROVISIONS RELATING TO 2022 SUB-SERIES A BONDS
SECTION 186.01 Authorization and Terms of 2022 Sub- Series A Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[PA R AMOUNT] are hereby authorized to be issued under the Law and pursuant to the Indenture. (a) S uch Bonds are designated as the “San Francisco Water Revenue Bonds, 2022 Sub-Series A (Refunding–Federally Taxable) (WSIP) (Green Bonds) ” (the “2022 Sub-Series A Bonds”). The aggregate principal amount of 2022 Sub- Series A Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Forty-Third Supplemental Indenture shall be $[PAR AMOUNT]. The 2022 Sub- Series A Bonds shall be of the tenor known as Current Interest Bonds.
The 2022 Sub-Series A Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2022 Sub- Series A Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2022 Sub-Series A Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2022 Sub- Series A Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2022 Sub- Series A Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 186.04 herein. (b) The 2022 Sub-Series A Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable semiannually on May 1 and November 1 in each year, commencing on ______ 1, 20__, calculated on the basis of a 360-day year consisting of twelve 30-day months:
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
*
__________________
* Term bond.
The 2022 Sub-Series A Bonds maturing on November 1, 20___ are hereby designated as Term Bonds.
(c) Subject to Section 186.04 hereof, the principal of and premium, if any, on the 2022 Sub-Series A Bonds shall be payable by check or wire transfer (as described in the next 104717355.4 6
paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2022 Sub-Series A Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15
th day of the calendar month immediately preceding an
interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may have filed with the Trustee for that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2022 Sub- Series A Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2022 Sub- Series A Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest paym ent date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before _____ 15, 20__, in which event it shall bear interest from _________, 2022; provided, howeve r, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2022 Sub- Series A Bonds shall be subject to redemption as provided in Section 186.02.
(f) The Trustee shall assign each 2022 Sub- Series A Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a rec ord thereof which shall be available to the Commission for inspection. (g) There shall be no Required Reserve for the 2022 Sub-Series A Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2022 Sub- Series A Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2022 Sub- Series A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2022 Sub- Series A Bonds in the manner and form provided in this Forty-Third Supplemental Indenture.
SECTION 186.02 T
erms of Redemption.
(a) Make-Whole Optional Redemption. Before November 1, 20__, the 2022 Sub- Series A Bonds shall be subject to redemption prior to their respective stated maturity dates either in whole or in part, at the option of the Commission, at any time, at a redemption pr ice 104717355.4 7
equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption.
The 2022 Sub- Series A Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. (b) Optional Redemption. The 2022 Sub- Series A Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series A Bonds ) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub- Series A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (c) Mandatory Sinking Fund Redemption. The 2022 Sub- Series A Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2022 Sub-Series A Bonds Sinking Fund Account (described in Section 186.07), on each November 1 on and after November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series A Bonds ) by lot within any such maturity if less than all of the 2022 Sub- Series A Bonds of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2022 Sub-Series A Bonds maturing Novembe r 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub- Series A Bonds to be redeemed in each such year set forth in Section 186.07 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series A Bonds prior to maturity pursuant to Section 186.02(b) above). (d) Other Terms of Redemption. Except as otherwise provided herein, the provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.03, 4.04, 4.05 and
4.06 shall apply to the redemption of the 2022 Sub-Series A Bonds.
SECTION 186.03 F
orm of 2022 Sub-Series A Bonds. The 2022 Sub-Series A Bonds and the Trustee ’s certificates of authentication and registration and the form of assignment to appear thereon shall be in substantially the form set forth as Exhibit AT -1 to this Forty- Third Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Third Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2022 Sub- S
eries A Bonds does not require the seal of the Commission.
SECTION 186.04 U se of Depository.
(a) The 2022 Sub- Series A Bonds shall be initially registered as provided in Section 186.01 hereof. Registered ownership of the 2022 Sub- Series A Bonds, or any portions thereof, may not thereafter be transferred except:
104717355.4 8
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection (a) (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; (ii) to any Substitute Depository not objected to by the Trustee, 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 Commission 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
(iii) 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 Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub- Series A Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2022 Sub- Series A Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2022 Sub -Series A 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 Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub-Series A Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2022 Sub- Series A Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 186.01 hereof, provided that the Trustee shall not be required to deliver such new 2022 S ub-Series A Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission.
(d) In the case of a partial redemption or an advance refunding of any 2022 Sub- Series A 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 2022 Sub-Series A Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Tru stee. The Trustee shall not be liable for such Securities Depository’ s (or any Substitute Depository’ s) failure to make such notations or errors in making such notations.
(e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2022 Sub- Series A 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 Commission; and the Commission and the Trustee shall not have responsibility for 104717355.4 9
transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2022 Sub- Series A Bonds. Neither the Commission 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 2022 Sub- Series A Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2022 Sub-Series A Bonds. (f) Notwithstanding any other provision of this Forty- Third Supplemental Indenture and so long as all Outstanding 2022 Sub- Series A Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2022 Sub- Series A Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2022 Sub- Series A Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 186.05 I
ssuance of 2022 Sub-Series A Bonds.
(a) At any time after the execution of this Forty -Third Supplemental Indenture, the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2022 Sub- Series A Bonds in the aggregate principal amount of $[PAR AMOUNT] to the initial purchasers t hereof specified in such Written Request or Certificate.
SECTION 186.06 A
pplication of Proceeds of 2022 Sub-Series A Bonds.
(a) The original purchaser of the 2022 Sub- Series A Bonds will pay and deliver the purchase price of the 2022 Sub- Series A Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $[_________] to the Trustee, and the Trustee shall deposit and transfer this amount, [together with $[_________] from the [_________] Fund,] as follows:
1. The Trustee shall deposit $[_________] in a separate fund to be known as the “2022 Series ABCD Costs of Issuance Fund,” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall transfer the remainder of such sum, in the amount of $[_________], to the Escrow Agent to be applied pursuant to the terms of the Escrow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2022 Series ABCD Costs of Issuance Fund, the Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
104717355.4 10
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance have been paid, the Commission shall deliver a Certificate of the Commission stating such fact to the Trustee (as described in clause (c) below). (c) The money in the 2022 Series ABCD Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty- Fourth Supplemental Indenture , Forty -Fifth Supplemental Indenture and the Forty-Sixth Supplemental Indenture) shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance incidental to or connected with the issuance of the 2022 Series ABCD Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2022 Series ABCD Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2022 Series ABCD Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on [_________], 2022, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2022 Series ABCD Costs of Issuance Fund shall be closed.
SECTION 186.07 2022 S
ub-Series A Sinking Fund Account.
(a) The Trustee shall establish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2022 Sub- Series A Sinking Fund Account, which the Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2022 Sub-Series A Term Bonds.
104717355.4 11
(b) The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2022 Sub- Series A Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance wit h Section 186.02(c) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2022 Sub-Series A Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “ 2022 Sub -Series A Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
$
†
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2022 Sub- Series A Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2022 Sub- Series A Minimum Sinking Fund Account Payment and the redemption of 2022 Sub-Series A Term Bonds therefrom by depositing with the Trustee 2022 Sub- Series A Term Bonds for cancellation prior to the Trustee ’s selection of the 2022 Sub-Series A Term Bonds for redemption.
(d) In lieu of the redemption of 2022 Sub- Series A Term Bonds pursuant to Section 186.02(c) hereof, at the Written Request of the Commission, moneys in the 2022 Sub- Series A Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2022 Sub- Series A Term 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 Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof , and all 2022 Sub- Series A Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2022 Sub- Series A Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2022 Sub-Series A Sinking Fund Account after such date and on or before the next succeeding 104717355.4 12
November 1, shall be used and withdrawn by the Trustee solely for the purpose of redeeming the 2022 Sub- Series A Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 186.02(c) and Section 186.07(b) hereof; and
(ii) the Trustee shal l during each 12 month period beginning with the 12- month period ending on November 1, 20__ purchase or call and redeem (as herein provided) an aggregate amount of 2022 Sub- Series A Term Bonds equal to at least the amount of Bond Obligation of the 2022 Sub- Series A Term Bonds identified in Section 186.07(b) above for such 12 -month period reduced by the principal amount of 2022 Sub- Series A Term Bonds deposited by the Commission with the Trustee as described in Section 186.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2022 Sub- Series A Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2022 Sub-S eries A Term Bonds identified in Section 186.07(b) above for such 12-month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2022 Sub- Series A Minimum Sinking Account Payment amounts stat ed in Section 186.07(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2022 Sub- Series A Sinking Fund Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2022 Sub-Series A Term Bonds at the final maturity thereof.
The Commission hereby covenants and agrees with the Owners of the 2022 Sub- Series A Bonds to call and redeem 2022 Sub- Series A Bonds from the 2022 Sub -Series A Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 186.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2022 Sub-Series A Term Bonds or as otherwise hereinabove provided).
SECTION 186.08 C
ontinuing Disclosure.
The Commission hereby covenants and agree s that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2022 Sub- Series A Bonds, executed and delivered by the Commission in connection with the issuance of the 2022 Sub- Series A Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2022 Series ABCD Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2022 Series ABCD Continuing Disclosure Certificate) or any Bondowner or beneficial owner m ay take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commission to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall be an action to compel performance. 104717355.4 13
AMENDMENTS TO INDENTURE
SECTION 187.01 Effectiveness of Amendments under this Article .
In accordance with Section 9.01 of the Indenture, the amendments to the Indenture set forth in this Article CLXXXVII shall become effective at such time as the written consents of the Owners of a majority in aggregate amount of the Bond Obligation of the Bonds then Outstanding and of each Credit Provider have been filed with the Trustee, and the other requirements contained in Article IX of the Indenture have been satisfied. Until such time as the amendments to the Indenture set forth in this Article CLXXXVII become effective the applicable provisions of the Indenture shall remain unaltered and in full force and effect except as he Indenture may be otherwise amended in accordance with Article IX or discharged in accordance with Article X of the Indenture. [As of the date of execution of this Forty- Third Supplemental Indenture, the written consents of each Credit Provider are attached hereto as Exhibit [___].] The provisions of the amendments to the Indenture set forth in this Article CLXXXVII are severable. Nothing herein shall preclude one or more of the provisions of this ame ndment, with the approval required by the Indenture, from becoming effective prior to the effective date of any other provision. The Commission shall promptly inform the Trustee and the Bondholders in the event that consent has been secured for one or more of the provisions of this Article CLXXXVII.
SECTION 187.02 A
mendments to Section 1.01 of the Indenture and Definitions.
Upon the effectiveness of the amendments in this Article CLXXXVII : (i) there shall be added to the Indenture the definition of “Excluded Principal,” “Qualified Financial Advisor” and “SIFMA” having the definitions set forth below; (ii) all references to the term “Parity State Loans” in the Indenture shall be deemed to r efer to “Parity Loans” and shall have the definition set forth below; and (iii) the definitions of “ Annual Debt Service, ” “ Average Annual Debt Service,” “Bondowner,” “ Owner” and “ Maximum Annual Debt Service ” in the Indenture shall be replaced by the definitions of such terms set forth below.
Bondowner, Owner
The term “Bondowner” or “Owner” means any person who is the registered owner of any Outstanding Bond, or, if such Outstanding Bond has a maturity of one year or less and is issued in bearer form, means the bearer of such Bond, or, with respect to any Parity Loan, means the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof), as applicable.
Excluded Principal
“Excluded Principal” means each payment of principal of Bonds with a remaining term, on the date of calculation, of not greater than 60 months and which the Commission specifies in a Certificate of the Commission and filed with the Trustee that the Commission intends to pay from the proceeds of Bonds or Parity Loans, other bonds, notes or other obligations of the 104717355.4 14
Commission or moneys other than Net Revenues. No such determination shall affect the security for the Bonds or Parity Loans or the obligation of the Commission to pay the Bonds and Parity Loans from Net Revenues.
Maximum Annual Debt Service, Annual Debt Service, Debt Service, Average Annual Debt Service
The term “ Maximum Annual Debt Service ” means, at any point in time, with respect to Bonds then Outstanding, the maximum amount of principal and interest becoming due in the then current or any future Fiscal Year, calculated by the Commission as provided in this definition. For purposes of calculating Maximum Annual Debt Service, the following assumptions are to be used to calculate the principal and interest becoming due in any Fiscal Year:
(i) in determining the principal amount due in each year, payment will (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with any amortization schedule established for such debt, including any Minimum Sinking Fund Account Payments or any scheduled redemption or payment of Bonds on the basis of Accreted Value, and for such purpose, the redemption payment or payment of Accreted Value will be deemed a principal payment and interest that is compounded and paid as Accreted Value will be deemed due on the scheduled redemption or payment date of such Capital Appreciation Bond, but excluding Excluded Principal;
(ii) if any of the Outstanding Series of Bonds constitute Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness or if Bonds then proposed to be issued would constitute Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness, then, for purposes of determining Maximum Annual Debt Service, such Bonds the principal of which the Commission has not specified as Excluded Principal will be amortized for a period specified by the Commission (but no longer than forty (40) years from the date of the issuance of the Bonds to which such Balloon Indebtedness relates) on a substantially level debt service basis or other amortization basis designated by the Commission, calculated based on a fixed rate equal to the rate at which the Commission could borrow for such period, as certified by a Qualified Financial Advisor; (iii) if any Outstanding Bonds constitute Tender Indebtedness or if Bonds then proposed to be issued would constitute Tender Indebtedness, then for purposes of determining the amounts of principal and interest due in any Fiscal Year on such Bonds, the options or obligations of the owners of such Bonds to tender the same for purchase or payment prior to their stated maturity or maturities will be treated as a principal maturity occurring on the first date on which owners of such Bonds may or are required to tender such Bonds except that any such option or obligation to tender Bonds will be ignored and not treated as a principal maturity, if (1) such Bonds are rated in one of the two highest long-term rating categories (without reference to gradations such as “plus” or “minus” ) by Moody’ s and by S&P or such Bonds are rated in the highest short -term, note or commercial paper rating categories by Moody ’s and by S&P and (2) the obligation, if any, the Commission may have under a Letter of Credit Agreement with respect to such 104717355.4 15
Bonds, other than its obligations on such Bonds, will either be subordinated to the obligation of the Commission on the Bonds or be incurred under the conditions and meeting the tests for the issuance of Additional Bonds set forth in the Indenture; (iv) If any Outstanding Bonds constitute Variable Rate Indebtedness, the interest rate shall, as of the date of calculation, be: (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the Commission in the Supplemental Indenture authorizing such Bonds (which the Commission must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax purposes under the Code), a fixed rate of interest reasonably determined by the Commission for obliga tions with similar duration, which interest rate has been certified by a Qualified Financial Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture; (v) if Bonds proposed to be issued will be Variable Rate Indebtedn ess, then such Bonds will be assumed to bear interest at : (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the Commission in the Supplemental Indenture authorizing such Bonds (which the Commission must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax purposes under the Code), a fixed rate of interest reasonably determined by the Commission for obligations with similar duration, which interest rate has been certified by a Qualified Financial Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture; (vi) if moneys or Federal Securities or general obligation bonds of the State of California have been deposited with and are held by the Trustee or another fiduciary to be used to pay principal and/or interest on specified Bonds, then the principal and/or interest to be paid from such moneys or Federal Securities or general obligation bonds of the State of California or from the earnings thereon will be disregarded and not included in calculating Maximum Annual Debt Service.
The term “ Annual Debt Service” means the sum of such principal and interest as computed for the twelve-month period ending June 30 to which reference is made.
The term “Debt Service” means the sum of all such principal and interest.
The term “ Average Annual Debt Service” means total Debt Service, divided by the number of twelve-month periods ending on June 30 (including any fractional periods) remaining until the last maturity date of any Outstanding Bond.
For the purpose of calculating Maximum Annual Debt Service, Annual Debt Service, Debt Service, and Average Annual Debt Service, in determining the amount of intere st coming due during any twelve -month period ending June 30 on any Series of Bonds that were issued as Build America Bonds, such amount will be reduced by an amount equal to the Refundable Credits the Commission is scheduled to receive during each such twe lve-month period ending June 30. If the amount of Refundable Credits scheduled to be received by the Commission for any Series of Bonds that were issued as Build America Bonds is reduced or otherwise not 104717355.4 16
received during any twelve -month period ending June 30, the Commission will calculate the amount of interest due on such Series of Bonds for the subsequent twelve month period ending June 30 by offsetting against the gross amount of interest payable on such Series only the amount of the Refundable Credits scheduled to be received under Federal legislation (or other Federal regulation, pronouncement or action) authorizing the reduction of Refundable Credits.
Parity Loans
“Parity Loans” means those loan agreements entered into between the Commission and the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof) to finance additions, betterments, extensions, repairs, renewals or replacements to the Enterprise, which are entered into after the issuance of the Bonds and which, by their terms, are secured by a pledge and lien on Net Revenues on a parity basis with debt service on the Bonds. Parity Loans may be evidenced by or secured by Bonds.
Qualified Financial Advisor
“Qualified Financial Advisor” means a person or a firm selected by the Commission who or which engages in the business of advising the management of public agencies similar to the Commission concerning the issuance of debt.
SIFMA
“SIFMA” means, as of any date, the most recent rate determined on the basis of the seven-day high grade market index of tax-exempt variable rate demand obligations, as calculated and published by Bloomberg and made available by the Securities Industry and Financial Markets Association on its SIFMA Municipal Swap Index, or if the SIFMA Municipal Swap Index is no longer published or reported, the rate per annum published or reported on the S&P Municipal Bond 7 Day High Grade Rate Index, or if neither the SIFMA Municipal Swap Index nor the S&P Municipal Bond 7 Day High Grade Rate Index is published, a per annum rate equal to 60% of the yield of the three -month U.S. Treasury bill as reported as of the end of each trading day.
SECTION 187.03 A
mendment to Section 3.05(c) of the Indenture. Section 3.05(c) of the Indenture is hereby amended and restated in its entirety to read as follows:
“( c) Fixed serial maturities or mandatory Minimum Sinking Fund Account Payments, or any combination thereof, shall be established in amounts sufficient to provide for the retirement of all of the Bonds of such additional Series on or before their respective maturity dates; provided, however, that such requirement shall not apply to Balloon Indebtedness or principal amounts of such Series of Bonds which the Commission has specified as Excluded Principal.” SECTION 187.04 A
mendment to Section 3.05(e) of the Indenture. Section 3.05(e) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(e) After giving effect to the application of the proceeds of the additional Series of B
onds, either (i) Annual Debt Service will not be increased in any Fiscal Year (excluding Debt 104717355.4 17
Service on the Outstanding Bonds to be refunded) in an amount in excess of 5% or (ii) the Average Annual Debt Service for the Bonds of such additional Series (during the period from their issuance to their last maturity date) shall be equal to or less than the Average Annual Debt Service on the Bonds to be refunded (during the period from the issuance of the additional Series to the last maturity date of the Bonds to be refunded).” SECTION 187.05 A
mendment to Section 3.06(c)(1) of the Indenture .
Section 3.06(c)(1) of the Indenture is hereby amended and restated in its entirety to read as follows:
“( 1) If the additional Series of Bonds are being issued pursuant to Section 3.04, after the sale of the Series of Additional Bonds proposed to be issued (but prior to the issuance and delivery thereof and receipt of payment therefor), the Commission shall file the following documents with the Trustee; these documents shall, with respect to such Series of Additional Bonds, be based upon the actual interest rate or rates determined at the time of sale thereof (except that, with respect to Variable Rate Indebtedness, the interest rate for the Series of Additional Bonds shall be calculated in accordance with the provisions of subsection (iv) of the definition of Maximum Annual Debt Service).
(i) A Certificate of the Commission setting forth for each of th e next three Fiscal Years estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues.
(ii) A Certificate of the Commission demonstrating that (1) the ratio of (A) Net Revenues for the most recent Fiscal Year for which audited financial statements are available, or any consecutive twelve calendar month period during the eighteen calendar month period prior to the issuance of such additional Series of Bonds, to (B) Annual Debt Service for the current Fiscal Year, calculated as of the date of sale of, and including such additional Series of Bonds, will not be less than 1.25:1; or (2) the ratio of (A) Net Revenues projected by the Commission for each of the next three Fiscal Years as determined in clause (i) above, and including in such projections amounts projected to be received from any adopted rate increases and fund balances of the Commission which are projected to be available for the payment of Debt Service (but excluding the Bond Reserve Fund), to (B) Annual Debt Service in each of such three Fiscal Years, calculated as of the date of sale of and including such additional Series of Bonds, will not be less than 1.25:1 in each of such Fiscal Years.”
SECTION 187.06 A
mendment to Section 3.07 of the Indenture. The final paragraph of Section 3.07 of the Indenture is hereby amended and restated in its entirety to read as follows:
“I n addition, the Commission may enter into Parity Loans if no Event of Default has occurred and is continuing under this Indenture or any Supplemental Indenture (and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under this Indenture or any Supplemental Indenture) and, on the date of the execution and delivery of such Parity Loans and with respect to Parity Loans executed and delivered prior to the effective date of the amendments set forth in Article CLXXXVII , on the effective date of the amendments set forth in Article CLXXXVII , the Commission delivers a Certificate to the Trustee setti ng forth, for each of the next three Fiscal Years after the delivery of the Parity 104717355.4 18
Loans, and in the case of Parity Loans executed and delivered prior to the effective date of the amendments set forth in Article CLXXXVII, the next three Fiscal Years, deter mined on such date, (i) the Revenues, Operation and Maintenance Costs of the Enterprise and Net Revenues and (ii) the Annual Debt Service (assuming the delivery of the Parity Loans), and demonstrating that the estimated Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund), in each of such Fiscal Years is at least equal to 1.25 times the Annual Debt Service in each of such Fiscal Years.” SECTION 187.07 A
mendment to Section 6.07(b) of the Indenture. Section 6.07(b) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(b) T he Commission will prepare and file with the Trustee annually, within seven months after the close of each Fiscal Year so long as any of the Bonds are Outstanding, financial statements of the Enterprise for the preceding Fiscal Year, prepared in accordance with generally accepted accounting principles applied on a consistent basis from year to year (which financial statements will include a statement showing the balances in each fund required to be established under the provisions of the Indenture), including a balance sheet, statement of income, statement of retained earnings and contributed capital, and statement of changes in financial position, which financial statements will be examined by and include the certificate or opinion of an Independent Certified Public Accountant. Such financial statements will be accompanied by a Certificate of the Commission stating that no Event of Default has occurred or is continuing as of the end of each Fiscal Year, or specifying the nature of the Events of Default, if any, which have occurred and are continuing.”
SECTION 187.08 A
mendment to Section 6.13(a) of the Indenture . The first paragraph of Section 6.13(a) of the Indenture is hereby amended and restated in its entirety to read as follows:
“( a) To the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charg es in connection with the water, services and facilities furnished by the Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and error in the estimates to pay the following amounts:”
SECTION 187.09 A
mendment to Section 6.13(b) of the Indenture . Section 6.13(b) of the Indenture is hereby amended and restated in its entirety to read as follows:
“( b) In addition to the requirements in subsection (a), to the fullest extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise, which are reasonably expected to be at least sufficient to yield during suc h Fiscal Year Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund) equal to 1.25 times Annual Debt Service payable in such Fiscal Year.”
104717355.4 19
SECTION 187.10 A mendment to Section 6.13 of the Indenture . The following clause (d) is hereby added to Section 6.13 of the Indenture:
“( d) So long as the Commission has complied with its obligations set forth in clause (a) and clause (b) of this Section 6.13, the failure to yield the amount of Revenues as set forth in clause (a) of this Section 6.13, or the failure of Net Revenues to equal 1.25 times Annual Debt Service as set forth in clause (b) of this Section 6.13 at the end of a Fiscal Year, shall not constitute a default or an Event of Default hereunder so long as the Commission has complied with clause (a) and clause (b) of this Section 6.13 at the commencement of the succeeding Fiscal Year.”
MISCELLANEOUS
SECTION 188.01 Terms of 2022 Sub-Series A Bonds Subject to the Indenture.
Except as expressly provided in this Forty- Third Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty- Third Supplemental Indenture, and to the 2022 Sub- Series A Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Third Supplemental Indenture.
This Forty- Third Supplemental Indenture and all the terms and provisions herein contained shall f orm part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in this Forty-Third Supplemental Indenture , the Indenture is hereby ratifi ed and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in this Forty-Third Supplemental Indenture shall be incorporated as part of the Indenture upon t heir effectiveness as set forth in Section 187.01 above.
SECTION 188.02 E
ffective Date of Forty-Third Supplemental Indenture. This Forty- Third Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 188.03 Hol der Consents to Amendments in Forty -Third Supplem ental Indenture. By acceptance of a 2022 Sub- Series A Bond, the holder thereof consents to the amendments described in Article CLXXXVII in this Forty-Third Supplemental Indenture.
SECTION 188.04 Exe cution in Counterparts; No Seal Required for Execution. This Forty-Third Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.
No seal of the Commission is required for the execution of this Forty- Third Supplemental Indenture.
104717355.4 20
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “ City Requirements” or “Additional City Requirements,” the provisions of this Article shall control.
SECTION 189.01 C onflict of Interest. Through its execution of this Forty -Third Supplemental Indenture , the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’ s Charter, Article III, Chapter 2 of City ’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Forty-Third Supplemental Indenture.
SECTION 189.02 Pr
oprietary or Confidential Information of the City . The Trustee understands and agrees that, in the performance of the work or services under this Forty-Third Supplemental Indenture or in contemplation thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Forty -Third Supplemental Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data.
SECTION 189.03 Lo
cal Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Business Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Franc isco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance ”), provided such amendments do not materially increase the Trustee ’s obligations or liabilities, or materially diminish the Trustee ’s rights, under this Forty -Third Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty -Third Supplemental Indenture as though fully set forth in this Section. The Trustee ’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Trustee ’s obligations under this Forty -Third Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty-Third Supplemental Indenture, to exercise any of the remedies provided for under this Forty-Third Supplemental Indenture, under the LBE Ordinance or other wise available at law or in equity, which remedies shall be cumulative unless this Forty -Third Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with 104717355.4 21
all other applicable local, state and f ederal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting.
(b) E nforcement
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Forty -Third Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee ’s net profit on this Forty -Third Supplemental Indenture, or 10% of the total amount of this Forty -Third Supplemental Indenture, or $1,000, whichever is greatest. The Director of the City ’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectivel y, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Trustee’ s LBE certification. The Director of CMD will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Forty -Third Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Forty - Third Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 189.04 N
ondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty -Third Supplemental Indenture, the Trustee ag rees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender i dentity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) S
ubcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply with such 104717355.4 22
provisions. The Trustee ’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Third Supplemental Indenture. (c) N ondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Third Supplemental Indenture and will not during the term of this Forty -Third Supplemental Indenture, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere i n the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. (d) C
ondition to Contract
As a condition to this Forty -Third Supplemental Indenture, the Trustee shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits ” form (Form CMD- 12B-101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). (e) I ncorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Forty -Third Supplemental Indenture under such Chapters, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Forty-Third Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 189.05 M
acBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Forty -Third Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 189.06 Tr
opical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of San Francisco urges contractors 104717355.4 23
not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 189.07 D rug-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug- Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Forty-Third Supplemental Indenture.
SECTION 189.08 Res
ource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Forty-Third Supplemental Indenture.
SECTION 189.09 Co
mpliance with Americans with Disabilities Act. The Trustee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Forty -Third Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal, state and local disab ility rights legislation. The Trustee agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Forty -Third Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Forty-Third Supplemental Indenture.
SECTION 189.10 Suns
hine Ordinance . In accordance with San Francisco
Administrative Code §67.24(e), contracts, contractors ’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’ s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 189.11 Limita
tions on Contributions . Through execution of this Forty - Third Supplemental Indenture, the Trustee acknowledges that it is familiar with Section 1.126 of the City ’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fi scal year have a total 104717355.4 24
anticipated or actual value of $50,000 or more. The Trustee further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee’s board of directors; the Trustee ’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 189.12 R
equiring Minimum Compensation for Covered Employees.
(a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in Sa n Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidelines and rules. The provisions of Section 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Fort y-Third Supplemental Indenture as though fully set forth. The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Trustee ’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section.
(b) The MCO requires the Trustee to pay the Trustee ’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompe nsated time off. The minimum wage rate may change from year to year and the Trustee is obligated to keep informed of the then -current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Forty -Third Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty - Third Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
(c) The Trustee shall not take adverse action or otherwise discri minate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
(e) The City is authorized to inspec t the Trustee ’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Forty -Third Supplemental Indenture. The City in its 104717355.4 25
sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee ’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Third Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Third Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Third Supplemental Indenture. Nothing in this Forty -Third Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 189.13 R
equiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HC AO), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Forty -Third Supplemental Indenture as though fully set forth herein. The text of the HCAO is available on the web at www.sfgov.org/olse.
Capitalized terms used in this Section and not defined in this Forty -Third Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q. (a) F
or each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
104717355.4 26
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Forty -Third Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’ s written notice of a breach of this Forty-Third Supplemental Indenture for violating the HCAO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Trustee shall notify City ’s Office of Contract Administration when it enters into such a Subcontract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on Subcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors ’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Sectio n against the Trustee based on the Subcontractor ’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherw ise discriminate against any employee for notifying the City with regard to the Trustee ’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. (f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (g) The Trustee shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Forty-Third Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. (i) The Trustee shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a written request from the City to do so and being provided at least ten business days to respond.
104717355.4 27
(k) The Trustee shall allow the City to inspect the Trustee’s job sites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Forty -Third Supplemental Indenture is executed because its fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later enters into an agreement or agreements that cause the Trustee’ s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees from agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 189.14 P
rohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Ch apter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Forty - Third Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’ s Controller. The terms and provisions of Chapter 12.G are incorporated herein by this ref erence.
In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Forty -Third Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 189.15 Pr
eservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Third Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “ preservative-treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper ar senate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative- treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “ saltwater immersion” shall mean a pressure-treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 189.16 Co
mpliance with Laws. The Trustee shall keep itself fully informed of the City’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in an y manner affecting the performance of this Forty-Third Supplemental Indenture, and must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time. 104717355.4 28
SECTION 189.17 P rotection of Private Information. The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information, ” and 12M.3, “ Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty-Third Supplemental Indenture. In such an even t, in addition to any other remedies available to it under equity or law, the City may terminate this Forty-Third Supplemental Indenture, bring a false claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 189.18 Fo od Service Waste Reduction Requirements. The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty -Third Supplemental Indenture. By entering into this Forty -Third Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Forty -Third Supplemental Indenture was made. Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee ’s failure to comply with this provision.
SECTION 189.19 Su
bmitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim. A contractor, subcontractor or consultant will be deemed to have submi tted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to discl ose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 189.20 Suga
r-Sweetened Beverage Prohibition. The Trustee agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San 104717355.4 29
Francisco Administrative Code Chapter 101, as part of its performance of this Forty -Third Supplemental Indenture.
SECTION 189.21 A greement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California.
Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 189.22 Ow nership of Results. Any interest of the Trustee or its Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Forty -Third Supplemental Indenture shall become the property of and will be transmitted to the City. However, the Trustee may retain and use copies for reference and as documentation of its experience and capabilities.
SECTION 189.23 Audi
t and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Forty-Third Supplemental Indenture. The Trustee will permit the City to audit, examine a nd make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Forty -Third Supplemental Indenture, whether funded in whole or in part under this Forty -Third Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under this Forty -Third Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Forty-Third Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 189.24 Subc
ontracting. The Trustee is prohibited from subcontracting this Forty-Third Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Forty-Third Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void.
SECTION 189.25 As
signment. The services to be performed by Trustee are personal in character and neither this Forty -Third Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by written instrument executed and approved in the same manner a s this Forty-Third Supplemental Indenture.
SECTION 189.26 Non-W
aiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
104717355.4 30
SECTION 189.27 C ity a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Forty-Third Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
104717355.4 S-1
IN WITNESS WHEREOF, the parties hereto have executed this Forty -Third Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Mark D. Blake, Deputy City Attorney
104717355.4 AT-1-1
EXHIBIT AT-1
FORM OF 2022 SUB-SERIES A BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ( “DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), 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. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2022 SERIES ABCD
2022 SUB-SERIES A BOND (REFUNDING-FEDERALLY TAXABLE)
(WSIP) (GREEN BONDS)
Dated Date Interest Rate Maturity Date CUSIP No.
_________, 2022 November 1, 20__
Registered Owner: Cede & Co.
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of C alifornia (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16 th day of the calendar month next
preceding any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or 104717355.4 AT-1-2
before _____ 15, 20__, in which event it shall bear interest from _________, 2022; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate per annum stated above, payable semiannually on May 1 and November 1 in ea ch year, commencing on ________ 1, 20__.
The principal (or redemption price) hereof is payable to the registered owner hereof upon the surrender hereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as trustee (herein, together with any successor as trustee under the Indenture, called the “ Trustee”), or such other office designated by the Trustee.
The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered owner hereof as of the close of business on the 15 th day of the
calendar month immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond shall be calculated on the basis of a 360- day year comprised of twelve 30- day months.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds ” (herein called the “Bonds” ), of the series and designation indicated on the face hereof (herein called the “ 2022 Sub- Series A Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental thereto, including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “ Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Forty-Third Supplemental Indenture, dated as of _______ 1, 2022, between the Trustee and the Commission, authorizing the issuance of the 2022 Sub- Series A Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in t he Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shal l have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof. 104717355.4 AT-1-3
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to t he water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
Before November 1, 20__, the 2022 Sub- Series A Bonds shall be subject to redemption either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption.
The 2022 Sub- Series A Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. All calculations and determinations referred to under this caption “ Make-Whole Optional Redemption of 2022 Sub- Series A Bonds,” except as provided in the preceding sentence, are expected (but not required) to be made by a municipal advisor or other agent selected by the Commission for such purposes (the “Calculation Agent”). “Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series A Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360- day year consisting of twelve 30 -day months) equal to the applicable Discount Yield.
104717355.4 AT-1-4
“Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent:
(i) plus ____ (__) basis points with respect to the 2022 Sub-Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
“Blended Treasury Yield ” means, with respect to a maturity of the 2022 Sub- Series A Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series A Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub- Series A Bonds maturity to be redeemed.
“Market Treasury Yield ” means that yield, as determined by the Commission or th e Calculation Agent, assuming semi-annual compounding based upon a 360-day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Tr easury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
104717355.4 AT-1-5
“Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
The 2022 Sub-Series A Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (e xcept as otherwise provided under t he procedures of Securities Depository for the 2022 Sub- Series A Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub-Series A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2022 Sub- Series A Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2022 Sub- Series A Sinking Fund Account (described in the Indenture), on ea ch November 1 on or after November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series A Bonds) by lot within any such maturity if less than all of the 2022 Sub- Series A Bonds of such maturity are re deemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2022 Sub- Series A Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub-Series A Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series A Term Bonds prior to maturity pursuant to the Indenture):
Redemption Date
(November 1) Principal Amount
$
†
______________
† Maturity
The 2022 Sub-Series A Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2022 Sub- 104717355.4 AT-1-6
Series A Bonds may be exchanged for a like aggregate principal amount of 2022 Sub- Series A Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things 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 Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
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 and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Section 99.01 of the Twenty-First Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
104717355.4 AT-1-7
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of _________, 2022.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
104717355.4 AT-1-8
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2022 SUB-SERIES A BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: _________, 2022
By: ______________________________________
Authorized Officer
104717355.4 AT-1-9
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within- mentioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
Norton Rose Fulbright US LLP draft 3/15/22
104717367.3
FORTY-FOURTH SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of _________ 1, 2022
AUTHORIZING THE ISSUANCE OF
$[PAR AMOUNT] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2022 SERIES ABCD
2022 SUB-SERIES B (REFUNDING-FEDERALLY TAXABLE)
(REGIONAL WATER)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
104717367.3 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 190.01 Definitions ........................................................................................................2
PROVISIONS RELATING TO 2022 SUB-SERIES B BONDS
SECTION 191.01 Authorization and Terms of 2022 Sub-Series B Bonds ....................................5 SECTION 191.02 Terms of Redemption .......................................................................................7 SECTION 191.03 Form of 2022 Sub-Series B Bonds ...................................................................8 SECTION 191.04 Use of Depository .............................................................................................8 SECTION 191.05 Issuance of 2022 Sub-Series B Bonds ............................................................10 SECTION 191.06 Application of Proceeds of 2022 Sub-Series B Bonds ...................................10 SECTION 191.07 2022 Sub-Series B Sinking Fund Account .....................................................11 SECTION 191.08 Continuing Disclosure ....................................................................................13
MISCELLANEOUS
SECTION 192.01 Terms of 2022 Sub-Series B Bonds Subject to the Indenture ........................13 SECTION 192.02 Effective Date of Forty-Fourth Supplemental Indenture ................................13 SECTION 192.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................14 SECTION 192.04 Execution in Counterparts; No Seal Required for Execution .........................14
ADDITIONAL CITY REQUIREMENTS
SECTION 193.01 Conflict of Interest ..........................................................................................14 SECTION 193.02 Proprietary or Confidential Information of the City .......................................14 SECTION 193.03 Local Business Enterprise Utilization; Liquidated Damages .........................14 SECTION 193.04 Nondiscrimination; Penalties ..........................................................................15 SECTION 193.05 MacBride Principles—Northern Ireland ..........................................................16 SECTION 193.06 Tropical Hardwood and Virgin Redwood Ban ................................................17 SECTION 193.07 Drug-Free Workplace Policy ..........................................................................17 SECTION 193.08 Resource Conservation.....................................................................................17 SECTION 193.09 Compliance with Americans with Disabilities Act ........................................17 SECTION 193.10 Sunshine Ordinance ........................................................................................17 SECTION 193.11 Limitations on Contributions ..........................................................................17 SECTION 193.12 Requiring Minimum Compensation for Covered Employees ........................18 SECTION 193.13 Requiring Health Benefits for Covered Employees .......................................19 104717367.3 ii
SECTION 193.14 Prohibition on Political Activity with City Funds ..........................................21 SECTION 193.15 Preservative-treated Wood Containing Arsenic .............................................21 SECTION 193.16 Compliance with Laws ...................................................................................22 SECTION 193.17 Protection of Private Information ...................................................................22 SECTION 193.18 Food Service Waste Reduction Requirements ...............................................22 SECTION 193.19 Submitting False Claims; Monetary Penalties ................................................22 SECTION 193.20 Sugar-Sweetened Beverage Prohibition .........................................................23 SECTION 193.21 Agreement Made in California; Venue ............................................................23 SECTION 193.22 Ownership of Results ......................................................................................23 SECTION 193.23 Audit and Inspection of Records ....................................................................23 SECTION 193.24 Subcontracting ................................................................................................23 SECTION 193.25 Assignment .....................................................................................................23 SECTION 193.26 Non-Waiver of Rights .....................................................................................24 SECTION 193.27 City a Third Party Beneficiary ........................................................................24 Exhibit AU-1 – Form of 2022 Sub-Series B Bond
104717367.3
FORTY-FOURTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[PAR AMOUNT] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2022 Series ABCD
2022 Sub-Series B (Refunding-Federally Taxable)
(Regional Water)
This Forty-Fourth Supplemental Indenture, dated as of _________ 1, 2022 (this “ Forty- Fourth Supplemental Indenture”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”), and the
PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Forty-Fourth Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of _______, 2022, there are outstanding $___________ aggregate principal amount of Bonds issued pursuant to this Indenture; WHEREAS, the 2010 Sub-Series B Bonds, the 2010 Sub-Series E Bonds, the 2010 Sub- Series G Bonds, the 2011 Sub- Series B Bonds, the 2011 Sub- Series C Bonds, the 2015 Series A Bonds, the 2016 Series AB Bonds, the 2016 Series C Bonds, the 2017 Series ABC Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds, the 2020 Series ABCD Bonds and the 2020 Series EFGH Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty -Fourth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series B (Refunding- Federally Taxable) (Reg ional Water)” (the “2022 Sub- Series B Bonds”) in the aggregate original principal amount of $[PAR AMOUNT] to defease and refund all or a portion of the outstanding _________ Bonds;
104717367.3 2
WHEREAS, simultaneous with the issuance of the 2022 Sub- Series B Bonds, the Commission has determined to issue (i) pursuant to a Forty-Third Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series A (Refunding-Federally Taxable) (WSIP) (Green Bonds)” (the “2022 Sub- Series A Bonds”) in the aggregate principal amount of $________ to defease and refund all or a portion of the outstanding _________ Bonds, (i) pursuant to a Forty- Fifth Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub -Series C (Refunding- Federally Taxable) (Hetch Hetchy Water)” (the “2022 Sub -Series C Bonds”) in the aggregate principal amount of $________ to defease and refund all or a portion of the outstanding _________ Bonds and ( iii) pursuant to a Forty-Sixth Suppl emental Indenture a sub -series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series D (Refunding- Federally Taxable) ( Non-WSIP)” (the “2022 Sub- Series D Bonds,” and together with the 2022 Sub-Series A Bonds, the 2022 Sub-Series B Bonds and the 2022 Sub-Series C Bonds, the “2022 Series ABCD Bonds”) in the aggregate principal amount of $________ to defease and refund all or a portion of the outstanding _________ Bonds;
WHEREAS, the 2022 Series ABCD Bonds (and each sub- series thereof) will b e issued by the Commission under the Indenture payable on a parity with the other Outstanding Series of Bonds and any Parity State Loans;
WHEREAS, the conditions and limitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2022 Series ABCD Bonds; WHEREAS, in order to provide for the issuance of the 2022 Sub- Series B Bonds, to establish and declare the terms and conditions upon which the 2022 Sub- Series B Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty-Fourth Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Forty -Fourth Supplemental Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parti es hereto are now duly authorized to execute and enter into this Forty-Fourth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 190.01 Definitions. The terms defined in this section shall, for all purposes of this Forty-Fourth Supplemental Indenture, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined.
Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
104717367.3 3
Blended Treasury Yield
The term “Blended Treasury Yield” means, with respect to a maturity of the 2022 Sub- Series B Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series B Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub- Series B Bonds maturity to be redeemed.
Calculation Agent
The term “Calculation Agent” means a municipal advisor or other agent selected by the Commission to perform the calculations required in connection with the redemption of any 2022 Sub-Series B Bonds pursuant to Section 191.02(a) of the Indenture.
Discount Yield
The term “Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent with respect to the 2022 Sub- Series B Bonds maturity to be redeemed:
(i) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
Discounted Value
The term “Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series B Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months) equal to the applicable Discount Yield.
104717367.3 4
DTC
The term “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 2022 Sub-Series B Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “Escrow Agreement” means that certain Escrow Agreement, dated as of _________ 1, 2022, by and between the Commission and the Escrow Agent.
Market Treasury Yield
The term “Market Treasury Yield” means that yield, as determined by the Commission or the Calculation Agent, assuming semi -annual compounding based upon a 360- day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
Valuation
Date
The term “Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
104717367.3 5
PROVISIONS RELATING TO 2022 SUB-SERIES B BONDS
SECTION 191.01 Authorization and Terms of 2022 Sub- Series B Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[PAR AMOUNT] are hereby authorized to be issued under the Law and pursuant to the Indenture. (a) S uch Bonds are designated as the “San Francisco Water Revenue Bonds, 2022 Sub-Series B (Refunding– Federally Taxable) (Regional Water)” (the “2022 Sub- Series B Bonds”). The aggregate principal amount of 2022 Sub- Series B Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Forty-Fourth Supplemental Indenture shall be $[PAR AMOUNT]. The 2022 Sub- Series B Bonds shall be of the tenor known as Current Interest Bonds.
The 2022 Sub-Series B Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2022 Sub- Series B Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2022 Sub-Series B Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2022 Sub- Series B Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2022 Sub- Series B Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 191.04 herein. (b) The 2022 Sub-Series B Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable semiannually on May 1 and November 1 in each year, commencing on _____ 1, 20__, calculated on the basis of a 360-day year consisting of twelve 30-day months:
104717367.3 6
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
*
__________________
* Term bond.
The 2022 Sub-Series B Bonds maturing on November 1, 20__ are hereby designated as Term Bonds.
(c) Subject to Section 191.04 hereof, the principal of and premium, if any, on the 2022 Sub-Series B Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2022 Sub-Series B Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15
th day of the calendar month immediately preceding an
interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may have filed w ith the Trustee for that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2022 Sub- Series B Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2022 Sub-Series B Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before _____ 15, 20__, in which event it shall bear 104717367.3 7
interest from _______, 2022; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2022 Sub- Series B Bonds shall be subject to redemption as provided in Section 191.02.
(f) The Trustee shall assign each 2022 Sub- Series B Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection. (g) There shall be no Required Reserve for the 2022 Sub-Series B Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2022 Sub- Series B Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2022 Sub- Series B Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2022 Sub- Series B Bonds in the manner and form provided in this Forty-Fourth Supplemental Indenture.
SECTION 191.02 T
erms of Redemption.
(a) Make-Whole Optional Redemption. Before November 1, 20__, the 2022 Sub- Series B Bonds shall be subject to redemption prior to their respective stated maturity dates either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption.
The 2022 Sub- Series B Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. (b) Optional Redemption. The 2022 Sub- Series B Bonds maturing on or after November 1, 20__ shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of matur ities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series B Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub- Series B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (c) Mandatory Sinking Fund Redemption. The 2022 Sub- Series B Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2022 Sub-Series B Bonds Sinking Fund Account (described in Section 191.07), on each November 1 on and after November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series B Bonds) by lot within any such 104717367.3 8
maturity if less than all of the 2022 Sub- Series B Bonds of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2022 Sub- Series B Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub-Series B Bonds to be redeemed in each such year set forth in Section 191.07 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series B Bonds prior to maturity pursuant to Section 191.02(b) above). (d) Other Terms of Redemption. Except as otherwise provided herein, the provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.03, 4.04, 4.05 and
4.06 shall apply to the redemption of the 2022 Sub-Series B Bonds.
SECTION 191.03 Fo
rm of 2022 Sub-Series B Bonds. The 2022 Sub-Series B Bonds and the Trustee’s certificates of authentication and registration and the form of assignment to appear thereon shall be in substantially the form set forth as Exhibit AU -1 to this Forty-Fourth Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Fourth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2022 Sub-S eries B
Bonds does not require the seal of the Commission.
SECTION 191.04 U se of Depository.
(a) The 2022 Sub- Series B Bonds shall be initially registered as provided in Section 191.01 hereof. Registered ownership of the 2022 Sub- Series B Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection (a) (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; (ii) to any Substitute Depository not objected to by the Trustee, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its fun ctions as depository, or (2) a determination by the Commission 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
(iii) 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 Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub- Series B Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, 104717367.3 9
a single new 2022 Sub- Series B Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2022 Sub- Series B 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 Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub-Series B Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2022 Sub- Series B Bonds, which the Commission sh all prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 191.01 hereof, provided that the Trustee shall not be required to deliver such new 2022 Sub- Series B Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission.
(d) In the case of a partial redemption or an advance refunding of any 2022 Sub- Series B 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 2022 Sub-Series B Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not be liable for such Securities Depository’s (or any Substitute Depository’s) failure to make such notations or errors in making such notations.
(e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2022 Sub- Series B 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 Commission; and the Commission and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2022 Sub- Series B Bonds. Neither the Commission 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 2022 Sub-S eries B Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2022 Sub-Series B Bonds. (f) Notwithstanding any other provision of this Forty- Fourth Supplemental Indenture and so long as all Outstanding 2022 Sub- Series B Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2022 Sub- Series B Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2022 Sub- Series B Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
104717367.3 10
SECTION 191.05 I ssuance of 2022 Sub-Series B Bonds.
(a) At any time after the execution of this Forty -Fourth Supplemental Indenture, the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2022 Sub- Series B Bonds in the aggregate principal amount of $[PAR AMOUNT] to the initial purchasers thereof specified in such Written Request or Certificate.
SECTION 191.06 A
pplication of Proceeds of 2022 Sub-Series B Bonds.
(a) The original purchaser of the 2022 Sub- Series B Bonds will pay and deliver the purchase price of the 2022 Sub- Series B Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $[______] to the Trustee, and the Trustee shall deposit and transfer this amount, [together with $[_________] from the [_________] Fund,] as follows:
1. The Trustee shall deposit $[______] in a separate fund to be known as the “2022 Series ABCD Costs of Issuance Fund,” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall transfer the remainder of such sum, in the amount of $[______], to the Escrow Agent to be applied pursuant to the terms of the Escrow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2022 Series ABCD Costs of Issuance Fund, t he Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
104717367.3 11
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance have been paid, the Commission shall deliver a Certificate of the Commission stating such fact to the Trustee (as described in clause (c) below). (c) The money in the 2022 Series ABCD Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty- Third Supplemental Indenture , the Forty-Fifth Supplemental Indenture and the Forty-Sixth Supplemental Indenture) shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance incidental to or connected with the issuance of the 2022 Series ABCD Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2022 Series ABCD Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2022 Series ABCD Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on _________, 2022, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2022 Series ABCD Costs of Issuance Fund shall be closed.
SECTION 191.07 2022 S
ub-Series B Sinking Fund Account.
(a) The Trustee shall establish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2022 Sub- Series B Sinking Fund Account, which the Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2022 Sub-Series B Term Bonds.
(b) The Trustee, on or before Oc tober 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2022 Sub- Series B Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 191.02(c) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2022 Sub-Series B Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2022 Sub -Series B Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
$
†
104717367.3 12
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2022 Sub- Series B Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2022 Sub- Series B Minimum Sinking Fund Account Payment and the redemption of 2022 Sub-Series B Term Bonds therefrom by depositing with the Trustee 2022 Sub-Series B Term Bonds for cancellation prior to the Trustee’s selection of the 2022 Sub-Series B Term Bonds for redemption.
(d) In lieu of the redemption of 2022 Sub- Series B Term Bonds pursuant to Section 191.02(c) hereof, at the Written Request of the Commission, moneys in the 2022 Sub- Series B Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2022 Sub- Series B Term 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 Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof, and all 2022 Sub- Series B Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2022 Sub- Series B Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2022 Sub-Series B Sinking Fund Account after such date and on or before the next succeeding November 1, shall be used and withdrawn by the Trustee solely for the purpose of redeeming the 2022 Sub- Series B Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 191.02(c) and Section 191.07(b) hereof; and
(ii) the T rustee shall during each 12 month period beginning with the 12- month period ending on November 1, 20__ purchase or call and redeem (as herein provided) an aggregate amount of 2022 Sub- Series B Term Bonds equal to at least the amount of Bond Obligation of t he 2022 Sub -Series B Term Bonds identified in Section 191.07(b) above for such 12 -month period reduced by the principal amount of 2022 Sub- Series B Term Bonds deposited by the Commission with the Trustee as described in Section 191.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2022 Sub- Series B Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2022 Sub- Series B Term Bonds identified in Section 191.07(b) above for such 12-month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2022 Sub- Series B Minimum Sinking Account Payment amounts stated in Section 191.07(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2022 Sub- Series B Sinking Fund Account shall be used, to the extent necessary, to purchase or retire the balance o f the Outstanding 2022 Sub-Series B Term Bonds at the final maturity thereof.
104717367.3 13
The Commission hereby covenants and agrees with the Owners of the 2022 Sub- Series B Bonds to call and redeem 2022 Sub- Series B Bonds from the 2022 Sub- Series B Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 191.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2022 Sub-Series B Term Bonds or as otherwise hereinabove provided).
SECTION 191.08 C ontinuing Disclosure.
The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2022 Sub- Series B Bonds, executed and delivered by the Commission in connection with the issuance of the 2022 Sub- Series B Bonds, as it may be supplemented and amended in accordance with its terms (the “2022 Series ABCD Continuing Disclosure Certificate”). Not withstanding any other provision of the Indenture, failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2022 Series ABCD Continuing Disclosure Certificate) or any Bondowner or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commission to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall be an action to compel performance.
MISCELLANEOUS
SECTION 192.01 Terms of 2022 Sub-Series B Bonds Subject to the Indenture.
Except as expressly provided in this Forty -Fourth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty- Fourth Supplemental Indenture, and to the 2022 Sub- Series B Bonds, with the sa me force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Fourth Supplemental Indenture.
This Forty- Fourth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in the Forty-Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty-Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture.
SECTION 192.02 E
ffective Date of Forty -Fourth Supplemental Indenture . This Forty-Fourth Supplemental Indenture shall take effect upon its execution and delivery. 104717367.3 14
SECTION 192.03 H older Consents to Amendments in Forty -Third Supplemental Indenture. By acceptance of a 2022 Sub- Series B Bond, the holder thereof consents to the amendments described in Article CLXXXVII in this Forty-Third Supplemental Indenture.
SECTION 192.04 Exe cution in Counterparts; No Seal Required for Execution. This Forty-Fourth Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.
No seal of the Commission is required for the execution of this Forty -Fourth Supplemental Indenture.
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “City Requirements” or “Additional City Requirements,” the provisions of this Article shall control.
SECTION 193.01 C onflict of Interest. Through its execution of this Forty -Fourth Supplemental Indenture , the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’s Charter, Artic le III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Forty-Fourth Supplemental Indenture.
SECTION 193.02 Pr
oprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty -Fourth Supplemental Indenture or in contemplation thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Forty-Fourth Supplemental Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data.
SECTION 193.03 Lo
cal Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Business Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not materially increase the Trustee’s obligations or liabilities, or materially diminish the Trustee’s rights, under this Forty -Fourth 104717367.3 15
Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty -Fourth Supplemental Indenture as though fully set forth in this Section. The Trustee’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Trustee’s obligations under this Forty-Fourth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty-Fourth Supplemental Indenture, to exercise any of the remedies provided for under this Forty-Fourth Supplemental Indenture , under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Fourth Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting. (b) E
nforcement
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Forty - Fourth Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee’s net profit on this Forty -Fourth Supplemental Indenture , or 10% of the total amount of this Forty -Fourth Supplemental Indenture, or $1,000, whichever is greatest. The Director of the City’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Trustee’s LBE certification. The Director of CMD will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Forty -Fourth Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Forty - Fourth Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 193.04 N
ondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty-Fourth Supplemental Indenture, the Trustee agrees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual 104717367.3 16
orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) S
ubcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply with such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Fourth Supplemental Indenture. (c) N
ondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Fourth Supplemental Indenture and will not during the term of this Forty -Fourth Supplemental Indenture, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. (d) C
ondition to Contract
As a condition to this Forty -Fourth Supplemental Indenture, the Trustee shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (Form CMD- 12B-101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). (e) I ncorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section by reference and made a part of this Forty-Fourth Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Forty-Fourth Supplemental Indenture under such Chapters, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Forty -Fourth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 193.05 M
acBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages 104717367.3 17
such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Forty -Fourth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 193.06 T
ropical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of San Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 193.07 Dru
g-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug- Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Forty-Fourth Supplemental Indenture.
SECTION 193.08 Res
ource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Forty-Fourth Supplemental Indenture.
SECTION 193.09 Co
mpliance with Americans with Disabilities Act. The Trustee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Forty -Fourth Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Trustee agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Forty -Fourth Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Forty-Fourth Supplemental Indenture.
SECTION 193.10 Suns
hine Ordinance . In accordance with San Francisco
Administrative Code §67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 193.11 Limita
tions on Contributions . Through execution of this Forty - Fourth Supplemental Indenture , the Trustee acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan 104717367.3 18
guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Trustee further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee’s board of directors; the Trustee’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 193.12 R
equiring Minimum Compensation for Covered Employees.
(a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in San Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidelines and rules. The provisions of Se ction 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Forty -Fourth Supplemental Indenture as though fully set forth. The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Trustee’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section.
(b) The MCO requires the Trustee to pay the Trustee’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off. The minimum wage rate may change from year to year and the Trustee is obligated to kee p informed of the then -current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Forty -Fourth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty - Fourth Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
(c) The Trustee shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. 104717367.3 19
(d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
(e) The City is authorized to inspect the Trustee’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Forty-Fourth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Fourth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty -Fourth Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P.
Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Fourth Supplemental Indenture. Nothing in this Forty -Fourth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 193.13 R
equiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HCAO), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Forty -Fourth Supplemental Indenture as 104717367.3 20
though fully set forth here in. The text of the HCAO is available on the web at www.sfgov.org/olse. Capitalized terms used in this Section and not defined in this Forty -Fourth Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q. (a) For each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Forty-Fourth Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’s written notice of a breach of this Forty-Fourth Supplemental Indenture for violating the HCAO, the Trus tee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Trustee shall notify City’s Office of Contract Administration when it enters in to such a Subcontract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on Subcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Trustee based on the Subcontractor’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying the City with regard to the Trustee’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. (f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (g) The Trustee shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Forty-Fourth Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. 104717367.3 21
(i) The Trustee shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a written request from the City to do so and being provided at least ten business days to respond.
(k) The Trustee shall allow the City to inspect the Trustee’s job sites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Forty -Fourth Supplemental Indenture is executed because its fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later enters into an agreement or agreements that cause the Trustee’s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees from agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 193.14 P
rohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Forty - Fourth Supplemental Indenture . The Trustee agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’s Controller. The terms and provisions of Chapter 12.G are incorporated herein by this reference. In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Forty -Fourth Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 193.15 Pr
eservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Fourth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative -treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative- treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “saltwater immersion” shall mean a 104717367.3 22
pressure-treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 193.16 C ompliance with Laws . Th e Trustee shall keep itself fully informed of the City’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Forty-Fourth Supplemental Indenture, and must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time.
SECTION 193.17 Pr
otection of Private Information. The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information,” and 12M.3, “Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty-Fourth Supplemental Indenture. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Forty -Fourth Supplemental Indenture, bring a false claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 193.18 Fo
od Service Waste Reduction Requirem ents. The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Forty -Fourth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty -Fourth Supplemental Indenture. By entering into this Forty-Fourth Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Forty -Fourth Supplemental Indenture was made. Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee’s failure to comply with this provision.
SECTION 193.19 Su
bmitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor , subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim 104717367.3 23
allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 193.20 S
ugar-Sweetened Beverage Prohibition. The Trustee agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Forty -Fourth Supplemental Indenture.
SECTION 193.21 Ag reement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California.
Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 193.22 Ow
nership of Results. Any interest of the Trustee or its Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Forty -Fourth Supplemental Indenture shall become the property of and will be transmitted to the City.
However, the Trustee may retain and use copies for reference and as documentat ion of its experience and capabilities.
SECTION 193.23 Audi
t and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Forty -Fourth Supplemental Indenture. The Trustee will permit the City to audit, examine and make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Forty-Fourth Supplemental Indenture, whether funded in whole or in part under this Forty -Fourth Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under this Forty-Fourth Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Forty -Fourth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 193.24 Subc
ontracting. The Trustee is prohibited from subcontracting this Forty-Fourth Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Forty -Fourth Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void.
SECTION 193.25 As
signment. The services to be performed by Trustee are personal in character and neither this Forty -Fourth Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by 104717367.3 24
written instrument executed and approved in the same manner as this Forty-Fourth Supplemental Indenture.
SECTION 193.26 No n-Waiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
SECTION 193.27 Ci
ty a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Forty-Fourth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
104717367.3
IN WITNESS WHEREOF, the parties hereto have executed this Forty -Fourth Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Mark D. Blake, Deputy City Attorney
104717367.3 AU-1-1
EXHIBIT AU-1
FORM OF 2022 SUB-SERIES B BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registe red in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHE R 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. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2022 SERIES ABCD
2022 SUB-SERIES B BOND (REFUNDING- FEDERALLY TAXABLE)
(REGIONAL WATER)
Dated Date Interest Rate Maturity Date CUSIP No.
_______, 2022 November 1, 20__
Registered Owner: Cede & Co.
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San F rancisco and the laws of the State of California (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16 th day of the calendar month next
preceding any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or 104717367.3 AU-1-2
before _____ 15, 20__, in which event it shall bear interest from _______, 2022; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate per annum stated above, payable semiannually on May 1 and November 1 in each year, commencing on ________ 1, 20__.
The principal (or redemption price) hereof is payable to the registered owner hereof upon the surrender hereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as trustee (herein, together with any successor as trustee under the Indenture, called the “Trustee”), or such other office designated by the Trustee.
The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered owner hereof as of the close of business on the 15 th day of the
calendar month immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond shall be calculated on the basis of a 360- day year comprised of twelve 30- day months.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds” (herein called the “Bonds”), of the series and designation indicated on the face hereof (herein called the “2022 Sub- Series B Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental thereto , including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Forty-Fourth Supplemental Indenture, dated as of _________ 1, 2022, between the Trustee and the Commission, authorizing the issuance of the 2022 Sub- Series B Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, cons ents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof. 104717367.3 AU-1-3
The Bonds are issued to refinance and finance the reconstruction, replacement, expa nsion and repair of or improvements to the water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
Before November 1, 20__, the 2022 Sub- Series B Bonds shall be subject to redemption either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption.
The 2022 Sub- Series B Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. All calculations and determinations referred to under this caption “Make -Whole Optional Redemption of 2022 Sub- Series B Bonds,” except as provided in the preceding sentence, are expected (but not required) to be made by a municipal advisor or other agent selected by the Commission for such purposes (the “Calculation Agent”). “Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series B Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusiv e of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360- day year consisting of twelve 30 -day months) equa l to the applicable Discount Yield.
104717367.3 AU-1-4
“Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent:
(i) plus ____ (__) basis points with respect to the 2022 Sub-Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
“Blended Treasury Yield” means, wi th respect to a maturity of the 2022 Sub- Series B Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that co rresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series B Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub- Series B Bonds maturity to be redeemed.
“Market Treasury Yield” means that yield, as determined by the Commission or the Calculation Agent, assuming semi-annual compounding based upon a 360-day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
104717367.3 AU-1-5
“Valuation Date” means no less t han the third Business Day nor more than the twentieth Business Day preceding the redemption date.
The 2022 Sub-Series B Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commis sion, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series B Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub-Series B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2022 Sub- Series B Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2022 Sub- Series B Sinking Fund Account (described in the Indenture), on each November 1 on or after November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series B Bonds) by lot within any such maturity if less than all of the 2022 Sub- Series B Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2022 Sub- Series B Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub-Series B Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series B Term Bonds prior to maturity pursuant to the Indenture):
Redemption Date
(November 1) Principal Amount
$
†
______________
† Maturity
The 2022 Sub-Series B Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2022 Sub- Series B Bonds may be exchanged for a like aggregate principal amount of 2022 Sub- Series B Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of 104717367.3 AU-1-6
authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things 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 Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
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 and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Section 99.01 of the Twenty-First Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
104717367.3 AU-1-7
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of _______, 2022.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
104717367.3 AU-1-8
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2022 SUB-SERIES B BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: _______, 2022
By: ______________________________________
Authorized Officer
104717367.3 AU-1-9
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within- mentioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
Norton Rose Fulbright US LLP draft 3/15/22
104719891.3
FORTY-FIFTH SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of _______ 1, 2022
AUTHORIZING THE ISSUANCE OF
$PAR AMOUNT] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2022 SERIES ABCD
2022 SUB-SERIES C (REFUNDING-FEDERALLY TAXABLE)
(HETCH HETCHY WATER)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
104719891.3 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 194.01 Definitions ........................................................................................................2
PROVISIONS RELATING TO 2022 SUB-SERIES C BONDS
SECTION 195.01 Authorization and Terms of 2022 Sub-Series C Bonds ....................................5 SECTION 195.02 Terms of Redemption .......................................................................................7 SECTION 195.03 Form of 2022 Sub-Series C Bonds ...................................................................8 SECTION 195.04 Use of Depository .............................................................................................8 SECTION 195.05 Issuance of 2022 Sub-Series C Bonds ............................................................10 SECTION 195.06 Application of Proceeds of 2022 Sub-Series C Bonds ...................................10 SECTION 195.07 2022 Sub-Series C Sinking Fund Account .....................................................11 SECTION 195.08 Continuing Disclosure ....................................................................................13
MISCELLANEOUS
SECTION 196.01 Terms of 2022 Sub-Series C Bonds Subject to the Indenture ........................13 SECTION 196.02 Effective Date of Forty-Fifth Supplemental Indenture ...................................14 SECTION 196.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................14 SECTION 196.04 Execution in Counterparts; No Seal Required for Execution .........................14
ADDITIONAL CITY REQUIREMENTS
SECTION 197.01 Conflict of Interest ..........................................................................................14 SECTION 197.02 Proprietary or Confidential Information of the City .......................................14 SECTION 197.03 Local Business Enterprise Utilization; Liquidated Damages .........................14 SECTION 197.04 Nondiscrimination; Penalties ..........................................................................15 SECTION 197.05 MacBride Principles—Northern Ireland ..........................................................16 SECTION 197.06 Tropical Hardwood and Virgin Redwood Ban ................................................17 SECTION 197.07 Drug-Free Workplace Policy ..........................................................................17 SECTION 197.08 Resource Conservation.....................................................................................17 SECTION 197.09 Compliance with Americans with Disabilities Act ........................................17 SECTION 197.10 Sunshine Ordinance ........................................................................................17 SECTION 197.11 Limitations on Contributions ..........................................................................17 SECTION 197.12 Requiring Minimum Compensation for Covered Employees ........................18 SECTION 197.13 Requiring Health Benefits for Covered Employees .......................................19 104719891.3 ii
SECTION 197.14 Prohibition on Political Activity with City Funds ..........................................21 SECTION 197.15 Preservative-treated Wood Containing Arsenic .............................................21 SECTION 197.16 Compliance with Laws ...................................................................................22 SECTION 197.17 Protection of Private Information ...................................................................22 SECTION 197.18 Food Service Waste Reduction Requirements ...............................................22 SECTION 197.19 Submitting False Claims; Monetary Penalties ................................................22 SECTION 197.20 Sugar-Sweetened Beverage Prohibition .........................................................23 SECTION 197.21 Agreement Made in California; Venue ............................................................23 SECTION 197.22 Ownership of Results ......................................................................................23 SECTION 197.23 Audit and Inspection of Records ....................................................................23 SECTION 197.24 Subcontracting ................................................................................................23 SECTION 197.25 Assignment .....................................................................................................23 SECTION 197.26 Non-Waiver of Rights .....................................................................................24 SECTION 197.27 City a Third Party Beneficiary ........................................................................24 Exhibit AV-1 – Form of 2022 Sub-Series C Bond
104719891.3
FORTY-FIFTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$PAR AMOUNT] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2022 Series ABCD
2022 Sub-Series C (Refunding-Federally Taxable)
(Hetch Hetchy Water)
This Forty-Fifth Supplemental Indenture, dated as of _______ 1, 2022 (this “Forty- Fifth Supplemental Indenture”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”), and the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Forty- Fifth Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of __________, 2022, there are outstanding $___________ aggregate principal amount of Bonds issued pursuant to this Indenture; WHEREAS, the 2010 Sub-Series B Bonds, the 2010 Sub-Series E Bonds, the 2010 Sub- Series G Bonds, the 2011 Sub- Series B Bonds, the 2011 Sub- Series C Bonds, the 2015 Series A Bonds, the 2016 Series AB Bonds, the 2016 Series C Bonds, the 2017 Series ABC Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds, the 2020 Series ABCD Bonds and the 2020 Series EFGH Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty- Fifth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series C (Refunding- Federally Taxable) (Hetch Hetchy Water) ” (the “2022 Sub- Series C Bonds”) in the aggregate original principal amount of $PAR AMOUNT] to defease and refund all or a portion of the outstanding _________ Bonds; 104719891.3 2
WHEREAS, simultaneous with the issuance of the 2022 Sub- Series C Bonds, the Commission has determined to issue (i) pursuant to a Forty-Third Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series A (Refunding-Federally Taxable) (WSIP) (Green Bonds)” (the “2022 Sub- Series A Bonds”) in the aggregate principal amount of $__________ to defease and refund all or a portion of the outstanding _________ Bonds , (i) pursuant to a Forty-Fourt h Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series B (Refunding-Federally Taxable) (Regional Water)” (the “2022 Sub- Series B Bonds”) in the aggregate principal amount of $__________ to defease and refund all or a portion of the outstanding _________ Bonds and ( iii) pursuant to a Forty-Sixth Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series D (Refunding-Federally Taxable) ( Non-WSIP)” (the “202 2 Sub- Series D Bonds,” and together with the 2022 Sub- Series A Bonds, the 2022 Sub- Series B Bonds and the 2022 Sub- Series C Bonds, the “2022 Series ABCD Bonds”) in the aggregate principal amount of $__________ to defease and refund all or a portion of the outstanding _________ Bonds; WHEREAS, the 2022 Series ABCD Bonds (and each sub- series thereof) will be issued by the Commission under the Indenture payable on a parity with the other Outstanding Series of Bonds and any Parity State Loans;
WHEREAS, the conditions and limitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2022 Series ABCD Bonds; WHEREAS, in order to provide for the issuance of the 2022 Sub- Series C Bonds, to establish and declare the terms and conditions upon which the 2022 Sub- Series C Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty- Fifth Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Forty- Fifth Supplemental Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Forty-Fifth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 194.01 Definitions. The terms defined in this section shall, for all purposes of this Forty- Fifth Supplemental Indenture, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined.
Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
104719891.3 3
Blended Treasury Yield
The term “Blended Treasury Yield” means, with respect to a maturity of the 2022 S ub- Series C Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series C Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub- Series C Bonds maturity to be redeemed.
Calculation Agent
The term “Calculation Agent” means a municipal advisor or other agent selected by the Commission to perform the calculations required in connection with the redemption of any 2022 Sub-Series C Bonds pursuant to Section 195.02(a) of the Indenture.
Discount Yield
The term “Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent with respect to the 2022 Sub- Series C Bonds maturity to be redeemed:
(i) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
Discounted Value
The term “Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series C Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months) equal to the applicable Discount Yield.
104719891.3 4
DTC
The term “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 2022 Sub-Series C Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “Escrow Agreement” means that certain Escrow Agreement, dated as of _______ 1, 2022, by and between the Commission and the Escrow Agent.
Market Treasury Yield
The term “Market Treasury Yield” means that yield, as determined by the Commission or the Calculation Agent, assuming semi -annual compounding based upon a 360- day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services S creen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time i s not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five pr imary dealers in U.S. Government securities selected by the Commission.
Valuation
Date
The term “Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
104719891.3 5
PROVISIONS RELATING TO 2022 SUB-SERIES C BONDS
SECTION 195.01 Authorization and Terms of 2022 Sub- Series C Bonds. Additional Bonds of the Commission in the aggregate principal amount of $PAR AMOUNT] are hereby authorized to be issued under the Law and pursuant to the Indenture. (a) S uch Bonds are designated as the “San Francisco Water Revenue Bonds, 2022 Sub-Series C (Refunding– Federally Taxable) (Hetch Hetchy Water) ” (the “2022 Sub- Series C Bonds”). The aggregate principal amount of 2022 Sub- Series C Bonds that may be issued (except as may be otherw ise provided in Section 2.08 of the Indenture) and Outstanding under this Forty -Fifth Supplemental Indenture shall be $PAR AMOUNT]. The 2022 Sub- Series C Bonds shall be of the tenor known as Current Interest Bonds.
The 2022 Sub-Series C Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2022 Sub- Series C Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2022 Sub- Series C Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2022 Sub- Series C Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2022 Sub- Series C Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 195.04 herein. (b) The 2022 Sub-Series C Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable semiannually on May 1 and November 1 in each year, commencing on ______ 1, 20__, calculated on the basis of a 360-day year consisting of twelve 30-day months:
104719891.3 6
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
__________________
* Term bond.
The 2022 Sub- Series C Bonds maturing on November 1, 20__ are hereby designated as Term Bonds.
(c) Subject to Section 195.04 hereof, the principal of and premium, if any, on the 2022 Sub-Series C Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2022 Sub-Series C Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15
th day of the calendar month immediately preceding an
interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may h ave filed with the Trustee for that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2022 Sub- Series C Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2022 Sub- Series C Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before _______ 15, 20__, in which event it shall bear 104719891.3 7
interest from __________, 2022; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2022 Sub- Series C Bonds shall be subject to redemption as provided in Section 195.02.
(f) The Trustee shall assign each 2022 Sub- Series C Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection. (g) There shall be no Required Reserve for the 2022 Sub-Series C Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2022 Sub- Series C Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2022 Sub- Series C Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2022 Sub- Series C Bonds in the manner and form provided in this Forty-Fifth Supplemental Indenture.
SECTION 195.02 T
erms of Redemption.
(a) Make-Whole Optional Redemption. Before November 1, 20__, the 2022 Sub- Series C Bonds shall be subject to redemption prior to their respective stated maturity dates either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption. The 2022 Sub- Series C Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. (b) Optional Redemption. The 2022 Sub- Series C Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series C Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub- Series C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (c) Mandatory Sinking Fund Redempt ion. The 2022 Sub- Series C Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2022 Sub-Series C Bonds Sinking Fund Account (described in Section 195.07), on each November 1 on and aft er November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series C Bonds) by lot within any such maturity if less than all of the 2022 Sub- Series C Bonds of such maturity are then being 104719891.3 8
redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2022 Sub- Series C Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in a ccordance with, the schedule of principal amounts of 2022 Sub-Series C Bonds to be redeemed in each such year set forth in Section 195.07 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series C Bonds prior to maturity pursuant to Section 195.02(b) above). (d) Other Terms of Redemption. Except as otherwise provided herein, the provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.03, 4.04, 4.05 and
4.06 shall apply to the redemption of the 2022 Sub-Series C Bonds.
SECTION 195.03 F orm of 2022 Sub-Series C Bonds. The 2022 Sub- Series C Bonds and the Trustee’s certificates of authentication and registration and the form of assignm ent to appear thereon shall be in substantially the form set forth as Exhibit AV -1 to this Forty- Fifth Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Fifth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2022 Sub-S eries C Bonds does not require the seal of the Commission.
SECTION 195.04 U se of Depository.
(a) The 2022 Sub- Series C Bonds shall be initially registered as provided in Section 195.01 hereof. Registered ownership of the 2022 Sub- Series C Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection (a) (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; (ii) to any Substitute Depository not objected to by the Trustee, 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 Commission 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
(iii) 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 Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub- Series C Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2022 Sub- Series C Bond, which the Commission shall prepare or cause to be 104719891.3 9
prepared, shall be executed and delivered for each maturity of 2022 Sub- Series C 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 Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub-Series C Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2022 Sub- Series C Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 195.01 hereof, provided that the Trustee shall not be required to deliver such new 2022 Sub- Series C Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission.
(d) In the case of a partial redemption or an advance refunding of any 2022 Sub- Series C 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 2022 Sub-Series C Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not be liable for such Securities Depository’s (or any Substitute Depository’s) failure to make such notations or errors in making such notations.
(e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2022 Sub- Series C 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 Commission; and the Commission and the Trustee shall not have responsibility for transmitting payments to, communicating with, notify ing, or otherwise dealing with any beneficial owners of the 2022 Sub- Series C Bonds. Neither the Commission 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 2022 Sub- Series C Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2022 Sub-Series C Bonds. (f) Notwithstanding any other provision of this Forty- Fifth Supplemental Indenture and so long as all Outstanding 2022 Sub- Series C Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Ce de & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2022 Sub- Series C Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2022 Sub- Series C Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
104719891.3 10
SECTION 195.05 I ssuance of 2022 Sub-Series C Bonds.
(a) At any time after the execution of this Forty -Fifth Supplemental Indenture, the Commission may execute and the Trus tee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2022 Sub- Series C Bonds in the aggregate principal amount of $PAR AMOUNT] to the initial purchasers thereof specified in such Written Request or Certificate.
SECTION 195.06 A pplication of Proceeds of 2022 Sub-Series C Bonds. (a) The original purchaser of the 2022 Sub- Series C Bonds will pay and deliver the purchase price of the 2022 Sub- Series C Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $[__________] to the Trustee, and the Trustee shall deposit and transfer this amount, [together with $[_________] from the [_________] Fund,] as follows:
1. The Trustee shall deposit $[__________] in a separate fund to be known as the “2022 Series ABCD Costs of Issuance Fund,” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall transfer the remainder of such sum, in the amount of $[__________], to the Escrow Agent to be applied pursuant to the terms of the Escr ow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2022 Series ABCD Costs of Issuance Fund, the Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
104719891.3 11
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance have been paid, the Commission shall deliver a Certificate of the Commission stating such fact to the Trustee (as described in clause (c) below). (c) The money in the 2022 Series ABCD Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty- Third Supplemental Indenture, the Forty-Fourth Supplemental Indenture and the Forty-Sixth Supplemental Indenture) shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance incidental to or connected with the issuance of the 2022 Series ABCD Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2022 Series ABCD Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2022 Series ABCD Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on __________, 2022, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2022 Series ABCD Costs of Issuance Fund shall be closed.
SECTION 195.07 2022 S
ub-Series C Sinking Fund Account.
(a) The Trustee shall establish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2022 Sub- Series C Sinking Fund Account, which the Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2022 Sub-Series C Term Bonds.
(b) The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2022 Sub- Series C Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 195.02(c) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2022 Sub-Series C Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2022 Sub -Series C Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
$
104719891.3 12
†
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2022 Sub- Series C Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2022 Sub- Series C Minimum Sinking Fund Account Payment and the redemption of 2022 Sub-Series C Term Bonds therefrom by depositing with the Trustee 2022 Sub- Series C Term Bonds for cancellation prior to the Trustee’s selection of the 2022 Sub-Series C Term Bonds for redemption.
(d) In lieu of the redemption of 2022 Sub- Series C Term Bonds pursuant t o Section 195.02(c) hereof, at the Written Request of the Commission, moneys in the 2022 Sub- Series C Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2022 Sub- Series C Term 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 Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof, and all 2022 Sub- Series C Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2022 Sub- Series C Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2022 Sub-Series C Sinking Fund Account after such date and on or before the next succeeding November 1, shall be used and withdrawn by the Trustee solely for the purpose of redeeming the 2022 Sub- Series C Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 195.02(c) and Section 195.07(b) hereof; and
(ii) the Trustee shall during each 12 month period beginning with the 12- month period ending on November 1, 20__ purchase or call and redeem (as herein provided) an aggregate amount of 2022 Sub- Series C Term Bonds equal to at least the amount of Bond Obligation of the 2022 Sub -Series C Term Bonds ident ified in Section 195.07(b) above for such 12 -month period reduced by the principal amount of 2022 Sub- Series C Term Bonds deposited by the Commission with the Trustee as described in Section 195.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2022 Sub- Series C Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2022 Sub- Series C Term Bonds identified in Section 195.07(b) above for such 12-month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2022 Sub- Series C Minimum Sinking Account Payment amounts stated in Section 195.07(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2022 Sub- Series C Sinking Fund Account shall be 104719891.3 13
used, to the extent necessary, to purchase or retire the balance of the Outstanding 2022 Sub-Series C Term Bonds at the final maturity thereof.
The Commission hereby covenants and agrees with the Owners of the 2022 Sub- Series C Bonds to call and redeem 2022 Sub- Series C Bonds from the 2022 Sub- Series C Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 195.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2022 Sub-Series C Term Bonds or as otherwise hereinabove provided).
SECTION 195.08 C ontinuing Disclosure.
The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2022 Sub- Series C Bonds, executed and delivered by the Commission in connection with the issuance of the 2022 Sub- Series C Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2022 Series ABCD Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2022 Series ABCD Continuing Disclosure Certificate) or any Bondowner or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commission to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall be an action to compel performance.
MISCELLANEOUS
SECTION 196.01 Terms of 2022 Sub-Series C Bonds Subject to the Indenture.
Except as expressly provided in this Forty- Fifth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty- Fifth Supplemental Indenture, and to the 2022 Sub- Series C Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Fifth Supplemental Indenture.
This Forty- Fifth Supplemental Indenture and all the terms and provisions herein contained shall f orm part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in th e Forty-Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty-Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture. 104719891.3 14
SECTION 196.02 E ffective Date of Forty-Fifth Supplemental Indenture. This Forty- Fifth Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 196.03 Hol der Consents to Amendments in Forty -Third Supplemental Indenture. By acceptance of a 2022 Sub- Series C Bond, the holder thereof consents to the amendments described in Article CLXXXVII in the Forty-Third Supplemental Indenture.
SECTION 196.04 Exe cution in Counterparts; No Seal Required for Execution. This Forty-Fifth Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. No seal of the Commission is required for the execution of this Forty-Fifth Supplemental Indenture.
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “City Requirements” or “Additional City Requirements,” the provisions of this Article shall control.
SECTION 197.01 C onflict of Interest. Through its execution of this Forty -Fifth Supplemental Indenture , the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’s Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Forty-Fifth Supplemental Indenture.
SECTION 197.02 Pr
oprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty-Fifth Supplemental Indenture or in contemplation thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Forty -Fifth Supplemental Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data.
SECTION 197.03 Lo
cal Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Bus iness Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not ma terially increase the Trustee’s 104719891.3 15
obligations or liabilities, or materially diminish the Trustee’s rights, under this Forty -Fifth Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty -Fifth Supplemental Indenture as though fully set forth in this Section. The Trustee’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Trustee’s obligations under this Forty-Fifth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty-Fifth Supplemental Indenture, to exercise any of the remedies provided for under this Forty-Fifth Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Fifth Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with all other applicable local, state and fed eral laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting.
(b) E
nforcement
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Forty -Fifth Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee’s net profit on this Forty -Fifth Supplemental Indenture, or 10% of the total amount of this Forty -Fifth Supplemental Indenture, or $1,000, whichever is greatest. The Director of the City’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or re vocation of the Trustee’s LBE certification. The Director of CMD will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Forty -Fifth Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Forty -Fifth Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 197.04 N
ondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty -Fifth Supplemental Indenture, the Trustee agrees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of 104719891.3 16
a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) S
ubcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply with such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Fifth Supplemental Indenture. (c) N
ondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Fifth Supplemental Indenture and will not during the term of this Forty -Fifth Supplemental Indenture, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity p ursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. (d) C
ondition to Contract
As a condition to this Forty -Fifth Supplemental Indenture , the Trustee shall execu te the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (Form CMD- 12B-101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). (e) I ncorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section by reference and made a part of this Forty -Fifth Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Forty -Fifth Supplemental Indenture under such Chapters, including but not limited to the remedies provided in such Chapters. Without lim iting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Forty -Fifth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 197.05 M
acBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing 104719891.3 17
business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Forty -Fifth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 197.06 T
ropical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of San Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 197.07 Dru
g-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug- Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Forty-Fifth Supplemental Indenture.
SECTION 197.08 Res
ource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Forty-Fifth Supplemental Indenture.
SECTION 197.09 Co
mpliance with Americans with Disabilities Act. The Trustee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Forty -Fifth Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal , state and local disability rights legislation. The Trustee agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Forty -Fifth Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Forty-Fifth Supplemental Indenture.
SECTION 197.10 Suns
hine Ordinance . In accordance with San Francisco
Administrative Code §67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 197.11 Limita
tions on Contributions . Through execution of this Forty - Fifth Supplemental Indenture, the Trustee acknowledges that it is familiar with Section 1.126 of the Ci ty’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, 104719891.3 18
supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of n egotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Trustee further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee’s board of directors; the Truste e’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 197.12 R
equiring Minimum Compensation for Covered Employees.
(a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in San Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidelines and rules. The provisions of Section 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Forty-Fifth Supplemental Indenture as though fully set forth.
The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Trustee’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section.
(b) The MCO requires the Trustee to pay the Trustee’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off. The minimum wage rate may change from year to year and the Trustee is obligated to keep informed of the then -current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Forty -Fifth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty-Fifth Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
(c) The Trustee shall not take adverse action or otherwise dis criminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. 104719891.3 19
(d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
(e) The City is authorized to inspect the Trustee’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Forty -Fifth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Fifth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Fifth Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Fifth Supplemental Indenture. Nothing in this Forty -Fifth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 197.13 R
equiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HCAO), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Forty -Fifth Supplemental Indenture as though fully set forth herein. The text of the HCAO is available on the web at www.sfgov.org/olse. 104719891.3 20
Capitalized terms used in this Section and not defined in this Forty-Fifth Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q. (a) For each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Forty-Fifth Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’s written notice of a breach of this Forty - Fifth Supplemental Indenture for violating the HCAO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Trustee shall notify City’s Office of Contract Administration when it enters into such a Subcontract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on Subcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Trustee based on the Subcontractor’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying the City with regard to the Trustee’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. (f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (g) The Trustee shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Forty-Fifth Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. 104719891.3 21
(i) The Trustee shall provide reports to the City in accordance with any report ing standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a written request from the City to do so and being provided at least ten business days to respond.
(k) The Trustee shall allow the City to inspect the Trustee’s job sites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Forty -Fifth Supplemental Indenture is executed because it s fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later enters into an agreement or agreements that cause the Trustee’s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees from agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 197.14 P
rohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Forty - Fifth Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’s Controller. The terms and provisions of Chapter 12.G are incorporated herein by this reference.
In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or remedies available hereu nder, (i) terminate this Forty -Fifth Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 197.15 Pr
eservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Fifth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative -treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative- treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwate r immersion. The term “saltwater immersion” shall mean a 104719891.3 22
pressure-treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 197.16 C ompliance with Laws. The Trustee shall keep itself fully informed of the City’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Forty-Fifth Supplemental Indenture, and must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time.
SECTION 197.17 Pr
otection of Private Information. The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information,” and 12M.3, “Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty -Fifth Supplemental Indenture. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Forty-Fifth Supplemental Indenture, bring a fa lse claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 197.18 Fo
od Service Waste Reduction Requirements. The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Fort y-Fifth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty -Fifth Supplemental Indenture. By entering into this Forty -Fifth Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Forty -Fifth Supplemental Indenture was made. Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee’s failure to comply with this provision.
SECTION 197.19 Su
bmitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or emp loyee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim 104719891.3 23
allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 197.20 S
ugar-Sweetened Beverage Prohibition. The Trustee agr ees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Forty -Fifth Supplemental Indenture.
SECTION 197.21 Ag reement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California.
Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 197.22 Owne
rship of Results. Any interest of the Trustee or its
Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Forty -Fifth Supplemental Indenture shall become the property of and will be transmitted to the City. However, the Trustee may retain and use copies for reference and as documentation of its experience and capabilities.
SECTION 197.23 Audi
t and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Forty -Fifth Supplemental Indenture. The Trustee will permit the City to audit, examine and make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Forty -Fifth Supplemental Indenture, whether funded in whole or in part under this Forty -Fifth Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under t his Forty-Fifth Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Forty -Fifth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 197.24 Subc
ontracting. The Trustee is prohibited from subcontracting this Forty-Fifth Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Forty -Fifth Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void.
SECTION 197.25 As
signment. The services to be performed by Trustee are personal in character and neither this Forty -Fifth Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by written instrument execute d and approved in the same manner as this Forty-Fifth Supplemental Indenture.
104719891.3 24
SECTION 197.26 No n-Waiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
SECTION 197.27 Ci
ty a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Forty-Fifth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
104719891.3
IN WITNESS WHEREOF, the parties hereto have executed this Forty -Fifth Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Mark D. Blake, Deputy City Attorney
104719891.3 AV-1-1
EXHIBIT AV-1
FORM OF 2022 SUB-SERIES C BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registe red in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHE R 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. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2022 SERIES ABCD
2022 SUB-SERIES C BOND (REFUNDING- FEDERALLY TAXABLE)
(HETCH HETCHY WATER)
Dated Date Interest Rate Maturity Date CUSIP No.
__________, 2022 November 1, 20__
Registered Owner: Cede & Co.
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San F rancisco and the laws of the State of California (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16 th day of the calendar month next
preceding any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or 104719891.3 AV-1-2
before _______ 15, 20__, in which event it shall bear interest from __________, 2022; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate per annum stated above, payable semiannually on May 1 and November 1 in each year, commencing on ________ 1, 20__.
The principal (or redemption price) hereof is payable to the registered owner hereof upon the surrender hereof at the corporate trust office of U.S. Bank Trust Company, Nati onal Association, in San Francisco, California, as trustee (herein, together with any successor as trustee under the Indenture, called the “Trustee”), or such other office designated by the Trustee.
The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered owner hereof as of the close of business on the 15 th day of the
calendar month immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond shall be calculated on the basis of a 360- day year comprised of twelve 30- day months.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds” (herein called the “Bonds”), of the series and designation indicated on the face hereof (herein called the “2022 Sub- Series C Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental th ereto, including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Forty-Fifth Supplemental Indenture, dated as of _______ 1, 2022, between the Trustee and the Commission, authorizing the issuance of the 2022 Sub- Series C Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof. 104719891.3 AV-1-3
The Bonds are issued to refinance and finance the reconstruction, replacement, ex pansion and repair of or improvements to the water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
Before November 1, 20__, the 2022 Sub- Series C Bonds shall be subject to redemption either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption. The 2022 Sub- Series C Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. All calculations and determinations referred to under this caption “Make-Whole Optional Redemption of 2022 Sub-Series C Bonds,” except as provided in the preceding sentence, are expected (but not required) to be made by a municipal advisor or other agent selected by the Commission for such purposes (the “Calculation Agent”).
“Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series C Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusi ve of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360- day year consisting of twelve 30 -day months) equ al to the applicable Discount Yield.
“Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent,
104719891.3 AV-1-4
(i) plus ____ (__) basis points with respect to the 2022 Sub- Series C Bonds maturing in 20__, and
(ii) pl us _____ (__) basis points with respect to the 2022 Sub- Series CA Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
“Blended Treasury Yield” means, with respect to a maturity of the 2022 Sub- Series C Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Trea sury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series C Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub- Series C Bonds maturity to be redeemed.
“Market Treasury Yield” means that yield, as determined by the Commiss ion or the Calculation Agent, assuming semi-annual compounding based upon a 360-day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
“Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
104719891.3 AV-1-5
The 2022 Sub-Series C Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series C Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub-Series C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2022 Sub- Series C Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2022 Sub- Series C Sinking Fund Account (described in the Indenture), on each November 1 on or after November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series C Bonds) by lot within any such maturity if less than all of the 2022 Sub- Series C Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2022 Sub- Series C Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub-Series C Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series C Term Bonds prior to maturity pursuant to the Indenture):
Redemption Date
(November 1) Principal Amount
$
†
______________
† Maturity
The 2022 Sub-Series C Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2022 Sub- Series C Bonds may be exchanged for a like aggregate principal amount of 2022 Sub- Series C Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of 104719891.3 AV-1-6
authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things 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 Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
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 and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Section 99.01 of the Twenty-First Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
104719891.3 AV-1-7
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of __________, 2022.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
104719891.3 AV-1-8
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2022 SUB-SERIES C BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: __________, 2022
By: ______________________________________
Authorized Officer
104719891.3 AV-1-9
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within- mentioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
Norton Rose Fulbright US LLP draft 3/15/22
104719949.2
FORTY-SIXTH SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of ________ 1, 2022
AUTHORIZING THE ISSUANCE OF
$[PAR AMOUNT] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2022 SERIES ABCD
2022 SUB-SERIES D (REFUNDING-FEDERALLY TAXABLE)
(NON-WSIP)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
104719949.2 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 198.01 Definitions ........................................................................................................2
PROVISIONS RELATING TO 2022 SUB-SERIES D BONDS
SECTION 199.01 Authorization and Terms of 2022 Sub-Series D Bonds ...................................5 SECTION 199.02 Terms of Redemption .......................................................................................7 SECTION 199.03 Form of 2022 Sub-Series D Bonds ...................................................................8 SECTION 199.04 Use of Depository .............................................................................................8 SECTION 199.05 Issuance of 2022 Sub-Series D Bonds ............................................................10 SECTION 199.06 Application of Proceeds of 2022 Sub-Series D Bonds ...................................10 SECTION 199.07 2022 Sub-Series D Sinking Fund Account .....................................................11 SECTION 199.08 Continuing Disclosure ....................................................................................13
MISCELLANEOUS
SECTION 200.01 Terms of 2022 Sub-Series D Bonds Subject to the Indenture ........................14 SECTION 200.02 Effective Date of Forty-Sixth Supplemental Indenture ..................................14 SECTION 200.03 Holder Consents to Amendments in Forth-Third Supplemental Indenture ....................................................................................................14 SECTION 200.04 Execution in Counterparts; No Seal Required for Execution .........................14
ADDITIONAL CITY REQUIREMENTS
SECTION 201.01 Conflict of Interest ..........................................................................................14 SECTION 201.02 Proprietary or Confidential Information of the City .......................................15 SECTION 201.03 Local Business Enterprise Utilization; Liquidated Damages .........................15 SECTION 201.04 Nondiscrimination; Penalties ..........................................................................16 SECTION 201.05 MacBride Principles—Northern Ireland ..........................................................17 SECTION 201.06 Tropical Hardwood and Virgin Redwood Ban ................................................17 SECTION 201.07 Drug-Free Workplace Policy ..........................................................................17 SECTION 201.08 Resource Conservation.....................................................................................17 SECTION 201.09 Compliance with Americans with Disabilities Act ........................................17 SECTION 201.10 Sunshine Ordinance ........................................................................................18 SECTION 201.11 Limitations on Contributions ..........................................................................18 SECTION 201.12 Requiring Minimum Compensation for Covered Employees ........................18 SECTION 201.13 Requiring Health Benefits for Covered Employees .......................................20 104719949.2 ii
SECTION 201.14 Prohibition on Political Activity with City Funds ..........................................21 SECTION 201.15 Preservative-treated Wood Containing Arsenic .............................................22 SECTION 201.16 Compliance with Laws ...................................................................................22 SECTION 201.17 Protection of Private Information ...................................................................22 SECTION 201.18 Food Service Waste Reduction Requirements ...............................................22 SECTION 201.19 Submitting False Claims; Monetary Penalties ................................................23 SECTION 201.20 Sugar-Sweetened Beverage Prohibition .........................................................23 SECTION 201.21 Agreement Made in California; Venue ............................................................23 SECTION 201.22 Ownership of Results ......................................................................................23 SECTION 201.23 Audit and Inspection of Records ....................................................................23 SECTION 201.24 Subcontracting ................................................................................................24 SECTION 201.25 Assignment .....................................................................................................24 SECTION 201.26 Non-Waiver of Rights .....................................................................................24 SECTION 201.27 City a Third Party Beneficiary ........................................................................24 Exhibit AW-1 – Form of 2022 Sub-Series D Bond
104719949.2
FORTY-SIXTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[PAR AMOUNT] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2022 Series ABCD
2022 Sub-Series D (Refunding-Federally Taxable)
(Non-WSIP)
This Forty- Sixth Supplemental Indenture, dated as of ________ 1, 2022 (this “Forty- Sixth Supplemental Indenture”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”), and the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Forty- Sixth Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of __________, 2022, there are outstanding $_________ aggregate principal amount of Bonds issued pursuant to this Indenture; WHEREAS, the 2010 Sub-Series B Bonds, the 2010 Sub-Series E Bonds, the 2010 Sub- Series G Bonds, the 2011 Sub- Series B Bonds, the 2011 Sub- Series C Bonds, the 2015 Series A Bonds, the 2016 Series AB Bonds, the 2016 Series C Bonds, the 2017 Series ABC Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds, the 2020 Se ries ABCD Bonds and the 2020 Series EFGH Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty-Sixth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series D (Refunding- Federally Taxable) (Non -WSIP)” (the “2022 Sub- Series D Bonds”) in the aggregate original principal amount of $[PAR AMOUNT] to defease and refund all or a portion of the outstanding _________ Bonds;
104719949.2 2
WHEREAS, simultaneous with the issuance of the 2022 Sub- Series D Bonds, the Commission has determined to issue (i) pursuant to a Forty- Third Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub-S eries A (Refunding-Federally Taxable) (WSIP) (Green Bonds)” (the “2022 Sub- Series A Bonds”) in the aggregate principal amount of $_______ to defease and refund all or a portion of the outstanding _________ Bonds, (ii) pursuant to a Forty -Fourth Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series B (Refunding- Federally Taxable) (Regional Water)” (the “2022 Sub -Series B Bonds”) in the aggregate principal amount of $_______ to defease and refund all or a portion of the outstanding _________ Bonds and (iii) pursuant to a Forty- Fifth Supplemental Indenture a sub -series of Bonds designated “San Francisco Water Revenue Bonds, 2022 Sub- Series C (Refunding- Federally Taxable) (Hetch Hetchy Water)” (the “2022 Sub -Series C Bonds,” and together with the 2022 Sub- Series A Bonds, the 2022 Sub- Series B Bonds and the Sub- Series D Bonds, the “2022 Series ABCD Bonds”) in the aggregate principal amount of $________ to defease and refund all or a portion of the outstanding _________ Bonds;
WHEREAS, the 2022 Series ABCD Bonds (and each sub- series thereof) will be issued by the Commission under the Indenture payable on a parity with the other Outstanding Series of Bonds and any Parity State Loans;
WHEREAS, the conditions and l imitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2022 Series ABCD Bonds; WHEREAS, in order to provide for the issuance of the 2022 Sub- Series D Bonds, to establish and declare the terms and conditions upon which the 2022 Sub- Series D Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty-Sixth Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Forty- Sixth Supplemental Indenture do exist, have happened and have be en performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Forty-Sixth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 198.01 Definitions. The terms defined in this section shall, for all purposes of this Forty- Sixth Supplemental Indenture, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined.
Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
104719949.2 3
Blended Treasury Yield
The term “Blended Treasury Yield” means, with respect to a maturity of the 2022 Sub- Series D Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series D Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corres ponding to the remaining average life of the 2022 Sub- Series D Bonds maturity to be redeemed.
Calculation Agent
The term “Calculation Agent” means a municipal advisor or other agent selected by the Commission to perform the calculations required in connection with the redemption of any 2022 Sub-Series D Bonds pursuant to Section 199.02(a) of the Indenture.
Discount Yield
The term “Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent with respect to the 2022 Sub-Series D Bonds maturity to be redeemed:
(i) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
Discounted Value
The term “Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series D Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months) equal to the applicable Discount Yield.
104719949.2 4
DTC
The term “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 2022 Sub-Series D Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “Escrow Agreement” means that certain Escrow Agreement, dated as of ________ 1, 2022, by and between the Commission and the Escrow Agent.
Market Treasury Yield
The term “Market Treasury Yield” means that yield, as determined by the Commission or the Calculation Agent, assuming semi -annual compounding based upon a 360- day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
Valuation
Date
The term “Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
104719949.2 5
PROVISIONS RELATING TO 2022 SUB-SERIES D BONDS
SECTION 199.01 Authorization and Terms of 2022 Sub-Series D Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[PAR AMOUNT] are hereby authorized to be issued under the Law and pursuant to the Indenture. (a) S uch Bonds are designated as the “San Francisco Water Revenue Bonds, 2022 Sub-Series D (Refunding– Federally Taxable) (Non -WSIP)” (the “2022 Sub- Series D Bonds”).
The aggregate principal amount of 2022 Sub- Series D Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Forty-Sixth Supplemental Indenture shall be $[PAR AMOUNT]. The 2022 Sub-Series D Bonds shall be of the tenor known as Current Interest Bonds.
The 2022 Sub-Series D Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2022 Sub- Series D Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2022 Sub-Series D Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2022 Sub- Series D Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2022 Sub- Series D Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 199.04 herein. (b) The 2022 Sub-Series D Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable semiannually on May 1 and November 1 in each year, commencing on _______ 1, 20__, calculated on the basis of a 360-day year consisting of twelve 30-day months:
104719949.2 6
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
__________________
* Term bond.
The 2022 Sub-Series D Bonds maturing on November 1, 20__ are hereby designated as Term Bonds.
(c) Subject to Section 199.04 hereof, the principal of and premium, if any, on the 2022 Sub-Series D Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2022 Sub-Series D Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15
th day of the calendar month immediately preceding an
interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may have filed w ith the Trustee for that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2022 Sub- Series D Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2022 Sub-Series D Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before ______ 15, 20__, in which event it shall bear interest from __________, 2022; provided, however, that if, at the time of authentication of any 104719949.2 7
Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2022 Sub- Series D Bonds shall be subject to redemption as provided in Section 199.02.
(f) The Trustee shall assign each 2022 Sub- Series D Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection. (g) There shall be no Required Reserve for the 2022 Sub-Series D Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2022 Sub- Series D Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2022 Sub- Series D Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2022 Sub- Series D Bonds in the manner and form provided in this Forty-Sixth Supplemental Indenture.
SECTION 199.02 T
erms of Redemption.
(a) Make-Whole Optional Redemption. Before November 1, 20__, the 2022 Sub- Series D Bonds shall be subject to redemption prior to their respective stated maturity dates either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption.
The 2022 Sub- Series D Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. (b) Optional Redemption. The 2022 Sub- Series D Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such mat urities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series D Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub- Series D Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. (c) Mandatory Sinking Fund Redemption. The 2022 Sub- Series D Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2022 Sub-Series D Bonds Sinking Fund Account (described in Section 199.07), on each November 1 on and after November 1, 20__, (except as otherwise provided under the procedures of Secu rities Depository for the 2022 Sub- Series D Bonds) by lot within any such maturity if less than all of the 2022 Sub- Series D Bonds of such maturity are then being 104719949.2 8
redeemed, upon payment of the principal amount thereof and accrued interest thereon to the da te fixed for redemption, without premium. Such sinking fund redemption of the 2022 Sub-Series D Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub- Series D Bonds to be redeemed in each such year set forth in Section 199.07 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series D Bonds prior to maturity pursuant to Section 199.02(b) above). (d) Other Terms of Redemption. Except as otherwise provided herein, the provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.03, 4.04, 4.05 and
4.06 shall apply to the redemption of the 2022 Sub-Series D Bonds.
SECTION 199.03 F orm of 2022 Sub-Series D Bonds. The 2022 Sub-Series D Bonds and the Trustee’s certificates of authentication and registration and the form of assignment to appear thereon shall be in substantially the form set forth as Exhibit AW-1 to this Forty-Sixth Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Sixth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2022 Sub- S eries
D Bonds does not require the seal of the Commission.
SECTION 199.04 U se of Depository.
(a) The 2022 Sub- Series D Bonds shall be initially registered as provided in Section 199.01 hereof. Registered ownership of the 2022 Sub- Series D Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection (a) (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; (ii) to any Substitute Depository not objected to by the Trustee, upon (1) the resignation of DTC or its successor (or any Substitute Depository or i ts successor) from its functions as depository, or (2) a determination by the Commission 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
(iii) 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 Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub- Series D Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2022 Sub- Series D Bond, which the Commission shall prepare or cause to be 104719949.2 9
prepared, shall be executed and delivered for each maturity of 2022 Sub -Series D 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 Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2022 Sub-Series D Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2022 Sub- Series D Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and r egistered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 199.01 hereof, provided that the Trustee shall not be required to deliver such new 2022 Sub- Series D Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission.
(d) In the case of a partial redemption or an advance refunding of any 2022 Sub- Series D 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 2022 Sub-Series D Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not b e liable for such Securities Depository’s (or any Substitute Depository’s) failure to make such notations or errors in making such notations.
(e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2022 Sub- Series D 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 Commission; and the Commission and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2022 Sub- Series D Bonds. Neither the Commission 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 2022 Sub- Series D Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2022 Sub-Series D Bonds. (f) Notwithstanding any other provision of this Forty- Sixth Supplemental Indenture and so long as all Outstanding 2022 Sub- Series D Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2022 Sub- Series D Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2022 Sub- Series D Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
104719949.2 10
SECTION 199.05 I ssuance of 2022 Sub-Series D Bonds.
(a) At any time after the execution of this Forty -Sixth Supplemental Indenture, the Commission may ex ecute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2022 Sub- Series D Bonds in the aggregate principal amount of $[PAR AMOUNT] to the initial purchasers thereof specified in such Written Request or Certificate.
SECTION 199.06 A pplication of Proceeds of 2022 Sub-Series D Bonds. (a) The original purchaser of the 2022 Sub- Series D Bonds will pay and deliver the purchase price of the 2022 Sub- Series D Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $[______] to the Trustee, and the Trustee shall deposit and transfer this amount, [together with $[_________] from the [_________] Fund,] as follows:
1. The Trustee shall deposit $[______] in a separate fund to be known as the “2022 Series ABCD Costs of Issuance Fund,” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall transfer the remainder of such sum, in the amount of $[______], to the Escrow Agent to be applied pursuant to the terms of the Escrow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2022 Series ABCD Costs of Issuance Fund, the Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
104719949.2 11
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien , right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance have been paid, the Co mmission shall deliver a Certificate of the Commission stating such fact to the Trustee (as described in clause (c) below). (c) The money in the 2022 Series ABCD Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty- Third Supplemental Indenture, the Forty-Fourth Supplemental Indenture and the Forty-Fifth Supplemental Indenture) shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance incidental to or connected with the issuance of the 2022 Series ABCD Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2022 Series ABCD Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2022 Series ABCD Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on _________, 2022, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2022 Series ABCD Costs of Issuance Fund shall be closed.
SECTION 199.07 2022 S
ub-Series D Sinking Fund Account.
(a) The Trustee shall estab lish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2022 Sub- Series D Sinking Fund Account, which the Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2022 Sub-Series D Term Bonds.
104719949.2 12
(b) The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2022 Sub- Series D Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 199.02(c) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2022 Sub-Series D Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2022 Sub -Series D Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
$
†
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2022 Sub- Series D Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2022 Sub- Series D Minimum Sinking Fund Account Payment and the redemption of 2022 Sub-Series D Term Bonds therefrom by depositing with the Trustee 2022 Sub-Series D Term Bonds for cancellation prior to the Trustee’s selection of the 2022 Sub-Series D Term Bonds for redemption.
(d) In lieu of the redemption of 2022 Sub- Series D Term Bonds pursuant to Section 199.02(c) hereof, at the Written Request of the Commission, moneys in the 2022 Sub- Series D Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2022 Sub- Series D Term 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 Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof, and all 2022 Sub- Series D Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2022 Sub- Series D Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2022 Sub-Series D Sinking Fund Account after such date and on or before the next succeeding November 1, shall be used and withdrawn by the Trustee solely for the purpose of redeeming the 2022 Sub -Series D Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 199.02(c) and Section 199.07(b) hereof; and
104719949.2 13
(ii) the Trustee shall during each 12 month period beginning with the 12- month period ending on November 1, 20__ purchase or call and redeem (as herein provided) an aggregate amount of 2022 Sub- Series D Term Bonds equal to at least the amount of Bond Obligation of the 2022 Sub -Series D Term Bonds identified in Section 199.07(b) above for such 12 -month period reduced by the principal amount of 2022 Sub- Series D Term Bonds deposited by the Commission with the Trustee as described in Section 199.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2022 Sub- Series D Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2022 Sub- Series D Term Bonds identified in Section 199.07(b) above for such 12-month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2022 Sub- Series D Minimum Sinking Account Payment amounts stated in Section 199.07(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2022 Sub- Series D Sinking Fund Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2022 Sub-Series D Term Bonds at the final maturity thereof.
The Commission hereby covenants and agrees with the Owners of the 2022 Sub- Series D Bonds to call and redeem 2022 Sub- Series D Bonds from the 2022 Sub- Series D Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 199.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2022 Sub-Series D Term Bonds or as otherwise hereinabove provided).
SECTION 199.08 C
ontinuing Disclosure.
The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2022 Sub- Series D Bonds, executed and delivered by the Commission in connection with the issuance of the 2022 Sub- Series D Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2022 Series ABCD Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2022 Series ABCD Continuing Disclosure Certificate) or any Bondowner or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commission to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2022 Series ABCD Continuing Disclosure Certificate shall be an action to compel performance. 104719949.2 14
MISCELLANEOUS
SECTION 200.01 Terms of 2022 Sub-Series D Bonds Subject to the Indenture.
Except as expressly provided in this Forty- Sixth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty- Sixth Supplemental Indenture, and to the 2022 Sub- Series D Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Sixth Supplemental Indenture.
This Forty- Sixth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in th e Forty-Third Supplemental Indenture, t he Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty-Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture.
SECTION 200.02 E
ffective Date of Forty-Sixth Supplemental Indenture. This Forty- Sixth Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 200.03 Hol der Consents to Amendments in Forth -Third Supplemental Indenture. By acceptance of a 2022 Sub- Series D Bond, the holder thereof consents to the amendments described in Article CLXXXVII in the Forty-Third Supplemental Indenture.
SECTION 200.04 Exe cution in Counterparts; No Seal Required for Execution. This Forty-Sixth Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. No seal of the Commission is required for the execution of this Forty-Sixth Supplemental Indenture.
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “City Requirements” or “A dditional City Requirements,” the provisions of this Article shall control.
SECTION 201.01 C onflict of Interest. Through its execution of this Forty -Sixth Supplemental Indenture , the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’s Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts 104719949.2 15
which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Forty-Sixth Supplemental Indenture.
SECTION 201.02 P roprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty -Sixth Supplemental Indenture or in contemplation thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Forty-Sixth Supplemental Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data.
SECTION 201.03 Lo
cal Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Business Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not materially increase the Trustee’s obligations or liabilities, or materially diminish the Trustee’s rights, under this Forty -Sixth Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty -Sixth Supplemental Indenture as though fully set forth in this Section. The Trustee’s willful failure to comply with any applicable provisions of t he LBE Ordinance is a material breach of the Trustee’s obligations under this Forty -Sixth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty-Sixth Supplemental Indenture, to exercise any of the remedies provided for under this Forty-Sixth Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Sixth Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting.
(b) E
nfo rcement
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Forty -Sixth Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee’s net profit on this Forty -Sixth Supplemental Indenture, or 10% of the total amount of this Forty -Sixth Supplemental Indenture, or $1,000, whichever is greatest. The Director o f the City’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Trustee’s LBE certification. The 104719949.2 16
Director of CMD will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Forty -Sixth Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its comp liance with the LBE Ordinance for a period of three years following termination or expiration of this Forty-Sixth Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 201.04 N
ondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty -Sixth Supplemental Indenture, the Trustee agrees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) S
ubcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply with such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Sixth Supplemental Indenture. (c) N
ondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Sixth Supplemental Indenture and will not during the term of this Forty -Sixth Supplemental Indenture, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membe rship or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. 104719949.2 17
(d) C ondition to Contract
As a condition to this Forty -Sixth Supplemental Indenture , the Trustee shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (Form CMD- 12B-101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). (e) I ncorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Franci sco Administrative Code are incorporated in this Section by reference and made a part of this Forty -Sixth Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Forty-Sixth Supplemental Indenture under such Chapters, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Forty -Sixth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payme nts due the Trustee.
SECTION 201.05 M
acBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Forty -Sixth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 201.06 Tr
opical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of S an Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 201.07 Dru
g-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug- Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Forty-Sixth Supplemental Indenture.
SECTION 201.08 Res
ource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Forty-Sixth Supplemental Indenture.
SECTION 201.09 Co
mpliance with Americans with Disabilities Act. The Trustee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a 104719949.2 18
contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Forty -Sixth Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Trustee agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Forty -Sixth Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Forty-Sixth Supplemental Indenture.
SECTION 201.10 S
unshine Ordinance . In accordance with San Francisco
Administrative Code §67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 201.11 Limita
tions on Contributions . Through execution of this Forty - Sixth Supplemental Indenture, the Trustee acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoin g restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Trustee further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee’s board of directors; the Trustee’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 201.12 Re
quiring Minimum Compensation for Covered Employees.
(a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in San Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidelines and rules. The provisions of Section 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Forty -Sixth Supplemental Indenture as though fully set 104719949.2 19
forth. The text of the MCO is available on the web at www.sfgov.org/olse/ mco. A partial listing of some of the Trustee’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section.
(b) The MCO requires the Trustee to pay the Trustee’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off. The minimum wage rate may change from year to year and the Trustee is obligated to keep informed of the the n-current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Forty -Sixth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty - Sixth Supplemental Indenture fails to comply, the City may purs ue any of the remedies set forth in this Section against the Trustee.
(c) The Trustee shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
(e) The City is authorized to inspect the Trustee’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Forty -Sixth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reason able estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Sixth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Sixth Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these 104719949.2 20
remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Sixth Supplemental Indenture. Nothing in this Forty -Sixth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 201.13 R
equiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HCAO), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regul ations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Forty -Sixth Supplemental Indenture as though fully set forth herein. The text of the HCAO is available on the web at www.sfgov.org/olse.
Capitalized terms used in this Section and not defined in this Forty-Sixth Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q. (a) F
or each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Forty -Sixth Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’s written notice of a breach of this Forty-Sixth Supplemental Indenture for violating the HCAO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Trustee shall notify City’s Office of Contract Administration when it enters into such a Subcont ract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO 104719949.2 21
and has imposed the requirements of the HCAO on Subcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Trustee based on the Subcontractor’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying the City with regard to the Trustee’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. (f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (g) The Trustee shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Forty-Sixth Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. (i) The Trustee shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a wr itten request from the City to do so and being provided at least ten business days to respond.
(k) The Trustee shall allow the City to inspect the Trustee’s job sites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Forty -Sixth Supplemental Indenture is executed because its fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later enters into an agreement or agreements that cause the Trustee’s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees from agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 201.14 P
rohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Forty - Sixth Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative 104719949.2 22
Code Chapter 12.G and any implementing rules and regulations promulgated by the City’s Controller. The terms and provisions of Chapter 12.G are incorporated herein by this reference.
In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or re medies available hereunder, (i) terminate this Forty -Sixth Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 201.15 P
reservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Sixth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative -treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative -treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “saltwater immersion” shall mean a pressure-treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 201.16 Co
mpliance with Laws . The Trustee shall keep i tself fully informed of the City’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Forty-Sixth Supplemental Indenture, and must at all times comply with such local co des, ordinances, and regulations and all applicable laws as they may be amended from time to time.
SECTION 201.17 Pr
otection of Private Information. The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information,” and 12M.3, “Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty -Sixth Supplemental Indenture. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Forty-Sixth Supplemental Indenture, bring a false claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 201.18 Fo
od Service Waste Reduction Requirements. The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Forty-Sixth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty -Sixth Supplemental Indenture. By entering into this Forty -Sixth Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to 104719949.2 23
determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Forty -Sixth Supplemental Indenture was made. Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee’s failure to comply with this provision.
SECTION 201.19 S
ubmitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the Ci ty by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a benefici ary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 201.20 Suga
r-Sweetened Beverage Prohibition. The Trustee agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Forty -Sixth Supplemental Indenture.
SECTION 201.21 Ag reement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California.
Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 201.22 Ow
nership of Results. Any interest of the Trustee or its Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Forty -Sixth Supplemental Indenture shall become the property of and will be transmitted to the City. However, the Trustee may retain and use copies for reference and as documentation of its experience and capabilities.
SECTION 201.23 Audi
t and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Forty-Sixth Supplemental Indenture. The Trustee will permit the City to audit, examine and make excerpts and transcripts from such books and 104719949.2 24
records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Forty-Sixth Supplemental Indenture, whether funded in whole or in part under this Forty-Sixth Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under this Forty -Sixth Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Forty -Sixth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 201.24 S
ubcontracting. The Trustee is prohibited from subcontracting this Forty-Sixth Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Forty -Sixth Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void.
SECTION 201.25 As
signment. The services to be performed by Trustee are personal in character and neither this Forty -Sixth Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by written instrument executed and approved in the same manner as this Forty -Sixth Supplemental Indenture.
SECTION 201.26 Non-W
aiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
SECTION 201.27 Ci
ty a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Forty -Sixth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
104719949.2
IN WITNESS WHEREOF, the parties hereto have executed thi s Forty-Sixth Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Mark D. Blake, Deputy City Attorney
104719949.2 AW-1-1
EXHIBIT AW-1
FORM OF 2022 SUB-SERIES D BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), 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. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2022 SERIES ABCD
2022 SUB-SERIES D BOND (REFUNDING- FEDERALLY TAXABLE)
(NON-WSIP)
Dated Date Interest Rate Maturity Date CUSIP No.
__________, 2022 November 1, 20__
Registered Owner: Cede & Co.
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16 th day of the calendar month next
preceding any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or 104719949.2 AW-1-2
before ______ 15, 20__, in which event it shall bear interest from __________, 2022; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which inte rest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate per annum stated above, payable semiannually on May 1 and November 1 in each year, commencing on ________ 1, 20__.
The principal (or redemption price) hereof is payable to the registered owner hereof upon the surrender hereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as trustee (herein, together with any successor as trustee under the Indenture, called the “Trustee”), or such other office designated by the Trustee.
The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered owner hereof as of the close of business on the 15 th day of the
calendar month immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond sha ll be calculated on the basis of a 360 -day year comprised of twelve 30- day months.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds” (herein called the “Bonds”), of the series and designation indicated on the face hereof (herein called the “2022 Sub- Series D Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental thereto, including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Forty-Sixth Supplemental Indenture, dated as of ________ 1, 2022, between the Trustee and the Commission, authorizing the issuance of the 2022 Sub- Series D Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof. 104719949.2 AW-1-3
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
Before November 1, 20__, the 2022 Sub- Series D Bonds shall be subject to redemption either in whole or in part, at the option of the Commission, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption. The 2022 Sub- Series D Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the Commission in its sole discretion. All calculations and determinations referred to under this caption “Make-Whole Optional Redemption of 2022 Sub-Series D Bonds,” except as provided in the preceding sentence, are expected (but not required) to be made by a municipal advisor or other agent selected by the Commission for such purposes (the “Calculation Agent”).
“Discounted Value” means, with respect to each outstanding maturity of the 2022 Sub- Series D Bonds to be redeemed, the sum as determined by the Commission or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi-annual basis, assuming a 360- day year consisting of twelve 30 -day months) equal to the applicable Discount Yield.
“Discount Yield” means, the Blended Treasury Yield, as determined by the Commission or the Calculation Agent:
104719949.2 AW-1-4
(i) plus ____ (__) basis points with respect to the 2022 Sub-Series A Bonds maturing in 20__, and
(ii) plus _____ (__) basis points with respect to the 2022 Sub- Series A Bonds maturing in 20__.
The Discount Yield will be calculated assuming semi- annual compounding based upon a 360-day year consisting of twelve 30-day months.
“Blended Treasury Yield” means, with respect to a maturity of the 2022 Sub- Series D Bonds, the yield computed by the Commission or the Calculation Agent as the linear interpolation of t wo Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of the maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2022 Sub- Series D Bonds maturity to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity is closest to but no earlier than the date corresponding to the remaining average life of the 2022 Sub- Series D Bonds maturity to be redeemed.
“Market Treasury Yield” means that yield, as determined by the Commission or the Calculation Agent, assuming semi-annual compounding based upon a 360-day year consisting of twelve 30-day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “Page PXl” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on -line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or
(iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the Commission.
“Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.
104719949.2 AW-1-5
The 2022 Sub-Series D Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series D Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2022 Sub-Series D Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2022 Sub- Series D Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2022 Sub- Series D Sinking Fund Account (described in the Indenture), on each November 1 on or after November 1, 20__, (except as otherwise provided under the procedures of Securities Depository for the 2022 Sub- Series D Bonds) by lot within any such maturity if less than all of the 2022 Sub -Series D Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2022 S ub-Series D Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2022 Sub-Series D Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2022 Sub-Series D Term Bonds prior to maturity pursuant to the Indenture):
Redemption Date
(November 1) Principal Amount
$
†
______________
† Maturity
The 2022 Sub-Series D Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limit ations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2022 Sub- Series D Bonds may be exchanged for a like aggregate principal amount of 2022 Sub- Series D Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor. 104719949.2 AW-1-6
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereb y certified that all of the conditions, things 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 Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
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 and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Section 99.01 of the Twenty-First Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
104719949.2 AW-1-7
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of __________, 2022.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
104719949.2 AW-1-8
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2022 SUB-SERIES D BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: __________, 2022
By: ______________________________________
Authorized Officer
104719949.2 AW-1-9
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within- mentioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
4884-6405-2494.3
NP Draft 3/17/22
(Refunding)
$______________
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS,
2022 SERIES ABCD
$__________
2022 SUB-SERIES A
(REFUNDING –
FEDERALLY
TAXABLE) (WSIP)
(GREEN BONDS)
$__________
2022 SUB-SERIES B
(REFUNDING –
FEDERALLY
TAXABLE)
(REGIONAL WATER)
$__________
2022 SUB-SERIES C
(REFUNDING –
FEDERALLY
TAXABLE) (HETCH
HETCHY WATER)
$__________
2022 SUB-SERIES D
(REFUNDING –
FEDERALLY
TAXABLE) (NON-
WSIP)
BOND PURCHASE CONTRACT
_______, 2022
Public Utilities Commission of the
City and County of San Francisco
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
Ladies and Gentlemen:
Morgan Stanley & Co. LLC (the “Representative”), acting on behalf of itself, Siebert Williams Shank & Co., LLC , Wells Fargo Bank, NA , Jeffries LLC, and RBC Capital Markets, LLC (collectively, the “ Underwriters”), offers to enter into this Bond Purchase Contract (this “Purchase Contract ”) with the Public Utilities Commission of the City and County of San Francisco (the “Commission”), which will be binding upon the Commission and the Underwriters upon acceptance hereof by the Commission. This offer is made subject to the acceptance by the Commission by its execution of this Purchase Contract and its delivery to the Representative on or before 11:59 p.m., California time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriters upon written notice delivered by the Representative to the Commission at any time prior to the acceptance of this Purchase Contract by the Commission. If the Representative withdraws this offer, or the Underwriters’ obligation to purchase the Bonds (as hereinafter defined) is otherwise terminated by the Representative pursuant to Section 8(d) hereof, then and in such case, the Commission shall be without any further obligation to the Underwriters, including the payment of any costs set forth under Section 10 hereof, and the Commission shall be free to sell the Bonds to any other party.
4884-6405-2494.3
2 The Representative represents that it has been duly authorized by the other Underwriters to act hereunder on its behalf and has full authority to take such action as it may deem advisable in respect of all matters pertaining to this Purchase Contract and that the Representative has been duly authorized to execute this Purchase Contract. Any action taken under this Purchase Contract by the Representative will be binding upon all the Underwriters.
Capitalized terms n ot otherwise defined herein shall have the meanings set forth in the Amended and Restated Indenture, dated as of August 1, 2002 (the “ Master Indenture”), by and between the Commission and U.S. Bank Trust Company, National Association, as trustee (“ U.S.
Bank”), as amended and supplemented to the date hereof, including as to be further supplemented by (i) a Forty-Third Supplemental Indenture, dated as of ______ 1, 2022 (the “Forty -Third Supplemental Indenture”), between the Commission and U.S. Bank relating to the 2022 Sub- Series A Bonds (defined below), (ii) a Forty-Fourth Supplemental Indenture, dated as of ______ 1, 2022 (the “Forty-Fourth Supplemental Indenture”), between the Commission and U.S. Bank relating to the 2022 Sub-Series B Bonds (defined below), (iii) a Forty -Fifth Supplemental Indenture, dated as of ______ 1, 2022 (the “Forty-Fifth Supplemental Indenture”), between the Commission and U.S. Bank relating to the 2022 Sub- Series C Bonds (defined below) and (iv) a Forty-Sixth Supplemental Indenture, dated as of ______ 1, 2022 (the “Forty-Sixth Supplemental Indenture”), between the Commission and U.S. Bank relating to the 2022 Sub- Series D Bonds (the Master Indenture, as supplemented, being herein referred to as the “Indenture”).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth herein, the Underwriters jointly and severally agree to purchase from the Commission, and the Commission hereby agrees to sell and deliver to, or for the account of, the Underwriters, all (but not less than all) of the $________ aggregate principal amount of Public Utilities Commission of the City and County of San Francisco, San Francisco Water Revenue Bonds, 2022 Series ABC D, comprised of four sub- series: (i) $ _______ 2022 Sub- Series A (Refunding – Federally Taxable) (WSIP) (Green Bonds) (the “2022 Sub-Series A Bonds”), (ii) $_________ 2022 Sub- Series B (Refunding – Fede rally Taxable) (Regional Water ) (the “2022 Sub-Series B Bonds”), (iii) $ _________ 2022 Sub- Series C (Refunding – Federally Taxable) (Hetch Hetchy Water) (the “2022 Sub-Series C Bonds”), and (iv) $__________ 2022 Sub-Series D (Refunding – Federally Taxable) (Non-WSIP) (the “2022 Sub-Series D Bonds” and collectively with the 2022 Sub- Series A Bonds, the 2022 Sub-Series B Bonds, and the 2022 Sub- Series C Bonds, the “Bonds”).
The aggregate purchase price for the Bonds shall be $______________, which is comprised of the purchase price of $_________ for the 2022 Sub- Series A Bonds (i.e., the par amount of the 2022 Sub- Series A Bonds less an underwriters’ discount in the amount of $________); the purchase price of $ _________ for the 2022 Sub- Series B Bonds (i.e., the par amount of the 2022 Sub-Series B Bonds less an underwriters’ discount in the amount of $___________); the purchase price of $ ________ for the 2022 Sub-Series C Bonds (i.e., the par amount of the 2022 Sub-Series C Bonds less an underwriters’ discount in the amount of $_________); and the purchase price of $_________ for the 2022 Sub- Series D Bonds (i.e., the par amount of the 2022 Sub- Series D Bonds less an underwriters’ discount in the amount of $___________). At the Closing, the Good Faith Deposit (defined herein) will be applied towards and deducted from the aggregate net purchase price for the Bonds as provided in Section 9 of this Purchase Contract.
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3 The Bonds shall be dated their date of delivery and shall have the maturities, be in the principal amounts, bear interest at the rates per annum and have the yields all as set forth on Schedule I attached hereto. The Bonds are subject to redemption, as shown on Schedule I. The Bonds shall be substantially in the form described in, and shall be issued and secured under and pursuant to, the Master Indenture and the Forty -Third Supplemental Indenture, the Forty-Fourth Supplemental Indenture, the Forty -Fifth Supplemental Indenture, and the Forty -Sixth Supplemental Indenture, as applicable. The Bonds shall be as otherwise described in the Official Statement (as hereinafter defined).
Section 2. Authorization for the Bonds; Purpose of Issue . The Commission has the authority to issue the Bonds under Section 9.109 of the Charter (the “Charter”) of the City and County of San Francisco (the “City”), Proposition A of 2002, Proposition E of 2002 and various ordinances and resolutions, adopted by the Board of Supervisors of the City (the “ Board of Supervisors”). The Bonds are being issued pursuant to Resolution No . ______, adopted by the Commission on _______, 2022 (the “Commission Resolution ”) and Ordinance ______ of the Board of Supervisors passed by two-thirds vote on _______, 2022 (the “Ordinance”).
The Bonds are being issued for the principal purpose of refunding for debt service savings a portion of the outstanding Water Revenue Bonds secured by the Revenues (as defined in the Master Indenture), as described below (the “Refunded Bonds”).
The proceeds of the 2022 Sub- Series A Bonds, together with certain other moneys available for such purpose, will be applied to refund all or a portion of the outstanding Public Utilities Commission of the City and County of San Francisco (a) [Refunding candidates to come]; and [(d)] pay the costs of issuance of the 2022 Sub-Series A Bonds.
The proceeds of the 2022 Sub-Series B Bonds, together with certain other moneys available for such purpose, will be applied to refund all or a portion of the outstanding Public Utilities Commission of the City and County of San Francisco (a ) [Refunding candidates to come]; and [(d)] pay the costs of issuance of the 2022 Sub-Series B Bonds.
The proceeds of the 2022 Sub-Series C Bonds, together with certain other moneys available for such purpose, will be applied to refund all or a portion of the outstanding Public Utilities Commission of the City and County of San Francisco (a) [Refunding candidates to come]; and [(d)] pay the costs of issuance of the 2022 Sub-Series C Bonds.
The proceeds of the 2022 Sub- Series D Bonds, together with certain other moneys available for such purpose, will be applied to refund all or a portion of the outstanding Public Utilities Commission of the City and County of San Francisco (a) [Refunding candidates to come]; and [(d)] pay the costs of issuance of the 2022 Sub-Series D Bonds.
Section 3. Public Offering . It shall be a condition to the obligations of the Underwriters to purchase, accept delivery of and pay for the Bonds that the entire principal amount of the Bonds be sold and delivered by the Commission to the Underwriters. The Underwriters will provide, consistent with the requirements of the Municipal Securities Rulemaking Board (the “MSRB”) Rule G-32, for the delivery of a copy of the Official Statement to each customer who purchases a Bond during the Underwriting Period (as hereinafter defined). The Underwriters 4884-6405-2494.3
4 further agree to comply with applicable laws and regulations, includi ng without limitation Rule 15c2-12 and MSRB Rule G-17, in connection with the offering and sale of the Bonds. The Underwriters agree to make a bona fide public offering of all of the Bonds, at prices not in excess of the prices set forth in Schedule I attached hereto . Subsequent to the initial public offering, the public offering prices of the Bonds may change as determined by the Representative to be necessary in connection with the marketing of the Bonds.
Section 4. Delivery of Official Statement. Prior to the date hereof, the Commission has provided to the Underwriters for review a form of the preliminary official statement relating to the Bonds dated _________, 2022 (including the cover page and appendices thereto, the “Preliminary Official Statement”), which, as of its date, a representative of the Commission, on behalf of the Commission, deemed final for purposes of Rule 15c2- 12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”), except for certain information permitted to be omitted therefrom by Rule 15c2-12. By its acceptance of this offer, the Commission hereby ratifies and consents to the use and distribution by the Underwriters of the Preliminary Official Statement in connection with the public offering and sale of the Bonds, and the Commission has authorized the delivery of a final official statement rela ting to the Bonds dated the date hereof (both in print or electronic form) which will consist of the Preliminary Official Statement and all information previously permitted to have been omitted by Rule 15c2-12.
The Commission hereby acknowledges that the P reliminary Official Statement has been made available to investors on the internet at www.MuniOS.com. The Commission hereby agrees to deliver or cause to be delivered to the Underwriters within seven (7) business days of the date hereof and in sufficient time to accompany any orders or confirmations from the Underwriters that request payment from any customers, not more than one hundred (100) copies of the final official statement (including all information permitted to be omitted by Rule 15c2 -12 in the Pr eliminary Official Statement and any amendments or supplements to such official statement as have been approved by the Commission and the Representative) (the “ Official Statement”) to enable the Underwriters to comply with the rules of the Securities and Exchange Commission (the “ SEC”) and the MSRB. The Commission hereby approves of the use and distribution by the Underwriters of the Official Statement in connection with the offer and sale of the Bonds. At the time of or prior to the Closing Date (as here inafter defined), the Representative shall file a copy of the Official Statement with the MSRB or its designee (including the MSRB’s Electronic Municipal Market Access system (“EMMA”)) or with any other repository approved from time to time by the SEC (either in addition to or in lieu of the filings referred to above).
The Commission will deliver the Continuing Disclosure Certificate substantially in the form set forth in the Preliminary Official Statement (the “Continuing Disclosure Certificate”) on the Closing Date. The form of the Continuing Disclosure Certificate will also be set forth in the Official Statement.
Section 5. The Closing. At 8:00 a.m., California time, on _________, 2022 or at such other time or on such other date as the Commission and the Represent ative may agree (the “Closing Date ”), the Commission shall deliver, or cause to be delivered to the Underwriters, through the Fast Automated Securities Transfer (“ FAST”) delivery system of The Depository Trust Company (“DTC”), the Bonds in book entry eligible form, duly executed and authenticated, and registered in the name of Cede & Co., as nominee of DTC. Concurrently with the delivery of 4884-6405-2494.3
5 the Bonds to the Underwriters, the Commission will deliver the documents hereinafter mentioned at the offices of Nort on Rose Fulbright US LLP (together with Law Offices of Monica M.
Baranovsky, “Co-Bond Counsel”), in San Francisco, California, or another place to be mutually agreed upon by the Commission and the Representative. The Underwriters shall accept such delivery and pay the purchase price for the Bonds set forth in Section 1 by federal funds wire transfer in immediately available funds to the order of U.S. Bank for the account of the Commission. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Representative shall order CUSIP (and ISIN, Common Codes or other identification numbers, if applicable) identification numbers and the Commission shall cause such CUSIP (and ISIN, Common Codes or other identification numbers, if applicable) identification numbers to be printed on the Bonds; provided, that neither the failure to print such number(s) on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriters to accept the Bonds. The Bonds shall be made available to U.S. Bank at least two (2) business days prior to the Closing.