AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
APPROVAL:
COMMISSION
SECRETARY
DEPARTMENT
Financial Services
AGENDA NO.
13 MEETING DATE
February 14, 2023
Approve Replacement Credit Facility and Dealer Agreements for Interim Funding of Wastewater Enterprise Capital Program: Regular Calendar
Project Manager: Nikolai J. Sklaroff
Approve Credit Facility Agreement and Dealer Agreements for the Interim Funding Program of the Wastewater Enterprise
Summary of
Proposed
Commission Action
Approve credit facility and dealer agreements for the Interim Funding Program of the Wastewater Enterprise in the form of (1) Revolving Credit and Term Loan Agreement and Fee Agreement with Bank of America NA for a term of three years; and (2) Dealer Agreements for Citigroup, Morgan Stanley, RBC Capital Markets, and US Bancorp ; and authorize the General Manager to enter into these associated agreements.
Background,
Description of Scope
of Services, and
Agreement Terms:
On April 25 , 2017, by Resolution No. 17-0086, this Commission approved a Reimbursement Agreement dated June 1, 2017, with the Bank of America NA , in the not -to exceed principal amount of $ 150 million and Letter of Credit, with a term of three years. The agreement and Letter of Credit was extended for two years and will expire on April 24, 2023 and requires replacement.
The purpose of this requested action is to approve an amendment to the reimbursement agreement and new Letter of Credit for the expiring credit facility as the : Second Amendment to the Bank of America Reimbursement Agreement supporting Series A -2 for the Interim Funding of the Wastewater Enterprise Capital Program term of three years.
The Wastewater Interim Funding Program, authorized by the Commission and Board of Supervisors in the total amount of $750 million, is made up of two components: (1) five series totaling $675 million that are for the issuance of commercial paper, each supported by a high- grade bank credit facility in the form of a letter of credit (LOC) or liquidity facility (LF); and (2) one series for $75 million as a Execute Agreement: Approve Replacement Credit Facility and Dealer Agreement for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: February 14, 2023
direct bank loa n that can be used to make draws from a high -grade bank pursuant to a revolving credit agreement (Revolver). Currently, the six
series of the Wastewater Interim Funding Program are as follows:
1) Series A-1: $150M Sumitomo Mitsui LOC (Exp. 3/7/2024) 2) Series A -2: $150M Bank of America LOC (Exp.
04/24/2023)
3) Series A-4: $75M TD Bank NA LF (Exp. 07/06/2027)
4) Series A -6: $ 200M State Street Bank LF (Exp.
10/14/2023)
5) Series A -7: $100M Sumitomo Mitsui LOC (Exp.
5/31/2027)
6) Series R-1: $75M US Bank Revolver (Exp. 7/19/2024)
The proposed amendment to the Bank of America agreement and Letter of Credit will replace the existing Bank of America Letter of Credit expiring on April 24, 2023.
The San Francisco Public Utilities Commission (SFPUC ) currently provides most of the interim funding of the Wastewater Enterprise capital program through the issuance , from time to time, of commercial paper (CP). In today’s market, CP results in an approximate all-in borrowing rate of about 3%. CP is determined to be the most cost -effective means to fund the encumbrance, contract certification, and cash spending requirements of the Wastewater Enterprise capital program, including the Sewer System Improvement Program, until long-term revenue bond or long- term State and fede ral loan financing proceeds are available.
Credit Facility Procurement Process:
To renew or replace expiring agreements, SFPUC issued a Request for Proposals (RFP) on December 2, 2022 and sent the RFP to 18 banks from a pre -qualified Bank Credit Facilities Pool. On December 20, 2022, SFPUC received proposals from eight banks.
Recommended Credit Facility and Terms:
Staff recommends Bank of America NA as the responsible proposer that submitted a responsive proposal with the lowest cost, at the following terms:
Wastewater Series A-2: Letter of Credit (LOC) with Bank of America NA in the principal amount of $150 million at an annual cost of 0. 27% (approximately $441,000 per year ), for Execute Agreement: Approve Replacement Credit Facility and Dealer Agreement for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: February 14, 2023
three years with the option to extend the LOC for up to a total term of up to nine years and a proposed not -to-exceed fee of $655,000 per year.
These fees are included in the Wastewater Enterprise capital budget and are comparable to fees recently obtained from banks for other recent SFPUC agreements and are lower than the fees on the existing agreements.
Bank of America NA have high-grade short-term credit ratings of P -1 (Moody’s) and A-1 (Standard & Poor’s).
Description of Replacement Agreement:
The work under the agreement with Bank of America NA consists of providing a credit facility for the Wastewater Interim Funding Program in the form of a Reimbursement Agreement supported by a Letter of Credit to provide security to C P noteholders of the timely repayment of principal and interest on any issued Commercial Paper should the SFPUC be unable to do so.
Dealer Agreements:
In connection with the Wastewater Commercial Paper Program, the Commission also issued a request for bids from prequalified banks to serve as the commercial paper dealer(s) for the Wastewater Commercial Paper Program to sell and remarket Commercial Paper Notes. A request for bids was sent to 33 prequalified firms in December 2022 to the Controller’s Office of Public Finance underwriting pool. Staff recommends as the lowest cost, responsive and responsible bidders, the following proposals: Citigroup, Morgan Stanley, RBC Capital Markets, and US Bancorp. The annual fee for each dealer is 0.05% of outstanding CP for all dealers, except for RBC Capital Markets, LLC , which has an annual fee of 0.045%. The fees are consistent with dealer fees obtained in the past
for the Water,
Wastewater and Power CP Programs. The combined not -to-exceed annual fees for the four firms will be in the amount of $375,000.
The term of the dealer agreements is five years, with optional extension up to a total term of nine years. These fees are included in the Wastewater Enterprise capital budget.
The dealer agreements provide that each firm can remarket up to $ 750 million of the Wastewater CP Program, but in no case will the combined amount of CP remarketed by the four firms exceed the authorized amount of $750 million at any given time.
Execute Agreement: Approve Replacement Credit Facility and Dealer Agreement for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: February 14, 2023
Summary of
Documents
The following are brief summaries of each document that the Commission is being asked to approve in form:
Second Amendment to Reimbursement Agreement:
This agreement between the SFPUC and Bank of America NA, which, sets out the terms pursuant to which the direct -pay and irrevocable Letter of Credit is issued to the Issuing and Paying Agent for the account of the Commission, as well as the terms under which the SFPUC repays Bank of America NA for draws on the respective Irrevocable Letter of Credit which is i ssued by Bank of America NA in favor of the Issuing and Paying Agent . The Letter of Credit (which appears as an appendix to the Reimbursement Agreement) is the credit facility that is drawn upon by the Issuing and Paying Agent to pay principal and interest due on maturing commercial paper, in the event the SFPUC does not.
Bank of America Fee Agreement:
The Fee Agreement, by and between the SFPUC and Bank of America NA, sets out the annual facility fee paid by the SFPUC to the bank, including fees in the event of Wastewater
Enterprise credit rating
downgrades; and any bank charges in connection with draws upon the LOC.
Dealer Agreement:
This agreement replaces the existing separate Dealer Agreement by and between the SFPUC and each respective dealer: Citigroup, Morgan Stanley, RBC Capital Markets, and US Bancorp. The Dealer Agreement, generally, sets out the terms pursuant to which such dealer may purchase or arrange for the sale of the commercial paper.
Offering Memorandum:
This is the disclosure document that is used by the Dealers in the initial issuance or remarketing of the CP to prospective investors. It contains brief descriptions of the SFPUC, including the Wastewater Enterprise and Wastewater Interim Funding Program; the CP Notes; Bank of America NA, and the bank’s Reimbursement Agreement.
Disclosure Considerations:
The Wastewater CP Program, through the Wastewater Interim Funding Program, would be supported by the Bank of America NA Letter of Credit as described in the Offering Memorandum (OM).
Unlike the Official Statement in a long-term revenue bond transaction, the OM for a CP Program supported by a Liquidity Facilities or Letters of Credit does not include detailed financial and/or operating information of the issuer , in this case the SFPUC and Wastewater Execute Agreement: Approve Replacement Credit Facility and Dealer Agreement for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: February 14, 2023
Enterprise. Instead, CP investors rely primarily on the financial standing of the credit bank ( Bank of America NA ) for the source of repayment.
The Reimbursement Agreement with Bank of America NA , contains representations and warranties which have been reviewed and affirmed to be appropriate for the SFPUC by staff, the City Attorney’s Office, and the SFPUC’s Note Counsel (Kutak Rock LLP). The representations and warranties include matters such as t he good standing of the SFPUC; the authorization of the agreements, commercial paper, and liquidity agreements; the absence of material litigation; the fairness and accuracy of the financial statements; and that there has been no material adverse change in the financial condition of the SFPUC.
Upon closing of this transaction, staff will post the key transaction documents on EMMA, the municipal bond industry’s on- line disclosure repository. There is no continuing disclosure undertaking for CP as it is exempt from the requirements of SEC Rule 15c-2-12.
Result of Inaction: A delay in this authorization could accelerate the frequency of long - term bond issuances, which could result in higher associated borrowing costs.
Budget & Costs: The Wastewater Enterprise capital budget and associated appropriations cover these associated costs.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
Environmental
Review:
The proposed action is replacement of an expiring agreement that provides interim funding for the Wastewater Enterprise capital program. On August 2, 2022, the Environmental Review Officer (ERO) issued a Certificate of the City and County of San Francisco Planning Department (pursuant to Section 8B.124(b) of the City Charter) under Proposition E of November 2002, granting authority for the issuance of debt to the Board of Supervisors, for the Wastewater Enterprise Capital Program. By this certification, the ERO certified that the projects to be funded through the sale of Wastewater Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the California Environmental Quality Act (CEQA) or will undergo environmental review pursuant to the CEQA when they are defined.
This certificate supersedes previous environmental certificates issued on May 17, 2016, June 26, 2018, and November 30, 2020, which were used for the previous Reimbursement Agreements. This
August 2,
2022 certificate can be found here:
https://sfpuc.sharefile.com/d-sf502051da55c435ebf4685dc7d27bb11
Execute Agreement: Approve Replacement Credit Facility and Dealer Agreement for Interim Funding of Wastewater Enterprise Capital Program
Commission Meeting Date: February 14, 2023
Attachments: 1. Form of Amendment 2 to Bank of America NA Reimbursement Agreement (including form of Irrevocable
Letter of Credit)
2. Form of Bank of America NA Fee Agreement
3. Form of Dealer Agreement
4. Offering Memorandum
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.: ___________
WHEREAS, On November 5, 2002, the voters of the City and County of San Francisco (the “City”) approved Proposition E (codified at Charter Section 8B.124, but hereinafter referred to as “Proposition E”), which among other things, authorized the Public Utilities Commission of the City and County of San Francisco (the “Commission”) to 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 of the City and County of San Francisco (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving wastewater facilities under the jurisdiction of the Commission (the “Wastewater Enterprise”); and
WHEREAS, Pursuant to Section 43.5 of the San Francisco Administrative Code (“Article V”), enacted by Ordinance No. 203- 98 adopted by the Board on June 8, 1998, and signed by the Mayor of the City and County of San Francisco (the “Mayor”) on June 19, 1998, as amended by Ordinance No. 270-06, adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, the Board established a procedure pursuant to which the Commission may issue short- term indebtedness, including the issuance of commercial paper in anticipation of the issuance of its revenue bonds; and
WHEREAS, Under Section 8B.124 of the Charter of the City and County of San Francisco (the “Charter”), the Board’s authority to authorize an issuance of debt under Proposition E is subject to the provision of certain certifications of an independent engineer retained by the Commission and certain cer tifications by the San Francisco Planning Department, which certifications shall make the findings and determinations set forth in Charter Section 8B.124 (together, the “Proposition E Certificates”); and WHEREAS, The Commission has previously authorized pursuant to Resolution No. 06- 0164, approved by the Commission on September 26, 2006, and the Board has previously approved pursuant to Ordinance No. 266- 06, adopted by the Board on October 24, 2006, and signed by the Mayor on October 31, 2006, the establis hment of a commercial paper program for the Wastewater Enterprise (the “Wastewater CP Program”) and the issuance of up to $150 million in aggregate principal amount of commercial paper notes outstanding at any one time; and
WHEREAS, The Commission has authorized pursuant to Resolution No. 11-0197, approved by the Commission on December 13, 2011, and the Board has approved pursuant to Ordinance No. 91- 12, adopted by the Board on May 8, 2012, and signed by the Mayor on May 14, 2012, an ordinance to authorize, an increase in the Wastewater CP Program to an amount not-to-exceed $300 million of commercial paper notes outstanding at any one time from a principal amount of not -to-exceed $150 million of commercial paper notes outstanding at any one time; and
WHEREAS, The Commission has authorized pursuant to Resolution No. 14-0139, approved by the Commission on August 26, 2014, and the Board has approved pursuant to Resolution No. 378-14, adopted by the Board on September 30, 2014, and signed by the Mayor on October 9, 2014, a resolution to authorize, an increase in the Wastewater CP Program to an aggregate principal amount not-to-exceed $500 million of commercial paper notes outstanding at any one time from a not-to-exceed amount of $300 million of commercial paper notes; and WHEREAS, The Commission previously determined that it would be desirable to provide an additional aggregate principal amount not -to-exceed $250 million of short -term financing for the Wastewater Enterprise and the Commission has authorized pursua nt to Resolution No. 17- 0086, approved by the Commission on April 25, 2017 (“Resolution 17- 0086”), and the Board has approved pursuant to Resolution No. 193-17, adopted by the Board on May 23, 2017, and signed by the Mayor on May 26, 2017, a resolution to authorize, an increase in the amount of short -term indebtedness which may be outstanding at any one time, increasing authorization to $750 million from $500 million of commercial paper notes (collectively, the “CP Notes”) or bank notes (the “Bank Notes”); and
WHEREAS, Pursuant to Article V and Ordinance No. 266- 06, the Commission is authorized to negotiate and execute credit or liquidity facilities to support the payment of principal and/or interest, as applicable, on the CP Notes and any additional agreeme nts related thereto; and
WHEREAS, In connection with the Wastewater CP Program, and in order to provide liquidity for the payment of the Commission’s maturing CP Notes (Wastewater Series, Proposition E) Series A -2 (Tax Exempt) (the “Series A -2 Notes”), the Commission has previously authorized, executed and delivered a letter of credit, dated as of June 2, 2017 (the “Current Bank of America Letter of Credit”), a Reimbursement Agreement, dated as of June 1, 2017, as amended by a First Amendment to Reimbursement Agreement, dated as of April 24, 2020 (together, the “Current Reimbursement Agreement”), each by and between the Commission and Bank of America, N.A. (“BANA”), a Fee Agreement, dated April 24, 2020 (the “Current Fee Agreement”), by and between the Commission and BANA, and an Issuing and Paying Agent Agreement, dated as of June 1, 2017 (the “Original Issuing and Paying Agent Agreement”), by and between the Commission and U.S. Bank Trust Company, National Association, (as successor in interest to U.S. Bank, National Association); and WHEREAS, The Current Bank of America Letter of Credit will terminate by its terms on April 24, 2023; and
WHEREAS, In order to support and/or maintain the Wastewater CP Program, the Commission issued a request for bids from qualified banks to provide for a substitute letter of credit; and
WHEREAS, After an evaluation of the responses to such request for bids, the Commission staff determined that the letter of credit supporting $150 million of the Series A -2 Notes (the “New BANA Letter of Credit”) offered by BANA was most advantageous to the Commission and was determined to be the lowest cost, responsive and responsible bidder to provide liquidity support for the Wastewater CP Program Series A-2 Notes; and
WHEREAS, to assist in ease of drafting and for the convenience of the Commission and BANA (as the provider of the Current Bank of America Letter of Credit and the New BANA Letter of Credit), rather than entering into a new reimbursement agreement and fee agreement, the Commi ssion finds it in its best interest to make certain amendments to the Current Reimbursement Agreement and the Current Fee Agreement in connection with the New BANA Letter of Credit; and
WHEREAS, The proposed form of (i) the Second Amendment to Reimbursement Agreement, by and between the Commission and BANA (the “Second Amendment to Reimbursement Agreement” and together with the Current Reimbursement Agreement, the “BANA Reimbursement Agreement”, which includes, as exhibits, the form of the New BANA Letter o f Credit and the form of Bank Note, the “BANA Bank Note”), to be executed by the Commission in favor of BANA evidencing any and all obligations of the Commission to reimburse BANA under the BANA Reimbursement Agreement, and (ii) an Amended and Restated Fee Agreement, by and between the Commission and BANA (the “BANA Fee Agreement”) have been presented to the Commission and filed with the Secretary, and the Commission finds it in its best interest to enter into such agreements; and WHEREAS, Pursuant to Resol utions No. 06- 0164, No. 11- 0197, No. 14- 0139, No. 17 0086, Resolution No. 378- 14, Resolution No. 193- 17 and the ordinances referred to herein, the Commission is authorized to take any and all necessary action in connection with the issuance of the CP Notes , including, the execution of one or more commercial paper dealer agreements entered into in connection with the sale and issuance of the CP Notes; and WHEREAS, In connection with the Wastewater CP Program, the Commission issued a request for bids from qua lified banks to serve as the commercial paper dealer(s) for the Wastewater CP Program CP Notes; and
WHEREAS, After an evaluation of the responses to such request for bids, the Commission staff determined that the bids from Citigroup Global Markets Inc., M organ Stanley & Co. LLC, RBC Capital Markets, LLC and U.S. Bancorp Investments, Inc. were most advantageous to the Commission and were determined to be the lowest cost, responsive and responsible bidder to serve as the commercial paper dealers for the Wastewater CP Program CP Notes; and
WHEREAS, The Commission finds it necessary to execute one or more commercial paper dealer agreements for the CP Notes and to deliver an offering memorandum in connection with the sale and issuance of the CP Notes; and
WHEREAS, The proposed form of dealer agreement (the “Dealer Agreement”) has been presented to the Commission and filed with the Secretary, and the Commission finds it in its best interest to enter into such agreement with one or more qualified commercial paper dealers; and WHEREAS, In connection with the foregoing substitution, the offering memorandum for the CP Notes will be updated to reflect the New BANA Letter of Credit, the BANA Reimbursement Agreement, the BANA Fee Agreement and the Series A -2 Notes, and such other matters deemed necessary to comply with federal securities laws; and
WHEREAS, The proposed form of offering memorandum (the “Offering Memorandum”) has been presented to the Commission and filed with the Secretary; and WHEREAS, The Commission has p aid, beginning no earlier than 60 days prior to the adoption of this Resolution and will pay, on and after the date hereof, certain expenditures (the “Expenditures” as defined in the Code referred to below) in connection with the acquisition, construction and/or equipping of the Wastewater Enterprise capital improvement projects; and WHEREAS, The Commission adopts this Resolution as official action of the Commission in order to comply with Treasury Regulation §1.150- 2 and any other regulations of the Internal Revenue Service (the “Code”) relating to the qualification for reimbursement of Commission Expenditures (as defined in the Code) incurred prior to the date of issue of any CP Notes; and
WHEREAS, The Proposition E Certificates meeting the Proposition E requirements, including California Environmental Quality Act (CEQA) requirements are on file with the Clerk of the Board in accordance with Proposition E prior to the issuance of any CP Notes; now, therefore, be it
RESOLVED by the Public Utilities Commission, as follows:
Section 1. Approval of BANA Agreements . The forms of the BANA Reimbursement Agreement, the BANA Bank Note, and the BANA Fee Agreement (collectively, the “BANA Agreements”), in substantially the forms submitted to this Commission, are hereby approved and recommended to the Director of the City’s Office of Public Finance (the “Director”) for approval pursuant to the Administrative Code, Article V thereof. The General Manager (or the duly authorized and acting General Manager) of the Commission (in either capacity, referred to herein as, the “General Manager”) or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, are authorized and directed to execute and deliver the BANA Agreements in substantially said forms, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such BANA Agreements, provided that the BANA Agreements may be extended for an additional term (as provided for in Section 2 below).
Section 2. Extension of Term of New BANA Letter of Credit. The General Manager or their designee the Deputy Chief Financial Officer and the Capital Finance Director, are further authorized, upon consultation with the City Attorney and the Director, to execute one or more amendments to the BANA Agreements to extend the term of the New BANA Letter of Credit authorized hereunder by an aggregate period not to exceed nine ( 9) years from the commencement date of the initial term, provided further that the annual facility fee payable to BANA thereunder shall not exceed $655,000.
Section 3. Limitations. In no event shall the CP Notes and Bank Notes combined, exceed $750,000,000 in aggregate principal amount and in no event shall the interest rate or interest rates cause the aggregate average interest cost to exceed 12% per annum, and in no event shall the term of any bank reimbursement obligation or revolving credit and term loan agreem ent exceed ten (10) years from the date of its original execution.
Section 4. Approval of Offering Memorandum. The General Manager or their designee, upon consultation with the City Attorney and the Director, is hereby authorized and directed to prepare and cause the distribution of an Offering Memorandum relating to the Wastewater CP Program, in substantially the form on file with the Commission, subject to such additions thereto and changes therein, and any amendments or supplements thereto from time to time whic h the General Manager, upon consultation with the City Attorney and the Director, shall approve. The General Manager (or any designee thereof) is further authorized and directed to distribute, in connection with the sale of any CP Notes, one or more Offering Memoranda in such form, as the General Manager, upon consultation with the City Attorney, Bond Counsel and the Director shall approve.
Section 5. Approval of Dealer Agreements. The form of the Dealer Agreement, in substantially the form submitted to this Commi ssion, is hereby approved and recommended to the Director for approval pursuant to Article V of the City’s Administrative Code. The General Manager or their designee the Deputy Chief Financial Officer and the Capital Finance Director, are authorized and directed to execute and deliver one or more Dealer Agreements in substantially said form, for an initial term of not to exceed five (5) years, subject to such additions thereto or changes therein which the General Manager, upon consultation with the City Attorney and Director, shall approve, such approval to be conclusively evidenced by the execution and delivery of such Dealer Agreements.
Section 6. Extensions of Term of Dealer Agreement. The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, are further authorized, in consultation with the City Attorney and the Director, to execute one or more amendments in order to extend the term of any Dealer Agreement authorized hereunder as long as the aggregate term of such Dealer Agreement does not to exceed nine (9) years from the commencement date of the initial term of such Dealer Agreement and so long as the total compensation to the commercial paper dealer(s) shall not exceed an aggregate of $375,000 per year.
Section 7. Intent to Reimburse. This Commission hereby declares the official intent of the Commission to reimburse the Commission with proceeds of the CP Notes with respect to the Wastewater Enterprise capital improvement projects made on and after a date that is no more than 60 days prior to the adoption of this Resolution. The Commission reasonably expects on the date hereof that it will reimburse the Expenditures with proceeds of the CP Notes. Each such Expenditure was and will be either (A) of a type properly chargeable to a capital account under general federal income tax principles (determined in each case as of the date of the Expenditure), (B) a cost of issuance with respect to the CP Notes, (C) a nonrecurring item that is not customarily payable from current reve nues, or (D) a grant to pay a party that is not related to or an agent of the issuer so long as such grant does not impose any obligation or condition (directly or indirectly) to repay any amount to or for the benefit of the Commission The Commission will make a reimbursement allocation, which is a written allocation that evidences the Commission’s use of proceeds of the CP Notes or other short -term indebtedness to reimburse an Expenditure, no later than 18 months after the later of the date on which the E xpenditure is paid or the component of the capital improvement projects is placed in service or abandoned, but in no event more than three years after the date on which the Expenditure is paid. The Commission recognizes that exceptions are available for certain “preliminary expenditures,” costs of issuance,
certain de minimis amounts, expenditures by “small issuers” (based on the year of issuance and not the year of expenditure) and expenditures for construction projects of at least 5 years.
Section 8. Further Actions . The General Manager or their designee, the Deputy Chief Financial Officer and the Capital Finance Director, and in consultation with the City Attorney and the Director, is hereby authorized and directed to execute such other agreements, certifications or documents and to take any and all necessary action in furtherance of the expiration and substitution of the Current Bank of America Letter of Credit, the execution of the BANA Agreements, any future extension of the New BANA Letter of Credit or the De aler Agreement(s) and the marketing and sale of the CP Notes.
Section 9. Delegation. The General Manager is authorized to delegate any of the responsibilities or duties set forth in this resolution to the Assistant General Manager, Business Services and Chief Financial Officer of the Commission.
Section 10. Ratification. All actions heretofore taken by the officials, employees and agents of the Commission with respect to the expiration of the Current BANA Letter of Credit and the substitution of the Current BANA Letter of Credit with the New BANA Letter of Credit, entering into the BANA Reimbursement Agreement and BANA Fee Agreement, and the execution by the Commission of the BANA Bank Note, are hereby approved, confirmed and ratified.
Section 11. Effective Date. This resolution shall take effect from and after its adoption.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting on February 14, 2023.
Secretary, Public Utilities Commission
4881-4989-8313.4
NP DRAFT 1/18
SECOND AMENDMENT TO
REIMBURSEMENT AGREEMENT
BETWEEN
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
AND
BANK OF AMERICA, N. A
DATED April __, 2023
Relating to:
$150,000,000
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
COMMERCIAL PAPER NOTES
(WASTEWATER SERIES, PROPOSITION E)
SERIES A-2 (TAX-EXEMPT)
4881-4989-8313.4
SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT
This SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT (this “ Second Amendment”), is made and entered into on April __, 2023 between PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”) and BANK OF AMERICA, N.A. (the “Bank”).
WITNESSETH
WHEREAS, the Commission and the Bank have previously entered into a Reimbursement Agreement, dated as of June 1, 2017 (as amended by the First Amendment to Reimbursement Agreement, dated April 24, 2020, the “ Original Agreement;” unless otherwise defined herein, capitalized terms used herein shall have the meanings given thereto in the Original Agreement) and a n Amended and Restated Fee Agreement dated April 24, 2020 (the “2020 Fee Agreement”), pursuant to which the Bank issued and maintained the Letter of Credit; and
WHEREAS, the Stated Expiration Date of the Letter of Credit is currently April 24, 2023, and the Commission has requested that the Bank extend the term of the Original Agreement and make other changes to the Original Agreement; and WHEREAS, the Commission and the Bank now desire to, among other things, (i) extend the Stated Expiration Date of the Letter of Credit, (ii) make certain additional amendments to the Original Agreement, and (iii) execute a new amended and restated fee agreement to replace the 2020 Fee Agreement to document certain pricing changes (the “ Amended and Restated Fee Agreement”); and
NOW, THEREFORE, in consideration of the foregoing, the premises and mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I. INTENTION OF PARTIES, AGREEMENT PROVISIONS.
The Commission and the Bank have entered into this Second Amendment pursuant to Section 2.12 and Section 7.1 of the Original Agreement and the New Fee Agreement to, among other things, extend the Stated Expiration Date and amend other terms set forth in the Original Agreement, to reflect the delivery of the Amended and Restated F ee Agreement to replace the 2020 Fee Agreement. The terms of the Original Agreement, as amended by this Second Amendment (as so amended, the “ Agreement”), shall govern the rights and obligations of th e Commission, and the Bank in connection with the transactions contemplated by the Agreement.
ARTICLE II. AMENDMENTS. The Original Agreement is hereby amended as follows:
(a) The definition of “Fee Agreement” in Section 1.1 of the Original Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
4881-4989-8313.4
- 3 -
“ ‘ Amended and Restated Fee Agreement’ means that certain Amended and Restated Fee Agreement dated the Second Amendment Effective Date, between the Commission and the Bank, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.” (b) The following defined terms shall be added to Section 1.1 of the Original Agreement and shall be inserted in alphabetical order:
“Second Amendment ” means that certain Second Amendment to Reimbursement Agreement, dated as of April __, 2023, between the Commission and the Bank.”
“Second Amendment Effective Date” means April __, 2023.” (c) Section 5.1(a)(i) of the Original Agreement is hereby amended by deleting the reference to “two hundred ten (210)” and replacing it with “two hundred forty (240)”. (d) Section 7.2(c) of the Original Agreement is hereby amended by delet ing the first set of information regarding notices to the Bank to go to the following:
“Bank of America, N.A.
333 S. Hope Street, 38th Floor
Los Angeles, California 90071
Attention: Jyoti Rathore
Telephone: (213) 621-4971
Email: [email protected] ”
(e) At the Second Amendment Effective Date, the Bank shall execute and deliver to the Trustee a certificate in the form of Annex J to the Letter of Credit extending the Stated Expiration Date to April __, 2026.
ARTICLE III. CONDITIONS TO DELIVERY OF THIS SECOND
AMENDMENT.
The amendments to the Original Agreement provided for in Article II hereof shall become effective on the Second Amendment Effective Date; provided that each of the following conditions shall be fulfilled to the satisfaction of the Bank:
(a) Documentation:
(i) An executed counterpart of this Second Amendment and the Amended and Restated Fee Agreement, each signed by the Commission and the Bank; (ii) The Commission shall have paid or made arrangements for payment of all costs and expenses incurred by the Bank in connection with this transaction, including without limitation reasonable attorney’s f ees; provided, that the Commission shall pay the Bank’s attorney’s fees of 4881-4989-8313.4
- 4 -
$12,500 within 30 days following its receipt of an invoice from such counsel; and
(iii) All other legal matters pertaining to the execution and delivery of this Second Amendment shall be satisfactory to the Bank and the execution and delivery hereof by the Bank shall constitute conclusive evidence that all such legal matters have been completed to the satisfaction of the Bank. [CONFIRMATION OF 2022 FINANCIAL STATEMENTS TO
OCCUR BY CLOSING DATE]
(b) Representations and Warranties True.
(i) The representations and warranties of the Commission contained in Article 4 of the Original Agreement and in this Second Amendment shall be true and correct with the same effect as though made on and as of the Second Amendment Effective Date, except to the extent a representation or warranty relates specifically to an earlier date (in which case, such representation and warranty shall be true and correct as of such date) and except that the representations in Section 4.6 of the Original Agreement refers to the Commission’s 2022 financial statements (instead of the 2016 financial statements) which has been previously provided to the Bank and the word nationally shall hereinafter be deemed to have been deleted from Section 4.6. (ii) In addition to the foregoing representations, the Commission hereby represents and warrants as follows:
(A) The execution, delivery and performance by the
Commission of this Second Amendment are within its powers, have been duly authorized by all necessary actions and do not contravene any law or any contractual restriction binding on the Commission;
(B) No further authorization, approval or other action by, and no notice or filing, is required for the due execution, delivery and performance by the Commission of this Second Amendment that has not been received as of the Second Amendment Effective Date; and (C) The Commission has provided, or will cause to have
provided, written notice of this Second Amendment to the Issuing and Paying Agent, the Dealers and the Rating Agencies.
(c) Absence of Certain Events . (i) On or prior to the Second Amendment Effective Date, there shall not have occurred any material adverse change in the affairs, condition and/or operations, financial or otherwise, of the Commission since the date of the Commission’s fiscal year ended 2022 audited financial statements; (ii) on or prior to the Second Amendment Effective Date, no change shall have occurred in any law, rule or regulation or in any interpretation thereof that, in the opinion of the Bank, would make it illegal for the Bank to execute and deliver this Second Amendment; and (iii) no event has occurred which constitutes an Event of Default under the Original Agreement. 4881-4989-8313.4
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(d) Bank Representations and Acknowledgements. The Bank hereby represents that, as of the Second Amendment Effective Date, it has no knowledge of any Change in Law that would result in increased costs;
ARTICLE IV. MISCELLANEOUS.
(a) The parties hereto acknowledge and confirm that, from and after the Second Amendment Effective Date, any reference in the Original Agreement or in the other Related Documents to the “Agreement” shall mean and refer to the Original Agreement as amended hereby.
(b) Except as provided herein, the Original Agreement shall remain in full force and effect and unaffected hereby except, as set forth herein, from and after the Second Amendment Effective Date.
(c) This Amendment and the Original Agreement, as amended hereby, sha ll be subject to Section 7.14 of the Agreement. In case any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby.
(d) This Amendment may be executed in one or more counterparts, each of which taken together shall constitute one original and all of which shall constitute one and the same instrument.
(e) The parties agree that the electronic signature of a party to this Second Amendment shall be as valid as an original signature of such party and shall be effective to bind such party to this Second Amendment. The parties agree that any electronically signed document (including this Second Amendment) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. Such paper copies or “printouts,” if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the parties to the same extent and under the same conditions as other original business reco rds created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the h earsay rule. For purposes hereof, “electronic signature” means a manually - signed original signature that is then transmitted by electronic means; “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a “pdf’ (p ortable document format) or other replicating image attached to an e -mail message; and, “electronically signed document” means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature.
[Remainder of page intentionally left blank; signature page follows.] 4881-4989-8313.4
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Nikolai J. Sklaroff
Title: Capital Finance Director
APPROVED AS TO FORM:
DAVID CHIU
City Attorney of the City and County of San
Francisco
By:
Name: Mark D. Blake
Title: Deputy City Attorney
ACKNOWLEDGED:
By:
Name: Anna Van Degna
Title: Director of Public Finance of the City and
County of San Francisco
4881-4989-8313.4
BANK OF AMERICA, N.A.
By:
Name:
Title:
4868-3734-3561.3
NP DRAFT 1/18
AMENDED AND RESTATED FEE AGREEMENT
April __, 2023
Public Utilities Commission of the City
and County of San Francisco
525 Golden Gate Avenue
San Francisco, CA 94102
Ladies and Gentlemen:
Reference is hereby made to that certain Reimbursement Agreement dated as of June 1, 2017, as amended by that certain First Amendment to Reimbursement Agreement dated as of April 24, 2020 and by that certain Second Amendment to Reimbursement Agreement dated April __, 2023 (as further amended, sup plemented, restated or otherwise modified from time to time, the “Agreement”), between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and Bank of America, N.A. (the “Bank”), relating to the Commission’s Commercial Paper Notes (Wastewater Series, Proposition E) Series A -2 (Tax-Exempt). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement.
The purpose of this Amended and Restated Fee Agreement (this “Fee Agreement”) is to amend and restate the Fee Agreement dated April 24, 2020 between the Bank and the Commission (the “2020 Fee Agreement”) and to confirm the agreement between the Bank and the Commission with respect to the Commitment Fees (as defined below) and certain other fees payable by the Commission to the Bank. This Fee Agreement is the Fee Agreement referenced in the Agreement, and the terms hereof are incorporated by reference into the Agreement. For the avoidance of doubt, this Fee Agreement amends and restates in its entirety the 2020 Fee Agreement between the Bank and the Commission, and the parties hereby agree and confirm that such fee letter is no longer in force and effect. In connection therewith, the Bank confirms that it has agreed to not charge any amendment fee as set forth in the 2020 Fee Agreement (hereinafter, the “Prior Fee Letter”).
In order to induce the Bank to enter into the Agreement and to issue the irrevocable Letter of Credit to provide liquidity for the Notes, the Commission agrees to make the following payments to the Bank at the following times:
(1) A commitment fee (the “Commitment Fee”) which shall be determined on a daily basis by multiplying (a) the Stated Amount at 5:00 p.m., Eastern time, on each day, by (b) the applicable Commitment Fee Rate (as defined below) in effect for such day, expressed as a decimal, and by (c) a fraction equal to 1/360. As used herein, “Commitment Fee Rate” means, initially,
0.27%, provided that in the event that any Rating (as defined below) is downgraded below “Aa3” by Moody’s, “AA-” by S&P or below “A A-” by Fitch to a level included in the grid below, the Commitment Fee Rate shall be equal to the per annum percentage set forth in the grid below, expressed as a decimal, opposite the level that contains the lowest Rating (it being understood that Level 1 contains the highest Ratings and Level 6 contains the lowest Ratings):
4868-3734-3561.3
- 2 -
LEVEL S&P RATING
MOODY’S
RATING FITCH RATING
COMMITMENT
FEE RATE
Level 1: AA- or above Aa3 or above AA- or above 0.27%
Level 2: A+ A1 A+ 0.47%
Level 3: A A2 A 0.67%
Level 4: A- A3 A- 0.87%
Level 5: BBB+ Baa1 BBB+ 1.07%
Level 6: BBB and Below Baa2 and Below BBB and Below 2.57% As used herein, the “Rating” means, with respect to a Rating Agency, the lowest long-term, unenhanced rating assigned by such Rating Agency to any Bonds. Notwithstanding the foregoing, (a) in the event that the Rating is withdrawn, suspended or otherwise unavailable from any Rating Agency for credit related reasons and/or (b) upon the occurrence and during the continuance of an Event of Default (which shall include when a Rating set forth in Level 6 in the t able above is triggered), the Commitment Fee Rate shall be increased in both cases by 1.50% per annum from the Commitment Fee Rate in effect immediately prior thereto. Any change in the Commitment Fee Rate resulting from a change in the Rating shall be and become effective as of and on the date of the announcement of the change in the Rating. References to the Rating above is a reference to the rating category of the Rating Agencies as presently determined by the respective Rating Agency and in the event of adoption of any new or changed rating system by a Rating Agency, the Ratings from such Rating Agency shall be deemed to refer to the rating category under the new rating system which most closely approximates the applicable rating category as currently in effect.
In connection with the Commitment Fees payable pursuant to this Section 1.1 for any fee period, the Bank hereby agrees to use its best efforts to deliver an invoice to the Commission for such Commitment Fees at least thirty (30) days in advance of the payment due date; provided, however, that the failure to provide any such invoice shall not limit or otherwise affect the obligation of the Commission to pay such Commitment Fees when due.
The Commitment Fee shall be payable in immediately available funds quarterly in arrears commencing on the first Business Day of June 2023; provided, however, that in connection with the payment due on the first Business Day of June 2023, the Commitment Fee shall be computed as follows: (X) at a rate equal to 0.28% per annum for the period from and including March 1, 2023 to but not including the Second Amendment Effective Date (subject to any adjustments as set forth in the Prior Fee Letter), and (Y) at a rate equal t o 0.27% per annum for the period from and including the Second Amendment Effective Date th rough and including May 31, 2023; and, thereafter, on the first Business Day of each June, September, December and March and thereafter to the Commitment Termination Date, and on the Commitment Termination Date, in all cases, covering the period from the date of the immediately preceding payment to such Business Day.
The Bank’s determination of the Commitment Fee pursuant hereto shall be conclusive absent manifest error.
(2) A fee of $250 plus the Bank’s customary wire transfer in respect of each drawing made under the Letter of Credit and honored by the Bank, which fee, and wire transfer shall be earned on the date such drawing is honored by the Bank and, unless paid to the B ank at the time 4868-3734-3561.3
- 3 -
each Drawing is reimbursed, shall be paid in arrears on the first Payment Date that occurs after the date such drawing is honored by the Bank.
(3) A transfer fee equal to $3,000 upon each transfer of the Letter of Credit in accordance with its terms. A transfer shall be deemed to have occurred whenever the Issuing and Paying Agent is replaced, substituted or changed as a result of sale, assignment, merger, consolidation, reorganization or an act of law. A transfer shall not be deemed to have occ urred solely as a result of a change in the legal name of the Issuing and Paying Agent. (4) At the time any amendment, modification, waiver, supplement or restatement of or consent sought in respect of, the Agreement, the Basic Documents and any other document s delivered under the Agreement is sought by any person other than the Bank, a fee of $3,000 plus attorneys’ fees and expenses, which fee shall be earned and payable whether or not any such amendment, modification, waiver, supplement or restatement is executed or consent granted. Fees for complex amendments, modifications, waivers, supplements, restatements or consents shall be negotiated on a case-by-case basis.
All amounts paid pursuant to this Fee Agreement shall be non- refundable and payable in immediately available funds. Computations of the Commitment Fee shall be made on the basis of a 360-day year and actual days elapsed. All amounts paid pursuant to this Fee Agreement shall be paid in the manner and to the account set forth in the Agreement.
This Fee Agreement may not be amended or waived except by an instrument in writing signed by the Bank and the Commission.
The provisions of Section 7.14 of the Agreement shall be incorporated by this reference into this Fee Agreement as if such provisions were se t forth in their entirety except that references to “this Agreement” shall mean this Fee Agreement and references to “hereunder” or “hereof’ shall mean under this Fee Agreement or of this Fee Agreement.
This Fee Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Fee Agreement by electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
This Fee Agreement is delivered to the Commission on the understanding that neither this Fee Agreement nor any of its terms shall be disclosed, directly or indirectly, to any financial institution other than the Issuing and Paying Agent unless such disclosure is made to such financial institution in accordance with the terms of the California Public Records Act. [SIGNATURES BEGIN ON THE FOLLOWING PAGE]
[Signature Page to Fee Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Fee Agreement to be duly executed and delivered by their respective officers thereunto duly authorized on the date first set forth above.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Name: Nikolai J. Sklaroff
Title: Capital Finance Director
BANK OF AMERICA, N.A.
By:
Name:
Title:
Wastewater Enterprise CP Program
4885-4107-0666.2
FORM OF:
DEALER AGREEMENT
(Dated as of [______] [_], 2023)
THIS DEALER AGREEMENT (this “Agreement”) is entered into as of [____] [_] , 2023 by and between the Public Utilities Commission (the “Commission”) of the City and County of San Francisco (the “City”) and [ Citigroup Global Markets Inc. ][Morgan Stanley & Co. LLC ][ RBC Capital Markets, LLC ][U.S. Bancorp Investments, Inc. ] (“[Citigroup][Morgan Stanley][RBC][US Bancorp]”). [Citigroup][Morgan Stanley][RBC][US Bancorp] is referred to as the “Dealer” herein.
RECITALS
The Commission proposes to issue and reissue its Commercial Paper Notes (Wastewater Series, Proposition E), in the maximum amou nt of $750,000,000 at any time outstanding, authorized in seven subseries: (i) Series A -1 (Tax -Exempt) (the “Series A -1 Notes”), (ii) Series A-2 (Tax Exempt) (the “Series A-2 Notes”), (iii) Series A-4 (Tax Exempt) (the “Series A-4 Notes”), (iv) Series A-6 (the “Series A-6 Notes”), consisting of Tax -Exempt Subseries A-6 (the “Subseries A -6 Notes”) and Taxable Subseries A-6- T (the “Subseries A -6-T Notes”) and (v) Series A -7 (Tax Exempt) (the “Series A-7 Notes”). The Series A -1 Notes, the Series A -2 Notes, the Series A-4 Notes, the Series A-6 Notes and the Series A-7 Notes are referred to herein collectively as the “Notes” and each as a “Series.”
The Commercial Paper Notes previously included a Series A-3 (Tax Exempt) (the “Series A-3 Notes”). The Series A -3 Notes were terminated on July 10, 2017. The Commercial Paper Notes previously included a Series A -5 (the “Series A -5 Notes”), consisting of Tax-Exempt Subseries A-5 (the “Subseries A -5 Notes”) and Taxable Subseries A -5-T (the “Su bseries A-5-T Notes”). The Series A-5 Notes were terminated on October 14, 2019.
The Notes authorized to be issued pursuant to the Charter; Article V of Chapter 43 of Part I of the San Francisco Administrative Code, enacted by Ordinance No. 203- 98 (the “P rocedural Ordinance”), adopted on June 8, 1998 by the Board and signed by the Mayor on June 19, 1998, as amended by Ordinance 270-06 adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, to establish a procedure for the Commission to issue commercial paper, and various other ordinances and resolutions of the Board and resolutions of the Commission (collectively with the Procedural Ordinance, the “Issuance Authorizations”) including, without limitation, Ordinance No. 111-16 adopted on June 14, 2016 by the Board and signed by the Mayor on June 24, 2016, Resolution No. 193-17 adopted on May 23, 2017 by the Board and signed by the Mayor on May 26, 2017, Resolution No. 17-0086, adopted by the Commission on April 25, 2017, and Resolution No. [___], adopted by the Commission on February [14], 2023.
As described in the Offering Memorandum, dated March [_], 2023, relating to the Notes (as the same may be amended, supplemented, restated or replaced, the “Offering Memorandum”), each Serie s of Notes is further issued pursuant to the terms of an Issuing and Paying Agent Agreement (each, an “Issuing and Paying Agent Agreement” and collectively, the “Issuing and Paying Agent Agreements”), each by and between U.S . Bank Trust Company, National 2 4885-4107-0666.2
Association (as successor in interest to U.S. Bank, National Association ), as Issuing and Paying Agent (the “Issuing and Paying Agent”) and the Commission.
As further described in the Offering Memorandum, each Series of Notes will be supported either by (i) an irrevocable direct-pay letter of credit (each, a “Letter of Credit” and collectively, the “Letters of Credit”) issued by a bank (each, a “LOC Bank” and collectively, the “LOC Banks”), pursuant to the terms of a reimbursement agreement (each, a “Reimbursement Agreement” and collectively, the “Reimbursement Agreements”) or (ii) a revolving credit and term loan agreement (each, a “Liquidity Agreement” and collectively, the “Liquidity Agreements”) issued by a bank (each, a “Liquidity Bank” and collectively, the “Liquidity Banks”). Each of the LOC Banks and the Liquidity Banks is referred to herein as a “Bank” and collectively as the “Banks.” [Citigroup][Morgan Stanley][RBC][US Bancorp] has agreed to act as a non -exclusive Dealer for the Notes and to perform the duties imposed by this Agreement.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows:
Section 1. Definitions. Unless the context clearly indicates a contrary meaning, each capitalized term used in this Agreement shall have the meaning given to that term in the Issuing and Paying Agent Agreements.
Section 2. Appointment of Dealer; Acceptance; Allocations; Evaluations. (a) Subject to the terms and conditions set forth in this Agreement, the Commission hereby appoints [Citigroup][Morgan Stanley][RBC][US Bancorp] as a Dealer for the Notes, and [Citigroup][Morgan Stanley][RBC][US Bancorp] hereby accepts such appointment and accepts and agrees to perform the duties and obligations imposed upon it as a Dealer under this Agreement, subject to the terms, conditions and limitations set forth in this Agreement.
(b) The Dealer shall act as a non-exclusive Dealer with respect to the Notes and shall be responsible to solicit and arrange sales of the Notes allocated to it, including, without limitation, the initial placement of such Notes and subsequent sales, establishing the rates and maturities of such Notes from time to time . The Dealer acknowledges that the Commission may enter into agreements with other dealers in connection with the offering and sale of the Notes. The Commission reserves the right to allocate and reallocate Notes among the Dealer and the other dealers with respect to the Notes at any time in its sole discretion for any reason.
(c) The Dealer acknowledges that the Commission intends to conduct a regular evaluation of the Dealer . Such evaluation will consider, among other things, an analysis of interest rates on the Notes allocated hereunder and managed by the Dealer in comparison to the interest rates provided by other dealers.
3 4885-4107-0666.2
(d) The Dealer acknowledges that the Commission has delivered to it executed copies of the Issuance Authorizations, the Issuing and Paying Agent Agreements, the Letters of Credit, the Reimbursement Agreements, the Liquidity Agreements and a Certificate of Designated Representatives in accordance with Section 6 hereof. (e) The Dealer hereby agrees that it will comply with all statutes and regulations applicable to it, including without limitation, all applicable securities laws and requirements of the Securities Exchange Commission, the Municipal Securities Rulemaking Board or any regulatory body having jurisdiction over the Dealer, non-compliance with which would adversely affect the Notes or the Commission’s Note program.
Section 3. Sale and Purchase of Notes.
(a) The Dealer acknowledges that the terms and conditions of the Notes are set forth in the Issuing and Paying Agent Agreements and that in particular, the Notes of each Series (i) shall be issued in denominations of $100,000 and in integral multiples of $1,000 in excess thereof, (ii) shall bear interest payable at maturity at an annual rate (in the case of the Tax-Exempt Notes, calculated on the basis of a year consisting of 365 days and the actual number of days elapsed, and, in the case of the Taxable Notes, on the basis of the actual number of days elapsed and a year consisting of 360 days) payable at maturity which shall not in any event exceed the Maximum Interest Rate of 12%, (iii) shall mature on a Business Day not more than 270 days after their respective issuance dates, but in no event later than the Business Day immediately preceding the applicable Termination Date, and (iv) shall be sold at a price equal to 100% of the principal amount thereof. (b) The Dealer shall use its best efforts, consistent with commercial customs and practices, to solicit and arrange sales of the Notes at such rates and maturities as may prevail from time to time in the market in accordance with Section 4 below, and, in any event, the Dealer shall use its best efforts to solicit and arrange sales of the Notes up to the Maximum Interest Rate, as required by the applicable Issuing and Paying Agent Agreement, and irrespective of wheth er the rate for unreimbursed drawings under the Letters of Credit or unreimbursed advances under the Liquidity Agreements is less than the Maximum Interest Rate . The Dealer agrees to make a good faith effort to notify Commission if for any reason it believes that it will not be able to sell the Notes on the date such Notes are to be issued. The Dealer and the Commission agree that any Notes which the Dealer may purchase or for which the Dealer may arrange the sale, will be purchased or sold on the terms and conditions and in the manner provided in the Issuing and Paying Agent Agreements and this Agreement. Anything herein to the contrary notwithstanding, to the extent of any conflict between the provisions hereof and the Issuing and Paying Agent Agreements, the provisions of the Issuing and Paying Agent Agreements shall be controlling.
Section 4. Transactions in Notes. All transactions in Notes between the Dealer and the Commission shall be in accordance with the Issuance Authorizations, the Issuing and Paying Agent Agreements, this Agreement, the Letters of Credit, the Reimbursement Agreements, the Liquidity Agreements and with the customs and practices in the commercial paper market 4 4885-4107-0666.2
regarding settlement and delivery formally adopted in writing from time to time by the New York Clearinghouse, to the extent not inconsistent with the Issuing and Paying Agent Agreements. As early as possible, but not later than 11:00 a.m . (New York City time) on the date on which any Notes are to be issued, the Dealer shall notify the Commission and the Director of the City’s Office of Public Finance of the City (which shall be deemed to include his or her designee) of the proposed final maturities, prices and interest rates (which interest rates shall not exceed the Maximum Interest Rate) at which the Dealer has arranged for the sale of or will purchase the Notes, and provide the Commission and the Director of the City’s Office of Public Finance with any other information as required for delivery of such Notes. The Dealer shall not be obligated to purchase any Notes unless and until agreement, as described in the following sentence, has been reached in each case on the proposed final maturities, prices and interest rates and the Dealer has agreed to such purchase. Not later than 11:4 5 a.m. (New York City time) on the date of issuance of the Notes, the Commission and the Director of the City’s Office of Public Finance may approve or disapprove of such final maturities, prices and interest rates (provided that if either the Commission or the Director of the City’s Office of Public Finance does not provide notice to the Dealer of disapproval then the Commission or the Director of the City’s Office of Public Finance, as applicable, shall be deemed to have approved such terms) and such Dealer shall either (a) confirm each transaction made with or arranged by it or (b) notify the Commission and the Issuing and Paying Agent of the difference, if any, between the amount of maturing Notes and the amount of Notes which the Dealer has arranged to sell or has agreed to purchase. Such confirmation or notification shall be given by telephone (or by other telecommunications medium acceptable to the Commission) and confirmed in writing to the Commission and the Issuing and Paying Agent in the Dealer’s customary form.
Section 5. Payment for Notes . The Dealer shall pay for the Notes purchased by the Dealer or sold by the Dealer in immediately available funds by 12:00 p.m . (New York City time) on the Business Day such Notes are delivered to the Dealer. All Notes will be sold at par, and will be executed in the manner provided for in the Issuing and Paying Agent Agreements.
Section 6. Designated Representative. Note transactions with the Commission, pursuant to Section 4 hereof, shall be with the Director of the City’s Office of Public Finance and any one of the officers or employees of the Commission or the City who are designated as a Designated Representative by a certificate signed by the General Manager of the Commission . The Commission will deliver to the Dealer a Certificate of Designated Representatives in the form appended to the Issuing and Paying Agent Agreements as Exhibit B. The General Manager and the Director of the City’s Office of Public Finance agree to provide the Dealer with a revised Certificate of Des ignated Representatives in substantially said form when and as required by changes in the Designated Representatives. The Dealer may rely upon such Certificate of Designated Representatives unless and until otherwise notified in writing by the General Manager or the Director of the City’s Office of Public Finance.
The Controller of the City shall, throughout the term of this agreement, be authorized to initiate Note transactions, notwithstanding any provision hereof or future amendment hereof to the contrary.
Section 7. Certain Representations of the Commission. The Commission represents to the Dealer as follows:
5 4885-4107-0666.2
(a) As of the date of each issuance of Notes: (i) the Commission has full power and authority to issue the Notes, to enter into, perform and observe the covenants and agreements on its part contained in this Agreement, the Issuing and Paying Agent Agreements, the Letters of Credit, the Reimbursement Agreements and the Liquidity Agreements (collectively, the “Documents”); (ii) such Documents have been duly authorized, executed and delivered by the Commission; and such Documents constitute legally valid and binding obligations of the Commission, in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other simila r laws affecting creditors’ rights generally and subject, as to enforceability, to the general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(b) As of the date of each issuance of Notes, the Issuance Authorizations are in full force and effect and have not been repealed, modified or amended since their adoption. (c) As of the date of each issuance of Notes, such Notes have been duly authorized and executed by the Commission, and when authenticated and delivered by the Issuing and Paying Agent, will be in conformity with, and entitled to the benefits of the Issuance Authorizations and the Issuing and Paying Agent Agreements. (d) The then- current Offering Memorandum related to the Notes, as supplemented or amended (the “Offering Memorandum”) will not as of its respective date, and as of each date of issuance or resale of one or more Notes pursuant to an Issuance Request, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that the Commission makes no representation with respect to information therein regarding the Banks, the Letters of Credit, the Reimbursement Agreements, the Liquidity Agreements, the Dealer or any other dealers, the Issuing and Paying Agent and DTC and its book- entry only system.)
(e) Although the Notes are exempted from the provisions of Rule 15c-2-12, the Commission has not failed during the previous five years to comply, in all material respects, with any previous undertakings in a written continuing disclosure contract or agreement under Rule 15c2-12, except as otherwise disclosed in writing to the Dealer. (f) The Co mmission will cooperate with the Dealer in arranging for the qualification of the Notes for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Dealer may designate and will use its best efforts to continue such qualifications in effect so long as the Notes are being offered by the Dealer; provided, however, that the Commission will not be required to execute a special or general consent to service of process or qualify to do business in connection with action taken under this subsection nor will the Commission be required to incur any material expense.
(g) The adoption by the City of the Issuance Authorizations, and the making and performance by the Commission of the other Documents and the Notes do not and will 6 4885-4107-0666.2
not materially conflict with or result in a material breach or violation of any of the terms or provisions of, or constitute a default under, any resolution, indenture, deed of trust, mortgage commitment, agreement or other instrument to which the Commission is a party or by which the Commission is bound, or any constitutional provision, existing law, administrative regulation, court order or consent decree to which the Commission or its property is subject.
(h) The Commission shall not adopt any amendment to the Documents that adversely affects the rights or obligations of the Dealer without the Dealer’s prior written consent.
Section 8. Offering Memorandum and Disclosure.
(a) The Commission shall prepare or cause to be prepared the Offering Memorandum. The Commissio n shall prepare or cause to be prepared an update to the Offering Memorandum on an annual basis by December 31 of each year (or at any other time in the sole discretion of the Commission) if in the judgment of the Commission, the then-existing Offering Memorandum is misleading in any material respect. (b) The Commission shall file on the Electronic Municipal Market Access (“EMMA”) database of the Municipal Securities Rulemaking Board (“MSRB”) or shall provide the Dealer with:
(i) copies of any notices filed by the Commission in accordance with Rule l5c2-12(b)(5)(i)(C) promulgated under the Securities Exchange Act of 1934 with respect to any outstanding revenue bonds, notes or other obligations for borrowed money of the Commission relating to the Wastewater Enter prise (the “Commission Bonds”) promptly following the filing thereof; (ii) copies of annual reports filed by the Commission in accordance with Rule 15c2-12(b)(5)(i)(A) with respect to Commission Bonds promptly following the filing thereof;
(iii) copies of the official statements or other disclosure documents with respect to Commission Bonds promptly following the issuance thereof; (iv) prompt notice and a copy of any amendment to the Issuing and Paying Agent Agreements, or of the substitution, termination or extension of a ny Letter of Credit or Liquidity Agreement;
(v) prompt notice of the occurrence and continuance of an event of default under the Issuing and Paying Agent Agreements, the Reimbursement Agreements or the Liquidity Agreements;
(vi) prompt notice of the suspension, reduction or withdrawal of the rating on any Commission Bonds or the public announcement of the possibility thereof by the Rating Agencies then rating the Commission Bonds; and 7 4885-4107-0666.2
(vii) prompt notice of the receipt by the Commission of notification from Bond Counsel that the Commission may not continue to rely on their opinion regarding the validity or tax-exempt status of the Notes. (c) The Commission will furnish the Dealer such documents and information concerning the business, operations and financial condition of the Commission, as the Dealer may from time to time reasonably request.
(d) If in the reasonable opinion of the Dealer, with the concurrence of Bond Counsel (or the Commission’s Disclosure Counsel) and the City Attorney, changes in applicable law require that a di sclosure document more extensive than the Offering Memorandum be prepared and distributed, the Commission agrees to prepare such document, with the assistance of the Dealer.
(e) The Dealer shall provide a copy of the Offering Memorandum, as supplemented, amended and updated from time to time, to each person to whom it sells Notes prior to or with the delivery of any payment confirmation. The Dealer agrees to promptly post the Offering Memorandum and any supplements thereto, upon receipt from the Commission, to EMMA and will advise customers that the Offering Memorandum, as supplemented, is available from EMMA and the Commission agrees that this shall satisfy the Dealer’s obligations in the previous sentence. The Dealer shall not provide prospective or actual purchasers of the Notes with any written offering materials, disclosure documents or other documents or information in connection with the solicitation of purchases and sales of the Notes other than the Offering Memorandum and any supplements, amendments or updates thereto and the Issuing and Paying Agent Agreements, the Letters of Credit, the Reimbursement Agreements or the Liquidity Agreements, as the same may be amended, supplemented or replaced from time to time.
(f) The Commission authorizes the use and distribution of copies of the Offering Memorandum by the Dealer in connection with the sale (or potential sale) of the Notes.
Section 9. Conditions to Dealer’s Obligations. The obligations of the Dealer under this Agreement have been undertaken in reliance on, and sh all be subject to, the due performance by the Commission of its obligations and agreements to be performed hereunder and to the accuracy of and compliance with the respective representations, warranties, covenants and agreements of the Commission contained herein, in each case on and as of the date of delivery of this Agreement and on and as of each date on which the Notes are to be issued. The obligations of the Dealer hereunder with respect to each date on which the Notes are to be issued are also subject, in the discretion of the Dealer, to the following further conditions precedent:
(a) The Documents shall be in full force and effect and the Notes to be issued on such date shall have the full benefits of all of the foregoing, all of which shall not have been amended, modified or supplemented in a manner that adversely affects the Dealer, except as may have been agreed to in writing by the Dealer, and there shall be in full force and effect such additional resolutions, agreements, instruments and certificates (including such certificates as may be required by Norton Rose Fulbright US LLP, Bond Counsel, 8 4885-4107-0666.2
regarding the exclusion from gross income of interest on all or a portion of the Notes from federal income tax) and such opinions of counsel, which resolutions, agreements, certificates and opinions of counsel shall be satisfactory in form and substance to the Dealer and there shall have been taken in connection therewith and in connection with the issuance or resale of the Notes all such action as shall, in the opinion of the aforesaid Bond Counsel, be necessary in connection with the transactions contemplated hereby. (b) No Event of Default (as such term is defined in the applicable Reimbursement Agreement or Liquidity Agreement) shall have occurred and be continuing; and no event shall have occurred and be continuing which with the passage of time or giving of notice or both, would constitute such an Event of Default. (c) The Dealer shall have received:
(i) executed copies of the Letters of Credit, the Reimbursement Agreements, the Liquidity Agreements and the Issuing and Paying Agent Agreements; together, upon request, with a copy of the transcript of all proceedings relating to the authorization of the Notes certified by a duly authorized official of the Commission;
(ii) an opinion of Norton Rose Fulbright US LLP, Bond Counsel, in the form attached as Appendix B to the Offering Memorandum; (iii) a certificate of the Commission executed by any duly authorized official of the Commission, dated as of or prior to such date, to the effect that the information concerning the Commission which is contained in the Offering Memorandum (or other disclosure materials provided by or on behalf of the Commission) is true and correct and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; and
(iv) copies of such other documents, certificates and opinions as the Dealer shall have reasonably requested.
Section 10. Compensation to Dealer.
(a) For the services to be performed by the Dealer under this Agreement, the Commission agrees to pay the Dealer an annual fee equal to [4.5][5] basis points ([0.045][0.05]%) of the average outstanding principal amount of the Notes managed by the Dealer, payable quarterly in arrears, within 30 days after receipt of the bill for the preceding quarter, commencing with the quarter ending [____] [_], 2023. (b) The Commission’s obligations under this Section 10 which have accrued or arisen prior to the effective date of any termination or expiration of this Agreement shall survive such termination or expiration.
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Section 11. Termination or Suspension. This Agreement may be terminated by the Commission at any time with respect to the Dealer and by the Dealer upon not less than 90 days’ prior written notice to the Commission and the Banks, provided that the Dealer may terminate with 60 days’ prior written notice to the Commission and the Banks if other dealers are in place with respect to the Notes. Notwithstanding the previous sentence, if the Dealer notifies the Commission and the Banks that it believes the Offering Memorandum (or other disclosure materials provided by the Commission) contains a ny untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and the Commission shall fail to cure such defect prior to the sale or resale of any Notes in a manner reasonably satisfactory to the Dealer, the Dealer may suspend its obligations under this Agreement until the Offering Memorandum is appropriately amended or supplemented. Notwithstanding the foregoing, no such termination or suspension shall affect the rights or obligations of the Commission or the Dealer hereunder arising prior to such termination or suspension. In addition the Dealer may suspend its obligations under this Agreement if any of the rating agencies then rating the Notes shall either (i) downgrade its respective rating assigned to the Notes, or (ii) suspend or withdraw its respective then -current rating assigned to the Notes, which, in either case, in the Dealer’s reasonable opinion adversely affects the marketability of the Notes.
Section 12. Counterparts. This Agreement may be executed in several counterparts, each of which shall be regarded as an original but all of which shall constitute one and the same document.
Section 13. Governing Law; 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 14. Notices. Except as otherwise specifically provided herein, all notices required or provided for under this Agreement shall be in writing and shall be delivered by hand, first class mail (postage prepaid), overnight express delivery or electronic mail, and shall be effectiv e when received at the following addresses or at such other address as a party may designate in a notice delivered to the other part hereto in accordance herewith:
If to the Commission: City and County of San Francisco
Public Utilities Commission
525 Golden Gate Ave., 13
th Floor
San Francisco, California 94102
Fax: (415) 554-3161
Attention: Chief Financial Officer & Assistant General
Manager, Business Services
E-Mail: [email protected]
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With copies to: City and County of San Francisco
Office of Public Finance
City Hall, Room 336
San Francisco, California 94102
Fax: (415) 554-4864
Attention: Anna Van Degna
Director of Public Finance
E-Mail: [email protected]
City and County of San Francisco
Office of the Controller
City Hall, Room 316
San Francisco, California 94102
Fax: (415) 554-7466
Attention: Benjamin Rosenfield
Controller
Email: [email protected]
If to Dealer: [______________________
______________________
______________________
Attention: ______________________
Telephone: ______________________
Facsimile: ______________________]
Section 15. Assignment. This Agreement shall not be assignable by any party hereto without the prior written consent of the other parties. This Agreement shall inure to the benefit of and shall be binding upon the Commission and the Dealer and their respective successor and assigns. This Agreement shall not be deemed to give any legal or equitable right, remedy or claim to any other person or entity other than the parties hereto.
Section 16. Headings. The section headings hereof have been inserted for convenience of reference only, shall not be part of this Agreement, and shall not be used to construe, define, limit or interpret the meaning of any provision hereof.
Section 17. Severability. If any provision of this Agreement shall be held or deemed by a court of competent jurisdiction to be invalid, inoperative or unenforceable for any reason, such determination shall not affect the validity or enforceability of the remaining provisions hereof.
Section 18. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters covered hereby, and supersedes all prior agreements and understandings between the parties, including any prior dealer agreement with respect to any Series of the Notes. This Agreement shall only be amended, supplemented or modified in a writing signed by all of the parties hereto.
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Section 19. No Personal Liability. The Commission, the City and their respective supervisors, members, officers, employees, representatives, agents and attorneys shall not be held personally liable for the execution or performance of this Agreement, or any breach or default of the provisions hereof.
Section 20. City Requirements. The Dealer hereby agrees to the City’s requirements, as provided in Exhibit A attached hereto and incorporated hereby by this reference.
Section 21. Term. The initial term of this Agreement shall be from the date first written above through [___] [_], 202[8]. The initial term of this Agreement may be extended by written instrument signed b y the parties hereto, provided that such extension is authorized under the Issuance Authorizations. The Commission shall use its best efforts to notify the Dealer of its intent to terminate or extend this Agreement at least sixty (60) days prior to such termination or extension.
Section 22. Dealing in Notes by the Dealer; No Obligation to Purchase Notes. (a) The Dealer, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Notes, including, without limitation, any Notes offered and sold by the Dealer pursuant to this Agreement, and may join in any action which any owner of the Notes may be entitled to take with like effect as if it did not act in any capacity hereunder.
The Dealer may sell any of the Notes at prices above or below par, at any time. The Dealer, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Commission and may act as depositary, account party, or agent for any committee or body of owners of the Notes or other obligations of the Commission as freely as if it did not act in any capacity hereunder. (b) Nothing in this Agreement shall be deemed to constitute the Dealer as an underwriter of the Notes or to obligate the Dealer to purchase any Notes for its own account at any time.
Section 23. No Advisory or Fiduciary Role; Municipal Advisor Rules. (a) The Commission acknowledges and agrees that (i) the placement of Notes pursuant to this Agreement is an arm’s -length commercial transaction between the Commission and the Dealer; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Dealer is and has been acting solely as a principal and is not acting as the agent, adviso r, municipal advisor or fiduciary of the Commission; (iii) the Dealer has not assumed an advisory or fiduciary responsibility in favor of the Commission with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Dealer has provided other services or is currently providing other services to the Commission on other matters) and the Dealer has no obligation to the Commission with respect to the transactions contemplated hereby e xcept the obligations expressly set forth in this Agreement; (iv) the Dealer and the Commission have different financial interests; and (v) the Commission has consulted its own legal, financial and other advisors to the extent it has deemed appropriate.
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(b) The Commission acknowledges that [Citigroup][Morgan Stanley][RBC][US Bancorp] may not be able to perform some of the services the Commission may request of [Citigroup][Morgan Stanley][RBC][US Bancorp] from time to time in connection with [Citigroup][Morgan Stanley][RBC][US Bancorp]’s engagement as Dealer to the extent that such services would cause [Citigroup][Morgan Stanley][RBC][US Bancorp] to be considered a “municipal advisor” under SEC Rel . No. 34-70462 (Sept. 20, 2013)) (such final rules and to the exte nt referenced therein, Section 975, the “Municipal Advisor Rules”) implementing Section 975 (“Section 975”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
Dennis J. Herrera
General Manager
APPROVED AS TO FORM:
DAVID CHIU
City Attorney
By:
Mark D. Blake
Deputy City Attorney
ACKNOWLEDGED:
ANNA VAN DEGNA
Director of Public Finance of the
City and County of San Francisco
By:
Director of Public Finance
[CITIGROUP GLOBAL MARKETS INC.]
[MORGAN STANLEY & CO. LLC]
[RBC CAPITAL MARKETS, LLC]
[U.S. BANCORP INVESTMENTS, INC.]
By:
Authorized Signatory
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EXHIBIT A
City Requirements
[TO BE UPDATED]
For purposes of this Exhibit A the term Dealer shall mean [Citigroup Global Markets Inc.][Morgan Stanley & Co. LLC][ RBC Capital Markets, LLC][U.S. Bancorp Investments, Inc.]. (a) Tropical Hardwood and Virgin Redwood Ban. The City 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. (b) Nondiscrimination: Penalties.
(i) Dealer Shall Not Discriminate. In the performance of this Agreement, the Dealer agrees not to discriminate against any employee, City and County employee working with the Dealer or subcontractor, applicant for employment with the Dealer 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, or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (ii) Subcontracts. The Dealer shall incorporate by reference in all subcontracts made in fulfillment of its obligations hereund er the provisions of Sections 12B.2(a), 12B.2(c)-(k) and 12C.3 of the San Francisco Administrative Code and shall require all subcontractors to comply with such provisions. The Dealer’s failure to comply with the obligations in this subsection shall constitute a material breach of this Agreement. (iii) Non-Discrimination in Benefits. The Dealer does not as of the date of this Agreement and will not during the term of this Agreement, 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 Section 12B.2(b) of the San Francisco Administrative Code. (iv) HRC Form. The Dealer shall execute the “Chapter 12B Declaration:
Nondiscrimination in Contracts and Benefits” form (Form HRC-12B-101) with supporting documentation and secure the approval of the form by the San Francisco Human Rights Commission.
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(v) Incorporation of Administrative Code Provis ions 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 Agreement as though fully set forth herein. The Dealer shall comply fully with and be bound by all of the provisions that apply to this Agreement under such Chapters of the San Francisco Administrative Code, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Dealer understands that pursuant to Section 12B.2(h) 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 Agreement may be assessed against the Dealer and/or deducted from any payments due the Dealer; provided, however, that such damages shall not be set off against the payment of rental or other contract related to Commercial Paper Notes or other debt obligations of the City.
(c) Limitations on Contributions. Through execution of this Agreement, the Dealer 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, including the Commission, 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 (A) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or a board on which an appointee of that individual serves, (B) a candidate for the office held by such individual, or (C) 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 Dealer acknowledges that the foreg oing restriction applies only if the contract or 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 Dealer further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Dealer’s board of directors; the Dealer’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership intere st of more than 20 percent in the Dealer; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Dealer. Additionally, the Dealer acknowledges that the Dealer must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126 of the City’s Campaign and Governmental Conduct Code. (d) MacBride Principles - Northern Ireland. Pursuant to San Francisco Administrative Code Section 12F.5, the City 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 urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Agreement on behalf of the Dealer acknowledges and agrees that he or she has read and understood this section. (e) Conflict of Interest. Through its execution of this Agreement, the Dealer hereby acknowledges that it is familiar with the provision 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
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it does not know of any facts which constitutes a violation of said provisions and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Agreement. (f) Earned Income Credit (“EIC ”) Forms . San Francisco Administrative Code section 12O requires that employers provide their employees with IRS Form W -5 (The Earned Income Credit Advance Payment Certificate) and the IRS EIC Schedule, as set forth below.
Employers can locate these forms at the IRS Office, on the Internet, or anywhere that Federal Tax Forms can be found.
(i) The Dealer shall provide EIC Forms to each Eligible Employee at each of the following times: (A) within thirty days following the date on which this Agreement becomes effective (unless the Dealer has already provided such EIC Forms at least once during the calendar year in which such effective date falls); (B) promptly after any Eligible Employee is hired by the Dealer; and (C) annually between January 1 and January 31 of each calendar year during the term of this Agreement.
(ii) Failure to comply with any requirement contained in the immediately preceding paragraph shall constitute a material breach by the Dealer of the terms of this Agreement. If, within thirty days after the Dealer receives written notice of such a breach, the Dealer fails to cure such breach or, if such breach cannot reasonably be cured within such period of thirty days, the Dealer fails to commence efforts to cure within such period or thereafter fails to diligently pursue such cure to completion, the City may pursue any rights or remedies available under this Agreement or under applicable law. (iii) Any subcontract entered into by the Dealer shall require the subcontractor to comply, as to the subcontractor’s Eligible Employees, with each of the terms of this Section.
(iv) Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Section 12O of the San Francisco Administrative Code.
(g) Local Business Enterprise Utilization; Liquidated Damages. (i) The LBE Ordinance. The Dealer shall comply with all the requirements of the Disadvantaged Business Enterprise 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 Dealer’s obligations or liabilities, or materially diminish the Dealer’s rights, under this Agreement. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Agreement as though fully set forth in this section. The Dealer’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Dealer’s obligations under this Agreement and shall entitle City, subject to any applicable notice and cure provisions set forth in this Agreement, to exercise any of the remedies provided for under this Agreement, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Agreement expressly provides that any remedy is exclusive. In addition, the Dealer shall comply fully
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with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting. (ii) Compliance and Enforcement. If the Dealer 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 Agreement pertaining to LBE participation, the Dealer shall be liable for liquidated damages in an amount equal to the Dealer’s net profit on this Agreement, or 10% of the total amount of this Agreement, or $1,000, whichever is greatest. The Director of the City’s Human Rights Commission or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of HRC”) may also impose other sanctions against the Dealer authorized in the LB E Ordinance, including declaring the Dealer to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Dealer’s LBE certification.
The Director of HRC will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to the San Francisco Administrative Code Section 14B.17.
By entering into this Agreement, the Dealer acknowledges and agrees that any liquidated damages assessed by the Director of the HRC shall be payable to City upon demand. The Dealer further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Dealer on any contract with City.
The Dealer agrees to maintain records necessary for monito ring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Agreement, and shall make such records available for audit and inspection by the Director of HRC or the Controller upon request.
(h) Drug-Free Workplace Policy. The Dealer 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 Commission or City premises. The Dealer agrees that any violation of this prohibition by the Dealer, its employees, agents or assigns will be deemed a material breach of this Agreement.
(i) Compliance with Americans with Disabilities Act. The Dealer 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 Dealer shall provide the services specified in this Agreement in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Dealer agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Agreement and further agrees that any violation of this prohibition on the part of the Dealer, its employees, agents or assigns will constitute a material breach of this Agreement.
(j) Sunshine Ordinance . In accordance with San Francisco Administrative Code Section 67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between the Commission or the City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision
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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. (k) Requiring Minimum Compensation for Covered Employees. (i) The Dealer 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 Chapter 12P are incorporated herein by reference and made a part of this Agreement 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 Dealer’s obligations under the MCO is set forth in this Section. The Dealer is required to comply with all the provisions of the MCO, irrespective of this listing of obligations in this Section.
(ii) The MCO requires the Dealer to pay the Dealer’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 Dealer is obligated to keep informed of the then -current requirements. Any subcontract entered into by the Dealer 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 Dealer’s obligation to ensure that any subcontractors of any tier under this Agreement comply with the requirements of the MCO. If any subcontractor under this Agreement fails to comply, City may pursue any of the remedies set forth in this Section against the Dealer.
(iii) The Dealer 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. (iv) The Dealer shall maintain employee and payroll records as required by the MCO. If the Dealer fails to do so, it shall be presumed that the Dealer paid no more than the minimum wage required under State law.
(v) The City is authorized to inspect the Dealer’s job sites and conduct interviews with employees and conduct audits of the Dealer. (vi) The Dealer’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Agreement. 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 Dealer fails to comply with these requirements. The Dealer 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 Dealer’s noncompliance.
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The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(vii) The Dealer 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 the contract, and under applicable law. If, within 30 days after receiving written notice of a breach of this Agreement for violating the MCO, the Dealer fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Dealer 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.
(viii) The Dealer 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. (ix) The City may conduct random audits of the Dealer. Random audits shall be (A) noticed in advance in writing; (B) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (C) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (D) limited to one audit of the Dealer every two years for the duration of this Agreement. Nothing in this Agreement is intended to preclude the City from investigating any report of an alleged violation of the MCO.
(l) Requiring Health Benefits for Covered Employees. Unless exempt, the Dealer 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 Chapter 12Q are incorporated herein by reference and made a part of this Agreement as though fully set forth herein. The text of the HCAO is available o n the web at http://www.sfgov.org/lwlh.htm. Capitalized terms used in this Section and not defined in this Agreement shall have the meanings assigned to such terms in Chapter 12Q. (i) For each Covered Employee, the Dealer shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Dealer chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(ii) Notwithstanding the above, if the Dealer is a small business as defined in Section 12Q.3(d) of the HCAO, it shall have no obligation to comply with part (i) above. (iii) The Dealer’s failure to comply with the HCAO shall constitute a material breach of this Agreement. The City shall notify the Dea ler if such a breach has occurred.
If, within 30 days after receiving City’s written notice of a breach of this Agreement for
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violating the HCAO, the Dealer fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Dealer fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, City shall have the right to pursue the remedies set forth in Section 12Q.5(f)(1-5). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to City.
(iv) Any subcontract entered into by the Dealer 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 Dealer 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 Dealer shall be responsible for its subcontractors’ compliance with this Chapter. If a subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Dealer based on the subcontractor’s failure to comply, provided that City has first provided the Dealer with notice and an opportunity to obtain a cure of the violation. (v) The Dealer shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying City with regard to the Dealer’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.
(vi) The Dealer 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. (vii) The Dealer 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 the City Contract. (viii) The Dealer shall keep itself informed of the current requirements of the HCAO.
(ix) The Dealer 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.
(x) The Dealer shall provide City with access to records pertaining to compliance with HCAO after receiving a written request from City to do so and being provided at least ten business days to respond.
(xi) The Dealer shall allow City to inspect the Dealer’s job sites and have access to the Dealer’s employees in order to monitor and determine compliance with HCAO.
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(xii) The City may conduct random audits of the Dealer to ascertain its compliance with HCAO. The Dealer agrees to cooperate with City when it conducts such audits.
(xiii) If the Dealer is exempt from the HCAO when this Agreement is executed because its amount is less than $25,000 ($50,000 for nonprofits), but the Dealer later enters into an agreement or agreements that cause the Dealer’s aggregate amount of all agreements with 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 agreements between the Dealer and the City to be equal to or greater than $75,000 in the fiscal year.
(m) Prohibition on Political Activity with City Funds. In accordance with San Francisco Administrative Code Chapter 12.G, the Dealer 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 Agreement. The Dealer 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 Dealer violates the provisions of this section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Agreement, and (ii) prohibit the Dealer from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Dealer’s use of profit as a violation of this section.
(n) Graffiti Removal. Graffiti is detrimental to the health, safety and welfare of the community in that it promotes a perception in the community that the laws protecting public and private property can be disregarded with impunity. This perception fosters a sense of disrespect of the law that results in an increase in crime; degrades the community and leads to urban blight; is detrimental to property values, business opportunities and the enjoyment of life; is inconsistent with the City’s property maintenance goals and aesthetic standards; and results in additional graffiti and in other properties becoming the target of graffiti unless it is quickly removed from public and private property. G raffiti results in visual pollution and is a public nuisance. Graffiti must be abated as quickly as possible to avoid detrimental impacts on the City and its residents, and to prevent the further spread of graffiti.
The Dealer shall remove all graffiti from any real property owned or leased by such Dealer in the City and County of San Francisco within forty eight (48) hours of the earlier of such Dealer’s (i) discovery or notification of the graffiti or (ii) receipt of notification of the graffiti from the Department of Public Works. This Section is not intended to require any Dealer to breach any lease or other agreement that it may have concerning its use of the real property. The term “graffiti” means any inscription, word, figure, marking or design that is affixed, marked, etched, scratched, drawn or painted on any building, structure, fixture or other improvement, whether permanent or temporary, including by way of example only and without limitation, signs, banners, billboards and fencing surrounding construction sites, whether public or private, without the consent of the owner of the property or the owner’s authorized agent, and which is visible from the public right-of-way. “Graffiti” shall not include: (A) any sign or banner that is authorized by, and in compliance with, the applicable requirements of the San Francisco Public Works Code, the
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San Francisco Planning Code or the San Francisco Building Code; or (B) any mural or other painting or marking on the property that is protected as a work of fine art under the California Art Preservation Act (California Civil Code Sections 987 et seq.) or as a work of visual art under the Federal Visual Artists Rights Act of 1990 (17 U.S.C. Section 101 et seq.).
Any failure of the Dealer to comply with this Section of this Agreement shall constitute a material breach of this Agreement.
(o) Food Service Waste Reduction Requirements. The Dealer 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 herein by reference and made a part of this Agreement as though fully set forth. This provision is a material term of this Agreement. By entering into this Agreement, the Dealer agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Dealer 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 Agreement was made. Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of such Dealer’s failure to comply with this provision. (p) Preservative-treated Wood Containing Arsenic . The Dealer may not purchase preservative-treated wood products containing arsenic in the performance of this Agreement 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 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 Dealer 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 Dealer 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.
(q) Nondisclosure of Private Information. The Dealer agrees to comply fully with and be bound by all of the provisions of Chapter 12M of the San Francisco Administrative Code (the “Nondisclosure of Private information Ordinance ”), including the remedies provided. The provisions of the Nondisclosure of Private Information Ordinance are incorporated herein by reference and made a part of this Agreement as though fully set forth. Capitalized terms used in this section and not defined in this Agreement shall have the meanings assigned to such terms in the Nondisclosure of Private Information Ordinance. Consistent with the requirements of the Nondisclosure of Private Information Ordinance, the Dealer agrees to all of the following:
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(i) Neither the Dealer nor any of its Subcontractors shall disclose Private Information obtained from the City in the performance of this Agreement to any other Subcontractor, person, or other entity, unless one of the following is true:
(1) the disclosure is authorized by this Agreement;
(2) the Dealer received advance written approval from the Contracting Department to disclose the information; or
(3) the disclosure is required by law or judicial order. (ii) Any disclosure or use of Private Information authorized by this Agreement shall be in accordance with any conditions or restrictions stated in this Agreement. Any disclosure or use of Private Information authorized by a Contracting Department shall be in accordance with any conditions or restrictions stated in the approval. (iii) Private Information shall mean any information that: (1) could be used to identify an individual, including without limitation, name, address, social security number, medical information, financial information, date and location of birth, and names of relatives; or (2) the law forbids any person from disclosing. (iv) Any failure of the Bark to comply with the Nondisclosure of Private Information Ordinance shall be a material breach of this Agreement. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Agreement, debar the Dealer, or bring a false claim action against the Dealer. (r) Proprietary or Confidential Information of City. The Dealer agrees to maintain the confidentiality of the Information (as d efined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the City and its obligations, (g) with the consent of the City or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Dealer on a nonconfidential basis from a source other than the City. For the purposes of this Section, “Information” means all information received from the City relating to the City or its business, other than any s uch information that is available to the Dealer on a nonconfidential basis prior to disclosure by the City; provided that, in the case of information received from the City after the date hereof, such information is clearly identified at the time of delive ry as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have
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complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
(s) Submitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code Section 21.35, any contractor, subcontractor or consultant who s ubmits a false claim shall be liable to the City for three times the amount of damages which the City sustains because of the false claim. 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: (i) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (ii) 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; (iii) conspires to defraud the City by getting a false claim allowed or paid by the City; (iv) 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 (v) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails t o disclose the false claim to the City within a reasonable time after discovery of the false claim. (t) Subcontracting. Except as otherwise provided in this Agreement, the Dealer is prohibited from subcontracting this Agreement or any part of it unless such subcontracting is first approved by City in writing. Neither party shall, on the basis of this Agreement, 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.
(u) Non-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.
(v) City a Third Party Beneficiary . The City is hereby designated as a t hird party beneficiary for the purpose of enforcing all of the obligations of the Dealer contained in this Exhibit A to this Agreement.
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OFFERING MEMORANDUM
DATED APRIL [__], 2023
Ratings: See “RATINGS” herein
$675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo Mitsui Banking Corporation, acting through its New York Branch
$150,000,000
Series A-2 (Tax Exempt)
Supported by a letter of credit issued by Bank of America, N.A $75,000,000
Series A-4 (Tax Exempt)
Supported by a revolving credit and term loan agreement with TD Bank, N.A.
$200,000,000*
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
Supported by a revolving credit and term loan agreement with State Street Bank and Trust Company
$100,000,000
Series A-7 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo Mitsui Banking Corporation,
acting through its New York Branch
This Offering Memorandum describes five series (each, a “Series”) of Public Utilities Commission of the City and County of San Francisco Commercial Paper Notes (Wastewater Series, Proposition E) (collectively, the “Commercial Paper Notes”) offered hereby. The Commercial Paper Notes are payable from and secured by a pledge of Available Wastewater Enterprise Revenues (as defined herein). The Commercial Paper Notes are special obligations of the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and are payable on a subordinated basis to the Commission’s outstanding Wastewater Revenue Bonds (which include, Wastewater Revenue Notes), SRF Loans, WIFIA Loan s and Subordinated Wastewater Bonds. See “THE COMMISSION AND THE WASTEWATER ENTERPRISE—Senior and Parity Indebtedness” herein.
The payment of each Series of Commercial Paper Notes will be additionally supported by a letter of credit or dedicated liquidity facility provided by a banking institution as specified above and as further described herein and in Appendix A – “SUMMARIES OF BANK FACILITIES” and Appendix B – “THE BANKS” herein.
Timely payment of the Commercial Paper Notes is dependent upon the availability of the funds under the applicable Letter of Credit (as defined herein) or the applicable Liquidity Facility (as defined herein). If for any reason a Bank fails to honor its respective Letter of Credit or Liquidity Facility, the Commission makes no representation, and no assurance can be given, that the Commission would have sufficient funds on hand and available to make the corresponding payment of principal and interest on the applicable Commercial Paper Notes. Prospective investors should therefore base their investment decisions, insofar as it relates to the creditworthiness of a Series of Commercial Paper Notes, solely on the credit of the applicable Bank, rather than the Commission.
THE GENERAL FUND OF THE CITY AND COUNTY OF SAN FRANCISCO IS NOT LIABLE, AND THE CREDIT OR THE TAXING
POWER OF THE CITY AND COUNTY OF SAN FRANCISCO IS NOT PLEDGED, FOR THE PAYMENT OF THE COMMERCIAL PAPER NOTES OR THE INTEREST THEREON.
The Commercial Paper Notes have not been registered under the Securities Act of 1933, as amended (the “Act”), in reliance upon an exemption from registration contained in the Act.
DEALERS FOR ALL SERIES:
Citigroup Morgan Stanley
RBC Capital Markets US Bancorp
* In connection with the Series A-6 Notes, the Commission approved an increase in the commitment amount, from $100,000,000 to $200,000,000, under the State Str eet A-6 Liquidity Facility (as defined herein), which became effective on October 15, 2019. In connection with such increase, the Commission approved the termination of the Series A-5 Notes (as defined herein), which became effective on October 14, 2019.
TABLE OF CONTENTS
Page
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INTRODUCTION ....................................................................................................................................... 1 THE COMMISSION AND THE WASTEWATER ENTERPRISE ........................................................... 3 The Commission ............................................................................................................................. 3 The Wastewater Enterprise ............................................................................................................. 3 Senior and Parity Indebtedness ....................................................................................................... 4 Investment Policy ........................................................................................................................... 6 Wastewater Enterprise Financial and Operating Data .................................................................... 6 THE COMMERCIAL PAPER NOTES ...................................................................................................... 7 Authorization and Certain Terms of the Commercial Paper Notes ................................................ 7 Security for the Commercial Paper Notes ....................................................................................... 8 Description of the Bank Facilities ................................................................................................... 8 Pledge of Available Wastewater Enterprise Revenues ................................................................. 10 RATINGS .................................................................................................................................................. 11 ABSENCE OF LITIGATION ................................................................................................................... 12 THE DEALERS ......................................................................................................................................... 12 TAX MATTERS ........................................................................................................................................ 13 Tax-Exempt Notes ........................................................................................................................ 13 Information Reporting and Backup Withholding ......................................................................... 13 State Tax Exemption ..................................................................................................................... 14 Future Developments .................................................................................................................... 14 LEGAL MATTERS ................................................................................................................................... 14 ADDITIONAL INFORMATION .............................................................................................................. 14
APPENDIX A SUMMARIES OF BANK FACILITIES
APPENDIX B THE BANKS
APPENDIX C BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES APPENDIX D CO PY OF JUNE 2022 OPINION OF BOND COUNSEL
APPENDIX E FORM OF SUPPLEMENT TO JUNE 2022 OPINION OF BOND COUNSEL
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Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel, previously delivered its opinion (the “June 2022 Opinion”) that under existing statutes, regulations, rulings and judicial decisions and assuming compliance with certain covenants set forth in the documents pertaining to the Tax-Exempt Notes and requirements of the Internal Revenue Code of 1986, as amended, as described t herein, interest on the Tax-Exempt Notes would not be includable in the gross income of the owners of the Tax -Exempt Notes for federal income tax purposes. In the June 2022 Opinion, Bond Counsel also opined that, interest on the Tax-Exempt Notes would not be treated as an item of tax preference for purposes of the federal alternative minimum tax. The June 2022 Opinion further stated that, under existing law, interest on the Commercial Paper Notes would be exempt from personal income taxes imposed by the State of California.
See “TAX MATTERS” herein.
OFFERING MEMORANDUM
$675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo
Mitsui Banking Corporation, acting through its New
York Branch
$150,000,000
Series A-2 (Tax Exempt)
Supported by a letter of credit issued by Bank of
America, N.A
$75,000,000
Series A-4 (Tax Exempt)
Supported by a revolving credit and term loan agreement with TD Bank, N.A.
$200,000,000*
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
Supported by a revolving credit and term loan
agreement
with State Street Bank and Trust Company
$100,000,000
Series A-7 (Tax Exempt)
Supported by a letter of credit issued by Sumitomo
Mitsui Banking Corporation, acting through its New
York Branch
INTRODUCTION
The purpose of this Offering Memorandum is to provide certain general information in connection with the issuance and sale from time to time by the Public Utilities Commission of the City and County of San Francisco (the “Commission”) of five series (each, a “Series”) of Commercial Paper Notes (Wastewater
* In connection with the Series A-6 Notes, the Commission approved an increase in the commitment amount, from $100,000,000 to $200,000,000, under the State Street A -6 Liquidity Facility (as defined herein), which became effective on October 15, 2019.
In connection with such increase, the Commission approved the termination of the Series A -5 Notes (as defined herein), which became effective on October 14, 2019.
2 4878-4807-0472.2
Series, Proposition E) for its Wastewater Enterprise (collectively, the “Commercial Paper Notes”) . The Commercial Paper Notes are payable from and secured by a pledge of Available Wastewater Enterprise Revenues (as defined herein). The payment of each Series of Commercial Paper Notes will be additionally supported by a letter of credit or dedicated liquidity facility (each, a “Bank Facility”) provided by a banking institution (each, a “Bank”) as described below under the caption the “THE COMMERCIAL PAPER NOTES – Description of the Bank Facilities” and as further described in Appendix A – “SUMMARIES OF BANK FACILITIES” and Appendix B – “THE BANKS” herein.
The Commercial Paper Notes consist of the following Series *: (i) Series A -1 (Tax-Exempt) (the
“Series A-1 Notes”), (ii) Series A-2 (Tax Exempt) (the “Series A-2 Notes”), (iii) Series A-4 (Tax Exempt) (the “Series A-4 Notes”), (iv) Series A-6 (the “Series A-6 Notes”), consisting of Tax-Exempt Subseries A- 6 (the “Subseries A-6 Notes”) and Taxable Subseries A-6-T (the “Subseries A-6-T Notes”) and (v) Series A-7 (Tax Exempt) (the “Series A-7 Notes”) . The Subseries A-6-T Notes are referred to herein as the “Taxable Notes.” The Commercial Paper Notes, excluding the Taxable Notes, are referred to herein collectively as the “Tax-Exempt Notes.”
Capitalized terms used herein and not defined shall have the respective meanings given such terms in the Indenture, dated as of January 1, 2003 (as amended by the First Amendment to Indenture, dated as of May 1, 2010, by the Fifth Supplemental Indenture dated as of September 14, 2017, and by the Sixth Supplemental Indenture dated as of August 1, 2018, and as supplemented by the First Supplemental Indenture, dated as of May 1, 2010, the Second Supplemental Indenture, dated as of January 1, 2013, the Third Supplemental Indenture, dated as of February 1, 2013, the Fourth Supplemental Indenture dated as of May 1, 2016, the Seventh Supplemental Indenture dated as of August 1, 2018, the Eighth Supplemental Indenture dated as of August 1, 2018, the Ninth Supplemental Indenture dated as of July 27, 2018, Tenth Supplemental Indenture, dated as of June 12, 2020, the Eleventh Supplemental Indenture, dated as of June 12, 2020, the Twelfth Supplemental Indenture, dated as of November 1, 2021, the Thirteenth Supplemental Indenture, dated as of November 1, 2021, and the Fourteenth Supplemental Indenture, dated as of July 1, 2022, and as the same may be subsequently supplemented, amended and modified from time to time (collectively, the “Wastewate r Bonds Indenture”), between the Commission and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee thereunder, providing for the issuance from time to time of the Commission’s Wastewater Revenue Bonds (which include Wastewater Revenue Notes), designated as the “Wastewater Revenue Bonds” and “Wastewater Revenue Notes”, as applicable, and other obligations as provided therein, as the same may be supplemented, amended and modified from time to time. The Commercial Paper Notes are payable on a subordinated basis to the Wastewater Revenue Bonds (which include, Wastewater Revenue Notes).
The Commercial Paper Notes are issued pursuant to the Charter of the City (the “Charter”), Proposition E, adopted by the voters of the City in November 2002, and various ordinances and resolutions of the City and the Commission.
* The Commercial Paper Notes previously included a Series A- 3 (Tax Exempt) (the “Series A -3 Not es”). The Series A-3 Notes were terminated on July 10, 2017, and have since been replaced by the Revolving Obligations available under the U.S. Bank Revolving Credit Agreement, as described below in “THE COMMISSION AND THE WASTEWATER ENTERPRISE— Senior and Parity Indebtedness.” The Commercial Paper Notes previously included a Series A-5 (the “Series A-5 Notes”), consisting of Tax-Exempt Subseries A-5 (the “Subseries A-5 Notes”) and Taxable Subseries A-5-T (the “Subseries A-5-T Notes”). The Series A-5 Notes were terminated on October 14, 2019. In connection with such termination, the Commission approved an increase in the commitment amount under the State Street A -6 Liquidity Facility (as defined herein), from $100,000,000 to $200,000,000, to maintain and support the Commission’s commercial paper program. Such increase became effective on October 15, 2019.
3 4878-4807-0472.2
The Commission may issue and have outstanding at any one time an aggregate principal amount of $675,000,000 of Commercial Paper Notes, provided that the aggregate principal amount of any Series may not exceed the principal amount set forth on the cover of this Offering Memorandum.
The general fund of the City and County of San Francisco (the “City”) is not liable, and neither the credit nor the taxing power of the City is pledged for the payment of the Commercial Paper Notes or the interest thereon.
The information in this Offering Memorandum has been obtained from the Commission, the Banks (as defined herein) and other sources believed to be reliable. The references herein to the Issuance Authorizations, the Issuing and Paying Agent Agreements and the Bank Facilities (all as hereinafter defined) do not purport to be complete or definitive, do not constitute summaries thereof, and are qualified in their entirety by reference to the provisions thereof. The information and expressions of opinion in this Offering Memorandum are subject to change without notice after the date hereof and future use of this Offering Memorandum s hall not otherwise create any implication that there has been no change in the matters referred to in this Offering Memorandum since the date hereof . The information contained herein will not typically be distributed or updated upon each new sale of Comme rcial Paper Notes, although the information will be distributed from time to time.
The Commercial Paper Notes are exempt from registration under Section 3(a)(2) of the Securities Act of 1933, as amended.
THE COMMISSION AND THE WASTEWATER ENTERPRISE
The Commission
The Commission, which consists of five members appointed by the Mayor of the City (the “Mayor”), is a department of the City responsible for the maintenance, operation and development of the Water Enterprise, the Wastewater Enterprise and the Hetch Hetchy Water and Power Enterprise (the “Power Enterprise”). The Water Enterprise provides retail drinking water to the City and wholesale water to customers in three other Bay Area counties. The Wastewater Enterprise, formerly known as the Clean Water Enterprise, consists of a sanitary waste and storm water collection, treatment and disposal system for the City. The Power Enterprise consists of water supply facilities and a hydroelectric generating system, and provides power to City agencies, the Modes to Irrigation District, the Turlock Irrigation District and certain other customers. Each of the Commission’s enterprises is operated and managed as a separate financial entity and separate enterprise funds are maintained for each enterprise. No revenues from either the Water Enterprise or the Power Enterprise have been pledged for payment of the Wastewater Enterprise Commercial Paper Notes and no such revenues shall be available for the repayment thereof.
The Commission operates and maintains dams and reservoirs, power generation and transmission facilities, water transmission facilities, water and wastewater treatment plants, water distribution facilities, wastewater collection facilities and power distribution facilities. The Commission’s facilities extend from the Hetch Hetchy watershed in the Sierra Nevada, across the Central Valley, over and around the southern end of San Francisco Bay and north along the San Francisco Peninsula to the City.
The Wastewater Enterprise
The Wastewater Enterprise operates a combined sewer system that serves residential, commercial and industrial users, making up a “daytime population equivalent” of approximately 1,060,000 with sanitary waste/stormwater collection, treatment and disposal services. The combined sewer system consists of three water pollution control plants, 993 miles of underground pipes and effluent outfalls to the San Francisco
4 4878-4807-0472.2
Bay and Pacific Ocean. The combined sewer system reduces pollution in the San Francisco Bay and Pacific Ocean by treating urban runoff that would otherwise flow to the Bay and Ocean. The Wastewater Enterprise treats and discharges approximately 148 million gallons per day of treated wastewater during dry weather and, with additional facilities and increased operations, the Wastewater Enterprise can treat approximately 465 million gallons of combined flow per day during wet weather.
San Francisco’s combined sewer system has served the City for more than 100 years with the bulk of the investment occurring 10 to 50 years ago. Since th en, and typical for the industry, the system has operated well but aging infrastructure, outdated equipment/technology, new developments and deferred maintenance due to funding constraints, highlight the need for major capital improvements throughout the collection and treatment systems. In response, a Sewer System Improvement Program (“SSIP”), which is a compilation of capital improvement projects, has been developed and will be implemented over approximately the next 20 years. The SSIP has a scope, budget and schedule based on the Commission’s endorsed levels of service. In 2012 the Commission authorized Commission staff to move forward with planning and development of a proposed Phase 1 set of SSIP projects, representing $2.7 billion of the total estimated cost of approximately $6.9 billion. On March 22, 2016, the Commission approved the “March 2016 SSIP Baseline Scope, Budget, and Schedule .” The overall SSIP budget remained at approximately $6.9 billion, however, the budget for SSIP Phase 1 increased from $2.7 billion to $2.910 billion. On April 24, 2018 the Commission approved revisions to the 2016 SSIP Baseline Scope, Schedule and Budget for Phase 1 projects as the “2018 Revised Baseline Scope, Schedule and Budget for the SSIP Phase 1 Projects” (the “2018 SSIP Baseline”). The budget for Phase 1 of SSIP increased from $2.910 billion to $2.979 billion.
Four projects were also initiated in 2018 from later phases of SSIP with a baseline budget of $430 million (the “Other SSIP Projects”). On December 22, 2020 the Commission approved revisions to the 2018 SSIP Baseline Scope, Schedule and Budget for SSIP projects as the “2020 Revised Baseline Scope, Schedule and Budget for the SSIP” (“2020 SSIP Baseline”). Pursuant to the 2020 SSIP Baseline, (i) t he budget for Phase 1 of SSIP increased from $2.979 billion to $3.655 billion, (ii) the budget for the four original Other SSIP Projects increased from $430 million to $513 million and 31 other projects originally identified for later phases of the SSIP totaling of $684 million were initiated as part of the category of Other SSIP Projects, increasing the budget for Other SSIP Projects to $1.197 billion, totaling $4.853 in total SSIP Projects initiated.
Pursuant to the 2020 SSIP Baseline described above, the Commission is in the process of revising the original three-phase implementation approach over a 20- year period to implementing Phase 1 projects and initiating projects originally identified for the Phase 2 and Phase 3 of the SSIP as part of its rolling 10- year capital plan. New SSIP projects are now expected to be initiated based on priority and schedule through the Commission’s budget process. SSIP costs under the 10-year capital plan for Fiscal Years 2023- 24 to 2032-33, are projected to be approximately $2.914 billion, with total SSIP costs projected to be 8.374 billion.
The expected completion date for projects under Phase 1 of the SSIP is June 2032, and the expected completion date for the 43 remaining SSIP projects is June 2032. As of September 30, 2022, approximately
51.0% of Phase 1 projects and approximately 3.0% of the other SSIP Projects had been completed.
Proceeds of the Commercial Paper Notes will be used to finance or refinance costs of the W astewater Enterprise’s capital program, including the SSIP.
Senior and Parity Indebtedness
As of January 1, 2023, the Wastewater Enterprise had approximately $2.04 billion in outstanding aggregate principal amount of Wastewater Revenue Bonds (which include, Wastewater Revenue Notes).; seven State Revolving Fund loans (“SRF Loans”) entered into with the State Water Resources Control Board in the aggregate principal amount of $400,511,103; and two loans entered into with the United States
5 4878-4807-0472.2
Environmental Protection Agency pursuant to the federal 2014 Water Infrastructure Finance and Innovation Act (“WIFIA Loans”), the first of such WIFIA Loans was originally dated July 27, 2018 in the amount of $699,242,023 and was subsequently re-executed on June 12, 2020 (to capture lower borrowing costs), and will fund approximately 49% of the costs of the BDFP, and the second of such WIFIA Loans, dated June 12, 2020 in the amount of $513,861,981, will fund approximately 49% of t he costs of the SEP New Headworks project and increased scope of the BDFP . Both the SRF Loans and the WIFIA Loans are authorized on parity with the senior lien Wastewater Revenue Bonds (which include, Wastewater Revenue Notes). The SRF loan program moneys are disbursed on a cost -incurred basis pursuant to disbursement requests submitted by the Commission. Furthermore, SRF loans amortize over a 30-year term commencing one year following completion of the respective project. As of January 1, 2023, SRF loan disbursements in the amounts of $324.3 million and $121.4 million, had been requested and received, respectively, by the Commission. As of January 1, 202 3, no disbursements under the WIFIA loans had been requested and received by the Commission. In addition, in fiscal year 2022-23 , the Commission expect s to issue approximately $[__] million of Wastewater Revenue Bonds to refund currently outstanding Wastewater Revenue Bonds and up to approximately $775 million of Wastewater Revenue Bonds to fund Wastewater capital improvements or to refund currently outstanding Commercial Paper Notes. The Commercial Paper Notes are secured on a subordinate basis to the Wastewater Revenue Bonds (which include, the Wastewater Revenue Notes) , the SRF Loans, the WIFIA Loan s and the Subordinated Wastewater Bonds . The Wastewater Revenue Bonds (which include, Wastewater Revenue Notes) and the WIFIA Loans have unenhanced ratings of [Aa2] by Moody’s Investors Service and [AA] by S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, as of [________] [__], 2023.
As of January 1 , 2023, the Com mission had approximately $552.2 million of Commercial Paper Notes outstanding.
The Commission has reserved the right to authorize and issue obligations or securities of the Commission secured in whole or in part by a lien on Wastewater Enterprise Revenues (as defined herein) subordinate (the “Subordinated Wastewater Bonds”) to the senior lien of the Wastewater Bonds Indenture (including, other obligations on parity with the lien of the Wastewater Bonds Indenture), but that would have a lien senior to the lien of the Commercial Paper Notes. As of January 1 , 2023, the Commission did not have any outstanding Subordinated Wastewater Bonds. P ursuant to the terms of the TD Bank A-4 Liquidity Facility and the State Street A -6 Liquidity Facility, in the event the Commission issue s Subordinated Wastewater Bonds, and after the respective banks have provided notice to the Commission and the Issuing and Paying Agent, the respective commitments under the TD Bank A-4 Liquidity Facility and the State Street A-6 Liquidity Facility will be reduced to the principal amount of the Series A-4 Notes and Series A-6 Notes, respectively, then outstanding. Upon the maturity date of such Series A-4 Notes and Series A-6 Notes, such commitments will be permanently reduced further and upon the final maturity of the such Series A-4 Notes and Series A-6 Notes, the commitments under the TD Bank A-4 Liquidity Facility and the State Street A -6 Liquidity Facility, respectively, will be terminated. Following receipt of such notice, the Commission will not issue any additional Series A -4 Notes or Series A-6 Notes while the TD Bank A-4 Liquidity Facility or the State Street A-6 Liquidity Facility, respectively, are in effect.
The Commercial Paper Notes previously included a Series A-3 (Tax Exempt) in the aggregate principal amount not to exceed $75,000,000 (the “Series A -3 N otes”). The Series A-3 Notes were terminated on July 10, 2017. Following such termination, the Commission entered into a revolving credit agreement (the “Revolving Credit Agreement”) with U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) (“U.S. Bank”), designated as Series R-1, pursuant to which the Commission is permitted to borrow from U.S. Bank up to $75,000,000 prior to July 18, 2024.
Repayment obligations under the Revolvi ng Credit Agreement are payable on parity with the CP Notes .
Under the Revolving Credit Agreement, upon a failure by the Commission to perform or observe its covenants, a default in other specified indebtedness of the Commission, or other specified events of default,
6 4878-4807-0472.2
U.S. Bank could terminate its commitment and declare all amounts then outstanding to be immediately due and payable.
The Commercial Paper Notes previously included a Series A-5 (the “Series A-5 Notes”), consisting of Tax-Exempt Subseries A-5 ( the “Subseries A-5 Notes”) and Taxable Subseries A-5-T (the “Subseries A-5-T Notes”). The Series A-5 Notes were terminated on October 14, 2019. In connection with such termination, the Commission approved an increase in the commitment amount under the St ate Street A-6 Liquidity Facility (as defined herein) with State Street (as defined herein) to maintain and support the Commission’s commercial paper program. Such increase in the commitment amount of the State Street A- 6 Liquidity Facility became effective on October 15, 2019.
Subject to the rate covenant and additional bonds test discussed under the caption “THE COMMERCIAL PAPER NOTES—Limited Obligation of Commercial Paper Notes,” there is no limitation in the Charter, the Issuance Authorizations or the Issuing and Paying Agent Agreements (defined below) on Commission issuing indebtedness senior to the Commercial Paper Notes. The Commission can, with majority voter approval or a two-thirds vote of the Board, authorize additional Wastewater Revenue Bonds (which include, Wastewater Revenue Notes) and Subordinated Wastewater Revenue Bonds the payment of which will be prior to the payment of the Commercial Paper Notes . The Commission can also authorize entering into additional parity SRF loans with the State Water Resources Control Board. The Commission also can authorize additional indebtedness on a parity with the Commercial Paper Notes without notice to, or consent of, any holder of the Commercial Paper Notes.
See Appendix A – “SUMMARIES OF BANK FACILITIES.”
Investment Policy
The Commission’s funds are invested through the City’s office of the Treasurer pursuant to the City’s investment policy. The investment policy of the City is reviewed annually and is subject to change.
A copy of the City’s Annual Statement of Investment Policy can be found at https://sftreasurer.org/banking- investments/investments.
Wastewater Enterprise Financial and Operating Data
Pursuant to continuing disclosure undertakings of the Commission in conne ction with certain outstanding Wastewater Revenue Bonds (which include, Wastewater Revenue Notes) , the Commission is obligated to file with the Municipal Securities Rulemaking Board (“MSRB”) through the Electronic Municipal Market Access (“EMMA”) website c ertain financial information and operating data not later than nine months after the end of its fiscal year (presently June 30), and to provide notices of the occurrence of certain listed events under securities laws. The Commission may provide supplement al information in its annual continuing disclosure report filings, and may from time to time provide voluntary notices, in its sole discretion, to provide information that may be material to investors. Additionally, the Commission provided COVID-19 information in its official statement prepared in connection with the issuance of the 2022B Bonds, dated May 12, 2022 (the “Series 2022B Official Statement”) and the effects that COVID-19 has had on the Commission and the Wastewater Enterprise as the date of the Series 202 2B Official Statement. The Commission may provide supplemental information in its annual continuing disclosure report filings and may from time to time provide voluntary notices, in its sole discretion, to provide information to investors. See “ADDITIONAL INFORMATION.”
7 4878-4807-0472.2
THE COMMERCIAL PAPER NOTES
Authorization and Certain Terms of the Commercial Paper Notes The Commission’s commercial paper program for its Wastewater Enterprise, including the Commercial Paper Notes described in this Offering Memorandum, are authorized to be issued pursuant to the Charter; Article V of Chapter 43 the San Francisco Administrative Code, enacted by Ordinance No . 203-98 (the “Procedural Ordinance”), adopted on June 8, 1998 by the Board and signed by the Mayor on June 19, 1998, as amended by Ordinance 270-06 adopted on October 24, 2006 by the Board and signed by the Mayor on October 31, 2006, to establish a procedure for the Commission to issue short -term indebtedness, and various other ordinances and resolutions of the Board and resolutions of the Commission (collectively with the Procedural Ordinance, the “Issuance Authorizations”). As of the date of this Offering Memorandum, the Board and the Commission have authorized commercial paper and short -term indebtedness authorization in an aggregate principal amount not to exceed $750,000,000. Pursuant to such Issuance Authorizations, in addition to the Commercial Paper Notes offered hereunder, the Commission has entered into a Revolving Credit Agreement with U.S. Bank, pursuant to which the bank has agreed to make certain advances to the Commission, from time to time, in an aggregate principal amount not to exceed $75,000,000 at any one time outstanding, and the Commission has delivered to such bank its revolving obligat ions tax -exempt note and its revolving obligations taxable note (the “Revolving Obligations”) evidencing the obligation of the Commission to repay to such bank the advances made under the Revolving Credit Agreement, which Revolving Obligations are on a parity with the Commercial Paper Notes. See also “THE COMMISSION AND THE WASTEWATER ENTERPRISE—Senior and Parity Indebtedness” above. The Revolving Obligations are not offered pursuant to this Offering Memorandum .
Only the Commercial Paper Notes, in the ag gregate principal amount not to exceed $675,000,000, are offered pursuant to this Offering Memorandum.
Each Series of Commercial Paper Notes is issued pursuant to a separate Issuing and Paying Agent Agreement by and between the Commission and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) , as issuing and paying agent (the “Issuing and Paying Agent”). The Commercial Paper Notes are dated the date of their original issuance, issued in book- entry form only in denominations of $100,000, and in integral multiples of $1,000 in excess of $100,000, and bear interest at separately stated interest rates not to exceed 12% per annum.
The Commercial Paper Notes are fully registered notes registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), New York, New York .
Beneficial ownership interests in the Commercial Paper Notes are available in book -entry form only, and purchasers of the Commercial Paper Notes will not receive certificates representing their interests in the Commercial Paper Notes purchased. While held in book-entry form, all payments of principal of and interest on the Commercial Paper Notes will be made by wire transfer to DTC or its nominee as the sole registered owner of the Commercial Paper Notes. Payments to the beneficial owners are the responsibility of DTC and its participants. See APPENDIX C – “BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES.”
Each Commercial Paper Note (i) will bear interest payable at maturity at an annual rate calculated on the basis of a year consisting of 365 days (or 360 days in the case of the Taxable Notes) and the actual number of days elapsed, and (ii) will mature not more than 270 days after its issuance date, but in no event later than the Business Day immediately preceding the Termination Date of the applicable Letter of Credit or Liquidity Facility.
Each Commercial Paper Note (i) will be sold at a price of not less than 100% of the principal amount thereof, and (ii) will mature on a Business Day . The Commercial Paper Notes will not be subject
8 4878-4807-0472.2
to redemption prior to maturity. Payments of principal of and interest on maturing Commercial Paper Notes will be made by the Issuing and Paying Agent directly to DTC.
Security for the Commercial Paper Notes
The Commercial Paper Notes will be payable solely from the proceeds of Commercial Paper Notes, Available Wastewater Enterprise Revenues or amounts drawn pursuant to the related Bank Facility, as provided in the Issuing and Paying Agent Agreements.
THE GENERAL FUND OF THE CITY AND COUNTY OF SAN FRANCISCO IS NOT
LIABLE, AND NEITHER THE CREDIT NOR THE TAXING POWER OF THE CITY AND COUNTY OF SAN FRANCISCO IS PLEDGED, FOR THE PAYMENT OF THE COMMERCIAL PAPER NOTES.
Description of the Bank Facilities
The payment of each Series of Commercial Paper Notes will be supported either by an irrevocable, direct pay letter of credit (each, a “Letter of Credit” and collectively, the “Letters of Credit”) pursuant to the terms of the related Reimbursement Agreement (each, a Reimbursement Agreement” and collectively, the “Reimbursement Agreements”) or by a dedicated liquidity facility , which includes a revolving credit and term loan agreement (each, a “Liquidity Facility” and together, the “Liquidity Facilities”) provided by a banking institution (each a “Bank”) as summarized below . A Letter of Credit or a Liquidity Facility is referred to herein as a “Bank Facility.”
9 4878-4807-0472.2
Series
Aggregate
Principal Amount
Authorized Bank Facility Bank
Stated Expiration
Date/Commitment
Expiration Date
Series A-1 $150,000,000 Letter of Credit Sumitomo Mitsui Banking Corporation,
acting through its
New York Branch
March 7, 2024
Series A-2 $150,000,000 Letter of Credit Bank of America, N.A.
[_____], 202[__]
Series A-4 $75,000,000 Revolving Credit
and Term Loan
Agreement
TD Bank, N.A. July 6, 2027
Series A-6* $200,000,000 Revolving Credit
and Term Loan
Agreement
State Street Bank and
Trust Company
October 13, 2023
Series A-7 $100,000,000 Letter of Credit Sumitomo Mitsui Banking Corporation,
acting through its
New York Branch
May 31, 2027
Each Letter of Credit is sized to provide sufficient funds for the payment of principal and interest on the related Series of Commercial Paper Notes, whether at maturity or earlier acceleration upon an event of default. Each Letter of Credit is irrevocable.
Each Liquidity Facility is sized to provide sufficient funds for the payment of only pri ncipal on the related Series of Commercial Paper Notes, whether at maturity or earlier acceleration upon an event of default. Interest on the related Series of such Commercial Paper Notes will be paid by Available Wastewater Revenues of the Commission.
Timely payment of the Commercial Paper Notes is de
pendent upon the availability of the funds
under the applicable Letter of Credit or the applicable Liquidity Facility. Under certain circumstances, the Liquidity Facilities are subject to immediate termination or suspension without notice or payment.
See Appendix A – “SUMMARIES OF BANK FACILITIES—BANK FACILITY FOR THE SERIES A- 4 COMMERCIAL PAPER NOTES—TD BANK A-4 LIQUIDITY FACILITY” AND “ —BANK FACILITY FOR THE SERIES A -6 COMMERCIAL PAPER NOTES —STATE STREET A- 6 LIQUIDITY FACILITY.”
If for any reason a Bank fails to honor its respective Letter of Credit or Liquidity Facility, the Commission makes no representation, and no assurance can be given, that the Commission would have
* In connection with the Series A -6 Notes, the Commission approved an increase in the current commitment amount, from $100,000,000 to $200,000,000, under the State Street A-6 Liquidity Facility (as defined herein), which became effective on October 15, 2019. In connection with such increase, the Commission approved the termination of the Series A-5 Notes (as defined herein), which became effective on October 14, 2019.
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sufficient funds on hand and available to make the corresponding payment of principal and interest on the applicable Commercial Paper Notes.
Each Bank Facility is described in greater detail in Appendix A hereto.
Information concerning each Bank providing a Bank Facility is provided in Appendix B hereto.
The information in Appendix B has been furnished by the respective Banks for use in this Offering Memorandum. Such information has not been independently confirmed or verified by the Commission.
No representation is made herein by the Commission as to the accuracy or adequacy of such information subsequent to the date hereof, or that the information contained and incorporated herein by refe rence is correct. The Commission has assumed no obligation to update such information in the future, or to advise of any adverse change in the financial condition of the Banks. Investors are advised to obtain and carefully review any financial reports and other information published after the date hereof about the Banks prior to making a decision to purchase the Commercial Paper Notes.
Pledge of Available Wastewater Enterprise Revenues
To the extent not paid from the proceeds of a draw upon the related Bank Facility or the proceeds of remarketed Commercial Paper Notes, the Commercial Paper Notes will be payable solely from Available Wastewater Enterprise Revenues.
“Available Wastewater Enterprise Revenues,” means all of the moneys in the Revenue Fund (as defined in the Wastewater Bonds Indenture and comprised primarily of Wastewater Enterprise Revenues and earnings thereon) remaining after (a) the payments required by the provisions of the Wastewater Bonds Indenture relating to operation and maintenance expenses, certain pension charges and other payments required with respect to Commission employees, and payments on Wastewater Bonds and all other amounts payable on a parity with such Wastewater Bonds under the Wastewater Bonds Indenture pursuant to the terms thereof and (b) all amounts required to be paid under any other indenture or resolution of the Commission for principal, interest, reserve fund and any other debt service requirements on other Wastewater Bonds and Subordinate Wastewater Bonds of the Commission as the same become due and payable.
“Wastewater Enterprise Revenues” has the meaning ascribed to the term “Net Revenues” in the Wastewater Bonds Indenture, which is defined as all of the Revenues less all Operation and Maint enance Costs of the Enterprise.
“Revenues” is defined as all gross revenues of the Wastewater Enterprise, including all charges received and all other income and receipts derived by the Commission from the operation of the Wastewater Enterprise, or arising from the Wastewater Enterprise, including connection and installation charges, but excluding:
(a) any money received by or for the account of the Commission from the levy or collection of tax
es,
(b) moneys received from the State and the United States of America and required to be deposited in restricted funds,
(c) refundable deposits made to establish credit,
(d) advances and contributions made to the Commission to be applied to construction,
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(e) moneys received constituting casualty insurance proceeds with respect to all or any part of the Enterprise (which shall be received and disposed of pursuant to the Wastewater Bonds Indenture) and moneys received constituting other insurance proceeds,
(f) moneys received from the sale or disposition of all or any part of the Enterprise (which shall be received and disposed of pursuant to the Wastewater Bonds Indenture), (g) moneys received upon the taking by or under the threat of eminent domain of all or any part of the Wastewater Enterprise (which moneys shall be received and disposed of pursuant to the Wastewater Bonds Indenture),
(h) proceeds from Bonds issued by the Commission or proceeds from loans or other indebtedness obtained by the Commission, and
(i) moneys or securities received by the Commission as gifts or grants, the use of which is restricted by the donor or grantor.
The term “Revenues” also i
ncludes (i) all interest or other income (excluding profits or losses from the sale or disposition of Permitted Investments or other securities owned by or on behalf of the Commission) derived from the deposit or investment of any moneys in any fund or account established under the Wastewater Bonds Indenture (excluding any Rebate Fund and any escrow fund pledged for the payment of defeased bonds) or in any fund or account of the Wastewater Enterprise and legally available to pay Debt Service on the Wastewater Bonds, and (ii) any other moneys, proceeds and other amounts that the Commission determines should be “Revenues” under the Wastewater Bonds Indenture.
Under each Issuing and Pay
ing Agent Agreement, the Commission covenants to establish, maintain and collect rates and charges with respect to the Wastewater Enterprise sufficient (after giving effect to the expected receipt of refinancing proceeds from the sale of Commercial Paper Notes or Wastewater Revenue Bonds (which include, Wastewater Revenue Notes)) to pay the Commercial Paper Notes, the Bank Notes and all other obligations payable from the Wastewater Enterprise. The Commission also covenants not to issue any additional bonds, notes or other obligations for borrowed money payable from or secured by the revenues of the Wastewater Enterprise unless the Commission certifies that either (i) actual revenues for the most recently completed fiscal year or (ii) projected revenues for the next three fiscal years following the issuance of such additional bonds, notes or other indebtedness, are or will be sufficient to satisfy the rate covenant defined above, assuming the issuance of such additional bonds, notes or other indebtedness to pay any maturing Commercial Paper Notes.
RATINGS
Moody’s has assigned a rating of “[P-1]” to each of the Notes.
S&P has assigned a rating of “[A-1]” to each of the Series A-1 Notes, the Series A-2 Notes and the Series A-7 Notes. S&P has assigned a rating of “[A-1+]” to each of the Series A-4 Notes and the Series A- 6 Notes.
Each of such ratings is based on the understanding that the Bank Facilities have been or will be issued by the Banks . Such ratings reflect only the views of such organ izations and an explanation of the significance of such ratings may be obtained only from the agencies at the following addresses: Moody’s Investors Service, Inc., 7 World Trade Center, New York, New York 10007 and S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, 55 Water Street, New York, New York 10004 . The Commission furnished to such rating agencies certain information and materials regarding the Commercial
12 4878-4807-0472.2
Paper Notes and the Wastewater Enterprise. In addition, each Bank furnished certain information to such rating agencies regarding such Bank and its respective Bank Facility . There is no assurance the rating on any Series of Commercial Paper Notes will continue for any given period or that it will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant and, therefore, any prospective purchaser should confirm the rating prior to purchasing any Series of Commercial Paper Notes. Any such change in or withdrawal of any such rating could have an adverse effect on the market for or market price of such Series of Commercial Paper Notes .
The above ratings are not recommendations to buy, sell or hold any Series of Commercial Paper Notes.
The Commission has not undertaken to provide notice to the holders of the Commercial Paper Notes of any change in the ratings on any Series of Commercial Paper Notes.
The ratings on the Commercial Paper Notes may be adversely affected by a downgrade of the credit rating(s) of the related Bank. Although the Commission has covenanted to maintain a Bank Facility for the Commercial Paper Notes, it is not obligated to replace any Bank in the event of a downgrade of such Bank’s rating(s). The Commission has not covenanted to provide notice to holders of the Commercial Paper Notes of any downgrade of the credit ratings of any Bank.
ABSENCE OF LITIGATION
[CONFIRM] There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body pending or, to the best of the knowledge of the Commission after reasonable investigation, threatened in any way (i) seeking to restrain or enjoin the issuance, sale or delivery of any of the Commercial Paper Notes o r (ii) challenging the validity of the Commercial Paper Notes.
THE DEALERS
The Commission has appointed Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and U.S. Bancorp Investments, Inc., each as a non -exclusive dealer with respect to the offering and sale from time to time of the Commercial Paper Notes. “US Bancorp” is the marketing name of U.S. Bancorp and its subsidiaries, including U.S. Bancorp Investments, Inc. (“USBII”), which is serving as a dealer for the Commercial Paper Notes, and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), which is serving as issuing and paying agent for the Commercial Paper Notes.
Each Dealer and its respective affiliates together comprise a full service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Each Dealer and its respective affiliates may have, from time to time, performed and may in the future perform, various investment banking services for Commission for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, each Dealer and its 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 its own account and for the accounts of its customers and may at any time hold long and short positions in such securities and instruments . Such investment securities activities may involve securities and instruments of the Commission.
No Dealer is acting as a financial or municipal advisor to the Commission in connection with the remarketing of the Commercial Paper Notes.
13 4878-4807-0472.2
TAX MATTERS
Tax-Exempt Notes
Norton Rose Fulbright US LLP, San Francisco, California, Bond Co unsel ("Bond Counsel"), previously delivered its opinion (the “June 2022 Opinion”) that, under existing statutes, regulations, rulings and judicial decisions and assuming compliance by the Commission with certain covenants in the Issuing and Paying Agent A greements, the Tax Certificate executed in connection with the issuance of the Tax Exempt Notes, and requirements of the Internal Revenue Code of 1986, as amended, regarding the use, expenditure and investment of proceeds of the Commercial Paper Notes and the timely payment of certain investment earnings to the United States, interest on the Tax Exempt Notes would not be includable in the gross income of the owners of the Tax Exempt Notes for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the Tax Exempt Notes to be included in federal gross income.
The June 2022 Opinion further stated that interest on the Tax Exempt Notes would not be treated as an item of tax preference for purposes of the federal alternative minimum tax.
Ownership of, or the receipt of interest on, tax -exempt obligations may result in collateral income tax consequences to certain taxpayers, including, without limita tion, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual receipts of Social Security or Railroad Retirement benefits, and taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers who may be eligible for the earned income tax credit. Bond Counsel expressed no opinion as to any collateral tax consequences and, accordingly, prospective purchasers of the Commercial Paper Notes should consult their tax advisors as to the applicability of any collateral tax consequences.
Certain requirements and procedures contained or referred to in the Issuing and Paying Agent Agreements and other relevant documents may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nat ionally recognized in the area of tax -exempt obligations. Bond Counsel expressed no opinion as to the effect of any change to any document pertaining to the Commercial Paper Notes or of any action taken or not taken where such change is made or action is taken or not taken without Bond Counsel's approval, or in reliance upon the advice of counsel other than Bond Counsel with respect to the exclusion from gross income of interest on the Tax -Exempt Notes for federal income tax purposes.
Information Reporting and Backup Withholding
Interest paid on tax -exempt obligations is subject to information reporting in a manner similar to interest paid on taxable obligations. While this reporting requirement does not, by itself, affect the excludability of interest fro m gross income for federal income tax purposes, the reporting requirement causes the payment of interest with respect to the Tax -Exempt Notes to be subject to backup withholding if such interest is paid to beneficial owners that (a) are not "exempt recipients," and (b) either fail to provide certain identifying information (such as the beneficial owner's taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a beneficial owner are a llowed as a refund or credit against such beneficial owner's federal income tax liability so long as the required information is furnished to the IRS.
14 4878-4807-0472.2
State Tax Exemption
The June 2022 Opinion further stated that, under existing law, interest on the Tax-Ex empt Notes would be exempt from personal income taxes imposed by the State of California.
Interest on the Taxable Notes is not excluded from gross income for federal income tax purposes, but the June 2022 Opinion stated that interest on the Taxable Notes would be exempt from the personal income taxes imposed by the State of California.
Future Developments
Future or pending legislative proposals, if enacted, regulations, rulings or court decisions may cause interest on the Tax -Exempt Notes to be subject, directly or indirectly, to federal income taxation or may cause interest on the Commercial Paper Notes to be subject, directly or indirectly, to State or local income taxation, or may otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. Legislation or regulatory actions and future or pending proposals may also affect the economic value of the federal or State tax exemption or the market value of the Commercial Paper Notes.
Prospective purchasers of the Commercial Paper Notes should consult their tax advisors regarding pending or proposed federal or State tax legislation, regulations, rulings or litigation, as to which Bond Counsel expresses no opinion.
A copy of the June 2022 Opinion is attached hereto as Appendix D, and a supplement to the June 2022 Opinion is attached hereto as Appendix E.
LEGAL MATTERS
Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel, has rendered the legal opinion described in “TAX MATTERS” above, a copy of which is set forth in Appendix D hereto, as supplemented by a letter of Bond Counsel dated July 7, 2022, which is set forth in Appendix E hereto .
Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Offering Memorandum . Upon the issuance of each Bank Facility, outside counsel to the Bank delivered opinions relating to such Bank Facility.
ADDITIONAL INFORMATION
Information herein concerning the Commission is limited. No attempt has been made to summarize the Issuing and Paying Agent Agreements or the Bank Facilities. The descriptions of and reference to such documents contained herein do not purport to be complete, and such references to and descriptions of such documents and all other documents and other items described herein are qualified in their entirety by reference to each such document and item.
Pursuant to continuing disclosure undertakings of the Commission in connection with certain outstanding Wastewater Revenue Bonds (which include, Wastewater Revenue Notes) , the Commission is obligated to provide certain annual financial information and operating data (each, an “Annual Report”) not later than nine months after the end of its fiscal year (presently June 3 0), and to provide notices of the occurrence of certain listed events under securities laws. The Commission will file each Annual Report with the MSRB through the EMMA website . The Commission will also file any notices of listed events (“Event Notice”) with the MSRB through the EMMA website.
The information and opinions herein and in any reports or filings pursuant to the Commission’s continuing disclosure undertakings described above, including any Annual Report or Event Notice, are
15 4878-4807-0472.2
subject to change without notice, and neither the delivery thereof nor the delivery of this Offering Memorandum shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission or other matters described therein or herein.
Copies of the Issuance Authorizations, the Bank Facilities (portions of which may be in redacted form) and the Issuing and Paying Agent Agreements may be obtained from the Dealers, and may also be obtained from the Commission at the following address:
City and County of San Francisco
Public Utilities Commission
Attention: Chief Financial Officer
525 Golden Gate Ave., 13th Floor
San Francisco, California 94102
Tel: (415) 554-3155
Fax. (415) 554-3161
No dealer or other person has been authorized by the Commission to give any information or to make any representations other than those contained in this Offering Memorandum, and if given or made, such other information or representations must not be relied upon as having been authorized by the Commission.
The Dealers have provided the following sentence for inclusion in this Offering Memorandum .
The Dealers have reviewed the information in this Offering Memorandum in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Dealers do not guarantee the accuracy or completeness of such information.
A-i
4878-4807-0472.2
APPENDIX A
SUMMARIES OF BANK FACILITIES
TABLE OF CONTENTS
Page
BANK FACILITY FOR THE SERIES A-1 COMMERCIAL PAPER NOTES ...................................... A-1 BANK FACILITY FOR THE SERIES A-2 COMMERCIAL PAPER NOTES ...................................... A-6 BANK FACILITY FOR THE SERIES A-4 COMMERCIAL PAPER NOTES .................................... A-11 BANK FACILITY FOR THE SERIES A-6 COMMERCIAL PAPER NOTES .................................... A-18 BANK FACILITY FOR THE SERIES A-7 COMMERCIAL PAPER NOTES .................................... A-25
A-1
4878-4807-0472.2
BANK FACILITY FOR THE SERIES A-1 COMMERCIAL PAPER NOTES
SMBC A-1 LETTER OF CREDIT
AND SMBC A-1 REIMBURSEMENT AGREEMENT
The Commission has entered into a reimbursement agreement (the “SMBC A-1 Reimbursement Agreement”) with SMBC Mitsui Banking Corporation, acting through its New York Branch (“ SMBC”), pursuant to which SMBC has issued an irrevocable direct -pay letter of credit (the “SMBC A-1 Letter of Credit”) for the account of the Commission supporting the payment of principal of and interest due thereon at maturity or upon acceleration of Series A-1 Notes. The Series A-1 Notes are issued pursuant to the terms of the Amended and Restated Issuing and Paying Agent Agreement, dated as of March 1, 2017, as amended and restated as of April 25, 2017 (the “Series A-1 Issuing and Paying Agent Agreement”), by and between U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as issuing and paying agent (the “Series A-1 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the SMBC A-1 Letter of Credit and SMBC A-1 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the SMBC A-1 Letter of Credit and SMBC A-1 Reimbursement Agreement. Investors should obtain and review copies of the SMBC A-1 Letter of Credit and SMBC A-1 Reimbursement Agreement in order to understand all of the terms of those documents . All capitalized terms appearing under this heading “ SMBC A-1 LETTER OF CREDIT AND SMBC A-1 REIMBURSEMENT AGREEMENT” not otherwise defined herein shall have the meanings assigned to them in the related document.
SMBC A-1 Letter of Credit
The SMBC A-1 Letter of Credit is an irrevocable transferable obligation of SMBC Mitsui Banking Corporation, acting through its New York Branch and supports the Series A-1 Notes only. The SMBC A- 1 Letter of Credit was issued in an amount equal to the maximum principal amount of the Series A-1 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculated on the basis of a year of 365 days (the “Stated Amount”). The Series A-1 Issuing and Paying Agent is authorized to draw on the SMBC A-1 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the SMBC A-1 Letter of Credit and in accordance with the terms and conditions and subject to the reductions and reinstatements in amount as set forth in the SMBC A-1 Letter of Credit, in one or more Drawings (as defined in the SMBC A-1 Letter of Credit), payable as set forth in the SMBC A-1 Letter of Credit on any Business Day (as defined in the SMBC A-1 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest at maturity on Series A-1 Notes, (ii) for the payment at maturity of the principal of and interest to maturity on Series A-1 Notes that otherwise mature on or after the date that the Series A-1 Issuing and Paying Agent receives the Final Drawing Notice (as defined in the SMBC A-1 Letter of Credit) from SMBC, or (iii) for (x) the payment of the principal of and interest due upon acceleration of certain of the Series A-1 Notes (each an “Acceleration Drawing”) or (y) the payment of the principal of and interest due upon acceleration of all outstanding Series A-1 Notes (the “Final Acceleration Drawing”), in each case an aggregate amount not exceeding the Stated Amount of the SMBC A-1 Letter of Credit.
Upon SMBC honoring any Drawing, the Stated Amount and the amount available to be drawn under the SMBC A-1 Letter of Credit for subsequent Drawings will be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount and the amounts from time to time available to be drawn under the SMBC A-1 Letter of Credit (except in the case of the Final Acceleration Drawing or a Drawing resulting from the delivery of the Final Drawing Notice) will be increased when and to the extent, but only when and to the extent, (i) (A) of transfer by the Series A -1
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Issuing and Paying Agent to SMBC on the date such Drawing is honored of proceeds of Series A-1 Notes issued on such date or (B) the Series A-1 Issuing and Paying Agent receives written notice from SMBC that SMBC has been reimbursed by or on behalf of the Commission for any amount drawn under the SMBC A-1 Letter of Credit, and (ii) that the Series A-1 Issuing and Paying Agent has not received from SMBC a No-Issuance Notice (as defined in the SMBC A-1 Letter of Credit). Upon SMBC honoring the Final Acceleration Drawing, the Stated Amount shall be permanently reduced to zero and the Stated Amount shall no longer be reinstated.
The SMBC A-1 Letter of Credit will expire at 4:00 p.m., New York City time, on the date (the earliest of such dates to occur is referred to as the “Termination Date”) which is the earliest of (i) March 7, 2024 (the “Stated Expiration Date”) or such later date as is specified by SMBC in a written notice to the Series A-1 Issuing and Paying Agent, (ii) the later of (a) the date on which SMBC receives written notice from the Series A-1 Issuing and Paying Agent that an Alternate Facility as is specified in such notice (as defined in the Series A-1 Issuing and Paying Agent Agreement) has been substituted for the SMBC A-1 Letter of Credit in accordance with the Series A-1 Issuing and Paying Agent Agreement and (b) the effective date of such Alternate Facility (after SMBC honors any properly presented and conforming Drawing on or prior to such date), (iii) the date on which SMBC receives written notice from the Series A-1 Issuing and Paying Agent that there are no longer any Series A -1 Notes Outstanding within the meaning of the Series A-1 Issuing and Paying Agent Agreement nor does the Commission intend to issue any additional Series A-1 Notes under the Series A-1 Issuing and Paying Agent Agreement and that the Series A-1 Issuing and Paying Agent elects to terminate the SMBC A-1 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the Series A-1 Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored under the SMBC A-1 Letter of Credit, and (v) the date on which the Final Acceleration Drawing is honored under the SMBC A-1 Letter of Credit.
SMBC A-1 Reimbursement Agreement Events of Default
If any of the following events shall occur, each such event shall be an “Event of Default” under the SMBC A-1 Reimbursement Agreement:
(a) the Commission shall fail to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation (as defined in the SMBC A-1 Re imbursement Agreement), or (ii) any Obligation (as defined in the SMBC A-1 Reimbursement Agreement) (other than a Reimbursement Obligation) and, in such case, such failure shall continue for three (3) Business Days; (b) any representation or warranty made by or on behalf of the Commission in the SMBC A-1 Reimbursement Agreement or in any other Basic Document (as defined in the SMBC A-1 Reimbursement Agreement) or in any certificate or statement delivered thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made or delivered; (c) the Commission shall default in the due performance or observance of certain covenants set forth in the SMBC A-1 Reimbursement Agreement; (d) the Commission shall default in the due performance or observance of any other term, covenant or agreement contained in the SMBC A-1 Reimbursement Agreement or any other Basic Document and such default shall remain unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission shall (i) have entered involuntarily against it an order f or relief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or
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be unable to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the SMBC A-1 Reimbursement Agreement), (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in paragraph (f) below;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Commission or any substantial part of its Property, or a proceeding described in clause (e)(v) above shall be instituted against the Commission and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any De bt (as defined in the SMBC A-1 Reimbursement Agreement) of the Commission by the Commission or any governmental authority with appropriate jurisdiction; (h) any material provision of the SMBC A-1 Reimbursement Agreement or any other Basic Document shall at any time for any reason cease to be valid and binding on the Commission for any reason or shall be declared by any court or other Governmental Authority with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforce ability thereof shall be publicly contested by the Commission or by a Governmental Authority with competent jurisdiction, or the Commission shall deny that it has any further liability under the SMBC A-1 Reimbursement Agreement or any other Basic Document;
(i) dissolution or termination of the existence of the Commission; (j) the Commission shall (i) default on the payment of the principal of or interest on any Wastewater Enterprise Debt (as defined in the SMBC A-1 Reimbursement Agreement), beyond the period of grace, if any, provided in the instrument or agreement under which such Wastewater Enterprise Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; (k) the Commission shall (i) default on the payment of the principal of or interest on any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, beyond the period of grace, if any, provided in the instrument or agreement unde r which such Debt (other than Wastewater Enterprise Debt) was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement
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evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt;
(l) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 shall be entered or filed against the Commission or against any of its Proper ty and remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days; (m) any “event of default” under any Basic Document (as defined respectively therein) shall have occurred;
(n) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effect that interest on the Series A-1 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-1 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; (o) any of Moody’s or S&P shall have downgraded its long-term unenhanced rating of any Senior Debt (as defined in the SMBC A-1 Reimbursement Agreement) of the Commission to below “Baa2” (or its equivalent), or “BBB” (or its equivalent), respectively, or suspended or withdrawn its rating of the same; or
(p) the passage of any Law (as defined in the SMBC A-1 Reimbursement Agreement) has occurred which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under the SMBC A-1 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the SMBC A- 1 Reimbursement Agreement or any of the other Basic Documents; provided that the Event of Default set forth in this paragraph (p) shall be null and void and of no further force and effect from and after the date any Reimbursement Agreement between the Commission and Bank of America, N.A., as provider of a letter of credit supporting any Commercial Paper Notes is terminated or a similar event of default is no longer provided therein.
SMBC A-1 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the SMBC A-1 Reimbursement Agreement, SMBC may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the SMBC A-1 Reimbursement Agreement or by law:
(a) declare all Obligations to be immediately due and payable, whereupon the same shall be immediately due and payable without any further notice of any kind, which notice is waived by the Commission; provide d, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “ SMBC A-1 LETTER OF CREDIT AND SMBC A-1 REIMBURSEMENT AGREEMENT—SMBC A-1 Reimbursement Agreement Events of Default,” such acceleration shall automatically occur (unless such automatic acceleration is waived by SMBC in writing); or
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(b) issue a No-Issuance Notice (the effect of which shall be as provided in the SMBC A-1 Reimbursement Agreement), reduce the Stated Amount of the SMBC A-1 Letter of Credit to the amount of the then outstanding Series A-1 Notes supported by the SMBC A-1 Letter of Credit plus a corresponding amount of interest coverage, reduce the Stated Amount of the SMBC A-1 Letter of Credit as the then outstanding Series A -1 Notes are paid, and/or terminate the SMBC A- 1 Letter of Credit when no Series A-1 Notes remain outstanding; or (c) issue the Final Drawing Notice (the effect of which shall be to cause the Termination Date of the SMBC A-1 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Series A-1 Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-2 COMMERCIAL PAPER NOTES
BANK OF AMERICA A-2 LETTER OF CREDIT
AND BANK OF AMERICA A-2 REIMBURSEMENT AGREEMENT
The Commission has entered into a reimbursement agreement (the Bank of America A-2 Reimbursement Agreement”) with Bank of America, N.A. (“Bank of America”), pursuant to which Bank of America will issue an irrevocable direct-pay letter of credit (the “Bank of America A-2 Letter of Credit”) for the account of the Commission supporting the payment of principal of and interest due thereon at maturity or upon acceleration of Series A-2 Notes. The Series A-2 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of June 1, 2017 (the “Series A-2 Issuing and Paying Agent Agreement”), by and between U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as issuing and paying agent (the “Series A-2 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the Bank of America A-2 Letter of Credit and the Bank of America A-2 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the Bank of America A-2 Letter of Credit or the Bank of America A-2 Reimbursement Agreement. Investors should obtain and review copies of the Bank of America A-2 Letter of Credit and the Bank of America A -2 Reimbursement Agreement in order to understand all of the terms of those documents . All capitalized terms appearing under this heading “BANK OF AMERICA A-2 LETTER OF CREDIT AND BANK OF AMERICA A-2 REIMBURSEMENT AGREEMENT” shall have the meanings assigned to them in the Bank of America A-2 Reimbursement Agreement.
Bank of America A-2 Letter of Credit
The Bank of America A-2 Letter of Credit is an irrevocable transferable obligation of Bank of America and supports the pay ment of principal of and interest on maturing Series A -2 Notes only. The Bank of America A-2 Letter of Credit may not be drawn on for any other purpose . The Bank of America A-2 Letter of Credit will be issued in an amount equal to the maximum principal amount of $150,000,000 of the Series A-2 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculated on the basis of a year of 365 days (the “Stated Amount”) . The Series A -2 Issuing and Paying Agent is authorized to draw on the Bank of America A-2 Letter of Credit in an aggregate amount not to exceed the Stated Amount of the Bank of America A-2 Letter of Credit and in accordance with the terms and conditions and, subject to the reductions and reinstatements as described therein, in amounts as set forth in the Bank of America A-2 Letter of Credit, in one or more Drawings (as defined in the Bank of America A-2 Letter of Credit), payable as set forth in the Bank of America A-2 Letter of Credit on any Business Day (as defined in the Bank of America A-2 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest on Series A -2 Notes or (ii) for the payment at maturity of the principal of and interest to maturity on Series A-2 Notes that otherwise mature on or after the date that the Series A-2 Issuing and Paying Agent receives a Final Drawing Notice (as defined in the Bank of America A-2 Letter of Credit) from Bank of America.
Upon Bank of America honoring any Drawing, the Stated Amount and the amount available to be drawn under the Bank of America A-2 Letter of Credit by the Series A-2 Issuing and Paying Agent pursuant to any subsequent Drawing shall be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount shall be increased when and to the extent, but only when and to the extent (i) (A) of transfer by the Series A-2 Issuing and Paying Agent to Bank of America on the date such Drawing is honored of proceeds of Se ries A- 2 Notes issued on such date or (B) the Series A-2 Issuing and Paying Agent receives written notice from Bank of America that Bank of America
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has been reimbursed by or on behalf of the Commission for any amount drawn under the Bank of America A-2 Letter of Credit by any Drawing, and (ii) that the Series A-2 Issuing and Paying Agent has not received a No-Issuance Notice (as defined in the Bank of America A-2 Letter of Credit) from Bank of America.
The Bank of America A-2 Letter of Credit shall expire at the close of business of Bank of America, on the date (the earliest of such date to occur referred to as the “Termination Date”) which is the earliest of (i) [_______] [__], 202[__] (unless extended pursuant to the terms of the Bank of America A -2 Letter of Credit), (ii) the later of the date on which Bank of America receives written notice from the Series A- 2 Issuing and Paying Agent that an Alternate Facility (as defined in the Series A-2 Issuing and Paying Agent Agreement) has been substituted for the Bank of America A-2 Letter of Credit in accordance with the Series A-2 Issuing and Paying Agent Agreement and the effective date of any such Alternate Facility (after Bank of America honors any properly presented and conforming Drawing on such date), (iii) the date on which Bank of America receives written notice from the Series A-2 Issuing and Paying Agent that there are no longer any Series A-2 Notes Outstanding within the meaning of the Series A-2 Issuing and Paying Agent Agreement and that the Series A-2 Issuing and Paying Agent elects to terminate the Bank of America A-2 Letter of Credit, and (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the Series A-2 Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored under the Bank of America A -2 Letter of Credit.
Bank of America A-2 Reimbursement Agreement Events of Default If any of the following events occurs, each such event will be an “Event of Default” under the Bank of America A-2 Reimbursement Agreement:
(a) the Commission fails to pay, or cause to be paid, as and when due, (i) any Reimbursement Obligation (as defined in the Bank of America A-2 Reimbursement Agreement), or (ii) any Obligation (as defined in the Bank of America A -2 Reimbursement Agreement) (other than a Reimbursement Obligation) under the Bank of America A -2 Reimbursement Agreement or under the Fee Agreement (as defined in the Bank of America A-2 Reimbursement Agreement) and, in such case, such failure continues for five (5) Business Days (as defined in the Bank of America A-2 Reimbursement Agreement);
(b) any representation or warranty made by or on behalf of the Commission in the Bank of America A-2 Reimbursement Agreement or in any other Basic Document (as defined in the Bank of America A-2 Reimbursement Agre ement) or in any certificate or statement delivered thereunder is incorrect or untrue in any material respect when made or deemed to have been made or delivered;
(c) the Commission defaults in the due performance or observance of certain no cure period covenants set forth in the Bank of America A-2 Reimbursement Agreement; (d) the Commission defaults in the due performance or observance of any other term, covenant or agreement contained in the Bank of America A-2 Reimbursement Agreement or any other Basic Document and such default remains unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission or the City and County of San Francis co, directly or indirectly, (i) has entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) becomes insolvent or does not pay, or is unable to pay, or admits in writing its inability to pay, its debts generally as they become due, (iii) makes an assignment for the benefit
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of creditors, (iv) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the Bank of America A-2 Reimbursement Agreement), (v) institutes any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fails to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) takes any corporate action in furtherance of any matter described in clauses (i) through (v) above, or (vii) fails to contest in good faith any appointment or proceeding described in paragraph (f) below; (f) a custodian, receiver, trustee, examiner, liquidator or similar official is appointed for the Commission or the City and County of San Francisco or any substantial part of its Property, or a proceeding described in clause (v) of paragraph (e) above is instituted against the Commission or the City and County of San Francisco and such proceeding continues undischarged, undismissed and unstayed for a period of thirty (30) days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt (as defined in the Bank of America A -2 Reimbursement Agreement) of the Commission by the Commission or any Governmental Authority (as defined in the Bank of America A -2 Reimbursement Agreement) with appropriate jurisdiction; (h) any material provision of the Bank of America A -2 Reimbursement Agreement, the Charter or any other Basic Document at any time for any reason ceases to be valid and binding on the Commission as a result of any legislative or administrative action by a Governmental Authority with competent jurisdiction or shall be declared in a final non appealable judgment by any court with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforceability thereof is publicly contested by the Commission, or the Commission publicly contests the validity or enforceability of any obligation to pay Wastewater Enterprise Debt, including, without limitation, the Wastewater Bonds Indenture, or any Authorized Representative publicly repudiates or otherwise denies in writing that it has any further liability or obligation under or with re spect to any provision of the Bank of America A -2 Reimbursement Agreement, the Charter, any other Basic Document or any operative document related to Wastewater Enterprise Debt (as defined in the Bank of America A-2 Reimbursement Agreement), including, wit hout limitation, the Wastewater Bonds Indenture (as defined in the Bank of America A-2 Reimbursement Agreement);
(i) dissolution or termination of the existence of the Commission; (j) the Commission (i) defaults on the payment of the principal of or interest on any Wastewater Enterprise Debt, beyond the period of grace, if any, provided in the instrument or agreement under which such Wastewater Enterprise Debt was created or incurred; or (ii) defaults in the observance or performance of any agreement or con dition relating to any Wastewater Enterprise Debt, including, without limitation, any Bank Agreement, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt;
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(k) the Commission (i) defaults on the payment of the principal of or interest on any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000 beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Wastewater Enterprise Debt) was created or incurred; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceler ation, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt); (l) any final, nonappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 are entered or filed against the Commission or against any of its Property and remain unpaid, unvacated, unbonded and unstayed for a period of sixty (60) days; (m) (i) the Commission shall default in the due performance or observance of any material term, covenant or agreement contained in any other Basic Document and the same shall not have been cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred; (n) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service is rendered to the effect that interest on the Series A-2 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-2 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, does not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challenges such ruling, assessment, notice or advice and a court of law makes a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; (o) any of Fitch, Moody’s and S&P (i) downgrades its long term rating of any Senior Debt (as defined in the Bank of America A-2 Reimbursement Agreement) of the Commission to below “BBB+ ” (or its equivalent), “ Baa1” (or its equivalent), or “ BBB+” (or its equivalent) respectively, or (ii) suspends or withdraws its rating of the same; or (p) the passage of any Law (as defined in the Bank of America A-2 Reimbursement Agreement) has occurred which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under the Bank of America A-2 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the Bank of America A -2 Reimbursement Agreement or any of the other Basic Documents.
Bank of America A-2 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the Bank of America A -2 Reimbursement Agreement, Bank of America may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the Bank of America A-2 Reimbursement Agreement or by law provided:
(a) declare all Obligations to be immediately due and payable, whereupon the same are immediately due and payable without any further notice of any kind, which notice is waived by
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the Commission; provided, however, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “BANK OF AMERICA A-2 LETTER OF CREDIT AND BANK OF AMERI CA A -2 REIMBURSE MENT AGREEMENT —Bank of America A-2 Reimbursement Agreement Events of Default,” such acceleration will automatically occur (unless such automatic acceleration is waived by Bank of America in writing); or (b) issue a No Issuance Notice (the effect of which will be as provided in the Bank of America A-2 Reimbursement Agreement), reduce the Stated Amount of the Bank of America A-2 Letter of Credit to the amount of the then outstanding Series A -2 Notes supported by the Bank of America A-2 Letter of Credit plus a corresponding amount of interest coverage, reduce the Stated Amount of the Bank of America A-2 Letter of Credit as the then outstanding Series A-2 Notes are paid and terminate the Bank of America A-2 Letter of Credit when no Series A-2 Notes remain outstanding; or
(c) issue the Final Drawing Notice (the effect of which will be to cause the Termination Date of the Bank of America A-2 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Series A-2 Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-4 COMMERCIAL PAPER NOTES
TD BANK A-4 LIQUIDITY FACILITY
The Commission has entered into a dedicated liquidity facility (the “ TD Bank A-4 Liquidity Facility”) with TD Bank, N.A. (“TD Bank”) to provide back-up liquidity to pay principal of maturing Series A-4 Notes. The Series A -4 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of July 1, 2012 (the “Series A-4 Issuing and Paying Agent Agreement”), by and between U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as issuing and paying agent (the “Series A-4 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the TD Bank A-4 Liquidity Facility. Such summary does not purport to be a complete description or restatement of the material provisions of the TD Bank A-4 Liquidity Facility. Investors should obtain and review a copy of the TD Bank A-4 Liquidity Facility in order to understand all of the terms of such document. All capitalized terms appearing under this heading “TD BANK A-4 LIQUIDITY FACILITY” shall have the meanings assigned to them in the TD Bank A-4 Liquidity Facility.
The Commission has entered into the TD Bank A-4 Liquidity Facility with TD Bank . The TD Bank A-4 Liquidity Facility can be drawn upon by the Commission, subject to compliance with certain conditions as specified in the TD Bank A-4 Liquidity Facility, in an amount up to the Commitment of $75,000,000 solely to fund the payment by the Commission of the principal of any maturing Series A -4 Notes at the stated maturity thereof. The TD Bank A-4 Liquidity Facility may not be drawn on for any other purpose.
All interest payments on outstanding Series A-4 Notes will be paid from Available Wastewater Enterprise Revenues of the Commission. The stated Commitment Expiration Date of the TD Bank A-4 Liquidity Facility is July 6, 2027, un less sooner terminated or later extended pursuant to its terms. In the event the Commission issues Subordinated Wastewater Bonds, and after TD Bank has provided notice to the Commission and the Issuing and Paying Agent, the commitment under the TD Bank A-4 Liquidity Facility will be reduced to the principal amount of the Series A-4 Notes then outstanding. Upon the maturity date of such Series A-4 Notes, the commitment will be permanently reduced further and upon the final maturity of such Series A -4 Notes, the commitment under the TD Bank A-4 Liquidity Facility will be terminated. Following receipt of such notice, the Commission will not issue any additional Series A -4 Notes while the TD Bank A-4 Liquidity Facility is in effect.
Immediate Termination Events
The following constitute Immediate Termination Events under the TD Bank A-4 Liquidity Facility:
Payments. The Commission (A) fails to pay any amount of interest on any Series A-4 Note when the same becomes due and payable in accordance with its terms, or (B) fails to pay principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan when the same becomes due and payable in accordance with its terms;
Invalidity. (A) Any provision of the Charter, the TD Bank A-4 Liquidity F acility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement , the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, at any time, and for any reason,
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ceases to be valid and binding on the Commission, or is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (B) an Authorized Representative of the Commission (i) publicly contests or contests in writing any provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues or (ii) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of the Charter, the TD Bank A- 4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A- 4 Issuing and Paying Agent Agreement, the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (C) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A -4 Note, the Series A-4 Issuing and Paying Agent Agreement , the City Legislation or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (D) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the City Legislation or the Resolutions finds or rules, in a judicial or administrative proceeding, that any provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the City Legislation or the Resolutions, as the case may be, relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, is not valid or not binding on, or enforceable against, the Commission; Insolvency, Etc. The Commission or the City and County of San Francisco, directly or indirectly, becomes insolvent or admits in writing its inability to pay its debts as they mature or declares a moratorium on the payment of its debts or apply for, consent to or acquiesce in the appointment of a trustee, custodian, liquidator or receiver for itself or any substantial part of its property, or takes any action to authorize or effect any of the foregoing; or in the absence of any such application, consent or acquiescence, a trustee, custodian, liquidator or receiver is appointed for it or for a substantial part of its property or revenues and is not discharged within a period of sixty (60) days; or the State or any other governmental authority having jurisdiction over the Commission or the City and County of San Francisco imposes a debt moratorium or comparable extraordinary restriction on repayment when due and payable of the principal of or interest on all Debt of the Commission and all of the Series A-4 Notes; or all, or any substantial part, of the property of the Commission or the City and County of San Francis co is condemned, seized, or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted by or against the Commission or the City and County of San Francisco (or any action is taken to authorize or effect the institution by it of any of the foregoing) and if instituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of sixty (60) days; Cross-Default to Senior Debt or Parity Debt. The Commission fails to pay, when due and payable, any principal of or interest on any Senior Debt or any Parity Debt (including, without limitation, any principal or sinking fund installments thereon but excluding Commercial Paper Notes and Other Commercial Paper Notes);
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Cross-Default to Commercial Paper Notes. The Commission fails to pay, when due and payable, any interest on any Commercial Paper Notes or Other Commercial Paper Notes (but excluding the interest on Commercial Paper Notes or Other Commercial Paper Notes issued by or on behalf of the Commission so long as the payment of such interest is supported by a third-party liquidity facility or a third-party credit facility);
Unsatisfied Judgments. A final, nonappealable, judgment or order for the payment of money in excess of $15,000,000, individually or in the aggregate, is rendered against the Commission and payable from Pledged Revenues and such judgment or order continues unsatisfied and unstayed for a period of sixty (60) days; or
Ratings. The long-term credit ratings assigned by Moody’s and S&P (to the extent then providing a rating) to unenhanced Parity Debt, unenhanced Subordinated Wastewater Bonds or unenhanced Senior Debt is (A) reduced below “Baa3” (or its equivalent) and “BBB -” (or its equivalent) or (B) withdrawn or suspended for any credit related reasons; provided, that nothing in the TD Bank A-4 Liquidity Facility requires the Commission to maintain a long-term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Existence. The dissolution or termination of the existence of the Commission if a Governmental Authority does not, contemporaneously with the dissolution or termination of the existence of the Commission, assume the obligations of the Commission under this Agreement and the other Basic Documents to which it is a party related to pay principal of or interest on the Series A-4 Notes, the Revolving Note, the Term Note, any Advance or any Term Loan and Senior Debt or any Parity Debt.
Other Events of Default
The following, together with the Immediate Termination Events and the Suspension Events, constitute Events of Default under the TD Bank A-4 Liquidity Facility:
Representations Untrue. Any representation, warranty, certification or statement made by the Commission in the TD Bank A-4 Liquidity Facility or in any Basic Document or in any certificate, financial statement or other document delivered pursuant to the TD Bank A-4 Liquidity Facility or any Basic Document was (in any such case) incorrect or untrue in any material respect when made or deemed to have been made.
Certain Covenant Defaults . The Commission defaults i n the due performance or observance of any term, covenant or agreement contained in certain clauses of the TD Bank A-4 Liquidity Facility.
Other Covenant Defaults. The Commission defaults in the due performance or observance of any term, covenant or agreement contained in the TD Bank A-4 Liquidity Facility (other than those covered as set forth under “TD BANK A-4 LIQUIDITY FACILITY—Immediate Termination Events—Payments” or “Other Events of Default—Certain Covenant Defaults” above) and such default, if capable of being remedied, remains unremedied for thirty (30) days after the earlier to occur of (i) written notice thereof has given to the Commission by TD Bank or (ii) an Authorized Representative of the Commission has actual knowledge thereof.
Other Invalidity. (i) Any material provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A -4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions, the City Legislation or the Fee Letter (other than a provision referred to in “TD BANK A-4 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”), is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or
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state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (ii) an Authorized Representative of the Commission (A) contests any material provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “ TD BANK A-4 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”) or (B) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any material provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “ TD BANK A-4 LIQUIDITY FACILITY —Immediate Termination Events —Invalidity”); or (iii) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any material provision of relating to the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A-4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “ TD BANK A-4 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”); (iv) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A -4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resolutions, the City Legislation or the Fee Letter finds or rules, in a judicial or administrative proceeding, that any material provision of the Charter, the TD Bank A-4 Liquidity Facility, the Revolving Note, the Term Note, any Series A -4 Note, the Series A-4 Issuing and Paying Agent Agreement, the Resol utions, the City Legislation or the Fee Letter (other than a provision referred to in “ TD BANK A-4 LIQUIDITY FACILITY —Immediate Termination Events—Invalidity” is not valid or not binding on, or enforceable against, the Commission or (v) a debt moratorium or comparable extraordinary restriction on repayment of debt has been declared or imposed (whether or not in writing) with respect to the Fee Letter, the Series A-4 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan.
Other Cross-Defaults. The Commission fails to pay when due and payable (i) any principal of or interest on any Debt (other than Senior Debt or Parity Debt) in excess of $10,000,000 of the Commission and such failure continues beyond any applicable period of grace specified in any underlying indenture, contract or instrument providing for the creation thereof or (ii) any principal on any Commercial Paper Notes or Other Commercial Paper Notes (other than the Series A-4 Notes).
Basic Document Default . (i) The Commission defaults in the due performance or observance of any material term, covenant or agreement contained in any other Basic Document and the same is not cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred.
Other Payments. The Commission fails to pay (i) any amount required pursuant to the Fee Letter when said amount is due and payable or (ii) any amount payable under the TD Bank A-4 Liquidity Facility within five (5) d ays after the same is due and after written demand by TD Bank in respect thereof, other than payments described in “TD BANK A-4 LIQUIDITY FACILITY—Immediate Termination Events— Payments” and clause (i) of this paragraph.
Taxability. A ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service is rendered to the effect that interest on the Series A-4 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-4 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, does not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challenges such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered.
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Other Insolvency. (i) There is commenced against the Commission any case, proceeding or other action of a nature referred to in “TD BANK A- 4 LIQUIDITY FACILITY—Immediate Termination Events—Insolvency, Etc.” above which (A) results in an order for such relief or in the appointment of a receiver or similar official or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (ii) there is commenced against the Commission, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets or for all or any portion of the Pledged Revenues, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof.
Ratings. The long-term credit ratings assigned by Moody’s or S&P to unenhanced Parity Debt or unenhanced Senior Debt shall be (i) reduced below “A3” (or its equivalent) or “A-” (or its equivalent)” or (ii) withdrawn or suspended for any credit related reasons; provided, that nothing in the TD Bank A-4 Liquidity Facility shall require the Commission to maintain a long -term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Cross Acceleration . The Commission (i) defaults in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt).
Remedies
(a) Immediate Termination Events. In the case any Event of Default which is an Immediate Termination Event has occurred, (i) the Commitment will immediately and automatically terminate, without notice from TD Bank, and (ii) all amounts due under the TD Bank A-4 Liquidity Facility, the Fee Letter and under the Revolving Note and the Term Note will immediately become due and payable; provided, that the Event of Default described in clause (B) of “TD BANK A-4 LIQUIDITY FACILITY —Immediate Termination Events—Payments.” will not qualify as an “Immediate Termination Event” under the TD Bank A-4 Liquidity Facility if the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan is due solely to an acceleration thereof by TD Bank for any reason other than the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan; provided, further , that the Event of Default described in TD BANK A-4 LIQUIDITY FACILITY—Immediate Termination Events—Cross-Default to Senior Debt or Parity Debt.” will not qualify as an “Immediate Terminat ion Event” under the TD Bank A-4 Liquidity Facility if the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt is due solely to an acceleration thereof by a provider of credit enhancement or liquidity support with respect thereto for any reason other than the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt.
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(b) Suspension Events . In the case of a Default described in “TD BANK A-4 LIQUIDITY FACILITY—Other Events of Default—Other Insolvency.” (a “Suspension Event”), the Commitment will be immediately suspended without notice or demand and, thereafter, TD Bank will be under no obligation to make Advances or Term Loans under the TD Bank A-4 Liquidity Facility until the Available Commitment is reinstated as described in the TD Bank A-4 Liquidity Facility. Promptly upon the occurrence of any such Suspension Event, TD Bank will notify the Commission, the Series A-4 Issuing and Paying Agent and the Dealer of such suspension and the effective date of such suspension in writing by facsimile, promptly confirmed by regular mail; provided, that TD Bank will incur no liability of any kind by reason of its failure to give such notice and such failure will in no way affect the suspension of the Available Commitm ent or its obligation to make Advances or Term Loans pursuant to the TD Bank A-4 Liquidity Facility. The Commission will promptly direct the Series A-4 Issuing and Paying Agent to notify all Holders of a suspension of the obligation of TD Bank to make Advances and Term Loans as a result of the occurrence of such Suspension Event. Upon the occurrence of a Suspension Event, the Commitment will immediately and automatically suspended and remain suspended until the case, proceeding or other action referred to therein is either dismissed, discharged or bonded within sixty (60) days from the commencement of such case, proceeding or action, or the date on which TD Bank’s obligations under the TD Bank A-4 Liquidity Facility have terminated or expired in accordance with the terms hereof (the “Termination Date”) occurs, whichever is first. In the event that said Suspension Event has been dismissed, discharged or bonded within the sixty (60) day period described therein and prior to the Termination Date, then the Ava ilable Commitment and the obligation of TD Bank to make Advances and Term Loans will be reinstated and the terms of the TD Bank A-4 Liquidity Facility will continue in full force and effect as if there had been no such suspension (unless the Commitment Per iod will otherwise have been terminated, suspended or expired as provided in the TD Bank A-4 Liquidity Facility). In the event that said Suspension Event is not dismissed, discharged or bonded within said sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of TD Bank to make Advances and Term Loans will terminate on the Termination Date without notice or demand and, thereafter, TD Bank will be under no obligation to make such Advances and Term Loans under the TD Bank A-4 Liquidity Facility.
(c) All Events of Default. In the case of any Event of Default, including any Immediate Termination Event or a Suspension Event that has occurred and is continuing, TD Bank (i) may by written notice to the Commission declare all amounts due under the TD Bank A-4 Liquidity Facility, under the Fee Letter or under the Revolving Note or the Term Note to be immediately due and payable, whereupon the same will immediately become due and payable, (ii) may by written notice to the Commission and the Series A -4 Issuing and Paying Agent (a n “EoD No-Issuance Notice”) in substantially the form of Exhibit H to the TD Bank A-4 Liquidity Facility declare the Commitment to be reduced to the principal amount of Series A-4 Notes then outstanding and to be permanently reduced further on the maturity date of each such Series A-4 Notes by an amount equal to the principal amount of such Series A-4 Notes with the Commitment to be terminated upon the last maturity date applicable to all such Series A-4 Notes, (iii) may petition a court of competent jurisdiction to issue a mandamus order to the Commission to compel specific performance of the covenants of the Commission contained in the Resolutions or herein and (iv) may pursue any other rights or remedies under the TD Bank A-4 Liquidity Facility, the Fee Letter, the Resolutions, any other Basic Document, applicable law or otherwise. Except as expressly provided in the TD Bank A-4 Liquidity Facility, procurement, demand, protest and all other notices of every kind are expressly waived in the TD Bank A-4 Liquidity Facility. Following receipt of an EoD No-Issuance Notice, the Commission shall not issue any additional Series A-4 Notes.
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(d) Timing of EoD No-Issuance Notice. An EoD No-Issuance Notice that is received by the Commission at or before 3:00 p.m. (New York City time) will be effective when received.
An EoD No-Issuance Notice that is received by Commission after 3:00 p.m. (New York City time) will not be effective until the opening of business on the next succeeding Business Day. (e) Copies of Notices. Concurrently with the occurrence of an Immediate Termination Event pursuant to the TD Bank A-4 Liquidity Facility or a n EoD No-Issuance Notice pursuant to the TD Bank A-4 Liquidity Facility, the Commission will give notice to the Series A-4 Issuing and Paying Agent and the Dealers.
In addition, concurrently with giving such notice to the Commission and the Series A-4 Issuing and Paying Agent, TD Bank will provide a copy thereof to the Dealers at their respective addresses referred to in the TD Bank A-4 Liquidity Facility; provided, however, that TD Bank will not incur any liability as a result of its failure to provide a copy of such a notice in accordance with this sentence.
Related Covenants
Under the related Series A-4 Issuing and Paying Agent Agreement, the Commission covenants to maintain in effect the TD Bank A-4 Liquidity Facility or an Alternate Facility meeting the requirements of such Series A-4 Issuing and Paying Agent Agreement at all times that Series A-4 Notes are Outstanding thereunder. The Commission further covenants that if it is unable to obtain a commitment for an Alternate Facility at least 90 days prior to the Commitment Expiration Date, it shall use its best efforts, to the extent permitted by law, to endeavor to refinance such outstanding Series A-4 Notes or Bank Notes, as the case may be.
The Commission shall deliver written notice of a proposed Alternate Facility to the Series A-4 Issuing and Paying Agent, TD Bank, the City and each Dealer not less than 45 days prior to the substitution date. The Series A-4 Issuing and Paying Agent shall deliver written noti ce of such substitution to the registered Holders of Series A-4 Notes at least 30 days prior to the substitution date. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-6 COMMERCIAL PAPER NOTES
STATE STREET A-6 LIQUIDITY FACILITY
The Commission has entered into a dedicated liquidity facility (the “State Street A -6 Liquidity Facility”) with State Street Bank and Trust Company (“State Street”) to provide back -up liquidity to pay principal of maturing Subseries A-6 Notes and maturing Subseries A-6-T Notes. The Series A-6 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of October 1, 2014, and as amended and supplemented by the First Supplement to Issuing and Paying Agent Agr eement, dated as of October 15, 2019* (together, the “Series A-6 Issuing and Paying Agent Agreement”), by and between U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as issuing and paying agent (the “Series A-6 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the State Street A-6 Liquidity Facility. Such summary does not purport to be a complete description or restatement of the material provisions of the State Street A-6 Liquidity Facility. Investors should obtain and review a copy of the State Street A-6 Liquidity Facility in order to understand all of the terms of such document. All capitalized terms appearing under this he ading “STATE STREET A -6 LIQUIDITY FACILITY” shall have the meanings assigned to them in the State Street A-6 Liquidity Facility.
The Commission has entered into the State Street A -6 Liquidity Facility with State Street. The State Street A -6 Liquidity Facility can be drawn upon by the Commission, subject to compliance with certain conditions as specified in the State Street A-6 Liquidity Facility, in an amount up to the Commitment of $200,000,000
* solely to fund the payment by the Commission of the principal of any maturing Series A- 6 Notes at the stated maturity thereof. The State Street A-6 Liquidity Facility may not be drawn on for any other purpose.
All interest payments on outstanding Series A-6 Notes will be paid from Available Wastewater Enterprise Revenues of the Commission. The stated Commitment Expiration Date of the State Street A -6 Liquidity Facility is October 13, 2023*, unless sooner terminated or later extended pursuant to its terms. In the event the Commission issues Subordinated Wastewater Bonds, and after State Street has provided notice to the Commission and the Issuing and Paying Agent, the commitment under the State Street A-6 Liquidity Facility will be reduced to the principal amount of the Series A-6 Notes then outstanding. Upon the maturity date of such Series A-6 Notes, the commitment will be permanently reduced further and upon the final maturity of such Series A-6 Notes, the commitment under the State Street A-6 Liquidity Facility will be terminated. Following receipt of such notice, the Commission will not issue any additional Series A-6 Notes while the State Street A-6 Liquidity Facility is in effect.
Immediate Termination Events
The following constitute Immediate Termination Events under the State Street A -6 Liquidity Facility:
Payments. The Commission (A) fails to pay any amount of interest on any Series A-6 Note when the same becomes due and payable in accordance with its terms, or (B) fails to pay principal of, or interest
* In connection with the Series A-6 Notes, the Commission approved an increase in the commitment amount, from $100,000,000 to $200,000,000, and an extension of the term of such commitment, under the State Street A -6 Liquidity Facility. Such increase and extension became effective on October 15, 2019.
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on, the Revolving Note, the Term Note, any Advance or any Term Loan when the same becomes due and payable in accordance with its terms;
Invalidity. (A) Any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A -6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues, at any time, and for any reason, ceases to be valid and binding on the Commission, or is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (B) an Authorized Representative of the Commission (i) publicly contests or contests in writing any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues or (ii) publicly repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A-6 Notes, the Term Note, th e Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (C) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A- 6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions relating to (x) the ability or the oblig ation of the Commission to pay, when due, the principal of or interest on the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues; or (D) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions finds or rules, in a judicial or administrative proceeding, that any provision of the Charter, the State Street A -6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement or the Resolutions, as the case may be, relating to (x) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the Series A -6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan or (y) the lien on or pledge of the Pledged Revenues , is not valid or not binding on, or enforceable against, the Commission; Insolvency, Etc. The Commission or the City and County of San Francisco, directly or indirectly, becomes insolvent or admits in writing its inability to pay its debts as they mature or declares a moratorium on the payment of its debts or apply for, consent to or acquiesce in the appointment of a trustee, custodian, liquidator or receiver for itself or any substantial part of its property, or takes any action to authorize or effect any of the foregoing; or in the absence of any such application, consent or acquiescence, a trustee, custodian, liquidator or receiver is appointed for it or for a substantial part of its property or revenues and is not discharged within a period of sixty (60) days; or the State or any other governmental authority having jurisdiction over the Commission or the City and County of San Francisco imposes a debt moratorium or comparable extraordinary restriction on repayment when due and payable of the principal of or interest on all Debt of the Commission and all of the Series A-6 Notes; or all, or any substantial part, of the property of the Commission or the City and County of San Francisco is condemned, seized, or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted by or against the Commission or the City and County of San Francisco (or any action is taken to authorize or effect the
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institution by it of any of the foregoing) and if instituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of sixty (60) days; Cross-Default to Senior Debt or Parity Debt. The Commission fails to pay, when due and payable, any principal of or interest on any Senior Debt or any Parity Debt (including, without limitation, any principal or sinking fund installments thereon but excluding Commercial Paper Notes and Other Commercial Paper Notes;
Cross-Default to Commercial Paper Notes. The Commission fails to pay, when due and payable, any interest on any Commercial Paper Notes or Other Commercial Paper Notes (other than as specified in clause (A) of “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events”); Unsatisfied Judgments. A final, nonappealable, judgment or order for the payment of money in excess of $10,000,000 is rendered against the Commission and payable from Pledged Revenues and such judgment or order continues unsatisfied and unstayed for a period of sixty (60) days; or Ratings. The long-term credit ratings assigned by Moody’s and Standard & Poor’s to unenhanced Parity Debt, unenhanced Subordinated Wastewater Bonds or unenhanced Senior Debt is (A) reduced below “Baa3” (or its equivalent) and “BBB -” (or its equivalent) or (B) withdrawn or suspended for any credit related reasons; provided, that nothing in the State Street A -6 Liquidity Facility requires the Commission to maintain a long-term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Other Events of Default
The following, together with the Immediate Termination Events and the Suspension Events, constitute Events of Default under the State Street A-6 Liquidity Facility:
Representations Untrue. Any representation, warranty, certification or statement made by the Commission in the State Street A -6 Liquidity Facility or in any Basic Document or in any certificate, financial statement or other document delivered pursuant to the State Street A -6 Liquidity Facility or any Basic Document was (in any such case) incorrect or untrue in any material respect when made or deemed to have been made.
Certain Covenant Defaults . The Commission defaults in the due performance or observance of any term, covenant or agreement contained in certain clauses of the State Street A-6 Liquidity Facility.
Other Covenant Defaults. The Commission defaults in the due performance or observance of any term, covenant or agreement contained in the State Street A-6 Liquidity Facility (other than those covered as set forth under “STATE STREET A -6 LIQUIDITY FACILITY —Immediate Termination Events— Payments” or “Other Events of Default —Certain Covenant Defaults” above) and such default, if capable of being remedied, remains unremedied for thirty (30) days after the earlier to occur of (i) written notice thereof has given to the Commission by State Street or (ii) an Authorized Representative of the Commission has actual knowledge thereof.
Other Invalidity. (i) Any material provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A -6 LIQUIDITY FACILITY—Immediate Termination Events —Invalidity”), is declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over
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the Commission; or (ii) an Authorized Representative of the Commission (A) contests any material provision of the Charter, the State Street A -6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A -6 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”) or (B) repudiates or otherwise denies in writing that it has any further liability or obligation under or with respect to any material provision of the Charter, the State Street A -6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Invalidity”); or (iii) the State or the Commission has taken or permitted to be taken any official action, or has duly enacted any statute, which would adversely affect the enforceability of any material provision of relating to the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termin ation Events —Invalidity”); (iv) any Governmental Authority with jurisdiction to rule on the validity or enforceability of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A-6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Res olutions or the Fee Letter finds or rules, in a judicial or administrative proceeding, that any material provision of the Charter, the State Street A-6 Liquidity Facility, the Revolving Note, the Term Note, any Series A -6 Note, the Series A-6 Issuing and Paying Agent Agreement, the Resolutions or the Fee Letter (other than a provision referred to in “STATE STREET A- 6 LIQUIDITY FACILITY—Immediate Termination Events —Invalidity” is not valid or not binding on, or enforceable against, the Commission or (v) a debt moratorium or comparable extraordinary restriction on repayment of debt has been declared or imposed (whether or not in writing) with respect to the Fee Letter, the Series A-6 Notes, the Term Note, the Revolving Note, any Advance or any Term Loan.
Other Cross-Defaults. The Commission fails to pay when due and payable (i) any principal of or interest on any Debt (other than Senior Debt or Parity Debt) in excess of $10,000,000 of the Commission and such failure continues beyond any applicable period of grace specified in any underlying indenture, contract or instrument providing for the creation thereof or (ii) any principal on any Commercial Paper Notes or Other Commercial Paper Notes (other than the Subseries A-6 Notes or Subseries A-6-T Notes).
Basic Document Default . (i) The Commission defaults in the due performance or observance of any material term, covenant or agreement contained in any other Basic Document and the same is not cured within any applicable cure period or (ii) any “event of default” under any other Basic Document (as defined respectively therein) has occurred.
Other Payments. The Commission fails to pay (i) any amount required pursuant to the Fee Letter when said amount is due and payable or (ii) any amount payable under the State Street A -6 Liquidity Facility within five (5) Business Days after the same is due and after written demand by State Street in respect thereof, other than payments described in “STATE STREET A -6 LIQUIDITY FACILITY — Immediate Termination Events—Payments” and clause (i) of this paragraph.
Taxability. A ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service is rendered to the effect that interest on the Series A-6 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-6 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, does not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission challenges such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered.
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Other Insolvency. (i) There is commenced against the Commission any case, proceeding or other action of a nature referred to in “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Insolvency, Etc.” above which (A) results in an order for such relief or in the appointment of a receiver or similar official or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (ii) there is commenced against the Commission, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets or for all or any portion of the Pledged Revenues, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof.
Ratings. The long-term credit ratings assigned by Moody’s or Standard & Poor’s to unenhanced Parity Debt or unenhanced Senior Debt shall be (i) reduced below “Baa2” (or its equivalent) or “BBB” (or its equivalent)” or (ii) withdrawn or suspended for any credit related reasons; provided, that nothing in the State Street A-6 Liquidity Facility shall require the Commission to maintain a long -term rating on Parity Debt, so long as the only Parity Debt outstanding is the Commercial Paper Notes and related credit and liquidity facilities.
Cross Acceleration . The Commission (i) defaults in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or s imilar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; or (ii) defaults in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event occurs or condition exists, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Debt (other than Wastewater Enterprise Debt).
Remedies
(a) Immediate Termination Even ts. In the case any Event of Default which is an Immediate Termination Event has occurred, (i) the Commitment will immediately and automatically terminate, without notice from State Street, and (ii) all amounts due under the State Street A-6 Liquidity Facility, the Fee Letter and under the Revolving Note and the Term Note will immediately become due and payable; provided, that the Event of Default described in clause (B) of “STATE STREET A-6 LIQUIDITY FACILITY—Immediate Termination Events—Payments.” will not qualify as an “Immediate Termination Event” under the State Street A-6 Liquidity Facility if the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan is due solely to an acceleration thereof by State Street for any reason other than the failure to pay the principal of, or interest on, the Revolving Note, the Term Note, any Advance or any Term Loan; provided, further, that the Event of Default described in STATE STREET A -6 LIQUIDITY FACILITY—Immediate Termination Events—Cross-Default to Senior Debt or Parity Debt.” will not qualify as an “Immediate Termination Event” under the State Street A-6 Liquidity Facility if the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt is due solely to an acceleration thereof by a provider of credit enhancement or liquidity support with respect thereto for any reason other than the failure to pay the principal of, or interest on, such Senior Debt or Parity Debt.
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(b) Suspension Events. In the case of a Default described in “STATE STREET A-6 LIQUIDITY FACILITY—Other Events of Default—Other Insolvency.” (a “Suspension Event”), the Commitment will be immediately suspended without notice or demand and, thereafter, State Street will be under no obligation to make Advances or Term Loans under the State Street A- 6 Liquidity Facility until the Available Commitment is reinstated as described in the State Street A - 6 Liquidity Facility. Promptly upon the occurrence of any such Suspension Event, State Street will notify the Commission, the Series A-6 Issuing and Paying Agent and the Dealer of such suspension and the effective date of such suspension in writing by facsimile, promptly confirmed by regular mail; provided, that State Str eet will incur no liability of any kind by reason of its failure to give such notice and such failure will in no way affect the suspension of the Available Commitment or its obligation to make Advances pursuant to the State Street A -6 Liquidity Facility. The Commission will promptly direct the Series A-6 Issuing and Paying Agent to notify all Holders of a suspension of the obligation of State Street to make Advances and Term Loans as a result of the occurrence of such Suspension Event . Upon the occurrence of a Suspension Event, the Commitment will immediately and automatically suspended and remain suspended until the case, proceeding or other action referred to therein is either dismissed, discharged or bonded within sixty (60) days from the commencement of such case, proceeding or action, or the date on which State Street’s obligations under the State Street A -6 Liquidity Facility have terminated or expired in accordance with the terms hereof (the “Termination Date”) occurs, whichever is first. In the event that said Suspe nsion Event has been dismissed, discharged or bonded within the sixty (60) day period described therein and prior to the Termination Date, then the Available Commitment and the obligation of State Street to make Advances and Term Loans will be reinstated and the terms of the State Street A-6 Liquidity Facility will continue in full force and effect as if there had been no such suspension (unless the Commitment Period will otherwise have been terminated, suspended or expired as provided in the State Street A-6 Liquidity Facility). In the event that said Suspension Event is not dismissed, discharged or bonded within said sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of State Street to make Advances and Term Loans will terminate on the Termination Date without notice or demand and, thereafter, State Street will be under no obligation to make such Advances and Term Loans under the State Street A-6 Liquidity Facility.
(c) All Events of Default. In the case of any Event of Default, including any Immediate Termination Event or a Suspension Event that has occurred and is continuing, State Street (i) may by written notice to the Commission declare all amounts due under the State Street A-6 L iquidity Facility, under the Fee Letter or under the Revolving Note or the Term Note to be immediately due and payable, whereupon the same will immediately become due and payable, (ii) may by written notice to the Commission and the Series A -6 Issuing and Paying Agent (a “No -Issuance Notice”) in substantially the form of Exhibit H to the State Street A -6 Liquidity Facility declare the Commitment to be reduced to the principal amount of Series A-6 Notes then outstanding and to be permanently reduced further on the maturity date of each such Series A-6 Notes by an amount equal to the principal amount of such Series A-6 Notes with the Commitment to be terminated upon the last maturity date applicable to all such Series A-6 Notes, (iii) may petition a court of c ompetent jurisdiction to issue a mandamus order to the Commission to compel specific performance of the covenants of the Commission contained in the Resolutions or herein and (iv) may pursue any other rights or remedies under the State Street A-6 Liquidity Facility, the Fee Letter, the Resolutions, any other Basic Document, applicable law or otherwise. Except as expressly provided in the State Street A-6 Liquidity Facility, procurement, demand, protest and all other notices of every kind are expressly waived in the State Street A -6 Liquidity Facility. Following receipt of a No -Issuance Notice, the Commission shall not issue any additional Series A-6 Notes.
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(d) Timing of No -Issuance Notice. A No -Issuance Notice that is received by the Commission at or before 3:00 p.m. (New York City time) will be effective when received. A No- Issuance Notice that is received by Commission after 3:00 p.m. (New York City time) will not be effective until the opening of business on the next succeeding Business Day. (e) Copies of Notices. Concurrently with the occurrence of an Immediate Termination Event pursuant to the State Street A -6 Liquidity Facility or a No -Issuance Notice pursuant to the State Street A-6 Liquidity Facility, the Commission will give notice to the Serie s A-6 Issuing and Paying Agent and the Dealers.
In addition, concurrently with giving such notice to the Commission and the Series A-6 Issuing and Paying Agent, State Street will provide a copy thereof to the Dealers at their respective addresses referred to in the State Street A-6 Liquidity Facility; provided, however, that State Street will not incur any liability as a result of its failure to provide a copy of such a notice in accordance with this sentence.
Related Covenants
Under the related Series A-6 Issuing and Paying Agent Agreement, the Commission covenants to maintain in effect the State Street A-6 Liquidity Facility or an Alternate Facility meeting the requirements of such Series A-6 Issuing and Paying Agent Agreement at all times that Series A-6 Notes are Outstanding thereunder. The Commission will further covenant that if it is unable to obtain a binding commitment for an Alternate Facility at least 90 days prior to the Commitment Expiration Date, it shall use its best efforts, to the extent permitted by law, to endeavor to refinance such outstanding Series A-6 Notes or Bank Notes, as the case may be.
The Commission shall deliver written notice of a proposed Alternate Facility to the Series A-6 Issuing and Paying Agent, State Street, the City and each Dealer not less than 45 days prior to the substitution date. The Series A-6 Issuing and Paying Agent shall deliver written notice of such substitution to the registered Holders of Series A-6 Notes at least 30 days prior to the substitution date. [Remainder of page left blank intentionally.]
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BANK FACILITY FOR THE SERIES A-7 COMMERCIAL PAPER NOTES
SMBC A-7 LETTER OF CREDIT
AND SMBC A-7 REIMBURSEMENT AGREEMENT
The Commission has entered into a reimbursement agreement (the “SMBC A-7 Reimbursement Agreement”) with SMBC, pursuant to which SMBC has issued an irrevocable direct -pay letter of credit (the “SMBC A-7 Letter of Credit”) for the account of the Commission supporting the payment of principal of and interest due thereon at maturity or upon acceleration of Series A-7 Notes. The Series A-7 Notes are issued pursuant to the terms of the Issuing and Paying Agent Agreement, dated as of June 1, 2017 (the “Series A-7 Issuing and Paying Agent Agreement”), by and between U.S. Bank Trus t Company, National Association (as successor in interest to U.S. Bank National Association) , as issuing and paying agent (the “Series A-7 Issuing and Paying Agent”), and the Commission.
The following description is a summary of certain provisions of the SMBC A-7 Letter of Credit and SMBC A-7 Reimbursement Agreement. Such summary does not purport to be a complete description or restatement of the material provisions of the SMBC A-7 Letter of Credit and SMBC A-7 Reimbursement Agreement. Investors should obtain and review copies of the SMBC A-7 Letter of Credit and SMBC A-7 Reimbursement Agreement in order to understand all of the terms of those documents . All capitalized terms appearing under this heading “ SMBC A-7 LETTER OF CREDIT AND SMBC A-7 REIMBURSEMENT AGREEMENT” not otherwise defined herein shall have the meanings assigned to them in the related document.
SMBC A-7 Letter of Credit
The SMBC A-7 Letter of Credit is an irrevocable transferable obligation of SMBC Mitsui Banking Corporation, acting through its New York Branch and supports the Series A-7 Notes only. The SMBC A- 7 Letter of Credit was issued in an amount equal to the maximum principal amount of the Series A-7 Notes plus 270 days’ interest thereon at the rate of 12% per annum calculated on the basis of a year of 365 days (the “Stated Amount”). The Series A-7 Issuing and Paying Agent is authorized to draw on SMBC in an aggregate amount not to exceed the Stated Amount of the SMBC A-7 Letter of Credit and in accordance with the terms and conditions and subject to the reductions and reinstatements in amount as set forth in the SMBC A-7 Letter of Credit, in one or more Drawings (as defined in the SMBC A-7 Letter of Credit), payable as set forth in the SMBC A-7 Letter of Credit on any Business Day ( as defined in the SMBC A-7 Letter of Credit), by presentation of the appropriate certifications, (i) for the payment at maturity of the principal of and interest at maturity on Series A-7 Notes, (ii) for the payment at maturity of the principal of and interest to maturity on Series A-7 Notes that otherwise mature on or after the date that the Series A-7 Issuing and Paying Agent receives the Final Drawing Notice (as defined in the SMBC A-7 Letter of Credit) from SMBC, or (iii) for (x) the payment of the principal of and interest due upon acceleration of certain of the Series A-7 Notes (each an “Acceleration Drawing”) or (y) the payment of the principal of and interest due upon acceleration of all outstanding Series A-7 Notes (the “Final Acceleration Drawing”), in each case an aggregate amount not exceeding the Stated Amount of the SMBC A-7 Letter of Credit.
Upon SMBC honoring any Drawing, the Stated Amount and the amount available to be drawn under the SMBC A-7 Letter of Credit for subsequent Drawings will be automatically decreased by an amount equal to the amount of such Drawing. In connection therewith, the Stated Amount and the amounts from time to time available to be drawn under the SMBC A-7 Letter of Credit (except in the case of the Final Acceleration Drawing or a Drawing resulting from the delivery of the Final Drawing Notice) will be increased when and to the extent, but only when and to the extent, (i) (A) of transfer by the Series A -7 Issuing and Paying Agent to SMBC on the date such Drawing is honored of proceeds of Series A-7 Notes issued on such date or (B) the Series A-7 Issuing and Paying Agent receives written notice from SMBC
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that SMBC has been reimbursed by or on behalf of the Commission for any amount drawn under the SMBC A-7 Letter of Credit, and (ii) that the Series A-7 Issuing and Paying Agent has not received from SMBC a No-Issuance Not ice (as defined in the SMBC A-7 Letter of Credit). Upon SMBC honoring the Final Acceleration Drawing, the Stated Amount shall be permanently reduced to zero and the Stated Amount shall no longer be reinstated.
The SMBC A-7 Letter of Credit will expire at 4:00 p.m., New York City time, on the date (the earliest of such dates to occur is referred to as the “Termination Date”) which is the earliest of (i) May 31, 2027 (the “Stated Expiration Date”) or such later date as is specified by SMBC in a written notice to the Series A-7 Issuing and Paying Agent, (ii) the later of (a) the date on which SMBC receives written notice from the Series A-7 Issuing and Paying Agent that an Alternate Facility as is specified in such notice (as defined in the Series A-7 Issuing and Paying Agent Agreement) has been substituted for the SMBC A-7 Letter of Credit in accordance with the Series A-7 Issuing and Paying Agent Agreement and (b) the effective date of such Alternate Facility (after SMBC honors any properly presented and conforming Drawing on or prior to such date), (iii) the date on which SMBC receives written notice from the Series A-7 Issuing and Paying Agent that there are no longer any Series A -7 Notes Outstanding within the meaning of the Series A-7 Issuing and Paying Agent Agreement nor does the Commission intend to issue any additional Series A-7 Notes under the Series A-7 Issuing and Paying Agent Agreement and that the Series A -7 Issuing and Paying Agent elects to terminate the SMBC A-7 Letter of Credit, (iv) the earlier of (a) the fifteenth (15th) calendar day after the date on which the Series A-7 Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored under the SMBC A-7 Letter of Credit, and (v) the date on which the Final Acceleration Drawing is honored under the SMBC A-7 Letter of Credit.
SMBC A-7 Reimbursement Agreement Events of Default
If any of the following events shall occur, each such event shall be an “Event of Default” under the SMBC A-7 Reimbursement Agreement:
(a) the Commission shall fail to pay, or cau se to be paid, as and when due, (i) any Reimbursement Obligation (as defined in the SMBC A-7 Re imbursement Agreement), or (ii) any Obligation (as defined in the SMBC A-7 Reimbursement Agreement) (other than a Reimbursement Obligation) and, in such case, such failure shall continue for three (3) Business Days; (b) any representation or warranty made by or on behalf of the Commission in the SMBC A-7 Reimbursement Agreement or in any other Basic Document (as defined in the SMBC A-7 Reimbursement Agreement) or in any certificate or statement delivered thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made or delivered; (c) the Commission shall default in the due performance or observance of certain covenants set forth in the SMBC A-7 Reimbursement Agreement; (d) the Commission shall default in the due performance or observance of any other term, covenant or agreement contained in the SMBC A-7 Reimbursement Agreement or any other Basic Document and such default shall remain unremedied for a period of thirty (30) days after the occurrence thereof;
(e) the Commission shall (i) have entered involuntarily against it an order for r elief under the United States Bankruptcy Code, as amended, (ii) become insolvent or shall not pay, or be unable to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce
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in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property (as defined in the SMBC A-7 Reimbursement Agreement), (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in paragraph (f) below;
(f) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Commission or any substantial part of its Property, or a proceeding described in clause (e)(v) above shall be instituted against the Commission and such proceeding continues undischarged or any such proceeding continues undismissed or unstayed for a period of thirty (30) or more days;
(g) a debt moratorium, debt restructuring, debt adjustment or comparable restriction is imposed on the repayment when due and payable of the principal of or interest on any Debt ( as defined in the SMBC A-7 Reimbursement Agreement) of the Commission by the Commission or any governmental authority with appropriate jurisdiction; (h) any material provision of the SMBC A-7 Reimbursement Agreement or any other Basic Document shall at any time for any reason cease to be valid and binding on the Commission for any reason or shall be declared by any court or other Governmental Authority with competent jurisdiction to be null and void, invalid, or unenforceable, or the validity or enforceabil ity thereof shall be publicly contested by the Commission or by a Governmental Authority with competent jurisdiction, or the Commission shall deny that it has any further liability under the SMBC A-7 Reimbursement Agreement or any other Basic Document;
(i) dissolution or termination of the existence of the Commission; (j) the Commission shall (i) default on the payment of the principal of or interest on any Wastewater Enterprise Debt (as defined in the SMBC A-7 Reimbursement Agreement), beyond the period of grace, if any, provided in the instrument or agreement under which such Wastewater Enterprise Debt was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Wastewater Enterprise Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition is to permit (determined without regard to whether any notice is required) any such Wastewater Enterprise Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt; (k) the Commission shall (i) default on the payment of the principal of or interest on any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Debt (other than Wastewater Enterprise Debt) was created or incurred; or (ii) default in the observance or performance of any agreement or condition relating to any Debt (other than Wastewater Enterprise Debt) aggregating in excess of $10,000,000, or contained in any instrument or agreement evidencing, securing or relating thereto, or any other default, event of default or similar event shall occur or condition exist, the effect of which default, event of default or similar event or condition
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is to permit (determined without regard to whether any notice is required) any such Debt to become immediately due and payable in full as the result of the acceleration, mandatory redemption or mandatory tender of such Wastewater Enterprise Debt;
(l) any final, unappealable judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, in an aggregate amount not less than $10,000,000 shall be entered or filed against the Commission or against any of its Property a nd remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days; (m) any “event of default” under any Basic Document (as defined respectively therein) shall have occurred;
(n) a ruling, assessment, notice of deficiency or technical advice by the Internal Revenue Service shall be rendered to the effect that interest on the Series A-7 Notes is includable in the gross income of the holder(s) or owner(s) of such Series A-7 Notes and either (i) the Commission, after it has been notified by the Internal Revenue Service, shall not challenge such ruling, assessment, notice or advice in a court of law during the period within which such challenge is permitted or (ii) the Commission shall challenge such ruling, assessment, notice or advice and a court of law shall make a determination, not subject to appeal or review by another court of law, that such ruling, assessment, notice or advice is correctly rendered; (o) any of Moody’s or S&P shall have downgraded its long-term unenhanced rating of any Senior Debt (as defined in the SMBC A-7 Reimbursement Agreement) of the Commission to below “Baa2” (or its equivalent), or “BBB” (or its equivalent), respectively, or suspended or withdrawn its rating of the same; or
(p) the passage of any Law (as defined in the SMBC A-7 Reimbursement Agreement) has occurred which could reasonably be expected to have a material adverse effect on the Commission’s ability to perform its obligations under the SMBC A-7 Reimbursement Agreement or the other Basic Documents or to result in a material adverse effect on the enforceability or validity of the SMBC A- 7 Reimbursement Agreement or any of the other Basic Documents; provided that the Event of Default set forth in this paragraph (p) shall be null and void and of no further force and effect from and after the date any Reimbursement Agreement between the Commission and Bank of America, N.A., as provider of a letter of credit supporting any Commercial Paper Notes is terminated or a similar event of default is no longer provided therein.
SMBC A-7 Reimbursement Agreement Remedies
Upon the occurrence of any Event of Default under the SMBC A-7 Reimbursement Agreement, SMBC may exercise any one or more of the following rights and remedies in addition to any other remedies provided in the SMBC A-7 Reimbursement Agreement or by law:
(a) declare all Obligations to be immediately due and payable, whereupon the same shall be immediately due and payable without any further notice of any kind, which notice is waived by the Commission; provided, h owever, that in the case of an Event of Default described in paragraph (e), (f) or (g) above under the subcaption “ SMBC A-7 LETTER OF CREDIT AND SMBC A-7 REIMBURSEMENT AGREEMENT—SMBC A-7 Reimbursement Agreement Events of Default,” such acceleration shall automatically occur (unless such automatic acceleration is waived by SMBC in writing); or
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(b) issue a No-Issuance Notice (the effect of which shall be as provided in the SMBC A-7 Reimbursement Agreement), reduce the Stated Amount of the SMBC A-7 Letter of Credit to the amount of the then outstanding Series A-7 Notes supported by the SMBC A-7 Letter of Credit plus a corresponding amount of interest coverage, reduce the Stated Amount of the SMBC A-7 Letter of Credit as the then outstanding Series A-7 Notes are paid, and terminate the SMBC A-7 Letter of Credit when no Series A-7 Notes remain outstanding; or (c) issue the Final Drawing Notice (the effect of which shall be to cause the Termination Date of the SMBC A-7 Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Series A-7 Issuing and Paying Agent); or (d) pursue any rights and remedies it may have under the Basic Documents; or (e) pursue any other action available at law or in equity.
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APPENDIX B
THE BANKS
TABLE OF CONTENTS
Page
SUMITOMO MITSUI BANKING CORPORATION, ACTING THROUGH ITS NEW YORK BRANCH .................................................................................................................................... B-2 BANK OF AMERICA, N.A. .................................................................................................................... B-3 TD BANK, N.A.. ...................................................................................................................................... B-5 STATE STREET BANK AND TRUST COMPANY .............................................................................. B-6
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The following information has been furnished by the Banks for use in this Offering Memorandum.
Such information has not been independently confirmed or verified by the Commission. No representation is made herein by the Commission as to the accuracy or adequacy of such information subsequent to the date hereof, or that the information contained and incorporated herein by reference is correct . The Commission has assumed no obligation to update such information in the future, or to advise of any adverse change in the financial condition of the Banks . Investors are advised to obtain and carefully review any financial reports and other information published after the date hereof about the Banks prior to making a decision to purchase the Commercial Paper Notes.
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Sumitomo Mitsui Banking Corporation, acting through its New York Branch Sumitomo Mitsui Banking Corporation (K abushiki Kaisha Mitsui Sumitomo Ginko) (“SMBC”) is a joint stock corporation with limited liability (Kabushiki Kaisha) under the laws of Japan. The registered head office of SMBC is located at 1-1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan.
SMBC was established in April 2001 through the merger of two leading banks, The Sakura Bank, Li
mited and The Sumitomo Bank, Limited. In December 2002, Sumitomo Mitsui Financial Group, Inc. (“SMFG”) was established through a stock transfer as a holding company under which SMBC became a wholly-owned subsidiary. SMFG reported ¥257,704,625 million (US$2.11 trillion) in consolidated total assets as of March 31, 2022.
SMBC is one of the world’s leading commercial banks and provides an extensive range of banking services to its customers in Japan and overseas. In Japan, SMBC accepts deposits, makes loans and extends guarantees to corporations, individuals, governments and governmental entities. It also offers financing solutions such as syndicated lending, structured finance and project finance. SMBC als o underwrites and deals in bonds issued by or under the guarantee of the Japanese government and local government authorities, and acts in various administrative and advisory capacities for certain types of corporate and government bonds. Internationally, SMBC operates through a network of branches, representative offices, subsidiaries and affiliates to provide many financing products, including syndicated lending and project finance.
The New York Branch of SMBC is licensed by the New York State Department of Financial Services to conduct branch banking business at 277 Park Avenue, New York, New York, and is subject to examination by the New York State Department of Financial Services and the Federal Reserve Bank of New York.
Financial and Other Information
Audited consolidated financial statements for SMFG and its consolidated subsidiaries for the fiscal year 2021 ended March 31, 2022 , as well as other corporate data, financial information and analyses, are available in English on SMFG’s website at www.smfg.co.jp/english. The information on SMFG’s website does not form part of this Offering Memorandum and is not incorporated herein by reference. SMBC does not accept any responsibility for any information contained in this Offering Memorandum other than the information relating to SMBC, acting through its New York Branch.
The delivery of this Offering Memorandum shall not create any implication that there has been no change in the affairs of SMBC since the date hereof, or that the information contained or referred to herein is correct as of any time subsequent to its date.
.
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Bank of America, N.A.
Bank of America, N.A. (“Bank of America”) is a national banking association organized under the laws of the United States, with its principal executive offices located in Charlotte, North Carolina. Bank of America is a wholly-owned indirect subsidiary of Bank of America Corporation (the “Corporation”) and is engaged in a general consumer banking, commercial banking and trust business, offering a wide ran ge of commercial, corporate, international, financial market, retail and fiduciary banking services. As of March 31 , 202 2, Bank of America had consolidated assets of $2. 514 trillion, consolidated deposits of $2.150 trillion and stockholder’s equity of $229.392 billion based on regulatory accounting principles.
The Corporation is a bank holding company and a financial holding company, with its principal executive offices located in Charlotte, North Carolina. Additional information regarding the Corporation is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 202 1, together with its subsequent periodic and current reports filed with the Securities and Exchange Commission (the “SEC”).
The SEC maintains a website at www.sec.gov which contains the filings that the Corporation files with the SEC such as reports, proxy statements and other documentation. The reports, proxy statements and other information the Corporation files with the SEC are also available at its website, www.bankofamerica.com.
The information concerning the Corporation and Bank of America is furnished solely to provide limited introductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed infor mation appearing in the referenced documents and financial statements referenced therein.
Bank of America will provide copies of the most recent Bank of America Corporation Annual Report on Form 10-K, any subsequent reports on Form 10-Q, and any required reports on Form 8-K (in each case, as filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended), and the publicly available portions of the most recent quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to:
Bank of America Corporation
Office of the Corporate Secretary/Shareholder Relations One Bank of America Center
150 N College St., NC1-028-28-03
Charlotte, North Carolina 28255
PAYMENTS OF PRINCIPAL AND INTEREST ON THE SERIES A-2 NOTES WILL BE MADE FROM DRAWINGS UNDER THE BANK OF AMERICA A-2 LETTER OF CREDIT. PAYMENTS OF THE PURCHASE PRICE OF THE SERIES A-2 NOTES WILL BE MADE FROM DRAWINGS UNDER THE BANK OF AMERICA A-2 LETTER OF CREDIT IF REMARKETIN G PROCEEDS ARE NOT AVAILABLE. ALTHOUGH THE BANK OF AMERICA A- 2 LETTER OF CREDIT IS A BINDING OBLIGATION OF THE BANK, THE SERIES A-2 NOTES ARE NOT DEPOSITS OR OBLIGATIONS
OF THE CORPORATION OR ANY OF ITS AFFILIATED BANKS AND ARE NOT GUARANTEED BY ANY OF THESE ENTITIES. THE SERIES A-2 NOTES ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY AND ARE
SUBJECT TO CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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The delivery of this information shall not create any implication that there has been no change in the affairs of the Corporation or Bank of America since the date of the most recent filings referenced herein, or that the information contained or referred to under this caption is correct as of any time subsequent to the referenced date.
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TD Bank, N.A.
TD Bank, N.A. (the “Bank”) is a national banking association organized under the laws of the United States, with its main office located in Wilmington, Delaware. The Bank is an indirect, wholly - owned subsidiary of The Toronto-Dominion Bank (“TD”) and offe rs a full range of banking services and products to individuals, businesses and governments throughout its market areas, including commercial, consumer and trust services and indirect automobile dealer financing. The Bank operates banking offices in Conne cticut, Delaware, the District of Columbia, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, North Carolina, New York, Pennsylvania, Rhode Island, South Carolina, Vermont and Virginia. As of March 31, 2022, the Bank had consolidated assets of $417.3 billion, consolidated deposits of $366.8 billion and stockholder's equity of $44.5 billion, based on regulatory accounting principles.
Additional information regarding the foregoing, and the Bank and TD, is available from the filings made by TD with the U.S. Securities and Exchange Commission (the “SEC”), which filings can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. In addition, the SEC ma intains a website at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file such information electronically with the SEC.
The information concerning TD and the Bank contained herein is furnished solely to provide limited introductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced herein.
The TD Bank A-4 Liquidity Facility has been delivered by the Bank and is the obligation of the Bank and not TD.
The Bank will provide copies of the publicly available portions of the most recent quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to:
TD Bank, N.A.
1701 Route 70 East
Cherry Hill, New Jersey 08034
Attn: Corporate and Public Affairs
Information regarding the financial condition and results of operations of the Bank is contained in the quarterly Call Reports of the Bank delivered to the Comptroller of the Currency and available online at https://cdr.ffiec.gov/public. General information regarding the Bank may be found in periodic filings made by TD with the SEC. TD is a foreign issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare certain filings with the SEC in accordance wit h the disclosure requirements of Canada, its home country. Canadian disclosure requirements are different from those of the United States. TD’s financial statements are prepared in accordance with International Financial Reporting Standards, and may be subject to Canadian auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies prepared in accordance with United States generally accepted accounting principles.
The delivery hereof shall not create any implication that there has been no change in the affairs of TD or the Bank since the date hereof, or that the information contained or referred to in this Appendix B is correct as of any time subsequent to its date.
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NEITHER TD NOR ANY OTHER SUBSIDIARY OF TD OTHER THAN THE BANK IS OBLIGATED TO MAKE PAYMENTS UNDER THE TD BANK A-4 LIQUIDITY FACILITY.
The Bank is responsible only for the information contained in this section of the Offering Memorandum and did not participate in the preparation of, or in any way verify the information contained in, any other part of the Offering Memorandum. Accordingly, the Bank assumes no responsibility for and makes no representation or warranty as to the accuracy or completeness of information contained in any other part of the Offering Memorandum.
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State Street Bank and Trust Company
State Street Bank and Trust Company (the “Bank”) is a wholly- owned subsidiary of State Street Corporation (the “Corporation”). The C orporation (NYSE: STT) through its subsidiaries, including the Bank, provides a broad range of financial products and services to institutional investors worldwide. With $43.68 trillion in assets under custody and administration and $4.14 trillion in assets under management as of December 31, 20 21, the Corporation operates in more than 100 geographic markets worldwide. As of December 31, 20 21, the Corporation had consolidated total assets of $314. 62 billion, consolidated total deposits of $ 255.04 billion, total investment securities of $ 115.83 billion, total loans, net of unearned income and allowance for losses, of $32.45 billion, and total shareholders’ equity of $27.36 billion.
The Bank’s Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices Only -- FFIEC 031 (the “Call Reports”) through December 31, 2021 have been submitted through the Federal Financial Institutions Examination Council and provided to the Board of Governors of the Federal Reserve System, the primary U.S. federal banking agency responsible for regulating the Corporation and the Bank. Publicly available portions of those Call Reports, and future Call Reports so submitted by the Bank, are available on the Federal Deposit Insurance Corporation’s w ebsite at www.fdic.gov. The Call Reports are prepared in conformity with regulatory instructions that do not in all cases follow U.S. generally accepted accounting principles.
Additional financial and other information related to the Corporation and the Bank, including the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 and additional annual, quarterly and current reports subsequently filed or furnished by the Corporation with the U.S. Securities and Exchange Commission (the “S EC”), can be accessed free of charge on the SEC’s website at www.sec.gov.
Any statement contained in any document referred to above shall be deemed to be modified or superseded for purposes of this Offering Memorandum to the extent that a statement contained herein or in any subsequently submitted, filed or furnished document modifies or supersedes such statement. The delivery hereof shall not create any implication that there has been no change in the affairs of the Bank or the Corporation since the date hereof, or that information contained or referred to in this Appendix is correct as of any time subsequent to this date. The information concerning the Corporation, the Bank or any of their respective affiliates is furnished solely to provide limited intro ductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced herein.
A copy of any or all of the publicly available portions of the documents referred to above, other than exhibits to such documents, may be obtained without charge to each person to whom a copy of this Offering Memorandum has been delivered, on the written request of any such person. Written requests for such copies should be directed to Investor Relations, State Street Corporation, One Lincoln Street, Boston, Massachusetts 02111, telephone number 617-786-3000.
The State Street Series A-6 Liquidity Agreement is an obligation solely of the Bank and is not an obligation of, or otherwise guaranteed by, the Corporation or any of its affiliates (other than the Bank).
Neither the Corporation nor any of its affiliates (other than the Bank) is required to make payments under the State Street Series A -6 Liquidity Agr eement. None of the Bank, the Corporation or any of their respective affiliates makes any representation as to, or is responsible for the suitability of the Series A-6 Notes for any investor, the feasibility or performance of any project or compliance with any securities or tax laws or regulations. The Series A-6 Notes are not direct obligations of, or guaranteed by, the Bank, the Corporation or any of their respective affiliates, except to the extent provided by in the State Street Series A-6 Liquidity Agreement.
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APPENDIX C
BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER NOTES
General
One master Commercial Paper Note for each of the following has been registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, NY: (i) in the aggregate principal amount not exceeding the $150,000,000 available to se cure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A-1 (Tax Exempt) under the SMBC A-1 Letter of Credit has been registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, NY; (ii) in the aggr egate principal amount not exceeding the $150,000,000 available to secure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A-2 (Tax Exempt) under the Bank of America A-2 Letter of Credit. One master Commercial Paper Note; (iii) in the aggregate principal amount not exceeding the $75,000,000 available to secure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A -4 (Tax Exempt) under the TD Bank A-4 Liquidity Facility ; (iv) in the aggregate principal amount not exceeding the $ 200,000,000
* available to secure the Commercial Paper Notes
(Wastewater Series, Proposition E) Series A-6, consisting of Tax -Exempt Subseries A-6 and Taxable Subseries A-6-T under the State Street A-6 Liquidity Facility; and (v) in the aggregate pr incipal amount not exceeding the $100,000,000 available to secure the Commercial Paper Notes (Wastewater Series, Proposition E) Series A-7 (Tax Exempt) under the SMBC A-7 Letter of Credit. DTC will act as securities depository for the Commercial Paper Notes.
Book-Entry System
DTC will act as securities depository for the Commercial Paper Notes. The Commercial Paper Notes 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 security certificate will be issued for the Commercial Paper Notes, in the aggregate principal amount of the Commercial Paper Notes, and will be deposited with DTC.
DTC, the world’s largest 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
* In connection with the Series A -6 Notes, the Commission approved an increase in the current commitment amount, from $100,000,000 to $200,000,000, and an extension of the term of such com mitment, under the State Street A-6 Liquidity Facility, which became effective on October 15, 2019. In connection with such increase and extension, the Commission approved the termination of the Series A-5 Notes (as defined herein), which become effective on October 14, 2019.
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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”). DTC has Standard & Poor’s rating: AA+.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission .
More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of the Commercial Paper Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Commercial Paper Notes on DTC’s records. The ownership interest of each actual purchaser of each Commercial Paper Note (“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 Commercial Paper Notes 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 certificates representing their ownership interests in the Commercial Paper Notes, except in the event that use of the book-entry system for the Commercial Paper Notes is discontinued.
To facilitate subsequent transfers, all Commercial Paper Notes 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 the Commercial Paper Notes 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 Commercial Paper Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Commercial Paper Notes 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 the Commercial Paper Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Commercial Paper Notes. For example, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Commercial Paper Notes unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer 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 the Commercial Paper Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal of and interest on the Commercial Paper Notes 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 Commission or the Issuing and Paying Agent, on payable 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 r esponsibility of such Participant and not of DTC (nor its nominee), the Issuing and Paying Agent, or the Commission, subject to any statutory
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or regulatory requirements as may be in effect from time to time . Payment of principal of and interest evidenced by the Commercial Paper Notes to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commission or the Issuing and Paying Agent, disbursement of such payments to Direct Participants wil l be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
NEITHER THE COMMISSION NOR THE ISSUING AND PAYING AGENT WILL HAVE
ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS
OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS.
Neither the Commission nor the Issuing and Paying Agent can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of and interest on the Commercial Paper Notes paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Offering Memorandum.
Discontinuation of the Book-Entry Only System
DTC may discontinue providing its services as securities depository with respect to the Commercial Paper Notes at any time by giving reasonable notice to the Commission or the Issuing and Paying Agent .
Under such circumstances, in the event that a successor securities depository is not obtained, Commercial Paper Note certificat es will be printed and delivered as described in the Issuing and Paying Agent Agreement.
The Commission may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Commercial Paper Note certificates will be printed and delivered as described in the Issuing and Paying Agent Agreement.
SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE COMMERCIAL PAPER
NOTES, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE OWNERS OR HOLDERS OF THE COMMERCIAL PAPER NOTES (OTHER THAN UNDER THE CAPTION “TAX MATTERS” HEREIN) SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE COMMERCIAL PAPER NOTES.
NEITHER THE COMMISSION, THE ISSUING AND PAYING AGENT, NOR THE DEALERS
WILL HAVE ANY RESPONS IBILITY OR OBLIGATION TO DTC DIRECT PARTICIPANTS,
INDIRECT PARTICIPANTS, OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE
ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DTC DIRECT PARTICIPANT, OR INDIRECT PARTICIPANT; (II) THE DELIVERY OF ANY NOTICE THAT IS PERMITTED OR
REQUIRED TO BE GIVEN TO THE OWNERS OF THE COMMERCIAL PAPER NOTES UNDER THE ISSUING AND PAYING AGENT AGREEMENT; (III) THE PAYMENT BY DTC OR ANY DTC
DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR IN TEREST DUE WITH RESPECT TO THE COMMERCIAL PAPER NOTES; (IV) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE REGISTERED OWNER OF COMMERCIAL PAPER NOTES; OR (V) ANY OTHER MATTER.
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APPENDIX D
COPY OF JUNE 2022 OPINION OF BOND COUNSEL
June 1, 2022
Public Utilities Commission
of the City and County of San Francisco
San Francisco, California
Not to Exceed $675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
$75,000,000
Series A-4 (Tax Exempt)
$150,000,000
Series A-2 (Tax Exempt)
$200,000,000
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
$100,000,000
Series A-7 (Tax Exempt)
Ladies and Gentlemen:
We have acted as bond counsel to the Public Utilities Commission of the City and County of San Francisco (the “Commission”) in connection with the issuance of the Commission’s Commercial Paper Notes (Wastewater Series, Proposition E), Tax Exempt Series A-1, A -2, A-4, A-6 (Tax-Exempt Subseries A-6) and A-7 (the “Series A-1 Notes,” the “Series A- 2 Notes,” the “Series A-4 Notes” and the “Subseries A-6 Notes,” respectively, and collectively, the “Tax Exempt CP Notes”), and Taxable Subseries A-6-T (the “Taxable CP Notes” and, together with the Tax Exempt CP Notes, the “CP Notes,” and each as a “Series” or “Subseries” as applicable. The CP Notes are being issued pursuant to the Charter of the City and County of San Francisco (the “City”), Article V of Chapter 43 of the San Francisco Administrative Code, enacted by Ordinance No. 203-98, adopted by the Board of Supervisors of the City (the “Board”) on June 8, 1998, and signed by the Mayor of the City (the “Mayor”) on June 19, 1998, as amended by Ordinance 270-06 adopted by the Board on October 24, 2006, and signed by the Mayor of the City on October 31, 2006, to establish a procedure for the Commission to issue commercial paper notes, (as amended, the “Procedural Ordinance”), and various other ordinances and resolutions of the Board and the Commission (collectively with the Procedural Ordinance, the “Issuance Authorizations”). Each Series of Notes is issued pursuant to an Issuing and Paying Agent Agreement (each an “Issuing and Paying Agent Agreement” and collectively, the “Issuing and Paying Agent Agreements”), by and between the Commission and U.S. Bank National Association (in such capacity, the “Issuing and Paying Agent”), (i) dated as of March 1, 2017, as amended and restated as of April 25, 2017, in the case of the Series A-1 Notes, (ii) dated as of June 1, 2017, in the case of the Series A-2 Notes, (iii) dated as of July 1, 2012, in the case of the Series A-4 Notes, (iv) dated as of October 1, 2014, in the case of the Series A-6 Notes and supplemented on October 15, 2019, and (v)
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dated as of June 1, 2017, in the case of the Series A-7 Notes. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Issuing and Paying Agent Agreements.
Pursuant to each Issuing and Paying Agent Agreement, the Commission has pledged Available Wastewater Enterprise Revenues for the payment of principal of and interest on the Notes. Additionally, the payment of the principal of and (in some cases) interest on each Series of Notes is supported by a letter of credit or dedicated liquidity facility (each such letter of credit or agreement providing such dedi cated liquidity facility, a “Bank Facility”) issued or provided by a bank or other financial institution (each, a “Bank”).
In our capacity as bond counsel, we have reviewed the Charter of the City, the Issuance Authorizations, the Issuing and Paying Agent Agreements, the Bank Facilities and agreements related thereto, certifications of the City, the Commission, the Banks and others, opinions of the City Attorney and of counsel for the Banks and such other documents, opinions and instruments as we have deemed necessary to render the opinions set forth herein. Our services as bond counsel were limited to such examination and to rendering the opinions set forth herein.
We have assumed the genuineness of all documents and signatures presented to us. We have no t undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents. Furthermore, we have assumed compliance with all covenants and agreements contained in the Issuing and Paying Agent Agreements, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Tax Exempt CP Notes to be included in gross income for federal income tax purposes.
Certain requirements and procedures contained or referred to in each Issuing and Paying Agent Agreement and other relevant documents may be changed and certain actions may be taken or not taken under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. We express no opinion as to the effect of any change to any document pertaining to the Tax Exempt CP Notes of any Series or Subseries or of any action taken or not taken where such change is made or action is taken or not taken without our approval or in reliance upon the advice of counsel other than our firm with respect to the exclusion from gross income of the interest on the Tax Exempt CP Notes of such Series or Subseries for federal income tax purposes.
Our opinion in item 2 below is subject to the limitations on the imposition of fees and charges by the Commission relating to the Wastewater Enterprise under Articles XIIIC and XIIID of the California Constitution and to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws affecting creditors’ rights generally, to the application of general equitable principles (regardless of whether considered in a proceeding in equity or at law), to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public agencies in the State of California. In addition, we express no opinion with respect to any indemnification, contribution, penalty, choice of forum or waiver provisions contained in the Issuing and Paying Agent Agreements.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. Each Series of the CP Notes has been duly authorized by the Commission in accordance with the laws of the State of California and the Issuance Authorizations.
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2. Each Issuing and Paying Agent Agreement has been duly authorized, executed and delivered by the Commission and, assuming due authorization, execution and delivery by the Issuing and Paying Agent, constitutes a valid, legal and binding obligation of the Commission enforceable against the Commission in accordance with its terms. Each Issuing and Paying Agent Agreement creates a valid pledge, to secure the payment of the principal of and interest on the CP Notes of the related Series, of the Available Wastewater Enterprise Revenues, as and to the extent set forth in such Issuing and Paying Agent Agreement and subject to the provisions of such Issuing and Paying Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein.
3. Each Series of CP Notes has been duly executed by the Commission and authenticated by the Paying Agent, and when issued and delivered against payment therefor in accordance with the terms of the related Issuing and Paying Agent Agreement, will constitute the valid, legal and binding limited obligations of the Commission, payable from and secured by a pledge of Available Wastewater Enterprise Revenues. Each Series of CP Notes will also be payable from the proceeds of refunding Notes of such Series or drawings or amounts available under the related Bank Facility as provi ded in the Issuing and Paying Agent Agreement. The general fund of the City is not liable, and the credit or taxing power of the City is not pledged, for the payment of the CP Notes or the interest thereon.
4. Under existing statutes, regulations, rulings and judicial decisions and assuming continuing compliance by the Commission with certain covenants in the related Issuing and Paying Agent Agreement, the Tax Certificate executed in connection with the issuance of the Tax Exempt CP Notes and requirements of the Internal Code of 1986 regarding the use, expenditure and investment of proceeds of the Tax Exempt CP Notes and the timely payment of certain investment earnings to the United States, interest on the Tax Exempt CP Notes is not included in gross income of the owners of the Tax Exempt CP Notes for purposes of federal income taxation. Failure to comply with such covenants and requirements may cause interest on the Tax Exempt CP Notes to be included in federal gross income retroactive to the date of issuance of the Tax Exempt CP Notes.
5. Interest on the Tax Exempt CP Notes is not treated as an item of tax preference for purposes of the federal alternative minimum tax.
6. Interest on the CP Notes is exempt from personal income tax imposed by the State of California.
Other than as described herein, we have neither addressed nor are we opining on the tax consequences to any person of the investment in, or the receipt or accrual of interest on, the CP Notes.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions. Such opinions may be adversely affected by actions taken or events occurring, including a change in law, regulation or ruling (or in the application or official interpretation of any law, regulation or ruling) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions are taken or such events occur, and we have no obligation to update this opinion in light of any such actions or events.
Unless otherwise notified by us, you may continue to rely on this opinion to the extent that (i) there is no change in applicable state or federal law; (ii) the representations and warranties of the parties contained in the related Issuing and Paying Agent Agreement and Bank Facility and agreements related thereto, and in certain certificates delivered by authorized officers of the Commission, remain true and accurate; (iii) no amendment has been made to the related Issuing and Paying Agent Agreement or Bank Facilit y or the CP Notes; and (iv) no litigation affecting the issuance or legality is pending or threatened at the time of the
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delivery of any such CP Notes. We undertake no obligation to determine, at any time, whether the conditions described in (i) through (iv) of the preceding sentence have been met.
This opinion is limited to the laws of the State of California and the laws of the United States.
Respectfully submitted,
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APPENDIX E
FORM OF SUPPLEMENT TO JUNE 2022 OPINION OF BOND COUNSEL July 7, 2022
Public Utilities Commission
of the City and County of San Francisco
San Francisco, California 94102
Not to Exceed $675,000,000
Public Utilities Commission
of the City and County of San Francisco
Commercial Paper Notes
(Wastewater Series, Proposition E)
$150,000,000
Series A-1 (Tax Exempt)
$75,000,000
Series A-4 (Tax Exempt)
$150,000,000
Series A-2 (Tax Exempt)
$200,000,000
Series A-6
Tax-Exempt Subseries A-6
Taxable Subseries A-6-T
$100,000,000
Series A-7 (Tax Exempt)
Ladies and Gentlemen:
We acted as bond counsel to the Public Utilities Commission of the City and County of San Francisco (the “Commission”) in connection with the issuance by the Commission of its Commercial Paper Notes (Wastewater Series, Proposition E), Tax Exempt Series A-1, A -2, A-4, A-6 (Tax-Exempt Subseries A-6) and A-7 (the “Series A-1 Notes,” the “Series A-2 Notes,” the “Series A-4 Notes,” the “Subseries A- 6 Notes” and the “Series A-7 Notes,” respectively, and collectively, the “ Tax-Exempt CP Notes”), and Taxable Subseries A-6-T (the “Taxable CP Notes” and, together with the Tax-Exempt CP Notes, the “CP Notes,” and each as a “Series” or “Subseries ” as applicable. The CP Notes are being issued pursuant to the Charter of the City and County of San Francisco (the “ City”), Article V of Chapter 43 of the San Francisco Administrative Code, enacted by Ordinance No. 203-98, adopted by the Board of Supervisors of the City (the “ Board”) on June 8, 1998, and signed by the Mayor of the City (the “ Mayor”) on June 19, 1998, as amended by Ordinance 270-06 adopted by the Board on October 24, 2006, and signed by the Mayor of the City on October 31, 2006, to establish a procedure for the Commission to issue commercial paper notes, (as amended, the “Procedural Ordinance ”), and various other ordinances and resolutions of the Board and the Commission (collectively with the Procedural Ordinance, t he “ Issuance Authorizations”).
Each Series of Notes is issued pursuant to an Issuing and Paying Agent Agreement (each an “Issuing and Paying Agent Agreement” and collectively, the “Issuing and Paying Agent Agreements”),
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by and between the Commission and U.S. Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association (in such capacity, the “ Issuing and Paying Agent ”), (i) dated as of March 1, 2017, as amended and restated as of April 25, 2017, in the case of the Series A-1 Notes, (ii) dated as of June 1, 2017, in the case of the Series A-2 Notes, (iii) dated as of July 1, 2012, in the case of the Series A-4 Notes, (iv) dated as of October 1, 2014, and supplemented on October 15, 2019, in the case of the Series A-6 Notes and (v) dated as of June 1, 2017, in the case of the Series A-7 Notes. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Issuing and Paying Agent Agreements or in our bond counsel opinion letter issued on June 1, 2022 with respect to the CP Notes (the “June 2022 Opinion Letter”).
In the June 2022 Opinion Letter, we opined as to certain matters of federal and state law, including an opinion, subject to certain assumptions, conditions and limitations, to the effect that interest on the Tax- Exempt CP Notes would not be includable in the gross income of the owners thereof for federal income tax purposes.
The June 2022 Opinion Letter states, “Unless otherwise notified by us, you may continue to rely on this opinion to the extent that (i) there is no change in applicable state or federal law; (ii) the representations and warranties of the parties contained in the related Issuing and Paying Agent Agreement and Bank Facility and agreements related thereto, and in certain certificates delivered by authorized officers of the Commission, remain true and accurate; (iii) no amendment has been made to the related Issuing and Paying Agent Agreement or Bank Facility or the CP Notes; and (iv) no litigation affecting the issuance or legality is pending or threatened at the time of the delivery of any such CP Notes.” Thus, if any of conditions (i) through (iv) of the preceding sentence (each a “ Condition” and, collectively, the “ Conditions”) were not met, you could not continue to rely on the June 2022 Opinion Letter unless we were to notify you otherwise. The June 2022 Opinion also states that we undertake no obligation to determine, at any time, whether the Conditions have been met.
We have been advised by you that t he Bank Facility with respect to the Series A-4 Notes is scheduled to expire on July 8, 2022, and that the Commission and TD Bank, N.A. (“ TD Bank ”) have entered into a Revolving Credit and Term Loan Agreement, dated as of July 1, 2022, and a Fee Letter, dated July 7, 2022 (the “ Bank Facility Substitution”), to provide liquidity support for the payment of the principal of the Series A-4 Notes.
The Bank Facility Substitution may cause Condition (iii) (described above) not to be satisfied, potentially affecting your ability to rely on the June 2022 Opinion Letter.
This letter is to notify you that the Bank Facility Substitution shall not, in and of itself, eliminate your ability otherwise to rely on the June 2022 Opinion Letter.
Please be advised that we express no view herein as to whether the conditions to the issuance of an Alternate Facility under Section 9.02 of the Issuing and Paying Agent Agreement with respect to the Series A-4 Tax-Exempt Notes have been met or whether any other action taken with respect to the existing Bank Facility is consistent with the terms of the Issuing and Paying Agent Agreements. Further, we express no opinion herein with respect to the exclusion from gross income of interest on the Tax-Exempt CP Notes for federal income tax purposes; nor do we express an opinion with respect to any other matter as to which an opinion was previously rendered in the June 2022 Opinion Letter. We have not been engaged to make, and we have not made, any inquiry or investigation with respect to any circumstances that may have occurred after the date of the June 2022 Opinion Letter, other than the Bank Facility Substitution, as described above, that might affect your ability to rely on the June 2022 Opinion Letter.
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We undertake no obligation to determine, or to inform any person, at any time whether the Conditions have been met, and we have no obligation to update the June 2022 Opinion Letter with respect to the Conditions.
Respectfully submitted,