Both the Supply Assurance and the Individual Supply Guarantees identified are e xpressed in terms of daily deliveries on an annual average basis and do not themselves constitute a guarantee by San Francisco to meet peak daily or hourly demands of the Wholesale Customers, irrespective of what those peak demands may be. The parties acknowledge, however, that the Regional Water System has been designed and constructed to meet peak daily and hourly demands and that its capacity to do so has not yet been reached. San Francisco agrees to operate the Regional Water System to meet peak requirements of the Wholesale Customers to the extent possible without adversely affecting its ability to meet peak demands of Retail Customers. The Agreement shall not preclude San Francisco from undertaking to meet specific peak demand requirements of individual Wholesale Customers in their Individual Water Sales Contracts.
The Supply Assurance is perpetual and shall survive the expiration or earlier termination of the Agreement.
Similarly, the Individual Supply Guarantees and/or the Individual Water Sales Contr acts are perpetual and shall survive the expiration or earlier termination of the Agreement or the Individual Water Sales Contracts.
The amount of water made available by San Francisco to the Wholesale Customers is subject to reduction, to the extent and for the period made necessary by reason of water shortage, Drought, Emergencies, or by malfunctioning or rehabilitation of facilities in the Regional Water System. The amount of water made available to the Wholesale Customers may not be reduced, however, merely because the water recycling and groundwater projects which WSIP envisions to be constructed within San Francisco, or the conservation programs intended to reduce water use by Retail Customers that are included in the WSIP, do not generate the yield or savings (10 MGD combined) anticipated by San Francisco.
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Allocation of Supply Assurance
A portion of the Supply Assurance has been allocated among 24 of the 26 Wholesale Customers. Three Wholesale Customers do not have Individual Supply Guarantees. The cit ies of San José and Santa Clara do not have an Individual Supply Guarantee because San Francisco has provided water to them on a temporary and interruptible basis. The City of Hayward does not have an Individual Supply Guarantee because of the terms of the 1962 contract between it and San Francisco.
If the total amount of water delivered by San Francisco to Hayward and to the Wholesale Customers with Individual Supply Guarantees exceeds 184 MGD over a period of three consecutive fiscal years (i.e., July 1 t hrough June 30), then the Individual Supply Guarantees of those Wholesale Customers shall be reduced pro rata so that their combined entitlement and the sustained use by Hayward does not exceed 184 MGD.
It is the responsibility of each Wholesale Customer to limit its purchases of water from San Francisco so as to remain within its Individual Supply Guarantee. San Francisco is not liable to any Wholesale Customer or obligated to supply more water to any Wholesale Customer individually or to the Wholesale Cus tomers collectively than the amount to which it or they are otherwise entitled under the Agreement due to the use by any Wholesale Customer of more water than the amount to which it is entitled under the Agreement.
San Francisco installs such new connections between the Regional Water System and the distribution system of any Wholesale Customer that are necessary to deliver the quantities of water to which the Wholesale Customer is entitled under the Agreement. San Francisco has the right to determine the location of such connections, in light of the need to maintain the structural integrity of the Regional Water System and, where applicable, the need to limit peaking directly off of Regional Water System pipelines by a Wholesale Customer’s individual retail customers, the need to ensure that a Wholesale Customer’s individual retail customers have access to alternative sources of water in the event of a reduction in San Francisco’s ability to provide them with water, and other factors which may affect the desirability or undesirability of a particular location.
Wholesale Customer Service Areas
A Wholesale Customer may not deliver water furnished to it by San Francisco outside the boundary of its service area without the prior written consent of San Francisco, except for deliveries to another Wholesale Customer on an emergency and temporary basis. San Francisco may refuse a Wholesale Customer’s request to expand its service area on any reasonable basis.
If two or more Wholesale Customers agree to adjust the boundaries of their respective service areas so that one assumes an obligation to serve customers in an area that was previously within the service area of another Wholesale Customer, they may also correspondingly adjust their respective Individual Supply Guar antees. Such adjustments require only the consent of San Francisco and the Wholesale Customers involved, so long as the Supply Assurance and the Individual Supply Guarantees of other Wholesale Customers are not affected.
San Francisco acknowledges that it has heretofore consented in writing to deliveries of water by individual Wholesale Customers outside their service area boundaries and agrees that nothing in the Agreement is intended to affect such prior authorizations, which remain in full force and eff ect according to their terms.
Permanent Transfers of Individual Supply Guarantees and Minimum Annual Purchase Quantities A Wholesale Customer that has an Individual Supply Guarantee may transfer a portion of it to one or more other Wholesale Customers; transfers of a portion of an Individual Supply Guarantee must be permanent; and transfers of portions of Individual Supply Guarantees are subject to approval by the SFPUC. SFPUC review is limited to (1) whether a proposed transfer complies with the Act, and ( 2) whether the affected facilities in the Regional Water System have sufficient capacity to accommodate delivery of the increased amount of water to the proposed transferee.
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Transfers of a portion of a Minimum Annual Purchase Quantity may be included in transfers of a portion of an Individual Supply Guarantee and are subject to the same requirements for Individual Supply Guarantee transfers as well as certain additional conditions.
Restrictions on Resale
Each Wholesale Customer agrees that it will not sell any water purchased from San Francisco to a private party for resale by such private party to others in violation of the Act.
Each Wholesale Customer also agrees that it will not sell water purchased from San Francisco to another Wholesale Customer without prior written approval of the SFPUC, except on a temporary and emergency basis. The SFPUC agrees that it will not unreasonably withhold its consent to a request by a Wholesale Customer to deliver water to another Wholesale Customer for resale.
Conservation; Use of Local Sources
Each Wholesale Customer shall take all actions within its legal authority related to water conservation that are necessary to insure that the SFPUC (a) remains eligible for (i) state and federal grants and (ii) access to the Drought Water Bank operated by the California Department of Water Resources, as well as other Drought -related water purchase or transfer programs, and (b) complies with future legal requirements imposed on the Regional Water System by the federal government, the State, or any other third party as conditions for receiving funding or water supply.
San Francisco and each Wholesale Customer agree that they will diligently apply their best efforts to use both surface water and groundwater sources located within their respective service areas and available recycled water to the maximum feasible extent, taking into account the environmental impacts, the public health effects and the effects on supply reliability of such use, as well as the cost of developing such sources .
Restrictions on Purchases of Water from Others; Minimum Annual Purchases Each Wholesale Customer (except for Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale) agrees that it will not contract for, purchase or receive, with or without compensation, directly or indirectly, from any person, corporation, governmental agency or other entity, any water for delivery or use within its service area without the prior written consent of San Francisco.
The prohibition in the preceding sentence does not apply to:
1. recycled water;
2. water necessary on an emergency and temporary basis, provided that the Wholesale Customer promptly gives San Francisco notice of the nature of the emergency, the amount of water that has been or is to be purchased, and the expected duration of the emergency; or
3. water in excess of a Wholesale Customer’s Individual Supply Guarantee.
Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale may purchase water from sources other than San Francisco, provided that San Francisco shall require that each purchase a minimum annual quantity of water from San Francisco. These Minimum Annual Purchase Quantities are set out in the Agreement and the Individual Water Sales Contracts between San Francisco and each of these four Wholesale Customers, and a portion of such a quantity may be transferred to another Wholesale Customer at the same time as a transfer of a portion of Individual Supply Guarantee. Certain Wholesale Customers may also be required to purchase Temporary Modified Minimum Annual Purchase Quantities from San Francisco.
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Water Quality
San Francisco shall deliver treated water to Wholesale Customers (except Coastside County Water District, which receives untreated water from Crystal Springs and Pilarcitos Reservoirs) that complies with primary maximum contaminant level and treatment technique standards at the regulatory entry points designated in the San Francisco Regional Water System Domestic Water Supply Permit (currently Permit No. 02-04-04P3810001) issued by the California Department of Public Health.
Regional Water System Repair, Maintenance and Operation San Francisco will keep the Regional Water System in good working order and repair consistent with prudent utility practice.
San Francisco will continue to operate its reservoirs in a manner that assigns higher priority to the delivery of water to the Bay Area and the environment than to the generation of electric power. The SFPUC, as the Regional Water System operator, is solely responsible for making day-to-day operational decisions.
Shortages
Notwithstanding San Francisco’s obligations to deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply Guarantees to Wholesale Customers individually, San Francisco may reduce the amount of water available or interrupt water deliveries to specific geographical areas within the Regional Water System service area to the extent that such reductions are necessary due to Emergencies, or in order to install, repair, rehabilitate, replace, investigate or inspect equipment in, or perform other maintenance work on, the Regional Water System. Such reductions or interruptions may be imposed by San Francisco without corresponding reductions or interruptions in the amount of water available to SFPUC water users outside the specific geographical area where reductions or interruptions are necessary, if the system’s ability to supply water outside the specific geographical area has not been impaired. In the event of such a reduction or interruption, San Francisco will restore the supply of water to the specific geographical area as soon as is possible.
Following a major system emergency event, the SFPUC will work closely with its Wholesale Customers to monitor customer demand, including the demand source. In the event that any individual Wholesale Service Area or Retail Service Area customer’s uncontrolled distribution system leaks could result in major water waste and endanger the supply provided by the Regional Water System as a whole, flow through some customer connections may need to be temporarily reduced or terminated. SFPUC will work closely with customers to assess the nature of the demand (e.g. fire-fighting versus leakage), so that public health and safety protection can be given top priority.
1. All emergencies that require use of non -potable source water will require use of chlorine, or other suitable disinfectant, if feasible.
2. San Francisco will use its best efforts to meet the seismic reliability and delivery reliability level of service goals adopted by the Commission in conjunction with the WSIP. San Francisco will distribute water on an equitable basis throughout the Regional Water System service area following a regional Emergency, subject to physical limitations caused by damage to the Regional Water System.
Notwithstanding San Francisco’s obligations to deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply Guarantees to Wholesale Customers individually, San Francisco may reduce the amount of water available to the Wholesale Customers in response to Drought.
1. The Tier 1 Shortage Plan set forth in the Agreement will continue to be used to allocate water from the Regional Water System between Retail and Wholesale Customers during system-wide shortages of 20% or less.
2. San Francisco and the Wholesale Customers may negotiate in good faith revisions to the Tier 1 Shortage Plan to adjust for and accommodate anticipated changes due to demand hardening in the SFPUC’s Wholesale and Retail Service Areas. Until agreement is reached, the current Tier 1 Shortage Plan will remain in effect.
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3. The SFPUC will honor allocations of water among the Wholesale Customers (“Tier 2 Allocations”) provided by BAWSCA or if unanimously agreed to by all Wholesale Customers. If BAWSCA or all Wholesale Customers do not provide the SFPUC with Tier 2 Allocations, then the SFPUC may make a final allocation decision after first meeting and discussing allocations with BAWSCA and the Wholes ale Customers. For Regional Water System shortages in excess of 20%, San Francisco shall (a) follow the Tier 1 Shortage Plan allocations up to the 20% reduction, (b) meet and discuss how to implement incremental reductions above 20% with the Wholesale Customers, and (c) make a final determination of allocations above the 20% reduction. After the SFPUC has made the final allocation decision, the Wholesale Customers shall be free to challenge the allocation on any applicable legal or equitable basis.
4. San Francisco will use its best efforts to identify potential sources of dry year water supplies and establish the contractual and other means to access and deliver those supplies in sufficient quantity to meet a goal of not more than 20% system-wide shortage in any year of the design drought.
Wheeling of Water from Outside SFPUC System
Subject to the Wheeling Statute, the SFPUC will not deny use of Regional Water System unused capacity for wheeling when such capacity is available for wheeling purposes during pe riods when the SFPUC has declared a water shortage emergency under Water Code Section 350 if the following conditions are met:
A. The transferor pays reasonable charges incurred by the SFPUC as a result of the wheeling, including capital, operation, maintenance, administrative and replacement costs (as such are defined in the Wheeling Statute).
B. Wheeled water that is stored in the Regional Water System spills first.
C. Wheeled water will not unreasonably: (1) impact fish and wildlife resources in Regional Water System reservoirs; (2) diminish the quality of water delivered for consumptive uses; or (3) increase the risk of exotic species impairing Regional Water System operations. The transferor may at its own expense provide for treatment to mitigate these effects.
D. Priority will be given to wheeling by Wholesale Customers or BAWSCA over arrangements for third-party public entities.
Limits on New Customers
Until December 31, 2028, San Francisco will not enter into contracts to supply water to any entity other than a Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:
1. It completes any necessary environmental review under CEQA of the proposed new wholesale water service obligations;
2. It concurrently completes any necessary environmental review under CEQA and commits to make both San José and Santa Clara permanent customers with Individual Supply Guarantees equal to at least 9 MGD; and
3. The Agreement is amended to incorporate any commitments to proposed new wholesale customers and to San José and Santa Clara, and to address the effects, if any, of the new customer(s) on water supply reliability, water quality and cost to existing customers of the Regional Water System.
As of January 1, 2029, San Francisco will not enter into contracts to supply water to any entity other than a Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:
1. It completes any necessary environmental review under CEQA of the proposed new wholesale water service obligations;
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2. It concurrently completes any necessary environmental review under CEQA and commits to make both San José and Santa Clara permanent customers with Individual Supply Guarantees equal to at least 9 MGD;
3. Doing so increases the reliability of the Regional Water System; and
4. The Agreement is concurrently amended (a) to reflect that increased reliability by means of an increased commitment by San Francisco to deliver water during Droughts and (b) to address the effects, if any, of the new customer(s) on water supply, water quality and cost to existing customers of the Regional Water System.
San Francisco may enter into new retail water service obligations outside of the City and County of San Francisco:
1. Only in Alameda, San Mateo, Santa Clara, San Joaquin and Tuolumne Counties;
2. That are within or immediately adjacent to areas in which it currently serves other Retail Customers; and
3. Until the aggregate additional demand represented by the new retail customers reaches 0.5 MGD.
The limitations on serving new Retail Customers described in this subsection do not apply to historical obligations to supply water that may be contained in prior agreements between the SFPUC or its predecessor the Spring Valley Water Comp any, and individual users or property owners located adjacent to Regional Water System transmission pipelines.
Subject to completion of necessary environmental review under CEQA, San Francisco may at any time enter into water exchanges or cost sharing agreements with other water suppliers to enhance dry year or normal year water deliveries, provided that San Francisco cannot incur new water service obligations to such other water suppliers unless the requirements for taking on new wholesale customers are met.
New Sources of Water Supply to Maintain Supply Assurance Sudden and unanticipated events may require San Francisco to act promptly to protect the health, safety and economic well -being of its Retail and Wholesale Customers. Such sudden events include, but are not limited to drought, earthquakes, terrorist acts, catastrophic failures of facilities owned and operated by San Francisco, and other natural or man-made events. If such events diminish San Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the Wholesale Revenue Requirement to pay for planning, evaluation and implementation of replacement sources of supply when such needs arise and without the prior approval of the Wholesale Customers.
Climate change, regulatory action s and other events may impact San Francisco’s ability to maintain the Supply Assurance from its existing surface water supplies, but on timescales long enough to permit San Francisco to collaborate with its Wholesale Customers on how best to address possible impacts to water supply. If such events diminish San Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the Wholesale Revenue Requirement to pay for planning, evaluation and implementation of replacement sources of supply when such needs arise and without the prior approval of the Wholesale Customers.
New Sources of Water Supply to Increase Supply Assurance San Francisco may offer to increase the Supply Assurance at the request of some or all of its Wholesale Customers. Costs associated with providing additional water from its existing water supplies in San Mateo, Santa Clara, Alameda, Tuolumne, and Stanislaus Counties shall be allocated to Wholesale and Retail Customers as described in the Agreement.
If San Francisco seeks t o develop additional water supplies from new sources to increase the Supply Assurance available to Wholesale Customers, studies and resulting water supply projects will be conducted jointly with BAWSCA under separate agreement(s) specifying the purpose of the projects, the anticipated regional benefits
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and how costs of studies and implementation will be allocated and charged. Nothing in the Agreement shall serve as precedent for the allocation of such new supply capital costs between Retail and Wholesale Customers or associated operational expenses, which shall only occur following approval of both parties and amendment of the Agreement, if necessary.
Interim Supply Limitation Imposed by SFPUC
In adopting the WSIP in Res. No. 08- 0200, the Commission included full implementation of all proposed WSIP capital improvement projects to achieve level of service goals relating to public health, seismic safety, and delivery reliability, but decided to adopt a water supply element that includes the Interim Supply Limit ation. The Interim Supply Limitation is allocated as follows between Retail and Wholesale Customers:
Retail Customers’ allocation: 81 MGD
Wholesale Customers’ allocation: 184 MGD
The Wholesale Customers’ collective allocation of 184 MGD under the Interim Supply Limitation includes the demand of the cities of San José and Santa Clara, whose demand is not included in the Supply Assurance.
Transfers of Interim Supply Allocations
Any Wholesale Customer, including Hayward, may transfer a portion of its Interim Supply Allocation to one or more other Wholesale Customers. All Wholesale Customers are also eligible transferees, including California Water Service Company up to its Individual Supply Guarantee. Transfers of a portion of an Interim Supply Allocation must be prospective. The duration of a transfer cannot be less than the balance of the fiscal year. Transfers of portions of Interim Supply Allocations are subject to approval by the SFPUC. SFPUC review is limited to determining (1) whether a proposed transfer complies with the Act, and (2) whether the affected facilities in the Regional Water System have sufficient capacity to accommodate delivery of the increased amount of water to the proposed transferee.
Maintenance of Condition of Hetch Hetchy Reservoir
San Francisco may not change the existing condition of the Hetch Hetchy Reservoir by:
1. Abandoning or decommissioning O’Shaughnessy Dam; or
2. Draining Hetch Hetchy Reservoir, except for purposes of (i) repair, rehabilitation, maintenance, improvement, or reconstruction of O’Shaughnessy Dam or appurtenances, (ii) supplying water to the Bay Area during drought, or (iii) meeting water release requirements under the Raker Act, or feder al or state law unless the parties enter into an amendment to the Water Supply Agreement.
Environmental Enhancement Surcharge
For the duration of the Interim Supply Limitation, the Commission will establish the Environmental Enhancement Surcharge concurrently with the budget- coordinated rate process set forth in the Agreement. The monetary amount of the Environmental Enhancement Surcharge per volume of water, such as dollars per acre -foot, will be equivalent for Retail Customer use in excess of 81 MGD and Wholesale Customer use in excess of 184 MGD.
The Environmental Enhancement Surcharge will be levied only if and when combined Retail Customer and Wholesale Customer purchases exceed the Interim Supply Limitation of 265 MGD and if the fund described below has been established by the San Francisco Board of Supervisors. In that event, the Environmental Enhancement Surcharge will apply to Retail Customers for use in excess of 81 MGD and to individual Wholesale Customers for use in excess of their Interim Supply Allocations established by the Commission.
1. Environmental Enhancement Surcharges related to the Retail Customers’ use in excess of their 81 MGD Retail Customer Allocation will be paid by the SFPUC, and no portion of such surcharges
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may be allocated to Whole sale Customers. The method of recovering the Environmental Enhancement Surcharges imposed upon Retail Customers shall be within the sole discretion of the SFPUC.
2. Environmental Enhancement Surcharges related to the individual Wholesale Customers’ use in excess of their respective Interim Supply Allocations will be paid to the SFPUC by individual Wholesale Customers.
Environmental Enhancement Surcharges paid by the SFPUC and by Wholesale Customers will be placed into a restricted reserve fund. The SFPUC will request the San Francisco Board of Supervisors to establish this fund by ordinance and, if adopted, the fund will be subject to the following restrictions:
1. Interest earnings will stay in the reserve fund.
2. The reserve fund shall (a) be subject to automatic appropriation; (b) require unexpended and unencumbered fund balances to be carried forward from year to year; and (c) not be transferred to the San Francisco General Fund.
3. The reserve fund may be used only for specific environmental restoration and enhance ment measures for the Sierra and local watersheds, such as those included in the Watershed Environmental Improvement Program.
4. Environmental Enhancement Surcharge proceeds shall be expended in an expeditious manner. Any Environmental Enhancement Surcharge proceeds that remain in the reserve fund as of December 31, 2018 shall be used to complete projects previously approved. Upon completion of the identified projects, the balance of any unexpended sums in the reserve fund shall be distributed to BAWSCA and the SFPUC in proportion to the total amount of surcharges assessed to the Wholesale and Retail Customers, respectively.
Specific uses of Environmental Enhancement Surcharges will be decided by the SFPUC and BAWSCA General Managers following input from environmental stakeholders and other interested members of the public. If parties are unable to agree, then they will jointly select a third person to participate in making the decision.
San José/Santa Clara Interim Supply Allocation and Process for Reduction/ Termination.
San Francisco will supply a combined annual average of 9 MGD to the cities of San José and Santa Clara through 2028. Water supplied by San Francisco may only be used in the existing defined service areas in the northern portions of San José and Santa Clara. San Francisco may reduce the quantity of water specified in this section when it establishes the Interim Supply Allocations for Wholesale Customers. The establishment of Interim Supply Allocations for San José and Santa Clara shall not be con sidered a reduction of supply, provided that the Interim Supply Allocations assigned to San José and Santa Clara do not effect a reduction greater than the aggregate average reduction in Individual Supply Guarantees for Wholesale Customers that have such guarantees.
San Francisco Decisions in 2028 Regarding Future Water Supply By December 31, 2028, San Francisco will have completed any necessary CEQA review that is relevant to making San José and Santa Clara permanent customers of the Regional Water System and will decide whether or not to make San José and Santa Clara permanent customers of the Regional Water System. San Francisco will make San José and Santa Clara permanent customers only if, and to the extent that, San Francisco determines that Regional Water System long term water supplies are available. In the event that San Francisco decides to afford permanent status to San José and Santa Clara, the Agreement will be amended.
By December 31, 2028, San Francisco will have completed any necessary CEQA review and will decide how much water if any, in excess of the Supply Assurance it will supply to Wholesale Customers from the Regional Water
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System to meet their projected future water demands until the year 2040, and whether to offer a corresponding increase in the Supply Assurance as a result of its determination.
Retained Discretion of SFPUC and Wholesale Customers
The Agreement contemplates discretionary actions that the SFPUC and the Wholesale Customers may choose to take in the future that could result in physical changes to the environment (“Discretionary Actions”). The Discretionary Actions include decisions to:
1. Develop additional or alternate water resources by the SFPUC or one or more Wholesale Customers;
2. Implement the physical facilities comprising the WSIP by December 30, 2021;
3. Approve wheeling proposals by Wholesale Customers;
4. Approve new wholesale customers and water exchange or cost sharing agreements with other water suppliers;
5. Provide additional water to San José and/or Santa Clara;
6. Offer permanent status to San José and/or Santa Clara;
7. Reduce or terminate supply to San José and/or Santa Clara;
8. Provide additional water to Wholesale Customers in excess of the Supply Assurance to meet their projected future water demands;
9. Offer a corresponding volumetric increase in the Supply Assurance; and
10. Implement Hetch Hetchy Water and Power projects listed in the Agreement.
Wholesale Revenue Requirement
The Agreement shall be applicable only to the water rates charged by San Francisco to the Wholesale Customers. Nothing contained in the Agreement shall limit, constrain, or in any way affect the rates which San Francisco may charge for water sold to Retail Customers or the methodology by which such rates are determined.
The Agreement sets forth the meth od by which the Wholesale Customers’ collective share of expenses incurred by the SFPUC in delivering water to them will be determined.
The Agreement implements two general principles as follows: (1) the Wholesale Customers should not pay for expenses of SFPUC operations from which they receive no benefit and (2) the Wholesale Customers should pay their share of expenses incurred by the SFPUC in delivering water to them on the basis of Proportional Annual Use unless otherwise explicitly provided in the Agreement.
To implement these general principles, the Wholesale Revenue Requirement will consist of, and be limited to the Wholesale Customers’ shares of the following categories of expense:
1. Contribution to the capital cost of Water Enterprise New Regional Assets.
2. Water Enterprise operation and maintenance expenses, including power purchased from the Hetch Hetchy Enterprise that is used in the operation of the Water Enterprise.
3. Water Enterprise administrative and general expenses.
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4. Water Enterprise property taxes.
5. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s operation and maintenance, administrative and general, and property tax expenses.
6. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s capital cost of New Assets classified as Water-Only and the Water-Related portion of Joint Assets.
In each of these cost categories, Direct Retail Expenses will be allocated entirely to Retail Customers. Direct Wholesale Expenses will be allocated entirely to the Wholesale Customers. Regional Expenses will be allocated between Retail Customers and Wholesale Customers.
For purposes of establishing the rates to be charged Wholesale Customers, expenses will be based on the budget for, and estimates of water purchases in, the following fiscal year. For purposes of accounting, the Wholesale Revenue Requirement will be determined on the basis of actual expenses incurred and actual water use.
In addition, rates charged to Wholesale Customers may include the Wholesale Customers’ contribution to a Wholesale Revenue Coverage Reserve, which is not included in the Wholesale Revenue Requirement itself.
Capital Cost Contribution – New Regional Assets
The Wholesale Customers shall pay the wholesale share of Net Annual Debt Service for new Regional Assets.
1. The amount of Net Annual Debt Service for New Regional Assets will be determined for each series of Indebtedness issued. Until the proceeds of a particular series are Substantially Expended, the amount attributable to specific projects will be based on th e expected use of proceeds shown in the “Certificate Regarding Use of Proceeds” executed by the SFPUC General Manager on behalf of the Commission in connection with the sale of the Indebtedness.
2. After the proceeds of a series are Substantially Expended, the SFPUC General Manager will prepare and execute a certificate showing the actual expenditure of proceeds at an allocation of Net Debt Service to New Regional Assets for a series of bonds will be used in the fiscal year in which the proceeds have been Substantially Expended and thereafter.
3. The Wholesale Customers’ share of Net Annual Debt Service for the New Regional Assets that are categorized as Direct Wholesale will be 100 percent. (None of the projects in the WSIP are categorized as Direct Wholesale.) The Wholesale Customers’ share of Net Annual Debt Service for all other New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use.
4. If Indebtedness is issued by the SFPUC to refund the 2006 Revenue Bonds, Series A or to refund any other long-term Indebtedness issued after July 1, 2009, the Net Annual Debt Service attributable to proceeds used for refunding will be allocated on the same basis as the Indebtedness being refunded.
5. In addition to Net Deb t Service, Wholesale Customers will pay a proportionate share of annual administrative costs associated with Indebtedness, such as bond trustee fees, credit rating agency fees, letter of credit issuer fees, San Francisco Revenue Bond Oversight Committee fees, etc., but only to the extent such fees are neither paid from proceeds of Indebtedness nor included in SFPUC operation and maintenance or administrative and general expenses.
The Wholesale Customers shall pay the wholesale share of the appropriation contained in the SFPUC annual budget for each year to be used to acquire or construct New Regional Assets.
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The Wholesale Customers’ share of the annual appropriation for revenue -funded New Regional Assets that are categorized as Direct Wholesale will be 100 percent. The Wholesale Customers’ share of the annual appropriation for all other revenue -funded New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use in each fiscal year. The amount appropriated in each fiscal year for the wholesale share of New Regional Assets shall be contributed to the Wholesale Capital Fund.
Hetch Hetchy Enterprise Expenses
There are two steps involved in determining the amount of the Wholesale Customers’ share of Hetch Hetchy Enterprise expenses.
1. The first step is to determine the Water Enterprise’s share of Hetch Hetchy Enterprise operation expenses, maintenance expenses, administrative and general expenses, and property taxes.
2. The second step is to determine the Wholesale Customers’ share of expenses allocable to the Water Enterprise.
The Water Enterprise’s share of Hetch Hetchy Enterprise expenses consist of 100 percent of Water -Only expenses and the Water-Related portion (45%) of Joint expenses.
The Wholesale Customers’ share of the sum of the Water Enterprise’s share of Hetch Hetchy Enterprise expenses shall be calculated by multiplying that dollar amount by Adjusted Proportional Annual Use.
Wholesale Customers are also allocated a share of Hetch Hetchy Enterprise capit al costs. The components of Hetch Hetchy Enterprise capital costs are as follows:
1. The Water Enterprise will be assigned 100 percent of Net Annual Debt Service attributable to acquisition and construction of New Hetch Hetchy Enterprise assets that are Water -Only and the Water-Related portion (45 percent) of Net Annual Debt Service on New Hetch Hetchy Enterprise Joint assets.
2. The Water Enterprise will be assigned 100 percent of capital expenditures from revenues for New Hetch Hetchy Enterprise assets that are Water-Only and the Water-Related portion (45 percent) of such expenditures for new Hetch Hetchy Enterprise Joint assets.
The Wholesale Customers’ share of the Net Annual Debt Service and revenue funded capital expenditures shall be calculated by multiplying that dollar amount by Adjusted Proportional Annual Use.
Additional Agreements Related to Financial Issues
The Wholesale Customers have no entitlement to any of the following sources of revenue to the SFPUC.
1. Revenues from leases or sales of SFPUC real property.
2. Revenues from other utility services such as the sale of electric power, natural gas and steam.
3. Revenues from the sale of water to customers and entities other than the Wholesale Customers.
4. Revenues earned from the investment of SFPUC funds other than funds contributed by the Wholesale Customers to the Wholesale Revenue Coverage Reserve or the Wholesale Capital Fund.
Wholesale Customers are also entitled to the benefit of earnings on proceeds of Indebtedness (through expenditure on New Regional Assets and /or application to Debt Service) and to interest on the Balancing Account.
5. Revenues not related to the sale of water.
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The Wholesale Customers will not be charged with any of the following expenses:
1. Capital costs for assets constructed or acquired prior to July 1, 1984.
2. Expenses incurred by the SFPUC for generation and distribution of electric power, including Hetch Hetchy Enterprise Power -Only expenses and the Power -Related share of Hetch Hetchy Enterprise Joint expenses. An exception to this is Regional energy costs incurred by the Water Enterprise, for which Wholesale Customers are charged on the basis of Proportional Annual Use.
3. Expenses incurred by SFPUC in providing water to Retail Customers.
4. Expenses associated with the SFPUC’s accruals o r allocations for uncollectible Retail Water accounts.
5. Attorneys’ fees and costs incurred by the Wholesale Customers that a court of competent jurisdiction orders San Francisco to pay as part of a final, binding judgment against San Francisco.
6. Any expenses associated with funding any reserves (other than the required Wholesale Revenue Coverage Reserve) accrued and not anticipated to be paid within one year unless such reserve is established by mutual agreement of the SFPUC and BAWSCA.
7. Any expenses accrued in respect to pending or threatened litigation, damage or personal injury claims or other loss contingencies unless projected to be paid within one year. Otherwise, such expenses will be charged to the Wholesale Customers when actually paid.
8. Any expenses associated with installing, relocating, enlarging, removing or modifying meters and service connections at the request of an individual Wholesale Customer.
9. The Retail Customers’ portion of any Environmental Enhancement Surcharges imposed to enforce the Interim Supply Limitation.
The following payments by Wholesale Customers, individually or collectively, are not credited as Wholesale revenues.
1. Payments by individual Wholesale Customers of the Environmental Enhancement Surcharge imposed to enforce the Interim Supply Limitation.
2. Payments of attorneys’ fees and costs incurred by San Francisco that a court of competent jurisdiction orders the Wholesale Customers to pay as part of a final, binding judgment against the Wholesale Customers.
3. Payments by individual Wholesale Customers for installation, relocation, enlargement, removal or modification of meters and service connections requested by, and charged to, a Wholesale Customer.
4. Payments applied to the amortization of the ending balance in the balancing account under the 1984 Agreement.
5. Payments of the Water Management Charge which are delivered to BAWSCA.
6. Payments directed to the Wholesale Revenue Coverage Reserve.
7. Prepayments of certain capital and revenues payment.
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The Wholesale Customers will receive a proporti onal benefit from funds received by the SFPUC from (a) governmental grants, rebates, reimbursements or other subventions, (b) private-sector grants for Regional capital or operating purposes of the Water Enterprise and the Water -Only and Water-related portion of Joint Hetch Hetchy Water Enterprise expenses, or (c) a SFPUC use of taxable bonds.
The Wholesale Customers will receive a proportionate benefit from recovery of damages, including liquidated damages, by SFPUC from judgments against or settlements with contractors, suppliers, sureties, etc., related to Regional Water System projects and the Water -Only and Water-Related portion of Joint Hetch Hetchy Enterprise projects.
The SFPUC will continue to charge Wholesale Customers for assets acquired or constructed with proceeds of Indebtedness on which Wholesale Customers paid Debt Service during the Term of the Agreement on the “cash” basis (as opposed to the “utility” basis) after the expiration or earlier termination of the Agreement.
Rate Adjustments
Adjustments to the rates applicable to the Wholesale Customers, other than emergency rate increases and drought rate increases, shall be coordinated with the budget development process described in the Agreement.
The Commission may adjust the Wholesale Customers’ rates in response to an Emergency that damages the Regional Water System and disrupts San Francisco’s ability to maintain normal deliveries of water to Retail and Wholesale Customers. In such an Emergency, the Commission may adopt an emergency rate surcharge applicable to Wholesale Customers without following the budgeting procedures set forth in the Agreement, provided that any such rates surcharge imposed by the Commission shall be applicable to both Retail and Wholesale Customers and incorporate the same percentage increase for all customers. Any emergency rate surcharge adopted by the Commission shall remain in effect only until the next-budget coordinated rate-setting cycle.
If the Commission declares a water shortage emergency under Water Code Section 350, implements the Tier 1 Shortage Plan and imposes drought rates on Retail Customers, it may concurrently adjust wholesale rates independently of coordination with the annual budget process. Those adjustments may be designed to encourage water conservation and may constitute changes to the structure of the rates. Drought Rate payments and payments of excess use charges levied in accordance with the Tier 1 Shortage Plan constitute Wholesale Customer Revenue and count towards the Wholesale Revenue Requirement. The SFPUC may use these revenues to purchase additional water for the Wholesale Customers from the State Drought Water Bank or other willing seller.
Rate Structure
The Agreement is not intended and shall not be construed to limit the Commission’s right (a) to adjust the structure of the rate schedule applicable to the Wholesale Customers (i.e., the relationship among the several charges set out therein) or (b) to add, delete, or change the various charges which make up the rate schedule, provided that neither such charges nor the structure of the rate schedule(s) applicable to the Wholesale Customers shall be arbitrary, unreasonable, or unjustly discriminatory as among said customers. The SFPUC will give careful consider ation to proposals for changes in the rate schedule made jointly by the Wholesale Customers but, subject to the limitations set out above, shall retain the sole and exclusive right to determine the structure of the rate schedule.
The SFPUC may recommend, and the Commission may adopt, changes in the structure of wholesale rates at any time. However, the new rate schedule implementing these changes will become effective at the beginning of the following fiscal year.
Balancing Account
After the close of each fiscal year, the SFPUC will compute the costs allocable to the Wholesale Customers for that fiscal year based on actual costs incurred by the SFPUC and actual amounts of water used by the Wholesale Customers and the Retail Customers. That amount will be compared to the amounts billed to the Wholesale Customers for that fiscal year (including any Excess Use Charges, but excluding revenues not credited to the Wholesale Revenue
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Requirement). The difference will be posted to a “balancing account” as a credit to, or charge against, the Wholesale Customers. Interest shall also be posted to the balancing account calculated by multiplying the amount of the opening balance by the average net interest rate, certified by the Controller as earned in the San Francisco Treasury for the previous fiscal year on the San Francisco County Pooled Investment Account. Interest, when posted, will carry the same mathematical sign (whether positive or negative) as carried by the opening balance. The amount posted to the balancing account in each year shall be added to, or subtracted from, the balance in the account from previous years.
If the amount in the balancing account is owed to the Wholesale Customers (a positive balance), the SFPUC shall take it into consideration in establishing wholesale rates. However, the SFPUC need not apply the entire amount to reduce wholesale rates for the immediately ensuing year. Instead, the SFPUC may prorate a positive ending balance over a period of up to three successive years in order to avoid fluctuating decreases and increases in wholesale rates.
If the amount in the balancing account is owed to the SFPUC (a negative balance), the SFPUC shall not be obligated to apply all or any part of the negative balance in establishing wholesale rates for the immediately ensuring year. Instead, the SFPUC may prorate the negative balance in whole or in part over multiple years in order to avoid fluctuating increases and decreases in wholesale rates.
Wholesale Revenue Coverage Reserve
The SFPUC may include in wholesale rates for any fiscal year an additional dollar amount (“Wholesale Revenue Coverage”), which for any fiscal year shall equal the following:
1. The lesser of (i) 25% of the Wholesale Customers’ share of Net Annual Debt Service for that fiscal year, or ( ii) the amount necessary to meet the Wholesale Customers’ proportionate share of Debt Service coverage required by then-current Indebtedness for that fiscal year, minus
2. A credit for (i) the actual amount previously deposited in the “Wholesale Revenue Cover age Reserve,” (ii) accrued interest on the amounts on deposit in the Wholesale Revenue Coverage Reserve, and (iii) an amount equal to any additional interest that would have accrued on the actual amounts previously deposited in the Wholesale Revenue Coverage Reserve assuming no withdrawals had been made therefrom.
During each fiscal year, the SFPUC will set aside and deposit that portion of revenue equal to Wholesale Revenue Coverage into a separate account that the SFPUC will establish and maintain, to be known as the “Wholesale Revenue Coverage Reserve.” Deposits into the Wholesale Revenue Coverage Reserve shall be made no less frequently than monthly. The Wholesale Revenue Coverage Reserve shall be credited with interest. The SFPUC may use amounts in the Wholesale Revenue Coverage Reserve for any lawful purpose. Any balance in the Wholesale Revenue Coverage Reserve in excess of the Wholesale Revenue Coverage amount as of the end of any fiscal year shall be applied as a credit against wholesale rates in the immediately following fiscal year unless otherwise directed by BAWSCA.
If, prior to expiration of the Term, the SFPUC determines that it would be in the best financial interest of both Retail Customers and Wholesale Customers of the Regional Water System for the Debt Service coverage requirement to be increased in one or more series of proposed new Indebtedness above 125%, or for the coverage covenant to be strengthened in other ways, it will provide a written report to BAWSCA. The report will contain (1) a description of proposed covenant(s) in the bond indenture; (2) an explanation of how savings are expected to be achieved (e.g., increase in the SFPUC’s credit rating over the then-current level; ability to obtain credit enhancement, etc.); (3) the estimated all- in true interest cost savings; (4) a comparison of the Wholesale Revenue Requirements using the Debt Service coverage limitation and under the proposed methodology; and (5) a comparison of the respective monetary benefits expected to be received by both Retail and Wholesale Customers. The SFPUC and BAWSCA agree to meet and confer in good faith about the proposed changes.
Any increase in Debt Service coverage proposed by the SFPUC shall be commensurate with Proportional Water Use by Retail and Wholesale Customers. If the SFPUC demonstrates that an increase in Debt Service coverage will result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Wat er Use, BAWSCA may agree to a modification of the
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Wholesale Revenue Coverage requirement. If BAWSCA does not agree to a proposed modification in coverage requirements in the covenants for new Indebtedness, SFPUC may nevertheless proceed with the modification and the issuance of new Indebtedness. Any Wholesale Customer, or BAWSCA, may challenge an increase in the Wholesale Revenue Requirement resulting from the modification in Debt Service coverage through arbitration. If the arbitrator finds that the increase in Debt Service coverage (1) did not and will not result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, or (2) was not commensurate with Proportional Water Use, the arbitrator may order the Wholesale Revenue Requirement to be recalculated both retrospectively and prospectively to eliminate the differential impact to Wholesale or Retail Customers.
Working Capital Requirement
The SFPUC maintains working capital in the form of unappropriated reserves for the purpose of bridging the gap between when the SFPUC incurs operating expenses required to provide service and when it receives revenues from its Retail and Wholesale Customers. The Who lesale Customers shall fund their share of working capital as part of the annual Wholesale Revenue Requirement calculation. The amount of wholesale working capital for which the Wholesale Customers will be responsible will be determined using the 60- day standard formula approach.
Applying this approach, annual wholesale working capital equals one -sixth of the wholesale allocation of operation and maintenance, administrative and general, and property tax expenses for the Water and Hetch Hetchy Enterprises. Wholesale working capital shall be calculated separately for the Water and Hetch Hetchy Enterprises.
Wholesale Capital Fund
The SFPUC shall establish a comparable Wholesale Revenue-Funded Capital Fund (Wholesale Capital Fund) to enable the Wholesale Customers to fund the wholesale share of revenue-funded New Regional Assets. The SFPUC may include in wholesale rates for any fiscal year an amount equal to the wholesale share of the SFPUC’s appropriation for revenue funded New Regional Assets for that year, whi ch sum will be credited to the Wholesale Capital Fund. The wholesale share of other sources of funding, where legally permitted and appropriately accounted for under GAAP, will also be credited to the Wholesale Capital Fund, together with interest earnings on the Wholesale Capital Fund balance.
The SFPUC will expend revenues appropriated and transferred to the Wholesale Capital Fund only on New Regional Assets.
In order to prevent the accumulation of an excessive unexpended and unencumbered surplus in the Wholesale Capital Fund, any excess fund balance will be transferred for the credit of the Wholesale Customers to the Balancing Account.
Arbitration and Judicial Review
All questions or disputes arising under the following subject areas shall be subject to mandatory, binding arbitration and shall not be subject to judicial determination:
1. the determination of the Wholesale Revenue Requirement, which shall include both the calculations used in the determination and the variables used in those calculations;
2. the SFPUC’s adherence to accounting practices and conduct of the compliance audit; and
3. the SFPUC’s classification of new assets for purposes of determining the Wholesale Revenue Requirement.
All other questions or disputes arising under this Agreement sha ll be subject to judicial determination.
Disputes about the scope of arbitrability shall be resolved by the courts.
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Preservation of Water Rights; Notice of Water Rights Proceedings It is the intention of San Francisco to preserve all of its water rights, irrespective of whether the water held under such water rights is allocated under the Agreement. Nothing in the Agreement shall be construed as an abandonment, or evidence of an intent to abandon, any of the water rights that San Francisco presently possess es.
Reservations of, and Limitations on, Claims
The 1984 Agreement resolved a civil action brought against San Francisco by certain of the Wholesale Customers. Plaintiffs in that action contended that they, and other Wholesale Customers that are municipali ties or special districts, were “co -grantees” within the meaning of Section 8 of the Act and were entitled to certain rights, benefits and privileges by virtue of that status. San Francisco disputed those claims.
Nothing in the Agreement, or in the Individual Water Sales Contracts, shall be construed or interpreted in any way to affect the ultimate resolution of the controversy between the Parties concerning whether any of the Wholesale Customers are “co -grantees” under the Act and, if so, what rights, bene fits and privileges accrue to them by reason of that claimed status.
The following claims, which San Francisco disputes, are reserved but may not be asserted during the Term (or portions thereof, as indicated):
1. The Wholesale Customers’ claim that the Act entitles them to water at cost.
2. The Wholesale Customers’ claim that San Francisco is obligated under the Act or state law to supply them with additional water in excess of the Supply Assurance. This claim may not be asserted unless and until San Francisco decides not to meet projected water demands of Wholesale Customers in excess of the Supply Assurance.
3. The claim by San José and Santa Clara that they are entitled under the Act, or any other federal or state law, to permanent, non -interruptible status and to be charged rates identical to those charged other Wholesale Customers. This claim may not be asserted unless and until San Francisco notifies San José or Santa Clara that it intends to interrupt or terminate water deliveries.
4. The Wholesale Customers’ claim that the SFPUC is not entitled to impose a surcharge for lost power generation revenues attributable to furnishing water in excess of the Supply Assurance. This claim may not be asserted unless and until SFPUC furnishes water in excess of the Supply Ass urance during the Term and also includes such a surcharge in the price of such water.
5. Claims by Wholesale Customers (other than San José and Santa Clara, whose service areas are fixed) that SFPUC is obligated under the Act or state law to furnish water, within their Individual Supply Guarantee, for delivery to customers outside their existing service area and that Wholesale Customers are entitled to enlarge their service areas to supply those customers. Such claims may be asserted only after SFPUC’s denial of, or failure for six months to act on, a written request by a Wholesale Customer to expand its service area.
The Wholesale Customers (and the SFPUC, where specified) will refrain from the following activities during the Term (or portions thereof, as specified):
1. The Wholesale Customers and the SFPUC will not contend before any court, administrative agency or legislative body or committee that the methodology for determining the Wholesale Revenue Requirement (or the requirements for (a) amortization of the ending balance under the 1984 Agreement, or (b) contribution to the Wholesale Revenue Coverage) determined in accordance with the Agreement violates the Act or any other provision of federal law, state law, or San Francisco’s City Charter, or is unfair, unreasonable or unlawful.
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2. The Wholesale Customers will not challenge the transfer of funds by the SFPUC to any other San Francisco City department or fund, provided such transfer complies with the San Francisco City Charter. The transfer of its funds, whether or not permitted by the City Charter, will not excuse the SFPUC from its failure to perform any obligation imposed by the Agreement.
3. The Wholesale Customers and the SFPUC will not assert monetary claims against one another based on the 1984 Agreement other than otherwise arbitral claims arising from the three fiscal years immediately preceding the start of the Term (i.e., Fiscal Years 2006-07, 2007-08 and 2008-09).
The Wholesale Customers do not, by executing the Agreement, concede the legality of the SFP UC’s establishing Interim Supply Allocations or imposing Environmental Enhancement Surcharges on water use in excess of such allocations. Any Wholesale Customer may challenge such allocation when imposed and/or such surcharges if and when levied, in any court of competent jurisdiction.
The furnishing of water in excess of the Supply Assurance by San Francisco to the Wholesale Customers shall not be deemed or construed to be a waiver by San Francisco of its claim that it has no obligation under any provision of law to supply such water to the Wholesale Customers, nor shall it constitute a dedication by San Francisco to the Wholesale Customers of such water.
Prohibition of Assignment
The Agreement shall be binding on, and shall inure to the benefit of, the Wholesale Customers and San Francisco, and their respective successors and permitted assigns. Each Wholesale Customer agrees that it will not transfer or assign any rights or privileges under the Agreement, either in whole or in part, or make any transfer of all or any part of its water system or allow the use thereof in any manner whereby any provision of the Agreement will not continue to be binding on it, its assignee or transferee, or such use of the system. Any assignment or transfer in violation of this covenant, and any assignment or transfer that would result in the supply of water in violation of the Act, shall be void.
Nothing shall prevent any Wholesale Customer (except the California Water Service Company and Stanford) from entering into a joint powers agreement or a municipal or multi -party water district with any other Wholesale Customer (except the two listed above) to exercise the rights and obligations granted to and imposed upon the Wholesale Customers hereunder, nor shall this section prevent any Wholesale Customer (except the two listed above) from succeeding to the rights and obligations of another Wholesale Customer hereunder as long as the Wholesale Service Area served by the Wholesale Customers involved in the succession is not thereby enlarged.
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APPENDIX C
SFPUC WATER ENTERPRISE FINANCIAL STATEMENTS
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APPENDIX D
PROPOSED FORM OF OPINION OF BOND COUNSEL
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$__________
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
San Francisco Water Revenue Bonds, 2023 Series AB
$__________
2023 Sub-Series A Bonds
(Regional Water and Local Water)
$__________
2023 Sub-Series B Bonds
(Hetch Hetchy Water)
[Closing Date]
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Public Utilities Commission of the City and County of San Francisco (the “ SFPUC”) in connection with the issuance of the water revenue bonds captioned above (the “ 2023AB Bonds”). The 2023AB Bonds are being issued pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the SFPUC and U.S. Bank Trust Company, National Association, as trustee (the “ Trustee”), as amended and supplemented, including as amended and supplemented by a Forty-Third Supplemental Indenture and a Forty-Fourth Supplemental Indenture, each dated as of June 1, 2023, by and between the SFPUC and the Trustee (collectively, the “Indenture”).
The SFPUC covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is b eing executed and delivered by the SFPUC for the benefit of the Holders and Beneficial Owners of the 2023AB Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission (the “ S.E.C.”) Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the SFPUC pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person that: (a) has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any 2023AB Bonds (including persons holding 2023AB Bonds through nominees, depositories or other intermediaries) including, but not limited to, the power to vote or consent with respect to any 2023AB Bonds or to dispose of ownership of any 2023AB Bonds; or (b) is treated as the owner of any 2023AB Bonds for federal income tax purposes.
“Dissemination Agent ” shall mean the SFPUC, acting in its capacity as Dissemination Agent under this Disclosure Certificate, or any successor Dissemination Agent designated in writing by the SFPUC and which has filed with the SFPUC a written acceptance of such designation. “Financial Obligation” means, for purposes of the Listed Events set out in Section 5(a)(10) and Sec tion (5)(b)(8), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.
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“Holder” shall mean either the r egistered owners of the 2023AB Bonds, or, if the 2023AB Bonds are registered in the name of The Depository Trust Company or another recognized depository, any applicable participant in such depository system.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive continuing disclosure filings pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB currently located at http://emma.msrb.org.
“Official Statement” shall mean the final Official Statement, dated __________, 2023, prepared in connection with the sale and offering of the 2023AB Bonds. “Participating Underwriters ” shall mean any of the original underwriters or purchasers of the 2023AB Bonds required to comply with the Rule in connection with the offering of the 2023AB Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the S.E.C. under the Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Reports.
(a) The SFPUC shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the SFPUC’s fiscal year (which currently ends June 30), commencing March 31, 2024, with the report for Fiscal Year 20 22-23, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is not the SFPUC, the SFPUC shall provide the Annual Report to the Dissemination Agent not later than 15 days prior to said date.
The Annual Report must be submitted in electronic format and accompanied by such identifying information as is prescribed by the MSRB, and may cross -reference other information as provided in Section 4 of this Disclosure Certificate. However, if the audited financial statements of the SFPUC are not available by the date required above for the filing of the Annual Report, the SFPUC shall submit unaudited financial statements and submit the audited financial statements as soon as they are available. If the SFPUC’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) If the SFPUC is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the SFPUC shall send a notice to the MSRB in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the SFPUC), file a report with the SFPUC certifying the date that the Annual Report was provided to the MSRB pursuant to this Disclosure Certificate.
SECTION 4. Content of Annual Reports. The SFPUC’s Annual Report shall contain or incorporate by reference the following information:
(a) Audited Financial Statements of the municipal water supply, storage and distribution system of the SFPUC for the prior fiscal year, prepared in accordance with generally accepted accounting principles applicable to the SFPUC from time to time. If the SFPUC’s audited financial statements are not available by the date the Annual Report is required to be filed, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available;
(b) An update for the prior fiscal year of the table in the Official Statement entitled “TABLE 8, HISTORICAL WHOLESALE AND RETAIL WATER SALES”;
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(c) An update for the prior fiscal year of the table in the Official Statement entitled “TABLE 17, HISTORICAL AND ADOPTED PERCENTAGE INCREASES (DECREASES) IN WHOLESALE WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior fiscal year;
(d) An update for the prior fi scal year of the table in the Official Statement entitled “TABLE 20, HISTORICAL PERCENTAGE INCREASES (DECREASES) IN RETAIL WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior fiscal year; (e) An update for the prior fiscal year of the table in the Official Statement in the section entitled “OBLIGATIONS PAYABLE FROM REVENUES – Outstanding Parity Revenue Bonds” showing all bonds of the SFPUC secured by Revenues; and (f) An update for the prior fiscal ye ar of the table in the Official Statement entitled “TABLE 26, HISTORICAL REVENUES, OPERATING & MAINTENANCE EXPENSES AND DEBT SERVICE COVERAGE.”
Any or all of the items listed above may be set forth in a document or set of documents, or may be included by specific reference to other documents, including official statements of debt issues of the SFPUC or related public entities, which are available to the public on the MSRB website. If the document included by reference is a final official statement, it must be available from the MSRB. The SFPUC shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) The SFPUC shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 2023AB Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS For m 5701-TEB) or other material notices or determinations with respect to the tax status of the 2023AB Bonds, or other material events affecting the tax status of the 2023AB Bonds;
7. Modifications to rights of Holders, if material;
8. Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the 2023AB Bonds, if material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the SFPUC;
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13. The consummation of a merger, consolidation, or acquisition involving the SFPUC or the sale of all or substantially all of the assets of the SFPUC, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
14. Appointment of a successor or additional trustee or the change of name of a trustee, if material;
15. Incurrence of a Financial Obligation of the SFPUC, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the SFPUC, any of which affect Holders; and
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) Whenever the SFPUC obtains knowledge of the occurrence of a Listed Event, and, if the Listed Event is described in subsections (a)(2), (a)(6) (other than an adverse tax opinion, the issuance by the IRS of a proposed or final determination of taxability, or a Notice of Proposed Issue (IRS Form 5701-TEB)), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13) or (a)(14) above, the SF PUC determines that knowledge of the occurrence of that Listed Event would be material under applicable federal securities law, the SFPUC shall, or shall cause the Dissemination Agent (if not the SFPUC) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2023AB Bonds under the Indenture.
(c) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the SFPUC in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the SFPUC, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of said party. (d) The SFPUC intends to comply with the Listed Events described in Section 5(a)(15) and Section 5(a)(16), and the definition of “Financial Obligation” in Section 2, with reference to the Rule, any other applicable federal securities laws and the guidance provided by the S.E.C. in Release No. 34- 83885 dated August 20, 2018 (the “ 2018 Release”), and any further amendments or written guidance provided by the S.E.C. or its staff with respect to the amendments to the Rule effected by the 2018 Release.
SECTION 6. Termination of Reporting Obligation . The SFPUC’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2023AB Bonds.
If such termination occurs pri or to the final maturity of the 2023AB Bonds, the SFPUC shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
SECTION 7. Dissemination Agent . The SFPUC may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate.
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SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the SFPUC may amend or waive this Disclosure Certificate or any provision of this Disclosure Certificate, p rovided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 3(b), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the 2023AB Bonds or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of the City Attorney or nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the 2023AB Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the owners of a majority in aggregate principal amount of the 2023AB Bonds or (ii) does not, in the opinion of the City Attorney or nationally recognized bond counsel, materially impair the interests of the Holders.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the SFPUC shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the SFPUC. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5; and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrati ve form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the SFPUC from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the SFPUC chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the SFPUC shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the SFPUC to comply with any provision of this Disclosure Certificate, any Participating Underwriters, Holder or Beneficial Owner of the 2023AB Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the SFPUC to comply with its obligations under this Disclosure Certificate; provided that any such action may be instituted only in a federal or State court located in the City and County of San Francisco, State of California.
Failure by the SFPUC to comply with any provision of this Disclosure Certificate shall not be deemed an Event of Default under the Indenture and the s ole remedy under this Disclosure Certificate in the event of any failure of the SFPUC to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the bene fit of the SFPUC, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the 2023AB Bonds, and shall create no rights in any other person or entity.
E-6
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
General Manager
Approved as to Form:
DAVI
D CHIU
CITY ATTORNEY
By:
Deputy City Attorney
E-7
CONTINUING DISCLOSURE CERTIFICATE EXHIBIT A
FORM OF NOTICE TO THE
MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Public Utilities Commission of the City and County of San Francisco Name of Issue: San Francisco Water Revenue Bonds, 2023 Series AB 2023 Sub-Series A Bonds (Regional Water and Local Water) 2023 Sub-Series B Bonds (Hetch Hetchy Water)
Date of Issuance: __________, 2023
NOTICE IS HEREBY GIVEN that the SFPUC has not provided an Annual Report with respect to the above -named Bonds as required by Section 3 of the Continuing Disclosure Certificate of the Public Utilities Commission of the City and County of San Francisco, dated __________, 2023. The SFPUC anticipates that the Annual Report will be filed by _____________.
Dated: _______________
PUBLIC UTILITIES COMMISSION OF THE CITY AND
COUNTY OF SAN FRANCISCO
By: [ to be signed only if filed]
Title:
F-1
APPENDIX F
SECURITIES DEPOSITORY AND THE BOOK-ENTRY SYSTEM
The information in this Appendix F has been obtained from DTC for use in securities offering documents, and the SFPUC takes no responsibility for the accuracy or completeness thereof. The SFPUC cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the beneficial owners either (a) payments of interest, principal or premium, if any, with respect to the 2023AB Bonds or (b) certificates representing ownership interest in or other confirmation of ownershi p interest in the 2023AB Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
As used in this Appendix F, “Securities” means the 2023AB Bonds, “Issuer” means the SFPUC, and “Agent” means the Trustee.
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities 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 each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amo unt of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post- trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securi ties certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of 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. The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“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 Securities 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 Securities, except in the event that use of the book -entry system for the Securities is discontinued.
F-2
4. To facilitate subsequent transfers, all Securities 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 Securities 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 Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities 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.
5. 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or 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 responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book- entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book- entry system has been obtained from sources that SFPUC believes to be reliable, but the SFPUC takes no responsibility for the accuracy thereof.
Norton Rose Fulbright US LLP draft 5/1/23
133887113.5
FORTY-THIRD SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of ____________ 1, 2023
AUTHORIZING THE ISSUANCE OF
$[PAR AMOUNT] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2023 SERIES AB
2023 SUB-SERIES A (REGIONAL WATER AND LOCAL WATER)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
133887113.5 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 185.01 Definitions ....................................................................................................... 2
PROVISIONS RELATING TO 2023 SUB-SERIES A BONDS
SECTION 186.01 Authorization and Terms of 2023 Sub-Series A Bonds .................................. 3 SECTION 186.02 Terms of Redemption ...................................................................................... 5 SECTION 186.03 Form of 2023 Sub-Series A Bonds .................................................................. 6 SECTION 186.04 Use of Depository ............................................................................................ 6 SECTION 186.05 Issuance of 2023 Sub-Series A Bonds ............................................................ 7 SECTION 186.06 Application of Proceeds of 2023 Sub-Series A Bonds .................................... 7 SECTION 186.07 Establishment and Application of the 2023 Sub-Series A Project Fund ......... 9 SECTION 186.08 2023 Sub-Series A Sinking Fund Account .................................................... 10 SECTION 186.09 Establishment and Application of the 2023 Sub-Series A Rebate Fund ....... 12 SECTION 186.10 Tax Covenants ............................................................................................... 13 SECTION 186.11 Continuing Disclosure ................................................................................... 14
AMENDMENTS TO INDENTURE
SECTION 187.01 Effectiveness of Amendments under this Article .......................................... 14 SECTION 187.02 Amendments to Section 1.01 of the Indenture and Definitions .................... 15 SECTION 187.03 Amendment to Section 3.05(c) of the Indenture ........................................... 18 SECTION 187.04 Amendment to Section 3.05(e) of the Indenture ........................................... 18 SECTION 187.05 Amendment to Section 3.06(c)(1) of the Indenture ...................................... 18 SECTION 187.06 Amendment to Section 3.07 of the Indenture ................................................ 19 SECTION 187.07 Amendment to Section 6.07(b) of the Indenture ........................................... 19 SECTION 187.08 Amendment to Section 6.13(a) of the Indenture ........................................... 20 SECTION 187.09 Amendment to Section 6.13(b) of the Indenture ........................................... 20 SECTION 187.10 Amendment to Section 6.13 of the Indenture ................................................ 20
MISCELLANEOUS
SECTION 188.01 Terms of 2023 Sub-Series A Bonds Subject to the Indenture ....................... 20 SECTION 188.02 Effective Date of Forty-Third Supplemental Indenture ................................ 21 SECTION 188.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ................................................................................................... 21 SECTION 188.04 Execution in Counterparts; No Seal Required for Execution ........................ 21 133887113.5 ii
ADDITIONAL CITY REQUIREMENTS
SECTION 189.01 Conflict of Interest ......................................................................................... 21 SECTION 189.02 Proprietary or Confidential Information of the City ..................................... 21 SECTION 189.03 Local Business Enterprise Utilization; Liquidated Damages ........................ 22 SECTION 189.04 Nondiscrimination; Penalties ........................................................................ 23 SECTION 189.05 MacBride Principles—Northern Ireland ........................................................ 24 SECTION 189.06 Tropical Hardwood and Virgin Redwood Ban ............................................... 24 SECTION 189.07 Drug-Free Workplace Policy ......................................................................... 24 SECTION 189.08 Resource Conservation ................................................................................... 24 SECTION 189.09 Compliance with Americans with Disabilities Act ....................................... 24 SECTION 189.10 Sunshine Ordinance ....................................................................................... 24 SECTION 189.11 Limitations on Contributions ......................................................................... 25 SECTION 189.12 Requiring Minimum Compensation for Covered Employees ....................... 25 SECTION 189.13 Requiring Health Benefits for Covered Employees ...................................... 26 SECTION 189.14 Prohibition on Political Activity with City Funds ......................................... 28 SECTION 189.15 Preservative-treated Wood Containing Arsenic ............................................ 28 SECTION 189.16 Compliance with Laws .................................................................................. 29 SECTION 189.17 Protection of Private Information .................................................................. 29 SECTION 189.18 Food Service Waste Reduction Requirements .............................................. 29 SECTION 189.19 Submitting False Claims; Monetary Penalties .............................................. 29 SECTION 189.20 Sugar-Sweetened Beverage Prohibition ........................................................ 30 SECTION 189.21 Agreement Made in California; Venue ......................................................... 30 SECTION 189.22 Ownership of Results .................................................................................... 30 SECTION 189.23 Audit and Inspection of Records ................................................................... 30 SECTION 189.24 Subcontracting ............................................................................................... 30 SECTION 189.25 Assignment .................................................................................................... 30 SECTION 189.26 Non-Waiver of Rights ................................................................................... 31 SECTION 189.27 City a Third Party Beneficiary ...................................................................... 31 Exhibit AT-1 – Form of 2023 Sub-Series A Bond
133887113.5
FORTY-THIRD SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[PAR AMOUNT] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2023 Series AB
2023 Sub-Series A (Regional Water and Local Water)
This Forty-Third Supplemental Indenture, dated as of ____________ 1, 2023 (this “Forty- Third Supplemental Indenture”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as successor trustee (the “Trustee”), and the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “ Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Forty -Third Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of ____________ 1, 2023, there are outstanding $___________ aggregate principal amount of water revenue bonds issued pursuant to the Indenture; WHEREAS, the 2010 Series ABC Bonds, the 2010 Series DE Bonds, the 2010 Series FG Bonds, the 2015 Refunding Series A Bonds, the 2016 Refunding Series AB Bonds, the 2016 Series C Bonds, the 2017 Series ABC Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds, the 2020 Series ABCD Bonds and the 2020 Refunding Series EFGH Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues;
WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds from time to time pursuant to a supplemental indenture;
WHEREAS, the Commission has determined to issue pursuant to this Forty-Third Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2023 Series AB, 2023 Sub-Series A (Regional Water and Local Water)” (the “2023 Sub-Series A Bonds”) in the aggregate original principal amount of $[PAR AMOUNT] to provide long-term financing or refinancing (including through the retirement of certain outstanding commercial paper notes) for reconstruction, replacement, expansion and repair of or improvements to the regional 133887113.5 2
water system and local (in-city) water system of the Enterprise, excluding the Commission’s Water System Improvement Program (“WSIP”);
WHEREAS, simultaneous with the issuance of the 2023 Sub- Series A Bonds, the Commission has determine d to issue pursuant to a Forty-Fourth Supplemental Indenture a sub- series of Bonds designated “ San Francisco Water Revenue Bonds, 2023 Series AB , 2023 Sub- Series B (Hetch Hetchy Water)” (the “2023 Sub-Series B Bonds,” and together with the 2023 Sub- Series A Bonds, the “2023 Series AB Bonds”) in the aggregate principal amount of $_________ to provide long- term financing or refinancing (including through the retirement of certain outstanding commercial paper notes) for the reconstruction, replacement, expansion and repair of or improvements to the Water Enterprise-related infrastructure of the Hetch Hetchy Water and Power System;
WHEREAS, the 2023 Series AB Bonds (and each sub-series thereof) will be issued by the Commission under the Indenture payable on a parity with the other Outstanding Series of Bonds and any Parity State Loans;
WHEREAS, the conditions and limitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2023 Series AB Bonds; WHEREAS, in order to provide for the issuance of the 2023 Sub- Series A Bonds , to establish and declare the terms and conditions upon which the 2023 Sub-Series A Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty -Third Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Forty-Third Supplemental Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Forty-Third Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 185.01 Definitions. The terms defined in this section shall, for all purposes of this Forty -Third Supplemental Indenture , have the meani ngs herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
133887113.5 3
DTC
The term “DTC” means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, in its capacity as Securities Depository for the 2023 Sub-Series A Bonds.
2023 Sub-S eries A Project
The term “2023 Sub-Series A Project” means the reconstruction, replacement, expansion and repair of or improvements to the regional water system and local (in-city) water system of the Enterprise, excluding the Commission’s Water System Improvement Program , financed or refinanced (including through the retirement of certain outstanding commercial paper notes) with proceeds of the 2023 Sub-Series A Bonds.
PROVISIONS RELATING TO 2023 SUB-SERIES A BONDS
SECTION 186.01 Authorization and Terms of 2023 Sub-Series A Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[PAR AMOUNT] are hereby authorized to be issued under the Charter and the Law and pursuant to the Indenture. (a) S uch Bonds are designated as the “San Fra ncisco Water Revenue Bonds, 2023 Series AB, 2023 Sub-Series A (Regional Water and Local Water)”. The 2023 Sub-Series A Bonds are being issued to provide funds to pay costs of the 2023 Sub-Series A Project, to pay capitalized interest on the 2023 Sub-Series A Bonds and to pay costs of issuance of the 2023 Sub- Series A Bonds. Such purposes constitute purposes described in Section 3.04 of the Indenture. The aggregate principal amount of 2023 Sub- Series A Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Forty -Third Supplemental Indenture shall be $[PAR AMOUNT] . The 2023 Sub- Series A Bonds shall be of the tenor known as Current Interest Bonds.
The 2023 Sub-Series A Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2023 Sub- Series A Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2023 Sub-Series A Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC , and shall be evidenced by one 2023 Sub- Series A Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Regis tered ownership of the 2023 Sub- Series A Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 186.04 herein. (b) The 2023 Sub-Series A Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable on November 1, 2023, and semiannually thereafter on May 1 and November 1 in each year, calculated on the basis of a 360-day year consisting of twelve 30-day months:
133887113.5 4
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
*
* Term bond.
The 2023 Sub-Series A Bonds maturing on November 1, 20__ and November 1, 20__ are hereby designated as Term Bonds.
(c) Subject to Section 186.04 hereof, the principal of and premium, if any, on the 2023 Sub-Series A Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2023 Sub-Series A Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15 th day of the calendar month immediately preceding an interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may have filed with the Trustee for that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2023 Sub- Series A Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2023 Sub-Series A Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before September 15 , 2023, in which event it shall bear interest from [CLOSING DATE]; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest fr om the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2023 Sub- Series A Bonds shall be subject to redemption as provided in Section 186.02.
(f) The Trustee shall assign each 2023 Sub-Series A Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection.
133887113.5 5
(g) There shall be no Required Reserve for the 2023 Sub-Series A Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2023 Sub- Series A Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2023 Sub-Series A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2023 Sub- Series A Bonds in the manner and form provided in this Forty-Third Supplemental Indenture.
SECTION 186.02 T
erms of Redemption.
(a) Optional Redemption. The 2023 Sub- Series A Bonds maturing on or after November 1, 20__ shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2023 Sub-Series A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(b) Mandatory Sinking Fund Redemption.
(i) The 2023 Sub-Series A Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2023 Sub-Series A Sinking Fund Account (described in Section 186.08), on each November 1 on and after November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub- Series A Bonds of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium.
Such sinking fund redemption of the 2023 Sub -Series A Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series A Bonds to be redeemed in each such year set forth in Section 186.08 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub-Series A Term Bonds prior to maturity pursuant to Section 186.02(a) above). (ii) The 2023 Sub-Series A Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2023 Sub-Series A Sinking Fund Account (described in Section 186.08), on November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub-Series A Bonds of such maturity are then being redeemed , upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2023 Sub- Series A Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series A Bonds to be redeemed in each such year set forth in Section 186.08 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub-Series A Term Bonds prior to maturity pursuant to Section 186.02(a) above). 133887113.5 6
(c) Other Terms of Redemption. Except as otherwise provided herein, t he provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.03, 4.04, 4.05 and
4.06 shall apply to the redemption of the 2023 Sub-Series A Bonds.
SECTION 186.03 F orm of 2023 Sub-Series A Bonds. The 2023 Sub-Series A Bonds and the Trustee ’s certificates of authentication and registration and the form of assignment to appear thereon shall be in substantially the form set forth as Exhibit AT -1 to this Forty -Third Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Third Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2023 Sub-Series A Bonds does not require the seal of the Commission.
SECTION 186.04 U se of Depository.
(a) The 2023 Sub- Series A Bonds shall be initially registered as provided in Section 186.01 hereof. Registered ownership of the 2023 Sub- Series A Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection ( a) (a “ Substitute Depository” ); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any Substitute Depository not objected to by the Trustee, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or
(iii) to any person as provided below, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause ( i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2023 Sub- Series A Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2023 Sub-Series A Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2023 Sub- Series A Bonds then Outstanding, registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Written Request of the Commission. (c) In the case of any transfer pursuant to clause ( iii) of subsection (a) of this Section, upon receipt of all Outstanding 2023 Sub-Series A Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2023 Sub-Series A Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such 133887113.5 7
denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 186.01 hereof, provided that the Trustee shall not be required to deliver such new 2023 Sub- Series A Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission. (d) In the case of a partial redemption or an advance refunding of any 2023 Sub-Series A Bonds evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such 2023 Sub-Series A Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not be liable for such Securities Depository’s (or any Substitute Depository’s) failure to make such notations or errors in making such notations. (e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2023 Sub-Series A Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2023 Sub- Series A Bonds . Neither the Commission nor the Trustee shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any 2023 Sub-Series A Bonds , and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2023 Sub-Series A Bonds.
(f) Notwithstanding any other provision of this Forty -Third Supplemental Indenture and so long as all Outstanding 2023 Sub-Series A Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2023 Sub- Series A Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2023 Sub- Series A Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 186.05 I
ssuance of 2023 Sub-Series A Bonds.
(a) At any time after the execution of this Forty -Third Supplemental Indenture, the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2023 Sub-Series A Bonds in the aggregate principal amount of $ [PAR AMOUNT] to the initial purchasers thereof specified in such Written Request or Certificate.
SECTION 186.06 A
pplication of Proceeds of 2023 Sub-Series A Bonds.
(a) The original purchaser of the 2023 Sub- Series A Bonds will pay and deliver the purchase price of the 2023 Sub-Series A Bonds (including any good faith deposit paid prior to the 133887113.5 8
Closing Date and applied to such pur chase price) equal to $__________ to the Trustee, and the Trustee shall deposit and transfer this amount, as follows:
1. The Trustee shall deposit $___________ in a separate fund to be known as the “2023 Series AB Costs of Issuance Fund,” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall deposit $ ___________ in the 2023 Sub- Series A Capitalized Interest Account , which the Trustee hereby agrees to establish and maintain within the Interest Fund.
3. [The Trustee shall transfer $__________ to the Treasurer for deposit to the 2023 Sub- Series A Project Fund established under Section 186.07.] [The Trustee shall transfer the remaining balance, being $ ___________, to U.S. Bank Trust Company, National Association, as issuing and paying agent for the commercial paper notes of the Enterprise, to retire a portion of such commercial paper notes.] (b) Before any payment is made by the Trustee to pay costs of issuance from the 2023 Series AB Costs of Issuance Fund, the Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set fort h in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
133887113.5 9
When all costs of issuance of the 2023 Series AB Bonds have been paid, the Commission shall deliver a Certificate of the Commission stating such fact to the Trus tee (as described in clause (c) below).
(c) The money in the 2023 Series AB Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty-Fourth Supplemental Indenture and the Forty-Fifth Supplemental Indenture) shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance incidental to or connected with the issuance of the 2023 Series AB Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2023 Series AB Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2023 Series AB Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on _________, 202_, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2023 Series AB Costs of Issuance Fund shall be closed. (d) Amounts on deposit in the 2023 Sub-Series A Capitalized Interest Account shall be applied to the payment of interest on the 2023 Sub- Series A Bonds on each May 1 and November 1, commencing on November 1, 2023, prior to amounts in the Interest Fund being so used, until no amounts remain on deposit in the 2023 Sub- Series A Capitalized Interest Account, whereupon the 2023 Sub-Series A Capitalized Interest Account shall be closed. All moneys held by the Trustee in the 2023 Sub-Series A Capitalized Interest Account may be invested in Permitted Investments maturing not later than the date on which such moneys are required for payment by the Trustee.
SECTION 186.07 E
stablishment and Application of the 2023 Sub- Series A Project Fund.
(a) The Commission hereby covenants and agrees to establish, maintain and hold hereunder within the Improvement Fund established under Section 3.03 of the Indenture, a separate account known as the “2023 Sub- Series A Project Fund” (herein called the “2023 S ub- Series A Project Fund”).
(b) The Treasurer shall hold the amounts on deposit in the 2023 Sub- Series A Project Fund, which shall be maintained and accounted for by the Controller so long as any moneys are on deposit therein. Upon completion of the 2023 Sub-Series A Project, the Commission may direct the transfer of any remaining balance in the 2023 Sub-Series A Project Fund to any other lawfully available fund or account of the Commission; provided such transfer is consistent with the Commission’s covenants in the Tax Certificate (as defined in Section 162.09 herein). (c) The moneys in the 2023 Sub-Series A Project Fund shall be held by the Treasurer in trust and applied to the costs of the 2023 Sub-Series A Project and the expenses incident thereto or connected therewith, including, if necessary, interest to the extent permitted by law, reimbursement to the Commission for expenses incident thereto or connected therewith incurred prior to the issuance of the 2023 Sub- Series A Bonds or in connection therewith, incl uding architectural, engineering and inspection fees and expenses, apparatus, equipment and furnishings, 133887113.5 10
testing and inspection, surveys, insurance premiums, losses during construction not insured against because of deductible amounts, the fees and expenses of the Trustee, legal, accounting and consultant fees and expenses, and similar expenses.
(d) All moneys held by the Treasurer in the 2023 Sub- Series A Project Fund may be invested in Legal Investments maturing not later than the date on which such moneys are required for payment by the Treasurer. The Treasurer shall pay out moneys from the 2023 Sub- Series A Project Fund only upon warrants drawn by the Controller in the manner provided by law. No withdrawals shall be made from the 2023 Sub- Series A Project Fund for any purpose not authorized by law.
SECTION 186.08 2023 S
ub-Series A Sinking Fund Account.
(a) The Trustee shall establish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2023 Sub- Series A Sinking Fund Account, which the Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2023 Sub-Series A Term Bonds.
(b) The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__ ), shall deposit in the 2023 Sub- Series A Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 186.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2023 Sub-Series A Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2023 Sub-Series A Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2023 Sub- Series A Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 186.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2023 Sub-Series A Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2023 Sub-Series A Minimum Sinking Fund Account Payment”):
133887113.5 11
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
(c) During the 12 -month period ending on September 15 of each year immediately preceding each redemption from the 2023 Sub- Series A Sinking Fund Account , the Commission may satisfy, in whole or in part, the 2023 Sub-Series A Minimum Sinking Fund Account Payment and the redemption of 2023 Sub-Series A Term Bonds therefrom by depositing with the Trustee 2023 Sub-Series A Term Bonds for cancellation prior to the Trustee’s selection of the 2023 Sub- Series A Term Bonds for redemption.
(d) In lieu of the redemption of 2023 Sub- Series A Term Bonds pursuant to Section 186.02(b) hereof, at the Written Request of the Commission, moneys in the 2023 Sub- Series A Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2023 Sub- Series A Term Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof, and all 2023 Sub-Series A Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2023 Sub- Series A Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2023 Sub-Series A Sinking Fund Account after such date and on or before the next succeeding November 1, shall be used and withdrawn by the Trustee solely for the purpose of redeeming the 2023 Sub-Series A Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 186.02(b) and Section 186.08(b) hereof; and (ii) the Trustee shall during each 12-month period beginning with the 12-month period ending on November 1, 20__, purchase or call and redeem (as herein provided) an aggregate amount of 2023 Sub-Series A Term Bonds equal to at least the amount of Bond Obligation of the 2023 Sub-Series A Term Bonds identified in Section 186.08(b) above for such 12-month period reduced by the principal amount of 2023 Sub-Series A Term Bonds deposited by the Commission with the Trustee as described in Section 186.08(c) hereof for such 12-month period, except that if during any such 12-month period, 2023 Sub-Series A Term Bonds of any Term Bond maturity have otherwise been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2023 Sub-Series A Term Bonds identified in Section 186.08(b) above for such 12- month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2023 Sub-Series A Minimum Sinking Account Payment amounts stated in Section 186.08(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2023 Sub-Series A Sinking Fund 133887113.5 12
Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2023 Sub-Series A Term Bonds at the final maturity thereof. (e) The Commission hereby covenants and agrees with the Owners of the 2023 Sub- Series A Bonds to call and redeem 2023 Sub-Series A Bonds from the 2023 Sub-Series A Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 186.08(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2023 Sub-Series A Term Bonds or as otherwise hereinabove provided).
SECTION 186.09 E stablishment and Application of the 2023 Sub- Series A Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder to be known as the “ 2023 Sub-Series A Rebate Fund” (for purposes of this Article, the “Rebate Fund”). Within the Rebate Fund, the Trustee shall maintain such accounts as it is instructed by the Commission as necessary in order to comply with the terms and requirements of the Tax Certificate with respect to the 2023 Sub- Series A Bonds, dated the date of issuance of the 2023 Sub- Series A Bonds (for purposes of this Article, the “ Tax Certificate”).
Subject to the transfer provisions provided in paragraph (e) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee for the account of the Commission in trust, to the extent required to satisfy the requirements for rebate, as set forth in the Tax Certificate (for purposes of this Article, the “ Rebate Requirement”), for payment to the federal government of the United States of America, and no other person shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 186.10 hereof and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions and fulfilled its obligation with respect to rebate as long as it follows the written directions of the Commission, including supplying all necessary information in the manner provided in the Tax Certificate. The Trustee shall not be required to take any actions under this Section, Section 186.10 hereof or the Tax Certificate in the absence of written directions by the Commission, and shall have no liability or responsibility to enforce compliance by the Commission with the terms of the Tax Certificate nor make computations in connection therewith. (b) Upon the Commission’ s written direction, an amount shall be deposited in the Rebate Fund by the Trustee from deposits by the Commission so that the balance of the am ount on deposit therein equals the Rebate Requirement. Computations of the Rebate Requirement shall be furnished by or on behalf of the Commission in accordance with the Tax Certificate. (c) The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this Section, other than from moneys held in the funds and accounts created under the Indenture or from other moneys provided to it by or on behalf of the Commission. (d) The Trustee shall invest all amounts held in the Rebate Fund in Permitted Investments as instructed in writing by the Commission, subject to the restrictions set forth in the 133887113.5 13
Tax Certificate. Moneys shall not be transferred from the Rebate Fund except as provided in paragraph (e) below.
(e) Upon receipt of the Commission’ s written directions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States, as so directed. In addition, if the Commission so directs, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed by the Commission’s written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the 2023 Sub-Series A Bonds and payment and satisfaction of any Rebate Requirement shall be withdrawn and remitted to the Commission upon the Commission’s written request. (f) Notwithstanding any other provision of the Indenture, the obligation to remit the Rebate Requirement to the United States and to comply with all other requirements of this Section, Section 186.10 hereof and the Tax Certificate shall survive the defeasance or payment in full of the 2023 Sub-Series A Bonds.
SECTION 186.10 T
ax Covenants.
The Commission covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the 2023 Sub-Series A Bonds under Section 103 of the Code.
The Commission will not directly or indirectly use or permit the use of any proceeds of the 2023 Sub-Series A Bonds or any other funds of the Commission, or take or omit to take any action that would cause the 2023 Sub- Series A Bonds to be “ arbitrage bonds” within the meaning of Section 148(a) of the Code. To that end, the Commission will comply with all requirements of Section 148 of the Code to the extent applicable to the 2023 Sub- Series A Bonds. If at any time the Commission is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Indenture or otherwise, the Commission shall so instruct the Trustee in writing, and the Trustee shall take such action a s required by such instructions.
Without limiting the generality of the foregoing, the Commission agrees that there shall be paid from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applied to the 2023 Sub-Series A Bonds from time to time. This covenant shall survive payment in full or defeasance of the 2023 Sub-Series A Bonds. The Commission specifically covenants to pay or cau se to be paid to the United States, at the times and in the amounts determined under Section 186.09 hereof, the Rebate Requirement. The Trustee agrees to comply with all written instructions of the Commission given in accordance with the Tax Certificate.
Notwithstanding any provision of this Section and Section 186.09 hereof, if the Commission provides to the Trustee an opinion of nationally recognized bond counsel to the effect that any action required under this Section and Section 186.09 hereof or under the Tax Certificate is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the 2023 Sub-Series A Bonds under Section 103 of the Code, 133887113.5 14
the Commission and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent.
The Commission shall assure that the proceeds of the 2023 Sub-Series A Bonds are not so used as to cause the 2023 Sub-Series A Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.
The Commission shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2023 Sub- Series A Bonds to be “ federally guaranteed” within the meaning of Section 149(b) of the Code.
SECTION 186.11 C ontinuing Disclosure.
The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2023 Sub-Series A Bonds, executed and delivered by the Commission in connection with the issuance of the 2023 Sub-Series A Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2023 Series AB Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2023 Series AB Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2023 Series AB Continuing Disclosure Certificate) or any Bondowner or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commission to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2023 Series AB Continuing Disclosure Certificate shall be an action to compel performance.
AMENDMENTS TO INDENTURE
SECTION 187.01 Effectiveness of Amendments under this Article .
In accordance with Section 9.01 of the Indenture, the amendments to the Indenture set forth in this Article CLXXXVII shall become effective at such time as the written consents of the Owners of a majority in aggregate amount of the Bond Obligation of the Bonds then Outstanding and of each Credit Provider have been filed with the Trustee, and the other requirements contained in Article IX of the Indenture have been satisfied. Until such time as the amendments to the Indenture set forth in this Article CLXXXVII become effective the app licable provisions of the Indenture shall remain unaltered and in full force and effect except as he Indenture may be otherwise amended in accordance with Article IX or discharged in accordance with Article X of the Indenture.
The provisions of the amendments to the Indenture set forth in this Article CLXXXVII are severable. Nothing herein shall preclude one or more of the provisions of this amendment, with the approval required by the Indenture, from becoming effective prior to the effective date of any 133887113.5 15
other provision. The Commission shall promptly inform the Trustee and the Bondholders in the event that consent has been secured for one or more of the provisions of this Article CLXXXVII.
SECTION 187.02 A mendments to Section 1.01 of the Indenture and Definitions.
Upon the effectiveness of the amendments in this Article CLXXXVII : (i) there shall be added to the Indenture the definition of “Excluded Principal,” “Qualified Municipal Advisor” and “SIFMA” having the definitions set forth below; (ii) all references to the term “Parity State Loans” in the Indenture shall be deemed to refer to “Parity Loans” and shall have the definition set forth below; and (iii) the definitions of “Annual Debt Service,” “Average Annual Debt Service,” “Bondowner,” “Owner” and “Maximum Annual Debt Service” in the Indenture shall be replaced by the definitions of such terms set forth below.
Bondowner, Owner
The term “Bondowner” or “Owner” means any person who is the registered owner of any Outstanding Bond, or, if such Outstanding Bond has a maturity of one year or less and is issued in bearer form, means the bearer of such Bond, or, with respect to any Parity Loan, means the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof), as applicable.
Excluded Principal
“Excluded Principal” means each payment of principal of Bonds with a remaining term, on the date of calculation, of not greater than 60 months and which the Commission specifies in a Certificate of the Commission and filed with the Trustee that the Commission intends to pay from the proceeds of Bonds or Parity Loans, other bonds, notes or other obligations of the Commission or moneys other than Revenues. No such determination shall affect the security for the Bonds or Parity Loans or the obligation of the Commission to pay the Bonds and Parity Loans from Revenues.
Maximum Annual Debt Service, Annual Debt Service, Debt Service, Average Annual Debt Service
The term “ Maximum Annual Debt Service ” means, at any point in time, with respect to Bonds then Outstanding, the maximum amount of principal and interest becoming due in the then current or any future Fiscal Year, calculated by the Commission as provided in this definition. For purposes of calculating Maximum Annual Debt Service, the following assumptions are to be used to calculate the principal and interest becoming due in any Fiscal Year:
(i) in determining the principal amount due in each year, payment will (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with any amortization schedule established for such debt, including any Minimum Sinking Fund Account Payments or any scheduled redemption or payment of Bonds on the basis of Accreted Value, and for such purpose, the redemption payment or payment of Accreted Value will be deemed a principal payment and interest that is compounded and paid as Accreted Value 133887113.5 16
will be deemed due on the scheduled redemption or payment date of such Capital Appreciation Bond, but excluding Excluded Principal;
(ii) if any of the Outstanding Series of Bonds constitute Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness or if Bonds then proposed to be issued would constitute Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness, then, for purposes of determining Maximum Annual Debt Service, such Bonds the principal of which the Commission has not specified as Excluded Principal will be amortized for a period specified by the Commission (but no longer than forty (40) years from the date of the issuance of the Bonds to which such Balloon Indebtedness relates) on a substantially level debt service basis or other amortization basis designated by the Commission, calculated based on a fixed rate equal to the rate at which the Commission could borrow for such period, as certified by a Qualified Municipal Advisor; (iii) if any Outstanding Bonds constitute Tender Indebtedness or if Bonds then proposed to be issued would constitute Tender Indebtedness, then for purposes of determining the amounts of principal and interest due in any Fiscal Year on such Bonds, the options or obligations of the owners of such Bonds to tender the same for purchase or payment prior to their stated maturity or maturities will be treated as a principal maturity occurring on the first date on which owners of such Bonds may or are required to tender such Bonds except that any such option or obligation to tender Bonds will be ignored and not treated as a principal maturity, if (1) such Bonds are rated in one of the two highest long-term rating categories (without reference to gradations such as “plus” or “minus”) by Moody’s and by S&P or such Bonds are rated in the highest short-term, note or commercial paper rating categories by Moody’ s and by S&P and (2) the obligation, if any, the Commission may have under a Letter of Credit Agreement with respect to such Bonds, other than its obligations on such Bonds, will either be subordinated to the obligation of the Commission on the Bonds or be incurred under the conditions and meeting the tests for the issuance of Additional Bonds set forth in the Indenture; (iv) If any Outstanding Bonds constitute Variable Rate Indebtednes s, the interest rate shall, as of the date of calculation, be: (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the Commission in the Supplemental Indenture authorizing such Bonds (which the Commission must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax purposes under the Code), a fixed rate of interest reasonably determined by the Commission for obligations with similar duration, which interest rate has been certified by a Qualified Municipal Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture; (v) if Bonds proposed to be issued will be Variable Rate Indebtedness, then such Bonds will be assumed to bear interest at : (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the Commission in the Supplemental Indenture authorizing such Bonds (which the Commission must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax purposes under the Code), a fixed rate of interest reasonably determined by the Commission for obligations with similar duration, which 133887113.5 17
interest rate has been certified by a Qualified Municipal Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture; (vi) if moneys or Federal Securities or general obligation bonds of the State of California have been deposited with and are held by the Trustee or another fiduciary to be used to pay principal and/or interest on specified Bonds, then the principal and/or interest to be paid from such moneys or Federal Securities or general obligation bonds of the State of California or from the earnings thereon will be disregarded and not included in calculating Maximum Annual Debt Service.
The term “Annual Debt Service” means the sum of such principal and interest as computed for the twelve-month period ending June 30 to which reference is made.
The term “Debt Service” means the sum of all such principal and interest.
The term “Average Annual Debt Service” means total Debt Service, divided by the number of twelve-month periods ending on June 30 (including any fractional periods) remaining until the last maturity date of any Outstanding Bond.
For the purpose of calculating Maximum Annual Debt Service, Annual Debt Service, Debt Service, and Average Annual Debt Service, in determining the amount of interest coming due during any twelve-month period ending June 30 on any Series of Bonds that were issued as Build America Bonds, such amount will be reduced by an amount equal to the Refundable Credits the Commission is scheduled to receive during each such twelve-month period ending June 30. If the amount of Refundable Credits scheduled to be received by the Commission for any Series of Bonds that were issued as Build America Bonds is reduced or otherwise not received during any twelve- month period ending June 30, the Commission will calculate the amount of interest due on such Series of Bonds for the subsequent twelve month period ending June 30 by offsetting against the gross amount of interest payable on such Series only the amount of the Refundable Credits scheduled to be received under Federal legislation (or other Federal regulation, pronouncement or action) authorizing the reduction of Refundable Credits.
Parity Loans
“Parity Loans” means those loan agreements entered into between the Commission and the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof) to finance additions, betterments, extensions, repairs, renewals or replacements to the Enterprise, which are entered into after the issuance of the Bonds and which, by their terms, are secured by a pledge and lien on Revenues on a parity basis with debt service on the Bonds. Parity Loans may be evidenced by or secured by Bonds.
Qualified Municipal Advisor
“Qualified Municipal Advisor” means a person or a firm selected by the Commission who or which engages in the business of advising the management of public agencies similar to the Commission concerning the issuance of debt.
133887113.5 18
SIFMA
“SIFMA” means, as of any date, the most recent rate determined on the basis of the seven- day high grade market index of tax -exempt variable rate demand obligations, as calculated and published by Bloomberg and made available by the Securities Industry and Financial Markets Association on its SIFMA Municipal Swap Index, or if the SIFMA Municipal Swap Index is no longer published or reported, the rate per annum published or reported on the S&P Municipal Bond 7 Day High Grade Rate Index, or if neither the SIFMA Municipal Swap Index nor the S&P Municipal Bond 7 Day High Grade Rate Index is published, a per annum rate equal to 60% of the yield of the three-month U.S. Treasury bill as reported as of the end of each trading day.
SECTION 187.03 A
mendment to Section 3.05(c) of the Indenture. Section 3.05(c) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(c) Fixed serial maturities or mandatory Minimum Sinking Fund Account Payments, or a
ny combination thereof, shall be established in amounts sufficient to provide for the retirement of all of the Bonds of such additional Series on or before their respective maturity dates; provided, however, that such requirement shall not apply to Balloon Indebtedness or principal amounts of such Series of Bonds which the Commission has specified as Excluded Principal.” SECTION 187.04 A
mendment to Section 3.05(e) of the Indenture. Section 3.05(e) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(e) After giving effect to the application of the proceeds of the additional Series of Bonds, either (i) Annual Debt Service will not be increased in any Fiscal Year (excluding Debt Service on the Outstanding Bonds to be refunded) in an amount in excess of 5% or (ii) the Average Annual Debt Service for the Bonds of such additional Series (during the period from their issuance to their last maturity date) shall be equal to or less than the Average Annual Debt Service on the Bonds to be refunded (during the period from the issuance of the additional Series to the last maturity date of the Bonds to be refunded).”
SECTION 187.05 A
mendment to Section 3.06(c)(1) of the Indenture .
Section 3.06(c)(1) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(1) If the additional Series of Bonds are being issued pursuant to Section 3.04, after the sale of the Series of Additional Bonds proposed to be issued (but prior to the issuance and delivery thereof and receipt of payment therefor), the Commission shall file the following documents with the Trustee; these documents shall, with respect to such Series of Additional Bonds, be based upon the actual interest rate or rates determined at the time of sale thereof (except that, with respect to Variable Rate Indebtedness, the interest rate for the Series of Additional Bonds shall be calculated in accordance with the provisions of subsection (iv) of the definition of Maximum Annual Debt Service).
(i) A Certificate of the Commission setting forth for each of the next three Fiscal Years estimates of (A) Revenues, (B) Operation and Maintenance C osts of the Enterprise and (3) Net Revenues.
133887113.5 19
(ii) A Certificate of the Commission demonstrating that (1) the ratio of (A) Net Revenues for the most recent Fiscal Year for which audited financial statements are available, or any consecutive twelve calendar month period during the eighteen calendar month period prior to the issuance of such additional Series of Bonds, to (B) Annual Debt Service for the current Fiscal Year, calculated as of the date of sale of, and including such additional Series of Bonds, w ill not be less than 1.25:1; or (2) the ratio of (A) Net Revenues projected by the Commission for each of the next three Fiscal Years as determined in clause (i) above, and including in such projections amounts projected to be received from any adopted rate increases (but excluding the Bond Reserve Fund), to (B) Annual Debt Service in each of such three Fiscal Years, calculated as of the date of sale of and including such additional Series of Bonds, will not be less than 1.25:1 in each of such Fiscal Years.”
SECTION 187.06 A
mendment to Section 3.07 of the Indenture. The final paragraph of Section 3.07 of the Indenture is hereby amended and restated in its entirety to read as follows:
“In addition, the Commission may enter into Parity Loans if no Event of Default has oc
curred and is continuing under this Indenture or any Supplemental Indenture (and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under this Indenture or any Supplemental Indenture) and, on the date of the execution and delivery of such Parity Loans and with respect to Parity Loans executed and delivered prior to the effective date of the amendments set forth in Article CLXXXVII , on the effective date of the amendments set forth in Article CLXXXVII, the Commission delivers a Certificate to the Trustee setting forth, for each of the next three Fiscal Years after the delivery of the Parity Loans, and in the case of Parity Loans executed and delivered prior to the effective date of the amendments set forth in Article CLXXXVII, the next three Fiscal Years, determined on such date, (i) the Revenues, Operation and Maintenance Costs of the Enterprise and Net Revenues and (ii) the Annual Debt Service (assuming the delivery of the Parity Loans), and demonstrating that the estimated Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund), in each of such Fiscal Years is at least equal to
1.25 times the Annual Debt Service in each of such Fiscal Years.” SECTION 187.07 A
mendment to Section 6.07(b) of the Indenture. Section 6.07(b) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(b) T he Commission will prepare and file with the Trustee annually, within seven months after the close of each Fiscal Year so long as any of the Bonds are Outstanding, financial statements of the Enterprise for the preceding Fiscal Year, prepared in accordance with generally accepted accounting principles applied on a consistent basis from year to year (which financial statements will include a statement showing the balances in each fund required to be established under the provisions of the Indenture), including a balance sheet, statement of income, statement of retained earnings and contributed capital, and statement of changes in financial position, which financial statements will be examined by and include the certificate or opinion of an Independent Certified Public Accountant. Such financial statements will be accompanied by a Certificate of the Commission stating that no Event of Default has occurred or is continuing as of the end of each Fiscal Year, or specifying the nature of the Events of Default, if any, which have occurred and are continuing.”
133887113.5 20
SECTION 187.08 A mendment to Section 6.13(a) of the Indenture. The first paragraph of Section 6.13(a) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(a) To the fulles t extent permitted by law, the Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise so as to yield Revenues a t least sufficient, after making reasonable allowances for contingencies and error in the estimates to pay the following amounts:”
SECTION 187.09 A
mendment to Section 6.13(b) of the Indenture. Section 6.13(b) of the Indenture is hereby amended and restated in its entirety to read as follows:
“(b) In addition to the requirements in subsection (a), to the fullest extent permitted by law, t
he Commission shall establish, fix and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the water, services and facilities furnished by the Enterprise, which are reasonably expected to be at least sufficient to yield during such Fiscal Year Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund) equal to 1.25 times Annual Debt Service payable in such Fiscal Year.”
SECTION 187.10 A
mendment to Section 6.13 of the Indenture. The following clause (d) is hereby added to Section 6.13 of the Indenture:
“(d) So long a s the Commission has complied with its obligations set forth in clause (a) and clause (b) of this Section 6.13, the failure to yield the amount of Revenues as set forth in clause (a) of this Section 6.13, or the failure of Net Revenues to equal 1.25 times Annual Debt Service as set forth in clause (b) of this Section 6.13 at the end of a Fiscal Year, shall not constitute a default or an Event of Default hereunder so long as the Commission has complied with clause (a) and clause (b) of this Section 6.13 at the commencement of the succeeding Fiscal Year.”
MISCELLANEOUS
SECTION 188.01 Terms of 2023 Sub-Series A Bonds Subject to the Indenture.
Except as expressly provided in this Forty -Third Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty -Third Supplemental Indenture, and to the 2023 Sub-Series A Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Third Supplemental Indenture.
This Forty-Third Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in this Forty-Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in this Forty-Third Supplemental Indenture shall be 133887113.5 21
incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in this Forty-Third Supplemental Indenture.
SECTION 188.02 E ffective Date of Forty-Third Supplemental Indenture. This Forty- Third Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 188.03 Hol der Consents to Amendments in Forty -Third Supplemental Indenture. By acceptance of a 2023 Sub- Series A Bond, the holder t hereof consents to the amendments described in Article CLXXXVII of this Forty-Third Supplemental Indenture.
SECTION 188.04 Exe cution in Counterparts; No Seal Required for Execution. This Forty-Third Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. No seal of the Commission is required for the execution of this Forty-Third Supplemental Indenture.
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “City Requirements” or “Additional City Requirements,” the provisions of this Article shall control.
SECTION 189.01 C onflict of Interest. Through its execution of this Forty -Third Supplemental Indenture , the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’s Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Forty-Third Supplemental Indenture.
SECTION 189.02 Pr
oprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty-Third Supplemental Indenture or in contemplation thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Forty -Third Supplemental Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data. 133887113.5 22
SECTION 189.03 L ocal Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Business Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not materially increase the Trustee’s obligations or liabilities, or materially diminish the Trustee’s rights, under this Forty-Third Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth in this Section. The Trustee’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Trustee’s obligations under this Forty-Third Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty -Third Supplemental Indenture, to exercise any of the remedies provided for under this Forty -Third Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Third Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting.
(b) E
nforce ment
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Forty -Third Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee’s net profit on this Forty-Third Supplemental Indenture, or 10% of the total amount of this Forty -Third Supplemental Indenture, or $1,000, whichever is greatest. The Director of t he City’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Trustee’s LBE certification. The Director of CMD will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Forty -Third Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Forty-Third Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
133887113.5 23
SECTION 189.04 N ondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty -Third Supplemental Indenture, the Trustee agrees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV statu s (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) S
ubcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply with such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Third Supplemental Indenture.
(c) N
ondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Third Supplemental Indenture and will not during the term of this Forty -Third Supplemental Indentur e, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. (d) C
ondition to Contract
As a condition to this Forty -Third Supplemental Indenture, the Trustee shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (Form CMD-12B- 101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). (e) I
ncorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Francisco Admi nistrative Code are incorporated in this Section by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Forty -Third Supplemental Indenture under such Chapters, 133887113.5 24
including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Forty -Third Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 189.05 M
acBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourag es such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Forty -Third Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 189.06 Tr
opical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of San Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 189.07 Dru
g-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug-Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Forty-Third Supplemental Indenture.
SECTION 189.08 Res
ource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Forty-Third Supplemental Indenture.
SECTION 189.09 Co
mpliance with Americans with Disabilities Act. The Trustee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Forty-Third Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Trustee agrees not to discriminate against disabled persons in the provision of services, benefits or activities provided under this Forty -Third Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Forty-Third Supplemental Indenture.
SECTION 189.10 Suns
hine Ordinance . In accordance with San Francisco
Administrative Code §67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that person or 133887113.5 25
organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 189.11 L imitations on Contributions . Through execution of this Forty - Third Supplemental Indenture, the Trustee acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Trustee further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee’s board of directors; the Trustee’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 189.12 Re
quiring Minimum Compensation for Covered Employees.
(a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in San Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidelines and rules. The provisions of Section 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth.
The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Trustee’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section. (b) The MCO requires the Trustee to pay the Trustee’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off.
The minimum wage rate may change from year to year and the Trustee is obligated to keep informed of the then -current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Forty -Third Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty-Third Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
133887113.5 26
(c) The Trustee shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
(e) The City is authorized to inspect the Trustee’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Forty -Third Supplemental Indenture. The City in i ts sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P. (g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Third Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Third Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedi es available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Third Supplemental Indenture. Nothing in this Forty -Third Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 189.13 R
equiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HCAO), as set f orth in San Francisco Administrative Code 133887113.5 27
Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth herein. The text of the HCAO is available on the web at www.sfgov.org/olse. Capitalized terms used in this Section and not defined in this Forty -Third Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q.
(a) For each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Forty-Third Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’s written notice of a breach of this Forty-Third Supplemental Indenture for violating the HCAO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Trustee shall notify City’s Office of Contract Administration when it enters into such a Subcontract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on Subcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Trustee based on the Subcontractor’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying the City with regard to the Trustee’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. (f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. 133887113.5 28
(g) The Trustee shall mai ntain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Forty-Third Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. (i) The Trustee shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a written request from the City to do so and being provided at least ten business days to respond.
(k) The Trustee shall allow the City to inspect the Trustee’s job s ites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Forty -Third Supplemental Indenture is executed because its fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later enters into an agreement or agreements that cause the Trustee’s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees from agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 189.14 P
rohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Forty -Third Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’s Controller.
The terms and provisions of Chapter 12.G are incorporated herein by this reference. In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Forty -Third Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 189.15 Pr
eservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing ar senic in the performance of this Forty-Third Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative-treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The 133887113.5 29
Trustee may purchase preservative-treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “saltwater immersion” shall mean a pressure -treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 189.16 C ompliance with Laws. The Trustee shall keep itself fully informed of the City’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Forty -Third Supplemental Indenture , and must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time.
SECTION 189.17 Pr
otection of Private Information. .The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information,” and 12M.3, “Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty -Third Supplemental Indenture. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Forty-Third Supplemental Indenture, bring a false claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 189.18 Food S
ervice Waste Reduction Requirements. The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Forty-Third Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty-Third Supplemental Indenture. By entering into this Forty-Third Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Forty-Third Supplemental Indenture was made.
Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee’s failure to comply with this provision.
SECTION 189.19 Su
bmitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that Section . A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim.
A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; 133887113.5 30
(b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the C ity within a reasonable time after discovery of the false claim.
SECTION 189.20 S ugar-Sweetened Beverage Prohibition. The Trustee agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code C hapter 101, as part of its performance of this Forty -Third Supplemental Indenture.
SECTION 189.21 Ag reement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 189.22 Ow
nership of Results. Any interest of the Trustee or its Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Forty -Third Supplemental Indenture shall become the property of and will be transmitted to the City. However, the Trustee may retain and use copies for reference and as documentation of its experience and capabilities.
SECTION 189.23 Audi
t and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Forty-Third Supplemental Indenture . The Trustee will permit the City to audit, examine and make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Forty-Third Supplemental Indenture, whether funded in whole or in part under this Forty-Third Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under this Forty -Third Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Forty-Third Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 189.24 Subc
ontracting. The Trustee is prohibited from subcontracting this Forty-Third Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Forty-Third Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void.
SECTION 189.25 As
signment. The services to be performed by Trustee are personal in character and neither this Forty -Third Supplemental Indenture nor any duties or obligations 133887113.5 31
hereunder may be assigned or delegated by the Trustee unless first approved by the City by written instrument executed and approved in the same manner as this Forty-Third Supplemental Indenture.
SECTION 189.26 No n-Waiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
SECTION 189.27 Ci
ty a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Forty-Third Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
133887113.5
IN WITNESS WHEREOF, the parties hereto have executed this Forty-Third Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Mark D. Blake, Deputy City Attorney
133887113.5 AT-1
EXHIBIT AT-1
FORM OF 2023 SUB-SERIES A BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
$______________ No. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2023 SERIES AB
2023 SUB-SERIES A BOND (REGIONAL WATER AND LOCAL WATER) Dated Date Interest Rate Maturity Date CUSIP No.
______, 2023 % November 1, 20__
Registered Owner: Cede & Co.
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16 th day of the calendar month next preceding
any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or before September 15 , 2023, in which event it shall bear interest from [CLOSING DATE] ; provided, 133887113.5 AT-2
however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate per annum stated above, payable on November 1, 2023 and semiannually thereafter on May 1 and November 1 in each year.
The principal (or redemption price) hereof is payable to the registered owner hereof upon the surrender hereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as trustee (herein, together with any successor as trustee under the Indenture, called the “ Trustee”), or such other office designated by the Trustee. The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered ow ner hereof as of the close of business on the 15 th day of the calendar
month immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond shall be calculated on the basis of a 360-day year comprised of twelve 30-day months.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds ” (herein called the “Bonds”), of the series and designation indicated on the face hereof (herein called the “ 2023 Sub-Series A Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental thereto, including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “ Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Forty -Third Supplemental Indenture , dated as of ____________ 1, 2023, between the Trustee and the Commission, authorizing the issuance of the 2023 Sub-Series A Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof.
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly 133887113.5 AT-3
described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
The 2023 Sub-Series A Bonds maturing on or after November 1, 20__ shall be subject to redemption prior to their stated maturity, at the op tion of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2023 Sub-Series A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2023 Sub-Series A Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2023 Sub- Series A Sinking Fund Account (described in the Indenture), on November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub -Series A Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2023 Sub- Series A Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series A Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub-Series A Term Bonds prior to maturity pursuant to the Indenture):
133887113.5 AT-4
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
The 2023 Sub-Series A Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2023 Sub- Series A Sinking Fund Account (described in the Indenture), on November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub -Series A Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2023 Sub- Series A Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series A Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub-Series A Term Bonds prior to maturity pursuant to the Indenture):
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
The 2023 Sub-Series A Bonds are issuable as fully registered Bonds without coupons in denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2023 Sub-Series A Bonds may be exchanged for a like aggregate principal amount of 2023 Sub-Series A Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon s urrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have 133887113.5 AT-5
happened or have been performed in due and regular time, form and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consent s to the amendment s described in Article CLXXXVII of the Forty-Third Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
133887113.5 AT-6
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of [CLOSING DATE].
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
133887113.5 AT-7
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2023 SUB-SERIES A BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: [CLOSING DATE]
By: ______________________________________
Authorized Officer
133887113.5 AT-8
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within- mentioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
Norton Rose Fulbright US LLP draft 5/1/23
134830285.4
FORTY-FOURTH SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of ____________ 1, 2023
AUTHORIZING THE ISSUANCE OF
$[PAR AMOUNT] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2023 SERIES AB
2023 SUB-SERIES B (HETCH HETCHY WATER)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
134830285.4 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 190.01 Definitions ....................................................................................................... 2
PROVISIONS RELATING TO 2023 SUB-SERIES B BONDS
SECTION 191.01 Authorization and Terms of 2023 Sub-Series B Bonds .................................. 3 SECTION 191.02 Terms of Redemption ...................................................................................... 5 SECTION 191.03 Form of 2023 Sub-Series B Bonds .................................................................. 6 SECTION 191.04 Use of Depository ............................................................................................ 6 SECTION 191.05 Issuance of 2023 Sub-Series B Bonds ............................................................. 7 SECTION 191.06 Application of Proceeds of 2023 Sub-Series B Bonds .................................... 8 SECTION 191.07 Establishment and Application of the 2023 Sub-Series B Project Fund ......... 9 SECTION 191.08 2023 Sub-Series B Sinking Fund Account .................................................... 10 SECTION 191.09 Establishment and Application of the 2023 Sub-Series B Rebate Fund ....... 12 SECTION 191.10 Tax Covenants ............................................................................................... 13 SECTION 191.11 Continuing Disclosure ................................................................................... 14
MISCELLANEOUS
SECTION 192.01 Terms of 2023 Sub-Series B Bonds Subject to the Indenture ....................... 14 SECTION 192.02 Effective Date of Forty-Fourth Supplemental Indenture .............................. 15 SECTION 192.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ................................................................................................... 15 SECTION 192.04 Execution in Counterparts; No Seal Required for Execution ........................ 15
ADDITIONAL CITY REQUIREMENTS
SECTION 193.01 Conflict of Interest ......................................................................................... 15 SECTION 193.02 Proprietary or Confidential Information of the City ..................................... 15 SECTION 193.03 Local Business Enterprise Utilization; Liquidated Damages ........................ 15 SECTION 193.04 Nondiscrimination; Penalties ........................................................................ 16 SECTION 193.05 MacBride Principles—Northern Ireland ........................................................ 17 SECTION 193.06 Tropical Hardwood and Virgin Redwood Ban ............................................... 18 SECTION 193.07 Drug-Free Workplace Policy ......................................................................... 18 SECTION 193.08 Resource Conservation ................................................................................... 18 SECTION 193.09 Compliance with Americans with Disabilities Act ....................................... 18 SECTION 193.10 Sunshine Ordinance ....................................................................................... 18 134830285.4 ii
SECTION 193.11 Limitations on Contributions ......................................................................... 18 SECTION 193.12 Requiring Minimum Compensation for Covered Employees ....................... 19 SECTION 193.13 Requiring Health Benefits for Covered Employees ...................................... 20 SECTION 193.14 Prohibition on Political Activity with City Funds ......................................... 22 SECTION 193.15 Preservative-treated Wood Containing Arsenic ............................................ 22 SECTION 193.16 Compliance with Laws .................................................................................. 22 SECTION 193.17 Protection of Private Information .................................................................. 23 SECTION 193.18 Food Service Waste Reduction Requirements .............................................. 23 SECTION 193.19 Submitting False Claims; Monetary Penalties .............................................. 23 SECTION 193.20 Sugar-Sweetened Beverage Prohibition ........................................................ 24 SECTION 193.21 Agreement Made in California; Venue ......................................................... 24 SECTION 193.22 Ownership of Results .................................................................................... 24 SECTION 193.23 Audit and Inspection of Records ................................................................... 24 SECTION 193.24 Subcontracting ............................................................................................... 24 SECTION 193.25 Assignment .................................................................................................... 24 SECTION 193.26 Non-Waiver of Rights ................................................................................... 24 SECTION 193.27 City a Third Party Beneficiary ...................................................................... 25 Exhibit AU-1 – Form of 2023 Sub-Series B Bond
134830285.4
FORTY-FOURTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[PAR AMOUNT] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2023 Series AB
2023 Sub-Series B (Hetch Hetchy Water)
This Forty-Fourth Supplemental Indenture, dated as of ____________ 1, 2023 (this “Forty- Fourth Supplemental Indenture”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as successor trustee (the “Trustee”), and the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “ Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Forty-Fourth Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of ____________ 1, 2023, there are outstanding $___________ aggregate principal amount of water revenue bonds issued pursuant to the Indenture; WHEREAS, the 2010 Series ABC Bonds, the 2010 Series DE Bonds, the 2010 Series FG Bonds, the 2015 Refunding Series A Bonds, the 2016 Refunding Series AB Bonds, the 2016 Series C Bonds, the 2017 Series ABC Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds, the 2020 Series ABCD Bonds and the 2020 Refunding Series EFGH Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues;
WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds from time to time pursuant to a supplemental indenture;
WHEREAS, the Commission has determined to issue pursuant to this Forty-Fourth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2023 Series AB, 2023 Sub-Series B (Hetch Hetchy Water )” (the “2023 Sub-Series B Bonds”) in the aggregate original principal amount of $ [PAR AMOUNT] to provide long-term financing or refinancing (including through the retirement of certain outstanding commercial paper notes) for 134830285.4 2
reconstruction, replacement, expansion and repair of or improvements t o the Water Enterprise - related infrastructure of the Hetch Hetchy Water and Power System; WHEREAS, simultaneous with the issuance of the 2023 Sub- Series B Bonds , the Commission has determined to issue pursuant to a Forty-Third Supplemental Indenture a sub- series of Bonds designated “ San Francisco Water Revenue Bonds, 2023 Series AB , 2023 Sub- Series A (Regional Water and Local Water)” (the “2023 Sub-Series A Bonds,” and together with the 2023 Sub-Series B Bonds, the “2023 Series AB Bonds”) in the aggregate principal amount of $_________ to provide long-term financing or refinancing (including through the retirement of certain outstanding commercial paper notes) for the reconstruction, replacement, expansion and repair of or impro vements to the regional water system and local (in -city) water system of the Enterprise, excluding the Commission’s Water System Improvement Program; WHEREAS, the 2023 Series AB Bonds (and each sub-series thereof) will be issued by the Commission under the Indenture payable on a parity with the other Outstanding Series of Bonds and any Parity State Loans;
WHEREAS, the conditions and limitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2023 Series AB Bonds; WHEREAS, in order to provide for the issuance of the 2023 Sub- Series B Bonds , to establish and declare the terms and conditions upon which the 2023 Sub-Series B Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty -Fourth Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Forty-Fourth Supplemental Indenture do exist, have happened and have bee n performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Forty-Fourth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 190.01 Definitions. The terms defined in this section shall, for all purposes of this Forty -Fourth Supplemental Indenture, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
134830285.4 3
DTC
The term “DTC” means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, in its capacity as Securities Depository for the 2023 Sub-Series B Bonds.
2023 Sub-Series B Project
The term “2023 Sub- Series B Project” means the reconstruction, replacement, expansion and repair of or improvements to the Water Enterprise -related infrastructure of the Hetch Hetchy Water and Power System , financed or refinanced (including through the retirement of certain outstanding commercial paper notes) with proceeds of the 2023 Sub-Series A Bonds.
PROVISIONS RELATING TO 2023 SUB-SERIES B BONDS
SECTION 191.01 Authorization and Terms of 2023 Sub- Series B Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[PAR AMOUNT] are hereby authorized to be issued under the Charter and the Law and pursuant to the Indenture. (a) Such Bonds are designated as the “San Fra ncisco Water Revenue Bonds, 2023 Series AB, 2023 Sub-Series B (Hetch Hetchy Water )”. The 2023 Sub-Series B Bonds are being issued to provide funds to pay costs of the 2023 Sub- Series B Project, to pay capitalized interest on the 2023 Sub-Series B Bonds and to pay costs of issuance of the 2023 Sub- Series B Bonds.
Such purposes constitute purposes described in Section 3.04 of the Indenture. The aggregate principal amount of 2023 Sub- Series B Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Forty-Fourth Supplemental Indenture shall be $[PAR AMOUNT]. The 2023 Sub-Series B Bonds shall be of the tenor known as Current Interest Bonds.
The 2023 Sub-Series B Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2023 Sub-Series B Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2023 Sub-Series B Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC , and shall be evidenced by one 2023 Sub- Series B Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2023 Sub- Series B Bonds , or any portion thereof, may not thereafter be transferred except as set forth in Section 191.04 herein. (b) The 2023 Sub-Series B Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable on November 1, 2023, and semiannually thereafter on May 1 and November 1 in each year, calculated on the basis of a 360-day year consisting of twelve 30-day months:
134830285.4 4
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
*
* Term bond.
The 2023 Sub-Series B Bonds maturing on November 1, 20__ and November 1, 20__ are hereby designated as Term Bonds.
(c) Subject to Section 191.04 hereof, the principal of and premium, if any, on the 2023 Sub-Series B Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2023 Sub-Series B Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15 th day of the calendar month immediately preceding an interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may have filed with the Trustee for that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2023 Sub- Series B Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2023 Sub-Series B Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before September 15 , 2023, in which event it shall bear interest from [CLOSING DATE]; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest fr om the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2023 Sub- Series B Bonds shall be subject to redemption as provided in Section 191.02.
(f) The Trustee shall assign each 2023 Sub-Series B Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection.
134830285.4 5
(g) There shall be no Required Reserve for the 2023 Sub-Series B Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2023 Sub- Series B Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2023 Sub-Series B Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2023 Sub- Series B Bonds in the manner and form provided in this Forty-Fourth Supplemental Indenture.
SECTION 191.02 Terms of Redemption.
(a) Optional Redemption. The 2023 Sub- Series B Bonds maturing on or after November 1, 20__ shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are deter mined by the Commission and by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2023 Sub-Series B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(b) Mandatory Sinking Fund Redemption.
(i) The 2023 Sub-Series B Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity , and payable from the 2023 Sub- Series B Sinking Fund Account (described in Section 191.08), on each November 1 on and after November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub- Series B Bonds of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2023 Sub- Series B Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub- Series B Bonds to be redeemed in each such year set forth in Section 191.08 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub- Series B Term Bonds prior to maturity pursuant t o Section 191.02(a) above).
(ii) The 2023 Sub-Series B Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2023 Sub- Series B Sinking Fund Account (described in Section 191.08), on November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub- Series B Bonds of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2023 Sub- Series B Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series B Bonds to be redeemed in each such year set forth in Section 191.08 below (such schedule of principal amounts subject to adjustment as directed by the 134830285.4 6
Commission in the event of optional redemption of any portion of such 2023 Sub-Series B Term Bonds prior to maturity pursuant to Section 191.02(a) above). (c) Other Terms of Redemption. Except as otherwise provided herein, the provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.03, 4.04, 4.05 and
4.06 shall apply to the redemption of the 2023 Sub-Series B Bonds.
SECTION 191.03 Form of 2023 Sub-Series B Bonds. The 2023 Sub-Series B Bonds and the Trustee ’s certificates of authentication and registration and the form of assignment to appear thereon shall be in substantially the form set forth as Exhibit AU-1 to this Forty -Fourth Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Fourth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2023 Sub-Series B Bonds does not require the seal of the Commission.
SECTION 191.04 Use of Depository.
(a) The 2023 Sub-Series B Bonds shall be initially registered as provided in Section 191.01 hereof. Registered ownership of the 2023 Sub- Series B Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection ( a) (a “ Substitute Depository” ); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any Substitute Depository not objected to by the Trustee, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or
(iii) to any person as provided below, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause ( i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2023 Sub- Series B Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2023 Sub-Series B Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2023 Sub- Series B Bonds then Outstanding, registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Written Request of the Commission. 134830285.4 7
(c) In the case of any transfer pursuant to clause ( iii) of subsection (a) of this Section, upon receipt of all Outstanding 2023 Sub-Series B Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2023 Sub-Series B Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 191.01 hereof, provided that the Trustee shall not be required to deliver such new 2023 Sub-Series B Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission. (d) In the case of a partial redemption or an advance refunding of any 2023 Sub- Series B Bonds evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such 2023 Sub-Series B Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not be liable for such Securities Depository’s (or any Substitute Depository’s) failure to make such notations or errors in making such notations. (e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2023 Sub-Series B Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee shall not have responsibility for transm itting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2023 Sub- Series B Bonds . Neither the Commission nor the Trustee shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any 2023 Sub- Series B Bonds , and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2023 Sub-Series B Bonds.
(f) Notwithstanding any other provision of this Forty -Fourth Supplemental Indenture and so long as all Outstanding 2023 Sub-Series B Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2023 Sub- Series B Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter o f representations delivered by the Commission and the Trustee to DTC with respect to the 2023 Sub-Series B Bonds , the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 191.05 Issuance of 2023 Sub-Series B Bonds.
(a) At any time after the execution of this Forty -Fourth Supplemental Indenture, the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2023 Sub-Series B Bonds in the aggregate principal amount of $ [PAR AMOUNT] to the initial purchasers thereof specified in such Written Request or Certificate.
134830285.4 8
SECTION 191.06 Application of Proceeds of 2023 Sub-Series B Bonds. (a) The original purchaser of the 2023 Sub- Series B Bonds will pay and deliver the purchase price of the 2023 Sub-Series B Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $__________ to the Trustee, and the Trustee shall deposit and transfer this amount, as follows:
1. The Trustee shall deposit $___________ in a separate fund to be known as the 2023 Series AB Costs of Issuance Fund established and maintained under the Forty- Third Supplemental Indenture.
2. The Trustee shall deposit $ ___________ in the 2023 Sub- Series B Capitalized Interest Account , which the Trustee hereby agrees to establish and maintain within the Interest Fund.
3. [The Trustee shall transfer $__________ to the Treasurer for deposit to the 2023 Sub- Series B Project Fund established under Section 191.07.] [The Trustee shall transfer the remaining balance, being $ ___________, to U.S. Bank Trust Company, National Association, as issuing and paying agent for the commercial paper notes of the Enterprise, to retire a portion of such commercial paper notes.] (b) Before any payment is made by the Trustee to pay costs of issuance from the 2023 Series AB Costs of Issuance Fund, the Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting 134830285.4 9
the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance of the 2023 Series AB Bonds have been paid, the Commission shall deliver a Certificate of the Commission stating such fact to the Trustee (as described in clause (c) below).
(c) The money in the 2023 Series AB Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty -Third Supplemental Indenture and the Forty -Fifth Supplemental Indenture) shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance i ncidental to or connected with the issuance of the 2023 Series AB Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2023 Series AB Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2023 Series AB Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on _________, 202_, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2023 Series AB Costs of Issuance Fund shall be closed. (d) Amounts on deposit in the 2023 Sub-Series B Capitalized Interest Account shall be applied to the payment of interest on the 2023 Sub- Series B Bonds on each May 1 and November 1, commencing on November 1, 2023, prior to amounts in the Interest Fund being so used, until no amounts remain on deposit in the 2023 Sub- Series B Capitalized Interest Account, whereupon the 2023 Sub-Series B Capitalized Interest Account shall be closed. All moneys held by the Trustee in the 2023 Sub-Series B Capitalized Interest Account may be invested in Permitted Investments maturing not later than the date on which such moneys are required for payment by the Trustee.
SECTION 191.07 Establishment and Application of the 2023 Sub- Series B Project Fund.
(a) The Commission hereby covenants and agrees to establish, maintain and hold hereunder within the Improvement Fund established under Section 3.03 of the Indenture, a separate account known as the “ 2023 Sub-Series B Project Fund” (herein called the “2023 Sub- Series B Project Fund”).
(b) The Treasurer shall hold the amounts on deposit in the 2023 Sub- Series B Project Fund, which shall be maintained and accounted for by the Controller so long as any moneys are on deposit therein. Upon completion of the 2023 Sub-Series B Project, the Commission may direct the transfer of any remaining balance in the 2023 Sub-Series B Project Fund to any other lawfully available fund or account of the Commission; provided such transfer is consistent with the Commission’s covenants in the Tax Certificate (as defined in Section 162.09 herein). (c) The moneys in the 2023 Sub- Series B Project Fund shall be held by the Treasurer in trust and applied to the costs of the 2023 Sub-Series B Project and the expenses incident thereto or connected therewith, including, if nec essary, interest to the extent permitted by law, reimbursement to the Commission for expenses incident thereto or connected therewith incurred 134830285.4 10
prior to the issuance of the 2023 Sub- Series B Bonds or in connection therewith, including architectural, engineering and inspection fees and expenses, apparatus, equipment and furnishings, testing and inspection, surveys, insurance premiums, losses during construction not insured against because of deductible amounts, the fees and expenses of the Trustee, legal, accounting and consultant fees and expenses, and similar expenses.
(d) All moneys held by the Treasurer in the 2023 Sub-Series B Project Fund may be invested in Legal Investments maturing not later than the date on which such moneys are required for payment by the Treasurer. The Treasurer shall pay out moneys from the 2023 Sub- Series B Project Fund only upon warrants drawn by the Controller in the manner provided by law. No withdrawals shall be made from the 2023 Sub- Series B Project Fund for any purpose not authorized by law.
SECTION 191.08 2023 Sub-Series B Sinking Fund Account.
(a) The Trustee shall establish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2023 Sub- Series B Sinking Fund Account , which the Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2023 Sub-Series B Term Bonds.
(b) The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2023 Sub-Series B Sinking Fund Acc ount from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 191.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2023 Sub-Series B Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2023 Sub-Series B Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2023 Sub- Series B Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 191.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2023 Sub-Series B Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2023 Sub-Series B Minimum Sinking Fund Account Payment”):
134830285.4 11
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
(c) During the 12 -month period ending on September 15 of each year immediately preceding each redemption from the 2023 Sub- Series B Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2023 Sub-Series B Minimum Sinking Fund Account Payment and the redemption of 2023 Sub-Series B Term Bonds therefrom by depositing with the Trustee 2023 Sub-Series B Term Bonds for cancellation prior to the Trustee’s selection of the 2023 Sub- Series B Term Bonds for redemption.
(d) In lieu of the redemption of 2023 Sub- Series B Term Bonds pursuant to Section 191.02(b) hereof, at the Written Request of the Commission, moneys in the 2023 Sub- Series B Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2023 Sub- Series B Term Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof, and all 2023 Sub-Series B Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2023 Sub- Series B Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2023 Sub-Series B Sinking Fund Account after such date and on or before the next succeeding November 1, shall be used and withdrawn by the Trustee solely for the purpose of redeeming the 2023 Sub-Series B Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 191.02(b) and Section 191.08(b) hereof; and (ii) the Trustee shall during each 12-month period beginning with the 12-month period ending on November 1, 20__, purchase or call and redeem (as herein provided) an aggregate amount of 2023 Sub-Series B Term Bonds equal to at least the amount of Bond Obligation of the 2023 Sub-Series B Term Bonds identified in Section 191.08(b) above for such 12-month period reduced by the principal amount of 2023 Sub-Series B Term Bonds deposited by the Commission with the Trustee as described in Section 191.08(c) hereof for such 12-month period, except that if during any such 12-month period, 2023 Sub-Series B Term Bonds of any Term Bond maturity have otherwise been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2023 Sub-Series B Term Bonds identified in Section 191.08(b) above for such 12 - month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2023 Sub-Series B Minimum Sinking Account Payment amounts stated in Section 191.08(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2023 Sub-Series B Sinking Fund 134830285.4 12
Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2023 Sub-Series B Term Bonds at the final maturity thereof. (e) The Commission hereby covenants and agrees with the Owners of the 2023 Sub- Series B Bonds to call and redeem 2023 Sub-Series B Bonds from the 2023 Sub-Series B Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 191.08(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2023 Sub-Series B Term Bonds or as otherwise hereinabove provided).
SECTION 191.09 Establishment and Application of the 2023 Sub- Series B Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder to be known as the “2023 Sub- Series B Rebate Fund” (for purposes of this Article, the “Rebate Fund”). Within the Rebate Fund, the Trustee shall maintain such accounts as it is instructed by the Commission as necessary in order to comply with the terms and requirements of the Tax Certificate with respect to the 2023 Sub- Series B Bonds, dated the date of issuance of the 2023 Sub- Series B Bonds (for purposes of this Article, the “ Tax Certificate”).
Subject to the transfer provisions provided in paragraph (e) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee for the account of the Commission in trust, to the extent required to satisfy the requirements for rebate, as set forth in the Tax Certificate (for purposes of this Article, the “ Rebate Requirement”), for payment to the federal government of the United States of America, and no other person shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 191.10 hereof and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions and fulfilled its obligation with respect to rebate as long as it follows the written directions of the Commission, including supplying all necessary information in the manner provided in the Tax Certificate. The Trustee shall not be required to take any actions under this Section, Section 191.10 hereof or the Tax Certificate in the absence of written directions by the Commission, and shall have no liability or responsibility to enforce compliance by the Commission with the terms of the Tax Certificate nor make computations in connection therewith. (b) Upon the Commission’ s written direction, an amount shall be deposited in the Rebate Fund by the Trustee from deposits by the Commission so that the balance of the amount on deposit therein equals the Rebate Requirement. Computations of the Rebate Requirement shall be furnished by or on behalf of the Commission in accordance with the Tax Certificate. (c) The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this Section, other than from moneys held in the funds and accounts created under the Indenture or from other moneys provided to it by or on behalf of the Commission. (d) The Trustee shall invest all amounts held in the Rebate Fund in Permitted Investments as instructed in writing by the Commission, subject to the restrictions set forth in the 134830285.4 13
Tax Certificate. Moneys shall not be transferred from the Rebate Fund except as provided in paragraph (e) below.
(e) Upon receipt of the Commission’ s written directions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States, as so directed. In addition, if the Commission so directs, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed by the Commission’s written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the 2023 Sub-Series B Bonds and payment and satisfaction of any Rebate Requirement shall be withdrawn and remitted to the Commission upon the Commission’s written request. (f) Notwithstanding any other provision of the Indenture, the obligation to remit the Rebate Requirement to the United States and to comply with all other requirements of this Section, Section 191.10 hereof and the Tax Certificate shall survive the defeasance or payment in full of the 2023 Sub-Series B Bonds.
SECTION 191.10 Tax Covenants.
The Commission covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the 2023 Sub-Series B Bonds under Section 103 of the Code.
The Commission will not directly or indirectly use or permit the use of any proceeds of the 2023 Sub-Series B Bonds or any other funds of the Commission, or take or omit to take any action that would cause the 2023 Sub- Series B Bonds to be “ arbitrage bonds” within the meaning of Section 148(a) of the Code. To that end, the Commission will comply with all requirements of Section 148 of the Code to the extent applicable to the 2023 Sub- Series B Bonds. If at any time the Commission is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Indenture or otherwise, the Commission shall so instruct the Trustee in writing, and the Trustee shall take such action as required by such instructions.
Without limiting the generality of the foregoing, the Commission agrees that there shall be paid from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applied to the 2023 Sub-Series B Bonds from time to time. This covenant shall survive payment in full or defeasance of the 2023 Sub-Series B Bonds. The Commission specifically covenants to pay or cause to be paid to the United States, at the times and in the amounts determined under Section 191.09 hereof, the Rebate Requirement. The Trustee agrees to comply with all written instructions of the Commission given in accordance with the Tax Certificate.
Notwithstanding any provision of this Section and Section 191.09 hereof, if the Commission provides to the Trustee an opinion of nationally recognized bond counsel to the effect that any action required under this Section and Section 191.09 hereof or under the Tax Certificate is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the 2023 Sub-Series B Bonds under Section 103 of the Code, 134830285.4 14
the Commission and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent.
The Commission shall assure that the proceeds of the 2023 Sub-Series B Bonds are not so used as to cause the 2023 Sub-Series B Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.
The Commission shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2023 Sub- Series B Bonds to be “ federally guaranteed” within the meaning of Section 149(b) of the Code.
SECTION 191.11 Continuing Disclosure.
The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2023 Sub-Series B Bonds, executed and delivered by the Commission in connection with the issuance of the 2023 Sub-Series B Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2023 Series AB Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2023 Series AB Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2023 Series AB Continuing Disclosure Certificate) or any Bondowner or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commission to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2023 Series AB Continuing Disclosure Certificate shall be an action to compel performance.
MISCELLANEOUS
SECTION 192.01 Terms of 2023 Sub-Series B Bonds Subject to the Indenture.
Except as expressly provided in this Forty-Fourth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty-Fourth Supplemental Indenture, and to the 2023 Sub-Series B Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Fourth Supplemental Indenture.
This Forty-Fourth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in the Forty-Third Supplemental Indent ure, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty-Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture. 134830285.4 15
SECTION 192.02 Effective Date of Forty-Fourth Supplemental Indenture. This Forty- Fourth Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 192.03 Holder Consents to Amendments in Forty -Third Supplemental Indenture. By acceptance of a 2023 Sub- Series B Bond, the holder t hereof consents to the amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture.
SECTION 192.04 Execution in Counterparts; No Seal Required for Execution. This Forty-Fourth Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. No seal of the Commission is required for the execution of this Forty-Fourth Supplemental Indenture.
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “City Requirements” or “Additional City Requirements,” the provisions of this Article shall control.
SECTION 193.01 Conflict of Interest. Through its execution of this Forty -Fourth Supplemental Indenture , the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’s Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Forty-Fourth Supplemental Indenture.
SECTION 193.02 Proprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty -Fourth Supplemental Indenture or in contemplatio n thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Forty-Fourth Supplemental Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data.
SECTION 193.03 Local Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Business Enterp rise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not materially increase the Trustee’s obligations or 134830285.4 16
liabilities, or materially diminish the Trustee’s rights, under this Forty -Fourth Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty-Fourth Supplemental Indenture as though fully set forth in this Section. The Trustee’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Trustee’s obligations under this Forty-Fourth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty -Fourth Supplemental Indenture, to exercise any of the remedies provided for under this Forty -Fourth Supplemental Indenture, under the LBE Ordinance or otherwise avai lable at law or in equity, which remedies shall be cumulative unless this Forty -Fourth Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with all other applicable local, state and federal l aws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting.
(b) Enforcement
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Forty-Fourth Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee’s net profit on this Forty -Fourth Supplemental Indenture, or 10% of the total amount of this Forty -Fourth Supplemental Indenture, or $1,000, whichever is greatest. The Director of the City’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Trustee’s LBE certification. The Director of CMD will determine the sanctions to be imposed, including the amount of liquidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Forty-Fourth Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Forty-Fourth Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 193.04 Nondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty-Fourth Supplemental Indenture, the Trustee agrees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of 134830285.4 17
a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, s exual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) Subcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply with such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Fourth Supplemental Indenture.
(c) Nondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Fourth Supplemental Indenture and will not during the term of this Forty -Fourth Supplemental Indenture, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specif ied above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. (d) Condition to Contract
As a condition to this Forty -Fourth Supplemental Indenture, the Trustee shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (Form CMD-12B- 101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). (e) Incorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section by reference and made a part of this Forty-Fourth Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Forty-Fourth Supplemental Indenture under such Chapters, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Forty-Fourth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 193.05 MacBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such 134830285.4 18
companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Forty -Fourth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 193.06 Tropical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of San Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 193.07 Drug-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug-Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Forty-Fourth Supplemental Indenture.
SECTION 193.08 Resource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Forty-Fourth Supplemental Indenture.
SECTION 193.09 Compliance with Americans with Disabilities Act. The Trust ee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Forty -Fourth Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Trustee agrees not to discriminate agains t disabled persons in the provision of services, benefits or activities provided under this Forty -Fourth Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Forty-Fourth Supplemental Indenture.
SECTION 193.10 Sunshine Ordinance . In accordance with San Francisco Administrative Code §67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’s net worth or other proprietary financial d ata submitted for qualification for a contract or other benefit until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 193.11 Limitations on Contributions. Through execution of this Forty - Fourth Supplemental Indenture, the Trustee acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract 134830285.4 19
must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Trustee furt her acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee’s board of directors; the Trustee’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee mu st inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 193.12 Requiring Minimum Compensation for Covered Employees. (a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in San Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidel ines and rules. The provisions of Section 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Forty -Fourth Supplemental Indenture as though fully set forth.
The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Trustee’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section. (b) The MCO requires the Trustee to pay the Trustee’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off.
The minimum wage rate may change from year to year and the Trustee is obligated to keep informed of the then -current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Forty -Fourth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty-Fourth Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
(c) The Trustee shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
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(e) The City is authorized to inspect the Trustee’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Forty-Fourth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public wi ll suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P. (g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Fourth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Fourth Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Fourth Supplemental Indenture. Nothing in this Forty -Fourth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 193.13 Requiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HCAO), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Forty-Fourth Supplemental Indenture as though fully set forth herein. The text of the HCAO is available on the web at www.sfgov.org/olse. Capitalized terms used in this Section and not defined in this Forty -Fourth Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q.
(a) For each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan 134830285.4 21
option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Forty-Fourth Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’s written notice of a breach of this Forty- Fourth Supplemental Indenture for violating the HCAO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set for th in this Section. The Trustee shall notify City’s Office of Contract Administration when it enters into such a Subcontract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on Subcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Trustee based on the Subcontractor’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying the City with regard to the Trustee’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. (f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (g) The Trustee shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Forty-Fourth Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. (i) The Trustee shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
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(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a written request from the City to do so and being provided at least ten business days to respond.
(k) The Trustee shall allow the City to insp ect the Trustee’s job sites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Forty -Fourth Supplemental Indenture is executed because its fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later ente rs into an agreement or agreements that cause the Trustee’s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees from agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 193.14 Prohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity”) in the performance of the services provided under this Forty -Fourth Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’s Controller.
The terms and provisions of Chapter 12.G are incorporated herein by this reference. In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Forty -Fourth Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 193.15 Preservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated w ood products containing arsenic in the performance of this Forty-Fourth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative-treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper ars enate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative-treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “saltwater immersion” shall mean a pressure -treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 193.16 Compliance with Laws. The Trustee shall keep itself fully informed of the City’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Forty -Fourth Supplemental Indenture, and 134830285.4 23
must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time.
SECTION 193.17 Protection of Private Information. .The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information,” and 12M.3, “Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the T rustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty -Fourth Supplemental Indenture. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Forty-Fourth Supplemental Indenture, bring a false claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 193.18 Food Service Waste Reduction Requirements . The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Forty-Fourth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty-Fourth Supplemental Indenture. By entering into this Forty-Fourth Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Forty-Fourth Supplemental Indenture was made.
Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee’s failure to comply with this provision.
SECTION 193.19 Submitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for t he statutory penalties set forth in that Section . A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of t hose penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim.
A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim. 134830285.4 24
SECTION 193.20 Sugar-Sweetened Beverage Prohibition. The Trustee agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Forty-Fourth Supplemental Indenture.
SECTION 193.21 Agreement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 193.22 Ownership of Results. Any interest of the Trustee or its Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Forty-Fourth Supplemental Indenture shall become the property of and will be transmitted to the City. However, the Trustee may retain and use copies for reference and as documentation of its experience and capabilities.
SECTION 193.23 Audit and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Forty -Fourth Supplemental Indenture. The Trustee will permit the City to audit, examine and make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Forty-Fourth Supplemental Indenture, whether funded in whole or in part under this Forty-Fourth Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under this Forty -Fourth Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency h aving an interest in the subject matter of this Forty-Fourth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 193.24 Subcontracting. The Trustee is prohibited from subcontracting this Forty-Fourth Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Forty-Fourth Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void.
SECTION 193.25 Assignment. The services to be performed by Trustee are personal in character and neither this Forty -Fourth Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by written instrument executed and approved in the same manner as this Forty -Fourth Supplemental Indenture.
SECTION 193.26 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.
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SECTION 193.27 City a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Forty-Fourth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
134830285.4
IN WITNESS WHEREOF, the parties hereto have executed this Forty -Fourth Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Mark D. Blake, Deputy City Attorney
134830285.4 AU-1
EXHIBIT AU-1
FORM OF 2023 SUB-SERIES B BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
$______________ No. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2023 SERIES AB
2023 SUB-SERIES B BOND (HETCH HETCHY WATER)
Dated Date Interest Rate Maturity Date CUSIP No.
______, 2023 % November 1, 20__
Registered Owner: Cede & Co.
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16 th day of the calendar month next preceding
any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or before September 15, 2023, in which event it shall bear interest from [CLOSING DATE] ; provided, 134830285.4 AU-2
however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate per annum stated above, payable on November 1, 2023 and semiannually thereafter on May 1 and November 1 in each year.
The principal (or redemption price) hereof is payable to the registered owner hereof upon the surrender hereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as trustee (herein, together with any successor as trustee under the Indenture, called the “ Trustee”), or such other office designated by the Trustee. The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered ow ner hereof as of the close of business on the 15 th day of the calendar
month immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond shall be calculated on the basis of a 360-day year comprised of twelve 30-day months.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds ” (herein called the “Bonds”), of the series and designation indicated on the face hereof (herein called the “2023 Sub-Series B Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental thereto, including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “ Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Forty-Fourth Supplemental Indenture, dated as of ____________ 1, 2023, between the Trustee and the Commission, authorizing the issuance of the 2023 Sub-Series B Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof.
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly 134830285.4 AU-3
described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
The 2023 Sub-Series B Bonds maturing on or after November 1, 20__ shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2023 Sub-Series B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2023 Sub-Series B Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2023 Sub- Series B Sinking Fund Account (described in the Indenture), on November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub- Series B Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2023 Sub- Series B Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series B Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub-Series B Term Bonds prior to maturity pursuant to the Indenture):
134830285.4 AU-4
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
The 2023 Sub-Series B Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2023 Sub- Series B Sinking Fund Account (described in the Indenture), on November 1, 20__, by lot within any such maturity if less than all of the 2023 Sub- Series B Bonds of such maturity are redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption without premium. Such sinking fund redemption of the 2023 Sub- Series B Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2023 Sub-Series B Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023 Sub-Series B Term Bonds prior to maturity pursuant to the Indenture):
Redemption Date
(November 1) Principal Amount
$
†
† Maturity
The 2023 Sub-Series B Bonds are issuable as fully registered Bonds without coupons in denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2023 Sub-Series B Bonds may be exchanged for a like aggregate principal amount of 2023 Sub-Series B Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon s urrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have 134830285.4 AU-5
happened or have been performed in due and regular time, form and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consent s to the amendment s described in Article CLXXXVII of the Forty-Third Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
134830285.4 AU-6
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of [CLOSING DATE].
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
134830285.4 AU-7
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2023 SUB-SERIES B BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: [CLOSING DATE]
By: ______________________________________
Authorized Officer
134830285.4 AU-8
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within-m entioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
HDW Draft – 6/5/23 [NEW MONEY]
3760032.6 046549 AGMT
$[AGGREGATE PAR]
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2023 SERIES AB
$__________
2023 SUB-SERIES A BONDS
(REGIONAL WATER AND LOCAL WATER)
$__________
2023 SUB-SERIES B BONDS
(HETCH HETCHY WATER)
BOND PURCHASE CONTRACT
[Pricing Date]
Public Utilities Commission of the
City and County of San Francisco
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
Ladies and Gentlemen:
The undersigned Wells Fargo Bank, N.A., on its own behalf and as representative (the “Representative”) of Jefferies LLC, RBC Capital Markets, LLC, Samuel A. Ramirez & Co., Inc., UBS Financial Services Inc. and U.S. Bancorp Investments, Inc. (collectively, the “Underwriters”), offers to enter into this Bond Purchase Contract (this “Purchase Contract”) with the Public Utilities Commission of the City and County of San Francisco (the “Commission” ), which will be binding upon the Commission and the Underwriters upon acceptance hereof by the Commission. This offer is made subject to the acceptance by the Commission by its execution of this Purchase Contract and its delivery to the Representative on or before 11:59 p.m., California time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriters upon written notice delivered by the Representative to the Commission at any time prior to the acceptance of this Purchase Contract by the Commission. If the Representative withdraws this offer, or the Underwriters’ obligation to purchase the Bonds (as hereinafter defined) is otherwise terminated pursuant to Section 9(d) hereof, then and in such case the Commission shall be without any further obligation to the Underwriters, including the payment of any costs set forth under Section 11(a) hereof, and the Commission shall be free to sell the Bonds to any other party.
The Representative represents that it has been duly authorized by the other Underwriters to act hereunder on its behalf and has full authority to take such action as it may deem advisable in respect to all matters pertaining to this Purchase Contract and that the Representative has been duly authorized to execute this Purchase Contract. Any action taken under this Purchase Contract by the Representative will be binding upon all of the Underwriters. -2-
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Capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended and Restated Indenture, dated as of August 1, 2002 (the “Master Indenture”), between the Commission and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”), as supplemented and amended to date and as further supplemented by a Forty- Third Supplemental Indenture, dated as of July 1, 2023 (the “Forty-Third Supplemental Indenture”) and a Forty-Fourth Supplemental Indenture, dated as of July 1, 2023 (the “Forty-Fourth Supplemental Indenture”), each between the Commission and the Trustee (the Master Indenture, as supplemented, being herein referred to as the “Indenture”).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth herein, the Underwriters jointly and severally agree to purchase from the Commission, and the Commission hereby agrees to sell and deliver to, or for the account of, the Underwriters, all (but not less than all) of the $[TOTAL PAR] aggregate principal amount of Public Utilities Commission of the City and County of San Francisco San Francisco Water Revenue Bonds, 2023 Series AB (the “Bonds”), consisting of the $[2023A Par] 2023 Sub-S eries A Bonds (Regional Water and Local Water) (the “ Series 2023A Bonds ”) and the $[2023B Par] Sub-Series B Bonds (Hetch Hetchy Water) (the “Series 2023B Bonds,” and together with the Series 2023A Bonds, the “Bonds”). The Commission currently plans to issue in August 2023 its Public Utilities Commission of the City and County of Sa n Francisco San Francisco Water Revenue Bonds, 2023 Series CD (the “Refunding Bonds”). Closing of the Bonds is not contingent upon the issuance of the Refunding Bonds.
The aggregate purchase price for the Bonds shall be $[Aggregate Purchase Price] (comprised of the purchase price of the Series 2023A Bonds in the amount of $[2023A Purchase Price], representing the principal amount of the Series 2023A Bonds, plus a [net] premium of $[2023A Premium] and less an Underwriters’ discount in the amount of $[2023A UW Discount], and the purchase price of the Series 2023B Bonds in the amount of $[2023B Purchase Price], representing the principal amount of the Series 2023B Bonds, plus a [net] prem ium of $[2023B Premium] and less an Underwriters’ discount of $[2023B UW Discount]) . At the Closing, the Good Faith Deposit (defined herein) will be applied and deducted from the aggregate net purchase price for the Bonds as provided in Section 10 of this Purchase Contract.
The Bonds shall be da
ted their date of delivery and shall have the maturities in principal amounts and bear interest at the rates per annum and have the prices all as set forth on Schedule I attached hereto. The Bonds shall be subject to optional and mandatory sinking fund redemption prior to maturity as shown on Schedule I. The Bonds shall be substantially in the form described in, and shall be issued and secured under and pursuant to, the Indenture. The Bonds shall be as otherwise described in the Official Statement (as hereinafter defined).
S
ection 2. Authorization for the Bonds; Purpose of Issue . T he Commission has the authority to issue the Bonds under Sections 9.107 of the Charter (the “ Charter”) of the City and County of San Francisco (the “City ”), Proposition A of 2002, Proposition E of 2002 and various ordinances and resolutions (collectively, the “New Money Authorizing Legislation”), adopted by the Board of Supervisors of the City (the “ Board of Supervisors ”), and Resolution No. [____], adopted by the Commission on [June 27], 2023 (the “Commission Resolution”). -3-
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The proceeds of the Bonds will be applied to (i) refund approximately $[___] million aggregate principal amount of and interest on Commercial Paper Notes issued to finance and refinance a portion of the design, acquisition and construction of various capital projects of benefit to the Commission’s Water Enterprise , (ii) finance and refinance a portion of the design, acquisition and construction of various capital projects of benefit to the Commission’s Water Enterprise, (iii) fund capitalized interest on the Bonds, and (iv) pay the costs of issuance of the Bonds.
S
ection 3. Public Offering. It shall be a condition to the obligations of the Underwriters to purchase, accept delivery of and pay for the Bonds that the entire principal amount of the Bonds be sold and delivered by the Commission to the Underwriters. The Underwriters intend to make a bona fide public offering of all the Bonds, at prices not in excess of the prices as set forth in Schedule I hereto (subject in all respects to the provisions of Section 8 hereof). The Underwriters will provide, consistent with the requirements of the Municipal Securities Rulemaking Board (the “MSRB”) Rule G-32, for the delivery of a copy of the Official Statement to each customer who purchases a Bond during the Underwriting Period (as hereinafter defined). The Underwriters further agree that it will comply with applicable laws and regulations, including without limitation Section 15(c)(2)(12) of the Securities Exchange Act of 1934 (“Rule 15c2-12”) and MSRB Rule G-17, in connection with the offering and sale of the Bonds. Subsequent to the initial public offering, the public offering prices of the Bonds may change as determined by the Underwriters to be necessary in connection with the marketing of the Bonds.
S
ection 4. Delivery of Official Statement. Prior to the date hereof, the Commission has provided to the Underwriters for review a form of the preliminary official statement relating to the Bonds dated [POS Date] (including the cover page and appendices thereto (the “Preliminary Official Statement”), which, as of its date, a representative of the Commission on behalf of the Commission deemed final for purposes of Rule 15c2-12 , except for certain information permitted to be omitted therefrom by Rule 15c2-12. By its acceptance of this offer, the Commission hereby ratifies and consents to the use and distribution by the Underwriters of the Preliminary Official Statement in connection with the public offering and sale of the Bonds, and the Commission has authorized the delivery of a final official statement relating to the Bonds dated the date hereof (both in print or electronic form) which will consist of the Preliminary Official Statement and all information previously permitted to have been omitted by Rule 15c2-12.
The Commission hereby acknowledges that the Preliminary Official Statement has been made available to investors on the internet at www.munios.com. The Commission hereby agrees to deliver or cause to be delivered to the Underwriters within seven (7) Business Days of the date hereof (but in no case later than one (1) Business Day prior to the Closing Date (as defined herein)) and in sufficient time to accompany any orders or confirmations from the Underwriters that request payment from any customers, the final official statement (including all information permitted to be omitted by Rule 15c2-12 and any amendments or supplements to such official statement as have been approved by the Commission and the Representative) (the “Official Statement” ) in “the designated electronic format” (as defined in Rule G -32 of the MSRB, to enable the Underwriters to comply with the rules of the Securities and Exchange Commission (the “SEC”) and the MSRB.
The Commission hereby approves of the use and distribution by the Underwriters of the Official Statement in connection with the offer and sale of the Bonds. At the time of or prior to the Closing -4-
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Date (as hereinafter de fined), the Representative shall file a copy of the Official Statement with the MSRB or its designee (including the MSRB’s Electronic Municipal Market Access system (“EMMA”)) or with any other repository approved from time to time by the SEC (either in addition to or in lieu of the filings referred to above).
The Commission will deliver the Continuing Disclosure Certificate substantially in the form set forth in the Preliminary Official Statement (the “Continuing Disclosure Certificate”) on the Closing Date. The form of the Continuing Disclosure Certificate will also be set forth in the Official Statement.
Section 5. The Closing. At ______ a.m., California time, on [Closing Date] or at such other time or on such other date as the Commission and the Representative may agree (the “Closing Date”), the Commission shall deliver, or cause to be delivered to or for the account of the Underwriters, through the Fast Automated Securities Transfer (“ FAST”) delivery system of The Depository Trust Company ( “DTC”), the Bonds in book- entry eligible form, duly executed and authenticated, and registered in the name of Cede & Co., as nominee of DTC. Concurrently with the delivery of the Bonds to the Representative, the Commission will deliver the documents hereinafter mentioned at the offices of Norton Rose Fulbright US LLP (“ Bond Counsel ”), in San Francisco, California, or another place to be mutually agreed upon by the Commission and the Representative. The Underwriters shall accept such delivery and pay the purchase price for the Bonds set forth in Section 1 by federal funds wire transfer in immediately available funds to the order of the Trustee for the account of the Commission. This payment for, and delivery of, the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Representative shall order CUSIP identification numbers and the Commission shall cause such CUSIP identification numbers to be printed on the Bonds; provided, that neither the failure to print such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriters to accept the Bonds.
Section 6. Representations, Warranties, and Agreements of the Commission . The Commission represents, warrants and agrees with the Underwriters as follows:
(a) Due Organization, Existence and Authority . The Commission is a duly constituted public commission of the City and County of San Francisco duly organized and validly existing pursuant to its Charter and the Constitution an d laws of the State of California (the “State”) , with full authority to: (i) adopt the Commission Resolution; (ii) execute and deliver the Master Indenture, the Forty-Third Supplemental Indenture and the Forty-Fourth Supplemental Indenture, the Continuing Disclosure Certificate and this Purchase Contract; (iii) approve the Official Statement and authorize its distribution by the Underwriters; and (iv) sell and deliver the Bonds to the Underwriters as provided herein.
All approvals and consents which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Commission of, its respective obligations under the Bonds, this Purchase Contract and the Indenture have been duly obtained or when required for future performance are expected to be obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds.
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(b) Accuracy and Completeness of the Preliminary Official Statement and Official Statement. The information in the Preliminary Official Statement, as of its date was and as of the date hereof is, and such information in the Official Statement, as of its date and at all times subsequent thereto up to and including the date of the Closing, will be, true and correct in all material respects, contains and will contain no misstatement of any material fact, and did not and will not omit any statement and information that is necessary to make the statements and information contained therein, in the light of the circumstances under which s uch statements were made, not misleading in any material respect, excluding in each case any information contained in the Preliminary Official Statement and the Official Statement relating to (i) the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, or other terms of the Bonds depending on such matters, (ii) DTC and the book- entry only system, (iii) any CUSIP numbers and (iv) information provided by the Underwriters, or bond ins urers, if any, for inclusion in the Preliminary Official Statement or Official Statement, including without limitation information regarding the prices and yields of the Bonds and under the caption “UNDERWRITING.”
(c) Amendment of Official Statement. If, at any time prior to the End of the Underwriting Period (as defined below), an event occurs or facts or conditions become known of which the Commission has knowledge, which in the reasonable opinion of Orrick, Herrington & Sutcliffe LLP (“Disclosure Counsel”) or the City Attorney might or would cause the information in the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Commission will notify the Representative, and if in the reasonable opinion of the Representative or the Commission, such event, fact or condition requires the preparation and publication of a supplement or amendment to the Official Statement, the Commission will amend or supplement the Official Statement in a form and in a manner reasonably approved by the Representative and the Commission, provided all expenses incurred in connection with preparing an amendment or supplement to the Official Statement will be paid by the Commission. As used herein and for the purposes of the foregoing, the term “End of the Underwriting Period” for the Bonds shall refer to the Closing, unless the Commission shall have been notified in writing to the contrary by the Representative on or prior to the Closing, but in any event not later than the date twenty- five (25) days following the Closing. For the purposes of this subsection, the Commission will furnish such information as the Representative may from time to time reasonably request in writing prior to the End of the Underwriting Period. (d) No Breach or Default. The Commission is not in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or the United States, or any agency or department of either, or of any applicable judgment or decree or any loan agreement , indenture, bond, note, resolution, agreement or other instrument to which the Commission is a party or to which the Commission or any of its properties or other assets is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument, which breach or default in any such case, -6-
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would have a material and adverse effect upon the business operations, properties or financial condition of the Commission or the issuance of the Bonds. As of the time of acceptance hereof and as of the Closing Date and except as otherwise disclosed in the Official Statement, neither the execution nor the delivery by the Commission of the Indenture, the Continuing Disclosure Certificate or this Purchase Contract, the adoption of the Commission Resolution, or the compliance by the Commission with such documents or authorizations, conflicts with or constitutes a material breach of, or default under, any applicable law or administrative regulation of the State or the United States, or any other statute or administrative rule or regulation, judgment, decree, order, license, permit, agreement or instrument to which the Commission is subject, which breach, default or conflict would have a material adverse effect on the ability of the Commission to pay the Bonds or perform its obligations under the Indenture, the Continuing Disclosure Certificate or this Purchase Contract.
(e) No Other Bond Issues or Debt . Other than the Refunding Bonds and commercial paper notes, or as disclosed in the Official Statement, between the time of acceptance hereof and the Closing Date, the Commission will not, without prior written notice to the Representative, issue any bonds or securities or incur any other indebtedness secured by the Revenues.
(f) No Litigation. As of the date hereof and as of the Closing Date, and except as disclosed in the Official Statement, th ere is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission: (i) affecting the existence of the Commission or the titles of its officers to their respective offices; (ii) seeking to restrain or to enjoin the sale or delivery of the Bonds or the application of the proceeds therefrom in accordance with the Indenture; (iii) in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the Continuing Disclosure Certificate, this Purchase Contract or any action of the Commission authorizing the issuance, execution or delivery thereof; (iv) in any way contesting the completeness or accuracy of the Official Statement or any amendment or supplement thereto; or (v) contesting the powers of the Commission with respect to the Bonds or any action of the Commission authorizing the issuance, execution or delivery thereof, nor to the knowledge of the Commission, as evidenced by the representative of the Commission signing this Purchase Contract, is there any basis therefor. As of the date hereof and as of the Closing Date, and except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission in which a final adverse decision would materially and adversely affect the operations of the Water Enterprise (as defined in the Indenture), Revenues or the consummation of the transactions contemplated by this Purchase Contract or contesting in any way the completeness, accuracy or fairness of the Official Statement. The Commission shall advise the Representative promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Preliminary Official Statement or the Official Statement in connection with the offering, sale or distribution of the Bonds.
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(g) Further Cooperation; Blue Sky . The Commission will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Representative may reasonably request in order to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Representative may designate; provided, however, that the Commission will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction.
(h) Continuing Disclosure. Based on a review of its previous undertakings and except as described in the Preliminary Official Statement and the Official Statement, [during the past five years, the Commission has complied in all material respects with its prior continuing disclosure undertakings under Rule 15c2-12.] (i) Valid and Binding Obligations . This Purchase Contract, the Forty-Third Supplemental Indenture, the Forty -Fourth Supplemental Indenture and the Continuing Disclosure Certificate, when executed and delivered by the other parties thereto, will have been duly authorized, executed and delivered and will constitute legal, valid and binding obligations of the Commission (except to the extent that such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, arrangement, fraudulent conveyance, moratorium and similar law affecting creditors rights generally , general principals of equity, the exercise of judicial discretion in appropriate cases, and to the limitations on remedies against city and counties in California). The Bonds, when issued, delivered and paid for as provided herein and in the Indenture, will have been duly authorized, executed and issued and will constitute legal, valid and binding limited obligations of the Commission entitled to the benefits of the Indenture. (j) Financial Statements. The financial statements of the Commission for the years ended June 30, 2022 and June 30, 2021 fairly represent the receipts, expenditures, assets, liabilities and cash balances of such amounts and, insofar as presented, other funds of the Commission as of the dates and for the periods therein set forth. Except as disclosed in the Official Statement or otherwise disclosed in writing to the Representative, there has not been any materially adverse change in the financial condition of the Commission or in its operations since the date of such financial statements and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. The financial statements of the Commission are public documents and the Commission has not requested nor did the Commission obtain permission from KPMG LLP, independent certified public accountants, to include the financial statements of the Commission for the years ended June 30, 2022 and June 30, 2021 in the Preliminary Official Statement or the Official Statement.
Section 7. Representations, Warranties and Agreements of the Underwriters. The Underwriters represent, warrant and agree with the Commission that:
(a) The Representative has been duly authorized to enter into this Purchase Contract.
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(b) The Underwriters shall comply with the San Francisco Business Tax Ordinance and shall, if not otherwise exempt from such ordinance, provide to the Commission a Business Tax Registration Certificate on or prior to the date hereof. (c) The Underwriters shall comply with all SEC and MSRB rules applicable to the offering, sale and delivery of the Bonds to ultimate purchasers. (d) The Underwriters shall comply with the Commission’s policy and practice that the Commission shall not pay, and the Underwriters shall not pass through to the Commission, any fees that are assessed on the Underwriters as part of the Governmental Accounting Standards Board fee, as well as the MSRB Underwriting and Transaction Assessment, the SIFMA Municipal Assessment or any other industry related fees that are required to be paid solely by the Underwriters.
Section 8.
Establishment of “Issue Price” of Bonds.
(a) The Representative, on behalf of the Underwriters, agrees to assist the Commission in establishing the “issue price” of the Bonds and shall execute and deliver to the Commission on or before the Closing Date an “issue price” or similar certificate, together with supporting pricing wires or equivalent communications, substantially in the form attached hereto as Appendix C, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, the Commission and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Commission under this Section 8 to establish the issue price of the Bonds may be taken on behalf of the Commission by the Commission’s Co- Municipal Advisors identified herein and any notice or report to be provided to the Commission may be provided to the Commission’s Co-Municipal Advisors. (b) With respect to Bonds of those maturities as to which at least 10% of the Bonds of the maturity has been sold to the public (defined in subsection (f) below) at a single price (the “10% test”), based on reporting by the Representative to the Commission on the date hereof and prior to the execution of this Purchase Contract, which maturities are indicated in Schedule I attached hereto as having satisfied the 10% test (the “10% Test Maturities”), the Commission will treat the first price at which 10% of each such maturity of the Bonds was sold to the public as the issue price of that maturity. With respect to Bonds of those maturities as to which the 10% test has not been satisfied, based on reporting by the Representative to the Commission on the date hereof and prior to the execution of this Purchase Contract, which maturities are indicated in Schedule I attached hereto as being subject to the “hold-the-offering- price rule,” defined below (the “Hold-the-Offering-Price Maturities”), the Representative and the Commission agree that the rules in paragraph (c) below shall apply. For purposes of this section, for Bonds maturing on the same date but having different interest rates, each separate CUSIP number for such Bonds is subject to the 10% test or subsection (c) below, as the case may be, as if such separate CUSIP number were a separate maturity. (c) With respect to the Hold -the-Offering-Price Maturities, the Representative confirms that the Underwriters have offered the Bonds to the public on or before the date of this Purchase Contrac t at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Schedule I attached hereto, except as otherwise set -9-
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forth therein. Schedule I also sets forth, as of the date of this Purchase Contract, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Commission and the Representative, on behalf of the Underwriters, agrees that the restrictions set forth in the next sentence shall apply (the “hold-the-offering-price rule”). So long as the hold-the-offering- price rule remains applicable to any maturity of the Bonds, the Underwriters will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5
th) business day after the sale date; or
(ii) the date on which the Underwriters have sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
(d) The Commission acknowledges that, in making the representations set forth in this subsection (d), the Representative will rely on (i) the agreement of each Underwriter to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for es tablishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold- the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an Underwriter is a party to a retail or other third-party distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker- dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold- the- offering-price rule, as set forth in the retail or other third-party distribution agreement and the related pricing wires. The Commission further acknowledges that each Underwriter shall be solely liable for its failure to comply with its agreement regarding the requirement for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, and that no Underwriter shall be liable for the failure of any other Underwriter, or of any dealer who is a member of a selling group, or of any broker -dealer that is a party to a retail or other third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds. (e) The Representative confirms that:
(i) any agreement among underwriters, any selling group agreement and each retail or other third-party distribution agreement (to which the Representative is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each Underwriter, each dealer who is a member of the selling group and each broker-dealer that is a party to such retail or other third- party distribution agreement, as applicable:
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(A) to promptly notify the Representative of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below); and (B) to acknowledge that, unless otherwise advised by the Underwriter, dealer or broker-dealer, the Representative shall assume that each order submitted by the Underwriter, dealer or broker-dealer is a sale to the public.
(ii) any agreement among underwriters and any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each Underwriter or dealer that is a party to a retail or other third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail or other third-party distribution agreement to comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Representative or the Underwriter and as set forth in the related pricing wires. (f) The Underwriters acknowledge that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this subsection (f). Further, for purposes of this subsection (f):
(i) “public” means any person other than an underwriter or a related party to an underwriter,
(ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Commission (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail or other third- party distribution agreement participating in the initial sale of the Bonds to the public),
(iii) a purchaser of any of the Bonds is a “related party” to an underwriter i f the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and
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(iv) “sale date” means the date of execution of this Purchase Contract by all parties.
Section 9. Closing Conditions. The Underwriters have authorized the Representative to enter into this Purchase Contract in reliance upon the representations, warranties and agreements herein and the performance by the Commission of its obligations hereunder, both as of the date hereof and as of the Closing Date. The obligations of the Underwriters under this Purchase Contract are and shall be subject to the following conditions:
(a) Bring-Down Representation. The representations and warranties of the Commission contained herein shall be true, accurate and correct in all material respects at the date hereof, and on the Closing Date, as if made on the Closing Date. (b) Executed Documents and Performance Thereunder . At the time of the Closing: (i) the Indenture, this Purchase Contract and the Continuing Disclosure Certificate shall be in full force and effect, and shall not have been amended, modified or supplemented except with the consent of the Representative (which consent will not be unreasonably withheld); and (ii) the Commission shall perform or have performed all of its obligations required under or specified in this Purchase Contract, the Indenture and the Continuing Disclosure Certificate to be performed prior to the Closing. (c) No Default. At the time of the Closing, no default shall have occurred or be existing under the Indenture or this Purchase Contract. (d) Termination Events . T he Representative may terminate this Purchase Contract by notification in writing to the Commission from the Representative, if, at any time on or prior to the Closing, any of the following occurs and, as a result of the occurrence of such an event, the marketability of the Bonds or the market price thereof, or the ability of the Underwriters to enforce contracts for the sale, at the contemplated offering prices, of the Bonds, in the reasonable opinion of the Representative, after consultation with the Commission, would be materially adversely affected:
(i) any event shall occur which makes untrue any statement or results in an omission to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading and the Commission fails to amend or supplement the Official Statement pursuant to Section 6(c) hereof or the effect of the amendment or supplement, in the reasonable judgment of the Representative, would materially adversely affect the market for the Bonds, at the contemplated offering prices (or yields) by the Underwriters of the Bonds; or
(ii) an amendment to the Constitution of the United States or the Constitution of the State or legislation in or by the Congress of the United States or the legislature of the State, or the amendment of legislation pending as of the date of this Purchase Contract in the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred -12-
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for consideration, or any decision of any federal or State court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority or the occurrence of any other comparable legislative or regulatory event affecting the federal or State tax status of the interest on the Bonds or bonds or obligations of the general charact er of the Bonds; provided, that the occurrence of any such event shall not constitute a termination event hereunder if the prospect of such constitutional, legislative, regulatory or judicial action or enactment shall have been publicly known on the date hereof; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State shall be rendered; or
(iv) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture need be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or
(v) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended and as then in effect; or
(vi) there shall have occurred a general suspension of trading or additional material restrictions not in force as of the date hereof shall have been imposed upon trading in the United States in securities generally by any governmental authority or by any national securities exchange; or (vii) a general banking moratorium shall have been declared by federal, State or State of New York authorities or a disruption in securities settlement, payment or clearance services has occurred; or
(viii) the ratings on the Bonds or any other debt obligations secured by Revenues of the Water Enterprise shall have been downgraded or withdrawn or the subject of an official notice as to a possible downgrading (such as being placed on -13-
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“credit watch” or “negative outlook”) subsequent to the date of this Purchase Contract by one of the rating agencies rating the Bonds; or (ix) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national or international emergency or war or other calamity or crisis (or any escalation thereof).
The termination of this Purchase Contract pursuant to this Section 9(d) by the Underwriters with respect to the Bonds shall not prohibit the Commission from selling such Bonds to any other underwriter.
(e) Closing Documents. At or prior to the Closing, the Representative shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents, in each case satisfactory in form and substance to the Representative:
(1
) Approving Authorizations . Certified copies of the Commission Resolution and the New Money Authorization Legislation. (2) B ond Documents. An executed copy of the Master Indenture and executed originals of the Forty- Third Supplemental Indenture, the Forty -Fourth Supplemental Indenture, the Continuing Disclosure Certificate and this Purchase Contract.
(3) F inal Opinion. An approving opinion of Bond Counsel, dated the Closing Date, and substantially in the form attached to the Official Statement, and a letter of such counsel addressed to the Representative to the effect that such opinion may be relied upon by the Underwriters to the same extent as if it had been addressed to them.
(4) Suppl emental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Commission and the Representative, dated the Closing Date, to the following effect:
(i ) The statements contained in the Official Statement under the captions “T HE 2023AB BONDS,” “S ECURITY FOR THE BONDS,” “T AX MATTERS,” APPENDIX A—“SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE,” and APPENDIX D—“PROPOSED FORM OF OPINION OF BOND COUNSEL,” insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture, and the opinion of Bond Counsel are accurate in all material respects.
(ii) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended. (iii) This Purchase Contract has been duly executed and delivered by the Commission and constitutes the valid and binding -14-
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agreement of the Commission , enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other similar laws affecting enforcement of creditors’ rights, by the application of equitable principles if equitable remedies are sought and limitations on the enforcement of legal remedies against public agencies in the State. (5
) Disclosure Counsel Opinion as to Official Statement. An opinion of Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel to the Commission, addressed to the Commission and the Underwriters, dated the Closing Date, to the effect that, while such counsel is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Preliminary Official Stateme nt or the Official Statement, based upon such counsel’s participation in conferences during which the contents of the Preliminary Official Statement and the Official Statement were discussed, no information came to such counsel’s attention which caused such counsel to believe that the Preliminary Official Statement, as of its date, or the Official Statement, as of its date and as of the Closing Date (except for the financial, statistical or economic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, CUSIP numbers, any information regarding DTC and its book- entry system, and any information contained in Appendices included therein (other than Appendix E), and any information incorporated by reference therein, as to which no opinion or view need be expressed) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(6) C
ertificate of the Commission . A certificate of the Commission dated the Closing Date, signed on behalf of the Commission by an authorized officer of the Commission, to the effect that:
(i ) The representations and warrant ies of the Commission contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date.
(ii) No event affecting the Commission has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (7 ) Certificate of the Trustee . A certificate of U.S. Bank Trust Company, National Association, as Trustee (also referred to herein as “U.S. Bank”), dated the Closing Date, to the effect that:
(i ) U.S. Bank is a national banking association organized and existing under the laws of the United States of America and has full power -15-
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and is qualified to accept and comply with the terms of the Indenture and to perform its obligations thereunder and to authenticate the Bonds. (ii) U.S. Bank has accepted the duties and obligations imposed on it by the Indenture.
(iii) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over U.S. Bank that has not been obtained is or will be requ ired for the consummation by U.S. Bank of the transactions contemplated by the Indenture to be undertaken by the U.S. Bank.
(iv) Compliance with the terms of the Indenture will not conflict with, result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which U.S. Bank is a party or by which it is bound, or, to the best knowledge of U.S. Bank, after reasonable investigation, any law, rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over U.S. Bank or any of its activities or properties (except that no representation, warranty or agreement is made by U.S. Bank with respect to any federal or state securities or Blue Sky laws or regulations).
(v) To the knowledge of the U.S. Bank after due inquiry, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body served on or threatened against or affecting the existence of U.S. Bank, or in any way contesting or affecting the validity or enforceability of the Indenture or the Bonds, or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations under the Indenture or the Bonds, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Bonds or the Indenture.
(8
) Opinion of Counsel to the Trustee . An opinion of counsel to U.S.
Bank addressed to the Commission and the Underwriters, dated the Closing Date, to the effect that:
(i ) U.S. Bank is a national banking association with trust powers, duly organized and validly existing and in good standing under the laws of the United States of America, having the legal authority to exercise trust powers in the State.
(ii) U.S. Bank has full legal power and adequate corporate authority to accept the duties and obligations imposed on it by the Indenture and to authenticate the Bonds and the full legal power and authority to own its properties and to carry on its business.
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(iii) The Bonds have been duly authenticated by U.S. Bank. (iv) No consent, approval, authorization or order of any court, regulatory authority or governmental body is required for the valid authorization, execution and delivery of the Indenture and the authentication of the Bonds or the consummation by the U.S. Bank of the transactions co ntemplated in the Indenture except such as have been obtained and except such as may be required under the state securities or Blue Sky laws in connection with the purchase and distribution of the Bonds by the Underwriters.
(v) U.S. Bank’s acceptance of its duties under the Indenture and the authentication of the Bonds by U.S. Bank and performance by U.S.
Bank of its obligations thereunder will not conflict with or result in a breach of any of the terms, conditions or provisions of its Articles of Associat ion or Bylaws or any other agreement or instrument to which U.S. Bank is a party or by which it is bound or any other existing law, regulation, court order or consent decree to which U.S. Bank is subject or constitute a default thereunder.
(vi) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending or threatened against U.S. Bank affecting the existence of U.S. Bank or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the authentication of the Bonds by U.S. Bank, or contesting the powers of U.S. Bank or its authority to perform its obligations under the U.S. Bank or the Bonds.
(9
) Tax Certificate. Tax Certificate of the Commission, dated the Closing Date, in form satisfactory to Bond Counsel.
(10) C alifornia Debt and Investment Advisory Commission Filings .
Copies of the Report of Proposed Debt Issuance and Report of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the Government Code.
(11) E
vidence of Ratings for the Bonds. Evidence of ratings from Moody’s Inves tors Service, Inc. ( “Moody’s”) and Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”), that such rating agencies have assigned their municipal bond ratings of “[___]” and “AA-,” respectively.
(12) O pinion of t he City Attorney. An opinion of the City Attorney addressed to the Underwriters, dated the Closing Date, in substantially the form attached hereto as Appendix B.
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(13) Blue Sky Memorandum. A copy of the Blue Sky Memorandum with respect to the Bonds, prepared by Hawkins Delafield & Wood LLP, counsel to the Underwriters (“Underwriters’ Counsel”).
(14) Opinion of the Underwriters’ Counsel. The opinion of Underwriters’ Counsel, dated the Closing Date and addressed to the Underwriters, in
form satisfactory to the Underwriters.
(15) A dditional Documents. Such legal opinions, additional certificates, instruments and other documents as the Representative, Bond Counsel or the City Attorney may reasonably deem necessary to evidence the truth and accuracy as of the time of the Closing of the representations of the Commission and the due performance or satisfaction by the Commission at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Commission.
If the Commission shall be unable to satisfy the conditions contained in t his Purchase Contract, unless waived by the Representative, or if the obligations of t he Underwriters shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and the Underwriters and the Commission shall not be under further obligation hereunder, except as further set forth in Section 11 hereof.
Section 10. Good Faith Deposit. To secure the Commission from any loss resulting from the failure of the Underwriters to accept delivery of and pay the purchase price for the Bonds pursuant to the terms of this Purchase Contract, the Underwriters agree to deliver to or to the order of the Commission, concurrently with the execution and delivery of this Purchase Contract, either an official bank check (which may be deposited by the Commission upon receipt) or a federal funds wire transfer in the amount of $[Good Faith Deposit] (the “ Good Faith Deposit”). At the Closing, the Good Faith Deposit will be applied towards and deducted from the aggregate net purchase price for the Bonds as provided in Section 1 of this Purchase Contract. If the Underwriters fail to pay the purchase price in full upon tender of the Bonds (other than for a reason permitted under Section 9 hereof), the Commission may retain such Good Faith Deposit as and for liquidated damages for such failure by the Underwriters. In such circumstance, the Underwriters will have no right to recover the Good Faith Deposit or to any allowance or credit therefor.
Retaining the Good Faith Deposit shall constitute the Commission’s sole and exclusive remedy and full liquidated damages for the Underwriters’ failure (other than for a reason expressly set forth herein) to purchase and accept delivery of the Bonds pursuant to the terms of this Purchase Contract and the Underwriters shall be released and discharged from any and all claims for damages by the Commission against the Underwriters related to such failure and any other defaults by Underwriters hereunder. Accordingly, the Underwriters hereby waive any right to claim that the actual damages of the Commission are less than the Good Faith Deposit, and the acceptance of this offer by the Commission shall constitute a waiver of any right the Commission may have to additional damages from the Underwriters. The Underwriters and the Commission hereby acknowledge and agree that the amount fixed pursuant to this Section for liquidated damages does not constitute a penalty and is a reasonable estimate of the damages that the Commission would sustain in the event of the Underwriter’s failure to purchase and to accept delivery of the Bonds -18-
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on the Closing Date pursuant to the terms of this Purchase Contract. Said amount is agreed upon and fixed as liquidated damages because of the difficulty of ascertaining as of the date hereof the actual amount of damages that would be sustained in such event. If the Commission fails to deliver the Bonds on the Closing Date pursuant to this Purchase Contract, or if the conditions to the obligations of the Underwriters to purchase, accept delivery of and pay for the Bonds as set forth in this Purchase Contract shall not be satisfied (unless waived in writing by the Representative pursuant to this Purchase Contract), or if this Purchase Contract is terminated for a reason set forth in Section 9 hereof, the Commission shall promptly return or cause the return of the Good Faith Deposit to the Representative. Upon such return of the Good Faith Deposit to the Representative, this Purchase Contract shall terminate, and neither party shall have any further obligations hereunder.
Section 11. Expenses.
(a) Commission. The Commission shall pay or cause to be paid (but solely from the proceeds of the Bonds and not otherwise) the expenses incident to the performance of the obligations of the Commission hereunder, including but not limited to: (1) the cost of printing of the Preliminary Official Statement and the final Official Statement in reasonable quantities and all other documents prepared in connection with the transactions contemplated hereby; (2) the fees and disbursements of the Trustee and counsel to the Trustee in connection with the issuance of the Bonds; (3) the fees and disbursements of Bond Counsel and Disclosure Counsel and of Montague DeRose and Associates, LLC and Backstrom McCarley Berry & Co., LLC, as Co -Municipal Advisors to the Commission, and any other experts or consultants retained by the Commission in connection with the transactions contemplated hereby; and (4) the costs related to obtaining ratings.
(b) Underwriters. The Commission has agreed to pay the Underwriters’ discount set forth in Section 1 of this Purchase Contract, and inclusive in the expense component of the Underwriter’s discount are expenses incurred or paid for by the Underwriters on behalf of the Commission in connection with the marketing, issuance, and delivery of the Bonds, including, but not limited to, advertising expenses, fees and expenses of Underwriters’ Counsel, the costs of any Preliminary and Final Blue Sky Memoranda, CUSIP fees, California D ebt and Investment Advisory Commission fees and transportation, lodging, and meals for the Commission’s employees and representatives.
The Commission and Representative acknowledge that expenses included in the expense component of the Underwriters’ discount are based upon estimates. The Commission and Representative agree that in the event the aggregate estimated expenses exceed the aggregate actual expenses incurred by the Representative in an amount equal to or greater than $1,000 (the “Reimbursement Threshold”), the Representative shall reimburse to the Commission the aggregate amount of expenses equal to or greater than the Reimbursement Threshold. For the avoidance of doubt, the Commission acknowledges and agrees that in the event the aggregate estima ted expenses exceed the aggregate actual expenses incurred by the Representative in an amount less than the Reimbursement Threshold, no reimbursement will be made by the Representative. The Commission acknowledges that it has had an opportunity, in consultation with such advisors as it -19-
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may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred as part of the issuance of the Bonds.
Section 12. C ity Contracting Requirements . The Underwriters agree to comply with the provisions set forth in Appendix A , attached hereto, which are incorporated herein by this reference.
S ection 13. Notices. Any notice or other communication to be given under this Purchase Contract to the Commission , to the Representative or to the Underwriters may be given by delivering the same in writing at the addresses set forth below:
If to the Commission:
Public Utilities Commission of the
City and County of San Francisco
525 Golden Gate Avenue, 13
th Floor
San Francisco, California 94102
Attention: Assistant General Manager, Business Services/Chief Financial Officer Telephone: (415) 554-3155
Fax: (415) 554-3161
With a copy to:
City and County of San Francisco
Office of Public Finance
City Hall, Room 338
1 Dr. Carlton B. Goodlett Place
San Francisco, California 94102
Telephone: (415) 554-5956
Fax: (415) 554-4864
If to the Representative:
Wells Fargo Bank, N.A.
333 S. Grand Ave., 9
th Floor
Los Angeles, California 90071
Attention: Michael Engelbrecht, Managing Director
Telephone: (213) 253-7219
Section 14. Entire Agreement . This Purchase Contract, when accepted by the Commission, shall constitute the entire agreement between the Commission and the Underwriters and is made solely for the benefit of the Commission and the Underwriters (i ncluding the successors or assigns of any Underwriters with the consent of the Commission) and no other person shall acquire or have any right hereunder by virtue hereof. All of the Commission’s representations, covenants and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of (a) any investigation made by or on behalf of the Underwriters, -20-
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(b) delivery of and payment for the Bonds hereunder, and (c) any termination of this Purchase Contract.
Section 15. Counterparts . This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. This Purchase Contract may be signed in counterparts, and upon delivery to the other party of such signed Purchase Contract, which delivery may be by facsimile transmission, shall constitute the binding agreement of each party to this Purchase Contract.
Section 16. Mutual Reliance on Representations and Warranties . The Commission hereby acknowledges that the Underwriters, in causing the Purchase Contr act to be executed by the Representative and in paying for the Bonds as provided herein, is relying upon the representations of the Commission set forth herein. The Underwriters hereby acknowledge that the Commission, in executing this Purchase Contract and issuing the Bonds described herein, is relying upon the representations and warranties of the Underwriters set forth herein.
Section 17. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Purchase Contract shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.
Section 18. State of California Law Governs . The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State of California.
This Purchase Contract shall be enforceable in the State of California, and any action arising out of this Purchase Contract shall be filed with and maintained in the City and County of San Francisco Superior Court, San Francisco, California; provided, that the Commission may waive the requirement of venue.
Section 19. Limited Liability . The obligations and liabilities of the Commission hereunder are limited obligations of the Commission payable solely from Revenues as defined and set forth in the Indenture. None of the Commissioners, the officers or employees of the Commission, or any person executing this Purchase Contract shall be liable personally for the obligations of the Commission hereunder or be subject to any personal liability or accountability by reason of the execution hereof. Neither of the faith and credit nor the taxing power of the State or any political subdivision thereof, including the City, is pledged to the obligations of the Commission hereunder.
Section 20. No Fiduciary or Advisory Role; Arm’s Length Transaction . The Underwriters and the Commission acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s -length commercial transaction between Commission, on the one hand, and the Underwriters, on the other hand, (ii) in connection with such transaction, the Underwriters are acting solely as a principal and not as a municipal advisor, a financial advisor, or a fiduciary of the Commission, and may have financial and other interests that differ from those of the Commission, (iii) the Underwr iters have not assumed a fiduciary responsibility in favor of the Commission with respect to the offering of the Bonds or the -21-
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discussions, undertakings and procedures leading thereto (whether or not any Underwriter, or any affiliate of an Underwriter, has provided or is currently providing services or advice to Commission on other matters), (iv) the only obligations the Underwriters have to the Commission with respect to the transaction contemplated hereby expressly are set forth in this Purchase Contract, and (v) the Commission and the Underwriters have consulted with their respective legal, financial and other advisors to the extent they deemed appropriate in connection with the offering of the Bonds. The Underwriters are not acting as a Municipal Advisor to the Commission (as defined in Section 15B of the Exchange Act of 1934, as amended) in connection with the matters contemplated by this Purchase Contract.
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Very truly yours,
WELLS FARGO BANK, N.A., as
Representative
By: ___________________________________
Name: Michael Engelbrecht
Title: Managing Director
Accepted as of the date first stated above:
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:_________________________________
Name:
Title:
Approved as to Form:
DAVID CHIU
City Attorney
By:_________________________________
Mark D. Blake, Deputy City Attorney
[Signature Page to Water Revenue Bonds 2023 Series AB
Bond Purchase Contract]
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SCHEDULE I
TO THE PURCHASE CONTRACT
MATURITY SCHEDULE
$[2023A PAR]
2023 SERIES A
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
Price 10% Test
Satisfied
Subject to
Hold-the-
Offering Price
Rule
* Term Bonds; subject to mandatory sinking fund redemption.
C Priced to the par call date of October 1, 20__.
Optional Redemption of 2023 Series A Bonds . The 2023A Bonds maturing on or after November 1, 20__ are subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2023A Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2023A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption of 2023 Series A Bonds . The 2023A Bonds maturing on November 1, ____ (the “2023A Term Bonds (____)”), are further subject to redemption prior to their stated maturity, and payable from the 2023A Sinking Fund Account, on each November 1 on and after November 1, ____, (except as otherwise provided under the procedures of Securities Depository for the 2023A Bonds) by lot within any such maturity if less than all of the 2023A Term Bonds (____) of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium.
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The 2023A Term Bonds (____) are subject to mandatory redemption on November 1 in each of the years and in the respective principal amounts as follows (such schedule subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023A Term Bonds (____) prior to maturity as described above):
Redemption Date
(November 1) Principal Amount
*
*Maturity.
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MATURITY SCHEDULE
$[2023B PAR]
2023 SERIES B
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
Price
10% Test
Satisfied
Subject to
Hold-the-
Offering Price
Rule
* Term Bonds; subject to mandatory sinking fund redemption.
C Priced to the par call date of November 1, 20__.
Optional Redemption of 2023 Series B Bonds . The 2023B Bonds maturing on or after November 1, 20__ are subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and (except as otherwise provided under the procedures of Securities Depository for the 2023B Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2023B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption of 2023 Series B Bonds . The 2023B Bonds maturing on November 1, ____ (the “2023B Term Bonds (____)”), are further subject to redemption prior to their stated maturity, and payable from the 2023B Sinking Fund Account, on each November 1 on and after November 1, ____, (except as otherwise provided under the procedures of Securities Depository for the 2023B Bonds) by lot within any such maturity if less than all of the 2023B Term Bonds (____) of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium.
The 2023B Term Bonds (____) are subject to mandatory redemption on November 1 in each of the years and in the respective principal amounts as follows (such schedule subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2023B Term Bonds (____) prior to maturity as described above):
Redemption Date
(November 1) Principal Amount
*
*Maturity.
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APPENDIX A
CITY CONTRACTING PROVISIONS
Each Underwriter shall comply with the following provisions of this Purchase Contract as if set forth in the text thereof. Capitalized terms used but not defined in this exhibit shall have the meanings given in the Purchase Contract.
1. N ondiscrimination; Penalties .
(a) Nondiscrimination in Contracts. Each Underwriter shall comply with the provisions of Chapters 12B and 12C of the San Francisco Administrative Code. Each Underwriter shall incorporate by reference in any subcontracts the provisions of Sections12B.2(a), 12B.2(c)- (k), and 12C.3 of the San Francisco Administrative Code and shall require any subcontractors to comply with such provisions. Each Underwriter is subject to the enforcement and penalty provisions in Chapters 12B and 12C.
(b) Nondiscrimination in the Provision of Employee Benefits. San Francisco Administrative Code 12B.2. Each Underwriter does not as of the date of this Purchase Contract, and will not during the term of this Purchase Contract, 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 employee benefits between employees with domestic partners and employees with spouses and/or between the domestic partners and spouses of such employees, subject to the conditions set forth in San Francisco Administrative Code Section12B.2.
(c) Condition to Contract. As a condition to the Purchase Contract, each Underwriter 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.
2. M
acBride Principles—Northern Ireland. The provisions of San Francisco Administrative Code §12F are incorporated by this reference and made part of this Purchase Contract. By entering into this Purchase Contract, each Underwriter confirms that it has read and understood that the City urges companies doing business in Northern Ireland to resolve employment inequities and to abide by the MacBride Principles, and urges San Francisco companies to do business with corporations that abide by the MacBride Principles.
3. T
ropical Hardw ood and Virgin Redwood Ban. Under San Francisco Environment Code Section 804(b), the City urges each Underwriter not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
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4. Alcohol and Drug-Free Workplace. The City reserves the right to deny access to, or require each Underwriter to remove from, City facilities personnel of such Underwriter who the City has reasonable grounds to believe has engaged in alcohol abuse or illegal drug activity which in any way impairs the City’s ability to maintain safe work facilities or to protect the health and well-being of City employees and the general public. The City shall have the right of final approval for the entry or re -entry of any such person previously denied access to, or removed from, City facilities. Illegal drug activity means possessing, furnishing, selling, offering, purchasing, using or being under the influence of illegal drugs or other controlled substances for which the individual lacks a valid prescription. Alcohol abuse means possessing, furnishing, selling, offering, or using alcoholic beverages, or being under the influence of alcohol.
5. C ompliance with Americans with Disabilities Act. Each Underwriter shall provide the services specified in the Purchase Contract in a manner that complies with the Americans with Disabilities Act (ADA), including but not limited to Title II’s program access requirements, and all other applicable federal, state and local disability rights legislation.
6. S unshine Ordinance. Each Underwriter acknowledges that this Purchase Contract and all records related to its formation, such Underwriter’s performance of services provided under the Purchase Contract, and the City’s payment are subject to the California Public Records Act, (California Government Code §6250 et. seq.), and the San Francisco Sunshine Ordinance, (San Francisco Administrative Code Chapter 67). Such records are subject to public inspection and copying unless exempt from disclosure under federal, state or local law.
7. L
imitations on Contributions . By executing this Purchase Contract, each Underwriter acknowledges its obligations under section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with, or is seeking a contract with, any department of the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building for a grant, loan or loan guarantee, or for a development agreement, from making any campaign contribution to (1) a City elected official if the contract must be approved by that official, a board on which that official serves, or the board of a state agency on which an appointee of that official serves, (2) a candidate for that City elective office held by such individual, or (3) a committee controlled by such elected official or a candidate for that office, at any time from the submission or a proposal for the contract until the later of either the termination of negotiations for such contract or twelve months after the date the City approves the contract. The prohibition on contributions applies to each prospective party to the contract; each member of each Underwriter’s board of directors; each Underwriter’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 10 percent in such Underwriter; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by such Underwriter. Each Underwriter certifies that it has informed each such person of the limitation on contributions imposed by Section 1.126 by the time it submitted a proposal for such contract and has provided the names of the persons required to be informed to the City department with whom it is contracting.
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8. Requiring Minimum Compensation for Covered Employees . Each Underwriter shall pay covered employees no less than the minimum compensation required by San Francisco Administrative Code Chapter 12P. Each Underwriter is subject to the enforcement and penalty provisions in Chapter 12P. By entering into this Purchase Contract, each Underwriter certifies that it is in compliance with Chapter 12P.
9. R equiring Health Benefits for Covered Employees. Each Underwriter shall comply with San Francisco Administrative Code Chapter 12Q. Each Underwriter shall choose and perform one of the Health Care Accountability options set forth in San Francisco Administrative Code Chapter 12Q.3. Each Underwriter is subject to the enforcement and penalty provisions in Chapter 12Q.
10. P
rohibition on Political Activity with City Funds . In performing the services provided under the Purchase Contract, each Underwriter shall comply with San Francisco Administrative Code Chapter 12G, which prohibits funds appropriated by the City for this Purchase Contract from being expended to participate in, support, or attempt to influe nce any political campaign for a candidate or for a ballot measure. Each Underwriter is subject to the enforcement and penalty provisions in Chapter 12G.
11. N
ondisclosure of Private, Proprietary or Confidential Information. If this Purchase Contract requires the City to disclose “Private Information” to an Underwriter within the meaning of San Francisco Administrative Code Chapter 12M, each Underwriter shall use such information consistent with the restrictions stated in Chapter 12M and in this Purchase Contract and only as necessary in performing the services provided under the Purchase Contract.
Each Underwriter is subject to the enforcement and penalty provisions in Chapter 12M.
I
n the performance of services provided under the Purchase Contract, each Underwriter may have access to the City’s proprietary or confidential information, the disclosure of which to third parties may damage the City. If the City discloses proprietary or confidential information to an Underwriter, such information must be held by such Underwriter in confidence and used only in performing the Purchase Contract. Each Underwriter shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary or confidential information.
12. C
onsideration of Criminal History in Hiring and Employment Decisions . Each Underwriter agrees to comply fully with and be bound by all of the provisions of Chapter 12T, “City Contractor/Subcontractor Consideration of Criminal History in Hiring and Employment Decisions,” of the San Francisco Administrative Code (“Chapter 12T”), including the remedies provided, and implementing regulations, as may be amended from time to time. The provisions of Chapter 12T are incorporated by reference and made a part of this Purchase Contract. The text of Chapter 12T is available on the web at http://sfgov.org/olse/fco. A partial listing of some of the Underwriters’ obligations under Chapter 12T is set forth in this Section. Each Underwriter is required to comply with all of the applicable provisions of Chapter 12T, irrespective of the listing of obligations in this Section. Capitalized terms used in this Section and not defined in
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this Purchase Contract shall have the meanings assigned to such terms in Chapter 12T.
The requirements of Chapter 12T shall only apply to an Underwriter’s operations to the extent those operations are in furtherance of the performance of this Purchase Contract, shall apply only to applicants and employees who would be or are performing work in furtherance of this Purchase Contract, and shall apply when the physical location of the employment or prospective employment of an individual is wholly or substantially within the City of San Francisco. Chapter 12T shall not apply when the application in a particular context would conflict with federal or state law or with a requirement of a government agency implementing federal or state law.
13. S
ubmitting False Claims; Monetary Penalties . The f ull text of San Francisco Administrative Code §§ 21.35, including the enforcement and penalty provisions, is incorporated into this Purchase Contract. Under San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that section. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant:
(a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
14. C
onflict of Interest. By entering into the Purchase Contract, each Underwriter certifies that it does not know of any fact which constitutes a violation of Section 15.103 of the City’s Charter; Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code; Title 9, Chapter 7 of the California Government Code (Section 87100 et seq.), or Title 1, Division 4, Chapter 1, Article 4 of the California Government Code (Section 1090 et seq.), and further agrees promptly to notify the City if it becomes aware of any such fact during the term of this Purchase Contract.
15. A
ssignment . The services provided under the Purchase Contract to be performed by each Underwriter are personal in character and neither this Purchase Contract nor any duties or obligations may be assigned or delegated by an Underwriter unless first approved by the City by written instrument executed and approved in the same manner as this Purchase Contract. Any purported assignment made in violation of this provision shall be null and void.
16. F
ood Service Waste Reduction Requirements. Each Underwriter shall comply with the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including but not limited to the provided remedies for noncompliance.
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17. Cooperative Drafting. This Purchase Contract has been drafted through a cooperative effort of the City and the Underwriters, and all parties have had an opportunity to have the Purchase Contract reviewed and revised by legal counsel. No party shall be considered the drafter of this Purchase Contract, and no presumption or rule that an ambiguity shall be construed against the party drafting the clause shall apply to the interpretation or enforcement of this Purchase Contract.
18. S
ugar- Sweetened Beverage Prohibition. Each Underwriter agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Purchase Contract.
19. F irst Source Hiring Program . Each Underwriter must comply with all of the provisions of the First Source Hiring Program, Chapter 83 of the San Francisco Administrative Code, that apply to this Purchase Contract, and each Underwriter is subject to the enforcement and penalty provisions in Chapter 83.
20. Laws Incorporated by Reference. The full text of the laws listed in this Exhibit A, including enforcement and penalty provisions, are incorporated into this Purchase Contract by reference. The full text of the San Francisco Municipal Code provisions incorporated by reference in this Exhibit A are available at www.sfgov.org under “Open Gov.”
21. P
revailing Wages . Services to be performed by the Underwriters under this Agreement may involve the performance of trade work covered by the provisions of Section
6.22(e) of the Administrative Code or Section 21C (collectively, “Covered Services”). The provisions of Section 6.22(e) and 21C of the Administrative Code are incorporated as provisions of this Agreement as if fully set forth herein and will apply to any Covered Services performed by each Underwriter.
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APPENDIX B
FORM OF CITY ATTORNEY OPINION
[Closing Date]
Public Utilities Commission
of the City and County of San Francisco
San Francisco, California
Board of Supervisors
of the City and County of San Francisco
San Francisco, California
RE: $[Aggregate Principal Amount]
P
ublic Utilities Commission of the City and County of San Francisco San Francisco Water Revenue Bonds, 2023 Series AB
Ladies and Gentlemen:
This office has acted as counsel to the Public Utilities Commission of the City and County of San Francisco (“Commission”) with respect to the issuance of its $[Aggregate Principal Amount] aggregate principal amount of Water Revenue Bonds comprised of $[2023A Par] aggregate principal amount of 2023 Sub- Series A Bonds (Regional Water and Local Water) and $[2023B Par] aggregate principal amount of 2023 Sub- Series B Bonds ( Hetch Hetchy Water ) (collectively, the “Bonds”). The Bonds are being issued pursuant to the Constitution and the laws of the State of California, the Charter of the City and County of San Francisco (“City”), and a Forty-Third Supplemental Indenture, dated as of July 1, 2023 (the “Forty -Third Supplemental Indenture”) and a Forty -Fourth Supplemental Indenture, dated as of July 1, 2023 (the “Forty- Fourth Supplemental Indenture”), each between the Commission and U.S. Bank Trust Company, National Association, as successor trustee (“Trustee”), supplementing the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as successor trustee, as amended and supplemented to date (collectively, the “Indenture”). All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Indenture.
In connection therewith, the undersigned has examined such documents, certificates and instruments as the undersigned deemed necessary for the purposes of this opinion, including, but not limited to, the Indenture, the Purchase Contract, dated [_______] , 2023 (the “Purchase Contract”), by and between the Commission and Wells Fargo Bank, N.A., as representative of the underwriters named therein, the Continuing Disclosure Certificate of the Commission, as executed and delivered on the date of delivery of the Bonds (“Continuing Disclosure Certificate”), and Resolution No. [_____] of the Commission adopted on [June 27], 2023 (“Commission Resolution”).
In reviewing the documents and matters referred to above, the undersigned has not undertaken to verify independently and has assumed the accuracy of the factual matters represented, warranted or certified therein. The undersigned has examined the Charter of the City.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions
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may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, w hether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. We disclaim any obligation to update this opinion. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Commission. In addition, we call attention to the fact that the rights and obligations under the Indenture and the Bonds and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities and counties in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoing documents.
Based upon and subject to the foregoing, the undersigned is of the opinion that:
1. The Commission is duly organized and validly existing as a commission of the City under and pursuant to the Charter of the City.
2. The Commission Resolution was duly passed at a meeting of the Commission. The meeting was called and held pursuant to law, with all public notice required by law and at which a quorum was present and acting throughout. The Commission Resolution is in full force and effect, as of the date hereof, and has not been modified, amended or rescinded since its approval date.
3. To the best of the undersigned’s knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity before or by any court, governmental agency, public board or body, is pending or threatened against the Commission to restrain or enjoin the issuance of the Bonds, or in any way contesting the validity of the Indenture, Continuing Disclosure Certificate, the Purchase Contract, or the City Resolution.
4. There is no litigation pending, with service of process having been accomplished, questioning the existence of the City or the Commission, or contesting the power of the Commission to fix water rates and charges, or in any way contesting or affecting (i) the proceedings under which the Bonds are to be issued, (ii) the validity of the Bonds or the validity of the Indenture, (iii) the pledge of Revenues by the Commission under the Indenture or (iv) the title to the office of the present members of the Board of Supervisors or the Commission; nor are there suits or claims against the City or the Commission which would materially impair the ability of the Commission to pay principal or interest on the Bonds when due.
5. The Indenture, Continuing Disclosure Certificate and the Purchase Contract have been duly authorized, executed and delivered by the Commission, and constitute valid and binding agreements of the Commission enforceable in accordance with their respective terms.
6. To the best of the undersigned’s knowledge, except as otherwise disclosed in the Official Statement, neither the execution nor the delivery by the Commission of the Indenture, the Continuing Disclosure Certificate or the Purchase Contract, the adoption of the Commission Resolution, or the compliance by the Commission with such documents or authorizations, conflicts with or constitutes a material breach of, or default under, any applicable law or administrative regulation of the State or the United States, or any other statute or administrative rule or regulation, judgment, decree, order, license, permit, agreement or instrument to which the Commission is subject, which breach, default or conflict would have a material adverse effect on the ability of the
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Commission to pay the Bonds or perform its obligations under the Indenture, the Continuing Disclosure Certificate or the Purchase Contract.
This letter is furnished for the benefit of the above -addressed parties, and is not intended to, and shall not, be relied upon by anyone other than the above -addressees. This letter shall not be circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. The City Attorney does not undertake any obligation to update this letter. Other than the Commission and the City, no attorney-client relationship has existed or exists between this office and any other party.
Very truly yours,
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APPENDIX C
ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Wells Fargo Bank, N.A., on its own behalf and as representative (the “Repres entative”) of Jefferies LLC, RBC Capital Markets, LLC, Samuel A.
Ramirez & Co., Inc., UBS Financial Services Inc. and U.S. Bancorp Investments, Inc. (together, the “Underwriting Group”), to the extent set forth herein, hereby certifies as set forth below w ith respect to the sale and issuance of the Public Utilities Commission of the City and County of San Francisco, San Francisco Water Revenue Bonds, 2023 Series AB (collectively, the “Bonds”).
1. Sale of the General Rule Maturities . As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A. The “10% Rule Used” box is checked for each such Maturity in Schedule A.
2. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Issuer means the Public Utilities Commission of the City and County of San Francisco.
(c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(d) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [Pricing Date]. (f) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Representative’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and t he Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate with
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respect to the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds, and by Norton Rose Fulbright US LLP, in connection with rendering their respective opinions that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. The representations set forth herein are not necessarily based on personal knowledge and, in certain cases, the undersigned is relying on representations made by the other members of the Underwriting Group.
WELLS FARGO BANK, N.A., as
Representative
By: __________________________________
Name:
Title:
Dated: [Closing Date]
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
(Attached)