A 1995 Don Pedro Project Settlement Agreement (“ Settlement Agreement”) and a 1996 Order by FERC (“1996 Order”) established increased water flows on the Tuolumne River to protect fisheries and riparian resources.
A restoration plan (“Restoration Plan”) adopted in 2000 guides planning, funding and implementation efforts. The Restoration Plan calls for a series of projects with a combined estimated cost of $25 million to improve river channel, riparian, and fisheries conditions within a 27- mile stretch of the Tuolumne River corridor below the La Grange Diversion Dam. Four of the ten priority projects were completed with available State and federal funding. More recently, the City and the Irrigation Districts as well as other non -governmental organizations have been working on implementing additional habitat restoration projects related to the Restoration Plan.
Pursuant to a 1966 agreement between the City and the Irrigation Districts, the City might have been liable to provide a portion of the increased flows mandated under the 1995 Settlement Agreement. Instead, the City and the Irrigation Districts entered into a new agreement (the “Side Agreement ”) whereby the Irrigation Districts agreed to provide all flows ordered by FERC to implement the Settlement Agreement until FERC issues a new license for the Don Pedro Project in exchange for which the City pays the Ir rigation Districts $3.5 million per year, subject to an escalation clause applied to keep pace with inflation. Pursuant to the terms of its agreement with the Irrigation Districts, the City may withdraw from the agreement upon one year’s notice.
The term of the Side Agreement runs until FERC issues a new license for the Don Pedro Project. License conditions, such as water-release requirements, could change under a new license. Changed release requirements could adversely affect the availability of Tuolumne River water to the SFPUC and hydroelectric generation. To prevent these potentially adverse effects to its operations on the Tuolumne River, the SFPUC is seeking to extend the existing Side Agreement so that it would remain in effect after the Don Pedro Project FERC license is renewed.
FERC has not yet provided a schedule for relicensing. However, it is expected that the National Marine Fisheries Service will first exercise its Endangered Species Act section 7 consultation authority before FERC moves forward with license approval. The National Marine Fisheries Service has not indicated when it will commence this consultation process.
Dam Licensing and Safety Issues
In 1929, the California Legislature enacted legislation providing for supervision over non- federal dams in the State. The statutes place the supervision of the safety of non- federal dams and reservoirs under the jurisdiction of the DSOD. Dams under DSOD jurisdiction are artificial barriers, together with appurtenant work, including outlet towers, which are 25 feet or more in height or have an impounding capacity of 50 acre-feet or more. Any artificial barrier not in excess of six feet in height, regardles s of storage, or that has a capacity not in excess of 15 acre-feet, regardless of height, is not considered within DSOD’s jurisdiction.
The DSOD reviews plans and specifications for the construction of new dams or for the enlargement, alteration, repair or removal of existing dams, under applications, and must grant written approval before the owner can proceed with construction. The DSOD routinely inspects operating dams to ensure that they are adequately maintained. The DSOD also conducts investigations of selected dams and directs the owners to additional investigations and detailed safety evaluations when necessary. In 2017, Oroville Da m, which is owned and operated by the State, suffered significant spillway structural problems and a major downstream area was temporarily evacuated. As a result of the Oroville Dam spillway problems, the State Legislature enacted legislation to enhance the DSOD’s authority; pursuant to such authority, the DSOD has requested additional evaluations of certain spillways, including spillways at the following four dams: Cherry Valley, O’Shaughnessy, Turner, and San Andreas. 126
SFPUC Dam and Safety Resiliency Program. The SFPUC has 18 dams under the jurisdiction of the DSOD.
In 2019, the SFPUC performed a comprehensive overview of evaluations and potential capital improvements that may be needed for these dams in the following 15 years. The SFPUC created a proposed schedule for improvement projects for 15 of the dams and submitted the schedule to the DSOD in 2020. Several new projects were added to the Capital Plan over time to address these needs. In 2024, an updated letter was sent to DSOD sharing progress on the evaluations and capital projects for 15 of the dams. In most cases, additional evaluations are being conducted to further determine capital needs as part of each project’s planning phase. Thus, while estimated funding has been included in the 2026 Capital Plan for these facility improvements, the scopes, budgets and schedules may be adjusted in future years as more information becomes available.
In December 2023, the SFPUC submitted a pre-application to the U.S. Army Corps of Engineers for a CWIFP loan to finance a collection of eight Water Enterprise projects supporting dam safety and resilience. In September 2024, the U.S. Army Corps of Engineers notified the SFPUC that its pre -application was selected to submit a full application for CWIFP financing consideration for a loan up to $614,811,376 . The SFPUC plans to submit the full application prior to the deadline of September 9, 2025. For more i nformation regarding the CWIFP loan, see “OBLIGATIONS PAYABLE FROM REVENUES – Corps Water Infrastructure Financing Program.” Capital improvement projects for SFPUC’s dams that are currently funded under the 2026 Capital Plan are described below:
O’Shaughnessy Dam. O’Shaughnessy Dam was completed in 1923 and raised in 1938. Most of the outlet facilities were installed when the dam was first built in 1923. These outlet facilities have exceeded their design life and need rehabilitation or replacement to maintain their reliability and functionality. The O’Shaughnessy Dam Outlet Works Project will extend the service life and reliable operation of the 100- year-old outlet system. The rehabilitation work is divided into two phases. The scope of Phase 1 includes replacing the access platforms in ladder wells, clearing critical drainage system s within the dam, building a new bulkhead system as a safe isolation for upcoming rehabilitation of gates and valves, replacing the instream flow release valves, and pre- construction planning of drum gates and slide gates replacement. The value of construction work for Phase 1 is es timated to be over $30 million dollars. Phase 1 construction has started with anticipated construction completion in 2026. The objective of Phase 2 is to rehabilitate slide gates, drum gates, large valves such as the 60-inch and 72-inch diameter needle valves, diversion tunnel and diversion pipeline, and associated control systems. The value of construction work for Phase 2 is estimated to be over $90 million dollars. The planning of Phase 2 will start in 2025, with staggered construction starting in 2030 and anticipated construction completion in 2041. The current estimated total project cost (which includes planning, bid and award, and close out costs, as well as construction costs) is $44 million for Phase 1 and $184 million for Phase 2.
Lake Eleanor Dam. Lake Eleanor Dam is a multiple arch reinforced concrete dam with roadway bridge at the crest that was constructed in 1918. Due to the age of the dam, some of the structural elements including the bridge and concrete barrels exhibit various degree s of deterioration including cracking and spalling of concrete, exposed rebar, leakage through the arch barrels, and cracks and erosion of the spillway concrete. The bridge is at the top of the dam and is an integral structure of the dam, providing the only vehicle and personnel access to the spillway structure and the other side of the dam for maintenance purposes. In addition, the dam’s spillway is inadequate to pass the updated inflow design flood. The Lake Eleanor Dam Rehabilitation Project will address concerns with concrete deterioration and spill capacity of the existing dam concrete structure, and first, rehabilitate the bridge, then subsequently replace the bridge deck when overall dam improvements are constructed. The project’s first phase, the bridge rehabilitation project, is in the final design phase with anticipated construction completion in 2027 and an estimated construction cost of about $4 million. The second phase of the project will address dam improvements including concrete deficiencies, increased capacity for releases, and increased downstream erosion protection.
Planning for this second phase is funded to start in 2025, with anticipated construction completion in 2037. The estimated total project cost for both phases of improvements to the bridge and dam is $114 million.
Priest Dam. The Priest Dam Condition Assessment and Monitoring Project includes a geotechnical exploration of the dam, a stability analysis, and a complete Condition Assessment Report. Additionally, the project will install new instrumentation to monitor the dam’s p erformance. Pre-construction work (review of files, records, and site visits) started in 2022 with the geotechnical investigation commencing in 2024 due to the need to coordinate with the Mountain Tunnel Project shutdowns. Construction work has been completed and the Condition Assessment 127
Report is currently in progress. The estimated project cost is $1.5-2.5 million. Pending the results from the Priest Dam Condition Assessment in 2025-2026, it is expected that a Priest Dam rehabilitation project may be developed in the future to correct potential deficiencies.
Cherry Valley Dam. Cherry Valley Dam was built in 1955. The spillway includes a 334-foot wide ogee-type concrete weir that discharges into an unlined adjacent channel. Engineering studies showed that remedial measures and erosion protection for the spill channel are needed to ensure that spill flows from Cherry Valley Dam spillway can be contained without erosion damage to the existing embankment dam and downstream area. Studies also found that long-term improvement to the spillway is needed to increase the hydraulic capacity of the spillway to safely pass the updated inflow design flood. The 2026 Capital Plan includes Cherry Dam Spillway Short-Term Improvements project as a short-term interim solution until a project for long-term spillway improvements can be implemented. The dam’s original design documents indicate that the spillway is rated for 52,000 cubic feet per second (“cfs ”). However, significant erosion damage occurred below the dam in 2010 when corresponding spillway releases were less than 1,800 cfs. The Cherry Dam Spillway Short -Term Improvements project will minimize the potential spill damage by improving the portion of the spillway that is unlined with erosion protection measures and re-establishing containment for the breached spill channel section from the 2010 spill, improving the flood protection for the dam and downstream area under a normal spill event. The value of construction work i s estimated to be $8 million with anticipated construction completion in 2027; the total project cost is $15 million. The SFPUC also plans to include a long- term project in the future capital plan to increase the spillway capacity and retrofit the intake tower for seismic reliability.
Early Intake Dam. Early Intake Dam is a single-curvature concrete arch structure. It was constructed between 1923 and 1924 to divert Hetch Hetchy water from the Tuolumne River into the Mountain Tunnel. Within a few years of the dam’s completion, significant cracking was observed at several locations, most likely due to the alkali-aggregate reactivity in the concrete. The structure has continued to deteriorate since then. Widely distributed and progressively worsening cracking has been observed throughout the dam and spillway structure over the years. The dam is reaching the end of its design life. The SFPUC has initiated a project to replace the dam. The Early Intake Dam Long -term Improvement Project will remove the existing concrete structure and construct a new facility to allow diversion of flows into Mountain Tunnel for water delivery under emergency and drought conditions. The SFPUC is considering a wide variety of alternatives, including, but not limited to, using pumps, low head weirs, tunnels, pipelines, and other water sources to supplement water supply to the Bay Area assuming the dam is removed. It is expected to take six years, from 2024 to 2029, to resolve complex environmental issues, water supply reliability issues, and obtain necessary approvals. The cost of construction work is estimated to be over $50 million dollars. The planning phase of the project has started, with anticipated construction completion in 2034.
Moccasin Lower Dam . In 2018, the town of Moccasin experienced more than 5.0 inches of precipitation over a 24 -hour period, of which 3.1 inches fell within a four -hour period. The torrent of rain caused severe flood damage to the facilities in Moccasin and almost overtopped Moccasin Dam. After the event, the SFPUC issued emergency contracts to remove debris and perform emergency interim repairs. All of the emergency repairs were completed in 2020. To ensure dam safety and minimize potential flood damage in the future, the SFPUC re-evaluated the required flood protection for the dam and downstream facilities. The scope of work for the Moccasin Dam Long- Term Improvements project includes re-constructing the auxiliary spillway to handle the updated inflow design flood and building additional measures to protect the major facilities. The project will consist of constructing a new ungated side channel spillway at the right abutment along the alignment of the existing auxiliary spill channel. Additional erosion protection will also be considered for both upstream and downstream of the reservoir. Planning began in 2020 to define the scope of the spillway improvements; construction is anticipated to occur in 2030-2033 to allow sufficient time for planning, engineering design, and environmental agency approvals. The value of construction work is estimated to be over $100 million dollars with an estimated total project cost of $142 million, and anticipated construction completion in 2033.
Pilarcitos Dam. Pilarcitos Dam is a 95-foot-high earth fill embankment dam originally constructed in 1866 by the Spring Valley Water Company, with a reservoir capacity of approximately 3,100 acre-feet. An overall condition and needs assessment of the facility was completed in 2021. The study identified that the embankment and the appurtenant structures have operational and dam safety (seismic and hydraulic) improvement needs. The scope of work for Pilarcitos Dam includes upgrades to the embankment, outlet s tructure, and spillway to meet seismic safety standards and to pass the updated inflow design flood. Conceptual engineering design for two alternatives, 128
representing the highest and lowest capital costs, is currently underway. Pre -construction is scheduled to complete in 2031 with construction scheduled for completion in 2034. The estimated project budget is $64 million.
San Andreas Dam . San Andreas Dam is a 105 -foot-high earth fill embankment dam built in 1870 and modified in 1875. The dam impounds a 19,000- acre-foot reservoir in San Mateo County. An overall condition and needs assessment for the dam was completed in 2021, identifying t he need to improve and upgrade the embankment and emergency outlet release facilities along with the spillway, where improvement needs were previously identified in 2019. Preliminary scope of work at San Andreas Dam includes the construction of a new spillway, a seismic stability study of the embankment, and a feasibility study of an emergency release outlet structure. Based on the condition assessment results, seismic safety standards, and the need to pass the updated inflow design flood, the dam’s embankment, spillway, and emergency release outlet structure would all require retrofit and/or replacement under one construction contract. Alternatives analysis is currently underway. Once completed, scope of work, schedule and budget will be updated. Pre-construction for the entire project is scheduled to be complete in 2031 with construction scheduled for completion in 2033. The current estimated project budget is $32 million, but this may be increased after project needs are further determined.
Turner Dam. Turner Dam is a 195 -foot-high earth fill embankment dam constructed in 1965. The dam impounds the 50,500-acre-foot San Antonio Reservoir in Alameda County. An overall condition and needs assessment for the facility, including the embankment, spillway and outlet works, began in 2020 and is part of a project to perform necessary upgrades anticipated to be completed by 2034. Results from the latest condition assessment, including an analysis performed in 2023, indicate that the dam embankment, spil lway, and outlet works would all need to be retrofitted and/or replaced to meet the seismic safety standard and to pass the updated inflow design flood. Since this project is still in the early planning phase, the schedule and budget for the upgrade projec t will be updated when the scope is better defined for the selected alternative. The project is preliminarily scheduled to complete pre-construction in 2031, with construction from 2032 to 2034.
Calaveras Reservoir Expansion. C ompleted in 2019, the Calaveras Dam has a reservoir capacity of 96,800 acre-feet and was designed to accommodate a potential future enlargement. This project was intended to add up to an additional 289,000 acre-feet of additional water storage for the Regional Water System supplies in years with average and higher than average water supply (“normal” and “wet” years). This project included raising the dam, expanding the capacity of the outlet structures and spillway, and adding necessary transmission and pumping infrastructure to convey water to the Calaveras Reservoir. This project has been deferred due to, among other reasons, high capital cost requirements, and may be reevaluated in the future. See “CAPITAL IMPROVEMENT PROGRAM AND OTHER WATER SUPPLY INITIATIVES – Water Supply Initiatives – AWS Program – AWS Projects – Calaveras Reservoir Expansion (Deferred).”
Merced Manor Reservoir. The Merced Manor Reservoir project will seismically strengthen and repair the roof of the reservoir. Scope of the project includes structural evaluation of the existing roof structure per current seismic code, design for seismic strengthening and repair, a nd construction of improvements. Pre -construction is underway with construction completion anticipated by 2031. The total project budget in the 2026 Capital Plan is $12 million.
Summit Reservoir. Summit Reservoir is a 14 million -gallon (43 acre-feet) capacity potable water storage reservoir on Twin Peaks in San Francisco that was built during the 1950s. Based on the as-built drawings, the original inlet/outlet structure appeared to be backfilled with compacted fill, whereas the majority of the reservoir is constructed on bedrock. Following the WSIP-funded seismic improvements, roof strengthening, and installation of new inlet/outlet structure that was completed in 2012, the DSOD reviewed the reservoir improvements and concluded that the reservoir met the criteria to be under their jurisdiction as a “dam” due to the original outlet structure embankment. In 2017, at the request of the DSOD, an engineering evaluation was performed in order to analyze the subsurface conditions and confirm that the seismic improvements performed under the WSIP were adequate, particularly in the area of embankment fill where the original inlet-outlet facilities were constructed. In 2019, a geotechnical investigation report was submitted to the DSOD that provided additional test results and information about the subsurface materials and conditions and concluded that the ground and the embankment appear to be stable. In 2021, an inspection of the concrete fl oor and walls in the West basin showed degradation of the sealant joints as well as some cracking and spalling along the floor and walls. Pre -construction of the repairs will be completed in 2025 and the repair of the 129
cracks will be performed in 2026-2027, with similar repairs to any potential cracks in the East basin thereafter. Total project cost is less than $2 million; additional budget will be requested in the future if needed.
Stanford Heights Reservoir . Stanford Heights Reservoir, a potable water storage reservoir located within San Francisco, is impounded by a 31- foot-high earth fill dam constructed in 1928. The SFPUC performed a stability analysis in 1993, and an updated seismic stability and deformation analysis check of the embankment in 1997. Further geotechnical and seismic stability investigations are needed to determine if improvements may be necessary. Further investigations and pre-construction activities are planned f or 2026 to 2027, with potential construction, if needed, in 2028 to 2030.
Sunset Reservoir South Basin. In a 1996 study, the SFPUC recommended seismic strengthening of the roof structure and other associated reservoir structural elements at the Sunset Reservoir South Basin which is formed with a 34-foot-high earth fill dam within San Francisco. However, due to budgetary prioritization decisions made by the SFPUC, and because the North Basin was seismically retrofitted, those recommendations were deferred. In 2018, a structural and seismic performance review of the Sunset South B asin recommended updating the seismic evaluation of the roof structure and structural elements prior to performing a structural improvement project. A project to strengthen the reservoir roof structure and other structural components if needed is scheduled for pre-construction in 2026 to 2030 with construction completion in 2033.
University Mound South Basin. In a 1996 study, the SFPUC recommended seismic strengthening of the roof structure and other associated reservoir structural elements at the University Mound South Basin which is formed with a 17-foot-high earth fill dam within San Francisco. However, due to budgetary prioritization decisions, and because the North Basin was seismically retrofitted, those recommendations were deferred. A seismic stability and deformation analysis of the embankment conducted by DSOD in 2006 showed acceptable seismic performance of the embankment.
Thus, it is anticipated that the improvement project will only be needed to seismically strengthen the roof structure and structural components of the reservoir. Pre -construction including planning is scheduled for 2026 to 2030, with improvements constructed by 2033.
Hazardous Material Management
The handling of hazardous materials is subject to a variety of federal and State regulations. The SFPUC currently complies with regulations regarding hazardous material safety with respect to hazardous material disposal and employee safety.
Endangered Species
Various species (including native fishes) present in and near the Tuolumne River and Bay Area streams (e.g., Alameda, San Mateo and Pilarcitos Creeks) are either listed or candidates for listing under the State or federal endangered species acts. New listings and future regulatory actions under the acts, or conditions placed in permits to undertake construction for certain capital projects, could potentially directly affect water supplies available to the Regional Water System. When necessary, the SFPUC works with the responsible State and federal agencies to obtain permits under the acts. In addition, future enforcement or implementation actions involving the 2018 Plan Amendment tributaries could further affect the availability of supplies to the State Wate r Project and the Central Valley Project, reducing SFPUC customers’ alternate water supplies and increasing their need for additional Regional Water System deliveries.
Required Instream Flow Schedules from Regional Water System Dams In order to comply with federal and State permit requirements in connection with dam and reservoir improvements to be carried out as part of the WSIP, the SFPUC has implemented schedules of instream flow releases from Lower Crystal Springs Reservoir to San Mateo Creek, from Calaveras Reservoir to Calaveras Creek/Alameda Creek, and from the Upper Alameda Creek Diversion Dam to Alameda Creek to enhance habitat for native species.
The SFPUC is constructing the Alameda Creek Recapture Project to recover a porti on of the loss of water supply associated with Calaveras Dam releases and bypasses.
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CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS
The activities of the SFPUC and the Water Enterprise, including, without limitation, the establishment of rates for water service and the issuance of Bonds, are subject to several limitations under both State and local law.
Certain of such limitations are summarized below. Additionally, such limitations may be revised, enhanced, expanded, or otherwise altered as provided under State and local law, including in certain instances by legislation adopted by State, regional or local authorities, including the State Legislature or the Board of Supervisors, or by California or San Francisco voters themselves through the power of initiative or referendum, by voting in favor of amendments to the Charter, or in any other lawful manner.
State Law Limitations
Tax and Spending Limitations. The taxing powers of public agencies in the State are limited by Article XIIIA of the California Constitution, added by an initiative amendment approved by the voters on June 6, 1978, and commonly known as Proposition 13.
Article XIIIA limits the maximum ad valorem tax on real property to 1% of “full cash value,” which is defined as “the County Assessor’s valuation of real property as shown on the Fiscal Year 1975- 76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or reduction in the consumer price index or comparable local data, or declining property value caused by damage, destruction, or other factors.
The tax rate limitation referred to above does not apply to ad valorem taxes to pay the debt service on any indebtedness approved by the voters before July 1, 1978, or on any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of the votes cast by the voters voting on the proposition.
Under the terms of Article XIIIA and pursuant to an allocation system created by implementing legislation, each county is required to levy the maximum ad valorem tax permitted by Article XIIIA and to distribute the proceeds to local agencies.
Assessed valuation growth allowed under Article XIIIA (new construction, change of ownership and up to 2% annual value growth) is allocated among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools shar e the growth of base revenues from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year. The availability of revenues from tax bases to such entities may be affected by the existence of certain successor agencies to former redevelopment agencies that, under certain circumstances, may be entitled to such revenues resulting from the upgrading of certain property values.
Under State law, any fee that exceeds the reasonable cost of providing the service for which the fee is charged may be considered a “special tax” that must be authorized by a two- thirds vote of the electorate. Accordingly, if a portion of the SFPUC’s water user rates or capacity charges were determined by a court to exceed the reasonable cost of providing service, the SFPUC might not be permitted to continue to collect that portion unless it were authorized to do so by a two-thirds majority of the votes cast in an election to authorize the collection of that portion of the rates or fees. If the SFPUC were unable to obtain such a two -thirds majority vote and were unable to reduce costs, such failure could adversely affect the SFPUC’s ability to pay the debt s ervice on the 2025ABC Bonds. However, the reasonable cost of providing water services has been determined by the State Controller to include depreciation and allowance for the cost of capital improvements. In addition, State courts have determined that fee s such as capacity charges will not be special taxes if they approximate the reasonable cost of constructing the water system improvements contemplated by the local agency imposing the fee.
The United States Supreme Court has upheld Article XIIIA against a challenge alleging violation of equal protection under the Fourteenth Amendment to the United States Constitution.
Proposition 218. Proposition 218, a State ballot initiative known as the “Right to V ote on Taxes Act,” was approved by California voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the California 131
Constitution, creating additional requirements for the imposition by most local governments of “general taxes,” “special taxes,” “assessments,” “fees,” and “charges.” Articles XIIIC and XIIID became effective, pursuant to their terms, as of November 6, 1996, although compliance with some of the provisions was deferred until July 1, 1997, and certain of the provisions purport to apply to any tax imposed for general governmental purposes (i.e., “general taxes”) imposed, extended or increased on or after January 1, 1995 and prior to November 6, 1996.
Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any “fee” or “charge” subject to its provisions. A “fee” or “charge” subject to Article XIIID includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee or charge by a majority of owners of the parcels upon which the fee or charge is to be imposed. Except for fees and charges for water , sewer and refuse collection services, the approval of a majority of the property owners subject to the fee or charge, or at the option of the agency, by a two- thirds vote of the electorate residing in the affected area, is required not less than 45 days following the public hearing on any such proposed new or increased fee or charge. In the view of the SFPUC, rates for water usage charged by the SFPUC to the wholesale customers are not fees or charges under Article XIIID, although no assurance may be give n by the SFPUC that a court would not determine otherwise.
The California Supreme Court decisions in Richmond v. Shasta Community Services District, 32 Cal. 4th 409 (2004) (“Richmond”), and Bighorn- Desert View Water Agency v. Verjil, 39 Cal. 4th 206 (2006) (“ Bighorn”) have clarified uncertainty surrounding the applicability of Section 6 of Article XIIID to service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvem ents to the water system and a fire suppression c harge. The Court held that both the capacity charge and the fire suppression charge were not subject to Article XIIID because a water connection fee is not a property-related fee or charge because it results from the property owner’s voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed “as an incident of property ownership” within the meaning of Article XIIID, rejecting, in Bighorn, the water agency’s argument that consumption- based water charges are not imposed “as an incident of property ownership” but as a result of the voluntary decisions of customers as to how much water to use.
On July 15, 2024, the California Court of Appeal issued a decision in Coziahr v. Otay Water District , 103 Cal. App. 5th 785 (2024), upholding the judgment of the lower court that Otay Water District’s tiered water rates were not compliant with Proposition 218. The court affirmed that water service rates subject to Proposition 218, including tiered water structures, must adhere to the proportionality requirement in Proposition 218 and that promoting water use conservation through water rates did not provide a basis for setting rates that exceed the proportional cost of service. The court also noted the principle established in City of Palmdale v. Palmdale Water District, 198 Cal. App. 4th 926 (2011), that rate differentials between groups, whether customers or tiers, support an inference of disproportionality and, to be constitutional, must be supported by evidence of costs justifying the differences. Similar water rate challenges under Proposition 218 have been filed against other public agencies in Californi a and are currently pending. The SFPUC is unable to predict the outcome of any such ongoing litigation or any future litigation under Proposition 218 that may follow.
The SFPUC provides public notice of proposed water rate increases in accordance with the requirements of Article XIIID through means that include, among others, holding informational presentations at community group meetings, mailings to residential and co mmercial customers of public hearings on rate increases, and press releases and media campaigns regarding rate increases, followed by public hearings conducted by the SFPUC’s Rate Fairness Board and by the SFPUC itself. The SFPUC also develops and adopts r etail utility user rates and fees in accordance with the requirements of Article XIIID(6)(b) that limit property-related fees and charges.
Article XIIIC extends the people’s initiative power to reduce or repeal previously authorized local taxes, assessments, fees and charges. This extension of the initiative power is not limited by the terms of Article XIIIC to fees, taxes, assessment fees an d charges imposed after November 6, 1996 and absent other authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public agency’s water rates and delivery charges. The Court noted, however, that it was not holding that the authorized initiative power is free of all limitations, stating that it was 132
not determining whether the electorate’s initiative power is subject to the public agency’s statutory obligation to set water service charges at a level that will “pay the operating expenses of the agency, … provide for repairs and depreciation of works, provide a reasonable surplus for improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due.”
Two class action cases have been filed and consolidated in the Superior Court of the State of California for County of San Francisco, challenging the compliance of the SFPUC’s water rates with Proposition 218: Toy, et al. v.
City and County of San Francisco, et al., Case No. CPF -22-517764, and Aquilina, et al. v. City and County of San Francisco, Case No. CPF-23-518342 (collectively, the “Complaints”). The principal claim of the Complaints is that the SFPUC has violated Proposition 218 by imposing rates tha t exceed the costs of service by including the costs of hydrants and associated water flows in water rates. The SFPUC believes the claims in the Complaints are inconsistent with California Government Code section 53750.5, which addresses the treatment of hydrant costs in water rates. The SFPUC cannot predict the outcome of the cases, however the SFPUC believes that its rate structure has been developed in compliance with all applicable laws in all material respects The courts have not fully interpreted the provisions of Proposition 218. The SFPUC is unable to predict how courts will further interpret Article XIIIC and Article XIIID, and what, if any, further implementing legislation will be enacted. Under the Bighorn case, San Francisco voters could adopt an initiative measure that reduces or repeals the SFPUC’s water rates and charges, though it is not clear whether (and courts have not decided whether) any such reduction or repeal by initiative would be enforceable in a situation in which such rates and charges are pledged to the repayment of bonded indebtedness. There can be no assurance that the courts will not further interpret, or the voters will not amend, Article XIIIC and Article XIIID to limit the ability of the SFPUC to impose, levy, charge and collect increased fees and charges for the Water Enterprise, or to call into question water rate increases previously adopted by the SFPUC. No assurance may be given that Articles XIIIC and XIIID will not have a materi al adverse impact on Revenues.
Proposition 26. Proposition 26, which amended Article XIIIA and XIIIC of the California Constitution, was approved by the electorate at the November 2, 2010 election. Proposition 26 imposes a two -thirds voter approval requirement for the imposition of fees and charges by the State. It also imposes a majority voter approval requirement on local governments with respect to fees and charges for general purposes, and a two- thirds voter approval requirement with respect to fees and charges for special purposes. According to its supporters, Proposition 26 was designed to prevent the circumvention of tax limitations imposed by the voters pursuant to Proposition 13, approved in 1978, Proposition 218, and other measures through the use of non-tax fees and charges.
Proposition 26 expressly excludes from its scope “a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the governmental entity of providing the service or product to the payor” and “assessments and property-related fees imposed in accordance with the provisions of Article XIIID.” The California Supreme Court has held that a fee for ongoing water service through an existing connection is impos ed “as an incident of property ownership” within the meaning of Article XIIID. See “– Proposition 218.” The SFPUC believes that the initiative is not intended to, and would not, apply to fees for water deliveries and services charged by the SFPUC. The SFPUC, however, is unable to predict how Proposition 26 will be interpreted by the courts to apply to the provision of water services by local governments such as the SFPUC.
Initiative and Referendum
Article XIIIA and Articles XIIIC and XIIID of the California Constitution were adopted pursuant to the State’s constitutional initiative process. From time to time other initiative measures could be adopted by California or San Francisco voters, placing additional limitations on, the SFPUC’s revenues or ability to increase revenues.
Charter Limitations
The Charter requires that bonds (such as the Bonds) secured by revenues, other than refunding bonds, may be issued only with the assent of a majority of voters. However, under the Charter amendments enacted by the voters in November 2002 (Proposition E), the SFPUC may issue revenue bonds, including notes, commercial paper or other 133
forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors, for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities or clean water facilities or combinations of water and clean water facilities under the jurisdiction of the SFPUC (and subject to the further conditions contained in Proposition E). See “OBLIGATIONS PAYABLE FROM REVENUES – Authority for Issuance of Revenue Bonds and Other Obligations Payable from Revenues – Proposition E.” In June 1998, the electorate of the City approved Proposition H which, subject to certain exceptions, including a limited exception to raise rates to pay debt service on voter-approved debt, froze the SFPUC’s water rates through July 1, 2006. The SFPUC can give no assurance that the electorate will not seek in the future to freeze or limit rate increases.
Future Charter Amendments
San Francisco voters could adopt additional Charter amendments in the future which would limit the ability of the SFPUC to issue debt or to enact rate increases, affect the financial condition or operation of the Water Enterprise or implement other changes affecting the financial condition or operations of the SFPUC and the Water Enterprise.
See “RISK FACTORS – Initiative, Referendum, Charter Amendments and Future Legislation.”
LITIGATION
The SFPUC is not aware of any litigation pending or threatened questioning the political existence of the City or the SFPUC or contesting the SFPUC’s power to fix Water Enterprise rates and charges, or in any way questioning or affecting:
(i) the proceedings under which the 2025ABC Bonds are to be issued, (ii) the validity of any provision of the 2025ABC Bonds or the Indenture, (iii) the pledge of Revenues by the SFPUC under the Indenture, or (iv) the titles to office of the present members of the Board of Supervisors and the Commission.
There are several suits and claims pending against the City and the SFPUC impacting the Water Enterprise, which may include personal injury, wrongful death and other suits and claims against which the City may self-insure.
The aggregate amount of the self-insured liabilities of the City and the SFPUC which may result from such suits and claims will not, in the opinion of the City Attorney, materially impair the ability of the SFPUC to pay principal of or interest on the 2025ABC Bonds as they become due. Oth er than as disclosed elsewhere in this Official Statement, there is no litigation pending, with service of process having been accomplished, against the City or the SFPUC which if determined adversely to the City or the SFPUC would, in the opinion of the C ity Attorney, materially impair the ability of the SFPUC to pay principal of and interest on the 2025ABC Bonds as they become due. See also “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS – State Law Limitations – Proposition 218.”
TAX MATTERS
Federal Tax Exemption. In the opinion of Bond Counsel to the SFPUC, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance by the Commission with certain covenants in the applicable resolution, the Tax Certificate and other documents pertaining to the 2025ABC Bonds and requirements of the Internal Revenue Code of 1986 (the “ Code”) regarding the use, expenditure and investment of proceeds of the 2025ABC Bonds and the timely payment of certain investment earnings to the United States, interest on the 2025ABC Bonds is not included in the gross income of the owners of the 2025ABC Bonds for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest on the 2025ABC Bonds to be included in gross income retroactive to the date of issuance of the 2025ABC Bonds.
In the further opinion of Bond Counsel, interest on the 2025ABC Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax on individuals. Bond Counsel expresses no opinion 134
regarding the applicability of the federal corporate alternative minimum tax to the adjusted financial statement income of certain corporations.
Ownership of, or the receipt of interest on, tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax -exempt obligations and taxpayers who may be eligible for the earned income tax credit. Bond Counsel expresses no opinion with respect to any collateral tax consequences and, accordingly, prospective purchasers of the 2025ABC Bonds should consult their tax advisors as to the applicability of any collateral tax consequences.
Certain requirements and procedures contained or referred to in the applicable resolution, the Tax Certificate or other documents pertaining to the 2025ABC Bonds may be changed, and certain actions may be taken or not taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. Bond Counsel expresses no opinion as to the effect of any change to any document pertaining to the 2025ABC Bonds or of any action taken or not taken where such change is made or action is taken or not taken without the approval of Bond Counsel or in reliance upon the advice of counsel other than Bond Counsel with respect to the exclusion from gross income of the interest on the 2025ABC Bonds for federal income tax purposes.
Bond Counsel’s opinion is not a guarantee of result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and judicial decisions and the representations and covenants of the Commission described above. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel’s opinion is not binding on the IRS. The IRS has an ongoing program of examining the tax- exempt status of the interest on municipal obligations. If an examination of the 2025ABC Bonds is commenced, under current procedures the IRS is likely to treat the Commission as the “taxpayer,” and the owners of the 2025ABC Bonds would have no right to participate in the examination process. In responding to or defending an examination of the tax-exempt status of the interest on the 2025ABC Bonds, the Commission may have different or conflicting interests from the owners. Additionally, public awareness of any future examination of the 2025ABC Bonds could adversely affect the value and liquidity of the 2025ABC Bonds during the pendency of the examination, regardless of its ultimate outcome.
Tax Accounting Treatment of Bond Premium. To the extent a purchaser acquires a 2025ABC Bond at a price in excess of the amount payable at its maturity, such excess will constitute “bond premium” under the Code. The Code and applicable Treasury Regulations provide generally that bond premium on a tax-exempt obligation is amortized over the remaining term of the obligation (or a shorter period in the case of certain callable obligations) based on the obligation's yield to maturity (or shorter period in the ca se of certain callable obligations). The amount of premium so amortized reduces the owner’s basis in such obligation for federal income tax purposes, though such amortized premium is not deductible for federal income tax purposes. This reduction in basis will increase the amount of any gain (or decrease the amount of any loss) recognized for federal income tax purposes upon a sale or other taxable disposition of the obligation. Bond Counsel is not opining on the accounting for bond premium or the consequence to a 2025ABC Bond purchaser of purchasing a 2025ABC Bond with bond premium. Accordingly, persons considering the purchase of 2025ABC Bonds with bond premium should consult their own tax advisors with respect to the determination of bond premium on such 2025ABC Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such 2025ABC Bonds.
Tax Accounting Treatment of Original Issue Discount. The excess, if any, of the stated redemption price at maturity of 2025ABC Bonds of a particular maturity over the initial offering price to the public of the 2025ABC Bonds of that maturity at which a substantial amount of the 2025ABC Bonds of that maturi ty is sold to the public is “original issue discount.” Original issue discount accruing on a 2025ABC Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes under the same conditions and limitations as are applicable to interest payable on such 2025ABC Bond. Original issue discount on a 2025ABC Bond of a particular maturity purchased pursuant to the initial public offering at the initial public offerin g price at which a substantial amount of the 2025ABC Bonds of that maturity is sold to the public accrues on a semiannual basis over the term of the 2025ABC Bond on the basis of a constant yield; and within each semiannual period accrues on a ratable daily 135
basis. The amount of original issue discount on a 2025ABC Bond accruing during each period is added to the adjusted basis of such 2025ABC Bond, which will affect the amount of taxable gain upon disposition (including sale, redemption or payment on maturity) of such 2025ABC Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers that purchase 2025ABC Bonds other than at the initial offering price. Bond Counsel is not opining on the accounting for or consequence to a 2025ABC Bond purchaser of purchasing a 2025ABC Bond with original issue discount. Accordingly, persons considering the purchase of 2025ABC Bonds with original issue discount should consult their own tax advisors with respect to the determination of original issue discount on such 2025ABC Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such 2025ABC Bonds.
Information Reporting and Backup Withholding. Interest paid on the 2025ABC Bonds will be subject to information reporting in a manner similar to interest paid on taxable obligations. Although such reporting requirement does not, in and of itself, affect the excludability of such interest from gross income for federal income tax purposes, such reporting requirement causes the payment of interest on the 2025ABC Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not “exempt recipients,” and (b) either fail to provide certain identifying information (such as the beneficial owner’s taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a bene ficial owner are allowed as a refund or credit against such beneficial owner’s federal income tax liability so long as the required information is furnished to the IRS.
State Tax Exemption. In the further opinion of Bond Counsel, interest on the 2025ABC Bonds is exempt from personal income taxes imposed by the State of California.
Future Developments . Existing law may change to reduce or eliminate the benefit to owners of the 2025ABC Bonds of the exclusion of the interest on the 2025ABC Bonds from gross income for federal income tax purposes or of the exemption of interest on the 2025ABC Bonds from St ate of California personal income taxation.
Any proposed legislation, whether or not enacted, or administrative action, whether or not taken, could also affect the value and marketability of the 2025ABC Bonds. Prospective purchasers of t he 2025ABC Bonds should consult their own tax advisors with respect to any proposed or future change in tax law.
Proposed Form of Opinion. The proposed form of opinion of Bond Counsel regarding the 2025ABC Bonds is attached in APPENDIX D.
CERTAIN LEGAL MATTERS
Certain legal matters incident to the authorization, sale and delivery of the 2025ABC Bonds are subject to the approval of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel to the SFPUC. Certain legal matters are being passed upon for the SFPUC by the City Attorney and by Orrick, Herrington & Sutcliffe LLP , San Francisco, California (“Disclosure Counsel”). Certain legal matters are being passed upon for the Underwriters by Hawkins Delafield & Wood LLP, San Francisco, California. Bond Counsel and Disclosure Counsel will receive compensation that is contingent upon the sale and delivery of the 2025ABC Bonds.
The form of approving opinion of Bond Counsel is set forth in Appendix D and will be available at the time of delivery of the 2025ABC Bonds. Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.
Orrick, Herrington & Sutcliffe LLP has served as Disclosure Counsel to the SFPUC and in such capacity has advised the SFPUC with respect to the requirements of applicable securities laws and participated with responsible SFPUC officials and staff in confer ences and meetings where information contained in this Official Statement was reviewed for accuracy and completeness. Disclosure Counsel is not responsible for the accuracy or completeness of the information presented in this Official Statement and has not undertaken to independently verify any of such information. Rather, the SFPUC is solely responsible for the accuracy and completeness of the information contained in this Official Statement. Upon the issuance of the 2025ABC Bonds, Orrick, Herrington & Sutcliffe LLP will deliver a letter to the SFPUC concerning certain matters with respect to the Official Statement. No purchaser or holder of the 136
2025ABC Bonds, or other person or party other than the SFPUC, will be entitled to rely on such letter or on the fact that Orrick, Herrington & Sutcliffe LLP has acted as Disclosure Counsel to the SFPUC.
RATINGS
Moody’s Investors Service (“ Moody’s”) has assigned its municipal bond rating of “ ___” to the 2025ABC Bonds, and S&P Global Ratings, a Standard & Poor’s Financial Services LLC business (“ S&P”), has assigned its municipal bond rating of “___” to the 2025ABC Bonds.
The ratings assigned by Moody’s and S&P express only the views of the respective rating agencies. The explanation of the significance of these ratings, and any outlook associated with these ratings, may be obtained from Moody’s and S&P, respectively. Each rating agency generally bases its rating on its own investigations, studies, and assumptions. The SFPUC has provided certain additional information and materials to the rating agencies (some of which does not appear in this Official Statement).
A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised dow nward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2025ABC Bonds. The SFPUC undertakes no responsibility to maintain its current ratings on the 2025ABC Bonds or to oppose any such downward revision, suspension or withdrawal.
UNDERWRITING
The 2025ABC Bonds are being purchased by J efferies LLC, as representative on behalf of itself and Wells Fargo Bank, National Association, Barclays Capital Inc., RBC Capital Markets LLC, Siebert Williams Shank & Co., LLC, and TD Securities (USA) LLC (collectively, the “Underwriters”).
The Underwriters have agreed to purchase from the SFPUC the 2025A Bonds at a purchase price of $________ (consisting of $________ aggregate principal amount of the 2025A Bonds, [plus/less] original issue [premium/discount], less an underwriter’s discount of $________), the 2025B Bonds at a purchase price of $________ (consisting of $________ aggregate principal amount of the 2025B Bonds, [plus/less] original issue [premium/discount], less an underwriters ’ discount of $________) , and the 2025C Bonds at a pur chase price of $______ (consisting of $______ aggregate principal amount of the 2025C Bonds, [plus/less] original issue [premium/discount] less an underwriter’s discount of $_________) . Under the bond purchase contract to be entered into in connection with the purchase of the 2025ABC Bonds, the Underwriters will be obligated to purchase all of the 2025ABC Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions to be satisfied by the SFPUC.
The Underwriters have certified the reoffering yields with respect to the 2025ABC Bonds set forth on the inside cover pages of this Official Statement. The SFPUC takes no responsibility for the accuracy of these yields. The Underwriters may offer and sell the 2025A Bonds, 2025B Bonds or 2025C Bonds to certain dealers and others yields higher than the offering yields stated on the inside cover page. The offering yields may be changed from time to time by the Underwriters.
The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the SFPUC for which they received or will receive customary fees.
In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for 137
the accounts of their customers and may at any time hold long and short positions in such securities and instruments.
Such investment and securities activities may involve securities and instruments of the SFPUC.
The Underwriters and/or their affiliates may own or hold the Target Bonds subject to the SFPUC’s tender offer for its own account or the account of its customers. To the extent the Underwriters and/or their affiliates own or hold any of the Target Bonds subject to the SFPUC’s tender offer, they would be engaged like any other investor or holder of the Target Bonds subject to the SFPUC’s tender offer. See “PLAN OF REFUNDING.” Jefferies LLC, the senior underwriter of the 2025ABC Bonds, is also acting as the Dealer Manager in connection with the tender offer described under “PLAN OF REFUNDING.” The SFPUC has agreed to pay to the Dealer Manager a customary fee for its services and to reimburse the Dealer Manager for its reasonable expenses relating to such tender offer from proceeds of the 2025ABC Bonds.
In addition, Jefferies LLC has entered into a buy- side advisory engagement with the City concerning the City’s proposed acquisition of certain assets of PG&E and may have received or will receive customary fees in connection with such engagement. See “THE PUBLIC UTILITIES COMMISSION – Organization, Purposes and Powers – Hetch Hetchy – Water and Power Operations.”
Wells Fargo Securities is the trade name for certain securities‐related capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association (“WFBNA”), which conducts its municipal securities sales, trading and underwriting operations through the Wells Fargo Bank, N.A. Municipal Finance Group, a separately identifiable department of WFBNA, registered with the Securities and Exchange Commission as a municipal securities dealer pursuan t to Section 15B(a) of the Securities Exchange Act of 1934.
WFBNA, acting through its Municipal Finance Group, the co- senior underwriter of the 2025ABC Bonds, has entered into an agreement (the “WFA Distribution Agreement”) with its affiliate, Wells Fargo Clearing Services, LLC (which uses the trade name “Wells Fargo Advisors”) (“WFA”), for the distribution of certain municipal securities offerings, including the 2025ABC Bonds. Pursuant to the WFA Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the 2025ABC Bonds with WFA.
WFBNA has also entered into an agreement (the “WFSLLC Distribution Agreement”) with its affiliate Wells Fargo Securities, LLC (“WFSLLC”), for the distribution of municipal securities offerings, including the 2025ABC Bonds.
Pursuant to the WFSLLC Distribution Agreement, WFBNA pays a portion of WFSLLC’s expenses based on its municipal securities transactions. WFBNA, WFSLLC, and WFA are each wholly -owned subsidiaries of Wells Fargo & Company.
TD Securities (USA) LLC (“ TD Securities”), an underwriter of the 2025ABC Bonds, has entered into two negotiated dealer agreements (the “TD Dealer Agreements ”) with Charles Schwab & Co., Inc. (“CS&Co .”) and InvestorLink Capital Markets, LLC (“ ICM”). These agreements allow CS&Co. and ICM to provide for the retail distribution of certain securities offerings, including the offered 2025ABC Bonds at the original issue prices. Pursuant to the TD Dealer Agreements, CS&Co. and ICM may purchase offered 2025ABC Bonds from TD Securities at the original issue prices less a negotiated portion of the selling concession applicable to any of the offered 2025ABC Bonds ICM or CS&Co. sells.
FINANCIAL STATEMENTS
Attached as Appendix C are the audited financial statements of the Water Enterprise for Fiscal Years 2023-24 and 2022-23, prepared by the SFPUC. The audited financial statements were audited by Macias Gini & O’Connell LLP, independent certified public accountants. The audited financial statements are included for convenience.
The audited financial statements of the SFPUC are public documents and the SFPUC has not requested nor did the SFPUC obtain permission from the auditors to include the audited financial statements as an Appendix to this Official Statement. Accordingly, the a uditor have made no representation in connection with inclusion of the audit financial statements herein that there has been no material change in the financial condition of the SFPUC since the most recent audit was concluded. The a uditors have not been engaged to perform and have not performed, since the 138
date of the report included herein, any procedures on the financial statements addressed in that report. The auditors also have not performed any procedures relating to this Official Statement.
CONTINUING DISCLOSURE
The SFPUC will covenant for the benefit of the Owners and Beneficial Owners of the 2025ABC Bonds, under a continuing disclosure certificate dated as of the date of delivery (the “ Disclosure Certificate”), to provide certain financial information and operating data regarding the Water Enterprise (the “Annual Report”) not later than March 31 following the end of its Fiscal Year (presently June 30), beginning on March 31, 2026, with the report for Fiscal Year 2024-25, and to promptly provide notices of the occurrence of certain enumerated events set forth in the Disclosure Certificate (“Listed Events”).
The SFPUC will agree to file the Annual Report and any notice of Listed Events as described in the Disclosure Certificate. The specific nature of the information to be contained in the Annual Report or the notices of Listed Events is set forth in the Disclosure Certificate. These covenants have been made to assist the Underwriters in complying with the Rule. The form of the Disclosure Certificate is attached to this Official Statement as Appendix E.
In 2017, the SFPUC and U.S. Bank National Association (“ U.S. Bank”) entered into revolving credit agreements providing for the extension of credit to the SFPUC in the amount of $100,000,000 for the Water Enterprise and $75,000,000 for the Wastewater Enterprise. The SFPUC has not drawn on either credit facility and has no outstanding obligations thereunder. On January 7, 2022, the SFPUC and U.S. Bank entered into amendments to such credit facilities extending the respective commitment expiration dates to July 18, 2024. The SFPUC filed listed event notices regarding such extensions on February 3, 2022.
CO-MUNICIPAL ADVISORS
Montague DeRose and Associates, LLC, Walnut Creek, California, and Backstrom McCarley Berry & Co., LLC, San Francisco, California (the “ Co-Municipal Advisors”), are acting as co -municipal advisors to the SFPUC with respect to the 2025ABC Bonds. The Co-Municipal Advisors have assisted the SFPUC in the preparation of this Official Statement and in other matters relating to the planning, structuring, execution and delivery of the 2025ABC Bonds. The Co-Municipal Advisors have not independently verified any of t he data contained herein or conducted a detailed investigation of the affairs of the SFPUC to determine the accuracy or completeness of this Official Statement.
Because of its limited participation, the Co -Municipal Advisors assume no responsibility for the accuracy or completeness of any of the information contained herein. The Co- Municipal Advisors will not purchase or make a market in any of the 2025ABC Bonds.
The compensation to be received by the Co- Municipal Advisors from the SFPUC for services provided in connection with the planning, structuring, execution and delivery of the 2025ABC Bonds is contingent upon the sale and delivery of the 2025ABC Bonds.
VERIFICATION OF MATHEMATICAL ACCURACY
Upon delivery of the 2025ABC Bonds, __________, will deliver a report on the mathematical accuracy of certain computations, contained in schedules provided to them on behalf of the SFPUC, relating to (a) the sufficiency of the anticipated receipts from securities and/or cash deposits in the Escrow Fund to redeem the Advance Refunded Bonds, Refunded 2015A Bonds, Refunded 2017A Bonds, Refunded 2017B Bonds and Refunded 2017C Bonds and (b) the “yield” on the investments deposited in the Escrow Fund for the Advance Refunded Bonds, Refunded 2015A Bonds, Refunded 2017A Bonds, Refunded 2017B Bonds and Refunded 2017C Bonds and on the 2025ABC Bonds considered by Bond Counsel in connection with the opinion rendered by such firm that the 2025ABC Bonds are not “arbitrage bonds” within the meaning of Section 148 of the Tax Code, as amended. See “PLAN OF REFUNDING.”
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INDEPENDENT PRICING CONSULTANT
PFM California Advisors LLC, San Francisco, California, is acting as an independent pricing consultant to the SFPUC with respect to the 2025ABC Bonds (the “ Pricing Consultant ”). As required by the SFPUC’s Debt Policies, the Pricing Consultant will monitor the pricing process and provide an independent pricing report to the SFPUC certifying whether the pricing results were fair and reasonable to the SFPUC in light of prevailing market conditions. The Pricing Consultant has not independently verified any of t he data contained herein or conducted a detailed investigation of the affairs of the SFPUC to determine the accuracy or completeness of this Official Statement.
Because of its limited participation, the Pricing Consultant assumes no responsibility for the accuracy or completeness of any of the information contained herein. The Pricing Consultant will not purchase or make a market in any of the 2025ABC Bonds.
The compensation to be received by the Pricing Consultant from the SFPUC for services provided in connection with the planning, structuring, execution and delivery of the 2025ABC Bonds is contingent upon the sale and delivery of the 2025ABC Bonds.
MISCELLANEOUS
References made in this Official Statement to certain documents and reports are brief summaries thereof that do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof.
The appendices to this Official Statement are integral parts of this Official Statement. Investors must read the entire Official Statement, including the appendices, to obtain information essential to making an informed investment decision.
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APPROV AL AND DELIVERY
This Official Statement has been duly approved, executed and delivered by the SFPUC.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:
General Manager
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APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIX B
SUMMARY OF CERTAIN PROVISIONS OF THE WATER SUPPLY AGREEMENT The following brief summary of certain provisions of the Water Supply Agreement is subject in all respects to all of the provisions of such document. This brief summary does not purport to be a complete statement of said provisions and prospective purchasers of the 2025ABC Bonds are referred to the complete text of said document.
Definitions
“1984 Agreement” refers to the 1984 Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County, which expired on June 30, 2009.
“Act” refers to the Raker Act, 38 Stat. 242, the Act of Congress, enacted in 1913, that authorized the construction of the Hetch Hetchy system on federal lands. “Adjusted Proportional Annual Use” means the respective percentages of annual water use, as adjusted to reflect deliveries of water by the Hetch Hetchy Water & Power Project to outside City Retail Customers. “Agreement” refers to the Water Supply Agreement, by and among San Francisco and the Wholesale Customers who approve the Agreement.
“BAWSC A” refers to the Bay Area Water Supply and Conservation Agency established pursuant to Division 31 of the California Water Code (Water Code §§81300-81461) or its successor and permitted assigns. “CEQA” refers to the California Environmental Quality Act found at §§21000 et seq. of the Public Resources Code and the Guidelines for the California Environmental Quality Act found at §§15000 et seq. of Title 14 of the California Code of Regulations, as amended from time to time. “Commission” means the governing board of the SFPUC.
“Debt Service” means principal and interest paid during a fiscal year on Indebtedness incurred by the SFPUC the proceeds of which are used or are scheduled to be used for the acquisition or construction of New Regional Assets or to refund such Indebtedness.
“Direct Retail” refers to Regional Water System capital or operating expenditures that are incurred to provide water service solely to Retail Customers.
“Direct Wholesale” refers to Regional Water System capital or operating expenditures that are incurred to provide water service solely to one or more Wholesale Customers. “Drought” means a water shortage caused by lack of precipitation, as reflected in resolutions of the Commission calling for voluntary or mandatory water rationing based on evaluation of water stored or otherwise available to the Regional Water System, whether or not the Commission declares a water shortage emergency pursuant to Water Code §§ 350 et seq., as amended from time to time. “Emergency” means a sudden, non-drought event, such as an earthquake, failure of Regional Water System infrastructure or other catastrophic event or natural disaster that results in an insufficient supply of water available to the Retail or Wholesale Service Areas for basic human consumption, firefighting, sanitation, and fire protection. “Encumbrance” or “Encumber” refers to the process by which the City Controller certifies the availability of amounts previously appropriated by the Commission for specifically identified SFPUC capital projects performed either by third parties or through work orders to other San Francisco departments.
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“Environmental Enhancement Surcharge” means the surcharge to be imposed by the SFPUC on individual parties to the Agreement whose use exceeds their Interim Supply Allocation when the collective use of water by all parties to the Agreement is in excess of the Interim Supply Limitation. “Excess Use Charges” are monthly charges set by the SFPUC, in the form of multipliers, that are applied to the Wholesale Customer water rates during times of mandatory rationing if a Wholesale Customer’s water usage is greater than its shortage allocation.
“Fundamental Rights” of Wholesale Customers are their status as parties to the Agreement, their allocation of water recognized in the Agreement, their protection against arbitrary, unreasonable, or unjustly discriminatory rates and any other specific rights described in the Agreement. “Hetch Hetchy Enterprise” refers to Hetch Hetchy Water and Power Enterprise, a SFPUC operating department.
“Indebtedness” includes revenue bonds, bond anticipation notes, certificates of participation (excluding certificates of participation towards which SFPUC contributes debt service as an operating expense), and commercial paper.
“Individual Supply Guarantee” refers to each Wholesale Customer’s share of the Supply Assurance. “Individual Water Sales Contract ” refers to the contracts between each Wholesale Customer and San Francisco that details customer -specific matters such as location of service connections, service area maps and other matters specific to that customer.
“Interim Supply Allocation” refers to each Wholesale Customer’s share, to be established by the SFPUC of the Interim Supply Limitation.
“Interim Supply Limitation” refers to the 265 MGD annual average limitation on water deliveries from Regional Water System watersheds.
“Joint,” when used in connection with Hetch Hetchy Enterprise assets or expenses, refers to assets used or expenses incurred in providing both water supply (“Water -Related”) and in the generation and transmission of electrical energy (“Power-Related”).
“Local System Water” refers to Regional Water System water supplies developed in San Mateo, Alameda and Santa Clara Counties or otherwise not produced by the Hetch Hetchy Enterprise under rights of way granted by the Act.
“MGD” refers to an average flow rate of one million gallons per day over a specific time period, often a year.
For example, one MGD is equal to 365 million gallons per year or 1,120 acre feet per year. “Minimum Annual Purchase Quantity” means the minimum amount of water that a Wholesale Customer that has as Individual Supply Guarantee agrees to purchase from San Francisco annually. “Net Annual Debt Service” refers to debt service less payments made from proceeds of Indebtedness (e.g., capitalized interest), earnings on bond proceeds (e.g., reserve fund earnings) used to pay Debt Service, and interest paid from renewed commercial paper, or from reserve fund liquidation. “New Assets” refers to Regional and Hetch Hetchy Water -Only and Water-Related capital assets added to Regional Water System plant in service after June 30, 2009. “New Regional Assets” refers to New Assets placed in service on or after July 1, 2009 that are used and useful in delivering water to Wholesale Customers. The following four categories comprise New Regional Assets:
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1. Water Enterprise Regional Assets
2. Water Enterprise Direct Wholesale Assets
3. Hetch Hetchy Water Only Assets
4. Water-Related portion (45 percent) of Hetch Hetchy Joint Assets “Power-Only,” when used with reference to Hetch Hetchy Enterprise capital costs and operating and maintenance expenses, means capital costs and expenses that are incurred solely for the construction and operation of assets used to generate and transmit electrical energy. “Power-Related” refers to the power related portion (55%) of Joint Hetch Hetchy Enterprise assets or expenses.
“Proportional Annual Use” means the shares of deliveries from the Regional Water System used by City Retail Customers and by the Wholesale Customers in a fiscal year, expressed as a percentage. “Proportional Water Use” refers the general principle of allocating Regional Water System costs based on the relative purchases of water by Retail and Wholesale Customers. “Regional Water System ” means the water storage, transmission and treatment system operated by the SFPUC in Tuolumne, Stanislaus, San Joaquin, Alameda, Santa Clara, San Mateo and San Francisco counties, including projects constructed under the WSIP, but excluding Direct Retail and Direct Wholesale assets. “Regional,” when used with reference to Water Enterprise capital assets and operating expenses, refers to assets and expenses that benefit Wholesale and Regional Customers. “Retail Customers” means any customer that purchases water from San Francisco that is not a Wholesale Customer, whether located inside or outside of San Francisco. “Retail Service Area” means the areas where SFPUC sells water to Retail Customers. “Retail Water” means water sold by the SFPUC to its Retail Customers within and outside San Francisco. “San Francisco” refers to the City and County of San Francisco. “SFPUC” refers to the San Francisco Public Utilities Commission as an operating department of San Francisco, the General Manager of which reports to the Commission. “Substantially Expended,” when used with respect to a specific bond issue, means 98% of the proceeds from that bond issue and investment earnings contributed to the project fund have been expended. “Supply Assurance” means the 184 MGD maximum annual average metered supply of water dedicated by San Francisco to public use in the Wholesale Service Area (not including San José and Santa Clara). “Temporary Modified Minimum Annual Purchase Quantity” means the minimum amount of water that a Wholesale Customer that has an Individual Supply Guarantee, which has received a permanent transfer of a portion of Individual Supply Guarantee and a portion of Minimum Annual Purchase Quantity, agrees to purchase from San Francisco on a temporary annual basis.
“Term” means the 25 -year term of the Agreement commencing July 1, 2009, including one or both 5- year extensions authorized by the Agreement.
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“Tier 1 Shortage Plan ” refers to the Water Shortage Allocation Plan, adopted by the SFPUC and the Wholesale Customers in conjunction with the Agreement describing the method for allocating water between the SFPUC and the Wholesale Customers collectively for shortages of up to 20% of deliveries from the Regional Water System, as amended from time-to-time.
“Water Enterprise” refers to the San Francisco Water Department (SFWD), an SFPUC Operating Department.
“Water Management Charge” refers to the charge collected by San Francisco on behalf of BAWSCA for local water resource development in the Wholesale Service Area. “Water-Only,” when used with reference to Hetch Hetchy Enterprise capital costs and operating and maintenance expenses, means capital costs and expenses that are incurred solely for the construction and operation of assets used to protect water quality or to provide for the delivery of water for consumptive purposes. “Water-Related” refers to the water related portion (45%) of Joint Hetch Hetchy Enterprise assets or expenses.
“Wheeling Statute” refers to Article 4 of Chapter 11 of the California Water Code, as amended from time to time.
“Wholesale Capital Fund” is the account established by the SFPUC for deposit of Wholesale Customer revenue that is used to fund the wholesale share of revenue-funded New Regional Assets. “Wholesale Customer” or “Customers” means one or more of the 26 water customers that are contracting for purchase of water from San Francisco pursuant to the Agreement. Cordilleras Mutual Water Company is a wholesale customer of the SFPUC, but is not a party to Water Supply Agreement and is not a “Wholesale Customer.” “Wholesale Revenue Coverage ” refers to the additional dollar amount included in wholesale rates each fiscal year that is charged to Wholesale Customers by the SFPUC for their proportionate share of Debt Service coverage.
“Wholesale Revenue Coverage Reserve” refers to the account established by the SFPUC for deposit of Wholesale Revenue Coverage.
“Wholesale Revenue Requirement” means the calculated Wholesale Customer portion of SFPUC Regional Water System capital and operating costs.
“Wholesale Service Area” means the combined service areas of the Wholesale Customers, as delineated on the service area maps attached to each Individual Water Sales Contract. “WSIP” refers to the Water System Improvement Program approved by the Commission in Resolution No. 08-0200 on October 30, 2008, as amended from time to time.
Term
The Term of the Agreement is twenty-five (25) years. The Term began on July 1, 2009 and ends on June 30, 2034.
In December 2031, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the Term of the Agreement. Between January 1, 2032 and June 30, 2032, any Wholesale Customer may accept the SFPUC’s offer to extend the Term by providing a written notice of extension to the SFPUC. If such notices of extension are received from Wholesale Customers representing at least two-thirds in number as of June 30, 2032 and seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale Customers during fiscal year 2030-31, the Term shall be extended for another five (5) years (“First Extension Term”), through June 30, 2039.
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No party to the Agreement which does not wish to remain a party during the Extension Term shall be compelled to do so by the actions of other parties.
In December 2036, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the Term of the Agreement. Between January 1, 2037 and June 30, 2037, any Wholesale Customer may accept the SFPUC’s offer to extend the Term by providing a written notice of extension to the SFPUC. If such notices of extension are received from Wholesale Customers representing at least two-thirds in number as of June 30, 2037 and seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale Customers during fiscal year 2035- 36, the Term shall be extended for another five (5) years (“Second Extension Term”), through June 30, 2044. No party to the Agreement which does not wish to remain a party during the Extension Term shall be compelled to do so by the actions of other parties.
Amendments to Agreement
The Agreement may be amended with the written consent of San Francisco and of Wholesale Customers representing at least two -thirds in number and seventy five percent (75%) of the quantity of water delivered by San Francisco to all Wholesale Customers during the fiscal year immediately preceding the amendment.
No amendment which adversely affects a Fundamental Right of a Wholesale Customer may be made without the written consent of that customer.
Supply Assurance
San Francisco agrees to deliver water to the Wholesale Customers up to the amount of the Supply Assurance.
Water delivered by San Francisco to Retail Customers shall not be included in the Supply Assurance. Such commitment is subject to the Interim Supply Limitation provisions in the Agreement.
Both the Supply Assurance and the Individual Supply Guarantees identified are expressed in terms of daily deliveries on an annual average basis and do not themselves constitute a guarantee by San Francisco to meet peak daily or hourly demands of the Wholes ale 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 Contracts are perpetual and shall survive the expiration or earlier termination of the Agreement or the Individual Water Sales Contracts.
The amount of water made available by San Francisco to the Wholesale Customers is subject to reduction, to the extent and for the period made necessary by reason of water shortage, Drought, 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.
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 cities 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 B-6
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 through June 30), then the Individual Supply Guarantees of those Wholesale Customers shall be reduced pro rata so that their combined entitlement and the sustained use by Hayward does not exceed 184 MGD.
It is the responsibility of each Wholesale Customer to limit its purchases of water from San Francisco so as to remain within its Individual Supply Guarantee. San Francisco is not liable to any Wholesale Customer or obligated to supply more water to any Wholesale Customer individually or to the Wholesale Customers collectively than the amount to which it or they are otherwise entitled under the Agreement due to the use by any Wholesale Customer of more water than the amount to which it is entitled under the Agreement.
San Francisco installs such new connections between the Regional Water System and the distribution system of any Wholesale Customer that are necessary to deliver the quantities of water to which the Wholesale Customer is entitled under the Agreement. San Francisco has the right to determine the location of such connections, in light of the need to maintain the structural integrity of the Regional Water System and, where applicable, the need to limit peaking directly off of Regional Water System pipelines by a Wholesale Customer’s individual retail customers, the need to ensure that a Wholesale Customer’s individual retail customers have access to alternative sources of water in the event of a reduction in San Francisco’s ability to provide them with water, and other factors which may affect the desirability or undesirability of a particular location.
Wholesale Customer Service Areas
A Wholesale Customer may not deliver water furnished to it by San Francisco outside the boundary of its service area without the prior written consent of San Francisco, except for deliveries to another Wholesale Customer on an emergency and temporary basis. San Francisco may refuse a Wholesale Customer’s request to expand its service area on any reasonable basis.
If two or more Wholesale Customers agree to adjust the boundaries of their respective service areas so that one assumes an obligation to serve customers in an area that was previously within the service area of another Wholesale Customer, they may also cor respondingly adjust their respective Individual Supply Guarantees. 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 effect 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 G uarantees 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.
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.
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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.
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 tech nique 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.
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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 interrup t 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 c ustomers 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.
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 Wholesale 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 B-9
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 periods 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;
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.
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San Francisco may enter into new retail water service obligations outside of the City and County of San Francisco:
1. Only in Alameda, San Mateo, Santa Clara, San Joaquin and Tuolumne Counties;
2. That are within or immediately adjacent to areas in which it currently serves other Retail Customers; and
3. Until the aggregate additional demand represented by the new retail customers reaches 0.5 MGD.
The limitations on serving new Retail Customers described in this subsection do not apply to historical obligations to supply water that may be contained in prior agreements between the SFPUC or its predecessor the Spring Valley Water Company, and individual users or property owners located adjacent to Regional Water System transmission pipelines.
Subject to completion of necessary environmental review under CEQA, San Francisco may at any time enter into water exchanges or cost sharing agreements with other water suppliers to enhance dry year or normal year water deliveries, provided that San Francisco cannot incur new water service obligations to such other water suppliers unless the requirements for taking on new wholesale customers are met.
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 actions and other events may impact San Francisco’s ability to maintain the Supply Assurance from its existing surface water supplies, but on timescales long enough to permit San Francisco to collaborate with its Wholesale Custom ers 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 o f 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 allocat ed to Wholesale and Retail Customers as described in the Agreement.
If San Francisco seeks to develop additional water supplies from new sources to increase the Supply Assurance available to Wholesale Customers, studies and resulting water supply projects will be conducted jointly with BAWSCA under separate agreement(s) sp ecifying the purpose of the projects, the anticipated regional benefits and how costs of studies and implementation will be allocated and charged. Nothing in the Agreement shall serve as precedent for the allocation of such new 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 B-11
delivery reliability, but decided to adopt a water supply element that includes the Interim Supply Limitation. 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 federal 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 Boar d of Supervisors. In that event, the Environmental Enhancement Surcharge will apply to Retail Customers for use in excess of 81 MGD and to individual Wholesale Customers for use in excess of their Interim Supply Allocations established by the Commission.
1. Environmental Enhancement Surcharges related to the Retail Customers’ use in excess of their 81 MGD Retail Customer Allocation will be paid by the SFPUC, and no portion of such surcharges may be allocated to Wholesale Customers. The method of recovering the 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.
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Environmental Enhancement Surcharges paid by the SFPUC and by Wholesale Customers will be placed into a restricted reserve fund. The SFPUC will request the San Francisco Board of Supervisors to establish this fund by ordinance and, if adopted, the fund will be subject to the following restrictions:
1. Interest earnings will stay in the reserve fund.
2. The reserve fund shall (a) be subject to automatic appropriation; (b) require unexpended and unencumbered fund balances to be carried forward from year to year; and (c) not be transferred to the San Francisco General Fund.
3. The reserve fund may be used only for specific environmental restoration and enhancement measures for the Sierra and local watersheds, such as those included in the Watershed Environmental Improvement Program.
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 considered 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 exte nt 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 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:
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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 method by which the Wholesale Customers’ collective share of expenses incurred by the SFPUC in delivering water to them will be determined.
The Agreement implements two general principles as follows: (1) the Wholesale Customers should not pay for expenses of SFPUC operations from which they receive no benefit and (2) the Wholesale Customers should pay their share of expenses incurred by the SF PUC in delivering water to them on the basis of Proportional Annual Use unless otherwise explicitly provided in the Agreement.
To implement these general principles, the Wholesale Revenue Requirement will consist of, and be limited to the Wholesale Customers’ shares of the following categories of expense:
1. Contribution to the capital cost of Water Enterprise New Regional Assets.
2. Water Enterprise operation and maintenance expenses, including power purchased from the Hetch Hetchy Enterprise that is used in the operation of the Water Enterprise.
3. Water Enterprise administrative and general expenses.
4. Water Enterprise property taxes.
5. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s operation and maintenance, administrative and general, and property tax expenses.
6. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s capital cost of New Assets classified as Water-Only and the Water-Related portion of Joint Assets.
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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 the expected use of proceeds shown in the “Certificate Regarding Use of Proceeds” executed by the SFPUC General Manager on behalf of the Commission in connection with the sale of the Indebtedness.
2. After the proceeds of a series are Substantially Expended, the SFPUC General Manager will prepare and execute a certificate showing the actual expenditure of proceeds at an allocation of Net Debt Service to New Regional Assets for a series of bonds will be used in the fiscal year in which the proceeds have been Substantially Expended and thereafter.
3. The Wholesale Customers’ share of Net Annual Debt Service for the New Regional Assets that are categorized as Direct Wholesale will be 100 percent. (None of the projects in the WSIP are categorized as Direct Wholesale.) The Wholesale Customers’ share of Net Annual Debt Service for all other New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use.
4. If Indebtedness is issued by the SFPUC to refund the 2006 Revenue Bonds, Series A or to refund any other long-term Indebtedness issued after July 1, 2009, the Net Annual Debt Service attributable to proceeds used for refunding will be allocated on the s ame basis as the Indebtedness being refunded.
5. In addition to Net Debt 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 Bo nd Oversight Committee fees, etc., but only to the extent such fees are neither paid from proceeds of Indebtedness nor included in SFPUC operation and maintenance or administrative and general expenses.
The Wholesale Customers shall pay the wholesale share of the appropriation contained in the SFPUC annual budget for each year to be used to acquire or construct New Regional Assets.
The Wholesale Customers’ share of the annual appropriation for revenue -funded New Regional Assets that are categorized as Direct Wholesale will be 100 percent. The Wholesale Customers’ share of the annual appropriation for all other revenue -funded New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use in each fiscal year. The amount appropriated in each fiscal year for the wholesale share of New Regional Assets shall be contributed to the Wholesale Capital Fund.
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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 capital costs. The components of Hetch Hetchy Enterprise capital costs are as follows:
1. The Water Enterprise will be assigned 100 percent of Net Annual Debt Service attributable to acquisition and construction of New Hetch Hetchy Enterprise assets that are Water -Only and the Water-Related portion (45 percent) of Net Annual Debt Service on New Hetch Hetchy Enterprise Joint assets.
2. The Water Enterprise will be assigned 100 percent of capital expenditures from revenues for New Hetch Hetchy Enterprise assets that are Water -Only and the Water-Related portion (45 percent) of such expenditures for new Hetch Hetchy Enterprise Joint assets.
The Wholesale Customers’ share of the Net Annual Debt Service and revenue funded capital expenditures shall be calculated by multiplying that dollar amount by Adjusted 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 proce eds of Indebtedness (through expenditure on New Regional Assets and /or application to Debt Service) and to interest on the Balancing Account.
5. Revenues not related to the sale of water.
The Wholesale Customers will not be charged with any of the following expenses:
1. Capital costs for assets constructed or acquired prior to July 1, 1984.
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2. Expenses incurred by the SFPUC for generation and distribution of electric power, including Hetch Hetchy Enterprise Power-Only expenses and the Power -Related share of Hetch Hetchy Enterprise Joint expenses. An exception to this is Regional energy costs incurred by the Water Enterprise, for which Wholesale Customers are charged on the basis of Proportional Annual Use.
3. Expenses incurred by SFPUC in providing water to Retail Customers.
4. Expenses associated with the SFPUC’s accruals or allocations for uncollectible Retail Water accounts.
5. Attorneys’ fees and costs incurred by the Wholesale Customers that a court of competent jurisdiction orders San Francisco to pay as part of a final, binding judgment against San Francisco.
6. Any expenses associated with funding any reserves (other than the required Wholesale Revenue Coverage Reserve) accrued and not anticipated to be paid within one year unless such reserve is established by mutual agreement of the SFPUC and BAWSCA.
7. Any expenses accrued in respect to pending or threatened litigation, damage or personal injury claims or other loss contingencies unless projected to be paid within one year. Otherwise, such expenses will be charged to the Wholesale Customers when actually paid.
8. Any expenses associated with installing, relocating, enlarging, removing or modifying meters and service connections at the request of an individual Wholesale Customer.
9. The Retail Customers’ portion of any Environmental Enhancement Surcharges imposed to enforce the Interim Supply Limitation.
The following payments by Wholesale Customers, individually or collectively, are not credited as Wholesale revenues.
1. Payments by individual Wholesale Customers of the Environmental Enhancement Surcharge imposed to enforce the Interim Supply Limitation.
2. Payments of attorneys’ fees and costs incurred by San Francisco that a court of competent jurisdiction orders the Wholesale Customers to pay as part of a final, binding judgment against the Wholesale Customers.
3. Payments by individual Wholesale Customers for installation, relocation, enlargement, removal or modification of meters and service connections requested by, and charged to, a Wholesale Customer.
4. Payments applied to the amortization of the ending balance in the balancing account under the 1984 Agreement.
5. Payments of the Water Management Charge which are delivered to BAWSCA.
6. Payments directed to the Wholesale Revenue Coverage Reserve.
7. Prepayments of certain capital and revenues payment.
The Wholesale Customers will receive a proportional benefit from funds received by the SFPUC from (a) governmental grants, rebates, reimbursements or other subventions, (b) private-sector grants for Regional capital or operating purposes of the Water Enter prise and the Water-Only and Water-related portion of Joint Hetch Hetchy Water Enterprise expenses, or (c) a SFPUC use of taxable bonds.
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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 t he 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 Reta il and Wholesale Customers and incorporate the same percentage increase for all customers. Any emergency rate surcharge adopted by the Commission shall remain in effect only until the next-budget coordinated rate-setting cycle.
If the Commission declares a water shortage emergency under Water Code Section 350, implements the Tier 1 Shortage Plan and imposes drought rates on Retail Customers, it may concurrently adjust wholesale rates independently of coordination with the annual budget process. Those adjustments may be designed to encourage water conservation and may constitute changes to the structure of the rates. Drought Rate payments and payments of excess use charges levied in accordance with the Tier 1 Shortage Plan constitute Wholesale Customer Revenue and count towards the Wholesale Revenue Requirement. The SFPUC may use these revenues to purchase additional water for the Wholesale Customers from the State Drought Water Bank or other willing seller.
Rate Structure
The Agreement is not intended and shall not be construed to limit the Commission’s right (a) to adjust the structure of the rate schedule applicable to the Wholesale Customers (i.e., the relationship among the several charges set out therein) or (b) to add, delete, or change the various charges which make up the rate schedule, provided that neither such charges nor the structure of the rate schedule(s) applicable to the Wholesale Customers shall be arbitrary, unreasonable, or unjustly discriminatory as among said customers. The SFPUC will give careful consideration to proposals for changes in the rate schedule made jointly by the Wholesale Customers but, subject to the limitations set out above, shall retain the sole and exclusive right to determine the structure of the rate schedule.
The SFPUC may recommend, and the Commission may adopt, changes in the structure of wholesale rates at any time. However, the new rate schedule implementing these changes will become effective at the beginning of the following fiscal year.
Balancing Account
After the close of each fiscal year, the SFPUC will compute the costs allocable to the Wholesale Customers for that fiscal year based on actual costs incurred by the SFPUC and actual amounts of water used by the Wholesale Customers and the Retail Customers. That amount will be compared to the amounts billed to the Wholesale Customers for that fiscal year (including any Excess Use Charges, but excluding revenues not credited to the Wholesale Revenue Requirement). The difference will be posted to a “balancing account” as a credit to, or charge against, the Wholesale Customers. Interest shall also be posted to the balancing account calculated by multiplying the amount of the opening balance by the average net interest rate, certified by the Controller as earned in the San Francisco Treasury for the previous fiscal year on the San Francisco County Pooled Investment Account. Interest, when posted, will carry the B-18
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 pr orate 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 Coverage Reserve,” (ii) accrued interest on the amounts on deposit in the Wholesale Revenue Coverage Reserve, and (iii) an amount equal to any additional interest that would have accrued on the actual amounts previously deposited in the Wholesale Revenue Coverage Reserve assuming no withdrawals had been made therefrom.
During each fiscal year, the SFPUC will set aside and deposit that portion of revenue equal to Wholesale Revenue Coverage into a separate account that the SFPUC will establish and maintain, to be known as the “Wholesale Revenue Coverage Reserve.” Deposits into the Wholesale Revenue Coverage Reserve shall be made no less frequently than monthly. The Wholesale Revenue Coverage Reserve shall be credited with interest. The SFPUC may use amounts in the Wholesale Revenue Coverage Reserve for any lawful purpose. Any balance in the Wholesale Revenue Coverage Reserve in excess of the Wholesale Revenue Coverage amount as of the end of any fiscal year shall be applied as a credit against wholesale rates in the immediately following fiscal year unless otherwise directed 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 expl anation of how savings are expected to be achieved (e.g., increase in the SFPUC’s credit rating over the then-current level; ability to obtain credit enhancement, etc.); (3) the estimated all -in true interest cost savings; (4) a comparison of the Wholesale Revenue Requirements using the Debt Service coverage limitation and under the proposed methodology; and (5) a comparison of the respective monetary benefits expected to be received by both Retail and Wholesale Customers. The SFPUC and BAWSCA agree to meet and confer in good faith about the proposed changes.
Any increase in Debt Service coverage proposed by the SFPUC shall be commensurate with Proportional Water Use by Retail and Wholesale Customers. If the SFPUC demonstrates that an increase in Debt Service coverage will result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, BAWSCA may agree to a modification of the Wholesale Revenue Coverage requirement. If BAWSCA does not agree to a propos ed 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 B-19
finds that the increase in Debt Service coverage (1) did not and will not result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, or (2) was not commensurate with Proportional Water Use, the arbitrator may order the Wholesale Revenue Requirement to be recalculated both retrospectively and prospectively to eliminate the differential impact to Wholesale or Retail Customers.
Working Capital Requirement
The SFPUC maintains working capital in the form of unappropriated reserves for the purpose of bridging the gap between when the SFPUC incurs operating expenses required to provide service and when it receives revenues from its Retail and Wholesale Customers. The Wholesale Customers shall fund their share of working capital as part of the annual Wholesale Revenue Requirement calculation. The amount of wholesale working capital for which the Wholesale Customers will be responsible will be determined using the 60-day standard formula approach.
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, which sum will be credited to the Wholesale Capital Fund. The wholesale share of other sources of funding, where legally permi tted 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 shall 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 possesses.
Reservations of, and Limitations on, Claims
The 1984 Agreement resolved a civil action brought against San Francisco by certain of the Wholesale Customers. Plaintiffs in that action contended that they, and other Wholesale Customers that are municipalities or special districts, were “co -grantees” within the meaning of Section 8 of the Act and were entitled to certain rights, benefits and privileges by virtue of that status. San Francisco disputed those claims.
Nothing in the Agreement, or in the Individual Water Sales Contracts, shall be construed or 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, benefits 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 wa ter in excess of the Supply Assurance during the Term and also includes such a surcharge in the price of such water.
5. Claims by Wholesale Customers (other than San 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 exi sting 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 endin g 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 SFPUC’s establishing Interim Supply Allocations or imposing Environmental Enhancement Surcharges on water use in excess of such allocations. Any Wholesale Customer may challenge such allocation when imposed and/or such surcharges if and when levied, in any court of competent jurisdiction.
The furnishing of water in excess of the Supply Assurance by San Francisco to the Wholesale Customers shall not be deemed or construed to be a waiver by San Francisco of its claim that it has no obligation under any provision of law to supply such water to the Wholesale Customers, nor shall it constitute a dedication by San Francisco to the Wholesale Customers of such water.
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 privile ges 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, 2025 Series ABC
$__________
2025 Sub-Series A (Refunding)
(WSIP) (Green Bonds)
$__________
2025 Sub-Series B (Refunding)
(Regional Water and
Local Water)
$__________
2025 Sub-Series C (Refunding)
(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 “2025ABC Bonds”). The 2025ABC 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-Seventh Supplemental Indenture, a Forty-Eighth Supplemental Indenture and a Forty-Ninth Supplemental Indenture, each dated as of April 1, 2025, by and between the SFPUC and the Trustee (collectively, the “Indenture”).
The SFPUC covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the SFPUC for the benefit of the Holders and Beneficial Owners of the 2025ABC 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 2025ABC Bonds (including persons holding 2025ABC Bonds through nominees, depositories or other intermediaries) including, but not limited to, the power to vote or consent with respect to any 2025ABC Bonds or to dispose of ownership of any 2025ABC Bonds; or (b) is treated as the owner of any 2025ABC 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)(15) and Section (5)(a)(16), 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 i n the Rule) has been provided to the MSRB consistent with the Rule.
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“Holder” shall mean either the registered owners of the 2025ABC Bonds, or, if the 2025ABC 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 Secur ities 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 __________, 2025 , prepared in connection with the sale and offering of the 2025ABC Bonds. “Participating Underwriters” shall mean any of the original underwriters or purchasers of the 2025ABC Bonds required to comply with the Rule in connection with the offering of the 2025ABC 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 March 31 of each year, commencing with the report for Fiscal Year 2024-25 (which is due not later than March 31, 2026), 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 SF PUC 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 sh all 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 Water Enterprise 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 Statement, 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 Fiscal Year of the table in the Official Statement entitled “TABLE 20, HISTORICAL AND ADOPTED PERCENTAGE INCREASES (DECREASES) IN RETAIL WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior Fiscal Year;
(e) An update for the prior Fiscal Year of the table in the Official Statement in the section entitled “OBLIGATIONS PAYABLE FROM REVENUES – Outstanding Parity Revenue Bonds” showing all bonds of the SFPUC secured by Revenues; and (f) An update for the prior Fiscal Year of the table in the Official Statement entitled “TABLE 25, 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 2025ABC Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the 2025ABC Bonds, or other material events affecting the tax status of the 2025ABC Bonds;
7. Modifications to rights of Holders, if material;
8. Optional, unscheduled or contingent bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the 2025ABC Bonds, if material;
11. Rating changes;
E-4
12. Bankruptcy, insolvency, receivership or similar event of the SFPUC;
13. The consummation of a merger, consolidation, or acquisition involving the SFPUC or the sale of all or substantially all of the assets of the SFPUC, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than 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, if material; and
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the SFPUC, any of which reflect financial difficulties.
Note: For the purposes of the event identified in subsection (a)(12), the event 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 th e ex isting 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 the SFPUC. (b) Whenever the SFPUC obtains knowledge of the occurrence of a Listed Event in subsection (a), 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 a Listed Event described in subsection (a)(8) 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 2025ABC Bonds under the Indenture.
(c) The SFPUC intends to comply with the Listed Events described in subsection (a)(15) and subsection (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 2025ABC Bonds. If such termination occurs prior to the final maturity of the 2025ABC 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.
E-5
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the SFPUC may amend or waive this Disclosure Certificate or any provision of this Disclosure Certificate, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 3(b), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the 2025ABC 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 of the City and County of San Francisco or nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the 2025ABC 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 2025ABC 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 i n 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 narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prep ared 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 2025ABC 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 sole remedy under this Disclosure Certificate in the event of any failure of the SFPUC to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the SFPUC, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the 2025ABC Bonds, and shall create no rights in any other person or entity.
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PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ________________________________ ________
General Manager
Approved as to Form:
DA VID CHIU
CITY ATTORNEY
By: ________________________________ ________
Deputy City Attorney
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CONTINUING DISCLOSURE CERTIFICATE
EXHIBIT A
FORM OF NOTICE TO THE
MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Public Utilities Commission of the City and County of San Francisco
Name of Issue: San Francisco Water Revenue Bonds, 2025 Series ABC 2025 Sub-Series A (Refunding) (WSIP) (Green Bonds)
2025 Sub-Series B (Refunding) (Regional Water and Local Water) 2025 Sub-Series C (Refunding) (Hetch Hetchy Water)
Date of Issuance: [Closing Date]
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 [Closing Date]. 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 2025ABC Bonds or (b ) certificates representing ownership interest in or other confirmation of ownershi p interest in the 2025ABC 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 2025ABC 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 amount o f 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 securities certificates. Direct Participants include both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, a ll 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 ident ity 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 c ustomary 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 2/11/25
202954225.6
FORTY-SEVENTH 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 April 1, 2025
AUTHORIZING THE ISSUANCE OF
$[par] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2025 SERIES ABC
2025 SUB-SERIES A (REFUNDING)
(WSIP) (GREEN BONDS)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
202954225.6 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 202.01 Definitions ........................................................................................................3
PROVISIONS RELATING TO 2025 SUB-SERIES A BONDS
SECTION 203.01 Authorization and Terms of 2025 Sub-Series A Bonds ...................................4 SECTION 203.02 Terms of Redemption .......................................................................................6 SECTION 203.03 Form of 2025 Sub-Series A Bonds ...................................................................7 SECTION 203.04 Use of Depository .............................................................................................7 SECTION 203.05 Issuance of 2025 Sub-Series A Bonds ..............................................................8 SECTION 203.06 Application of Proceeds of 2025 Sub-Series A Bonds .....................................9 SECTION 203.07 2025 Sub-Series A Sinking Fund Account .....................................................10 SECTION 203.08 Establishment and Application of the 2025 Sub-Series A Rebate Fund ........12 SECTION 203.09 Tax Covenants ................................................................................................13 SECTION 203.10 Continuing Disclosure ....................................................................................14
MISCELLANEOUS
SECTION 204.01 Terms of 2025 Sub-Series A Bonds Subject to the Indenture ........................14 SECTION 204.02 Effective Date of Forty-Seventh Supplemental Indenture ..............................15 SECTION 204.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................15 SECTION 204.04 Execution in Counterparts; No Seal Required for Execution .........................15
ADDITIONAL CITY REQUIREMENTS
SECTION 205.01 Conflict of Interest ..........................................................................................15 SECTION 205.02 Proprietary or Confidential Information of the City .......................................15 SECTION 205.03 Local Business Enterprise Utilization; Liquidated Damages .........................16 SECTION 205.04 Nondiscrimination; Penalties ..........................................................................17 SECTION 205.05 MacBride Principles—Northern Ireland ..........................................................18 SECTION 205.06 Tropical Hardwood and Virgin Redwood Ban ................................................18 SECTION 205.07 Drug-Free Workplace Policy ..........................................................................18 SECTION 205.08 Resource Conservation.....................................................................................18 SECTION 205.09 Compliance with Americans with Disabilities Act ........................................18 SECTION 205.10 Sunshine Ordinance ........................................................................................18 SECTION 205.11 Limitations on Contributions ..........................................................................19 202954225.6 ii
SECTION 205.12 Requiring Minimum Compensation for Covered Employees ........................19 SECTION 205.13 Requiring Health Benefits for Covered Employees .......................................21 SECTION 205.14 Prohibition on Political Activity with City Funds ..........................................22 SECTION 205.15 Preservative-treated Wood Containing Arsenic .............................................22 SECTION 205.16 Compliance with Laws ...................................................................................23 SECTION 205.17 Protection of Private Information ...................................................................23 SECTION 205.18 Food Service Waste Reduction Requirements ...............................................23 SECTION 205.19 Submitting False Claims; Monetary Penalties ................................................23 SECTION 205.20 Sugar-Sweetened Beverage Prohibition .........................................................24 SECTION 205.21 Agreement Made in California; Venue ............................................................24 SECTION 205.22 Ownership of Results ......................................................................................24 SECTION 205.23 Audit and Inspection of Records ....................................................................24 SECTION 205.24 Subcontracting ................................................................................................24 SECTION 205.25 Assignment .....................................................................................................24 SECTION 205.26 Non-Waiver of Rights .....................................................................................25 SECTION 205.27 City a Third Party Beneficiary ........................................................................25 Exhibit AX – Form of 2025 Sub-Series A Bond
202954225.6
FORTY-SEVENTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[par] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2025 SERIES ABC
2025 Sub-Series A (Refunding)
(WSIP) (Green Bonds)
This Forty-Seventh Supplemental Indenture, dated as of April 1, 2025 (this “Forty-Seventh 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-Seventh 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, 2025, 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 , the 2020 Refunding Series EFGH Bonds, the 2023 Series AB Bonds and the 2023 Refunding Series CD Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty -Seventh Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2025 Series ABC, 2025 Sub-Series A (Refunding) (WSIP) (Green Bonds)” (the “2025 Sub-Series A Bonds”) in the aggregate original principal amount of $[par] to purchase and cancel or defease and refund a portion of the Commission’s outstanding San Francisco Water Revenue Bonds, 202954225.6 2
[details to be confirmed] [(a) 2015 Series A (Refunding); (b) 2017 Series ABC Bonds, 2017 Sub- Series A Bonds (WSIP) (Green Bonds); (c) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds); and (d) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds)];
WHEREAS, simultaneous with the issuance of the 2025 Sub- Series A Bonds , the Commission has determined to issue pursuant to a Forty -Eighth Supplemental Indenture a sub- series of Bonds designated “ San Francisco Water Revenue Bonds, 2025 Series ABC , 2025 Sub- Series B (Refunding) (Regional Water and Local Water )” (the “2025 Sub-Series B Bonds”) and pursuant to a Forty-Ninth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2025 Series ABC, 2025 Sub-Series C (Refunding) (Hetch Hetchy Water)” (the “2025 Sub- Series C Bonds” and, together with the 2025 Sub- Series A Bonds and the 2025 Sub-Series B Bonds , the “2025 Series ABC Bonds”) in the aggregate principal amount of $__________ to purchase and cancel or defease and refund a portion of the Commission’s outstanding San Francisco Water Revenue Bonds, [details to be confirmed] [(a) 2017 Series ABC Bonds, 2017 Sub -Series B Bonds (Non-WSIP); (b) 2017 Series ABC Bonds, 2017 Sub-Series C Bonds (Hetch Hetchy); (c) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series B Bonds (Refunding – Federally Taxable) (Hetch Hetchy) ; (d) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series C Bonds (Refunding – Federally Taxable) (Local Water Main) ; (e) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series F Bonds (Refunding – Federally Taxable) (Non-WSIP); (f) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series G Bonds (Ref unding – Federally Taxable) (Local Water); and (g) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water)]; WHEREAS, the 2025 Series ABC 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 2025 Series ABC Bonds; WHEREAS, in order to provide for the issuance of the 2025 Sub- Series A Bonds , to establish and declare the terms and conditions upon which the 2025 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 -Seventh 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-Seventh 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-Seventh Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
202954225.6 3
DEFINITIONS
SECTION 202.01 Definitions. The terms defined in this section shall, for all purposes of this Forty-Seventh 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) sha ll have the meanings specified therein.
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 2025 Sub-Series A Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “Escrow Agreement” means that certain Escrow Agreement, dated as of April 1, 2025, by and between the Commission and the Escrow Agent.
Final Notice of Acceptance
The term “Final Notice of Acceptance” means the Final Notice of Acceptance relating to the Invitation to Offer Bonds for Purchase made by the Commission dated [April 3, 2025].
Purchased Bonds
The term “Purchased Bonds” means the $___________ in outstanding aggregate principal amount of the Commission’s [ San Francisco Water Revenue Bonds, 2016 Series AB, 2016 Sub- Series A Bonds (Refunding), San Francisco Water Revenue Bonds, 2017 Series DEFG, 2017 Sub- Series D Bonds (Refunding) (Green Bonds), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series B Bonds ( Refunding – Federally Taxable) (Hetch Hetchy), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series C Bonds (Refunding – Federally Taxable) (Local Water Main) , San Francisco Water Revenue Bonds, 2020 Series ABCD, 2020 Sub- Series B Bonds (Regional Water), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series F Bonds (Refunding – Federally Taxable) (Non-WSIP), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series G Bonds (Refunding – Federally Taxable) (Local Water), and San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water) ], as more particularly identified and accepted for purchase in the Final Notice of Acceptance. 202954225.6 4
PROVISIONS RELATING TO 2025 SUB-SERIES A BONDS
SECTION 203.01 Authorization and Terms of 2025 Sub-Series A Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[par] 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 Francisco Water Revenue Bonds, 2025 Series ABC, 2025 Sub-Series A (Refunding) (WSIP) (Green Bonds) ” (the “2025 Sub-Series A Bonds”). The aggregate principal amount of 2025 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- Seventh Supplemental Indenture shall be $[par]. The 2025 Sub-Series A Bonds shall be of the tenor known as Current Interest Bonds.
The 2025 Sub-Series A Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2025 Sub- Series A Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2025 Sub-Series A Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2025 Sub- Series A Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2025 Sub- Series A Bonds , or any portion thereof, may not thereafter be transferred except as set forth in Section 203.04 herein. (b) The 2025 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, 2025, 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:
202954225.6 5
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
* Term Bonds
[The 2025 Sub-Series A Bonds maturing on November 1, 20__ [and November __, 20__] are hereby designated as Term Bonds.]
(c) Subject to Section 203.04 hereof, the principal of and premium, if any, on the 2025 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 2025 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 2025 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 2025 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 202954225.6 6
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 [ October] 15, 2025, in which event it shall bear interest from [ April __], 2025, provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2025 Sub-Series A Bonds shall be subject to redemption as provided in Section 203.02.
(f) The Trustee shall assign each 2025 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.
(g) There shall be no Required Reserve for the 2025 Sub-Series A Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2025 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 2025 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 2025 S ub-Series A Bonds in the manner and form provided in this Forty-Seventh Supplemental Indenture.
SECTION 203.02 Terms of Redemption.
(a) Optional Redemption. The 2025 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 2025 Sub-Series A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(b) [if applicable] Mandatory Sinking Fund Redemption. (i) The 2025 Sub- Series A Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2025 Sub- Series A Bonds Sinking Fund Account (described in Section 203.07), on each November 1 on and after November 1, 20__, by lot within any such maturity if less than all of the 2025 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 2025 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 2025 Sub- Series A Bonds to be redeemed in each such year set forth in Section 203.07 below (such schedule of principal amounts subject to adjustment as 202954225.6 7
directed by the Commission in the event of optional redemption of any portion of such 2025 Sub- Series A Bonds prior to maturity pursuant to Section 203.02(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 2025 Sub-Series A Bonds.
SECTION 203.03 Form of 2025 Sub-Series A Bonds. The 2025 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 AX to this Forty -Seventh Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Seventh Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2025 Sub-Series A Bonds does not require the seal of the Commission.
SECTION 203.04 Use of Depository.
(a) The 2025 Sub-Series A Bonds shall be initially registered as provided in Section 203.01 hereof. Registered ownership of the 2025 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 2025 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 2025 Sub-Series A Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2025 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. 202954225.6 8
(c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2025 Sub-Series A Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2025 Sub-Series A Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 203.01 hereof, provided that the Trustee shall not be required to deliver such new 2025 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 2025 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 2025 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 2025 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 t ransmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2025 Sub- Series A Bonds . Neither the Com mission 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 2025 Sub-Series A Bonds , and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2025 Sub-Series A Bonds.
(f) Notwithstanding any other provision of this Forty-Seventh Supplemental Indenture and so long as all Outstanding 2025 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 2025 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 2025 Sub- Series A Bonds , the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 203.05 Issuance of 2025 Sub-Series A Bonds.
(a) At any time after the execution of this Forty -Seventh Supplemental Indenture, the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2025 Sub-Series A Bonds in the aggregate principal amount of $[par] to the initial purchasers thereof specified in such Written Request or Certificate. 202954225.6 9
SECTION 203.06 Application of Proceeds of 2025 Sub-Series A Bonds. (a) The original purchaser of the 2025 Sub- Series A Bonds will pay and deliver the purchase price of the 2025 Sub-Series A Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $__________ to the Trustee, and the Trustee shall deposit and transfer this amount, as follows:
1. The Trustee shall deposit $__________ in a separate fund to be known as the “2025 Series ABC Costs of Issuance Fund, ” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall deposit $________ in a separate fund to be known as the “2025 Series ABC Purchased Bonds Fund,” which the Trustee hereby agrees to establish and maintain.
3. The Trustee shall transfer the remainder of such sum, in the amount of $__________, to the Escrow Agent to be applied pursuant to the terms of the Escrow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2025 Series ABC 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 attac hment 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.
202954225.6 10
When all costs of issuance of the 2025 Series ABC 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 2025 Series ABC Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty -Eighth Supplemental Indenture and the Forty-Ninth 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 2025 Series ABC 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 2025 Series ABC Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2025 Series ABC Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on [ October __, 202 5], whichever is earlier, shall be transferred by the Trustee to the Commission and the 2025 Series ABC Costs of Issuance Fund shall be closed.
On the delivery date of the 2025 Sub- Series A Bonds , the monies set aside and placed within the 2025 Series ABC Purchased Bonds Fund pursuant to this Forty-Seventh Supplemental Indenture, the Forty-Eighth Supplemental Indenture and the Forty-Ninth Supplemental Indenture shall be applied, together with other amounts, solely to payment of the purchase price of and accrued interest on the Purchased Bonds. The Trustee shall wire the purchase price of and accrued interest on the Purchased Bonds to DTC for credi t to the Purchased Bonds, all as set forth in a Written Request of the Commission delivered concurrently with delivery of the 2025 Series ABC Bonds, through the Automated Tender Option Program (“ATOP”). The Commission directs the Trustee to cancel such Purchased Bonds. At such time as the Purchased Bonds have been purchased and cancelled, or at such time as no funds remain in the 2025 Series ABC Purchased Bonds Fund, the Trustee may close and terminate the 2025 Series ABC Purchased Bonds Fund.
SECTION 203.07 2025 Sub-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 2025 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 2025 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 2025 Sub- Series A Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 203.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2025 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 “2025 Sub-Series A Minimum Sinking Fund Account Payment”):
202954225.6 11
Redemption Date
(November 1) Principal Amount
20__†
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2025 Sub- Series A Sinking Fund Account , the Commission may satisfy, in whole or in part, the 2025 Sub-Series A Minimum Sinking Fund Account Payment and the redemption of 2025 Sub- Series A Term Bonds therefrom by depositing with the Trustee 2025 Sub-Series A Term Bonds for cancellation prior to the Trustee’s selection of the 2025 Sub- Series A Term Bonds for redemption.
(d) In lieu of the redemption of 2025 Sub- Series A Term Bonds pursuant to Section 203.02(b) hereof, at the Written Request of the Commission, moneys in the 2025 Sub- Series A Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2025 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 2025 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 2025 Sub- Series A Sinking Fund Account on each September 15, beginning on September 15, 2025 and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2025 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 2025 Sub-Series A Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 203.02(b) and Section 203.07(b) hereof; and (ii) the Trustee shall during each 12 month period beginning with the 12-month period ending on November 1, 20__, purchase or call and redeem (as herein provided) an aggregate amount of 2025 Sub-Series A Term Bonds equal to at least the amount of Bond Obligation of the 2025 Sub-Series A Term Bonds identified in Section 203.07(b) above for such 12-month period reduced by the principal amount of 2025 Sub-Series A Term Bonds deposited by the Commission with the Trustee as described in Section 203.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2025 Sub-Series A Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2025 Sub-Series A Term Bonds identified in Section 203.07(b) above for such 12 - month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2025 Sub-Series A Minimum Sinking Account Payment amounts stated in Section 203.07(b) above shall be deemed to have been reduced on a 202954225.6 12
Proportionate Basis, and further except that moneys in the 2025 Sub-Series A Sinking Fund Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2025 Sub-Series A Term Bonds at the final maturity thereof.
The Commission hereby covenants and agrees with the Owners of the 2025 Sub- Series A Bonds to call and redeem 2025 Sub- Series A Bonds from the 2025 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 203.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2025 Sub-Series A Term Bonds or as otherwise hereinabove provided).
SECTION 203.08 Establishment and Application of the 2025 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 “ 2025 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 2025 Sub- Series A Bonds , dated the date of issuance of the 2025 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 203. 09 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 203.09 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.
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. (c) 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 202954225.6 13
Tax Certificate. Moneys shall not be transferred from the Rebate Fund except as provided in paragraph (e) below.
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 2025 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.
(d) 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 203.09 hereof and the Tax Certificate shall survive the defeasance or payment in full of the 2025 Sub-Series A Bonds.
SECTION 203.09 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 2025 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 2025 Sub-Series A Bonds or any other funds of the Commission, or take or omit to take any action that would cause the 2025 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 2025 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 2025 Sub-Series A Bonds from time to time. This covenant shall survive payment in full or defeasance of the 2025 Sub-Series A Bonds. The Commission specifically covenants to pay or cause to be paid to the United State s, at the times and in the amounts determined under Section 203.08 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 203.08 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 203.08 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 2025 Sub-Series A Bonds under Section 103 of the Code, 202954225.6 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 2025 Sub-Series A Bonds are not so used as to cause the 2025 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 2025 Sub- Series A Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
SECTION 203.10 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 2025 Sub-Series A Bonds, executed and delivered by the Commission in connection with the issuance of the 2025 Sub-Series A Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2025 Series ABC Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2025 Series ABC Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2025 Series ABC 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 Sec tion, and the sole remedy in the eve nt of any failure of the Commission to comply with the 2025 Series ABC Continuing Disclosure Certificate shall be an action to compel performance.
MISCELLANEOUS
SECTION 204.01 Terms of 2025 Sub-Series A Bonds Subject to the Indenture.
Except as expressly provided in this Forty -Seventh Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty-Seventh Supplemental Indenture, and to the 2025 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-Seventh Supplemental Indenture.
This Forty-Seventh Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in the Forty -Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVI I 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. 202954225.6 15
This Forty-Seventh 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. The Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof , as supplemented and amended hereby.
SECTION 204.02 Effective Date of Forty -Seventh Supplemental Indenture . This Forty-Seventh Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 204.03 Holder Consents to Amendments in Forty- Third Supplemental Indenture. By acceptance of a 2025 Sub- Series A Bond, the holder thereof consents to the amendments described in Article CLXXXVII in the Forty-Third Supplemental Indenture.
SECTION 204.04 Execution in Counterparts; No Seal Required for Execution. This Forty-Seventh 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-Seventh 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 205.01 Conflict of Interest . Through its execution of this Forty -Seventh 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 become s aware of any such fact during the term of this Forty-Seventh Supplemental Indenture.
SECTION 205.02 Proprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty -Seventh 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 -Seventh Supplemental Indenture. The Trustee shall exe rcise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data. 202954225.6 16
SECTION 205.03 Local 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 -Seventh Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty -Seventh 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-Seventh Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty- Seventh Supplemental Indenture, to exercise any of the remedies provided for under this Forty- Seventh Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Seventh 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) 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-Seventh 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 -Seventh Supplemental Indenture, or 10% of the total amount of this Forty -Seventh 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-Seventh 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 - Seventh Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
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SECTION 205.04 Nondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty -Seventh 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, facilit ies, 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, na tional origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) 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 wit h such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Seventh Supplemental Indenture.
(c) Nondiscrimination in Benefits
The Trustee does not as of the date of this Forty-Seventh Supplemental Indenture and will not during the term of this Forty-Seventh 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, m embership 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) Condition to Contract
As a condition to this Forty-Seventh 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 -Seventh 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-Seventh Supplemental Indenture under such Chapters, 202954225.6 18
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-Seventh Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 205.05 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 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 -Seventh Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 205.06 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 205.07 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-Seventh Supplemental Indenture.
SECTION 205.08 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-Seventh Supplemental Indenture.
SECTION 205.09 Compliance 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 s hall provide the services specified in this Forty-Seventh 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 discr iminate against disabled persons in the provision of services, benefits or activities provided under this Forty -Seventh 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-Seventh Supplemental Indenture.
SECTION 205.10 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 data submitted for qualification for a contract or other benefit until and unless that per son or 202954225.6 19
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 205.11 Limitations on Contributions . Through execution of this Forty - Seventh 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 ow nership 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 205.12 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-Seventh 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 -Seventh Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty - Seventh Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
202954225.6 20
(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 -Seventh Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P.
(g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty-Seventh Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Seventh 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-Seventh Supplemental Indenture . Nothing in t his Forty-Seventh Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
202954225.6 21
SECTION 205.13 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 -Seventh 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-Seventh 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-Seventh 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- Seventh 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 per iod, 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 S ubcontractor 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. 202954225.6 22
(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-Seventh 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 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 -Seventh 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 205.14 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 -Seventh 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 -Seventh 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 205.15 Preservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Seventh 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 combinati on, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The 202954225.6 23
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 205.16 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-Seventh 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 205.17 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 Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty-Seventh 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-Seventh 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 205.18 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 -Seventh Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty-Seventh Supplemental Indenture. By entering into this Forty-Seventh 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) liquida ted 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 -Seventh 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 205.19 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 the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false cl aim 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; 202954225.6 24
(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.
SECTION 205.20 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 -Seventh Supplemental Indenture.
SECTION 205.21 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 205.22 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-Seventh 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 205.23 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-Seventh 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 ma tters covered by this Forty -Seventh Supplemental Indenture, whether funded i n whole or in part under this Forty -Seventh 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-Seventh 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 -Seventh Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 205.24 Subcontracting. The Trustee is prohibited from subcontracting this Forty-Seventh 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 -Seventh 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 205.25 Assignment. The services to be performed by Trustee are personal in character and neither this Forty -Seventh Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by written 202954225.6 25
instrument executed and approved in the same manner as this Forty -Seventh Supplemental Indenture.
SECTION 205.26 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.
SECTION 205.27 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-Seventh Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
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202954225.6 S-1
IN WITNESS WHEREOF, the parties hereto have executed this Forty -Seventh 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: ________________________________
Katherine T. Ortega, Deputy City
Attorney
202954225.6 AX-1
EXHIBIT AX
FORM OF 2025 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
2025 SERIES ABC
2025 SUB-SERIES A (REFUNDING)
(WSIP) (GREEN BONDS)
Dated Date Interest Rate Maturity Date CUSIP No.
April __, 2025 % 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 hereinaft er 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 202954225.6 AX-2
[October]15, 2025, in which event it shall bear interest from [April __], 2025; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on t he 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, 2025 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 owner hereo f 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 “ 2025 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-Seventh Supplemental Indenture, dated as of [April] 1, 2025, between the Trustee and the Commission, authorizing the issuance of the 2025 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.
202954225.6 AX-3
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
The 2025 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 2025 Sub-Series A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
[The 2025 Sub-Series A Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2025 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 20__ 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 2025 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 2025 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 2025 Sub-Series A Term Bonds prior to maturity pursuant to the Indenture):] 202954225.6 AX-4
Redemption Date
(November 1) Principal Amount
$
20__†
† Maturity
The 2025 Sub-Series A Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2025 Sub-Series A Bonds may be exchanged for a like aggregate principal amount of 2025 Sub-Series A Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
202954225.6 AX-5
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 [April __], 2025.
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
202954225.6 AX-6
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2025 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: _________ __, 20__
By: ______________________________________
Authorized Officer
202954225.6 AX-7
[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 2/11/25
202954244.6
FORTY-EIGHTH 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 April 1, 2025
AUTHORIZING THE ISSUANCE OF
$[par] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2025 SERIES ABC
2025 SUB-SERIES B (REFUNDING)
(REGIONAL WATER AND LOCAL WATER)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
202954244.6 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 206.01 Definitions ........................................................................................................3
PROVISIONS RELATING TO 2025 SUB-SERIES B BONDS
SECTION 207.01 Authorization and Terms of 2025 Sub-Series B Bonds ....................................4 SECTION 207.02 Terms of Redemption .......................................................................................5 SECTION 207.03 Form of 2025 Sub-Series B Bonds ...................................................................6 SECTION 207.04 Use of Depository .............................................................................................6 SECTION 207.05 Issuance of 2025 Sub-Series B Bonds ..............................................................8 SECTION 207.06 Application of Proceeds of 2025 Sub-Series B Bonds .....................................8 SECTION 207.07 2025 Sub-Series B Sinking Fund Account .......................................................9 SECTION 207.08 Establishment and Application of the 2025 Sub-Series B Rebate Fund ........11 SECTION 207.09 Tax Covenants ................................................................................................12 SECTION 207.10 Continuing Disclosure ....................................................................................13
MISCELLANEOUS
SECTION 208.01 Terms of 2025 Sub-Series B Bonds Subject to the Indenture ........................14 SECTION 208.02 Effective Date of Forty-Eighth Supplemental Indenture ................................14 SECTION 208.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................14 SECTION 208.04 Execution in Counterparts; No Seal Required for Execution .........................14
ADDITIONAL CITY REQUIREMENTS
SECTION 209.01 Conflict of Interest ..........................................................................................15 SECTION 209.02 Proprietary or Confidential Information of the City .......................................15 SECTION 209.03 Local Business Enterprise Utilization; Liquidated Damages .........................15 SECTION 209.04 Nondiscrimination; Penalties ..........................................................................16 SECTION 209.05 MacBride Principles—Northern Ireland ..........................................................17 SECTION 209.06 Tropical Hardwood and Virgin Redwood Ban ................................................17 SECTION 209.07 Drug-Free Workplace Policy ..........................................................................17 SECTION 209.08 Resource Conservation.....................................................................................17 SECTION 209.09 Compliance with Americans with Disabilities Act ........................................18 SECTION 209.10 Sunshine Ordinance ........................................................................................18 SECTION 209.11 Limitations on Contributions ..........................................................................18 202954244.6 ii
SECTION 209.12 Requiring Minimum Compensation for Covered Employees ........................18 SECTION 209.13 Requiring Health Benefits for Covered Employees .......................................20 SECTION 209.14 Prohibition on Political Activity with City Funds ..........................................21 SECTION 209.15 Preservative-treated Wood Containing Arsenic .............................................22 SECTION 209.16 Compliance with Laws ...................................................................................22 SECTION 209.17 Protection of Private Information ...................................................................22 SECTION 209.18 Food Service Waste Reduction Requirements ...............................................22 SECTION 209.19 Submitting False Claims; Monetary Penalties ................................................23 SECTION 209.20 Sugar-Sweetened Beverage Prohibition .........................................................23 SECTION 209.21 Agreement Made in California; Venue ............................................................23 SECTION 209.22 Ownership of Results ......................................................................................23 SECTION 209.23 Audit and Inspection of Records ....................................................................23 SECTION 209.24 Subcontracting ................................................................................................24 SECTION 209.25 Assignment .....................................................................................................24 SECTION 209.26 Non-Waiver of Rights .....................................................................................24 SECTION 209.27 City a Third Party Beneficiary ........................................................................24 Exhibit AY – Form of 2025 Sub-Series B Bond
202954244.6
FORTY-EIGHTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[par] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2025 Series ABC
2025 Sub-Series B (Refunding)
(Regional Water and Local Water)
This Forty-Eighth Supplemental Indenture, dated as of April 1, 2025 (this “Forty-Eighth 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-Eighth 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, 2025, 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 , the 2020 Refunding Series EFGH Bonds, the 2023 Series AB Bonds and the 2023 Refunding Series CD Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty -Eighth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2025 Series ABC, 2025 Sub-Series B (Refunding) (Regional Water and Local Water)” (the “2025 Sub-Series B Bonds”) in the aggregate original principal amount of $[par] to purchase and cancel or defease and refund a portion of the Commission’s outstanding San Francisco Water Revenue 202954244.6 2
Bonds, [details to be confirmed] [(a) 2017 Series ABC Bonds, 2017 Sub - Series B Bonds (Non- WSIP); (b) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series C Bonds (Refunding – Federally Taxable) (Local Water Main) ; (c) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series F Bonds (Refunding – Federally Taxable) (Non-WSIP); and (d) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series G Bonds (Refunding – Federally Taxable) (Local Water)];
WHEREAS, simultaneous with the issuance of the 2025 Sub- Series B Bonds, the Commission has determined to issue pursuant to a Forty- Seventh Supplemental Indenture a sub- series of Bonds designated “ San Francisco Water Revenue Bonds, 2025 Series ABC , 2025 Sub- Series A (Refunding) (WSIP) (Green Bonds)” (the “2025 Sub-Series A Bonds”) and pursuant to a Forty-Ninth Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2025 Series ABC , 2025 Sub-Series C (Refunding) (Hetch Hetchy Water)” (the “2025 Sub-Series C Bonds” and, together with the 2025 Sub- Series A Bonds and the 2025 Sub- Series B Bonds, the “2025 Series ABC Bonds”) in the aggregate principal amount of $__________ to purchase and cancel or defease and refund a portion of the Commission’s outstanding San Francisco Water Revenue Bonds, [ details to be confirmed ] [(a) 2015 Series A (Refunding); (b) 2017 Series ABC Bonds, 2017 Sub-Series A Bonds (WSIP) (Green Bonds); (c) 2017 Series ABC Bonds, 2017 Sub-Series C Bonds (Hetch Hetchy); (d) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds); (e) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series B Bonds (Refunding – Federally Taxable) (Hetch Hetchy); (f) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds) ; and (g) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water)];
WHEREAS, the 2025 Series ABC 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 2025 Series ABC Bonds; WHEREAS, in order to provide for the issuance of the 2025 Sub- Series B Bonds, to establish and declare the terms and conditions upon which the 2025 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 -Eighth 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-Eighth 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-Eighth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
202954244.6 3
DEFINITIONS
SECTION 206.01 Definitions. The terms defined in this section shall, for all purposes of this Forty -Eighth 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.
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 2025 Sub-Series B Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “Escrow Agreement” means that certain Escrow Agreement, dated as of April 1, 2025, by and between the Commission and the Escrow Agent.
Final Notice of Acceptance
The term “Final Notice of Acceptance” means the Final Notice of Acceptance relating to the Invitation to Offer Bonds for Purchase made by the Commission dated [April 3, 2025].
Purchased Bonds
The term “Purchased Bonds” means the $___________ in outstanding aggregate principal amount of the Commission’s [ San Francisco Water Revenue Bonds, 2016 Series AB, 2016 Sub- Series A Bonds (Refunding), San Francisco Water Revenue Bonds, 2017 Series DEFG, 2017 Sub- Series D Bonds (Refunding) (Green Bonds), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series B Bonds ( Refunding – Federally Taxable) (Hetch Hetchy), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series C Bonds (Refunding – Federally Taxable) (Local Water Main), San Francisco Water Revenue Bonds, 2020 Series ABCD, 2020 Sub- Series B Bonds (Regional Water), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series F Bonds (Refunding – Federally Taxable) (Non-WSIP), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series G Bonds (Refunding – Federally Taxable) (Local Water), and San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water) ], as more particularly identified and accepted for purchase in the Final Notice of Acceptance. 202954244.6 4
PROVISIONS RELATING TO 2025 Sub-Series B BONDS
SECTION 207.01 Authorization and Terms of 2025 Sub- Series B Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[par] 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 Francisco Water Revenue Bonds, 2025 Series ABC, 2025 Sub-Series B (Refunding) (Regional Water and Local Water)” (the “2025 Sub- Series B Bonds”). The aggregate principal amount of 2025 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-Eighth Supplemental Indenture shall be $[par]. The 2025 Sub- Series B Bonds shall be of the tenor known as Current Interest Bonds.
The 2025 Sub-Series B Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2025 Sub-Series B Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2025 Sub-Series B Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2025 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 2025 Sub- Series B Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 207.04 herein. (b) The 2025 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, 2025, 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:
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
* Term Bonds
[The 2025 Sub-Series B Bonds maturing on November 1, 20__ [and November 1, 20__] are hereby designated as Term Bonds.]
(c) Subject to Section 207.04 hereof, the principal of and premium, if any, on the 2025 Sub-Series B Bonds shall be payable by check or wire transfer (as described in the next paragraph) 202954244.6 5
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 2025 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 2025 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 2025 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 [ October] 15, 2025, in which event it shall bear interest from [ April __], 2025; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2025 Sub-Series B Bonds shall be subject to redemption as provided in Section 207.02.
(f) The Trustee shall assign each 2025 Sub-Series B Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection.
(g) There shall be no Required Reserve for the 2025 Sub-Series B Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2025 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 2025 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 2025 S ub-Series B Bonds in the manner and form provided in this Forty-Eighth Supplemental Indenture.
SECTION 207.02 Terms of Redemption.
(a) Optional Redemption. The 2025 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 202954244.6 6
Commission and by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2025 Sub-Series B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(b) [if applicable] Mandatory Sinking Fund Redemption. (i) The 2025 Sub- Series B Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2025 Sub- Series B Bonds Sinking Fund Account (described in Section 207.07), on each November 1 on and after November 1, 20__, by lot within any such maturity if less than all of the 2025 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 2025 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 2025 Sub- Series B Bonds to be redeemed in each such year set forth in Section 207.07 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2025 Sub- Series B Bonds prior to maturity pursuant to Section 207.02(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 2025 Sub-Series B Bonds.
SECTION 207.03 Form of 2025 Sub-Series B Bonds. The 2025 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 AY to this Forty -Eighth Supplemental Indenture , with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Eighth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2025 Sub-Series B Bonds does not require the seal of the Commission.
SECTION 207.04 Use of Depository.
(a) The 2025 Sub-Series B Bonds shall be initially registered as provided in Section 207.01 hereof. Registered ownership of the 2025 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
202954244.6 7
(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 2025 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 2025 Sub-Series B Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2025 Sub- Series B Bonds then Outstanding, registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Written Request of the Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2025 Sub-Series B Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2025 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 207.01 hereof, provided that the Trustee shall not be required to deliver such new 2025 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 2025 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 2025 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 2025 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 t ransmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2025 Sub- Series B Bonds. Neither the Com mission 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 2025 Sub- Series B Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2025 Sub-Series B Bonds.
(f) Notwithstanding any other provision of this Forty -Eighth Supplemental Indenture and so long as all Outstanding 2025 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 pre mium, if any, and interest on the 2025 Sub- Series B Bonds by arranging for payment in such manner that funds for such payments a re properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by 202954244.6 8
the Commission and the Trustee to DTC with respect to the 2025 Sub -Series B Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 207.05 Issuance of 2025 Sub-Series B Bonds.
(a) At any time after the execution of this Forty -Eighth Supplemental Indenture , the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2025 Sub-Series B Bonds in the aggregate principal amount of $[par] to the initial purchasers thereof specified in such Written Request or Certificate.
SECTION 207.06 Application of Proceeds of 2025 Sub-Series B Bonds. (a) The original purchaser of the 2025 Sub- Series B Bonds will pay and deliver the purchase price of the 2025 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 2025 Series ABC Costs of Issuance Fund established and maintained under the Forty- Seventh Supplemental Indenture.
2. The Trustee shall deposit $________ in a separate fund to be known as the 2025 Series ABC Purchased Bonds Fund established and maintained under the Forty- Seventh Supplemental Indenture.
3. The Trustee shall transfer the remainder of such sum, in the amount of $__________, to the Escrow Agent to be applied pursuant to the terms of the Escrow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2025 Series ABC 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 202954244.6 9
(z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition , which has not been released or will not be released simultaneously with the payment of such obligation.
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance of the 2025 Series ABC 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 2025 Series ABC Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty -Seventh Supplemental Indenture and the Forty- Ninth 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 2025 Series ABC 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 2025 Series ABC Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2025 Series ABC Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on [ October __, 202 5], whichever is earlier, shall be transferred by the Trustee to the Commission and the 2025 Series ABC Costs of Issuance Fund shall be closed.
On the delivery date of the 2025 Sub- Series B Bonds, the monies set aside and placed within the 2025 Series ABC Purchased Bonds Fund pursuant to this Forty -Eighth Supplemental Indenture, the Forty-Seventh Supplemental Indenture and the Forty-Ninth Supplemental Indenture shall be applied, together with other amounts, solely to payment of the purchase price of and accrued interest on the Purchased Bonds. The Trustee shall wire the purchase price of and accrued interest on the Purchased Bonds to DTC for credi t to the Purchased Bonds, all as set forth in a Written Request of the Commission delivered concurrently with delivery of the 2025 Series ABC Bonds, through the Automated Tender Option Program (“ATOP”). The Commission directs the Trustee to cancel such Purchased Bonds. At such time as the Purchased Bonds have been purchased and cancelled, or at such time as no funds remain in the 2025 Series ABC Purchased Bonds Fund, the Trustee may close and terminate the 2025 Series ABC Purchased Bonds Fund.
SECTION 207.07 2025 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 2025 Sub- Series B Sinking Fund Account, which the 202954244.6 10
Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2025 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 2025 Sub- Series B Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 207.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2025 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 “2025 Sub-Series B Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
20__†
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2025 Sub- Series B Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2025 Sub-Series B Minimum Sinking Fund Account Payment and the redemption of 2025 Sub- Series B Term Bonds therefrom by depositing with the Trustee 2025 Sub-Series B Term Bonds for cancellation prior to the Trustee’s selection of the 2025 Sub- Series B Term Bonds for redemption.
(d) In lieu of the redemption of 2025 Sub- Series B Term Bonds pursuant to Section 207.02(b) hereof, at the Written Request of the Commission, moneys in the 2025 Sub- Series B Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2025 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 2025 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 2025 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 2025 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 202954244.6 11
redeeming the 2025 Sub-Series B Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 207.02(b) and Section 207.07(b) hereof; and (ii) the Trustee shall during each 12 month period beginning with the 12-month period ending on November 1, 20__, purchase or call and redeem (as herein provided) an aggregate amount of 2025 Sub-Series B Term Bonds equal to at least the amount of Bond Obligation of the 2025 Sub-Series B Term Bonds identified in Section 207.07(b) above for such 12-month period reduced by the principal amount of 2025 Sub-Series B Term Bonds deposited by the Commission with the Trustee as described in Section 207.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2025 Sub-Series B Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2025 Sub-Series B Term Bonds identified in Section 207.07(b) above for such 12- month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2025 Sub-Series B Minimum Sinking Account Payment amounts stated in Section 207.07(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2025 Sub-Series B Sinking Fund Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2025 Sub-Series B Term Bonds at the final maturity thereof.
The Commission hereby covenants and agrees with the Owners of the 2025 Sub- Series B Bonds to call and redeem 2025 Sub- Series B Bonds from the 2025 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 207.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2025 Sub-Series B Term Bonds or as otherwise hereinabove provided).
SECTION 207.08 Establishment and Application of the 2025 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 “ 2025 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 2025 Sub- Series B Bonds, dated the date of issuance of the 2025 Sub- Series B Bonds (f or 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 207. 09 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 202954244.6 12
Certificate. The Trustee shall not be required to take any actions under this Section, Section 207.09 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.
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. (c) 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 Tax Certificate. Moneys shall not be transferred from the Rebate Fund except as provided in paragraph (e) below.
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 2025 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.
(d) 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 207.09 hereof and the Tax Certificate shall survive the defeasance or payment in full of the 2025 Sub-Series B Bonds.
SECTION 207.09 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 2025 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 2025 Sub-Series B Bonds or any other funds of the Commission, or take or omit to take any action that would cause the 2025 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 2025 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 a s required by such instructions.
202954244.6 13
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 2025 Sub-Series B Bonds from time to time. This covenant shall survive payment in full or defeasance of the 2025 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 207.08 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 207.08 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 207.08 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 2025 Sub-Series B Bonds under Section 103 of the Code, 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 2025 Sub-Series B Bonds are not so used as to cause the 2025 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 2025 Sub- Series B Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
SECTION 207.10 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 2025 Sub-Series B Bonds, executed and delivered by the Commission in connection with the issuance of the 2025 Sub-Series B Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2025 Series ABC Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2025 Series ABC Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2025 Series ABC 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 Sec tion, and the sole remedy in the eve nt of any failure of the Commission to comply with the 2025 Series ABC Continuing Disclosure Certificate shall be an action to compel performance.
202954244.6 14
MISCELLANEOUS
SECTION 208.01 Terms of 2025 Sub-Series B Bonds Subject to the Indenture.
Except as expressly provided in this Forty-Eighth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty-Eighth Supplemental Indenture, and to the 2025 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-Eighth Supplemental Indenture.
This Forty-Eighth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in the Forty -Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty- Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture.
This Forty-Eighth 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. The Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof , as supplemented and amended hereby.
SECTION 208.02 Effective Date of Forty-Eighth Supplemental Indenture. This Forty- Eighth Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 208.03 Holder Consents to Amendments in Forty- Third Supplemental Indenture. By acceptance of a 2025 Sub- Series B Bond, the holder thereof consents to the amendments described in Article CLXXXVII in the Forty-Third Supplemental Indenture.
SECTION 208.04 Execution in Counterparts; No Seal Required for Execution. This Forty-Eighth 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-Eighth 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.
202954244.6 15
SECTION 209.01 Conflict of Interest . Through its execution of this Forty -Eighth 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-Eighth Supplemental Indenture.
SECTION 209.02 Proprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty -Eighth 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 partie s 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-Eighth 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 209.03 Local 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 -Eighth Supplemental Indenture. Such provisions of the LBE Ordinanc e are incorporated by reference and made a part of this Forty-Eighth 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-Eighth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty -Eighth Supplemental Indenture, to exercise any of the remedies provided for under this Forty-Eighth Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Eighth 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) 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-Eighth 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 -Eighth Supplemental Indenture, or 10% of the total amount of this Forty -Eighth Supplemental Indenture , or $1,000, whichever is greatest. The Director of the City’s Contracts Monitoring Division or any other 202954244.6 16
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-Eighth 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-Eighth Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 209.04 Nondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty-Eighth 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, facilit ies, 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, nat ional origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) 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 wit h such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Eighth Supplemental Indenture.
(c) Nondiscrimination in Benefits
The Trustee does not as of the date of this Forty -Eighth Supplemental Indenture and will not during the term of this Forty -Eighth 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, m embership 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 202954244.6 17
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 -Eighth 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-Eighth 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-Eighth 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-Eighth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 209.05 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 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 -Eighth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 209.06 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 209.07 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-Eighth Supplemental Indenture.
SECTION 209.08 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-Eighth Supplemental Indenture.
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SECTION 209.09 Compliance 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 s hall provide the services specified in this Forty -Eighth 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 discri minate against disabled persons in the provision of services, benefits or activities provided under this Forty -Eighth 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-Eighth Supplemental Indenture.
SECTION 209.10 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 data submitted for qualification for a contract or other benefit until and unless that per son 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 209.11 Limitations on Contributions . Through execution of this Forty - Eighth 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 pers ons 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 209.12 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 202954244.6 19
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 -Eighth 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 -Eighth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty-Eighth 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.
(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-Eighth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P. (g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Eighth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Eighth 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 202954244.6 20
remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Eighth Supplemental Indenture. Nothing in this Forty-Eighth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 209.13 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-Eighth 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 -Eighth 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-Eighth 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- Eighth 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 perio d, 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 202954244.6 21
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-Eighth 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 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 -Eighth 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 f rom agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 209.14 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 -Eighth Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code 202954244.6 22
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 -Eighth 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 209.15 Preservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Eighth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative-treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative-treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purc hasing 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 209.16 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 -Eighth 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 209.17 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 Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty -Eighth 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-Eighth 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 209.18 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-Eighth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty-Eighth Supplemental Indenture. By entering into this Forty-Eighth 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 202954244.6 23
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-Eighth 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 209.19 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 the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false cl aim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim.
A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 209.20 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 -Eighth Supplemental Indenture.
SECTION 209.21 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 209.22 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-Eighth 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 209.23 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 -Eighth 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-Eighth Supplemental Indenture, whether funded in whole or in part under this Forty-Eighth Supplemental Indenture. The Trustee shall maintain such data 202954244.6 24
and records in an accessible location and condition for a period of not less than three years after final payment under this Forty-Eighth 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-Eighth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 209.24 Subcontracting. The Trustee is prohibited from subcontracting this Forty-Eighth 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-Eighth 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 209.25 Assignment. The services to be performed by Trustee are personal in character and neither this Forty -Eighth 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 -Eighth Supplemental Indenture.
SECTION 209.26 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.
SECTION 209.27 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-Eighth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
202954244.6 S-1
IN WITNESS WHEREOF, the parties hereto have executed this Forty -Eighth 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: ________________________________
Katherine T. Ortega, Deputy City
Attorney
202954244.6 AY-1
EXHIBIT AY
FORM OF 2025 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 HER EOF 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
2025 SERIES ABC
2025 SUB-SERIES B (REFUNDING)
(REGIONAL WATER AND LOCAL WATER)
Dated Date Interest Rate Maturity Date CUSIP No.
[April __, 2025] % 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 hereinaft er 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 202954244.6 AY-2
[October] 15, 2025, in which event it shall bear interest from [April __], 2025; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on t he 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, 2025 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 owner hereo f 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 “ 2025 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, inte rest 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-Eighth Supplemental Indenture, dated as of [April] 1, 2025, between the Tru stee and the Commission, authorizing the issuance of the 2025 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.
202954244.6 AY-3
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
The 2025 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 2025 Sub-Series B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
[The 2025 Sub-Series B Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2025 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 20__ 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 2025 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 2025 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 2025 Sub-Series B Term Bonds prior to maturity pursuant to the Indenture):] 202954244.6 AY-4
Redemption Date
(November 1) Principal Amount
$
20__†
† Maturity
The 2025 Sub-Series B Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2025 Sub-Series B Bonds may be exchanged for a like aggregate principal amount of 2025 Sub-Series B Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
202954244.6 AY-5
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 [April __], 2025.
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
202954244.6 AY-6
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2025 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: _________ __, 20__
By: ______________________________________
Authorized Officer
202954244.6 AY-7
[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 2/11/25
203080351.5
FORTY-NINTH 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 April 1, 2025
AUTHORIZING THE ISSUANCE OF
$[par] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2025 SERIES ABC
2025 SUB-SERIES C (REFUNDING)
(HETCH HETCHY WATER)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
203080351.5 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 210.01 Definitions ........................................................................................................3
PROVISIONS RELATING TO 2025 SUB-SERIES C BONDS
SECTION 211.01 Authorization and Terms of 2025 Sub-Series C Bonds ....................................4 SECTION 211.02 Terms of Redemption .......................................................................................5 SECTION 211.03 Form of 2025 Sub-Series C Bonds ...................................................................6 SECTION 211.04 Use of Depository .............................................................................................6 SECTION 211.05 Issuance of 2025 Sub-Series C Bonds ..............................................................8 SECTION 211.06 Application of Proceeds of 2025 Sub-Series C Bonds .....................................8 SECTION 211.07 2025 Sub-Series C Sinking Fund Account .......................................................9 SECTION 211.08 Establishment and Application of the 2025 Sub-Series C Rebate Fund ........11 SECTION 211.09 Tax Covenants ................................................................................................12 SECTION 211.10 Continuing Disclosure ....................................................................................13
MISCELLANEOUS
SECTION 212.01 Terms of 2025 Sub-Series C Bonds Subject to the Indenture ........................14 SECTION 212.02 Effective Date of Forty-Ninth Supplemental Indenture .................................14 SECTION 212.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................14 SECTION 212.04 Execution in Counterparts; No Seal Required for Execution .........................14
ADDITIONAL CITY REQUIREMENTS
SECTION 213.01 Conflict of Interest ..........................................................................................15 SECTION 213.02 Proprietary or Confidential Information of the City .......................................15 SECTION 213.03 Local Business Enterprise Utilization; Liquidated Damages .........................15 SECTION 213.04 Nondiscrimination; Penalties ..........................................................................16 SECTION 213.05 MacBride Principles—Northern Ireland ..........................................................17 SECTION 213.06 Tropical Hardwood and Virgin Redwood Ban ................................................17 SECTION 213.07 Drug-Free Workplace Policy ..........................................................................17 SECTION 213.08 Resource Conservation.....................................................................................17 SECTION 213.09 Compliance with Americans with Disabilities Act ........................................18 SECTION 213.10 Sunshine Ordinance ........................................................................................18 SECTION 213.11 Limitations on Contributions ..........................................................................18 203080351.5 ii
SECTION 213.12 Requiring Minimum Compensation for Covered Employees ........................18 SECTION 213.13 Requiring Health Benefits for Covered Employees .......................................20 SECTION 213.14 Prohibition on Political Activity with City Funds ..........................................21 SECTION 213.15 Preservative-treated Wood Containing Arsenic .............................................22 SECTION 213.16 Compliance with Laws ...................................................................................22 SECTION 213.17 Protection of Private Information ...................................................................22 SECTION 213.18 Food Service Waste Reduction Requirements ...............................................22 SECTION 213.19 Submitting False Claims; Monetary Penalties ................................................23 SECTION 213.20 Sugar-Sweetened Beverage Prohibition .........................................................23 SECTION 213.21 Agreement Made in California; Venue ............................................................23 SECTION 213.22 Ownership of Results ......................................................................................23 SECTION 213.23 Audit and Inspection of Records ....................................................................23 SECTION 213.24 Subcontracting ................................................................................................24 SECTION 213.25 Assignment .....................................................................................................24 SECTION 213.26 Non-Waiver of Rights .....................................................................................24 SECTION 213.27 City a Third Party Beneficiary ........................................................................24 Exhibit AZ – Form of 2025 Sub-Series C Bond
203080351.5
FORTY-NINTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[par] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2025 Series ABC
2025 Sub-Series C (Refunding)
(Hetch Hetchy Water)
This Forty-Ninth Supplemental Indenture, dated as of April 1, 2025 (this “Forty-Ninth 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 -Ninth 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, 2025, 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 , the 2020 Refunding Series EFGH Bonds, the 2023 Series AB Bonds and the 2023 Refunding Series CD Bonds are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds, as well as refunding Bonds, from time to time pursuant to a supplemental indenture; WHEREAS, the Commission has determined to issue pursuant to this Forty -Ninth Supplemental Indenture a sub-series of Bonds designated “San Francisco Water Revenue Bonds, 2025 Series ABC, 2025 Sub-Series C (Refunding) (Hetch Hetchy Water)” (the “2025 Sub-Series C Bonds”) in the aggregate original principal amount of $[par] to purchase and cancel or defease and refund a portion of the Commission’s outstanding San Francisco Water Revenue Bonds, 203080351.5 2
[details to be confirmed] [(a) 2017 Series ABC Bonds, 2017 Sub-Series C Bonds (Hetch Hetchy); (b) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series B Bonds (Refunding – Federally Taxable) (Hetch Hetchy) ; and (c) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water)]; WHEREAS, simultaneous with the issuance of the 2025 Sub- Series C Bonds, the Commission has determined to issue pursuant to a Forty- Seventh Supplemental Indenture a sub- series of Bonds designated “ San Francisco Water Revenue Bonds, 2025 Series ABC , 2025 Sub- Series A (Refunding) (WSIP) (Green Bonds)” (the “2025 Sub-Series A Bonds”) and pursuant to a Forty-Eighth Supplemental Indenture a sub- series of Bonds designated “San Francisco Water Revenue Bonds, 2025 Series ABC , 2025 Sub- Series B (Refunding) (Regional Water and Local Water)” (the “2025 Sub-Series B Bonds” and, together with the 2025 Sub-Series A Bonds and the 2025 Sub-Series C Bonds, the “ 2025 Series ABC Bonds”) in the aggregate principal amount of $__________ to purchase and cancel or defease and refund a portion of the Commission’s outstanding San Francisco Water Revenue Bonds, [ details to be confirmed ] [(a) 2015 Series A (Refunding); (b) 2017 Series ABC Bonds, 2017 Sub- Series A Bonds (WSIP) (Green Bonds); (c) 2017 Series ABC Bonds, 2017 Sub - Series B Bonds (Non- WSIP); (d) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds); (e) San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series C Bonds (Refunding – Federally Taxable) (Local Water Main) ; (f) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds); (g) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series F Bonds (Refunding – Federally Taxable) (Non -WSIP); and (h) San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series G Bonds (Refunding – Federally Taxable) (Local Water)];
WHEREAS, the 2025 Series ABC 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 2025 Series ABC Bonds; WHEREAS, in order to provide for the issuance of the 2025 Sub- Series C Bonds, to establish and declare the terms and conditions upon which the 2025 Sub-Series C Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Forty-Ninth 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-Ninth 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-Ninth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
203080351.5 3
DEFINITIONS
SECTION 210.01 Definitions. The terms defined in this section shall, for all purposes of this Forty -Ninth 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.
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 2025 Sub-Series C Bonds.
Escrow Agent
The term “Escrow Agent” means U.S. Bank Trust Company, National Association.
Escrow Agreement
The term “Escrow Agreement” means that certain Escrow Agreement, dated as of April 1, 2025, by and between the Commission and the Escrow Agent.
Final Notice of Acceptance
The term “Final Notice of Acceptance” means the Final Notice of Acceptance relating to the Invitation to Offer Bonds for Purchase made by the Commission dated April 3, 2025.
Purchased Bonds
The term “Purchased Bonds” means the $___________ in outstanding aggregate principal amount of the Commission’s [ San Francisco Water Revenue Bonds, 2016 Series AB, 2016 Sub- Series A Bonds (Refunding), San Francisco Water Revenue Bonds, 2017 Series DEFG, 2017 Sub- Series D Bonds (Refunding) (Green Bonds), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub- Series B Bonds (Refunding – Federally Taxable) (Hetch Hetchy), San Francisco Water Revenue Bonds, 2019 Series ABC, 2019 Sub-Series C Bonds (Refunding – Federally Taxable) (Local Water Main), San Francisco Water Revenue Bonds, 2020 Series ABCD, 2020 Sub- Series B Bonds (Regional Water), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub-Series F Bonds (Refunding – Federally Taxable) (Non-WSIP), San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series G Bonds (Refunding – Federally Taxable) (Local Water), and San Francisco Water Revenue Bonds, 2020 Series EFGH, 2020 Sub- Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water) ], as more particularly identified and accepted for purchase in the Final Notice of Acceptance. 203080351.5 4
PROVISIONS RELATING TO 2025 SUB-SERIES C BONDS
SECTION 211.01 Authorization and Terms of 2025 Sub- Series C Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[par] 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 Francisco Water Revenue Bonds, 2025 Series ABC , 2025 Sub-Series C (Refunding) (Hetch Hetchy Water )” (the “2025 Sub- Series C Bonds”). The aggregate principal amount of 2025 Sub-Series C Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Forty- Ninth Supplemental Indenture shall be $[par]. The 2025 Sub-Series C Bonds shall be of the tenor known as Current Interest Bonds.
The 2025 Sub-Series C Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2025 Sub-Series C Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2025 Sub-Series C Bonds shall be initially registered in the name of “Cede & Co.,” as nominee of DTC, and shall be evidenced by one 2025 Sub- Series C Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. Registered ownership of the 2025 Sub- Series C Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 211.04 herein. (b) The 2025 Sub-Series C Bonds shall mature on November 1 on the following dates and in the following amounts and shall bear interest at the following rates per annum payable on [November] 1, 2025, 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:
Maturity Date
(November 1) Principal Amount Interest Rate
$ %
*
* Term Bonds
[The 2025 Sub-Series C Bonds maturing on November 1, 20__ and [November 1, 20__] are hereby designated as Term Bonds.]
203080351.5 5
(c) Subject to Section 211.04 hereof, the principal of and premium, if any, on the 2025 Sub-Series C Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2025 Sub-Series C Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15
th day of the calendar month immediately preceding an interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may 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 2025 Sub- Series C Bonds filed with the Trustee by such 15
th day, by wire transfer to such account designated in such request at a financial institution in the United States.
(d) Each 2025 Sub-Series C Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before [ October] 15, 2025, in which event it shall bear interest from [ April __], 2025; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default. (e) The 2025 Sub-Series C Bonds shall be subject to redemption as provided in Section 211.02.
(f) The Trustee shall assign each 2025 Sub-Series C Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection.
(g) There shall be no Required Reserve for the 2025 Sub-Series C Bonds. (h) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2025 Sub- Series C Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2025 Sub-Series C Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2025 S ub-Series C Bonds in the manner and form provided in this Forty-Ninth Supplemental Indenture.
SECTION 211.02 Terms of Redemption.
(a) Optional Redemption. The 2025 Sub-Series C Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of 203080351.5 6
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 2025 Sub-Series C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(b) [if applicable] Mandatory Sinking Fund Redemption. (i) The 2025 Sub- Series C Bonds maturing on November 1, 20__, are further subject to redemption prior to their stated maturity, and payable from the 2025 Sub- Series C Bonds Sinking Fund Account (described in Section 211.07), on each November 1 on and after November 1, 20__, by lot within any such maturity if less than all of the 2025 Sub-Series C Bonds of such maturity are then being redeemed, upon payment of the principal amount thereof and accrued intere st thereon to the date fixed for redemption, without premium. Such sinking fund redemption of the 2025 Sub- Series C Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2025 Sub- Series C Bonds to be redeemed in each such year set forth in Section 211.07 below (such schedule of principal amounts subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2025 Sub- Series C Bonds prior to maturity pursuant to Section 211.02(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 2025 Sub-Series C Bonds.
SECTION 211.03 Form of 2025 Sub-Series C Bonds. The 2025 Sub-Series C 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 A Z to this Forty -Ninth Supplemental Indenture , with necessary or appropriate variations, omissions and insertions as permitted or required by this Forty-Ninth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2025 Sub-Series C Bonds does not require the seal of the Commission.
SECTION 211.04 Use of Depository.
(a) The 2025 Sub-Series C Bonds shall be initially registered as provided in Section 211.01 hereof. Registered ownership of the 2025 Sub- Series C Bonds, or any portions thereof, may not thereafter be transferred except:
(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection (a) (a “ Substitute Depository” ); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any Substitute Depository not objected to by the Trustee, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such 203080351.5 7
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 2025 Sub- Series C Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2025 Sub-Series C Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2025 Sub- Series C Bonds then Outstanding, registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Written Request of the Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2025 Sub-Series C Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2025 Sub-Series C Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 211.01 hereof, provided that the Trustee shall not be required to deliver such new 2025 Sub- Series C Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission. (d) In the case of a partial redemption or an advance refunding of any 2025 Sub-Series C Bonds evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such 2025 Sub-Series C Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not be liable for such Securities Depository’s (or any Substitute Depository’s) failure to make such notations or errors in making such notations. (e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2025 Sub-Series C Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee shall not have responsibility for t ransmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2025 Sub- Series C Bonds. Neither the Com mission 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 2025 Sub- Series C Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2025 Sub-Series C Bonds.
(f) Notwithstanding any other provision of this Forty -Ninth Supplemental Indenture and so long as all Outstanding 2025 Sub-Series C 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 203080351.5 8
redemption premium, if any, and interest on the 2025 Sub- Series C Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2025 Sub -Series C Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 211.05 Issuance of 2025 Sub-Series C Bonds.
(a) At any time after the execution of this Forty -Ninth Supplemental Indenture , the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2025 Sub-Series C Bonds in the aggregate principal amount of $[par] to the initial purchasers thereof specified in such Written Request or Certificate.
SECTION 211.06 Application of Proceeds of 2025 Sub-Series C Bonds. (a) The original purchaser of the 2025 Sub- Series C Bonds will pay and deliver the purchase price of the 2025 Sub-Series C Bonds (including any good faith deposit paid prior to the Closing Date and applied to such purchase price) equal to $__________ to the Trustee, and the Trustee shall deposit and transfer this amount, as follows:
1. The Trustee shall deposit $__________ in a separate fund to be known as the 2025 Series ABC Costs of Issuance Fund established and maintained under the Forty- Seventh Supplemental Indenture.
2. The Trustee shall deposit $________ in a separate fund to be known as the 2025 Series ABC Purchased Bonds Fund established and maintained under the Forty- Seventh Supplemental Indenture.
3. The Trustee shall transfer the remainder of such sum, in the amount of $__________, to the Escrow Agent to be applied pursuant to the terms of the Escrow Agreement.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2025 Series ABC 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:
203080351.5 9
(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 attac hment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance of the 2025 Series ABC 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 2025 Series ABC Costs of Issuance Fund (including such amounts deposited therein pursuant to the Forty -Seventh Supplemental Indenture and the Forty -Eighth 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 2025 Series ABC 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 2025 Series ABC Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2025 Series ABC Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on [ October __, 202 5], whichever is earlier, shall be transferred by the Trustee to the Commission and the 2025 Series ABC Costs of Issuance Fund shall be closed.
On the delivery date of the 2025 Sub- Series C Bonds, the monies set aside and placed within the 2025 Series ABC Purchased Bonds Fund pursuant to this Forty -Ninth Supplemental Indenture, the Forty- Seventh Supplemental Indenture and the Forty-Eighth Supplemental Indenture shall be applied, together with other amounts, solely to payment of the purchase price of and accrued interest on the Purchased Bonds. The Trustee shall wire the purchase price of and accrued interest on the Purchased Bonds to DTC for credit to the Purchased Bonds, all as set forth in a Written Request of the Commission delivered concurrently with delivery of the 2025 Series ABC Bonds, through the Automated Tender Option Program (“ATOP”). The Commission directs the Trustee to cancel such Purchased Bonds. At such time as the Purchased Bonds have been purchased and cancelled, or at such time as no funds remain in the 2025 Series ABC Purchased Bonds Fund, the Trustee may close and terminate the 2025 Series ABC Purchased Bonds Fund.
SECTION 211.07 2025 Sub-Series C Sinking Fund Account.
(a) The Trustee shall establish and hold within the Principal Fund established under Section 5.02(b) of the Indenture, a 2025 Sub- Series C Sinking Fund Account, which the 203080351.5 10
Commission hereby covenants and agrees to cause to be maintained, for payment of the Bond Obligation of the 2025 Sub-Series C Term Bonds.
(b) The Trustee, on or before October 31 of each year (commencing on or before October 31, 20__), shall deposit in the 2025 Sub- Series C Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem in accordance with Section 211.02(b) hereof or to pay at final maturity, as the case may be, on the next succeeding November 1, the principal of the 2025 Sub-Series C Term Bonds maturing on November 1, 20__ in the following respective principal amounts in each of the following years (each such deposit of moneys being referred to as a “2025 Sub-Series C Minimum Sinking Fund Account Payment”):
Redemption Date
(November 1) Principal Amount
20__†
______________
† Maturity
(c) During the 12- month period ending on September 15 of each year immediately preceding each redemption from the 2025 Sub- Series C Sinking Fund Account, the Commission may satisfy, in whole or in part, the 2025 Sub-Series C Minimum Sinking Fund Account Payment and the redemption of 2025 Sub- Series C Term Bonds therefrom by depositing with the Trustee 2025 Sub-Series C Term Bonds for cancellation prior to the Trustee’s selection of the 2025 Sub- Series C Term Bonds for redemption.
(d) In lieu of the redemption of 2025 Sub- Series C Term Bonds pursuant to Section 211.02(b) hereof, at the Written Request of the Commission, moneys in the 2025 Sub- Series C Sinking Fund Account may be used and withdrawn by the Trustee at any time for the purchase of 2025 Sub-Series C Term Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Commission shall direct by Written Request, but not to exceed the principal thereof, and all 2025 Sub- Series C Term Bonds so purchased by the Trustee or deposited by the Commission, shall be cancelled and delivered to the Commission; provided, however, that:
(i) all moneys in the 2025 Sub- Series C Sinking Fund Account on each September 15, beginning on September 15, 20__ and ending on September 15, 20__, together with any additional sums the Trustee expects to receive for deposit in the 2025 Sub-Series C Sinking Fund Account after such date and on or before the next succeeding November 1, shall be used and withdrawn by the Trustee solely for the purpose of 203080351.5 11
redeeming the 2025 Sub-Series C Term Bonds that are subject to redemption on such next succeeding November 1 pursuant to Section 211.02(b) and Section 211.07(b) hereof; and (ii) the Trustee shall during each 12 month period beginning with the 12-month period ending on November 1, 20__, purchase or call and redeem (as herein provided) an aggregate amount of 2025 Sub-Series C Term Bonds equal to at least the amount of Bond Obligation of the 2025 Sub-Series C Term Bonds identified in Section 211.07(b) above for such 12-month period reduced by the principal amount of 2025 Sub-Series C Term Bonds deposited by the Commission with the Trustee as described in Section 211.07(c) hereof for such 12-month period, except that if during any such 12-month period, 2025 Sub-Series C Term Bonds of any Term Bond maturity have previously been redeemed or purchased by the Trustee or deposited by the Commission in excess of the amount of Bond Obligation of the 2025 Sub-Series C Term Bonds identified in Section 211.07(b) above for such 12- month period, unless otherwise directed by the Commission at the time of such redemption, purchase or deposit, the remaining 2025 Sub-Series C Minimum Sinking Account Payment amounts stated in Section 211.07(b) above shall be deemed to have been reduced on a Proportionate Basis, and further except that moneys in the 2025 Sub-Series C Sinking Fund Account shall be used, to the extent necessary, to purchase or retire the balance of the Outstanding 2025 Sub-Series C Term Bonds at the final maturity thereof.
The Commission hereby covenants and agrees with the Owners of the 2025 Sub- Series C Bonds to call and redeem 2025 Sub- Series C Bonds from the 2025 Sub- Series C Sinking Fund Account pursuant to this Section on November 1 in each of the years, and in the amounts, stated in Section 211.07(b) above (subject to adjustment of such amounts in the event of optional redemption of such 2025 Sub-Series C Term Bonds or as otherwise hereinabove provided).
SECTION 211.08 Establishment and Application of the 2025 Sub- Series C 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 “ 2025 Sub-Series C 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 2025 Sub- Series C Bonds, dated the date of issuance of the 2025 Sub- Series C Bonds (f or 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 211. 09 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 203080351.5 12
Certificate. The Trustee shall not be required to take any actions under this Section, Section 211.09 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.
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. (c) 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 Tax Certificate. Moneys shall not be transferred from the Rebate Fund except as provided in paragraph (e) below.
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 2025 Sub-Series C Bonds and payment and satisfaction of any Rebate Requirement shall be withdrawn and remitted to the Commission upon the Commission’s written request.
(d) 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 211.09 hereof and the Tax Certificate shall survive the defeasance or payment in full of the 2025 Sub-Series C Bonds.
SECTION 211.09 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 2025 Sub-Series C Bonds under Section 103 of the Code.
The Commission will not directly or indirectly use or permit the use of any proceeds of the 2025 Sub-Series C Bonds or any other funds of the Commission, or take or omit to take any action that would cause the 2025 Sub- Series C 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 2025 Sub- Series C 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.
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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 2025 Sub-Series C Bonds from time to time. This covenant shall survive payment in full or defeasance of the 2025 Sub-Series C Bonds. The Commission specifically covenants to pay or cause to be paid to the United State s, at the times and in the amounts determined under Section 211.08 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 211.08 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 211.08 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 2025 Sub-Series C Bonds under Section 103 of the Code, 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 2025 Sub-Series C Bonds are not so used as to cause the 2025 Sub-Series C 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 2025 Sub- Series C Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
SECTION 211.10 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 2025 Sub-Series C Bonds, executed and delivered by the Commission in connection with the issuance of the 2025 Sub-Series C Bonds, as it may be supplemented and amended in accordance with its terms (the “ 2025 Series ABC Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2025 Series ABC Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Participating Underwriter (as such term is defined in the 2025 Series ABC 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 Sec tion, and the sole remedy in the eve nt of any failure of the Commission to comply with the 2025 Series ABC Continuing Disclosure Certificate shall be an action to compel performance.
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MISCELLANEOUS
SECTION 212.01 Terms of 2025 Sub-Series C Bonds Subject to the Indenture.
Except as expressly provided in this Forty-Ninth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Forty -Ninth Supplemental Indenture, and to the 2025 Sub-Series C Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Forty-Ninth Supplemental Indenture.
This Forty-Ninth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLXXXVII in the Forty-Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty -Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture.
This Forty-Ninth 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. T he Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof , as supplemented and amended hereby.
SECTION 212.02 Effective Date of Forty-Ninth Supplemental Indenture. This Forty- Ninth Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 212.03 Holder Consents to Amendments in Forty- Third Supplemental Indenture. By acceptance of a 2025 Sub- Series C Bond, the holder thereof consents to the amendments described in Article CLXXXVII in the Forty-Third Supplemental Indenture.
SECTION 212.04 Execution in Counterparts; No Seal Required for Execution. This Forty-Ninth 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-Ninth 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.
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SECTION 213.01 Conflict of Interest . Through its execution of this Forty -Ninth 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-Ninth Supplemental Indenture.
SECTION 213.02 Proprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Forty -Ninth 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 partie s 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 -Ninth 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 213.03 Local 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 -Ninth Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Forty-Ninth 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-Ninth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Forty -Ninth Supplemental Indenture, to exercise any of the remedies provided for under this Forty-Ninth Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Forty -Ninth 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) 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 -Ninth 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-Ninth Supplemental Indenture, or 10% of the total amount of this Forty -Ninth Supplemental Indenture, or $1,000, whichever is greatest. The Director of the Ci ty’s Contracts Monitoring Division or any other public official 203080351.5 16
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 -Ninth 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-Ninth Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 213.04 Nondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Forty -Ninth 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, facilit ies, 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, nati onal origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) 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 wit h such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Forty-Ninth Supplemental Indenture.
(c) Nondiscrimination in Benefits
The Trustee does not as of the date of this Forty-Ninth Supplemental Indenture and will not during the term of this Forty -Ninth 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, m embership 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 203080351.5 17
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 -Ninth 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 -Ninth 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 -Ninth 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-Ninth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 213.05 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 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 -Ninth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 213.06 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 213.07 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-Ninth Supplemental Indenture.
SECTION 213.08 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-Ninth Supplemental Indenture.
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SECTION 213.09 Compliance 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 s hall provide the services specified in this Forty-Ninth 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 discrim inate against disabled persons in the provision of services, benefits or activities provided under this Forty -Ninth 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-Ninth Supplemental Indenture.
SECTION 213.10 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 data submitted for qualification for a contract or other benefit until and unless that per son 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 213.11 Limitations on Contributions . Through execution of this Forty - Ninth 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 perso ns 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 213.12 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 203080351.5 19
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 -Ninth 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 -Ninth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Forty-Ninth 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.
(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 -Ninth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P. (g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Forty -Ninth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Forty-Ninth 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 203080351.5 20
remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of this Forty-Ninth Supplemental Indenture. Nothing in this Forty-Ninth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 213.13 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-Ninth 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 -Ninth 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-Ninth 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 - Ninth 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 203080351.5 21
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-Ninth 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 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 -Ninth 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 fr om agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 213.14 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 -Ninth Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code 203080351.5 22
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 -Ninth 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 213.15 Preservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Forty-Ninth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative-treated wood containing arsenic” shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative-treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purchasing preservative -treated wood containing arsenic for saltwater immersion. The term “ saltwater immersion” shall mean a pressure-treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 213.16 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 -Ninth 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 213.17 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 Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Forty -Ninth 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-Ninth 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 213.18 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-Ninth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Forty-Ninth Supplemental Indenture. By entering into this Forty-Ninth 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 203080351.5 23
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-Ninth 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 213.19 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 the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false cl aim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim.
A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 213.20 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-Ninth Supplemental Indenture.
SECTION 213.21 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 213.22 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-Ninth 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 213.23 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 -Ninth 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-Ninth Supplemental Indenture, whether funded in whole or in part under this Forty -Ninth Supplemental Indenture. The Trustee shall maintain such data 203080351.5 24
and records in an accessible location and condition for a period of not less than three years after final payment under this Forty -Ninth 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-Ninth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 213.24 Subcontracting. The Trustee is prohibited from subcontracting this Forty-Ninth 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-Ninth 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 213.25 Assignment. The services to be performed by Trustee are personal in character and neither this Forty -Ninth 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-Ninth Supplemental Indenture.
SECTION 213.26 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.
SECTION 213.27 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-Ninth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
203080351.5 S-1
IN WITNESS WHEREOF, the parties hereto have executed this Forty-Ninth 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: ________________________________
Katherine T. Ortega, Deputy City
Attorney
203080351.5 AZ-1
EXHIBIT AZ
FORM OF 2025 SUB-SERIES C BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ( “DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is 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
2025 SERIES ABC
2025 SUB-SERIES C (REFUNDING)
(HETCH HETCHY WATER)
Dated Date Interest Rate Maturity Date CUSIP No.
[April __, 2025] % 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 hereinaft er 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 203080351.5 AZ-2
[October] 15, 2025, in which event it shall bear interest from [April __], 2025; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on t he 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, 2025 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 owner hereo f 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 “ 2025 Sub-Series C Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental 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 -Ninth Supplemental Indenture , dated as of [April] 1, 2025, between the Trustee and the Commission, authorizing the issuance of the 2025 Sub-Series C Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof.
203080351.5 AZ-3
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds payable from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
The 2025 Sub-Series C Bonds maturing on or after November 1, 20__, shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after November 1, 20__, from such maturities or portions of maturities as are determined by the Commission and by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2025 Sub-Series C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
[The 2025 Sub-Series C Term Bonds maturing November 1, 20__, are further subject to redemption prior to their stated maturity and payable from the 2025 Sub- Series C Sinking Fund Account (described in the Indenture), on November 1, 20__, by lot within any such maturity if less than all of the 20__ 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 2025 Sub- Series C Term Bonds maturing November 1, 20__ shall only be made in amounts equal to, and in accordance with, the schedule of principal amounts of 2025 Sub-Series C Bonds to be redeemed in each such year set forth below (subject to adjustment as directed by the Commission in the event of optional redemption of any portion of such 2025 Sub-Series C Term Bonds prior to maturity pursuant to the Indenture):] 203080351.5 AZ-4
Redemption Date
(November 1) Principal Amount
$
20__†
† Maturity
The 2025 Sub-Series C Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Indenture, 2025 Sub-Series C Bonds may be exchanged for a like aggregate principal amount of 2025 Sub-Series C Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed have been signed by the Trustee.
By acceptance of this Bond, the holder hereof consents to the amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
203080351.5 AZ-5
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 [April __], 2025.
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
203080351.5 AZ-6
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2025 SUB-SERIES C BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: ______ __, 20__
By: ______________________________________
Authorized Officer
203080351.5 AZ-7
[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.
[REFUNDING] Hawkins Delafield & Wood LLP
Draft No. 3: 1/31/2025
3930622.6 047823 AGMT
$[PAR AMOUNT ABC]
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS, 2025 SERIES ABC
$[PAR AMOUNT A]
2025 SUB-SERIES A
(REFUNDING)
(WSIP)(GREEN BONDS)
$[PAR AMOUNT B]
2025 SUB-SERIES B
(REFUNDING)
(REGIONAL WATER AND
LOCAL WATER)
$[PAR AMOUNT C]
2025 SUB-SERIES C
(REFUNDING)
(HETCH HETCHY WATER)
BOND PURCHASE CONTRACT
[Sale 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 Jefferies LLC , on its own behalf and as representative (the “Representative”) of Wells Fargo Bank, N.A., Barclays Capital Inc., RBC Capital Markets, LLC, Siebert Williams Shank & Co., LLC, and TD Securities (USA) LLC (collectively, the “Underwriters”), offers to enter into this Bond Purchase Contract (this “Purchase Contract”) with the Public Utilities Commission of the City and County of San Francisco (the “Commission” ), which will be binding upon the Commission and the Underwriters upon acceptance hereof by the Commission. This offer is made subject to the acceptance by the Commission by its execution of this Purchase Contract and its delivery to the Representative on or before 11:59 p.m., California time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriters upon written notice delivered by the Representative to the Commission at any time prior to the acceptance of this Purchase Contract by the Commission. If the Representative withdraws this offer, or the Underwriters’ obligation to purchase the Bonds (as hereinafter defined) is otherwise terminated 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-Seventh Supplemental Indenture, dated as of April 1, 2025 (the “Forty-Seventh Supplemental Indenture”), relating to the Series 2025A Bonds (as defined b elow), a Forty-Eighth Supplemental Indenture, dated as of April 1, 2025 (the “Forty -Eighth Supplemental Indenture ”), relating to the Series 2025B Bonds (as defined below), and a Forty-Ninth Supplemental Indenture, dated as of April 1, 2025 (the “Forty-Ninth Supplemental Indenture”), relating to the Series 2025C Bonds (as defined below), 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 $[PAR AMOUNT ABC] aggregate principal amount of Public Utilities Commission of the City and County of San Francisco San Francisco Water Revenue Bonds, 2025 Series ABC (the “Bonds”), consisting of the $[ PAR AMOUNT A] 2025 Sub-Series A (Refunding) (WSIP) (Green Bonds ) (the “Series 2025A Bonds ”), the $ [PAR AMOUNT B] 2025 Sub-Series B (Refunding) (Regional Water and Local Water ) (the “Series 2025B Bonds ”), and the $[ PAR AMOUNT C ] 2025 Sub- Series C (Refunding) (Hetch Hetchy Water) (the “Series 2025C Bonds ,” and together with the Series 2025A Bonds and the Series 2025B Bonds, the “Bonds”).
The aggregate purchase price for the Bonds shall be $[_________] (comprised of the purchase price of the Series 2025A Bonds in the amount of $[_________] , representing the principal amount of the Series 2025A Bonds, plus a [net] premium of $[_________] and less an Underwriters’ discount in the amount of $ [_________], the purchase price of the Series 2025B Bonds in the amount of $[_________] , representing the principal amount of the Series 2025B Bonds, plus a [net] premium of $[_________] and less an Underwriters’ discount of $[_________], and the purchase price of the Series 2025C Bonds in the amount of $[_________] , representing the principal amount of the Series 2025C Bonds , plus a [net] premium of $[_________] and less an Underwriters’ discount in the amount of $[_________]). 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 dated 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).
Section 2. Authorization for the Bonds; Purpose of Issue . T he Commission has the authority to issue the Bonds under Sections 9.109 of the Charter (the “ Charter”) of the City and County of San Francisco (the “ City”), and pursuant to Ordinance No. 131- 24 of the Board of -3-
3930622.6 047823 AGMT
Supervisors of the City (the “ Board of Supervisors”) passed by two-thirds vote on June 18, 2024 and signed by the Mayor on June 27, 2024 (the “ Ordinance”), and Resolution No. [25-____], adopted by the Commission on [March 11, 2025] (the “Commission Resolution”).
Proceeds of the Bonds will be used to (i) pay the purchase price of certain outstanding water revenue bonds of the SFPUC tendered for cash pursuant to the Invitation (as defined in the Preliminary Official Statement), (ii) current refund certain outstanding water revenue bonds of the SFPUC, and (iii) pay the costs of issuance of the Bonds.
Section 3. Public Offering. It shall be a condition to the obligations of the Underwriters to purchase, accept delivery of and pay for the Bonds that the entire principal amount of the Bonds be sold and delivered by the Commission to the Underwriters. The Underwriters 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, as applicable and 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 they will comply with applicable laws and regulations, including without limitation the Securities and Exchange Commission’s Rule 15c2- 12 as promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”), 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.
Section 4. Delivery of Official Statement. Prior to the date hereof, the Commission has provided to the Underwriters for review a form of the preliminary official statement relating to the Bonds dated [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 Section (b) (1) of 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 in a “designated electronic format” (as defined in Rule G -32 of the MSRB). 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 (which shall incorporate all information permitted to be omitted by Rule 15c2-12 from the Preliminary Official Statement and any further 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 -4-
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enable the Underwriters to comply with the rules of the Securities and Exchange Commission (the “SEC”) and the MSRB. The Commission hereby approves of the use and distribution by the Underwriters of the Official Statement in connection with the offer and sale of the Bonds. At the time of or prior to the Closing Date (as hereinafter defined), the Representative shall file a copy of the Official Statement with the MSRB or its designee (including the MSRB’s Electronic Municipal Market Access system (“EMMA”)) or with any other repository approved from time to time by the SEC (either in addition to or in lieu of the filings referred to above).
The Commission will deliver the Continuing Disclosure Certificate substantially in the form set forth in the Preliminary Official Statement (the “Continuing Disclosure Certificate”) on the Closing Date. The form of the Continuing Disclosure Certificate will also be set forth in the Official Statement.
Section 5. The Closing. At [8:30] 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 trans fer 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 and laws of the State of California (the “ State” or “California”), with full authority to: (i) adopt the Commission Resolution; (ii) execute and deliver the Master Indenture, the Forty-Seventh Supplemental Indenture, the Forty -Eighth Supplemental Indenture, the Forty-Ninth Supplemental Indenture, the Escrow Agreement, dated as of April 1, 2025 (the “Escrow Agreement”), by and between the Commission and U.S. Bank T rust Company, National Association, as escrow agent (the “Escrow Agent ”), 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 consent s which are required for the due authorization of, which would -5-
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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, [the Escrow Agreement] 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. (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 inform ation that is necessary to make the statements and information contained therein, in the light of the circumstances under which such statements were made, not misleading in any material respect, excluding in each case any information contained in the Preli minary 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 insurers, if any, for inclusion in the Preliminary Official Statement or Official Statement 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 a nd 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. -6-
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(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 ag reement, 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, 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 Escrow Agreement,] 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 Escrow Agreement,] the Continuing Disclosure Certificate or this Purchase Contract. (e) No Other Bond Issues or Debt. [Other than 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, 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, pe nding 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 Escrow Agreement,] 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) contesti ng 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 Pur chase 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 -7-
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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.
(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 Escrow Agreement,] the Forty-Seventh Supplemental Indenture, the Forty -Eighth Supplemental Indenture, the Forty-Ninth 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 tha t 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, 2024 and June 30, 2023 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 -8-
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documents and the Commission has not requested nor did the Commission obtain permission from Macias Gini & O’Connell LLP, independent certified public accountants, to include the financial statements of the Commission for the years ended June 30, 2024 and June 30, 2023 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.
(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 -9-
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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 subsection (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 Contract 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 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 be half of the Underwriters, agree 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 (5th) 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 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 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 -10-
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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:
(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); (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;
(C) to report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Representative that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public; and
(D) to comply with the hold-the -offering-price rule, if applicable, in each case if and for so long as directed by the Representative and as set forth in the related pricing wires; (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 (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Representative or the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (B) 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 .
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(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 publi c (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 if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities a re corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and
(iv) “sale date” means the date of execution of this Purchase Contract by all parties.
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 , [the Escrow Agreement ] 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 -12-
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performed all of its obligations required under or specified in this Purchase Contract, [ the Escrow Agreement, ] 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 . The 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 th e 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 for consideration, or any dec ision 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 character 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
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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 “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); or (x) there shall have occurred any materially adverse change in the affairs or financial condition of the Commission; or
(xi) the purchase of and payment for the Bonds by the Underwriters, or the resale of the Bonds by the Underwriters, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission.
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.
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(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 Ordinance and the Commission Resolution.
(2) Bond Documents. An executed copy of the Master Indenture and executed originals of the Forty-Seventh Supplemental Indenture, the Forty-Eighth Supplemental Indenture, the Forty-Ninth Supplemental Indenture, the Escrow Agreement, the Continuing Disclosure Certificate and this Purchase Contract. (3) Final 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) Supplemental 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 2025ABC 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, legal, and binding 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) Defeasance Opinion. A defeasance opinion of Bond Counsel with respect to the Refunded Bonds.
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(6) 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 Statement 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 and as of the date of the Purchase Contract, 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.
(7) Certificate 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 warranties 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. (8) Certificate of the Trustee [and Escrow Agent]. A certificate of U.S.
Bank Trust Company, National Association, as Trustee and Escrow Agent (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 and is qualified to accept and comply with the terms of the Indenture and the Escrow Agreement (together, the “ U.S. Bank Documents ”) 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 U.S. Bank Documents.
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(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 required for the consummation by U.S. Bank of the transactions contemplated by the U.S. Bank Documents to be undertaken by U.S. Bank.
(iv) Compliance with the terms of the U.S. Bank Documents 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 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 U.S. Bank Documents or the Bonds, or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations under the U.S. Bank Documents or the Bonds, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Bonds or the U.S. Bank Documents.
(9) Opinion of Counsel to the Trustee and Escrow Agent. 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 all requisite corporate power, authority and legal right to execute and deliver the U.S. Bank Documents and has taken all necessary action to authorize the execution and acceptance of the U.S.
Bank Documents.
(iii) The Bonds have been duly authenticated by U.S. Bank. (iv) To such counsel’s knowledge, no authorization, approval, consent, or order of any governmental agency or regulatory authority having jurisdiction over U.S. Bank that has not been obtained by U.S. Bank -17-
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is required for the authorization, execution, delivery and performance by U.S. Bank of the U.S. Bank Documents.
(v) The execution and delivery by U.S. Bank of the U.S. Bank Documents and the performance of the obligations of U.S. Bank under the U.S. Bank Documents by U.S. Bank, will not contravene the Articles of Association or the Bylaws of U.S. Bank or any law or regulation governing the banking and trust powers of U.S. Bank known to us or any judgment, order or decree known to such counsel and applicable to U.S. Bank of any court, governmental authority or arbitrator of the State of California. (10) Tax Certificate. Tax Certificate of the Commission, dated the Closing Date, in form satisfactory to Bond Counsel , relating to the Bonds
(11) California 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.
(12) Evidence of R atings for the Bonds. Evidence of ratings from Moody’s Investors Service, Inc. ( “Moody’s”) and S&P Global Ratings (“S&P”), that such rating agencies have assigned their municipal bond ratings of “[___]” and “[___],” respectively, to the Bonds.
(13) Opinion of the 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.
(14) 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”).
(15) 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.
(16) Verification Report . A verification report of [VERIFICATION AGENT], as described in the Official Statement.
(17) Green Bonds Certification from Climate Bonds Initiative. A copy of the certification from Climate Bonds Initiative confirming the certification of the Series 2025A Bonds as “Climate Bonds.”
(18) Additional Documents. Such legal opinions, additional certificates, instruments and other documents as the Representative, Bond Counsel or the City -18-
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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 this Purchase Contract, unless waived by the Representative, or if the obligations of the Underwriters shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and the Underwrite rs 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 $[_________] (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 U nderwriters 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 a gainst 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 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 w aived 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, -19-
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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, Climate Bonds Initiative, as climate bonds certifier, and any other experts or consultants retained by the Commission in connection with the trans actions contemplated hereby; (4) fees of the verification agent and (5) 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, CUSI P fees, California Debt and Investment Advisory Commission fees, the fees of Digital Assurance Certification, L.L.C. for continuing disclosure compliance review and expenses incurred by the Underwriters on behalf of the Commission’s employees and representatives which are in connection with this Purchase Contract including, but not limited to, transportation, lodging, and meals
Section 12. City Contracting Requirements . The Underwriters agree to comply with the provisions set forth in Appendix A , attached hereto, which are incorporated herein by this reference.
Section 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
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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:
Jefferies LLC.
11100 Santa Monica Blvd.
Los Angeles, California 90025
Attention: Simon Wirecki, Managing Director
Telephone: (310) 575-5251
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 (including 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, (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 Contract 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 U nderwriters 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.
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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 ma y have financial and other interests that differ from those of the Commission, (iii) the Underwriters have not assumed a fiduciary responsibility in favor of the Commission with respect to the offering of the Bonds or the 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 re spect 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,
JEFFERIES LLC, as Representative
By: ___________________________________
Name: Simon Wirecki
Title: Managing Director
[Signature Page to Water Revenue Bonds 2025 Series ABC
Bond Purchase Contract]
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Accepted as of the date first stated above:
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:_________________________________
Name: [Dennis J. Herrera]
Title: [General Manager]
[Signature Page to Water Revenue Bonds 2025 Series ABC
Bond Purchase Contract]
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Approved as to Form:
DAVID CHIU
City Attorney
By:_________________________________
[Katherine T. Ortega], Deputy City Attorney
[Signature Page to Water Revenue Bonds 2025 Series ABC
Bond Purchase Contract]
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SCHEDULE I
TO THE PURCHASE CONTRACT
MATURITY SCHEDULE
$[PAR AMOUNT A]
2025 SUB-SERIES A
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
Price
Yield
10% Test
Satisfied
Subject to
Hold-the-
Offering
Price Rule
[Call provisions to be conformed]
Optional Redemption of Series 2025A Bonds . The 2025A 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 May 1, 20[35], 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 2025A Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2025A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption of Series 2025A Bonds . The 2025A Bonds maturing on November 1 , 20[__] (the “2025A Term Bonds (20[__])”), are further subject to S-I-2
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redemption prior to their stated maturity, and payable from the 2025A Sinking Fund Account, on each November 1 on and after November 1 , 20[__], (except as otherwise provided under the procedures of Securities Depository for the 2025A Bonds) by lot within any such maturity if less than all of the 2025A Term Bonds (20[__]) 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 2025A Term Bonds (20[__]) 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 por tion of such 2025A Term Bonds (20[__]) prior to maturity as described above):
Redemption Date
(November 1) Principal Amount
*
*Maturity.
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MATURITY SCHEDULE
$[PAR AMOUNT B]
2025 SUB-SERIES B
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
Price
Yield
10% Test
Satisfied
Subject to
Hold-the-
Offering
Price Rule
[Call provisions to be conformed]
Optional Redemption of Series 2025B Bonds . The 2025B 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 May 1, 20[35], 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 2025B Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2025B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption of Series 2025B Bonds . The 2025B Bonds maturing on November 1 , 20[__] (the “ 2025B Term Bonds (20[__])”), are further subject to redemption prior to their stated maturity, and payable from the 2025B Sinking Fund Account, on each November 1 on and after November 1 , 20[__], (except as otherwise provided under the S-I-4
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procedures of Securities Depository for the 2025B Bonds) by lot within any such maturity if less than all of the 2025B Term Bonds (20[__]) 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 2025B Term Bonds (20[__]) 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 por tion of such 2025B Term Bonds (20[__]) prior to maturity as described above):
Redemption Date
(November 1) Principal Amount
*
*Maturity.
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MATURITY SCHEDULE
$[PAR AMOUNT C]
2025 SUB-SERIES C
Maturity Date
(November 1)
Principal
Amount
Interest
Rate
Price
Yield
10% Test
Satisfied
Subject to
Hold-the-
Offering
Price Rule
[Call provisions to be conformed]
Optional Redemption of Series 2025C Bonds . The 2025C 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 May 1, 20[35], 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 2025C Bonds) by lot within any one maturity, at a redemption price equal to 100% of the principal amount of the 2025C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption of Series 2025C Bonds . The 2025C Bonds maturing on November 1, 20[__] (the “ 2025C Term Bonds (20[__])”), are further subject to redemption prior to their stated maturity, and payable from the 2025C Sinking Fund Account, on each November 1 on and after November 1, 20[__] , (except as otherwise provided under the S-I-6
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procedures of Securities Depository for the 2025C Bonds) by lot within any such maturity if less than all of the 2025C Term Bonds (20[__]) 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 2025C Term Bonds (20[__]) 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 por tion of such 2025C Term Bonds (20[__]) 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. Nondiscrimination; 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 Sections 12 B.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 i n San Francisco Administrative Code Section 12 B.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. MacBride 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. Tropical Hardwood 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. Compliance 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. Sunshine 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. Limitations 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 m aking 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. Requiring 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. Prohibition 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 participat e in, support, or attempt to influence 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. Nondisclosure 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.
In 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. Consideration 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 this Purchase Contract shall have the meanings assigned to such terms in Chapter 12T.
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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 employm ent 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 governm ent agency implementing federal or state law.
13. Submitting False Claims; Monetary Penalties . The full 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. Conflict 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. Assignment. 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. Food 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.
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
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against the party drafting the clause shall apply to the interpretation or enforcement of this Purchase Contract.
18. Sugar-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. First 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. Prevailing 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: $[PAR AMOUNT ABC] Public Utilities Commission of
the City and County of San Francisco
Water Revenue Bonds, 2025 Series ABC
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 $[ PAR AMOUNT ABC ] aggregate principal amount of San Francisco Water Revenue Bonds, 2025 Series ABC comprised of $[PAR AMOUNT A] aggregate principal amount of 2025 Sub- Series A (Refunding) (WSIP) (Green Bonds ), $[PAR AMOUNT B ] aggregate principal amount of 2025 Sub- Series B (Refunding) (Regional Water and Local Water ), and $[ PAR AMOUNT C ] aggregate principal amount of 2025 Sub- Series C (Refunding) (WSIP) (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”), a Forty -Seventh Supplemental Indenture, dated as of April 1, 2025 (the “Forty-Seventh Supplemental Indenture”), a Forty-Eighth Supplemental Indenture, dated as of April 1, 2025 (the “Forty-Eighth Supplemental Indenture”), and a Forty-Ninth Supplemental Indenture, dated as of April 1, 2025 (the “Forty- Ninth 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 [Sale Date] (the “Purchase Contract”), by and between the Commission and Jefferies LLC , as representative of the underwriters named therein, [the Escrow Agreement, by and between the Commission and the Trustee,] the Continuing Disclosure Certificate of the Commission, as executed and delivered on the date of delivery of the Bonds (“Continuing Disclosure Certificate”), Resolution No. [25 -____] of the Commission adopted on [March 11, 2025] (“Commission Resolution”), and Ordinance No. 131-24 of the Board of Supervisors of the City (the “Board of Supervisors”) passed by a two- thirds vote on June 18, 2024; and signed by the Mayor on June 27, 2024 (“City Ordinance”).
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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 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, whether 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, the Bonds and [the Escrow Agreement 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 and City Ordinance were duly passed at meetings of the Commission and the Board of Supervisors, respectively. The meetings were 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 and City Ordinance are in full force and effect, as of the date hereof, and have not been modified, amended or rescinded since their 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 Escrow Agreement, the Purchase Contract, the City Ordinance 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 Supervisor s 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, [the Escrow Agreement] 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 Preliminary Official Statement and the Official Statement, neither the execution nor the delivery by the Commission of the Indenture, the Escrow Agreement, the Continuing Disclosure Certificate
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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 regul ation 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 Escrow Agreement, 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 Jefferies LLC, on its own behalf and as representative (the “Representative”) of Wells Fargo Bank, N.A., Barclays Capital Inc., RBC Capital Markets, LLC, Siebert Williams Shank & Co., LLC, and TD Securities (USA) LLC (together, the “Underwriting Group”), to the extent set forth herein, hereby certifies as set forth below with respect to the sale and issuance of the Public Utilities Commission of the City and County of San Francisco, San Francisco Water Revenue Bonds, 2025 Series ABC (collectively, the “Bonds”).
1. [Alternative 11 – All Maturities Use General Rule : Sale of the Bonds . As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.][Alternative 22 – Select Maturities Use General Rule: 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 of the Bonds was sold to the Public is the respective price listed in Schedule A.]
2. [Initial Offering Price of the Hold-the-Offering-Price Maturities].
(a) [The Underwriting Group offered the Hold- the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equi valent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Purchase Contract, the members of the Underwriting Group have agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, they would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold- the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail or other third- party distribution agreement shall contain the agreement of each broker -dealer who is a party to the retail or other third-party distribution agreement, to comply with the hold-the-offering-price rule. The Representative has not offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.]
3. Defined Terms.
[(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”]
1 If Alternative 1 is used , delete the remainder of paragraph 1 and all of paragraph 2 and re number paragraphs accordingly.
2 If Alternative 2 is used, delete Alternative 1 of paragraph 1 and use each Alternative 2 in paragraphs 2(a) and (b).
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[(b) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.”]
[(c) Holding Period means, with respect to a Hold -the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date ([DATE] ), or (ii) the date on which an Underwriter has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.]
(d) Issuer means the P ublic Utilities Commission of the City and County of San Francisco.
(e) 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.
(f) 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” fo r purposes of this certificate means any two or more persons who have greater than 50 percent common ownership, directly or indirectly.
(g) 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 [Sale Date].
(h) 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 or other third-party 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 the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate with 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.
JEFFERIES LLC, as Representative
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By: __________________________________
Name:
Title:
Dated: [Closing Date]
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND
INITIAL OFFERING PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES
(Attached)
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SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)
Norton Rose Fulbright US LLP draft of 1/30/25
203057559.4
1 ESCROW AGREEMENT
RELATED TO
REFUNDING AND DEFEASANCE OF CERTAIN
PUBLIC UTILITIES COMMISSION
OF THE CITY AND COUNTY OF SAN FRANCISCO
WATER REVENUE BONDS
THIS ESCROW AGREEMENT, dated as of April 1, 2025, is by and between 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”), and 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 escrow agent hereunder (the “Escrow Agent ”) and as successor trustee with respect to the Refunded Bonds referred to below (the “Trustee”).
WITNESSET H:
WHEREAS, at a duly called and held election on November 5, 2002, a majority of voters voting on the measure approved Proposition E (“ Proposition E of 2002”) to authorize the issuance by the Commission of its revenue bonds or other forms of revenue financing, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors of the City (the “Board ”), for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities under the jurisdiction of the Commission, subject to satisfaction of certain conditions; and
WHEREAS, the authority to issue revenue bonds pursuant to Proposition E of 2002 is expressly notwithstanding, and in addition to, the authority gra nted to the Board under Section 9.107 of the Charter, to provide for the issuance of revenue bonds of the City upon the assent of a majority of the voters upon any proposition for the issuance of revenue bonds; and WHEREAS, at the aforementioned duly called and held revenue bond election on November 5, 2002, a majority of voters voting on the measure also approved, under the authority of Charter Section 9.107, Proposition A (“ Proposition A of 2002”) which, among other things, authorized the Commission to issue its revenue bonds and/or other forms of revenue financing in a principal amount not to exceed $1,628,000,000 (such authorized amount being subject to reduction to the extent projects designed and intended in substantial part to improve the reliability of the City’s regional water system are issued by the San Francisco Bay Area Regional Water System Financing Authority) for the purpose of financing the costs of acquisition and construction of improvements to the City’s water system, funding capitalized interest and all costs and expenses incidental to such improvements, including but not limited to engineering, inspection, auditing, legal and fiscal agent fees and costs of issuance; and WHEREAS, Section 9.109 of the Charter authorizes the Board to provide for the issuance of revenue refunding bonds, for which no voter approval is required, for the purpose of refunding any outstanding revenue bonds of the City provided that such refunding bonds are 203057559.4 2
expected to result in net debt service savings to the City on a present value basis, calculated as provided by ordinance; and
WHEREAS, pursuant to Proposition E of 2002, Proposition A of 2002, or, as applicable, Section 9.109, and various ordinances and resolutions adopted by the Board and the Commission thereunder, the Commission has previously issued, under that certain Amended and Restated Indenture, dated as of August 1, 2002, by and between the Commission and the Trustee, as further amended and supplemented (the “ Indenture”), among other bonds, its San Francisco Water Revenue Bonds : (i) 2015 Series A (Refunding) (the “2015A Bonds”), (ii) 2017 Series ABC, 2017 Sub-Series A Bonds (WSIP) (Green Bonds ) (the “2017A Bonds”) (iii) 2017 Series ABC, 2017 Sub-Series B Bonds (Non-WSIP) (the “2017B Bonds”); (iv) 2017 Series ABC, 2017 Sub-Series C Bonds (Hetch Hetchy ) (the “2017C Bonds ”), (v) 2019 Series ABC, 2019 Sub- Series A Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds) (the “2019A Bonds ”); (vi) 2019 Series ABC, 2019 Sub- Series B Bonds (Refunding – Federally Taxable) (Hetch Hetchy) (the “2019B Bonds ”); (vii) 2019 Series ABC, 2019 Sub- Series C Bonds (Refunding – Federally Taxable) (Local Water Main) (the “2019C Bonds ”); (viii) 2020 Series EFGH, 2020 Sub-Series E Bonds (Refunding – Federally Taxable) (WSIP) (Green Bonds) (the “2020E Bonds”); (ix) 2020 Series EFGH, 2020 Sub- Series F Bonds (Refunding – Federally Taxable) (Non-WSIP) (the “2020F Bonds”); (x) 2020 Series EFGH, 2020 Sub-Series G Bonds (Refunding – Federally Taxable) (Local Water) (the “2020F Bonds”); and (xi) 2020 Series EFGH, 2020 Sub- Series H Bonds (Refunding – Federally Taxable) (Hetch Hetchy Water) (the “2020H Bonds ”); and
WHEREAS, on June 18, 2024 the Board of Supervisors of the City passed Ordinance No. 131-24, by a two- thirds vote, authorizing, among other things, the issuance of water revenue refunding bonds by the Commission, without limitation as to principal amount, subject to satisfaction of certain conditions; and on March 11, 2025, the Commission adopted Resolution No. 25-_____, authorizing the issuance of water revenue refunding bonds in an aggregate principal amount not exceeding $__________, each under the authority granted pursuant to Section 9.109 of the Charter; and
WHEREAS, under the authority hereinabove mentioned, the Commission has now determined to issue $[par] aggregate principal amount of its San Francisco Water Revenue Bonds, 2025 Series ABC in three sub-series: (i) 2025 Sub-Series A (Refunding) (WSIP) (Green Bonds) in the principal amount of $__________ (the “2025A Bonds”), to be issued under a Forty-Seventh Supplemental Indenture supplementing the Indenture; (ii) 2025 Sub-Series B (Refunding) (Non-WSIP) in the principal amount of $__________ (the “ 2025B Bonds”), to be issued under a Forty-Eighth Supplemental Indenture supplementing the Indenture ; and (iii) 2025 Sub-Series C (Hetch Hetchy) in the principal amount of $__________ (the “2025C Bonds”), to be issued under a Forty-Ninth Supplemental Indenture supplementing the Indenture. The 2025 Series ABC Bonds are being issued, in part, for the purpose of refunding and defeasing:
i. $__________ principal amount of the 2015A Bonds (such portion of the 2015A Bonds being refunded, referred to herein as the “2015A Refunded Bonds”); ii. $__________ principal amount of the 2017A Bonds (such portion of the 2017A Bonds being refunded, referred to herein as the “2017A Refunded Bonds”); 203057559.4 3
iii. $__________ principal amount of the 2017B Bonds (such portion of the 2017B Bonds being refunded, referred to herein as the “2017B Refunded Bonds”); and iv. $__________ principal amount of the 2017C Bonds (such portion of the 2017C Bonds being refunded, referred to herein as the “2017C Refunded Bonds”); v. $__________ principal amount of the 2019A Bonds (such portion of the 2019A Bonds being refunded, referred to herein as the “2019A Refunded Bonds”) vi. $__________ principal amount of the 2019B Bonds (such portion of the 2019B Bonds being refunded, referred to herein as the “2019B Refunded Bonds”) vii. $__________ principal amount of the 2019C Bonds (such portion of the 2019C Bonds being refunded, referred to herein as the “2019C Refunded Bonds”) viii. $__________ principal amount of the 2020E Bonds (such portion of the 2020E Bonds being refunded, referred to herein as the “2020E Refunded Bonds”) ix. $__________ principal amount of the 2020F Bonds (such portion of the 2020F Bonds being refunded, referred to herein as the “2020F Refunded Bonds”) x. $__________ principal amount of the 2020G Bonds (such portion of the 2020G Bonds being refunded, referred to herein as the “2020G Refunded Bonds”) xi. $__________ principal amount of the 2020H Bonds (such portion of the 2020H Bonds being refunded, referred to herein as the “ 2020H Refunded Bonds ” and, together with the 2015A Refunded Bonds, the 2017A Refunded Bonds, the 2017B Refunded Bonds , the 2017C Refunded Bonds , the 2019A Refunded Bonds , the 2019B Refunded Bonds, the 2019C Refunded Bonds, the 2020E Refunded Bonds, the 2020F Refunded Bonds, and the 2020G Refunded Bonds, the “Refunded Bonds”) all as more specifically shown in Exhibit A attached hereto; and WHEREAS, by irrevocably depositing with the Escrow Agent a portion of the proceeds of the 2025 Series ABC Bonds and directing the Escrow Agent to invest such amounts in certain federal securities satisfying the criteria set forth in Section 10.02 of the Indenture (as further detailed in Exhibit C attached hereto, the “ Initial Federal Securities” and designated as such on such Exhibit C), the Escrow Agent will have sufficient moneys to pay: [to be confirmed] (a) the interest coming due on the Refunded Bonds on each interest payment date therefor on and before their respective maturity date s, and redemption dates, as applicable, of such Refunded Bonds, and (b) the principal due at maturity on the Refunded Bonds; and WHEREAS, the Escrow Agent, in reliance on the verification report prepared by [ AW Smith LLC] (the “Verification Report”), which Verification Report shows that money deposited in the Escrow Fund (hereinafter defined) will be sufficient when invested in the federal securities hereafter specified, and giving account to the maturing principal of such securities and investment earnings thereon (excluding reinvestment earnings) and cash deposited in the Escrow Fund are sufficient to provide for the timely payment of the Refunded Bonds, has determined that the Escrow Fund is sufficient for such purpose; and 203057559.4 4
WHEREAS, concurrently with the refunding of the Refunded Bonds, the Commission will purchase and cancel certain of its bonds, including a portion of [ the 2019A Bonds , the 2019B Bonds, the 2019C Bonds, the 2020E Bonds, the 2020E Bonds, the 2020F Bonds, the 2020G Bonds, and the 2020H Bonds];
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Commission and the Escrow Agent agree as follows:
SECTION 1. Establishment of Escrow Fund. There is hereby created and established with the Escrow Agent a special, segregated and irrevocable escrow fund (the “Escrow Fund”) to be held in the custody of the Escrow Agent in escrow for the benefit of the registered owners of the Refunded Bonds, separate and apart from other funds of the Commission. Within the Escrow Fund, the Escrow Agent shall create [eleven][ adjust down if less than all target bonds are advance refunded] separate accounts:
i. one relating exclusively to the 2015A Refunded Bonds (the “ 2015A Escrow Account”);
ii. one relating exclusively to the 2017A Refunded Bonds (the “ 2017A Escrow Account”);
iii. one relating exclusively to the 2017B Refunded Bonds (the “ 2017B Escrow Account”);
iv. one relating exclusively to the 2017C Refunded Bonds (the “ 2017C Escrow Account”);
v. one relating exclusively to the 2019A Refunded Bonds (the “ 2019A Escrow Account”);
vi. one relating exclusively to the 2019B Refunded Bonds (the “ 2019B Escrow Account”);
vii. one relating exclusively to the 2019C Refunded Bonds (the “ 2019C Escrow Account”);
viii. one relating exclusively to the 2020E Refunded Bonds (the “ 2020E Escrow Account”);
ix. one relating exclusively to the 2020F Refunded Bonds (the “ 2020F Escrow Account”);
x. one relating exclusively to the 2020G Refunded Bonds (the “ 2020G Escrow Account”); and
xi. one relating exclusively to the 2020H Refunded Bonds (the “ 2020H Escrow Account”).
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SECTION 2. Deposit of Moneys. The Commission hereby irrevocably deposits with the Escrow Agent the amount of $__________ in the Escrow Fund, representing:
i. $__________ of proceeds of the [ 2025A] Bonds (which shall be allocated and deposited to the 2015A Escrow Account);
ii. $__________ of proceeds of the [2025A ] Bonds (which shall be allocated and deposited to the 2017A Escrow Account);
iii. $__________ of proceeds of the [2025B ] Bonds (which shall be allocated and deposited to the 2017B Escrow Account);
iv. $__________ of proceeds of the [ 2025C] Bonds (which shall be allocated and deposited to the 2017C Escrow Account);
v. $__________ of proceeds of the [2025A] Bonds (which shall be allocated and deposited to the 2019A Escrow Account);
vi. $__________ of proceeds of the [2025C] Bonds (which shall be allocated and deposited to the 2019B Escrow Account);
vii. $__________ of proceeds of the [2025B] Bonds (which shall be allocated and deposited to the 2019C Escrow Account);
viii. $__________ of proceeds of the [2025A] Bonds (which shall be allocated and deposited to the 2020E Escrow Account);
ix. $__________ of proceeds of the [2025B] Bonds (which shall be allocated and deposited to the 2020F Escrow Account);
x. $__________ of proceeds of the [2025B] Bonds (which shall be allocated and deposited to the 2020G Escrow Account); and
xi. $__________ of proceeds of the [2025C] Bonds (which shall be allocated and deposited to the 2020H Escrow Account);
The moneys in the Escrow Fund (and the [eleven] accounts therein) shall be applied solely as provided in this Escrow Agreement. The Commission has determined in reliance on the Verification Report that the moneys set forth above when invested in the federal securities hereafter specified, and giving account to the maturing principal of such federal securities and investment earnings thereon (excluding reinvestment earnings) are at least equal to an amount sufficient to defease the Refunded Bonds by paying when due the amounts shown i n Exhibit B attached hereto.
SECTION 3. Application of Moneys in the Escrow Fund. The Escrow Agent acknowledges receipt of the moneys described in Section 2 in the Escrow Fund and agrees , on [____________], 2025, to use $__________ of such moneys to purchase , on behalf of and for the account of the Commission, the Initial Federal Securities, and to hold $__________ as 203057559.4 6
uninvested cash (such Initial Federal Securities and uninvested cash for each Escrow Account within the Escrow Fund all as more specifically described in Exhibit C). [Subject to the conditions set forth in the next sentence, the Escrow Agent shall apply amounts received from the investment of the Initial Federal Securities and the un -invested cash described above to purchase, on behalf of and for the account of the Commission, the U.S.
Treasury Securities, State and Local Government Series Securities – Time Deposit (“SLGs”) bearing interest at 0.00% per annum (as further detailed in Exhibit C attached hereto, the “Reinvestment Zero SLGs ” and designated as such on Exhibit C ). The Escrow Agent’s obligation to acquire the Reinvestment Zero SLGs is conditioned upon (i) the availability of receipts from the Initial Federal Securities and such un -invested cash to acquire the Reinvestment Zero SLGs , and (ii) the availability of United States Treasury, State and Local Government Series, Time Deposit Securities bearing interest at the rate of 0.000% per annum on each of the purchase dates designated on Exhibit C.]
The Initial Federal Securities and the [Reinvestment Zero SLGs] are scheduled to mature on or before the times when they will be required for the payment of the principal at maturity of, and interest on, the applicable Refunded Bonds as shown in Exhibit B.
SECTION 4. Payment of the Refunded Bonds.
(a) Payment of the Refunded Bonds . The moneys on deposit in the Escrow Fund (including moneys from the maturing principal of the Initial Federal Securities and the [Reinvestment Zero SLGs] (or other Federal Securities hereafter deposited therein in accordance with Section 8) and the investment income and other earnings thereon) shall be applied by the Escrow Agent as follows:
(i) The Escrow Agent shall apply the amounts on deposit in the 2015A Escrow Account to pay the redemption price equal to 100% of the principal amount of the 2015A Refunded Bonds to be redeemed , plus accrued interest thereon on [________, 2025];
(ii) The Escrow Agent shall apply the amounts on deposit in the 2017A Escrow Account to pay the redemption price equal to 100% of the principal amount of the 2017A Refunded Bonds to be redeemed, plus accrued interest thereon on [_______, 2025];
(iii) The Escrow Agent shall apply the amounts on deposit in the 2017B Escrow Account to pay the redemption price equal to 100% of the principal amount of the 2017B Refunded Bonds to be redeemed, plus accrued interest thereon on [_______, 2025];
(iv) The Escrow Agent shall apply the amounts on deposit in the 2017C Escrow Account to pay the redemption price equal to 100% of the principal amount of the 2017C Refunded Bonds to be redeemed, plus accrued interest thereon on [_______, 2025];
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(v) The Escrow Agent shall apply the amounts on deposit in the 2019A Escrow Account to pay (x) interest on the 2019A Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; (vi) The Escrow Agent shall apply the amounts on deposit in the 2019B Escrow Account to pay (x) interest on the 2019B Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; (vii) The Escrow Agent shall apply the amounts on deposit in the 2019C Escrow Account to pay (x) interest on the 2019C Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; (viii) The Escrow Agent shall apply the amounts on deposit in the 2020E Escrow Account to pay (x) interest on the 2020E Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; (ix) The Escrow Agent shall apply the amounts on deposit in the 2020F Escrow Account to pay (x) interest on the 2020F Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; (x) The Escrow Agent shall apply the amounts on deposit in the 2020G Escrow Account to pay (x) interest on the 2020G Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; (xi) The Escrow Agent shall apply the amounts on deposit in the 2020H Escrow Account to pay (x) interest on the 2020H Refunded Bonds coming due on and prior to the respective maturity dates thereof, and (y) the principal amounts therefor coming due on their respective maturity dates; all as shown in the disbursement requirements set forth in Exhibit B. (b) Priority of Payments . The Owners of the Refunded Bonds of each sub - series shall have a lien on, and the Commission hereby irrevocably pledges and grants a security interest in, the moneys and securities in the Escrow Fund which are allocable and sufficient to repay the Refunded Bonds of such sub- series, in accordance with this Escrow Agreement, until such moneys and such securities are used and applied as provided in this Escrow Agreement.
(c) Transfer of Excess Funds in Escrow Fund. Any amounts remaining in the Escrow Fund following the payment of all Refunded Bonds shall be transferred by the Escrow Agent to or at the direction of the Commission.
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SECTION 5. Irrevocable Instructions to Provide Notices; Incorporation of Definitions in Indenture; Application of Certain Terms of Indenture.
(a) Irrevocable Instructions to Provide Notice s of Defeasance. The Commission hereby irrevocably instructs the Escrow Agent (as Trustee for the Refunded Bonds):
(i) to provide, within three (3) business days of the date of deposit of amounts pursuant to Section 2 hereof, notices substantially in the forms set forth in Exhibit D attached hereto, that irrevocable deposit s have been made with the Escrow Agent and that the Refunded Bonds of the respective sub- series have been deemed to be paid in accordance with the Indenture, (i) by mail to the registered owners of the applicable sub- series of the Refunded Bonds, (ii) by mail to the Securities Depositories, (iii) by mail to one or more Information Services and (iv) by electronic means of communication to the Municipal Securities Rulemaking Board (“MSRB”) through the Electronic Municipal Market Access System (referred to as “EMMA”), at www.emma.msrb.org; and (ii) provide, at least thirty (30) days but not more than sixty (60) days prior to the applicable redemption date for each sub- series of the Refunded Bonds, notice substantially in the forms set forth in Exhibit E attached hereto, of the redemption of the Refunded Bonds designated for redemption on such date (i) by mail to the registered owners of the Refunded Bonds, (ii) by mail to the Securities Depositories, (iii) by mail to one or more Information Services and (iv) by electronic means of communication to the MSRB through EMMA, at www.emma.msrb.org, all in accordance with the Indenture. (b) Incorporation of Definitions . Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Indenture. (c) Application of Certain Terms. All of the terms of the Indenture relating to the making of payments of principal , interest and redemption price with respect to the applicable Refunded Bonds and relating to the notices of defeasance and redemption are incorporated in this Escrow Agreement as if set forth in full herein. The procedures set forth in the Indenture relating to the resignation and removal of the Trustee thereunder are also incorporated in this Escrow Agreement as if set forth in full herein and shall be the procedures to be followed with respect to any resignation or removal of the Escrow Agent hereunder.
SECTION 6. Performance of Duties . The Escrow Agent agrees to perform only the duties set forth herein and shall have no responsibility to take any action or omit to take any action not set forth herein; provided that the Escrow Agent hereby confirms that it will take all actions required to be taken by it under the Indenture and this Escrow Agreement in order to effectuate the defeasance, redemption and payment of the Refunded Bonds as provided herein.
SECTION 7. Escrow Agent’s Authority to Make Investments . Except as provided in Section 3 and Section 8 of this Escrow Agreement, the Escrow Agent shall have no power or duty to invest any funds held under this Escrow Agreement or to sell, transfer or otherwise dispose of the moneys held hereunder.
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SECTION 8. Investment of Funds in the Escrow Fund.
(a) Except as otherwise provided in Section 3 hereof, amounts held in the Escrow Fund under this Escrow Agreement may be invested only in United States treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States of America are pledged for the payment of principal and interest (including obligations issued or held in book- entry form and securities which represent an undivided interest in such direct obligations); any securities now or hereafter authorized, both the principal of and interest on which is guaranteed directly by the full faith and credit of the United States of America, and including interest strips held in book-entry form by the Federal Reserve Bank of New York of bonds issued by the Resolution Funding Corporation; bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):
(i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S.
Export-Import Bank, (ii) certificates of beneficial ownership of the Rural Economic Community Development Administration (formerly the Farmers Home Administration), (iii) obligations of the Federal Financing Bank, (iv) debentures of the Federal Housing Administration; (v) participation certificates of the General Services Administration, (vi) guaranteed Title XI financings of the U.S. Maritime Administration, and (vii) project notes, local authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban Development. Those obligations described in the preceding sentence are herein referred to as “ Federal Securities.”
(b) Only if and to the extent the Commission so directs , the Escrow Agent shall redeem, transfer or exchange the Initial Federal Securities , the [Reinvestment Zero SLGs] or any Federal Securities which are then held as an investment of the Escrow Fund and reinvest the proceeds thereof, together with the other moneys held in such Escrow Fund in Federal Securities, and may release to the Commission the excess amount then resulting in the Escrow Fund provided that the Commission delivers to the Escrow Agent the following:
(i) an opinion of an independent certified public accountant to the effect that, after such reinvestment the principal amount of Federal Securities, together with the interest thereon and other available moneys held in the Escrow Fund, will be sufficient without reinvestment to pay interest on , and the principal or redemption price of, the Refunded Bonds as provided in Section 4 hereof; and (ii) an unqualified opinion of nationally recognized municipal bond counsel to the effect that (a) such investment will not cause either the Refunded Bonds issued under the Indenture to be “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder in effect on the date of such investment, or otherwise cause the interest on any of such bonds (not designated as taxable bonds) to be included in the gross income of the recipients thereof for federal income tax 203057559.4 10
purposes, and (b) such reinvestment complies with the Constitution and laws of the State of California and with all relevant documents relating to the issuance of the Refunded Bonds.
(c) Subject to Section 3, i f, at any time, the Initial Federal Securities , the [Reinvestment Zero SLGs] or other Federal Securities then held as an investment of the Escrow Fund mature or payments are made thereon to the Escrow Agent or the Escrow Agent otherwise holds or receives cash in advance of the time same cash is needed to make payment on the Refunded Bonds, such amounts shall be held uninvested unless the Escrow Agent has received written instructions from the Commission directing the investment of such amounts and all of the following requirements have been met:
(i) such moneys shall be invested only in Federal Securities that mature not later than the date on which the funds invested therein will be needed to make payments on the Refunded Bonds;
(ii) such moneys shall be invested only in Federal Securities that mature in an amount, together with interest thereon, not less than the full amount paid by Escrow Agent to acquire such investments;
(iii) prior to any such reinvestment, the Escrow Agent shall receive from the Commission or the Commission’s financial advisor a certificate to the effect that the investments to be acquired by the Escrow Agent meet the requirements of Subsections 8(c)(i) and 8(c)(ii) above; and (iv) if the yield on the securities purchased as part of such reinvestment is greater than 0.00% or the reinvestment is being made pursuant to an agreement providing for the purchase of Federal Securities at a future time or times (other than the [Reinvestment Zero SLGs] required in Section 3 above), then prior to any such reinvestment, the Commission shall deliver to the Escrow Agent an unqualified opinion of nationally recognized municipal bond counsel to the effect that such reinvestment will not cause either the Refunded Bonds issued under the Indenture to be “arbitrage bonds” within the meaning of Section 148 of the Code, and the regulations thereunder in effect on the date of such investment, or otherwise cause the interest on any of such bonds (not designated as taxable bonds) to be included in the gross income of the recipients thereof for federal income tax purposes; provided that, if such investment is made pursuant to the terms of an agreement between the Escrow Agent and a supplier of securities which agreement is entered into by the Escrow Agent at the written direction of the Commission and provides for investments to be provided at a future time or times, then the requirement set forth in this Subsection 8(c)(iv) shall be met if the opinion described herein is provided prior to the time the agreement is entered into and relates to all investments made in accordance with the terms of such agreement.
(d) In addition to the requirements and restrictions set forth above in Subsection 8(c), if the Refunded Bonds then carry a rating assigned by Moody’s and/or 203057559.4 11
Standard & Poor’s on the basis of the security provided by the Escrow Fund, then the Commission shall not direct the Escrow Agent to enter into an agreement providing for the purchase of securities at a future time or times as an investment of the Escrow Fund unless prior to the time the Escrow Agent enters into such agreement, the Commission has been notified by the rating agency or agencies then maintaining such rating or ratings that entering into the agreement will not cause the rating or ratings then assigned to the Refunded Bonds to be reduced or withdrawn.