CleanPowerSF Sfpuc Commission
July 14, 2026

Clean Water State Revolving Fund (CWSRF)
for Lower Alemany Area Stormwater
Improvement Project
1 Loans & Grants
Business Services | July 14, 2026
Alexandra Gunnell, Loans & Grants Director
Agenda
2 • SRF Loan Program Background / SFPUC History
• Project Funding / Financing Terms
• Loan Administration
• Good Faith Estimate
• Summary of Requested Commission Action:
o Approve the form of Installment Sale Agreement for a
Clean Water State Revolving Fund Loan for the Lower
Alemany Area Stormwater Improvement Project in an
amount not to exceed $60,000,000 with a principal
forgiveness amount for up to $5,000,000; and
authorize the General Manager to execute any other
necessary agreements for this agreement.

Lower Alemany Area Stormwater
Improvement Project
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State Revolving Fund
Program
3 • The SRF is a US EPA program administered
in California by the State Water Resources Control
Board
• Provides low-cost loans for qualified water and
wastewater projects
o Loan interest rate set at 50% of the State’s most
recent GO bond issuance interest rate; currently

2.3%
o Additional grant/principal forgiveness funding for
eligible water recycling and stormwater projects
SEP Primary/Secondary Clarifier
Upgrades & SEP 521/522
Disinfection Upgrades

SFPUC Wastewater Enterprise
SRF Projects
SFPUC has also executed 3 SRF financing agreements for Water Enterprise totaling $479,312,982 since 2014
Project Loan Amount Interest Rate Date Executed
Folsom Stormwater $50M loan + $5M grant 1.8% June 11, 2025 Treasure Island $110M loan + $5M grant 1.7% June 11, 2025 SEP Headworks $112M 1.1% May 10, 2021
BDFP $128M loan + $4M grant 1.4% May 7, 2020
OSP Digester Gas Utilization $50.4M loan + $4M grant 1.4% May 7, 2020 SEP 521/522 $40M 1.8% September 28, 2017
SEP Clarifiers $34.4M 1.8% September 21, 2017
NPO Rehab $20.2M 1.8% September 21, 2017
Lake Merced EIP $7.4M 1.6% January 12, 2016
Lower Alemany Stormwater
Improvement SRF Loan
5 • Lower Alemany Area Stormwater Improvement Project - $364M forecasted total project cost o The Lower Alemany area is prone to flooding during moderate to heavy storms.This project will increase combined flow capacity and resilience by constructing a 10-foot diameter tunnel and sewer box.
• $50M Clean Water SRF loan, plus a $5M grant to provide partial funding ($60M Commission authorization request includes construction period interest accrual estimate) • Wastewater Enterprise Capital Improvement Program (WWECIP) will fund the project incrementally over the life of the contract.

Financing Terms
• Interest rate estimated to be 2.3%
• 30-yr repayment commences April 1 immediately following Construction Completion
• Secured by a pledge of Net revenues of the Wastewater Enterprise • Parity lien with revenue bonds, 9 SRF and 3 WIFIA loans Loan Administration
• Compliance with state and federal requirements
(CEQA-Plus, Davis-Bacon, American Iron &
Steel / Build America, Buy America)
• Quarterly construction progress reporting
• Project site visits conducted by SWRCB and
possibly by US EPA
• Periodic disbursement requests and repayments
• Project report at construction completion
• Noticing requirements for project milestones and
significant project events and changes
• Financial reporting and noticing, similar to what
is required for revenue bonds
Biosolids Digester Facilities Project

“Good Faith Estimate”
7 Lower Alemany Area Stormwater Improvement Project
True Interest Cost 1.77%
Finance Charge of the Loan $36,000
Amount of Proceeds Received $54,964,000
Total Payment Amount $75,160,418
SB 450 requires the governing body of a local public body to obtain and disclose good faith estimates of the following financing-related information prior to the authorization of bonds, notes or other forms of indebtedness.

Source: Montague DeRose & Associations LLC as of May 1, 2026 Summary of Requested
Commission Action
8 Approve the form of Installment Sale Agreement for a Clean Water State Revolving Fund Loan for the Lower Alemany Area Stormwater Improvement Project in an amount not to exceed $60,000,000; and authorize the General Manager to execute the Installment Sale Agreement.

Questions?
9 AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT: Business Services AGENDA NUMBER: 9 MEETING DATE: July 14, 2026
Calendar: Regular Calendar
Project Manager: Alexandra Gunnell
Authorize Clean Water State Revolving Fund Loan Agreement for the Wastewater Enterprise Lower Alemany Area Stormwater Improvement Project Summary of Proposed
Commission Action:

Authorize the General Manager to execute an Installment Sale Agreement to secure a Clean Water State Revolving
Fund Loan for the Lower Alemany Area Stormwater
Improvement Project in a principal amount not to exceed $60,000,000 and with a principal forgiveness amount for up to $5,000,000.

Background: San Francisco Public Utilities Commission (SFPUC) Involvement in the Clean Water State Revolving Fund
(SRF) Program

The SFPUC has a long history of working with the State
Water Resources Control Board (State Water Board) under the SRF loan program. From 1991 to 2001, the SFPUC
entered 13 SRF loans totaling $280 million to fund many Wastewater Enterprise capital projects. The SFPUC did not seek SRF loan financing between 2001 and 2014, due to
interest rates and amortization terms that were less favorable than revenue bond financing. In early 2014, after seeking input from public agencies including the SFPUC, the State Water Board implemented revisions to the SRF loan program to (i) extend the amortization period to 30 years to align with conventional 30-year revenue bond terms, and (ii) allow SRF loans to be on a parity lien basis with revenue bonds (rather than the former requirement that SRF loans be issued on a more restrictive senior lien basis).

Since 2014, SFPUC senior management has worked closely
with the State Water Board to ensure that the SFPUC would be able to resume participation in the SRF Loan Program.

The SFPUC has executed nine SRF loans since 2014 for the Agenda Title: Lower Alemany Area Stormwater Improvement Project Commission Meeting Date: July 14, 2026

Wastewater Enterprise, in a combined amount not to exceed $570,511,103 (which includes $ 18,000,000 in grant
funding/principal forgiveness ). In addition, the SFPUC has entered into three SRF loans for the Water Enterprise in a combined amount not to exceed $ 479,312,982 (which
includes $15,000,000 in grant funding).

Legislative History

The proposed loan is being issued pursuant to previously approved Wastewater Enterprise financing authorizations which, among other things, authorized the issuance of
Wastewater Revenue Bonds and other forms of indebtedness (including, SRF installment sales agreements), to finance capital projects benefiting the W astewater Enterprise as detailed in the below table.

On February 14, 2023, the Commission adopted Resolution No. 23-0038 and on July 25, 2023, the Board of Supervisors adopted Ordinance No. 181 -23 authorizing the issua
nce of
Wastewater Revenue Bonds and other forms of indebtedness to fund W astewater Enterprise capi tal projects and delegate authorization to execute W astewater Enterprise SRF loan agreements to the Commission.

On February 13, 2024, the Commission adopted Resolution No. 24-0031 and on June 11, 2024, the Board of Supervisors adopted Ordinance No. 125 -24 authorizing
the issuance of
Wastewater Revenue Bonds and other forms of indebtedness to finance capital projects benefiting the W astewater
Enterprise.

SFPUC
Resolution
BOS
Ordinance
Date
of Ordinance
Ordinance
Signed by
Mayor
23-0038 181-23 July 25, 2023 July 28, 2023
24-0031 125-24 June 11, 2024 June 21, 2024

Lower Alemany Area Stormwater Improvement Project
Description
The Lower Alemany area has been subject to flooding during moderate to heavy storms. The Lower Alemany Area
Stormwater Improvements will improve collection system
capacity and increase flood resilience during wet weather events by constructing a 10-foot internal diameter tunnel and Agenda Title: Lower Alemany Area Stormwater Improvement Project Commission Meeting Date: July 14, 2026

sewer box.

The Lower Alemany Area Stormwater Improvement Project
cost is projected to be $ 364,055,015 which would be partially funded by the proposed low-cost SRF loan.

SRF Financing Terms

The State Water Board’s SRF Loan Program currently
provides 30- year loans at an interest rate equal to or less than one- half of the most recent State of California 30- year General Obligation Bond rate, with the loan rate currently estimated to be [ 2.0%.] This rate compares favorably to the FY2026-27 4.75% borrowing interest cost assumption used for planning projected Wastewater Enterprise borrowing in the 10-year financial plan.

Payment of the Lower Alemany Area Stormwater
Improvement Project SRF Loan will be secured by a pledge of the net revenues of the Wastewater Enterprise, on a parity lien basis with the Wastewater Enterprise’s outstanding senior lien Wastewater Revenue Bonds, other SRF Loans,
and the federal Water Infrastructure Finance and Innovation Act (WIFIA) Loans.

The SRF loan also includes a Principal Forgiveness
Component of up to $5,000,000. SFPUC may draw up to
[$55,000,000] in eligible project expenditures for
reimbursement under the SRF loan, but the principal portion of the loan repayment relating to the project funds requested under the loan, would be reduced to $50,000,000.

Financing capital projects from SRF loans differs from
financing projects through revenue bonds in several
significant ways:

Reimbursement: Unlike revenue bonds where the issuer
receives the proceeds at the time of the sale, SRF loans are disbursed as a reimbursement after project costs are
incurred. This will require the Wastewater Enterprise’s available cash or commercial paper program to encumber
contracts and pay project costs until reimbursement is made by the State. Reimbursement by the State is subject to
availability of sufficient SRF program funds, subject to administrative delays, and not guaranteed through the
duration of the project construction period. In addition, the Agenda Title: Lower Alemany Area Stormwater Improvement Project Commission Meeting Date: July 14, 2026

differences in timing mean the relative interest advantage of one financing versus another may fluctuate to the extent interest rates are volatile and long- term borrowing is occurring at different points in time. Accordingly, it is possible that the SFPUC may need to issue revenue bonds to refund any outstanding commercial paper and finance the project.

Noticing Requirements: The State requires notification from the SFPUC should any of the following events occur
substantial change in project scope; significant work
stoppage (>30 days); delay completion of construction (>90 days); discovery of archeological or historical resource; discovery of endangered or threatened species; public
meeting publicizing the loan agreement; and completion of project.

Additional Terms

In May 2017, the State Water Board approved tailored loan terms for all SRF loans entered into between the SFPUC and the State Water Board. The tailored loan terms allow for the SFPUC’s SRF loan agreements to align with bond indenture requirements of the Wastewater Enterprise. In summary, the special terms to be incorporated into these loan agreements include:
• Use of terms and conditions related to debt service
coverage and additional debt tests consistent with the
SFPUC’s existing indentures, including the definitions
of revenues and operations and maintenance; and
• Provisions requiring the SFPUC to (i) provide notice, within 30 days, whenever it is reported that net
revenues, calculated on a current -year basis
(excluding retained earnings from the previous year
and other available funds), are projected to fall below

1.1 times debt service in any year, and (ii) within 60
days after such notice, prepare a fiscal plan detailing the SFPUC’s ability to meet all upcoming operations
and maintenance expenses and debt service
requirements for the next three years, and any
corrective actions the SFPUC intends to take to
ensure fiscal sustainability, including if necessary,
raising rates and charges.

SB 450 Legislation Compliance

In 2017, California Senate Bill 450 (SB 450) was enacted. SB Agenda Title: Lower Alemany Area Stormwater Improvement Project Commission Meeting Date: July 14, 2026

450 requires the governing body of a local public body to obtain and disclose good faith estimates of the following financing-related information prior to the authorization of bonds, notes or other forms of indebtedness (including the Lower Alemany Area Stormwater Improvement Project SRF
Loan):

1. True Interest Cost (TIC) of the loan.

2. Finance charge of the loan: This represents the sum of all fees and charges paid to third parties.

3. Amount of proceeds received: This represents
proceeds of the loan net of the fees and charges paid
to third parties and any reserves or capitalized interest funded by the loan.

4. Total payment amount: This represents the sum of all debt service payments on the loan calculated to the
final maturity of the loan plus any fees and charges
paid to third parties not paid with proceeds of the loan.

SB 450 requires that the good faith estimates be obtained from either the issuer’s municipal advisor, underwriter or third-party lender.

The following represents a good faith reasonable estimate of certain costs for the Lower Alemany Area Stormwater
Improvement Project SRF Loan for purposes of compliance with SB 450, based upon information available as of May 1, 2026. Staff has consulted with its municipal advisor assigned to this project, Montague DeRose & Associates LLC, and
obtained estimates reflecting the expected closing date with regard to the Lower Alemany Area Stormwater Improvement.

Actual results may vary.

1. True Interest Cost: 1.77%

2. Finance Charge of the Loan (reflects transaction costs of issuance): $36,000.00

3. Amount of Proceeds Received by the Public Body for
Entering into the Loan (net of reserves or capitalized
interest deposits and the finance charge of the loan):
$54,964,000

4. Total Payment Amount (i.e., Total Net Debt Service net of Capitalized Interest, if any): $75,160,418

Environmental
Review:

On March 25, 2025, the Planning Department determined the Project to be categorically exempt from environmental review under the
California Environmental Quality Act (CEQA)
Guidelines Section 15301, Class 1 (Existing Facilities) , and Agenda Title: Lower Alemany Area Stormwater Improvement Project Commission Meeting Date: July 14, 2026

CEQA Guidelines Section 15303, Class 3 (New Construction or Conversion of Small Structures) (Case Number 2023-
000654ENV).

This action is within the scope of the Project evaluated in the exemption.

View the CEQA exemption determination.

Attachments: 1. Exhibit A: Summary of SRF Loan Agreements

2. Exhibit B: Form of Installment Sale Agreement with the State Water Resources Control Board

PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________________
WHEREAS, On November 5, 2002, the voters of the City and County of San Francisco (the “City”) approved Proposition E (“Proposition E”), codified as Article VIIIB of the Charter of the City (the “Charter”), which, among other things, authorized the Public Utilities Commission of the City and County of San Francisco (the “Public Utilities Commission”) to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two- thirds vote of the Board of Supervisors of the City (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 Public Utilities Commission, subject to the provision of certain certifications of an independent engineer retained by the Public Utilities Commission and certain certifications by the San Francisco Planning Department (the “Planning Department”), which certifications shall make the findings and determinations set forth in Charter Section 8B.124 (together, the “Proposition E Certificates”); and

WHEREAS, On February 11, 2020, the Public Utilities Commission adopted Resolution No. 20-0031, authorizing, among other things, that the General Manager (as defined herein) submit to and request that the Board of Supervisors approve proposed ordinances authorizing the issuance of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the California State Water Resources Control Board (the “State Water Resources Control Board”) to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission); and

WHEREAS, On July 27, 2021, the Board of Supervisors adopted Ordinance No. 173-20, signed by the Mayor of the City (the “Mayor”) on August 4, 2021, to, among other matters, authorize the issuance of up to $349,919,252 of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission) to finance capital projects benefiting the Wastewater Enterprise (as defined in that certain Indenture, dated as of January 1, 2003, by and between the Public Utilities Commission and U.S. Bank National Association, as trustee, as amended and supplemented (the “Indenture”), and to declare, on behalf of the Public Utilities Commission, pursuant to Internal Revenue Service Treasury Regulation Section 1.150- 2, the official intent of the Public Utilities Commission to the use of proceeds of such installment sales agreements for reimbursement purposes; and

WHEREAS, On July 27, 2021, the Board of Supervisors adopted Ordinance No. 128-21, signed by the Mayor on August 4, 2021, which amended Ordinance No. 173-20, to, among other matters, authorize the issuance of up to $563,430,430 of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission) to finance capital projects benefiting the Wastewater Enterprise, and to declare, on behalf of the Public Utilities Commission, pursuant to Internal Revenue Service Treasury Regulation Section 1.150- 2, the official intent of the Public Utilities Commission to the use of proceeds of such installment sales agreements for reimbursement purposes; and

WHEREAS, On February 8, 2022, the Public Utilities Commission adopted Resolution No. 22- 0030, authorizing, among other things, that the General Manager submit to and request that the Board of Supervisors approve a proposed ordinance authorizing the issuance of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board, to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission); and

WHEREAS, On June 14, 2022, the Board of Supervisors adopted Ordinance No. 110-22, signed by the Mayor on June 24, 2022, to, among other matters, authorize the issuance of up to $704,198,901 of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission) to finance capital projects benefiting the Wastewater Enterprise, and to declare, on behalf of the Public Utilities Commission, pursuant to Internal Revenue Service Treasury Regulation Section 1.150- 2, the official intent of the Public Utilities Commission to the use of proceeds of such installment sales agreements for reimbursement purposes; and

WHEREAS, On February 14, 2023, the Public Utilities Commission adopted Resolution No. 23- 0038, authorizing, among other things, that the General Manager submit to and request that the Board of Supervisors approve a proposed ordinance authorizing the issuance of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board, to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission); and

WHEREAS, On July 25, 2023, the Board of Supervisors adopted Ordinance No. 181-23, signed by the Mayor on July 28, 2023, to, among other matters, authorize the issuance of up to $1,047,288,286 of Wastewater Revenue Bonds and other forms of

indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission) to finance capital projects benefiting the Wastewater Enterprise, and to declare, on behalf of the Public Utilities Commission, pursuant to Internal Revenue Service Treasury Regulation Section 1.150- 2, the official intent of the Public Utilities Commission to the use of proceeds of such installment sales agreements for reimbursement purposes; and

WHEREAS, On February 13, 2024, the Public Utilities Commission adopted Resolution No. 24- 0031, authorizing, among other things, that the General Manager submit to and request that the Board of Supervisors approve a proposed ordinance authorizing the issuance of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board, to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission); and

WHEREAS, On June 11, 2024, the Board of Supervisors adopted Ordinance No. 125-24, signed by the Mayor on June 21, 2024, to, among other matters, authorize the issuance of up to $1,715,671,086 of Wastewater Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the Public Utilities Commission and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the Public Utilities Commission) to finance capital projects benefiting the Wastewater Enterprise, and to declare, on behalf of the Public Utilities Commission, pursuant to Internal Revenue Service Treasury Regulation Section 1.150- 2, the official intent of the Public Utilities Commission to the use of proceeds of such installment sales agreements for reimbursement purposes; and

WHEREAS, The Proposition E Certificates meeting the Proposition E requirements are on file with the Clerk of the Board in accordance with Proposition E; and

WHEREAS, On March 25, 2025, the Planning Department determined the Project to be categorically exempt from environmental review under the California Environmental Quality Act (CEQA) Guidelines Section 15301, Class 1 (Existing Facilities), and CEQA Guidelines Section 15303, Class 3 (New Construction or Conversion of Small Structures) (Case Number 2023-000654ENV); and

WHEREAS, This action is within the scope of the Project evaluated in the exemption; and

WHEREAS, Pursuant to resolutions and ordinances described herein, the Public Utilities Commission is required to present the terms and form of any installment sales agreements authorized therein for prior approval by the Public Utilities Commission; and

WHEREAS, The table attached hereto as Exhibit A provides a list of state loans previously made or expected to be made by the State Water Resources Control Board to the Public Utilities Commission, and such table reflects the previously authorized or expected to be authorized (as applicable) not -to-exceed principal amounts for such state loans, the respective estimated construction completion dates for the respective projects expected to be financed under such state loans and the respective estimated commencement date of the repayment term thereunder; and

WHEREAS, The Public Utilities Commission now desires to approve the terms and form of that certain installment sale agreement and grant relating to the Lower Alemany Area Stormwater Improvement Project, dated as of its date (the “Installment Sale Agreement and Grant”), by and between the State Water Resources Control Board and the Public Utilities Commission; now, therefore be it resolved as follows:

Section 1. Approval of the Installment Sale Agreement and Grant. The Public Utilities Commission hereby authorizes and directs the General Manager (or the duly authorized and acting General Manager) of the Public Utilities Commission (in either capacity, referred to herein as, the “General Manager”) or their designee, to enter into the Installment Sale Agreement and Grant, the form of which is attached hereto as Exhibit B, with the State Water Resources Control Board pursuant to Section 8B.124 of the Charter. The state loan evidenced by the Installment Sale Agreement and Grant shall be payable from a pledge of the Net Revenues (as defined in the Indenture) of the Wastewater Enterprise on a parity lien with the payment of other parity obligations of the Wastewater Enterprise.

The Public Utilities Commission hereby approves the terms of the Installment Sale Agreement and Grant in substantially the form now before this meeting to secure repayment of the state loan in a principal amount not -to-exceed $60,000,000 (such not- to-exceed principal amount includes any construction period interest and/or capitalized interest that may be factored in as the principal repayment portion of the state loan), with such changes and modifications therein as shall be approved by the General Manager, in consultation with the City Attorney of the City (the “City Attorney”), provided such changes or modifications do not materially increase the financial risk to the Public Utilities Commission. The state loan evidenced by the Installment Sale Agreement and Grant shall bear interest at a rate not in excess of 12% per annum and the repayment term of the loan shall not be in excess of forty (40) years. The Public Utilities Commission anticipates that a portion (estimated to be approximately $5,000,000) of the state loan evidenced by the Installment Sale Agreement and Grant will constitute principal forgiveness/grant funds by the State Water Resources Control Board.

Section 2. Purpose of this Resolution. The Public Utilities Commission adopts this resolution for the purpose of establishing compliance with the resolutions and ordinances described herein.

Section 3. General Authority. The General Manager (or their designee), the Assistant General Manager, Business Services - Chief Financial Officer (or their designee), and the Capital Finance Director (or their designee) of the Public Utilities Commission and their duly authorized deputies and agents are hereby authorized and directed, jointly and severally, to take such actions and to execute and deliver such certificates, agreements, requests or other documents, as they may deem necessary to facilitate the execution and delivery of the Installment Sale Agreement and Grant, to obtain title and other insurance with respect to the facilities to be financed and otherwise to carry out the provisions of this resolution. In addition, the General Manager (or their designee) are each authorized to enter into any amendments to the Installment Sale Agreement and Grant to provide for final budget costs, adjustments to the portion of the state loan constituting principal forgiveness/grant funds, and changes to the dates for construction completion and/or termination of the Installment Sale Agreement and Grant, provided such amendments do not increase the not -to-exceed principal amount of the state loan, the maximum interest rate or the maximum term thereof approved in Section 1 above.

Section 4. SB 450 Compliance. The Public Utilities Commission acknowledges that the good faith estimates required by Section 5852.1 of the California Government Code are disclosed in the staff report and are available to the public at the meeting at which this resolution is approved.

Section 5. Ratification. That the actions approved by this resolution and heretofore taken are hereby ratified, approved and confirmed by this Public Utilities Commission.

Section 6. Effective Date. This resolution shall take effect from and after its adoption.

I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting of July 14, 2026.

__________________________________
Director of Commission Affairs
San Francisco Public Utilities Commission
Project State Revolving Fund Project No.

Authorized
Not-to-Exceed Loan Amount
Estimated
Construction Completion Date
Repayment Term
Commences No Later Than (Estimated)
Lake Merced Green Infrastructure Project 8064-110(1) $7,435,000 July 31, 2020 July 31, 2022 SEP 521/522 and Disinfection Upgrades Project 8088-110(2) $40,006,740 November 18, 2018 November 18, 2020 SEP Primary/Secondary Clarifier Upgrades Project 8132-110(2) $34,445,778 March 30, 2018 March 30, 2020 North Point Facility Outfall System Rehabilitation Project 8129-110(2) $20,199,435 February 26, 2018 February 26, 2020 OSP Digester Gas Utilization Upgrade Project 8371-110(3) $54,387,969 August 22, 2021 August 22, 2023 SEP Biosolids Digester Facilities Project 8372-110(3) $132,000,000 May 1, 2026 May 1, 2028 SEP New Headworks (Grit) Replacement Project 8286-110(4) $112,036,181 March 1, 2024 March 1, 2026
New Treasure Island Wastewater Treatment Plant Project 8651-110(5) $120,300,000 February 27, 2027 April 1, 2028
Folsom Area Stormwater Improvement Project 8732-110(5)
$59,000,000 September 1, 2029 April 1, 2030
Lower Alemany Area Stormwater Improvement Project 8847-110 (6) $60,000,000 June 30, 2032 April 1, 2033
(1) The Public Utilities Commission entered into such State Revolving Fund loan on December 22, 2015. (2) The Public Utilities Commission entered into such State Revolving Fund loan on September 14, 2017. (3) The Public Utilities Commission entered into such State Revolving Fund loan on April 15, 2020. (4) The Public Utilities Commission entered into such State Revolving Fund loan on April 12, 2021. (5) The Public Utilities Commission entered into such State Revolving Fund loan on June 11, 2025. (6) State loan expected to be made pursuant to a form an an installment sale agreement and grant presented to the Public Utlities Commission for approval on the date of approval hereof.

Wastewater Enterprise

DRAFT DATED: 4/14/2026

CLEAN WATER

PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO

AND

CALIFORNIA STATE WATER RESOURCES CONTROL BOARD

CONSTRUCTION

INSTALLMENT SALE AGREEMENT

[PROJECT NO. and NAME]

AGREEMENT NO. [ ]

PROJECT FUNDING AMOUNT: $
PRINCIPAL FORGIVENESS COMPONENT: $
ESTIMATED REASONABLE PROJECT COST: $

ELIGIBLE WORK START DATE: ______________
ELIGIBLE CONSTRUCTION START DATE: ______________
COMPLETION OF CONSTRUCTION DATE: ______________
FINAL REIMBURSEMENT REQUEST DATE: _____________
FINAL PAYMENT DATE: _____________
RECORDS RETENTION END DATE: _____________

THIS PAGE INTENTIONALLY LEFT BLANK
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX
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TABLE OF CONTENTS
AGREEMENT ............................................................................................................................................... 1

1. AUTHORITY. ...................................................................................................................................... 1

2. INTENTION. ....................................................................................................................................... 1

3. AGREEMENT, TERM, DOCUMENTS INCORPORATED BY REFERENCE. ................................... 1

4. PARTY CONTACTS ........................................................................................................................... 2

5. DEFINITIONS. .................................................................................................................................... 3 EXHIBIT A – SCOPE OF WORK ................................................................................................................ 11 A.1. PROJECT DESCRIPTION, USEFUL LIFE, AND SCOPE OF WORK. ........................................ 11 A.2. STANDARD PROJECT REQUIREMENTS...................................................................................... 11 A.2.1 Acknowledgements. ................................................................................................................................. 11 A.2.2 Reports ..................................................................................................................................................... 11 A.2.2.1 Progress Reports. ............................................................................................................................. 11 A.2.2.2 Project Completion Report. ............................................................................................................. 12 A.2.2.3 As Needed Reports. ......................................................................................................................... 12 A.2.2.4 [Reserved.] ....................................................................................................................................... 12 A.2.2.5 [Reserved.] ....................................................................................................................................... 12 A.2.3 Signage. ................................................................................................................................................... 12 A.2.4 Commencement of Operations. ............................................................................................................... 12 A.3 DATES & DELIVERABLES. ............................................................................................................. 13 A.4 SCHEDULE. ..................................................................................................................................... 13 EXHIBIT B – FUNDING TERMS ................................................................................................................. 14 B.1. FUNDING AMOUNTS AND REIMBURSEMENTS ...................................................................... 14 B.1.1 Funding Contingency and Other Sources. ............................................................................................... 14 B.1.2 Estimated Reasonable Cost. ..................................................................................................................... 14 B.1.3 Project Funding Amount. ......................................................................................................................... 14 B.1.4 Principal Forgiveness Component. .......................................................................................................... 14 B. 1.5 Budget Costs. ........................................................................................................................................... 14 B.1.6 Contingent Disbursement. ....................................................................................................................... 15 B.1.7 Reimbursement Procedure. ...................................................................................................................... 15 B.1.8 Withholding of Disbursements. ............................................................................................................... 16 B.1.9 Fraud and Misuse of Public Funds; Enforcement. ................................................................................... 17 B.2 RECIPIENT’S PAYMENT OBLIGATION AND PLEDGE ................................................................. 17 B.2.1 Project Costs. ........................................................................................................................................... 17 B.2.2 Estimated Principal Payment Due. .......................................................................................................... 17 B.2.3 Interest Rate and In-Lieu of Interest Charges. ......................................................................................... 18 B.2.4 [Reserved.] ............................................................................................................................................... 18 B.2.5 Obligation Absolute. ................................................................................................................................ 18 Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX
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B.2.6 Payment Timing....................................................................................................................................... 18 B.2.7 Pledged Revenues. ................................................................................................................................... 19 B.2.7.1 Establishment of Enterprise Fund. ....................................................................................................... 19 B.2.7.2 Pledge of Net Revenues and Enterprise Fund. ..................................................................................... 19 B.2.7.3 Application and Purpose of the Enterprise Fund. ................................................................................ 20 B.2.8 No Prepayment. ....................................................................................................................................... 20 B.2.9 [Reserved.] ............................................................................................................................................... 20 B.3 RATES, FEES AND CHARGES. ..................................................................................................... 20 B.4 ADDITIONAL DEBT. ........................................................................................................................ 20 B.5 NO LIENS. ........................................................................................................................................ 21 EXHIBIT C – GENERAL & PROGRAMMATIC TERMS & CONDITIONS .................................................. 22 C.1 REPRESENTATIONS & WARRANTIES. ..................................................................................... 22 C.1.1 Application and General Recipient Commitments. ................................................................................. 22 C.1.2 Authorization and Validity. ..................................................................................................................... 22 C.1.3 No Violations. .......................................................................................................................................... 22 C.1.4 No Litigation. ........................................................................................................................................... 22 C.1.5 Property Rights. ....................................................................................................................................... 22 C.1.6 Solvency and Insurance. .......................................................................................................................... 23 C.1.7 Legal Status and Eligibility. ..................................................................................................................... 23 C.1.8 Financial Statements and Continuing Disclosure. ................................................................................... 23 C.1.9 System Obligations .................................................................................................................................. 23 C.1.10 No Other Material Obligations. ............................................................................................................... 23 C.1.11 Compliance with State Water Board Funding Agreements. .................................................................... 23 C.2 DEFAULTS AND REMEDIES ...................................................................................................... 24 C.2.1 Return of Funds; Acceleration; and Additional Payments. ...................................................................... 24 C.2.2 [Reserved.] ............................................................................................................................................... 24 C.2.3 [Reserved.] ............................................................................................................................................... 24 C.2.4 Judicial remedies. .................................................................................................................................... 24 C.2.5 Termination. ............................................................................................................................................ 24 C.2.6 Damages for Breach of Tax-Exempt Status. ............................................................................................ 24 C.2.7 Damages for Breach of Federal Conditions. ............................................................................................ 25 C.2.8 Remedies and Limitations. ...................................................................................................................... 25 C.2.9 Non-Waiver. ............................................................................................................................................ 25 C.2.10 Status Quo. ............................................................................................................................................... 25 C.3 STANDARD CONDITIONS .................................................................................................................. 25 C.3.1 Access, Inspection, and Public Records. ................................................................................................. 25 C.3.2 Accounting and Auditing Standards; Financial Management Systems; Records Retention. ................... 25 C.3.3 Amendment. ............................................................................................................................................ 27 C.3.4 Assignability. ........................................................................................................................................... 27 C.3.5 Audit. ....................................................................................................................................................... 27 C.3.6 Bonding. .................................................................................................................................................. 27 C.3.7 Competitive Bidding ................................................................................................................................ 27 C.3.8 Compliance with Applicable Laws, Rules, and Requirements. ............................................................... 27 C.3.9 Computer Software. ................................................................................................................................. 28 C.3.10 Conflict of Interest. .................................................................................................................................. 28 C.3.11 Continuous Use of Project; No Lease, Sale, Transfer of Ownership, or Disposal of Project. ................. 28 C.3.12 Data Management. ................................................................................................................................... 28 C.3.13 Disputes. .................................................................................................................................................. 28 Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX
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C.3.14 [Reserved]. ............................................................................................................................................... 28 C.3.15 Environmental Clearance. ........................................................................................................................ 28 C.3.16 Governing Law. ....................................................................................................................................... 29 C.3.17 Income Restrictions. ................................................................................................................................ 29 C.3.18 Indemnification and State Reviews. ........................................................................................................ 29 C.3.19 Independent Actor. .................................................................................................................................. 30 C.3.20 Integration. ............................................................................................................................................... 30 C.3.21 Leveraging Covenants. ............................................................................................................................ 30 C.3.22 No Discrimination. .................................................................................................................................. 30 C.3.23 No Third Party Rights. ............................................................................................................................. 31 C.3.24 No Obligation of the State. ...................................................................................................................... 31 C.3.25 Notice....................................................................................................................................................... 31 C.3.26 Operation and Maintenance; Insurance.................................................................................................... 34 C.3.27 Permits, Subcontracting, and Remedies. .................................................................................................. 34 C.3.28 Professionals. ........................................................................................................................................... 35 C.3.29 Prevailing Wages. .................................................................................................................................... 35 C.3.30 Public Funding. ........................................................................................................................................ 35 C.3.31 Recipient’s Responsibility for Work. ...................................................................................................... 35 C.3.32 Related Litigation. ................................................................................................................................... 35 C.3.33 Rights in Data. ......................................................................................................................................... 35 C.3.34 State Water Board Action; Costs and Attorney Fees. .............................................................................. 36 C.3.35 Timeliness. ............................................................................................................................................... 36 C.3.36 Unenforceable Provision.......................................................................................................................... 36 C.3.37 Venue. ...................................................................................................................................................... 36 C.3.38 Waiver and Rights of the State Water Board. .......................................................................................... 36 C.4 MISCELLANEOUS STATE AND FEDERAL REQUIREMENTS .......................................................... 36 C.4.1 [Reserved.] ............................................................................................................................................... 36 C.4.2 State Cross-Cutters. ................................................................................................................................. 36 C.4.3 Federal Requirements and Cross-Cutters for SRF Funding. .................................................................... 37 EXHIBIT D – SPECIAL CONDITIONS ........................................................................................................ 44 EXHIBIT E – PAYMENT SCHEDULE ......................................................................................................... 54 EXHIBIT F – TAX CERTIFICATE ............................................................................................................... 55 F.1 Purpose. ........................................................................................................................................... 55 F.2 Tax Covenant. .................................................................................................................................. 55 F.3 Governmental Unit. .......................................................................................................................... 55 F.4 Financing of a Capital Project. ......................................................................................................... 55 F.5 Ownership and Operation of Project. ............................................................................................... 55 F.6 Temporary Period. ............................................................................................................................ 55 F.7 Working Capital. ............................................................................................................................... 56 F.8 Expenditure of Proceeds. ................................................................................................................. 56 F.9 Private Use and Private Payments. ................................................................................................. 56 Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX
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F.10 No Sale, Lease or Private Operation of the Project. .................................................................... 56 F.11 No Disproportionate or Unrelated Use. ........................................................................................ 57 F.12 Management and Service Contracts. ........................................................................................... 57 F.13 No Disposition of Financed Property. ........................................................................................... 57 F.14 Useful Life of Project..................................................................................................................... 57 F.15 Payments. ..................................................................................................................................... 57 F.16 No Other Replacement Proceeds. ................................................................................................ 58 F.17 No Sinking or Pledged Fund. ........................................................................................................ 58 F.18 [Reserved.] ................................................................................................................................... 58 F.19 Reimbursement Resolution. ......................................................................................................... 58 F.20 Reimbursement Expenditures. ..................................................................................................... 58 F.21 Change in Use of the Project. ....................................................................................................... 58 F.22 Rebate Obligations. ...................................................................................................................... 58 F.23 No Federal Guarantee. ................................................................................................................. 59 F.24 Amendments. ................................................................................................................................ 59 F.25 Reasonable Expectations. ............................................................................................................ 59 F.26 Assignment. .................................................................................................................................. 59

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024

AGREEMENT

1. AUTHORITY.
(a) The State Water Resources Control Board (State Water Board) is authorized, and implements its authority, to provide financial assistance under this Agreement pursuant to Section 13475 et seq. of the Water Code, and Resolution Nos. 2025-0013 and 2025-0022. (b) The Recipient is authorized to enter into this Installment Sale Agreement (Agreement) pursuant to Resolution No. ________________.

2. INTENTION.
(a) The Recipient desires to receive financial assistance for and undertake work required for the wastewater construction Project according to the terms and conditions set forth in this Agreement. (b) The State Water Board proposes to assist in providing financial assistance for eligible costs of the Project in the amount set forth in Exhibit B, according to the terms and conditions set forth in this Agreement, with the expectation that the Recipient shall repay a portion of the financial assistance to the State Water Board.
(c) The Recipient intends to evidence its obligation to submit Payments to the State Water Board and secure its obligation with Net Revenues of its wastewater enterprise, as set forth in Exhibit B, according to the terms and conditions set forth in this Agreement.
(d) The Recipient intends to certify and evidence its compliance with the Tax Covenants set forth in Exhibit F.

3. AGREEMENT, TERM, DOCUMENTS INCORPORATED BY REFERENCE.

In consideration of the mutual representations, covenants and agreements herein set forth, the State Water Board and the Recipient, each binding itself, its successors and assigns, do mutually promise, covenant, and agree to the terms, provisions, and conditions of this Agreement.

(a) The Recipient hereby sells to the State Water Board and the State Water Board hereby purchases from the Recipient the Project. Simultaneously therewith, the Recipient hereby purchases from the State Water Board, and the State Water Board hereby sells to the Recipient, the Project in accordance with the provisions of this Agreement. All right, title, and interest in the Project shall immediately vest in the Recipient on the date of execution and delivery of this Agreement by both parties without further action on the part of the Recipient or the State Water Board. (b) Subject to the satisfaction of any condition precedent to this Agreement, this Agreement shall become effective upon the signature of both the Recipient and the State Water Board. Conditions precedent are not limited to the following:

i. The Recipient must deliver to the Division a resolution authorizing this Agreement. ii. The Recipient must deliver an opinion of bond counsel and general counsel satisfactory to the State Water Board’s counsel dated on or after the date that the Recipient signs this Agreement.

(c) Upon execution, the term of the Agreement shall begin on the Eligible Work Start Date and extend through the Final Payment Date.

(d) This Agreement includes the following exhibits and attachments thereto:

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
i. EXHIBIT A – SCOPE OF WORK
ii. EXHIBIT B – FUNDING TERMS
iii. EXHIBIT C – GENERAL & PROGRAMMATIC TERMS & CONDITIONS iv. EXHIBIT D – SPECIAL CONDITIONS
v. EXHIBIT E – PAYMENT SCHEDULE
vi. EXHIBIT F – TAX CERTIFICATE

(e) This Agreement includes the following documents incorporated by reference, as well as any documents incorporated by reference in Exhibit D:

i. the Final Plans & Specifications, dated __________, which are the basis for the construction contract to be awarded by the Recipient;
ii. the Waste Discharge Requirement Order No. _________ (and/or National Pollutant Discharge Elimination System Permit No. _________), and any amendments thereto; iii. the Recipient’s Reimbursement Resolution No. _______ dated _________________; iv. the Recipient’s Tax Questionnaire dated _________________. v. the federal Davis-Bacon requirements. By accepting this Agreement, the Recipient acknowledges and agrees to the terms and conditions provided in the DBRA Requirements for EPA Subrecipients | US EPA (https://www.epa.gov/grants/dbra- requirements-epa-subrecipients). The Recipient shall ensure that the following language is included in all contracts and subcontracts funded under this Agreement:

By accepting this contract, the contractor acknowledges and agrees to the terms and conditions provided in the Contract Provisions for Davis-Bacon and Related Acts | US EPA (https://www.epa.gov/grants/contract-provisions-davis-bacon-and- related-acts).
(For reference, see also
https://www.waterboards.ca.gov/water_issues/programs/grants_loans/srf/davisbacon.ht ml.)
vi. [other incorporated documents, if any]
(f) This Agreement, and any amendments hereto, may be executed and delivered in any number of counterparts, each of which when delivered shall be deemed to be an original, but such counterparts shall together constitute one document. The parties may sign this Agreement, and any amendments hereto, either by an electronic signature using a method approved by the State Water Board or by a physical, handwritten signature. The parties mutually agree that an electronic signature using a method approved by the State Water Board is the same as a physical, handwritten signature for the purposes of validity, enforceability, and admissibility.

4. PARTY CONTACTS
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
State Water Board [Recipient]
Section: Division of Financial Assistance
Name: xxxx, Project Manager Name: Title
Address: 1001 I Street, ___ Floor Address:

City, State,
Zip:

Sacramento, CA 95814 City, State, Zip:

Phone: (916) Phone:

Fax: (916) Fax:

Email: [PMemail]@waterboards.ca.gov
[[email protected]]
Email:

The Recipient may change its contact upon written notice to the Division, which notice shall be accompanied by authorization from the Recipient’s Authorized Representative. The State Water Board will notify the Recipient of any changes to its contact.

While the foregoing are contacts for day-to-day communications regarding Project work, the Recipient shall provide official communications and events of Notice as set forth in Exhibit C to the Division’s Deputy Director.

5. DEFINITIONS.

Unless otherwise specified, each capitalized term used in this Agreement has the following meaning:

“Additional Payments" means the reasonable extraordinary fees and expenses of the State Water Board, and of any assignee of the State Water Board's right, title, and interest in and to this Agreement, in connection with this Agreement, including all expenses and fees of accountants, trustees, staff, contractors, consultants, costs, insurance premiums and all other extraordinary costs reasonably incurred by the State Water Board or assignee of the State Water Board. "Allowance" means an amount based on a percentage of the accepted bid for an eligible project to help defray the planning, design, and construction engineering and administration costs of the Project. “Agreement” means this agreement, including all exhibits and attachments hereto. “Annual Debt Service” means the sum of principal and interest on all Outstanding Commission Bonds and Parity Loans as computed for the twelve-month period ending June 30 to which reference is made, and calculated by the Commission using the following assumptions:
(a) In determining the principal amount due for such twelve-month period ending June 30, payment shall (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with the amortization schedule established for such debt, including any Minimum Sinking Fund Account Payments or any scheduled redemption or payment of Commission Bonds on the basis of Accreted Value, and for such purpose, the redemption payment or payment of Accreted Value shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or Payment Date of such Capital Appreciation Bond, but excluding Excluded Principal.
(b) If any Outstanding Commission Bonds constitute Variable Rate Indebtedness, the interest rate shall, as of the date of calculation, be: (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the Commission in the Supplemental Indenture authorizing such Commission Bonds (which the Commission must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
purposes under the Code), a fixed rate of interest reasonably determined by the Commission for obligations with similar duration, which interest rate has been certified by a Qualified Financial Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture. (c) If Defeasance Obligations have been deposited with and are held by the Trustee or another fiduciary to be used to pay principal and/or interest on specified Commission Bonds, or any amounts have been deposited in the Interest Fund from the proceeds of any Series of Commission Bonds or from any other source to pay interest on such Commission Bonds, then the principal and/or interest to be paid from such Defeasance Obligations or from the earnings thereon, or from such amounts in the Interest Fund, shall be disregarded and not included in calculating Annual Debt Service. (d) In determining the amount of interest coming due during any twelve-month period ending June 30 on any Series of Commission Bonds that are issued as Build America Bonds or obligations issued under any future program similar to Build America Bonds, amounts equal to the Refundable Credits the Commission is scheduled to receive during each twelve-month period ending June 30 shall be deducted from such interest.
"Authorized Representative" means the duly appointed representative of the Recipient as set forth in the certified original of the Recipient’s authorizing resolution that designates the authorized representative by title.
"Bank" means the California Infrastructure and Economic Development Bank. “Bond Funded Portion of the Project Funds” means any portion of the Project Funds which was or will be funded with Bond Proceeds.
“Bond Proceeds” means original proceeds, investment proceeds, and replacement proceeds of Bonds. "Bonds" means any series of bonds issued by the Bank, the interest on which is excluded from gross income for federal tax purposes, all or a portion of the proceeds of which have been, are, or will be applied by the State Water Board to fund all or any portion of the Project Costs or that are secured in whole or in part by Payments paid hereunder.
“Charge In Lieu of Interest” means any fee or charge in lieu of some or all of, but not to exceed, the interest that would otherwise be owed under this Agreement, as set forth in Exhibit E. "Code" as used in Exhibit F of this Agreement means the Internal Revenue Code of 1986, as amended, and any successor provisions and the regulations of the U.S. Department of the Treasury promulgated thereunder.
"Completion of Construction" means the date, as determined by the Division after consultation with the Recipient, that the work of building and erection of the Project is substantially complete, and is identified in Exhibit A of this Agreement.
“Construction Period Interest” (CPI) means interest that accrues on disbursed Project Funds prior to Completion of Construction. Construction Period Interest is capitalized at Completion of Construction. “Cover Page” means the front page of this Agreement.
“Days” means calendar days unless otherwise expressly indicated. “Deputy Director” means the Deputy Director of the Division.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
"Division" means the Division of Financial Assistance of the State Water Board or any other segment of the State Water Board authorized to administer this Agreement. “Eligible Construction Start Date” means the date set forth on the Cover Page of this Agreement, establishing the date on or after which construction costs may be incurred and eligible for reimbursement hereunder.
“Eligible Work Start Date” means the date set forth on the Cover Page of this Agreement, establishing the date on or after which any non-construction costs may be incurred and eligible for reimbursement hereunder.
“Enterprise Fund” means the wastewater enterprise fund of the Recipient in which Revenues are deposited. “Event of Default” means the occurrence of any of the following events:
a) Failure by the Recipient to make any payment required to be paid pursuant to this Agreement, including Payments;
b) A representation or warranty made by the Recipient in this Agreement or in any document furnished by the Recipient to the State Water Board pursuant to this Agreement shall prove to have been inaccurate, misleading or incomplete in any material respect; c) A material adverse change in the condition of the Recipient, the Revenues, or the System, which the Division reasonably determines would materially impair the Recipient’s ability to satisfy its obligations under this Agreement.
d) Failure by the Recipient to comply with the additional debt test or rate covenant requirement, if any, in Exhibit B or Exhibit D of this Agreement;
e) Failure to operate the System or the Project without the Division’s approval; f) Failure by the Recipient to observe and perform any covenant, condition, or provision in this Agreement, which failure shall continue for a period of time, to be determined by the Division; g) The occurrence of a material breach or event of default under any System Obligation that results in the acceleration of principal or interest or otherwise requires immediate prepayment, repurchase or redemption;
h) Initiation of proceedings seeking arrangement, reorganization, or any other relief under any applicable bankruptcy, insolvency, or other similar law; the appointment of or taking possession of the Recipient’s property by a receiver, liquidator, assignee, trustee, custodian, conservator, or similar official; the Recipient’s entering into a general assignment for the benefit of creditors; the initiation of resolutions or proceedings to terminate the Recipient’s existence, or any action in furtherance of any of the foregoing; i) A determination pursuant to Gov. Code section 11137 that the Recipient has violated any provision in Article 9.5 of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code; or j) Loss of the Recipient’s rights, licenses, permits, or privileges necessary for the operation of the System or the Project, or the occurrence of any material restraint on the Recipient’s enterprise by a government agency or court order.
k) Any event called an “Event of Default” in Section 7.01 of the Indenture. “Final Payment Date” is the date by which all principal and accrued interest due under this Agreement is to be paid in full to the State Water Board and is specified on the Cover Page of this Agreement. “Final Reimbursement Request Date” means the date set forth as such on the Cover Page of this Agreement, after which date, no further Project Funds disbursements may be requested. "Fiscal Year" means the period of twelve (12) months terminating on June 30 of any year, or any other annual period selected and designated by the Recipient as its Fiscal Year in accordance with applicable law.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
"Force Account" means the use of the Recipient's own employees, equipment, or resources for the Project.
“GAAP” means generally accepted accounting principles, the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor, or the Uniform System of Accounts, as adopted by the California Public Utilities Commission for water utilities. “Indenture” means the Indenture, originally dated as of January 1, 2003, by and between the Recipient and U.S Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association, as Trustee, as originally executed and as amended or supplemented by any supplemental indenture authorized thereunder, up to, and including, the Eighteenth Supplemental Indenture, dated July 1, 2024.
“Indirect Costs” means those costs that are incurred for a common or joint purpose benefiting more than one cost objective and are not readily assignable to the Project (i.e., costs that are not directly related to the Project). Examples of Indirect Costs include, but are not limited to: central service costs; general administration of the Recipient; non-project-specific accounting and personnel services performed within the Recipient organization; depreciation or use allowances on buildings and equipment; the costs of operating and maintaining non-project-specific facilities; tuition and conference fees; generic overhead or markup; and taxes.
"Initiation of Construction" means the date that notice to proceed with work is issued for the Project, or, if notice to proceed is not required, the date of commencement of building and erection of the Project. “Listed Event” means, so long as the Recipient has outstanding any System Obligation subject to Rule 15c2-12, any of the events required to be reported with respect to such System Obligation pursuant to Rule 15c2-12(b)(5).
“Material Obligation” means an obligation of the Recipient that is material to this transaction, including System Obligations.
“Maximum Annual Debt Service” means, as of the date of calculation, the largest amount of Debt Service in the then current or any future Fiscal Year, calculated by the Commission using the following assumptions:
(a) In determining the principal amount due in each year, payment shall (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with any amortization schedule established for such debt, including any Minimum Sinking Fund Account Payments or any scheduled redemption or payment of Commission Bonds on the basis of Accreted Value, and for such purpose, the redemption payment or payment of Accreted Value shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or Payment Date of such Capital Appreciation Bond, but excluding Excluded Principal.
(b) If any of the Outstanding Series of Commission Bonds constitute Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness or if Commission Bonds then proposed to be issued would constitute Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness, then, for purposes of determining Maximum Annual Debt Service, such Commission Bonds the principal of which the Commission has not specified as Excluded Principal will be amortized for a period specified by the Commission (but no longer than forty (40) years from the date of the issuance of the Commission Bonds to which such Balloon Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
Indebtedness relates) on a substantially level debt service basis or other amortization basis designated by the Commission, calculated based on a fixed rate equal to the rate at which the Commission could borrow for such period, as certified by a Qualified Financial Advisor. (c) If any Outstanding Commission Bonds constitute Variable Rate Indebtedness, the interest rate shall, as of the date of calculation, be: (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the Commission in the Supplemental Indenture authorizing such Commission Bonds (which the Commission must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax purposes under the Code), a fixed rate of interest reasonably determined by the Commission for obligations with similar duration, which interest rate has been certified by a Qualified Financial Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture.
(d) If Defeasance Obligations have been deposited with and are held by the Trustee or another fiduciary to be used to pay principal and/or interest on specified Commission Bonds, or any amounts have been deposited in the Interest Fund from the proceeds of any Series of Commission Bonds or from any other source to pay interest on such Commission Bonds, then the principal and/or interest to be paid from such Defeasance Obligations or from the earnings thereon, or from such amounts in the Interest Fund, shall be disregarded and not included in calculating Maximum Annual Debt Service.
(e) In determining the amount of interest coming due during any twelve-month period ending June 30 on any Series of Commission Bonds that are issued as Build America Bonds or obligations issued under any future program similar to Build America Bonds, amounts equal to the Refundable Credits the Commission is scheduled to receive during each twelve-month period ending June 30 shall be deducted from such interest.
"Net Revenues" means all of the Revenues less all Operation and Maintenance Costs of the System. "Obligation" means the obligation of the Recipient to make Payments (including Additional Payments) as provided herein, as evidenced by the execution of this Agreement, proceeds of such obligations being used to fund the Project as specified in the Project Description in Exhibit A and Exhibit B and in the documents thereby incorporated by reference.
"Operations and Maintenance Costs" means, so long as outstanding Parity Obligations other than the Obligation are outstanding, the definition of such term as defined under such Parity Obligations, and thereafter, the reasonable and necessary costs paid or incurred by the Recipient for maintaining and operating the System, determined in accordance with GAAP, including all reasonable expenses of management and repair and all other expenses necessary to maintain and preserve the System in good repair and working order, and including all reasonable and necessary administrative costs of the Recipient that are charged directly or apportioned to the operation of the System, such as salaries and wages of employees, overhead, taxes (if any), the cost of permits, licenses, and charges to operate the System and insurance premiums; but excluding, in all cases depreciation, replacement, and obsolescence charges or reserves therefor and amortization of intangibles. “Parity Obligations” mean 2010 Series B wastewater revenue bonds; 2013 Series B wastewater revenue bonds; 2016 Series A and B wastewater revenue bonds; 2018 Series A and B wastewater revenue bonds; 2021 Series A and B wastewater revenue bonds; 2022 Series B wastewater revenue bonds; 2023 Series A, B, and C wastewater revenue bonds; 2024 Series A, B, C, and D wastewater revenue bonds; CWSRF 8372-110; CWSRF 8371-110; CWSRF 8064-110; CWSRF 8129-110; CWSRF 8088-110; CWSRF 8132-110; CWSRF 8286-110; CWSRF 8651-110; CWSRF 8732-110; WIFIA Loan Agreement N17128CA; WIFIA Loan Agreement N19131CA; WIFIA Loan Agreement 21112CA; and any additional Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024
Commission Bond obligation, as such term is defined in Exhibit D of this Agreement, incurred pursuant to Section B.4 of this Agreement.
“Payment” means any payment due to the State Water Board from the Recipient pursuant to this Agreement.
"Policy" means the State Water Board's “Policy for Implementing the Clean Water State Revolving Fund,” as amended from time to time, including the Intended Use Plan in effect as of the execution date of this Agreement.
“Project” means the Project financed by this Agreement as described in Exhibits A and B and in the documents incorporated by reference herein.
"Project Completion" means the date, as determined by the Division after consultation with the Recipient, that operation of the Project is initiated or is capable of being initiated, whichever comes first. "Project Costs" means the incurred costs of the Recipient which are eligible for financial assistance under this Agreement, which are allowable costs as defined under the Policy, and which are reasonable, necessary and allocable by the Recipient to the Project under GAAP, and may include capitalized interest.
“Project Funds” means all moneys disbursed to the Recipient by the State Water Board for eligible Project Costs pursuant to this Agreement.
“Recipient” means Public Utilities Commission of the City and County of San Francisco. “Records Retention End Date” means the last date that the Recipient is obligated to maintain records and is set forth on the Cover Page of this Agreement.
“Regional Water Quality Control Board” or “Regional Water Board” means the appropriate Regional Water Quality Control Board.
“Reimbursement Resolution” means the Recipient’s reimbursement resolution identified and incorporated by reference in this Agreement.
"Revenues" means, all gross revenues of the System, including all charges received for and all other income and receipts derived by the Recipient from the operation of the System, or arising from the System, including connection and installation charges, but excluding:
(1) any money received by or for the account of the Recipient from the levy or collection of taxes, (2) moneys received from the State of California and the United States of America and required to be deposited in restricted funds,
(3) refundable deposits made to establish credit,
(4) advances and contributions made to the Recipient to be applied to construction, (5) moneys received constituting casualty insurance proceeds with respect to all or any part of the System (which moneys will be received and deposited pursuant to the Indenture) and moneys received constituting other insurance proceeds,
(6) moneys received from the sale or disposition of all or any part of the System (which moneys will be received and deposited pursuant to the Indenture), (7) moneys received upon the taking by or under the threat of eminent domain of all or any part of the System (which moneys will be received and deposited pursuant to the Indenture), (8) proceeds from Commission Bonds issued by the Recipient pursuant to the Indenture or proceeds from loans or other indebtedness obtained by the Recipient, and (9) moneys or securities received by the Recipient as gifts or grants, the use of which is restricted by the donor or grantor.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024

The term "Revenues" also includes (i) all interest or other income (excluding profits or losses from the sale or disposition of Permitted Investments, as defined in the Indenture, or other securities owned by or on behalf of the Recipient) derived from the deposit or investment of any moneys in any fund or account established under the Indenture (excluding any rebate fund and any escrow fund pledged for the payment of defeased bonds) or in any fund or account of the System and legally available to pay debt service on System Obligations, and (ii) any other moneys, proceeds and other amounts that the Recipient determines should be "Revenues" under the Indenture.
“Rule 15c2-12(b)(5)” means Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. “Senior Obligation” means a debt obligation of the Recipient that is senior to this Obligation. There are no Senior Obligations.
“SRF” means the Clean Water State Revolving Fund.
“State” means State of California.
“State Water Board” means the State Water Resources Control Board. “Subordinate Obligation” mean Wastewater Commercial Paper Program Series A-1, A-2, A-3,A-4, A-5, A- 6, A-7, and A-8; Revolving Credit Agreement Series R-1; and Certificates of Participation Series 2009D. "System" means all wastewater collection, transport, pumping, treatment, storage, and/or disposal facilities, including land and easements thereof, owned by the Recipient, including the Project, and all other properties, structures or works hereafter acquired and constructed by the Recipient and determined to be a part of the System, together with all additions, betterments, extensions or improvements to such facilities, properties, structures, or works, or any part thereof hereafter acquired and constructed. So long as there may be any pre-existing and outstanding System Obligations of the Recipient other than the Obligation, the definition for the term “System” shall have the meaning assigned to the term “Enterprise” under the Indenture.
“System Obligation” means any obligation of the Recipient payable from the Revenues, including but not limited to this Obligation, any Parity Obligation, any Subordinate Obligation, and such additional obligations as may hereafter be issued in accordance with the provisions of such obligations and this Agreement.
“Useful Life” means the economically useful life of the Project beginning at Completion of Construction and is set forth in Exhibit A.
“Year” means calendar year unless otherwise expressly indicated.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

SRF 27ii2024

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.

PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO:

By:____________________________________
Name: Dennis J. Herrera
Title: General Manager

Date:__________________________________

STATE WATER RESOURCES CONTROL BOARD:

By:____________________________________
Name: [Officer]
Title: Deputy Director
Division of Financial Assistance

Date:__________________________________

Approved as to form:

DAVID CHIU
City Attorney of the City and County of San Francisco

By: ____________________________________
NAME: SHERYL BREGMAN
Title: Deputy City Attorney
Acknowledged:

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit A

EXHIBIT A – SCOPE OF WORK

A.1. PROJECT DESCRIPTION, USEFUL LIFE, AND SCOPE OF WORK. (a) The Project is the project set forth on the Cover Page of this Agreement. (b) The Useful Life of this Project is at least ________ years. (c) Scope of Work.
[to be inserted by DFA]
A.2. STANDARD PROJECT REQUIREMENTS.

A.2.1 Acknowledgements.

The Recipient shall include the following acknowledgement in any document, written report, or brochure prepared in whole or in part pursuant to this Agreement:

“Funding for this project has been provided in full or in part through an agreement with the State Water Resources Control Board. California’s Clean Water State Revolving Fund is capitalized through a variety of funding sources, including grants from the United States Environmental Protection Agency and state bond proceeds. The contents of this document do not necessarily reflect the views and policies of the foregoing, nor does mention of trade names or commercial products constitute endorsement or recommendation for use.”

A.2.2 Reports
A.2.2.1 Progress Reports.
(a) The Recipient must provide a progress report to the Division each quarter, beginning no later than 90 days after execution of this Agreement.
(b) The Recipient must provide a progress report with each reimbursement request. Failure to provide a complete and accurate progress report may result in the withholding of Project Funds, as set forth in Exhibit B.
(c) A progress report must contain the following information:
i. A summary of progress to date including a description of progress since the last report, percent construction complete, percent contractor invoiced, and percent schedule elapsed;
ii. A description of compliance with environmental requirements; iii. A listing of change orders including amount, description of work, and change in contract amount and schedule; and
iv. Any problems encountered, proposed resolution, schedule for resolution, and status of previous problem resolutions.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit A
A.2.2.2 Project Completion Report.
(a) The Recipient must submit a Project Completion Report to the Division with a copy to the appropriate Regional Water Board on or before the due date established by the Division and the Recipient at the time of final project inspection. The Project Completion Report must include the following:
i. Description of the Project,
ii. Description of the water quality problem the Project sought to address, iii. Discussion of the Project’s likelihood of successfully addressing that water quality problem in the future, and
iv. Summary of compliance with applicable environmental conditions. (b) If the Recipient fails to submit a timely Project Completion Report, the State Water Board may stop processing pending or future applications for new financial assistance, withhold disbursements under this Agreement or other agreements, and begin administrative proceedings.

A.2.2.3 As Needed Reports.

The Recipient must provide expeditiously, during the term of this Agreement, any reports, data, and information reasonably required by the Division, including but not limited to material necessary or appropriate for evaluation of the funding program or to fulfill any reporting requirements of the state or federal government.

A.2.2.4 [Reserved.]
A.2.2.5 [Reserved.]
A.2.3 Signage.

The Recipient shall place a sign at least four feet tall by eight feet wide made of ¾ inch thick exterior grade plywood or other approved material in a prominent location on the Project site and shall maintain the sign in good condition for the duration of the construction period. The sign must include the following disclosure statement and color logos (available from the Division):
a.

b. “Funding for this [name of project] project has been provided in full or in part by the Clean Water State Revolving Fund through an agreement with the State Water Resources Control Board.  California’s Clean Water State Revolving Fund is capitalized through a variety of funding sources, including grants from the United States Environmental Protection Agency and state bond proceeds.”

A.2.4 Commencement of Operations.

Upon Completion of Construction of the Project, the Recipient must expeditiously initiate Project operations.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit A
A.3 DATES & DELIVERABLES.
(a) Time is of the essence.

(b) The Recipient must expeditiously proceed with and complete construction of the Project.

(c) The following dates are established as on the Cover Page of this Agreement:

i. Eligible Work Start Date
ii. Eligible Construction Start Date
iii. Completion of Construction Date
iv. Final Reimbursement Request Date
v. Records Retention End Date
vi. Final Payment Date

(d) The Recipient must award the prime construction contract timely.

(e) The Recipient agrees to start construction no later than six (6) months after execution of this Agreement.

(f) The Recipient must deliver any request for extension of the Completion of Construction date no less than 90 days prior to the Completion of Construction date.

(g) The undisbursed balance of this Agreement will be deobligated if the Recipient does not provide its final reimbursement request to the Division on or before the Final Reimbursement Request Date.

(h) Upon request by the Division, the Recipient shall submit verifiable data to support deliverables specified in the Scope of Work. The Recipient’s failure to comply with this requirement may be construed as a material breach of this Agreement.

A.4 SCHEDULE.

Failure to provide items by the due dates indicated in the table below may constitute a material violation of this Agreement. The Project Manager may adjust the dates in the “Estimated Due Date” column of this table, but Critical Due Date adjustments will require an amendment to this Agreement. The Recipient must complete and submit all work in time to be approved by the Division prior to Project Completion. As applicable for specific submittals, the Recipient must plan adequate time to solicit, receive, and address comments prior to submitting the final submittal. The Recipient must submit the final reimbursement request prior to the Final Reimbursement Request Date set forth on the Cover Page.

[DFA will insert Schedule of Deliverables]

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

EXHIBIT B – FUNDING TERMS
B.1. FUNDING AMOUNTS AND REIMBURSEMENTS
B.1.1 Funding Contingency and Other Sources.
(a) If this Agreement’s funding for any fiscal year expires due to reversion or is reduced, substantially delayed, or deleted by the Budget Act, by Executive Order, or by order or action of the Department of Finance, the State Water Board has the option to either cancel this Agreement with no liability accruing to the State Water Board, or offer an amendment to the Recipient to reflect the reduced amount.

(b) If funding for Project Costs is made available to the Recipient from sources other than this Agreement, the Recipient must notify the Division. The Recipient may retain such funding up to an amount which equals the Recipient's share of Project Costs. To the extent allowed by requirements of other funding sources, excess funding must be remitted to the State Water Board to be applied to Payments due hereunder, if any.

B.1.2 Estimated Reasonable Cost.

The estimated reasonable cost of the total Project, including associated planning and design costs is Written Dollar Amount dollars and no cents ($Dollar Amount).

B.1.3 Project Funding Amount.

Subject to the terms of this Agreement, the State Water Board agrees to provide Project Funds not to exceed the amount of the Project Funding Amount set forth on the Cover Page of this Agreement.

B.1.4 Principal Forgiveness Component.
(a) Contingent on the Recipient’s performance of its obligations under this Agreement, the State Water Board will forgive principal of not to exceed the amount of the Principal Forgiveness Component set forth on the Cover Page of this Agreement.
(b) Upon Completion of Construction, the State Water Board will prepare an alternate payment schedule reflecting this forgiveness.

B. 1.5 Budget Costs.
(a) Estimated budget costs are contained in the Summary Project Cost Table below:
[DFA will insert table]
The Division’s Final Budget Approval and related Form 259 and Form 260 will document a more detailed budget of eligible Project Costs and Project funding amounts. Construction of the Project may be completed in phases with written approval of the Division. If construction proceeds under separate phases, the Recipient must submit a Final Budget Approval package and receive Final Budget Approval from the Division for each phase.

Upon written request by the Recipient, the Division may adjust the line items of the budget at the time of Division’s Final Budget Approval(s). Upon written request by the Recipient, the Division may also adjust the line items of the budget at the time of Recipient’s submittal of its final claim. Any line item adjustments Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

to the budget that are due to a change in scope of work will require an Agreement amendment. The sum of adjusted line items in the budget approved through the Final Budget Approval process must not exceed the Project Funding Amount. The Division may also propose budget adjustments. (b) Under no circumstances may the sum of line items in the budget approved through the Final Budget Approval process exceed the Project Funding Amount. Any increase in the Project Funding Amount will require an Agreement amendment.

B.1.6 Contingent Disbursement.
(a) The State Water Board’s disbursement of funds hereunder is contingent on the Recipient’s compliance with the terms and conditions of this Agreement.

(b) The State Water Board's obligation to disburse Project Funds is contingent upon the availability of sufficient funds to permit the disbursements provided for herein. If sufficient funds are not available for any reason, including but not limited to failure of the federal or State government to appropriate funds necessary for disbursement of Project Funds, the State Water Board shall not be obligated to make any disbursements to the Recipient under this Agreement. This provision shall be construed as a condition precedent to the obligation of the State Water Board to make any disbursements under this Agreement.

Nothing in this Agreement shall be construed to provide the Recipient with a right of priority for disbursement over any other entity. If any disbursements due the Recipient under this Agreement are deferred because sufficient funds are unavailable, it is the intention of the State Water Board that such disbursement will be made to the Recipient when sufficient funds do become available, but this intention is not binding.

(c) [Reserved.]

(d) Construction costs and disbursements are not available until after the Division has approved the final budget form submitted by the Recipient for the corresponding costs.

(e) No costs incurred prior to the Eligible Work Start Date are eligible for reimbursement.

(f) Construction costs incurred prior to the Eligible Construction Start Date are not eligible for reimbursement.

(g) Failure to proceed according to the timelines set forth in this Agreement may require the Recipient to repay to the State Water Board all disbursed Project Funds.

(h) The Recipient agrees to ensure that its final reimbursement request is received by the Division no later than the Final Reimbursement Request Date. If the final reimbursement request is not received timely, the undisbursed balance of this Agreement will be deobligated.

(i) The Recipient is not entitled to interest earned on undisbursed funds.

B.1.7 Reimbursement Procedure.

Except as may be otherwise provided in this Agreement, disbursement of Project Funds will be made as follows:

(a) Upon execution and delivery of this Agreement by both parties, the Recipient may request immediate reimbursement of any eligible incurred planning and design allowance costs through submission to the State Water Board of the Reimbursement Request Form 260 and Form 261, or any amendment thereto, duly completed and executed. To be eligible for reimbursement, Project Costs, including any planning and design allowance costs, must have been incurred in Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

compliance with all applicable requirements, including the state and federal cross-cutting requirements listed in Exhibit C.

(b) The Recipient must submit a reimbursement request for costs incurred prior to the date this Agreement is executed by the State Water Board no later than one hundred and eighty (180) days after this Agreement is executed by the State Water Board. Late reimbursement requests may not be honored.

(c) The Recipient may request reimbursement of eligible construction and equipment costs consistent with budget amounts approved by the Division in the Final Budget Approval.

(d) Additional Project Funds will be promptly disbursed to the Recipient upon receipt of reimbursement request Form 260 and Form 261, or any amendment thereto, duly completed and executed by the Recipient for incurred costs consistent with this Agreement, along with receipt of progress reports due under Exhibit A.

(e) The Recipient must not request reimbursement for any Project Cost until such cost has been incurred and is currently due and payable by the Recipient, although the actual payment of such cost by the Recipient is not required as a condition of reimbursement request. Supporting documentation (e.g., receipts) must be submitted with each reimbursement request. The amount requested for administration costs must include a calculation formula (i.e., hours or days worked times the hourly or daily rate = total amount claimed). Disbursement of Project Funds will be made only after receipt of a complete, adequately supported, properly documented, and accurately addressed reimbursement request. Upon request by the Division, supporting documents for professional and administrative services must include the employees’ names, classifications, labor rates, hours worked, and descriptions of the tasks performed.

Reimbursement requests submitted without supporting documents may be wholly or partially withheld at the discretion of the Division.

(f) The Recipient must spend Project Funds within 30 days of receipt. If the Recipient earns interest earned on Project Funds, it must report that interest immediately to the State Water Board. The State Water Board may deduct earned interest from future disbursements.

(g) The Recipient shall not request a reimbursement unless that Project Cost is allowable, reasonable, and allocable.

(h) Notwithstanding any other provision of this Agreement, no disbursement shall be required at any time or in any manner which is in violation of or in conflict with federal or state laws, policies, or regulations.

(i) No work or travel outside the State of California is permitted under this Agreement unless the Division provides prior written authorization. Failure to comply with this restriction may result in termination this Agreement, pursuant to Exhibit C. Any reimbursement for necessary travel and per diem shall be at rates not to exceed those set by the California Department of Human Resources at http://www.calhr.ca.gov/employees/Pages/travel-reimbursements.aspx. as of the date costs are incurred by the Recipient.

B.1.8 Withholding of Disbursements.

Notwithstanding any other provision of this Agreement, the State Water Board may withhold all or any portion of the Project Funds upon the occurrence of any of the following events:

(a) The Recipient’s failure to maintain reasonable progress on the Project as determined by the Division;
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

(b) Placement on the ballot or passage of an initiative or referendum to repeal or reduce the Recipient’s taxes, assessments, fees, or charges levied for operation of the System or payment of debt service on System Obligations;
(c) Commencement of litigation or a judicial or administrative proceeding related to the Project, System, or Revenues that the State Water Board determines may materially impair the timely satisfaction of Recipient’s obligations under this Agreement; (d) Any investigation by the State Water Board, District Attorney, California State Auditor, Bureau of State Audits, the USEPA Office of Inspector General, the Internal Revenue Service, Securities and Exchange Commission, a grand jury, or any other state or federal agency, relating to the Recipient’s financial management, accounting procedures, or internal fiscal controls in connection with the System or the Enterprise Fund; (e) A material adverse change in the condition of the Recipient, the Revenues, or the System, that the Division reasonably determines would materially impair the Recipient’s ability to satisfy its obligations under this Agreement, or any other event that the Division reasonably determines would materially impair the Recipient’s ability to satisfy its obligations under this Agreement;
(f) The Recipient’s material violation of, or threat to materially violate, any term of this Agreement;
(g) Evidence of fraud, forgery, embezzlement, theft, or any other misuse of public funds by the Recipient or its employees, or by its contractors or agents regarding the Project or the System;
(h) An event requiring Notice as set forth in Exhibit C; (i) An Event of Default.

B.1.9 Fraud and Misuse of Public Funds; Enforcement.

All requests for reimbursement submitted must be accurate and signed by the Recipient’s Authorized Representative under penalty of perjury. All costs submitted pursuant to this Agreement must only be for the work or tasks set forth in this Agreement. The Recipient must not submit any invoice containing costs that are ineligible or have been reimbursed from other funding sources unless required and specifically noted as such (i.e., match costs). Any eligible costs for which the Recipient is seeking reimbursement shall not be reimbursed from any other source. Double or multiple billing for time, services, or any other eligible cost is improper and will not be compensated. Any suspected occurrences of fraud, forgery, embezzlement, theft, or any other misuse of public funds may result in suspension of disbursements and, notwithstanding any other section in this Agreement, the termination of this Agreement requiring the repayment of all Project Funds disbursed hereunder. Additionally, the Deputy Director of the Division may request an audit; refer the matter for appropriate administrative action, including but not limited to the recovery of financial assistance provided and the imposition of civil penalties; and/or refer the matter to the Attorney General’s Office or the appropriate district attorney’s office for criminal prosecution or the imposition of civil liability.

B.2 RECIPIENT’S PAYMENT OBLIGATION AND PLEDGE
B.2.1 Project Costs.

The Recipient must pay any and all costs connected with the Project including, without limitation, any and all Project Costs and Additional Payments. If the Project Funds are not sufficient to pay the Project Costs in full, the Recipient must nonetheless complete the Project and pay that portion of the Project Costs in excess of available Project Funds, and shall not be entitled to any reimbursement therefor from the State Water Board.

B.2.2 Estimated Principal Payment Due.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

The estimated amount of principal that will be due to the State Water Board from the Recipient under this Agreement is Written Dollar Amount dollars and no cents ($Dollar Amount).

B.2.3 Interest Rate and In-Lieu of Interest Charges.
(a) The Recipient agrees to make all Payments according to the schedule in Exhibit E, and as otherwise set forth herein, at an interest rate of Written Interest Rate % (X%) per annum. (b) Interest will accrue beginning with each disbursement. Interest accrued prior to Completion of Construction will be Construction Period Interest and will be capitalized. At Completion of Construction, all accrued Construction Period Interest will be rolled into the principal amount. The final Payment Schedule will reflect the inclusion of Construction Period Interest in the principal amount. (c) Construction Period Interest cannot be estimated at the date of execution of the Agreement. In the preliminary Payment Schedule, the estimated CPI may be zero. This will change as the Recipient receives disbursements. The total amount of Construction Period Interest owed by the Recipient will not be finalized until Completion of Construction.
(d) In lieu of, and not to exceed, interest otherwise due under this Agreement, the Recipient agrees to pay the following charge(s), as further set forth in Exhibit E:
 an Administrative Service Charge
 a Small Community Grant Fund Charge

B.2.4 [Reserved.]
B.2.5 Obligation Absolute.

The obligation of the Recipient to make the Payments and other payments required to be made by it under this Agreement, from the Net Revenues, on parity with the Parity Obligations, and in accordance with the underlying documents related to the outstanding Parity Obligations, and/or other amounts legally available to the Recipient therefor, is absolute and unconditional, and until such time as the Payments and Additional Payments have been paid in full, the Recipient must not discontinue or suspend any Payments or other payments required to be made by it hereunder when due, whether or not the Project, or any related part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Payments and other payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever.

B.2.6 Payment Timing.
(a) Beginning on the immediate April 1 after Completion of Construction, the Recipient must submit an annual Payment of the principal of the Project Funds, including capitalized Construction Period Interest, together with all interest accruing thereon. The Recipient must make Payments fully amortizing the total principal of the Project by the Final Payment Date. Payments are based on a standard fully amortized assistance amount with equal annual payments. The Division will provide a courtesy payment notice to the Recipient prior to the Payment due date, which will include the Payment amount due. The Division will use its best effort to provide the courtesy payment notice to the Recipient no later than 30 days prior to the Payment due date. Notwithstanding the delivery of a payment notice, the Recipient is responsible for timely payment of all amounts due.

(b) The remaining balance is the previous balance, plus the disbursements, plus the accrued interest on both, plus any Charge In Lieu of Interest, less the Payment. Payment calculations will be made beginning Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

on the immediate April 1 after Completion of Construction. Exhibit E is a payment schedule based on the provisions of this Exhibit and an estimated disbursement schedule. Actual payments will be based on actual disbursements.

(c) Upon Completion of Construction and submission of necessary reports by the Recipient, the Division will prepare an appropriate payment schedule and supply the same to the Recipient. The Division may amend this schedule as necessary to accurately reflect amounts due under this Agreement. The Division will prepare any necessary amendments to the payment schedule and send them to the Recipient. The Recipient must make each Payment on or before the due date therefor. A ten (10) day grace period will be allowed, after which time a penalty in the amount of costs incurred by the State Water Board will be assessed for late payment. These costs may include, but are not limited to, lost interest earnings, staff time, bond debt service default penalties, if any, and other related costs. For purposes of penalty assessment, payment will be deemed to have been made if payment is deposited in the U.S. Mail within the grace period with postage prepaid and properly addressed. Any penalties assessed will not be added to the assistance amount balance, but will be treated as a separate account and obligation of the Recipient. The interest penalty will be assessed from the payment due date.

(d) The Recipient is obligated to make all payments required by this Agreement to the State Water Board, notwithstanding any individual default by its constituents or others in the payment to the Recipient of fees, charges, taxes, assessments, tolls or other charges ("Charges") levied or imposed by the Recipient. The Recipient must provide for the punctual payment to the State Water Board of all amounts which become due under this Agreement and which are received from constituents or others in the payment to the Recipient. In the event of failure, neglect or refusal of any officer of the Recipient to levy or cause to be levied any Charge to provide payment by the Recipient under this Agreement, to enforce or to collect such Charge, or to pay over to the State Water Board any money collected on account of such Charge necessary to satisfy any amount due under this Agreement, the State Water Board may take such action in a court of competent jurisdiction as it deems necessary to compel the performance of all duties relating to the imposition or levying and collection of any of such Charges and the payment of the money collected therefrom to the State Water Board. Action taken pursuant hereto shall not deprive the State Water Board of, or limit the application of, any other remedy provided by law or by this Agreement.

(e) Each Payment must be paid in lawful money of the United States of America by check or other acceptable form of payment set forth at www.waterboards.ca.gov/make_a_payment.

The Recipient must pay Payments and Additional Payments from Net Revenues and/or other amounts legally available to the Recipient therefor.

B.2.7 Pledged Revenues.

B.2.7.1 Establishment of Enterprise Fund.

In order to carry out its System Obligations, the Recipient covenants that it shall establish and maintain or shall have established and maintained the Enterprise Fund. All Revenues received shall be deposited when and as received in trust in the Enterprise Fund.

B.2.7.2 Pledge of Net Revenues and Enterprise Fund.

The Obligation hereunder shall be secured by a lien on and pledge of the Net Revenues on parity with the Parity Obligations and in accordance with the underlying documents related to the outstanding Parity Obligations. The Recipient hereby pledges and grants such lien on and pledge of the Net Revenues to secure the Obligation, including payment of Payments and Additional Payments hereunder. The Net Revenues in the Enterprise Fund shall be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the Recipient.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

B.2.7.3 Application and Purpose of the Enterprise Fund.

Subject to the provisions of any outstanding System Obligation, money on deposit in the Enterprise Fund shall be applied and used first, to pay Operations and Maintenance Costs, and thereafter, all amounts due and payable with respect to the System Obligations in order of priority. Subject to the provisions of any outstanding Parity Obligations, after making all payments hereinabove required to be made in each Fiscal Year, the Recipient may expend in such Fiscal Year any remaining money in the Enterprise Fund for any lawful purpose of the Recipient, including payment of Subordinate Obligations.

B.2.8 No Prepayment.

Pursuant to State Water Board’s Debt Management Policy, adopted on October 3, 2017, the Recipient may not prepay any portion of the principal and interest due under this Agreement without the written consent of the Deputy Director of the Division.

B.2.9 [Reserved.]

B.3 RATES, FEES AND CHARGES.
(a) The Recipient must, to the extent permitted by law, fix, prescribe and collect rates, fees and charges for the System during each Fiscal Year which are reasonable, fair, and nondiscriminatory and which will be sufficient to meet the requirements of Section 6.13 of the Indenture, including the requirement to generate Revenues in the amounts necessary to cover Operations and Maintenance Costs, and must ensure that Net Revenues are equal to at least 1.25 times the Annual Debt Service with respect to all outstanding Parity Obligations, including this Obligation and at least 1.00 times the Annual Debt Service with respect to all outstanding Subordinate Obligations. So long as the Recipient has complied with its obligations under Section 6.13 of the Indenture and Exhibit D of this Agreement, the failure to yield the amount of Revenues as set forth in the Indenture, or failure of Net Revenues to equal at least 1.25 times Annual Debt Service with respect to all outstanding Parity Obligations and at least 1.00 times Annual Debt Service with respect to all outstanding Subordinate Obligations at the end of the Recipient’s fiscal year, shall not cause an event of default under the Indenture or this Agreement, so long as the Recipient has complied with Section 6.13 of the Indenture at the commencement of the succeeding fiscal year of the Recipient.

(b) The Recipient may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates, fees and charges then in effect unless the Revenues after such reduced rates, fees, and charges are put into effect will at all times be sufficient to meet the requirements of this section.

(c) Upon consideration of a voter initiative to reduce Revenues, the Recipient’s Authorized Representative must make a written finding regarding the effect of such a reduction on the Recipient's ability to satisfy the rate covenant set forth in this Section. The Recipient’s Authorized Representative must request, if necessary, the authorization of the Recipient’s decision-maker or decision-making body to file litigation to challenge any such initiative that it finds will render it unable to satisfy the rate covenant set forth in this Agreement and its obligation to operate and maintain the Project for its Useful Life. The Recipient must diligently pursue and bear, if necessary, any and all costs related to such challenge. The Recipient must notify and regularly update the State Water Board regarding the status of any such challenge.

B.4 ADDITIONAL DEBT.
(a) The Recipient’s future debt that is secured by Net Revenues pledged herein may not be senior to this Obligation.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit B

(b) The Recipient may issue additional Parity debt in accordance with sections 3.05-3.08 of the Indenture.

(c) The Recipient may issue subordinate debt so long as the Recipient, in connection with the System, is in compliance with the requirement in Exhibit B.3(a) of this Agreement to establish, maintain and collect rates and charges with respect to the System sufficient to pay the Recipient’s System commercial paper notes and revolving notes, and all other System Obligations, including the proposed additional subordinate debt. Draws on the Recipient’s System commercial paper notes and revolving notes listed in the definition of Subordinate Obligations in Section 5 of this Agreement, up to the amount currently authorized pursuant to these commercial paper notes and revolving notes at the time of execution of this Agreement, will not cause the Recipient to have to demonstrate coverage requirements pursuant to this Exhibit B.4(c).

B.5 NO LIENS.

The Recipient must not make any pledge of or place any lien on the Project, System, or Revenues except as otherwise provided or permitted by the Indenture and this Agreement.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

EXHIBIT C – GENERAL & PROGRAMMATIC TERMS & CONDITIONS

C.1 REPRESENTATIONS & WARRANTIES.

The Recipient represents, warrants, and commits to the following as of the Eligible Work Start Date and continuing thereafter for the term of this Agreement.

C.1.1 Application and General Recipient Commitments.

The Recipient has not made any untrue statement of a material fact in its application for this financial assistance, or omitted to state in its application a material fact that makes the statements in its application not misleading.

The Recipient agrees to comply with all terms, provisions, conditions, and commitments of this Agreement, including all incorporated documents.

The Recipient agrees to fulfill all assurances, declarations, representations, and commitments in its application, accompanying documents, and communications filed in support of its request for funding under this Agreement.

C.1.2 Authorization and Validity.

The execution and delivery of this Agreement, including all incorporated documents, has been duly authorized by the Recipient. Upon execution by both parties, this Agreement constitutes a valid and binding obligation of the Recipient, enforceable in accordance with its terms, except as such enforcement may be limited by law.

C.1.3 No Violations.

The execution, delivery, and performance by Recipient of this Agreement, including all incorporated documents, do not materially violate any provision of any law or regulation in effect as of the date of execution of this Agreement by the Recipient, or result in any breach or default under any contract, obligation, indenture, or other instrument to which Recipient is a party or by which Recipient is bound as of the date of execution of this Agreement by the Recipient.

C.1.4 No Litigation.

There are, as of the date of execution of this Agreement by the Recipient, no pending or, to Recipient’s knowledge, threatened actions, claims, investigations, suits, or proceedings before any governmental authority, court, or administrative agency which materially affect the financial condition or operations of the Recipient, the System, the Revenues, and/or the Project, other than as previously disclosed in writing to the State Water Board by the Recipient.

There are no proceedings, actions, or offers by a public entity to acquire by purchase or the power of eminent domain the System or any of the real or personal property related to or necessary for the Project.

C.1.5 Property Rights.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

The Recipient owns or has sufficient property rights in the Project property for the longer of the Useful Life or the term of this Agreement, either in fee simple or for a term of years that is not subject to third-party revocation during the Useful Life of the Project.

C.1.6 Solvency and Insurance.

None of the transactions contemplated by this Agreement will be or have been made with an actual intent to hinder, delay, or defraud any present or future creditors of Recipient. The Recipient is solvent and will not be rendered insolvent by the transactions contemplated by this Agreement. The Recipient is able to pay its debts as they become due. The Recipient maintains sufficient insurance coverage considering the scope of this Agreement, including, for example but not necessarily limited to, general liability, automobile liability, workers compensation and employer liability, professional liability. The Recipient’s obligation to maintain sufficient insurance coverage may be satisfied by a reasonable system of self-insurance, as established in Section C.3.26 of this Agreement.

C.1.7 Legal Status and Eligibility.

The Recipient 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 the laws of the State of California. Recipient must at all times maintain its current legal existence and preserve and keep in full force and effect its legal rights and authority. The Recipient acknowledges that changes to its legal or financial status may affect its eligibility for funding under this Agreement and commits to maintaining its eligibility. Within the preceding ten years, the Recipient has not failed to demonstrate compliance with state or federal audit disallowances.

C.1.8 Financial Statements and Continuing Disclosure.

The financial statements of Recipient previously delivered to the State Water Board as of the date(s) set forth in such financial statements: (a) are materially complete and correct; (b) present fairly the financial condition of the Recipient; and (c) have been prepared in accordance with GAAP. Since the date(s) of such financial statements, there has been no material adverse change in the financial condition of the Recipient, nor have any assets or properties essential to the proper operation of the System or the maintenance of the Revenues reflected on such financial statements been sold, transferred, assigned, mortgaged, pledged or encumbered, except as previously disclosed in writing by Recipient and approved in writing by the State Water Board.

The Recipient is current in its continuing disclosure obligations associated with its Material Obligations, if any.

C.1.9 System Obligations
The Recipient has no System Obligations other than those defined in this Agreement.

C.1.10 No Other Material Obligations.

The Recipient has no Material Obligations other than System Obligations.

C.1.11 Compliance with State Water Board Funding Agreements.

The Recipient represents that it is in compliance with all State Water Board funding agreements to which it is a party.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

C.2 DEFAULTS AND REMEDIES
In addition to any other remedy set forth in this Agreement, the following remedies are available under this Agreement.

C.2.1 Return of Funds; Acceleration; and Additional Payments.

Notwithstanding any other provision of this Agreement, if the Division determines that an Event of Default has occurred, the Recipient may be required, upon demand, immediately to do each of the following:
i. return to the State Water Board any grant or principal forgiveness amounts received pursuant to this Agreement;
ii. subject to the limitations set forth in Sections 7.01 and 7.02 of the Indenture, accelerate the payment of any principal owed under this Agreement, all of which shall be immediately due and payable;
iii. pay interest at the highest legal rate on all of the foregoing; and iv. pay any Additional Payments.

C.2.2 [Reserved.]
C.2.3 [Reserved.]
C.2.4 Judicial remedies.

Whenever the State Water Board determines that an Event of Default shall have occurred, the State Water Board may enforce its rights under this Agreement by any judicial proceeding, whether at law or in equity. Without limiting the generality of the foregoing, the State Water Board may:
i. by suit in equity, require the Recipient to account for amounts relating to this Agreement as if the Recipient were the trustee of an express trust; ii. by mandamus or other proceeding, compel the performance by the Recipient and any of its officers, agents, and employees of any duty under the law or of any obligation or covenant under this Agreement, including but not limited to the imposition and collection of rates for the services of the System sufficient to meet all requirements of this Agreement; and
iii. take whatever action at law or in equity as may appear necessary or desirable to the State Water Board to collect the Payments then due or thereafter to become due, or to enforce performance of any obligation or covenant of the Recipient under this Agreement.

C.2.5 Termination.

Upon an Event of Default, the State Water Board may terminate this Agreement. Interest shall accrue on all amounts due at the highest legal rate of interest from the date that the State Water Board delivers notice of termination to the Recipient.

C.2.6 Damages for Breach of Tax-Exempt Status.

In the event that any breach of any of the provisions of this Agreement by the Recipient results in the loss of tax-exempt status for any bonds of the State or any subdivision or agency thereof, or if such breach results in an obligation on the part of the State or any subdivision or agency thereof to reimburse the federal government by reason of any arbitrage profits, the Recipient must immediately reimburse the State or any subdivision or agency thereof in an amount equal to any damages paid by or loss incurred by the State or any subdivision or agency thereof due to such breach.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

C.2.7 Damages for Breach of Federal Conditions.

In the event that any breach of any of the provisions of this Agreement by the Recipient results in the failure of Project Funds to be used pursuant to the provisions of this Agreement, or if such breach results in an obligation on the part of the State or any subdivision or agency thereof to reimburse the federal government, the Recipient must immediately reimburse the State or any subdivision or agency thereof in an amount equal to any damages paid by or loss incurred by the State or any subdivision or agency thereof due to such breach.

C.2.8 Remedies and Limitations.

None of the remedies available to the State Water Board shall be exclusive of any other remedy, and each such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. The State Water Board may exercise any remedy, now or hereafter existing, without exhausting and without regard to any other remedy.

Any claim of the Recipient is limited to the rights and remedies provided to the Recipient under this Agreement and is subject to the claims procedures provided to the Recipient under this Agreement.

C.2.9 Non-Waiver.

Nothing in this Agreement shall affect or impair the Recipient’s Obligation to pay Payments as provided herein or shall affect or impair the right of the State Water Board to bring suit to enforce such payment.

No delay or omission of the State Water Board in the exercise of any right arising upon an Event of Default shall impair any such right or be construed to be a waiver of any such Event of Default. The State Water Board may exercise from time to time and as often as shall be deemed expedient by the State Water Board, any remedy or right provided by law or pursuant to this Agreement.

C.2.10 Status Quo.

If any action to enforce any right or exercise any remedy shall be brought and either discontinued or determined adversely to the State Water Board, then the State Water Board shall be restored to its former position, rights and remedies as if no such action had been brought.

C.3 STANDARD CONDITIONS
C.3.1 Access, Inspection, and Public Records.

The Recipient must ensure that the State Water Board, the Governor of the State, the USEPA, the USEPA’s Office of Inspector General, any member of Congress, or any authorized representative of the foregoing, will have safe and suitable access to the Project site at all reasonable times during Project construction and thereafter for the term of the Agreement. The Recipient acknowledges that, except for a subset of information regarding archaeological records, the Project records and locations are public records, including but not limited to all of the submissions accompanying the application, all of the documents incorporated into this Agreement by reference, and all reports, reimbursement requests, and supporting documentation submitted hereunder.

C.3.2 Accounting and Auditing Standards; Financial Management Systems; Records Retention. (a) The Recipient must maintain project accounts according to GAAP as issued by the Governmental Accounting Standards Board (GASB) or its successor. The Recipient must maintain GAAP-compliant project accounts, including GAAP requirements relating to the reporting of infrastructure assets.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

(b) The Recipient must comply with federal standards for financial management systems. The Recipient agrees that, at a minimum, its fiscal control and accounting procedures will be sufficient to permit preparation of reports required by the federal government and tracking of Project funds to a level of expenditure adequate to establish that such funds have not been used in violation of federal or state law or the terms of this Agreement. To the extent applicable, the Recipient must comply with the provisions and requirements of the federal Single Audit Act (SAA) of 1984, 2 CFR part 200, subpart F, and 2 CFR section 200.302, and updates or revisions thereto, including but not limited to:

 Maintain an annual (Fiscal Year) accounting system and identify all expenditures of federal financial assistance;
 Conduct a SAA audit using an independent auditor in those Fiscal Years when expenditures of total federal financial assistance equal or exceed $750,000, and submit the SAA audit to the Federal Audit Clearinghouse within the earlier of thirty (30) calendar days after receipt of the auditor’s report(s) or nine (9) months of the end of the audit period;  Notify the Division when a SAA audit has been conducted and submitted to the Federal Audit Clearinghouse;
 Notify and provide the Division with a copy of the SAA audit within thirty (30) days of completion of the audit;
 Inform the Division of findings and recommendations pertaining to federal financial assistance provided through the State Water Board contained in SAA audits conducted by the Recipient;  Initiate corrective actions for audit reports with findings and recommendations that impact federal financial assistance provided through the State Water Board and notify the Division when corrective actions are complete.
(c) Without limitation of the requirement to maintain Project accounts in accordance with GAAP, the Recipient must:

i. Establish an official file for the Project which adequately documents all significant actions relative to the Project;
ii. Establish separate accounts which will adequately and accurately depict all amounts received and expended on the Project, including all assistance funds received under this Agreement;
iii. Establish separate accounts which will adequately depict all income received which is attributable to the Project, specifically including any income attributable to assistance funds disbursed under this Agreement; iv. Establish an accounting system which will accurately depict final total costs of the Project, including both direct and Indirect Costs;
v. Establish such accounts and maintain such records as may be necessary for the State to fulfill federal reporting requirements, including any and all reporting requirements under federal tax statutes or regulations; and vi. If Force Account is used by the Recipient for any phase of the Project, other than for planning, design, and construction engineering and administration provided for by allowance, accounts will be established which reasonably document all employee hours charged to the Project and the associated tasks performed by each employee.

(d) The Recipient must maintain separate books, records and other material relative to the Project.

The Recipient must also retain such books, records, and other material for itself and for each contractor or subcontractor who performed or performs work on this project for a minimum of thirty-six (36) years after Completion of Construction. The Recipient must require that such books, records, and other material are subject at all reasonable times (at a minimum during normal business hours) to inspection, copying, Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

and audit by the State Water Board, the California State Auditor, the Bureau of State Audits, the USEPA, the USEPA’s Office of Inspector General, the Internal Revenue Service, the Governor, or any authorized representatives of the aforementioned. The Recipient must allow and must require its contractors to allow interviews during normal business hours of any employees who might reasonably have information related to such records. The Recipient agrees to include a similar duty regarding audit, interviews, and records retention in any contract or subcontract related to the performance of this Agreement. The provisions of this section survive the term of this Agreement.

C.3.3 Amendment.

No amendment or variation of the terms of this Agreement shall be valid unless made in writing and signed by both the Recipient and the Deputy Director or designee.

Requests for amendments must be in writing and directed to the contact listed in Section 4 and to the Division’s Chief of Loans and Grants Administration Section.

C.3.4 Assignability.

This Agreement is not assignable by the Recipient, either in whole or in part, without the consent of the State Water Board in the form of a formal written amendment to this Agreement.

C.3.5 Audit.
(a) The Division may call for an audit of financial information relative to the Project if the Division determines that an audit is desirable to assure program integrity or if an audit becomes necessary because of state or federal requirements. If an audit is called for, the audit must be performed by a certified public accountant independent of the Recipient and at the cost of the Recipient. The audit must be in the form required by the Division.

(b) Audit disallowances must be returned to the State Water Board.

C.3.6 Bonding.

Where contractors are used, the Recipient must not authorize construction to begin until each contractor has furnished a performance bond in favor of the Recipient in the following amounts: faithful performance (100%) of contract value; labor and materials (100%) of contract value. This requirement shall not apply to any contract for less than $25,000.00.

C.3.7 Competitive Bidding
Recipient must adhere to any applicable state law or local ordinance for competitive bidding and applicable labor laws.

C.3.8 Compliance with Applicable Laws, Rules, and Requirements.

The Recipient must, at all times, comply with and require its contractors and subcontractors to comply with all applicable federal and state laws, rules, guidelines, regulations, and requirements. Without limitation of the foregoing, to the extent applicable, the Recipient must:

(a) Comply with the provisions of the adopted environmental mitigation plan, if any, for the term of this Agreement;

(b) Comply with the Policy; and
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

(c) Comply with and require compliance with the state and federal requirements set forth elsewhere in this Agreement.

C.3.9 Computer Software.

The Recipient certifies that it has appropriate systems and controls in place to ensure that state funds will not be used in the performance of this Agreement for the acquisition, operation or maintenance of computer software in violation of copyright laws.

C.3.10 Conflict of Interest.

The Recipient certifies that its owners, officers, directors, agents, representatives, and employees are in compliance with applicable state and federal conflict of interest laws.

C.3.11 Continuous Use of Project; No Lease, Sale, Transfer of Ownership, or Disposal of Project.

The Recipient agrees that, except as provided in this Agreement, it will not abandon, substantially discontinue use of, lease, sell, transfer ownership of, or dispose of all or a significant part or portion of the Project during the Useful Life of the Project without prior written approval of the Division. Such approval may be conditioned as determined to be appropriate by the Division, including a condition requiring repayment of all disbursed Project Funds or all or any portion of all remaining funds covered by this Agreement together with accrued interest and any penalty assessments that may be due.

C.3.12 Data Management.

The Recipient will undertake appropriate data management activities so that Project data can be incorporated into statewide data systems.

C.3.13 Disputes.
(a) The Recipient may appeal a staff decision within 30 days to the Deputy Director of the Division or designee, for a final Division decision. The Recipient may appeal a final Division decision to the State Water Board within 30 days. The Office of the Chief Counsel of the State Water Board will prepare a summary of the dispute and make recommendations relative to its final resolution, which will be provided to the State Water Board’s Executive Director and each State Water Board Member. Upon the motion of any State Water Board Member, the State Water Board will review and resolve the dispute in the manner determined by the State Water Board. Should the State Water Board determine not to review the final Division decision, this decision will represent a final agency action on the dispute.

(b) This clause does not preclude consideration of legal questions, provided that nothing herein shall be construed to make final the decision of the State Water Board, or any official or representative thereof, on any question of law.

(c) Recipient must continue with the responsibilities under this Agreement during any dispute.

(d) This section relating to disputes does not establish an exclusive procedure for resolving claims within the meaning of Government Code sections 930 and 930.4.

C.3.14 [Reserved].

C.3.15 Environmental Clearance.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

(a) No work that is subject to CEQA or NEPA may proceed under this Agreement unless the State Water Board has provided environmental clearance. The State Water Board may require changes in the scope of work or additional mitigation as a condition to providing construction or implementation funding under this Agreement. Recipient shall not perform any work subject to CEQA and/or NEPA before the State Water Board completes its environmental review and specifies any changes in scope or additional mitigation that may be required. Proceeding with work subject to CEQA and/or NEPA without approval by the State Water Board shall constitute a breach of a material provision of this Agreement. (b) If this Project includes modification of a river or stream channel, the Recipient must fully mitigate environmental impacts resulting from the modification. The Recipient must provide documentation that the environmental impacts resulting from such modification will be fully mitigated considering all of the impacts of the modification and any mitigation, environmental enhancement, and environmental benefit resulting from the Project, and whether, on balance, any environmental enhancement or benefit equals or exceeds any negative environmental impacts of the Project.

C.3.16 Governing Law.

This Agreement is governed by and shall be interpreted in accordance with the laws of the State of California.

C.3.17 Income Restrictions.

The Recipient agrees that any refunds, rebates, credits, or other amounts (including any interest thereon) accruing to or received by the Recipient under this Agreement must be paid by the Recipient to the State Water Board, to the extent that they are properly allocable to costs for which the Recipient has been reimbursed by the State Water Board under this Agreement.

C.3.18 Indemnification and State Reviews.

The parties agree that review or approval of Project plans and specifications by the State Water Board is for administrative purposes only, including conformity with application and eligibility criteria, and expressly not for the purposes of design defect review or construction feasibility, and does not relieve the Recipient of its responsibility to properly plan, design, construct, operate, and maintain the Project. To the extent permitted by law, the Recipient agrees to indemnify, defend, and hold harmless the State Water Board, the Bank, and any trustee, and their officers, employees, and agents for the Bonds, if any (collectively, "Indemnified Persons"), against any loss or liability arising out of any claim or action brought against any Indemnified Persons from and against any and all losses, claims, damages, liabilities, or expenses, of every conceivable kind, character, and nature whatsoever arising out of, resulting from, or in any way connected with (1) the System or the Project or the conditions, occupancy, use, possession, conduct, or management of, work done in or about, or the planning, design, acquisition, installation, or construction, of the System or the Project or any part thereof; (2) the carrying out of any of the transactions contemplated by this Agreement or any related document; (3) any violation related to the Project or the financing, of any applicable law, rule or regulation, any environmental law (including, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the California Hazardous Substance Account Act, the Federal Water Pollution Control Act, the Clean Air Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, the Safe Drinking Water Act, the California Hazardous Waste Control Law, and California Water Code Section 13304, and any successors to said laws), rule or regulation or the release of any toxic substance on or near the System or the Project; or (4) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements required to be stated therein, in light of the circumstances under which they were made, not misleading with respect to any information provided by the Recipient for use in any disclosure document utilized in connection with any of the transactions contemplated by this Agreement, except those arising from the gross negligence or willful misconduct of the Indemnified Persons. The Recipient Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

must also provide for the defense and indemnification of the Indemnified Persons in any contractual provision extending indemnity to the Recipient in any contract let for the performance of any work under this Agreement, and must cause the Indemnified Persons to be included within the scope of any provision for the indemnification and defense of the Recipient in any contract or subcontract. To the fullest extent permitted by law, the Recipient agrees to pay and discharge any judgment or award entered or made against Indemnified Persons with respect to any such claim or action, and any settlement, compromise or other voluntary resolution. The provisions of this section survive the term of this Agreement.

C.3.19 Independent Actor.

The Recipient, and its agents and employees, if any, in the performance of this Agreement, shall act in an independent capacity and not as officers, employees, or agents of the State Water Board.

C.3.20 Integration.

This Agreement constitutes the complete and final agreement between the parties. No oral or written understanding or agreement not incorporated in this Agreement shall be binding on either party.

C.3.21 Leveraging Covenants.
(a) Notwithstanding any other provision hereof, the Recipient covenants and agrees that it will comply with the Tax Covenants set forth in Exhibit F of this Agreement.

(a) The Recipient covenants to furnish such financial, operating and other data pertaining to the Recipient as may be requested by the State Water Board to: (i) enable the State Water Board to cause the issuance of Bonds and provide for security therefor; or (ii) enable any underwriter of Bonds issued for the benefit of the State Water Board to comply with Rule 15c2-12(b)(5).

(b) The Recipient further covenants to provide the State Water Board with copies of all continuing disclosure documents or reports that are disclosed pursuant to (i) the Recipient’s continuing disclosure undertaking or undertakings made in connection with any outstanding System Obligation, (ii) the terms of any outstanding System Obligation, or (iii) a voluntary disclosure of information related to an outstanding System Obligation. The Recipient must disclose such documents or reports to the State Water Board at the same time such documents or reports are submitted to any dissemination agent, trustee, nationally recognized municipal securities information repository, the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) website or other person or entity.

C.3.22 No Discrimination.
(a) The Recipient must comply with Government Code section 11135 and the implementing regulations (Cal. Code Regs, tit. 2, § 11140 et seq.), including, but not limited to, ensuring that no person is unlawfully denied full and equal access to the benefits of, or unlawfully subjected to discrimination in the operation of, the Project or System on the basis of sex, race, color, religion, ancestry, national origin, ethnic group identification, age, mental disability, physical disability, medical condition, genetic information, marital status, or sexual orientation as such terms are defined under California law, for as long as the Recipient retains ownership or possession of the Project.

(b) If Project Funds are used to acquire or improve real property, the Recipient must include a covenant of nondiscrimination running with the land in the instrument effecting or recording the transfer of such real property.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

(c) The Recipient must comply with the federal American with Disabilities Act of 1990 and implementing regulations as required by Government Code section 11135(b).

(d) The Recipient’s obligations under this section shall survive the term of this Agreement.

(e) During the performance of this Agreement, Recipient and its contractors and subcontractors must not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, sexual orientation, physical disability (including HIV and AIDS), mental disability, medical condition (cancer), age (over 40), marital status, denial of family care leave, or genetic information, gender, gender identity, gender expression, or military and veteran status.

(f) The Recipient, its contractors, and subcontractors must ensure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment.

(g) The Recipient, its contractors, and subcontractors must comply with the provisions of the Fair Employment and Housing Act and the applicable regulations promulgated thereunder. (Gov. Code, §12990, subds. (a)-(f) et seq.;Cal. Code Regs., tit. 2, § 7285 et seq.) Such regulations are incorporated into this Agreement by reference and made a part hereof as if set forth in full.

(h) The Recipient, its contractors, and subcontractors must comply with all applicable federal civil rights regulations, including statutory and national policy requirements. (2 CFR § 200.300). This includes, to the greatest extent practicable and to the extent permitted by law, the requirement to respect and protect the freedom of persons and organizations to engage in political and religious speech. (Executive Order 13798).

(i) The Recipient, its contractors, and subcontractors must give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.

(j) The Recipient must include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under this Agreement.

C.3.23 No Third Party Rights.

The parties to this Agreement do not create rights in, or grant remedies to, any third party as a beneficiary of this Agreement, or of any duty, covenant, obligation, or undertaking established herein.

C.3.24 No Obligation of the State.

Any obligation of the State Water Board herein contained shall not be an obligation, debt, or liability of the State and any such obligation shall be payable solely out of the moneys encumbered pursuant to this Agreement.

C.3.25 Notice.

Upon the occurrence of any of the following events, the Recipient must provide notice as set forth below.

(a) Within 24 hours of the following, the Recipient must notify the Division by phone at (916) 327-9978 and by email to [PM email address and senior email address] and [email protected] of:
i. The seizure of, or levy on, any Revenues securing this Agreement; ii. Any discovery of any potential tribal cultural resource, archaeological or historical resource, or human remains in the Project area (also notify the Division’s Senior Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

Cultural Resources Officer, at ([email protected]). Should a potential tribal cultural resource or archaeological or historical resource be discovered during construction or Project implementation, the Recipient must ensure that all work in the area of the find will cease until a qualified archaeologist has evaluated the situation and made recommendations regarding preservation of the resource, and the Division has determined what actions should be taken to protect and preserve the resource. The Recipient must implement appropriate actions as directed by the Division. If there are any applicable provisions of a mitigation, monitoring and reporting program adopted for the Project, the Recipient shall comply with such provisions. In the event of the discovery of human remains during construction of the Project, the Recipient shall cease construction and take other action required by any applicable laws, which may include but are not limited to Health and Safety Code, section 7050.5 and Public Resources Code, section 5097.98.

(b) [Reserved.]

(c) Within five (5) business days, the Recipient must notify the Division by phone at (916) 327-9978; by email to [email protected] [PM email address and senior email address] and [email protected]; and by mail to the contact address set forth in Section 4 of this Agreement of the occurrence of any of the following events:

i. Bankruptcy, insolvency, receivership or similar event of the Recipient, or actions taken in anticipation of any of the foregoing;
ii. Change of ownership of the Project or the System or change of management or service contracts, if any, for operation of the System; iii. Loss, theft, damage, or impairment to Project, the Revenues or the System, if material;
iv. Failure to meet any debt service coverage test in Exhibit B of this Agreement; v. Listed Events and Events of Default, except as otherwise set forth in this section; vi. Failure to observe or perform any covenant or comply with any condition in this Agreement;
vii. An offer from a public entity to purchase the Project or the System or any portion thereof, or any of the real or personal property related to or necessary for the Project;
viii. A proceeding or action by a public entity to acquire the Project or the System by power of eminent domain;
ix. Incurrence of a System Obligation or other Material Obligation by the Recipient; or
x. A default, event of acceleration, termination event, modification of terms, or other similar event under the terms of a System Obligation or other Material Obligation of the Recipient, any of which reflect financial difficulties.

(d) Within ten (10) business days, the Recipient must notify the Division by phone at (916) 327-9978, by email to [PM email address and senior email address] and [email protected], and by mail to the contact address set forth in Section 4 of this Agreement of the following events:

i. Material defaults on Material Obligations, other than this Obligation; ii. Unscheduled draws on material debt service reserves or credit enhancements, reflecting financial difficulties;
iii. Substitution of credit or liquidity providers, if any or their failure to perform, related to Parity Obligations;
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

iv. Any material litigation pending or threatened with respect to the Project or the Recipient’s technical, managerial or financial capacity to operate the System or the Recipient’s continued existence, or any judgment or court order relating to such litigation that has a significant effect on the Project or the System; v. Circulation of a petition to repeal, reduce, or otherwise challenge the Recipient’s rates for services of the System;
vi. Consideration of dissolution, or disincorporation, or any other event that could materially impair the Revenues;
vii. Adverse tax opinions, the issuance by the Internal Revenue Service or proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices of determinations with respect to the tax status of any tax-exempt bonds;
viii. Rating changes on outstanding System Obligations, if any; ix. Issuance of additional Parity Obligations;
x. Enforcement actions by or brought on behalf of the State Water Board or Regional Water Board; or
xi. Any investigation other than routine or random audits by the District Attorney, California State Auditor, Bureau of State Audits, USEPA’s Office of Inspector General, the Internal Revenue Service, Securities and Exchange Commission, a grand jury, or any other state or federal agency, relating to the Recipient’s financial management, accounting procedures, or internal fiscal controls;

(e) The Recipient must notify the Division promptly by phone at (916) 327-9978, by email to [PM email address and senior email address] and [email protected], and by mail to the contact address set forth in Section 4 of this Agreement of any of the following events:

i. The discovery of a false statement of fact or representation made in this Agreement or in the application to the Division for this financial assistance, or in any certification, report, or request for reimbursement made pursuant to this Agreement, by the Recipient, its employees, agents, or contractors; ii. Any substantial change in scope of the Project. The Recipient must undertake no substantial change in the scope of the Project until prompt written notice of the proposed change has been provided to the Division and the Division has given written approval for the change;
iii. Cessation of all major construction work on the Project where such cessation of work is expected to or does extend for a period of thirty (30) days or more; iv. Any circumstance, combination of circumstances, or condition, which is expected to or does delay Completion of Construction for a period of ninety (90) days or more;
v. Discovery of any unexpected endangered or threatened species, as defined in the federal Endangered Species Act. Should a federally protected species be unexpectedly encountered during construction of the Project, the Recipient agrees to promptly notify the Division. This notification is in addition to the Recipient’s obligations under the federal Endangered Species Act; vi. Any Project monitoring, demonstration, or other implementation activities required in Exhibit A or Exhibit D of this Agreement, if any; vii. Any public or media event publicizing the accomplishments and/or results of this Agreement and provide the opportunity for attendance and participation by state and federal representatives with at least ten (10) working days’ notice to the Division;
viii. Any allegation of research misconduct involving research activities that are supported in whole or in part with USEPA funds under this Project, as required by Exhibit C.4.3(xxix);
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

ix. Any events requiring notice to the Division pursuant to the provisions of this Agreement;
x. Completion of Construction of the Project, and actual Project Completion; xi. The award of the prime construction contract for the Project; xii. Initiation of construction of the Project.

C.3.26 Operation and Maintenance; Insurance.

The Recipient agrees to sufficiently and properly staff, operate and maintain all portions of the System during the Useful Life of the Project in accordance with all applicable state and federal laws, rules, and regulations.

The Recipient will procure and maintain or cause to be maintained insurance on the System with responsible insurers, or as part of a reasonable system of self-insurance, in such amounts and against such risks (including damage to or destruction of the System) as are usually covered in connection with systems similar to the System. Such insurance may be maintained by a self-insurance plan so long as such plan provides for (i) the establishment by the Recipient of a separate segregated self-insurance fund, or self-insurance program established to accomplish similar purposes and acceptable to the State Water Board, funded in an amount determined (initially and on at least an annual basis) by Recipient (by the division or divisions experienced in the field of risk management) and (ii) the establishment and maintenance of a claims processing and risk management program.

In the event of any damage to or destruction of the System caused by the perils covered by such insurance, the net proceeds thereof shall be applied to the reconstruction, repair or replacement of the damaged or destroyed portion of the System. The Recipient must begin such reconstruction, repair or replacement as expeditiously as possible, and must pay out of such net proceeds all costs and expenses in connection with such reconstruction, repair or replacement so that the same must be completed and the System must be free and clear of all claims and liens. If such net proceeds are insufficient to reconstruct, repair, or restore the System to the extent necessary to enable the Recipient to pay all remaining unpaid principal portions of the Payments, if any, in accordance with the terms of this Agreement, the Recipient must provide additional funds to restore or replace the damaged portions of the System.

Recipient agrees that for any policy of insurance concerning or covering the construction of the Project, it will cause, and will require its contractors to cause, a certificate of insurance to be issued showing the State Water Board, its officers, agents, employees, and servants as additional insured; and must provide the Division with a copy of all such certificates prior to the commencement of construction of the Project.

C.3.27 Permits, Subcontracting, and Remedies.

Recipient must procure all permits, licenses and other authorizations necessary to accomplish the work contemplated in this Agreement, pay all charges and fees, and give all notices necessary and incidental to the due and lawful prosecution of the work. Signed copies of any such permits or licenses must be submitted to the Division before any construction begins.

The Recipient must not contract or allow subcontracting with excluded parties. The Recipient must not contract with any party who is debarred or suspended or otherwise excluded from or ineligible for participation in any work overseen, directed, funded, or administered by the State Water Board program for which this funding is authorized. For any work related to this Agreement, the Recipient must not contract with any individual or organization on the State Water Board’s List of Disqualified Businesses and Persons that is identified as debarred or suspended or otherwise excluded from or ineligible for participation in any work overseen, directed, funded, or administered by the State Water Board program Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

for which funding under this Agreement is authorized. The State Water Board’s List of Disqualified Businesses and Persons is located at
http://www.waterboards.ca.gov/water_issues/programs/enforcement/fwa/dbp.shtml

C.3.28 Professionals.

The Recipient agrees that only licensed professionals will be used to perform services under this Agreement where such services are called for. All technical reports required pursuant to this Agreement that involve planning, investigation, evaluation, design, or other work requiring interpretation and proper application of engineering, architectural, or geologic sciences, shall be prepared by or under the direction of persons registered to practice in California pursuant to Business and Professions Code, sections 5536.1, 6735, 7835, and 7835.1. To demonstrate compliance with California Code of Regulations, title 16, sections 415 and 3065, all technical reports must contain a statement of the qualifications of the responsible registered professional(s). As required by these laws, completed technical reports must bear the signature(s) and seal(s) of the registered professional(s) in a manner such that all work can be clearly attributed to the professional responsible for the work.

C.3.29 Prevailing Wages.

The Recipient agrees to be bound by all applicable provisions of State Labor Code regarding prevailing wages. The Recipient must monitor all agreements subject to reimbursement from this Agreement to ensure that the prevailing wage provisions of the State Labor Code are being met.

In addition, the Recipient agrees to comply with the Davis-Bacon provisions incorporated by reference in Section 3 of this Agreement.

C.3.30 Public Funding.

This Project is publicly funded. Any service provider or contractor with which the Recipient contracts must not have any role or relationship with the Recipient, that, in effect, substantially limits the Recipient's ability to exercise its rights, including cancellation rights, under the contract, based on all the facts and circumstances.

C.3.31 Recipient’s Responsibility for Work.

The Recipient shall be responsible for all work and for persons or entities engaged in work performed pursuant to this Agreement, including, but not limited to, contractors, subcontractors, suppliers, and providers of services. The Recipient shall be responsible for responding to any and all disputes arising out of its contracts for work on the Project. The State Water Board will not mediate disputes between the Recipient and any other entity concerning responsibility for performance of work.

C.3.32 Related Litigation.

Under no circumstances may the Recipient use funds from any reimbursement under this Agreement to pay costs associated with any litigation the Recipient pursues against the State Water Board or any Regional Water Quality Control Board. Regardless of the outcome of any such litigation, and notwithstanding any conflicting language in this Agreement, the Recipient agrees to repay all of the disbursed funds plus interest in the event that Recipient does not complete the project.

C.3.33 Rights in Data.

The Recipient agrees that all data, plans, drawings, specifications, reports, computer programs, operating manuals, notes, and other written or graphic work produced in the performance of this Agreement are Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

subject to the rights of the State as set forth in this section. The State shall have the right to reproduce, publish, and use all such work, or any part thereof, in any manner and for any purposes whatsoever and to authorize others to do so. If any such work is copyrightable, the Recipient may copyright the same, except that, as to any work which is copyrighted by the Recipient, the State reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, and use such work, or any part thereof, and to authorize others to do so, and to receive electronic copies from the Recipient upon request.

C.3.34 State Water Board Action; Costs and Attorney Fees.

Any remedy provided in this Agreement is in addition to and not in derogation of any other legal or equitable remedy available to the State Water Board as a result of breach of this Agreement by the Recipient, whether such breach occurs before or after completion of the Project, and exercise of any remedy provided by this Agreement by the State Water Board shall not preclude the State Water Board from pursuing any legal remedy or right which would otherwise be available. In the event of litigation between the parties hereto arising from this Agreement, it is agreed that each party shall bear its own costs and attorney fees.

C.3.35 Timeliness.

Time is of the essence in this Agreement.

C.3.36 Unenforceable Provision.

In the event that any provision of this Agreement is unenforceable or held to be unenforceable, then the parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby.

C.3.37 Venue.

Any action arising out of this Agreement shall be filed and maintained in the Superior Court in and for the County of Sacramento, California.

C.3.38 Waiver and Rights of the State Water Board.

Any waiver of rights by the State Water Board with respect to a default or other matter arising under this Agreement at any time shall not be considered a waiver of rights with respect to any other default or matter. Any rights and remedies of the State Water Board provided for in this Agreement are in addition to any other rights and remedies provided by law.

C.4 MISCELLANEOUS STATE AND FEDERAL REQUIREMENTS
C.4.1 [Reserved.]

C.4.2 State Cross-Cutters.

Recipient represents that, as applicable, it complies and covenants to maintain compliance with the following with respect to all Project Costs for the term of this Agreement:

i. The California Environmental Quality Act (CEQA), as set forth in Public Resources Code 21000 et seq. and in the CEQA Guidelines at Title 14, Division 6, Chapter 3, Section 15000 et seq.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

ii. Water Conservation requirements, including regulations in Division 3 of Title 23 of the California Code of Regulations.

iii. Monthly Water Diversion Reporting requirements, including requirements set forth in Water Code section 5103.

iv. Public Works Contractor Registration with Department of Industrial Relations requirements, including requirements set forth in Sections 1725.5 and 1771.1 of the Labor Code.

v. Volumetric Pricing & Water Meters requirements, including the requirements of Water Code sections 526 and 527.

vi. Urban Water Management Plan requirements, including the Urban Water Management Planning Act (Water Code, § 10610 et seq.).

vii. Urban Water Demand Management requirements, including the requirements of Section 10608.56 of the Water Code.

viii. Delta Plan Consistency Findings requirements, including the requirements of Water Code section 85225 and California Code of Regulations, title 23, section 5002.

ix. Agricultural Water Management Plan Consistency requirements, including the requirements of Water Code section 10852.

x. Charter City Project Labor Requirements, including the requirements of Labor Code section 1782 and Public Contract Code section 2503.

xi. The Recipient agrees that it will, at all times, comply with and require its contractors and subcontractors to comply with directives or orders issued pursuant to Division 7 of the Water Code.

xii. Regulations in Division 4 of Title 22 of the California Code of Regulations, including but not limited to California Waterworks Standards in Chapter 16, and Lead and Copper regulations in Chapter 17.5.

C.4.3 Federal Requirements and Cross-Cutters for SRF Funding.

The Recipient acknowledges, warrants compliance with, and covenants to continuing compliance with the following federal terms and conditions with respect to all Project Costs for the term of this Agreement and for the Useful Life of the Project:

i. Unless the Recipient has obtained a waiver from USEPA on file with the State Water Board or unless this Project is not a project for the construction, alteration, maintenance or repair of a public water system or treatment work, the Recipient shall not purchase “iron and steel products” produced outside of the United States on this Project. Unless the Recipient has obtained a waiver from USEPA on file with the State Water Board or unless this Project is not a project for the construction, alteration, maintenance or repair of a public water system or treatment work, the Recipient hereby certifies that all “iron and steel products” used in the Project were or will be produced in the United States. For purposes of this section, the term "iron and steel products" means the following products made primarily of iron or steel: lined or unlined pipes and fittings, manhole covers and other municipal castings, hydrants, tanks, flanges, pipe clamps and restraints, valves, structural steel, reinforced precast concrete, and construction materials.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

“Steel” means an alloy that includes at least 50 percent iron, between .02 and 2 percent carbon, and may include other elements.

ii. [Reserved.]

iii. [Reserved.]

iv. The Recipient must include in full the Wage Rate Requirements (Davis-Bacon) language incorporated by reference in Section 3 of this Agreement in all construction contracts and subcontracts.

v. The Recipient must comply with the signage requirements set forth in Exhibit A.

vi. The Recipient shall notify the State Water Board and the USEPA contact of public or media events publicizing the accomplishment of significant events related to this Project and provide the opportunity for attendance and participation by federal representatives with at least ten (10) working days’ notice.

vii. The Recipient shall comply with applicable USEPA general terms and conditions found at:
https://www.epa.gov/grants/epa-general-terms-and-conditions-effective-october-1-2024-or-later.

viii. No Recipient may receive funding under this Agreement unless it has provided its Unique Entity Identifier, assigned by the System for Award Management, to the State Water Board.

ix. [Reserved.]

x. The Recipient represents and warrants that it and its principals are not excluded or disqualified from participating in this transaction as such terms are defined in Parts 180 and 1532 of Title 2 of the Code of Federal Regulations (2 CFR). If the Recipient is excluded after execution of this Agreement, the Recipient shall notify the Division within ten (10) days and shall inform the Division of the Recipient’s exclusion in any request for amendment of this Agreement. The Recipient shall comply with Subpart C of Part 180 of 2 CFR, as supplemented by Subpart C of Part 1532 of 2 CFR. Such compliance is a condition precedent to the State Water Board’s performance of its obligations under this Agreement. When entering into a covered transaction as defined in Parts 180 and 1532 of 2 CFR, the Recipient shall require the other party to the covered transaction to comply with Subpart C of Part 180 of 2 CFR, as supplemented by Subpart C of Part 1532 of 2 CFR.

xi. To the extent applicable, the Recipient shall disclose to the State Water Board any potential conflict of interest consistent with USEPA’s Final Financial Assistance Conflict of Interest Policy at https://www.epa.gov/grants/epas-final-financial-assistance-conflict-interest-policy. A conflict of interest may result in disallowance of costs.

xii. USEPA and the State Water Board have the right to reproduce, publish, use and authorize others to reproduce, publish and use copyrighted works or other data developed under this assistance agreement.

xiii. Where an invention is made with Project Funds, USEPA and the State Water Board retain the right to a worldwide, nonexclusive, nontransferable, irrevocable, paid-up license to practice the invention owned by the Recipient. The Recipient must utilize the Interagency Edison extramural invention reporting system at http://iEdison.gov and shall notify the Division when an invention report, patent report, or utilization report is filed.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

xiv. The Recipient agrees that any reports, documents, publications or other materials developed for public distribution supported by this Agreement shall contain the Disclosure statement set forth in Exhibit A.

xv. The Recipient acknowledges that it is encouraged to follow guidelines established under Section 508 of the Rehabilitation Act, codified at 36 CFR Part 1194, with respect to enabling individuals with disabilities to participate in its programs supported by this Project.

xvi. The Recipient, its employees, contractors and subcontractors and their employees warrants that it will not engage in severe forms of trafficking in persons, procure a commercial sex act during the term of this Agreement, use forced labor in the performance of this Agreement, or engage in acts that directly support or advance trafficking in persons, including (i) destroying, concealing, removing, confiscating, or otherwise denying an employee access to that employee’s identity or immigration documents; (ii) failing to provide return transportation or pay for return transportation costs to an employee from a country outside the United States to the country from which the employee was recruited upon the end of employment if request by the employee, unless exempted from the requirement to provide or pay for such return transportation by the Federal department or agency providing or entering into the grant or cooperative agreements or the employee is a victim of human trafficking seeking victim services or legal redress in the country of employment or a witness in a human trafficking enforcement action; (iii) soliciting a person for the purpose of employment, or offering employment, by means of materially false or fraudulent pretenses, representations, or promises regarding that employment; (iv) charging recruited employees a placement or recruitment fee; or (v) providing or arranging housing that fails to meet the host country’s housing and safety standards. The Recipient must include this provision in its contracts and subcontracts under this Agreement. The Recipient must inform the State Water Board immediately of any information regarding a violation of the foregoing. The Recipient understands that failure to comply with this provision may subject the State Water Board to loss of federal funds. The Recipient agrees to compensate the State Water Board for any such funds lost due to its failure to comply with this condition, or the failure of its contractors or subcontractors to comply with this condition. The State Water Board may unilaterally terminate this Agreement if the Recipient that is a private entity is determined to have violated the foregoing.

xvii. The Recipient certifies to the best of its knowledge and belief that:
a. No federal appropriated funds have been paid or will be paid, by or on behalf of the Recipient, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan, or cooperative agreement. b. If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress in connection with this Agreement, the Recipient shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions, and notify the State Water Board.

The Recipient shall require this certification from all parties to any contract or agreement that the Recipient enters into and under which the Recipient incurs costs for which it seeks reimbursements under this Agreement.

xviii. The Recipient must comply with the following federal non-discrimination requirements:

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

a. Title VI of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, and national origin, including limited English proficiency (LEP). b. Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination against persons with disabilities.
c. The Age Discrimination Act of 1975, which prohibits age discrimination. d. Section 13 of the Federal Water Pollution Control Act Amendments of 1972, which prohibits discrimination on the basis of sex.
e. 40 CFR Part 7, as it relates to the foregoing.

xix. If the Project relates to construction of a publicly owned treatment works, where the Recipient contracts for program management, construction management, feasibility studies, preliminary engineering, design, engineering, surveying, mapping, or architectural related services, the Recipient shall ensure that any such contract is negotiated in the same manner as a contract for architectural and engineering services is negotiated under chapter 11 of title 40, United States Code, or an equivalent State qualifications-based requirement as determined by the State Water Board.

xx. If the Project relates to construction of a publicly owned treatment works, the Recipient certifies that it has developed and is implementing a fiscal sustainability plan for the Project, except as set forth in Exhibit D, that includes an inventory of critical assets that are a part of the Project, an evaluation of the condition and performance of inventoried assets or asset groupings, a certification that the Recipient has evaluated and will be implementing water and energy conservation efforts as part of the plan, and a plan for maintaining, repairing, and, as necessary, replacing the Project and a plan for funding such activities.

xxi. Executive Order No. 11246. The Recipient shall include in its contracts and subcontracts related to the Project the following provisions:

"During the performance of this contract, the contractor agrees as follows:"(a) The contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, or national origin. Such action shall include, but not be limited to the following:
employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause.
"(b) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, or national origin. "(c) The contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer, advising the labor union or workers' representative of the contractor's commitments under Section 202 of Executive Order No. 11246 of September 24, 1965, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.
"(d) The contractor will comply with all provisions of Executive Order No. 11246 of Sept. 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

"(e) The contractor will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.
"(f) In the event of the contractor's noncompliance with the nondiscrimination clauses of this contract or with any of such rules, regulations, or orders, this contract may be cancelled, terminated or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 11246 of Sept 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law. "(g) The contractor will include the provisions of Paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order No. 11246 of Sept. 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing such provisions including sanctions for noncompliance: Provided, however, That in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the contractor may request the United States to enter into such litigation to protect the interests of the United States."
xxii. The Recipient agrees to comply with the requirements of USEPA’s Program for Utilization of Small, Minority and Women’s Business Enterprises.

xxiii. Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 of the Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans; 42 USC § 7606; 33 USC § 1368. Except where the purpose of this Agreement is to remedy the cause of the violation, the Recipient may not procure goods, services, or materials from suppliers excluded under the federal System for Award Management: sam.gov

xxiv. Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as amended; 42 USC §§4601-4655. The Recipient must comply with the Act’s implementing regulations at 49 CFR 24.101 through 24.105.

xxv. The Recipient agrees that if its network or information system is connected to USEPA networks to transfer data using systems other than the Environmental Information Exchange Network or USEPA’s Central Data Exchange, it will ensure that any connections are secure. For purposes of this subsection, a connection is defined as a dedicated persistent interface between a USEPA information technology system and an external information technology system for the purpose of transferring information. Transitory, user-controlled connections such as website browsing are excluded from this definition. If the Recipient's connections as defined above do not go through the Environmental Information Exchange Network or USEPA's Central Data Exchange, the Recipient agrees to contact the USEPA Project Officer and work with the designated Regional/Headquarters Information Security Officer to ensure that the connections meet USEPA security requirements, including entering into Interconnection Service Agreements as appropriate.

This condition does not apply to manual entry of data by the Recipient into systems operated and used by USEPA's regulatory programs for the submission of reporting and/or compliance data.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

xxvi. All geospatial data created pursuant to this Agreement that is submitted to the State Water Board for use by USEPA or that is submitted directly to USEPA must be consistent with Federal Geographic Data Committee endorsed standards. Information on these standards may be found at www.fgdc.gov.

xxvii. If the Recipient is a water system that serves 500 or fewer persons, the Recipient represents that it has considered publicly-owned wells as an alternative drinking water supply. xxviii. The Recipient represents that it is not a corporation that has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability; and it is not a corporation that was convicted of a felony criminal violation under a Federal law within the preceding 24 months.

xxix. The Recipient agrees to immediately notify the Project Manager in writing about any allegation of research misconduct involving research activities that are supported in whole or in part with USEPA funds under this Project, including fabrication, falsification, or plagiarism in proposing, performing, or reviewing research, or in reporting research results, or ordering, advising, or suggesting that subordinates engage in research misconduct.

xxx. The Recipient agrees to comply with, and require all contractors and subcontractors to comply with, USEPA’s Scientific Integrity Policy, available at https://www.epa.gov/osa/policy-epa- scientific-integrity, when conducting, supervising, and communicating science and when using or applying the results of science. For purposes of this condition scientific activities include, but are not limited to, computer modelling, economic analysis, field sampling, laboratory experimentation, demonstrating new technology, statistical analysis, and writing a review article on a scientific issue.

The Recipient shall not suppress, alter, or otherwise impede the timely release of scientific findings or conclusions; intimidate or coerce scientists to alter scientific data, findings, or professional opinions or exert non-scientific influence on scientific advisory boards; knowingly misrepresent, exaggerate, or downplay areas of scientific uncertainty; or otherwise violate the USEPA’s Scientific Integrity Policy. The Recipient must refrain from acts of research misconduct, including publication or reporting, as described in USEPA’s Policy and Procedures for Addressing Research Misconduct, Section 9.C, and must ensure scientific findings are generated and disseminated in a timely and transparent manner, including scientific research performed by contractors and subcontractors.

xxxi. The Recipient agrees to comply with the Animal Welfare Act of 1966 (7 USC 2131-2156).

Recipient also agrees to abide by the “U.S. Government Principles for the Utilization and Care of Vertebrate Animals used in Testing, Research, and Training,” available at http://grants.nih.gov/grants/olaw/references/phspol.htm#USGovPrinciples.

xxxii. The Recipient certifies that no Project Funds will be used on:

a. Video surveillance or telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities), telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities);
b. Telecommunications or video surveillance services produced by such entities; c. Telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense, in consultation with the Director of the National Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit C

Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country; or
d. Other telecommunications or video surveillance services or equipment in violation of 2 CFR 200.216.

xxxiii. [Reserved.]

xxxiv. [Reserved.]

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

EXHIBIT D – SPECIAL CONDITIONS

1. In accordance with the Recipient’s current practice of providing quarterly financial updates to the Recipient’s governing body, not more frequently than quarterly during each Fiscal Year in which the Obligation is outstanding, the Recipient shall determine whether Net Revenues for the then current Fiscal Year (calculated on a current Fiscal Year basis and excluding any transfers from reserve funds, rate stabilization funds, or retained Revenues from any prior Fiscal Years; and calculated in accordance with the method of calculation set forth in the Indenture) are anticipated to fall below 1.1 times debt service for such Fiscal Year, and in such event, shall notify the Division within 30 days of such determination. Notwithstanding the foregoing, such determination shall not constitute a violation by the Recipient of a material provision of this Agreement provided the Recipient has sufficient Revenues to pay all Operations and Maintenance Costs and avoid any payment-related default under this Obligation and all Parity Obligations in the current Fiscal Year. Within 60 days after providing such notice, the Recipient shall prepare a document detailing the Recipient’s anticipated Revenues, Operations and Maintenance Costs, and debt service requirements for the next three years, and demonstrating its abilities to make all debt service payments and pay all Operations and Maintenance Costs. The Recipient shall also detail any corrective actions the Recipient intends to undertake to ensure fiscal sustainability, including if necessary, raising rates and charges. This document must be satisfactory to the Division.

2. No Reserve Fund: There is no reserve fund required as security for the Obligation.

3. Other Material Obligations include: The Recipient has no outstanding Material Obligations, other than System Obligations.

4. For the purpose of the definitions of “Annual Debt Service,” “Maximum Annual Debt Service,” and “Parity Obligation,” capitalized terms that are not otherwise defined in Section 5 of this Agreement have the following meaning (capitalized terms in Sections 4 and 5 of this Exhibit D that are not defined in Section 5 of this Agreement or in this Exhibit D have the meaning prescribed to them in the Indenture):

a. “Accreted Value” means, with respect to any Capital Appreciation Bond, the principal amount thereof plus the interest accrued thereon from its date, compounded at the approximate interest rate thereof on each date specified in the Supplemental Indenture pursuant to which such Capital Appreciation Bonds are issued. The Accreted Value on any such date of compounding will be the amount set forth in the Accreted Value Table and, with respect to any date other than a date on which compounding occurs, will be determined by straight-line interpolation (based on a year consisting of 12 30-day months), as calculated by the Trustee. The calculation of Accreted Value by the Trustee will be binding and conclusive as to the Accreted Value of Capital Appreciation Bonds. b. “Balloon Indebtedness” means a Series of Commission Bonds 25% or more of the principal of which matures on the same date and is not required by the documents governing such Commission Bonds to be amortized by payment or redemption prior to such date. For purposes of this definition, an optional or mandatory tender of Commission Bonds for purchase as described within the definition of Tender Indebtedness will not be treated as a maturity.
c. “Build America Bonds” means any bonds or other obligations issued as Build America Bonds under Section 54AA of the Code, or under any other provision of the Code that creates a substantially similar direct-pay subsidy program.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

d. "Capital Appreciation Bonds" means all or any portion of a Series of Commission Bonds designated as Capital Appreciation Bonds and on which interest is compounded and paid either at maturity or on prior redemption.
e. "Commission" means the Public Utilities Commission of the City, and all commissions, agencies or public bodies hereafter created which succeed to or take over the powers and duties of the Commission with respect to the Enterprise. f. “Commission Bonds” mean Clean Water Revenue Bonds authorized by, and at any time Outstanding under, the Indenture and any supplement thereto, including any additional Commission Bonds authorized by, and at any time Outstanding under the Indenture and any supplement thereto, and for the purposes of Sections 5.01(c), 6.13, 7.01 and 7.02 of the Indenture, the term “Commission Bonds” includes Parity Loans. g. “Defeasance Obligations” means:
(a) Cash;
(b) Federal Securities;
(c) The interest component of Resolution Funding Corporation strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form;
(d) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P, provided that, if the issue is rated only by S&P (i.e., there is no Moody’s rating), then the pre-refunded municipal bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals; and
(e) 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 Farmers Home Administration; (iii) participation certificates of the General Services Administration; (iv) Federal Financing Bank bonds and debentures; (v) guaranteed Title XI financings of the U.S. Maritime Administration; and (vi) 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.
h. “Excluded Principal” means each payment of principal of Commission Bonds with a remaining term, on the date of calculation, of not greater than 60 months and which the Commission specifies in a Certificate of the Commission and filed with the Trustee that the Commission intends to pay from the proceeds of Commission Bonds or Parity Loans, other bonds, notes or other obligations of the Commission or moneys other than Net Revenues. No such determination shall affect the security for the Commission Bonds, Senior State Loans or Parity Loans or the obligation of the Commission to pay the Commission Bonds, Senior State Loans and Parity Loans from Net Revenues. i. “Minimum Sinking Fund Account Payments” means the aggregate amounts required by the Indenture and any subsequent Supplemental Indenture to be deposited in Sinking Fund Accounts for the payment of Term Bonds.
j. “Outstanding,” when used as of any particular time with reference to Commission Bonds, means (subject to the provisions of the Indenture) all Commission Bonds theretofore executed, issued and delivered by the Commission under the Indenture except -- (a) Commission Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;
(b) Commission Bonds for the payment or redemption of which funds or securities in the necessary amount (as set forth in the Indenture) have theretofore been deposited with a fiduciary (whether upon or prior to the maturity or redemption date of such Commission Bonds), provided that, if such Commission Bonds are to be redeemed prior to the maturity thereof, notice of Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

such redemption is given as in provided in the Indenture, or provision satisfactory to the Trustee is made for the giving of such notice; and (c) Commission Bonds in lieu of or in substitution for which other Commission Bonds have been executed, issued and delivered by the Commission pursuant to the Indenture.

For purposes of this definition and within the meaning of the Indenture, any Commission Bonds, the principal of or interest on which has been paid by a Credit Provider, shall not be deemed paid by or on behalf of the Commission, shall not be defeased and shall remain Outstanding under this Indenture until the Credit Provider has been paid or reimbursed for such payment by the Commission.
k. “Parity Loans” means those loan agreements entered into between the Commission and the State of California (or any board, department or agency thereof) or the federal government (or any board, department or agency thereof) to finance additions, betterments, extensions, repairs, renewals or replacements to the Enterprise, which are entered into after the issuance of the 2003 Refunding Series A Bonds and which, by their terms, are secured by a pledge and lien on Net Revenues on a parity basis with debt service on the Commission Bonds. Parity Loans may be evidenced by or secured by Commission Bonds.
l. “Payment Date” means any date on which payment of the principal of or interest on the Commission Bonds is due, or on which any Term Bonds are required to be redeemed from any Minimum Sinking Fund Account Payments.
m. “Qualified Financial Advisor” means a person or a firm selected by the Commission who or which engages in the business of advising the management of public agencies similar to the Commission concerning the issuance of debt.
n. “Refundable Credits” means, (a) with respect to a Series of Commission Bonds issued as Build America Bonds under Section 54AA of the Code, the amounts which are payable by the Federal government under Section 6431 of the Code, which the Commission has elected to receive under Section 54AA(g)(1) of the Code, and (b) with respect to a Series of Commission Bonds issued as Build America Bonds under any other provision of the Code that creates a substantially similar direct-pay subsidy program, the amounts which are payable by the Federal government under the applicable provisions of the Code which the Commission has elected to receive under the applicable provisions of the Code.
o. “SIFMA” means, as of any date, the most recent rate determined on the basis of the seven-day high grade market index of tax-exempt variable rate demand obligations, as calculated and published by Bloomberg and made available by the Securities Industry and Financial Markets Association on its SIFMA Municipal Swap Index, or if the SIFMA Municipal Swap Index is no longer published or reported, the rate per annum published or reported on the S&P Municipal Bond 7 Day High Grade Rate Index, or if neither the SIFMA Municipal Swap Index nor the S&P Municipal Bond 7 Day High Grade Rate Index is published, a per annum rate equal to 60% of the yield of the three-month U.S. Treasury bill as reported as of the end of each trading day.
p. “Supplemental Indenture” means any indenture amendatory of or supplemental to the Indenture that complies with the provisions of the Indenture for amendments and supplements, and includes any amended and restated indenture that complies with the provisions of the Indenture for amendments and supplements. q. “Trustee” means U.S. Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association, acting as an independent trustee with the duties and powers provided in the Indenture, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in the Indenture.
r. "Variable Rate Indebtedness" means any portion of indebtedness, the interest rate on which is not fixed at the time such indebtedness is incurred, and has not at some subsequent date been fixed for the entire term of the indebtedness.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

5. Sections 3.05-3.08 of the Indenture have the following meaning (for the purposes of this provision, the term “Bond” has the meaning set forth in in the Indenture, instead of the meaning prescribed to in in Section 5 of the Agreement):

SECTION 3.05. Issuance of Additional Bonds. In addition to the 2003 Refunding Series A Bonds, the Commission may, subject to the requirements of the Law, by Supplemental Indenture establish one or more other Series of Bonds payable from Net Revenues on a parity with the 2003 Refunding Series A Bonds and secured by a lien upon and pledge of Net Revenues equal to the lien and pledge securing the 2003 Refunding Series A Bonds, and the Commission may issue and the Trustee may authenticate and deliver Bonds of any Series so established, in such principal amount and for such lawful purpose or purposes (including refunding of any Bonds issued hereunder and then Outstanding) as shall be determined by the Commission in said Supplemental Indenture, but only upon compliance by the Commission with the provisions of Section 3.07, and subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such additional Series of Bonds:
(a) No Event of Default shall have occurred and be continuing under this Indenture or any Supplemental Indenture and no event shall have occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under the Indenture or any Supplemental Indenture. (b) The Supplemental Indenture providing for the issuance of such additional Series of Bonds shall require that the amount on deposit in the Bond Reserve Fund to be established pursuant to Section 5.02 be increased, if and to the extent necessary, immediately upon the receipt of the proceeds of the sale of such additional Series of Bonds, to an amount equal to the Required Reserve. This deposit may be made from such proceeds or any other source, as provided in the Supplemental Indenture. (c) The Supplemental Indenture providing for the issuance of such additional Series of Bonds shall provide for the payment of interest and principal as follows:
(i) Principal on such Additional Bonds shall be payable either semiannually on April 1 and October 1 of each year in which principal falls due or annually on October 1 of each year in which principal falls due, and Term Bonds of any Series shall have a principal maturity date of October 1. Interest on such Additional Bonds that are Current Interest Bonds shall be payable semiannually on April 1 and October 1 of each year excepting the first year, provided that the first installment of interest shall be payable on either April 1 or October 1 and shall be for a period of not longer than twelve months and that the interest shall be payable thereafter semiannually on April 1 and October 1. (ii) Notwithstanding subsection (i), the Supplemental Indenture authorizing the issuance of such Additional Bonds may provide for the payment of principal and interest on dates other than those specified in subsection (i) if the Supplemental Indenture provides for the monthly payment of a portion of interest and principal becoming due and payable on the succeeding Interest Payment Date and Principal Payment Date, as applicable, as set forth in detail in the Supplemental Indenture.
(iii) Interest on any Bonds constituting Variable Rate Indebtedness or Tender Indebtedness may be payable on such Payment Dates as shall be specified in the Supplemental Indenture.
(d) Fixed serial maturities or mandatory Minimum Sinking Fund Account Payments, or any combination thereof, shall be established in amounts sufficient to provide for the retirement of all of the Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

Bonds of such additional Series on or before their respective maturity dates; provided, however, that such requirement shall not apply to Balloon Indebtedness or principal amounts of such Series of Bonds which the Commission has specified as Excluded Principal.
(e) The aggregate principal amount of Bonds issued hereunder shall not exceed any limitation imposed by law or by any Supplemental Indenture.
(f) After the sale of the Series of Additional Bonds proposed to be issued (but prior to the issuance and delivery thereof and receipt of payment therefor), the Commission shall file the following documents with the Trustee; these documents shall, with respect to such Series of Additional Bonds, be based upon the actual interest rate or rates determined at the time of sale thereof (except that, with respect to Variable Rate Indebtedness, the interest rate for the Series of Additional Bonds shall be calculated in accordance with the provisions of subsection (b) of the definition of Annual Debt Service). (i) A Certificate of the Commission setting forth for each of the next three Fiscal Years estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues.
(ii) A Certificate of the Commission demonstrating that (1) the ratio of (A) Net Revenues for the most recent Fiscal Year for which audited financial statements are available, or any consecutive twelve calendar month period during the eighteen calendar month period prior to the issuance of such additional Series of Bonds, to (B) Annual Debt Service for the current Fiscal Year, calculated as of the date of sale of, and including such additional Series of Bonds, will not be less than 1.25:1; or (2) the ratio of (A) Net Revenues projected by the Commission for each of the next three Fiscal Years as determined in Section 3.05(f)(i) above, and including in such projections amounts projected to be received from any adopted rate increases and fund balances of the Commission which are projected to be available for the payment of Debt Service (but excluding the Bond Reserve Fund), to (B) Annual Debt Service in each of such three Fiscal Years, calculated as of the date of sale of and including such additional Series of Bonds, will not be less than 1.25:1 in each of such Fiscal Years.

SECTION 3.06. Issuance of Additional Bonds for Refunding. In addition to the 2003 Refunding Series A Bonds, the Commission may, subject to the requirements of the Law, by Supplemental Indenture establish one or more other Series of Bonds payable from Net Revenues on a parity with the 2003 Refunding Series A Bonds and secured by a lien upon and pledge of Net Revenues equal to the lien and pledge securing the 2003 Refunding Series A Bonds, and the Commission may issue, and the Trustee may authenticate and deliver, Bonds of any Series so established, for the purpose of refunding any Bonds issued hereunder and then Outstanding, but only upon compliance by the Commission with the provisions of Section 3.07, and subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such additional Series of Bonds; (a) No Event of Default shall have occurred and be continuing under this Indenture or any Supplemental Indenture and no event shall have occurred which, but for the passage of time or the giving of notice would constitute an Event of Default under the Indenture or any Supplemental Indenture. (b) The Supplemental Indenture providing for the issuance of such additional Series of Bonds shall require that the amounts on deposit in the Bond Reserve Fund to be established pursuant to Section 5.02 be increased, if necessary, upon the receipt of the proceeds of the sale of such additional Series of Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

Bonds to an amount equal to the Required Reserve. This deposit may be made from such proceeds or any other source, as provided in the Supplemental Indenture. (c) The Supplemental Indenture providing for the issuance of such additional Series of Bonds shall provide for the payment of interest and principal as follows:
(i) Principal on such Additional Bonds shall be payable either semiannually on April 1 and October 1 of each year in which principal falls due or annually on October 1 of each year in which principal falls due, and Term Bonds of any Series shall have a principal maturity date of October 1. Interest on such Additional Bonds that are Current Interest Bonds shall be payable semiannually on April 1 and October 1 of each year excepting the first year, provided that the first installment of interest shall be payable on either April 1 or October 1 and shall be for a period of not longer than twelve months and that the interest shall be payable thereafter semiannually on April 1 and October 1. (ii) Notwithstanding subsection (i), the Supplemental Indenture authorizing the issuance of such Additional Bonds may provide for the payment of principal and interest on dates other than those specified in subsection (i) if the Supplemental Indenture provides for the monthly payment of a portion of interest and principal becoming due and payable on the succeeding Interest Payment Date and Principal Payment Date, as applicable, as set forth in detail in the Supplemental Indenture.
(iii) Interest on any Bonds constituting Variable Rate Indebtedness or Tender Indebtedness may be payable on such Payment Dates as shall be specified in the Supplemental Indenture providing for the issuance of such Bonds. (d) Fixed serial maturities or mandatory Minimum Sinking Fund Account Payments, or any combination thereof, shall be established in amounts sufficient to provide for the retirement of all of the Bonds of such additional Series on or before their respective maturity dates, unless such Bonds are Balloon Indebtedness.
(e) The aggregate principal amount of Bonds issued hereunder shall not exceed any limitation imposed by law or by any Supplemental Indenture.
(f) After giving effect to the application of the proceeds of the additional Series of Bonds, either (i) Annual Debt Service will not be increased in any Fiscal Year (excluding Debt Service on the Outstanding Bonds to be refunded) in an amount in excess of 5% or (ii) the Average Annual Debt Service for the Bonds of such additional Series (during the period from their issuance to their last maturity date) shall be equal to or less than the Average Annual Debt Service on the Bonds to be refunded (during the period from the issuance of the additional Series to the last maturity date of the Bonds to be refunded). (g) After the sale of the additional Series of Bonds proposed to be issued (but prior to the issuance and delivery thereof and receipt of payment therefor), the Commission shall file the following documents with the Trustee; these documents shall, with respect to such additional Series of Bonds, be based upon the actual interest rate or rates determined at the time of sale thereof. (i) A Certificate of the Commission that all of the requirements of this Section 3.06 have been met,
Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

(ii) A certificate of one or more Qualified Financial Advisors that the requirements of subsection (f) of this Section have been met.

SECTION 3.07. Proceedings for the Issuance of Additional Series of Bonds. (a) Whenever the Commission determines to issue an additional Series of Bonds pursuant to Section

3.05 or 3.06, as the case may be, the Commission shall execute or adopt a Supplemental Indenture providing for the issuance of such additional Series of Bonds. (b) Such Supplemental Indenture shall specify the maximum principal amount of Bonds of such Series, provide for the distinctive designation of Bonds of such Series, and prescribe the other terms and conditions of such additional Series of Bonds in accordance with this Indenture and subject to the provisions of Section 3.05 or 3.06, as the case may be. The Commission may by such Supplemental Indenture prescribe any provisions respecting the Bonds of such Series not inconsistent with the terms of this Indenture, including registration, transfer and exchange provisions, provisions for the payment of principal and interest and sinking fund provisions.
(c) Before such additional Series of Bonds may be issued and delivered, the Commission shall file the following documents with the Trustee:
(i) An Opinion of Counsel setting forth (1) that such counsel has examined the Supplemental Indenture and found it to be in compliance with the requirements of this Indenture; (2) that the execution and delivery of the additional Series of Bonds have been sufficiently and duly authorized by the Commission; (3) that said additional Series of Bonds, when duly executed by the Commission and, if required, authenticated and delivered by the Trustee, will be valid and binding special obligations of the Commission, payable from Net Revenues as provided herein; and (4) that the issuance of the additional Series of Bonds will not adversely affect the exclusion from federal income taxation of interest on any Bonds then Outstanding.
(ii) The certificates and reports required by Section 3.05 (if the Additional Bonds constitute an additional lien on the Net Revenues) or 3.06 (if the Additional Bonds are issued to refund any Outstanding Bonds), as appropriate. (iii) The Supplemental Indenture, duly executed or certified and approved by the Trustee.
(d) Upon the delivery to the Trustee of the foregoing instruments, the Trustee shall authenticate and deliver said additional Series of Bonds, in the aggregate principal amount specified in such Supplemental Indenture, to, or upon the Written Request of, the Commission, when such additional Series of Bonds shall have been presented to it for that purpose.

SECTION 3.08. No Issuance of Additional Bonds or Other Obligations Except as Permitted Herein; Exceptions. So long as any of the Bonds remain Outstanding, the Commission may issue any Additional Bonds or obligations payable from Net Revenues on a parity with the Bonds only pursuant to Sections

3.05, 3.06 and 3.07, except under any of the following conditions, in which case none of the limitations or restrictions on the issuance of additional Series of Bonds set forth in Sections 3.05, 3.06 and 3.07 shall be applicable:

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

(a) if the Owners of a majority in aggregate amount of the Bond Obligation and any Credit Provider consent in writing to the issuance of such Additional Bonds or obligations, or (b) the obligation constitutes debt of the Commission (including without limitation loan agreements entered into between the Commission and the State of California (or any board, department or agency thereof) to finance or refinance additions, betterments, extensions, repairs, renewals or replacements to the Enterprise) payable by its terms from Net Revenues on a subordinate basis to the payment of Debt Service on the Bonds.

In addition, the Commission may enter into Parity Loans if no Event of Default has occurred and is continuing under this Indenture or any Supplemental Indenture (and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under this Indenture or any Supplemental Indenture) and, on the date of the execution and delivery of such Parity Loans and with respect to Parity Loans executed and delivered prior to the effective date of the amendments set forth in Article II of the Sixth Supplemental Indenture, on the effective date of the amendments set forth in Article II of the Sixth Supplemental Indenture, the Commission delivers a Certificate to the Trustee setting forth, for each of the next three Fiscal Years after the delivery of the Parity Loans, and in the case of Parity Loans executed and delivered prior to the effective date of the amendments set forth in Article II of the Sixth Supplemental Indenture, the next three Fiscal Years, determined on such date, (i) the Revenues, Operation and Maintenance Costs of the Enterprise and Net Revenues and (ii) the Annual Debt Service (assuming the delivery of the Parity Loans), and demonstrating that the estimated Net Revenues (together with any fund balances of the Commission, which are available for Debt Service, but excluding the Bond Reserve Fund), in each of such Fiscal Years is at least equal to 1.25 times the Annual Debt Service in each of such Fiscal Years.

[environmental]

Executive Order N-6-22 — Russian Sanctions.

On March 4, 2022, Governor Gavin Newsom issued Executive Order N-6-22 (the EO) regarding Economic Sanctions against Russia and Russian entities and individuals. “Economic Sanctions” refers to sanctions imposed by the U.S. government in response to Russia’s actions in Ukraine, as well as any sanctions imposed under state law. The EO directs state agencies to terminate contracts with, and to refrain from entering any new contracts with, individuals or entities that are determined to be a target of Economic Sanctions. Accordingly, should the State Water Board determine Recipient is a target of Economic Sanctions or is conducting prohibited transactions with sanctioned individuals or entities, that shall be grounds for termination of this Agreement. The State Water Board shall provide Recipient advance written notice of such termination, allowing Recipient at least 30 calendar days to provide a written response. Termination shall be at the sole discretion of the State Water Board.

The Recipient represents that the Recipient is not a target of economic sanctions imposed in response to Russia’s actions in Ukraine imposed by the United States government or the State of California. The Recipient is required to comply with the economic sanctions imposed in response to Russia’s actions in Ukraine, including with respect to, but not limited to, the federal executive orders identified in California Executive Order N-6-22, located at https://www.gov.ca.gov/wp-content/uploads/2022/03/3.4.22-Russia- Ukraine-Executive-Order.pdf and the sanctions identified on the United States Department of the Treasury website (https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and- country-information/ukraine-russia-related-sanctions). The Recipient is required to comply with all applicable reporting requirements regarding compliance with the economic sanctions, including, but not limited to, those reporting requirements set forth in California Executive Order N-6-22 for all Recipients with one or more agreements with the State of California with an aggregated value of Five Million Dollars Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

($5,000,000) or more. Notwithstanding any other provision in this Agreement, failure to comply with the economic sanctions and all applicable reporting requirements may result in termination of this Agreement.

For Recipients with an aggregated agreement value of Five Million Dollars ($5,000,000) or more with the State of California, reporting requirements include, but are not limited to, information related to steps taken in response to Russia’s actions in Ukraine, including but not limited to:

1. Desisting from making any new investments or engaging in financial transactions with Russian institutions or companies that are headquartered or have their principal place of business in Russia;

2. Not transferring technology to Russia or companies that are headquartered or have their principal place of business in Russia; and

3. Direct support to the government and people of Ukraine.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit D

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit E

EXHIBIT E – PAYMENT SCHEDULE
See the attached preliminary Payment Schedule. The final Payment Schedule will be forwarded to the Recipient after all disbursements have been paid and construction of the Project has been completed.

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit F

EXHIBIT F – TAX CERTIFICATE

F.1 Purpose.

The purpose of this Exhibit F is to establish the reasonable expectations of the Recipient regarding the Project and the Project Funds, and is intended to be and may be relied upon for purposes of Sections 103, 141 and 148 of the Code and as a certification described in Section 1.148-2(b)(2) of the Treasury Regulations. This Exhibit F sets forth certain facts, estimates and circumstances which form the basis for the Recipient’s expectation that neither the Project nor the Bond Funded Portion of the Project Funds is to be used in a manner that would cause the Obligation to be classified as “arbitrage bonds” under Section 148 of the Code or “private activity bonds” under Section 141 of the Code.

F.2 Tax Covenant.

The Recipient agrees that it will not take or authorize any action or permit any action within its reasonable control to be taken, or fail to take any action within its reasonable control, with respect to the Project which would result in the loss of the exclusion of interest on the Bonds from gross income for federal income tax purposes under Section 103 of the Code.

F.3 Governmental Unit.

The Recipient is a state or local governmental unit as defined in Section 1.103-1 of the Treasury Regulations or an instrumentality thereof (a "Governmental Unit") and is not the federal government or any agency or instrumentality thereof.

F.4 Financing of a Capital Project.

The Recipient will use the Project Funds to finance capital expenditures it has incurred or will incur for the construction, reconstruction, installation or acquisition of the Project in accordance with the terms of this Agreement. Such expenditures shall not have previously been financed with the proceeds of any other issue of indebtedness except for interim financing by the Recipient, the date of maturity, prepayment or redemption of which is within thirty (30) days of the date of disbursement of Project Funds under this Agreement. All Project Funds shall be allocated to expenditures by the Recipient within thirty (30) days of the date of disbursement, including (if at all) Project Funds allocated to repay interim financing of the Recipient. For purposes of this Section F.4, “interim financing” means notes, commercial paper, loans, lines of credit and other forms of short-term borrowing.

F.5 Ownership and Operation of Project.

The Recipient exclusively owns and, except as provided in Section F.12 hereof, operates the Project.

F.6 Temporary Period.

The Recipient reasonably expects that at least eighty-five percent (85%) of the Bond Funded Portion of the Project Funds will be allocated to expenditures for the Project within three (3) years of the earlier of the effective date of this Agreement or the date the Bonds are issued ("Applicable Date"). The Recipient has incurred, or reasonably expects that it will incur within six (6) months of the Applicable Date, a substantial binding obligation (i.e., not subject to contingencies within the control of the Recipient or a related party) to a third party to expend at least five percent (5%) of the Bond Funded Portion of the Project Funds on Project Costs. The completion of acquisition, construction, improvement and equipping Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit F

of the Project and the allocation of the Bond Funded Portion of the Project Funds to Project Costs will proceed with due diligence.

F.7 Working Capital.

No operational expenditures of the Recipient or any related entity are being, have been or will be financed or refinanced with Project Funds.

F.8 Expenditure of Proceeds.

The Bond Funded Portion of the Project Funds shall be used exclusively for the following purposes: (i) Reimbursement Expenditures (as defined in Section F.20 below), (ii) Preliminary Expenditures (as defined in Section F.20 below) in an aggregate amount not exceeding twenty percent (20%) of the Bond Funded Portion of the Project Funds, (iii) capital expenditures relating to the Project originally paid by the Recipient on or after the date hereof, (iv) interest on the Obligation through the later of three (3) years after the Applicable Date or one (1) year after the Project is placed in service, and (v) initial operating expenses directly associated with the Project in the aggregate amount not more than five percent (5%) of the Bond Funded Portion of the Project Funds.

F.9 Private Use and Private Payments.

No portion of the Project Funds or the Project is being, has been or will be used in the aggregate for any activities that constitute a Private Use (as defined below). No portion of the principal of or interest with respect to the Payments will be secured by any interest in property (whether or not the Project) used for a Private Use or in payments in respect of property used for a Private Use, or will be derived from payments in respect of property used for a Private Use. "Private Use" means any activity that constitutes a trade or business that is carried on by persons or entities, other than a Governmental Unit. The leasing of the Project or the access by or the use of the Project by a person or entity other than a Governmental Unit on a basis other than as a member of the general public shall constitute a Private Use. Use by or on behalf of the State of California or any of its agencies, instrumentalities or subdivisions or by any local Governmental Unit and use as a member of the general public will be disregarded in determining whether a Private Use exists. Use under an arrangement that conveys priority rights or other preferential benefits is generally not use on the same basis as the general public. Arrangements providing for use that is available to the general public at no charge or on the basis of rates that are generally applicable and uniformly applied do not convey priority rights or other preferential benefits. For this purpose, rates may be treated as generally applicable and uniformly applied even if (i) different rates apply to different classes of users, such as volume purchasers, if the differences in rates are customary and reasonable; or (ii) a specially negotiated rate arrangement is entered into, but only if the user is prohibited by federal law from paying the generally applicable rates, and the rates established are as comparable as reasonably possible to the generally applicable rates. An arrangement that does not otherwise convey priority rights or other preferential benefits is not treated, nevertheless, as general public use if the term of the use under the arrangement, including all renewal options, is greater than 200 days. For this purpose, a right of first refusal to renew use under the arrangement is not treated as a renewal option if (i) the compensation for the use under the arrangement is redetermined at generally applicable, fair market value rates that are in effect at the time of renewal; and (ii) the use of the financed property under the same or similar arrangements is predominantly by natural persons who are not engaged in a trade or business.

F.10 No Sale, Lease or Private Operation of the Project.

The Project (or any portion thereof) will not be sold or otherwise disposed of, in whole or in part, to any person who is not a Governmental Unit prior to the final maturity date of the Obligation. The Project will not be leased to any person or entity that is not a Governmental Unit prior to the final maturity date of the Obligation. Except as permitted under Section F.12 hereof, the Recipient will not enter any contract or Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit F

arrangement or cause or permit any contract or arrangement to be entered with persons or entities that are not Governmental Units if that contract or arrangement would confer on such persons or entities any right to use the Project on a basis different from the right of members of the general public. The contracts or arrangements contemplated by the preceding sentence include but are not limited to management contracts, take or pay contracts or put or pay contracts, and capacity guarantee contracts.

F.11 No Disproportionate or Unrelated Use.

No portion of the Project Funds or the Project is being, has been, or will be used for a Private Use that is unrelated or disproportionate to the governmental use of the Project Funds.

F.12 Management and Service Contracts.

The Recipient represents that, as of the date hereof, it is not a party to any contract, agreement or other arrangement with any persons or entities engaged in a trade or business (other than Governmental Units) that involve the management or operation of property or the provision of services at or with respect to the Project that does not comply with the standards of the Treasury Regulations, or Revenue Procedure 2017-13, as applicable. The Recipient represents that it will not be party to any such contract, agreement or arrangement with any person or entity that is not a Governmental Unit for the management of property or the provision of services at or with respect to the Project, while the Obligation (including any obligation or series thereof issued to refund the Obligation, as the case may be) is outstanding, except: (a) with respect to any contract, agreement or arrangement that does not constitute “private business use” of the Project under Code §141(b), or (b) with respect to any contract, agreement or arrangement that complies with (i) Revenue Procedure 97-13, 1997-1 C.B. 632, as amended by Revenue Procedure 2001-39, 2001- 2 C.B. 38, and as amplified by Notice 2014-67, with respect to contracts entered into before August 18, 2017 and not materially modified or extended after August 18, 2017, or (ii) Revenue Procedure 2017-13, with respect to contracts entered into or materially modified or extended on or after August 18, 2017, or (c) with respect to any contract, agreement or arrangement that does not give rise to use of the Bond Funded Portion of the Project Funds or the Project by a non-Governmental Unit of more than the amount of such non-qualified use permitted by the Code, or (d) in the event that the Recipient receives an opinion of counsel, satisfactory to the State Water Board and the Bank and expert in the issuance of state and local government bonds the interest on which is excluded from gross income under Section 103 of the Code (“Nationally-Recognized Bond Counsel”), that such contract, agreement or arrangement will not adversely affect the exclusion of the interest on the Obligation from gross income for federal income taxation purposes.

F.13 No Disposition of Financed Property.

As of the date hereof, the Recipient does not expect to sell or otherwise dispose of any portion of the Project, in whole or in part, prior to the final maturity date of the Obligation.

F.14 Useful Life of Project.

As of the date hereof, the Recipient reasonably expects that the economic useful life of the Project, commencing at Project Completion, will be at least equal to the term of this Agreement, as set forth in Exhibit A hereto.

F.15 Payments.

Payments generally are expected to be derived from assessments, taxes, fees, charges or other current Revenues of the Recipient in each year, and such current Revenues are expected to equal or exceed the Payments during each payment period. Any amounts accumulated in a sinking fund or bona fide debt service fund to pay Payments (whether or not deposited to a fund or account established by the Recipient) will be disbursed to pay Payments within thirteen months of the initial date of accumulation or Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit F

deposit. Any such fund used for the payment of Payments will be depleted once a year except for a reasonable carryover amount not exceeding the greater of earnings on such fund or one-twelfth of the Payments in either case for the immediately preceding year.

F.16 No Other Replacement Proceeds.

The Recipient will not use any of the Bond Funded Portion of the Project Funds to replace or substitute other funds of the Recipient that were otherwise to be used to finance the Project or which are or will be used to acquire securities, obligations or other investment property reasonably expected to produce a yield that is materially higher than the yield on the Bonds.

F.17 No Sinking or Pledged Fund.

Except as set forth in Section F.18 below, the Recipient will not create or establish any sinking fund or pledged fund which will be used to pay Payments on the Obligation within the meaning of Section 1.148- 1(c) of the Treasury Regulations. If any sinking fund or pledged fund comes into being with respect to the Obligation before the Obligation has been fully retired which may be used to pay the Payments, the Recipient will invest such sinking fund and pledged fund moneys at a yield that does not exceed the yield on the Bonds.

F.18 [Reserved.]
F.19 Reimbursement Resolution.

The “reimbursement resolution” adopted by the Recipient is incorporated herein by reference.

F.20 Reimbursement Expenditures.

Reimbursements are disallowed, except as specifically authorized in Exhibit B or Exhibit D of this Agreement. To the extent so authorized, a portion of the Bond Funded Portion of the Project Funds may be applied to reimburse the Recipient for Project Costs paid before the date hereof, so long as the Project Cost was (i) not paid prior to sixty (60) days before the Recipient’s adoption of a declaration of official intent to finance the Project, (ii) not paid more than eighteen (18) months prior to the date hereof or the date the Project was placed-in-service, whichever is later, and (iii) not paid more than three (3) years prior to the date hereof (collectively, “Reimbursement Expenditures”), unless such cost is attributable to a “preliminary expenditure.” Preliminary expenditure for this purpose means architectural, engineering, surveying, soil testing and similar costs incurred prior to the commencement of construction or rehabilitation of the Project, but does not include land acquisition, site preparation and similar costs incident to the commencement of acquisition, construction or rehabilitation of the Project. Preliminary expenditures may not exceed 20% of the Bond Funded Portion of the Project Funds.

F.21 Change in Use of the Project.

The Recipient reasonably expects to use all of the Bond Funded Portion of the Project Funds and the Project for the entire stated term to maturity of the Obligation. Absent an opinion of Nationally- Recognized Bond Counsel to the effect that such use of the Bond Funded Portion of the Project Funds will not adversely affect the exclusion from federal gross income of interest on the Bonds pursuant to Section 103 of the Code, the Recipient will use the Bond Funded Portion of the Project Funds and the Project solely as set forth in this Agreement.

F.22 Rebate Obligations.

If the Recipient satisfies the requirements of one of the spending exceptions to rebate specified in Section

1.148-7 of the Treasury Regulations, amounts earned from investments, if any, acquired with the Bond Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit F

Funded Portion of the Project Funds will not be subject to the rebate requirements imposed under Section 148(f) of the Code. If the Recipient fails to satisfy such requirements for any period, it will notify the State Water Board and the Bank immediately and will comply with the provisions of the Code and the Treasury Regulations at such time, including the payment of any rebate amount calculated by the State Water Board or the Bank.

F.23 No Federal Guarantee.

The Recipient will not directly or indirectly use any of the Bond Funded Portion of the Project Funds in any manner that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code, taking into account various exceptions including any guarantee related to investments during an initial temporary period until needed for the governmental purpose of the Bonds, investments as part of a bona fide debt service fund, investments of a reasonably required reserve or replacement fund, investments in bonds issued by the United States Treasury, investments in refunding escrow funds or certain other investments permitted under the Treasury Regulations.

F.24 Amendments.

The provisions in this Exhibit may be amended, modified or supplemented at any time to reflect changes in the Code upon obtaining written approval of the State Water Board and the Bank and an opinion of Nationally-Recognized Bond Counsel to the effect that such amendment, modification or supplement will not adversely affect the exclusion from federal gross income of interest on the Bonds pursuant to Section 103 of the Code.

F.25 Reasonable Expectations.

The Recipient warrants that, to the best of its knowledge, information and belief, and based on the facts and estimates as set forth in the tax covenants in this Exhibit, the expectations of the Recipient as set forth in this Exhibit are reasonable. The Recipient is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representation made in the provisions in this Exhibit.

F.26 Assignment.

The Recipient consents to any pledge, sale, or assignment to the Bank or a trustee for the benefit of the owners of the Bonds, if any, at any time of any portion of the State Water Board's estate, right, title, and interest and claim in, to and under this Agreement and the right to make all related waivers and agreements in the name and on behalf of the State Water Board, as agent and attorney-in-fact, and to perform all other related acts which are necessary and appropriate under this Agreement, if any, and the State Water Board's estate, right, title, and interest and claim in, to and under this Agreement to Payments (but excluding the State Water Board's rights to Additional Payments and to notices, opinions and indemnification under each Obligation).

Name of Recipient
Agreement No.: XX-XXX-550
Project No.: X-XX-XXXX-XXX

Exhibit F