1 Nikolai J. Sklaroff,
Capital Finance Director
July 28, 2026
Water Financing
Authorization
2026 Water Revenue Bonds
Agenda
• Why is this financing needed?
• 2026 Water Revenue Bonds for Interim Borrowing
• FY 2028 Water Bonds
• Proposed Commission Actions
2 Why is this financing needed
• As Capital Program grows, divergence between amount needed to release appropriation on Controller's budgetary reserve “Reserve Releases” and Cash Spending
• No Water Bonds in FY2027 in 10-year Financial Plan from February • This Interim Water Bond is in FY 2026-27 Capital Financing Plan o Based on projected release of budget appropriation on Controller’s Reserve identified in May.
3 Nov-27 FM5, FY2028 ,
(18,000,520)
May-26 FM11, FY2026 ,
75,000,000
Aug-26 FM2, FY2027 ,
(68,883,215) Nov-26 FM5, FY2027 ,
(186,263,608) Feb-27 FM8, FY2027 ,
(297,496,394)
May-27 FM11, FY2027 ,
(378,734,557)
(500,000,000)
(400,000,000)
(300,000,000)
(200,000,000)
(100,000,000)
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
FM11,
FY2026
May-26
FM12,
FY2026
Jun-26
FM1,
FY2027
Jul-26
FM2,
FY2027
Aug-26
FM3,
FY2027
Sep-26
FM4,
FY2027
Oct-26
FM5,
FY2027
Nov-26
FM6,
FY2027
Dec-26
FM7,
FY2027
Jan-27
FM8,
FY2027
Feb-27
FM9,
FY2027
Mar-27
FM10,
FY2027
Apr-27
FM11,
FY2027
May-27
FM12,
FY2027
Jun-27
FM1,
FY2028
Jul-27
FM2,
FY2028
Aug-27
FM3,
FY2028
Sep-27
FM4,
FY2028
Oct-27
FM5,
FY2028
Nov-27
FM6,
FY2028
Dec-27
Cash Spending Capacity Reserve Release Capacity
2026 Water Bond Direct Purchase
Provides necessary capacity to release capital project’s budget appropriation on Controller’s Reserve.
Low-cost interim borrowing to defer debt until the long-term bonds in the FY 27 10-Year Financial Plan.
Provides rapid execution, avoids need for Disclosure Documents and additional rating for a modestly higher interest rate compared to public market sale.
o Permitted deviation from the Method of Sale provision of Debt Management Policies and Procedures.
Retires outstanding Commercial Paper which reduces spend down risk associated with unspent proceeds.
4 FY2028 Water Bonds
5 • Direct Purchase will be retired by Water Revenue Bonds to be sold in early FY2028, as scheduled in the Commission’s 10-year Plan. • The projected par of the FY2028 Water Revenue Bond is $1.1 billion which will be used to:
• Retire this Direct Purchase of an amount not to exceed $400 million
• Retire outstanding Commercial Paper issued during FY2027, as appropriate.
• Provide new project funds for future FY2028 spending at the time of bond issuance, as appropriate.
• Separate RFP solicitation for bonds to be sold through a public market sale including disclosure documents and public ratings • Water Enterprise is currently rated Aa2 (Moody’s) and AA- (S&P).
History of Interest Rates
(Taxable and Tax-Exempt Indices)
6 Direct Purchase to provide crucial timing, structure and delivery flexibility to take advantage of dynamic rate environment.
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
30Y MMD 30Y UST
10-Year Average 30Y MMD 10-Year Average 30Y UST
5.51 5.06%
3.83%
3.76 3 24%
2.96%
30-YEAR HISTORICAL MMD AND UST YIELDS
Source: LSEG Municipal Market Monitor, J.P. Morgan as of 7/16/2026 Jul-16 30-Year Avg.
30-Year MMD 4.32% 3.95%
30-Year UST 5.10% 4.17%
30-Year MMD/UST 84.77% 96.10%
Water Enterprise Debt Service
• Approximately $5.1 billion of outstanding debt with annual debt service averaging about $363 million per year from 2028 to 2037
7 Direct Purchase RFP
8 • On May 22, 2026, RFP was sent to Office of Public
Finance Underwriter Pool and the Airport’s Credit Facility Pool.
• SFPUC received seven strong bids.
• Proposals reviewed by the SFPUC’s Municipal Advisors
and Capital Finance.
• Wells Fargo Bank, N.A. Direct Purchase selected.
Transaction Description
2026 Water Revenue Bonds
• The proposed bonds will finance, through the retirement of commercial paper, Water Enterprise capital improvements for an amount up to $400 Million* and create additional reserve release capacity.
• Call structure allows the SFPUC to refund the 2026 Water Bonds as part of the bond transaction that was projected in the most recent Financial Plan to occur in Fiscal Year 2027-28.
• As short-term interim financing, principal treated as Balloon Indebtedness for purposes of debt affordability and coverage calculations under the Master Indenture.
• Secured on a parity with all Water Enterprise revenue bonds. • Two options for pricing. The optimal option will be selected prior to purchase. 9 *Final Par to be determined at pricing.
**Indicative rate provided for illustrative purposes. Actual rates to be determined prior to purchase.
Pricing Options Methodology Indicative Rate as of 6/15/26** Variable Rate 80% daily simple SOFR + 18 basis
points
3.13%
Fixed Rate Determined 2 days prior to closing
based, in part, on the SOFR swap
curve and other market conditions.
3.36%
Total*
($)
SOURCES:
Par Amount $400,000,000
Total Sources $400,000,000
USES:
Project Fund (Commercial Paper
Retirement) $399,650,000
Cost of Issuance 300,000
Underwriter’s Discount 50,000
Total Uses $400,000,000
Sources & Uses of Funds
(Water 2026 Bonds)
10 *Preliminary, subject to change. Current estimates based on rates as of June 30, 2026. 11 • SB 450 enacted in October 2017 requires local agencies to disclose estimates of certain debt financing-related information at authorization:
"Good Faith Estimate"
True
Interest
Cost
(TIC)
Finance
Charge
of the
Bonds
Amount of
Proceeds
Received
from Sale
Total
Payment
Amount
2026
Water
Bonds
3.45% $350,000 $399,650,000 $413,870,000
Preliminary and subject to change based on market conditions at the time the bonds are sold. Current estimates based on rates as of June 30, 2026
Net Water Bond Debt Service
(Aggregate Projected)
12*Preliminary, subject to change.
($M) FYE
2027
FYE
2028
FYE
2029
FYE
2030
FYE
2031
FYE
2032
FYE
2033
FYE
2034
FYE
2035
FYE
2036 Total
Water - $1,117 - $1,025 - $843 - - - - $2,985
2027 Financial Plan – Projected Annual Par Amounts of Revenue Bond Issuance $ Millions
Rates adopted through FY 2027; grey debt service reflects bonds to be issued per 10 year financial plan assumptions
Form of Transaction Documents
• Bond Purchase Contracts
Agreements between SFPUC and Purchaser, outlining
terms of each bond sale.
• 54th Supplemental Indenture
Agreement between SFPUC and Trustee for the
issuance and security of bonds.
• Continuing Disclosure Certificate
Outlines disclosure reporting requirements during term of bonds.
13 14
• Commission Training
Disclosure Counsel provided the Commission
refresher training on July 14, 2026
• Disclosure Standard:
Rule 10b-5 “unlawful for any person . . . to make any
untrue statement of a material fact or to omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances
under which they were made, not misleading . . . .”
• No Disclosure Upon Sale
However, still entering a continuing disclosure
commitment
Commission Legal Obligations
Recommended Commission Action
• Authorize issuance of up to $400 million of 2026 Water Bonds as a Direct Purchase
• Approve form of related bond sale documents
• Authorize General Manager to enter into bond purchase contract with Purchaser
15 Anticipated Financing Schedule
16 July 28th Commission Approval of 2026
Water Bonds
August 11th
August 13th
Rate Set
Expected closing
July
S M T W T F S
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31
August
S M T W T F S
1 2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
*Preliminary, subject to change
17 Questions
SFPUC Capital Finance Team
Nikolai J. Sklaroff, Capital Finance Director
Edward Kwong, Capital Finance Analyst
Daniel Fuchs, Capital Finance Analyst
Eric Kwak, Debt Analyst
Earl Dunivan, Debt Analyst
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT: Financial Services Division AGENDA NUMBER: 10 MEETING DATE: July 28, 2026__
Calendar: Regular Calendar
Project Manager: Nikolai J. Sklaroff
Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds Summary of Proposed
Commission Action:
Authorize the issuance of up to $ 400 million of 2026 Water Revenue Bonds to fund the costs of San Francisco Public Utilities Commission W ater Enterprise capital projects and to retire commercial paper; and approve the form of and
authorize the execution and delivery of related documents.
Background: 2026 Water Bonds: The San Francisco Public Utilities Commission (SFPUC) proposes to issue 202 6 Water Bonds
pursuant to Proposition E, approved by San Francisco voters on November 5, 2002, and which Proposition E has been
incorporated into the San Francisco Charter as Section
8B.124, and by various resolutions and ordinances approved by the Commission and the Board of Supervisors. Proceeds of the 2026 Water Bonds
will be used to fund Water
Enterprise capital projects and refund outstanding
commercial paper issued for those projects as follows:
approximately $302 million will fund Regional and Local Water capital improvement projects and approximately $91 million will fund Hetch Hetchy Water capital improvement projects.
The 2026 Water Revenue Bonds transaction was included as part of the FY 202 6-27 Capital Financing Plan presented to the Commission on June 9, 202 6. Note this transaction was not projected in the 10- year Financial Plan approved by the Commission in February and is driven by the need to create capacity for “Controller’s Reserve Release” to let contracts and is a partial acceleration of the planned issuance in FY 2027-28 for budgetary purposes. The 2026 Water Bonds are being issued as a permitted deviation from the method of sale provision of the “Debt Management Policies &
Procedures,” most recently updated and approved by the
Commission on November 26, 2019 by Resolution No. 19 - Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
0224, as recommended by the SFPUC Chief Financial
Officer. The recommended deviation is based on the
determination that this method of sale best serves the
SFPUC’s operational needs by generating the funding
capacity necessary to release budget appropriations currently held in the San Francisco Controller’s reserve, enabling the timely encumbrance of projects and capital spending for Fiscal Year 2026- 2027. The bonds have been structured to have no impact on FY 2026-2027 budget and to minimize the cost of ac celerated needs to neutralize any impact on ratepayers.
Plan of Finance: The SFPUC expects to issue up to $ 400 million 20 26 Water Bonds, sized to refinance prior
expenditures for Regional Water, Local Water, and Hetch Hetchy Water capital improvement costs which were
originally financed by commercial paper . By refinancing accumulated Commercial Paper, this transaction allows the Water Enterprise to award additional contracts and make additional spending commitments while also allowing the SFPUC to fund additional capital project needs in reliance on the availability of commercial paper.
Structure of the Bonds : To conform to authorization
requirements under the Master Indenture and the short -term borrowing ordinances , the 2026 Water Bonds will have a nominal five- year (plus 1 day) maturity, with a n optional redemption date no later than the first anniversary of the issuance date. The structure provides that the 2026 Water Bonds are subject to a higher rate, unless they are refunded before the first anniversary of issuance . The SFPUC will not be in default if unanticipated circumstances prevent refunding of the 2026 Water Bonds by the first anniversary of issuance.
This structure allows the SFPUC to re fund the 2026 Water Bonds as part of the bond transaction that was projected in the 10-year Financial Plan in Fiscal Year 2027-28, planned to be issued in August 2027, while simultaneously creating the capacity currently needed for “Controller’s Reserve Release” to let contracts.
The SFPUC has used a similar structure before with the issuance of the 2018 Wastewater Bonds Series C which was subsequently refunded by 2023 Wastewater Bonds Series C.
Unlike those bonds, however, the principal for the 2026 Water Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
Bonds will be treated as Balloon Indebtedness for purposes of certain calculations required under the Master Indenture .
Balloon Indebtedness is a debt structure in which the
required payment of a significant portion of the principal is deferred until a later date , rather than being fully amortized through regular payments. In this case, the final maturity (and resulting deferral) will last approximately five years. For purposes of SFPUC debt affordability and coverage
calculations, the Master Indenture permits debt service Balloon Indebtedness to be amortized over an assumed 25 years at a n assumed standardized market interest rate, in recognition that the debt is expected to be refinanced at an earlier call date and, henc e, not paid from water rates. The SFPUC would not be required to set rates based on the
balloon payment. Interest will be payable when the bonds are prepaid or on the first anniversary of issuance. The 2026 Water Bonds will be secured on a parity with all outstanding Water Enterprise revenue bonds.
To maintain flexibility to achieve the lowest cost to borrow, the interest rate will be set on the date of purchase and calculated based on one of two options based on SOFR (the Secured Overnight Financing Rate), which is a widely used benchmark interest rate based on transactions in the U.S.
Treasury repurchase market:
Option Methodology Indicative Rate
as of 6/15/26*
Variable Rate 80% daily simple
SOFR + 18 basis
points
3.13%
Fixed Rate Determined 2 days
prior to closing
based, in part, on
the SOFR swap
curve and other
market conditions.
3.36%
*Indicative rate provided for illustrative purposes. Actual rates to be determined on the date of purchase.
The SFPUC will select the lowest cost option prior to
purchase. If the 2026 Water Bonds remain outstanding after the first anniversary of issuance, the interest rate will automatically increase to 6% for the first 79 days and 8% Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
thereafter (as the bond purchaser is assuming that the bonds will be refunded no later than such date) . All dates and amounts are preliminary subject to change pending the bond pricing.
Transaction Schedule: The sale of the 2026 Water Bonds is expected to occur in August 2026 with closing before the end of August, subject to market conditions. Due to the
extraordinary market volatility observed in the market
recently, this schedule is preliminary and subject to change.
SB 450 Legislation Compliance: Pursuant to Senate Bill
450 (SB 450) enacted in 2017, California law requires the governing body of a local public body to obtain and disclose, prior to authorization of a new bond issue, good faith
estimates of the following financing-related information:
(1) True Interest Cost (TIC) of the bonds.
(2) Finance charge of the bonds: Representing the sum of all fees and charges paid to third parties.
(3) Amount of proceeds received: Representing proceeds
of the bonds net of fees and charges paid to third
parties and any reserves or capitalized interest funded by the bonds.
(4) Total payment amount: The sum of all debt service
payments on the bonds calculated to the final maturity
of the bonds.
SB 450 requires that the good faith estimates be obtained from either the issuer’s municipal advisor, underwriter, or third-party lender. The Commission has been presented with this information in past staff reports requesting approval of bonds issued or loans executed since the enactment of SB 450.
The following represents a good faith reasonable estimate of certain costs of the 2026 Water Bonds
for purposes of
compliance with SB 450 and based upon information as of June 30, 2026. Staff has consulted with its municipal advisor, Montague DeRose & Associates, and obtained estimates
reflecting the expected closing date with regard to the 2026 Water Bonds . Actual results may vary based on prevailing market conditions when the bonds are priced.
Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
(1) True Interest Cost (TIC): 3.4507%
(2) Finance Charge of the Bonds: $350,000 (reflects
costs of issuance and other fees as appropriate)
(3) Amount of Proceeds Received by the Public Body
for Sale of the Bonds: $399,650,000
(4) Total Payment Amount: Total Net Debt Service of
$413,870,000 (represents total estimated debt service,
net of capitalized interest, if any)
Method of Sale: In consultation with the SFPUC’s Municipal Advisors on this transaction (Montague DeRose & Associates and Backstrom McCarley & Berry), SFPUC staff has
recommended a Direct Purchase/ Private Placement for the 2026 Water Bonds. The SFPUC solicited purchasers through a competitive RFP process and selected from among seven bids. The selected purchaser ( an affiliate of Wells Fargo Bank, N.A. ) (“Wells” or “Purchaser”) would purchase bonds issued by the Water Enterprise, pursuant to a modified bond purchase contract (BPA) similar to the SFPUC’s typical
negotiated public offerings. However, unlike a standard public offering, the direct purchase proposed by the Purchaser does not require a marketing period, preliminary official statement, or prio
r public enterprise disclosure before executing the
BPA, nor would a rating be required. In exchange for these more accommodating and money-saving terms, interest rates on such bonds might be slightly higher than those achieved in the public market , however the proposal submitted by Wells is quite competitive and provides attractive financing terms.
In addition to the document and disclosure flexibility offered, this transaction offers timing, structuring and delivery flexibility, while also streamlining the process, helping the SFPUC to remain nimble to take advantage of optimal rates in a dynamic market environment and take advantage of
favorable market conditions more quickly than it could with a conventional public offering. Most importantly, the method of sale allows for the SFPUC to generate the funding capacity necessary to release budget appropriation currently sitting on Controller’s reserve to enable project encumbrance and capital spending for Fiscal Year 2026-2027.
Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
A Request for Proposals was sent on May 22, 2026 to all firms in the Controller’s Office of Public Finance Underwriter Pool and the City’s Credit Facilities pool created by the San Francisco Airport Commission . A total of seven proposals were received by June 5, 2026 and reviewed by the SFPUC’s Co-Municipal Advisors and staff . Bond counsel and the City Attorney’s Office was also consulted and provided review of proposals. An amendment to the Request for Proposals with clarified terms was sent to the seven proposers on June 15, 2026 and final proposals were received June 17, 2026 . After a formal evaluation, Wells was selected as Purchaser based on the firms’ flexible proposal that meets the Master
Indenture’s requirements
, technical expertise, and
competitive pricing and fees.
Bond Documents: The Commission is being asked to
approve the form and authorize the execution of documents relating to the 2026 Water Bonds, as described below:
Bond Purchase Contract – The agreement between the
SFPUC and the Purchaser of the bonds setting forth
conditions upon which the bonds will be purchased by the Purchaser, and the obligations of both parties, including provisions allowing the Purchaser to not purchase the
bonds in the event of certain circumstances.
Master Indenture Supplement (as amended by the Fifty-
Fourth Supplemental Indenture) – The Master Indenture
is an agreement between the SFPUC and the Trustee
which sets forth the contractual terms for the bonds,
including pledge of revenues, flow of funds, covenants, defaults and remedy provisions, and provisions to issue additional debt. Each Supplemental Indenture set s forth the terms of each individual series of bonds, including (among other bond terms) maturities, interest rates and terms of early redemption.
Continuing Disclosure Certificate – This document sets
forth the SFPUC’s commitment to providing annual
financial and operating data disclosure for the Water
Enterprise, and the ongoing disclosure of certain
enumerated material events as set forth by the Securities and Exchange Commission’s (SEC) Rule 15c2- 12. To
facilitate the direct placement, the SFPUC is required to Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
execute a continuing disclosure certificate (CDC) in the same form as the CDC executed in connection with its
prior bond issuance. Accordingly, there is no additional regulatory burden on the SFPUC.
Legal and Advisory Team: SFPUC Finance staff has
worked collaboratively with outside municipal advisors, as well as the City Attorney’s Office and outside bond counsel, to develop all aspects of the documents associated with the sale of the 2026 Water Bonds, including all attachments.
The parties working with the SFPUC on this financing are as follows:
(1) General Counsel : City Attorney’s Office of the
City and County of San Francisco
(2) Bond Counsel: Norton Rose Fulbright U.S. LLP
(3) Co-Municipal Advisors: Montague DeRose &
Associates, LLC and Backstrom McCarley Berry &
Co., LLC
(4) Purchaser: Wells Fargo Municipal
Capital Strategies, LLC, and
affiliate of Wells Fargo Bank, N.A.
(5) Purchaser’s Counsel: Chapman and Cutler LLP
(6) Trustee: U.S. Bank Trust Company, National
Association
(7) Independent Pricing Consultant: PFM Financial
Advisors, LLC
The pricing of the bonds will be determined in negotiations with Wells on the sale date. The fairness of the pricing will be evaluated by the SFPUC’s Municipal Advisors and staff will take the Municipal Advisors ’ recommendation under
advisement prior to accepting the offer from Wells.
An independent pricing verification agent —a municipal
advisor not otherwise involved in the transaction— will be engaged to provide an independent pricing report and sales analysis.
Disclosure Considerations:
A summary level bond disclosure “Questions and Answers” Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
is set forth below:
Q. What is the size of the bond issue?
A. The SFPUC expects to issue an aggregate not -to-
exceed $400 million of the 2026 Water Bonds.
Q. Why are bonds being issued?
A. The 2026 Water Bonds are being issued to retire
outstanding Commercial Paper and provide funding for
approved Water Enterprise capital projects.
Q. What is the bond structure?
A. The 202 6 Water Bonds will have a nominal five- year maturity (plus 1 day) , with a n optional redemption date no later than the first anniversary of the issuance . The 2026 Water Bonds will not fund a debt service reserve fund.
Q. How will the bonds be sold?
A. The 202 6 Water Bonds will be sold through a direct
purchase/private placement , where the purchaser (bank) have been selected through a competitive RFP issued to
the City’s prequalified underwriting and credit facility pools and the pricing terms (i.e., interest rates) of the bonds are set after negotiating with the purchaser based on market conditions plus a premium, with advice from the SFPUC’s two transaction municipal advisors. An independent pricing consultant will verify the SFPUC received a fair price.
Q. How will debt service on the bonds be paid?
A. The 2026 Water Bonds will be secured by a pledge of “net revenues” of the Water Enterprise, in accordance with the Water Indenture and on a parity with outstanding water revenue bonds. Net revenues are rates and charges (and other revenue) remaining after the payment of Operating and Maintenance Expenses of the Water Enterprise. The
SFPUC expects to refinance the bonds after one year in
conjunction with a larger planned bond sale in August 2027, and thus does not expect that the bonds will be actually paid from net revenue.
Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
Q. What impact will the issuance of the bonds have on
Water Enterprise rates?
A. Conservative assumptions for this debt service and debt service coverage requirements have been included in the current Water Enterprise 10- Year Financial
Plan adopted
by the Commission in February 2026 and therefore this
debt is not expected to further increase rates. Projected annual retail rate increases are projected to average
approximately 6.4% over 10 years (2027-2036).
Q. Will issuance of the bonds have a negative impact
on the SFPUC credit ratings?
A. No credit ratings are required for the issuance of these bonds. Nor does the SFPUC anticipate that the issuance
of the bonds will have any adverse impact on outstanding ratings.
If there is any information Commissioners believe they need to understand the transaction as presented for approval, or to evaluate the adequacy of disclosure, or if Commissioners have important information concerning the Water Enterprise of which they are not sure the SFPUC is aware,
Commissioners are encouraged to contact SFPUC finance
staff or the City Attorney’s Office.
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Section
15378(b)(4) because it involves the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to any specific project that may result in a potentially significant impact on the
environment.
Approval of projects to be funded through this action would only occur after the necessary environmental review process has been completed pursuant to the CEQA and any
certification required by Proposition E (approved by the voters in 2002 for water and wastewater projects).
On July 13, 2026, the Environmental Review Officer issued a certificate of the City and County of San Francisco Planning Department, pursuant to Section 8B.124(b) of the City
Agenda Title: Authorize the Issuance of up to $400 million of 2026 Water Revenue Bonds to Finance Water Enterprise Capital Projects
Commission Meeting Date: July 28, 2026
Charter under Proposition E (November 2002), certifying that the projects to be funded through the sale of Water Revenue Bonds and/or Other Forms of Indebtedness, including
Commercial Paper, either already comply with the
requirements of the CEQA or will undergo CEQA review
when they are defined.
View the certificate.
Attachments: 1. Bond Purchase Contract
2. 54th Supplemental Indenture
3. Continuing Disclosure Certificate
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________
WHEREAS, At a duly called and held election on November 5, 2002, a majority of voters voting on the measure approved Proposition E, as amended by a ballot proposition approved by the voters of the City on June 5, 2018 (“Proposition E”) which, among other things, amended the Charter of the City and County of San Francisco (“City”) to authorize the Public Utilities Commission (“Commission”) of the City 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 (“Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities under the jurisdiction of the Commission or for any other lawful purpose of the water utility of the City in furtherance of the purposes provided in Proposition E , subject to satisfaction of certain conditions; and
WHEREAS, The authority to issue revenue bonds pursuant to Proposition E is expressly notwithstanding, and in addition to, the authority granted to the Board under Section 9.107 of the City Charter (“Charter”), which provides for the issuance of revenue bonds of the City upon the assent of a majority of the voters upon any proposition for the issuance of revenue bonds; and
WHEREAS, Pursuant to Proposition E and various ordinances and resolutions adopted by the Board and this Commission thereunder, as of June 1, 2026, there has been authorized $6,171,641,818 aggregate principal amount of water revenue bonds or other forms of indebtedness, including notes, commercial paper and other short -term indebtedness, and pursuant to such authorization, $5,773,219,982 aggregate principal amount of indebtedness has been issued or incurred to date and $ 398,421,836 of aggregate principal amount of indebtedness remains authorized but unissued, assuming (i) State revolving fund loan amounts are incurred for the full not to exceed amount of $479,312,982 and (ii) all refunding debt issued under separate authorizations are excluded; and
WHEREAS, Pursuant to the Proposition E, Article V of Chapter 43 of Part I of the San Francisco Administrative Code, and various other ordinances and resolutions adopted by the Board and the Commission, an interim funding program for the Commission’s municipal water supply, storage and distribution system (the “Water Enterprise”) has been established in an aggregate principal amount not to exceed $750,000,000 (the “Authorized Short-term Indebtedness”), consisting of a $550,000,000 authorization for commercial paper (“CP Notes”) and a $200,000,000 authorization for short-term, direct purchase revolving obligations, and as of June 30, 2026, approximately $417,307,000, aggregate principal amount of such Authorized Short -term Indebtedness has been issued or incurred; and
304852833.3
WHEREAS, The Commission finds that it would be financially advantageous to refinance certain CP Notes now or hereafter outstanding with bonds (“CP Refinancing Bonds”) and that some or all of the 2026 Bonds are expected to be CP Refinancing Bonds; and
WHEREAS, Under the authority granted under Proposition E and various ordinances and resolutions adopted by the Board (such authorization is collectively referred to as the “Authorizing Legislation”), it is proposed that the Commission issue one or more series or subseries of water revenue bonds in an aggregate principal amount not to exceed $400,000,000 (the “2026 Bonds”), issued on a federally tax-exempt or taxable basis, for the principal purpose of financing ( which may include financing through the retirement of commercial paper) certain capital projects and improvements (hereinafter described) to or benefitting the Water Enterprise, all pursuant to the Amended and Restated Indenture, dated as of August 1, 2002 (as the same has been further amended and supplemented, the “Indenture”), by and between the Commission and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”), and one or more supplemental indentures (“Supplemental Indentures”) , between the Commission and the Trustee, as herein provided; and
WHEREAS, The Commission’s Debt Management Policies and Procedures authorize the General Manager to approve a “negotiated sale” (as distinct from a “competitive sale”) of Commission bonds to an underwriter “if deemed necessary for a successful offering”, and
WHEREAS, Alternatively, such Policies and Procedures authorize the General Manager to approve a “private placement” of bonds if such sale “would result in a lower overall cost than would be achieved by selling bonds at a public sale;” and
WHEREAS, The Policies and Procedures acknowledge that the Commission may approve debt that deviates from such Policies and Procedures upon the recommendation of the SFPUC Chief Financial Officer; and
WHEREAS, Staff and the municipal advisors to the Commission have recommended that the 2026 Bonds be sold to Wells Fargo Bank, N.A. or Wells Fargo Municipal Capital Strategies, LLC (the “Purchaser”), in a private placement, in one or more series or subseries, pursuant to one or more Bond Purchase Contracts (each, a “Bond Purchase Contract”) between the Commission and the Purchaser; and
WHEREAS, Staff and the municipal advisors to the Commission have recommended that the 2026 Bonds be sold to Wells Fago Bank, N.A. or Wells Fargo Municipal Capital Strategies, LLC (the “Purchaser”), in a private placement, in one or more series or subseries, pursuant to one or more Bond Purchase Contracts (each, a “Bond Purchase Contract”) between the Commission and the Purchaser; and
WHEREAS, Staff and the municipal advisors to the Commission advise that the sale to the Purchaser will provide greater flexibility for execution of the financing by 304852833.3
avoiding requirements of a public sale (such as the preparation of a disclosure document and investor presentation, the provision of multiple credit ratings, and the associated staff time incurred in connection with such activities); and
WHEREAS, Based upon the foregoing, the General Manager and the Chief Financial Officer have found and determined that the sale of the 2026 Bonds to the Purchaser provides greater flexibility than would be achieved by selling such bonds at public sales to timely create capacity for “Control ler’s Reserve Release” to let project contracts and recommend Commission approval; and
WHEREAS, Staff further recommends that one or more continuing disclosure certificates (each a “Continuing Disclosure Certificate”) be executed and delivered with respect to the 2026 Bonds; and
WHEREAS, The Commission has been presented with and has examined a proposed form of Supplemental Indenture for each series or subseries of 2026 Bonds, and form of Bond Purchase Contract and Continuing Disclosure Certificate; and
WHEREAS, Subject to the requirements set forth in the Authorizing Legislation and the requirements of the Indenture, the Commission is or will be duly authorized and empowered, pursuant to each and every requirement of law, to authorize the foregoing transactions and issue the 2026 Bonds and to authorize the execution and delivery , as applicable, of the Supplemental Indentures, the Bond Purchase Contracts, the Continuing Disclosure Certificates and related documents, for the purposes described herein, in the manner and upon the terms provided herein; and
WHEREAS, Prior to the issuance of the 2026 Bonds, the General Manager will file with the Clerk of the Board a certificate(s) of a consulting engineer in satisfaction of t he requirements of clause (a) of Section 8B.124 of Proposition E, all in furtherance of the sale of water revenue bonds and other forms of indebtedness , to the extent applicable; and
WHEREAS, This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Section 15378(b)(4) because it involves the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to any specific project that may result in a potentially significant impact on the environment; and
WHEREAS, Approval of projects to be funded through this action would only occur after the necessary environmental review process has been completed pursuant to the CEQA and any certification required by Proposition E (approved by the voters in 2002 for water and wastewater projects); and
WHEREAS, On July 13, 2026, the Environmental Review Officer issued a certificate of the City and County of San Francisco Planning Department , pursuant to Section 8B.124(b) of the City Charter under Proposition E (November 2002), certifying 304852833.3
that the projects to be funded through the sale of Water Revenue Bonds and/or Other Forms of Indebtedness, including Commercial Paper, either already comply with the requirements of the CEQA or will undergo CEQA review when they are defined; and
WHEREAS, In compliance with California Government Code Section 5852.1, the Commission has obtained from Montague DeRose and Associates, LLC , one of the municipal advisors to the Commission with respect to the 2026 Bonds , good faith estimates of the following information: (a) the true interest cost of the 2026 Bonds, (b) the sum of all fees and charges paid to third parties with respect to the 2026 Bonds , (c) the amount of proceeds of the 2026 Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the 2026 Bonds , and (d) the sum total of all debt service payments on the 2026 Bonds calculated to the final maturity of the 2026 Bonds plus the fees and charges paid to third parties not paid with the proceeds of the 2026 Bonds, and such estimates are disclosed and set forth in the staff report provided to the Commission in connection with this resolution; now, therefore, be it
RESOLVED, by the Public Utilities Commission of the City and County of San Francisco, as follows:
Section 1. Issuance of the 2026 Bonds. The issuance of the 2026 Bonds in one or more series or subseries, all or a portion of which may be designated as green bonds (if applicable) and issued on one or more dates, all as may be determined by the General Manager (all references in this resolution to the General Manager of the Commission to include any authorized designee thereof pursuant to Section 6 hereof) in an aggregate principal amount not exceeding $400,000,000, is hereby authorized and approved by the Commission, subject to the limitations and conditions provided herein.
The 2026 Bonds may be issued for the purpose of provi ding funds (a) for the refinancing of all or a portion of the Outstanding CP Notes, (b) to pay for certain capital projects and improvements (i) under the Water Enterprise’s Water System Improvement Program (“WSIP”) capital program (which constitutes the Regional Water Program and the Local Water Program), (ii) to the Water Enterprise-related infrastructure of the Hetch Hetchy Water and Power System), and (iii) certain further improvements and other capital projects to or for the benefit of the Water Enterprise, (c) to pay capitalized interest on the 2026 Bonds and (d) to pay the costs of issuance of the 2026 Bonds . If determined to be beneficial to the Commission by the General Manager, with the advice of Montague DeRose and Associates, LLC and Backstrom McCarley Berry & Co., LLC, the municipal advisors to the Commission with respect to the 2026 Bonds (together, the “Municipal Advisors”), the 2026 Bonds may also be issued for the secondary purposes of providing funds to pay for (i) any credit enhancement of any 2026 Bonds (including without limitation bond insurance policies and/or reserve fund surety bonds or insurance policies) and (ii) the funding of debt service reserves for the 2026 Bonds or for other bonds issued under the Indenture.
304852833.3
The General Manager is hereby authorized and directed to determine the aggregate principal amount of 2026 Bonds to be issued from time to time (subject to the maximum amount s and further limitations and conditions set forth herein) and to determine the various titles and series designations (including the designation of any series of bonds as “notes”) of the 2026 Bonds. The 2026 Bond s may be issued as obligations the interest on which is or is not subject to federal income tax. The form of the 2026 Bonds, in substantially the form set forth in the form of the Supplemental Indenture presented to this meeting, is hereby approved. The General Manager of the Commission is hereby authorized and directed to approve and to execute the 2026 Bonds by manual or facsimile signature, and the Director of Commission Affairs (who is also the Secretary of the Commission for purposes of the Indenture) is hereby authorized and directed to attest, by manual or facsimile signature, with such changes, additions, amendments or modifications thereto which they may approve with the advice of the City Attorney, such approval to be conclusively evidenced by the issuance of the 2026 Bonds, subject to the limitations set forth in Section 4 hereof.
Section 2. Disposition of Revenues ; Rate Covenant . Section 5.01(b) of the Indenture which sets forth the disposition of Revenues (as defined in the Indenture) applicable to the Commission’s Water Enterprise revenue bonds is hereby confirmed by the Commission and the Commission further confirms, pledges and covenants with the holders of the 2026 Bonds that the Revenues shall be appropriated and expended in the order of priority set forth in Section 5.01(b) of the Indenture, as the same may be amended from time to time . This Commission also declares that the Commission will comply with all of the terms, provisions and covenants contained in the Indenture, as the same may be amended from time to time, including the covenants to establish, fix, prescribe and collect rates, fees and charges sufficient to enable the Commission to comply with the terms, conditions and covenants of the Indenture.
Section 3. Supplemental Indentures. The proposed form of Supplemental Indentures for each series and/or subseries of 2026 Bonds submitted to this Commission, and the terms and conditions thereof, is hereby approved. The General Manager of the Commission is hereby authorized and directed to execute and deliver and the Director of Commission Affairs or the Director of Commission Affairs’ designee is authorized to attest to one or more Supplemental Indentures in such form, with such additions thereto or changes therein which they may approve wit h the advice of the City Attorney, such approval to be conclusively evidenced by the execution and delivery of such Supplemental Indentures. The Director of Commission Affairs is directed to file a copy of the form of Supplemental Indenture with the minutes of this meeting. Subject to the further limitations hereof, the principal amount, date, maturity date or dates, maximum interest rate or rates, interest rate determination methods, tender for purchase provisions, series designation, interest payment dates, forms, registration privileges, place or places of payment, terms of redemption, insurance provisions and other terms of the 2026 Bonds shall be as provided in the Indenture.
Section 4. Sale; Bond Purchase Contract. The sale of the 2026 Bonds, in one or more series or subseries and on one or more dates, is hereby authorized and approved 304852833.3
by the Commission, subject to the limitations and conditions provided herein. Subject to the other limitations provided herein, the interest rate or rates (which rate or rates may be fixed or variable) on the 2026 Bonds shall not exceed twelve percent (12%) and the final maturity of any 2026 Bonds shall not exceed 40 years from their date of issuance. The General Manager is hereby authorized and directed, for and on behalf of and in the name of the Commission, to sell such 2026 Bonds at one or more sales in such principal amount as the General Manager may determine, subject to the further limitations and conditions hereof. The General Manager is hereby authorized to enter into one or more Bond Purchase Contracts with the Purchaser as the General Manager deems appropriate, substantially in the form presented at this meeting and on file with the Director of Commission Affairs, with such changes and additions as the General Manager may approve upon consultation with the City Attorney, such approval to be evidenced conclusively by the execution and delivery of each such Bond Purchase Contract; provided, however, that the total compensation to the Purchaser, inclusive of all expense reimbursements, shall not exceed five-hundredths of a percent (0.05%) of the par value of the 2026 Bond s to be sold pursuant to any such Bond Purchase Contract . The 2026 Bonds sold in a sale shall be delivered to the Purchaser upon payment of the purchase price agreed upon in the applicable Bond Purchase Contract, together with accrued interest, if any. The Director of Commission Affairs is directed to file a copy of said form of Bond Purchase Contract with the minutes of this meeting.
Section 5. Continuing Disclosure Certificate. The proposed form of Continuing Disclosure Certificate for the 2026 Bond s, submitted to this Commission, is hereby approved. The General Manager is hereby authorized and directed to execute one or more Continuing Disclosure Certificates for the 2026 Bond s from time to time, substantially in the form submitted to this Commission, with such additions, changes and corrections thereto as the General Manager shall approve with the advice of the City Attorney, such approval to be conclusively evidenced by the ex ecution and delivery of such Continuing Disclosure Certificate. The Director of Commission Affairs is directed to file a copy of said form of Continuing Disclosure Certificate with the minutes of this meeting.
Section 6. General Authority . The General Manager or the acting General Manager is hereby authorized and directed, each acting alone, each acting alone, for and in the name and on behalf of this Commission, to execute and deliver any and all documents, certificates and representations, including, but not limited to, signature certificates, no-litigation certificates, tax certificates, letters of representation relating to book-entry registration, custody agreements, filing agent agreements and listing agreements, to contract for municipal bond insurance and /or one or more surety bonds or insurance policies for the debt service reserves for the 2026 Bonds as set forth herein, to do any and all things and take any and all actions which may be necessary or advisable, in their discretion, to accomplish the intent and purposes of this resolution including the issuance and sale of the 2026 Bonds, the financing or refinancing of the projects, the retirement of the CP Notes, and the other actions which the Commission has approved in this resolution. The General Manager or acting General Manager may delegate the authority in this resolution to the Deputy General Manager and Chief Operating Officer; 304852833.3
the Chief Financial Officer and Assistant General Manager, Business Services; or any Deputy Chief Financial Officer of the Commission, as the General Manager or the acting General Manager deems necessary or appropriate.
Section 7. Good-Faith Estimates . The Commission acknowledges that the good faith estimates required by S ection 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 8. Ratification. All actions heretofore taken by the officers, employees and agents of the Commission with respect to the authorization, sale and issuance of the 2026 Bonds and the authorizations under this Resolution prior to the date hereof and in accordance with the provisions hereof are hereby approved, confirmed and ratified.
Section 9. 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 July 28, 2026.
___________________________________
Director of Commission Affairs
San Francisco Public Utilities Commission
Chapman Draft Dated June 29, 2026
86c24d47-1__wells_sfpuc_2026_water_bonds_bpa_4938_1781_7783_v3 10004909
$[________]
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS, 2026 SERIES [_]
BOND PURCHASE CONTRACT
[________], 2026
Public Utilities Commission of the
City and County of San Francisco
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
Ladies and Gentlemen:
The undersigned Wells Fargo Municipal Capital Strategies, LLC (the “Purchaser”), offers to enter into this Bond Purchase Contract (this “ Purchase Contract ”) with the Public Utilities Commission of the City and County of San Francisco (the “Commission”), which will be binding upon the Commission and the Purchaser upon acceptance hereof by the Commission. This offer is made subject to the acceptance by the Commission by its execution of this Purchase Contract and its delivery to the Purchaser on or before 11:59 p.m., California time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Purchaser upon written notice delivered by the Purchaser to the Commission at any time prior to the acceptance of this Purchase Contract by the Commission. If the Purchaser withdraws this offer, or the Purchaser’s obligation to purchase the Bonds (as hereinafter defined) is otherwise terminated pursuant to Section 9(d) hereof, then and in such case the Commission shall be without any further obligation to the Purchaser, including the payment of any costs set forth under Section 11(a) hereof, and the Commission shall be free to sell the Bonds to any other party.
Capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended and Restated Indenture, dated as of August 1, 2002 (the “Master Indenture”), between the Commission and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”), as supplemented and amended to date and as further supplemented by a [____] Supplemental Indenture, dated as of July 1, 2026 (the “[____] Supplemental Indenture”), relating to the Bonds (as defined below), between the Commission and the Trustee (the Master Indenture, as supplemented, being herein referred to as the “Indenture”).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth herein, the Purchaser agrees to purchase from the Commission, and the Commission hereby agrees to sell and deliver to, or for the account of, the Purchaser , all (but not less than all) of the $[____]
aggregate principal amount of Public Utilities Commission of the City and County of San Francisco San Francisco Water Revenue Bonds, 2026 Series [_] (the “Bonds”).
The aggregate purchase price for the Bonds shall be $[____]. -2-
The Bonds shall be dated their date of delivery and shall have the maturity in principal amount and bear interest at the rate per annum and have the price all as set forth on Schedule I attached hereto. The Bonds shall be subject to optional redemption prior to maturity as shown on Schedule I. The Bonds shall be substantially in the form described in, and shall be issued and secured under and pursuant to, the Indenture. The Bonds shall be as otherwise described in the Indenture.
Section 2. Authorization for the Bonds; Purpose of Issue . T he Commission has the authority to issue the Bonds under Section 9.107 of the Charter (the “Charter ”) of the City and County of San Francisco (the “City ”), including Proposition E of 2002 (“Proposition E”) and [various ordinances and resolutions] (collectively, the “Authorizing Legislation”), adopted by the Board of Supervisors of the City (the “Board of Supervisors”), and Resolution No. [__], adopted by the Commission on [____] , 2026 (the “Commission Resolution”). The ordinance authorizing the Bonds is referred to as the “City Ordinance.”
The proceeds of the Bonds will be applied to [refund tax-exempt Commercial Paper Notes issued to finance and refinance a portion of the design, acquisition and construction of various capital projects of benefit to the Commission’s Water Enterprise] and to pay the costs of issuance of the Bonds.
Section 3. Delivery of Documents.
On the Closing Date, the Commission will deliver a Continuing Disclosure Certificate, in form and substance satisfactory to the Purchaser (the “Continuing Disclosure Certificate”).
Except as set forth in the preceding paragraph, the Commission shall be under no obligation hereunder to deliver any disclosure document in respect of the Bonds before, upon or after delivery of the Bonds hereunder.
Section 4. Reserved.
Section 5. The Closing. At 8:30 a.m., California time, on [____], 2026, or at such other time or on such other date as the Commission and the Purchaser may agree (the “Closing Date”), the Commission shall deliver, or cause to be delivered to or for the account of the Purchaser , the Bonds in physical form, duly executed and authenticated, and registered in the name of the Purchaser. Concurrently with the delivery of the Bonds to the Purchaser , the Commission will deliver the documents hereinafter mentioned at the offices of Norton Rose Fulbright US LLP (“Bond Counsel”), in Los Angeles, California, or another place to be mutually agreed upon by the Commission and the Purchaser . The Purchaser shall accept such delivery and pay the purchase price for the Bonds set forth in Section 1 by federal funds wire transfer in immediately available funds to the order of the Trustee for the account of the Commission. This payment for, and delivery of, the Bonds, together with the delivery of the aforementioned documents, is herein called the “Closing.” No CUSIP identification number shall be assigned to or printed on the Bonds. -3-
Section 6. Representations, Warranties, and Agreements of the Commission . The Commission represents, warrants and agrees with the Purchaser as follows:
(a) Due Organization, Existence and Authority . The Commission is a duly constituted public commission of the City and County of San Francisco duly organized and validly existing pursuant to its Charter and the Constitution and laws of the State of California (the “ State” or “California”), with full authority to: (i) adopt the Commission Resolution; (ii) execute and deliver the Master Indenture, the [____] Supplemental Indenture, the Continuing Disclosure Certificate and this Purchase Contract; and (i ii) sell and deliver the Bonds to the Purchaser as provided herein. All approvals and consents which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Commi ssion of, its respective obligations under the Bonds, this Purchase Contract and the Indenture have been duly obtained or when required for future performance are expected to be obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the sale of the Bonds.
(b) Reserved.
(c) Reserved.
(d) No Breach or Default. The Commission is not in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or the United States, or any agency or department of either, or of any applicable judgment or decree or any loan ag reement, indenture, bond, note, resolution, agreement or other instrument to which the Commission is a party or to which the Commission or any of its properties or other assets is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument, which breach or default in any such case, would have a material and adverse effect upon the business operations, properties or financial condition of the Commission or the issuance of the Bonds. As of the time of acceptance hereof and as of the Closing Date, neither the execution nor the delivery by the Commission of the Indenture, the Continuing Disclosure Certificate or this Purchase Contract, the adoption of the Commission Resolution , or the compliance by the Commission with such documents or authorizations, conflicts with or constitutes a material breach of, or default under, any applicable law or administrative regulation of the State or the United States, or any other statute or administrative rule or regulation, judgment, decree, order, license, permit, agreement or instrument to which the Commission is subject, which breach, default or conflict would have a material adverse effect on the ability of the Commission to pay the Bonds or perform its obligations under the Indenture, the Continuing Disclosure Certificate or this Purchase Contract. (e) No Other Bond Issues or Debt . Other than commercial paper notes and similar interim borrowing facilities, between the time of acceptance hereof and the Closing Date, the Commission will not, without prior written notice to the Purchaser , issue any bonds or securities or incur any other indebtedness secured by the Revenues. -4-
(f) No Litigation. As of the date hereof and as of the Closing Date, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission: (i) affecting the existence of the Commission or the titles of its officers to their respective offices; (ii) seeking to restrain or to enjoin the sale or delivery of the Bonds or the application of the proceeds ther efrom in accordance with the Indenture; (iii) in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the Continuing Disclosure Certificate, this Purchase Contract or any action of the Commission authorizing the issua nce, execution or delivery thereof; or (iv) contesting the powers of the Commission with respect to the Bonds or any action of the Commission authorizing the issuance, execution or delivery thereof, nor to the knowledge of the Commission, as evidenced by t he Representative of the Commission signing this Purchase Contract, is there any basis therefor. As of the date hereof and as of the Closing Date, and except as disclosed to the Purchaser in writing, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission in which a final adverse decision would materially and adversely affect the operations of the Water Enterprise (as defined in the Indenture), Revenues or the consummation of the transactions contemplated by this Purchase Contract. (g) Reserved.
(h) Reserved.
(i) Valid and Binding Obligations . This Purchase Contract, the [____] Supplemental Indenture and the Continuing Disclosure Certificate, when executed and delivered by the other parties thereto, will have been duly authorized, executed and delivered and will constitute legal, valid and binding obligations of the Commission (except to the extent tha t such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, arrangement, fraudulent conveyance, moratorium and similar law affecting creditors rights generally, general principals of equity, the exercise of judicial discretion in appropriate cases, and to the limitations on remedies against city and counties in California). The Bonds, when issued, delivered and paid for as provide d herein and in the Indenture, will have been duly authorized, executed and issued and will constitute legal, valid and binding limited obligations of the Commission entitled to the benefits of the Indenture.
(j) Financial Statements. The financial statements of the Commission f or the years ended June 30, 2025 and June 30, 2024 fairly represent the receipts, expenditures, assets, liabilities and cash balances of such amounts and, insofar as presented, other funds of the Commission as of the dates and for the periods therein set forth. Except as otherwise disclosed in writing to the Purchaser, there has not been any materially adverse change in the financial condition of the Commission or in its operations since the date of such financial statements and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. -5-
(k) Covenants. The Commission shall (i) reflect the indebtedness evidenced by the Bonds in any statement of assets and liabilities, in compliance with standards promulgated by the Governmental Accounting Standards Board, prepared by or for the Commission and (ii) notify each rating agency maintaining a rating on any of its debt payable from Power Enterprise revenues of the issuance of the Bonds.
Section 7. Representations, Warranties and Agreements of the Purchaser . The Purchaser represents, warrants and agrees with the Commission that:
(a) The Purchaser has been duly authorized to enter into this Purchase Contract and to deliver the Issue Price Certificate attached hereto as Appendix C and the Investor Letter attached hereto as Appendix D.
(b) The Purchaser shall comply with the San Francisco Business Tax Ordinance and shall, if not otherwise exempt from such ordinance, provide to the Commission a Business Tax Registration Certificate on or prior to the date hereof. (c) The Purchaser shall comply with the Commission’s policy and practice that the Commission shall not pay, and the Purchaser shall not pass through to the Commission, any fees that are assessed on the Purchaser as part of the Governmental Accounting Standards Board fee or any other industry related fees that are required to be paid solely by the Purchaser.
Section 8. Reserved.
Section 9. Closing Conditions. The Purchaser is authorized to enter into this Purchase Contract in reliance upon the representations, warranties and agreements herein and the performance by the Commission of its obligations hereunder, both as of the date hereof and as of the Closing Date. The obligations of the Purchaser under this Purchase Contract are and shall be subject to the following conditions:
(a) Bring-Down Representation. The representations and warranties of the Commission contained herein shall be true, accurate and correct in all material respects at the date hereof, and on the Closing Date, as if made on the Closing Date. (b) Executed Documents and Performance Thereunder . At the time of the Closing: (i) the Indenture, this Purchase Contract and the Continuing Disclosure Certificate shall be in full force and effect, and shall not have been amended, modified or supplemented except with the consent of the Purchaser (which consent will not be unreasonably withheld); and (ii) the Commission shall perform or have performed all of its obligations required under or specified in this P urchase Contract, the Indenture and the Continuing Disclosure Certificate to be performed prior to the Closing. (c) No Default. At the time of the Closing, no default shall have occurred or be existing under the Indenture or this Purchase Contract. -6-
(d) Termination Events. The Purchaser may terminate this Purchase Contract by notification in writing to the Commission from the Purchaser, if, at any time on or prior to the Closing, any of the following occurs and, as a result of the occurrence of such an event, the market price of the Bonds , in the reasonable opinion of the Purchaser , after consultation with the Commission, would be materially adversely affected:
(i) Reserved.
(ii) an amendment to the Constitution of the United States or the Constitution of the State or legislation in or by the Congress of the United States or the legislature of the State, or the amendment of legislation pending as of the date of this Purchase Contr act in the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any deci sion of any federal or State court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority or the occurrence of an y other comparable legislative or regulatory event affecting the federal or State tax status of the interest on the Bonds or bonds or obligations of the general character of the Bonds; provided, that the occurrence of any such event shall not constitute a termination event hereunder if the prospect of such constitutional, legislative, regulatory or judicial action or enactment shall have been publicly known on the date hereof; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State shall be rendered; or
(iv) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance or sale of the Bonds, including all underlying obligations, as contemplated hereby, is in violation or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture need be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or
(v) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under the Trust Indenture Act of 1939, as amended and as then in effect; or
-7-
(vi) there shall have occurred a general suspension of trading or additional material restrictions not in force as of the date hereof shall have been imposed upon trading in the United States in securities generally by any governmental authority or by any national securities exchange; or (vii) a general banking moratorium shall have been declared by federal, State or State of New York authorities or a disruption in securities settlement, payment, commercial banking or clearance services has occurred; or (viii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national or international emergency or war or other calamity or crisis (or any escalation thereof); or (ix) there shall have occurred any materially adverse change in the affairs or financial condition of the Commission; or
(x) the purchase of and payment for the Bonds by the Purchaser on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission.
The termination of this Purchase Contract pursuant to this Section 9(d) by the Purchaser with respect to the Bonds shall not prohibit the Commission from selling such Bonds to any other purchaser or underwriter.
(e) Closing Documents. At or prior to the Closing, the Purchaser shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents, in each case satisfactory in form and substance to the Purchaser:
(1) Approving Authorizations . Certified copies of the Commission Resolution, the Authorizing Legislation and the City Ordinance. (2) Bond Documents. An executed copy of the Master Indenture and executed originals of the [____] Supplemental Indenture, the Continuing Disclosure Certificate and this Purchase Contract.
(3) Final Opinion. An approving opinion or opinions of Bond Counsel, dated the Closing Dat e, and a letter or letters of such counsel addressed to the Purchaser to the effect that such opinion or opinions may be relied upon by the Purchaser to the same extent as if such opinion or opinions had been addressed to them.
(4) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Commission and the Purchaser , dated the Closing Date, to the following effect:
-8-
(i) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended. (ii) This Purchase Contract has been duly executed and
delivered by the Commission and constitutes the valid, legal, and binding agreement of the Commission, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other similar laws affecting enforcement of creditors’ rights, by the application of equitable principles if equitable remedies are sought and limitations on the enforcement of legal remedies against public agencies in the State. (5) Certificate of the Commission . A certificate of the Commission dated the Closing Date, signed on behalf of the Commission by an authorized officer of the Commission, to the effect that the representations and warranties of the Commission contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date. (6) Certificate of the Trustee . A certificate of U.S. Bank Trust Company, National Association, as Trustee (also referred to herein as “U.S. Bank”), dated the Closing Date, to the effect that:
(i) U.S. Bank is a national banking association organized and existing under the laws of the United States of America and has full power and is qualified to accept and comply with the terms of the Indenture and to perform its obligations thereunder and to authenticate the Bonds. (ii) U.S. Bank has accepted the duties and obligations imposed on it by the Indenture.
(iii) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over U.S. Bank that has not been obtained is or will be required for the consummation by U.S. Bank of the transactions contemplated by the Indenture to be undertaken by U.S. Bank.
(iv) Compliance with the terms of the Indenture will not conflict with, result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which U.S. Bank is a party or by which it is bound, or, to the best knowledge of U.S. Bank, after reasonable investigation, any law, rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over U.S. Bank or any of its activities or properties (except that no representation, warranty or agreement is made by U.S. Bank with respect to any federal or state securities or Blue Sky laws or regulations).
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(v) To the knowledge of U.S. Bank after due inquiry, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body served on or threatened against or affecting the existence of U.S. Bank, or in any way contesting or affecting the validity or enforceability of the Indenture or the Bonds, or contesting the powers of U.S. Bank or its authority to enter into and perform its obligations under the Indenture or the Bonds, w herein an unfavorable decision, ruling or finding would adversely affect the validity of the Bonds or the Indenture. (7) Opinion of Counsel to the Trustee . An opinion of counsel to U.S.
Bank addressed to the Commission and the Purchaser , dated the Closing Date, to the effect that:
(i) U.S. Bank is a national banking association with trust powers, duly organized and validly existing and in good standing under the laws of the United States of America, having the legal authority to exercise trust powers in the State.
(ii) U.S. Bank has all requisite corporate power, authority and legal right to execute and deliver the Indenture and has taken all necessary action to authorize the execution and acceptance of the Indenture. (iii) The Bonds have been duly authenticated by U.S. Bank. (iv) To such counsel’s knowledge, no authorization, approval, consent, or order of any governmental agency or regulatory authority having jurisdiction over U.S. Bank that has not been obtained by U.S. Bank is required for the authorization, execution, delivery and performance by U.S. Bank of the Indenture.
(v) The execution and delivery by U.S. Bank of the Indenture and the performance of the obligations of U.S. Bank under the Indenture by U.S. Bank, will not contravene the Articles of Association or the Bylaws of U.S. Bank or any law or regulation governing the banking and trust powers of U.S. Bank known to us or any judgment, order or decree known to such counsel and applicable to U.S. Bank of any court, governmental authority or arbitrator of the State of California.
(8) Tax Certificate. The Tax Certificate of the Commission, dated the Closing Date, in form satisfactory to Bond Counsel, relating to the Bonds. (9) California Debt and Investment Advisory Commission Filings .
Copies of the Report of Proposed Debt Issuance and Report of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the Government Code and Section 8855(g) of the Government Code.
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(10) Evidence of Ratings for Parity Bonds. Evidence of ratings from Fitch Ratings and S&P Global Ratings, that such rating agencies have assigned their municipal bond ratings of “AA -” and “AA ,” respectively, to bonds issued under the Master Indenture and secured thereunder on a parity with the Bonds (for the avoidance of doubt, the Bonds shall not be rated by any rating agency). (11) Opinion of the City Attorney. An opinion of the City Attorney addressed to the Purchaser , dated the Closing Date, in substantially the form attached hereto as Appendix B.
(12) Issue Price Certificate. An issue price certificate of the Purchaser, dated the Closing Date, in substantially the form attached hereto as Appendix C. (13) Investor Letter . An investor letter of the Purchaser, dated the Closing Date, in substantially the form attached hereto as Appendix D. (14) Additional Documents. Such legal opinions, additional certificates, instruments and other documents as the Purchaser , Bond Counsel or the City Attorney may reasonably deem necessary to evidence the truth and accuracy as of the time of the Closing of the representations of the Commission and the due performance or satisfaction by the Commission at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Commission.
If the Commission shall be unable to satisfy the conditions contained in this Purchase Contract, unless waived by the Purchaser, or if the obligations of the Purchaser shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and the Purchaser and the Commission shall not be under further obligation hereunder, except as further set forth in Section 11 hereof.
Section 10. Reserved.
Section 11. Expenses.
(a) Commission. The Commission shall pay or cause to be paid (but solely from the proceeds of the Bonds and not otherwise) the expenses incident to the performance of the obligations of the Commission hereunder, including but not limited to: (1) the fees and disbursements of the Trustee and counsel to the Trustee in connection with the issuance of the Bonds; and (2) the fees and disbursements of Bond Counsel and of PFM Financial Advisors LLC, Municipal Advisors to the Commission, and any other experts or consultants retained by the Commission in connection with the transactions contemplated hereby. (b) Purchaser. The Commission has agreed to pay the expenses incurred or paid for by the Purchaser on behalf of the Commission in connection with the issuance, and delivery of the Bonds, including, but not limited to, fees and expenses of Purchaser’s Counsel, [CUSIP fees], California Debt and Inve stment Advisory Commission fees, and expenses incurred by the -11-
Purchaser on behalf of the Commission’s employees and representatives which are in connection with this Purchase Contract including, but not limited to, transportation, lodging, and meals.
Section 12. City Contracting Requirements. The Purchaser agrees to comply with the provisions set forth in Appendix A , attached hereto, which are incorporated herein by this reference.
Section 13. Notices. Any notice or other communication to be given under this Purchase Contract to the Commission or to the Purchaser may be given by delivering the same in writing at the addresses set forth below:
If to the Commission:
Public Utilities Commission of the
City and County of San Francisco
525 Golden Gate Avenue, 13th Floor
San Francisco, California 94102
Attention: Assistant General Manager, Business Services/Chief Financial Officer Telephone: (415) 554-3155
Fax: (415) 554-3161
With a copy to:
City and County of San Francisco
Office of Public Finance
City Hall, Room 338
1 Dr. Carlton B. Goodlett Place
San Francisco, California 94102
Telephone: (415) 554-5956
Fax: (415) 554-4864
If to the Purchaser:
Wells Fargo Municipal Capital Strategies, LLC
[333 Market St.,17th Floor
San Francisco, California 94105
Attention: Jason Pollack
Telephone: 628-260-3395]
Section 14. Entire Agreement . This Purchase Contract, when accepted by the Commission, shall constitute the entire agreement between the Commission and the Purchaser and is made solely for the benefit of the Commission and the Purchaser (including the successors or assigns of the Purchaser with the consent of the Commission) and no other person shall acquire or have any right hereunder by virtue hereof. All of the Commission’s representations, covenants and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless -12-
of (a) any investigation made by or on behalf of the Purchaser, (b) delivery of and payment for the Bonds hereunder and (c) any termination of this Purchase Contract.
Section 15. Counterparts; Electronic Signatures . This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. This Purchase Contract may be signed in counterparts, and upon delivery to the other party of such signed Purchase Contract, which delivery may be by facsimile transmission or electronic form, shall constitute the binding agreement of each party to this Purchase Contract.
Each party agrees that this Purchase Contract may be electronically signed, and that any electronic signatures appearing on this Purchase Contract are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.
Section 16. Mutual Reliance on Representations and Warranties . The Commission hereby acknowledges that the Purchaser is relying upon the representations of the Commission set forth herein. The Purchaser hereby acknowledges that the Commission, in executing this Purchase Contract and issuing the Bonds described herein, is relying upon the representations and warranties of the Purchaser set forth herein.
Section 17. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Purchase Contract shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.
Section 18. State of California Law Governs . The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State of California.
This Purchase Contract shall be enforceable in the State of California, and any action arising out of this Purchase Contract shall be filed with and maintained in the City and County of San Francisco Superior Court, San Francisco, California; provided, that the Commission may waive the requirement of venue.
Section 19. Limited Liability . The obligations and liabilities of the Commission hereunder are limited obligations of the Commission payable solely from Revenues as defined and set forth in the Indenture. None of the Commissioners, the officers or employees of the Commission, or any person executing this Purchase Contract shall be liable personally for the obligations of the Commission hereunder or be subject to any personal liability or accountability by reason of the execution hereof. Neither of the faith and credit nor the taxing power of the State or any political subdivision thereof, including the City, is pledged to the obligations of the Commission hereunder.
Section 20. No Fiduciary or Advisory Role; Arm’s Length Transaction. The Purchaser and the Commission acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s-length commercial transaction between Commission, on the one hand, and the Purchaser , on the other hand, (ii) in connection with such transaction, the Purchaser is acting solely as a principal and not as a municipal advisor, a financial advisor, or a fiduciary of the Commission, and may have financial and other interests that differ from those of -13-
the Commission, (iii) the Purchaser has not assumed a fiduciary responsibility in favor of the Commission with respect to the offering of the Bonds or the discussions, undertakings and procedures leading thereto (whether or not the Purchaser , or any affiliate of the Purchaser , has provided or is currently providing services or advice to Commission on other matters), (iv) the only obligations the Purchaser has to the Commission with respect to the transaction contemplated hereby expressly are set forth in this Purchase Contract, and (v) the Commission and the Purchaser have consulted with their respective legal, financial and other advisors to the extent they deemed appropriate in connection with the sale of the Bonds. The Purchaser is not acting as a Municipal Advisor to the Commission (as defined in Section 15B of the Exchange Act of 1934, as amended) in connection with the matters contemplated by this Purchase Contract.
Section 21. Continuing Covenants. The representations, warranties and covenants of the Commission set forth in this Section 21 shall survive delivery of the Bonds and shall remain in full force and effect for so long as the Bonds remain outstanding and the Purchaser or any of its affiliates is the owner of any portion of the Bonds. To the extent that the Purchaser, or an affiliate of the Purchaser, is not the owner of any portion of the Bonds, the provisions set forth below shall no longer be of force or effect.
(a) The following capitalized terms shall have the following meanings:
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Commission from time to time concerning or relating to bribery or corruption.
“Anti-Terrorism Laws” means any statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction, writ, decree or award of any Governmental Authority of competent jurisdiction relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.
“Governmental Authority” means the United States of America or any state or political subdivision thereof, any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government in the United States of America (or any state, municipality or political subdivision thereof), including, without limitation, any central bank or other governmental or quasi-governmental authority exercising control over banks or other financial institutions, and any corporation or other entity or authority owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing.
“Person” means an individual, a firm, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof.
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions (as of November 12, 2025, the so- called Donetsk People’s Republic, the so- called Luhansk People’s Republic, the Crimea Region of Ukraine, Cuba, Iran, North Korea and Syria).
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“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, His Majesty’s Treasury of the United Kingdom, the European Union or any EU member state or who is otherwise the subject or target of Sanctions or (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person.
“Sanction(s)” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State , the United Nations Security Council, His Majesty’s Treasury of the United Kingdom, the European Union or any EU member state.
(b) The Commission hereby represents and warrants that:
(i) The Commission has implemented and maintains in effect policies and procedures designed to ensure compliance by the Commission and its directors, officers, employees and agents with Anti -Corruption Laws and applicable Sanctions, and the Commission and its officers and employees and to the knowledge of the Commission its directors and agents, are in compliance with Anti -Corruption Laws and applicable Sanctions in all material respects. None of (a) the Commission or to the knowledge of the Commission any of its directors, officers or employees, or (b) to the knowledge of the Commission, any of its agents or any subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No transaction contemplated by this Purchase Contract will violate Anti-Corruption Laws or applicable Sanctions. The Commission is not in violation of any Anti-Terrorism Law nor does it engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
(c) The Commission shall (i) comply with Anti -Corruption Laws and applicable Sanctions, and (ii) provide such information and take such actions as are reasonably requested by the Purchaser in order to assist the Purchaser in maintaining compliance with anti-money laundering laws and regulations related to Anti -Corruption Laws and applicable Sanctions.
(d) The Commission shall not use, nor permit the use of, the proceeds of the Bonds to be applied in violation of any Anti-Corruption Laws, Anti-Terrorism Laws or Sanctions. (e) The Commission shall not use, and shall require that its directors, officers, employees and agents shall not use, the proceeds of the Bonds (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto. -15-
(f) (i) The Purchaser hereby notifies the Commission that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that includes the name and address of the Commission and other information that will allow the Purchaser to identify the Commission in accordance with the Patriot Act. The Commission agrees to provide documentary and other evidence of Commission’s identity as may be requested by the Purchaser at any time to enable the Purchaser to verify the Commission’s identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the Patriot Act.
(ii) The Commission shall (i) ensure that no person who owns a controlling interest in or otherwise controls the Commission is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the United States Department of Treasury Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, that prohibits or limits the Purchaser from making any advance or extension of credit to the Commission or from ot herwise conducting business with the Commission and (ii) ensure that the proceeds of the Commercial Paper Notes shall not be used to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto. Further, the Commission shall comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.
(g) The Commission agrees that the Purchaser may at any time sell, assign, pledge or transfer all or any portion of the Bonds, or one or more interests in all or any part of the Bonds, to one or more purchasers, assignees and/or participants, so long as such purchaser, assignee or participant is (i) an affiliate of Wells Fargo Municipal Capital Strategies, LLC; or (ii)(A) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act; and (B) a commercial bank organized under the laws of the United States, or any state thereof, or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and, in any such case, having a combined capital and surplus, determined as of the date of any transfer pursuant to this Section, of not less than $5,000,000,000. (h) So long as the Purchaser, or an affiliate of the Purchaser, is the owner of the Bonds , such Bonds will not be rated by a nationally recognized organization which regularly rates such obligations, marketed pursuant to any Official Statement, Offering Memorandum or any other disclosure documents, placed or offered by a broker dealer in the capacity of a n underwriter or a placement agent, or registered with or made eligible for registration with any securities depository, including but not limited to The D epository Trust Company, New York, New York.
(i) The Commission hereby agrees to pay all costs and expenses paid or incurred by the Purchaser, including the reasonable fees and out of pocket expenses of counsel for the Bank, otherwise arising in connection with this Purchase Contract, the Indenture or t he Bonds including, without limitation, in connection with any transfer of or amendment to -16-
this Purchase Contract, the Indenture or the Bonds, the enforcement hereof or thereof or the protection of the rights of the Purchaser hereunder or thereunder. (j) In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of the Bonds or the Indenture), the Commission acknowledges and agrees, that: (a) the Commission has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (b) the Commission is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated her eby and by the Bonds and the Indenture.
(k) The Commission agrees that it shall (i) reimburse the Purchaser for (A) any increased costs due to a change in law, rule, ruling, guideline, regulation or directive imposed upon the Purchaser, including, without limitation, provisions concerning increased costs, changes in capital adequacy, capital requirements and other requirements of law or governmental authority (provided that the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof, and all requests, rules, guidelines, requirements and directives prom ulgates by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall in each case be deemed to be a change in requirement of law, regardless of the date enacted, adopted, issued or implemented), or in the administration, interpretation, implementation or application thereof; and (B) all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, fines, additions to tax or penalties applicable thereto; and (ii) pay the Purchaser’s breakage or other pre-payment costs owed to the Purchaser, including the Breakage Fee set forth in the Indenture.
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Very truly yours,
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By: ___________________________________
Name:
Title:
[Signature Page to Water Revenue Bonds 2026 Series [_]
Bond Purchase Contract]
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Accepted as of the date first stated above:
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By:_________________________________
Name: Dennis J. Herrera
Title: General Manager
[Signature Page to Water Revenue Bonds 2026 Series [_]
Bond Purchase Contract]
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Approved as to Form:
DAVID CHIU
City Attorney
By:_________________________________
Sheryl L. Bregman, Deputy City Attorney
[Signature Page to Water Revenue Bonds 2026 Series [_]
Bond Purchase Contract]
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SCHEDULE I
TO THE PURCHASE CONTRACT
MATURITY SCHEDULE
$[____]
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS, 2026 SERIES [_]
Maturity Date
Principal
Amount
Interest
Rate Price Yield
[____], 2031
Optional Redemption. [________]
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APPENDIX A1
CITY CONTRACTING PROVISIONS
The Purchaser shall comply with the following provisions of this Purchase Contract as if set forth in the text thereof. Capitalized terms used but not defined in this exhibit shall have the meanings given in the Purchase Contract.
1. Nondiscrimination; Penalties.
(a) Nondiscrimination in Contracts. The Purchaser shall comply with the provisions of Chapters 12B and 12C of the San Francisco Administrative Code. The Purchaser shall incorporate by reference in any subcontracts the provisions of Sections 12B.2(a), 12B.2(c)- (k), and 12C.3 of the San Francisco Administrative Code and shall require any subcontractors to comply with such provisions. The Purchaser is subject to the enforcement and penalty provisions in Chapters 12B and 12C.
(b) Nondiscrimination in the Provision of Employee Benefits. San Francisco Administrative Code 12B.2. The Purchaser does not as of the date of this Purchase Contract, and will not during the term of this Purchase Contract, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of employee benefits between employees with domestic partners and employees with spouses and/or between the domestic partners and spouses of such employees, subject to the conditions set forth i n San Francisco Administrative Code Section 12B.2.
(c) Condition to Contract . As a condition to the Purchase Contract, t he Purchaser shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (form HRC-12B-101) with supporting documentation and secure the approval of the form by the San Francisco Human Rights Commission.
2. MacBride Principles —Northern Ireland. The provisions of San Francisco Administrative Code §12F are incorporated by this reference and made part of this Purchase Contract. By entering into this Purchase Contract, t he Purchaser confirms that it has read and understood that the City urges companies doing business in Northern Ireland to resolve employment inequities and to abide by the MacBride Principles, and urges San Francisco companies to do business with corporations that abide by the MacBride Principles.
3. Tropical Hardwood and Virgin Redwood Ban. Under San Francisco Environment Code Section 804(b), the City urges the Purchaser not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
4. Alcohol and Drug-Free Workplace. The City reserves the right to deny access to, or require the Purchaser to remove from, City facilities personnel of the Purchaser who the City
1 To be reviewed and updated.
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has reasonable grounds to believe has engaged in alcohol abuse or illegal drug activity which in any way impairs the City’s ability to maintain safe work facilities or to protect the health and well-being of City employees and the general public. The City shall have the right of final approval for the entry or re -entry of any such person previously denied access to, or removed from, City facilities. Illegal drug activity means possessing, furnishing, selling, offering, purchasing, using or being under the influence of illegal drugs or other controlled substances for which the individual lacks a valid prescription. Alcohol abuse means possessing, furnishing, selling, offering, or using alcoholic beverages, or being under the influence of alcohol.
5. Compliance with Americans with Disabilities Act. The Purchaser shall provide the services specified in the Purchase Contract in a manner that complies with the Americans with Disabilities Act (ADA), including but not limited to Title II’s program access requirements, and all other applicable federal, state and local disability rights legislation.
6. Sunshine Ordinance. The Purchaser acknowledges that this Purchase Contract and all records related to its formation, the Purchaser’s performance of services provided under the Purchase Contract, and the City’s payment are subject to the California Public Records Act, (California Government Code §6250 et. seq.), and the San Francisco Sunshine Ordinance, (San Francisco Administrative Code Chapter 67). Such records are subject to public inspection and copying unless exempt from disclosure under federal, state or local law.
7. Limitations on Contributions. By executing this Purchase Contract, the Purchaser acknowledges its obligations under section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with, or is seeking a contract with, any department of the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building for a grant, loan or loan guarantee, or for a development agreement, from making any campaign contribution to (1) a City elected official if the contract must be approved by that official, a board on which that official serves, or the board of a state agency on which an appointee of that official serves, (2) a candidate for that City elective office held by such individual, or (3) a committee controlled by such elected official or a candidate for that office, at any time from the submission or a proposal for the contract until the later of either the termination of negotiations for such contract or twelve months after the date the City approves the contract. The prohibition on contributions applies to each prospective party to the contract; each member of the Purchaser ’s board of directors; the Purchaser’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 10 percent in the Purchaser ; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Purchaser. The Purchaser certifies that it has informed each such person of the limitation on contributions imposed by Section 1.126 by the time it submitted a proposal for such contract and has provided the names of the persons required to be informed to the City department with whom it is contracting.
8. Requiring Minimum Compensation for Covered Employees. The Purchaser shall pay covered employees no less than the minimum compensation required by San Francisco Administrative Code Chapter 12P. The Purchaser is subject to the enforcement and penalty provisions in Chapter 12P. By entering into this Purchase Contract, the Purchaser certifies that it is in compliance with Chapter 12P.
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9. Requiring Health Benefits for Covered Employees. The Purchaser shall comply with San Francisco Administrative Code Chapter 12Q. The Purchaser shall choose and perform one of the Health Care Accountability options set forth in San Francisco Administrative Code Chapter 12Q.3. The Purchaser is subject to the enforcement and penalty provisions in Chapter 12Q.
10. Prohibition on Political Activity with City Funds . In performing the services provided under the Purchase Contract, the Purchaser shall comply with San Francisco Administrative Code Chapter 12G, which prohibits funds appropriated by the City for this Purchase Contract from being expended to participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure. The Purchaser is subject to the enforcement and penalty provisions in Chapter 12G.
11. Nondisclosure of Private, Proprietary or Confidential Information. If this Purchase Contract requires the City to disclose “Private Information” to the Purchaser within the meaning of San Francisco Administrative Code Chapter 12M, the Purchaser shall use such information consistent with the restrictions stated in Chapter 12M and in this Purchase Contract and only as necessary in performing the services provided under the Purchase Contract. The Purchaser is subject to the enforcement and penalty provisions in Chapter 12M.
12. In the performance of services provided under the Purchase Contract, the Purchaser may have access to the City’s proprietary or confidential information, the disclosure of which to third parties may damage the City. If the City discloses proprietary or confidential information to the Purchaser, such information must be held by the Purchaser in confidence and used only in performing the Purchase Contract. The Purchaser shall exercise the same standard of care to protect such information as a reasonably prude nt contractor would use to protect its own proprietary or confidential information.
13. Consideration of Criminal History in Hiring and Employment Decisions . The Purchaser agrees to comply fully with and be bound by all of the provisions of Chapter 12T, “City Contractor/Subcontractor Consideration of Criminal History in Hiring and Employment Decisions,” of the San Francisco Administrative Code (“Chapter 12T”), including the remedies provided, and implementing regulations, as may be amended from time to time. The provisions of Chapter 12T are incorporated by reference and made a part of this Purchase Contract. The text of Chapter 12T is available on the web at http://sfgov.org/olse/fco. A partial listing of some of the Purchaser’s obligations under Chapter 12T is set forth in this Section. The Purchaser is required to comply with all of the applicable provisions of Chapter 12T, irrespective of the listing of obligations in this Section. Capitalized terms used in this Section and not defined in this Purchase Contract shall have the meanings assigned to such terms in Chapter 12T.
The requirements of Chapter 12T shall only apply to the Purchaser ’s operations to the extent those operations are in furtherance of the performance of this Purchase Contract, shall apply only to applicants and employees who would be or are performing work in furtherance of this Purchase Contract, and shall apply when the physical location of the employment or prospective employment of an individual is wholly or substantially within the City of San Francisco. Chapter 12T shall not apply when the application in a particular context would conflict
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with federal or state law or with a requirement of a government agency implementing federal or state law.
14. Submitting False Claims; Monetary Penalties . The full text of San Francisco Administrative Code §§ 21.35, including the enforcement and penalty provisions, is incorporated into this Purchase Contract. Under San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that section. A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant:
(a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or request for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the City, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
15. Conflict of Interest. By entering into the Purchase Contract, the Purchaser certifies that it does not know of any fact which constitutes a violation of Section 15.103 of the City’s Charter; Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code; Title 9, Chapter 7 of the California Government Code (Section 87100 et seq.), or Title 1, Division 4, Chapter 1, Article 4 of the California Government Code (Section 1090 et seq.), and further agrees promptly to notify the City if it becomes aware of any such fact during the term of this Purchase Contract.
16. Assignment. The services provided under the Purchase Contract to be performed by the Purchaser are personal in character and neither this Purchase Contract nor any duties or obligations may be assigned or delegated by the Purchaser unless first approved by the City by written instrument executed and approved in the same manner as this Purchase Contract. Any purported assignment made in violation of this provision shall be null and void.
17. Food Service Waste Reduction Requirements. The Purchaser shall comply with the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including but not limited to the provided remedies for noncompliance.
18. Cooperative Drafting. This Purchase Contract has been drafted through a cooperative effort of the City and the Purchaser, and all parties have had an opportunity to have the Purchase Contract reviewed and revised by legal counsel. No party shall be considered the drafter of this Purchase Contract, and no presumption or rule that an ambiguity shall be construed against the party drafting the clause shall apply to the interpretation or enforcement of this Purchase Contract.
19. Sugar-Sweetened Beverage Prohibition. The Purchaser agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Purchase Contract.
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20. First Source Hiring Program . The Purchaser must comply with all of the provisions of the First Source Hiring Program, Chapter 83 of the San Francisco Administrative Code, that apply to this Purchase Contract, and the Purchaser is subject to the enforcement and penalty provisions in Chapter 83.
21. Laws Incorporated by Reference. The full text of the laws listed in this Exhibit A, including enforcement and penalty provisions, are incorporated into this Purchase Contract by reference. The full text of the San Francisco Municipal Code provisions incorporated by reference in this Exhibit A are available at www.sfgov.org under “Open Gov.”
22. Prevailing Wages. Services to be performed by the Purchaser under this Purchase Contract may involve the performance of trade work covered by the provisions of Section 6.22(e) of the Administrative Code or Section 21C (collectively, “Covered Services”). The provisions of Section 6.22(e) and 21C of the Administrative Code are incorporated as provisions of this Purchase Contract as if fully set forth herein and will apply to any Covered Services performed by the Purchaser.
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APPENDIX B
FORM OF CITY ATTORNEY OPINION
[____], 2026
Public Utilities Commission
of the City and County of San Francisco
San Francisco, California
Board of Supervisors
of the City and County of San Francisco
San Francisco, California
Wells Fargo Municipal Capital Strategies, LLC
San Francisco, California
RE: $[____]
Public Utilities Commission of the City and County of San Francisco San Francisco Water Revenue Bonds, 2026 Series [_]
Ladies and Gentlemen:
This office has acted as counsel to the Public Utilities Commission of the City and County of San Francisco (“Commission”) with respect to the issuance of its $[____] aggregate principal amount of Water Revenue Bonds 2026 Series [_] (the “Bonds”). The Bonds are being issued pursuant to the Constitution and the laws of the State of California, the Charter of the City and County of San Francisco (“City”), and a [____] Supplemental Indenture, dated as of [____], 2026 (the “[____] Supplemental Indenture”), between the Commission and U.S. Bank Trust Company, National Association, as successor trustee (“Trustee”), supplementing the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as succes sor trustee, as amended and supplemented to date (collectively, the “Indenture”). All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Indenture.
In connection therewith, the undersigned has examined such documents, certificates and instruments as the undersigned deemed necessary for the purposes of this opinion, including, but not limited to, the Indenture, the Purchase Contract, dated [____], 2026 (the “Purchase Contract”), by and between the Commission and Wells Fargo Municipal Capital Strategies, LLC, as the Purchaser named therein, the Continuing Disclosure Certificate of the Commission, as executed and delivered on the date of delivery of the B onds (“Continuing Disclosure Certificate”), Resolution No. [____] of the Commission adopted on [____] , 2026 (“Commission Resolution”) and Ordinance No. [____], of the Board of Supervisors of the City (the “Board of Supervisors”) , finally passed by the Board of Supervisors on [____] (the “City Ordinance”).
In reviewing the documents and matters referred to above, the undersigned has not undertaken to verify independently and has assumed the accuracy of the factual matters represented, warranted or certified therein. The undersigned has examined the Charter of the City.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions
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may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. We disclaim any obligation to update this opinion. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Commission. In addition, we call attention to the fact that the rights and obligations under the Indenture and the Bonds and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrange ment, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities and counties in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoing documents.
Based upon and subject to the foregoing, the undersigned is of the opinion that:
1. The Commission is duly organized and validly existing as a commission of the City under and pursuant to the Charter of the City.
2. The Commission Resolution and the City Ordinance were duly passed at meetings of the Commission and the Board of Supervisors, respectively. The meetings were called and held pursuant to law, with all public notice required by law and at which a quorum was present and acting throughout. The Commission Resolution and the City Ordinance are in full force and effect, as of the date hereof, and have not been modified, amended or rescinded since its approval date.
3. To the best of the undersigned’s knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity before or by any court, governmental agency, public board or body, is pending or threatened against the Commission to restrain or enjoin the issuance of the Bonds, or in any way contesting the validity of the Indenture, Continuing Disclosure Certi ficate, the Purchase Contract, the Commission Resolution or the City Ordinance.
4. There is no litigation pending, with service of process having been accomplished, questioning the existence of the City or the Commission, or contesting the power of the Commission to fix water rates and charges, or in any way contesting or affecting (i) the proceedings under which the Bonds are to be issued, (ii) the validity of the Bonds or the validity of the Indenture, (iii) the pledge of Revenues by the Commission under the Indenture or (iv) the title to the office of the present members of the Boar d of Supervisors or the Commission; nor are there suits or claims against the City or the Commission which would materially impair the ability of the Commission to pay principal or interest on the Bonds when due.
5. The Indenture, Continuing Disclosure Certificate and the Purchase Contract have been duly authorized, executed and delivered by the Commission, and constitute valid and binding agreements of the Commission enforceable in accordance with their respective terms.
6. To the best of the undersigned’s knowledge, neither the execution nor the delivery by the Commission of the Indenture, the Continuing Disclosure Certificate or the Purchase Contract, the adoption of the Commission Resolution, or the compliance by the Commission with such documents or authorizations, conflicts with or constitutes a material breach of, or default under, any applicable law or administrative regulation of the State or the United States, or any other statute or ad ministrative rule or regulati on, judgment, decree, order, license, permit, agreement or instrument to which the Commission is subject, which breach, default or conflict would have a material adverse effect on the ability of the Commission to pay the Bonds or perform its obligations under the Indenture, the Continuing Disclosure Certificate or the Purchase Contract.
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This letter is furnished for the benefit of the above -addressed parties, and is not intended to, and shall not, be relied upon by anyone other than the above -addressees. This letter shall not be circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. The City Attorney does not undertake any obligation to update this letter. Other than the Commission and the City, no attorney-client relationship has existed or exists between this office and any other party.
Very truly yours,
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APPENDIX C
ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Wells Fargo Municipal Capital Strategies, LLC (the “Purchaser”), to the extent set forth herein, hereby certifies as set forth below with respect to the sale and issuance of the Public Utilities Commission of the City and County of San Francisco, San Francisco Water Revenue Bonds, 2026 Series [_] (the “Bonds”).
1. Purchase of the Bonds. On the date of this Certificate, the Purchaser is purchasing each maturity of the Bonds at the respective prices listed in Schedule A. The Purchaser is not acting as an Underwriter with respect to the Bonds. The Purchaser has no present intention to sell, reoffer, or otherwise dispose of the Bonds (or any portion of the Bonds or any interest in the Bonds) other than a sale or transfer to (A) an affiliate or other party related to the Purchaser or (B) a funding entity or other special purpose arrangement established by the Purchaser or an affiliate of the Purchaser such as a tender option bond trust (or similar securitization vehicle); provided, however, that Purchaser has the right to transfer, sell, or otherwise dispose of the Bonds or any part thereof at some future time and from time to time at its sole discretion. The Purchaser has not contracted with any person pursuant to a written agreement to ha ve such person participate in the initial sale of the Bonds, and the Purchaser has not agreed with the Issuer pursuant to a written agreement to sell the Bonds to persons other than Purchaser.
If the Purchaser transfers, sells or otherwise disposes of the Bonds or any interest therein within 45 days of the date hereof other than to an Affiliate, then, not later than five (5) Business Days following such transfer, sale or disposition, the Purchas er shall report the price of such transfer, sale or disposition to the Issuer, acknowledging that such reported price, upon the advice of bond counsel, may be required to serve as the “issue price” of the Bonds (or interest therein) for purposes of certain sections of the Internal Revenue Code and applicable Treasury Regulations.
Prior to any such sale, transfer or disposition, all of the Bonds will be held exclusively for the Purchaser’s own account (or the Affiliate’s own account) and not subject to any contractual arrangement for such transfer, sale or disposition, other than to an Affiliate. A transfer to a funding entity or other special purpose arrangement established by the Purchaser (or an Affiliate) such as a tender option bond trust (or similar securitization vehicle) shall be treated the same as any transfer, sale or disposition to any party other than an Affiliate. The above reporting requirement shall apply equally to any transfer, sale or disposition by any Affiliate (other than to another Af filiate the Purchaser) within 45 days of the date hereof. For purposes of this paragraph, the term “Affiliate” shall mean any entity that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the Purchaser. An entity shall be deemed to control another entity for the purposes of this definition if such first entity possesses 100% of the common stock or other equity interest in the second entity.
The interest rate on the Bonds was negotiated in an arm’s length transaction.
The aggregate price for the Bonds, to be paid by the Purchaser pursuant to the terms of the Bond Purchase Contract , is $[____] , comprised of an amount equal to 100% of the aggregate principal amount of the Bonds.
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2. Defined Terms.
Issuer means the Public Utilities Commission of the City and County of San Francisco.
Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate means any two or more persons who have greater than 50 percent common ownership, directly or indirectly.
Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail or other third- party distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Purchaser’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate with respect to the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds, and by Norton Rose Fulbright US LLP, in connection with rendering their respective opinions that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
The undersigned is authorized to execute this certificate on behalf of the Purchaser, which certifications are not necessarily based on personal knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein.
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By: __________________________________
Name:
Title:
Dated: [________], 2026
SCHEDULE A
SALE PRICES OF THE BONDS
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APPENDIX D
INVESTOR LETTER
Public Utilities Commission of the
City and County of San Francisco
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
Norton Rose Fulbright US LLP
San Francisco, California
Re: City and County of San Francisco San Francisco Water Revenue Bonds 2026 Series [_]
Ladies and Gentlemen:
This letter is to provide you with certain representations and agreements with respect to our purchase of all of the above-referenced Bonds (the “Bonds”), dated their date of issuance. The Bonds were issued under and secured in the manner set forth in the Amended and Restated Indenture, dated as of August 1, 2002 (the “Master Indenture” ), between the Public Utilities Commission of the City and County of San Francisco (the “Commission”) and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee” ), as supplemented and amended to date and as further supplemented by a [____] Supplemental Indenture, dated as of July 1, 2026 (the “[____] Supplemental Indenture”), relating to the Bonds, between the Commission and the Trustee (the Master Indenture, as supplemented, being herein referred to as the “Indenture”). Wells Fargo Municipal Capital Strategies , LLC (the “Purchaser,” the “undersigned,” “us” or “we,” as applicable) , is purchasing the Bonds pursuant to a Bond Purchase Contract dated as of [________], 2026, between the Commission and the Purchaser. We hereby represent and warrant to you and agree with you as follows:
1. We understand that the Bonds have not been registered pursuant to the Securities Act of 1933, as amended (the “1933 Act” ), the securities laws of any state nor has the Indenture been qualified pursuant to the Trust Indenture Act of 1939, as amended, in reliance upon certain exemptions set forth therein. We acknowledge that the Bonds (i) are not being registered or otherwise qualified for sale under the “blue sky” laws and regulations of any state, and (ii) will not be listed on any securities exchange.
2. As of the date hereof, we have not offered, offered to sell, offered for sale or sold any of the Bonds by means of any form of general solicitation or general advertising, and we are not an underwriter of the Bonds within the meaning of Section 2(11) of the 1933 Act.
3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other tax-exempt obligations,
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to be able to evaluate the risks and merits of the investment represented by the purchase of the Bonds.
4. We have authority to purchase the Bonds and to execute this letter and any other instruments and documents required to be executed by the purchaser in connection with the purchase of the Bonds.
5. The undersigned is a duly appointed, qualified and acting representative of the Purchaser and is authorized to cause the Purchaser to make the certificat ions, representations and warranties contained herein by execution of this letter on behalf of the Purchaser.
6. The Purchaser is a “qualified institutional buyer” as defined in Rule 144A promulgated under the 1933 Act, and is a commercial bank organized under the laws of the United States, having a combined capital and surplus of not less than $5,000,000,000 as of the date hereof, and is able to bear the economic risks of such investment.
7. The undersigned understands that no official statement, prospectus, offering circular, or other comprehensive offering statement is being provided with respect to the Bonds. The undersigned has made its own inquiry and analysis with respect to the Commission, the Bonds and the security therefor, and other material factors affecting the security for and payment of the Bonds.
8. The undersigned acknowledges that it has either been supplied with or been given access to information, including financial statements and other financial information, regarding the Commission , to which a reasonable investor would attach significance in making investment decisions, and has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Commission, the Bonds and the security therefor, so that as a reasonable investor, it has been able to make its de cision to purchase the Bonds.
9. The Bonds are being acquired by the Purchaser for investment for its own account and not with a present view toward resale or distribution; provided, however, that the Purchaser reserves the right to sell, transfer or redistribute the Bonds, but agrees that any such sale, transfer or distribution by the Purchaser shall be to a Person:
(a) that is an affiliate of the Purchaser;
(b) that is a trust or other custodial arrangement established by the Purchaser or one of its affiliates, the owners of any beneficial interest in which are limited to qualified institutional buyers; or
(c) that the Purchaser reasonably believes to be a qualified institutional buyer and a commercial bank organized under the laws of the United States, or any state thereof, or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such
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country, and, in any case, having a combined capital and surplus of not less than $5,000,000,000 as of the date of such sale, transfer or distribution who executes an investor letter substantially in the form of this letter.
Very truly yours,
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By: _______________________________________
Name:
Title:
Norton Rose Fulbright US LLP draft 6/29/26
304962944.2
FIFTY-FOURTH SUPPLEMENTAL INDENTURE
by and between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
Dated as of _________ 1, 2026
AUTHORIZING THE ISSUANCE OF
$[PAR] AGGREGATE PRINCIPAL AMOUNT OF
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BONDS
2026 SERIES [B]
(_________)
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented)
304962944.2 i
TABLE OF CONTENTS
Page
DEFINITIONS
SECTION 230.01 Definitions ........................................................................................................2
PROVISIONS RELATING TO 2026 SERIES [B] BONDS
SECTION 231.01 Authorization and Terms of 2026 Series [B] Bonds ........................................4 SECTION 231.02 Terms of Redemption .......................................................................................6 SECTION 231.03 Form of 2026 Series [B] Bonds ........................................................................7 SECTION 231.04 [Use of Depository] ..........................................................................................7 SECTION 231.05 Issuance of 2026 Series [B] Bonds ...................................................................9 SECTION 231.06 Application of Proceeds of 2026 Series [B] Bonds ..........................................9 SECTION 231.07 Establishment and Application of the 2026 Series [B] Project Fund .............10 SECTION 231.08 [Reserved] .......................................................................................................11 SECTION 231.09 Establishment and Application of the 2026 Series [B] Rebate Fund .............11 SECTION 231.10 Tax Covenants ................................................................................................12 SECTION 231.11 Continuing Disclosure ....................................................................................13
MISCELLANEOUS
SECTION 232.01 Terms of 2026 Series [B] Bonds Subject to the Indenture .............................13 SECTION 232.02 Effective Date of Fifty-Fourth Supplemental Indenture .................................14 SECTION 232.03 Holder Consents to Amendments in Forty-Third Supplemental Indenture ....................................................................................................14 SECTION 232.04 Execution in Counterparts; No Seal Required for Execution .........................14
ADDITIONAL CITY REQUIREMENTS
SECTION 233.01 Conflict of Interest ..........................................................................................14 SECTION 233.02 Proprietary or Confidential Information of the City .......................................14 SECTION 233.03 Local Business Enterprise Utilization; Liquidated Damages .........................15 SECTION 233.04 Nondiscrimination; Penalties ..........................................................................16 SECTION 233.05 MacBride Principles—Northern Ireland ..........................................................17 SECTION 233.06 Tropical Hardwood and Virgin Redwood Ban ................................................17 SECTION 233.07 Drug-Free Workplace Policy ..........................................................................17 SECTION 233.08 Resource Conservation.....................................................................................17 SECTION 233.09 Compliance with Americans with Disabilities Act ........................................17 SECTION 233.10 Sunshine Ordinance ........................................................................................18 304962944.2 ii
SECTION 233.11 Limitations on Contributions ..........................................................................18 SECTION 233.12 Requiring Minimum Compensation for Covered Employees ........................18 SECTION 233.13 Requiring Health Benefits for Covered Employees .......................................20 SECTION 233.14 Prohibition on Political Activity with City Funds ..........................................21 SECTION 233.15 Preservative-treated Wood Containing Arsenic .............................................21 SECTION 233.16 Compliance with Laws ...................................................................................22 SECTION 233.17 Protection of Private Information ...................................................................22 SECTION 233.18 Food Service Waste Reduction Requirements ...............................................22 SECTION 233.19 Submitting False Claims; Monetary Penalties ................................................22 SECTION 233.20 Sugar-Sweetened Beverage Prohibition .........................................................23 SECTION 233.21 Agreement Made in California; Venue ............................................................23 SECTION 233.22 Ownership of Results ......................................................................................23 SECTION 233.23 Audit and Inspection of Records ....................................................................23 SECTION 233.24 Subcontracting ................................................................................................23 SECTION 233.25 Assignment .....................................................................................................24 SECTION 233.26 Non-Waiver of Rights .....................................................................................24 SECTION 233.27 City a Third Party Beneficiary ........................................................................24 Exhibit BE – Form of 2026 Series [B] Bond
304962944.2
FIFTY-FOURTH SUPPLEMENTAL INDENTURE
(Supplemental to the Amended and Restated Indenture,
dated as of August 1, 2002, as amended and supplemented) Authorizing the Issuance of
$[PAR] Aggregate Principal Amount of
Public Utilities Commission of the
City and County of San Francisco
San Francisco Water Revenue Bonds
2026 Series [B]
(_________)
This Fifty-Fourth Supplemental Indenture, dated as of _________ 1, 2026 (this “Fifty- Fourth Supplemental Indenture”), by and between U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as successor trustee (the “Trustee”), and the PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO (the “Commission”), a commission duly constituted under the Charter (the “ Charter”) of the City and County of San Francisco (the “City”);
WITNESSETH:
WHEREAS, this Fifty -Fourth Supplemental Indenture is supplemental to the Amended and Restated Indenture, dated as of August 1, 2002, between the Commission and the Trustee, as amended and supplemented (the “Indenture”);
WHEREAS, as of _____ 1, 2026, there are outstanding $_________ aggregate principal amount of water revenue bonds issued pursuant to the Indenture; WHEREAS, the 2010 Series ABC Bonds, the 2010 Series DE Bonds, the 2010 Series FG Bonds, the 2016 Refunding Series AB Bonds, the 2016 Series C Bonds, the 2017 Refunding Series DEFG Bonds, the 2019 Refunding Series ABC Bonds , the 2020 Series ABCD Bonds , the 2020 Refunding Series EFGH Bonds, the 2023 Series AB Bonds, the 2023 Refunding Series CD Bonds, the 2025 Refunding Series ABC Bonds , [and] the 2025 Series DEF Bonds [and the ___] are the only water revenue bonds of the Commission currently outstanding and secured by Revenues; WHEREAS, the Indenture provides that the Commission may, subject to the requirements of the Law and the Indenture, issue one or more other Series of Bonds from time to time pursuant to a supplemental indenture;
WHEREAS, the Commission has determined to issue pursuant to this Fifty -Fourth Supplemental Indenture a series of Bonds designated “San Francisco Water Revenue Bonds, 2026 Series [B] (_______)” (the “2026 Series [B] Bonds”) in the aggregate original principal amount of $[PAR] for the purpose of financing [(including the retirement of certain outstanding commercial paper notes)] for [reconstruction, replacement, expansion and repair of or improvements to the regional water system and local (in -city) water system of the Enterprise, including the 304962944.2 2
Commission’s Water System Improvement Program (“WSIP”) , and the reconstruction, replacement, expansion and repair of or improvements to the Enterprise -related infrastructure of the Hetch Hetchy Water and Power System];
[Add recital describing any sub-series of Water Revenue Bonds issued simultaneously.] WHEREAS, the 2026 Series [B] Bonds [(and each sub-series thereof)] will be issued by the Commission under the Indenture payable on a parity with the other Outstanding Series of Bonds and any Parity State Loans;
WHEREAS, the conditions and limitations contained in the Law and the Indenture will be satisfied at the time of issuance of the 2026 Series [B] Bonds; WHEREAS, in order to provide for the issuance of the 2026 Series [B] Bonds, to establish and declare the terms and conditions upon which the 2026 Series [B] Bonds are to be issued and to secure the payment of the principal thereof, and premium, if any, and interest thereon, the Commission has authorized the execution and delivery of this Fifty-Fourth Supplemental Indenture; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Fifty-Fourth Supplemental Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Fifty-Fourth Supplemental Indenture; NOW, THEREFORE, the parties hereto agree, as follows:
DEFINITIONS
SECTION 230.01 Definitions. The terms defined in this section shall, for all purposes of this Fifty -Fourth Supplemental Indenture, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Terms defined in the Indenture not otherwise defined herein (including the preamble hereto) shall have the meanings specified therein.
Breakage Premium
The term “Breakage Premium” has the meaning given in Appendix A to this Fifty -Fourth Supplemental Indenture.
Daily Simple SOFR
The term “Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day, a “SOFR Determination Day”) that is five (5) U.S. Government Securities Business Days prior to (A) if such SOFR Rate Day is a U.S.
Government Securities Business Day, such SOFR Rate Day or (B) if such SOFR Rate Day is not 304962944.2 3
a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the [SOFR Administrator’s Website]; provided that if by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s Website, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; [provided further that SOFR as determined pursuant to this proviso shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days] and (b) the Floor. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Commission. [DTC
The term “DTC” means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, in its capacity as Securities Depository for the 2026 Series [B] Bonds.]
Floor
The term “Floor” means zero percent (0.00%).
[Maximum Rate
The term “Maximum Rate” means the lesser of (a) the maximum non-usurious interest rate that may, under applicable Federal law and applicable state law, be contracted for, charged or received under such laws and (b) 12% per annum.]
Purchaser
The term “Purchaser” means Wells Fargo Bank, N.A., as initial purchaser of the 2026 Series [B] Bonds. Subsequent transfers of the 2026 Series [B] Bonds shall not alter the meaning of the term “Purchaser.”
SOFR
The term “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
SOFR Administrator
The term “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). 304962944.2 4
SOFR Determination Day
The term “SOFR Determination Day” has the meaning specified in the definition of “Daily Simple SOFR”.
Stepped Rate
The term "Stepped Rate" means six percent ( 6.00%) per annum for the first 79 days following and including the Stepped Rate Adjustment Date and eight percent (8.00%) per annum thereafter.
Stepped Rate Adjustment Date
The term "Stepped Rate Adjustment Date" means [_____], 2027.
U.S. Government Securities Business Day
The term “U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. 2026 Series [B] Project
The term “2026 Series [B] Project” means [the reconstruction, replacement, expansion and repair of or improvements to the regional water system and local (in -city) water system of the Enterprise, including the Commission’s Water System Improvement Program and the reconstruction, replacement, expansion and repair of or improvements to the Water Enterprise - related infrastructure of the Hetch Hetchy Water and Power System], financed (including through the retirement of certain outstanding commercial paper notes) with proceeds of the 2026 Series [B] Bonds.
PROVISIONS RELATING TO 2026 SERIES [B] BONDS
SECTION 231.01 Authorization and Terms of 2026 Series [B] Bonds. Additional Bonds of the Commission in the aggregate principal amount of $[PAR] are hereby authorized to be issued under the Charter and the Law and pursuant to the Indenture. (a) Such Bonds are designated as the “San Francisco Water Revenue Bonds, 2026 Series [B] (________)”. The 2026 Series [B] Bonds are being issued to provide funds to pay costs of the 2026 Series [B] Project, to pay capitalized interest on the 2026 Series [B] Bonds and to pay costs of issuance of the 2026 Series [B] Bonds. Such purposes constitute purposes described in Section 3.04 of the Indenture. The aggregate principal amount of 2026 Series [B] Bonds that may be issued (except as may be otherwise provided in Section 2.08 of the Indenture) and Outstanding under this Fifty-Fourth Supplemental Indenture shall be $[PAR]. The 2026 Series [B] Bonds shall be of the tenor known as Current Interest Bonds.
304962944.2 5
The 2026 Series [B] Bonds shall be issued as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. The 2026 Series [B] Bonds shall be dated as of the date of delivery thereof, and shall accrue interest from such date.
The 2026 Series [B] Bonds shall be initially registered in the name of [the Purchaser]/[“Cede & Co.,” as nominee of DTC ], and shall be evidenced by one 2026 Series [B] Bond maturing on each maturity date in a denomination corresponding to the total principal designated to mature on such date. [ Registered ownership of the 2026 Series [B] Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 231.04 herein]. (b) The 2026 Series [B] Bonds shall mature on November 1, 20[__] in the principal amount of $[PAR].
(c) [FOR FIXED RATE:] [The 2026 Series [B] Bonds shall bear interest at the rate per annum of [____]% to but excluding the Stepped Rate Adjustment Date , and at the Stepped Rate thereafter. Interest shall be calculated on the basis of a 360 day year based upon the actual number of days elapsed.] / [FOR VARIABLE RATE:] [To but excluding the Stepped Rate Adjustment Date, the 2026 Series [B] Bonds shall bear interest on the outstanding principal amount thereof, for each day, at a rate per annum equal to the sum of (i) the product of (x) 0.80 and (y) Daily Simple SOFR and (ii) 0.0018, such sum rounded upward to the fifth decimal place (the “SOFR Rate”); provided the SOFR Rate shall not exceed the Maximum Rate; provided further the initial SOFR Rate shall be [____]% per annum. Except for the initial SOFR Rate , the applicable SOFR Rate shall be determined by the [Purchaser] on each SOFR Determination Day. From and after the Stepped Rate Adjustment Date , the 2026 Series [B] Bonds shall bear interest on the outstanding principal amount thereof at the Stepped Rate. Interest shall be calculated on the basis of a 360 day year based upon the actual number of days elapsed.]
(d) Interest on the 2026 Series [B] Bonds shall be payable on [insert Stepped Rate Adjustment Date], 2027, and semiannually thereafter on May 1 and November 1 in each year. (e) [Subject to Section 231.04 hereof, t][T]he principal of and premium, if any, on the 2026 Series [B] Bonds shall be payable by check or wire transfer (as described in the next paragraph) in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as the Trustee, or such other office designated by the Trustee.
The interest on the 2026 Series [B] Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Trustee as the Owner thereof as of the close of business on the 15
th day of the calendar month immediately preceding an interest payment date, whether or not such day is a Business Day, such interest to be paid by check mailed to such Owner at such address as appears on such registration books or at such address as such Owner may have filed with the Trustee f or that purpose, or at the request of an Owner of at least $1,000,000 in aggregate principal amount of 2026 Series [B] Bonds filed with the Trustee by such 15 th day, by wire transfer to such account designated in such request at a financial institution in the United States.
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(f) Each 2026 Series [B] Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16th day of the calendar month next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before [_____] 15, 20__, in which event it shall bear interest from [CLOSING DATE]; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee following such default.
(g) The 2026 Series [B] Bonds shall be subject to redemption as provided in Section 231.02.
(h) The Trustee shall assign each 2026 Series [B] Bond authenticated and registered by it a distinctive letter or number, or letter and number, and shall maintain a record thereof which shall be available to the Commission for inspection.
(i) There shall be no Required Reserve for the 2026 Series [B] Bonds. (j) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the 2026 Series [B] Bonds and has found, as a result of such review, that all conditions, things and acts required by law to exist, happen or be performed precedent to and in the issuance of the 2026 Series [B] Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is authorized, pursuant to each and every requirement of law, to issue the 2026 Series [B] Bonds in the manner and form provided in this Fifty-Fourth Supplemental Indenture.
SECTION 231.02 Terms of Redemption.
(a) Optional Redemption Prior to [First Optional Redemption Date], 2027. The 2026 Series [B] Bonds shall be subject to redemption on any date prior to [ First Optional Redemption Date], 2027, at the option of the Commission, from any source of available funds, as a whole or in part by lot, at a redemption price equal to 100% of the principal amount of the 2026 Series [B] Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, plus the Breakage Premium.
(b) Optional Redemption on or after [ First Optional Redemption Date ], 2027. The 2026 Series [B] Bonds shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part by lot, on any date on or after [First Optional Redemption Date ], 2027, at a redemption price equal to 100% of the principal amount of the 2026 Series [B] Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
(c) [Reserved].
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(d) Other Terms of Redemption. Except as otherwise provided herein, the provisions of the Indenture relating to redemption of Bonds set forth in Sections 4.02, 4.04, 4.05 and 4.06 shall apply to the redemption of the 2026 Series [B] Bonds. (e) Notice of Redemption. By acceptance of a 2026 Series [B] Bond, the holder thereof accepts the amendments described in this subsection . Section 4.03 of the Indenture shall not apply to the redemption of the 2026 Series [B] Bonds. Notice of redemption shall be mailed by the Trustee not less than five (5) Business Days nor more than sixty 60 days prior to the redemption date to the respective Owners of any 2026 Series [B] Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee. Each notice of redemption shall state the date of such notice, the 2026 Series [B] Bonds to be redeemed, the date of issue of 2026 Series [B] Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee) the CUSIP number, if any, of the maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the 2026 Series [B] Bonds of such maturity to be redeemed, and, in the case of 2026 Series [B] Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said 2026 Series [B] Bonds the principal amount thereof or of said specified portion of the principal amount thereof in the case of 2026 Series [B] Bonds to be redeemed in part only, together with interest accrued thereon to the redemption date, and the premium, if any, thereon (such premium to be specified) and that from and alter such redemption date interest thereon shall cease to accrue, and shall require that such 2026 Series [B] Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice.
The insufficiency of any such notices shall not affect the sufficiency of the proceedings for redemption. Neither failure by the Trustee to mail notice of redemption pursuant to this Section to any one or more of the respective Owners of any 2026 Series [B] Bonds designated for redemption nor any defect in such notice shall affect the sufficiency of the proceedings for redemption with respect to the Owners to whom such notice was mailed.
Notice of redemption of Bonds shall be given by the Commission or at the request of the Commission by the Trustee for and on behalf and at the expense of the Commission SECTION 231.03 Form of 2026 Series [B] Bonds. The 2026 Series [B] Bonds and the Trustee’s certificates of authentication and registration and the form of assignment to appear thereon shall be in substantially the form set forth as Exhibit BE to this Fifty-Fourth Supplemental Indenture, with necessary or appropriate variations, omissions and insertions as permitted or required by this Fifty-Fourth Supplemental Indenture.
Pursuant to Section 3.06 and 9.01(b) of the Indenture, execution of the 2026 Series [B] Bonds does not require the seal of the Commission.
SECTION 231.04 [Use of Depository].
(a) The 2026 Series [B] Bonds shall be initially registered as provided in Section 231.01 hereof. Registered ownership of the 2026 Series [B] Bonds, or any portions thereof, may not thereafter be transferred except:
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(i) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (ii) of this subsection (a) (a “ Substitute Depository” ); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any Substitute Depository not objected to by the Trustee, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or
(iii) to any person as provided below, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Commission to remove DTC or its successor (or Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) of this Section, upon receipt of all Outstanding 2026 Series [B] Bonds by the Trustee, together with a Written Request of the Commission to the Trustee designating the Substitute Depository, a single new 2026 Series [B] Bond, which the Commission shall prepare or cause to be prepared, shall be executed and delivered for each maturity of 2026 Series [B] Bonds then Outstanding, registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Written Request of the Commission. (c) In the case of any transfer pursuant to clause (iii) of subsection (a) of this Section, upon receipt of all Outstanding 2026 Series [B] Bonds by the Trustee, together with a Written Request of the Commission to the Trustee, new 2026 Series [B] Bonds, which the Commission shall prepare or cause to be prepared in definitive form, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such Written Request of the Commission, subject to the limitations of Section 231.01 hereof, provided that the Trustee shall not be required to deliver such new 2026 Series [B] Bonds within a period less than 60 days after the date of receipt of such Written Request from the Commission. (d) In the case of a partial redemption or an advance refunding of any 2026 Series [B] Bonds evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such 2026 Series [B] Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. The Trustee shall not be liable for such Securities Depository’ s (or any Substitute Depository’s) failure to make such notations or errors in making such notations. (e) The Commission and the Trustee shall be entitled to treat the person in whose name any 2026 Series [B] Bond is registered as the Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee shall not have responsibility for t ransmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the 2026 Series [B] Bonds. Neither the Commission nor the Trustee shall have any responsibility 304962944.2 9
or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any 2026 Series [B] Bonds, and the Trustee may rely conclusively on its records as to the identity of the Owners of the 2026 Series [B] Bonds.
(f) Notwithstanding any other provision of this Fifty -Fourth Supplemental Indenture and so long as all Outstanding 2026 Series [B] Bonds are registered in the name of Cede & Co. or its registered assigns, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondowner, and its registered assigns, in effecting payment of the principal of and redemption premium, if any, and interest on the 2026 Series [B] Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made available on the date they are due all in accordance with the letter of representations delivered by the Commission and the Trustee to DTC with respect to the 2026 Series [B] Bonds, the provisions of which the Trustee may rely upon to implement the foregoing procedures notwithstanding any inconsistent provisions herein.
SECTION 231.05 Issuance of 2026 Series [B] Bonds. At any time after the execution of this Fifty-Fourth Supplemental Indenture, the Commission may execute and the Trustee may authenticate and, upon a Written Request or Certificate of the Commission, deliver 2026 Series [B] Bonds in the aggregate principal amount of $[PAR] to the P urchaser as specified in such Written Request or Certificate.
SECTION 231.06 Application of Proceeds of 2026 Series [B] Bonds. (a) On the date of issuance and delivery of the 2026 Series [B] Bonds , the Purchaser of the 2026 Series [B] Bonds will pay and deliver the purchase price of the 2026 Series [B] Bonds equal to $[PURCHASE PRICE] to the Trustee , who shall deposit and transfer this amount as follows::
1. The Trustee shall deposit $[COI] in a separate fund to be known as the “2026 Series [B] Costs of Issuance Fund,” which the Trustee hereby agrees to establish and maintain.
2. The Trustee shall transfer $ [____] to the Treasurer for deposit to the 2026 Series [B] Project Fund established under Section 231.07. The Trustee shall transfer the remaining balance, being $_______, to U.S. Bank Trust Company, National Association, as issuing and paying agent for the commercial paper notes of the Enterprise, to retire a portion of such commercial paper notes.
(b) Before any payment is made by the Trustee to pay costs of issuance from the 2026 Series [B] Costs of Issuance Fund, the Commission shall cause to be filed with the Trustee a Written Requisition of the Commission showing with respect to each payment to be made:
1. the item number of the payment;
2. the name and address of the person to whom payment is due;
3. the amount to be paid; and
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4. the purpose for which the obligation to be paid was incurred.
Each such Written Requisition shall state, and shall be sufficient evidence to the Trustee:
(y) that obligations in the stated amounts have been incurred by the Commission and that each item thereof is a proper charge; and (z) that there has not been filed with or served upon the Commission notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with the payment of such obligation.
Upon receipt of each such Written Requisition, the Trustee will pay the amounts set forth in such Written Requisition as directed by the terms hereof. The Trustee need not make any such payment if it has received notice of any lien, right to lien or attac hment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously with such payment.
When all costs of issuance of the 2026 Series [B] Bonds have been paid, the Commission shall deliver a Certificate of the Commission stating such fact to the Trustee (as described in clause (c) below).
(c) The money in the 2026 Series [B] Costs of Issuance Fund shall be used and disbursed in the manner provided herein and therein for the purpose of paying all costs of issuance incidental to or connected with the issuance of the 2026 Series [B] Bonds (or for making reimbursements to the Commission or any other person, firm or corporation for such costs theretofore paid by such person or it).
Any balance of money remaining in the 2026 Series [B] Costs of Issuance Fund after the payment of all costs incidental to or connected with the issuance of the 2026 Series [B] Bonds (as certified to the Trustee by the Commission pursuant to the final paragraph of clause (b) above) or on ___________, 20__, whichever is earlier, shall be transferred by the Trustee to the Commission and the 2026 Series [B] Costs of Issuance Fund shall be closed.
SECTION 231.07 Establishment and Application of the 2026 Series [B] Project Fund. (a) The Commission hereby covenants and agrees to establish, maintain and hold hereunder within the Improvement Fund established under Section 3.03 of the Indenture, a separate account known as the “2026 Series [B] Project Fund” (herein called the “2026 Series [B] Project Fund”).
(b) The Treasurer shall hold the amounts on deposit in the 2026 Series [B] Project Fund, which shall be maintained and accounted for by the Controller so long as any moneys are on deposit therein. Upon completion of the 2026 Series [B] Project, the Commission may direct the transfer of any remaining balance in the 2026 Series [B] Project Fund to any other lawfully available fund or account of the Commission; provided such transfer is consistent with the Commission’s covenants in the Tax Certificate (as defined in Section 231.09 herein). 304962944.2 11
(c) The moneys in the 2026 Series [B] Project Fund shall be held by the Treasurer in trust and applied to the costs of the 2026 Series [B] Project and the expenses incident thereto or connected therewith, including, if necessary, interest to the extent permitted by law, reimbursement to the Commission for expenses incident thereto or connected therewith incurred prior to the issuance of the 2026 Series [B] Bonds or in connection therewith, including architectural, engineering and inspection fees and expenses, apparatus, equipment and furnishings, testing and inspection, surveys, insurance premiums, losses during construction not insured against because of deductible amounts, the fees and expenses of the Trustee, legal, accounting and consultant fees and expenses, and similar expenses.
(d) All moneys held by the Treasurer in the 2026 Series [B] Project Fund may be invested in Legal Investments maturing not later than the date on which such moneys are required for payment by the Treasurer. The Treasurer shall pay out moneys from the 2026 Series [B] Project Fund only upon warrants drawn by the Controller in the manner provided by law. No withdrawals shall be made from the 2026 Series [B] Project Fund for any purpose not authorized by law.
SECTION 231.08 [Reserved].
SECTION 231.09 Establishment and Application of the 2026 Series [B] Rebate Fund. (a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder to be known as the “ 2026 Series [B] Rebate Fund” (for purposes of this Article, the “Rebate Fund”). Within the Rebate Fund, the Trustee shall maintain such accounts as it is instructed by the Commission as necessary in order to comply with the terms and requirements of the Tax Certificate with respect to the 2026 Series [B] Bonds, dated the date of issuance of the 2026 Series [B] Bonds (for purposes of this Article, the “Tax Certificate”).
Subject to the transfer provisions provided in paragraph (e) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee for the account of the Commission in trust, to the extent required to satisfy the requirements for rebate, as set forth in the Tax Certificate (for purposes of this Article, the “ Rebate Requirement”), for payment to the federal government of the United States of America, and no other person shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 231.10 hereof and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions and fulfilled its obligation with respect to rebate as long as it follows the written directions of the Commission, including supplying all necessary information in the manner provided in the Tax Certificate. The Trustee shall not be required to take any actions under this Section, Section 231.10 hereof or the Tax Certificate in the absence of written directions by the Commission, and shall have no liability or responsibility to enforce compliance by the Commission with the terms of the Tax Certificate nor make computations in connection therewith. (b) Upon the Commission’s written direction, an amount shall be deposited in the Rebate Fund by the Trustee from deposits by the Commission so that the balance of the amount on deposit therein equals the Rebate Requirement. Computations of the Rebate Requirement shall be furnished by or on behalf of the Commission in accordance with the Tax Certificate. 304962944.2 12
The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this Section, other than from moneys held in the funds and accounts created under the Indenture or from other moneys provided to it by or on behalf of the Commission. (c) The Trustee shall invest all amounts held in the Rebate Fund in Permitted Investments as instructed in writing by the Commission, subject to the restrictions set forth in the Tax Certificate. Moneys shall not be transferred from the Rebate Fund except as provided in paragraph (e) below.
Upon receipt of the Commission’s written directions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States, as so directed. In addition, if the Commission so directs, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed by the Commission’s written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the 2026 Series [B] Bonds and payment and satisfaction of any Rebate Requirement shall be withdrawn and remitted to the Commission upon the Commission’s written request.
(d) Notwithstanding any other provision of the Indenture, the obligation to remit the Rebate Requirement to the United States and to comply with all other requirements of this Section, Section 231.10 hereof and the Tax Certificate shall survive the defeasance or payment in full of the 2026 Series [B] Bonds.
SECTION 231.10 Tax Covenants.
The Commission covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the 2026 Series [B] Bonds under Section 103 of the Code.
The Commission will not directly or indirectly use or permit the use of any proceeds of the 2026 Series [B] Bonds or any other funds of the Commission, or take or omit to take any action that would cause the 2026 Series [B] Bonds to be “ arbitrage bonds ” within the meaning of Section 148(a) of the Code. To that end, the Commission will comply with all requirements of Section 148 of the Code to the extent applicable to the 2026 Series [B] Bonds. If at any time the Commission is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Indenture or otherwise, the Commission shall so instruct the T rustee in writing, and the Trustee shall take such action as required by such instructions.
Without limiting the generality of the foregoing, the Commission agrees that there shall be paid from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applied to the 2026 Series [B] Bonds from time to time. This covenant shall survive payment in full or defeasance of the 2026 Series [B] Bonds. The Commission specifically covenants to pay or cause to be paid to the United States, at the times and in the amounts determined, the Rebate Requirement. The Trustee agrees to comply with all written instructions of the Commission given in accordance with the Tax Certificate.
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Notwithstanding any provision of this Section and Section 231.09 hereof, if the Commission provides to the Trustee an opinion of nationally recognized bond counsel to the effect that any action required under this Section and Section 231.09 hereof or under the Tax Certificate is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the 2026 Series [B] Bonds under Section 103 of the Code, the Commission and the Trustee may re ly conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent.
The Commission shall assure that the proceeds of the 2026 Series [B] Bonds are not so used as to cause the 2026 Series [B] Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.
The Commission shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2026 Series [B] Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
SECTION 231.11 Continuing Disclosure.
The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate, dated as of the date of issuance of the 2026 Series [B] Bonds, executed and delivered by the Commission in connection with the issuance of the 2026 Series [B] Bonds, as it may be supplemented and amended in accordance with its terms (the “2026 Series [B] Continuing Disclosure Certificate”). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the 2026 Series [B] Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Bondowner or beneficial owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Commis sion to comply with its obligations under this Section, and the sole remedy in the event of any failure of the Commission to comply with the 2026 Series [B] Continuing Disclosure Certificate shall be an action to compel performance.
MISCELLANEOUS
SECTION 232.01 Terms of 2026 Series [B] Bonds Subject to the Indenture.
Except as expressly provided in this Fifty-Fourth Supplemental Indenture, every term and condition contained in the Indenture shall apply to this Fifty -Fourth Supplemental Indenture, and to the 2026 Series [B] Bonds, with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Fifty-Fourth Supplemental Indenture.
This Fifty-Fourth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. Except as expressly amended by Article CLX XXVII in the Forty-Third Supplemental Indenture, the Indenture is hereby ratified and confirmed and shall 304962944.2 14
continue in full force and effect in accordance with the terms and provisions thereof. The amendments set forth in Article CLXXXVII in the Forty -Third Supplemental Indenture shall be incorporated as part of the Indenture upon their effectiveness as set forth in Section 187.01 in the Forty-Third Supplemental Indenture.
This Fifty-Fourth Supplemental Indenture and all the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. T he Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof , as supplemented and amended hereby.
SECTION 232.02 Effective Date of Fifty-Fourth Supplemental Indenture. This Fifty- Fourth Supplemental Indenture shall take effect upon its execution and delivery.
SECTION 232.03 Holder Consents to Amendments in Forty- Third Supplemental Indenture. By acceptance of a 2026 Series [B] Bond, the holder thereof consents to the amendments described in Article CLXXXVII in the Forty-Third Supplemental Indenture.
SECTION 232.04 Execution in Counterparts; No Seal Required for Execution. This Fifty-Fourth Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. No seal of the Commission is required for the execution of this Fifty-Fourth Supplemental Indenture.
ADDITIONAL CITY REQUIREMENTS
As used in this Article, “Agreement” means the Indenture.
To the extent of any inconsistency between the provisions in this Article and the provisions in prior Articles of this Indenture entitled “City Requirements” or “Additional City Requirements,” the provisions of this Article shall control.
SECTION 233.01 Conflict of Interest . Through its execution of this Fifty -Fourth Supplemental Indenture, the Trustee acknowledges that it is familiar with the provisions of Section 15.103 of the City’s Charter, Article III, Chapter 2 of City’s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California, and certifies that it does not know of any facts which constitute a violation of said provision and agrees that it will immediately notify the City if it becomes aware of any such fact during the term of this Fifty-Fourth Supplemental Indenture.
SECTION 233.02 Proprietary or Confidential Information of the City. The Trustee understands and agrees that, in the performance of the work or services under this Fifty -Fourth Supplemental Indenture or in contemplation thereof, the Trustee may have access to private or confidential information which may be owned or controlled by the City and that such information may contain proprietary or confidential details, the disclosure of which to third partie s may be damaging to the City. The Trustee agrees that all information disclosed by City to the Trustee shall be held in confidence and used only in the performance of this Fifty -Fourth Supplemental 304962944.2 15
Indenture. The Trustee shall exercise the same standard of care to protect such information as a reasonably prudent contractor would use to protect its own proprietary data.
SECTION 233.03 Local Business Enterprise Utilization; Liquidated Damages. (a) The LBE Ordinance
The Trustee shall comply with all the requirements of the Local Business Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the “LBE Ordinance”), provided such amendments do not materially increase the Trustee ’s obligations or liabilities, or materially diminish the Trustee ’s rights, under this Fifty -Fourth Supplemental Indenture. Such provisions of the LBE Ordinance are incorporated by reference and made a part of this Fifty-Fourth Supplemental Indenture as though fully set forth in this Section. The Trustee’s willful failure to comply with any applicable provisions of the LBE Ordinance is a material breach of the Trustee’s obligations under this Fifty-Fourth Supplemental Indenture and shall entitle City, subject to any applicable notice and cure provisions set forth in this Fifty -Fourth Supplemental Indenture, to exercise any of the remedies provided for under this Fifty -Fourth Supplemental Indenture, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Fifty -Fourth Supplemental Indenture expressly provides that any remedy is exclusive. In addition, the Trustee shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting.
(b) Enforcement
If the Trustee willfully fails to comply with any of the provisions of the LBE Ordinance, the rules and regulations implementing the LBE Ordinance, or the provisions of this Fifty -Fourth Supplemental Indenture pertaining to LBE participation, the Trustee shall be liable for liquidated damages in an amount equal to the Trustee ’s net profit on this Fifty-Fourth Supplemental Indenture, or 10% of the total amount of this Fifty -Fourth Supplemental Indenture, or $1,000, whichever is greatest. The Director of the City’s Contracts Monitoring Division or any other public official authorized to enforce the LBE Ordinance (separately and collectively, the “Director of CMD”) may also impose other sanctions against the Trustee authorized in the LBE Ordinance, including declaring the Trustee to be irresponsible and ineligible to contract with the City for a period of up to five years or revocation of the Trustee’s LBE certification. The Director of CMD will determine the sanctions to be imposed, including the amount of li quidated damages, after investigation pursuant to Administrative Code §14B.17.
By entering into this Fifty-Fourth Supplemental Indenture, the Trustee acknowledges and agrees that any liquidated damages assessed by the Director of the CMD shall be payable to City upon demand. The Trustee further acknowledges and agrees that any liquidated damages assessed may be withheld from any monies due to the Trustee on any contract with City.
The Trustee agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three years following termination or expiration of this Fifty-Fourth 304962944.2 16
Supplemental Indenture, and shall make such records available for audit and inspection by the Director of CMD or the Controller upon request.
SECTION 233.04 Nondiscrimination; Penalties.
(a) Trustee Shall Not Discriminate
In the performance of this Fifty-Fourth Supplemental Indenture, the Trustee agrees not to discriminate against any employee, City and County employee working with the Trustee or subcontractor, applicant for employment with the Trustee or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, o r membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person’s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. (b) Subcontracts
The Trustee shall incorporate by reference in all subcontracts the provisions of §§12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code (copies of which are available from Purchasing) and shall require all subcontractors to comply wit h such provisions. The Trustee’s failure to comply with the obligations in this subsection shall constitute a material breach of this Fifty-Fourth Supplemental Indenture.
(c) Nondiscrimination in Benefits
The Trustee does not as of the date of this Fifty-Fourth Supplemental Indenture and will not during the term of this Fifty -Fourth Supplemental Indenture, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the City elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, m embership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in §12B.2(b) of the San Francisco Administrative Code. (d) Condition to Contract
As a condition to this Fifty-Fourth Supplemental Indenture, the Trustee shall execute the “Chapter 12B Declaration: Nondiscrimination in Contracts and Benefits” form (Form CMD-12B- 101) with supporting documentation and secure the approval of the form by the San Francisco Contracts Monitoring Division (formerly ‘Human Rights Commission’). 304962944.2 17
(e) Incorporation of Administrative Code Provisions by Reference The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section by reference and made a part of this Fifty -Fourth Supplemental Indenture as though fully set forth herein. The Trustee shall comply fully with and be bound by all of the provisions that apply to this Fifty -Fourth Supplemental Indenture under such Chapters, including but not limited to the remedies provided in such Chapters. Without limiting the foregoing, the Trustee understands that pursuant to §§12B.2(h) and 12C.3(g) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Fifty -Fourth Supplemental Indenture may be assessed against the Trustee and/or deducted from any payments due the Trustee.
SECTION 233.05 MacBride Principles—Northern Ireland. Pursuant to San Francisco Administrative Code §12F.5, the City and County of San Francisco urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City and County of San Francisco urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Fifty -Fourth Supplemental Indenture on behalf of the Trustee acknowledges and agrees that he or she has read and understood this Section.
SECTION 233.06 Tropical Hardwood and Virgin Redwood Ban. Pursuant to §804(b) of the San Francisco Environment Code, the City and County of San Francisco urges contractors not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood wood product, virgin redwood or virgin redwood wood product.
SECTION 233.07 Drug-Free Workplace Policy . The Trustee acknowledges that pursuant to the Federal Drug-Free Workplace Act of 1989, the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on City premises. The Trustee agrees that any violation of this prohibition by the Trustee, its employees, agents or assigns will be deemed a material breach of this Fifty-Fourth Supplemental Indenture.
SECTION 233.08 Resource Conservation. Chapter 5 of the San Francisco Environment Code (“Resource Conservation”) is incorporated herein by reference. Failure by the Trustee to comply with any of the applicable requirements of Chapter 5 will be deemed a material breach of this Fifty-Fourth Supplemental Indenture.
SECTION 233.09 Compliance with Americans with Disabilities Act. The Trustee acknowledges that, pursuant to the Americans with Disabilities Act (ADA), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. The Trustee shall provide the services specified in this Fifty-Fourth Supplemental Indenture in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. The Trustee agrees not to discri minate against disabled persons in the provision of services, benefits or activities provided under this Fifty-Fourth Supplemental Indenture and further agrees that any violation of this prohibition on the part of the Trustee, its employees, agents or assigns will constitute a material breach of this Fifty-Fourth Supplemental Indenture.
304962944.2 18
SECTION 233.10 Sunshine Ordinance . In accordance with San Francisco Administrative Code §67.24(e), contracts, contractors’ bids, responses to solicitations and all other records of communications between City and persons or firms seeking contracts, shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person or organization’ s net worth or other proprietary financial data submitted for qualification for a contract or other benefit until and unless that per son or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request.
SECTION 233.11 Limitations on Contributions . Through execution of this Fifty - Fourth Supplemental Indenture, the Trustee acknowledges that it is familiar with Section 1.126 of the City’s Campaign and Governmental Conduct Code, which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (1) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (2) a candidate for the office held by such individual, or (3) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six months after the date the contract is approved. The Trustee acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. The Trustee further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of the Trustee ’s board of directors; the Trustee ’s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in the Trustee; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by the Trustee. Additionally, the Trustee acknowledges that the Trustee must inform each of the pers ons described in the preceding sentence of the prohibitions contained in Section 1.126. The Trustee further agrees to provide to the City the names of each person, entity or committee described above.
SECTION 233.12 Requiring Minimum Compensation for Covered Employees. (a) The Trustee agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (MCO), as set forth in San Francisco Administrative Code Chapter 12P (Chapter 12P), including the remedies provided, and implementing guidelines and rules. The provisions of Section 12P.5 and 12P.5.1 of Chapter 12P are incorporated herein by reference and made a part of this Fifty -Fourth Supplemental Indenture as though fully set forth.
The text of the MCO is available on the web at www.sfgov.org/olse/mco. A partial listing of some of the Trustee’s obligations under the MCO is set forth in this Section. The Trustee is required to comply with all the provisions of the MCO, irrespective of the listing of obligations in this Section. (b) The MCO requires the Trustee to pay the Trustee ’s employees a minimum hourly gross compensation wage rate and to provide minimum compensated and uncompensated time off.
The minimum wage rate may change from year to year and the Trustee is obligated to keep informed of the then -current requirements. Any subcontract entered into by the Trustee shall require the subcontractor to comply with the requirements of the MCO and shall contain 304962944.2 19
contractual obligations substantially the same as those set forth in this Section. It is the Trustee’s obligation to ensure that any subcontractors of any tier under this Fifty -Fourth Supplemental Indenture comply with the requirements of the MCO. If any subcontractor under this Fifty-Fourth Supplemental Indenture fails to comply, the City may pursue any of the remedies set forth in this Section against the Trustee.
(c) The Trustee shall not take adverse action or otherwise discriminate against an employee or other person for the exercise or attempted exercise of rights under the MCO. Such actions, if taken within 90 days of the exercise or attempted exercise of such rights, will be rebuttably presumed to be retaliation prohibited by the MCO. (d) The Trustee shall maintain employee and payroll records as required by the MCO.
If the Trustee fails to do so, it shall be presumed that the Trustee paid no more than the minimum wage required under State law.
(e) The City is authorized to inspect the Trustee’s job sites and conduct interviews with employees and conduct audits of the Trustee.
(f) The Trustee’s commitment to provide the Minimum Compensation is a material element of the City’s consideration for this Fifty-Fourth Supplemental Indenture. The City in its sole discretion shall determine whether such a breach has occurred. The City and the public will suffer actual damage that will be impractical or extremely difficult to determine if the Trustee fails to comply with these requirements. The Trustee agrees that the sums set forth in Section 12P.6.1 of the MCO as liquidated damages are not a penalty, but are reasonable estimates of the loss that the City and the public will incur for the Trustee’s noncompliance. The procedures governing the assessment of liquidated damages shall be those set forth in Section 12P.6.2 of Chapter 12P. (g) The Trustee understands and agrees that if it fails to comply with the requirements of the MCO, the City shall have the right to pursue any rights or remedies available under Chapter 12P (including liquidated damages), under the terms of this Fifty -Fourth Supplemental Indenture, and under applicable law. If, within 30 days after receiving written notice of a breach of this Fifty-Fourth Supplemental Indenture for violating the MCO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under applicable law, including those set forth in Section 12P.6(c) of Chapter 12P. Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(h) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the MCO. (i) The City may conduct random audits of the Trustee. Random audits shall be (i) noticed in advance in writing; (ii) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by the MCO; (iii) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten days of the written notice; and (iv) limited to one audit of the Trustee every two years for the duration of 304962944.2 20
this Fifty-Fourth Supplemental Indenture. Nothing in this Fifty-Fourth Supplemental Indenture is intended to preclude the City from investigating any report of an alleged violation of the MCO.
SECTION 233.13 Requiring Health Benefits for Covered Employees. Unless exempt, the Trustee agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (HCAO), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of Section 12Q.5.1 of Chapter 12Q are incorporated by reference and made a part of this Fifty-Fourth Supplemental Indenture as though fully set forth herein. The text of the HCAO is available on the web at www.sfgov.org/olse. Capitalized terms used in this Section and not defined in this Fifty -Fourth Supplemental Indenture shall have the meanings assigned to such terms in Chapter 12Q.
(a) For each Covered Employee, the Trustee shall provide the appropriate health benefit set forth in Section 12Q.3 of the HCAO. If the Trustee chooses to offer the health plan option, such health plan shall meet the minimum standards set forth by the San Francisco Health Commission.
(b) Notwithstanding the above, if the Trustee is a small business as defined in Section 12Q.3(e) of the HCAO, it shall have no obligation to comply with part (a) above. (c) The Trustee’s failure to comply with the HCAO shall constitute a material breach of this Fifty-Fourth Supplemental Indenture. The City shall notify the Trustee if such a breach has occurred. If, within 30 days after receiving the City’ s written notice of a breach of this Fifty - Fourth Supplemental Indenture for violating the HCAO, the Trustee fails to cure such breach or, if such breach cannot reasonably be cured within such period of 30 days, the Trustee fails to commence efforts to cure within such period, or therea fter fails diligently to pursue such cure to completion, the City shall have the right to pursue the remedies set forth in 12Q.5.1 and 12Q.(f)(1-6). Each of these remedies shall be exercisable individually or in combination with any other rights or remedies available to the City.
(d) Any Subcontract entered into by the Trustee shall require the Subcontractor to comply with the requirements of the HCAO and shall contain contractual obligations substantially the same as those set forth in this Section. The Trustee shall notify City ’s Office of Contract Administration when it enters into such a Subcontract and shall certify to the Office of Contract Administration that it has notified the Subcontractor of the obligations under the HCAO and has imposed the requirements of the HCAO on S ubcontractor through the Subcontract. The Trustee shall be responsible for its Subcontractors’ compliance with Chapter 12Q. If a Subcontractor fails to comply, the City may pursue the remedies set forth in this Section against the Trustee based on the Subcontractor’s failure to comply, provided that the City has first provided the Trustee with notice and an opportunity to obtain a cure of the violation. (e) The Trustee shall not discharge, reduce in compensation, or otherwise discriminate against any employee for notifying the City with regard to the Trustee ’s noncompliance or anticipated noncompliance with the requirements of the HCAO, for opposing any practice proscribed by the HCAO, for participating in proceedings related to the HCAO, or for seeking to assert or enforce any rights under the HCAO by any lawful means. 304962944.2 21
(f) The Trustee represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of the HCAO. (g) The Trustee shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders, including the number of hours each employee has worked on this Fifty-Fourth Supplemental Indenture. (h) The Trustee shall keep itself informed of the current requirements of the HCAO. (i) The Trustee shall provide reports to the City in accordance with any reporting standards promulgated by the City under the HCAO, including reports on Subcontractors and Subtenants, as applicable.
(j) The Trustee shall provide the City with access to records pertaining to compliance with HCAO after receiving a written request from the City to do so and being provided at least ten business days to respond.
(k) The Trustee shall allow the City to inspect the Trustee ’s job sites and have access to the Trustee’s employees in order to monitor and determine compliance with HCAO. (l) The City may conduct random audits of the Trustee to ascertain its compliance with HCAO. The Trustee agrees to cooperate with the City when it conducts such audits. (m) If the Trustee is exempt from the HCAO when this Fifty -Fourth Supplemental Indenture is executed because its fees hereunder are in an amount that is less than $25,000 ($50,000 for nonprofits), but the Trustee later enters into an agreement or agreements that cause the Trustee’s aggregate amount of all agreements with the City to reach $75,000, all the agreements shall be thereafter subject to the HCAO. This obligation arises on the effective date of the agreement that causes the cumulative amount of fees f rom agreements between the Trustee and the City to be equal to or greater than $75,000 in the fiscal year.
SECTION 233.14 Prohibition on Political Activity with City Funds . In accordance with San Francisco Administrative Code Chapter 12.G, the Trustee may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, “Political Activity ”) in the performance of the services provided under this Fifty -Fourth Supplemental Indenture. The Trustee agrees to comply with San Francisco Administrative Code Chapter 12.G and any implementing rules and regulations promulgated by the City’ s Controller.
The terms and provisions of Chapter 12.G are incorporated herein by this reference. In the event the Trustee violates the provisions of this Section, the City may, in addition to any other rights or remedies available hereunder, (i) terminate this Fifty -Fourth Supplemental Indenture, and (ii) prohibit the Trustee from bidding on or receiving any new City contract for a period of two (2) years. The Controller will not consider the Trustee’s use of profit as a violation of this Section.
SECTION 233.15 Preservative-treated Wood Containing Arsenic . The Trustee may not purchase preservative -treated wood products containing arsenic in the performance of this Fifty-Fourth Supplemental Indenture unless an exemption from the requirements of Chapter 13 of the San Francisco Environment Code is obtained from the Department of the Environment under Section 1304 of the Environment Code. The term “preservative-treated wood containing arsenic” 304962944.2 22
shall mean wood treated with a preservative that contains arsenic, elemental arsenic, or an arsenic copper combination, including, but not limited to, chromated copper arsenate preservative, ammoniacal copper zinc arsenate preservative, or ammoniacal copper arsenate preservative. The Trustee may purchase preservative-treated wood products on the list of environmentally preferable alternatives prepared and adopted by the Department of the Environment. This provision does not preclude the Trustee from purch asing preservative-treated wood containing arsenic for saltwater immersion. The term “ saltwater immersion” shall mean a pressure-treated wood that is used for construction purposes or facilities that are partially or totally immersed in saltwater.
SECTION 233.16 Compliance with Laws. The Trustee shall keep itself fully informed of the City ’s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Fifty -Fourth Supplemental Indenture, and must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time.
SECTION 233.17 Protection of Private Information. The Trustee has read and agrees to the terms set forth in San Francisco Administrative Code Section 12M.2, “Nondisclosure of Private Information, ” and 12M.3, “ Enforcement,” and in Administrative Code Chapter 12M, “Protection of Private Information,” which are incorporated herein as if fully set forth. The Trustee agrees that any failure of the Trustee to comply with the requirements of Section 12M.2 of Chapter 12M shall be a material breach of this Fifty -Fourth Supplemental Indenture. In such an event, in addition to any other remedies available to it under equity or law, the City may terminate this Fifty-Fourth Supplemental Indenture, bring a false claim action against the Trustee pursuant to Chapter 6 or Chapter 21 of the Administrative Code, or debar the Trustee.
SECTION 233.18 Food Service Waste Reduction Requirements . The Trustee agrees to comply fully with and be bound by all of the provisions of the Food Service Waste Reduction Ordinance, as set forth in San Francisco Environment Code Chapter 16, including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 16 are incorporated by reference and made a part of this Fifty-Fourth Supplemental Indenture as though fully set forth herein. This provision is a material term of this Fifty-Fourth Supplemental Indenture. By entering into this Fifty-Fourth Supplemental Indenture, the Trustee agrees that if it breaches this provision, the City will suffer actual damages that will be impractical or extremely difficult to determine; further, the Trustee agrees that the sum of one hundred dollars ($100) liquidated damages for the first breach, two hundred dollars ($200) liquidated damages for the second breach in the same year, and five hundred dollars ($500) liquidated damages for subsequent breaches in the same year is reasonable estimate of the damage that the City will incur based on the violation, established in light of the circumstances existing at the time this Fifty-Fourth Supplemental Indenture was made.
Such amount shall not be considered a penalty, but rather agreed monetary damages sustained by the City because of the Trustee’s failure to comply with this provision.
SECTION 233.19 Submitting False Claims; Monetary Penalties . Pursuant to San Francisco Administrative Code §21.35, any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in that Section. A contractor, subcontractor or consultant who submits a false claim shall also be liable to the City for the costs, including attorneys’ fees, of a civil action brought to recover any of those penalties or damages, and may be liable to the City for a civil penalty of up to $10,000 for each false claim. 304962944.2 23
A contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the City a false claim or req uest for payment or approval; (b) knowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the City; (c) conspires to defraud the City by getting a false claim allowed or paid by the City; (d) knowingly makes, uses, or causes to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the City; or (e) is a beneficiary of an inadvertent submission of a false claim to the Cit y, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the City within a reasonable time after discovery of the false claim.
SECTION 233.20 Sugar-Sweetened Beverage Prohibition. The Trustee agrees that it will not sell, provide, or otherwise distribute Sugar -Sweetened Beverages, as defined by San Francisco Administrative Code Chapter 101, as part of its performance of this Fifty -Fourth Supplemental Indenture.
SECTION 233.21 Agreement Made in California; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco.
SECTION 233.22 Ownership of Results . Any interest of the Trustee or its Subcontractors in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by the Trustee or its subcontractors in connection with services to be performed under this Fifty -Fourth Supplemental Indenture shall become the property of and will be transmitted to the City. However, the Trustee may retain and use copies for reference and as documentation of its experience and capabilities.
SECTION 233.23 Audit and Inspection of Records . The Trustee agrees to maintain and make available to the City, during regular business hours, accurate books and accounting records relating to its work under this Fifty-Fourth Supplemental Indenture. The Trustee will permit the City to audit, examine and make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Fifty-Fourth Supplemental Indenture, whether funded in whole or in part under this Fifty -Fourth Supplemental Indenture. The Trustee shall maintain such data and records in an accessible location and condition for a period of not less than three years after final payment under this Fifty -Fourth Supplemental Indenture or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Fifty-Fourth Supplemental Indenture shall have the same rights conferred upon the City by this Section.
SECTION 233.24 Subcontracting. The Trustee is prohibited from subcontracting this Fifty-Fourth Supplemental Indenture or any part of it unless such subcontracting is first approved by the City in writing. Neither party shall, on the basis of this Fifty -Fourth Supplemental Indenture, contract on behalf of or in the name of the other party. An agreement made in violation of this provision shall confer no rights on any party and shall be null and void. 304962944.2 24
SECTION 233.25 Assignment. The services to be performed by Trustee are personal in character and neither this Fifty -Fourth Supplemental Indenture nor any duties or obligations hereunder may be assigned or delegated by the Trustee unless first approved by the City by written instrument executed and approved in the same manner as this Fifty -Fourth Supplemental Indenture.
SECTION 233.26 Non-Waiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter.
SECTION 233.27 City a Third Party Beneficiary. The City is hereby designated as a third party beneficiary for the purpose of enforcing all of the obligations of the Trustee contained in this Article of this Fifty-Fourth Supplemental Indenture and to the extent that any other rights are given to the City hereunder.
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304962944.2 S-1
IN WITNESS WHEREOF, the parties hereto have executed this Fifty -Fourth Supplemental Indenture by their officers thereunto duly authorized as of the date and year first written above.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By: ______________________________________
Vice President
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ______________________________________
General Manager
ATTEST:
____________________________________
Secretary of the Public Utilities
Commission of the City and County
of San Francisco
Approved as to form:
David Chiu, City Attorney
By: ________________________________
Sheryl L. Bregman,
Deputy City Attorney
304962944.2 BE-1
EXHIBIT BE
FORM OF 2026 SERIES [B] BOND
Unless this bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ( “DTC”), to the Commission or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
$______________ No. R-______
State of California
City and County of San Francisco
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
SAN FRANCISCO WATER REVENUE BOND
2026 SERIES [B]
(_______)
Dated Date Interest Rate Maturity Date CUSIP No.
[CLOSING DATE] Variable November 1, 20__
Registered Owner: [Cede & Co./Purchaser entity name]
Principal Amount: _____________________ DOLLARS
The PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO, a commission duly organized and existing under and pursuant to the Charter of the City and County of San Francisco and the laws of the State of California (herein called the “Commission”), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to the registered owner set forth above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinaft er provided for), the principal sum set forth above in lawful money of the United States of America, and to pay (but only out of the revenues hereinafter referred to) interest thereon at the rate or rates set forth therefor in the Indenture in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is authenticated as of a day during the period from the 16
th day of the calendar month next preceding any interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on or before October 15, 20__, in which event it shall bear interest 304962944.2 BE-2
from [CLOSING DATE]; provided, however, that if, at the time of authentication of any Bond, interest is in default on Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds and shall be payable to the Owners thereof of record as of a special date as shall be established by the Trustee (as defined below) following such default) until payment of such principal sum, at the interest rate pe r annum stated above, payable on [insert Stepped Rate Adjustment Date], 20__ and semiannually thereafter on May 1 and November 1 in each year.
The principal (or redemption price) hereof is payable to the registered owner hereof upon surrender hereof at the corporate trust office of U.S. Bank Trust Company, National Association, in San Francisco, California, as trustee (herein, together with any s uccessor as trustee under the Indenture, called the “Trustee”), or such other office designated by the Trustee. The interest hereon is payable to the person whose name appears on the bond registration books of the Trustee as the registered owner hereof as of the close of business on the 15 th day of the calendar month
immediately preceding an interest payment date, whether or not such day is a business day, such interest to be paid, except as otherwise provided in the Indenture, by check mailed to such registered owner at such address as appears on such registration books. Interest on this Bond shall be calculated on the basis of a 360 day year based upon the actual number of days elapsed.
This Bond is one of a duly authorized issue of revenue bonds of the Commission designated as the “San Francisco Water Revenue Bonds ” (herein called the “Bonds”), of the series and designation indicated on the face hereof (herein called the “2026 Series [B] Bonds”) and is a Current Interest Bond (as such term is defined in the Indenture hereinafter referred to). The Bonds are not limited in aggregate principal amount and consist or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as in said Indenture provided, all issued and to be issued under and pursuant to the provisions of the Charter of the City and County of San Francisco and all laws of the State of California supplemental thereto, including the Revenue Bond Law of 1941 to the extent made applicable by said Charter (herein collectively called the “ Law”), and pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the Trustee and the Commission, as further amended and supplemented, including as amended and supplemented by that certain Fifty-Fourth Supplemental Indenture, dated as of _________ 1, 2026, between the Trustee and the Commission, authorizing the issuance of the 2026 Series [B] Bonds (collectively, the “Indenture”).
Reference is hereby made to the Indenture (a copy of which is on file at the office of the Trustee) and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues (as such term is defined in the Indenture) and the rights thereunder (and limitations thereon) of the registered owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Commission thereunder; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner of this Bond, and to all the provisions thereof the owner of this Bond, by his acceptance hereof, consents and agrees. Each owner hereof shall have recourse to all of the provisions of the Law and the Indenture and shall be bound by all of the terms and conditions thereof.
The Bonds are issued to refinance and finance the reconstruction, replacement, expansion and repair of or improvements to the water facilities of the Enterprise, as more particularly 304962944.2 BE-3
described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to the principal thereof, interest thereon and any premiums upon the redemption of any thereof, from the revenues of the Enterprise (which, as more particularly defined in the Indenture, are therein and herein called the “ Revenues”). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of the Bonds; but nevertheless out of the Revenues certain amounts may be applied for other purposes prior to the payment of the interest on or principal of the Bonds as provided in the Indenture. Additional Series of Bonds paya ble from the Revenues may be issued on a parity with the Bonds of this Series, but only subject to the conditions and limitations contained in the Indenture.
The principal of and interest on this Bond are payable solely from the Revenues, and the Commission is not obligated to pay them except from the Revenues. The Commission has no taxing power. The general fund of the City and County of San Francisco is not liable, and the credit or taxing power of the City and County of San Francisco is not pledged, for the payment of the Bonds or their interest. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Commission or any of its income or receipts, except the Revenues. The owner hereof has no right to compel the exercise of any taxing power of the City and County of San Francisco.
The rights and obligations of the Commission and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture.
The 2026 Series [B] Bonds shall be subject to redemption prior to their stated maturity, at the option of the Commission, from any source of available funds, as a whole or in part by lot, on any date on or after ____, 20__, at a redemption price equal to 100% of the principal amount of the 2026 Series [B] Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium.
The 2026 Series [B] Bonds are issuable as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple thereof provided that no Bond shall have principal maturing on more than one principal payment date. Subject to the limitations and conditions a nd upon payment of the charges, if any, as provided in the Indenture, 2026 Series [B] Bonds may be exchanged for a like aggregate principal amount of 2026 Series [B] Bonds of the same series, tenor and maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations and of the same series and tenor, for the same aggregate principal amount will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Commission and the Trustee shall not be affected by any notice to the contrary.
304962944.2 BE-4
It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Law and the laws of the State of California, and that the amount of this Bond, together with all other obligations of the Commission, does not exceed any limit prescribed by the Law or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed have been signed by the Trustee.
Pursuant to Section 9.06 of the Indenture, the Owner of this 2026 Series [B] Bond accepts the amendments as to this 2026 Series [B] Bond set forth in Section 231.02(e) of the Indenture.
By acceptance of this Bond, the holder hereof consents to the amendments described in Article CLXXXVII of the Forty-Third Supplemental Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
304962944.2 BE-5
IN WITNESS WHEREOF, the Public Utilities Commission of the City and County of San Francisco has caused this Bond to be executed on its behalf, signed by the manual or facsimile signatures of its General Manager and of the Controller of the City and County of San Francisco and countersigned by the manual or facsimile signature of its Secretary, all as of [CLOSING DATE].
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
__________________________________________
General Manager of the Commission
__________________________________________
Controller of the City and County
of San Francisco
Countersigned:
____________________________________
Secretary of the Commission
304962944.2 BE-6
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
AND REGISTRATION TO APPEAR ON THE 2026 SERIES [B] BOND] This Bond is one of the Bonds described in the within- mentioned Indenture, which has been authenticated and registered on the date set forth below.
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
Dated: _______ __, 20__
By: ______________________________________
Authorized Officer
304962944.2 BE-7
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto __________________________ the within- mentioned Registered Bond and hereby irrevocably constitute(s) and appoint(s) ___________________ attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
_______________________________________
SIGNATURE GUARANTEED BY:
____________________________________
NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.
304962944.2 Appendix A-1
APPENDIX A
FORM OF 2026 SERIES [B] BOND
CALCULATION OF BREAKAGE PREMIUM
[UNDERGOING REVIEW. TO BE REVISED.]
The Breakage Premium applicable to a [Termination], in whole or in part, for any reason, shall be calculated as set forth in this Exhibit [_].
1. Capitalized terms used in this Exhibit [_] and not otherwise defined herein have the meanings assigned thereto in the [Resolution].
The following defined terms are used in this Exhibit [_]:
“Breakage Premium” means the premium required to be paid by the Commission in connection with any [Termination], calculated as provided in this Exhibit [_].
“Calculation Agent” means Wells Fargo Bank, National Association or its affiliates or such other entity designated by the Purchaser.
“Day Count Fraction” is the anticipated basis on which interest is to be computed on the Bond. The Day Count Fraction [is calculated on the bases of actual days elapsed in a 365- or 366 year][utilizes 30-day months and 360-day years].
“Mandatory Purchase Date” means _____________, 20[__].
“Reference Rate” means [__.__]% per annum. [NTD: Reference Rate is the fixed rate]
“Scheduled Date” means each date specified on Schedule 1 hereto in the columns labeled Scheduled Date.
“Schedule of Principal Amounts” is the anticipated principal amount of the Bonds scheduled to be outstanding on the date the Bonds are funded and on the Scheduled Date. The Schedule of Principal Amounts for the Scheduled Dates is specified in Schedule 1 to this Exhibit [_].
“Termination” means any [redemption pursuant to Section [_] of the Supplemental Indenture, conversion to a new Interest Rate Mode pursuant to Section [_] of the Supplemental Indenture, [other mandatory/optional tender, or acceleration pursuant to Section [_] of the Supplemental Indenture].
“Termination Date” means any [Conversion Date, redemption date pursuant to Section [_] of the Supplemental Indenture, [other tender date,] or date on which the Bonds are accelerated pursuant to Section [_] of the Supplemental Indenture]. 304962944.2 Appendix A-2
2. In connection with any Termination, a premium shall be paid by the Commission to the Purchaser if the Breakage Premium is a positive number. No Breakage Premium shall be payable for a Termination if the Breakage Premium for that Termination is a negative number.
Breakage Premiums will be determined by the Calculation Agent, on the Business Day next preceding the Termination Date, as follows:
“Breakage Premium” is the difference of:
(i) the sum of the present values of a series of amounts computed for each Scheduled Date after the Termination Date through the Mandatory Purchase Date, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on that Scheduled Date, times (B) the Reference Rate times (C) the Day Count Fraction for such Affected Principal Period,
minus
(ii) the sum of the present values of a series of amounts computed for each Scheduled Date after the Termination Date through the Mandatory Purchase Date, each of which amounts is equal to the product of (A) the Affected Principal Amount for the Affected Principal Period ending on that Scheduled Date, times (B) the Termination Rate, times (C) the Day Count Fraction for such Affected Principal Period,
where:
(1) the Calculation Agent computes such present values by discounting each such series of amounts described in clauses (i) and (ii) above from their respective Scheduled Date to the Termination Date using a series of discount factors corresponding to those Scheduled Dates as determined by the Calculation Agent from the Daily Simple SOFR swap yield curve that the Calculation Agent would use as of the Termination Date in valuing a series of fixed rate interest rate swap payments similar to such series of amounts;
(2) the “Affected Principal Amount” for an Affected Principal Period is the principal amount of the Bond reflected in the Schedule of Principal Amounts scheduled to be outstanding during that Affected Principal Period determined as of the relevant Termination Date by reference to such Schedule of Principal Amounts before giving effect to any Termination on that Termination Date, and for any Termination, multiplying each such principal amount times the Termination Fraction;
(3) the “Affected Principal Period” is each period from and including a Scheduled Date to but excluding the next succeeding Scheduled Date; provided, however, if the Termination Date is not a Scheduled Date, the initial Affected Principal Period shall be the period from and including the Te rmination Date to but excluding the next succeeding Scheduled Date and the Affected Principal Amount for such initial Affected Principal Period shall be the amount stated in the Schedule of Principal Amounts Outstanding for the Scheduled Date next preceding the Termination Date;
304962944.2 Appendix A-3
(4) the “Termination Fraction” means, for each Scheduled Date, a fraction the numerator of which is the amount of the credit to be applied pursuant to the applicable provisions of the Agreement to reduce the amount of the payment otherwise due on such date and the denominator of which is the amount of the payment otherwise due on such date (without regard to such credit); and
(5) the “Termination Rate” for any Termination Date is the fixed rate the Calculation Agent determines is representative of what swap dealers would be willing to pay to the Calculation Agent (or, if required to be cleared under the Commodity Exchange Act or a Commodity Futures Trading Commission rule or regulation promulgated thereunder, to a swap clearinghouse) as fixed rate payors [in accordance with the Interest Payment Frequency in return for receiving the daily average of SOFR over a one-month period (or such alternate rate index designated for use in lieu of SOFR by the International Swaps and Derivatives Association) based payments monthly] under interest rate swap transactions that would commence on such Termination Date, and mature on, or as close as commercially practicable to, the Mandatory Purchase Date.
3. The Calculation Agent shall determine the Breakage Premium hereunder in good faith using such methodology as the Calculation Agent deems appropriate under the circumstance, and the Calculation Agent’s determination shall be conclusive and binding in the a bsence of manifest error.
304962944.2 Appendix A-4
SCHEDULE I
Scheduled Date
Redemption Outstanding
Norton Rose Fulbright US LLP draft 6/29/26
CONTINUING DISCLOSURE CERTIFICATE
$[PAR AMOUNT]
PUBLIC UTILITIES COMMISSION OF
THE CITY AND COUNTY OF SAN FRANCISCO
San Francisco Water Revenue Bonds, 2026 Series [B]
[____], 2026
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Public Utilities Commission of the City and County of San Francisco (the “SFPUC”) in connection with the issuance of the water revenue bonds captioned above (the “ 2026[B] Bonds”). The 2026[B] Bonds are being issued pursuant to an Amended and Restated Indenture, dated as of August 1, 2002, between the SFPUC and U.S. Bank Trust Company, National Association, as trustee (the “ Trustee”), as amended and supplem ented, including as amended and supplemented by a Fifty-Fourth Supplemental Indenture, each dated as of [____] 1, 2026, by and between the SFPUC and the Trustee (collectively, the “Indenture”).
The SFPUC covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the SFPUC for the benefit of the Holders [and Beneficial Owners] of the 2026[B] Bonds.
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the SFPUC pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
[“Beneficial Owner” shall mean any person that: (a) has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any 2026[B] Bonds (including persons holding 2026[B] Bonds through nominees, depositories or other intermediaries) including, but not limited to, the power to vote or consent with respect to any 2026[B] Bonds or to dispose of ownership of any 2026[B] Bonds; or (b) is treated as the owner of any 2026[B] Bonds for federal income tax purposes.]
“Dissemination Agent” shall mean the SFPUC, acting in its capacity as Dissemination Agent under this Disclosure Certificate, or any successor Dissemination Agent designated in writing by the SFPUC and which has filed with the SFPUC a written acceptance of such designation. “Financial Obligation ” means, for purposes of the Listed Events set out in Section 5(a)(15) and Section (5)(a)(16), a (i ) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii ) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined i n the Rule) has been provided to the MSRB consistent with the Rule.
“Holder” shall mean either the registered owners of the 2026[B] Bonds, or, if the 2026[B] Bonds are registered in the name of The Depository Trust Company or another recognized depository, any applicable participant in such depository system.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive continuing disclosure filings pursuant to the Rule. Until otherwise designated by the MSRB or the Securi ties and Exchange Commission, filings with the MSRB are to be 2 made through the Electronic Municipal Market Access (EMMA) website of the MSRB currently located at http://emma.msrb.org.
“Official Statement” shall mean the final Official Statement, dated June 5 , 2025, prepared in connection with the sale and offering of the Commission’s San Francisco Water Revenue Bonds, 2025 Series DEF, 2025 Sub- Series D (Regional Water and Local Water), San Francisco Water Revenue Bonds, 2025 Series DEF, 2025 Sub-Series E (Hetch Hetchy Water), and San Francisco Water Revenue Bonds, 2025 Series DEF, 2025 Sub-Series F (Refunding). “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Reports.
(a) The SFPUC shall, or shall cause the Dissemination Agent to, not later than March 31 of each year, commencing with the report for Fiscal Year 2025-26 (which is due not later than March 31, 2027), provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is not the SFPUC, the SFPUC shall provide the Annual Report to the Dissemination Agent not later than 15 days prior to said date. The Annual Report must be submitted in electronic format and accompanied by such identifying information as is prescribed by the MSRB, and may cross -reference other information as provided in Section 4 of this Disclosure Certificate.
However, if the audited financial statements of the SF PUC are not available by the date required above for the filing of the Annual Report, the SFPUC shall submit unaudited financial statements and submit the audited financial statements as soon as they are available. If the SFPUC ’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) If the SFPUC is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the SFPUC shall send a notice to the MSRB in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the SFPUC) file a report with the SFPUC certifying the date that the Annual Report was provided to the MSRB pursuant to this Disclosure Certificate.
SECTION 4. Content of Annual Reports. The SFPUC’s Annual Report shall contain or incorporate by reference the following information:
(a) Audited financial statements of the Water Enterprise for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles applicable to the SFPUC from time to time. If the SFPUC’s audited financial statements are not available by the date the Annual Report is required to be filed, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available; (b) An update for the prior Fiscal Year of the table in the Official Statement entitled “TABLE 8, HISTORICAL WHOLESALE AND RETAIL WATER SALES”;
(c) An update for the prior Fiscal Year of the table in the Official Statement entitled “TABLE 17, HISTORICAL AND ADOPTED PERCENTAGE INCREASES (DECREASES) IN WHOLESALE WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior Fiscal Year;
(d) An update for the prior Fiscal Year of the table in the Official Statement entitled “TABLE 20, HISTORICAL AND ADOPTED PERCENTAGE INCREASES (DECREASES) IN RETAIL WATER RATES,” provided that such update need include rate increases (decreases) through the end of the prior Fiscal Year;
3 (e) An update for the prior Fiscal Year of the table in the Official Statement in the section entitled “OBLIGATIONS PAYABLE FROM REVENUES – Outstanding Parity Revenue Bonds ” showing all bonds of the SFPUC secured by Revenues; and (f) An update for the prior Fiscal Year of the table in the Official Statement entitled “TABLE 25, HISTORICAL REVENUES, OPERATING & MAINTENANCE EXPENSES AND DEBT SERVICE COVERAGE.”
Any or all of the items listed above may be set forth in a document or set of documents, or may be included by specific reference to other documents, including official statements of debt issues of the SFPUC or related public entities, which are available to the public on the MSRB website. If the document included by reference is a final official statement, it must be available from the MSRB. The SFPUC shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) The SFPUC shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the 2026[B] Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the 2026[B] Bonds, or other material events affecting the tax status of the 2026[B] Bonds;
7. Modifications to rights of Holders, if material;
8. Optional, unscheduled or contingent 2026[B] Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the 2026[B] Bonds, if material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the SFPUC;
13. The consummation of a merger, consolidation, or acquisition involving the SFPUC or the sale of all or substantially all of the assets of the SFPUC, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
14. Appointment of a successor or additional trustee or the change of name of a trustee, if material;
4 15. Incurrence of a Financial Obligation of the SFPUC, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the SFPUC, any of which affect Holders, if material; and
16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the SFPUC, any of which reflect financial difficulties.
Note: For the purposes of the event identified in subsection (a)(12), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the SFPUC in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the SFPUC, or if such jurisdiction has been assumed by leaving th e ex isting governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmenta l authority having supervision or jurisdiction over substantially all of the assets or business of the SFPUC. (b) Whenever the SFPUC obtains knowledge of the occurrence of a Listed Event in subsection (a), the SFPUC shall, or shall cause the Dissemination Agent (if not the SFPUC) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of a Listed Event described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2026[B] Bonds under the Indenture.
(c) The SFPUC intends to comply with the Listed Events described in subsection (a)(15) and subsection (a)(16) and the definition of “ Financial Obligation” in Section 2, with reference to the Rule, any other applicable federal securities laws and the guidance provided by the Securities and Exchange Commission in Release No. 34 -83885 dated August 20, 2018 (the “2018 Release ”), and any further amendments or written guidance provided by the Securities and Exchange Commission or its staff with respect to the amendments to the Rule effected by the 2018 Release.
SECTION 6. Termination of Reporting Obligation . The SFPUC ’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2026[B] Bonds.
If such termination occurs prior to the final maturity of the 2026[B] Bonds, the SFPUC shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
SECTION 7. Dissemination Agent . The SFPUC may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the SFPUC may amend or waive this Disclosure Certificate or any provision of this Disclosure Certificate, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 3(b), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or s tatus of an obligated person with respect to the 2026[B] Bonds or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of the City Attorney of the City and County of San Francisco or nationally recognized bond counsel, have complied with the requirements of the Rule (assuming the Rule was applicable) at the time of the original 5 issuance of the 2026[B] Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i ) is approved by the owners of a majority in aggregate principal amount of the 2026[B] Bonds or (ii) does not, in the opinion of the City Attorney or nationally recognized bond counsel, materially impair the interests of the Holders.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the SFPUC shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the SFPUC. In addition, if the amendment relates to the accounting principles to be followed i n preparing financial statements: (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5; and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prep ared on the basis of the former accounting principles.
SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the SFPUC from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the SFPUC chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the SFPUC shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the SFPUC to comply with any provision of this Disclosure Certificate, any Holder [or Beneficial Owner ] of the 2026[B] Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the SFPUC to comply with its obligations under this Disclosure Certificate; provided that any such action may be instituted only in a federal or State court located in the City and County of San Francisco, State of California. Failure by the SFPUC to comply with any provision of this Disclosure Certificate shall not be deemed an Event of Default under the Indenture and the sole remedy under this Disclosure Certificate in the event of any failure of the SFP UC to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the SFPUC, the Dissemination Agent, Holders [and Beneficial Owners] from time to time of the 2026[B] Bonds, and shall create no rights in any other person or entity.
6 Dated as of the date first written above.
PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO
By: ________________________________ ________
General Manager
Approved as to Form:
DA VID CHIU
CITY ATTORNEY
By: ________________________________ ________
Deputy City Attorney
7 CONTINUING DISCLOSURE CERTIFICATE
EXHIBIT A
FORM OF NOTICE TO THE
MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Public Utilities Commission of the City and County of San Francisco
Name of Issue: San Francisco Water Revenue Bonds, 2026 Series [B]
Date of Issuance: [____] 2026
NOTICE IS HEREBY GIVEN that the SFPUC has not provided an Annual Report with respect to the above -named Bonds as required by Section 3 of the Continuing Disclosure Certificate of the Public Utilities Commission of the City and County of San Francisco, dated [____] 2026. The SFPUC anticipates that the Annual Report will be filed by _____________.
Dated: _______________
PUBLIC UTILITIES COMMISSION OF THE CITY
AND COUNTY OF SAN FRANCISCO
By: [to be signed only if filed]
Title: