Agenda packet — Coachella City Council, January 26, 2022 (part 4 of 6)

Item 28.
4831-8682-1629.2
7 the Escrow Fund after payment of all fees and expenses of the Escrow Agent shall be released to the Authority.

SECTION 16. This Agreement is made in the State of California under the Constitution and laws of the State of California and is to so be construed.

SECTION 17. If any one or more of the covenants or agreements provided in this Agreement on the part of the Authority or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement.

All the covenants, promises and agreements in this Agreement contained by or on behalf of the Authority or by or on behalf of the Escrow Agent shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not.

SECTION 18. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument.

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8 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed by their duly authorized officers as of the date first-above written.

COACHELLA WATER AUTHORITY
By
Executive Director
U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent and as Defeased Bonds Trustee
By
Authorized Officer

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A-1

EXHIBIT A

ESCROW REQUIREMENTS

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B-1

EXHIBIT B

SCHEDULE OF ESCROW SECURITIES

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C-1
Exhibit C
Notice of Optional Redemption

COACHELLA WATER AUTHORITY
WATER REVENUE REFUNDING BONDS, 2012 SERIES
Maturity
(August 1)
Principal
Amount
Redemption
__Price__ CUSIP
2023 510,000 100 18979PBD4
2024 530,000 100 18979PBE2
2027 1,690,000 100 18979PBF9
2032 3,350,000 100 18979PBG7
NOTICE IS HEREBY GIVEN to the owners of the above-captioned bonds (the “Bonds”) of the Coachella Water Authority (the “Authority”) in accordance with that certain Indenture of Trust, dated as of December 1, 2012 (the “Indenture”), by and between the Authority and U.S. Bank National Associaiton, as successor to Union Bank, N.A., as trustee (the “Trustee”), pursuant to which such Bonds were issued, that all of the Bonds have been called for redemption on August 1, 2022 (the “Redemption Date”), pursuant to the provisions of the governing documents of the Bonds.

On said Redemption Date there will become due and payable the Redemption Price of the Bonds, in the specified portion of the principal amount above, together with interest accrued thereon to the Redemption Date, and that from and after such Redemption Date interest thereon shall cease to accrue. Payment of the Redemption Price on the Bonds called for redemption will be paid only upon presentation and surrender thereof in the following manner:

Owners of the Bonds should surrender said Bonds on the redemption date at the following address:

By Mail, Hand or Overnight:

U.S. Bank
Global Corporate Trust Services
111 Fillmore Avenue E
St. Paul, MN 55107
IMPORTANT NOTICE. Federal law requires the Trustee to withhold taxes at the applicable rate from the payment if an IRS Form W-9 or applicable IRS Form W-8 is not provided. Please visit www.irs.gov for additional information on the tax forms and instructions.

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C-2
Neither the Authority nor the Trustee shall be held responsible for the selection or use of the CUSIP number, nor is any representation made as to its corrections indicated in this Notice of Redemption. It is included solely for convenience of the owners of the Bonds.

DATED: ________, 2022
U.S. BANK ANTIONAL ASSOCIATION, as Trustee

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D-1
Exhibit D

NOTICE OF DEFEASANCE

COACHELLA WATER AUTHORITY
WATER REVENUE REFUNDING BONDS, 2012 SERIES
Maturity
(August 1)
Principal
Amount CUSIP
2022 490,000 18979PBC6
2023 510,000 18979PBD4
2024 530,000 18979PBE2
2027 1,690,000 18979PBF9
2032 3,350,000 18979PBG7
Notice is hereby given to the owners of the above-captioned and listed bonds (collectively, the “Defeased Bonds”) that:
(i) There has been deposited in an Escrow Fund with U.S. Bank National Association, as Escrow Bank, certain monies and investment securities as permitted by that Indenture of Trust, dated as of December 1, 2012 (the “Indenture”) by and between U.S. Bank National Association, as successor to Union Bank, N.A., as trustee (the “Trustee”) and the Coachella Water Authority (the “Authority”), pursuant to which the Defeased Bonds were issued, for the purpose of defeasing the Defeased Bonds. The investment securities will mature at the proper times and in the proper amounts to produce funds which, along with the moneys deposited with the Escrow Bank, will be sufficient (a) to pay the principal of and interest on the Defeased Bonds through and including August 1, 2022, and (b) to redeem the Defeased Bonds on August 1, 2022 at redemption price equal to 100% of the principal amount thereof (collectively, the “Payment Price”).
(ii) The Trustee has been irrevocably instructed by the Authority to mail a notice of redemption with respect to the Defeased Bonds in accordance with the Indenture and to redeem the Defeased Bonds on August 1, 2022.

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D-2
(iii) The Defeased Bonds are deemed to be paid in accordance with the Indenture and all liability of the Authority under the Indenture has ceased and been discharged except for the obligation of the Trustee to pay the owners of the Defeased Bonds the Payment Price when due from amounts on deposit in the Escrow Fund in accordance with the Indenture. (iv) The Continuing Disclosure Agreement, dated as of December 1, 2012, relating to the Defeased Bonds has been terminated.

Dated this _________, 2022
U.S. BANK NATIONAL ASSOCIATION, as
Trustee

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$[_______]

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS
2022A SERIES

PURCHASE CONTRACT
[_______], 2022
Coachella Water Authority
1515 Sixth Street
Coachella, California 92236
Ladies and Gentlemen:

Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) hereby offers to enter into this Purchase Contract with you, the Coachella Water Authority (the “Authority”), for the purchase by the Underwriter and the delivery by you of the Bonds specified below. The Bonds are being issued by the Authority to (a) refund all of the Authority’s $5,000,000 Water Revenue Bonds (USDA) Series 2008, (b) finance certain improvements to the water system of the City of Coachella (such system is designated, the “Enterprise”), and (c) pay the costs of issuance of the Bonds, including the premium for a municipal bond insurance policy. This offer is made subject to acceptance by you prior to 11:59 p.m., Los Angeles time, on the date hereof. Upon such acceptance, this Purchase Contract shall be in full force and effect in accordance with its terms and shall be binding upon you and the Underwriter.

1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell to the Underwriter, all (but not less than all) of the $[_______] aggregate principal amount of the Authority’s Water Revenue Refunding Bonds, 2022A Series (the “Bonds”), at the purchase price of $[_________] (being the principal amount of the Bonds, less an Underwriter’s discount in the amount of $[_________], and [plus/less] [net] original issue [premium/discount] of $[________]).

The Bonds will have the maturities and bear interest at the rates set forth on Exhibit A hereto.

The Bonds will be subject to redemption as set forth in the Official Statement herein described. The Bonds will be dated as described in the Official Statement. The Bonds will be issued in book entry form only.

The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy (the “Insurance Policy”) to be issued concurrently with the delivery of the Bonds by [INSURER] (the “Insurer”).

The Authority acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s-length commercial transaction between the Authority and the Underwriter in which the Underwriter is acting solely as principal and not as agent of the Authority and the Underwriter is not acting as a municipal advisor (within the meaning of Section 15B of The

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2 Securities Exchange Act of 1934, as amended), financial advisor or fiduciary to the Authority; (ii) the Underwriter has not assumed any advisory or fiduciary responsibility to the Authority with respect to the transaction contemplated by this Purchase Contract and the discussions, undertakings or procedures leading thereto (irrespective of whether the Underwriter, or any affiliate of the Underwriter has provided other services or is currently providing other services to the Authority on other matters); (iii) the only obligations the Underwriter has to the Authority with respect to the transaction contemplated by this Purchase Contract are expressly set forth in this Purchase Contract; (iv) the Underwriter has financial and other interests that differ from those of the Authority; and (v) the Authority has consulted its own financial and/or municipal legal, accounting, tax and other advisors, as applicable, to the extent the Authority has deemed appropriate. The Authority acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (the “MSRB”).

2. Authorizing Instruments and Law. The Bonds shall be issued pursuant to the provisions of a resolution (the “Resolution”) adopted by the Authority on [_______], 2021 authorizing the issuance of the Bonds. The Bonds are issued pursuant to an Indenture of Trust, dated as of January 1, 2022 (the “Indenture”), between the Authority and Wilmington Trust, National Association (the “Trustee”), and shall be as described in the Indenture.

The Bonds are limited obligations of the Authority payable primarily from and secured by certain Net Revenues pledged under the Indenture.

3. Offering the Bonds. The Underwriter agrees to offer all the Bonds to the public initially at the prices (or yields) set forth on the inside cover pages of the Official Statement of the Authority pertaining to the Bonds, dated [________], 2022 (the Official Statement, together with all appendices thereto, and with such changes therein and supplements thereto as are consented to in writing by the Underwriter, are herein called the “Official Statement”). Subsequent to the initial public offering of the Bonds, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The Underwriter also reserves the right to: (i) over-allot or effect transactions which stabilize or maintain the market price of the Bonds at levels above those that might otherwise prevail in the open market and (ii) discontinue such stabilizing, if commenced, at any time without prior notice. “Public Offering” shall include an offering to a representative number of institutional investors or registered investment companies, regardless of the number of such investors to which the Bonds are sold.

4. Establishment of Issue Price.

A. The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

B. Except as set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Contract, the

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3 Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.

C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Contract at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase Contract, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Contract) and (ii) the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
a. the close of the fifth (5th) business day after the sale date; or b. the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter will advise the Authority promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

D. The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,

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4 (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.

E. The Authority acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Authority further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds.

F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.

Further, for purposes of this section:
a. “public” means any person other than an underwriter or a related party;
b. “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to

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5 participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public);
c. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
d. “sale date” means the date of execution of this Purchase Contract by all parties.

5. Delivery of Official Statement on the Date Hereof. The Authority shall deliver to the Underwriter one copy of the Official Statement manually executed on behalf of the Authority by an authorized representative. The Authority shall also deliver a sufficient number of copies of the Official Statement to enable the Underwriter to distribute a single copy of each Official Statement to any potential customer of the Underwriter requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending on the End Date (defined below). The Authority shall deliver these copies to the Underwriter within seven (7) business days after the execution of this Purchase Contract and in sufficient time to accompany or precede any sales confirmation that requests payment from any customer of the Underwriter. The Underwriter shall inform the Authority in writing of the End Date, and covenants to file the Official Statement with the Municipal Securities Rulemaking Board (the “MSRB”) on a timely basis. “End Date” as used herein is that date which is the earlier of:
(a) ninety (90) days after the end of the underwriting period, as defined in SEC Rule 15c2-12 adopted by the Securities and Exchange Commission on June 28, 1989 (“Rule 15c2-12”); or (b) the time when the Official Statement becomes available from the MSRB, but in no event less than twenty-five (25) days after the underwriting period (as defined in Rule 15c2-12) ends.

The Authority has authorized the use of the Official Statement in connection with the public offering of the Bonds. The Authority also has consented to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement dated [__________], 2022 relating to the Bonds in connection with the public offering of the Bonds (which, together with all appendices thereto, is herein called the “Preliminary Official Statement”). Authorized officers of the Authority have certified to the Underwriter that such Preliminary Official Statement was deemed to be final as of its date for purposes of Rule 15c2-12, with the exception of certain final pricing and related information referred to in Rule 15c2-12. The Underwriter has distributed a copy of the Preliminary Official Statement to potential customers on request.

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6 6. The Closing. At 8:00 A.M., California time, on [________], 2022, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Authority and the Underwriter, the Authority will deliver (i) the Bonds in book entry form through the facilities of The Depository Trust Company (“DTC”), and (ii) the closing documents hereinafter mentioned at the offices of Nixon Peabody LLP, Los Angeles, California (“Bond Counsel”), or another place to be mutually agreed upon by the Authority and the Underwriter. The Underwriter will accept such delivery from the Authority. The Underwriter will pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer of immediately available funds. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the “Closing.”

7. Authority Representations, Warranties and Covenants. The Authority represents, warrants and covenants to the Underwriter that:
(a) The Authority is a joint exercise of powers agency, duly organized and validly existing pursuant to the Constitution and laws of the State of California (the “State”), and has all necessary power and authority to enter into and perform its duties under the Indenture, the Continuing Disclosure Certificate, dated the Closing Date (the “Continuing Disclosure Certificate”), of the Authority and this Purchase Contract (collectively, the “Authority Documents”). (b) The Bonds, when issued in accordance with the Indenture, will be legally valid and binding special obligations of the Authority, entitled to the benefits of the Indenture and enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.
(c) To the best knowledge of the Authority, neither the execution and delivery of the Authority Documents, or the approval and execution of the Official Statement or this Purchase Contract, and compliance with the provisions on the Authority’s part contained therein, nor the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment of the terms hereof and thereof, materially conflicts with or constitutes a material breach of or default under nor materially contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in a security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents.
(d) The Authority Documents have been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute legal, valid and binding agreements of the Authority enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against cities and agencies in the State of California.

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7 (e) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory agency having jurisdiction over the Authority required for the consummation by the Authority of the transactions contemplated by the Official Statement and this Purchase Contract. (f) To the best of the knowledge of the Authority, there is, and on the Closing there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the Authority to restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Authority Documents or the authority of the Authority to approve this Purchase Contract, or enter into the Authority Documents or contesting the powers of the Authority to enter into or perform its obligations under any of the foregoing or in any way contesting the powers of the Authority in connection with any action contemplated by this Purchase Contract or to restrain or enjoin the execution of, or, except as described in the Preliminary Official Statement and the Official Statement, the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, nor is there any basis for any such action, suit, proceeding or investigation.
(g) The Preliminary Official Statement provided to the Underwriter has been deemed final by the Authority, as required by Rule 15c2-12. As of the date thereof and at all times subsequent thereto up to and including the End Date, the information relating to the Authority, the Bonds, the Enterprise and the Authority Documents contained in the Official Statement was and will be materially complete for its intended purposes. The information relating to the Authority, the Bonds, the Enterprise and the Authority Documents contained in the Official Statement (excluding any information with respect to DTC, the book-entry only system, the Trustee, the Insurance Policy or the Insurer (as defined in the Official Statement and discussed below)) is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect. (h) The Authority agrees to cooperate with the Underwriter in endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the Authority will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject.
(i) By official action of the Authority prior to or concurrently with the execution hereof, the Authority has duly approved the distribution of the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in the Authority Documents and the consummation by it of all other transactions contemplated by the Official Statement and this Purchase Contract. (j) To the best knowledge of the Authority, it is not in breach of or default under any material applicable law or administrative regulation of the State of California or the United States or any material applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject and in connection with which the Authority is obligated to make payments from its own funds, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or

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8 both, would constitute a default or an event of default under any such instrument the consequence of which could be to materially and adversely affect the performance of the Authority under the Authority Documents.
(k) If between the date of this Purchase Contract and the End Date an event occurs, of which the Authority has knowledge, which might or would cause the information relating to the Authority, the Enterprise or the Authority’s functions, duties and responsibilities contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading in any material respect, the Authority will notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement in a form and in a manner approved by the Underwriter, provided all expenses thereby incurred will be paid for by the Authority. (l) If the information relating to the Enterprise, the Authority, its functions, duties and responsibilities contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date of the Closing, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading in any material respect. (m) The Authority covenants that it will comply with all tax covenants relating to it in the Authority Documents, the Tax Certificate of the Authority and this Purchase Contract. (n) Substantially all the proceeds from the sale of the Bonds (after deducting the expenses of issuance and sale of the Bonds paid for from such proceeds) will be used to finance and/or refinance certain improvements to the Enterprise, and the Authority will not take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to that provided in the Indenture. (o) The Authority will deliver all opinions, certificates, letters and other instruments and documents reasonably required by the Underwriter and this Purchase Contract. (p) Any certificate of the Authority delivered to the Underwriter shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein.
(q) As of the time of acceptance hereof and as of the Closing, the Authority does not, and will not have outstanding, any indebtedness which is secured by a lien on Revenues except as disclosed in the Official Statement.
(r) Between the date of this Purchase Contract and the date of Closing, the Authority will not, without the prior written consent of the Underwriter, and except as disclosed in

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9 the Official Statement, offer or issue any certificates, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, secured by a lien on Net Revenues. (s) All authorizations, approvals, licenses, permits, consents and orders of or filings with any governmental authority, legislative body, board, agency or commission having jurisdiction in the matters which are required for the due authorization of, which would constitute a condition precedent to or the absence of which would adversely affect the due performance by the Authority of its obligations in connection with, the Authority Documents have been duly obtained or made, except as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds.
(t) The Authority has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Authority is a bond issuer whose arbitrage certifications may not be relied upon.
(u) The written information supplied by the Authority to the Underwriter with respect to the financial information relating to the Enterprise is true, correct and complete in all material respects for the purposes for which it was supplied. (v) Except as otherwise described in the Preliminary Official Statement and Official Statement, the Authority has not failed in any material respect to comply with any undertaking of the Authority under Rule 15c2-12 in the previous five years.

8. Representations and Agreements of the Underwriter. The Underwriter represents to and agrees with the Authority that, as of the date hereof and as of the date of the Closing:
(a) The Underwriter is duly authorized to execute and deliver this Purchase Contract and to take any action under this Purchase Contract required to be taken by it. (b) The Underwriter is in compliance with MSRB Rule G-37 with respect to the Authority and is not prohibited thereby from acting as underwriter with respect to securities of the Authority.
(c) The Underwriter has, and has had, no financial advisory relationship with the Authority with respect to the Bonds, and no investment firm controlling, controlled by or under common control with the Underwriter has or has had any such financial advisory relationship, within the meaning of California Government Code Section 53590, or otherwise. (d) The Underwriter has not paid or agreed to pay, nor will it pay or agree to pay, any entity, company, firm or person, other than a bona fide officer, agent or employee working for the Underwriter, any compensation, fee, gift or other consideration contingent upon or resulting from the award of or entering into this Purchase Contract.

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10 (a) Bring-Down Representation. The representations, warranties and covenants of the Authority contained herein shall be true and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder. At the time of the Closing:
(i) the Authority Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter; (ii) there shall be in full force and effect the Resolution as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions on the part of the Authority contemplated by the Official Statement and the Authority Documents; (iii) the Authority shall perform or have performed its obligations required as specified in the Authority Documents to be performed at or prior to Closing; and (iv) the Official Statement shall not have been supplemented or amended, except pursuant to Paragraph 7(k) or as otherwise may have been agreed to in writing by the Underwriter.
(c) No Default. At the time of the Closing, no default shall have occurred or be existing under the Authority Documents and the Authority shall not be in default in the payment of principal or interest on any of its bonded indebtedness which default shall adversely impact the ability of the Authority to make payments on the Bonds. (d) Termination Events. The Underwriter shall have the right to terminate this Purchase Contract, without liability therefor, by written notification to the Authority if at any time at or prior to the Closing:
(i) Any event occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or the Official Statement, or results in the Preliminary Official Statement or the Official Statement containing any untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(ii) Legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental

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11 agency shall be made or proposed, the effect of any or all of which would be to alter, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the Bonds, or the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated herein; or
(iii) Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering, or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect; or (iv) A general suspension of trading in securities on the New York Stock Exchange or any other national securities exchange, the establishment of minimum or maximum prices on any such national securities exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, or any material increase of restrictions now in force (including, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter); or
(v) The declaration of a general banking moratorium by federal, New York or State authorities or a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or (vi) Establishment of any new restrictions in securities materially affecting the free market for securities of the same nature as the Bonds (including the imposition of any limitations on interest rates) or the charge to the net capital requirements of the Underwriter established by the New York Stock Exchange, the Securities and Exchange Commission, any other Federal or state agency or the Congress of the United States, or by Executive Order; or
(vii) The occurrence of an adverse event in the affairs of the Authority which, in the reasonable judgement of the Underwriter, materially impairs the investment quality of the Bonds; or
(viii) Any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or

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12 other authority materially adversely affecting the tax status of the Authority, its property, income or securities (or interest thereon), or the ability of the Authority to issue the Bonds and pledge the Net Revenues as contemplated by the Indenture and the Official Statement; or
(ix) There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or (x) There shall have occurred since the date of this Purchase Contract any materially adverse change in the affairs or financial position, results of operations or condition, financial or otherwise, of the Authority, other than changes in the ordinary course of business or activity or in the normal operation of the Authority, except as described in the Official Statement; or
(xi) Any proceeding shall have been commenced or be
threatened in writing by the SEC against the Authority or the suspension by the SEC of trading in the outstanding securities of the Authority; or (xii) Any rating of the Insurer shall have been downgraded, suspended or withdrawn or placed on negative outlook or negative watch by a national rating service, which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (xiii) An event described in Section 7(k) hereof shall have occurred which, in the reasonable professional judgment of the Underwriter, requires the preparation and publication of a supplement or amendment to the Official Statement;
(xiv) The marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets;
(xv) The purchase of and payment for the Bonds by the
Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; or (xvi) Any rating of the Bonds or other obligations of the Authority by a national rating agency shall have been withdrawn or downgraded or placed on negative outlook or negative watch.

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13 (e) Closing Documents. At or prior to the Closing, the Underwriter shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. The approving opinion of Bond Counsel dated the date of the Closing and substantially in the form included as APPENDIX D to the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Authority, the Underwriter and the Trustee to the effect that the foregoing opinion may be relied upon by the Underwriter to the same extent as if such opinion was addressed to them. (2) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, in substantially the form and to the following effect:
(a) The statements and information contained in the Official Statement on the cover page relating to tax exemption, the description of the Bonds, and security for the Bonds, and under the captions “INTRODUCTION – General,” “ - The Bonds,” and “- Security for the Bonds,” “THE BONDS” (except for the information under the caption “Book-Entry Only System”), “SECURITY FOR THE BONDS” and “TAX MATTERS,” and in APPENDICES A and D, are true and accurate in all material respects; and
(b) The Bonds are exempt from registration under Section 3(a)(2) of the Securities Act of 1933, as amended and the Indenture is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended; (c) The Purchase Contract has been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto, constitutes legal, valid and binding agreement of the Authority enforceable against the Authority in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and equitable remedies if equitable remedies are sought, and except no opinion need be expressed as to the enforceability of the indemnification, waiver, choice of law or contributions provisions contained therein.
(3) Authority Counsel Opinion. An opinion of the Authority’s General Counsel, dated as of the Closing and addressed to the Authority, the Trustee and the Underwriter, in form and substance acceptable to Bond Counsel and counsel for the Underwriter, to the following effect:
(i) the Authority is a joint exercise of powers agency, duly organized and validly existing under the Constitution and the laws of the State of California;
(ii) the preparation and distribution of the Preliminary Official Statement, the Official Statement and this Purchase Contract have been duly approved by the Authority;
(iii) the resolution of the Authority approving and authorizing the execution and delivery of the Official Statement, this Purchase Contract and the

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14 Authority Documents has been duly adopted at a meeting of the governing body of the Authority which was called and held pursuant to law, and with all public notice required by law and at which a quorum was present and acting throughout; (iv) there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best knowledge of such counsel, threatened against or affecting the Authority, which would adversely impact the Authority’s ability to complete the transactions described in and contemplated by the Official Statement, to restrain or enjoin the payments under, or in any way contesting or affecting the validity of the Authority Documents, or the transactions described and defined in the Official Statement wherein an unfavorable decision, ruling or finding would adversely affect the validity and enforceability of the Authority Documents;
(v) the execution and delivery of the Authority Documents and the approval of the Official Statement, and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Authority is subject;
(vi) the Authority Documents have been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute legal, valid and binding agreements of the Authority enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against public agencies in the State of California; (vii) no authorization, approval, consent, or other order of the State of California or any other governmental authority or agency within the State of California is required for the valid authorization, execution and delivery of the Authority Documents and the approval of the Official Statement; and (viii) without having undertaken any independent inquiry, nothing has come to their attention which would lead them to believe that the information contained in the Official Statement in the Sections “INTRODUCTION – The City, the Authority and the Water Enterprise,” “THE WATER ENTERPRISE” and “NO LITIGATION” contains an untrue statement or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(4) Trustee Counsel Opinion. The opinion of counsel to the Trustee, dated the date of the Closing, addressed to the Authority and the Underwriter, in form and substance acceptable to Bond Counsel and counsel for the Underwriter.

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15 (5) Negative Assurance Letter of Disclosure Counsel. A letter from Nixon Peabody LLP, disclosure counsel to the Authority (“Disclosure Counsel”), dated the Closing Date, addressed to the Underwriter and the Authority, to the effect that, based upon its participation in the preparation of the Official Statement as counsel to the Authority and without having undertaken to determine independently the fairness, accuracy, or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that the Preliminary Official Statement (except for the completion of pricing information and any other matters or terms of the Bonds relating thereto) as of its date or as of the date of this Purchase Contract or the Official Statement as of its date or as of the date of the Closing (excluding therefrom (i) the expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts, the financial statements or other financial, numerical, economic, demographic or statistical data, or assessed valuations contained in the Official Statement; (ii) any CUSIP numbers or information relating thereto; (iii) any information with respect to The Depository Trust Company and its book-entry system; (iv) any information contained in the appendices to the Official Statement; (v) any information incorporated by reference into the Official Statement; (vi) any information with respect to the underwriters or underwriting matters with respect to the Bonds, including but not limited to information under the caption CONCLUDING INFORMATION—Underwriting”; (vii) information under the captions “NO LITIGATION”; (ix) any information with respect to the ratings on the Bonds and the rating agencies referenced therein, including but not limited to information under the caption “CONCLUDING INFORMATION—Ratings”; and (x) any information with respect to the Insurance Policy or the Insurer, including but not limited to information under the captions, “BOND INSURANCE” contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (6) Authority Certificate. A certificate, dated the date of the Closing, signed by a duly authorized official of the Authority satisfactory in form and substance to the Underwriter, (a) confirming as of such date the representations and warranties of the Authority contained in this Purchase Contract; (b) certifying that the Authority has complied with all agreements, covenants and conditions to be complied with by the Authority at or prior to the Closing under the Authority Documents; (c) certifying that to the best of such official’s knowledge, no event affecting the Authority has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing the statements or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; and (d) certifying that the Authority has authorized and consented to the inclusion in the Official Statement of the City of Coachella’s financial report and accountant’s opinion for the year ended June 30, 2020, and no further consent of any party is required for such inclusion. (7) Trustee’s Certificate. A Certificate of the Trustee, dated the date of Closing, addressed to the Authority and the Underwriter, in form and substance acceptable to counsel for the Underwriter to the following effect:
(i) The Trustee is duly organized and existing as a national banking association in good standing under the laws of the United States, having the full power and authority to accept and perform its duties under the Indenture;
(ii) Subject to the provisions of the Indenture, the Trustee will apply the proceeds from the Bonds to the purposes specified in the Indenture; and

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16 (iii) The Trustee has duly authorized and executed the Indenture and authenticated the Bonds.
(8) Official Statement. The Official Statement and each supplement or amendment, if any, thereto, executed on behalf of the Authority by a duly authorized officer of the Authority.
(9) Authority Documents. An original executed copy of each of the Authority Documents.
(10) Authority Resolution. A certified copy of the Resolution. (11) IRS Form 8038-G. Evidence that the federal tax information form 8038-G has been prepared for filing.
(12) Nonarbitrage Certificate. A tax and nonarbitrage certificate in form satisfactory to Bond Counsel.
(13) Ratings. Evidence that the Bonds have been rated as set forth in the Official Statement and that such ratings continue in effect as of the Closing. (14) Insurance Policy. The Insurance Policy issued by the Insurer; an opinion of counsel to the Insurer, dated the date of Closing, addressed to the Authority, the Trustee and the Underwriter, regarding the Insurer’s valid existence, power and authority, the Insurer’s due authorization and issuance of the Insurance Policy and the enforceability of the Insurance Policy against the Insurer; and a certificate of the Insurer or an opinion of counsel to the Bond Insurer, dated the date of Closing, regarding the accuracy of the information in the Official Statement describing the Insurer and the Insurance Policy.
(15) CDIAC Statement. A copy of the Notice of 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. (16) Underwriter’s Counsel Opinion. An opinion, dated the date of the Closing and addressed to the Underwriter, of Kutak Rock LLP, counsel to the Underwriter, in such form as may be acceptable to the Underwriter.
(17) Additional Documents. Such additional certificates, instruments and other documents as the Underwriter may reasonably deem necessary.

If the Authority shall be unable to satisfy the conditions contained in this Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract may be terminated by the Underwriter, and neither the Underwriter nor the Authority shall be under any further obligation hereunder.

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17 9. Expenses. The Underwriter shall be under no obligation to pay, and the Authority shall pay or cause to be paid, the expenses incident to the performance of the obligations of the Authority hereunder including but not limited to:
(a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the Authority Documents and the cost of preparing, printing, issuing and delivering the Bonds;
(b) the fees and disbursements of any counsel, financial advisors, accountants or other experts or consultants retained by the Authority; (c) the fees and disbursements of Bond Counsel and Disclosure Counsel; (d) the cost of preparation and printing the Preliminary Official Statement and any supplements and amendments thereto and the cost of preparation and printing of the Official Statement, including a reasonable number of copies thereof for distribution by the Underwriter; (e) charges of rating agencies for the rating of the Bonds; and (f) the expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds.

The Underwriter shall pay: (i) the cost of preparation and printing of any “blue sky” filings; (ii) all “blue sky” filing fees in connection with the public offering of the Bonds; (iii) fees, if any, payable to the California Debt and Investment Advisory Commission, the MSRB, the fees associated with obtaining CUSIP numbers for the Bonds, and fees of the Public Securities Association and the California Public Securities Association in connection with the execution and delivery of the Bonds; (iv) the fees, expenses and disbursements of Underwriter’s Counsel; and (v) all other expenses incurred by them in connection with the public offering of the Bonds not outlined in (a) through (f) above, including any advertising expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds. Any meals in connection with or adjacent to meetings, rating agency presentations, pricing activities or other transaction-related activities shall be considered an expense of the transaction and included in the expense component of the Underwriter’s discount.

Some or all of the expenses to be paid by the Underwriter may be included as part of the expense component of the underwriting discount or commission or may be reimbursed to the Underwriter as out-of-pocket expenses.

10. Notice. Any notice or other communication to be given to the Underwriter may be given by delivering the same to Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Public Finance. Any notice or other communication to be given to the Authority pursuant to this Purchase Contract may be given by delivering the same in writing to such entity, at the address set forth on the first page hereof.

11. Entire Agreement. This Purchase Contract, when accepted by the Authority, shall constitute the entire agreement between the Authority and the Underwriter and is made solely for the benefit of the Authority and the Underwriter (including the successors or assigns of any Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the Authority’s representations, warranties and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of any investigation made by

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18 or on behalf of the Underwriter, until the earlier of (a) delivery of and payment for the Bonds hereunder, and (b) any termination of this Purchase Contract.

12. Counterparts. This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

13. 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.

14. State of California Law Governs. The validity, interpretation and performance of the Authority Documents shall be governed by the laws of the State.

15. No Assignment. The rights and obligations created by this Purchase Contract shall not be subject to assignment by the Underwriter or the Authority without the prior written consent of the other parties hereto.

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19 16. Definitions. Terms not otherwise defined herein shall have the same meaning as used in the Indenture.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Managing Director
The foregoing is hereby agreed to and accepted as of the date first above written:

COACHELLA WATER AUTHORITY
By:

Authorized Representative
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF PURCHASE CONTRACT]

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A-1

EXHIBIT A

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS
2022A SERIES
Maturity
(August 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOfferingPrice Rule
(marked if
used)
_______________
(T) Term Bond.
(C) Priced to optional call at par on August 1, 20[__]. * At the time of execution of this Purchase Contract and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Contract. .

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B-1

EXHIBIT B

FORM OF ISSUE PRICE CERTIFICATE
$[_______]

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS
2022A SERIES
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

1. Sale of the Bonds.
(a) The Underwriter offered each Maturity of the Bonds to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (b) As set forth in the Bond Purchase Contract, dated [_______], 2022, between the Issuer and the Underwriter, the Underwriter agreed in writing that, (i) for each Maturity of the Bonds, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule.

Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Bonds at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.

2. Insurance Policy. The fees paid for the Insurance Policy represent a reasonable, arm’s length charge for the assumption of credit risk involved in this transaction. The present value of the fees paid for the Insurance Policy is less than the present value of interest reasonably expected to be saved with respect to the Bonds as a result of the Insurance Policy. The discount rate used for computing such present value is the yield of the Bonds (determined with regard to the Insurance Policy fees).

4. Defined Terms.
(a) Holding Period means, for each Maturity of the Bonds, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Hilltop has sold at least 10% of such Maturity of the Bonds to the Public at prices that are no higher than the Initial Offering Price for such Maturity. (b) Insurance Policy means the policy of municipal bond insurance purchased by the Coachella Water Authority from [INSURER]

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B-2
(c) Issuer means the Coachella Water Authority.
(d) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(e) 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 generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (f) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [__________]. (g) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). [Remainder of Page Left Intentionally Blank]

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B-3
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Underwriter’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 and with respect to compliance with the federal income tax rules affecting the Bonds, and by Nixon Peabody LLP in connection with rendering its opinion 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.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Name:

Dated: [_________]

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B-4

SCHEDULE A

SALE PRICES
[BOND PRICING TO BE ATTACHED]

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B-5

SCHEDULE B

PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)

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$[_______]

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS
2022B SERIES

FORWARD DELIVERY PURCHASE CONTRACT
[_______], 2022
Coachella Water Authority
1515 Sixth Street
Coachella, California 92236
Ladies and Gentlemen:

Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) hereby offers to enter into this Forward Delivery Purchase Contract with you, the Coachella Water Authority (the “Authority”), for the purchase by the Underwriter and the delivery by you of the Bonds specified below. The Bonds are being issued by the Authority to (a) refund all of the Authority’s Water Revenue Refunding Bonds, 2012 Series (the “Refunded Bonds”) and (b) pay the costs of issuance of the Bonds, including the premium for a municipal bond insurance policy. This offer is made subject to acceptance by you prior to 11:59 p.m., Los Angeles time, on the date hereof. Upon such acceptance, this Purchase Contract shall be in full force and effect in accordance with its terms and shall be binding upon you and the Underwriter.

1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell to the Underwriter, all (but not less than all) of the $[_______] aggregate principal amount of the Authority’s Water Revenue Refunding Bonds, 2022B Series (the “Bonds”), at the purchase price of $[_________] (being the principal amount of the Bonds, less an Underwriter’s discount in the amount of $[_________], and [plus/less] [net] original issue [premium/discount] of $[________]).

The Bonds will have the maturities and bear interest at the rates set forth on Exhibit A hereto.

The Refunded Bonds will be defeased and refunded in accordance with an Escrow Agreement, dated as of May 1, 2022 (the “Escrow Agreement”), by and between the Authority and U.S. Bank National Association, as escrow agent (the “Escrow Agent”).

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2 The Authority acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s-length commercial transaction between the Authority and the Underwriter in which the Underwriter is acting solely as principal and not as agent of the Authority and the Underwriter is not acting as a municipal advisor (within the meaning of Section 15B of The Securities Exchange Act of 1934, as amended), financial advisor or fiduciary to the Authority; (ii) the Underwriter has not assumed any advisory or fiduciary responsibility to the Authority with respect to the transaction contemplated by this Purchase Contract and the discussions, undertakings or procedures leading thereto (irrespective of whether the Underwriter, or any affiliate of the Underwriter has provided other services or is currently providing other services to the Authority on other matters); (iii) the only obligations the Underwriter has to the Authority with respect to the transaction contemplated by this Purchase Contract are expressly set forth in this Purchase Contract; (iv) the Underwriter has financial and other interests that differ from those of the Authority; and (v) the Authority has consulted its own financial and/or municipal legal, accounting, tax and other advisors, as applicable, to the extent the Authority has deemed appropriate. The Authority acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (the “MSRB”).

2. Authorizing Instruments and Law. The Bonds shall be issued pursuant to the provisions of a resolution (the “Resolution”) adopted by the Authority on [_______], 2021 authorizing the issuance of the Bonds. The Bonds are issued pursuant to an Indenture of Trust, dated as of May 1, 2022 (the “Indenture”), between the Authority and Wilmington Trust, National Association (the “Trustee”), and shall be as described in the Indenture.

The Bonds are limited obligations of the Authority payable primarily from and secured by certain Net Revenues pledged under the Indenture.

4. Establishment of Issue Price
A. The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.

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3 B. Except as set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Contract, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.

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4 comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.

Further, for purposes of this section:
a. “public” means any person other than an underwriter or a related party;

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5 b. “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public);
c. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
d. “sale date” means the date of execution of this Purchase Contract by all parties.

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6 date for purposes of Rule 15c2-12, with the exception of certain final pricing and related information referred to in Rule 15c2-12. The Underwriter has distributed a copy of the Preliminary Official Statement to potential customers on request.

At the request of the Underwriter, the Authority shall prepare one updated Official Statement between the date of Closing (as hereinafter defined) and Settlement (as hereinafter defined), which shall be dated a date not later than one week prior to Settlement relating to the Bonds (the “Updated Official Statement”), which, as of such date, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Updated Official Statement may consist either of the Final Official Statement and a supplement thereto or a separate document substantially in the form of the Final Official Statement updated to its date of delivery. If an Updated Official Statement is prepared, the Authority shall furnish to the Underwriter, not less than five days prior to Settlement or on such earlier requested date of the Updated Official Statement, copies of the Updated Official Statement in sufficient quantity as requested by the Underwriter to comply with SEC Rule 15c2-12(b)(4) and the rules of the MSRB. The Underwriter agrees to promptly file any Updated Official Statement with a nationally recognized municipal securities information repository.

As used herein, the term “Official Statement” shall mean (i) at any point in time during the period from the date of the Final Official Statement to but not including the date of delivery of any Updated Official Statement to the Underwriter pursuant to this paragraph, the Final Official Statement, and (ii) from and after the date of such delivery of any Updated Official Statement, the Updated Official Statement. References herein as of a specific date to the Official Statement shall mean the Official Statement applicable on such date in accordance with the preceding sentence.

6. The Closing. At 8:30 a.m. California time on _______, 2021, or such other time as shall be agreed upon by the Underwriter and the Authority (the “Closing Date”), the Authority will deliver or cause to be delivered to the Underwriter at the offices of Nixon Peabody LLP, bond counsel to the Authority (“Bond Counsel”) in Los Angeles, California (or such other location as may be designated by the Underwriter and approved by the Authority) the closing documents hereinafter mentioned and (such delivery being herein referred to as “Closing”).

Assuming the Closing is completed in accordance with the provisions of this Purchase Contract, then, subject to the provisions of this Purchase Contract, the Underwriter shall be obligated to purchase the Bonds and pay the purchase price therefor (and the Authority shall be obligated to issue and deliver such Bonds) at 8:30 a.m., California time, on [______], 2022, or at such later date as may be mutually agreed upon by the Authority and the Underwriter (the “Settlement Date”). In connection with the payment for and delivery of the Bonds (the “Settlement”), the Authority will deliver or cause to be delivered to the Underwriter the Bonds in registered form, duly executed, together with the other documents required by Section 10 below, and subject to the terms and conditions of this Purchase Contract, the Underwriter will accept delivery of the Bonds through the facilities of The Depository Trust Company (“DTC”) or such other place as shall have been mutually agreed upon by the Underwriter and the Authority and pay the purchase price of the Bonds as set forth in Section 1. Delivery of the documents provided for herein to be made at Settlement shall be made at the office of Bond Counsel, or such other place as shall have been mutually agreed upon by the Underwriter and the Authority.

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7 7. Authority Representations, Warranties and Covenants. The Authority represents, warrants and covenants to the Underwriter that:
(a) The Authority is a joint exercise of powers agency, duly organized and validly existing pursuant to the Constitution and laws of the State of California (the “State”), and has all necessary power and authority to enter into and perform its duties under the Indenture, the Continuing Disclosure Certificate, dated the Closing Date (the “Continuing Disclosure Certificate”) of the Authority, the Escrow Agreement and this Purchase Contract (collectively, the “Authority Documents”).
(b) The Bonds, when issued in accordance with the Indenture, will be legally valid and binding special obligations of the Authority, entitled to the benefits of the Indenture and enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.
(c) To the best knowledge of the Authority, neither the execution and delivery of the Authority Documents, or the approval and execution of the Official Statement or this Purchase Contract, and compliance with the provisions on the Authority’s part contained therein, nor the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment of the terms hereof and thereof, materially conflicts with or constitutes a material breach of or default under nor materially contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in a security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents.
(d) The Authority Documents have been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute legal, valid and binding agreements of the Authority enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against cities and agencies in the State of California.
(e) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory agency having jurisdiction over the Authority required for the consummation by the Authority of the transactions contemplated by the Official Statement and this Purchase Contract. (f) To the best of the knowledge of the Authority, there is, and on the Closing there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the Authority to restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Authority Documents or the authority of the Authority to approve this Purchase

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8 Contract, or enter into the Authority Documents or contesting the powers of the Authority to enter into or perform its obligations under any of the foregoing or in any way contesting the powers of the Authority in connection with any action contemplated by this Purchase Contract or to restrain or enjoin the execution of, or, except as described in the Preliminary Official Statement and the Official Statement, the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, nor is there any basis for any such action, suit, proceeding or investigation.
(g) The Preliminary Official Statement provided to the Underwriter has been deemed final by the Authority, as required by Rule 15c2-12. As of the date thereof and at all times subsequent thereto up to and including the End Date, the information relating to the Authority, the Bonds, the Enterprise and the Authority Documents contained in the Official Statement was and will be materially complete for its intended purposes. The information relating to the Authority, the Bonds, the water system of the City of Coachella (such system is designated, the “Enterprise”) and the Authority Documents contained in the Official Statement (excluding any information with respect to DTC, the book-entry only system, the Trustee, the Insurance Policy or the Insurer (as defined in the Official Statement and discussed below)) is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect. (h) The Authority agrees to cooperate with the Underwriter in endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the Authority will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject.
(i) By official action of the Authority prior to or concurrently with the execution hereof, the Authority has duly approved the distribution of the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in the Authority Documents and the consummation by it of all other transactions contemplated by the Official Statement and this Purchase Contract. (j) To the best knowledge of the Authority, it is not in breach of or default under any material applicable law or administrative regulation of the State of California or the United States or any material applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject and in connection with which the Authority is obligated to make payments from its own funds, 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 an event of default under any such instrument the consequence of which could be to materially and adversely affect the performance of the Authority under the Authority Documents.
(k) If between the date of this Purchase Contract and the End Date and the Settlement an event occurs, of which the Authority has knowledge, which might or would cause the information relating to the Authority, the Enterprise or the Authority’s functions, duties and responsibilities contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was

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9 presented, not misleading in any material respect, the Authority will notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement in a form and in a manner approved by the Underwriter, provided all expenses thereby incurred will be paid for by the Authority.
(l) If the information relating to the Enterprise, the Authority, its functions, duties and responsibilities contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date of the Closing and the Settlement, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading in any material respect. (m) The Authority covenants that it will comply with all tax covenants relating to it in the Authority Documents, the Tax Certificate of the Authority and this Purchase Contract. (n) Substantially all the proceeds from the sale of the Bonds (after deducting the expenses of issuance and sale of the Bonds paid for from such proceeds) will be used to finance and/or refinance certain improvements to the Enterprise, and the Authority will not take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to that provided in the Indenture. (o) The Authority will deliver all opinions, certificates, letters and other instruments and documents reasonably required by the Underwriter and this Purchase Contract. (p) Any certificate of the Authority delivered to the Underwriter shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein.
(q) As of the time of acceptance hereof and as of the Closing and the Settlement, the Authority does not, and will not have outstanding, any indebtedness which is secured by a lien on Net Revenues except as disclosed in the Official Statement. (r) Between the date of this Purchase Contract and the date of Closing and the Settlement, the Authority will not, without the prior written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue any certificates, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, secured by a lien on Net Revenues.
(s) All authorizations, approvals, licenses, permits, consents and orders of or filings with any governmental authority, legislative body, board, agency or commission having jurisdiction in the matters which are required for the due authorization of, which would constitute a condition precedent to or the absence of which would adversely affect the due performance by the Authority of its obligations in connection with, the Authority Documents have been duly obtained or

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10 made, except as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds.
(t) The Authority has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Authority is a bond issuer whose arbitrage certifications may not be relied upon.
(u) The written information supplied by the Authority to the Underwriter with respect to the financial information relating to the Enterprise is true, correct and complete in all material respects for the purposes for which it was supplied. (v) Except as otherwise described in the Preliminary Official Statement and Official Statement, the Authority has not failed in any material respect to comply with any undertaking of the Authority under Rule 15c2-12 in the previous five years.

9. Closing Conditions. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties and covenants herein and the performance by the Authority of its respective obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriter’s obligations hereunder are and shall be subject to the following additional conditions:
(a) Bring-Down Representation. The representations, warranties and covenants of the Authority contained herein shall be true and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing.

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11 (b) Executed Agreements and Performance Thereunder. At the time of the Closing:
(i) the Authority Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter;
(ii) there shall be in full force and effect the Resolution as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions on the part of the Authority contemplated by the Official Statement and the Authority Documents;
(iii) the Authority shall perform or have performed its obligations required as specified in the Authority Documents to be performed at or prior to Closing; and
(iv) the Official Statement shall not have been supplemented or amended, except pursuant to Paragraph 7(k), or as otherwise may have been agreed to in writing by the Underwriter.
(c) No Default. At the time of the Closing, no default shall have occurred or be existing under the Authority Documents and the Authority shall not be in default in the payment of principal or interest on any of its bonded indebtedness which default shall adversely impact the ability of the Authority to make payments on the Bonds. (d) Termination Events. The Underwriter shall have the right to terminate this Purchase Contract, without liability therefor, by written notification to the Authority if at any time at or prior to the Closing:
(i) Any event occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or the Official Statement, or results in the Preliminary Official Statement or the Official Statement containing any untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(ii) Legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to alter, directly or indirectly, federal income taxation upon interest received

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12 on obligations of the general character of the Bonds, or the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated herein; or
(iii) Legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering, or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect; or (iv) A general suspension of trading in securities on the New York Stock Exchange or any other national securities exchange, the establishment of minimum or maximum prices on any such national securities exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, or any material increase of restrictions now in force (including, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter); or
(v) The declaration of a general banking moratorium by federal, New York or State authorities, or the general suspension of trading by the New York Stock Exchange, any national securities exchange, or any governmental authority securities exchange or a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or
(vi) Establishment of any new restrictions in securities materially affecting the free market for securities of the same nature as the Bonds (including the imposition of any limitations on interest rates) or the charge to the net capital requirements of the Underwriter established by the New York Stock Exchange, the Securities and Exchange Commission, any other Federal or state agency or the Congress of the United States, or by Executive Order; or
(vii) The occurrence of an adverse event in the affairs of the Authority which, in the reasonable judgement of the Underwriter, materially impairs the investment quality of the Bonds; or

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13 (viii) Any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Authority, its property, income or securities (or interest thereon), or the ability of the Authority to issue the Bonds and pledge the Net Revenues as contemplated by the Indenture and the Official Statement; or
(ix) There shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or (x) There shall have occurred since the date of this Purchase Contract any materially adverse change in the affairs or financial position, results of operations or condition, financial or otherwise, of the Authority, other than changes in the ordinary course of business or activity or in the normal operation of the Authority, except as described in the Official Statement; or
(xi) Any proceeding shall have been commenced or be
threatened in writing by the SEC against the Authority or the suspension by the SEC of trading in the outstanding securities of the Authority; or (xii) Any rating of the Insurer shall have been downgraded, suspended or withdrawn or placed on negative outlook or negative watch by a national rating service, which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (xiii) An event described in Section 7(k) hereof shall have occurred which, in the reasonable professional judgment of the Underwriter, requires the preparation and publication of a supplement or amendment to the Official Statement;
(xiv) The marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets;
(xv) The purchase of and payment for the Bonds by the
Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; or (xvi) Any rating of the Bonds or other obligations of the Authority by a national rating agency shall have been withdrawn or downgraded or placed on negative outlook or negative watch.

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14 (e) Closing Documents. At or prior to the Closing, the Underwriter shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. A letter of Bond Counsel dated the date of Closing and addressed to the Authority to the effect that assuming satisfaction by the Authority and the Underwriter of their respective obligations to be satisfied under this Purchase Contract and the issuance of the Bonds, and no change in any applicable law, regulations or rulings, or in interpretations thereof, or in any other facts or circumstances (tax or otherwise) which, in the view of Bond Counsel, affect or are material to the opinion of Bond Counsel (including, without limitation, the existence of any litigation), Bond Counsel will be able to issue its approving opinion on the Settlement Date and substantially in the form included as APPENDIX D to the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Authority, the Underwriter and the Trustee to the effect that the foregoing opinion may be relied upon by the Underwriter to the same extent as if such opinion was addressed to them. (2) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, in substantially the form and to the following effect:
(a) The statements and information contained in the Official Statement on the cover page relating to tax exemption, the description of the Bonds, and security for the Bonds, and under the captions “INTRODUCTION – General,” “ - The Bonds,” and “- Security for the Bonds,” “THE BONDS” (except for the information under the caption “Book-Entry Only System”), “SECURITY FOR THE BONDS” and “TAX MATTERS,” and in APPENDICES A and D, are true and accurate in all material respects; and
(b) The Bonds are exempt from registration under Section 3(a)(2) of the Securities Act of 1933, as amended and the Indenture is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended; (c) The Purchase Contract has been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto, constitutes legal, valid and binding agreement of the Authority enforceable against the Authority in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and equitable remedies if equitable remedies are sought, and except no opinion need be expressed as to the enforceability of the indemnification, waiver, choice of law or contributions provisions contained therein.
(3) Authority Counsel Opinion. An opinion of the Authority’s General Counsel, dated as of the Closing and addressed to the Authority, the Trustee and the Underwriter, in form and substance acceptable to Bond Counsel and counsel for the Underwriter to the effect that it is not currently aware of any reason that will prevent such counsel from delivering an opinion substantially as described in Section 10(f).
(4) Trustee Counsel Opinion. A letter of counsel to the Trustee, dated the date of the Closing, addressed to the Authority and the Underwriter, to the effect that it is not currently aware of any reason that will prevent such counsel from delivering its opinion substantially

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15 described in Section 10(l) in form and substance acceptable to Bond Counsel and counsel for the Underwriter.
(5) Escrow Agent Counsel Opinion. A letter of counsel to the Escrow Agent dated the date of the Closing, addressed to the Authority and the Underwriter, to the effect that it is not currently aware of any reason that will prevent such counsel from delivering its opinion substantially described in Section 10(m) in form and substance acceptable to Bond Counsel and counsel for the Underwriter.
(6) Negative Assurance Letter of Disclosure Counsel. A letter from Nixon Peabody LLP, disclosure counsel to the Authority (“Disclosure Counsel”), dated the Closing Date, addressed to the Underwriter and the Authority, to the effect that, based upon its participation in the preparation of the Official Statement as counsel to the Authority and without having undertaken to determine independently the fairness, accuracy, or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that the Preliminary Official Statement (except for the completion of pricing information and any other matters or terms of the Bonds relating thereto) as of its date or as of this Purchase Contract or the Official Statement as of its date or as of the date of the Closing (excluding therefrom (i) the expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts, the financial statements or other financial, numerical, economic, demographic or statistical data, or assessed valuations contained in the Official Statement; (ii) any CUSIP numbers or information relating thereto; (iii) any information with respect to The Depository Trust Company and its book-entry system; (iv) any information contained in the appendices to the Official Statement; (v) any information incorporated by reference into the Official Statement; (vi) any information with respect to the underwriters or underwriting matters with respect to the Bonds, including but not limited to information under the caption CONCLUDING INFORMATION—Underwriting”; (vii) information under the captions “NO LITIGATION”; (ix) any information with respect to the ratings on the Bonds and the rating agencies referenced therein, including but not limited to information under the caption “CONCLUDING INFORMATION— Ratings”; and (x) any information with respect to the Insurance Policy or the Insurer, including but not limited to information under the captions, “BOND INSURANCE” contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (7) Defeasance Opinion. A letter of Bond Counsel, dated the Closing Date and addressed to the Trustee and the Underwriter to the effect that, assuming satisfaction by the Authority and the Underwriter of their respective obligations to be satisfied under this Purchase Contract and the execution and delivery of the Indenture and the Bonds, and no change in any applicable law, regulations or rulings, or in interpretations thereof, or in any other facts or circumstances (tax or otherwise) which, in the view of Bond Counsel, affect or are material to the opinion of Bond Counsel (including, without limitation, the existence of any litigation), Bond Counsel will be able to issue a defeasance opinion or opinions with respect to the Refunded Bonds, dated the Settlement Date and addressed to the Trustee and the Underwriter, in form and substance satisfactory to the Underwriter.
(8) Authority Certificate. A certificate, dated the date of the Closing, signed by a duly authorized official of the Authority satisfactory in form and substance to the Underwriter, (a) confirming as of such date the representations and warranties of the Authority contained in this Purchase Contract; (b) certifying that the Authority has complied with all agreements, covenants and conditions to be complied with by the Authority at or prior to the Closing under the Authority

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16 Documents; (c) certifying that to the best of such official’s knowledge, no event affecting the Authority has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing the statements or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; and (d) certifying that the Authority has authorized and consented to the inclusion in the Official Statement of the Authority’s financial report and accountant’s opinion for the year ended June 30, 2020, and no further consent of any party is required for such inclusion. (9) Official Statement. The Official Statement and each supplement or amendment, if any, thereto, executed on behalf of the Authority by a duly authorized officer of the Authority.
(10) Authority Resolution. A certified copy of the Resolution. (11) IRS Form 8038-G. Evidence that the federal tax information form 8038-G has been prepared for filing.
(12) Nonarbitrage Certificate. A tax and nonarbitrage certificate in form satisfactory to Bond Counsel.
(13) Ratings. Evidence that the Bonds have been rated as set forth in the Official Statement and that such ratings continue in effect as of the Closing. (14) Underwriter’s Counsel Opinion. An opinion, dated the date of the Closing and addressed to the Underwriter, of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), in such form as may be acceptable to the Underwriter. (15) Additional Documents. Such additional certificates, instruments and other documents as the Underwriter may reasonably deem necessary.

10. Settlement Conditions The Underwriter’s obligations under this Purchase Contract to purchase, to accept delivery of and pay for the Bonds at the Settlement shall be conditioned upon the representations, warranties and covenants of the Authority contained herein as of the Settlement Date as if made on such date, the performance of the Authority of its respective obligations under this Purchase Contract, including, without limitation, the Closing having been completed, and the Authority having tendered performance of their respective obligations under Section 6 with respect to the Settlement, which Settlement shall not be completed unless the Underwriter shall receive at the time of Settlement the following:
(a) At the time of Settlement, the Authority Documents, all as described in the Official Statement, shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the Authority Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing

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17 by the Underwriter, and there shall be in full force and effect such resolutions as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated hereby.
(b) Any Updated Official Statement and each supplement or amendment thereto and such number of conformed copies as the Underwriter shall reasonably require; (c) The approving opinion, dated the date hereof and addressed to the Authority of Bond Counsel in substantially the form of Appendix D to the Official Statement; (d) A supplemental opinion of Bond Counsel addressed to the Underwriter in form and substance acceptable to the Underwriter, and dated the Settlement Date in the form and substance acceptable to the Underwriter;
(e) A defeasance opinion of Bond Counsel, dated the Settlement Date, and addressed to the Authority and U.S. Bank National Association, as trustee for the Refunded Bonds, and the Underwriter in the form and substance acceptable to the Underwriter; (f) An opinion of the Authority’s General Counsel, dated as of the Closing and addressed to the Authority, the Trustee and the Underwriter, in form and substance acceptable to Bond Counsel and counsel for the Underwriter to the effect to the following effect:
(i) the Authority is a joint exercise of powers agency, duly organized and validly existing under the Constitution and the laws of the State of California;
(ii) the preparation and distribution of the Preliminary Official Statement, the Official Statement and this Purchase Contract have been duly approved by the Authority;
(iii) the resolution of the Authority approving and authorizing the execution and delivery of the Official Statement, this Purchase Contract and the Authority Documents has been duly adopted at a meeting of the governing body of the Authority which was called and held pursuant to law, and with all public notice required by law and at which a quorum was present and acting throughout; (iv) there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best knowledge of such counsel, threatened against or affecting the Authority, which would adversely impact the Authority’s ability to complete the transactions described in and contemplated by the Official Statement, to restrain or enjoin the payments under, or in any way contesting or affecting the validity of the Authority Documents, or the transactions described and defined in the Official Statement wherein an unfavorable decision, ruling or finding would adversely affect the validity and enforceability of the Authority Documents;
(v) the execution and delivery of the Authority Documents and the approval of the Official Statement, and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby, do not and will not in any

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18 material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the Authority is subject;
(vi) the Authority Documents have been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto, as applicable, constitute legal, valid and binding agreements of the Authority enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against public agencies in the State of California; (vii) no authorization, approval, consent, or other order of the State of California or any other governmental authority or agency within the State of California is required for the valid authorization, execution and delivery of the Authority Documents and the approval of the Official Statement; and (viii) without having undertaken any independent inquiry, nothing has come to their attention which would lead them to believe that the information contained in the Official Statement in the Sections “INTRODUCTION – The City, the Authority and the Water Enterprise,” “THE WATER ENTERPRISE” and “NO LITIGATION” contains an untrue statement or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(g) A letter of Nixon Peabody LLP, as Disclosure Counsel, dated the Settlement Date, and addressed to the Underwriter and the Authority substantially in the form and substance acceptable to the Underwriter (which may include any deletions or corrections to the applicable references to sections in the Updated Official Statement); (h) The opinion of Underwriter’s Counsel, dated the Settlement Date and addressed to the Underwriter in form and substance acceptable to the Underwriter; (i) A certificate of a duly authorized representative of the Authority, dated the Settlement Date, in form and substance similar to that contained in the certificate required under Section 9(e)(8) hereof;
(j) A certificate of a duly authorized official of the Trustee, dated the Settlement Date, to the effect that: (A) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States, having the full power and being qualified to enter into and perform its duties under the Indenture and to authenticate and deliver the Bonds to the Underwriter; (B) the Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriter pursuant to the Indenture; (C) when delivered to and paid for by the Underwriter at the Closing, the Bonds will have been duly authenticated and delivered by the Trustee; (D) the execution and delivery of the Indenture and compliance with the provisions on the Trustee’s part contained therein, will not conflict with or constitute a breach of or default under any law,

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19 administrative regulation, judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the Trustee is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or blue sky laws or regulations), which conflict, breach or default would materially impair the ability of the Trustee to perform its obligations under the Indenture, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the lien created by the Indenture under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Indenture; and (E) to the best of the knowledge of the Trustee, it has not been served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or body, nor is any such action or other proceeding threatened against the Trustee, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain, or enjoining the execution and delivery of the Bonds or the collection of revenues to be applied to pay the principal, premium, if any, and interest with respect to the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Indenture, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or funding would materially adversely affect the validity or enforceability of the Indenture or the power and authority of the Trustee to enter into and perform its duties under the Indenture and to authenticate and deliver the Bonds to or upon the order of the Underwriter; (k) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of the Indenture;
(l) The opinion, dated the Settlement Date and addressed to the Underwriter of Counsel to the Trustee, to the effect that: (A) the Trustee has been duly organized as a national banking association under the laws of the United States with trust powers, having full power and authority to enter into and to perform its duties as Trustee under the Indenture; (B) the Trustee has duly authorized, executed and delivered the Indenture, and by all proper corporate action has authorized the acceptance of the trusts of the Indenture; (C) the Indenture constitutes the legally valid and binding agreement of the Trustee, enforceable against the Trustee in accordance with its terms, and (D) the Bonds have been validly authenticated and delivered by the Trustee to the Underwriter; (m) A certificate and general resolution of the Escrow Agent and opinion of Counsel to the Escrow Agent in the form substantially similar to those required above for the Trustee; (n) A Tax Certificate of the Authority in form and substance acceptable to Bond Counsel;
(o) A Certificate of the Authority with respect to the Water System evidencing that the insurance required by the Indenture has been procured and is in full force and effect; (p) The Insurance Policy issued by the Insurer; an opinion of counsel to the Insurer, dated the date of Settlement, addressed to the Authority, the Trustee and the Underwriter, regarding the Insurer’s valid existence, power and authority, the Insurer’s due authorization

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20 and issuance of the Insurance Policy and the enforceability of the Insurance Policy against the Insurer; and a certificate of the Insurer or an opinion of counsel to the Bond Insurer, dated the date of Settlement, regarding the accuracy of the information in the Official Statement describing the Insurer and the Insurance Policy.
(q) Evidence that the federal tax information form 8038-G has been prepared for filing; (r) A copy of the Notice of Proposed Sale and Report of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855(g) of the California Government Code;
(s) A copy of the Authority’s executed Blanket Letter of Representation to The Depository Trust Company;
(t) A verification report or reports of Causey Demgen & Moore P.C., as verification agent (the “Verification Agent”) verifying the arithmetical accuracy of certain computations relating to the computation of forecasted receipts of principal of and interest on the securities and cash deposits in the escrow account to pay the principal of and interest on and redemption price of the Refunded Bonds.
(u) Evidence stating the current rating on the Bonds from S&P Global Ratings as of the Settlement Date; and
(v) Such additional legal opinions, certificates, instruments or evidences thereof and other documents as the Counsel to the Underwriter or Bond Counsel may request to evidence the due authorization, execution and delivery of the Bonds and the conformity of the Bonds, the Authority Legal Documents with the terms of the Bonds and the descriptions thereof in the Official Statement.

11. Settlement Termination. The Underwriter shall have the right to terminate this Purchase Contract, without liability therefor, by written notification to the Authority if at any time on or after Closing and on or prior to Settlement:
(a) There shall have been a Change in Law. A “Change in Law” means (i) any change in or addition to applicable federal or state law, whether statutory or as interpreted by the courts or by federal or state agencies, including any changes in or new rules, regulations or other pronouncements or interpretations by federal or state agencies; (ii) any legislation enacted by the Congress of the United States (if such enacted legislation has an effective date which is on or before the Settlement Date), (iii) any law, rule or regulation enacted by any governmental body, department or agency (if such enacted law, rule or regulation has an effective date which is on or before the Settlement Date) or (iv) any judgment, ruling or order issued by any court or administrative body, which in any such case would, (A) as to the Underwriter prohibit the Underwriter from completing the underwriting of the Bonds or selling the Bonds or beneficial ownership interests therein to the public, or (B) as to the Authority, would make the completion of the issuance, sale or delivery of the Bonds illegal.

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21 (b) Legislation shall be enacted, or a decision by a court of the United States shall be rendered, or any action shall be taken by, or on behalf of, the Securities and Exchange Commission which has the effect of requiring the Bonds, and any and all underlying obligations, to be registered under, or the sale thereof to be in violation of, the Securities Act of 1933, as amended or has the effect of requiring the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, or, in each case, any law analogous thereto relating to governmental bodies;
(c) As a result of any legislation, regulation, ruling, order, release, court decision or judgment or action by the U.S. Department of the Treasury, the Internal Revenue Service, or any agency of the State either enacted, issued, effective, adopted or proposed (but only with respect to any such proposed legislation, regulation, ruling, order, release, court decision or judgment or action that continues to be proposed as of the Settlement Date), or for any other reason, Bond Counsel cannot issue an opinion substantially in the form of Appendix C to the Official Statement as to the tax-exempt status of the Bonds.
(d) There shall have occurred (A) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war or (B) any other calamity or crisis in the financial markets of the United States or elsewhere. (e) The Preliminary Official Statement, as of its date, contained any untrue statement or misstatement of material fact or omitted to state a material fact necessary in order to make the statements and information contained therein not misleading in any material respect; the Official Statement (as amended, if applicable) as of its date or as of the Closing Date contained any untrue statement or misstatement of material fact or omitted to state a material fact necessary in order to make the statements and information contained therein not misleading in any material respect; or the Updated Official Statement (as amended, if applicable) as of its date or as of the Settlement Date, contained or contains any untrue statement or misstatement of material fact or omitted or omits to state a material fact necessary in order to make the statements and information contained therein not misleading in any material respect; (f) The declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading on any national securities exchange; (g) A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the U.S. Securities and Exchange Commission (“SEC”) or any other governmental authority having jurisdiction. (h) A general banking moratorium has been declared by federal, New York or State authorities and shall remain in effect.
(i) Legislation shall have been enacted by the Congress of the United States or shall have been favorably reported out of committee or be pending in committee, or shall have been recommended to the Congress for passage by the President of the United States,

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22 or a decision by a court of the United States shall be rendered, or a ruling, regulation, proposed regulation or statement by or on behalf of the SEC or other governmental agency having jurisdiction of the subject matter shall be made, to the effect that any obligations of the general character of the Bonds, or any comparable securities of the Authority, are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, the Securities Exchange Act of 1934 or the Trust Indenture Act of 1939 or otherwise, or would be in violation of any provision of the federal securities laws.
(j) Any event or circumstance exists that either makes untrue or incorrect, in a material respect, any statement or information contained in the Official Statement, or is not reflected in the Official Statement but should be reflected in the Official Statement in order to make the statements and information contained in the Official Statement not misleading in any material respect and, in either such event, the Authority refuses to permit the Official Statement to be supplemented to supply such statement or information, or the effect of the Official Statement as so supplemented is to materially adversely affect the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds. (k) Additional material restrictions not in force as of the date of the Purchase Contract shall have been imposed upon trading in securities generally by any federal, State or New York governmental authority or by any United States national securities exchange.
(l) The New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose as to the Bonds or securities of the general character of the Bonds any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements of the Underwriter.
(m) The Authority does not deliver a certification as of the Settlement Date to the effect that (A) the evidence of the ratings on the Bonds delivered at and as of the initial closing date remains accurate or (B) the ratings on the Bonds at and as of the Settlement Date are as stated in such certification.

If the Authority shall be unable to satisfy the conditions contained in this Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the Authority shall be under further obligation hereunder, except as further set forth in Section 9 and Section 10.

12. Expenses. The Underwriter shall be under no obligation to pay, and the Authority shall pay or cause to be paid, the expenses incident to the performance of the obligations of the Authority hereunder including but not limited to:
(a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the Authority Documents and the cost of preparing, printing, issuing and delivering the Bonds;

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23 (b) the fees and disbursements of any counsel, financial advisors, accountants or other experts or consultants retained by the Authority; (c) the fees and disbursements of Bond Counsel and Disclosure Counsel; (d) the cost of preparation and printing the Preliminary Official Statement and any supplements and amendments thereto and the cost of preparation and printing of the Official Statement, including a reasonable number of copies thereof for distribution by the Underwriter; (e) charges of rating agencies for the rating of the Bonds; and (f) the expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds.

13. Notice. Any notice or other communication to be given to the Underwriter may be given by delivering the same to Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Public Finance. Any notice or other communication to be given to the Authority pursuant to this Purchase Contract may be given by delivering the same in writing to such entity, at the address set forth on the first page hereof.

14. Entire Agreement. This Purchase Contract, when accepted by the Authority, shall constitute the entire agreement between the Authority and the Underwriter and is made solely for the benefit of the Authority and the Underwriter (including the successors or assigns of any Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the Authority’s representations, warranties and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter, until the earlier of (a) delivery of and payment for the Bonds hereunder, and (b) any termination of this Purchase Contract.

15. Counterparts. This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

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Item 28.
24 16. 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.

17. State of California Law Governs. The validity, interpretation and performance of the Authority Documents shall be governed by the laws of the State.

18. No Assignment. The rights and obligations created by this Purchase Contract shall not be subject to assignment by the Underwriter or the Authority without the prior written consent of the other parties hereto.

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Item 28.
25 19. Definitions. Terms not otherwise defined herein shall have the same meaning as used in the Indenture.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Managing Director
The foregoing is hereby agreed to and accepted as of the date first above written:

COACHELLA WATER AUTHORITY
By:

Authorized Representative
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF PURCHASE CONTRACT]

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Item 28.

A-1

EXHIBIT A

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS
2022B SERIES
Maturity
(August 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOfferingPrice Rule
_______________
(T) Term Bond.
(C) Priced to optional call at par on August 1, 20[__]. * At the time of execution of this Purchase Contract and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Contract. .

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Item 28.

B-1

EXHIBIT B

FORM OF ISSUE PRICE CERTIFICATE
$[_______]

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS
2022B SERIES
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).

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Item 28.

STIFEL, NICOLAUS & COMPANY,

INCORPORATED
By:

Name:

Dated: [_________]

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B-3

SCHEDULE A

SALE PRICES
[BOND PRICING TO BE ATTACHED]

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B-4

SCHEDULE B

PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)

Page 537 ends

Item 28.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment without notice. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. 4817-2199-5518.5
NP DRAFT 12/13/21
PRELIMINARY OFFICIAL STATEMENT DATED ________, 2022
NEW ISSUE - FULL BOOK ENTRY ONLY RATINGS: Insured: S&P: “__” Underlying: S&P: “__”
(See “CONCLUDING INFORMATION — Ratings” herein)
In the opinion of Nixon Peabody LLP, Bond Counsel, under existing law and assuming compliance with the tax covenants, including with respect to the 2022B Bonds, the satisfaction of certain terms and conditions provided in the 2022B Bond Purchase Agreement as described under the heading “FORWARD DELIVERY OF THE 2022B BONDS” described herein, and the accuracy of certain representations and certifications made by the Authority and the City described herein, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). Bond Counsel, is also of the opinion that interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed under the Code. Bond Counsel is further of the opinion that interest on the Bonds is exempt from personal income taxes of the State of California (“State”) under present law. See “TAX MATTERS” herein regarding certain other tax consequences. $__________

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS,
2022A SERIES
$__________*

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS,
2022B SERIES (FORWARD DELIVERY)
Dated: Date of Delivery Due: August 1, as shown herein
The above-captioned Water Revenue Refunding Bonds, 2022A Series (the “2022A Bonds”) and the Water Revenue Refunding Bonds, 2022B (the “2022B Bonds” and together with the 2022A Bonds, the “Bonds”) are being issued by the Coachella Water Authority (the “Authority”) pursuant to separate Indentures of Trust, dated as of [February] 1, 2022 and [May] 1, 2022, respectively (each, an “Indenture” and together the “Indentures”) both by and between the Authority and Wilmington Trust, National Association, Costa Mesa, California (the “Trustee”), and will be secured as described herein. The 2022A Bonds are being issued to (a) refund certain prior obligations of the Authority, (b) finance certain improvements to the Water Enterprise, and (c) pay the costs of issuance of the 2022A Bonds. The 2022B Bonds are being issued to (a) refund certain prior obligations of the Authority, and (b) pay the costs of issuance of the 2022B Bonds. See “THE FINANCING PLAN,” “THE WATER ENTERPRISE” and “ESTIMATED SOURCES AND USES OF FUNDS” herein. Definitions of certain capitalized terms herein are contained in APPENDIX A hereto, and are incorporated herein by reference.

The Bonds will be executed and delivered as fully registered certificates in book-entry form only, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company (“DTC”), New York, New York. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases of the Bonds will be in principal amounts of $5,000 or in any integral multiples of $5,000. Interest payable with respect to the Bonds will be payable on February 1 and August 1 in each year, beginning August 1, 2022 (the “Interest Payment Dates”), and principal payable with respect to the Bonds will be paid on the dates set forth in the Maturity Schedule on the inside cover. Payments of principal of and interest on the Bonds will be paid by the Trustee, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial Owners of the Bonds.

Payment of principal of and interest on the Bonds (the “Debt Service Payments”) are a special limited obligation of the Authority, payable from and secured by a pledge of and first lien on all Net Revenues (defined herein) of the Water Enterprise. Subject to certain conditions set forth in the Indenture, the Authority may at any time incur revenue bonds, notes or other evidences of indebtedness of the Authority payable from Net Revenues on parity with or subordinate to the Bonds and Parity Obligations.

The 2022A Bonds are subject to redemption as described herein* . See “THE BONDS —Redemption of the 2022A Bonds” herein. The 2022B Bonds are not subject to redemption prior to maturity. See “THE BONDS —No Redemption of the 2022B Bonds herein.

The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Bonds by [_________]. See “BOND INSURANCE” herein. [INSERT INSURER LOGO]

THE OBLIGATION OF THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE BONDS IS A

SPECIAL OBLIGATION OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED BY NET REVENUES AND OTHER FUNDS PROVIDED FOR IN THE RESPECTIVE INDENTURE. NONE OF THE AUTHORITY, THE CITY OF COACHELLA (THE “CITY”), THE

STATE OF CALIFORNIA, NOR ANY OF THEIR POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY, OR

CONTINGENTLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL OR ANY PORTION OF THE DEBT

SERVICE DUE ON THE BONDS, TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT SECURED BY A LIEN ON THE PHYSICAL ASSETS OF THE AUTHORITY OR OF THE CITY. THE BONDS ARE NOT A PLEDGE OF THE FAITH AND CREDIT OF THE AUTHORITY, THE CITY,

THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS NOR DO THEY CONSTITUTE INDEBTEDNESS IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. NO PERSON EXECUTING THE BONDS IS SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE.

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4817-2199-5518.5
This cover page contains information for general reference only. It is not a summary of the security or terms of this issue.

Investors are advised to read the entire Official Statement, including the section entitled “RISK FACTORS,” for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds.

Capitalized terms used but not defined on the front cover of this Official Statement shall have the meanings set forth herein.

_________________________________________________________________________________

MATURITY SCHEDULE
(See Inside Front Cover)
_________________________________________________________________________________ The Bonds are offered when, as and if sold and issued, subject to the approval as to their legality by Nixon Peabody LLP, Los Angeles, California, Bond Counsel. Certain legal matters will be passed upon by the City Attorney of the City of Coachella, California as counsel for the Authority, and by Nixon Peabody LLP, Los Angeles, California, Disclosure Counsel. The Underwriter is being represented by its counsel, Kutak Rock LLP, Irvine, California. It is anticipated that the 2022A Bonds and the 2022B Bonds in book-entry form, will be available for delivery through the facilities of DTC, on or about _____, 2022 and _____, 2022, respectively. Potential investors should carefully review the information under the caption “FORWARD DELIVERY OF THE 2022B Bonds – Certain Considerations Regarding Forward Delivery of the 2022B Bonds” herein.
[STIFEL]
Date: _____, 2022

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Item 28.
4817-2199-5518.5

MATURITY SCHEDULE
$__________

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS,
2022A SERIES
Base CUSIP: _______
$________Serial Bonds
Maturity Date
(August 1)
Principal
Amount
Interest
Rate Yield Price CUSIP®

$_______ _____% Term Bonds Due August 1, ____; Yield - _____%; Price - _____%; CUSIP® - ___ $_______ _____% Term Bonds Due August 1, ____; Yield - _____%; Price - _____%; CUSIP® - ___ $__________*

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS,
2022B SERIES
Base CUSIP®: _______
$________Serial Bonds
Maturity Date
(August 1)
Principal
Amount
Interest
Rate Yield Price CUSIP®

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Item 28.
4817-2199-5518.5

CITY OF COACHELLA

COACHELLA WATER AUTHORITY

CITY COUNCIL/AUTHORITY BOARD MEMBERS/ELECTED OFFICIALS
Steven Hernandez, Mayor/President
Josie Gonzalez, Mayor Pro Tem/Vice President
Neftali Galarza, Council Member/Board Member
Megan Beaman Jacinto, Council Member/Board Member
Denise Delgado, Council Member/Board Member
Arturo Aviles, City Treasurer
Angela M. Zepeda, City Clerk and Authority Secretary

CITY/AUTHORITY STAFF
Dr. Gabriel Martin, City Manager/Executive Director
Nathan Statham, Finance Director/Treasurer
Cástulo R. Estrada, Utilities Manager
Carlos Campos, City Attorney and Authority Counsel

SPECIAL SERVICES

BOND AND DISCLOSURE COUNSEL
Nixon Peabody LLP
Los Angeles, California

MUNICIPAL ADVISOR
Urban Futures, Inc.

Tustin, California

TRUSTEE
Wilmington Trust, National Association
Costa Mesa, California

VERIFICATION AGENT
Causey Demgen & Moore P.C.

Denver, Colorado

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4817-2199-5518.5
[MAP]

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4817-2199-5518.5
No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the Authority or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

The issuance and sale of the Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Sections 3(a)2 and 3(a)12, respectively, for the issuance and sale of such municipal securities. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

The information set forth herein includes information obtained from sources which are believed to be reliable. The information and expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority since the date hereof. See “INTRODUCTION—Forward-Looking Statements” herein. This Official Statement is submitted with respect to the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the Authority. All summaries of the Indentures and other documents are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.

The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors and under federal securities laws, as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR

EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

This Official Statement, including any supplement or amendment hereto, is intended to be deposited with the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access (EMMA) web site. The City also maintains a web site which may describe the Authority. However, the information presented therein is not part of this Official Statement and must not be relied upon in making an investment decision with respect to the Bonds.

References to web site addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such web sites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of, and as that term is defined in, SEC Rule 15c2-12.
[_______] (“____”) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, [______] has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer supplied by the Insurer and presented under the heading “BOND INSURANCE” herein and “APPENDIX H — SPECIMEN MUNICIPAL BOND INSURANCE POLICY” hereto.

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i

TABLE OF CONTENTS
Page
INTRODUCTION ........................................................................................................................................ 4 General ................................................................................................................................................... 4 The City, the Authority and the Water Enterprise .................................................................................. 4 The Bonds............................................................................................................................................... 5 Purpose ................................................................................................................................................... 5 Security for the Bonds ............................................................................................................................ 5 Bond Insurance ....................................................................................................................................... 6 Risk Factors ............................................................................................................................................ 6 Limited Obligations ................................................................................................................................ 6 Tax Matters ............................................................................................................................................. 7 Offering and Delivery of the Bonds ....................................................................................................... 7 Continuing Disclosure ............................................................................................................................ 7 Forward-Looking Statements ................................................................................................................. 7 Professionals Involved in the Offering ................................................................................................... 8 Other Information ................................................................................................................................... 8 THE FINANCING PLAN ............................................................................................................................ 8 The Refunding Plan ................................................................................................................................ 8 Capital Projects ....................................................................................................................................... 9 ESTIMATED SOURCES AND USES OF FUNDS .................................................................................. 10 SCHEDULE OF DEBT SERVICE PAYMENTS ...................................................................................... 11 THE BONDS .............................................................................................................................................. 12 Description of the Bonds ...................................................................................................................... 12 Redemption of the 2022A Bonds ......................................................................................................... 12 No Redemption of the 2022B Bonds .................................................................................................... 15 Book-Entry Only System ..................................................................................................................... 15 Acceleration .......................................................................................................................................... 15 SECURITY FOR THE BONDS ................................................................................................................. 15 General ................................................................................................................................................. 15 Pledge of Net Revenues........................................................................................................................ 16 Application of Revenues ...................................................................................................................... 17 Rate Covenant ...................................................................................................................................... 18 Rate Stabilization Account ................................................................................................................... 19 Issuance of Parity Obligations .............................................................................................................. 19 BOND INSURANCE ................................................................................................................................. 20 Bond Insurance Policy .......................................................................................................................... 20 THE WATER ENTERPRISE ..................................................................................................................... 20 Water Supply ........................................................................................................................................ 20 Water Enterprise Management, Operation & Service Area ................................................................. 20 Water Storage & Distribution System .................................................................................................. 22 Water Wells and Booster Pumps .......................................................................................................... 22 Insurance .............................................................................................................................................. 23 Drought Management ........................................................................................................................... 23 Water Users .......................................................................................................................................... 23

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ii
Water Rates .......................................................................................................................................... 24 Billing and Collection Procedures ........................................................................................................ 27 Historical Operating Results ................................................................................................................. 28 Projected Net Revenues and Debt Service Coverages ......................................................................... 32 ENTERPRISE FINANCIAL INFORMATION ......................................................................................... 33 Financial Statements ............................................................................................................................. 33 Retirement Systems .............................................................................................................................. 33 RISK FACTORS ........................................................................................................................................ 33 Water Enterprise Demand and Growth ................................................................................................ 34 Water Enterprise Expenses ................................................................................................................... 34 Clean Water and Loss of Groundwater Supplies .................................................................................. 34 Parity Obligations ................................................................................................................................. 35 Proposition 218 .................................................................................................................................... 35 Proposition 26 ...................................................................................................................................... 37 Constitutional Limit on Appropriations ............................................................................................... 37 No Obligation to Tax ............................................................................................................................ 38 Natural Disasters .................................................................................................................................. 38 Drought ................................................................................................................................................. 38 Cybersecurity........................................................................................................................................ 40 Hazardous Substances .......................................................................................................................... 40 Risks Related to Coronavirus ............................................................................................................... 40 Statutory Changes and Initiatives ......................................................................................................... 41 Insurance .............................................................................................................................................. 41 Early Redemption of Premium Bonds .................................................................................................. 41 Limitations on Remedies Available; Bankruptcy ................................................................................. 41 Loss of Tax Exemption ........................................................................................................................ 42 Absence of Market for the Bonds ......................................................................................................... 42 TAX MATTERS ......................................................................................................................................... 43 General ................................................................................................................................................. 43 CONTINUING DISCLOSURE .................................................................................................................. 45 NO LITIGATION ....................................................................................................................................... 45 FORWARD DELIVERY OF THE 2022B BONDS ................................................................................... 46 Certain Considerations Regarding Forward Delivery of the 2022B Bonds ......................................... 46 CONCLUDING INFORMATION ............................................................................................................. 50 Underwriting ........................................................................................................................................ 50 Ratings .................................................................................................................................................. 50 Legal Opinions ..................................................................................................................................... 51 Municipal Advisor ................................................................................................................................ 51 Professional Fees .................................................................................................................................. 51 Miscellaneous ....................................................................................................................................... 51

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iii
APPENDIX A—SUMMARY OF THE INDENTURE ............................................................................ A-1 APPENDIX B—GENERAL INFORMATION REGARDING THE CITY OF COACHELLA AND RIVERSIDE COUNTY ..................................................................................... B-1 APPENDIX C—AUDITED FINANCIAL STATEMENTS OF THE CITY FOR FISCAL YEAR 2019-20 ............................................................................................. C-1 APPENDIX D—FORM OF FINAL OPINIONS OF BOND COUNSEL ................................................ D-1 APPENDIX E—FORM OF CONTINUING DISCLOSURE AGREEMENTS ...................................... E-1 APPENDIX F—THE BOOK-ENTRY SYSTEM ..................................................................................... F-1 APPENDIX G—FORM OF FORWARD DELIVERY CONTRACT ..................................................... G-1 APPENDIX H—SPECIMEN MUNICIPAL BOND INSURANCE POLICY ......................................... H-1

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4 OFFICIAL STATEMENT
$__________

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS,
2022A SERIES
$__________*

COACHELLA WATER AUTHORITY

WATER REVENUE REFUNDING BONDS,
2022B SERIES

INTRODUCTION
General
The purpose of this Official Statement (which includes the cover page and the Appendices attached hereto) is to provide information concerning the issuance of the above-captioned Water Revenue Refunding Bonds, 2022A Series (the “2022A Bonds”) and the Water Revenue Refunding Bonds, 2022B Series (the “2022B Bonds,” and together with the 2022A Bonds, the “Bonds”). The 2022A Bonds and 2022B Bonds are being issued by the Coachella Water Authority (the “Authority”) pursuant to the provisions of separate Indentures of Trust, dated as of [February] 1, 2022 and [May] 1, 2022, respectively (each an “Indenture” and together, the “Indentures”), each by and between the Authority and Wilmington Trust, National Association, as trustee (the “Trustee”). The Bonds will be issued pursuant to the provisions of Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended (the “Bond Law”), and a resolution of the Authority adopted on _____, 2021 (the “Resolution”).

The City, the Authority and the Water Enterprise
The City is located in Riverside County, in the center of the Coachella Valley, approximately 134 miles east of Los Angeles, 553 miles south of San Francisco and 22 miles southeast of Palm Springs.

Coachella covers an area in excess of 19 square miles at an average elevation of 67 feet below sea level.

Incorporated in 1946, the City operates as a general law city. It has a council-manager form of government, with four City Council members and the Mayor elected at large for staggered four-year terms.

The Authority is a joint powers agency organized and existing under and by virtue of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code, as amended. The City and the Successor Agency to the Coachella Redevelopment Agency (the “Agency”) entered into a Joint Exercise of Powers Agreement dated as of July 1, 2003 to establish the Authority. The Authority is governed by a Board of Directors (the “Authority Board”) of five Members comprised of the same individuals who comprise the City Council of the City. The Authority was created for the purpose, among other things, of providing financing relating to any utility system or service through the lease, acquisition or construction by the Authority of such public capital improvements. Under the Bond Law, the Authority has the power to issue bonds to pay the costs of public capital improvements.

The Authority has leased from the City of Coachella (the “City”) the water system (the “Water Enterprise”) of the City pursuant to a Lease Agreement, dated as of July 1, 2003 (the “Lease Agreement”). The Water Enterprise is comprised of three reservoirs, three wells, two booster pump stations and a water distribution system with approximately 634,000 linear feet of distribution pipelines.

See “THE WATER ENTERPRISE” herein. Pursuant to the Water Enterprise Management Agreement, dated as of July 1, 2003 (the “Management Agreement”), the City operates and maintains the Water Enterprise on behalf of the Authority.

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5 For other information concerning the City, the Authority and the Water Enterprise, see “THE WATER ENTERPRISE” and “ENTERPRISE FINANCIAL INFORMATION” herein. For other selected demographic and economic information, see “APPENDIX B—GENERAL INFORMATION REGARDING THE CITY OF COACHELLA” hereto. A copy of the audited financial statements of the City for the year ended June 30, 2020 is attached hereto as APPENDIX C.

The Bonds
The Bonds will be executed and delivered as fully registered certificates in book-entry form only, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company (“DTC”), New York, New York. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases of the Bonds will be in principal amounts of $5,000 or in any integral multiples of $5,000. Interest payable with respect to the Bonds will be payable on February 1 and August 1 in each year, beginning August 1, 2022 (the “Interest Payment Dates”), and principal payable with respect to the Bonds will be paid on the dates set forth in the Maturity Schedules on the inside cover. Payments of principal of and interest on the Bonds will be paid by the Trustee, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial Owners of the Bonds.

The 2022A Bonds are subject to optional and mandatory sinking fund redemption prior to their scheduled payment dates as described herein. See “THE BONDS—Redemption of the 2022A Bonds” herein. The 2022B Bonds are not subject to redemption prior to their scheduled payment dates. See “THE BONDS—No Redemption of the 2022B Bonds” herein.

Purpose
The 2022A Bonds are being issued by the Authority to (a) refund certain prior obligations of the Authority, (b) finance certain improvements to the Water Enterprise, and (c) pay the costs of issuance of the 2022A Bonds. The 2022B Bonds are being issued by the Authority to (a) refund certain prior obligation of the Authority, and (b) pay the costs of issuance of the 2022B Bonds. See “THE FINANCING PLAN,” “THE WATER ENTERPRISE,” “ESTIMATED SOURCES AND USES OF FUNDS” and “FORWARD DELIVERY OF THE 2022B BONDS” herein.

Security for the Bonds
The Bonds, when issued, will be special, limited obligations of the Authority, secured by a first pledge, charge and lien upon Net Revenues (defined herein) of the Water Enterprise. Net Revenues are held in the Bond Fund of the Authority under each Indenture. See “SECURITY FOR THE BONDS” herein.

Subject to certain conditions set forth in each Indenture, the Authority may at any time incur revenue bonds, notes or other evidences of indebtedness of the Authority payable from Net Revenues on parity with or subordinate to the Bonds and Parity Obligations. See “SECURITY FOR THE BONDS— Issuance of Parity Obligations” herein.

Pursuant to each Indenture, the Authority has covenanted to fix, prescribe and collect certain rates and charges for service provided by the Water Enterprise. See “SECURITY FOR THE BONDS—Rate Covenant” herein.

The Authority is not funding a debt service reserve fund for the Bonds.

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6 Bond Insurance
The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy (the “Insurance Policy”) to be issued concurrently with the delivery of the Bonds by [___________] (the “Insurer” or “[___]”). See “BOND INSURANCE” herein and “APPENDIX H—SPECIMEN MUNICIPAL BOND INSURANCE POLICY” hereto.

Risk Factors
Payment of debt service on the Bonds depends primarily upon the generation and collection of Net Revenues. There can be no assurance that the demand for the services provided by the Water Enterprise will be maintained at levels described in this Official Statement, or that the expenses for operating and maintaining the Water Enterprise will be consistent with the levels described in this Official Statement. Changes in technology, decreased demand, new regulatory requirements, increases in the cost of energy or other expenses would reduce Net Revenues, and could require the City to implement substantial increases in Enterprise rates or charges in order to comply with the rate covenant. Such rate increases could increase the likelihood of nonpayment by Enterprise customers, and could also cause further decreases in customer demand.

See “RISK FACTORS” herein for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds, including a discussion of the impact of Proposition 218, Constitutional limits on fees and charges, seismic considerations, limitation on remedies and changes in law.

Limited Obligations

THE OBLIGATION OF THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL OF

AND INTEREST ON THE BONDS IS A SPECIAL OBLIGATION OF THE AUTHORITY, PAYABLE

SOLELY FROM AND SECURED BY NET REVENUES AND OTHER FUNDS PROVIDED FOR IN THE INDENTURE. NONE OF THE AUTHORITY, THE CITY, THE STATE OF CALIFORNIA (THE “STATE”), NOR ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY,

OR CONTINGENTLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL

OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVY OR TO PLEDGE

ANY FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT SECURED BY A LIEN ON THE PHYSICAL ASSETS OF THE AUTHORITY OR THE CITY. THE BONDS ARE NOT A PLEDGE OF THE

FAITH AND CREDIT OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF ITS

POLITICAL SUBDIVISIONS NOR DO THEY CONSTITUTE INDEBTEDNESS IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. NO

PERSON EXECUTING THE BONDS IS SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE.

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7 Tax Matters
In the opinion of Nixon Peabody LLP, Bond Counsel (“Bond Counsel”), under existing law and assuming compliance with the tax covenants described herein, and the accuracy of certain representations and certifications made by the Authority and the City described herein, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). Bond Counsel is also of the opinion that interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed under the Code. Bond Counsel is further of the opinion that interest on the Bonds is exempt from personal income taxes of the State of California (“State”) under present law. See “TAX MATTERS” herein regarding certain other tax consequences. See “FORWARD DELIVERY OF THE 2022B BONDS – Certain Considerations Regarding Forward Delivery of the 2022B Bonds” below.

Offering and Delivery of the Bonds
The Bonds are offered when, as and if issued, subject to approval as to their legality by Bond Counsel. It is anticipated that the 2022A Bonds and the 2022B Bonds, in book-entry form, will be available for delivery through the facilities of DTC on or about [______], 2022 (the “Closing Date”) and [_____], 2022 (the “Settlement Date”), respectively. The 2022B Bonds will be issued pursuant to a forward delivery arrangement. See “FORWARD DELIVERY OF THE 2022B BONDS – Certain Considerations Regarding Forward Delivery of the 2022B Bonds” below.

Continuing Disclosure
The Authority will covenant for the benefit of the Owners and Beneficial Owners of the Bonds to make available certain financial information and operating data relating to the Water Enterprise and to provide notices of the occurrence of certain enumerated events, in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5) (the “Rule”). See “CONTINUING DISCLOSURE” herein for additional information regarding the Authority’s continuing disclosure obligations and prior compliance therewith. The specific nature of the information to be made available and the notices of listed events required to be provided are described in “APPENDIX E—FORM OF CONTINUING DISCLOSURE AGREEMENTS” herein.

Forward-Looking Statements
Certain statements included or incorporated by reference in this Official Statement (including the appendices hereto), including, but not limited to (i) statements containing projections of Net Revenues and other financial items, (ii) statements of future economic performance of the Water Enterprise, and (iii) statements of the assumptions underlying or relating to statements described in (i) and (ii) above, constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend,” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information regarding the Water Enterprise herein.

ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN

SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,

UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,

PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM

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8 ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE AUTHORITY NOR THE CITY

PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

Professionals Involved in the Offering
Nixon Peabody LLP, Los Angeles, California, is acting as Bond Counsel with respect to the Bonds. Certain legal matters will be passed upon by the City Attorney for the City of Coachella, as counsel to the Authority, and by Nixon Peabody LLP, Los Angeles, California, Disclosure Counsel. The Underwriter is being represented by its counsel, Kutak Rock LLP, Irvine, California. Fees payable to Bond Counsel, Disclosure Counsel and Underwriter’s Counsel are contingent upon the execution and delivery of the Bonds.

Other Information
This Official Statement is not to be construed as a contract or agreement between the Authority, the City, and/or the purchasers or Owners of any of the Bonds. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Quotations from and summaries and explanations of the California Government Code, other applicable legislation, the Indentures, the Water Enterprise, proceedings of the Authority and the City with respect to the operations thereof and with respect to the Bonds, agreements and other documents referenced herein, do not purport to be complete, and reference is made to said documents, constitutional provisions and statutes for full and complete statements of their provisions. Prospective purchasers of the Bonds are advised to refer to such documents, provisions, and reports for full and complete statements of their contents. References herein to each series of Bonds are qualified in their entirety by reference to the form thereof included in the applicable Indenture. Copies of the proceedings of the Authority referred to above, each Indenture and other documents described in this Official Statement are available for inspection at the offices of the Authority at: [53990 Enterprise Way, Coachella, California 92236, Attention: Finance Director]. The Authority may impose a charge for copying, mailing and handling.

Certain of the information set forth herein, other than that provided by the Authority, has been obtained from official sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Authority. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof.

THE FINANCING PLAN
The Refunding Plan
A portion of the net proceeds of the 2022A Bonds will be used to redeem on the delivery date of the 2022A Bonds all of the Authority’s $5,000,000 Water Revenue Bonds (USDA) Series 2008 (the “Series 2008 Bonds”), of which $4,182,110 is currently outstanding.

Upon the forward delivery of the 2022B Bonds on or about [May] 1, 2022, a portion of the proceeds from the sale of the 2022B Bonds, together with certain other available funds, will be used to

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9 refund all of the Authority’s $10,435,000 Water Revenue Refunding Bonds, 2012 Series (the “2012 Bonds”), of which $6,570,000 is currently outstanding.

In order to effectuate the refunding of the 2012 Bonds, a portion of the proceeds from the sale of the 2022B Bonds will be deposited into an escrow fund (the “Escrow Fund”) and used to defease the 2012 Bonds in accordance with the terms of the Escrow Agreement, dated as of May 1, 2022 (the “Escrow Agreement”), by and between the Authority and U.S. Bank National Association, as defeased bonds trustee and escrow agent (the “Escrow Agent”). Pursuant to the Escrow Agreement, moneys on deposit in the Escrow Fund will be held as cash or invested solely in permitted Escrow Securities, as such term is defined in the Escrow Agreement. The cash and Escrow Securities, together with the interest accrued with respect thereto, will be held by the Escrow Agent and applied in accordance with the terms of the Escrow Agreement (i) to pay in a timely manner the principal of and interest on the 2012 Bonds on August 1, 2022, and (ii) to pay the redemption price of the outstanding 2012 Bonds, maturing on and after August 1, 2023, on August 1, 2022, which is the first optional redemption date therefor.

Upon delivery of the 2022B Bonds, Causey Demgen & Moore P.C. will deliver a report verifying the mathematical accuracy of certain computations concerning (i) the adequacy of the maturing principal amounts of and interest on the Escrow Securities to, together with the cash on deposit in the Escrow Fund, defease the outstanding 2012 Bonds in full on the date of delivery of the 2022B Bonds, as described herein, and (ii) the yield on the 2022B Bonds and on such Escrow Securities considered by Bond Counsel in their determination that the interest on the 2022B Bonds is excluded from gross income for federal income tax purposes. Upon the establishment and funding of the Escrow Fund as described above, the lien of the Indenture of Trust pursuant to which the 2012 Bonds were issued will cease, terminate, and become void with respect to the 2012 Bonds, except for the rights of the owners of the 2012 Bonds to payments from the Escrow Fund.

The refunding of the 2012 Bonds is conditioned upon the receipt of proceeds of the 2022B Bonds, which is subject to the conditions of the Forward Delivery 2022B Bond Purchase Agreement. See “FORWARD DELIVERY OF THE 2022B BONDS– Certain Considerations Regarding Forward Delivery of the 2022B Bonds”
Capital Projects
Certain proceeds of the 2022A Bonds will be used to finance certain improvements to the Water Enterprise. Such potential improvement projects include the construction of a new well, Well No. 20, which will provide the needed additional firm capacity and fire flow in the 150 zone while meeting increasing demand and replacing Well No. 11. Four potential sites for construction of Well No. 20 have been identified, however final site selection is contingent on ongoing site analysis. Well design and construction costs are estimated to be $3,000,000. One-half of the Well No. 20 costs are considered to be capacity expansion and will be funded with development impact fee funds (connection charges).

Proceeds not used in the construction of Well No. 20 may be used to complete interior relining of a 3.6 million gallon (“MG”) reservoir and/or fund the City’s scheduled transition from 3G automated meter reading meters to 4G advanced metering infrastructure meters. All three projects are included in the City’s Fiscal Year 2021-22 capital improvement projects budget.

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10 ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds are as follows:

Sources of Funds: 2022A Bonds 2022B Bonds
Principal Amount of Bonds
Net Original Issue Premium/Discount

TOTAL SOURCES

Uses of Funds:

Refunding of the Series 2008 Bonds
Deposit to Escrow Fund
Deposit to Project Fund
Costs of Issuance(1)

TOTAL USES
___________________
(1) Reflects all costs of issuance, including the Underwriter’s discount and the printing costs, fees of Bond Counsel, Disclosure Counsel, the Authority’s Counsel, the costs and fees of the Municipal Advisor, Verification Agent, Trustee, premiums for the Insurance Policy, and other costs of issuing the Bonds.
[Remainder of page intentionally left blank.]

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11 SCHEDULE OF DEBT SERVICE PAYMENTS
The following table sets forth the payment of principal and interest on the Bonds for each twelve-month period ending on August 1 (assuming no early redemptions):

Year
(August 1)
2022A
Principal
2022A
Interest
2022A Total
Debt Service
2022B
Principal
2022B
Interest
2022B Total
Debt Service
Total Debt
Service
$ $ $ $ $
Total $ $ $ $ $ $ $

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12 THE BONDS
Description of the Bonds
The Bonds are authorized pursuant to the Bond Law, the Indentures and the Resolution.

The Bonds shall be delivered in the form of fully registered Bonds, without coupons, in denominations of $5,000 or any integral multiple thereof, and shall be dated the date of delivery to the initial purchaser thereof. The Bonds, when executed and delivered, will be registered in the name of Cede & Co., as registered owner and nominee of DTC. So long as DTC, or Cede & Co. as its nominee, is the registered owner of all Bonds, all payments with respect to the Bonds will be made directly to DTC, and disbursement of such payments to the DTC Participants (defined below) will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners (defined below) will be the responsibility of the DTC Participants, as more fully described hereinafter. See “—Book-Entry System” below.

Interest on the Bonds shall be payable on February 1 and August 1 in each year, beginning August 1, 2022 (each, an “Interest Payment Date”), and continuing to and including the date of maturity or prior redemption, whichever is earlier. Principal of the Bonds shall be payable on August 1 in each of the years and in the amounts set forth on the inside cover page of this Official Statement. Principal and premium, if any, of the Bonds shall be payable to the Owner upon presentation and surrender of such Bond at the corporate trust office of the Trustee in Costa Mesa, California. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months and shall be payable by check mailed by first class mail on each Interest Payment Date to the Owners as of the close of business on the 15th day of the month (whether or not such day is a Business Day) preceding an Interest Payment Date (the “Record Date”) at their addresses shown on the registration books maintained by the Trustee; provided however, that upon the written request from any Owner of any Bond in a denomination of, or Bonds aggregating, at least $1,000,000 in principal amount, received on or prior to the 15th day of the month preceding an applicable Interest Payment Date, payment may be made by wire transfer on the Interest Payment Date with regard to which such payment is made.

The Bonds may be transferred or exchanged at the principal office of the Trustee, to the extent and upon the conditions set forth in each Indenture. The Trustee may require the payment of a reasonable service charge by the owner of any Bond requesting exchange, and the Trustee will require payment of a sum sufficient to cover any tax or other governmental charge required to be paid with respect thereto. The Trustee may refuse to transfer or exchange any 2022A Bonds during the period established for the selection of 2022A Bonds for redemption or the portion of any 2022A Bond selected for redemption.

If a Bond is mutilated, lost, stolen or destroyed, the Trustee, at the expense of the owner of such Bond, will authenticate, subject to the provisions of each Indenture, a new Bond of like tenor and amount.

In the case of a lost, stolen or destroyed Bond, the Trustee may require that an indemnity be furnished and payment of an appropriate fee for each new Bond delivered in replacement of such Bond and may require payment of the expenses of the Authority and the Trustee incurred in connection therewith.

Redemption of the 2022A Bonds
Optional Redemption of the 2022A Bonds.

The 2022A Bonds maturing on or before August 1,
____, shall not be subject to optional redemption prior to their respective stated maturities. The 2022A Bonds maturing on or after August 1, ____, are subject to redemption prior to their respective stated maturities, at the option of the Authority, from any source of available funds, as a whole or in part (by such maturities as may be specified by the Authority and by lot within a maturity, or, if the Authority fails

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13 to designate such maturities, then in inverse order of maturity) on any date on or after August 1, ____, at a redemption price equal to the principal amount of 2022A Bonds called for redemption, without premium, together with accrued interest to the date fixed for redemption.

Mandatory Sinking Fund Redemption of the 2022A Bonds.

The 2022A Bonds maturing
August 1, ____ shall be subject to mandatory sinking fund redemption in part, by lot, commencing on August 1, ____, from mandatory sinking fund payments set aside in the Sinking Fund Account, a subaccount of the Bond Fund, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, in the aggregate respective principal amounts and on the dates set forth below:
2022A Bonds maturing August 1, ____
Redemption Date
(August 1)
Redemption
Amount
$

†

____________
†
Maturity
The 2022A Bonds maturing August 1, ____ shall be subject to mandatory sinking fund redemption in part, by lot, commencing on August 1, ____, from mandatory sinking fund payments set aside in the Sinking Fund Account, a subaccount of the Bond Fund, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, in the aggregate respective principal amounts and on the dates set forth below:
2022A Bonds maturing August 1, ____
Redemption Date
(August 1)
Redemption
Amount
$

†

____________
†
Final Maturity
Special Mandatory Redemption. The 2022A Bonds are subject to redemption as a whole or in part, on any date, from and to the extent insurance proceeds received with respect to the Water Enterprise are not used to repair, rebuild or replace the Water Enterprise, or from and to the extent of eminent domain proceeds received with respect to the Water Enterprise are elected for such use by the Authority, at a redemption price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium.

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Item 28.
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14 Selection of 2022A Bonds for Redemption. Whenever provision is made for the redemption of less than all of the 2022A Bonds, the Trustee shall select the 2022A Bonds for redemption among maturities, in inverse order of maturity or at the direction of the Authority, on a pro rata basis and by lot within a maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair.

For purposes of such selection, the Trustee shall treat each 2022A Bond as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate 2022A Bond
Notice of Redemption. The Trustee will (i) mail a notice of redemption to the respective Owners of all 2022A Bonds selected for redemption in whole or in part, and (ii) remit a notice of redemption to DTC and the Municipal Securities Rulemaking Board’s (the “MSRB”) Electronic Municipal Market Access system (“EMMA”), or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds as the Authority may specify. Such notice will state the date of such notice, the 2022A Bonds to be redeemed, the date of issue of such 2022A Bonds, the redemption date, the redemption price, the place of redemption (including the name and appropriate address of the Trustee), the CUSIP number of the maturity or maturities and, if less than all of the 2022A Bonds of any such maturity are to be redeemed, the numbers of the 2022A Bonds of such maturity to be redeemed and, in the case of 2022A Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed, and will give notice that further interest on such 2022A Bonds or the portions thereof to be redeemed will not accrue from and after the redemption date, and will require that such 2022A Bonds be then surrendered for redemption at the address of the Trustee so designated; provided, that neither the Authority nor the Trustee will have any responsibility for any defect in the CUSIP number that appears on any 2022A Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee will be liable for any inaccuracy in such numbers. If any 2022A Bond chosen for redemption will not be redeemable in whole, such notice will also state that such 2022A Bond is to be redeemed in part only and that upon presentation of such 2022A Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new 2022A Bond or 2022A Bonds of the same maturity date of authorized denominations equal in aggregate principal amount to such unredeemed portion. In the event of an optional redemption of 2022A Bonds, the Trustee will mail a notice of redemption only after receipt of a Written Request of the Authority; provided, that if the Authority will not have deposited or otherwise made available to the Trustee the money required for the payment of the redemption price of the 2022A Bonds to be redeemed at the time of such mailing, such notice of redemption will state that the redemption is expressly conditioned upon the timely deposit of sufficient funds for such purpose with the Trustee.

Subject to the provisions stated above, the Trustee shall take the following actions with respect to such Redemption Notice: (a) At least twenty (20) but not more than sixty (60) days prior to the redemption date the Trustee shall cause Redemption Notices to be given to the respective Owners of 2022A Bonds designated for redemption by first class mail, postage prepaid, at their addresses appearing on the Bond Register maintained by the Trustee and (b) at least twenty (20) but not more than sixty (60) days prior to the redemption date, such Redemption Notice shall be given to each of DTC and EMMA or, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds as the Authority may specify. Neither failure to receive any Redemption Notice nor any defect in such Redemption Notice so given shall affect the sufficiency of the proceedings for the redemption of such 2022A Bonds.

Effect of Notice of Redemption. Notice of redemption having been duly given and moneys for payment of the redemption price of, together with interest accrued to the redemption date on, the 2022A Bonds (or portions thereof) so to be redeemed being held by the Trustee, on the redemption date

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Item 28.
4817-2199-5518.5
15 designated in such notice (i) the 2022A Bonds (or portions thereof) so to be redeemed shall become due and payable at the Redemption Price specified in such notice, plus interest accrued thereon to the redemption date, (ii) interest on such 2022A Bonds (or portions thereof) shall cease to accrue, (iii) such 2022A Bonds shall cease to be entitled to any benefit or security under the Indenture, and (iv) the Owners of such 2022A Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest.

No Redemption of the 2022B Bonds
The 2022B Bonds are not subject to redemption prior to maturity.

Book-Entry Only System
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered certificates registered in the name of Cede & Co., (DTC’s partnership nominee). One fully-registered Bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. See “APPENDIX F—THE BOOK-ENTRY SYSTEM” herein.

The Authority and the Trustee cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal, interest or premium, if any, with respect to the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The Authority and the Trustee are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner with respect to the Bonds or an error or delay relating thereto.

Acceleration
If an Event of Default (as such is defined in the Indenture) shall occur, the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding may, upon the satisfaction of certain conditions set forth in the Indenture, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately. Any suit requesting such accelerated payment of debt service and/or money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See “APPENDIX A— SUMMARY OF THE INDENTURE” hereto under the caption “Events of Default and Remedies of Bondowners; Acceleration of Maturities” for further information with respect to the acceleration of the Bonds and other remedies.

SECURITY FOR THE BONDS
General

THE OBLIGATION OF THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL OF

AND INTEREST ON THE BONDS IS A SPECIAL OBLIGATION OF THE AUTHORITY, PAYABLE

SOLELY FROM AND SECURED BY NET REVENUES AND OTHER FUNDS PROVIDED FOR IN THE INDENTURE. NONE OF THE AUTHORITY, THE CITY, THE STATE OF CALIFORNIA, NOR

ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY, OR

CONTINGENTLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL OR

ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVY OR TO PLEDGE ANY

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Item 28.
4817-2199-5518.5
16 FORM OF TAXATION WHATSOEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT SECURED BY A LIEN ON THE PHYSICAL ASSETS OF THE AUTHORITY OR THE CITY. THE BONDS ARE NOT A PLEDGE OF THE FAITH AND

CREDIT OF THE AUTHORITY OR THE CITY, THE STATE OR ANY OF ITS POLITICAL

SUBDIVISIONS NOR DO THEY CONSTITUTE INDEBTEDNESS IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. NO PERSON EXECUTING THE

BONDS IS SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE.

Pledge of Net Revenues
The Bonds are secured by a first pledge of the Net Revenues received by the Authority as a result of the operation of the Water Enterprise, as those terms are defined below and upon all money and securities on deposit in certain accounts under the Indenture. The obligation of the Authority to make debt service payments on the Bonds from Net Revenues is absolute and unconditional, and until such time as all debt service payments on the Bonds shall have been fully paid and the Bonds are no longer Outstanding (or provision for the payment thereof shall have been made), the Authority will not, under any circumstances, discontinue, abate or suspend any payment due under each Indenture when due, whether or not the Water Enterprise is operating or operable or has been completed, or whether or not the Water Enterprise is condemned, damaged, destroyed or seized or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset, counterclaim, defense, recoupment, abatement, suspension, deferment or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement or covenant contained in the Indenture for any cause whatsoever.

All Net Revenues are pledged by the Authority to the payment of debt service on the Bonds and debt service on Parity Obligations as provided in each Indenture, and the Net Revenues shall not be used for any other purpose while any of the Bonds remain Outstanding; provided, however, that out of the Net Revenues, there may be apportioned such sums for such purposes as are expressly permitted by the Indenture, including payment of debt service on any Parity Obligations. This pledge shall constitute a first lien on the Net Revenues for the payment of the debt service on the Bonds and debt service on any Parity Obligations in accordance with each Indenture. The Bonds are not secured by a direct lien on the Water Enterprise or any other property of the Authority or the City.

In each Indenture, the Authority covenants that, so long as any Bonds are Outstanding, the Authority will not issue or incur any obligations payable from Revenues or Net Revenues superior to the payment of debt service on the Bonds or Parity Obligations. The Authority is authorized to issue additional Parity Obligations secured by Net Revenues with a lien on a parity basis with the lien of the Bonds, provided it complies with certain provisions in each Indenture. See “—Issuance of Parity Obligations” below. The Authority is also authorized to issue subordinate debt secured by Net Revenues. “Net Revenues” are, for any Fiscal Year, an amount equal to all of the Revenues received with respect to such Fiscal Year, minus the amount required to pay all Operation and Maintenance Costs becoming payable with respect to such Fiscal Year.
“Revenues” means all revenues, income, rents, fees, charges, rates and other moneys and receipts derived or to be derived by the Authority from or attributable to the lease and operation of the Water Enterprise including, without limiting the generality of the foregoing, (i) all revenues attributable to the Water Enterprise or to the payment of the costs thereof received or to be received by the Authority under any contract for service from the Water Enterprise or any part thereof or any contractual arrangement, with respect to the use of the Water Enterprise or any portion thereof or the services or capacity thereof,

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Item 28.
4817-2199-5518.5
17 (ii) the proceeds of any standby water availability charges collected by the Authority or the City to the extent such proceeds are available to pay debt service on the Bonds, (iii) the proceeds of any insurance covering business interruption loss relating to the Water Enterprise, and (iv) realized investment income earned on any moneys or securities deposited in any accounts to secure or provide for the payment of debt service on obligations issued or incurred by the Authority and secured by Net Revenues, and realized investment earnings received on any invested moneys of the Water Enterprise, but excluding any proceeds of taxes restricted by law to be used by the Authority to pay bonds hereafter issued and any state and federal grants received by the Authority. Revenues shall also be increased by the amounts, if any, transferred during such Fiscal Year or other period from the Rate Stabilization Account to the Revenue Fund and shall be decreased by the amounts, if any, transferred during such Fiscal Year or other period from the Revenue Fund to the Rate Stabilization Account, pursuant to the Indenture. Revenues shall not include unrealized investment earnings or losses as a result of mark to market calculations. “Operation and Maintenance Costs” means costs spent or incurred for maintenance and operation of the Water Enterprise calculated in accordance with generally accepted accounting principles, including (among other things) the cost of purchasing water, the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water Enterprise in good repair and working order, and including administrative costs of the City that are charged directly or apportioned to the Water Enterprise, including but not limited to salaries and wages of employees, payments to any pension system, overhead, insurance, taxes (if any), fees of auditors, accountants, attorneys or engineers and insurance premiums, and including all other reasonable and necessary costs of the City and the Authority or charges (other than debt service payments) required to be paid by it to comply with the terms of the Bonds or of any resolution or indenture authorizing the issuance of Parity Obligations, or of such Parity Obligations, but excluding, in all cases, depreciation, replacement and obsolescence charges or reserves therefore and amortization of intangibles or other bookkeeping entries of a similar nature and all capital charges.
“Revenue Fund” means the Revenue Fund held by the Authority into which all Revenues, as received, are deposited.

Application of Revenues
Payments from Revenue Fund. The Authority has covenanted that all of the Revenues shall be deposited by the City, on behalf of the Authority, immediately upon receipt in the Revenue Fund, for the benefit of Bondholders and the holders of Parity Obligations, and shall be disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture.

Revenues in the Revenue Fund shall be set aside and applied in the following order of priority.

Additionally, amounts may, from time to time as the Authority deems necessary or appropriate, be transferred from the Rate Stabilization Account and deposited in the Revenue Fund, as provided in each Indenture.
(1) Operation and Maintenance Costs. The Authority shall first pay from the moneys in the Revenue Fund the budgeted Operation and Maintenance Costs as such Operation and Maintenance Costs become due and payable.
(2) Debt Service Payments. On or before the 15th day of each January and July, the City, on behalf of the Authority, shall withdraw from the Revenue Fund and (A) transfer to the Trustee, for deposit in a special fund designated as the “Bond Fund” that is established pursuant to the Indenture and that shall be held in trust, an amount which, together with the balance then on deposit in the Bond Fund, the Interest Account and the Principal Account (other than amounts required for payment of

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Item 28.
4817-2199-5518.5
18 principal of or interest on any Bonds which have matured or been called for redemption but which have not been presented for payment), that is equal to the aggregate amount of principal of and interest coming due and payable on the Bonds on the next succeeding Interest Payment Date and (B) transfer to the Trustee an amount equal to the aggregate amount of principal of and interest coming due and payable on any Parity Obligations on the next succeeding Interest Payment Date. (3) Surplus/Rate Stabilization Account. As long as all of the foregoing payments, allocations and transfers are made at the times and in the manner set forth above in subsection (2), inclusive, and the payment of any amounts owed to the insurer, if any, shall have been paid, any moneys remaining in the Revenue Fund may at any time be treated as surplus and applied for any lawful purpose.

The Authority may maintain and hold a separate account to be known as the Rate Stabilization Account.

From time to time the Authority may deposit in the Rate Stabilization Account, from remaining Net Revenues described in this subsection (3) or other available funds of the Authority, such amounts as the Authority shall determine. Transfers to the Rate Stabilization Account count against Net Revenues for that Fiscal Year. The Authority may withdraw amounts from the Rate Stabilization Account (i) for transfer to the Revenue Fund for inclusion in Revenues for any Fiscal Year, or (ii) for any other lawful use of the Authority. All interest or other earnings upon deposits in the Rate Stabilization Account shall be accounted for as Revenues.

Payment of Debt Service Payments. On or before the Business Day preceding each Interest Payment Date, the Trustee shall transfer from the Bond Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Bond Fund), the following amounts, in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Net Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:

First: to the Interest Account, the aggregate amount of interest becoming due and payable on the next succeeding Interest Payment Date on all Bonds then Outstanding; and Second: to the Principal Account, the aggregate amount of principal becoming due and payable on the Outstanding Bonds on the next succeeding Interest Payment Date, if any.

Rate Covenant
General. The Authority has covenanted in the Indenture that it shall fix, prescribe, revise and collect rates, fees and charges for the Water Enterprise as a whole for the services and improvements furnished by the Water Enterprise during each Fiscal Year which are at least sufficient, after making allowances for contingencies and error in the estimates, to yield Revenues that are sufficient to pay the following amounts in the following order of priority:
(i) all anticipated Operation and Maintenance Costs of the Water Enterprise for such Fiscal Year;
(ii) debt service payments on the Bonds and on any Parity Obligations as they become due and payable during such Fiscal Year, without preference or priority, except to the extent such debt service payments are payable from the proceeds of the Bonds or Parity Obligations or from any other source of legally available funds of the Authority that have been deposited with the Trustee for purposes prior to the commencement of such Fiscal Year; and

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Item 28.
4817-2199-5518.5
19 (iii) all other payments required to meet any other obligations of the Authority which are charges, liens, encumbrances upon the Revenues or Net Revenues during such Fiscal Year.

To the fullest extent permitted by law, the Authority will fix, prescribe, revise and collect, or cause to be fixed, prescribed, revised and collected, rates, fees and charges for the services and improvements furnished by the Water Enterprise which are reasonably expected to be at least sufficient to yield during each Fiscal Year Net Revenues equal to 120% of Debt Service payments on the Bonds and Parity Obligations for such Fiscal Year. The Authority may make adjustments from time to time in such rates and charges and may make such classifications thereof as it deems necessary, but shall not reduce the rates and charges then in effect unless the Net Revenues from such reduced rates and charges are reasonably expected to be sufficient to meet the requirements described here. For purposes of this calculation, Net Revenues shall be calculated without regard to allocation of the City’s administrative overhead costs to the Water Enterprise.

So long as the Authority has complied with its obligations described above, the failure of Net Revenues to meet the 120% of Debt Service threshold at the end of a Fiscal Year shall not constitute a default or an Event of Default so long as the Authority did meet the 120% of Debt Service threshold at the commencement of the succeeding Fiscal Year.

Rate Stabilization Account
The Authority has established a Rate Stabilization Account. From time to time the Authority may deposit in the Rate Stabilization Account, from remaining Net Revenues or other available funds of the Authority, such amounts as the Authority shall determine. The Authority may withdraw amounts from the Rate Stabilization Account (i) for transfer to the Revenue Fund for inclusion in Revenues for any Fiscal Year, or (ii) for any other lawful use of the Authority. All interest or other earnings upon deposits in the Rate Stabilization Account shall be accounted for as Revenues.

Issuance of Parity Obligations
Except for bonds issued to fully or partially refund the Bonds or Parity Obligations, the Authority will not issue or incur any Parity Obligations unless:
(i) No Event of Default shall have occurred and be continuing under the Indenture unless such default shall be cured simultaneously with the issuance of such Parity Obligations; (ii) The Authority obtains or provides a certificate prepared by an Independent Accountant or Independent Financial Consultant showing that the Net Revenues as shown by the books of the Authority or City for any 12 consecutive calendar months during the 18 calendar month period ending prior to the incurring of such Parity Obligations, or the most recent audited financial statement available, shall have amounted to at least 120% of the Maximum Aggregate Annual Debt Service for all Bonds and Parity Obligations to be outstanding immediately after incurring such additional Parity Obligations. For purposes of this calculation, Net Revenues shall be calculated without regard to allocation of the City’s administrative overhead costs to the Water Enterprise.

For purposes of preparing the certificate described in subsection (ii) of this section, the Independent Accountant or Independent Financial Consultant may rely upon financial statements prepared by the Authority or City, which have not been subject to audit by an independent certified public accountant if audited financial statements for the Fiscal Year or period are not available. For purposes of

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Item 28.
4817-2199-5518.5
20 demonstrating compliance with the foregoing, Net Revenues may be adjusted (at the option of the Authority) to include the Additional Revenues.
“Additional Revenues” shall mean an allowance for Net Revenues (i) arising from any increase in the charges made for service from the Water Enterprise adopted prior to the incurring of such Bonds or Parity Obligations and effective within eighteen (18) months following the date of incurring such Bonds or Parity Obligations, in an amount equal to the total amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of the most recent completed Fiscal Year or during any more recent twelve (12) month period selected by the Authority, and (ii) arising from any increase in service connections to the Water Enterprise prior to the incurring of such Bonds or Parity Obligations, in an amount equal to the total amount by which the Net Revenues would have been increased if such connections had been in existence during the whole of the most recent completed Fiscal Year or during any more recent twelve (12) month period selected by the Authority, all as shown by the certificate or opinion of an Independent Financial Consultant.

BOND INSURANCE
Bond Insurance Policy
[To come.]

THE WATER ENTERPRISE
Water Supply
The City is located on the banks of what was formerly the Whitewater River but is now part of the All-American Canal system. The City is situated over alluvial fan deposits from the Santa Rosa mountains to the south and is underlain by a vast groundwater basin known as the Whitewater River subbasin. The Lower Whitewater River sub-basin is naturally replenished through mountain rainfall, and is the source of the City’s water. The City shares this water source with the Coachella Valley Water District, which services an area contiguous to the Water Enterprise service area. The Authority is entitled to draw water from the basin with no restrictions as to quantity pursuant to the Authority’s participation under the replenishment program for the Lower Whitewater River Sub-Basin Area of Benefit. Under the program, the Authority is required to pay to the Coachella Valley Water District, a replenishment assessment charge for each acre-foot of water produced for the Area of Benefit and extracted by the Authority. The groundwater quality is excellent and requires minimal treatment prior to entering the Water Enterprise distribution system. Since 1991, in compliance with federal and state regulations, the Authority has chlorinated its groundwater prior to distribution. The Authority is in compliance with all relevant State and federal regulations, including the Safe Drinking Water Act.

Additional demographic and economic information relating to the City is set forth in “APPENDIX B– GENERAL INFORMATION ABOUT THE CITY OF COACHELLA.” Water Enterprise Management, Operation & Service Area
The City has provided continuous domestic water service to its residents for 46 years. Prior to that time, the water system was privately owned and operated. The City acquired the Water Enterprise in 1954 and created the Water Department and Enterprise Fund in 1957. The Authority leased the Water Enterprise from the City pursuant to the Lease Agreement and concurrently entered into the Management Agreement with the City to operate the Water Enterprise on behalf of the Authority. The operation of the

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Item 28.
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21 Water Enterprise is administered and managed by the Utilities Manager under the direct supervision of the City Manager. The Water Enterprise has twelve employees. The employees of the Water Enterprise are represented by the Laborers’ International Union of North America Local No. 1184 and are currently working under a labor agreement that will expire on June 30, 2023. The Water Enterprise’s permanent employees are covered by the California Public Employees Retirement System (“PERS”) through the City. The Water Enterprise separately reports the PERS contributions attributable to its employees in its annual audited financial statements. The Water Enterprise, through the City, offers post-employment benefits (“OPEB”) to eligible employees. As of June 30 2021, an amount of $1,141,250 of the City’s total Net OPEB Obligation was allocated to the employees of the Water Enterprise. Additional information regarding the City’s employee retirement plans, annual pension costs, the funding status thereof and significant accounting policies related thereto is set forth in the notes to the City’s comprehensive annual financial report, which may be obtained from the City or at www.coachella.org.

However, the information contained on such website is not incorporated herein by any reference.

Biographical information on the individuals responsible for managing and operating the Water Enterprise is provided in the following paragraphs.

Gabriel Martin, City Manager.

Dr. Martin is the City’s City Manager and was appointed to that position in June 2021. He administers operations and coordinates the development and implementation of goals, objectives, programs and projects for the City, Water Authority and Sanitary District. Prior to his appointment, he served as the City’s Economic Development Director from August 2020 to June 2021 and as its Economic Development Manager from August 2017 to August 2020. Dr. Martin has a Doctorate in Public Administration from the University of La Verne; a Master Degree in Public Administration from the California State University, San Bernardino and a Bachelor Degree in Economics/Business Administration from the University of California, Riverside.

Nathan Statham, Finance Director.

Nathan Statham is the City’s Finance Director. Mr. Statham was appointed Finance Director in March of 2020 and oversees the City’s finance, accounting, accounts payable, billing, payroll processing, budgeting, bond issuance and financial reporting functions. Prior to joining the City, Mr. Statham filled an equivalent roll for the City of La Verne from January 2018 through March 2020. From January 2012 through December 2017 Mr. Statham was a municipal auditor with the audit firm Rogers, Anderson, Malody and Scott, LLP. Mr. Statham has a Bachelor Degree and Master of Business Administration from California State University, San Bernardino and is a licensed Certified Public Accountant in the State of California.

Cástulo R. Estrada, Utilities Manager.

Cástulo Estrada is the City’s Utilities Manager. Mr. Estrada was appointed Utilities Manager in March of 2018 and oversees the City's water and wastewater operations, develops and administers an annual operating and capital budget for the utilities, insures compliance with all state and federal environmental and regulatory requirements, supervises all utility personnel. Prior to being appointed Utilities Manager, Mr. Estrada filled other roles in for the City in Utilities Engineering starting in 2012.

Mr. Estrada currently sits on the board of directors for the Coachella Valley Water District and Salton Sea Authority. Mr. Estrada has a Bachelor Degree in Civil Engineering from California State Polytechnic University, Pomona.

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Item 28.
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22 The average daily water demand for the Water Enterprise was approximately [8,107] hundred cubic feet for the 2020 calendar year. The Water Enterprise currently consists of [six] active wells, [two] booster pumping stations, three reservoirs with a total capacity of [10.1] million gallons, a distribution system of approximately 634,000 linear feet of pipeline ranging in sizes from 4 inches to 18 inches and approximately 9,080 water service accounts, 8,402 of which are for residential customers and 678 of which are for commercial and industrial customers.

The service area of the Water Enterprise is coterminous with the City limits, together with the City’s sphere of influence. The City encompasses an area of approximately 13,172 acres, with approximately [6,872] acres of undeveloped land, [3,798] acres of agricultural land, and [820] acres of land dedicated to residential uses. As the City becomes more developed, the demand for water services is expected to increase proportionately, thus allowing growth of the Water Enterprise without requiring an increase in the size of the service area.

Water Storage & Distribution System
The Water Enterprise’s reservoirs are comprised of three tanks: a 3.6 MG tank located along Mecca Street just south of Avenue 51, a 1.5 MG tank located on Avenue 46 to the east of Coachella and a

5.4 MG tank located at Avenue 48 and Tyler Street. The 3.6 MG tank serves the low-pressure zone, the

1.5 MG tank serves the high pressure zone and the 5.0 MG tank serves both the low and high-pressure zones. The boundary between the two pressure zones coincides with Avenue 48. A booster pump station located at Well No. 12 serves the 3.6 MG tank. Additional booster pumps are located at the 5.0 MG reservoir. These booster pumps are necessary to maintain adequate pressure in the lower and higher pressure zones.

The 3.6 MG reservoir was constructed in 1987, and has a diameter of 154 feet and a height of 26 feet; this reservoir is supplied by Well Nos. 11, 12, 16, 17 and 19. The 1.5 MG Reservoir was constructed in 1971, and is 32 feet high and has a diameter of 90 feet. Water is pumped into this tank from Well No. 18 and the associated booster pump station. The 5.0 MG reservoir was constructed in 2007 and has a diameter of 175 feet and a height of 32 feet. This reservoir is supplied by Well No. 18.

The existing water distribution system is divided into two pressure zones. The high pressure zone is north of Avenue 48, and the low pressure zone lies south of Avenue 48, east of Van Buren, west of the Coachella Storm Drain channel, and north of Avenue 54. The majority of the Water Enterprise pipeline infrastructure is located within the low pressure zone. In 2000, all domestic water service meters were replaced with meters that can be read remotely from the street.

Water Wells and Booster Pumps
There are currently six wells in operation in the Water Enterprise.

Well No. 11 is on Avenue 48 along the railway line. This well was drilled in 1977. It consists of a 150 HP pump that has a pumping rate of 1,139 gpm.

Well No. 12 is located just south of Avenue 51 on Mecca Street within the same enclosure as the

3.6 MG reservoir and booster pump. This well was also drilled in 1988. It consists of a 100 HP pump with a pumping rate of 2,000 gpm.

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Item 28.
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23 Well No. 16 is on Avenue 54, east of Tyler Street at the east end of Tyler Lane. This well was drilled in 1991. It consists of a 250 HP pump that has a pumping rate of 1,301 gpm.

Well No. 17 is on Van Buren Street, south of Avenue 48 . This well was drilled in 2005. It consists of a 200 HP pump that has a pumping rate of 2,100 gpm.

Well No. 18 is on Avenue 48 and Tyler Street within the same enclosure as the 5.0 MG reservoir and booster pump. This well was drilled in 2005. It consists of a 100 HP pump that has a pumping rate of 1,400 gpm.

Well No. 19 is on Jackson Street, south of Avenue 48. This well was drilled in 2005. It consists of a 200 HP pump that has a pumping rate of 2,100 gpm.

Insurance
The insurable property and facilities of the Water Enterprise are covered under the City’s general insurance policies. The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and emissions; and natural disasters. The City is a member of the Public Entity Risk Management Authority (“PERMA”), a joint powers authority formed under Section 990 of the California Government Code for the purpose of jointly funding programs of insurance coverage for its members. PERMA is currently comprised of thirty participating member agencies.

The City participates in the liability, worker’s compensation, employment practices and property insurance programs of PERMA.

The City is self-insured for the first $125,000, $250,000 and $25,000 of each occurrence or accident in the liability, workers’ compensation and employment practices programs respectively. For property insurance, the City is self-insured for the first $10,000 per occurrence and $100,000 for flood.

Excess costs above the self-insured amounts are shared between participating members based on their respective deposit premium contributions and in accordance with PERMA policies.

Drought Management
By June of each year the Authority prepares, and presents to the Authority Board for its approval, a water supply and demand assessment as part of its water shortage contingency plan (the “Water Shortage Contingency Plan”). The Water Shortage Contingency Plan outlines the Authority’s water shortage response actions to potential water shortage scenarios. The Water Shortage Contingency Plan describes potential water use restrictions and their enforcement, water use monitoring and reporting, operational changes, and customer communication protocols. The most recent Water Shortage Contingency Plan was adopted by the Authority Board on June 23, 2021. See the caption “RISK FACTORS —Drought” for further discussion on drought risks.

Water Users
The following are the top ten water users and their usage (in hundreds of cubic feet) and total billings for Fiscal Year 2020-21.

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Item 28.
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24 TABLE 1

COACHELLA WATER AUTHORITY

WATER ENTERPRISE
Leading Users of the Water Enterprise
(Fiscal Year 2020-21)
Customer
Annual
Consumption
(in HCF)
Percent of total
Metered
Consumption Billings
Percentage of
Total
Billings(1)

Spotlight 29 Casino 57,242 1.83% $105,931.68 1.7%
City of Coachella 49,437 1.58 86,060.73 1.40
CVUSD Coachella Valley High 31,371 1.00 52,575.03 0.80
Ocean Mist Farms 17,052 0.55 31,539.96 0.50
Sanitary District City of Coachella 17,072 0.55 28,575.24 0.40 Coachella Youth Sports Association 14,786 0.47 26,641.74 0.40 Desert Palms Apartments 13,487 0.43 24,001.59 0.40
Coral Mountain Academy 13,659 0.44 22,943.79 0.40
Love’s Travel Stops 13,352 0.43 22,255.08 0.30
Armtec Defense Prod. 1 11,933 0.38 21,934.29 0.30
Total 239,391 7.66% $422,459.13 6.63%
_______________
Source: Authority.
(1) Rounded percentages.

Water Rates
Water Rates are set by the City Council and are not subject to review by any state or local government agency. The most recent revision to the City’s water rate structure was approved by the City Council on March 24, 2010, with the initial new rates effective with the May 1, 2010 billing cycle. The following summarizes the City’s current water rates.

TABLE 2

COACHELLA WATER AUTHORITY

WATER ENTERPRISE
Current Rates and Charges
RATES FOR MONTHLY METER CHARGE ($/METER SIZE)
Meter Size Service Charge
⅝ inch or ¾ inch $ 13.80
1 inch 19.32
1 ½ inches 24.84
2 inches 40.02
3 inches 151.82
4 inches 193.22
6 inches 289.83
8 inches 400.24

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25 RATES FOR CONSUMPTION
Tiers Commodity Charge
Block 1 Rates (per hcf) 0 to 41 hcf $ 1.50 per hcf
Block 2 Rates (per hcf) over 41 hcf 1.65 per hcf
_______________
Source: Authority.
[Remainder of page intentionally left blank.]

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Item 28.
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26 HISTORICAL RATES FOR MONTHLY METER CHARGE ($/METER SIZE) Fiscal Years 2016 through 2020
Meter Size 2016 2017 2018 2019 2020
⅝ inch or ¾ inch $13.80 $13.80 $13.80 $13.80 $13.80
1 inch 19.32 19.32 19.32 19.32 19.32
1 ½ inches 24.84 24.84 24.84 24.84 24.84
2 inches 40.02 40.02 40.02 40.02 40.02
3 inches 151.82 151.82 151.82 151.82 151.82
4 inches 193.22 189.83 193.22 193.22 193.22
6 inches 289.83 289.83 289.83 189.83 289.83
8 inches 400.24 400.24 400.24 400.24 400.24
_______________
Source: Authority.

HISTORICAL RATES FOR CONSUMPTION
Fiscal Years 2016 through 2020
Commodity Charge
Tiers 2016 2017 2018 2019 2020
Block 1 Rates (per hcf) 0 to 41 hcf $1.50 per hcf $1.50 per hcf $1.50 per hcf $1.50 per hcf $1.50 per hcf Block 2 Rates (per hcf) over 41 hcf 1.65 per hcf 1.65 per hcf 1.65 per hcf 1.65 per hcf 1.65 per hcf ______________
Source: Authority.

Demand and Sales
Listed below is the number of water accounts operated by the City and total water production during the past five fiscal years.

TABLE 3

COACHELLA WATER AUTHORITY

WATER ENTERPRISE
Water Enterprise Production and Number of Accounts
(Fiscal Years 2017-18 to 2020-21)
Fiscal Year
Ended June 30
Number of
Accounts
Total
Production
(HCF)(1)
2016 8,773 2,474,082
2017 8,694 2,697,545
2018 8,770 2,910,415
2019 8,741 2,821,867
2020 8,892 2,776,405
2021 9,080 3,127,058
___________________
Source: Authority.

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Item 28.
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27 Increased demand for water services has historically been the result of real estate development within the City, development activity in the surrounding area and, to a minor extent, increased discharges of water by new and existing industrial and commercial businesses in the City. In Fiscal Year 2020-21, the number of accounts increased by 158. This increase is primarily attributable to residential and commercial development during Fiscal Year 2020-21.

As of June 30, 2020, the Water Enterprise had 9,080 active/open water accounts, 8,402 of which represent residential users (individual and multifamily) and 678 of which represent commercial users.

Revenues from residential users, including multifamily units, accounted for approximately 73% of the revenues received by the Authority during the Fiscal Year 2020-21. Set forth below is a further composite of water account users as of the end of Fiscal Year 2020-21.

TABLE 4

COACHELLA WATER AUTHORITY

WATER ENTERPRISE
Water Account User Composition
As of June 30, 2020
Water Accounts User Composition
Percent of Total
Accounts(1)
Percent of Total
Consumption(1)
Percent of Total
Revenue

7,921 Individual Residential Properties 87.24% 71.44% 62% 481 Apartment or other Multifamily Units 5.30 12.12 10
678 Other(2) 7.47 16.44 28
__________________
Source: Authority.
(1) Rounded percentages.
(2) Includes commercial, industrial, fire hydrants and landscaped-only properties.

Billing and Collection Procedures
The Authority has implemented a schedule of utility billings, delinquent notices and turn-off procedures which apply to the Water Enterprise. Billings are mailed or emailed in two cycles. For cycle 1 customers, bills are mailed by the last day of the preceding month and are due on the twenty-fifth of the month. For cycle 2 customers, bills are mailed by the 15th of the preceding month and are due on the tenth of the month. If an account is delinquent, subsequent utility bills contain a delinquency notice. Shutoff notices are mailed after an account has been delinquent for over sixty days. Shutoff notices provide information for payment plans and circumstances under which services will not be shutoff. Certain medical and financial circumstances will preclude the shutoff of a customer’s account if the customer can prove a threat to health and safety or financial inability to pay. Fifteen days after the shutoff notice has been mailed, the City can schedule a service disconnect. Fifteen days after the shutoff notice has been mailed, the City can schedule a service disconnect.

The average delinquency rate during Fiscal Year 2020-21 was approximately [__]%.

Delinquencies over 90 days represented approximately 30% of the accounts receivable balance as of [June 30, 2021]. Additionally, approximately $200,000 of the delinquent balance are COVID-19 (as defined herein) related arrearages. The City, on behalf of the Authority, has applied for, and expects to be awarded, funding through the California State Water Board California Water and Wastewater Arrearage Payment Program to cover these COVID-19-related delinquent amounts. Excluding COVID-19 related

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Item 28.
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28 delinquencies, approximately $139,000 of the delinquent balance is in collections. The City expects to collect 90% of the delinquent accounts. The Authority does not anticipate potential collections losses on the delinquent accounts to have any material impact on its finances.

Historical Operating Results
The tables below summarize the operating revenues, operating expenses and changes in net position of the Water Authority, the historical cash flows and debt service coverages of the Water Enterprise and the net assets of the Water Enterprise each derived from the Authority’s audited financial statements for the Fiscal Years 2016-17 through 2019-20 [and the unaudited financial statements for Fiscal Year 2020-21]. The Authority’s audited financial statements for the Fiscal Year ended June 30, 2020, are included as Appendix B to this Official Statement. The following tables should be read in conjunction with the information and related footnotes contained in Appendix B. [Remainder of page intentionally left blank.]

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Item 28.
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29 TABLE 5

COACHELLA WATER AUTHORITY
Historical Financial Results
(Fiscal Years Ending June 30)
2017 2018 2019 2020 2021(1)

OPERATING REVENUE
Charges for services $ 5,810,063 $ 6,170,863 $6,221,940 $5,991,611 $6,370,999 Other revenue 759,370 990,251 598,860 534,781 528,909
Total operating revenues $ 6,569,433 $ 7,161,114 $6,820,800 $6,526,392 $6,899,908

OPERATING EXPENSES:

Salaries and benefits $1,017,658 $2,161,526 $1,822,409 $2,190,055 $2,370,782 Administrative and general 943,915 301,712 303,426 293,420 705,362 Professional services 653,371 458,456 810,812 1,327,643 323,446 Materials and supplies 443,288 582,964 193,977 539,657 403,799 Repairs and maintenance 57,900 118,158 61,404 109,706 228,832 Utilities 1,097,220 897,224 890,703 911,288 955,177
Depreciation and amortization 1,427,613 1,317,192 1,300,348 1,278,343 1,095,093 Total Operating Expenses $ 5,640,965 $ 5,837,232 $5,383,079 $6,650,112 $6,082,491

Operating Income $928,468 $1,323,882 $1,437,721 ($123,720) $817,417

NONOPERATING REVENUES (EXPENSES):

Connection charges $407,149 $938,957 $222,211 $443,534 $780,444 Intergovernmental revenue - - 154,667 65,224 57,742
Investment income (loss) ($15,319) ($5,426) 374,094 465,751 (20,864) Interest expense and fiscal changes (515,953) (495,430) (483,642) (471,527) (546,108) Total Nonoperating Revenues (Expenses) ($124,123) $ 438,101 $267,330 $502,912 $271,214

Income (Loss) Before Operating Transfers $804,345 $1,761,983 $1,705,051 $379,262 $1,088,631

TRANSFERS
Transfers in - 30,969 $140,060 -
Transfers out ($647,388) ($730,827) ($618,502) ($794,162) ($759,279) Total Transfers ($647,388) ($699,858) ($478,442) ($794,162) ($759,279)

Change in Net Position $156,957 $1,062,125 $1,226,609 ($414,900) $329,352

Total Net Position, Beginning of Year $24,024,849 $24,684,111 $25,746,236 $27,409,036 $26,994,136 Total Net Position, End of Year $24,181,806 $25,746,236 $26,972,845 $26,994,136 $27,323,488 ______________________
Source: Authority.
(1) Data is unaudited.

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Item 28.
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30 TABLE 6

COACHELLA WATER AUTHORITY
Statement of Net Position
(Fiscal Years Ending June 30)
2017 2018 2019 2020 2021(1)

ASSETS
Current Assets
Cash and Investments $ 3,470,521 $ 4,153,705 $ 5,437,950 $ 6,461,191 $6,756,497 Restricted Cash 5,970,914 6,554,892 6,776,459 7,418,413 8,199,452 Prepaid items 103,407 97,281 92,367 85,607 77,826
Accounts receivable, net 700,487 1,046,976 1,348,135 1,579,888 1,149,203 Total Current Assets $ 10,245,329 $ 11,852,8543 $ 13,654,911 $ 15,545,099 $16,182,978 Noncurrent Assets
Capital Assets not being depreciated $1,364,146 $1,521,227 $1,595,516 $891,319 $926,741 Capital Assets being depreciated 60,855,825 60,944,527 60,944,527 60,706,705 60,636342 Less: accumulated depreciation -30,416,989 -31,734,180 -33,034,528 -33,910,097 -34,895,781 Investment with fiscal agent - -34 70 46 166,806
Total Noncurrent Assets $31,802,982 $30,731,608 $29,505,585 $27,687,973 $26,834,108

Total Assets $42,048,311 $42,584,462 $43,160,496 $43,233,072 $43,017,086

DEFERRED OUTFLOWS OF RESOURCES
Deferred changes from debt refunding: $167,360 $156,900 $146,440 $135,980 $125,520 Deferred amount related to pension 505,630 775,814 674,356 610,992 2,947,059 Deferred amount related to other
postemployment benefits - - 37,143 204,339 184,845
Total Deferred Outflows of Resources $672,990 $932,714 $857,939 $951,311 $3,257,424

LIABILITIES -
Current Liabilities:

Accounts payable and accrued liabilities $643,202 $357,215 $320,748 $566,196 $279,672 Deposits payable 379,453 387,504 365,308 346,309 353,763 Accrued wages payable 25,079 36,360 31,138 47,109 59,383 Interest payable 237,823 232,757 227,584 222,260 245,599 Compensated absences, due within one year 85,597 183,452 57,868 106,154 103,125 Bonds payable, due within one year 497,801 505,767 518,863 532,095 721,498 Total Current Liabilities $ 1,868,955 $ 1,703,055 $ 1,521,509 $ 1,822,123 $1,763,040 Noncurrent Liabilities:

Compensated absences, due in more than one
year $80,269 - $55,753 $33,960 $73,292
Net other postemployment benefits liability 398,862 $744,544 780,961 1,067,287 1,141,250 Net pension liability 2,789,045 2,315,420 2,182,131 2,321,945 2,461,383 Bonds Payable, due in more than one year 13,402,364 12,861,459 12,307,456 11,740,222 13,373,912 Total Noncurrent Liabilities $16,670,540 $15,921,423 $15,326,301 $15,163,414 $17,049,837

Total Liabilities $18,539,495 $17,624,478 $16,847,810 $16,985,537 $18,812,877

DEFERRED INFLOWS OF RESOURCES
Deferred amount related to pension - $117,179 $174,025 $159,814 $99,984 Deferred amount related to other
postemployment benefits - 29,283 23,755 44,896 38,160
Total Deferred Inflows of Resources - $146,462 $197,780 $204,710 $138,144

NET POSITION
Net investment in capital assets $18,070,177 $17,521,282 $16,825,636 $15,551,590 $15,087,741 Restricted 5,970,914 6,554,926 6,776,529 7,418,459 8,446,410 Unrestricted 140,715 1,670,028 3,370,680 4,024,087 3,789,338 Total Net Position $24,181,806 $25,746,236 $26,972,845 $26,994,136 $27,323,489 ______________________
Source: Authority.
(1) Unaudited.

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Item 28.
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31 TABLE 7

COACHELLA WATER AUTHORITY
Historical Financial Results and
Debt Service Coverage
(Fiscal Years Ending June 30)
2017 2018 2019 2020 2021(3)
Gross Water Revenues
Charges for Services $5,810,063 $6,170,863 $6,221,940 $5,991,611 $6,370,999 Connection Charges(1) 407,149 938,957 222,211 443,464 780,444 Investment Income(2) -15,319 -5,426 374,094 465,751 145,100 Other Revenue 759,370 990,251 753,527 600,005 528,909
Total Gross Water Revenues $6,961,263 $8,094,645 $7,571,772 $7,500,901 $7,825,452 Water Expenses
Salaries & Benefits $1,017,658 $2,161,526 $1,822,409 $2,190,055 $2,399,599 Administrative Costs 943,915 301,712 303,426 293,420 339,834 Professional Services(3) 653,371 458,456 810,812 1,327,643 268,051 Material and Supplies 443,288 582,964 193,977 539,657 403,799 Repairs and Maintenance 57,900 118,158 61,404 109,706 228,832 Utilities 1,097,220 897,224 890,703 911,288 955,177
Total Water Expenses(4)(5) $4,213,352 $4,520,040 $4,082,731 $5,371,769 $4,595,292 Operating Income $2,826,212 $3,640,334 $3,192,922 $1,742,719 $3,230,160 Coverage
Total Debt Service(6) $1,021,540 $1,022,875 $1,019,262 $1,020,394 $1,020,394 Debt Service Coverage 2.77 3.56 3.13 1.71 3.17

Transfer Out ($647,388) ($730,827) ($618,502) ($794,162) ($759,279) ______________________
Source: Authority.
(1) Amounts represent development impact fees that can only be used for expansions to the Water Enterprise. Such amounts would not have been available to pay debt service on the 2008 USDA Bonds or the 2012 Bonds. (2) Includes unrealized gains or losses on investments as a result of mark to market calculation. (3) Increase in Fiscal Year 2018-19 is primarily due to replacement of significant number of water meters that for accounting purposes are not capitalized. Increase in Fiscal Year 2019-20 is primarily due to system analysis and design costs for State mandated Chromium 6 level reductions. The State relaxed the mandate and accordingly the improvements were not undertaken.
(4) Does not include allocation of various overhead costs that are discretionary and reflected in the line item designated as Transfer Out.
(5) Excludes depreciation and amortization.
(6) Debt Service on the 2008 USDA Bonds and the 2012 Bonds (excludes payments on pension benefit obligation). (7) Unaudited.
[Remainder of page intentionally left blank.]

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Item 28.
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32 Projected Net Revenues and Debt Service Coverages
The following table provides a projection of current revenues, operating expenditures, debt service payments and debt service coverage for the fiscal years ending June 30, 2022 through June 30, 2026, reflecting certain significant assumptions concerning future events and circumstances. The financial forecast represents the Authority’s estimate of projected financial results based upon its judgment of the most probable occurrence of certain important future events. Actual operating results achieved during the projection period may vary from those presented in the forecast and such variations may be material.

TABLE 8

COACHELLA WATER AUTHORITY

WATER ENTERPRISE
Projected Net Revenues
and Debt Service Coverage
(Fiscal Year Ending June 30)
2022 2023 2024 2025 2026
Gross Water Revenues
Charges for Services $6,133,363.84 $6,234,091.19 $6,336,472.77 $6,440,535.75 $6,546,307.74 Interest 146,884.07 134,001.67 122,249.12 99,302.40 80,662.89 Other Revenues 531,845.00 551,216.31 571,293.19 592,101.32 613,667.34 Total Gross Water Revenues $6,812,092.91 $6,919,309.18 $7,030,015.07 $7,131,939.47 $7,240,637.97

Direct Water Costs
Salaries & Benefits $2,538,159 $2,633,956 $2,733,370 $2,781,867 $2,831,226 Administrative and General 1,070,102 1,110,490 1,152,403 1,172,850 1,193,660 Utilities & Replenishment Costs 1,010,332 1,048,465 1,088,037 1,107,342 1,126,989 Other Water Costs 242,045 251,181 260,661 265,286 269,993 Total Direct Water Costs $4,860,638 $5,044,092 $5,234,471 $5,327,346 $5,421,868

Net Water Revenues $1,951,455.35 $1,875,216.99 $1,795,544.14 $1,804,593.76 $1,818,769.62

Coverage
2008 USDA Bonds Debt Service $1,019,900.00 $1,019,900.00 $1,019.900.00 $1,020,000.00 $1,019,900.00 2021 Bonds Debt Service
Debt Service on the Bonds
Total Debt Service $1,019,900.00 $1,019,900.00 $1,019,900.00 $1,020,000.00 $1,019,000.00 Debt Service Coverage 1.91 1.84 1.76 1.77 1.78

Transfer Out
______________________
Source: Authority.

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Item 28.
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33 ENTERPRISE FINANCIAL INFORMATION
Financial Statements
Attached as APPENDIX C are the audited financial statements of the City (the “Financial Statements”) for Fiscal Year 2019-20, which include financial statements for the Water Authority, prepared by the City Finance Department and audited by The Pun Group, Accountants & Advisors, Santa Ana, California (the “Auditor”).

The Auditor’s letter concludes that all the Financial Statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2020, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The Financial Statements should be read in their entirety. The City has not requested nor did the City obtain permission from the Auditor to include the Financial Statements as an appendix to this Official Statement. Accordingly, the Auditor has not performed any post-audit review of the financial condition or operations of the City. In addition, the Auditor has not reviewed this Official Statement.

Retirement Systems
This caption contains certain information relating to the California Public Employees Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. Neither the Authority, the Underwriter nor the City has independently verified the information provided by CalPERS and makes no representations nor expresses any opinion as to the accuracy of the information provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference herein. The City cannot guarantee the accuracy of such information.

Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future. Actuarial assessments will change with the future experience of the pension plans.
[To come.]

RISK FACTORS
The following factors, along with other information in this Official Statement, should be considered by potential investors in evaluating the risks in the purchase of the Bonds.

Forward Delivery
The 2022B Bonds are anticipated to be issued on or about the Settlement Date pursuant to a forward delivery arrangement. During the Forward Delivery Period, certain information contained in this Official Statement may change in material respects. Certain changes in such information would permit the Underwriter to terminate the 2022B Bond Purchase Agreement (as defined herein) or release the

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Item 28.
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34 purchasers of their obligation to purchase the 2022B Bonds as described under the caption “FORWARD DELIVERY OF THE 2022B BONDS—Certain Considerations Regarding Forward Delivery of the 2022B Bonds—Termination of the 2022B Bond Purchase Agreement,” above. See the caption “FORWARD DELIVERY OF THE 2022B BONDS —Certain Considerations Regarding Forward Delivery of the 2022B Bonds” for a description of various risks associated with the forward delivery of the 2022B Bonds.

Water Enterprise Demand and Growth
There can be no assurance that the local demand for the services provided by the Water Enterprise will be maintained at levels described in this Official Statement. Reduction in the level of demand could require an increase in rates or charges in order to produce Net Revenues sufficient to comply with the Authority’s rate covenant in the Indentures. Such rate increases could increase the likelihood of nonpayment, and could also further decrease Enterprise customer demand. There can be no assurance that any other entity with regulatory authority over the Water Enterprise will not adopt further restrictions on operation thereof.

Water Enterprise Expenses
There can be no assurance that Operation and Maintenance Costs of the Water Enterprise will be consistent with the levels described in this Official Statement. The kind and degree of water treatment which is effected by the Water System is regulated, to a large extent, by the federal government. Clean water standards set forth in the Safe Drinking Water Act and the Environmental Protection Act continue to set standards for the operations of the Water System and to mandate its use of technology. In the event that the California Division of Drinking Water Programs or the Federal government, either acting through the Environmental Protection Agency or by adoption of additional legislation, should impose stricter quality standards upon the Water System, its expenses would increase accordingly and rates and charges would have to be increased to offset those expenses. It is not possible to predict the direction which State and federal regulation will take with respect to water treatment. Changes in treatment, transportation and other types of technology, increases in the cost of energy, increased or decreased development within the City, or other expenses could also reduce Net Revenues, and could require substantial increases in rates or charges in order for the Authority to comply with the rate covenant in the Indenture. Rate increases could increase the likelihood of nonpayment by the Water Enterprise customers, and could also decrease water service demands within the City.

Clean Water and Loss of Groundwater Supplies
A key source of Revenues to be used by the Authority pay debt service on the Bonds is derived from the sale of groundwater pumped by the Water System. If the Lower Whitewater River sub-basin or portions thereof were to suffer contamination or other degradation in the quality of the water therein, the groundwater that could be pumped might be reduced and the Revenues of the Water System could correspondingly fall. Such degradation in water quality could result from intrusion of seawater from the coastal areas, movement of saline plumes, contamination by industrial and other human activities, shifting of the aquifers and other barriers due to earthquakes and other geological activity, migration of contamination from other basins, and other reasons. Neither the City nor the Authority has received notice that the Lower Whitewater River sub-basin has experienced any substantial contamination or other degradation in the quality of the water. No assurance can be given that the City’s water quality will not be so adversely affected in the future.

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Item 28.
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35 Parity Obligations
Although the Authority has covenanted not to issue additional obligations payable from Net Revenues senior to the Debt Service Payments, each Indenture permits the issuance of certain indebtedness which may have a lien which is on a parity basis to the lien on Net Revenues contained in the Indenture, if certain conditions and coverage tests are met. These coverage tests involve, to some extent, projections of Net Revenues. If such indebtedness is issued or incurred, the debt service coverage for the Debt Service Payments securing the Bonds will be diluted below what it otherwise would be subject to under the coverage tests. Moreover, there is no assurance that the assumptions that form the basis of such projections, if any, will be actually realized subsequent to the date of such projections. If such assumptions are not realized, the amount of future Net Revenues may be less than projected, and the actual amount of Net Revenues may be insufficient to provide for the payment of the Debt Service Payments and such additional indebtedness. See “SECURITY FOR THE BONDS—Issuance of Parity Obligations” herein and “THE WATER ENTERPRISE—Projected Revenues and Expenses” for a description of anticipated debt service coverage on the Parity Obligations currently expected to be incurred with respect to the Water Enterprise.

Proposition 218
Proposition 218, a state ballot initiative known as the “Right to Vote on Taxes Act” was approved by California voters on November 5, 1996 and, except for certain provisions that became effective on July 1, 1997, became effective on November 6, 1996. Proposition 218 added Article XIIIC, entitled “Voter Approval of Local Tax Levies” (“Article XIIIC”), and Article XIIID, entitled “Assessment and Property Related Fee Reform (“Article XIIID”), to the California Constitution. Article XIIIC and Article XIIID limit the imposition by a local government of “general taxes,” “special taxes,” “assessments” and “fees” or “charges.” The City is a local government within the meaning of Article XIIIC and Article XIIID.

Article XIIIC, provides, among other things, that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local fee or charge. This extension of the initiative power is not limited by the terms of Article XIIIC to fees and charges imposed after November 6, 1996 and, absent other authority, could result in retroactive reduction in existing fees and charges. Although the terms “fees” and “charges” are not defined in Article XIIIC, the California Supreme Court, in Bighorn-Desert View Water Agency v. Kari Verjil; E.W. Kelley (July 2006), has stated that there is no basis for excluding from Article XIIIC’s authorization any of the fees subject to Article XIIID. If fees or charges charged or collected by the City for the Water Enterprise are subjected to the initiative process and the outcome of any initiative proceedings results in a reduction or repeal of such fees or charges, respectively, the ability of the Water Enterprise to generate revenues sufficient to comply with the Authority’s covenants under the Indenture may be adversely affected. Furthermore, if voters were to approve an initiative lowering the City’s water rates, or other charges, the City would need voter approval before it could change the rate or charge that had been set by initiative. The City could, however, increase a charge that was not affected by initiative or to impose an entirely new charge without voter approval.

The California Supreme Court further stated in Bighorn that it was not holding that the initiative power is free of all limitations and was not determining whether the initiative power is subject to the statutory provision requiring that water service charges be set at a level that will pay debt service on bonded debt and operating expenses. Such initiative power could be subject to the limitations imposed on the impairment of contracts under the contract clause of the United States Constitution. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states: “Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996

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36 general election, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protection by Section 10 of Article I of the United States Constitution.” Government Code Section 5854 appears to limit the voters’ power to repeal or reduce Enterprise fees and charges if such reductions would interfere with the Authority’s payment of debt service on the Bonds. If Government Code Section 5854 becomes the subject of a challenge, however, no guarantee can be made that the courts will agree with such interpretation.

Article XIIID prohibits the assessment upon any parcel of property or upon any person “as an incident of property ownership” (defined to exclude fees for the provision of electrical or gas service) by a local government of any tax, assessment, fee or charge except voter-approved ad valorem property taxes and special taxes, fees or charges as a condition of property development, and assessments and “fees or charges for property related services” levied or imposed in accordance with the provisions of Article XIIID.

Under Article XIIID, revenues derived from a “fee” or “charge” (defined as “any levy other than an ad valorem tax, a special tax or an assessment, imposed by a local government upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property related service”) may not exceed the funds required to provide the “property-related service” and may not be used for any purpose other than that for which the fee or charge was imposed. Further, the amount of a “fee” or “charge” may not exceed the proportional cost of the service attributable to the parcel, no “fee” or “charge” may be imposed for a service unless that service is actually used by, or is immediately available to, the owner of the property in question, and no “fee” or “charge” may be imposed for general governmental service where the service is “available to the public at large in substantially the same manner as it is to the property owners.”
In addition, in order for a “fee” or “charge” to be imposed or increased, Article XIIID provides that, among other things, the parcel upon which a fee or charge is proposed for imposition must be identified, the amount of the fee or charge proposed to be imposed on each such parcel must be calculated, written notice by mail of the proposed fee or charge must be provided to the “record owner” of each identified parcel, and a public hearing must be conducted upon the proposed fee or charge. If written protests against the proposed “fee” or “charge” are presented by a majority of owners of the identified parcels, the fee or charge may not be imposed. The California Supreme Court in Bighorn indicated that once a property owner or resident has paid the connection charges and has become a customer of a public water agency, all charges for water delivery incurred thereafter are charges for a property-related service, whether the charge is calculated on the basis of consumption or is imposed as a fixed monthly fee. Accordingly, the imposition or increase of any fee or charge by the City for water service will be the subject of such a majority protest. If such a majority protest occurs, the ability of the Water Enterprise to generate revenues sufficient to comply with the Authority’s covenants under the Indenture may be adversely affected.

Article XIIID states that, beginning July 1, 1997, all “fees” or “charges” must comply with its provisions. It is unclear how the provisions of Article XIIID will be applied to fees or charges established prior to such date. It is also unclear how the provisions of Article XIIID will be applied to fees or charges established after such date but prior to the Bighorn decision.

As a result of the Bighorn decision, there can be no assurance that Proposition 218 will not limit the ability of the Authority and the City to impose, levy, charge and collect increased fees and charges for water service.

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37 Numerous recent appellate court opinions interpret and apply Proposition 218 in the context of evaluating the validity of water-related fees and charges. The Authority is unable to predict at this time how Proposition 218 will ultimately be interpreted by the courts and what, if any, further implementing legislation will be enacted, and there can be no assurance that Proposition 218 will not limit the future ability of the City to impose, levy, charge and collect increased fees and charges for water.

Proposition 26
Proposition 26 was approved by the electorate at the November 2, 2010 election and amended California Constitution Articles XIIIA and XIIIC. The proposition imposes a two-thirds voter approval requirement for the imposition of fees and charges by the State. It also imposes a majority voter approval requirement on local governments with respect to fees and charges for general purposes, and a two-thirds voter approval requirement with respect to fees and charges for special purposes. Proposition 26, according to its supporters, is intended to prevent the circumvention of tax limitations imposed by the voters in California Constitution Articles XIIIA, XIIIC and XIIID of the California Constitution pursuant to Proposition 13, approved in 1978, Proposition 218, approved in 1996, and other measures through the use of non-tax fees and charges. Proposition 26 expressly excludes from its scope a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the State or local government of providing the service or product to the payor. Proposition 26 applies to charges imposed or increased by local governments after the date of its approval. The Authority believes that the City’s current rates and charges for the Water Enterprise are not taxes under Proposition 26.

Recent appellate court opinions interpret and apply Proposition 26 in the context of evaluating the validity of water-related fees and charges. The Court of Appeal in Newhall County Water Dist. v. Castaic Lake Water Agency, 243 Cal. App. 4th 1430 (2016) invalidated a rate structure adopted by Castaic Lake Water Agency in 2013 because that agency could not, in accordance with Proposition 26, properly base its rates for imported water on retail water purveyors’ use of groundwater. Castaic Lake Water Agency did not supply groundwater and the Court of Appeal found that it lacked statutory authority to regulate groundwater. The Authority is unable to predict at this time how Proposition 26 will be interpreted by the courts or what its ultimate impact will be.

Constitutional Limit on Appropriations
Under Article XIIIB of the California Constitution, state and local government entities have an annual “appropriations limit” which limits their ability to spend certain moneys called “appropriations subject to limitation,” which consists of tax revenues, certain state subventions and certain other moneys, including user charges to the extent they exceed the costs reasonably borne by the entity in providing the service for which it is levying the charge. In general terms, the “appropriations limit” is to be based on certain Fiscal Year 1978-79 expenditures, and is to be adjusted annually to reflect changes in the consumer price index, population, and expenditures, and is to be adjusted annually to reflect changes in the consumer price index, population, and services provided by these entities. Among other provisions of Article XIIIB, if an entity’s revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. The Authority is of the opinion that the rates and use charges imposed by the City on behalf of the Authority in connection with the Water Enterprise do not exceed the costs the Authority reasonably bears in providing water service.

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38 No Obligation to Tax
The obligation of the Authority to pay the debt service payments on the Bonds does not constitute an obligation of the Authority for which the Authority is obligated to levy or pledge any form of taxation or for which the Authority has levied or pledged any form of taxation. The obligation of the Authority to pay debt service payments on the Bonds does not constitute a debt or indebtedness of the City or the State of California or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.

Natural Disasters
The occurrence of an earthquake, fire, wildfire, drought, flooding or other natural disaster which resulted in significant damage within the City or otherwise significantly impacted the economy of the City could materially adversely affect the financial condition of the City. In addition, the City’s economy could be impacted in the future by potential future increased state or federal regulations.

Earthquakes are considered a threat to the City due to the highly active seismic region in which the City lies and the proximity of fault zones, which could influence the entire southern coastal portion of the State. Although no major earthquake has caused substantial damage to the City, the City is located over the San Andreas Fault.

An earthquake along one of the faults in the vicinity of the City, either known or unknown, could cause a number of casualties and extensive property damage. The effects of such an earthquake could be aggravated by aftershocks and secondary effects such as fires, landslides, dam failure, liquefaction and other threats to public health, safety and welfare. The potential direct and indirect consequences of a major earthquake could easily exceed the resources of the City.

The City generally is not located within a 100-year floodplain.

Drought
[To be reviewed by the City.] Droughts that have had an adverse effect on California water supplies occurred in 1976, 1977 and 1987 through 1992, 2008 through 2011, and 2012 through early 2017. The 2012 drought lasted for five years and was one of the worst on record for the State.

Due to drought conditions and court-ordered restrictions, which reduced water deliveries from the State Water Project, on January 17, 2014, then-Governor Jerry Brown declared a State-wide Drought State of Emergency. As of such date, the State faced water shortfalls due to the driest year in recorded State history; California’s river and reservoirs were below their record low levels, and manual and electronic readings recorded the water content of snowpack at the highest elevations in the State (chiefly in the Sierra Nevada mountain range) at about 20% of normal average for the winter season. As part of his State of Emergency declaration, then-Governor Brown directed State officials to expedite existing conservation grant programs, facilitate water transfers, conduct a water conservation and outreach campaign in cooperation with local water agencies and organizations, and take additional drought response and water conservation actions. He further directed State officials to assist agricultural producers and communities that may be economically impacted by dry conditions. Following the Governor Brown’s declaration, the State Water Board issued a statewide notice of water shortages and potential future curtailment of water right diversions.

On April 1, 2015, the then-Governor Brown issued an executive order mandating certain water conservation measures, including a requirement that the State Water Board impose restrictions to achieve

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39 a statewide 25% reduction in urban water usage, through February 28, 2016. On November 13, 2015, the then-Governor Brown issued a subsequent executive order mandating that, should drought conditions persist through January 2016, such reductions in urban water usage shall remain in effect through October 31, 2016. As of December 31, 2015, the cumulative statewide reduction in urban water usage was almost

1.1 million acre-feet of water saved, and putting the State 91% of the way to meeting the 1.2 million acrefeet savings goal to be achieved through February 2016.

On May 9, 2016, then-Governor Brown issued a further executive order pursuant to which certain urban water usage emergency drought regulations, including bans on hosing down driveways and watering laws within 48 hours of a rainstorm, will remain in place indefinitely. Urban water suppliers, including the City, will be required to report their water use to the State each month and to develop plans to get through long-term periods of drought. On May 18, 2016, the State suspended the statewide 25% reduction in urban water usage, instructing local communities to set their own conservation standards.

The City set a goal to conserve 10% of urban water usage based on the direction provided by the State.

Both of the May 2016 executive orders were issued in response to a winter in which an El Niño weather pattern caused excess rainfall in the northern part of the State but did not provide enough rainfall in the southern part of the State to fully ameliorate drought conditions.

Following unprecedented water conservation and plentiful winter rain and snow, then-Governor Brown ended the drought state of emergency in most of California on April 7, 2017, while maintaining water reporting requirements and prohibitions on wasteful practices, such as watering during or right after rainfall. The State Water Board will maintain urban water use reporting requirements and prohibitions on wasteful practices such as watering during or after rainfall, hosing off sidewalks and irrigating ornamental turf on public street medians.

In 2018, then-Governor Brown signed Senate Bill 606 and Assembly Bill 1668 into law. These bills relate to water conservation and drought planning and empower the State of California Department of Water Resources (“DWR”) and the State of California Water Resources Control Board to adopt longterm standards for the following: (i) indoor residential water use; (ii) outdoor residential water use; (iii) commercial, industrial and institutional water use for landscape irrigation; and (iv) water loss. The indoor water use standard has been defined as 55 gallons per person per day (“GPCD”) until January 2025; the standard will decrease over time to 50 GPCD in January 2030. Standards for outdoor residential water use and commercial, industrial and institutional water use for landscape irrigation are still being developed. Urban water suppliers will be required to stay within annual water budgets, based on these standards, for their service areas.

The Authority is unable to predict the effect on the Water System of the implementation of Senate Bill 606 and Assembly Bill 1668 or any future legislation with respect to water conservation. [However, the Authority believes that it will be able to meet the 55 GPCD standard for indoor water use based on the current water demands and ongoing efforts to encourage conservation.] On April 21, 2021, Governor Gavin Newsom directed State agencies to take immediate action to bolster drought resilience and prepare for impacts on communities, businesses and ecosystems should dry conditions which have existed since 2019 continue. In addition, on July 8, 2021, the Governor declared a drought state of emergency in 50 counties in northern and central California and requested that all water users voluntarily reduce water use by 15%. As of October 19, 2021, all 58 counties in California are under a drought state of emergency.

No assurance is hereby given that future limitations on water supplies in California will not be imposed by Executive Order.

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40 Cybersecurity
The City relies on computers and technology to conduct its operations, including management of the Water System. The City and its departments face cyber threats from time to time including, but not limited to, hacking, viruses, malware and other forms of technology attacks. To date, there have been no significant, cyber-attacks on the City’s computers and technologies.

While the City is routinely maintaining its technology systems and continuously implementing new information security controls, no assurances can be given that the City’s security and operational control measures will be successful in guarding against all cyber threats and attacks. The results of any attack on the City’s computer and technology could negatively impact the City’s operations, and the costs related to such attacks could be substantial.

Hazardous Substances
The discovery of a hazardous substance that limits the beneficial use of taxable property within the City could result in the reduction in the assessed value of property, and therefore property tax revenue available to make debt service on the Bonds. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most wellknown and widely applicable of these laws, but State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the City be affected by a hazardous substance, could be to reduce the marketability and value of such property by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.

Hazardous substance liabilities may arise in the future with respect to any of the property in the City as a result of the existence, currently, of a substance that is presently classified as hazardous but which has not been released or the release of which is not presently threatened. Hazardous substance liabilities may also arise in the future as a result of the existence, currently, on a parcel of a substance that is not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such a substance.

Risks Related to Coronavirus
The global outbreak of the novel coronavirus COVID-19 (“COVID-19), a respiratory disease declared to be a pandemic (the “Pandemic”) by the World Health Organization, significantly affected the national capital markets and national, state and local economies in various ways. Unemployment in the United States dramatically increased as a result of the Pandemic and triggered a nationwide recession in February 2020. The nationwide economy has largely recovered to pre pandemic levels. On April 2, 2020, Governor Newsom issued Executive Order N-42-20 establishing a moratorium on water service shutoffs to residential and certain business utility customers. This shutoff moratorium has been extended through December 31, 2021with the passage of California Senate Bill 115. Under Generally Accepted Accounting Principles, water sales are considered to be revenue when the water is consumed by the customer and the Authority is thereby owed for the provision of the consumed water. As a result, charges for service revenues reflect all water sales regardless of cash collection. Water billings that are considered revenue but for which cash has not been received are reflected in the Authority’s financial statements as accounts receivable. The Authority has evaluated the amount of unpaid customer accounts due to the pandemic and

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Coachella City CouncilJanuary 26, 2022

Coachella City Council
January 26, 2022