This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any juris diction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Attachment V
PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY ___, 2025
NEW ISSUE - FULL BOOK-ENTRY RATING: S&P: “___”
See “RATING”
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to ce rtain qualifications described herein, under existing law, the interest on the 2025 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the 2025 Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.”
$_____________*
CITY OF HAYWARD
2025 WASTEWATER REVENUE BONDS
Dated: Date of Delivery Due: March 1, as shown on inside cover Authority for Issuance. The captioned bonds (the “2025 Bonds”) are being issued by the City of Hayward (the “City”) pursuant to the City Charter, the City of Hayward Water and Wastewater Enterprise Revenue Bond Law, constituting Chapter 8, Article 22 of the Hayw ard Municipal Code (the “Bond Law”), a resolution adopted by the City Council of the City on [___________], 2025 and pursuant to an Indenture of Trust dated as of March 1, 2025 (the “Indenture”) between the City and The Bank of New York Mellon Trust Company, N.A. , Los Angeles, California, as trustee (the “Trustee”).
Purpose. The proceeds of the 2025 Bonds will be used to (i) finance capital improvement projects for the City’s wastewater system (the “Wastewater System”); (ii) to fund capitalized interest on the 2025 Bonds through September 1, 2025; and (iii) pay the costs of issuing the 2025 Bonds. See “THE FINANCING PLAN.”
Security for the 2025 Bonds; No Reserve Fund. The 2025 Bonds are special limited obligations of th e City and are payable from and secured by a pledge of and lien on the Net Revenues (as such term is defined in the Indenture) of the Wastewater System and from amounts on deposit in certain funds and accounts established under the Indenture. The City is n ot providing for a debt service reserve fund for the 2025 Bonds and is not obligated to fund a reserve fund in connection with, or upon the issuance of, any Parity Obligations. See “SECURITY FOR THE 2025 BONDS.”
Current and Future Parity Obligations. The 2025 Bonds are secured by the Net Revenues of the Wastewater System on a parity with the City’s obligations under an agreement between the City and the State Water Resources Control Board, effective July 27, 2006 ( the “2006 SRF Agreement”). In addition, the City may issue additional debt secured by the Net Revenues of the Wastewater System on a parity basis, subject to the conditions set forth in the Indenture. See “SECURITY FOR THE 2025 BONDS – Parity Obligations.” The City anticipates incurring additio nal Parity Obligations to finance capital improvement projects. See “WASTEWATER SYSTEM FINANCIAL INFORMATION – Future Wastewater System Financings.”
Bond Terms; Book-Entry Only. The 2025 Bonds will bear interest at the rates shown on the inside cover page , payable semiannually on March 1 and September 1 of each year, commencing on September 1, 2025 , and will be issued in fully -registered form without coupons in the denomination of $5,000 or any integral multiple of $5,000. The 2025 Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ( “DTC”). Purchasers of the 2025 Bonds will not receive certificates representing their interests in the 2025 Bonds. Payments of the principal of, premium, if any, and interest on the 2025 Bonds will be made to DTC, which is obligated in turn to remit such principal, premium, if any, and interest to its DTC Participants for subsequent disbursement to the ben eficial owners of the 2025 Bonds. See “THE 2025 BONDS - Description” and “APPENDIX F - DTC and the Book-Entry Only System.” Redemption. The 2025 Bonds are subject to redemption prior to maturity as described herein. See “THE 2025 BONDS –Redemption.” The following firm is serving as municipal advisor to the City:
[Insert NHA Logo]
This cover page contains information for general reference only, and is not a summary of the security or terms of this issue.
Investors must read the entire Official Statement, including the section entit led “CERTAIN RISK FACTORS,” for a discussion of special factors that should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the 2025 Bonds. Capitalized terms used on this cover page and not otherwise defined have the meanings set forth in this Official Statement.
Competitive Sale of the 2025 Bonds. The 2025 Bonds will be sold and awarded pursuant to a competitive bidding process to be held on ___________, 2025, as set forth in t he Official Notice of Sale. The 2025 Bonds are offered when, as and if issued and accepted by the Purchaser, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will also be passed upon for the City by Jones Hall, A Professional Law Corporation, as Disclosure Counsel. [Certain legal matters will be passed upon for the City by the City Attorney.] It is an ticipated that the 2025 Bonds, in book-entry only form, will be available through the facilities of DTC on or about _____________, 2025.
The date of this Official Statement is: _________, 2025.
* Preliminary; subject to change.
MATURITY SCHEDULE
$_________________*
City of Hayward
2025 Wastewater Revenue Bonds
Base CUSIP†: _____
Maturity
(March 1)
Principal
Amount
Interest
Rate
Yield
Price
CUSIP†
Number
$____ - ____% Term 2025 Bonds due March 1, 20__; Yield ____%; Price ____ ; CUSIP†: ___
$____ - ____% Term 2025 Bonds due March 1, 20__; Yield ____%; Price ____ ; CUSIP†: ___
*Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright (c) 202 5 CUSIP Global Services. All rights reserved. CUSIP® data herei n is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the Purchaser, or their agents or counsel take any responsibility for the accuracy of such numbers.
CITY OF HAYWARD, CALIFORNIA
City Council
Mark Salinas, Mayor
Julie Roche, Mayor Pro Tem
Angela Andrews, Council Member
Ray Bonilla Jr., Council Member
Dan Goldstein, Council Member
George Syrop, Council Member
Francisco Zermeño, Council Member
City Officials
Dr. Ana Alvarez, City Manager
Regina Youngblood, Assistant City Manager
Dustin Claussen, Assistant City Manager
Michael Lawson, City Attorney
Miriam Lens, City Clerk
[Nicole Gonzales, Finance Director]
Municipal Advisor
NHA Advisors, LLC
San Rafael, California
Bond Counsel and Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Trustee
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the 2025 Bonds other than as contained in this Official Statement, and if given or made, such other information or re presentation must not be relied upon as having been authorized.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the 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.
Effective Date. This Official Statement speaks only as of its date, and the in formation and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2025 Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City since the date of this Official Statement.
Use of this Official Statement. This Official Statement is submitted in connection with the sale of the 2025 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the 2025 Bonds.
Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.
Document References and Summaries. All references to and summaries of the Indenture or other documents contained in this Official Statement ar e subject to the provisions of those documents and do not purport to be complete statements of those documents.
Stabilization of and Changes to Offering Prices. The Purchaser may overallot or take other steps that stabilize or maintain the market price o f the 2025 Bonds at a level above that which might otherwise prevail in the open market. If commenced, the Purchaser may discontinue such market stabilization at any time. The Purchaser may offer and sell the 2025 Bond s to certain dealers, dealer banks a nd banks acting as agent at prices lower than the public offering prices stated on the cover page of this Official Statement, and those public offering prices may be changed from time to time by the Purchaser.
Bonds are Exempt from Securities Laws Regist ration. The issuance and sale of the 2025 Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provid ed under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.
Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement 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,” “budget” or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD -
LOOKING STATEMENTS INVOLVE KNOWN A ND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR
REVISIONS TO THOSE FORWARD -LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.
Internet Site. The City maintains a number of websites. However, the information presented on the City’s websites is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2025 Bonds. References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Such websites and the information or links contained therein are not incorporated into, and are not part of, this fin al official statement for purposes of, and as that term is defined in, SEC Rule 15c2-12.
i
TABLE OF CONTENTS
Page Page
INTRODUCTION ................................ ....... 1 General ................................ .................. 1 The City ................................ .................. 2 The Wastewater System ......................... 2
Authority for Issuance ............................. 2
Redemption ................................ ............ 2 Security and Source of Payment for
the 2025 Bonds ................................ ... 2
Current and Future Parity Obligations ..... 3
No Debt Service Reserve Fund .............. 3
Rate Covenants ................................ ...... 3 Limited Obligation ................................ ... 3 Continuing Disclosure Information .......... 4
Risk Factors ................................ ........... 4 FINANCING PLAN ................................ ..... 4 Capital Improvement Projects ................. 4
Estimated Sources and Uses of Funds ... 5
Debt Service Schedule ........................... 6
THE 2025 BONDS ................................ ..... 7 Description ................................ ............. 7 Redemption ................................ ............ 7 Book-Entry Only System ......................... 9
SECURITY AND SOURCES OF
PAYMENT FOR THE 2025 BONDS ..... 10
Pledge of Net Revenues ....................... 10
Rate Stabilization Fund......................... 11
Deposit and Transfer of Net Revenues . 11
No Reserve Fund ................................ . 12
Parity Obligations ................................ . 13 Rate Covenant; Collection of Rates
and Charges ................................ ..... 14
Insurance; Net Proceeds ...................... 14
THE CITY ................................ ................ 16 THE WASTEWATER SYSTEM ................ 16
Overview ................................ .............. 16 Service Area ................................ ......... 16 Users of the Wastewater System .......... 16
Facilities ................................ ............... 17 Regulatory Compliance ........................ 18
Management and Operations ............... 19
WASTEWATER SYSTEM FINANCIAL
INFORMATION................................ ..... 20
Rates, Fees and Charges ..................... 20
Wastewater System Revenues ............. 24
Billing, Collection and Delinquencies .... 25
Historical Revenues and Expenses....... 26
Statement of Net Position ..................... 27
Projected Revenues, Expenditures and
Debt Service Coverage ..................... 29
Capital Improvement Program .............. 32
Future Wastewater System Financings . 34
Wastewater System Reserves;
Available Cash ................................ .. 34
Debt Management Policy ...................... 34
CERTAIN RISK FACTORS ...................... 34
Wastewater System Demand ................ 34
Wastewater System Expenses ............. 35
Future Parity Obligations ...................... 35
Articles XIllC and XIIID of the State
Constitution ................................ ....... 35 Natural Calamities ................................ 38 Climate Change ................................ .... 39 Cybersecurity ................................ ........ 39 Limited Recourse on Default ................. 40
Limitations on Remedies Available;
Bankruptcy ................................ ........ 40 No Obligation to Tax ............................. 40
No Reserve Fund ................................ .. 40
Change in Law ................................ ...... 40 Statutory and Regulatory Compliance ... 40
Construction Risk ................................ .. 41 Loss of Tax-Exemption ......................... 41
Secondary Market for 2025 Bonds ........ 41
TAX MATTERS ................................ ........ 42 CERTAIN LEGAL MATTERS ................... 43
NO MATERIAL LITIGATION .................... 44
RATING ................................ ................... 44 CONTINUING DISCLOSURE .................. 44
UNDERWRITING ................................ ..... 45
EXECUTION ................................ ............ 46
APPENDIX A: CITY OF HAYWARD GENREAL DEMOGRAPHIC AND ECONOMIC INFORMATION APPENDIX B: ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY OF HAYWARD FOR THE FISCAL YEAR ENDED JUNE 30, 2023
APPENDIX C: SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX D: PROPOSED FORM OF BOND COUNSEL OPINION
APPENDIX E: FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX F: DTC AND THE BOOK-ENTRY ONLY SYSTEM
ii
[Insert Regional Location Map]
1 __________________________________
OFFICIAL STATEMENT
__________________________________
$_______________*
City of Hayward
2025 Wastewater Revenue Bonds
INTRODUCTION
This introduction contains only a brief summary of certain of the terms of the 2025 Bonds (as defined herein) being offered and a brief description of the Official Statement. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of, provisions of the Constitution and laws of the State of California and any documents referred to herein do not purport to be complete and such references are qualified in their en tirety by reference to the complete provisions. The information and expressions of opinion herein speak only as of their date and are subject to change without notice.
Neither the delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the City of Hayward (the “City”) since the date hereof.
All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Indenture (as defined herein). See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
General
This Official Statement, including the cover and the Appendices attached hereto (the “Official Statement”), provides certain information concerning the sale and delivery of the City of Hayward 2025 Wastewater Revenue Bonds (the “2025 Bonds”). The 2025 Bonds are being issued pursuant to an Indenture of Trust, dated as of March 1, 2025, between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) (the “Indenture”).
When delivered, the 2025 Bond s will be registered in the name of Cede & Co., as nominee of The Depository Trust Company , New York, New York (“DTC”), which will act as Depository for the 2025 Bonds. Purchases of the 2025 Bonds may be made in book-entry form only, through brokers and dealers who are, or who act t hrough, DTC Participants. Beneficial Owners of the 2025 Bonds will not receive physical delivery of certificated securities. Principal of and interest on the 2025 Bonds will be payable by the Trustee to DTC, which will in turn remit such payments to the DTC Participants, which will in turn remit such payments to the Beneficial Owners of the 2025 Bond s. See APPENDIX F – “DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
* Preliminary; subject to change.
2 The 2025 Bond s are being issued to (i) finance capital improvement projects for the City’s wastewater system, (ii) to fund capitalized interest on the 2025 Bonds through September 1, 2025, and (iii) pay the costs of issuing the 2025 Bonds. See “FINANCING PLAN.” The 2025 Bonds are subject to optional and mandatory sinking fund redemption prior to their stated maturities as described in this Official Statement. See “THE 2025 BOND S – Redemption.”
The City
The City is located fourteen miles south of Oakland in the San Francisco Bay Area and includes sixty-one square miles lying between the eastern shore of the San Francisco Bay and the southern Oakland-Berkeley Hills. The City is the sixth largest city in th e San Francisco Bay Area and the third largest city in Alameda County (the “County”). The City serves as a major transportation hub and center of commercial and industrial activity, with immediate access to major interstate freeways, rail lines, and public transit routes such as Bay Area Rapid Transit.
See “THE CITY” for additional information regarding the City and APPENDIX A – “CITY OF HAYWARD GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION ” for certain demographic and economic information regarding the City, the County and the State.
The Wastewater System
The City owns and operates a wastewater collection, treatment, and disposal system (the “Wastewater System”) that serves essentially all of the developed areas within the City as well as a limited portion of adjacent unincorporated areas (collectively, the “Service Area”). A small section in the northern part of the City, consisting of approximately 2,000 homes w ith a population of about 6,000, is served by the Oro Loma Sanitary District. The City is also a member of a joint powers authority, the East Bay Dischargers Authority (the “EBDA”), which provides dichlorination and outfall facilities to convey treated wat er from member agencies’ treatment plants to a discharge point in the San Francisco Bay.
See “THE WASTEWATER SYSTEM ” for additional information regarding the Wastewater System.
Authority for Issuance
The City is issuing the 2025 Bonds pursuant to the provisions of the City Charter, the City of Hayward Water and Wastewater Enterprise Revenue Bond Law, constituting Chapter 8, Article 22 of the Hayward Municipal Code (the “Bond Law”), a resolution adopted by the City Council of the City on [February 25], 2025 and pursuant to the Indenture.
Redemption
The 2025 Bonds are subject to redemption prior to maturity as described in “THE 2025 BONDS – Redemption” herein.
Security and Source of Payment for the 2025 Bonds
The 2025 Bonds are special limited obligations of the City and are payable from and secured by a pledge of and lien on the Net Revenues (as such term is defined in the Indenture)
3 of the Wastewater System and from amounts on deposit in certain f unds and accounts established under the Indenture. The City is not providing for a debt service reserve fund for the 2025 Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2025 BONDS.” Current and Future Parity Obligations
The 2025 Bonds are secured by the Net Revenues of the Wastewater System on a parity with the City’s obligations under a certain outstanding Agreement No. 05 -807-550-0, by and between the City and the State Water Resources Control Board dated July 27, 2006 (the “2006 SRF Agreement”). The City may issue additional bonds or other obligations secured by Net Revenues on parity with the 2025 Bonds and the 2006 SRF Agreement ( “Parity Obligations,” as defined herein), provided that the conditions set forth in the Indenture are met.
The City is not obligated to fund a debt service reserve fund in connection with, or upon the issuance of, Parity Obligations. See “CERTAIN RISK FACTORS ” and “SECURITY F AND SOURCES OF PAYMENT OR THE BONDS – Parity Obligations.”
The City currently anticipates incurring Parity Obligations to provide additional financing for the 2025 Projects (as defined herein) in an aggregate amount of approximately $343 million.
See “WASTEWATER SYSTEM FINANCIAL INFORMATION – Future Wastewater System Financings” for additional details.
No Debt Service Reserve Fund
The 2025 Bond s will not be secured by a debt service reserve fund or account. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2025 BONDS – No Reserve Fund.”
Rate Covenants
In the Indenture, the City covenants to fix, prescribe, revise and collect rates, fees and charges to generate sufficient Revenues (defined in the Indenture and describ ed herein) which are sufficient to pay certain amounts set forth in the Indenture and described herein, including, but not limited to, debt service on the all outstanding Bonds, the 2006 SRF Agreement, and any other Parity Obligations. In addition, the City covenants to fix, prescribe, revise and collect rates, fees and charges sufficient to yield Net Revenues which are at least equal to the sum of (i) 110% of debt service on the 2006 SRF Agreement, the 2025 Bonds, and any other Parity Obligations for such Fiscal Year and (ii) 100% of (A) debt service on the 2006 SRF Agreement, the 2025 Bonds, and any other Parity Obligations for such Fiscal Year and (B) debt service payable during such Fiscal Year on all Subordinate Obligations.
Limited Obligation
Neither the 2025 Bonds nor the obligation to pay principal of or interest thereon constitutes a debt, obligation or liability of the City, the State of California or any of its political subdivisions within the meaning of any Constitutional limitation on indebtedness, or a pledge of the full faith and credit of the City. The 2025 Bonds are secured solely by the pledge of Net Revenues by the City and certain funds held under the Indenture. The 2025 Bonds are not secured by a pledge of the taxing power of the City.
4 Continuing Disclosure Information
The City has agreed to provide, or cause to be provided, in accordance with Securities Exchange Commission Rule 15c2 -12(b)(5), as amended (the “Rule”), certain annual financial information and operating data, including audited financial statements, and an update of certain information relating to the Wastewater System . Such annual information and data will not include updates regarding the status of the Project (as hereinafter defined). See “CONTINUING DISCLOSURE.”
Risk Factors
Certain events could affect the ability of the City to pay debt service on the 2025 Bonds when due. See the caption “CERTAIN RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters that are set forth in this Official Statement, in evaluating an investment in the 2025 Bonds.
FINANCING PLAN
The proceeds of the 2025 Bonds will be used to (i) finance capital improvement projects for the Wastewater System, (ii) to fund capitalized interest on the 2025 Bonds through September 1, 2025, and (iii) pay the costs of issuing the 2025 Bonds.
Capital Improvement Projects
A portion of the proceeds of the 2025 Bonds will be used to fund a portion of the costs of the capital improvement projects described below.
Phase II Project . Increasing nutrient loadings in the San Francisco Bay is a growing concern for the Bay Area water quality community . In 2024, the California Regional Water Quality Control Board (the “SWRCB”), San Francisco Bay Region, initiated its Third Nutrients Watershed Permit, which requires all applicable agencies to reduce nutrient discha rge into the San Francisco Bay. The City and the EBDA are required to reduce total inorganic nitrogen by 50% by 2034. A portion of the proceeds of the 2025 Bonds will be used to finance the construction of improvements necessary to comply with such regulat ory requirements (the “Phase II Project”).
WRRF Administration and Laboratory Building Project. A portion of the proceeds of the 2025 Bonds is also expected to finance a portion of the costs of construction of a 21,800-square foot building housing a cen tralized administration building, main control room for the Water Resource Recovery Facility ( “WRRF”) operations, expanded laboratory facilities, SCADA and staff facilities (the “WRRF Administration and Laboratory Building Proj ect” and, together with the Phase II Project, the “2025 Projects”).
See “WASTEWATER SYSTEM FINANCIAL INFORMATION – Capital Improvement Program” for more information on these and other projects included in the Wastewater System’s capital improvement program. See “WASTEWATER SYSTEM FINANCIAL INFORMATION – Future Wastewater System Financings” for a discussion of additional financings anticipated to be needed to finance the above capital improvement projects.
5 Estimated Sources and Uses of Funds
The estimated sources and uses of funds relating to the 2025 Bonds are as follows:
Sources:
Principal Amount $
Plus: [Net] Original Issue Premium
TOTAL SOURCES $
Uses:
Deposit to 2025 Project Fund
Deposit to Bond Service Fund (1)
Costs of Issuance (2)
TOTAL USES $
(1) Represents capitalized interest on the 2025 Bonds through September 1, 2025. (2) Includes purchaser’s discount, bond and disclosure counsel fees, municipal advisor’s fees, printing costs, rating agency fees, trustee fees and other costs of issuing the 2025 Bonds.
6 Debt Service Schedule
Scheduled debt service on the 2025 Bonds, assuming no redemptions prior to maturity, is shown in the following table.
Fiscal Year
Ending June 30 Principal Interest
Total
Debt Service
Total
7 THE 2025 BONDS
Description
The 2025 Bonds will be dated their date of issuance and delivery, will bear interest at the rates per annum set forth on the inside cover page hereof payable semiannually on March 1 and September 1 (each, an “Interest Payment Date ”), commencing September 1, 2025, and will mature on the dates and in the amounts set forth on the inside cover page. The 2025 Bonds will be issued in denominations of $5,000 or any integral multiple thereof, so long as no 2025 Bond may have more than one maturity date. The 2025 Bonds will be issued only as one fully registered 2025 Bond for each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), as registered owner of all Bonds. See “APPENDIX F – DTC and the Book-Entry Only System” below. Ownership may be changed only upon the registration books maintained by the Trustee as provided in the Indenture. See the discussion under “Transfer and Exchange” below.
Interest on the 2025 Bonds is payable from the Interest Payment Date next preceding the date of authentication thereof unless: (i) a 2025 Bond is authenticated between an Interest Payment Date and the 15th calendar day of the month immediately preceding such Interest Payment Date (each, a “Record Date”), in which event it will bear interes t from such Interest Payment Date; (ii) a 2025 Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the date of original delivery of the 2025 Bonds; or interest on any 2025 Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.
Interest on the 2025 Bonds (including the final interest payment upon maturit y or redemption) is payable when due by check or draft of the Trustee mailed to the Owner thereof at such Owner’s address as it appears on the Registration Books at the close of business on the preceding Record Date; provided that at the written request of the Owner of at least $1,000,000 aggregate principal amount of 2025 Bonds, which written request is on file with the Trustee as of any Record Date, interest on such 2025 Bonds will be paid on the succeeding Interest Payment Date to such account in the Uni ted States as specified in such written request. The principal of the 2025 Bonds and any premium upon redemption, are payable in lawful money of the United States of America upon presentation and surrender thereof at the Office of the Trustee.
While the 2025 Bonds are held in the book-entry only system of DTC, all such payments will be made to Cede & Co., as the registered Owner of the 2025 Bonds. See “APPENDIX F – DTC and the Book-Entry Only System.”
Redemption
Optional Redemption. The 2025 Bonds maturing on or before March 1, 2035, are not subject to redemption prior to their respective stated maturities. The 2025 Bonds maturing on or after March 1, 2036, are subject to redemption in whole, or in part among maturities on such basis as set forth in a certificate of the City filed with the Trustee, and in any event by lot within a maturity, at the option of the City, from any available source of funds, on any date on or after
Preliminary; subject to change.
8 March 1, 20 35, at a redemption price equal to 100% of the p rincipal amount thereof to be redeemed, together with accrued interest thereon to the redemption date, without premium.
Mandatory Sinking-Fund Redemption. The 2025 Bonds maturing on March 1, 20__ (the “Term Bonds”) are subject to mandatory sinking fund redemption in whole, or in part by lot, at a redemption price equal to the principal amount thereof to be redeemed, without premium, plus accrued interest to the date of redemption, in the aggregate respective principal amounts and on June 1 in the years as set forth in the following table.
Sinking Fund Principal Amount
Redemption Date to be Redeemed
(March 1) or Purchased
If some but not all of the Term Bonds have been redeemed under subsection (a), the total amount of all future sinking fund payments will be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis, as determined by the Trustee.
Notice of Redemption. The Trustee on behalf and at the expense of the City shall mail (by first class mail) notice of any redemption to the respective Owners of any 2025 Bonds designated for redemption at their respective addresses appearing on the Registration Books, and to the Securities Depositories and to one or more Information Services, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affec t the validity of the proceedings for the redemption of such 2025 Bonds or the cessation of the accrual of interest thereon. Such notice must state the date of the notice, the redemption date, the redemption place and the redemption price and must designa te the CUSIP numbers, the 2025 Bond numbers and the maturity or maturities (in the event of redemption of all of the 2025 Bonds of such maturity or maturities in whole) of the 2025 Bonds to be redeemed, and must require that such 2025 Bonds be then surrend ered at the Office of the Trustee identified in such notice for redemption at the redemption price, giving notice also that further interest on such 2025 Bonds will not accrue from and after the redemption date. In addition, the redemption notice must state that the City has the right to rescind the notice, if applicable.
Right to Rescind Notice of Optional Redemption . The City has the right to rescind any notice of the optional redemption of 2025 Bonds by written notice to the Trustee prior to the date fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the 2025 Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture. The City and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of redemption.
Selection of Bonds for Redemption . Whenever provision is made in in the Indenture for the redemption of fewer than all of the 2025 Bonds, the City shall designate the maturities of the 2025 Bonds to be redeemed, and the Trustee shall select the 2025 Bonds within a maturity by lot in any manner which the Trustee in its sole discretion deems appropriate. For purposes
9 of such selection, all 2025 Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate 2025 Bonds which may be separately redeemed. If only a portion of any 2025 Bond is called for redemption, then upon surrender of such 2025 Bond the City shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the City, a new 202 5 Bond or 2025 Bonds of the same series and maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the 2025 Bond to be redeemed.
Effect of Redemption . From and after the date fixed for redemption, if n otice of redemption has been duly mailed and funds available for the payment of the principal of and interest (and premium, if any) on the 2025 Bonds so called for redemption have been duly provided, such 2025 Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Unless otherwise directed in writing by the City, the Trust ee shall cancel and destroy all 2025 Bonds redeemed under the Indenture.
Transfer and Exchange . So long as the 2025 Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of 2025 Bonds will be made in accordance with DTC procedures. See APPENDIX F – “DTC AND THE BOOK -ENTRY ONLY SYSTEM.”
Any 2025 Bond may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2025 Bond for cancellation at the Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee.
Whenever any 2025 Bond or 2025 Bonds shall be surrendered for registration or tr ansfer, the City shall execute and the Trustee shall authenticate and deliver a new 2025 Bond or 2025 Bonds of like series, maturity, interest rate and aggregate principal amount. The City shall pay all costs of the Trustee incurred in connection with any such transfer, except that the Trustee may require the payment by the 2025 Bond Owner of any tax or other governmental charge required to be paid with respect to such transfer.
2025 Bonds may be exchanged at the Office of the Trustee, for a like aggregat e principal amount of 2025 Bonds representing other authorized denominations of the same series, interest rate and maturity. The City shall pay all costs of the Trustee incurred in connection with any such exchange, except that the Trustee may require the payment by the 2025 Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
Book-Entry Only System
The 2025 Bond s will be delivered in fully registered form, will be transferable and exchangeable as set forth in the Indenture and, when delivered, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as Depository for the 2025 Bonds. Ownership interests in the 2025 Bond s may be purchased in book -entry form onl y, in authorized denominations. So long as the 2025 Bond s are registered in the name of Cede & Co., all payments with respect to principal of and interest on the 2025 Bond s will be made by the Trustee to DTC, which is obligated in turn to remit such payme nts to its Direct Participants for subsequent disbursement to the Beneficial Owners of the 2025 Bonds. See APPENDIX F – “DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
10 SECURITY AND SOURCES OF PAYMENT FOR THE 2025 BONDS
Pledge of Net Revenues
General. The 2025 Bonds are secured by a first pledge of and lien on all of the Net Revenues of the Wastewater System, on a parity basis with the 2006 SRF Agreement and any future Parity Obligations . In addition, the 2025 Bonds are secured by a pledge of all of the moneys in the Bond Service Fund, including all amounts derived from the investment of such moneys. The 2025 Bonds , the 2006 SRF Agreement and all other Parity Obligations are equally secured by a pledge, charge and lien upon the Net Revenues and such moneys without priority for series, issue, number or date and the payment of the interest on and principal of the 2025 Bonds shall be and are secured by an exclusive pledge, charge and lien upon the and such moneys. So long as any of the 2025 Bonds are O utstanding, the Net Revenues and such moneys may not be used for any other purpose; except that out of the Net Revenues there may be apportioned such sums, for such purposes, as are expressly permitted by the Indenture and the Parity Obligation Documents.
Definitions. Set forth below are the definitions of certain terms used in the Indenture:
“Net Revenues” means, for any Fiscal Year, all Revenues received by the City in such Fiscal Year less the Operation and Maintenance Costs for such Fiscal Year.
“Revenues” means all gross income and revenue received or receivable by the City from the ownership or operation of the Wastewater System, or otherwise arising from the Wastewater System during any Fiscal Year, including all rates, fees, and charges (including connection fees and charges) as received by the City for the services of the Wastewater System. It includes all other income and reven ue howsoever derived by the City from System ownership or operation, or otherwise arising from the Wastewater System, including but not limited to all receipts derived from the investment of funds held by the City under the Indenture or any Parity Obligati on Documents, transfers from (but exclusive of any transfers from the applicable Fiscal Year’s income and revenue to) the Sewer Fund Rate Stabilization Fund, and all moneys received by the City from other public entities whose inhabitants are served pursua nt to contracts with the City.
“Operation and Maintenance Costs ” means the reasonable and necessary costs paid or incurred by the City to maintain and operate the Wastewater System, determined in accordance with generally accepted accounting principles, including all reasonable expenses of management and repair and all other expenses necessary to maintain and preserve the Wastewater System in good repair and working order. It includes all reasonable and necessary administrative costs of the City that are charged directly or apportioned to Wastewater System operation, such as employee salaries and wages, overhead, taxes (if any), permit and license costs, operational charges, and insurance premiums. It excludes, in all cases, depreciation, replacement, and obsolescence charges or reserves therefor, amortization of intangibles and interest expense relating to subordinate obligations and unsecured obligations of the City. For the avoidance of doubt, bookkeeping entries and capital charges are excluded from Operations and Maintenance Costs.
“Parity Obligations Documents ” means, collectively, (a) each Supplemental indenture, (b) the 2006 SRF Agreement, and (c) all leases, installment sale agreements,
11 trust agreements, indentures of trust and other documents pres cribing the terms and provisions applicable to any issue of Parity Obligations. For a description of current and potential future Parity Obligations, see “–Parity Obligations.”
“Bonds” is sometimes used in this Official Statement to refer to ( a) the 2025 Bonds and (b) Parity Obligations issued as bonds pursuant to a Supplemental Indenture in accordance with the Indenture.
“Subordinate Obligations ” means all bonds, notes, loan agreements, installment sale agreements, leases or other obligations of the Cit y (a) that are either (i) payable from but not secured by a pledge or and lien upon any of the Net Revenues or (i) payable from and secured by a pledge of and lien upon any of the Net Revenues on a junior and subordinate basis to the Bonds and all other Pa rity Obligations, and (b) the principal of which cannot be accelerated and paid unless the Bonds and any Parity Obligations have been indefeasibly paid in full.
Rate Stabilization Fund
The City has the right at any time to establish a fund to be held by it and administered in accordance with the Indenture, for the purpose of stabilizing the rates and charges imposed by the City with respect to the Wastewater System (the “Rate Stabilization Fund”). From time to time the City may deposit amounts in the Rate Stabilization Fund, from any source of legally available funds, as the City may determine, provided that deposits for each Fiscal Year may be made until (but not after) one hundred eighty (180) days following the end of such Fiscal Year.
The City may, but is not required to, withdraw amounts on deposit in the Rate Stabilization Fund and deposit such amounts in the Wastewater Fund in any Fiscal Year , such withdrawals for a Fiscal Year to be made until (but not after) one hundred eighty (180) days after the end of such Fiscal Year. Amounts so transferred from the Rate Stabilization Fund to the Wastewater Fund during the time specified in the previous sentence constitute Revenues for that Fiscal Year (except to the extent provided in “ –Rate Covenant; Colle ction of Rates and Charges – Net Revenue Coverage ” and “ –Parity Obligations” ), and will be applied for the purposes of the Wastewater Fund. Amounts on deposit in the Rate Stabilization Fund are not pledged to and do not secure the Bonds or any issue of Parity Obligations. All interest or other earnings on deposits in the Rate Stabilization Fund will be retained therein or, at the option of the City, be applied for any other lawful purposes. The City has the right at any time to withdraw any or all amount s on deposit in the Rate Stabilization Fund and apply such amounts for any other lawful purposes of the City.
Deposit and Transfer of Net Revenues
Flow of Funds . The City has previously established a Wastewater Fund (the “Wastewater Fund”), which it will continue to hold and maintain for the purposes and uses set forth in the Indenture and the Parity Obligation Documents. The City shall deposit all Revenues in the Wastewater Fund promptly upon the receipt thereof, and shall apply amounts i n the Wastewater Fund solely for the uses and purposes set forth in the Indenture and in the Parity Obligation Documents. The City may at any time use and apply moneys in the Wastewater Fund for the payment of the Operation and Maintenance Costs of the Was tewater System (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs the payment of which is not immediately required).
12 Deposits into the Bond Service Fund; Application of Moneys in the Bond Se rvice Fund. On or before the 3rd Business Day of the month preceding each Interest Payment Date, so long as any 2025 Bonds remain Outstanding, the City shall withdraw from the Wastewater Fund and pay to the Trustee for deposit into the Bond Service Fund a n amount which, together with other available amounts then on deposit in the Bond Service Fund, is at least equal to the aggregate amount of principal of and interest coming due and payable on the 2025 Bonds on such Interest Payment Date, including the pri ncipal of the Term Bonds upon the mandatory sinking fund redemption thereof and the provisions of one or more Supplemental Indentures.
Payment of the debt service on the Bonds and the principal of and interest on any Parity Obligations will be made without preference or priority. If the amount of Net Revenues on deposit in the Wastewater Fund are any time insufficient to enable the City to pay when due the debt service on the Bonds and the principal of and interest on any Parity Obligations, such payments will be made on a pro rata basis.
The Trustee shall apply amounts in the Bond Service Fund solely for the purpose of (i) paying the interest on the Outstanding Bonds when due and payable (including accrued interest on any 2025 Bonds purchased or redeemed), (ii) paying the principal of the Term Bonds upon the mandatory sinking fund redemption thereof, and (iii) paying the principal of the 2025 Bonds at the maturity thereof and the provisions of one or more Supplemental Indentures. Upon the payment of all Outstanding Bonds, the Trustee shall transfer any moneys remaining in the Bond Service Fund to the City for deposit into the Wastewater Fund.
On the Closing Date, the Trustee will deposit a portion of the proceeds of the 2025 Bonds in the Bond Service Fund and such amounts will be used to pay interest on the 2025 Bonds on September 1, 2025 and, to the extent available, March 1, 2026. See “FINANCING PLAN.”
Other Uses of Wastewater Fund . The City will manage, conserve and apply moneys in the Wastewate r Fund in such a manner that all deposits required to be made under the Indenture and any Parity Obligation Document, will be made at the times and in the amounts so required.
So long as no event of default has occurred and is continuing under and as def ined in the Indenture, the City may at any time use and apply moneys in the Wastewater Fund for any one or more of the following purposes:
(i) the acquisition and construction of extensions and betterments to the Wastewater System;
(ii) the redemption or prepayment of any of the Bonds , the 2006 SRF Agreement and any other Parity Obligations which are then subject to redemption or prepayment or the purchase thereof from time to time in the open market, at prices and in such manner, either at public or private sale, or otherwise, as the City in its discretion may determine; or
(iii) any other lawful purpose of the City relating to the Wastewater System , including deposits into the Rate Stabilization Fund.
No Reserve Fund
13 No reserve fund is being establish ed in connection with the 2025 Bonds and no reserve fund is required to be established in connection with the issuance of any Parity Obligations (see “–Parity Obligations” below).
Parity Obligations
In addition to the 2025 Bonds, the City currently has outstanding certain Parity Obligations, consisting of the 2006 SRF Agreement. In addition, the City may issue additional Parity Obligations from time to time in such principal amount as it determines, subject to the following conditions precedent:
(a) No Event of Default (or no event with respect to which notice has been given and which, once all notice of grace periods have passed, would constitute an Event of Default) has occurred and is continuing.
(b) Net Revenues for the period of 12 consecutive months within the 18 months immediately preceding the issuance of the proposed additional Parity Obligations based on the City’s audited financial statement(s) for such period or a certificate of an Independent Accountant emplo yed by the City, were at least equal to 110% of the debt service on the Outstanding Bonds, the 2006 SRF Agreement and any other outstanding Parity Obligations in the Fiscal Year immediately succeeding the Fiscal Year in which the additional Parity Obligation is issued or incurred.
(c) (i) Estimated Net Revenues for the Fiscal Year in which the proposed Additional Parity Obligation is issued, and (ii) projected Net Revenues for the five Fiscal Years immediately following the Fiscal Year in which the additional Parity Obligation is issued, will be at least equal to 110% of the Debt Service in such Fiscal Year(s) for all Outstanding Bonds, all outstanding Parity Obligations and the proposed additional Parity Obligation. For purposes of clause (c)(ii), (A) if a ll or a portion of the interest due in such five Fiscal Years on any Outstanding Bonds, outstanding Parity Obligations or the proposed additional Parity Obligation. is being or will be capitalized from the proceeds of such Outstanding Bonds, outstanding Pa rity Obligations or the proposed additional Parity Obligation, the five Fiscal Year period will commence with the first Fiscal Year beginning after the last capitalized interest payment, (B) projected Net Revenues for each Fiscal Year in the five Fiscal Ye ar period may include Revenues arising from increases in the rates and charges estimated to be fixed and prescribed or received for the services of the Wastewater System and which are economically feasible and reasonably considered necessary based on proje cted operations for such Fiscal Year, and (C) Net Revenues for a Fiscal Year may be increased by transfers from the Rate Stabilization Fund to the Wastewater Fund, provided that Net Revenues excluding such transfers are at least equal to the sum of (i) the amount described in the preceding clause (a)(ii) for such Fiscal Year and (ii)debt service payable during such Fiscal Year on all Subordinate Obligations.
(d) The issuance of such Parity Obligations shall comply with all conditions to the issuance thereof as set forth in the applicable provisions of the Parity Obligation Documents.
(e) The City shall deliver to the Trustee a Certificate of the City certifying, and an opinion of Bond Counsel stating, that the conditions precedent to the issuance of such P arity Obligations set forth in the foregoing subsections (a), (b) and (c) above have been satisfied.
The City is not obligated to fund a debt service reserve fund in connection with, or upon the issuance of, any Parity Obligations.
14 Rate Covenant; Collection of Rates and Charges
Revenue Coverage. The City covenants in the Indenture that it will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order:
(a) all Operation and Maintenance Costs estimated by the City to become due and payable in the Fiscal Year;
(b) the principal of and interest on all outstanding Bonds, the 2006 SRF Agreement, and all other outstanding Parity Obligations as they become due and payable during the Fiscal Year, without preference or priority;
(c) all amounts, if any, required to restore the balance in any reserve fund established for any other Parity Obligations to the required level; and
(d) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon, or which are otherwise payable from, the Revenues or the Net Revenues during such Fiscal Year.
Net Revenue Coverage. In addition to the covenant set forth regarding Revenues coverage, the City covenants in the Indenture that it will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which are sufficient to yield Net Revenues which are at least equal to the sum of (i) 110% of the amount of principal of and interest on all outstanding Bonds, the 2006 SRF Agreement, and all other Parity Obligations as they come due and payable during the Fiscal Year, and (ii) 100% (A) the amount of principal of and interest on all outstanding Bonds, the 2006 SRF Agreement, and all other Parity Obligations as they come due and payable during the Fiscal Year and (B) debt service payable during suc h Fiscal Year on all Subordinate Obligations.
For purposes of this Net Revenue Covenant, the Net Revenues may include transfers from the Rate Stabilization Fund to the Wastewater Fund for such Fiscal Year, if any, provided that the Net Revenues excluding s uch transfers are at least equal to the sum of (i) the amount of principal of and interest on all outstanding Bonds, the 2006 SRF Agreement, and all other Parity Obligations as they come due and payable during the Fiscal Year and (ii) debt service payable during such Fiscal Year on all Subordinate Obligations.
Insurance; Net Proceeds
The City will at all times maintain with responsible insurers all such insurance on the Wastewater System as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to the Wastewater System. All amounts collected from insurance against accident to or destruction of any portion of the Wastewater System shall be deposited in an Insurance and Condemnation Fund established and held by the City and applied as follows:
(a) If the City has determined that it needs to use the insurance proceeds to make additions, betterments, extensions or improvements to the Wastewater System in order for the
15 City to comply with the Inde nture, the City shall use such insurance proceeds to make such additions, betterments, extensions or improvements. If the amount of such insurance proceeds shall exceed the costs of such additions, betterments, extensions or improvements that are required for the City to comply with the Indenture, the excess shall be applied to any lawful purpose of the Wastewater System, including (i) the payment of debt service on the Bonds and any Parity Obligations, (ii) the prepayment or discharge of the Bonds and any Parity Obligations as provided in the Indenture and the Parity Obligation Documents, as applicable, and (iii) the payment of capital costs of improvements to the Wastewater System.
(b) If the City has determined that it does not need to use the award to make additions, betterments, extensions or improvements to the Wastewater System in order for the City to comply with the Indenture, the City shall use such award for any lawful purpose of the Wastewater System, including (i) the payment of debt service on the Bonds and any Parity Obligations, (ii) the prepayment or discharge of the Bonds and any Parity Obligations as provided in the Indenture and the Parity Obligation Documents, as applicable, and (iii) the payment of capital costs of improvements to the Wastewater System.
(c) Notwithstanding the foregoing, to the extent the award relates to improvements financed by one or more series of the Bonds, until such time as such Bonds have been redeemed or paid at maturity, (i) any use of such related award shall comply with the tax covenants of the Indenture or similar applicable provisions of Supplemental Indentures, (ii) such related award may not pay debt service on or prepay, discharge or redeem any others Bonds or other Parity Obligations, (iii) if such related award will be used to pay debt service on or prepay, discharge or redeem such Bonds, they cannot be invested at a yield that is greater than the arbitrage yield of such Bonds and (iv) if such Bonds are refunded by tax -exempt refunding bonds (“ Refunding Bonds”), such related award in the Insurance and Condemnation Fund shall be used for purposes not inconsistent with the tax covenants of the Indenture or similar applicable provisions of Supplemental Indentures.
16 THE CITY
The City is a charter city that was incorporated in 1876. The City operates under the council-manager form of government, in which authority is concentrated in the elected city council, which appoints a professional manager (the “City Manager”) to implement its policies.
The Mayor is elected by the voters of the City for a four -year term. The City Manager oversees the City’s annual operating budget and personnel matters, and serves as the City Council’s chief policy advisor.
The City Council consists of seven members elected to serve staggered four-year terms.
See APPENDIX A – “CITY OF HAYWARD GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION” for certain demographic and economic information regarding the City.
THE WASTEWATER SYSTEM
Overview
The City of Hayward wastewater system (the “Wastewater System”) is one of three enterprises managed, operated and maintained by the City. The other enterprises are the water and airport enterprises. The Wastewater System is comprised of a collection system , and treatment and disposal facilities located at 3700 Enterprise Avenue.
The City's first wastewater treatment plant was constructed in 1954. Since that time, a number of improvements and facilities have been constructed and installed including a new headworks, and sludge drying beds to manage the increasing volumes that came with development within the City's residential, commercial, and industrial sectors and to meet increasingly stringent discharge requirements from the California Water Resources Control Board (the “SWRCB”).
Service Area
The Wastewater System serves essentially all the developed areas within the City as well as a limited portion of adjacent unincorporated areas (collectively, the “Service Area ”) which comprises approximately 61 square miles. A small section in the northern part of the City, consisting of approximately 2,000 homes with a population of about 6,000, is served by Oro Loma Sanitary District. The Wastewater System provides sewage collection, primary and secondary treatment and disposal services for customers within the Service Area. The City is also a member of a joint powers authority, the East Bay Dischargers Authority (the “EBDA”), which provides dechlorination and outfall facilities to convey treated water from member agencies' treatment plants to a discharge point in the San Francisco Bay.
Users of the Wastewater System
The Wastewater System serves more than 35,000 residential, commercial and industrial units, made up primarily of residential customers. Table 1 below sets forth a five-year history of Wastewater System users.
17 Table 1
CITY OF HAYWARD WASTEWATER SYSTEM
Customer Base by Type of Account
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Single Family
Residential 29,232 29,693 29,859 30,096 30,166
Multi Family Residential 1,436 1,436 1,438 1,441 1,444
Commercial / Industrial 3,393 3,411 3,421 3,448 3,475
Governmental /
Institutional 210 214 214 219 220
Critical User (Large
Industrial Users) 24 24 24 22 19
TOTAL 34,295 34,778 34,956 35,226 35,324
____________________
Source: City of Hayward.
Facilities
Collection System . The collection system consists of more than 3 25 miles of underground sanitary sewer lines and trunk lines of up to 48 -inches, 2.5 miles of force mains, two major lift stations, and seven smaller lift stations.
Water Resource Recovery Facility . The Water Resource Recovery Facility (the “WRRF”), formerly known as the Water Pollution Control Facility, is located on an approximately 306-acre site in the western part of the City. The WRRF site includes 220 acres of former oxidation ponds. Operation of the WRRF is a 24 -hour, seven -days a week, 365 -day a ye ar activity. The average of 11.38 million gallons per day ( “mgd”) of wastewater originating from residential, commercial, industrial and institutional customers within the service Area was treated and discharged at the WRRF in Fiscal Year 2023 -24. The perm itted capacity of the WRRF is 18.5 mgd.
Primary and secondary wastewater treatment is provided at the WRRF. Effluent from the WRRF is disinfected with hypochlorite and discharged to the EBDA “super sewer” line for final disposal. The treated wastewater is dechlorinated and then discharged into the deeper water of the San Francisco Bay. The WRRF treats wastewater in two steps: primary and secondary, each of which is required to meet environmental standards.
Primary Treatment. Primary treatment is comprised of preliminary, floatation and sedimentation processes. Preliminary treatment consists of processing the wastewater through grinders to reduce the size of large solids and relying on gravity to remove the solids from the wastewater. The wastewater is then subjected to a vacuator process to separate oils and greases by floatation in addition to removing heavier grit in order to protect equipment from abrasion and wear. The last stage of solids removal is primary clarification where additional solids settle in open clarifier tanks by gravity sedimentation.
Secondary Treatment. Secondary treatment consists of trickling filter and a final clarifier processes. The trickling filter removes organic materials in the primary effluent through the use of biological g rowth attached to media inside the filter tower. As the biological growth consumes the organic material in the primary effluent, solids thicken and precipitate from the media, pulling down additional solids in the final clarifier. The
18 final clarifier efflu ent is then chlorinated and discharged from the WRRF to the EBDA super sewer line.
Biosolids Management. The solid, stabilized organic materials removed from wastewater are called “biosolids.” The WRRF generates approximately [4,500 yards (4,000 dry metric tons)] per year of biosolids during the wastewater treatment process. The WRRF has capacity to store digested sludge for one year but ultimately disposes of all the dewatered biosolids offsite.
All the biosolids from the WRRF are currently removed by Waste Management of Alameda County ( “Waste Management ”), who is also the franchised hauler for solid waste collection and recycling services in the City. Biosolids are transported by Waste Management to offsite landfills. The City’s current contract with Waste Management expires in 2033.
Historical Flows and Treatment Capacity. The WRRF can treat up to 18.5 mgd, based on its permitted average dry weather flow capacity. Historical flow information for the last five fiscal years is presented in Table 2 below.
Table 2
CITY OF HAYWARD WASTEWATER SYSTEM
Historical Wastewater Flow and WRRF Capacity(1)
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Average Daily Flow (2) 10.72 10.36 10.57 12.38 11.83
Peak Day Flow 13.4 16.9 21.1 33.6 21.6
Treatment Capacity (3) 18.5 18.5 18.5 18.5 18.5
Wet Weather Capacity 35.0 35.0 35.0 35.0 35.0
__________________
(1) Average and capacity presented in mgd. Peak day flow presented in millions of gallons for such peak day. (2) Average Daily Flow shown here is higher than average dry weather flows due to the inclusion of flows during rainy periods. (3) Current permitted average dry weather flow capacity under Permit.
Source: City of Hayward.
Regulatory Compliance
The construction and operation of wastewater treatment facilities and the discharge of sewage are highly regulated by State and federal laws to meet various requirements for the operation, treatment, monitoring, maintenance and disposal/discharge of wastew ater. The two principal laws governing wastewater treatment are the federal Clean Water Act enacted in 1972, and the State's Porter-Cologne Act first enacted in 1969. These laws require that policies, plans, requirements and standards for discharges of was tewater be developed in order to protect the beneficial uses of the water. The United States Environmental Protection Agency, the federal agency charged with implementation and enforcement of the Clean Water Act, has delegated much of the planning, permitt ing and enforcement activities to the states. In California, the SWRCB develops policies, plans, requirements and discharge standards for the three types of State waters: inland surface waters, enclosed bays and estuaries, and the ocean. The SWRCB is the e nforcement arm for the State and federal water pollution control programs, issuing the discharge permits and establishing the waste discharge requirements.
The discharge standards are set forth in NPDES permits issued and modified every five years by the SWRCB. The City discharges wastewater pursuant to the terms of an NPDES permit issued to EBDA. The current NPDES permit (the “Permit”) for EBDA was issued in 2022
19 and prescribes wastewater discharge requirements for the WRRF. The Permit expires in 20 27 and continues in full force until the SWRCB issues a new permit.
The other regulatory agency that issues a permit necessary for construction or operation of the Wastewater System is the Bay Area Air Quality Management District, which is responsible for estab lishing air emissions standards for the WRRF and the issuance of air emission permits.
Management and Operations
The Wastewater System is operated by the City on a self -supporting basis under the authority of the City Council. Day -to-day operations of th e Wastewater System are under the supervision of the City's Public Works Director. Brief resumes for management personnel of the Wastewater System and WRRF are set forth below:
Alex Ameri, Director of Public Works . Mr. Ameri was appointed as Director of Utilities & Environmental Services Department in 2011 , and he was then appointed as Director of Public Works and Utilities Department upon merging with the Department of Public Works. He is responsible for the management of construction, operation and main tenance of the City's utilities systems, including the wastewater system and the water distribution and storage facilities. He is also responsible for preparing and implementing the City’s Capital Improvement Program and managing the budgets for the wastew ater, water, recycled water and stormwater systems. Prior to this appointment, Mr. Ameri was appointed as the Deputy Director of Public Works/Utilities in 1993 and served as a Development Services Engineer with the City from 1989 to 1993. He also served th e City of Santa Barbara as a Land Development Engineer from 1987 to 1989. Mr. Ameri holds a Bachelor of Science in Civil Engineering, a Master of Science in Civil Engineering and a Master of Engineering in Mechanical Engineering. Mr. Ameri is also a Registered Professional Engineer in California, New York and New Jersey.
David Donovan, Water Resource Recovery Facility Manager . Mr. Donovan joined the City in 2015 as an Operations Supervisor and has served as the WRRF Manager since 2016.
He is responsible fo r the overall management of the City’s WRRF and oversees a team of 30 operations, maintenance, technical, laboratory and administrative staff in planning and executing process changes and maintenance projects. Mr. Donovan is registered with the California State Water Resource Control Board as the Chief Plant Operator (CPO) and is responsible for ensuring that the WRRF meets and exceeds compliance of the NPDES permit.
He also collaborates with other external agencies for the operations and maintenance of EBD A facilities. Prior to joining the City, he was a Shift Supervisor at West County Wastewater District, and held various operator roles in City of San Leandro Water Pollution Control Plant and Central Contra Costa Sanitary District. He is a licensed Grade V Operator.
Mark Orlandi, Water Resource Recovery Facility Operations Manager. Mr. Orlandi joined the City in 2016 as a Lead Operator and now serves as the WRRF Operations Manager. In his current role, he is responsible for managing the 24/7 operations of the WRRF, which includes wastewater treatment, recycled water treatment, solids handling, and cogeneration operations.
He oversees a team of six Lead Operators and seven Operators. He started his wastewater career through the Tri Valley ROP program held at Dublin San Ramon Services District in 2011.
Following the completion of his Operator in Training hours with the Manteca Wastewater Quality Control Facility, he was hired to work at the San Leandro Water Pollution Control Plant. After earning his license, he worked for Veolia Water as an Operations and Maintenance Technician for both water and wastewater in Discovery Bay. He then worked for Severn Trent Services in
20 Mountain House as a Lead Operator for the wastewater facility. He is a licensed Grade V operator.
Dan Magalhaes, Water Resource Recovery Facility Maintenance Manager . Mr.
Magalhaes started with the City in 2004 as the first WRRF Maintenance Supervisor after working in private sector, where he had over 20 years of industrial maintenance experience in food processing, packaging, and the paper and pulp industries. He started in quality control as an apprentice in the field of industrial maintenance. Upon his arrival at the WRRF, Mr.
Magalhaes established corrective, preventative, and predictive maintenance protocols that have yielded operational efficiencies in the treatment process as well as the resource recovery operations at the cogeneration, solar, and recycled water facilities. He has also worked closely with the Operations team to develop an ef fective Maintenance team and improve operational practices. In his current role, he works closely with Director Ameri, the WRRF management team, City engineers, and consultants to continue the improvement and growth of the WRRF.
Kyle Carbert, Senior Utilities Engineer. Mr. Carbert joined the City in 2023 and has been involved in the 2025 Projects since the preliminary design stage. He has more than 18 years of public works experience, with a focus on utilities projects, in both the public and private secto r.
Mr. Carbert is currently serving as the City’s project manager overseeing the 2025 Projects’ design. He will be responsible for working closely with the construction management team and interfacing with the WRRF operations and maintenance staff during c onstruction. Mr. Carbert is also serving a key role reviewing design packages, supporting the environmental review effort, coordinating with the City’s building and planning departments, and managing the design effort.
Elli Lo, Senior Management Analyst . Ms. Lo is responsible for assisting with the development of the City’s Capital Improvement Program. She is responsible for the administration of the CWSRF loan for the City’s Recycled Water Project, which includes budget tracking and applying for disbursements. Ms. Lo will provide the 2025 Projects’ day-to-day fiscal administration, which will include tracking costs and disbursements for all funding sources, including WIFIA. Ms. Lo has over 9 years in fiscal management for similar projects.
WASTEWATER SYSTEM FINANCIAL INFORMATION
Rates, Fees and Charges
The Wastewater System receives moneys from two primary sources: wastewater service charges and connection fees.
Service Charges . Customers of the Wastewater System receive bi -monthly bills, with monthly wastewater service charges based on a user classification system consisting , with residential customers charged based on dwelling type. Commercial users are charged based on business type, with different rate tables for customers with or without a separate irrigation water meter.
Residential. Residential users of the Wastewater System are billed a flat monthly charge depending upon classification (e.g., standard residential, multi -family, or mobile home). Alternatively, u sers with low water consumption in a given billing cycle automatically receive lower economy and lifeline wastewater rates . As of Fiscal Year 2023-24, approximately one-third of customer bills received the lower economy or lifeline wastewater rates. See “CERTAIN RISK FACTORS – Wastewater System Demand.”
21 Commercial. Commercial users of the Wastewater System are billed on a volume charge based on one-hundred cubic feet (“ccf”) of metered water consumption. Different volume charges are applied depending upon the user classification code.
Industrial. Industrial users of the Wastewater System, also sometimes called critical users, are charged based on actual wastewater strength and volume. This category is applicable for approximately 25 large businesses with wastewater discharge permits.
Current and Adopted Future Rates. The City has historically adopted revisions to its Wastewater System rates and charges on a two -year cycle, with the currently effective rates and charges having been adopted in 2023. However, the City is transitioning to a five -year cycle. The first new five-year cycle of Wastewater System rates and charges were approved by the City Council on February 18, 2025. The adopted rates will be effective annually from July 1, 2025 through June 30, 2030, and the adopted connection fees will be effective annually from September 1, 2025 through August 30, 2027. Table 3 sets for the current and adopted future Wastewater System rates.
Table 3
CITY OF HAYWARD WASTEWATER SYSTEM
Historical and Adopted Future Wastewater System Rates
Monthly Residential Service Charges
Current
(October 1,
2024-June 30,
2025)
Effective July
1, 2025
Effective July
1, 2026
Effective July
1, 2027
Effective July
1, 2028
Effective July
1, 2029
Standard Residential
(per unit) $44.19 $47.83 $53.57 $60.00 $67.20 $75.27
Multi-Family (per unit) 39.33 43.49 48.71 54.56 61.11 68.45 Mobile Home (per
unit) 30.94 32.34 36.23 40.58 45.45 50.91
Economy, 5-8 units of
water usage 20.70 22.52 25.23 28.26 31.66 35.46
Lifeline, 0 -4 units of
water usage 10.36 11.61 13.01 14.58 16.33 18.29
22 Commercial (With Separate Irrigation Meter)
Volume Charge per CCF of Metered Water Use
Current
(October 1,
2024-June 30,
2025)
Effective July
1, 2025
Effective July
1, 2026
Effective July
1, 2027
Effective July
1, 2028
Effective July
1, 2029
All Other Domestic Use $7.99 $7.95 $8.91 $9.98 $11.18 $12.53 Restaurant w/ Grease
Interceptor 10.44
10.53 11.80 13.22 14.81 16.59
Restaurant w/o Grease
Interceptor 13.52
12.96 14.52 16.27 18.23 20.42
Commercial Laundry 8.07 9.04 10.13 11.35 12.72 14.25 Bakery 13.77 14.39 16.12 18.06 20.23 22.66
Industrial Laundry 12.53 14.04 15.73 17.62 19.74 22.11 Beverage Bottling 8.15 9.13 10.23 11.46 12.84 14.39 Food Manufacturing 30.34 25.72 28.81 32.27 36.15 40.49 Meat Products 15.37 17.22 19.29 21.61 24.21 27.12
Slaughterhouse 17.69 19.82 22.20 24.87 27.86 31.21
Dairy Product Processors 12.68 14.21 15.92 17.84 19.99 22.39 Canning & Packing 9.04 10.13 11.35 12.72 14.25 15.96 Grain Mills 11.90 13.33 14.93 16.73 18.74 20.99
Fats and Oils 8.58 9.61 10.77 12.07 13.52 15.15
Pulp & Paper
Manufacturing 10.45
10.07 11.28 12.64 14.16 15.86
Inorganic Chemicals 14.51 16.26 18.22 20.41 22.86 25.61 Paint Manufacturing 22.62 25.34 28.39 31.80 35.62 39.90 Leather Tanning 29.79 33.37 37.38 41.87 46.90 52.53 Fabricated Metal 4.32 5.87 6.58 7.37 8.26 9.26
Commercial (Without Separate Irrigation Meter)
Volume Charge per CCF of Metered Water Use
Current
(October 1,
2024-June 30,
2025)
Effective July
1, 2025
Effective July
1, 2026
Effective July
1, 2027
Effective July
1, 2028
Effective July
1, 2029
Commercial/Governmental $7.20 $7.16 $8.02 $8.99 $10.07 $11.28 Restaurant w/ Grease
Interceptor 9.40 9.47 10.61 11.89 13.32 14.92
Restaurant w/o Grease
Interceptor 12.17 11.66 13.06 14.63 16.39 18.36
Commercial Laundry 7.26 7.79 8.73 9.78 10.96 12.28
Bakery 12.38 13.87 15.54 17.41 19.50 21.84
Industrial Laundry 11.27 12.63 14.15 15.85 17.76 19.90 Beverage Bottling 7.33 8.21 9.20 10.31 11.55 12.94
Food Manufacturing 27.30 30.58 34.25 38.36 42.97 48.13 Meat Products 13.84 13.15 14.73 16.50 18.48 20.70
Slaughterhouse 15.93 17.85 20.00 22.40 25.09 28.11
Dairy Product Processors 11.41 12.78 14.32 16.04 17.97 20.13 Canning & Packing 8.13 9.11 10.21 11.44 12.82 14.36 Grain Mills 10.72 12.01 13.46 15.08 16.89 18.92
Fats and Oils 7.72 8.65 9.69 10.86 12.17 13.64
Pulp & Paper
Manufacturing 9.40 8.89 9.96 11.16 12.50 14.00
Inorganic Chemicals 13.07 14.64 16.40 18.37 20.58 23.05 Paint Manufacturing 20.37 22.82 25.56 28.63 32.07 35.92 Leather Tanning 26.80 30.02 33.63 37.67 42.20 47.27 Fabricated Metal 3.89 5.28 5.92 6.64 7.44 8.34
23 Industrial (aka Critical User) Service Charges
Based on Wastewater Flows
Current
(October 1,
2024-June 30,
2025)
Effective
July 1, 2025
Effective
JulyU1, 2026
Effective
July 1, 2027
Effective
July 1, 2028
Effective
July 1, 2029
Flow – cost per
ccf of
wastewater $3.69323 $5.49120 $6.15020 $6.88830 $7.71490 $8.64070 Carbonaceous
Biochemical
Oxygen
Demand – cost
per pound 0.88057 0.51680 0.57890 0.64840 0.72630 0.81350 Suspended
Solids – cost
per pound 1.18346 1.78620 2.00060 2.24070 2.50960 2.81080 _____________
Source: City of Hayward.
Comparative Monthly Wastewater Service Charges . The City's average residential charges effective as of July 1, 2025 were approved by the City Council on February 18, 2025, and are set forth in Table 4 below with a comparison to other Bay Area cities.
Table 4
CITY OF HAYWARD WASTEWATER SYSTEM
Monthly Sewer Charge Comparison Average Residential Service
City
Average Monthly
Residential Charge
City of Oakland $79.10
City of San Leandro 53.20
Union Sanitary District 50.97
Hayward (effective 7/1/25) 48.75
Castro Valley SD 45.89
Dublin San Ramon SD 43.02
Oro Loma SD 40.55
_____________
Source: City of Hayward.
Connection Fees. Connection fees are one -time charges levied by the City to recover costs incurred by the Wastewater System for providing capacity in the Wastewater System required by new users. The collection of such fees is therefore subject to the pace of development in the Service Area.
Wastewater connection fees are collected at the time that a new connection is made to the public sanitary Wastewater System, or when an existing commercial or industrial customer wishes to increase the volume and/or waste strength of wastewater discharge from its facility to the public Wastewater System. Current and adopted connection fees are set forth in Table 5 below.
24 Table 5
CITY OF HAYWARD WASTEWATER SYSTEM
Connection Fees (As of October 1)
Current (effective
September 1, 2024)
Effective September
1, 2025
Effective September
1, 2026
Residential
Single Family, Duplex, Triplex, Fourplex $12,031.00 $13,235.00 $14,559.00 Multi-Family (per unit) 10,709.00 11,781.00 12,960.00
Accessory Dwelling Units (per unit) 4,813.00 5,295.00 5,825.00
Commercial, Industrial, Other
Per gallon of daily capacity required $33.61 $32.98 36.28 Per pound per year of carbonaceous
biochemical oxygen demand
13.33 34.11 37.53
Per pound per year of suspended solids 14.34 22.34 24.58 Minimum 12,031.00 13,235.00 14,559.00
_____________
Source: City of Hayward.
Wastewater System Revenues
Table 6 below shows the Wastewater System revenues by type of account for the last five fiscal years. The data presented in Table 6 do not include connection fees or other fees.
Table 6
CITY OF HAYWARD WASTEWATER SYSTEM
Revenues by Type of Account
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Single Family
Residential $9,905,540 $10,497,449 $10,349,030 $10,809,011 $11,233,360 Multi Family Residential 5,990,676 6,248,930 6,471,238 6,916,171 7,332,005 Commercial / Industrial 6,984,989 6,783,537 6,935,206 8,400,240 7,981,391 Governmental /
Institutional 994,173 765,898 734,615 1,213,238 901,704 Critical User (Large
Industrial Users) 1,599,538 1,323,257 999,878 773,100 1,197,356 TOTAL $25,474,915 $25,619,071 $25,489,968 $28,111,759 $28,645,816 _____________
Source: City of Hayward.
25 Table 7 below sets forth the current and future adopted connection fees by type of use.
Table 7
CITY OF HAYWARD WASTEWATER SYSTEM
Ten Largest Wastewater System Rate Payers
As of June 30, 2024
Customer Name Type of Business Billed Amount
% of Total
Wastewater Use
Charges
Hayward Unified School District Institutional $411,039 1.43% Russell City Energy Center Industrial – Critical User 338,134 1.18 Park Orchard Apartments Multi Family Residential 318,702 1.11 Essex Portfolio LP Multi Family Residential 242,247 0.85 Alvista at the Bridge Apartments Multi Family Residential 234,156 0.82 Lyrical Foods, Inc. Industrial – Food Manufacturing 206,614 0.72 Cal State – East Bay Institutional 200,722 0.70
Bottling Group LLC (Pepsi-Cola) Industrial – Critical User 172,242 0.60 Glen Eden Garden Homes Assoc. Multi Family Residential 168,763 0.59 Monterey Coast LP Multi Family Residential 157,043 0.55 TOTAL $2,449,662 8.55%
_____________
Source: City of Hayward.
The connection fee revenues received by the Wastewater System for the last five fiscal years are set forth in Table 8 below.
Table 8
CITY OF HAYWARD WASTEWATER SYSTEM
Historical Connection Fee Revenues
Fiscal Year
Connection Fee
Revenues
2019-20 $4,422,747
2020-21 3,464,083
2021-22 4,898,975
2022-23 4,636,000
2023-24 3,275,991
_____________
Source: City of Hayward.
Billing, Collection and Delinquencies
Users of the Wastewater System who are connected to the City's water system are billed separately for sewer service and water service, on a combined bill, by the City's Water Department. The fee for either service may not be paid separately from the other. Users of the City's Wastewater System who are not connected to the City's water system are billed for sewer service only.
Bills are issued bi -monthly and are considered delinquent 17 days after the due date.
After 180 days, if the account is closed and the bill remains unpaid, the delinquent bill is sent to collections; if the account remains open, the City continues to seek payment of the delinquent bill. The City complies with State law regarding discontinuation of water service due to account delinquency. Since most customers of the Wastewater System also receive water service from
26 the City and are billed on a combined basis, the water shutoff policy effectively applies to most customers of the Wastewater System.
Historical delinquency and write-off information is set forth in Table 9 below.
Table 9
CITY OF HAYWARD WASTEWATER SYSTEM
Historical Delinquencies and Write-offs
(as of June 30 of each Fiscal Year)
2019-20 2020-21 2021-22 2022-23 2023-24
Total Amount Billed to
Ratepayers $25,048,676 $25,205,057 $26,435,961 $26,933,425 $28,433,576 Total Amount Delinquent $662,989 $820,456 $230,868 $831,856 $330,680 Delinquency as % of Billing 2.65% 3.26% 0.87% (1) 3.09% 1.16% (2) Amounts Written Off as
Uncollectable $54,957 $85,862 $88,516 $80,040 $15,510
Write-Offs as % of Billing 0.22% 0.34% 0.33% 0.30% 0.05% __________________
(1) Delinquency rate in Fiscal Year 2021-22 reflects approximately $584,000 received from the SWRCB’s California Water and Wastewater Arrearage Payment Program (“CWWAPP”) as a credit toward delinquent customer bills. (2) Delinquency rate in Fiscal Year 2023-24 reflects approximately $470,000 received from CWWAPP as a credit toward delinquent customer bills.
Source: City of Hayward.
Historical Revenues and Expenses
The Wastewater System operations are accounted for as an enterprise fund of the City.
The Statements of Revenues, Expenses, and Changes in Fund Net Assets of the Wastewater System for the five most recent fiscal years are set forth in Table 10 below.
27 Table 10
CITY OF HAYWARD WASTEWATER SYSTEM
Historical Revenues, Expenses, Changes in Fund Net Assets (Fiscal Year Ended June 30)
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
(Unaudited)
OPERATING REVENUES
Charges for services $29,524,613 $29,100,056 $30,598,276 $31,803,745 Miscellaneous 554,184 1,044,328 858,881 3,420,550
Total operating revenues 30,078,797 30,144,384 31,457,157 $35,224,295
OPERATING EXPENSES
Salaries and related expenses 9,074,215 8,804,152 9,824,309 $9,641,707 Materials, supplies and services 4,819,900 6,089,429 5,380,560 10,148,860 Repairs and maintenance 850,110 795,021 1,229,342 1,840,082 Depreciation 5,037,959 5,576,099 6,183,762 6,162,641
Total operating expenses 19,782,184 21,264,701 22,617,973 $27,793,290
Operating income (loss) 10,296,613 8,879,683 8,839,184 $7,431,005
NONOPERATING REVENUES (EXPENSES)
Investment income (loss) 2,308,947 482,896 (2,189,270) $1,208,068 Interest (expense) (365,746) (663,767) (525,149) (513,983) Gain on investment in JPA -- -- (965,799) 28,806
Gain from equity investment 119,683 -- -- --
Net nonoperating revenues
(expenses) 2,062,884 (180,871) (3,680,218) $722,891
Income (loss) before capital
contributions and transfers 12,359,497 8,698,812 5,158,966 $8,153,896
TRANSFERS
Transfers in
3,730,000 3,115,520 794,608 $989,607
Transfers out (1,182,724) (1,667,760) (4,706,386) (2,168,406) Net Transfers 2,547,276 1,447,760 (3,911,778) $(1,178,799)
Change in net position 14,906,773 10,146,572 1,247,188 $6,975,097
Net position - beginning 163,864,820 178,771,593 188,918,165 $190,165,353 Net position - ending $178,771,593 188,918,165
$190,165,353 $197,140,450
__________________
Sources: City of Hayward for Fiscal Year 2023-24; City of Hayward Annual Comprehensive Financial Reports for Fiscal Years 2019-20 through 2022-23.
Statement of Net Position
The Statements of Net Position for the Wastewater System for the five most recent fiscal years are set forth in Table 11 below.
28 Table 11
CITY OF HAYWARD WASTEWATER SYSTEM
Statement of Net Position
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
(Unaudited)
ASSETS
Current assets:
Cash and investments $97,058,021 $110,952,654 $109,542,651 $114,087,334 Cash and investments with fiscal agents -- 1 1 1
Accounts receivable, net 5,609,235 5,603,829 5,754,901 5,414,240 Due from other governments 1,554,592 -- 14,084 15,631
Deposits, parts, supplies and other -- -- 2,471,492 2,139,985 Due from other funds -- 136,051 329,813 232,283
Total current assets 104,221,848 116,692,535 118,112,942 121,889,474 Noncurrent assets:
Investment in EBDA 10,382,103 10,382,103 9,416,305 9,445,110 Deposits, parts, supplies and other 3,134,504 2,802,998 -- -- Capital assets:
Land 1,830,143 1,830,143 1,830,143 1,830,143
Construction in progress 30,048,965 5,085,671 9,809,312 14,961,990 Depreciable capital assets, net 85,866,482 110,664,618 105,133,799 99,432,728 Total noncurrent assets 131,262,197 130,765,433 126,189,559 125,669,971 Total assets 235,484,045 247,457,968 244,302,501 247,559,445
DEFFERED OUTFLOWS OF RESOURCES
Related to pensions 1,102,287 1,136,199 1,096,350 2,924,467 Related to OPEB 852,546 534,569 1,213,193 1,099,633
Total deferred outflows of resources 1,954,833 1,670,768 2,309,543 4,024,100
LIABILITIES
Current liabilities:
Accounts payable 923,618 1,437,253 703,903
1,680,669
Accrued interest 249,517 325,412 323,438 320,987
Accrued liabilities 222,668 326,616 311,084 380,772
Unearned revenue 219,065 229,565 229,565 229,565
Compensated absences, due within 1 year 325,684 306,077 411,368 409,742 Accrued reclamation costs 125,000 125,000 125,000 125,000 Long-term debt, due within 1 year 3,338,694 3,492,587 3,503,260 3,515,005 Total current liabilities 5,404,246 6,242,510 5,607,618 6,661,740
Noncurrent liabilities:
Compensated absences, due in more than 1 year
102,860 333,335 144,240 125,763
Net pension liabilities, due in more than 1 year 10,366,211 10,662,127 8,179,023 12,243,824 Net OPEB liability, due in more than 1 year 4,803,691 4,173,825 4,747,574 4,560,031 Long-term debt, due in more than 1 year 35,447,451 36,523,485 33,020,238 29,505,232 Total nonconcurrent liabilities 50,720,213 51,692,772 46,091,075 46,434,850 Total liabilities 56,124,459 57,935,282 51,698,693 53,096,590 (continued on next page)
29 Fiscal
Year
2019-20
Fiscal
Year
2020-21
Fiscal
Year
2021-22
Fiscal
Year
2022-23
Fiscal Year
2023-24
(Unaudited)
DEFFERED INFLOWS OF RESOURCES
Related to pensions 158,152 18,325 2,577,316 30,215
Related to OPEB 2,384,674 2,256,964 2,170,682 1,316,290 Total deferred inflows of resources 2,542,826 2,275,289 4,747,998 1,346,505
NET POSITION
Net investment in capital assets 78,959,445 77,564,260 80,249,756 83,204,624 Restricted for debt service -- 1 1 1
Unrestricted 99,812,148 111,353,904 109,915,596 113,935,825 Total net position $178,771,593 188,918,165 $190,165,353 $197,140,450 _____________________
Sources: City of Hayward for Fiscal Year 2023-24; City of Hayward Annual Comprehensive Financial Reports for Fiscal Years 2019-20 through 2022-23.
[remainder of page left intentionally blank]
30 Historical Revenues, Expenditures and Debt Service Coverage
The following table summarizes the historical operating results for the Wastewater System over the five fiscal years shown.
Table 12
CITY OF HAYWARD WASTEWATER SYSTEM
Historical Revenues, Expenses and Debt Service Coverage
Fiscal Year
2019-20
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
(Unaudited)
Revenues:
Charges for Services (1)(2)
$[29,524,61
3] $25,635,973 $25,700,301 $27,167,748 $29,532,215
Connection Fees (1)(2) [__] 3,464,083 4,897,975 4,636,000 3,275,991
Miscellaneous (1) 554,184 1,044,328 858,881 3,420,550 411,109
Investment Income (3) [0] 707,502 406,863 1,635,114 2,516,331 Transfers In (4) 0 586,720 611,607 611,607 611,607
Total Revenues
Operating Expenses:
Salaries and Related Expenses (1) 9,074,215 8,804,152 9,824,309 9,641,707 11,580,354 Adjustment for Non-cash Items (5) [__] 561,776 0 1,238,793 (743,472) Materials, Supplies, and Services (1) 4,819,900 6,089,429 5,380,560 10,148,860 9,051,444 Less: Capital Expenses [__] (3,273,173) (1,309,569) (6,270,428) (4,787,792) Less: Non-Cash Bad Debt Expense [__] (64,410) (1,095,290) (130,373) (168,675) Repairs and Maintenance (1) $850,110 $795,021 $1,229,342 $1,840,082 1,659,216 Total Operating Expenses $14,744,225 $12,912,795 $14,029,352 $16,468,641 $16,591,075
Net Revenues Before Debt Service $15,334,572 $18,525,811 $18,446,275 $21,002,379 $19,756,178
Debt Service (6)
2006 SRF Agreement 2,727,501 2,727,501 2,727,501 2,727,501 2,727,501 2016/18 SRF Agreement (7) 0 586,720 611,607 611,607 611,607 Total Debt Service $2,727,501 $3,314,221 $3,339,108 $3,339,108 $3,339,108
Debt Service Coverage 5.62x 5.59x 5.52x 6.29x 5.92x
______________________________
(1) Source: City of Hayward Annual Comprehensive Financial Reports. (2) Charges for services as presented in the City's Annual Comprehensive Financial Reports includes Connection Fees revenues. Connection fees are shown separately in this table and the Charges for Services line is accordingly reduced to net out connection fees.
(3) Investment income shown on a cash basis, net of non-cash fair market adjustments under GASB 72. (4) Reflects transfers from Recycled Water Fund related to that Recycled Water Fund's share of the debt service on the 2016/18 SRF Loan.
(5) Source: City of Hayward financial records; these expenses are excluded from the definition of "Operating Expenses" for the 2025 Bonds and future parity debt.
(6) Debt service shown here excludes payments on a 2011 CEC L oan and 2019 CEC Loan, neither of which are secured by a pledge of wastewater revenues.
(7) 2016 SRF Loan was amended in 2018; this debt service cost is paid through a transfer from the Recycled Water Fund .
See footnote 4.
31 Projected Revenues, Expenditures and Debt Service Coverage
The following table summarizes the projected operating results for the Wastewater System over the current and next four fiscal years. The projections below are based on several assumptions that the Wastewater System regards as reasonable based on their current plans and knowledge of the activities of outside entities that impact the financial performance of the Wastewater System . No assurance can be given, however, that such assumptions will be realized, and actual results ma y vary materially from those projected and produce substantially different financial results. Actual revenues and expenses may vary materially from these projections.
Table 13
CITY OF HAYWARD WASTEWATER SYSTEM
Projected Revenues, Expenses and Debt Service Coverage
Fiscal Year
2024-25
(Estimated)
Fiscal Year
2025-26
Fiscal Year
2026-27
Fiscal Year
2027-28
Fiscal Year
2028-29
Revenues:
Charges for Services (1) $31,599,470 $34,996,413 $39,195,983 $43,899,501 $49,167,441
Miscellaneous (2) 250,000 250,000 250,000 250,000 250,000
Investment Income (3) 200,000 200,000 200,000 200,000 200,000
Connection Fees (4) 3,000,000 3,750,000 3,750,000 3,750,000 3,750,000 Transfers In (5) 611,607 942,677 929,210 915,743 902,277 Total Revenues $35,661,077 $40,139,090 $44,325,193 $49,015,244 $54,269,717
Operating Expenses:
Salaries and Related Expenses (6) 11,270,357 11,721,172 12,190,018 12,677,619 13,184,724 Materials, Supplies, and Services (6) 4,258,776 4,429,127 4,606,292 4,790,544 4,982,166 Repairs and Maintenance (6) 1,725,585 1,794,608 1,866,392 1,941,048 2,018,690
Additional Operating Expenses (Project-
related) (7) 0 0 0 4,000,916 4,160,953
Additional personnel (Project-related) (7) 0 0 0 3,603,164 3,747,291 Total Operating Expenses $17,254,718 $17,944,907 $18,662,703 $27,013,292 $28,093,823
Net Revenues Before Debt Service $18,406,359 $22,194,183 $25,662,490 $22,001,952 $26,175,894
Debt Service (8)
2006 SRF Agreement 2,727,501 2,727,501 2,727,501 2,727,501 2,727,501 2016/18 SRF Agreement (9) 611,607 0 0 0 0
2025 Bonds* (10) 0 3,204,750 6,409,500 6,409,500 6,409,500 Estimated WIFIA Loan(11) 0 0 0 0 0
Estimated Future Revenue Bonds(12) 0 0 0 2,458,625 4,917,250 Total Debt Service* $3,339,108 $5,932,251 $9,137,001 $11,595,626 $14,054,251
Debt Service Coverage * 5.51x 3.74x 2.81x 1.90x 1.86x
______________________________
* Preliminary; subject to change.
(1) Projected Charges for Services revenues assume 7% rate increase in July 2024 and 12% annual rate increases each subsequent July through July 2028.
(2) Miscellaneous revenue projected at $250,000 annually, which is approximately 60% of the Miscellaneous revenue in FY 2023-24.
(3) Investment income projected at $200,000 annually, which the City believes to be a conservative estimate given expected future cash balances.
32 (4) Connection fee revenues based on an estimated 350 -400 new connections annually for the term of the projection. This estimate is based on curre nt or anticipated developments within the service area; the City's 5 -year historical average is 300 new connections per year.
(5) Transfer in for FY 2024 -25 reflects the Recycled Water Fund's share of the 2016/18 SRF Loan; future transfers in reflect estimated repayment of a $13.5 million interfund loan between the Sewer Fund and the Recycled Water Fund. Such transfers are "Revenues" within the terms of the 2025 Bonds and future parity debt. (6) Projected expenses based on Fiscal Year 2023 -24 expenses (net of non-cash expenses and capital expenses), growing at 4% annually.
(7) Estimated operating expenses related to facilities constructed as part of the Project; conservatively estimated to start 2 years before Project completion.
(8) Debt service shown here excludes payments on a 2011 CEC Loan and 2019 CEC Loan, neither of which are secured by a wastewater revenue pledge.
(9) The City prepaid the 2016/18 SRF Loan in January 2025; payment was made through an interfund transfer between the Sewer Fund and the Recycled Water Fund (see footnote 5 above). (10) Estimated; reflects capitalized interest for a portion of fiscal year 2025 -26; interest only amortization through fiscal year 2028-29.
(11) The City intends to capitalize interest on the WIFIA loan through Fis cal Year 2032-33. See “– Future Wastewater System Financings” for further information.
(12) Estimated; reflects capitalized interest for a portion of fiscal year 2027 -28. See “– Future Wastewater System Financings” for further information.
The projected revenues, expenses and debt service coverage is subject to uncertainties.
Inevitably, some assumptions used to develop the projections will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between projections and actual results, and those differences may be material.
Capital Improvement Program
Overview. Each fiscal year, the City adopts a 10 -year Capital Improvement Program (“CIP”) that includes improvements for the Wastewater System. The CIP is separate from the City’s operating budget and funds public infrastructure projects. Each fiscal year’s CIP is typically presented to the City Council in May, before being adopted by the City Council in May or June.
Phase II Facilities Plan. In 2020, the City completed the WRRF Phase II Facilities Plan the (“Phase II Facilities Plan”) to guide WRRF infrastructure needs for the following 20 years.
The Phase II Facilities Plan updated the previous Water Pollution Control Facility Master P lan to, among other things, address regulatory requirements restricting discharge of nutrients to the San Francisco Bay. The net proceeds of the 2025 Bonds are expected to be used for costs of the 2025 Projects (which consist of the Phase II Project and the WRRF Administration and Laboratory Building Proj ect), which are included in the Phase II Facilities Plan. The total estimated cost of the 2025 Projects is approximately $ 426 million for the Phase II Project and approximately $63 million for the WRRF Admi nistration and Laboratory Building Proj ect. Such costs include approximately $79 million in construction contingency. The Phase II Project is currently anticipated to be completed in Fiscal Year 20 30-31 and the WRRF Administration and Laboratory is currently anticipated to be completed in Fiscal Year 2026 -27. See “FINANCING PLAN – Capital Improvement Projects” for more information on 2025 Projects and the use of proceeds of the 2025 Bonds.
The CIP also includes other projects, improvements, and replacemen ts for the Wastewater System.
Table 13 below presents the CIP for the Wastewater System for Fiscal Years 2024 -25 through 2033 -34, as adopted by the City Council of the City in June 2024 . As a new CIP is adopted each fiscal year, the City frequently evaluates additional projects . Future CIPs could include additional projects and the cost of such projects is unknown.
33 Table 14
CITY OF HAYWARD WASTEWATER SYSTEM
Wastewater System Capital Improvement Program
Fiscal Years 2024-25 through 2033-34
Fiscal Year
2024-25
Fiscal Year
2025-26
Fiscal Year
2026-27
Fiscal Year
2027-28
Fiscal Year
2028-29
Fiscal Year
2029-30
Fiscal Year
2030-31
Fiscal Year
2031-32
Fiscal Year
2032-33
Fiscal Year
2033-34 TOTAL
Sewer Collection
System $10,680,000 $7,550,000 $7,700,000 $8,070,000 $8,370,000 $8,670,000 $9,040,000 $9,340,000 $9,640,000 $10,010,000 $89,070,000 WRRF 2,718,000 6,665,000 1,360,000 3,250,000 1,420,000 12,060,000 1,120,000 2,920,000 1,010,000 1,340,000 33,863,000 WRRF Laboratory 160,000 160,000 160,000 180,000 180,000 180,000 200,000 200,000 200,000 200,000 1,820,000 WRRF Phase II
Improvements (1) 25,474,508 97,958,000 85,167,000 68,226,000 33,884,000 0 0 0 0 0 310,709,508 Other 230,000 205,000 205,000 210,000 210,000 210,000 215,000 215,000 215,000 220,000 2,135,000 TOTAL $39,262,508 112,538,000 94,592,000 79,936,000 44,064,000 21,120,000 10,575,000 12,675,000 11,065,000 11,770,000 $437,597,508 _____________
(1) WRRF Phase II Improvements shown in this table are a low-end estimate of the cost of the 2025 Projects being financed in part by the WIFIA Loan and in part by the 2025 Bonds.
Source: City of Hayward FY 2025-2034 Capital Improvement Program.
34 Future Wastewater System Financings
As additional financing for the Phase II Project, the City anticipates undertaking additional financings in the next three years in the approximate amount of $343 million. First, the City expects to secure a loan from the United States Environmental Protection Agency under the terms of the Water Infrastructure Finance and Innovation Act of 2014 (the “ WIFIA Loan”) in the approximate principal amount of $244 million. Second, t he City anticipates the iss uance of additional wastewater revenue bonds in the approximate principal amount of $ 99 million. Any amounts not covered by the WIFIA Loan or additional wastewater revenue bonds are expected to be paid from other available sources of funds of the City, inc luding available Wastewater Fund reserves.
Wastewater System Reserves; Available Cash
It is the City’s practice to maintain various reserves for the Wastewater System. First, the City targets maintaining a reserve equal to at least 25% of Maintenance an d Operation Costs in an operating reserve. Second, the City targets maintaining a capital reserve equal to one year of the five-year average CIP. Third, the City targets funding a rate stabilization fund (which is not considered a Rate Stabilization Fund u nder the terms of the Indenture) for the Wastewater System at an amount equal to 25% of annual service changes. As of June 30, 2024, the target for these reserves was approximately $ 25 million in aggregate, or approximately 550 days of Maintenance and Operation Costs. As of June 30, 2024, the Wastewater System had available cash on hand totaling approximately $[___] million (unaudited), including approximately $[___] million in reserves. This amount was equivalent to approximately [____] days of Maintenance and Operation Costs during Fiscal Year 2023-2024.
Debt Management Policy
The City Council adopted a Debt Management Policy for the City on May 21, 2002 . The policy is reviewed annually by the City Council and was last amended on June 20, 2023. The policy allocates responsibility for debt management activities to the Finance Department, describes the purposes for which debt may be issued, establishes overall parameters for issuing and administering the City’s debt, including initial and continuing discl osure as required under the City’s undertakings entered into pursuant to the Rule.
CERTAIN RISK FACTORS
The following describes certain special considerations and risk factors affecting the payment of and security for the 2025 Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any 2025 Bonds and the order in which information is presented does not necessarily reflect the relative importance of the various risks. Potential investors in the 2025 Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the 2025 Bonds.
There can be no assurance that other considerations will not materialize in the future.
Wastewater System Demand
There can be no assurance that the local demand for wastewater service provided by the Wastewater System will be maintained at levels described in this Official Statement under the heading “THE WASTEWATER SYSTEM.” Additionally, residential customers of the
35 Wastewater System who have low water consumption in a given billing cycle automatically receive significantly lower economy or lifeline wastewater service charges. If more residential customers reduced water consu mption to below the eligibility levels for economy or lifeline wastewater service charges, Wastewater System revenues could be reduced accordingly. See “WASTEWATER SYSTEM FINANCIAL INFORMATION – Rates, Fees and Charges.”
Reduction in the level of demand c ould require an increase in rates or charges in order to produce Net Revenues sufficient to comply with the City’s rate covenant in the Indenture.
Such rate increases could increase the likelihood of nonpayment, and could also further decrease demand. Fu rthermore, there can be no assurance that any other entity with regulatory authority over the Wastewater System will not adopt further restrictions on operation of the Wastewater System.
Wastewater System Expenses
There can be no assurance that Operati on and Maintenance Costs of the Wastewater System will be consistent with the levels described in this Official Statement. Changes in technology, increases in the cost of energy or other expenses would reduce Net Revenues, and could require substantial increases in rates or charges in order to comply with the rate covenant.
Such rate increases could increase the likelihood of nonpayment, and could also decrease demand. In addition, the Wastewater System is subject to significant regulatory provisions, and costs associated with complying with federal and State requirements may materially increase Operation and Maintenance Costs in the future. Finally, cyber-security incidents that may befall the City generally, or the Wastewater System specifically, resulting from hacking, viruses, malware, ransomware or other attacks on the City’s or Wastewater System’s computer systems, could have a material adverse impact on Operation and Maintenance Costs.
Future Parity Obligations
The Indenture permits the issuance by the City of certain indebtedness which may have a lien upon the Net Revenues which is on a parity basis to the lien which secures the 2025 Bonds and the 2006 SRF Agreement , if certain coverage tests are met (see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Parity Obligations” herein). These coverage tests involve, to some extent, projections of Net Revenues. If such indebtedness is issued, the debt service coverage for the Bonds will be diluted below what it otherwise would be s ubject to under the coverage tests. Moreover, there is no assurance that the assumptions which 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 amo unt 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 2025 Bonds, the 2006 SRF Agreement, and such additional Parity Obligations.
Articles XIllC and XIIID of the State Constitution
General. On November 5, 1996, California voters approved Proposition 218, the so - called “Right to Vote on Taxes Act. ” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which affect the ability of local governmen ts to levy and collect both existing and future taxes, assessments, and property -related fees and charges. Proposition 218, which generally became effective on November 6, 1996, changed, among other things, the procedure for the imposition of any new or increased property-related “fee” or “charge,” which is defined as “any levy other than an ad valorem tax, a special tax or an assessment, imposed by a [local
36 government] upon a parcel or upon a person as an incident of property ownership, including user fee s or charges for a property related service ” (and referred to in this section as a “property-related fee or charge”).
On November 2, 2010, California voters approved Proposition 26, the so -called “Supermajority Vote to Pass New Taxes and Fees Act. ” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature.
With respect to local government “taxes,” Proposition 26 expressly excludes a variety of levies, charges and exactions from the definition of “tax,” including a “charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege. ” Although the City believes that the Wastewater System rates and charges are not taxes for pur poses of Proposition 26, a court could conclude that, to the extent the City transfers surplus funds to the General Fund, the Wastewater System rates and charges constitute “taxes” for purposes of Proposition 26.
Proposition 26 amended Article XIIIC to pr ovide that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.
Property-Related Fees and Charges . Under Article XIIID, before a municipality may impose or increase any property-related fee or charge, the entity must give written notice to the record owner of each parcel of land affected by that fee or charge. The municipality must then hold a hearing upon the proposed imposition or increase at least 45 days after the written notice is mailed, and, if a majority of the property owners of the identified parcels present written protests against the proposal, the municipality may not impose or increase the property -related fee or charge.
Further, under Article XIIID, revenues derived from a property-related fee or charge may not exceed the funds required to provide the “property-related service” and the entity may not use such fee or charge for any purpose other than that for which it imposed the fee or charge.
The amount of a property -related fee or charge may not exceed the proportional cost of the service attributable to the parcel, and no property -related fee or charge may be imposed for a service unless that service is actually us ed by, or is immediately available to, the owner of the property in question.
Initiative Power. In addition, Article XIIIC states that “the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher th an that applicable to statewide statutory initiatives.”
37 Judicial Interpretation of Articles XIIIC and XIIID . After Proposition 218 was enacted in 1996, appellate court cases and an Attorney General’s opinion initially indicated that fees and charges levied for water and wastewater services would not be considered property-related fees and charges, and thus not be subject to the requirements of Article XIIID regarding notice, hearing and protests in connection with any increase in the fees and charges bein g imposed.
However, three subsequent cases have held that certain types of water and wastewater charges could be subject to the requirements of Article XIIID under certain circumstances.
In Richmond v. Shasta Community Services District (2004) 32 Cal. 4th 409, the California Supreme Court addressed the applicability of the notice, hearing and protest provisions of Article XIIID to certain charges related to water service. In Richmond, the Court held that capacity charges are not subject to Proposition 21 8. The Court also indicated in dictum that a fee for ongoing water service through an existing connection could, under certain circumstances, constitute a property -related fee and charge, with the result that a local government imposing such a fee and cha rge must comply with the notice, hearing and protest requirements of Article XIIID.
In Howard Jarvis Taxpayers Association v. City of Fresno (2005) 127 Cal.App.4th 914, the California Court of Appeal, Fifth District, concluded that water, sewer and trash fees are property-related fees subject to Proposition 218 and a municipality must comply with Article XIIID before imposing or increasing such fees. The California Supreme Court denied the City of Fresno’s petition for review of the Court of Appeal’s decision on June 15, 2005.
In July 2006, the California Supreme Court, in Bighorn-Desert View Water Agency v.
Verjil (2006) 39 Cal.4th 205, addressed the validity of a local voter initiative measure that would have (a) reduced a water agency’s rates for water consumption (and other water charges), and (b) required the water agency to obtain voter approval before increasing any existing water rate, fee, or charge, or imposing any new water rate, fee, or charge. The court adopted the position indicated by its s tatement in Richmond that a public water agency’s charges for ongoing water delivery are “fees and charges ” within the meaning of Article XIIID, and went on to hold that charges for ongoing water delivery are also “fees” within the meaning of Article XIIIC’s mandate that the initiative power of the electorate cannot be prohibited or limited in matters of reducing or repealing any local tax, assessment, fee or charge. Therefore, the court held, Article XIIIC authorizes local voters to adopt an initiative me asure that would reduce or repeal a public agency’s water rates and other water delivery charges. (However, the court ultimately ruled in favor of the water agency and held that the entire initiative measure was invalid on the grounds that the second part of the initiative measure, which would have subjected future water rate increases to prior voter approval, was not supported by Article XIIIC and was therefore invalid.)
The court in Bighorn specifically noted that it was not holding that the initiative power is free of all limitations; the court stated that it was not determining whether the electorate’s initiative power is subject to the statutory provision requiring that water service charges be set at a level that will pay for operating expenses, prov ide for repairs and depreciation of works, provide a reasonable surplus for improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due.
Current Practice Regarding Rates and Charges . The City’s practice in implementing increases in water rates and charges has been to comply with the requirements of Article XIIID, including the practice of providing property owners with a 45 -day maile d notice and public hearing before the City Council approves rate increases.
38 Conclusion. It is not possible to predict how courts will further interpret Article XIIIC and Article XIIID in future judicial decisions, and what, if any, further implementing legislation will be enacted. Under the Bighorn case, local voters could adopt an initiative measure that reduces or repeals the City’s rates and charges, though it is not clear whether (and California courts have not decided whether) any such reduction or repeal by initiative would be enforceable in a situation in which such rates and charges are pledged to the repayment of bonds or other indebtedness, as is the case with respect to the 2025 Bonds. There can be no assurance that the courts will not further interpret, or the voters will not amend, Artic le XIIIC and Article XIIID to limit the ability of local agencies to impose, levy, charge and collect increased fees and charges for water, or to call into question previously adopted water rate increases.
Natural Calamities
General. From time to time, the City is subject to natural calamities, including, but not limited to, earthquakes, floods, and wildfires, that may adversely affect economic activity in the City, and which could have a negative impact on the Net Revenues of the Wastewater System.
The Wastewater System is also susceptible to subject to risks relating to drought and climate change/sea level rise.
Seismic. The City is located in a seismically active region. Active earthquake faults underlie both the City and the surrounding Bay Area. Three major earthquake faults that comprise the San Andreas fault system extend through the Bay Area. On August 24, 2014, an earthquake occurred in Napa, California. The tremor’s epicenter was located approximately 3.7 miles northwest of American Canyon ne ar the West Napa Fault and registered 6.0 on the Richter scale of earthquake intensity. The Napa earthquake caused fires, damaged buildings and roads, and injured approximately 200 people. The Napa earthquake was the largest earthquake in the Bay Area sinc e the 1989 Loma Prieta earthquake on the San Andreas Fault, which was centered about 60 miles south of San Francisco and registered 6.9 on the Richter scale of earthquake intensity. The Loma Prieta earthquake caused fires and collapses of and structural damage to buildings, highways and bridges in the Bay Area.
In April 2008, the Working Group on California Earthquake Probabilities (a collaborative effort of the U.S. Geological Survey, the California Geological Society, and the Southern California Earthqua ke Center) reported that there is a 63% chance that one or more earthquakes of magnitude 6.7 or larger will occur in the Bay Area before the year 2038. Such earthquakes may be very destructive. The United States Geological Survey predicts that a magnitude 7 earthquake occurring today on the Hayward Fault would likely cause hundreds of deaths and approximately $100 billion of damage. To date, the United States Geological Survey has not issued an updated report taking into account the Napa earthquake. Propert y within the City could sustain extensive damage in a major earthquake, and a major earthquake could adversely affect the area’s economic activity.
While the City is not currently located in any existing special study zone, defined in the Alquist-Priolo Earthquake Zoning Act, which requires the State Division of Mines and Geology to delineate all known active faults and establish minimum set back distances for the construction of habitable structures near active fault zones, it is possible that new geolog ical faults could be discovered in the area and that an earthquake occurring on such faults could result in damage of varying degrees of seriousness to property and infrastructure in the City, including the facilities of the Wastewater System.
39 Flood. The National Flood Insurance Reform Act requires, among other things, that the Federal Emergency Management Agency ( “FEMA”) assess its flood hazard map inventory at least once every five years. The current flood insurance rate map (a “FIRM”) indicates that th e City is not within the boundaries of a 100 -year floodplain. A 100 -year floodplain is an area expected to be inundated during a flood event of the magnitude for which there is a 1% possibility of occurrence in any year.
The City makes no representation that FEMA will not issue revised FIRMs that place the City within the boundaries of a 100-year floodplain.
Drought. As with much of the State, the City experiences recurring drought as a result of its climate conditions. Droughts impact public health and safety related to both water supply and wildfire risk. On October 19, 2021, the Governor declared a Statewide drought state of emergency and requested that all water users voluntarily reduce water use by 15%. On March 24, 2023, the Governor eased the emer gency drought restrictions imposed as a result of the Governor’s 2021 declaration. There can be no assurance that subsequent declarations will not impose mandatory water use restrictions should dry conditions persist in future years.
Climate Change
The S tate is susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of ex treme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the City and its Wastewater System is difficult to predict, but it could be significant and it could have a material adverse effect on the Wastewater System by requiring greater expenditures to counteract the effects of climate change or by changing the operations and activities of City residents and business establishments.
Cybersecurity
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subj ect to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks.
On July 9, 2023, the City became aware of a breach and attempts to disrupt and hold hostage parts of its network. The City Manager respo nded by declaring a local emergency and the City Council passed a resolution proclaiming a local emergency on July 13, 2023. A resolution amending and extending the proclamation of local emergency was passed on August 7, 2023. The City declared the emergen cy to provide greater flexibility in responding to the threat. The breach did not have a material impact on City finances or operations.
No assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, including the Wastewater System.
40 Limited Recourse on Default
If the City defaults on its obligation to pay the 2025 Bonds, the Trustee has the right to accelerate the total unpaid principal amounts of the 2025 Bonds. However, in the event of a default and such acceleration there can be no assurance that the City will have sufficient Net Revenues to pay the accelerated 2025 Bonds.
Limitations on Remedies Available; Bankruptcy
The enforceability of the rights and remedies of the Owners and the obligations of the City may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, r eorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; equitable principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercising of powers by the federal or State government, if initiated, could subject the Owners to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights.
No Obligation to Tax
The obligation of the City to pay the 2025 Bonds does not constitute an obligation of the City for which the Ci ty is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay 2025 Bonds does not constitute a debt or indebtedness of any City, the State of California or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.
No Reserve Fund
No reserve fund is being established in connection with the 2025 Bonds and no reserve fund is required to be established in connection with the issuance of any Parity Obligations.
Accordingly, if Net Revenues are insufficient to make debt service payments on the 2025 Bonds and Parity Obligations, no reserve will be available to the Trustee to draw on to make payments to holders of the 2025 Bonds.
Change in Law
In addition to the other limitations described herein, the California electorate or Legislature could adopt a constitutional or legislative property tax decrease or an initiative with the effect of reducing revenues pa yable to or collected by the City. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations that could have the effect of reducing the Net Revenues and adversely affecting the security of the 2025 Bonds.
Statutory and Regulatory Compliance
Laws and regulations governing the treatment and disposal of wastewater are enacted and promulgated by federal, State and local government agencies. Compliance with these laws
41 and regulations is an d will continue to be costly, and, as more stringent standards are developed, such costs will likely increase.
Claims against the Wastewater System for failure to comply with applicable laws and regulations could be significant. Such claims may be payable from assets of the Wastewater System or from other legally available sources. In addition to claims by private parties, changes in the standards f or public agency wastewater systems such as that operated by the City may also lead to administrative orders issued by federal or State regulators. Future compliance with such orders could also impose substantial additional costs on the City. No assuranc e can be given that the cost of compliance with such laws, regulations and orders would not adversely affect the ability of the City to generate Net Revenues sufficient to pay debt service on the 2025 Bonds when due.
Construction Risk
The City has entere d into agreements for the construction of the Projects. The City anticipates that such contracts will be subject to adjustment for a variety of circumstances, including higher than anticipated costs of labor and materials or subcontractor bids, changes in scope, unforeseen site conditions and force majeure e vents. The estimated costs of, and the projected schedule for, the Projects are subject to a number of uncertainties. The ability of the City to complete the Projects may be adversely affected by various factors including but not limited to: (1) estimati ng errors, (2) design and engineering errors, (3) changes to the scope of the Projects, (4) material and/or labor shortages, (5) unforeseen site conditions, (6) adverse weather conditions and other force majeure events, (7) contractor defaults, (8) labor d isputes, (9) unanticipated levels of inflation, and (10) environmental issues. No assurance can be provided that the Projects will not cost more than the current budget therefor. Any schedule delays or cost increases could result in the need to issue add itional indebtedness and may result in increased costs, thereby making the Wastewater System less economically competitive. There can be no assurances that significant increases in costs over the amounts projected by the City will not materially adversely affect the financial condition or operations of the Wastewater System.
Loss of Tax-Exemption
As discussed in this Official Statement under the caption “TAX MATTERS,” interest on the 2025 Bonds could become includable in gross income for purposes of federa l income taxation retroactive to the date the 2025 Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in the Indenture. Should such an event of taxability occur, the 2025 Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Indenture.
Secondary Market for 2025 Bonds
There can be no guarantee that there will be a secondary market for the 2025 Bonds or, if a secondary market exists, that any 2025 Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then -prevailing circumstances.
Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is
42 being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the 2025 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the 2025 Bonds may be subject to the corporate alternative minimum tax
The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1 986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the 2025 Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has made certain represe ntations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the 2025 Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 2025 Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount ” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a 2025 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “bond pr emium” for purposes of federal income taxes and State of California personal income taxes.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the 2025 Bond on the basis of a constant interest rate compo unded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such 2025 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2025 Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2025 Bonds who purchase the 2025 Bonds aft er the initial offering of a substantial amount of such maturity. Owners of such 2025 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2025 Bonds with original issue discount, including the treatment of purc hasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such 2025 Bonds is sold to the public.
Under the Tax Code, bond premium is amortized on an annual basis over the term of the 2025 Bond (said term being the shorter of the 2025 Bond's maturity date or its call date). The amount of bond premium amortized each year reduces the adjusted basis of the owner of the 2025 Bond for purposes of determining taxable gain or loss upon disposition. The amount of bond premium on a 2025 Bond is amortized each year over the term to maturity of the 2025
43 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight -line interpolations between compounding d ates). Amortized 2025 Bond premium is not deductible for federal income tax purposes. Owners of premium 2025 Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of Californ ia personal income tax and federal income tax consequences of owning such 2025 Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the 2025 Bonds is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the 2025 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the 2025 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions e xpressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the 2025 Bonds, or as to the consequences of owning or receiving interest on the 2025 Bonds, as of any future date. Prospective purchasers of the 2025 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Owners of the 2025 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 20 25 Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the 2025 Bonds, the ownership, sale or disposition of the 2025 Bonds, or the amount, accrual or receipt of interest on the 2025 Bonds.
CERTAIN LEGAL MATTERS
The validity of the 2025 Bond s and certain other legal matters are subject to the approving opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel to the City. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement.
Certain legal matters will be passed upon for the City and the City by the City Attorney, and by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel. Payment of the fees and ex penses of Bond Counsel, Disclosure Counsel , the Municipal Advisor , and the Purchaser is contingent upon the sale and delivery of the 2025 Bonds.
44 NO MATERIAL LITIGATION
In connection with issuance of the 2025 Bonds, the City will certify that there is no litigation pending or, to the City’s knowledge, threatened in any way to restrain or enjoin the issuance, execution or delivery of the 2025 Bonds, to contest the validity of the 2025 Bonds, the Indenture or any proceedings of the City with respect thereto.
Although the City is subject to claims and lawsuits from time to time, the City does not believe there are any claims or lawsuits pending against the City that could materially adversely affect the finances of the City or the Wastewater System so as to impair the ability of the City to pay principal of, and interest on, the 2025 Bonds when due.
RATING
S&P Global Ratings ( “S&P”) has assigned its municipal bond rating of “____” to the 2025 Bonds. Such rating reflects only the view of S&P, and an explanation of the significance of the rating, and any outlook assigned to or associated with the rating, should be obtained from S&P.
Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. The City has provided certain additional information and materials to the rating agency (some of which does not appear in this Official Statement). To the extent that suc h information has been omitted from this Official Statement, it has been deemed immaterial to investors in the 2025 Bonds.
There is no assurance that this rating will continue for any given period of time or that this rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating on the 2025 Bonds may have an adverse effect on the market price or marketability of the 2025 Bonds.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of owners of the Certificates to provide certain financial information and operating data relating to the City and its general fund by not later than nine months after the end of the City’s fiscal year, or March 31 each year based on the City’s current fiscal year -end of June 30, commencing March 31, 202 5, with the report for fiscal year 2023-24 (the “Annual Report”) and to provide notices of the occurrence of certain listed events (“Event Notices”); provided that the requirement to file the Annual Report for the 2023-24 fiscal year by no later than March 31, 2025, shall be satisfied by the filing of the Official Statement. All Annual Reports and Event Notices are required to be fil ed electronically with the Municipal Securities Rulemaking Board (the “MSRB”).
These covenants have been made in order to assist the Purchaser in complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”). The specific nature of the information to be contained in the Annual Report and the Event Notices is set forth in APPENDIX E.
45 ]Based upon a review of the City’s filing obligations during the past five years, there have been no instances in which th e City failed to comply, in all material respects, with any undertaking previously entered into by it pursuant to the Rule.]
UNDERWRITING
The 2025 Bonds were sold at competitive sale held on ________, 2025, and were awarded to ________ (the “Purchaser”), whose proposal represented the lowest true interest rate for the 2025 Bonds. The 2025 Bonds are being purchased by the Purchaser at a purchase price of $________, which represents the aggregate principal amount of the 2025 Bonds ($________), plus net o riginal issue premium of $________ less a purchaser’s discount of $________.
The Purchaser will be obligated to take and pay for all of the 2025 Bonds if any are taken. The Purchaser intends to offer the 2025 Bonds to the public at the offering prices s et forth on the inside cover page of this Official Statement. After the initial public offering, the public offering price may be varied from time to time by the Purchaser.
46 EXECUTION
The execution and delivery of this Official Statement have been dul y authorized by the City.
CITY OF HAYWARD
By:
Finance Director
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APPENDIX A
CITY OF HAYWARD GENERAL DEMOGRAPHIC AND ECONOMIC INFORMATION
General
The City. The City was given the official name of “Haywood,” due to a clerical error the same year the post office was established, 1860. In 1876, “Haywood” was incorporated as the “Town of Haywards,” with a population of 1,100. On March 11, 1876, the City was chartered into the State and officially recognized as a City. In 1894, the “s” in “Haywards” was dropped and on September 18, 1928, the status of the community was changed to the “City of Hayward.” In the early decades of the 20th Century, the Hayward Area became known as the “Heart of the Garden of Eden ” because of its temperate climate and fertile soil. Everything – produce, chickens, cattle, flowers – grew in abundance. By 1950, the City grew to a population of 14,000, had become the “Apricot City” and home to Hunt’s Cannery.
On March 7, 1956, the City adopted the City of Hayward Charter. By 1960, the population had swelled to 72,700. By the mid-1960’s, the City’s landscape changed from apricot trees and canneries to subdivisions and shopping centers. The City’s growth continued through the 1970’s and 1980’s. By 1990, with a population of 121,000, the City became one of the top 15 most ethnically-diverse communities in the nation. Here, people from many cultures live and work together to build a community reflective of its residents.
The County. The County of Alameda (the “County”) is located on the east side of the San Francisco Bay, extending to the City of Albany on the north, the City of Fremont on the south, and to the City of Livermore on the east, and is approximately ten miles west of San Francisco. Automobile access to San Francisco is provided by the San Francisco -Oakland Bay Bridge.
The northern part of the County has direct access to San Francisco Bay and the City and County of San Francisco. It is highly diversified with residential areas, active commercial areas, traditional heavy industry, the University of California at Berkeley, the Port of Oakland, and sophisticated manufacturing, computer services and biotechnology firms. The middle of the County is also highly developed including older established residential and industrial areas. The southeastern corner of the County, including the cities of Pleasanton and Livermore, has se en strong growth in residential development and manufacturing. Many high -tech firms have moved from neighboring Silicon Valley in Santa Clara County to the County.
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Population
As of January 1, 2024, the population of the City was estimated to be 159,770. The following table presents population data for the last five years for the City, County and State.
COUNTY OF ALAMEDA
Population
Year City of Hayward County of Alameda State of California 2020 159,266 1,663,114 39,648,938
2021 162,079 1,666,341 39,327,868
2022 159,986 1,643,683 39,114,785
2023 160,699 1,650,656 39,061,058
2024 159,770 1,641,869 39,128,162
Source: State Department of Finance estimates (as of January 1).
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Principal Employers
The following table shows the principal employers in the City, listed alphabetically, as shown in the City’s Annual Comprehensive Financial Report for fiscal year ending June 30, 2023.
CITY OF HAYWARD
Principal Employers(1)
Employer
Alameda County Sheriff’s Department
Baxter Bio Pharma
California State University East Bay
Chabot Community College
Fremont Bank Operations Center
Hayward Unified School District
Illumina
Impax Laboratories, Inc.
Pentagon Technologies
Plastikon Industries, Inc.
Siemens Building Tech
St. Rose Hospital
(1) Presented in alphabetical order based on economic development’s assessment.
Source: City Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023.
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The unemployment rate in the Oakland-Hayward-Berkeley MD was 4.5% in December 2024, down from a revised 4.8% in November 2024, and unchanged the year -ago estimate of
4.5%. This compares with an unadjusted unemployment rate of 5.2% for California and 3.8% for the nation during the sam e period. The unemployment rate was 4.5% in the County, and
4.6% in Contra Costa County.
The table below lists employment by industry group for Alameda and Contra Costa Counties for the years 2019 to 2023.
OAKLAND- HAYWARD-BERKELEY MD
(Alameda and Contra Costa Counties)
Annual Averages Civilian Labor Force, Employment and Unemployment, Employment by Industry
(March 2023 Benchmark)
2019 2020 2021 2022 2023
Civilian Labor Force (1)(2) 1,401,500 1,364,400 1,354,000 1,367,400 1,376,700 Employment 1,359,000 1,242,300 1,270,000 1,320,400 1,320,300 Unemployment 42,500 122,100 84,000 47,100 56,400
Unemployment Rate 3.0% 9.0% 6.2% 3.4% 4.1%
Wage and Salary Employment: (3)
Agriculture 1,400 1,500 1,700 1,900 1,900
Mining and Logging 200 200 200 300 300
Construction 75,600 71,100 74,300 75,400 75,100
Manufacturing 101,000 98,700 106,000 112,300 111,900
Wholesale Trade 45,400 42,100 41,100 41,500 41,400
Retail Trade 112,000 101,500 105,300 106,200 105,600
Transportation, Warehousing, Utilities 43,700 45,200 49,500 54,500 54,400 Information 27,600 25,600 24,700 25,000 24,200
Finance and Insurance 37,200 35,900 34,800 33,600 32,300 Real Estate and Rental and Leasing 18,100 16,800 17,200 18,400 18,400 Professional and Business Services 193,200 184,900 190,700 195,500 189,500 Educational and Health Services 198,400 191,300 198,500 205,800 216,500 Leisure and Hospitality 121,000 84,700 92,500 108,300 112,100 Other Services 41,200 33,100 35,600 39,200 41,300
Federal Government 13,400 14,200 13,400 13,100 13,300
State Government 39,600 38,200 35,900 33,100 33,700
Local Government 121,800 113,500 111,800 115,200 118,000 Total all Industries 1,190,700 1,098,500 1,133,200 1,179,100 1,189,900
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
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Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after -tax” income. Personal income is the aggregate of wages and salaries, other labor -related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income and median household effective buying income for the City, the County, the State and the United States for the period 2021 through 2025.
CITY OF HAYWARD, COUNTY OF ALAMEDA,
STATE OF CALIFORNIA, AND UNITED STATES
Effective Buying Income
2021 through 2025
Year
Area
Total Effective
Buying Income
(000’s Omitted)
Median
Household
Effective Buying
Income
2021 Hayward $5,228,881 $77,359
Alameda County 77,794,202 88,389
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 Hayward $5,859,087 $88,091
Alameda County 85,225,529 99,940
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
2023 Hayward $5,653,768 $86,987
Alameda County 80,766,211 98,721
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
2024 Hayward $5,951,502 $91,190
Alameda County 84,213,255 101,689
California 1,510,708,521 80,973
United States 11,987,185,826 67,876
2025 Hayward $6,156,310 $93,050
Alameda County 88,476,678 106,127
California 1,557,429,767 82,725
12,525,577,707 69,687
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Source: Claritas, LLC.
Commercial Activity
Summaries of the historic taxable sales within the City and the County during the past five years in which data is available are shown in the following tables.
Total taxable sales during the first three quarters of calendar year 2024 in the City were reported to be $2,952,754,941, a 2.97% increase from the total taxable sales of $2,867,659,534 reported during the first three quarters of calendar year 2023.
CITY OF HAYWARD
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2019 2,241 $1,882,843 4,378 $3,347,430
2020 2,351 1,635,537 4,628 2,942,668
2021 2,169 1,903,039 4,407 3,371,260
2022 2,229 2,037,312 4,494 3,684,279
2023 2,207 2,066,380 4,443 3,907,462
Source: State Department of Tax and Fee Administration.
Total taxable sales during the first three quarters of calendar year 2024 in the County were reported to be $29,003,232,735, a 6.05% decrease from the total taxable sales of $30,871,933,944 reported during the first three quarters of calendar year 2023.
ALAMEDA COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2019 28,375 $21,921,743 49,197 $35,116,164
2020 28,831 19,931,259 50,461 32,176,002
2021 26,964 22,602,772 47,565 37,935,594
2022 27,010 23,910,667 48,059 44,323,669
2023 26,192 23,007,753 46,749 41,256,727
Source: State Department of Tax and Fee Administration.
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Construction Activity
The following tables show a five -year summary of the valuation of building permits issued in the City and the County.
CITY OF HAYWARD
Building Permit Valuation
(Valuation in Thousands of Dollars)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $209,636.7 $55,409.9 $63,505.1 $51,406.8 $58,268.1 New Multi-family 61,901.8 76,703.6 41,238.4 73,973.6 82,132.4 Res. Alterations/Additions 27,798.2 8,628.6 9,667.1 17,639.0 18,082.5 Total Residential $299,336.7 $140,742.1 $114,410.6 $143,019.4 $158,483.0
New Commercial $38,931.4 $76,422.5 $33,378.0 $59,909.2 4,050.0 New Industrial 0.0 0.0 0.0 4,800.0 20,000.0
New Other 5,731.6 8,08.2 3,582.0 25,373.1 2,967.9
Com. Alterations/Additions 36,908.3 3,433.2 50,245.9 84,008.9 61,284.5 Total Nonresidential $81,571.3 $79,855.7 $87,205.9 $174,091.2 $88,302.4
New Dwelling Units
Single Family 562 184 238 204 155
Multiple Family 440 335 1,279 335 603
TOTAL 1,002 519 1,517 539 758
Source: Construction Industry Research Board, Building Permit Summary.
ALAMEDA COUNTY
Building Permit Valuation
(Valuation in Thousands of Dollars)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $675,129.8 $394,500.3 $407,585.0 $339,046.4 $332,289.9 New Multi-family 782,536.4 772,038.0 829,822.2 795,917.3 507,952.9 Res. Alterations/Additions 512,409.9 293,866.8 222,971.3 323,712.1 425,659.0 Total Residential $1,970,076.1 $1,460,405.1 $1,460,378.5 $1,458,675.8 $1,265,901.8
New Commercial $718,569.0 $238,516.5 $312,914.6 $268,498.4 405,330.0 New Industrial 5,638.5 0.0 600.0 33,740.8 65,576.2
New Other 78,049.9 131,447.0 110,817.0 120,294.6 94,551.2 Com. Alterations/Additions 922,668.1 628,230.5 892,656.8 993,782.1 852,215.1 Total Nonresidential $1,724,925.5 $998,194.0 $1,316,988.4 $1,416,315.9 $1,417,672.5
New Dwelling Units
Single Family 1,871 1,152 1,589 1,176 1,061
Multiple Family 4,145 2,610 4,494 3,366 3,686
TOTAL 6,016 3,762 6,083 4,542 4,747
Source: Construction Industry Research Board, Building Permit Summary.
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Transportation
The City has become the crossroad of the Bay Area. Interstate Highway 580 (east-west), Interstate Highway 680 (north -south) and Highway 61 provides access to commuters and residents to travel to the nearby cities of Oakland, San Francisco, Sacramento, San Jose, and the Central Valley with ease.
Bay Area Rapid Transit (BART), the regional rapid transit system, has two stations in the City: the Hayward station, in downtown; and the South Hayward station, near the Hayward - Union City border. The AC Transit bu s system, which provides bus service for Alameda County and Contra Costa County, operates in the City, and has a repair/training center located there.
Amtrak, the national rail passenger system, provides daily service at its Hayward station for the Capitol Corridor train, which runs between San Jose in the South Bay, and Auburn in the Greater Sacramento area.
The City has a general aviation airport, the Hayward Executive Airport. The Hayward Air National Guard station was located at the airport in 1942, until being reassigned to Moffett Field in 1980.
Employee Retirement System
PERS Plan Description . All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other ) Plans, agent multiple -employer defined benefit pension plans administered by the California Public Employees’ Retirement System ( “PERS”), which acts as a common investment and administrative agent for its participating member employers. Employees of the Wastewater System are eligible to participate in the City’s Miscellaneous Plan. Benefit provisions under the Plans are established by State statute and City resolution. PERS issues publicly available reports that include a full description of the pension p lans regarding benefit provisions, assumptions and membership information that can be found on the PERS website.
PERS Plan Eligibility. For a more detailed discussion of the eligibility requirements for the City’s PERS retirement plans, see Appendix B, Note 13.
PERS Plan Contributions. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the PERS Board of Administrat ion (the “Board of Administration”). For the measurement period ended June 30, 202 3 (the measurement date), the average active employee contribution rate on or after January 1, 2013 is 6.75% of annual pay for the Miscellaneous Plan. The employer contribution rate on or after January 1, 2013 is
9.77% of annual payroll for the Miscellaneou s Plan. The contribution requirements of the plan members are established by State statute, and the employer contribution rates are established and may be amended by PERS.
Implementation of GASB Nos. 68. Commencing with fiscal year ended June 30, 2015, the City implemented the provisions of GASB Statement Nos. 68, which require certain new pension disclosures in the notes to its audited financial statements commencing with the audit for fiscal year 2014 -15. Statement No. 68 generally requires the City to recognize its proportionate share of the unfunded pension obligation by recognizing a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year. As
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a result of the implementation of GASB Statement Nos. 68, the City reflected a restatement of its beginning net position as of July 1, 2014.
For a more detailed discussion of the eligibility requirements for the City’s retirement plans, see Appendix B, Note 13 for detailed information about the actuari al assumptions underlying the contributions. The City’s fiscal year 202 1-22 contributions to the City’s Miscellaneous Plan and the funded status of the Miscellaneous Plan are set forth below.
Fiscal Year
Ended
Total Pension
Liability
Plan
Fiduciary
Net Position
Net Pension
Liability
Plan
Fiduciary Net
Position as a
Percentage
of the Total
Pension
Liability
Covered
Employee
Payroll
Plan Net
Pension
Liability as a
Percentage
of Covered
Employee
Payroll
Contributions
Employer
6/30/2022 $544,066,746 $354,826,823 $189,239,923 65.22% $53,975,164 350.61% $16,196,634
Recent Actions by PERS. On November 15, 2021, the CalPERS Board selected a new asset allocation mix that will guide the fund’s investment portfolio for the next four years, while at the same time retaining the reduction of discount rate from 7.0% to 6.8%. Notable changes for employers include a decrease in median total employer contribution rates, from less than 1% in miscellaneous plans to a decrease of more than 2% in some safety plans. Contribution changes took effect in fiscal year 2023-24 for public agencies.
Other Post Employment Benefits (“OPEB”)
Description of Postretirement Healthcare Benefits (OPEB) . The City participates in the California Employers’ Retiree Benefit Trust ( “CERBT”), an agent multiple -employer plan administered by PERS, consisting of an aggregation of single-employer plans.
By City Council resolution, the City provides certain health care benefits for employees who retire directly from the City with at least five years of service with the City and who are vested in PERS. The City participates in the PE RS health care plan which is governed under the California Public Employees Health and Medical Care Act ( “PEMCHA”). Required retiree medical plan contributions are also governed by PEMCHA for member agencies.
The City contributes up to a fixed dollar amou nt of retiree medical benefits, which varies by employee bargaining group and coverage level as governed by PEMCHA. Benefits continue for surviving spouses in amounts as required by PEMCHA. Should an eligible retiree opt out of the PERS medical plan, they will receive $ 149 to 151 per month in lieu of contributions to the PERS plan.
As of the June 30, 2021, measurement date, the following current and former employees of the City were covered by the benefit terms of the OPEB Plan:
Inactive employees or beneficiaries currently receiving benefits 712 Inactive employees entitled to but not yet receiving benefits 170 Active employees 806
Total 1,697
Source: City of Hayward Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023.
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Funding Policy and Actuarial Assumptions. The annual required contribution (“ARC”) was determined as part of a June 30, 2021 actuarial valuation using the projected unit credit cost method. This is a cost method that takes into account the benefits th at are expected to be paid for current actives and retirees. The actuarial assumptions included (a) 6.10% investment rate of return, 3.00% projected annual salary increase and a 2.50% health care cost inflation.
The long -term expected rate of return on OPE B plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produ ce the long -term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
Total OPEB Liability. The City’s OPEB liability of $89,461,199 was measured as of June 30, 2022, and was determined by an actuarial valuation as of June 30, 2021, rolled forward to June 30, 2022, using standard update procedures.
The City’s Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023, and in particula r Note 15 thereto, includes information about the City’s postemployment healthcare liabilities and funding.
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APPENDIX B
ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY OF HAYWARD FOR THE FISCAL YEAR ENDED JUNE 30, 2023
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
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APPENDIX D
PROPOSED FORM OF BOND COUNSEL OPINION
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$_____________
CITY OF HAYWARD
2025 WASTEWATER REVENUE BONDS
This Continuing Disclosure Certificate (the “Disclosure Certificate ”) is executed and delivered by the City of Hayward (the “City”) in connection with the issuance of the bonds captioned-above (the “Bonds”). The Bonds are being issued pursuant to a n Indenture of Trust, dated as of March 1, 2025, between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), as supplemented or amended from time to time in accordance with the provisions thereof (the “Indenture”).
The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with Rule 15c2 -12(b)(5) of the Securities and Exchange Commission.
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms have the following meanings:
“Annual Rep ort” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4.
“Annual Report Date” means the date not later than March 31 after the end of each fiscal year of the City (currently June 30th).
“Dissemination Agent ” means, initially, [Willdan Financial Services] , or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a).
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule.
“Official Statement ” means the final official statement dated ___________, 202 5, executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means any of the original purchasers of the Bonds required to comply with the Rule in connection with offering of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
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Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2025, with the report for the 2023-24 fiscal year, provide to the MSRB in an electronic format as prescribed by the MSRB, an Annual Repor t that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided, however, that the requirement to file the Annual Report for the 2023-2024 fiscal year by no later than March 31, 2025, shall be satisfied by the filing of the Official Statement with the MSRB.
Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). I f by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Disse mination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) notice in a timely manner to the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with t he City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports . The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audite d financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statemen ts shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the
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most recently completed fiscal year , substantially similar to that provided in the corresponding tables in the Official Statement, as follows:
(1) Table 1 – Customer Base by Type of Account,
(2) Table 7 – Ten Largest Wastewater System Rate Payers, and
(3) Table 12 – Historical Revenues, Expenditures and Debt Service Coverage.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including off icial statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. (7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
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(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the term ination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or an obligated person, any of which affect security holders, if material. (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.
(b) Upon the occurrence of a Listed Event, the City shall, or shall cau se the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstandi ng the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14) and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The City shall cause a notice to be filed as set forth in paragraph (b) above with re spect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Ce rtificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body a nd officials or officers in possession but subject to the supervision and orders of a court or
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governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having sup ervision or jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledg ed as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Munic ipal Securities Rulemaking Board consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB . All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation . The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior t o the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver . Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied wi th the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is appr oved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed
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pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new a ccounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on th e presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is requ ired by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no ob ligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations und er this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disc losure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
(a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duti es hereunder, including the costs and expenses (including attorney fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder, and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive res ignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and
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shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Di ssemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: CITY OF HAYWARD
By:
Finance Director
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APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company ( “DTC”), the procedures and record keeping with respect to beneficial ownership interests in the 2025 Bonds, payment of principal, interest and other payments on the 2025 Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial own ership interest in the 2025 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and ne ither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the 2025 Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the 2025 Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Pa rticipants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2025 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2025 Bonds, o r (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2025 Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in t his Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company ( “DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s larg est securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation ” within the meaning of the New York Uniform Commercial Code, and a “clearing agency ” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants ( “Direct Participants ”) deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.
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DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( “DTCC”).
DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( “Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information contained o n this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expecte d to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership inte rests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, ex cept in the event that use of the book -entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowl edge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the no minee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
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7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Iss uer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts u pon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructi ons and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or r egulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Is suer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information i n this section concerning DTC and DTC’s book -entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.