Agenda — Hillsborough City Council, May 8, 2023 (part 2 of 3)

Instructions:
For all permit applications, complete and sign this form and attach with your permit application. For PG&E, AT&T, and Comcast permit applications, on Step 1 of the eTrakit Online Portal:
o Under Permit Type Information, include your company’s internal project number at the beginning of the “Short Description”
o Under Location,
if the scope of work is for a specific private property address (i.e. gas tie-in, service upgrade, etc.), select that address
if the scope of work is not directly related to property address (i.e. gas main leak, aerial fiber installation, etc.), select “1320 La Honda Road” and provide the nearest address in the “Short Description” under Permit Type Information.
1) Project Applicant (Primary Contact)
2) Location(s) of Work
☐ Single
☐ Public Right-of-Way
☐ Multiple Streets
☐ Easements
☐ Near Creek
3) Description of Work:
(Continued on next page)
Name: ____________________________________________ Phone: ______________________________________ Email: ____________________________________________ Company: ____________________________________ Address or Nearest Address: _____________________________________________________________________ APN:___________________________________________ Project Number:___________________________________ Check all items that apply:
_________________________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ ATTACHMENT 3
Alvaro Gandara Astray 916-282-8158
[email protected] STC Netcom Inc.
1020 CRYSTAL SPRINGS RD
031280190 CALHPS82778377
Contracted by Comcast Cable to upgrade existing emergency power backup to 72hrs per CPUC mandate. In order to meet requirements we will be installing a precast concrete pad with battery cabinet next to utility pole.

ONLINE ENCROACHMENT PERMIT APPLICATION
Town of Hillsborough Public Works Department
1600 Floribunda Ave | Hillsborough, CA | 94010
(650) 375-7444 main | (650) 548-0859 fax
[email protected] | www.hillsborough.net

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4) Provide the following measurements:

Driveway Apron: _______ LF
Rolled Gutter: _______ LF
Trench: _______ LF
Bell Hole / Excavation Pit: ____ LF x ____ LF (Length x Width) 5) Street Opening or Type of Installation Permit (Check all items that apply):
☐ CATV
☐ Curb and Gutter
☐ Directional Boring
☐ Driveway/Apron
☐ Electric
☐ Gas Line/Leak
☐ Geotech Work
☐ Parking Strip
☐ Potholing
☐ Sanitary Sewer Lateral
☐ Storm Drain
☐ Street Paving
☐ Street – Full Road Closure
☐ Street – Partial Closure
☐ Telephone
☐ Tree Work
☐ Trenching
☐ Other (explain below)
6) Encroachment Permit Standards
All encroachment permits are subject to the following standards.

Methods and Materials
The applicant shall submit a plan and a profile showing location, grade elevation and trench details of proposed work to be constructed and the location and method by which the proposed work is to be connected to any existing Hillsborough utility. The plan submittal shall be reviewed and approved by the engineering department prior to issuance of the permit.
All work with in the public right-of-way shall be installed per the Town of Hillsborough Standard Details available on the Town website unless otherwise approved by the City Engineer or his/her designee. Backfill shall be imported material of a type specified by the Town Standard Details and shall be compacted to a minimum of 95% relative compaction, unless otherwise approved by the City Engineer or his/her designee. New pavement section shall match the existing thickness, but not less than 4" AC over 8" Class 2 AB. Jackhammering of the paved surface of any street is not allowed. All trenches must be saw-cut prior to excavation. T-Cuts are required and shall be a minimum of 12 inches on all sides of the trench, all saw cuts (including tails) must be sealed.
Contractors shall email the Public Works Inspector at [email protected] with the encroachment permit number, scope of work or inspection type, and requested inspection date and time at least 24 hours in advance to schedule an inspection for all work including but not limited to; bedding, utilities, cover, compaction, patching, paving, parking strips, forms, etc.
The permittee must conduct video inspection of all sewer mains, laterals and storm drains within the area of each directional boring project.
No equipment or materials shall be stored in the public right-of-way without written authorization from the Director of Public Works.
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Licenses and Liabilities
A Class A contracting license is required when working in the public right-of-way unless otherwise approved by the City Engineer or his/her designee. (Extreme care shall be exercised). All necessary permits must be obtained from the appropriate agencies prior to the issuance of an Encroachment Permit, including but not limited to California Fish and Wildlife, Regional Water Quality Control Board (RWQCB), Army Corp of Engineers, CALTRANS, local cities and counties, etc. All costs of repairing any and all infrastructure damaged with in the right-of-way shall be paid for by the owner/applicant and should be reported immediately to the Town Inspector. Bond deposit(s) shall not be returned until the final inspection by the Public Works Department has been completed.
Applicant shall hold the Town, its employees and representatives harmless and assume all liability for claim(s) which may arise by or because of this permit.

Traffic and Safety
Any open holes / trenches in the street or on the shoulder shall be covered with steel plates or as required by the Town Inspector. All excavations shall be covered at the end of each day. Work in the right-of-way shall be conducted between the hours of 8:00am – 5:00pm, Monday through Friday, unless written authorization is obtained from the Director of Public Works 48 hours prior to the start of work. The area to be encroached upon shall be marked 48 hours prior to such encroachment. Notification shall be given to Underground Service Alert (USA) 1 800 642-2444 for all digging proposed in the right-of-way 48 hours prior to the commencement of any excavation.
Caltrans safety standards shall be used for all traffic control measures. A traffic control plan shall be submitted and approved for all work done in the public right-of-way.
All signs, cones, barricades and traffic control devices must be clearly marked with contractor’s/subcontractor’s name. Provisions for two-way traffic shall be maintained at all times using flagmen as necessary. All works shall comply with OSHA standards. Excavations of 5 feet or deeper shall conform to CAL/OSHA Standards for shoring.
During non-daylight hours, applicant shall use yellow flashing lights and reflective tape on all barricades and/or street closure signage to CALTRANS standards.
Barricades with flashers shall be on-site prior to excavation. I acknowledge that I have read and do here by accept the terms and conditions contained in the above Encroachment Permit Standards.
5) SIGNATURE (APPLICANT OR AUTHORIZED AGENT)
Signature: ___________________________________________________ Date: _______________________ Printed Name: _________________________________________________________________________________ ___________________________ 04/11/2022
Alvaro Gandara Astray
If there are questions regarding these comments, please contact John Iaquinto at (650) 375-7418. 1 -
Project Location: 1320 La Honda Road – Crystal Springs Road Description: Upgrade existing emergency power backup. Install a pre-cast concrete pad with battery cabinet next to existing Pole.

Date:5/16/22
Permit No. ENC22-0167
Plans Dated & By: 2022 – STC Netcom Inc. – Project #CALHPS82778377

PROJECT COMMENTS
x The Town’s aesthetic standards in Policy 19-01 were made to apply Small Cell and any similar infrastructure (Policy, Section B.). The following comments are to ensure this application complies with Policy 19-01, adopted by Town Resolution 19-03. x Equipment placed above ground, whether pole-mounted or ground-mounted, shall be placed to avoid, to the extent technically feasible, prominent visibility from the driveways, entryways and windows associated with residential dwellings. Applicants are encouraged to consult with Town staff in advance to evaluate potential visibility issues. As a general matter, but not as a rule, locations as close to the common property line between adjoining properties as possible will likely comply with this requirement. Per C5 x All accessory equipment installed above ground level shall not cumulatively exceed:
(a) nine cubic feet in volume if installed in a residential district; or [(b) 17 cubic feet in volume if installed in a non-residential district. The volume calculation shall include any shroud, cabinet or other concealment device used in connection with the accessory equipment. The volume calculation shall not include any equipment or other improvements placed underground.] Per E 7
x Shall not permanently displace any landscaping or cause any street trees to be trimmed, damaged or displaced. If any landscaping or street trees are damaged or displaced, the applicant shall be responsible, at its sole cost and expense, to plant and maintain replacement trees at the site for five years or the duration of the permit term (whichever is longer). Likewise, new infrastructure and/or associated equipment shall not prevent the planting or replanting of a street tree in the future. Per E 10
x To the extent the structures are utility boxes within the meaning of this Code, be reviewed and subject to the same approvals as utility boxes installed in connection with other infrastructure deployments; and shall be located flush to grade where necessary to avoid incommoding the public or creating a hazard. Per G1 & G2 x To the extent permitted above ground, shall otherwise be shrouded and painted and textured (or wrapped) to blend with the streetscape and landscape around the site. Whenever possible, above ground equipment components should be placed behind landscaped features in the right-of-way to further conceal the equipment and blend in with the surroundings. Non-reflective paints shall be used on all painted surfaces. – Per G3
x Equipment shrouds at the base of a pole shall: (a) not exceed 24 inches wide on any side and 48 inches high; (b) be consistent with any standards and specifications by the City Engineer for decorative pole bases or, if no such standards or specifications exist, shall be designed to Town of Hillsborough
Public Works Department / Engineering Division
1320 La Honda Road x Hillsborough x CA x 94010
650.375-7444 [ tel ] x 650.548-0859 [ fax ]
If there are questions regarding these comments, please contact John Iaquinto at (650) 375-7418. 2 mimic the pole to which it is attached ; (c) not have any flat surface area on the top of the shroud greater than two square inches to prevent objects from being placed on the shroud; and (d) include a tapered or decorative transition between the top of the base mounted shroud and the pole. Per G 4
x Employ the smallest and lowest profile equipment, placed in the least conspicuous location when viewed from properties from which the WCF is visible. Per J1 x Accommodate collocation or other future expansions or modifications to the extent feasible and consistent with the other design requirements of this policy; and be consistent with the general plan. J2 & J3

SPECIFIC PERMIT CONDITIONS OF APPROVAL
x Permittee shall comply with the attached encroachment permit standards.

Applicant is required to contact resident adjacent to the location where the new cabinet will be installed prior to installation. Additionally, any landscaping removed must be restored by the applicant.
x Work location is in proximity to existing Town sewer, Storm drain and water main. Electrical service shall maintain a minimum 1’ vertical, and 3’ horizontal clearance from sewer, storm drain and water mains. It is the responsibility of the permit holder to ensure the protection of both public and private assets. Permit holder will be liable for any damage to properties within the scope of this project.
x All excavations shall be covered at the end of the day. Barricades and flashes shall be onsite prior to excavation. x 24-hour notice shall be given to the Town’s Public Works Inspector by calling 650-375-7444 and asking for the inspection of the job site on the day of the work. x Permittee must fully comply with the approved traffic control plan that was submitted with the application and approved by the Public Works Engineer. All residents in the area must be able to always access their driveways.
x Permittee shall provide written notices to residents/property owners at least one (1) week in advance of the work. The notices shall be provided to all properties in the area that will be affected by the road closure. The notices shall provide residents with the date of and a description of the work and contact information for PG&E project staff including name and phone number. x Access to private driveways shall be always maintained. If a private driveway must be temporarily closed to accommodate the work, permit holder shall provide written notification to the residents at least one (1) week in advance.
x “No Parking” signs shall be posted a minimum of 72 hours in advance of the restriction. The date and time of the restrictions shall be clearly posted on the “No Parking” signs. 61236.02002\41055345.8
Exhibit A

1. The permittee shall execute and record an agreement regarding revocable permit in a form acceptable to the city attorney setting forth the circumstances under which the permittee shall be required to remove the outdoor fixture from the right-of-way.

2. General Conditions.

A. Compliance Report. Within thirty (30) days after installation of infrastructure deployment(s), the permittee shall deliver to the city manager a written report that demonstrates that its infrastructure deployment(s) as constructed and normally-operating fully complies with the conditions of the permit, including height restrictions, and applicable safety codes, including structural engineering codes. The demonstration shall be provided in writing to the city manager containing all technical details to demonstrate such compliance, and certified as true and accurate by qualified professional engineers, or, in the case of height or size restrictions, by qualified surveyors. This report shall be prepared by the permittee and reviewed by the Town at the sole expense of the permittee, which shall promptly reimburse the Town for its review expenses.

1. If the initial report required by this section shows that the infrastructure deployment(s) do not so comply, the permit shall be deemed suspended, and all rights thereunder of no force and effect, until the permittee demonstrates to the Town's satisfaction that the infrastructure deployment(s) is compliant. Permittee shall promptly reimburse the Town for its compliance review expenses.

2. If the initial report required by this section is not submitted within the time required, the city manager or its selected and qualified professionals may, but is not required to, undertake such investigations as are necessary to prepare the report described in paragraph A. permittee shall within five (5) days after receiving written notice from the city manager that the Town is undertaking the review, shall deposit such additional funds with the city manager to cover the estimated cost of the Town obtaining the report. Once said report is obtained by the Town, the Town shall then timely refund any unexpended portion of the permittee's deposit. The report shall be provided to the permittee. If the report shows that the permittee is non-compliant, the Town may suspend the permit until the permittee demonstrates to the Town's satisfaction that the infrastructure deployment(s) is compliant.

3. If the infrastructure deployment(s) is not brought into compliance promptly, the Town may revoke the permit and require removal of the infrastructure deployment(s) and all related equipment and improvements to return the site to its original condition before the installation or construction occurred.

B. Permit Expiration. The permit will automatically expire six (6) months from the approval date (the "build-out period") unless the permittee obtains all other permits and approvals required to install, construct and/or operate the 61236.02002\41055345.8
approved infrastructure deployment(s), which includes without limitation any permits or approvals required by the any federal, state or local public agencies with jurisdiction over the subject property, the infrastructure deployment(s) or its use; provided that the city manager may extend this build-out period at the request of the permittee for good cause shown. If this build-out period expires, the Town will not extend the build-out period but the permittee may resubmit a complete application, including all application fees, for the same or substantially similar project.

C. Code Compliance. The permittee shall also comply with Chapter 12.04 and all other requirements of this Code.

D. Government Approvals. The permittee shall obtain and maintain all other applicable permits, approvals, and agreements necessary to install and operate the infrastructure deployment(s) in conformance with federal, state, and local laws, rules and regulations. The permittee expressly acknowledges and agrees that this obligation is intended to be broadly construed and that no other specific requirements in these conditions are intended to reduce, relieve or otherwise lessen the permittee's obligations to maintain compliance with all laws. No failure or omission by the Town to timely notice, prompt or enforce compliance with any applicable provision in the Hillsborough Municipal Code, this policy any permit, any permit condition or any applicable law or regulation, shall be deemed to relieve, waive or lessen the permittee's obligation to comply in all respects with all applicable provisions in the Hillsborough Municipal Code, this policy, any permit, any permit condition or any applicable law or regulation.

E. Inspection. The Town or its agents may inspect the permitted infrastructure deployment(s) and property and may enter onto a site to inspect the deployment(s) upon reasonable notice to the permittee. In case of an emergency or risk of imminent harm to persons or property within the vicinity of permitted infrastructure deployment(s), the Town reserves the right to enter upon the sites of the infrastructure deployment(s) and to support, disable, or remove those elements of the infrastructure deployment(s) posing an immediate threat to public health and safety. The permittee, if present, may observe the Town's officers, officials, staff, agents or other designees while any such inspection or emergency access occurs.

F. Contact Information. The permittee shall maintain on file with the Town and onsite at the infrastructure deployment(s) contact information of all parties responsible for maintenance of the infrastructure deployment(s).

G. Indemnification. The permittee and, if applicable, the private property owner shall defend, indemnify and hold harmless the Town, its agents, officers, officials, and employees:

1. From any and all damages, liabilities, injuries, losses, costs and expenses and from any and all claims, demands, lawsuits, writs of mandamus, and other actions or proceedings brought against the Town or its agents, 61236.02002\41055345.8
officers, officials, or employees to challenge, attack, seek to modify, set aside, void or annul the Town's approval of the permit(s); and

2. From any and all damages, liabilities, injuries, losses, costs and expenses and any and all claims, demands, lawsuits, or causes of action and other actions or proceedings of any kind or form, whether for personal injury, death or property damage, arising out of or in connection with the activities or performance of the permittee or, if applicable, the private property owner or any of each one's agents, employees, licensees, contractors, subcontractors, or independent contractors ((i) and (ii) collectively are "actions").

H. Termination. A permit may be terminated if the Town determines that the permit was granted based on false, misleading or incomplete information; if a material provision of the permit is no longer enforceable; or if the permittee violates a condition of the permit, or modifies the infrastructure deployment(s) or support structures without permission.

I. Performance Bond. The permittee shall file with the Town, and shall maintain in good standing throughout the term of the permit, a performance bond or other surety or another form of security for the removal of the infrastructure deployment(s) in the event that the use is abandoned or the permit expires, or is revoked, or is otherwise terminated. The security shall be in the amount equal to one hundred fifteen percent (150%) of the cost of physically removing each infrastructure deployment and all related facilities and equipment on the site. The permittee shall reimburse the Town for staff time associated with the processing and tracking of the bond, based on established hourly rates. Reimbursement shall be paid when the security is posted.

J. Minimize Disruptions. The permittee shall make a good faith effort to minimize project-related disruptions to adjacent properties. Site improvement and construction work, including set-up, loading or unloading of materials or equipment, performed as part of this project is subject to the provisions of Section 8.32.040. Emergency maintenance and repairs are exempt from the restricted hours. Violation of this condition may result in issuance of a stop work order or administrative citations.

K. Graffiti. All graffiti on any of the infrastructure deployment(s) must be removed at the sole expense of the permittee within forty-eight (48) hours after notification from the Town.

L. Compliance, Generally. All infrastructure deployment(s) within the Town shall be designed, maintained, and shall be operated at all times to comply with the provisions of the Code, this policy and the following other requirements:

1. Conditions in any permit or license issued by a local, state, or federal agency, which has jurisdiction over the infrastructure deployment; 61236.02002\41055345.8

2. Rules, regulations, and standards of the state and federal governments and the town, including without limitation the FCC, the CPUC and the Hillsborough Municipal Code.

3. Easements, covenants, conditions, and/or restrictions on or applicable to the underlying real property;

4. Rules, regulations, and standards of the town governing underground utility districts;

5. All other laws, codes, and regulations applicable to the infrastructure facility; including the California Environmental Quality Act (CEQA).

M. Maintenance. Without limiting the foregoing, all infrastructure deployment(s) shall be maintained in good working condition and to the visual standards established at the time of approval over the life of the permit(s) as may be extended. The infrastructure deployment(s) and surrounding areas shall remain free from trash, debris, litter, graffiti, and other forms of vandalism. Any damage shall be repaired as soon as is practicable, and in no instance more than ten (10) calendar days from the time of notification by the Town or after discovery by the permittee.

N. Revocation. A permit may be revoked if permittee is not in compliance with permit conditions, if the permit conditions are not enforceable, or for a failure to comply with any provision of the Hillsborough Municipal Code relating to the permit, or relating to the infrastructure deployment associated with the permit ("default event"). By way of example and not limitation, a refusal to timely remove infrastructure deployment(s) located in the rights-of-way where required in connection with a public works project would be a default event.

1. The city manager may revoke a permit only after: (i) written notice of the default event has been provided to the permittee; and (ii) the permittee has been afforded a reasonable opportunity to cure and comply with its permit, or demonstrate that no default event occurred.

2. If the permittee fails to cure, the City Council or the City Council through a designee shall conduct a noticed public hearing where the permittee shall be afforded an opportunity to speak and be heard and to provide written material prior to the hearing. If the City Council, after the public hearing, finds that the infrastructure deployment(s) or the permittee has violated any law regulating the infrastructure deployment(s) or has failed to comply with these requirements, the permit, any applicable agreement or any condition of approval the City Council may revoke the permit.

3. Upon revocation, the City Council may require the removal of the infrastructure deployment(s) or take any other legally permissible action or combination of actions necessary to protect the health and welfare of the Town.

O. Abandonment. Any permittee who abandons or discontinues use of an infrastructure deployment for a continuous period of ninety (90) days shall so notify the city manager by certified mail within thirty (30) days after the ninety (90) day period.
61236.02002\41055345.8

1. If the city manager believes an infrastructure deployment has been abandoned or discontinued for a continuous period of ninety (90) days, the city manager shall send a notice of abandonment or discontinuation to the permittee stating why the Town believes the infrastructure deployment to be abandoned or discontinued. Failure of the permittee to reply to the city manager in writing within thirty (30) days after receiving, rejecting, or returning the Town's certified letter shall entitle the city manager to make a determination that the infrastructure deployment is, in fact, abandoned or discontinued.

2. Upon declaration of the city manager that the infrastructure deployment is abandoned or discontinued, as to private property, the permittee or owner of the affected real property shall have ninety (90) days from the date of the declaration or a further reasonable time as may be approved by the city manager, within which to complete one of the following actions:
i. Reactivate use of the infrastructure deployment;
ii. Transfer the rights to use the infrastructure deployment to another entity (who shall be subject to all the provisions of this policy) and the entity immediately commences use of the infrastructure deployment; or iii. Remove the infrastructure deployment and any supporting structures installed solely in connection with the infrastructure deployment, and restore the site to be consistent with the then-existing surrounding area.

3. If after the ninety (90) day time period set forth in subsection 1 of this section none of the required actions in subsections 2.i through 2.iii of this section has occurred, the City Council at a noticed public hearing may declare that the infrastructure deployment is deemed abandoned.

The city manager shall provide notice of such finding to the permittee last known to use the infrastructure deployment and, if applicable, to the owner of the affected private real property, providing thirty (30) days from the date of the notice within which to complete one of the following actions:
i. Reactivate use of the infrastructure deployment, subject to the terms and conditions of the applicable permit;
ii. Transfer the rights to use the infrastructure deployment to another operator (who shall be subject to all the provisions of the Code and this policy); or
iii. Remove the infrastructure deployment and any supporting structures installed solely in connection with the infrastructure deployment, and restore the site to be consistent with the then-existing surrounding area.

4. If there is no reactivation, transfer or removal as set forth in subsection 3 of this section, the Town may thereafter remove the abandoned infrastructure deployment, repair any and all damages to the premises caused by such removal, and otherwise restore the premises as is 61236.02002\41055345.8
appropriate to be in compliance with applicable codes. If the Town removes the infrastructure deployment, the Town may, but shall not be required to, store the removed infrastructure deployment or any part thereof, and may use it, sell it or dispose of it in any manner deemed by the Town to be appropriate. The entity that abandoned the infrastructure deployment, or its successor in interest, and if on private property, the private property owner shall be jointly liable for the entire cost of such removal, repair, restoration and storage and shall remit payment to the Town promptly after demand therefor is made. In addition, the city council, at its option, may utilize any financial security required in conjunction with granting the permit to recover such costs.

5. Until the cost of removal, repair, restoration and storage is paid in full, a lien shall be placed on the infrastructure deployment and any related personal property and any private real property on which the infrastructure deployment was located for the full amount of the cost of removal, repair, restoration and storage. The city clerk shall cause the lien to be recorded with the San Mateo County recorder.

P. Transfer. A permittee shall not assign or transfer any interest in its permit(s) for infrastructure deployment(s) without advance written notice to the Town.

The notice shall specify the identity of the assignee or transferee of the permit, as well as the assignee or transferee's address, telephone number, name of primary contact person(s), and other applicable contact information, such as an e-mail address or facsimile number. The new assignee or transferee shall comply with all of the permit's terms and conditions of approval, and shall submit to the Town a written acceptance of the permit's terms and conditions and a written assumption of the obligations thereafter accruing under such permit prior to the date that such assignment or transfer is intended to take effect.

Q. Records. Throughout the permit term, the permittee must maintain a complete and accurate copy of the written administrative record, which includes without limitation the permit application, the approved permit, the approved plans and photo simulations incorporated into the approval, all conditions associated with this approval, any ministerial permits or approvals issued in connection with this approval and any records, memoranda, documents, papers and other correspondence entered into the public record in connection with the permit (collectively, "records"). If the permittee does not maintain such records as required in this condition, any ambiguities or uncertainties that would be resolved by inspecting the missing records will be construed against the permittee. The permittee shall protect all records from damage from fires, floods and other hazards that may cause deterioration.

The permittee may keep records in an electronic format; provided, however, that hard copies or electronic records kept in the Town's regular files will control over any conflicts between such Town-controlled copies or records and the permittee's electronic copies, and complete originals will control over all other copies in any form. The requirements in this condition shall not be construed to create any obligation to create or prepare any records not otherwise required to be created or prepared by other applicable laws. 61236.02002\41055345.8
Compliance with the requirements in this condition shall not excuse the permittee from any other similar record-retention obligations under applicable law.

R. Landscaping. The permittee shall replace any landscape features damaged or displaced by the construction, installation, operation, maintenance or other work performed by the permittee or at the permittee's direction on or about the site. If any trees are damaged or displaced, the permittee shall hire and pay for a licensed arborist to select, plant and maintain replacement landscaping in an appropriate location for the species. Only International Society of Arboriculture certified workers under the supervision of a licensed arborist shall be used to install the replacement tree(s), Any replacement tree must be substantially the same size as the damaged tree, The type, size and location for a replacement tree shall be subject to the city manager's approval. The permittee shall, at all times, be responsible to maintain any replacement landscape features.

S. Reimbursement. The permittee acknowledges and agrees that (i) the permittee's request for authorization to construct, install and/or operate the infrastructure deployment(s) will cause the Town to incur costs and expenses; (ii) the permittee shall be responsible to reimburse the Town for all costs incurred in connection with the permits, which includes without limitation costs related to application review, permit issuance, site inspection and any other costs reasonably related to or caused by the request for authorization to construct, install and/or operate the infrastructure deployment; (iii) any application fees required for the application may not cover all such reimbursable costs and that the permittee shall have the obligation to reimburse Town for all such costs ten (10) days after a written demand for reimbursement and reasonable documentation to support such costs; and (iv) the Town shall have the right to withhold any permits or other approvals in connection with the infrastructure deployment(s) until and unless any outstanding costs have been reimbursed to the Town by the permittee.

T. Town Work. The permittee acknowledges that the Town, in its sole discretion and at any time, may: (i) change any street grade, width or location; (ii) add, remove or otherwise change any improvements in, on, under or along any street owned by the Town or any other public agency, which includes without limitation any sewers, storm drains, conduits, pipes, vaults, boxes, cabinets, poles and utility systems for gas, water, electric or telecommunications; and/or (iii) perform any other work deemed necessary, useful or desirable by the Town (collectively, "Town work"). The Town reserves the rights to do any and all Town work without any admission on its part that the Town would not have such rights without the express reservation in this permit. If the Public Works Director determines that any Town work will require the permittee's infrastructure deployment(s) located in the public rights-of-way to be rearranged and/or relocated, the permittee shall, at its sole cost and expense, do or cause to be done all things necessary to accomplish such rearrangement and/or relocation. If the permittee fails or refuses to either 61236.02002\41055345.8
permanently or temporarily rearrange and/or relocate the permittee's infrastructure deployment(s) within a reasonable time after the Public Works Director's notice, the Town may (but will not be obligated to) cause the rearrangement or relocation to be performed at the permittee's sole cost and expense. The Town may exercise its rights to rearrange or relocate the permittee's facility without prior notice to permittee when the Public Works Director determines that the Town work is immediately necessary to protect public health or safety. The permittee shall reimburse the Town for all costs and expenses in connection with such work within ten (10) days after a written demand for reimbursement and reasonable documentation to support such costs.

2. Specific Right-of-Way Construction Conditions.

A. Roadway cuts and excavations shall be subject to HMC Section 12.04.130 “Street Preservation”.

B. Work location is in proximity to existing Town sewer and water main. Electrical service shall maintain a minimum 1’ vertical, and 3’ horizontal clearance from sewer and water mains. It is the responsibility of the permittee to ensure the protection of both public and private assets. Permittee will be liable for any damage to properties within the scope of this project.

C. 24 hour notice shall be given to the Town for inspection of all trench work. The notice must be via phone call at (650) 375-7444.

D. Trenches shall be backfilled per Town standard detail C16.

E. Permittee shall not backfill more than 6” sand above gas pipe.

F. Permittee shall not use jackhammer to excavate the paved road. Restoration and paving of the surfaces must comply with the Town of Hillsborough’s standards.

G. Permittee shall comply with the approved traffic control plan. One (1) lane shall remain open to traffic during the course of the project. Full road closures are not permitted for this project. Construction hours are limited between the hours of 8:00am – 5:00pm.

H. Permittee shall provide a written notice to all residents/property owners adjacent and across from construction areas at least one (1) week in advance of the work.

The notice shall provide property owners with the date(s) of construction, description of the work, and contact information for Comcast project staff, including a name and phone number.

T1
SHEET TITLE:

ISSUE STATUS

REV DATE BY DESCRIPTION

SITE INFORMATION
SEAL
A 09/17/21 90% CD BN
3011 COMCAST PLACE
LIVERMORE, CA 94551
23 MAUCHLY, STE 110
IRVINE, CA 92618
J5 PROGRAM ID: ALP-CA-CPUC
J5 PROJECT ID: P-060675
3767 ALPHA WAY
BELLINGHAM, WA 98226

AN ENERSYS COMPANY
3/28/23

0 12/30/21 100% CD BN
1 08/16/22 PCC#1 JW2 03/28/23 PCC#1 MJC
2 LOCATION MAP
DO NOT SCALE DRAWINGS IF NOT FULL SIZE (24 X 36)

CONTRACTOR SHALL VERIFY ALL PLANS AND EXISTING DIMENSIONS AND CONDITIONS ON THE JOB SITE AND SHALL

IMMEDIATELY NOTIFY THE ARCHITECT / ENGINEER IN WRITING OF ANY DISCREPANCIES BEFORE PROCEEDING WITH THE WORK OR BEAR THE RESPONSIBILITY FOR THE SAME.

GENERAL CONTRACTOR NOTES

CODE COMPLIANCE

ALL WORK AND MATERIALS SHALL BE PERFORMED AND INSTALLED IN ACCORDANCE WITH THE CURRENT EDITIONS OF THE FOLLOWING CODES AS ADOPTED BY THE LOCAL GOVERNING AUTHORITIES. NOTHING IN THESE PLANS IS TO BE CONSTRUED TO PERMIT WORK NOT CONFORMING TO THESE CODES.

1. CALIFORNIA BUILDING STANDARDS CODE: 2019
TRIENNIAL EDITION OF TITLE 24, WITH AN EFFECTIVE
DATE OF JANUARY 1, 2020.PART 1 - CALIFORNIA ADMINISTRATIVE CODEPART 2 - CALIFORNIA BUILDING CODE, BASED ON THE 2018 INTERNATIONAL BUILDING CODE
PART 2.5 - CALIFORNIA RESIDENTIAL CODE, BASED
ON THE 2018 INTERNATIONAL RESIDENTIAL CODE
PART 3 - CALIFORNIA ELECTRICAL CODE, BASED ON
THE 2017 NATIONAL ELECTRICAL CODE
PART 4 - CALIFORNIA MECHANICAL CODE, BASED ON
THE 2018 UNIFORM MECHANICAL CODE
PART 5 - CALIFORNIA PLUMBING CODE, BASED ON
THE 2018 UNIFORM PLUMBING CODE
PART 6 - CALIFORNIA ENERGY CODEPART 7 - VACANT
PART 8 - CALIFORNIA HISTORICAL BUILDING CODEPART 9 - CALIFORNIA FIRE CODE, BASED ON THE 2018

INTERNATIONAL FIRE CODE
PART 10 - CALIFORNIA EXISTING BUILDING CODE,BASED ON THE 2018 INTERNATIONAL EXISTINGBUILDING CODEPART 11 - CALIFORNIA GREEN BUILDING STANDARDS

CODE (ALSO KNOWN AS CALGREEN)
PART 12 - CALIFORNIA REFERENCED STANDARDS
CODE

2. ANSI/TIA-222 (REV H)3. 2018 NFPA 101, LIFE SAFETY CODE

4. 5. 2019 NFPA 13, STANDARD FOR THE INSTALLATIONOF SPRINKLER SYSTEMS 

EXISTING SITE PHOTO

SITE PLAN

TITLE SHEET
Call before you dig.

Know what'sbelow.

TO OBTAIN LOCATION OF PARTICIPANTS

UNDERGROUND FACILITIES BEFORE

YOU DIG IN CALIFORNIA (NORTH &
CENTRAL) , CALL USA NORTH 811
TOLL FREE: 1-800-227-2600 OR
www.usanorth811.org

CALIFORNIA STATUTE
REQUIRES MIN OF 2

WORKING DAYS NOTICE

BEFORE YOU EXCAVATE
NORTH
OWNER:

APPLICANT:

SITE INFORMATION

DRAWING INDEX

DESCRIPTION
T1 TITLE SHEET AND SITE PLAN
A1 ELEVATIONS
D1 DETAILS
SITE ADDRESS:

LATITUDE/LONGITUDE (NAD 83):

JURISDICTION:

POWER PROVIDER:

AMP DRAW:
1040 Crystal Springs Rd
HILLSBOROUGH, CA 94010

37.5482845, -122.3453227
Hillsborough Public WorksPG&E

5.80 SHEET

PROJECT TEAM
-
A1

ENGINEER/
ARCHITECT:

J5 INFRASTRUCTURE PARTNERSJOSE M. MIRANDA

ARCHITECT/ENGINEER CONTACT
PH: (949) 247-7767EMAIL: [email protected]
23 MAUCHLY, SUITE 110
IRVINE, CALIFORNIA, 92618
COMCAST CABLE3011 COMCAST PLACE
LIVERMORE, CA 94551
AE
(E) POLE MOUNTED COMCAST ENCLOSURE TO REMAIN(E) BATTERIES WITHIN TO BE REMOVED(N) POWER SUPPLY TO BE INSTALLED WITHIN 5 D1
~ RESIDENCE ~
(E) EDGE OF PAVEMENT
(2)(N) ALPHA PN-4 POWER NODE SYSTEM
ENCLOSURES W/ (18) (N) 12V ALPHA 210FTX BATTERIES

MOUNTED TO (N) CONCRETE PAD AT GRADE
1 D1
2 D1
7 D1

CRYSTAL SPRINGS ROAD

CRYSTAL SPRINGS ROAD
(E) DIRT
(E) UTILITY POLE
ALPHA TECHNOLOGIES, INC.

RICH SEIFFDIRECTOR OF SERVICE WEST DIVISIONENERGY SYSTEMS AMERICASPH: (331) 276-0232EMAIL: [email protected] THIS PROJECT MODIFICATION OF EXISTING CONSISTS OF:
x INSTALLATION OF (2 (N) ALPHA PN-4 POWERNODE SYSTEM ENCLOSUREx INSTALLATION OF (18) (N) 12V ALPHA 210FTX BATTERIESx INSTALLATION OF (1) (N) PRECAST CONCRETE PADx REMOVAL & REPLACEMENT OF (E) POWER SUPPLYx ALL ASSOCIATED ELECTRIC WIRES AND CONDUITS TO CONNECT

POWERNODE CABINET TO EXISTING ALPHA CABINET
TA4 SCOPE OF WORK
3 D1
1 8'-0"
TC1 TRAFFIC CONTROL 1
1'-0"
2 PWE-3
FRONT

CABINET
BACK
PWE-3
FRONT
A1
SHEET TITLE:

ISSUE STATUS

REV DATE BY DESCRIPTION

AN ENERSYS COMPANY
3/28/23

0 12/30/21 100% CD BN
1 08/16/22 PCC#1 JW2 03/28/23 PCC#1 MJC
2 ELEVATIONS
EXISTING ELEVATION 2 PROPOSED ELEVATION 1
(E) UTILITY POLE
GRADE
(E) UTILITY POLE

CRYSTAL SPRINGS ROAD
CONDUIT ROUTING NOTE:

1. GC TO ROUTE (N) 1-1/2" RIGID U/G CONDUIT FROM (N)

CABINETS TO (E) MAIN CABINET FOR (N) BATTERY & INTERFACE ASSOCIATED CABLING. SEE TRENCHING DETAIL ON SHEET D1.
(E) POLE MOUNTED COMCAST ENCLOSURE TO REMAIN(E) BATTERIES WITHIN TO BE REMOVED(N) POWER SUPPLY TO BE INSTALLED WITHIN 5 D1
(E) POLE MOUNTED COMCAST ENCLOSURE TO REMAIN(E) BATTERIES WITHIN TO BE REMOVED(E) POWER SUPPLY WITHIN TO BE REMOVED & REPLACED (N) 1-1/2"Ø SCH 40 RIGID CONDUIT

ROUTE UP FROM BASE OF (E)

WOOD POLE TO (E) CABINET
8 D1
NOTES:

1. CONTRACTOR TO COMPLY WITH ALL APPLICABLE/REQUIRED INSPECTIONS PER LOCAL JX GUIDELINES.

2. CONTRACTOR SHALL BE AWARE OF (E) PEDESTRIAN AND VEHICLE ACCESS. CONTRACTOR SHALL NOT BLOCK WALKWAYS, DRIVEWAYS AND/OR OTHER FORMS OF ACCESS. CONTRACTOR SHALL REACH OUT TO ENGINEER IF REVISIONS TO DESIGN HEREON ARE REQUIRED.

CRYSTAL SPRINGS ROAD
GRADE
(2)(N) ALPHA PN-4 POWER NODE SYSTEM
ENCLOSURES W/ (18) (N) 12V ALPHA
210FTX BATTERIES MOUNTED TO (N)

CONCRETE PAD AT GRADE
2 D1
1 D1
7 D1
3 D1
(E) TREE (BEYOND)
9 D1
(E) TREE (BEYOND)
1 D1
SHEET TITLE:

ISSUE STATUS

REV DATE BY DESCRIPTION

AN ENERSYS COMPANY
3/28/23

0 12/30/21 100% CD BN
1 08/16/22 PCC#1 JW2 03/28/23 PCC#1 MJC
2 DETAILS

EQUIPMENT SPECIFICATIONS
MFG:MODEL:

HEIGHT:

WIDTH:

DEPTH:

WEIGHT:

ALPHAXM3.1-HP

7.76 IN

16.43 IN10.57 IN
61 LBS
NOTE:

1. USE MANUFACTURER SUPPLIED
MOUNTING HARDWARE.

NOMINAL INPUT VOLTAGE: 120V AC
OUTPUT VOLTAGE: 63/89V AC
WARNING TAPE 12" BELOW GRADE90% COMPACTED FILL
UNDISTURBED EARTHPROTECT-IN-PLACE (E) U.G. CONDUIT,
TYP. (IF APPLICABLE)(SEE NOTE)
(E) SURFACE(SEE PLAN)

PATCH AND REPAIR

TO MATCH EXISTING
ONE (1) 1-1/2"Ø OR EQUIVALENT SCH.
40 RIGID U.G. CONDUIT
NOTE:

1. PRIOR TO STARTING CONSTRUCTION, THE CONTRACTOR

HAS THE RESPONSIBILITY TO LOCATE ALL EXISTING UTILITIES,

CONDUITS WHETHER OR NOT SHOWN ON THE PLANS,
AND TO PROTECT THEM FROM DAMAGE.
2'-6"
3"
2'-0"
MIN.
1'-6"
VARIES
56 N.T.S. TRENCHING DETAIL
N.T.S.POWER SUPPLY DETAIL
PVC SCHEDULE 40 SIZE AS

SHOWN ON DRAWINGS

RIGID STEEL TO

PVC ADAPTER
GRADE

RIGID STEEL CONDUIT

COUPLING

RIGID STEEL

CONDUIT PLUG
R=24" MIN. RIGID STEEL CONDUIT
6"
8 N.T.S. STUB-UP DETAIL9 N.T.S. CONDUIT RISER ATTACHMENT DETAIL (E) WOOD POLE

CONDUIT STRAP W/
(2) 1/4" LAG SCREWS
@ 12" O.C.(N) 1-1/2"Ø SCH 40 RIGID

CONDUIT PER PLAN
NOTE:

1. CONTRACTOR TO VERIFY RISER MOUNTING REQUIREMENTS

W/ POLE OWNER AND/OR POWER COMPANY
7 N.T.S. BATTERY SPECIFICATIONS
EQUIPMENT SPECIFICATIONS (1 UNIT)
MFG:MODEL:

HEIGHT:

WIDTH:

LENGTH:

WEIGHT:

ALPHA210 FTX

13.02 IN

4.91 IN22.01 IN
145 LBS 13.02"

22.01"

4.91"
ALPHA
210 FTX BATTERY UNIT
1 N.T.S. DUAL EQUIPMENT CABINET DETAIL
CABINET SPECIFICATIONSMANUFACTURER: ALPHAMODEL: PN-4
HEIGHT: 52"
WIDTH: 26"
DEPTH: 24"
WEIGHT (EMPTY): 360 LBS.WEIGHT (W/ BATTERIES): 2,970 LBS.MATERIAL: ALUMINUM BATTERY CONFIGURATION:

CABINET #1: (4) BATTERY STRINGSCABINET #2: (2) BATTERY STRINGS 52"
26"
24"
FRONT
SIDE
TOP
26"

KNOCKOUT,
TYP.

BATT STRING #2
BATT STRING #4
BATT STRING #1 BATT STRING #1
BATT STRING #2BATT STRING #3
56"
2"
6"
52"
(N) PRECAST CONCRETE PAD
(SEE DETAIL HEREON)
2 N.T.S. CONCRETE PAD & ANCHORAGE DETAIL

EQUIPMENT CABINET
3/8"Ø GALVANIZED THREAD ROD
W/ HILTI HIT-HY 200 ADHESIVE
EMBED = 4"
SPECIAL INSPECTION PER (ESR-3187)
(4) EA UNIT

NUT & INSULATING WASHER
2'-6"
4'-8"
4"
EMBED.
4"
MIN.
6" MIN. THICK

PRECAST

CONCRETE PAD
OUTLINE OFCABINET, TYP.

A
A

SECTION A-A
6" MIN. THICK PRECAST

CABINET ANCHOR CONCRETE PAD
POINTS, TYP.

PLACE CONCRETE PAD MINIMUM 2"FROM NEARBY CONCRETE PAD(S) CABINET GROUND #2
STRANDED IN 1/2" PVC TIED

INTO (N) GROUND RING

CONNECTION MADE WITH
BUMDY CONNECTORP/N YGHR58C2W
#6 AWG
TWO 8' GROUND

RODS PLACED A
MIN. OF 6' APART
#2 AWG

ENCLOSURE FOOTPRINTS
3 2
4 5
1 1/2"x8" COPPER GROUND ROD, FOUR PLACES, DRIVEN
ABOUT 2 FEET (TYP.) FROM THE CORNERS OF THE PAD.
#2 BARE COPPER WIRE LOOP TERMINATED TO EACH
GROUND ROD AND BURIED BELOW GRADE 18 INCHES.CORROSION-PROOF CONNECTIONS (25+ YEAR LIFE-SPAN)

AND HARDWARE SUITABLE FOR DIRECT BURIAL MUST BE
USED.#2 BARE COPPER WIRE FROM LOOP TO THE ENCLOSURE.

WHEN THE ELECTRICAL SUPPLY IS A PRIMARY SERVICE (NOT
A SECONDARY OR FEEDER SERVICE) A #2 BARE COPPER

WIRE MUST BE BOND THE LIGHTNING PROTECTION LOOP
TO THE GROUNDING ELECTRODE CONDUCTOR WHERETHEY ARE CLOSEST.

LIGHTNING PROTECTION (OPTIONAL)
#6 BARE COPPER WIRE FROM SERVICE
NEUTRAL/GROUND BAR WITH 2 GROUND
RODS LOCATED 6" APART.

SERVICE GROUNDING (REQUIRED)
1 2345
3 2'-0" MIN
N.T.S.GROUNDING DETAIL
NOTE:

GROUND TEXT SHALLMEASURE LESS THAN 25 OHMS.

IF EXCEEDED, CONTRACTOR

TO INSTALL ADDITIONAL
GROUND RODS AS REQUIRED.
2'-0"
MIN.

TC1
SHEET TITLE:

ISSUE STATUS

REV DATE BY DESCRIPTION

AN ENERSYS COMPANY
3/28/23

0 12/30/21 100% CD BN
1 08/16/22 PCC#1 JW2 03/28/23 PCC#1 MJC
2 DETAILS

TRAFFIC CONTROL FOR LANE CLOSURE ON TWO LANE ROAD USING

FLAGGERS
WORK AREA TRAFFIC CONTROL HANDBOOK 2019 14TH EDITION

PER STANDARDS AND GUIDANCE OF CA-MUTCD
GENERAL NOTES:

1. ALL WORK AND MATERIALS SHALL COMPLY WITH THE CALIFORNIA MANUAL ON UNIFORM TRAFFIC CONTROL DEVICES (MUTCD), 2019 EDITION.

2. ALL STRIPING AND MARKINGS SHALL CONFORM TO THE STATE OF CALIFORNIA 2010 STANDARD PLAN A20A.

3. THE CONTRACTOR SHALL PROVIDE FOR ACCESS TO ALL ADJACENT PROPERTIES.

4. FLASHING YELLOW BEACONS, TYPE "B", SHALL BE USED ON ALL W20-1 SIGNS AND ON ALL TYPE III BARRICADES GUARDING THE WORK OVERNIGHT.

5. ALL SIGNS SHALL BE REFLECTORIZED AND STANDARD SIZE.6. ALL TUBULAR DELINEATORS AND CONES SHALL BE 28" MINIMUM HEIGHT, REFLECTORIZED AND MAINTAINED ERECT IN

THE INDICATED POSITION AT ALL TIMES, AND SHALL BE REPAIRED, REPLACED, OR CLEANED AS NECESSARY TO PRESERVE THEIR APPEARANCE AND CONTINUITY, AND SHALL INCLUDE A 12" HIGH-INTENSITY REFLECTORIZED SLEEVE..

7. THE CONTRACTOR SHALL MAINTAIN, ON A CONTINUOUS BASIS, ALL SIGNS, DELINEATORS, BARRICADES, ETC., TO ENSURE PROPER FLOW AND SAFETY OF TRAFFIC DURING CONSTRUCTION.

8. THE CONTRACTOR SHALL HAVE SIGNS, DELINEATORS, BARRICADES, ETC., PROPERLY INSTALLED PRIOR TO COMMENCING CONSTRUCTION.

9. CONSTRUCTION OPERATIONS SHALL BE CONDUCTED IN SUCH A MANNER AS TO CAUSE AS LITTLE INCONVENIENCE AS POSSIBLE TO ABUTTING PROPERTY OWNERS.

10. ADDITIONAL TRAFFIC CONTROLS, TRAFFIC SIGNS OR BARRICADING MAY BE REQUIRED IN THE FIELD. THE CONTRACTOR

SHALL BE RESPONSIBLE FOR THE PLACEMENT OF ANY ADDITIONAL DEVICES NECESSARY TO ASSURE THE SAFETY TO THE PUBLIC AT ALL TIMES DURING CONSTRUCTION.

11. EXACT LOCATION AND TYPE OF CONSTRUCTION SIGNS SHALL BE DIRECTED BY THE ENGINEER BASED UPON CONSTRUCTION CONDITIONS.

12. MOVE DELINEATORS AND/OR CONES TO SIDEWALK DURING NON-WORKING HOURS. REMOVE BARRICADES ETC., FROM TRAVEL LANE.

13. REMOVE OR TURN OFF SIGNS DURING NON-WORKING HOURS.14. ALL CONFLICTING LINES, EXISTING CURB PAINT, AND MARKINGS SHALL BE REMOVED BY WET SANDBLASTING OR OTHER APPROVED METHOD PRIOR TO INSTALLATION OF NEW/TEMPORARY STRIPING. ALL CONFLICTING RAISED PAVEMENT MARKERS SHALL BE REMOVED. PAVEMENT THAT IS DAMAGED DUE TO REMOVAL OF MARKERS SHALL BE REPAIRED TO THE SATISFACTION OF THE CITY ENGINEER AND/OR STATE INSPECTOR.

15. DIMENSIONS BASED ON GIS MAPPING DATA AND/OR RECORD DRAWINGS AND NOT A SURVEY.16. TIME OF LANE CLOSURE TO BE IN ACCORDANCE WITH REQUIREMENTS OF JURISDICTION.17. ADDITIONAL ADVANCED FLAGGERS MAY BE REQUIRED. FLAGGER SHOULD STAND IN A CONSPICUOUS PLACE, BE VISIBLE TO APPROACHING TRAFFIC. PLACE A MINIMUM OF FOUR CONES AT 40-FT INTERVAL IN ADVANCE OF FLAGGER STATION AS SHOWN.

CHANNELIZING DEVICES (TYP.)

ONE LANE
AHEAD
ROAD
A
AHEAD
WORK
ROAD
A A
BE

PREPARED

TO STOP
LANE
CLOSED
50' TO 100' E 50' TO 100'

END ROAD
WORK
END

ROAD WORK

ONE LANE
ROAD

AHEAD A
ROAD
WORK
AHEAD
A A
BE

PREPARED

TO STOP

WORK HOURS
7:00AM - 3:30PM
Comcast Cable Communications, Inc.
3055 Triad Place
Livermore, CA 94551-9559
Town Of Hillsborough
Building and Planning
Attn: Doug Belcik, Associated Civil Engineer
1600 Floribunda Avenue
Hillsborough, CA 94010
RE: Design Standards for Infrastructure Deployments HMC 1.24.020 Dear Mr. Belcik:

Thank you for responding to Comcast’s recent email regarding our request for an exception to the above-referenced Hillsborough Municipal Code section related to placement of infrastructure in Hillsborough’s public right of way (PROW). As you may be aware, Comcast is looking to deploy back-up power cabinets n order to fully implement the CPUC’s Wireline Resiliency mandate; you can find more information about that mandate here: https://www.cpuc.ca.gov/industries-and-topics/internetand-phone/service-quality-and-etc/communications-network-resiliency.

Comcast is seeking to place seven (7) battery cabinets in the PROW in Hillsborough; due to the stored energy required by the CPUC in the event of a commercial power disruption or outage, the cabinets are larger than generally required.

Comcast requests that the City Engineer recommend that the Town Council grant the exception as we qualify under the findings set forth in HMC 1.24.020, as follows:

The city engineer shall not recommend an exception unless the city engineer finds that:

A. Granting the exception will not be materially detrimental to the public health, safety or welfare or injurious to other property in the town, and B. There are special circumstances or conditions affecting the property that make strict compliance with the subject requirement(s):

1.Unjustifiable from a cost/benefit analysis; or

2.Unnecessary for purposes of protecting the public health, safety or welfare; or

3.Unadvisable for purposes of protecting the public health, safety or welfare.

In regard to section A, our technology has been certfied by all state & federal standards and poses no threat or impact to the public safety. In fact, the project has been deemed necessary to enhance public safety by ensuring essential services are available during a commmercial power outage event, at no cost to the public or Town of Hillsborough.

ATTACHMENT 4
-164-
Regarding section B, as stated above, the amount of stored energy required to provide seventy-two (72) hours of backup to our network is not compatible with the Town’s current above-ground cabinet size requirements, thus making this uneccessary and unadvisable for purposes of protecting the public health, saftey or welfare.

Comcast is a willing partner with the Town of Hillsborough and its residents to assist in any landscaping betterment, as well other considerations where these cabinets will need to be deployed to support our existing infrustucture power supply units that have been in place for numerious years. We are very willing to meet with Town officials to discuss this program in depth.

Please feel free to contact me to discuss any questions/concerns that may arise from our request for this exception.

We are looking forward to the opportunity to provide a more resilient network to the Town of Hillsborough. We appreciate the continued partnership and appreciate your prompt response.

Best,
Billy Glisson
Area Construction Manager-Comcast
Ph: 925/337-0726
[email protected]
-165-
Public Works Department
Ph. 650-375-7444 |Fx. 650-548-0859 | 1600 Floribunda Ave., Hillsborough, CA 94010 | www.hillsborough.net

TOWN OF HILLSBOROUGH
California
NAME

ADDRESS
ZIP

CITY COUNCIL NOTICE OF PUBLIC HEARING
ITEM SUBJECT: Resolution approving the City Engineer’s recommendation to Grant Comcast’s request for exception to policy 19-01 to install seven battery cabinets in the public right-of-way pursuant to CEQA guideline 15303.

SUMMARY: Comcast is seeking to place seven battery cabinets in the Town’s Public Right-of-way, to fully implement the California Public Utilities Commission’s (CPUC) Wireline Resiliency Mandate. More information on the mandate can be found at the following link:
https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/service-quality-and-etc/communicationsnetwork-resiliency The locations of the proposed battery cabinets are as follows:
• 1020 Crystal Springs Road
• 1305 Hayne Road
• 1025 Tournament Drive
• 1025 Vista Road
Restrictions to above ground wireless facilities, including Comcast’s proposed battery cabinets, have been set by the Town’s Policy 19-01, establishing location and design standards for wireless communication facilities and other infrastructure deployments. Per the current policy, Comcast’s proposed battery cabinets are not permitted, however, per Municipal Code 1.24.020 – City Engineer’s Findings, the City Engineer can recommend Council to grant an exception to any policy if deemed necessary for public health, safety, or welfare. In this case, the battery cabinets pose no threat or impact to public health or safety and will upgrade the communications network to provide seventy-two hours of backup power, which is essential for the safety and welfare of Town residents in the event of a power outage.

Allowing this installation would comply with CPUC’s Wireline Resiliency Mandate. Therefore, the City Engineer recommends granting Comcast’s request for exception to Policy 19-01 to install seven battery cabinet’s in the Public right-of-way.

The proposal will be considered by the City Council at its meeting on:

Monday, March 13, 2023, at 6:00 PM
ATTACHMENT 5
-166-
Public Works Department
Ph. 650-375-7444 |Fx. 650-548-0859 | 1600 Floribunda Ave., Hillsborough, CA 94010 | www.hillsborough.net

TOWN OF HILLSBOROUGH
California
To attend the meeting in person: 1600 Floribunda Avenue, Hillsborough, CA 94010 To provide Public Comment in person: Complete a yellow speaker card and submit it to the City Clerk.

To participate in the meeting via Zoom Video Conference:
• Log in to the meeting at
https://us06web.zoom.us/j/88482343386?pwd=bWxDMGg2YS9tQjJ6clFVeFdycWFHdz09 • Dial-in via phone: 1 669 444 9171
Meeting ID: 884 8234 3386
Passcode: 729466
To provide Public Comment via Zoom: Request to speak using the “raise hand” feature in Zoom or, if calling in by phone, by pressing *9 on the telephone keypad prior to the close of the public comment period. In response, the Town will unmute the speaker and allow them to speak up to three minutes.

AGENDA MATERIALS: The City Council meeting agenda and staff report for this item will be posted on the Town’s website at https://www.hillsborough.net/agendacenter no later than Friday, March 10, 2023.

PUBLIC COMMENTS: Members of the public may provide written comments via email to the City Clerk at [email protected] or by mail/in person at 1600 Floribunda, Hillsborough, 94010. To ensure your comment is delivered to the City Council, please submit no later than 4:00 p.m. on Monday, March 13, 2023. To be included in the staff report published prior to the meeting, written comments must be received by 5 p.m. on Wednesday, March 8, 2023.

QUESTIONS: Please direct questions to Doug Belcik, Acting Senior Engineer at [email protected]. -167-
Public Works Department
Ph. 650-375-7444 |Fx. 650-548-0859 | 1600 Floribunda Ave., Hillsborough, CA 94010 | www.hillsborough.net

TOWN OF HILLSBOROUGH
California
Name
Street Address
City, State Zip

CITY COUNCIL NOTICE OF PUBLIC HEARING
ITEM SUBJECT: Resolution Amending Resolution No. 23-23 to Approve Comcast’s Permit Applications to: (A) Relocate Two (2) New Battery Cabinets (Utility Outdoor Fixtures) from 1020 Crystal Springs Road to 1040 Crystal Springs Road; and (B) Install Two (2) New Battery Cabinets (Utility Outdoor Fixtures) at 1025 Vista Road, and Granting Comcast’s Request for an Exception to Policy No. 19-01 for the Installations, Pursuant to CEQA Guideline 15303
SUMMARY: Comcast is seeking to place four battery cabinets in the Town’s Public Right-of-way with two battery cabinets at 1040 Crystal Springs Road and two battery cabinets at 1025 Vista Road, to fully implement the California Public Utilities Commission’s (CPUC) Wireline Resiliency Mandate. More information on the mandate can be found at the following link:
https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/service-quality-and-etc/communicationsnetwork-resiliency This item was initially brought to Council on March 13, 2023 with four locations: 1020 Crystal Springs Road, 1305 Hayne Road, 1025 Tournament Drive and 1025 Vista Road. The City Council approved three locations (1020 Crystal Springs Road, 1305 Hayne Road and 1025 Tournament Drive) pursuant to its adoption of Resolution No. 23-23. On April 10, 2023, the City Council voted to reconsider its approval at a public hearing to be conducted on May 8, 2023 but only as it relates to the two battery cabinets at the1020 Crystal Springs Road location. In addition, Town staff is bringing forth the option for the City Council to approve two battery cabinets at 1025 Vista Road as part of this public hearing.

Thus, the City Council will consider four battery cabinets at two proposed locations on May 8, 2023:
• 1040 Crystal Springs Road (Two (2) battery Cabinets to be relocated from 1020 Crystal Springs Road to 1040 Crystal Springs Road)
• 1025 Vista Road (Two (2) Battery Cabinets)
Restrictions to above ground wireless facilities, including Comcast’s proposed battery cabinets, have been set by the Town’s Policy 19-01, establishing location and design standards for wireless communication facilities and other infrastructure deployments. Per the current policy, Comcast’s proposed battery cabinets are not permitted, however, per Municipal Code 1.24.020 – City Engineer’s Findings, the City Engineer can recommend Council to grant an exception to any policy if deemed necessary for public health, safety, or welfare. In this case, the battery cabinets pose no threat or impact to public health or safety and will upgrade the communications network to provide seventy-two hours of backup power, which is essential for the safety and welfare of Town residents in the event of a power outage.

Monday, May 8, 2023, at 6:00 PM
To attend the meeting in person: 1600 Floribunda Avenue, Hillsborough, CA 94010 To provide Public Comment in person: Complete a yellow speaker card and submit it to the City Clerk.

To participate in the meeting via Zoom Video Conference:

ONLINE: Visit https://zoom.us/; when prompted, enter:

Meeting ID: 865 7702 2616
Passcode: 713878
BY PHONE: Dial 1 (669) 444-9171; when prompted, enter:

Meeting ID: 865 7702 2616
Passcode: 713878
To provide Public Comment via Zoom: Request to speak using the “raise hand” feature in Zoom or, if calling in by phone, by pressing *9 on the telephone keypad prior to the close of the public comment period. In response, the Town will unmute the speaker and allow them to speak up to three minutes.

AGENDA MATERIALS: The City Council meeting agenda and staff report for this item will be posted on the Town’s website at https://www.hillsborough.net/agendacenter no later than Friday, May 5, 2023.

PUBLIC COMMENTS: Members of the public may provide written comments via email to the City Clerk at [email protected] or by mail/in person at 1600 Floribunda, Hillsborough, 94010. To ensure your comment is delivered to the City Council, please submit no later than 4:00 p.m. on Monday, May 8, 2023. To be included in the staff report published prior to the meeting, written comments must be received by 5 p.m. on Wednesday, May 3, 2023.

QUESTIONS: Please direct questions to Doug Belcik, Acting Senior Engineer at [email protected]. -169-
61236.02002\41055345.8
Exhibit A

2. General Conditions.

B. Permit Expiration. The permit will automatically expire six (6) months from the approval date (the "build-out period") unless the permittee obtains all other permits and approvals required to install, construct and/or operate the ATTACHMENT 6
-170-
61236.02002\41055345.8
approved infrastructure deployment(s), which includes without limitation any permits or approvals required by the any federal, state or local public agencies with jurisdiction over the subject property, the infrastructure deployment(s) or its use; provided that the city manager may extend this build-out period at the request of the permittee for good cause shown. If this build-out period expires, the Town will not extend the build-out period but the permittee may resubmit a complete application, including all application fees, for the same or substantially similar project.

C. Code Compliance. The permittee shall also comply with Chapter 12.04 and all other requirements of this Code.

G. Indemnification. The permittee and, if applicable, the private property owner shall defend, indemnify and hold harmless the Town, its agents, officers, officials, and employees:

1. From any and all damages, liabilities, injuries, losses, costs and expenses and from any and all claims, demands, lawsuits, writs of mandamus, and other actions or proceedings brought against the Town or its agents, -171-
61236.02002\41055345.8
officers, officials, or employees to challenge, attack, seek to modify, set aside, void or annul the Town's approval of the permit(s); and

K. Graffiti. All graffiti on any of the infrastructure deployment(s) must be removed at the sole expense of the permittee within forty-eight (48) hours after notification from the Town.

1. Conditions in any permit or license issued by a local, state, or federal agency, which has jurisdiction over the infrastructure deployment; -172-
61236.02002\41055345.8

2. Rules, regulations, and standards of the state and federal governments and the town, including without limitation the FCC, the CPUC and the Hillsborough Municipal Code.

3. Easements, covenants, conditions, and/or restrictions on or applicable to the underlying real property;

4. Rules, regulations, and standards of the town governing underground utility districts;

5. All other laws, codes, and regulations applicable to the infrastructure facility; including the California Environmental Quality Act (CEQA).

4. If there is no reactivation, transfer or removal as set forth in subsection 3 of this section, the Town may thereafter remove the abandoned infrastructure deployment, repair any and all damages to the premises caused by such removal, and otherwise restore the premises as is -174-
61236.02002\41055345.8
appropriate to be in compliance with applicable codes. If the Town removes the infrastructure deployment, the Town may, but shall not be required to, store the removed infrastructure deployment or any part thereof, and may use it, sell it or dispose of it in any manner deemed by the Town to be appropriate. The entity that abandoned the infrastructure deployment, or its successor in interest, and if on private property, the private property owner shall be jointly liable for the entire cost of such removal, repair, restoration and storage and shall remit payment to the Town promptly after demand therefor is made. In addition, the city council, at its option, may utilize any financial security required in conjunction with granting the permit to recover such costs.

P. Transfer. A permittee shall not assign or transfer any interest in its permit(s) for infrastructure deployment(s) without advance written notice to the Town.

The permittee may keep records in an electronic format; provided, however, that hard copies or electronic records kept in the Town's regular files will control over any conflicts between such Town-controlled copies or records and the permittee's electronic copies, and complete originals will control over all other copies in any form. The requirements in this condition shall not be construed to create any obligation to create or prepare any records not otherwise required to be created or prepared by other applicable laws. -175-
61236.02002\41055345.8
Compliance with the requirements in this condition shall not excuse the permittee from any other similar record-retention obligations under applicable law.

T. Town Work. The permittee acknowledges that the Town, in its sole discretion and at any time, may: (i) change any street grade, width or location; (ii) add, remove or otherwise change any improvements in, on, under or along any street owned by the Town or any other public agency, which includes without limitation any sewers, storm drains, conduits, pipes, vaults, boxes, cabinets, poles and utility systems for gas, water, electric or telecommunications; and/or (iii) perform any other work deemed necessary, useful or desirable by the Town (collectively, "Town work"). The Town reserves the rights to do any and all Town work without any admission on its part that the Town would not have such rights without the express reservation in this permit. If the Public Works Director determines that any Town work will require the permittee's infrastructure deployment(s) located in the public rights-of-way to be rearranged and/or relocated, the permittee shall, at its sole cost and expense, do or cause to be done all things necessary to accomplish such rearrangement and/or relocation. If the permittee fails or refuses to either -176-
61236.02002\41055345.8
permanently or temporarily rearrange and/or relocate the permittee's infrastructure deployment(s) within a reasonable time after the Public Works Director's notice, the Town may (but will not be obligated to) cause the rearrangement or relocation to be performed at the permittee's sole cost and expense. The Town may exercise its rights to rearrange or relocate the permittee's facility without prior notice to permittee when the Public Works Director determines that the Town work is immediately necessary to protect public health or safety. The permittee shall reimburse the Town for all costs and expenses in connection with such work within ten (10) days after a written demand for reimbursement and reasonable documentation to support such costs.

2. Specific Right-of-Way Construction Conditions.

A. Roadway cuts and excavations shall be subject to HMC Section 12.04.130 “Street Preservation”.

C. 24 hour notice shall be given to the Town for inspection of all trench work. The notice must be via phone call at (650) 375-7444.

D. Trenches shall be backfilled per Town standard detail C16.

E. Permittee shall not backfill more than 6” sand above gas pipe.

F. Permittee shall not use jackhammer to excavate the paved road. Restoration and paving of the surfaces must comply with the Town of Hillsborough’s standards.

H. Permittee shall provide a written notice to all residents/property owners adjacent and across from construction areas at least one (1) week in advance of the work.

The notice shall provide property owners with the date(s) of construction, description of the work, and contact information for Comcast project staff, including a name and phone number.

I. Access to private driveways shall be maintained at all times. If a private driveway must be temporarily closed to accommodate the work, permittee shall provide written notification to the residents at least one (1) week in advance. -177-
61236.02002\41055345.8
J. “No Parking” signs shall be posted a minimum of seventy-two 72 hours in advance of the restriction. The date and time of the restrictions shall be clearly posted on the “No Parking” signs.
-178-
1 Doug Belcik
From: ryan Thompson
Sent: Friday, March 3, 2023 3:34 PM
To: Doug Belcik
Cc: Danielle Beare
Subject: Re: Comcast Battery Locations - 1025 Vista Road Doug, I am not sure how formal the complaint needs to be, but we are very much opposed to the placement of the batteries in front of our house.

First, as you know, the only park in town for children to play is Vista Park. So too for dogs. Parking near Vista is justifiably difficult if not impossible. Cars are constantly parked (legally and illegally) in front of our home and in the exact place proposed by comcast. Children are running across the street on a daily basis, and adding Comcast service trucks to this complicated location is going to be dangerous. Birthday parties, AYSO soccer etc all take place at Vista.

Again it is the ONLY park in Hillsborough. This also applies to dog walkers who park in front of the proposed location EVERY morning. That said, cars will block the battery cabinets and likely reduce the amount of parking already in short supply. Fire season is exactly the same season as AYSO soccer here in Hillsborough. Cars are parked on BOTH sides of Vista across from the park. It makes passage one way most of the time during weekends - this seems like a very dangerous situation going forward. Adding Comcast cabinets or service trucks accessing them will make this a danger zone and traffic nightmare.

Second, we are starting a landscape project and we need to add a pedestrian gate to access our home. The current location is exactly where the pedestrian access gate is proposed to be located.

Third, the cabinets (directly in front of our home) is an eyesore and will significantly reduce the value of our property. There is SO much land in Hillsborough where boxes could be placed that are NOT in front of ANHYONE's house. There are literally acres of fence line where a placement would not cause significant harm to property value. My wife and I just finished the remodel of our home - improving the value of the home and the neighborhood. Cabinets would reduce it.

Fourth - the town has spent considerable amounts of money beautifying the areas around Vista Park - the park itself, the islands etc. Placing the eyesore of battery cabinets will hurt these efforts and waste taxpayer money.

Fifth - Comcast is claiming that there is no danger associated with these boxes. Where is the science behind batteries not being toxic to humans and children? The boxes contain batteries that are harmful to people; known carcinogens. I don't think placing them in front of a park for children (AYSO, birthday parties etc) is a good idea. Is it a good place to test the battery's safety? What if the batteries are damaged? Earthquake? I suspect MANY parents who bring their children to the park would.

Last, there is an important fire hydrant close to where the cabinets would be located. Having Comcast trucks potentially block access to the hydrant could be a danger particularly during fire season when the cabinets would be most in use.

This is exacerbated by the fact that we are in front of a park where children play.

Unfortunately the downsides are high enough for our family and community, that we will go to all lengths to block this.

Best,
Ryan and Danielle Thompson
On Fri, Mar 3, 2023 at 10:30 AM Doug Belcik <[email protected]> wrote:

Hi Ryan,
ATTACHMENT 7
-179-
ATTACHMENT 8
-180-

Robert Zachary Brownlie
+1 213 426 2580
[email protected]
Goodwin Procter LLP
601 South Figueroa Street
Suite 4100
Los Angeles, CA 90017
goodwinlaw.com
+1 213 426 2500
May 2, 2023

VIA E-MAIL
Hillsborough City Council
1600 Floribunda Avenue
Hillsborough, California 94010
Attention: Doug Belcik
E-Mail: [email protected]
Re: Opposition to Comcast Battery Cabinets near 1025 Vista Road, Hillsborough, California Dear Hillsborough City Council:

We represent one of the homeowners near the proposed Comcast battery cabinet location on 1025 Vista Road, Hillsborough, California (the “Site”) and are writing this letter as counsel on behalf of our client reflecting the comments of our client. As you know, during the March 13, 2023 City Council Meeting, the City Council (the “Council”) of the Town of Hillsborough (the “Town”) struck the Site from Resolution No. 23 approving Comcast’s permit applications and the city engineer’s recommendation to grant Comcast’s request for exception to Policy No. 19-01 after finding the Site impractical for the installation of battery cabinets, noting that Comcast should pursue alternative locations. The Council was correct to strike the Site from Resolution No. 23 and should both deny Comcast’s permit application and deny Comcast’s request for exception to Policy No. 19-01 with respect to the Site.

THE COUNCIL SHOULD DENY COMCAST’S APPLICATION BECAUSE COMCAST’S REVISED PLAN DOES NOT ADDRESS THE COUNCIL’S RECOMMENDATION TO FIND AN ALTERNATIVE SITE OR THE COUNCIL’S SAFETY AND WELFARE CONCERNS
The Council should deny Comcast’s permit application because Comcast’s revised plan merely moves the battery box closer to its original utility pole rather than moving the battery box to an alternative location, such as the road island, which was the preferred location recommended by the Council. The new proposed location does not address the Council’s public safety and welfare concerns for three reasons.

First, the Site’s proximity to a parking space is hazardous both to members of the community who use the parking space to visit Vista Park and to the battery box itself. Comcast’s proposed Site is adjacent to one of the few parking spaces near Vista Park. The high use of the spot by members of the community creates an unnecessary risk of collision. Additionally, the parking space’s layout as a space that drivers must back into combined with the small size of the space increases the risk of a collision that may damage -181-
May 2, 2023

Page 2 ends

the battery box, and, as pointed out by the Council, the Site is likely too small to install bollards to mitigate that risk.

Second, the Site’s location on Vista Road would risk creating a bottleneck on an already highlytrafficked road. Vista Road’s location along Vista Park leads to high use and also means community members must park their vehicles on both sides of Vista Road, effectively creating a single lane for traffic.

The Comcast service vehicles needed to access the proposed Site would both add to traffic and create a potential bottleneck when stopped to service the site. Importantly, the Comcast service vehicles could also block access to the fire hydrant on Vista Road. Thus, service vehicles could not only impede traffic for community members but also for emergency vehicles.

Third, the Site would create a blind spot for the driveways on both sides of the utility pole and for vehicles driving along Vista Road. This issue is of particular concern here because of the sheer size of the battery box, which is notably twice the volume permitted for utility boxes in Hillsborough. Especially considering that community members often park vehicles in the space in front of the Site, the battery box would block the already limited line of sight for drivers pulling out of the driveways on both sides of the utility pole and for pedestrians crossing Vista Road. The battery box would also make it more difficult for drivers on Vista Road to spot pedestrians crossing the road to access Vista Park. In such a high-traffic area near a park used by children and pets, the Site creates an unjustifiably hazardous blind spot.

THE COUNCIL SHOULD DENY COMCAST’S APPLICATION BECAUSE COMCAST SHOULD

CONSIDER OTHER ALTERNATIVE LOCATIONS THAT WILL HAVE LESS OF AN IMPACT ON

HOMEOWNERS AND THE BEAUTIFICATION AROUND VISTA PARK
The Council should deny Comcast’s application because Comcast should consider other locations that would have less of a detrimental impact on the community. As Comcast stated during the March 13 City Council Meeting, it is possible for Comcast to relocate its pole-mounted enclosure so that the battery box could be installed elsewhere. Hillsborough has several utility poles to which Comcast can relocate its pole-mounted equipment that would allow Comcast to install battery boxes on sites that are not directly in front of homes, parking spaces or driveways. The proposed Site not only directly impacts the homeowners on both sides of the utility pole, but also, as outlined above, impacts those in the community as a whole who use Vista Park and drive on Vista Road. Furthermore, installing such a large battery box would waste taxpayer money already spent on beautification efforts around Vista Park.

THE COUNCIL SHOULD DENY COMCAST’S EXCEPTION TO POLICY NO. 19-01 BECAUSE

GRANTING THE EXCEPTION WOULD BE MATERIALLY DETRIMENTAL TO THE PUBLIC HEALTH,

SAFETY AND WELFARE AND INJURIOUS TO THE PROPERTY IN THE TOWN The Council should deny Comcast’s exception to Policy No. 19-01, which restricts the volume of utility boxes to nine (9) cubic feet, because the risks and detrimental impact of the boxes are directly related to the size of the boxes, which each have a volume of over eighteen (18) cubic feet.

As discussed above, the battery boxes are detrimental to public safety and welfare because they create a hazard for members of the community who need space to park for access to Vista Park and create a dangerous blind spot for the driveways on both sides of the utility pole and drivers on Vista Road. -182-
May 2, 2023

Page 3 ends

Indeed, the large size of the battery boxes exacerbate both the parking issue and the line of sight issue.

Additionally, the battery boxes are detrimental to the property value in the community and make the Town’s beautification efforts less effective. The size of the boxes are also directly related to this concern because the size makes the boxes more noticeable and gives them a larger footprint.

Finally, the battery boxes may be detrimental to public health, as residents are still not satisfied with Comcast’s answers to the health concerns related to installing large, above-ground battery boxes in an area with high pedestrian traffic, including both children and the elderly. Even if the battery boxes are not dangerous while functioning correctly, residents are still concerned about dangers to health and safety should a natural disaster or any other event, such as a vehicle collision, damage the battery box.

CONCLUSION
In sum, the Council should deny Comcast’s application because Comcast’s revised plan neither relocates the battery box to the Council’s preferred site nor otherwise addresses the Council’s concerns from the March 13, 2023 City Council Meeting. Further, the Council should deny Comcast’s exception to Policy No. 19-01 because granting an exception would be materially detrimental to the public health, safety and welfare, as the detriments are directly related to the size of the battery box.

Sincerely,
Robert Zachary Brownlie
-183-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
11 PUBLIC HEARING

CITY COUNCIL MEETING
MAY 08, 2023

AGENDA STAFF REPORT
ITEM SUBJECT: RESOLUTION SETTING AND CONFIRMING THE FEES AND CHARGES FOR FISCAL YEAR 2023-24 AND RESOLUTION AUTHORIZING WATER AND SEWER CONNECTION FEES EFFECTIVE JULY 1, 2023 PURSUANT TO CEQA GUIDELINE 15378 SUMMARY: The Town of Hillsborough provides the community with a wide variety of municipal services, including, but not limited to, police and fire protection, water delivery, wastewater collection, street maintenance, storm drainage, planning and development services, and building inspection services. General-purpose revenues, such as property taxes, are used to fund community-wide services such as police protection. User fees are used to cover the cost of providing services that have special benefit to an individual or group such as a planning application, building permit or encroachment permit associated with personal projects/property.

The Town updates the fees and charges every few years. Most fees and charges were last updated in FY 2021-22 and will now see the same type of updates for proposed FY 2023-24.

The proposed fees are intended to provide full cost recovery for the services rendered. However, the City Council may waive fees to subsidize and/or provide incentives to promote certain activities, provided those subsidies or incentives are funded with unrestricted revenue. Examples include the waiving or lowering of fees for accessory dwelling units, solar panels, and hazardous tree removal.

New Fees
There are three new proposed fees for FY 2023-24.

1. Public Works - Sewer Video Review- $376: Fee for cost recovery for Public Works inspector to review, report, coordinate and process private sewer lateral videos submitted through Forward Lateral.

2. Public Works - Water Meter Upgrade- Short Service upgrade to 1 inch- $8,916: Fee for cost recovery for Water department staff to excavate, install a service connection and 1 inch water meter, backfill trench and repave roadway for a water service coming from Town water main. This fee is used for a water service directly over or near the main.

3. Public Works - Water Meter Upgrade - Long Service upgrade to 1 inch- $19,747: Fee for cost recovery for Water department staff to excavate, install a service connection and 1 inch water meter, backfill trench and repave roadway for a water service coming from Town water main. This fee is used for a water service that requires trenching across the roadway to connect to the main.

Changes to Existing Fees
Fees are increasing for Police, Planning, Building, Engineering and Public Works Special Services.

Many of these fees have not been updated since approximately FY 2021-22, despite labor rate -185-
Agenda Staff Report - Hillsborough City Council
May 08, 2023

Page 2 ends

increases incurred by the Town. Some fees are decreasing due to efficiencies. The combination of updated labor rates, reassessed scope of work and improved efficiencies has all contributed to the proposed rates. Fees with significant increases proposed for consideration generally reflect rare and unique circumstances, and generally involve significant staff or consultant time. Updating the labor rates will ensure full cost recovery for the services performed by staff.

In the Planning fees section, there are only three changes to existing fees, which are the Appeal of ADRB decision, Appeal of Administrative Determination and Accessory Dwelling Unit Recordation fee. The other Planning fees will be reviewed in the next fee update cycle once staffing models/processes are finalized.

Deleted Fees
A few fees from the Police department have been discontinued, as the service is no longer provided or relevant, or the costs are captured in another fee.

Sewer and Water Rates
Sewer and water rates are presented on the Schedule of Fees and Charges at the maximum allowable rates as adopted for the five-year sewer and water rate series. These rates are separately reviewed and adopted by resolution each year for implementation on July 1 for sewer rates and January 1 for water rates. The rates that are currently in effect remain until reviewed and adopted by resolution.

Water and sewer connection fees are annually adjusted based on the Engineering News Record Construction Cost 20-City Average Index (ENR-CCI), which was 1.7%. Proposed connection fees on July 1, 2023, are $17,871.00 for water and $17,391.00 for sewer.

Fire Fees - Central County Fire Department
The Town’s Master Fee Schedule includes fees administered by the Central County Fire Department (CCFD) to Town customers so they can see all costs for their project. Examples of CCFD fees are care facilities inspections, re-inspections, construction, sprinkler systems, permitting and standby fire services. All fees are paid by the customer directly to CCFD directly and are not imposed by the Town. The FY 2023-24 CCFD fee schedule was approved by the CCFD Board on April 12, 2023.

FISCAL IMPACT: Fees fully recover the Town’s cost to perform the services and are budgeted as Service Charges revenues in the various funds.

ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENTS:

1. Resolution - Fees and Charges

2. Proposed Schedule of Fees and Charges

3. Resolution - Water and Sewer Connection Fees
-186-
Agenda Staff Report - Hillsborough City Council
May 08, 2023

Page 3 ends

PREPARED BY: Richard Santiago, Assistant Finance Director RECOMMENDATION:

1. Open the public hearing and receive comments;

2. Close the public hearing; and

3. Adopt the resolution setting and confirming the fees and charges for FY 2023-24; and

4. Adopt the resolution authorizing water and sewer connection fees for FY 2023-24 effective July 1, 2023.
-187-
RESOLUTION NO. 23-

RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH

SETTING AND CONFIRMING THE FEES AND CHARGES FOR
FISCAL YEAR 2022-2023
WHEREAS, the Town of Hillsborough (Town) provides the community with a wide variety of municipal services, including, but not limited to, police and fire protection, water delivery, wastewater collection, street maintenance, storm drainage, planning and development services, and building inspection services; garbage flat fee and San Mateo County Animal Control fee and charges; and
WHEREAS, annually, the Town sets the fees and charges necessary to provide services; and
WHEREAS, the Town develops a Cost Allocation Plan that reflects the full cost of providing the services; and
WHEREAS, the proposed action has been properly noticed as required by various provisions of the Mitigation Fee Act as applicable, including but not limited to Government Code Section 66018 following publication requirements set forth in Government Code Section 6062a; and
WHEREAS, included in the Town of Hillsborough Schedule of Fees and Charges is the Central County Fire Department (CCFD) master fee schedule. All CCFD fees presented are collected or remitted to CCFD and are not retained by the Town.

WHEREAS, the Financial Advisory Committee, the City Council and the public have been presented in an open and noticed public meeting, all of the details of the proposed changes in the fees and charges schedule and the related Cost Allocation Plan.

NOW, THEREFORE, be it resolved, determined and ordered by the City Council of the Town of Hillsborough, California, that:

SECTION 1. The above Recitals are true and correct and by this reference incorporated herein.

SECTION 2. The City Council hereby adopts the Fiscal Year 2023-24 Town of Hillsborough Schedule of Fees and Charges outlined in Exhibit “A” hereto attached and the related Cost Allocation Plan. The Fees and Charges imposed by this Resolution shall supersedes any prior fees or charges imposed by resolution or otherwise by the City Council, to the extent such prior fees or charges conflict herewith.

SECTION 3. The City Council called a public hearing for May 8, 2023, at City Council Chambers, for the purpose of receiving public comments to the proposed Fees and Charges. Notice of the public hearing was given by publication -188-
ATTACHMENT 1
in a newspaper of general circulation within the Town once a week for two weeks commencing at least ten (10) days prior to the public hearing, with at least 5 days intervening between the first and last publication. On May 8, 2023, at the time and place set for the public hearing, the City Council heard and considered all oral and written presentations and comments made regarding the proposed Fees and Charges.

SECTION 4. The City Council finds and determines that:

(a) The Fees and Charges established by this resolution:
(1) are imposed for a specific government service provided directly to the payor, or for reasonable regulatory costs of the Town for issuing licenses and permits, performing investigations, inspections, and administrative enforcements of the Town’s Municipal Code or other rules or ordinances;
(2) are no more than necessary to cover the reasonable costs of the governmental activity for which the Fee or Charge is imposed; and
(3) 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 for which the Fee or Charge is imposed.
(b) The Fees and Charges are not taxes within the meaning of California Constitution article XIII C, section 1(e).

SECTION 5. If any section, subsection, clause or phrase in this resolution or the application thereof to any person or circumstances is for any reason held invalid, the validity of the remainder of this resolution or the application of such provision to other persons or circumstances shall not be affected thereby. The City Council hereby declares that it would have passed this resolution and each section, subsection, sentence, clause, or phrase thereof, irrespective of the fact that one or more sections, subsections, sentences, clauses, or phrases or the application thereof to any person or circumstance be held invalid.

Mayor of the Town of Hillsborough

Attest: City Clerk
This resolution was adopted by the City Council of the Town of Hillsborough at its regular meeting held on the 8th day of May 2023, by the following vote of the members thereof:
-189-
AYES: Councilmembers
NOES: Councilmembers
ABSENT: Councilmembers
ABSTAIN: Councilmembers
-190-
Attachment 2 –
Schedule of Fees and
Charges
-191-
ATTACHMENT 2

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES
Deposit accounts: Full payment is required before permits issued. Failure to pay additional monies owed under deposit account constitutes an infraction, regardless of permit issuance.

SPECIAL TAX, SERVICE CHARGES & OTHER CITYWIDE FEES
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24 Business License Tax
Category 1 - Permit Business
(i.e. those businesses that must
obtain permits for specific work
projects in the Town) (payable
at the time permit is applied for
or before service and
collected by Building
Department with the building
permit) (T-1)
.5% of permit value
with $20 minimum
.5% of permit value
with $20 minimum

Category 2 - Non-Permit
Business (those businesses not
in Category 1 or Category 3)
(T-2)
.5% of Gross
Receipts with $100
minimum
.5% of Gross
Receipts with $100
minimum

Category 3 – Title Insurance
Companies (based on policy
amount)
$.30 per $1,000 $.30 per $1,000
Administrative fee $100 $100
Additional fee for each sales
associate in brokerage firms $25 $25

Additional fee for home
occupation business to
reimburse for Fire Inspection
to be assessed by
Central County Fire
Department
to be assessed by
Central County Fire
Department
Penalty to obtain business
license (5.04.230B)
$200 + 20% + 1 ½%
per month
$200 + 20% + 1 ½%
per month
Penalty to renew business
license (5.04.230A)
$200 + 50% + 1 ½%
per month
$200 + 50% + 1 ½%
per month
Business Vehicle Sticker $20 each $20 each
Public Safety Special
Tax Voter approved on June 1998
Improved Property $570 $570
Unimproved Property $218 $218
Sewer (annual
service)
Residential (Equivalent
Dwelling Unit) $3,832 $3,985
Hillsborough Racquet Club $1,150 $2,203
Cal Trans Rest Stop $19,928 $21,122
Crystal Springs Upland School $18,012 $17,535
Burlingame Country Club $80,480 $78,909
Crystal Springs Golf Club $24,527 $21,521
Hillsborough School District $37,941 $40,251
Nueva School $3,832 $3,985
Sewer Capital
Construction
Development Fee
Residential connection $17,101 $17,391
Residential with 2nd unit
including guest unit Actual Cost Actual Cost

Commercial connection rate
based on flow with minimum
amount to be determined by
PW
Actual Cost Actual Cost
-192-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES
Bi-Monthly Water Charges: The bi-monthly water volume and service charges presented above reflect the maximum allowable rates for each fiscal year. To see the Town’s current water rates, refer to the Town website: https://www.hillsborough.net/188/Water-Service-Rates.

SPECIAL TAX, SERVICE CHARGES & OTHER CITYWIDE FEES
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24 Storm Drainage
Assessment
Ordinance 541 6/27/94
(Collected by County) $7.34 $7.34
Bi-Monthly Volume
Charge
Maximum
Allowable
Maximum
Allowable
Customer
Category Tier Size (Bi-Monthly Units)
Residential (HCF) $/HCF $/HCF
Tier 1 1 to 20 $7.12 $6.77
Tier 2 21 to 44 $9.04 $8.98
Tier 3 45 to 70 $12.41 $14.43
Tier 4 Over 70 $18.96 $19.50
Revenue
Stabilization Factors Level of Water Conservation Maximum Allowable Maximum
Allowable
10% 1.05 1.05
20% 1.11 1.11
30% 1.19 1.19
40% 1.29 1.30
50% 1.44 1.45
Bi-Monthly Water
Service Charge Meter Size
Maximum
Allowable
$/Meter Size
Maximum
Allowable
$/Meter Size
¾” $163.56 $153.50
1” $199.20 $181.62
1 ½” $279.38 $244.87
2” $386.28 $329.22
3” $671.34 $554.12
6” $1,882.86 $1,509.99
8” $2,951.84 $2,353.40
Non-Residential $9.55 $9.53
Water Penalty For each unit above allotment
(see Note) $10 $10
Water Deposit Assessed to all new accounts $500 $500
Water Hydrant
Meter
Deposit (To be refunded after
use) $2,000 $2,000
Water Usage $14.18 $14.18
Water Delinquent
Bills
Basic penalty (unpaid after 30
days) 10% 10%
Interest (unpaid after 30 days) .5% per month .5% per month Additional penalty (after
delinquency notice) .5% per month .5% per month
Water Capital
Construction
Development Fee
1 inch $17,572 $17,871
1 ½ inch Actual Cost Actual Cost
2 inch Actual Cost Actual Cost
3 inch (rate based on delivery
capacity) Actual Cost Actual Cost
-193-

TOWN OF HILLSBOROUGH

SPECIAL TAX, SERVICE CHARGES & OTHER CITYWIDE FEES
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24 6 inch (rate based on delivery
capacity) Actual Cost Actual Cost
Miscellaneous
Events
Accounts referred to collection
agencies
+ 47% of amount
owed
+ 47% of amount
owed
Annual Report or Budget
Document $50 $50
Invoicing fee $25 $25
Photocopies $1 + $.20 each $1 + $.20 each
Fundraising Events Application fee (includes Fire
Dept fee of $200) $500 $500
Public notification fee (ADRB
and Fundraising Applications) $80 $80
Sign fee $175 $175
Police or Fire Additional
Resources:

Minor Event Actual with
minimum of $1,000
Actual with
minimum of $1,000
Major Event Actual with
minimum of $5,000
Actual with
minimum of $5,000
All Other Personnel Actual Actual

ALL OTHER STAFF
TIME Assistant Planner - $130
Associate Planner $186 $168
Assistant Building & Planning
Director $286 $250
Assistant Building Official - $182
Building Inspector I - $115
Building Inspector II $166 -
Planning & Building Director $339 $245
Planning & Building Technician
II $130 $120
Planning Manager - $222
Sr. Bldg Inspector/Plan Checker $188 $165
City Attorney Actual cost + 20%
administrative fee
Actual cost + 20%
administrative fee
Landscape Architect Actual cost Actual cost
All Others Actual cost Actual cost
Other Contractual Services Actual cost + 20%
Admin fee
Actual cost + 20%
Admin fee
Non-Sufficient Funds Actual Charge by
the Bank
Actual Charge by
the Bank
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TOWN OF HILLSBOROUGH

PLANNING DIVISION
Fee Description Task Description Project Description Adopted FY 22-23 Proposed FY 23-24 Annexation
Actual cost with
$10,000 minimum
deposit
Actual cost with
$10,000 minimum
deposit
Pre-application
review by Planner $1,033 $1,033
Administrative
Design Review
Minor Architectural
project
Additions less than
400 sq. ft. with no
Architectural
Style/Exterior
Material changes
$589 $589
Major Architectural
Project
Additions of 400 sq.
ft. or larger and/or
Architectural
Style/Exterior
Material changes
$985 $985
Minor Landscape
project
Tier I (Less than
5,000 sq. ft.) of new
irrigated area.
$547 $547
Major Landscape
project
Tier II (5,000 sq. ft.
or more) of new
irrigated area
and/or projects in
WUI areas
$716 $716
Landscaping
Required by ADRB $778 $778
Antennas and
Satellite dishes $304 $304

Gates, Columns,
and/or fencing
along the street
$481 $481

First request for 1-
year extension of
Administrative
approval
$401 $401
Emergency Tree
Removal1 $274 $274

First request for 1-
year extension of
ADRB approval
$537 $537

Public Notification
Fee for
Administrative
Design Review
$163 $163
ADRB
Roofing $1,454 $1,454
Major Landscape
Plans $1,958 $1,958
Minor Landscape
Plans $1,065 $1,065
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TOWN OF HILLSBOROUGH

PLANNING DIVISION
Fee Description Task Description Project Description Adopted FY 22-23 Proposed FY 23-24 Ground floor
additions > 500 sq.ft $1,813 $1,813
Upper level
additions $2,119 $2,119
New house; Tear
downs $3,389 $3,389
Substantial
Remodel /
Architectural Style
Change
$2,830 $2,830

Houses exceeding
8,000 sq.ft - ADRB
review
$3,833 $3,833
Houses exceeding
12,000 square feet -
ADRB review
$4,784 $4,784
Houses exceeding
8,000 sq. ft – City
Council Review
$3,762 $3,762
Revisions to
approved plans $1,686 $1,686
Satellite dishes,
antennas $1,116 $1,116
Continuance for
design changes ½ of original fee ½ of original fee
Subsequent request
for 1-year extension
of ADRB or Admin
approval
$875 $875
Appeal of ADRB
decision $4,394 $5,022
Appeal of an
Administrative
Determination
$1,954 $2,371
Preliminary review
by ADRB $1,963 $1,963
Subsequent review $917 $917
Public Notification
Fee for ADRB
Application
$279 $279
Code Amendments
Actual cost with
$5,000 minimum
deposit
Actual cost with
$5,000 minimum
deposit
Conceptual /
Developmental
Plans

Actual cost with
$5,000 minimum
deposit
Actual cost with
$5,000 minimum
deposit
Ministerial Review -
SB 9 "Lot Split" $963 $963
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TOWN OF HILLSBOROUGH

PLANNING DIVISION
Fee Description Task Description Project Description Adopted FY 22-23 Proposed FY 23-24 Ministerial Review -
SB 9 "Two-Unit
Project"
$1,235 $1,235
Covenant against
property to insure
continued
use/action
(Restrictive
Covenant)
$493 $493
Environmental
documents Initial study Actual cost Actual cost
Categorical
exemption
Actual Cost base
on consultant rate
Actual Cost base
on consultant rate
Negative
Declaration
Actual cost with
$5,000 minimum
deposit
Actual cost with
$5,000 minimum
deposit
EIR
Actual cost with
$10,000 minimum
deposit
Actual cost with
$10,000 minimum
deposit
General Plan
Amendment Actual cost Actual cost
Private Schools,
Permit to Operate
Actual cost with
$7,500 minimum
deposit
Actual cost with
$7,500 minimum
deposit
Private Schools,
Annual Certification Under 25 Students $431 $431
Private Schools,
Annual Certification Over 25 Students $766 $766
Accessory Dwelling
Unit Application $685 $685
Accessory Dwelling
Unit Recordation
Fee
$290 $296
Accessory Dwelling
Unit Exception $905 $905
Variance, Nonconforming
structure
$5,800 $5,800
Wireless
Communication
Facilities Permit
Application

Actual cost with
$20,000 minimum
deposit
Actual cost with
$20,000 minimum
deposit
Minor Wireless
Communications
Facilities Permit
Application

Actual cost with
$10,000 minimum
deposit
Actual cost with
$10,000 minimum
deposit
Wireless Appeal
Actual cost with
$5,000 minimum
deposit
Actual cost with
$5,000 minimum
deposit
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TOWN OF HILLSBOROUGH

BUILDING DIVISION
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24 Historic Building
Demolition Discretionary permit Actual cost with $2,000 minimum Actual cost with
$2,000 minimum
Certificate of hardship Actual cost Actual cost
Temporary Uses Trailers, prefab & rollaway houses $450 $450 Construction trailers $425 $425
Scan of Document Per page $3.00 each $3.00 each

CONSTRUCTION PERMIT FEES

INTRODUCTION
The Town of Hillsborough has adopted the 2016 California Building Code (CBC) that includes the 2015 edition of the International Building Code (IBC), the 2015 edition of the International Residential Code (IRC), the 2015 editions of the Uniform Mechanical and Plumbing Codes (UMC and UPC), and the 2015 edition of the National Electrical Code (NEC).

Building and Combination Permit Fees are based on the valuation of the project, which is the fair market value of labor and materials of the complete project, including materials and permanent fixtures. The Building Official determines cost per square foot, upon which to base the valuation. Electrical, mechanical and plumbing permit fees are often based on the number of hours staff spent on a particular project.

Town waives fees on second units except for plan check fees and the basic fees for photovoltaic systems.

SUMMARY AND BREAKDOWN OF FEES
Building Permit Fee The Building Permit Fee shall be as set forth in the Fee Schedule (See Table 1-A/18)
Electrical/Mechanical/Plumbing
Permit Fees
See Schedules E/18, M/08 & P/18.

Technology Fee The Technology Fee is charged on all permits and is 5% of all Permit Fee.

SMIP Fee The SMIP (Strong Motion Instrumentation Program) fee is a state fee collected on all building permits issued by local agencies and subsequently remitted to the State.

CalBSCF The CalBSCF (California Building Standards Administration Fund) fee is a state fee collected on all building permits issued by local agencies and remitted to the State.

General Plan Maintenance Fee The fee is intended to reimburse agencies for State mandates for land use policies.

Construction Vehicle Street Impact Fee The fee is intended to raise additional funds to improve streets that are impacted or heavily utilized by construction vehicles.

Business License Fee The business license fee is assessed on businesses including contractors operating within the Town limits. For convenience of administration, fees assessed on contractors and other construction related vendors, are collected upon issuance of the building permit.

Plan Review Fee The fee is assessed when plans are required for the issuance of the building permit.
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TOWN OF HILLSBOROUGH

Revised Inside Plan Check Fee This fee is based on actual time and computed based on current hourly rate.

Green Point Regulations
Monitoring Fee
When a project is required to meet the Green Point Regulation, the responsible party shall pay a monitoring fee to cover the costs of monitoring the project for compliance against the Green Point Checklist. The fee deposit shall be $1,200 to cover staff time.

The monitoring fee may be partially or fully refunded if the responsible party shows proof of his/her contracting with a Green Point rater. The Green Point rater shall provide evidence of adequate green building compliance or documentation to the Building Official showing compliance to the requirements pursuant to the Hillsborough Municipal Code 15.19.070.

Revised Outside Plan Check Fee This fee is based on actual cost.

Renewal Fee for an Expired Permit A renewal fee will be assessed for an expired permit based on the length of time from issuance and the value of the original permit.

Stop Work Issued When a Stop Work Notice is issued for work being performed without permits or performed beyond the scope of existing permits, a special investigation and inspection shall be made before permits may be reissued for such work and a fee will be charged.

Construction Site Stop Work When a Stop Work Notice is issued for work or conditions that violate California or Municipal Codes, a reactivation fee will be assessed.

Reinspection Fee When the work for a called inspection is not ready or not accessible to the inspector, a fee will be assessed and must be paid prior to calling the next inspection
Special Fee When the Building Inspection Department requested necessary services that are not included in the fee schedule, the Building Official may assess and collect such fees that are necessary to defray the cost of the service.

Fee Adjustment In instances where the strict application of the fee from this Schedule would constitute a substantial inequity to an applicant or to the Town, the Building Official shall be authorized to adjust such fees on a case-by-case basis. Any such adjustment shall be recorded in writing and entered into the appropriate files.

TABLE 1-A/18 – BUILDING AND COMBINATION PERMITS
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
Building Permit Fee:
$1-$4,000 $181 $175
$4,001-$25,000
$158 for the first $4,000 plus
$14.30 for each additional
$1,000 or fraction thereof, to
and including $25,000
$158 for the first $4,000 plus
$14.30 for each additional
$1,000 or fraction thereof, to
and including $25,000
$25,001-$50,000
$468.51 for the first $25,000
plus $10.21 for each
additional $1,000 or fraction
thereof, to and including
$50,000
$468.51 for the first $25,000 plus
$10.21 for each additional
$1,000 or fraction thereof, to
and including $50,000
$50,001-$100,000
$720.90 for the first $50,000
plus $7.35 for each additional
$1,000 or fraction thereof, to
and including $100,000
$720.90 for the first $50,000 plus
$7.35 for each additional
$1,000 or fraction thereof, to
and including $100,000
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TOWN OF HILLSBOROUGH

TABLE 1-A/18 – BUILDING AND COMBINATION PERMITS
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
$100,001-$500,000
$1,086.95 for the first $100,000
plus $5.90 for each additional
$1,000 or fraction thereof, to
and including $500,000
$1,086.95 for the first $100,000
plus $5.90 for each additional
$1,000 or fraction thereof, to
and including $500,000
$500,001-$1,000,000
$3,446.05 for the first $500,000
plus $5.00 for each additional
$1,000 or fraction thereof, to
and including $1,000,000
$3,446.05 for the first $500,000
plus $5.00 for each additional
$1,000 or fraction thereof, to
and including $1,000,000
$1,000,000 and up
$5,944.80 for the first
$1,000,000 plus $3.75 for
each additional $1,000 or
fraction thereof
$5,944.80 for the first $1,000,000
plus $3.75 for each additional
$1,000 or fraction thereof
Green building – HMC

15.19.070-
Monitoring Fee
Each G-1 thru G-4 Projects $1,200 G-1 thru G-4 Projects $1,200 SMIP Per permit .01% (0.0001) of permit
valuation
.01% (0.0001) of permit
valuation
CalSSCF Per permit $1 per $25,000 of permit
valuation
$1 per $25,000 of permit
valuation
Business License Tax Per permit .5% (0.005) of permit
valuation with $20 minimum
.5% (0.005) of permit valuation
with $20 minimum
General Plan Maintenance Fee Per permit .05% (0.0005) of permit valuation (7/1/04)
.51% (0.0051) of permit
valuation (8/8/22)
Construction Vehicle Impact
Fee Per permit .83% (0.0083) of the job value
(7/1/06)
.83% (0.0083) of the job value
(7/1/06)
Technology Fee 5% (.05) of the permit fee
(7/1/03)
5% (.05) of the permit fee
(7/1/03)
Building Plan Check Fee Per permit
with plans 65% of the permit fee 65% of the permit fee
Building Bond Deposit Project >
than 50K 2% (0.02) of the job valuation 2% (0.02) of the job valuation Scan of Document Per page $3.00 each $3.00 each
Expedite Plan Check Fee Per hour SUM OF (Consultant cost + 20%) + (staff time x 1.5)
SUM OF (Consultant cost +
20%) + (staff time x 1.5)
Revision Plan Check Fee Per hour SUM OF (Consultant cost + 20%) + (staff time x 1.5)
SUM OF (Consultant cost +
20%) + (staff time x 1.5)
Stop Work Issued Pursuant to HMC § 15.04.070
+ Staff time
Pursuant to HMC § 15.04.070 +
Staff time
Public utility maintenance &
emergency tree removal Each Actual Cost Actual Cost
Re-inspection / Additional
Inspection Fee $150 $151
After Hour Inspection Fee (3
hour minimum) Each
3 hr min x 1.5 hourly rate
Additional hours at 1.5 x rate
Sunday = 3 hr min hourly rate
x 2
3 hr min x 1.5 hourly rate
Additional hours at 1.5 x rate
Sunday = 3 hr min hourly rate x
2 Staff time charge/lost job card Staff time Staff time Renewal fee for expired permit:
< 1 year
> 1 year
Staff time
Staff time plus valuation of
the remaining work
Staff time
Staff time plus valuation of the
remaining work
Construction Trailers Actual Cost Actual Cost
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TOWN OF HILLSBOROUGH

TABLE 1-A/18 – BUILDING AND COMBINATION PERMITS
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
Recycle Monitoring Cost Cost + 20% (refer to HMC §

15.18.030)
Cost + 20% (refer to HMC §

15.18.030)
Recycle Fines
Pursuant to HMC § 15.18.040
(Up to ten times the cost of
the permit)
Pursuant to HMC § 15.18.040
(Up to ten times the cost of the
permit)
Building Bond Penalties Pursuant to HMC § 15.30.060 Pursuant to HMC § 15.30.060 Code Enforcement Penalties Refer to HMC § 15.04.070 +
staff time
Refer to HMC § 15.04.070 + staff
time
Permit Expired Fees Per hour Staff time charges Staff time charges Special Project Direct Cost See summary and
breakdown of fees
See summary and breakdown
of fees
Civil Engineering Plan Check
Fee Per hour Cost + 20% admin fee Cost + 20% admin fee
Engineering
Inspection/Consulting Per hour Cost + 20% admin fee Cost + 20% admin fee Outside Structural Plan Check Per hour Cost + 20% admin fee Cost + 20% admin fee Erosion Control Inspection Per hour See ENGINEERING SECTION See ENGINEERING SECTION Fire Plan Check/Review Per hour Charged directly by CCFD Charged directly by CCFD Copy of files or plans on a CD
or Disc $67 $65
REROOF:
< 5 SQUARE FEET
5 TO 40 SQUARE FEET
> 4O SQUARE FEET
VALUED @ $11,001 - $244.40
VALUED @ $25,001 - $440.51
VALUED @ $35,001 - $542.61
VALUED @ $11,001 - $244.40
VALUED @ $25,001 - $440.51
VALUED @ $35,001 - $542.61
SCHEDULE E/18 – ELECTRICAL AND COMBINATION PERMIT
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
Electrical Permit Fee $181 $179
Electrical Combination Permit
Fee $71 $76
Additional
Appliance/Unit/Repair Each $40 $46
Business License Tax Per permit .5% .5%
Technology Fee Per permit 5% 5%
Generator Each $150 + BASE FEE $146 + BASE FEE
Electrical Services:
< 600 V up to 400 AMPS
< 600 V 400+ AMPS
Each
Each
$150 + BASE FEE
$220 + BASE FEE
$151 + BASE FEE
$205 + BASE FEE
New Single Family Residential Per SF $0.11 per square foot $0.11 per square foot Addition/Alteration < 1,150 SF Per SF $181 + BASE FEE $175 + BASE FEE Addition/Alteration > 1,150 SF Per SF $0.10 per square foot $0.10 per square foot Kitchen Each $150 + BASE FEE $145 + BASE FEE
Bathroom Each $110 + BASE FEE $116 + BASE FEE
Swimming Pools/Spa Each $260 + BASE FEE $270 + BASE FEE Tennis Courts Each $220 + BASE FEE $175 + BASE FEE
Landscape Lighting Each $220 + BASE FEE $175 + BASE FEE Temporary Power Each $110 + BASE FEE $88 + BASE FEE

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TOWN OF HILLSBOROUGH

SCHEDULE E/18 – ELECTRICAL AND COMBINATION PERMIT
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
Photovoltaic
< 10kw
> 10kw
Each
Each
$299
$299
$299
$299
Re-inspection / Additional
Inspection Fee Per hour $150 $149
Staff Time Charge Per hour See schedule See schedule
Plan/Revision Plan Check Fee Staff time charges Staff time charges Direct Cost See summary and
breakdown of fees
See summary and breakdown
of fees
Photo Copy $1.00 for 1st page, $0.20 each
additional page plus tax
$1.00 for 1st page, $0.20 each
additional page plus tax
EVC and Battery Storage
Systems FEES ARE WAIVED FEES ARE WAIVED
SCHEDULE M/18 – MECHANICAL AND COMBINATION PERMIT
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
Mechanical Permit Fee $181 $188
Mechanical Combination
Permit Fee $80 $78
Additional
Appliance/Unit/Repair Each $79 $58
Business License Tax Per
permit See table above See table above
Technology Fee Per
permit See table above See table above
Plan & Revision Plan Check
Fee Per hour Actual staff time Actual staff time
New Single Family
Residential Per SF $0.10 per square foot + BASE FEE $0.10 per square foot + BASE FEE Addition/Alteration:
< 1,056 SF
> 1,056 SF Per SF
$150 + BASE FEE
$0.09 per square foot + BASE FEE
$158 + BASE FEE
$0.09 per square foot + BASE FEE
HVAC/Heating System
Replacement Each $150 + BASE FEE $158 + BASE FEE
Additional appliances Each $40 $29
Home Efficiency Review $126 /hour + BASE FEE $126 /hour + BASE FEE Stop Work Penalties Pursuant to HMC § 15.04.070 +
Staff time
Pursuant to HMC § 15.04.070 +
Staff time
Re-inspection Fee /
Additional inspection fee Each $150 $158
Staff Time Charge Per hour See schedule See schedule
Plan/Revision Plan Check
Fee Per hour Staff time charges Staff time charges
Direct Cost See summary and breakdown
of fees
See summary and breakdown
of fees
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TOWN OF HILLSBOROUGH

SCHEDULE P/18 – PLUMBING PERMIT AND COMBINATION PERMIT
Type of Fee How
Charged Adopted FY 22-23 Proposed FY 23-24
Plumbing Permit $181 $187
Plumbing Combination Permit
Fee $71 $71
Business License Tax Per permit See table above See table above Technology Fee Per permit See table above See table above New Single Family Residential Per SF $0.11 per square foot $0.11 per square foot Addition/Alteration:
<950 SF
>950 SF Per SF
$150 + BASE FEE
$0.10 per square foot
$116 + BASE FEE
$0.10 per square foot
Additional Appliances Per Unit $40 $29
Kitchen Each $150 + BASE FEE $145 + BASE FEE
Bathroom Each $110+ BASE FEE $116+ BASE FEE
Swimming Pools Each $260 +BASE FEE $267 +BASE FEE
Sewer & Water Test Each $409 + BASE FEE $350 + BASE FEE Backflow Device for Sewer Each $110 + BASE FEE $111 + BASE FEE Sewer Lateral Replacement Each $110 + BASE FEE $111 + BASE FEE Drainage/Irrigation $220 + BASE FEE $205 + BASE FEE
Stop Work Penalties Pursuant to HMC § 15.04.070
+ Staff time
Pursuant to HMC § 15.04.070 +
Staff time
Re-inspection / Additional
Inspection Fee $150 $151
Plan & Revision Plan Check SUM OF (Consultant cost +
20%) + (staff time)
SUM OF (Consultant cost +
20%) + (staff time)
Staff time charge See schedule See schedule
Direct Cost See summary and
breakdown of fees
See summary and breakdown
of fees
Sewer Connections –
Residential & Commercial
See Special Tax, Service
Charges, & Other Citywide
Fees
See Special Tax, Service
Charges, & Other Citywide
Fees
New Water Service or Meter
See Special Tax, Service
Charges, & Other Citywide
Fees
See Special Tax, Service
Charges, & Other Citywide
Fees
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TOWN OF HILLSBOROUGH

ENGINEERING DIVISION
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24 Address Change Quarterly approval where house
currently exists $1,214 $1,295
Accelerated process, in addition to
above $431 $454
Appeal fee $737 $807
Construction
Vehicle Impact
Refer to Building Department Fee
Schedule
Encroachment
Permits With Engineering Review $860 $959
Over the Counter $526 $611
Additional service added to the
base encroachment permit:

1. Utility Trench $193 $229

2. Curb & Gutter $193 $229

3. Parking Strip $193 $229

4. Driveway Apron $193 $229

5. Curb Drains $193 $229

6. Bell Holes $193 $229

7. Sewer Tie-in $193 $229

8. Storm Drains $193 $229

9. ROW fixtures $193 $229

10. Planting in ROW $193 $229
Inspection Staff time cost Staff time cost
Reinspection/Extra inspection $178 $207
Revocable encroachment permit
(REP) $2,480 $2,866
Erosion Control
Inspection (in
addition to
grading fees for
erosion control
during wet
season)
Level 1 $1,360 $1,471
Level 2 Additional $2,380 Additional $2,575
Level 3 $3,709 + actual cost
in excess of 10 hours
$3,910 + actual cost
in excess of 10 hours
Re-issue $1,335 $1,471
Exceptions Grading $821 $736
Right-of-Way $821 $736
Fire Flow Test Flow Hydrant $521 $569
Non-flow $323 $342
Grading Permit Application fee $124 $120
Grading Permit Base Fee $1,114 $1,164
< 500 cubic yards to be moved $1,662 $1,762
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TOWN OF HILLSBOROUGH

ENGINEERING DIVISION
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24 500 – 1,499 cubic yards to be
moved $3,091 $3,292

> 1,500 cubic yards to be moved
and transport to and from site >=
1,500 cubic yards
$6,865 $7,418

> 1,500 cubic yards to be moved
and transport to and from site is <
1,500 cubic yards
$5,351 $5,726
Land Divisions Abandonment
Actual Cost with
$5,000 minimum
deposit
Actual Cost with
$5,000 minimum
deposit
Tentative Map
Actual Cost with
$20,000 minimum
deposit
Actual Cost with
$20,000 minimum
deposit
Parcel/Final Map
Actual Cost with
$22,582 minimum
deposit + $365/lot
Actual Cost with
$23,972 minimum
deposit + $365/lot
Lot Line Adjustment
Actual Cost with
$5,000 minimum
deposit
Actual Cost with
$5,000 minimum
deposit
Park Permit $856 $791
Roadway Slurry Seal in-lieu fee $4/square yard $4/square yard Stop Work Permit Reactivation fee (per occurrence) $1,870 $1,989 -205-

TOWN OF HILLSBOROUGH

PUBLIC WORKS DIVISION – SPECIAL SERVICES
Fee
Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24

Sewer Video
Review
Review and process private
sewer lateral videos - $376
General
Service
Request
Sewer – Regular work hours Actual Cost Actual Cost
Streets – Regular work hours Actual Cost Actual Cost
Water – Regular work hours Actual Cost Actual Cost
Sewer – After work hours Actual cost
(3hrs/$612 minimum)
Actual cost
(3hrs/$646 minimum)
Streets – After work hours Actual cost
(3hrs/$612 minimum)
Actual cost
(3hrs/$661 minimum)
Water – After work hours Actual cost
(3hrs/$585 minimum)
Actual cost
(3hrs/$667 minimum)
Sewer Lateral
Test
PW review (required at time of
sale of property) $377 $434
Water Meter
Upgrade and
Service Tap
Short Service – upgrade to 1
inch - $8,916
Short Service – 1 inch to 1.5 inch $7,344 $10,024
Short Service – 1 inch or 1.5 inch
to 2 inch $7,533 $10,233
Long Service (more than 5 feet
into roadway) Upgrade to 1
inch
- $19,747
Long Service (more than 5 feet
into roadway) 1 inch to 1.5 inch $17,518 $20,855

Long Service (more than 5 feet
into roadway) 1 inch or 1.5 inch
to 2 inches
$17,707 $21,064
Stand Alone Meter
Replacement Charge $2,596 $2,596
Resetting pavers/flagstone with
meter upgrade
Contractor’s Actual
Cost with $1,000
minimum deposit
Contractor’s Actual
Cost with $1,000
minimum deposit
Water Reconnection Charge (regular
work hours) $153 $197
Reconnection Charge (after
hours) $585 $667
*regular hours
Reconnection Charge (Qualify for
Low Income) $50 $50
*after hours
Reconnection Charge (Qualify for
Low Income) $150 $150
Manual Water Meter Read $153 $178
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TOWN OF HILLSBOROUGH

POLICE DEPARTMENT
Fee Description Task/Project Description Adopted FY 22-23 Proposed FY 23-24

Abatement cost Per lot or nuisance
declared
Actual + 100% admin fee
with $250 minimum
Actual + 100% admin fee
with $250 minimum
Alarm Permit $60 $60
False Alarm (1st and 2nd) Free of Charge Free of Charge False Alarm – 3rd to 5th
alarm $100 each Removed
False Alarm – 6th and
subsequent $200 each Removed
Reinstatement fee $200 Removed
School $30 Removed
Monitoring Fee $24/month $24/month
Character Letter $22 $25
Copies Police Report $20 $22
Fingerprints (per card) $22 $24
Repossession fee
(GC 41612) $15 $15
Vehicle Release $39 $43
All Other Services Police Officer $189 $197
Police Corporal $216 $220
Police Sergeant $241 $241
Code Enforcement
Officer $163 $179
Communications Officer $157 $172
Community Service
Officer $88 $95
Police Records Supervisor $137 $149
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TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES
FIRE FEES – CENTRAL COUNTY FIRE DEPARTMENT
Service REFERENCE

ADOPTED
FY2022-23

PROPOSED
FY2023-24
Care Facilities Inspections
Pre-inspection of licensed community care (per
hour)
H&S Code
§13235 $173 $190
Residential Care Facility for Elderly serving 6 or
fewer persons – fire inspection enforcement
H&S Code
§1569.84
Fee set by
State
Fee set by
State
Residential Care Facility $358 $381
Large Family Day Care $111 $111
Skilled Nursing Facilities $686 $741
Hospital/Institution $2,658 $3,621
Re-Inspections
Second re-inspection (fee per inspection) $133 $126
Third and subsequent re-inspection (fee per
inspection)
$161 $157
Construction Fees
General Fire & Life Safety Services
 Consultation & Research
 Pre-application meetings & Design
Review
 Property Survey
 General Construction Inspections
 Processing, Scheduling, and Record
Keeping
12% of
Building
Permit fees
for
Commercial,
NonResidential
and MultiFamily
Residential
12% of
Building
Permit fees
for
Commercial,
NonResidential
and MultiFamily
Residential
Building or Planning Plan Check Fees (per hour) $181 $224 Expedite Building or Planning Check Fees
(2 hour minimum) $362 $412
Consultation and Planning (per hour) $263 $302
Alternate Means of Protection Review (per hour) $263 $423 Additional Construction Inspection (all permits)
(per hour) NEW - $185
Fire Alarm/Fire Protection Systems
Permit for Sprinkler Monitoring System $207 $228
Permit for Manual System $207 $228
Permit for Automatic System $371 $408
Permit for Combination System $535 $588
Fixed Fire Extinguishing System Permit $289 $318
Standpipe System Permit $371 $408
Storage Tank (above or below ground) Permit $207 $228
Multi-Residential or Commercial Fire Alarm system
remodel or extension
$207 $228
Multi-residential or commercial minor fire alarm
remodel or repair (device relocation/adjustment)
$125 $183
Emergency Responder Radio Coverage System
Permit
§510, CFC
Title 24 Part 9
$342 $465

-208-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES
FIRE FEES – CENTRAL COUNTY FIRE DEPARTMENT
Service REFERENCE

ADOPTED
FY2022-23

PROPOSED
FY2023-24
Fire Sprinkler Systems
One or two Family Dwelling Fire Sprinkler System
(NFPA 13D) - flat fee including 2 inspections
(additional inspections will be charged at the
hourly rate of the staff who perform each
inspection)
$452 $588
Fire Pump Permit $207 $228
New Multi-Residential or Commercial Fire sprinkler
System (NFPA 13 or 13R) Permit – flat fee including
2 inspections (additional inspections will be
charged at the hourly rate of the staff who
perform each inspection)
$864 $948
Multi-Residential or Commercial Fire Sprinkler
system remodel or extension
$207 $273
Fire Sprinkler minor remodel or repair (sprinkler
head relocation/adjustment) $125 $183
Underground Fire Service Line Permit $371 $408
Fire Flow Information Admin Fee
(Please refer to fee schedule for each city for
respective fire flow fees for each city)
$39 $39
Miscellaneous Fees and Permits
Community CPR / AED Class
$40 Resident
$50 NonResident
$40 Resident
$50 NonResident
Labor Rate for Mechanic Shop $125 $125
Photographs from investigations Cost of
Reproduction
Cost of
Reproduction
Photocopies NEW - $1 + .20
cents/page
Fire Incident Reports (not including photographs) $10 $15 Non-Sufficient Funds | Returned Check Fee NEW - As charged by Bank
Work without a construction permit (fees to be
determined at Fire Marshal’s discretion)
Up to 10
times the
permit fees
Up to 10
times the
permit fees
Emergency Response Costs for Driving under the
Influence. (Billing upon conviction) Govt. Code
§53150-58
Costs
according to
Personnel
Schedule
below plus
Apparatus
cost of $140
as set by
State
Costs
according to
Personnel
Schedule
below plus
Apparatus
cost of $140
as set by
State
False Alarms
$540 for 3 to
5 and $1,080
for 6 or more
$540 for 3 to
5 and $1,080
for 6 or more
Wildland-Urban Interface (WUI) Inspection $200 $200
-209-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES
FIRE FEES – CENTRAL COUNTY FIRE DEPARTMENT
Service REFERENCE

ADOPTED
FY2022-23

PROPOSED
FY2023-24
Change of Use inspection (usually triggered by
new business license)
$158 $155
Hazardous Materials Clean-up/Response
Costs
according to
Personnel
Schedule
below plus
Apparatus
cost of $140
as set by
State
Costs
according to
Personnel
Schedule
below plus
Apparatus
cost of $140
as set by
State
Standby Service
Firefighter (per hour – minimum of 3 hours) $116 $127
Fire Captain (per hour – minimum of 3 hours) $134 $146
Battalion Chief (per hour – minimum of 3 hours) $157 $168 Engine Company (per hour – minimum of 3
hours
plus apparatus costs – per day as set by the
State)
$480 per
hour + $140
per hour for
apparatus
$480 per hour
+ $141.96 per
hour for
apparatus
Personnel Costs (per hour)
Administration $67 $73
Firefighter $116 $127
Fire Captain $134 $146
Fire Prevention Specialist $82 $90
Fire Inspector $164 $180
Deputy Fire Marshal $173 $190
Battalion Chief $157 $168
Fire Marshal $198 $232
Deputy Fire Chief $238 $238
Fire Chief $272 $289
General Permits
Aerosol Products $193 $206
Amusement Buildings $316 $341
Apartments, Hotels, and Motels – 10 or less units $163 $161 Apartments, Hotels, and Motels – 11 to 25 units $184 $184 Apartments, Hotels, and Motels – 26 to 100 units $205 $206 Apartments, Hotels, and Motels – 101 to 300 units NEW - $356 Apartments, Hotels, and Motels – 301 or more
units
NEW - $446
Apartments (Specialized Inspection) $219 $116
Aviation Facilities $563 $611
Battery System $563 $611
Carnivals and Fairs $316 $341
Christmas Tree Lot $316 $341
Combustible Fiber Storage $316 $341
Combustible Material Storage $316 $341
Commercial Occupancy Assigned to Prevention $200 $116
-210-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES
FIRE FEES – CENTRAL COUNTY FIRE DEPARTMENT
Service REFERENCE

ADOPTED
FY2022-23

PROPOSED
FY2023-24
Commercial Rubbish-Handling Operation $316 $341
Compressed Gases $316 $341
Cryogens $316 $341
Dry Cleaning Plants $316 $341
Dust-Producing Operations $316 $341
Exhibits & Trade Shows – Display Booth $316 $341
Exhibits & Trade Shows – With Open Flame $316 $341
Exhibits & Trade Shows – Display Fuel Powered
Equipment $316 $341
Explosives or Blasting Agents $563 $611
Fire Hydrants and Water Control Valves $313 $336
Fireworks $563 $611
Flammable or Combustible Liquids $563 $611
Hazardous Materials $563 $611
High-Piled Combustible Storage – 20,000 square
feet or less $572 $621
High-Piled Combustible Storage – more than
20,000 square feet $654 $711
Highrise H&S§13214(b) $449 $636
Hot-Work Operations $316 $341
Liquefied Petroleum Gasses $563 $611
Liquid-or gas-fueled Vehicles or Equipment in
Assembly Buildings $563 $611
Live Audiences $563 $611
Lumber Yards storing in excess of 100,000 board
feet $440 $476
Magnesium Working $316 $341
Motor Vehicle Fuel-Dispensing Stations $316 $341
Open Burning $316 $341
Organic Coating $316 $341
Ovens, Industrial Baking and Drying $316 $341
Parade Floats $316 $341
Places of Assembly $522 $566
Production Facilities $522 $566
Pyrotechnical and Special Effects Material $563 $611
Radioactive Materials $316 $341
Refrigeration Equipment $440 $476
Repair Garage $316 $341
Spraying and Dipping $316 $341
Tents, Canopies, and Temporary Membrane
Structures $478 $516
Tire Storage $316 $341
Wood Products $316 $341
-211-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES

SAN MATEO COUNTY ANIMAL CONTROL FEES & CHARGES
The Town’s latest ordinance 6.12.070 adopts the San Mateo County Fee Schedule for animal control services. The above fees reflect the County’s fee schedule. Any updates to the County Fee Schedule that are not reflected on this schedule supersede the fees on this schedule.
**These fees are charged by the County of San Mateo and are remitted to the Town based on contractual formula.

6.12.070 - Schedule of fees and charges
Animal Control and Licensing fees and charges established by this code are as follows:
(a) License Fees**
Dogs
Unaltered dog and wolf hybrid
1-year license $50.00
3-year license $145.00
Senior Pet Owner (over 60 yrs)
1-year license $18.00
3-year license $54.00
Altered dog and wolf hybrid
1-year license $20.00
3-year license $55.00
Senior Pet Owner (over 60 yrs)
1-year license $9.00
3-year license $23.00
Misc dog fees
Late fee $20.00
Duplicate tag $8.00
Cats
Unaltered cat
1-year license $15.00
3-year license $45.00
Senior Pet Owner (over 60 yrs)
1-year license $7.00
3-year license $21.00
Altered cat
1-year license $7.00
3-year license $17.50
Altered Cat
-212-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES

SAN MATEO COUNTY ANIMAL CONTROL FEES & CHARGES
.
1-year license $5.00
3-year license $11.25
Misc cat fees
Late fee $7.00
Duplicate tag $5.00
(b) Redemption Charges
Type A & B (large or medium size animals — horses, cows, hogs, sheep, etc.)
Impound cost $125.00
Board cost per day $25.00
Transportation cost (per animal) $70.00
Trailering cost (per use) $70.00
Type C (dogs, cats and wolf hybrids)
Impound Costs — First Offense
Altered — licensed, wearing tag $40.00
Unaltered — licensed, wearing tag $60.00
Altered — unlicensed, no tag $50.00
Unaltered — unlicensed, no tag $80.00
Impound Costs — Second Offense
Altered — licensed, wearing tag $90.00
Unaltered — licensed, wearing tag $120.00
Altered — unlicensed, no tag $90.00
Unaltered — unlicensed, no tag $120.00
Impound Costs — Third Offense
Altered — licensed, wearing tag $135.00
Unaltered — licensed, wearing tag $150.00
Altered — unlicensed, no tag $135.00
Unaltered — unlicensed, no tag $150.00
Impound Costs — Fourth Offense
Altered — licensed, wearing tag $180.00
Unaltered — licensed, wearing tag $210.00
-213-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES

SAN MATEO COUNTY ANIMAL CONTROL FEES & CHARGES
.

Altered — unlicensed, no tag $180.00
Unaltered — unlicensed, no tag $210.00
Impound Costs — Fifth Offense and up
Altered — licensed, wearing tag $225.00
Unaltered — licensed, wearing tag $255.00
Altered — unlicensed, no tag $225.00
Unaltered — unlicensed, no tag $255.00
Board charges (per day)
Altered — dogs/wolf hybrids $20.00
Unaltered — dogs/wolf hybrids $25.00
Altered — cats $16.00
Unaltered — cats $19.00
Type D (small size animals, i.e. birds, hamsters)
Impound cost $40.00
Board cost $13.00
(c) Surrender, Euthanasia and Dead on Arrival Disposal Fees Dog — Licensed or unlicensed
Surrender $60.00
Euthanasia $50.00
DOA Disposal $30.00
Cat — Licensed or unlicensed
Surrender $60.00
Euthanasia $50.00
DOA Disposal $30.00
Rabbit/Small Animal
Surrender $60.00
Euthanasia $50.00
DOA Disposal $30.00
Litter of Three or more
Surrender $50.00
Euthanasia $40.00
-214-

TOWN OF HILLSBOROUGH

SCHEDULE OF FEES AND CHARGES

SAN MATEO COUNTY ANIMAL CONTROL FEES & CHARGES
.

DOA Disposal $30.00
Bird/Fowl
$30.00
Euthanasia $15.00
DOA Disposal $22.00
All Exotic Animals
Surrender $25.00
Euthanasia $25.00
DOA Disposal $25.00
Farm Animals
Surrender $60.00
Euthanasia $100.00
DOA Disposal $100.00
(d) Quarantine Fee — Home $50.00
(e) Dangerous Animal Permit (DAP) Fee $260.00
(f) DAP Inspection Fee $100.00
(g) DAP Signage $10.00
(h) Field Return Fee $35.00
(i) Breeding Permit Fee $50.00
(j) Fancier Permit and/or exotic pet fee $100.00
(k) Return Check Fee $25.00
(l) Records Request Fee $.20/page
(m) Animal Control and Licensing Program may establish license discounts for recognized animal rescue organizations.
-215-
RESOLUTION NO. 23-

RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH AUTHORIZING WATER AND SEWER CONNECTION FEES EFFECTIVE JULY 1, 2023
WHEREAS, on February 12, 2007, the City Council passed an ordinance amending Sections 13.20.030 and 13.32.105 whereby water and sewer connection fees respectively are annually adjusted based on the Engineering News Record Construction Cost (ENR-CCI) 20-City Average Index; and WHEREAS, the ENR-CCI 20-City Average Index used for 2023-24 is 1.7%; and WHEREAS, the proposed fees and charges for the year 2023-24, if adopted, would be effective July 1, 2023, until amended; and
WHEREAS, the actions taken pursuant to this Resolution do not constitute an “increase” to any fee or charge subject to article XIII D, section 6 of the California Constitution, and do not constitute the imposition of new connection fees under Government Code section 66013, because they are being adjusted in accordance with a pre-approved formula; and WHEREAS, fees and charges adjusted pursuant hereto do not exceed the cost of the service for which they are imposed; and
WHEREAS, the Financial Advisory Committee, the City Council and the public have been presented in an open and noticed public meeting, all of the details of the proposed changes to the water and sewer connection fees.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the Town of Hillsborough hereby authorizes sewer service charges and sewer and water connection fees for the fiscal year 2023-24, effective July 1, 2023, as follows:

Water and Sewer Residential Connection Fee
Adopted
fiscal year
2022-23
Proposed
fiscal year
2023-24
Sewer Capital Construction Development Fee $17,101 $17,391 Water Capital Construction Development Fee $17,572 $17,871 This resolution shall be printed and posted upon the authorized official bulletin boards of the Town of Hillsborough.

Mayor of the Town of Hillsborough
Attest: City Clerk
-216-
ATTACHMENT 3
This resolution was adopted by the City Council of the Town of Hillsborough at its regular meeting held on the 8th day of May 2023, by the following vote of the members thereof:

AYES: Councilmembers
NOES: Councilmembers
ABSENT: Councilmembers
ABSTAIN: Councilmembers
-217-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
12 OLD BUSINESS

CITY COUNCIL MEETING
MAY 8, 2023

AGENDA STAFF REPORT
ITEM SUBJECT: RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF REVENUE REFUNDING BONDS, SERIES 2023 (WATER AND SEWER PROJECTS) TO REFINANCE

OUTSTANDING BONDS, AUTHORIZING EXECUTION OF INDENTURE OF TRUST, AND

AUTHORIZING EXECUTION OF AND APPROVING RELATED AGREEMENTS AND OFFICIAL ACTIONS PURSUANT TO CEQA GUIDELINE 15378
SUMMARY: This agenda item is to consider approval of a resolution (the “Resolution”) authorizing the issuance and sale of the Town’s Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects) (the “Bonds”) for the purpose of refinancing the Town’s outstanding certificates of participation and to terminate the related interest rates swaps and authorizing the Finance Director or City Manager to execute the related documents.

BACKGROUND
The Town of Hillsborough (the “Town”) currently has outstanding debt obligations in connection with its water and sewer projects which are recommended to be refunded in order to simplify the Town’s debt profile through the issuance and sale of the Bonds. The refunding bonds may also achieve modest savings in debt service but more importantly will reduce the administrative burden of monitoring variable rate indebtedness and reduce the inherent risks associated with swapped transactions. The outstanding debt obligations to be refunded with the Bonds are as follows:

1. The Town’s $4,900,000 original principal amount Variable Rate Certificates of Participation (Refunding) 2000 Series A (the “2000A Certificates”); and

2. The Town’s $10,100,000 original principal amount Variable Rate Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B (the “2000B Certificates” and together with the 2000A Certificates, the “2000 Certificates”); and

3. The Town’s $15,000,000 Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A(the “2003 Certificates”); and

4. The Town’s $12,000,000 Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A (the “2006 Certificates” and together with the 2000 Certificates and the 2003 Certificates, the “Outstanding Certificates”).

In order to hedge against rising interest rates and maximize delivery of capital projects financed with proceeds of the 2000B Certificates, 2003 Certificates, and 2006 Certificates, the Town entered into swap transactions with JP Morgan Chase Bank, N.A. (the “Swap Agreements”), in the -219-
Agenda Staff Report - Hillsborough City Council
May 08, 2023

Page 2 ends

respective initial notional amounts of $9,700,000, $15,000,000, and $12,000,000. Part of the proceeds of the Bonds will be used to pay a termination fee for termination of the Swap Agreements.

The Town is authorized to issue the Bonds pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 and 53580, respectively. The Bonds are payable from the revenues of the Town’s Water and Sewer Enterprise pursuant to the terms of the Indenture (the form of which is attached hereto) and are not an obligation of the Town’s General Fund., .

The Bonds will be sold to Loop Capital Markets, LLC, as Underwriter, pursuant to a bond purchase agreement (the “Bond Purchase Agreement”), the form of which is presented to the Council.

As required by the Government Code, the Town has obtained from Acacia Financial Group, Inc., its Municipal Advisor, good faith estimates of (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds, all of which are disclosed in Exhibit A to the Resolution.

It is anticipated that the Bonds will be issued with fixed interest rates, as taxable or tax-exempt bonds, and that the proceeds of the Bonds will be applied pursuant to the provisions of the Indenture, as finally executed and delivered, in order to (i) refund and prepay the Outstanding Certificates, (ii) to finance, or to reimburse the payment of, a fee relating to the termination of the Swap Agreements, and (iii) to pay costs incurred in connection with the issuance of the Bonds.

AUTHORIZING DOCUMENTS
The following documents are authorized to be executed and delivered via the Resolution, the forms of which are attached hereto.

1. Indenture – The Indenture is a legal and binding contract by and between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee, which provides detailed information on terms, clauses, and covenants related to the Bonds.

2. Bond Purchase Contract – The Bond Purchase Agreement is the contract between the Town and the Underwriter detailing the terms and conditions for the sale of the Bonds to the Underwriter.

3. Official Statement – The Official Statement is an offering document prepared for the benefit of potential investors in the Bonds, pursuant to municipal securities laws. In some respects, an Official Statement is comparable to a prospectus for a corporate equity or debt offering. The Official Statement details the terms of the Bonds along with information related to the Town and its Water and Sewer Enterprise (the source of repayment for the Bonds). -220-
Agenda Staff Report - Hillsborough City Council
May 08, 2023

Page 3 ends

4. Continuing Disclosure Certificate – Each issuance of publicly sold municipal bonds includes a continuing disclosure certificate which states that the issuer agrees to provide certain information to the investment community on an annual basis for as long as the Bonds remain outstanding.

ADDITIONAL AUTHORIZATIONS
Swap Terminations – In connection with the refunding of the Outstanding Certificates, the existing swap agreements with J.P. Morgan will need to be terminated. The Resolution authorizes the termination of the Swap Agreements.

The City Manager or Finance Director are each authorized to consummate the sale and issuance of the Bonds, and to execute and finalize all documents related described above and such additional certificates and instructions as are needed to complete the issuance of the Bonds.

Appointment of Professionals – The Resolution, if adopted, appoints Best Best & Krieger LLP as Bond Counsel and Disclosure Counsel to the Town, Acacia Financial Group, Inc. as Municipal Advisor, and Loop Capital Markets, LLC as Underwriter with respect to the Bonds.

FISCAL IMPACT: The fiscal impact will be based on the final pricing of the Bonds.

ENVIRONMENTAL ISSUES: The consideration of this item is exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guideline 15378(b) as a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact, or as an administrative activity that will not result in direct or indirect physical changes in the environment. Any items or projects funded through the budget are not a commitment to any project, but instead, any such projects will undergo their own analysis and potential approval in the future.

ATTACHMENTS:

1. Resolution

2. Bond Purchase Agreement

3. Indenture

4. Official Statement
PREPARED BY: Jan Cooke, Acting City Manager
RECOMMENDATION: Adopt the resolution authorizing the issuance and sale of Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects) to refinance outstanding bonds, authorizing execution of and approving related agreements and official actions. -221-
61236.05003\41148959.3
RESOLUTION NO. 23-

RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF HILLSBOROUGH

AUTHORIZING THE ISSUANCE AND SALE OF REVENUE REFUNDING BONDS, SERIES 2023 (WATER AND SEWER PROJECTS) TO REFINANCE OUTSTANDING

BONDS, AUTHORIZING EXECUTION OF INDENTURE OF TRUST, AND

AUTHORIZING EXECUTION OF AND APPROVING RELATED AGREEMENTS AND

OFFICIAL ACTIONS
WHEREAS, the Town of Hillsborough (the “Town”) has previously issued its $4,900,000 Certificates of Participation (Refunding) 2000 Series A (the “2000A Certificates”) and its $10,100,000 Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B (the “2000B Certificates” and together with the 2000A Certificates, the “2000 Certificates”), which are currently outstanding in the amount of $2,300,000 and $4,200,000, respectively, for the purpose of financing and refinancing water and sewer system improvements for the Town; and
WHEREAS, the Town has previously issued its $15,000,000 Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A, for the purpose of financing and refinancing water and sewer system improvements for the Town (the “2003 Certificates”), which are currently outstanding in the amount of $7,800,000; and
WHEREAS, the Town has previously issued its $12,000,000 Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A, for the purpose of financing water and sewer system improvements (the “2006 Certificates” and together with the 2000 Certificates and the 2003 Certificates, the “Refunded Certificates”), which are currently outstanding in the amount of $7,305,000; and
WHEREAS, the 2000 Certificates currently bear interest at a variable rate of interest and are secured by payments to be made under that certain Installment Purchase Agreement, dated as of May 1, 2000, by and between the Town and the Hillsborough Public Improvement Corporation (the “Corporation”), a nonprofit public benefit corporation organized and existing under the laws of the State (the “2000 Installment Purchase Agreement”); and WHEREAS, the 2003 Certificates currently bear interest at a variable rate of interest and are secured by payments to be made under that certain Installment Purchase Agreement, dated as of August 1, 2003, by and between the Town and the Corporation (the “2003 Installment Purchase Agreement”); and
WHEREAS, the 2006 Certificates currently bear interest at a variable rate of interest and are secured by payments to be made under that certain Installment Purchase Agreement, dated as of April 1, 2006, by and between the Town and the Corporation (the “2006 Installment Purchase Agreement” and together with the 2000 Installment Purchase Agreement and the 2003 -222-
ATTACHMENT 1
61236.05003\41148959.3
- 2 -
Installment Purchase Agreement, the “Prior Installment Purchase Agreements”); and
WHEREAS, in order to hedge against rising interest rates and maximize delivery of capital projects financed with proceeds of the 2000B Certificates, 2003 Certificates, and 2006 Certificates, the Town entered into interest rate swap transactions with JP Morgan Chase Bank, N.A. (such transactions being hereinafter together referred to as the “Swap Agreements”), in the respective initial notional amounts of $10,100,000, $15,000,000 and $12,000,000; and
WHEREAS, the Town is authorized pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 and 53580, respectively, of said Code (the “Bond Law”), to issue its revenue bonds for the purpose of refunding any outstanding indebtedness of the Town which is payable from the revenues of the Enterprise (as defined in the Indenture), and the City Council has determined that it is in the interests of the Town at this time to provide for the issuance of its Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects) (the “Bonds”) under the Bond Law to refund the Refunded Certificates; and
WHEREAS, the Town has determined that the Bonds will be sold to Loop Capital Markets LLC, as Underwriter, and there has been presented to the Town a form of bond purchase agreement (the “Bond Purchase Agreement”); and WHEREAS, the Town has obtained from Acacia Financial Group, Inc. (the “Municipal Advisor”) good faith estimates of (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds, and such estimates are disclosed at this public meeting as set forth in Exhibit A hereto; and WHEREAS, in order to comply with amendments to Government Code Section 8855 made by Senate Bill 1029 (Chapter 307, Stats. 2016), the Town has adopted a debt management policy; and
WHEREAS, it is anticipated that the Bonds will be issued with fixed interest rates, as tax-exempt or taxable bonds, and that the proceeds of the Bonds will be applied pursuant to the provisions of the Indenture as finally executed and delivered in order to (i) refund and pay the redemption price of the Refunded Certificates, (ii) to finance, or to reimburse the payment of, a fee relating to the termination of the Swap Agreements, and (iii) to pay costs incurred in connection with the issuance of the Bonds; and -223-
61236.05003\41148959.3
- 3 -
WHEREAS, the City Council of the Town (the “City Council”) wishes at this time to authorize all proceedings relating to the issuance and sale of the Bonds and all other agreements and documents relating thereto.

NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the Town of Hillsborough as follows:

Section 1. Issuance of Bonds. The City Council hereby authorizes the issuance of the Bonds under and pursuant to the Bond Law and that certain Indenture of Trust (the “Indenture”), by and between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee. The City Council hereby approves the Indenture in substantially the form presented at this meeting and on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the Mayor, the City Manager and/or the Finance Director, or such acting or interim officer thereof (each an “Authorized Officer”), whose execution thereof shall be conclusive evidence of such approval. The Authorized Officers are hereby authorized and directed for and in the name and on behalf of the Town to execute, and the City Clerk is hereby authorized and directed to attest, the final form of the Indenture. The good faith estimates required by Senate Bill 450 relating to the Bonds are set forth in Exhibit A hereto.

The proceeds of the Bonds shall be applied to (i) refund and cause the redemption of the Refunded Certificates, (ii) finance, or reimburse the Town for the payment of, a fee in connection with the termination of the Swap Agreements, and (iii) pay costs incurred in connection with the issuance of the Bonds, all in accordance with the provisions of this Resolution and the Indenture.

Section 2. Approval of Bond Purchase Contract and Conditions of Approval.

The form of Bond Purchase Agreement presented at this meeting and on file with the City Clerk is hereby approved, and the Authorized Officers are each individually hereby authorized to accept, for and in the name of the Town, such Bond Purchase Agreement in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof, provided that the aggregate principal amount of Bonds to be sold pursuant to the Bond Purchase Agreement shall not exceed $22,000,000, which may include federally tax-exempt and/or taxable Bonds, and the Underwriters’ discount or fee (not including any original issue discount or premium on the bonds) shall not exceed 0.50% of the principal amount of Bonds sold.

Section 3. Official Statement; Continuing Disclosure. The City Council hereby approves the Preliminary Official Statement describing the Bonds in the form as presented at this meeting and on file with the City Clerk. The City Council hereby authorizes the Authorized Officers to approve and to deem nearly final, within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, a form of Preliminary Official Statement describing the Bonds. Distribution of such Preliminary Official Statement by the Underwriter is hereby approved. The Authorized Officers are hereby authorized and directed to approve any changes in or additions to such Preliminary Official Statement for the purpose of finalizing such document, and the execution thereof by the Authorized Officers shall be conclusive evidence of approval of any such changes and additions. The City Council hereby authorizes the distribution of the Final -224-
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Official Statement by the Underwriter. The Final Official Statement shall be executed in the name and on behalf of the Town by the Authorized Officers. The Authorized Officers are further authorized to sign on behalf of the Town a continuing disclosure certificate with respect to the financing, in such form as may be approved by Bond Counsel.

Section 4. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate, the form of which is attached to the Preliminary Official Statement as an appendix, which is hereby approved, and which shall be executed by an Authorized Officer and delivered on the date of issuance and delivery of the Bonds.

Section 5. Swap Termination. Any Authorized Officer of the Town is hereby authorized to make any changes to the Swap Agreements, the ISDA Master Agreement, including Schedule, Credit Support Annex and Confirmation as necessary to effectuate any changes necessary for the issuance of the Bonds and the termination of the Swap Agreements, the approval of such changes to be conclusively evidenced by the execution and delivery of the amending documentation relating thereto by the Town.

Any Authorized Officer is authorized to terminate any portion of the Swap Agreements, and pay such termination fee thereof with proceeds of the Bonds, or funds on hand with the Town to be reimbursed with proceeds of the Bonds. The City Manager is authorized to employ Acacia Financial Group, Inc. as an advisor as to the amount of the termination payment for the Swap.

Section 6. Appointment of Professionals. The City Council hereby appoints Best Best & Krieger LLP as Bond Counsel and Disclosure Counsel to the Town, Acacia Financial Group, Inc. as Municipal Advisor, and Loop Capital Markets LLC as Underwriter with respect to the Bonds.

Section 7. Modifications. The approval of the Indenture, the Preliminary Official Statement, and Bond Purchase Agreement given by this Resolution shall apply to any modification or amendment of any of said agreements which is agreed upon and approved by Bond Counsel and an Authorized Officer as being necessary to carry out the provisions thereof and the authorization and direction provided in this Resolution.

Section 8. Official Actions. The Authorized Officers are each, acting alone, authorized and directed in the name and on behalf of the Town to execute the foregoing documents, or make and execute any and all supplementary documents, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate the issuance and sale of the Bonds, obtain a rating from a reputable rating agency, and any of the other transactions contemplated by the agreements and documents approved pursuant to this Resolution. Any Authorized Officer is authorized to obtain municipal bond insurance or a debt service reserve fund policy for the Bonds. Whenever in this Resolution any officer of the Town is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable.
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Section 8. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.

Mayor of the Town of Hillsborough

Attest: City Clerk
This resolution was adopted by the City Council of the Town of Hillsborough at its regular meeting held on the 8th day of May 2023, by the following vote of the members thereof:

AYES: Councilmembers
NOES: Councilmembers
ABSENT: Councilmembers
ABSTAIN: Councilmembers
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A-1

EXHIBIT A

GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the Town by Acacia Financial Group, Inc. as Municipal Advisor to the Town (the “Municipal Advisor”), each with respect to the Bonds.

Principal Amount. The Municipal Advisor has informed the Town that, based on the Town’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $19,260,000.00 (the “Estimated Principal Amount”).

True Interest Cost of the Bonds. The Municipal Advisor has informed the Town that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 2.6903%.

Finance Charge of the Bonds. The Municipal Advisor has informed the Town that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties, including swap termination fees (or costs associated with the Bonds), is $1,681,300.00.

Amount of Proceeds to be Received. The Municipal Advisor has informed the Town that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Town for sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserve fund funded with proceeds of the Bonds, is $19,989,522.25.

Total Payment Amount. The Municipal Advisor has informed the Town that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Town will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $24,815,525.00.

The foregoing estimates constitute good faith estimates only. The actual principal amount of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, -227-
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(b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Town’s financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the Town based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof.

Market interest rates are affected by economic and other factors beyond the control of the Town.
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$_________

TOWN OF HILLSBOROUGH
REVENUE REFUNDING BONDS, SERIES 2023
(WATER AND SEWER PROJECTS)

BOND PURCHASE CONTRACT
__________, 2023
Town of Hillsborough
1600 Floribunda Avenue
Hillsborough, California 94010
Ladies and Gentlemen:

Loop Capital Markets LLC (the “Underwriter”), acting on behalf of itself and not as an agent or representative of you, offers to enter into this Bond Purchase Contract (the “Purchase Contract”) with the Town of Hillsborough (the “Town”) which, upon acceptance of this offer by the Town will be binding upon the Town and the Underwriter. This offer is made subject to acceptance of this Purchase Contract by the Town on or before 11:59 p.m. California time on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon written notice delivered to the Town at any time prior to such acceptance.

Capitalized terms used in this Purchase Contract and not otherwise defined herein shall have the meanings given to such terms as set forth in the Indenture (defined below).

Section 1. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Contract, the Underwriter agrees to purchase from the Town and the Town agrees to sell to the Underwriter, all (but not less than all) of the $________ principal amount of Town of Hillsborough Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects) (the “Bonds”). The Bonds will be dated the date of delivery thereof, and shall have the maturities and bear interest at the rates per annum as set forth on Schedule 1 attached hereto.

The aggregate purchase price of the Bonds shall be $_________ (consisting of the $_________ aggregate principal amount of the Bonds, plus/less net original issue premium/discount in the amount of $_________, less an Underwriter’s discount of $__________).

The Bonds are being issued (i) to refinance certain prior obligations of the Town described in the Official Statement described below and (ii) to pay certain costs of issuing the Bonds.

Section 2. The Town previously delivered to the Underwriter a Preliminary Official Statement dated __________, 2023 (the “Preliminary Official Statement”) and will deliver to the Underwriter a final Official Statement dated the date hereof as provided in Section 5 of this Purchase Contract (as amended and supplemented from time to time pursuant to Section 6 of this Purchase Contract, the “Official Statement”). The Town has previously delivered to the Underwriter a certificate relating to the Preliminary Official Statement, in substantially the form attached hereto as Exhibit A. -229-
ATTACHMENT 2
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2 Section 3. The Bonds are being issued pursuant to provisions of Sections 53570 et seq. and 53580 et seq. of the California Government Code, Resolution No. _________, adopted by the City Council of the Town on _________, 2023 (the “Town Resolution”) and an Indenture of Trust, dated as of ________ 1, 2023 (the “Indenture”) by and between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Bonds are payable as provided in the Indenture and as set forth in the Official Statement. The Bonds are special, limited obligations of the Town payable solely from and secured by the Net Revenues generated by the Enterprise (as such terms are defined in the Indenture).

Section 4. (a) It shall be a condition to the obligation of the Underwriter to purchase, accept delivery of, and pay for the Bonds that the entire $_________ principal amount of the Bonds to be outstanding under the Indenture shall be delivered by the Town to the Underwriter on the date of the Closing. The Underwriter agrees to make an initial bona fide public offering of all of the Bonds, at not in excess of the initial public offering yields or prices set forth on Schedule 1 attached hereto, however, the Bonds may be offered and sold to certain dealers (including dealers depositing the Bonds into investment trusts) at prices lower than such initial public offering prices or yields. Following the initial public offering of the Bonds, the offering prices may be changed from time to time by the Underwriter.
(b) The Underwriter agrees to assist the Town in establishing the issue price of the Bonds and shall execute and deliver to the Issuer at Closing an “issue price” or similar certificate substantially in the form attached hereto as Exhibit E, together with the supporting pricing wires or equivalent communications, with modifications to such certificate as may be deemed appropriate or necessary, in the reasonable judgment of the Underwriter, the Town and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. (c) Except for the maturities set forth in Schedule 1 attached hereto, the Town will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). (d) The Underwriter confirms that the Underwriter has offered the Bonds to the public on or before the date of this Purchase Contract at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Schedule 1. Schedule 1 hereto sets forth, as of the date of this Purchase Contract, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Town and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Town to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”).

So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the Sale Date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public (the “hold-the-offering-price rule”).
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3 The Underwriter shall promptly advise the Town or the Town’s municipal advisor when the Underwriter has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.

The Town acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on, (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that the Underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, as set forth in the retail distribution agreement and the related pricing wires. The Town further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement to comply with its agreement regarding the hold-the-offering-price rule as applicable to the Bonds. (e) (i) The Underwriter confirms that:
(A) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the Underwriter is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (1) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (2) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter and as set forth in the related pricing wires, and (B) any agreement among underwriters relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to (1) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and (2) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter and as set forth in the related pricing wires.
(ii) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to any of the Underwriter shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
(A) “public” means any person other than an underwriter or a related party; (B) “underwriter” means (1) any person that agrees pursuant to a written contract with the Town (or with the Underwriter to form an underwriting syndicate) to -231-
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4 participate in the initial sale of the Bonds to the public and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public); (C) a purchaser of any of the Bonds is a “related party” to an underwriter if the Underwriter and the purchaser are subject, directly or indirectly, to (1) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (2) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (3) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
(D) “sale date” means the date of execution of this Purchase Contract by all parties.

Section 5. The Town hereby authorizes the use of the Official Statement by the Underwriter in connection with the sale of the Bonds. The Town consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the sale of the Bonds.

The Preliminary Official Statement was deemed “final” by the Town as of its date for purposes of Securities and Exchange Commission Rule 15c2-12(b)(1) (the “Rule”), except for the omission of certain information permitted to be omitted by such Rule. The Town will supply or cause to be supplied to the Underwriter, not later than (i) seven business days from the date of this Purchase Contract, (ii) two business days before the Closing, and (iii) the date required by the rules and regulations of the Municipal Securities Rulemaking Board (the “MSRB”) and in time to accompany any confirmation that requests payment from any customer, the Official Statement in sufficient quantity as requested by the Underwriter to comply with Securities and Exchange Commission Rule 15c2-12(b)(4) and the rules of the MSRB such Official Statement to be complete as of its date of delivery (as amended and supplemented from time to time pursuant to Section 6(i) of this Purchase Contract, the “Official Statement”). The Underwriter hereby agrees that it will not send any confirmation requesting payment for the purchase of any Bonds unless the confirmation is accompanied by or preceded by the delivery of a copy of the Official Statement. The Underwriter agrees to: (1) provide the Town with final pricing information on the Bonds on a timely basis prior to the date of the Closing, (2) promptly file a copy of the Official Statement, including any supplements prepared by the Town with a nationally recognized municipal securities information repository, (3) take any and all other actions necessary to comply with applicable Securities and Exchange Commission rules and MSRB rules governing the sale of the Bonds and (4) promptly notify the Town of the end of the underwriting period (as such term is defined in Rule 15c2-12).

Section 6. The Town represents and warrants to the Underwriter that:
(a) The City Council of the Town has taken official action by the adoption of the Town Resolution by a majority of its members at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, on _________, 2023, authorizing all action necessary to be taken by it for (1) the execution and delivery of the Indenture, the Tax Certificate, the Continuing Disclosure Agreement, dated as of ________, 2023 and this -232-
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5 Purchase Contract (collectively, the “Town Agreements”), (2) the due performance of the Town Agreements, and (3) the taking of any and all such action as may be required on the part of the Town to carry out, give effect to and consummate the transactions contemplated hereby; (b) The Town is a general law city duly organized and existing under the Constitution and laws of the State and has all necessary power and authority to adopt the Town Resolution, to enter into and perform its duties under the Town Agreements and, when the Town Agreements are executed and delivered by the respective parties thereto, the Town Agreements will each constitute legal, valid and binding obligation of the Town enforceable in accordance with its respective terms;
(c) By official action of the Town prior to or concurrently with the acceptance hereof, the Town has duly approved the Town Agreements, has duly authorized and approved the Preliminary Official Statement and the Official Statement, has duly authorized and approved the execution and delivery of the Town Agreements, and the performance by the Town of the obligations contained in, the Town Agreements and the consummation by it of all other transactions contemplated by the Official Statement; (d) No approval, consent or authorization of any governmental or public agency, authority or person is required for the execution and delivery by the Town of any of the Town Agreements or the performance by the Town of its obligations thereunder or for the issuance or sale of the Bonds.
(e) The execution and delivery of each of the Town Agreements have been duly authorized by the Town; the Purchase Contract has been duly executed and delivered by the Town; and the Purchase Contract constitutes, and the other Town Agreements and the Bonds will constitute, legal, valid and binding obligations of the Town enforceable in accordance with their terms; and the execution and delivery of the Town Agreements, and compliance with the provisions of each thereof will not conflict with or constitute a breach of or a default under any instrument relating to the organization, existence or operation of the Town, or any commitment, agreement or other instrument to which the Town is a party or by which it is or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the Town (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the Town and its affairs; (f) Promptly after the Official Statement is available in final form, the Town shall deliver or cause to be delivered to the Underwriter copies of the Official Statement signed by a duly authorized officer of the Town and, within the time period required under Section 5 hereof, a sufficient number of copies of the printed final Official Statement as the Underwriter shall request (not to exceed 150);
(g) At the time of the Town’s acceptance hereof and at all times subsequent thereto up to and including the time of the Closing, the Official Statement does not and will not contain any untrue statement of a material fact concerning the Town or omit to state a material fact concerning the Town required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (h) There is no action, suit, proceeding or investigation before or by any court, public board or body pending or, to the best knowledge of the Town as of the date hereof, -233-
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6 threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the Town, or the titles of its members or officers, (ii) enjoin or restrain the issuance or sale of the Bonds, the collection of the rates and charges for the domestic water system or the use of any other monies or properties pledged under the Indenture for the payment of the Bonds, (iii) in any way question or affect any of the rights, powers, duties or obligations of the Town with respect to the monies pledged or to be pledged to pay the principal of, premium, if any, or interest on the Bonds, (iv) in any way question or affect any authority for the issuance or sale of the Bonds, or the validity or enforceability of the Bonds or the Town Agreements or (v) in any way question or affect the Purchase Contract or the other Town Agreements or the transactions contemplated by the Purchase Contract, the other Town Agreements, the documents referred to in the Official Statement, or any other agreement or instrument to which the Town is a party relating to the Bonds; (i) For not more than 25 days from the end of the “underwriting period” (as defined in Securities and Exchange Commission Rule 15c2-12(e)(2)), if, in the reasonable opinion of Disclosure Counsel and the Town Attorney of the Town, any event shall occur as a result of which it is necessary to amend or supplement the Official Statement in order to make the statements therein not misleading in light of the circumstances existing at the time it is delivered to a purchaser, the Town will prepare and furnish to the Underwriter a reasonable number of copies of any amendment of or supplement to the Official Statement (in form and substance satisfactory to Disclosure Counsel and the Town Attorney of the Town) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection (i), the Town will furnish to the Underwriter such information as it may from time to time request. The Town may assume that the “end of the underwriting period” for purposes of Securities and Exchange Commission 15c2-12 will occur on the date of Closing unless otherwise notified, in writing, by the Underwriter on or prior to the date of Closing.

If the Official Statement is supplemented or amended pursuant to this subsection (i), at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the date of the Closing, the Official Statement as so supplemented or amended will not contain, to the best of the Town’s knowledge, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) The Town will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request, to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate, and will assist, if necessary therefor, in the continuation of such qualifications in effect as long as required for the distribution of the Bonds; provided, however, that the Town shall not be required to qualify as a foreign corporation or to file any general consents to service of process under the laws of any state;
(k) Except as may be required under Blue Sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the Town required for the -234-
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7 execution and delivery of the Purchase Contract or the issuance or sale of the Bonds or the consummation by the Town of the other transactions contemplated by the Official Statement or the Town Agreements;
(l) Any certificate signed by any official of the Town authorized to do so shall be deemed a representation and warranty by the Town to the Underwriter as to the statements made therein;
(m) The Town is not in default, and at no time has defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding;
(n) There has not been any materially adverse change in the financial condition of the Water Fund or the Wastewater Fund since June 30, 2022 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change;
(o) The Town will undertake, pursuant to the Continuing Disclosure Agreement, to provide certain annual financial information and notices of the occurrence of certain events.

A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final Official Statement; and
(p) Except as disclosed in the Official Statement, the Town has not within the five year period preceding the date of the Preliminary Official Statement and the date of the Official Statement failed to comply, in any material respect, with any of its previous continuing disclosure undertakings to provide annual reports or notices of certain enumerated events.

Section 7. At 8:00 A.M., California time, on __________, 2023 (the “Closing”), or on such later date as may be agreed upon by the Underwriter and the Town, the Bonds, duly executed, will be delivered to the Underwriter through the Trustee, as FAST agent on behalf of DTC, and at the offices of Best Best & Krieger LLP (“Bond Counsel”) in Riverside, California, or such other place as shall have been mutually agreed upon by the Underwriter and the Town, the other documents described herein, and the Underwriter shall pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Contract in immediately available funds to the order of the Trustee.

The Bonds will be issued in fully registered form. It is anticipated that CUSIP identification numbers will be inserted on the Bonds, but neither the failure to provide such numbers nor any error with respect thereto shall constitute a cause for failure or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Contract.

Section 8. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties and agreements of the Town contained herein and to be contained in the documents and instruments to be delivered at the Closing, and upon the performance by the Town of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter’s obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be subject to the performance by the Town of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following conditions:
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8 (a) The representations and warranties of the Town contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing;
(b) At the time of the Closing, (i) the Indenture and the Tax Certificate shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to by the Town and Underwriter, and (ii) the Town shall perform or have performed all of its obligations required under or specified in the Town Agreements performed at or prior to the date of the Closing;
(c) As of the date of the Closing, all necessary official action of the Town relating to the Town Agreements, shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect; (d) The Underwriter shall have the right to terminate the Underwriter’s obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds by notifying the Town of its election to do so if, after the execution hereof and prior to the Closing:
(i) legislation shall be introduced in, enacted by, reported out of committee, or recommended for passage by the State of California, either House of the Congress, or recommended to the Congress or otherwise endorsed for passage (by press release, other form of notice or otherwise) by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or legislation is proposed for consideration by either such committee by any member thereof or presented as an option for consideration by either such committee by the staff or such committee or by the staff of the Joint Committee on Taxation of the Congress of the United States, or a bill to amend the Code (which, if enacted, would be effective as of a date prior to the Closing) shall be filed in either House, or a decision by a court of competent jurisdiction shall be rendered, or a regulation or filing shall be issued or proposed by or on behalf of the Department of the Treasury or the Internal Revenue Service of the United States, or other agency of the federal government, or a release or official statement shall be issued by the Department of the Treasury or the Internal Revenue Service of the United States, in any such case with respect to or affecting (directly or indirectly) the taxation of interest received on obligations of the general character of the Bonds which, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Bonds or the sale, at the contemplated offering prices (or yields), by the Underwriter of the Bonds; or
(ii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national or international emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the reasonable judgment of the Underwriter, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or
(iii) (1) legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other -236-
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9 governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended (the “Securities Act”), or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect, or (2) a stop order, ruling, regulation, proposed regulation or statement by or on behalf of the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering, sale or distribution of obligations of the general character of the Bonds is in violation or would be in violation of any provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended or the Trust Indenture Act of 1939, as amended; or (iv) in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price generally of obligations of the general character of the Bonds, are materially and adversely affected because additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; or
(v) there shall have occurred a general suspension of trading, minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges or prices for securities shall have been required on the New York Stock Exchange or other national stock exchange whether by virtue of a determination by that exchange or by order of the Securities and Exchange Commission or any other governmental agency having jurisdiction or the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, or financial responsibility requirements of the Underwriter; or (vi) a general banking moratorium shall have been declared by federal or New York or California state authorities or a major financial crisis or a material disruption in commercial banking or securities settlement or clearances services shall have occurred such as to make it, in the judgment of the Underwriter, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or (vii) (1) a downgrading or suspension of any rating (without regard to credit enhancement) by S&P Global Ratings (“S&P”) of any debt securities issued by the Town secured by or payable from Revenues or Net Revenues or payable from a contractual or other obligation of the Town which is secured by or payable from Revenues or Net Revenues, or (2) there shall have been any official statement as to a possible downgrading (such as being placed on “credit watch” or “negative outlook” or any similar qualification) of any rating without regard to credit enhancement by S&P of any debt securities described in clause (1) above, including the Bonds; or
(viii) any legislation, ordinance, rule or regulation shall be introduced in or be enacted by any governmental body, department or agency in the State or a decision of a -237-
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10 court of competent jurisdiction within the State shall be rendered, which, in the reasonable opinion of the Underwriter, after consultation with the Town, materially adversely affects the market price of the Bonds; or
(ix) an event shall occur which makes untrue or incorrect in any material respect, as of the time of such event, any statement or information contained in the Official Statement or which is not reflected in the Official Statement but should be reflected therein in order to make the statements contained therein not misleading in any material respect and requires an amendment of or supplement to the Official Statement and the effect of which, in the reasonable judgment of the Underwriter, would materially adversely affect the market for the Bonds or the sale, at the contemplated offering prices (or yields), by the Underwriter of the Bonds.
(e) At or prior to the Closing, the Underwriter shall have received each of the following documents:
(i) A certified copy of the Town Resolution and executed originals of the Town Agreements;
(ii) The Preliminary Official Statement and the Official Statement, with the Official Statement executed on behalf of the Town by a duly authorized officer of the Town; (iii) The Continuing Disclosure Agreement, executed on behalf of the Town by a duly authorized officer of the Town;
(iv) An approving opinion of Bond Counsel, dated the date of Closing, substantially in the form attached as Appendix D to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriter and the Trustee; (v) A supplemental opinion of Bond Counsel, dated the date of Closing and addressed to the Underwriter, in substantially the form of Exhibit C; (vi) An opinion of Best Best & Krieger, Disclosure Counsel, dated the date of closing and addressed to the Underwriter, in substantially the form of Exhibit D; (vii) A certificate dated the date of Closing from a duly authorized official of the Town to the effect that:
(A) The representations and warranties of the Town contained in Section 6 hereof are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing;
(B) To the best of their knowledge, no event effecting the Town has occurred since the date of the Official Statement which should be disclosed in the Official Statement in order to make the statements therein in light of the circumstances in which they were made not misleading in any material respect; and
(C) No litigation is pending or threatened (a) to restrain or enjoin the issuance or sale of the Bonds or the validity of the Indenture, (b) in any way contesting or -238-
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11 affecting the validity of the Town Agreements or the Bonds, or (c) in any way contesting the existence or powers of the Town;
(viii) An opinion of the City Attorney dated the date of Closing and addressed to the Town and the Underwriter in substantially the form of Exhibit B; (ix) An opinion of Counsel to the Trustee dated the date of Closing, addressed to the Town, the Trustee, and the Underwriter, to the effect that:
(A) the Trustee is a national banking association duly organized and validly existing under the laws of the United States of America and has full power and authority to execute and deliver the Indenture and to perform its obligations under the Indenture; and
(B) the Indenture has been duly authorized, executed and delivered by the Trustee and constitutes a valid and binding obligation of the Trustee enforceable against the Trustee in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws or equitable principles relating to or limiting creditors’ rights generally;
(x) A certificate of the Trustee, dated the date of the Closing, to the effect that:
(A) The Trustee is a national banking association duly existing under the laws of the United States of America, and has full power and is qualified to accept and comply with the terms of the Indenture, and to perform its obligations stated therein; (B) The Trustee has accepted the duties and obligations imposed on it by the Indenture;
(C) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the consummation by the Trustee of the transactions contemplated by the Indenture to be undertaken by the Trustee; (D) Compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any material agreement or material instrument to which the Trustee is a party or by which it is bound, or, to the best knowledge of the Trustee, any law, rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties (except that no representation, warranty or agreement is made by the Trustee with respect to any Federal or state securities or Blue Sky laws or regulations); and (E) To the knowledge of the Trustee, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body served on or threatened against or affecting the existence of the Trustee, or in any way contesting or affecting the validity or enforceability of the Indenture against the Trustee, or contesting the powers of the Trustee or its authority to enter into and -239-
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12 perform its obligations under the Indenture or the Bonds, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Bonds or the Indenture; (xi) An opinion of Nixon Peabody LLP (“Underwriter’s Counsel”) in form and substance satisfactory to the Underwriter;
(xii) A Tax Certificate, executed on behalf of the Town by a duly authorized officer;
(xiii) Evidence that a federal tax information form 8038-G has been prepared for filing with respect to the Bonds;
(xiv) Evidence of required filings with the California Debt and Investment Advisory Commission (“CDIAC”);
(xv) A copy of the executed Blanket Letter of Representations by and between the Town and The Depository Trust Company, New York, New York, relating to the book-entry system for the Bonds;
(xvi) A letter from S&P indicating that the Bonds have been rated “_____”; (xvii) A certified resolution of the Trustee evidencing the authority of the Trustee to undertake its duties under the Indenture and the authority of the officer executing the Indenture to bind the Trustee in accordance therewith; and (xviii) Such additional legal opinions, certificates, instruments and documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the Town’s representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Town on or prior to the date of the Closing of all agreements then to be performed and all conditions then to be satisfied by the Town.

All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter and Underwriter’s Counsel.

Receipt of, and payment for, the Bonds shall constitute evidence of the satisfactory nature of such as to the Underwriter. The performance of any and all obligations of the Town hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriter may be waived by the Underwriter in its sole discretion.

If the Town shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Contract, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate, and neither the Underwriter nor the Town shall be under further obligation hereunder, except that the respective obligations of the Town and the Underwriter set forth in Section 9 hereof shall continue in full force and effect.

Section 9. (a) The Underwriter shall be under no obligation to pay, and the Town shall pay the following expenses incident to the performance of the Town’s obligation hereunder: (i) the -240-
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13 fees and disbursements of Bond Counsel and Disclosure Counsel; (ii) the cost of printing and delivering the Bonds, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to Section 6(i) of this Purchase Contract); (iii) the fees and disbursements of Acacia Financial Group, Inc., as Municipal Advisor and Swap Advisor to the Town, accountants, advisers and of any other experts or consultants retained by the Town; (iv) expenses (included in the expense component of the Underwriter’s spread) incurred on behalf of the Town’s officers, employees or representatives which are incidental to implementing this Purchase Contract, including, but not limited to, meals, transportation and lodging of those officers, employees or representatives; and (v) any other expenses and costs of the Town incident to the performance of its obligations in connection with the issuance and sale of the Bonds (which may be paid through the expense component of the underwriters’ discount), including out of pocket expenses and regulatory expenses, and any other expenses agreed to by the parties and expenses incurred on behalf of the Town employees and representatives which are incidental to implementing this Purchase Contract, including but not limited to meals, transportation and lodging of such employees or representatives. (b) The Underwriter shall pay all expenses incurred by them in connection with the public offering and distribution of the Bonds including, but not limited to (i) all out-ofpocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds, (ii) the fees and expenses of Underwriter’s Counsel, the fees and expenses of Digital Assurance Certification LLC for a continuing disclosure compliance review and amounts owed by the Underwriter to CDIAC in connection with the issuance of the Bonds (which will be reimbursed to the Underwriter through the expense component of the underwriter’s discount) but excluding these expenses provided in (a)(iv) above or as otherwise agreed to by the Underwriter and the Town.

Section 10. Any notice or other communication to be given to the Town under this Purchase Contract may be given by delivering the same in writing at the Town’s address set forth above, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Loop Capital Markets LLC, 111 W. Jackson Blvd., Suite 1901, Chicago, Illinois 60604; Attention: Stephen Berkeley.

Section 11. This Purchase Contract is made solely for the benefit of the Town and the Underwriter (including their successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Town’s representations, warranties and agreements contained in this Purchase Contract shall remain operative and in full force and effect regardless of:
(a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Contract. The agreements contained in this Section and in Section 10 shall survive any termination of this Purchase Contract.

Section 12. In the event that any provision of this Purchase Contract shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision of this Purchase Contract.

Section 13. This Purchase Contract shall be governed by and interpreted under the laws of the State of California.

Section 14. This Purchase Contract may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute the Purchase Contract by signing any such counterpart.
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14 Section 15. The Town and the Underwriter acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s-length commercial transaction between the Town and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not acting as the agent, advisor or fiduciary of the Town, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Town with respect to the purchase and sale contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Town on other matters) and the Underwriter has no contractual obligation to the Town with respect to the purchase and sale contemplated hereby except the contractual obligations expressly set forth in this Purchase Contract, (iv) the Underwriter is not acting as municipal advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended), (v) the Underwriter has financial and other interests that differ from those of the Town, and (vi) the Town and the Underwriter have consulted their own legal, financial and other advisors to the extent they deemed appropriate in connection with the purchase and sale of the Bonds. Nothing in the foregoing paragraph is intended to limit the Underwriter’s obligation of fair dealing to the Town under MSRB Rules G-17 and G-30.

Section 16. This Purchase Contract shall become effective upon the execution of the acceptance hereof by an authorized officer of the Town and shall be valid and enforceable as of the time of such acceptance.
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15 Very truly yours,

LOOP CAPITAL MARKETS LLC
By:

Authorized Signatory
Accepted as of the date first stated above:

TOWN OF HILLSBOROUGH
By:___________________________________
Authorized Officer
Time of Execution:
_______________________ p.m.
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SCHEDULE 1

MATURITIES, AMOUNTS, RATES AND PRICES
Maturity
(June 1)
Principal
Amount
Interest
Rate Yield Price
10%
Test
Used
Hold the
Price
Offering
Rule Used

* Term Bonds.
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A-1

EXHIBIT A
$_________*

TOWN OF HILLSBOROUGH
REVENUE REFUNDING BONDS, SERIES 2023
(WATER AND SEWER PROJECTS)

FORM OF THE CERTIFICATE OF THE TOWN

REGARDING PRELIMINARY OFFICIAL STATEMENT
The undersigned hereby states and certifies:

1. That she is the duly appointed, qualified and acting Finance Director of the Town of Hillsborough (the “Town”) and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same;

2. That there has been delivered to Loop Capital Markets LLC (the “Underwriter”) of the captioned Bonds, a Preliminary Official Statement, dated __________, 2023, including the cover page and all appendices thereto, in electronic form (the “Preliminary Official Statement”), which the Town deemed final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for information permitted to be omitted therefrom by Rule 15c2-12 and except for information concerning the Depository Trust Company and the book entry system as to which no representation is made; and

3. The Town hereby approves the use and distribution by the Underwriter of the Preliminary Official Statement.

Dated: __________, 2023

TOWN OF HILLSBOROUGH
By:

Jan Cooke
Finance Director
_______________________
* Preliminary, subject to change.
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B-1

EXHIBIT B

FORM OF OPINION OF CITY ATTORNEY
[Letterhead of City Attorney]
__________, 2023
Town of Hillsborough
Hillsborough, California
Loop Capital Markets LLC
San Francisco, California
$________

TOWN OF HILLSBOROUGH
REVENUE REFUNDING BONDS, SERIES 2023
(WATER AND SEWER PROJECTS)
(Opinion of City Attorney)
Ladies and Gentlemen:

We are City Attorney to the Town of Hillsborough, California (the “Town”), a general law city organized and existing under the laws of the State of California (the “State”) and have served as such in connection with the issuance, sale and delivery of $________ aggregate principal amount of its Town of Hillsborough Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects) (the “Bonds”). In that connection, we have examined certain records reflecting the actions taken by the Town pertaining to the authorization, execution and delivery of the following agreements (sometimes collectively referred to herein as the “Town Documents”): the Indenture of Trust, dated as of _________ 1, 2023 (the “Indenture”), by and between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), the Bond Purchase Contract, dated __________, 2023 (the “Bond Purchase Contract”), by and between the Town and Loop Capital Markets LLC, and the Continuing Disclosure Agreement, dated as of _________, 2023, by and between the Town and _________, as dissemination agent. We have reviewed the Town Documents, the Official Statement, dated ________, 2023 (the “Official Statement”) relating to the above captioned Bonds, Resolution No. _________, approving and authorizing the execution of the Town Documents to which the Town is a party and approving the Official Statement, adopted by the City Council of the Town on _________, 2023 (the “Resolution”), and such additional documents as we have deemed necessary to render this opinion. For purposes of this opinion, capitalized terms used herein and not defined have the meanings assigned to them in the Bond Purchase Contract or the Indenture.

As used in this opinion, the phrase “current actual knowledge” means knowledge as we have obtained from (i) the incumbency and signature certificate of the Town, (ii) the representations and warranties contained in each closing certificate of the Town, and (iii) knowledge of facts or other information currently known to lawyers in our firm who have performed legal services for the Town. -246-
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B-2
Based upon the foregoing, we are of the opinion that:

1. The Town is a general law city, duly organized and validly existing under the Constitution and the laws of the State.

2. The Town has full legal power and lawful authority to enter into the Town Documents.

3. The Town Documents have been duly authorized, executed and delivered by the Town and constitute the valid and binding agreements of the Town enforceable against the Town in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditor’s rights generally.

4. The Resolution of the Town approving and authorizing the execution and delivery of the Town Documents and approving and authorizing the execution and delivery of the Official Statement, was duly adopted at a meeting of the governing body of the Town, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Resolution is in full force and effect and has not been modified, amended or rescinded.

5. Except as otherwise disclosed in the Official Statement, to our current actual knowledge, there is no litigation, proceeding, action, suit or investigation at law or in equity before or by any court, governmental agency or body, pending and for which the Town has been served or threatened against the Town or the Enterprise, challenging the creation, organization or existence of the Town or the Enterprise, or the validity of the Town Documents or seeking to restrain or enjoin the Net Revenues or in any way contesting or affecting the validity of the Town Documents or any of the transactions referred to therein or contemplated thereby or contesting the authority of the Town to enter into or perform its obligations under any of the Town Documents, or under which a determination adverse to the Town would have a material adverse effect upon the financial condition or the revenues of the Enterprise, or which, in any manner, questions or affects the right or ability of the Town to enter into the Town Documents or affects in any manner the right or ability of the Town to make debt service payments on the Bonds or otherwise perform its obligations under the Town Documents.

Our opinion is further qualified by the following:
(a) We express no opinion with respect to the laws of any state or jurisdiction other than California and the United States regarding the enforceability of any transaction mentioned herein or the interpretation, authorization, execution, validity, enforceability or effect of any of the documents mentioned herein; provided further that we express no opinion with respect to California or federal tax and securities law.
(b) As City Attorney in this matter, we have not rendered financial advice to the Town and do not represent by this opinion, or otherwise, that we reviewed or made any assessment about, nor do we express any opinion about, the ability of the Town to pay debt service or amounts due on the Bonds, and accordingly, we offer no opinion whatsoever regarding such financial feasibility or ability to repay the Bonds.
(c) We express no opinion as to the validity and enforceability of any indemnity or liquidated damages provisions.
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B-3
This letter is furnished by us as City Attorney. Other than the Town, no attorney-client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. Our engagement with respect to the Bonds has terminated as of the date hereof, and we disclaim any obligation to update this letter. This letter is delivered to you, is solely for your benefit and the benefit of your direct successors and assigns, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person.

We bring to your attention the fact that our conclusions are an expression of professional judgment and are not a guarantee of a result.

Respectfully submitted,
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C-1

EXHIBIT C

FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
___________, 2023
Town of Hillsborough
Hillsborough, California
Loop Capital Markets LLC
San Francisco, California
$__________

TOWN OF HILLSBOROUGH
REVENUE REFUNDING BONDS, SERIES 2023
(WATER AND SEWER PROJECTS)
Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance and sale by the Town of Hillsborough, California (the “Town”) of $__________ aggregate principal amount of its Town of Hillsborough Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects) (the “Bonds”). We are delivering this letter pursuant to Section 8(e)(v) of the Bond Purchase Contract, dated __________, 2023 (the “Bond Purchase Contract”), by and between Loop Capital Markets LLC and the Town. All capitalized terms used herein and not defined shall have the meanings as set forth in the Bond Purchase Contract.

In connection with the issuance of the Bonds and the opinions set forth below, we have examined the Indenture of Trust, dated as of __________ 1, 2023, (the “Indenture”), by and between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”); the Bond Purchase Contract; the Continuing Disclosure Agreement; the Tax Compliance Certificate, dated __________, 2023, by the Town; the Resolution; the Official Statement; and such other documents, instruments and materials as we deemed necessary to provide the opinions and conclusions set forth herein.

The opinions and conclusions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions or conclusions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof.

We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Town. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such documents.
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C-2
In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Bond Purchase Contract, the Continuing Disclosure Agreement, the Tax Compliance Certificate and the Resolution and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the foregoing documents.

From such examination we are of the opinion that:
(a) The Bond Purchase Contract and the Continuing Disclosure Agreement have each been duly authorized, executed and delivered by the Town and, assuming the due authorization, execution and delivery by the other party thereto, as applicable, each constitute a binding and enforceable obligation of the Town.
(b) The Bonds are exempt from registration under Section (3)(a)(2) of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended.
(c) The information in the Official Statement under the headings “INTRODUCTION,” “THE 2023 BONDS,” “SECURITY THE 2023 BONDS” and “TAX MATTERS,” in “APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE” and in “APPENDIX D—FORM OF OPINION OF BOND COUNSEL,” insofar as such statements expressly summarize certain provisions of the Bonds and the Indenture, and Bond Counsel’s opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material respects.

Additionally we consent to the form of our Bond Counsel opinion being included as Appendix D to the Official Statement.

This letter is furnished by us as Bond Counsel. No attorney-client relationship has existed or exists between our firm and Loop Capital Markets, in connection with the Bonds or by virtue of this letter. This opinion is issued to and for the sole benefit of the Addressees set forth above and is issued for the sole purpose of the transaction specifically referred to herein. No person other than the Addressees set forth above may rely upon this opinion without our express prior written consent. This opinion may not be utilized by you for any other purpose whatsoever and may not be quoted by you without our express prior written consent. Our engagement with respect to the Bonds has concluded with their issuance. We assume no obligation to review or supplement this opinion subsequent to its date, whether by reason of a change in the current laws, by legislative or regulatory action, by judicial decision or for any other reason.

Very truly yours,
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D-1

EXHIBIT D

FORM OF OPINION OF DISCLOSURE COUNSEL
__________, 2023
Town of Hillsborough
1600 Floribunda Avenue
Hillsborough, California 94010
Loop Capital Markets LLC
580 California Street, 16th Floor
San Francisco, California 94104
Re: $___________ Town of Hillsborough Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects)
Ladies and Gentlemen:

We have acted as Disclosure Counsel to the Town of Hillsborough, California (the “Town”) with respect to the issuance of the above captioned bonds (the “Bonds”). The Bonds are being issued pursuant to the provisions of (i) Sections 53570 et seq. and 53580 et seq. of the California Government Code, (ii) Resolution No. _________ adopted by the City Council of the Town on _________, 2023, and (iii) the Indenture of Trust, dated as of __________ 1, 2023 (the “Indenture”), by and between the Town and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”). The Bonds are more fully described in the final Official Statement of the Town dated __________, 2023 (the “Official Statement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Official Statement.

In rendering this opinion, we have reviewed such records, documents, certificates and opinions, and made such other investigations of law and fact as we have deemed necessary or appropriate.

This opinion is limited to matters governed by the Federal securities law of the United States, and we assume no responsibility with respect to the applicability or effect of the laws of any other jurisdiction.

In our capacity as Disclosure Counsel, we have rendered certain legal advice and assistance to the Town in connection with the preparation of the Preliminary Official Statement, dated __________, 2023 (the “Preliminary Official Statement”) and the Official Statement. Rendering such legal advice and assistance involved, among other things, discussions and inquiries concerning various legal matters, review of certain records, documents and proceedings, and participation in conferences with, among others, representatives of Bond Counsel, the Town, the Underwriter, Underwriter’s Counsel, the Municipal Advisor, and other consultants, at which conferences the contents of the Official Statement and related matters were discussed. On the basis of the information made available to us in the course of the foregoing (but without having -251-
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undertaken to determine or verify independently, or assuming any responsibility for, the accuracy, completeness or fairness of any of the statements contained in the Official Statement), no facts have come to the attention of the personnel in our firm directly involved in rendering legal advice and assistance in connection with the preparation of the Preliminary Official Statement and the Official Statement which cause us to believe that the Preliminary Official Statement as of its date and as of ______, 2023, and the Official Statement as of its date and as of the date hereof (excluding therefrom financial, engineering and statistical data; the Appendices thereto; forecasts, projections, estimates, assumptions and expressions of opinions; the treatment of the Bonds or the interest, discount or premium related thereto for tax purposes under the law of any jurisdiction; and the statements contained in the Official Statement under the captions “TAX MATTERS” and “UNDERWRITING,” as to all of which we express no view) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

During the period from the date of the Official Statement to the date of this opinion, except for our review of the certificates and opinions regarding the Official Statement delivered on the date hereof, we have not undertaken any procedures or taken any actions which were intended or likely to elicit information concerning the accuracy, completeness or fairness of any of the statements contained in the Official Statement.

We are furnishing this opinion to you, as Disclosure Counsel to the Town, solely for your benefit. No attorney-client relationship has existed or exists between our firm and the Underwriter in connection with the Bonds or by virtue of this letter. This opinion is rendered in connection with the transaction described herein, and may not be relied upon by you for any other purpose.

This opinion shall not extend to, and may not be used, circulated, quoted, referred to, or relied upon by, any other person, firm, corporation or other entity without our prior written consent. Our engagement with respect to this matter terminates upon the delivery of this opinion to you at the time of the closing relating to the Bonds, and we have no obligation to update this opinion.

Respectfully submitted,
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EXHIBIT E
$____________

TOWN OF HILLSBOROUGH
REVENUE REFUNDING BONDS, SERIES 2023
(WATER AND SEWER PROJECTS)

ISSUE PRICE CERTIFICATE
The undersigned, on behalf of LOOP CAPITAL MARKETS LLC (“Loop”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).

1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.

2. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Loop offered each Maturity of the Bonds to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date.

A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Contract, Loop has agreed in writing that, (i) for each Hold-the-Offering-Price Maturity of the Bonds, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-theoffering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Hold-the-Offering-Price Maturity of the Bonds at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.

3. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” (c) Holding Period means, for each Hold-the-Offering-Price Maturity of the Bonds, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date (_______, 2023), or (ii) the date on which Loop has sold at least 10% of such Maturity of the Bonds to the Public at prices that are no higher than the Initial Offering Price for such Maturity. (d) Issuer means the Town of Hillsborough.
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(e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an underwriter or a related party to an underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is _________, 2023. (h) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Loop’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Best Best & Krieger LLP, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.

LOOP CAPITAL MARKETS
By:
[Title]
Dated: ____________, 2023
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SCHEDULE A

SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL

OFFERING PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES Maturity
(June 1)
Principal
Amount
Interest
Rate Yield Price
10%
Test
Used
Hold the
Price
Offering
Rule Used

* Term Bonds.
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SCHEDULE B

PRICING WIRE OR EQUIVALENT COMMUNICATION
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INDENTURE OF TRUST
By and between the

TOWN OF HILLSBOROUGH
and

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL

ASSOCIATION,
as Trustee
Dated as of [June 1, 2023]
Relating to
Town of Hillsborough
$[PAR AMOUNT]
Revenue Refunding Bonds, Series 2023
(Water and Sewer Projects)
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ATTACHMENT 3
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TABLE OF CONTENTS
Page
-iARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL

SECURITY
SECTION 1.01 Definitions........................................................................................................ 2 SECTION 1.02 Rules of Construction .................................................................................... 13 SECTION 1.03 Authorization and Purpose of 2023 Bonds .................................................... 14 SECTION 1.04 Equal Security ................................................................................................ 14

ARTICLE II
ISSUANCE OF 2023 BONDS
SECTION 2.01 Terms of 2023 Bonds ..................................................................................... 14 SECTION 2.02 Redemption .................................................................................................... 15 SECTION 2.03 Form of 2023 Bonds ...................................................................................... 17 SECTION 2.04 Execution of 2023 Bonds ............................................................................... 17 SECTION 2.05 Transfer of 2023 Bonds ................................................................................. 17 SECTION 2.06 Exchange of 2023 Bonds ............................................................................... 18 SECTION 2.07 Temporary 2023 Bonds.................................................................................. 18 SECTION 2.08 Bond Registration Books ............................................................................... 18 SECTION 2.09 2023 Bonds Mutilated, Lost, Destroyed or Stolen ......................................... 18 SECTION 2.10 Book Entry System ........................................................................................ 19

ARTICLE III
ISSUE OF 2023 BONDS; ADDITIONAL OBLIGATIONS
SECTION 3.01 Issuance of 2023 Bonds ................................................................................. 21 SECTION 3.02 Application of Proceeds of Sale of 2023 Bonds; Transfers from the 2000 Indenture, 2003 Indenture, and 2006 Indenture .................................... 21 SECTION 3.03 [RESERVED]. ............................................................................................... 21 SECTION 3.04 Cost of Issuance Fund .................................................................................... 21 SECTION 3.05 Issuance of Additional Obligations ................................................................ 22 SECTION 3.06 Validity of 2023 Bonds .................................................................................. 24

ARTICLE IV
PLEDGE OF NET REVENUES; FUNDS AND ACCOUNTS
SECTION 4.01 Pledge of Net Revenues ................................................................................. 24 SECTION 4.02 Revenue Accounts; Receipt and Deposit of Revenues .................................. 25 SECTION 4.03 Establishment of Debt Service Fund and Accounts Therein and Allocation of Revenues Thereto .................................................................... 26 SECTION 4.04 Application of Debt Service Fund ................................................................. 27 SECTION 4.05 Rate Stabilization Account ............................................................................ 27 SECTION 4.06 Investments .................................................................................................... 27 -258-
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TABLE OF CONTENTS
(continued)
Page
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SECTION 4.07 Valuation; Investments .................................................................................. 28

ARTICLE V
COVENANTS OF THE TOWN; SPECIAL TAX COVENANTS
SECTION 5.01 Punctual Payment; Compliance With Documents ......................................... 29 SECTION 5.02 Against Encumbrances................................................................................... 29 SECTION 5.03 Discharge of Claims ....................................................................................... 29 SECTION 5.04 Acquisition, Construction or Financing of Improvements to the Enterprise ....................................................................................................... 29 SECTION 5.05 Maintenance and Operation of Enterprise in Efficient and Economical Manner ........................................................................................................... 29 SECTION 5.06 Against Sale, Eminent Domain ...................................................................... 29 SECTION 5.07 Insurance ........................................................................................................ 30 SECTION 5.08 Records and Accounts.................................................................................... 31 SECTION 5.09 Protection of Security and Rights of Owners ................................................ 31 SECTION 5.10 Against Competitive Facilities ....................................................................... 31 SECTION 5.11 Payment of Taxes, Etc ................................................................................... 31 SECTION 5.12 Rate Covenant; Amount of Rates and Charges, Operating Reserves ............ 31 SECTION 5.13 No Priority for Additional Obligations .......................................................... 32 SECTION 5.14 No Arbitrage .................................................................................................. 32 SECTION 5.15 Information Report......................................................................................... 32 SECTION 5.16 Private Activity 2023 Bond Limitation.......................................................... 32 SECTION 5.17 Federal Guarantee Prohibition ....................................................................... 32 SECTION 5.18 Further Assurances......................................................................................... 32 SECTION 5.19 Continuing Disclosure ................................................................................... 32 SECTION 5.20 Rebate Requirement ....................................................................................... 33 SECTION 5.21 Maintenance of Tax-Exemption .................................................................... 33

ARTICLE VI

THE TRUSTEE
SECTION 6.01 Appointment of Trustee ................................................................................. 33 SECTION 6.02 Acceptance of Trusts...................................................................................... 33 SECTION 6.03 Fees, Charges and Expenses of Trustee ......................................................... 37 SECTION 6.04 Notice to Bond Owners of Default ................................................................ 37 SECTION 6.05 Intervention by Trustee .................................................................................. 38 SECTION 6.06 Removal of Trustee ........................................................................................ 38 SECTION 6.07 Resignation by Trustee .................................................................................. 38 SECTION 6.08 Appointment of Successor Trustee ................................................................ 38 SECTION 6.09 Merger or Consolidation ................................................................................ 38 SECTION 6.10 Concerning any Successor Trustee ................................................................ 39 SECTION 6.11 Appointment of Co-Trustee ........................................................................... 39 SECTION 6.12 Indemnification; Limited Liability of Trustee ............................................... 40 -259-
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TABLE OF CONTENTS
(continued)
Page
iii

ARTICLE VII

MODIFICATION AND AMENDMENT OF THE INDENTURE
SECTION 7.01 Amendment by Consent of Bond Owners ..................................................... 40 SECTION 7.02 Amendment Without Consent of Bondholders .............................................. 40 SECTION 7.03 Disqualified 2023 Bonds................................................................................ 41 SECTION 7.04 Endorsement or Replacement of 2023 Bonds After Amendment ................. 41 SECTION 7.05 Amendment by Mutual Consent .................................................................... 41 SECTION 7.06 Execution of Supplemental Indentures .......................................................... 41

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01 Events of Default and Acceleration of Maturities ......................................... 42 SECTION 8.02 Application of Funds Upon Acceleration ...................................................... 43 SECTION 8.03 Other Remedies; Rights of Bond Owners ...................................................... 43 SECTION 8.04 Power of Trustee to Control Proceedings ...................................................... 44 SECTION 8.05 Appointment of Receivers ............................................................................. 44 SECTION 8.06 Non-Waiver.................................................................................................... 44 SECTION 8.07 Rights and Remedies of Bond Owners .......................................................... 45 SECTION 8.08 Termination of Proceedings ........................................................................... 45

ARTICLE IX

MISCELLANEOUS
SECTION 9.01 Limited Liability of Town ............................................................................. 45 SECTION 9.02 Parties Interested Herein ................................................................................ 46 SECTION 9.03 Discharge of Indenture ................................................................................... 46 SECTION 9.04 Content of Certificates ................................................................................... 47 SECTION 9.05 Execution of Documents by Bond Owners .................................................... 47 SECTION 9.06 Waiver of Personal Liability .......................................................................... 48 SECTION 9.07 Partial Invalidity............................................................................................. 48 SECTION 9.08 Destruction of Cancelled 2023 Bonds ........................................................... 48 SECTION 9.09 Funds and Accounts ....................................................................................... 48 SECTION 9.10 Notices ........................................................................................................... 49 SECTION 9.11 Unclaimed Moneys ........................................................................................ 49 EXHIBIT A FORM OF BOND ............................................................................................... A-1 -260-
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1 INDENTURE OF TRUST
THIS INDENTURE OF TRUST, made and entered into as of June 1, 2023, by and between the TOWN OF HILLSBOROUGH, a general law town organized and existing under the constitution and laws of the State of California (the “Town”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, with a corporate trust office in Los Angeles, California, and being qualified to accept and administer the trusts hereby created, as trustee (the “Trustee”).

WITNESSETH:

WHEREAS, the Town has previously issued its $4,900,000 Certificates of Participation (Refunding) 2000 Series A (the “2000A Certificates”) and its $10,100,000 Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B (the “2000B Certificates” and together with the 2000A Certificates, the “2000 Certificates”), which are currently outstanding in the principal amounts of $2,100,000 and $3,800,000, respectively, for the purpose of financing and refinancing water and sewer system improvements for the Town; and WHEREAS, the Town has previously issued its $15,000,000 Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A, for the purpose of financing and refinancing water and sewer system improvements for the Town (the “2003 Certificates”), which are currently outstanding in the principal amount of $7,200,000; and WHEREAS, the Town has previously issued its $12,000,000 Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A (the “2006 Certificates” and together with the 2000 Certificates and the 2003 Certificates, the “Refunded Certificates”), which are currently outstanding in the principal amount of $6,865,000; and WHEREAS, the 2000 Certificates currently bear interest at a variable rate of interest and are secured by payments to be made under that certain Installment Purchase Agreement, dated as of May 1, 2000, by and between the Town and the Hillsborough Public Improvement Corporation (the “Corporation”), a nonprofit public benefit corporation organized and existing under the laws of the State (the “2000 Installment Purchase Agreement”); and WHEREAS, the 2003 Certificates currently bear interest at a variable rate of interest and are secured by payments to be made under that certain Installment Purchase Agreement, dated as of August 1, 2003, by and between the Town and the Corporation (the “2003 Installment Purchase Agreement”); and
WHEREAS, the 2006 Certificates currently bear interest at a variable rate of interest and are secured by payments to be made under that certain Installment Purchase Agreement, dated as of April 1, 2006, by and between the Town and the Corporation (the “2006 Installment Purchase Agreement” and together with the 2000 Installment Purchase Agreement and the 2003 Installment Purchase Agreement, the “Prior Installment Purchase Agreements”); and WHEREAS, in order to hedge against rising interest rates and maximize delivery of capital projects financed with proceeds of the 2000B Certificates, 2003 Certificates, and 2006 Certificates, -261-
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2 the Town entered into interest rate swap transactions with JP Morgan Chase Bank, N.A. (such transactions being hereinafter together referred to as the “Swap Agreements”), in the respective initial notional amounts of $10,100,000, $15,000,000 and $12,000,000; and WHEREAS, the Town, after due investigation and deliberation, has determined that it is in the best interests of the Town at this time to provide for the issuance of the Town of Hillsborough 2023 Revenue Refunding Bonds (the “2023 Bonds”) under this Indenture for the purpose of refunding the Refunded Certificates, terminating and discharging the Installment Purchase Agreements, paying costs of issuance, and to pay a termination fee related to swaps relating to the 2000B Certificates, the 2003 Certificates, and the 2006 Certificates, and to that end the Hillsborough City Council (the “City Council”) has heretofore adopted its Resolution No. [___], approving and authorizing the issuance of the 2023 Bonds for such purposes; and WHEREAS, in order to provide for the authentication and delivery of the 2023 Bonds, to establish and declare the terms and conditions upon which the 2023 Bonds are to be issued and secured, and to secure the payment of the principal thereof and of the interest and premium, if any, thereon, the City Council has authorized the execution and delivery of this Indenture; and WHEREAS, all of the 2023 Bonds will be secured by a pledge of the Net Revenues, as defined herein, and certain other moneys and securities held by the Town and the Trustee hereunder; and
WHEREAS, the Town has determined that all acts and proceedings required by law necessary to make the 2023 Bonds, when executed by the Town, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Town, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken; and the execution and delivery of this Indenture have been in all respects duly authorized.

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and premium (if any) on all 2023 Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the 2023 Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the 2023 Bonds by the Owners thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Town does hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time to time of the 2023 Bonds, as follows:

ARTICLE I
DEFINITIONS; AUTHORIZATION AND
PURPOSE OF BONDS; EQUAL SECURITY
SECTION 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any Additional Obligations Instrument and -262-
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3 of the 2023 Bonds and of any certificate, opinion, request or other documents herein mentioned have the meanings herein specified.
“Additional Obligations” means Obligations, other than the 2023 Bonds, which are either currently outstanding or issued pursuant to Section 3.05 hereof. “Additional Obligations Instrument” means all leases, installment sale agreements, trust agreements, indentures of trust, and other documents prescribing the terms and provisions applicable to any issue of Additional Obligations, and any other agreement, instrument, and document executed and delivered pursuant to or in connection with any of the foregoing. “Administrative Costs” means the ordinary and necessary administrative costs and incidental expenses related to the 2023 Bonds, the Indenture, and any Additional Obligations, including, but not limited to Trustee fees (including any fees and expenses of its counsel) and fees incurred in connection with the calculation of arbitrage rebate due to the federal government with respect to the 2023 Bonds.
“Authorized Investments” means any of the following, but only to the extent that the same are acquired at Fair Market Value, which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:
(a) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America; (b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America: (i) Export-Import Bank; (ii) Farm Credit System Financial Assistance Corporation, (iii) Rural Economic Community Development (formerly the Farmers Home Administration); (iv) General Services Administration; (v) U.S. Maritime Administration; (vi) Small Business Administration; (vii) Government National Mortgage Association (GNMA); (viii) U.S. Department of Housing & Urban Development (PHA’s); (ix) Federal Housing Administration; and (x) Federal Financing Bank;
(c) senior debt obligations rated “Aa” by Moody’s or “AA” by S&P issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, senior debt obligations of other government-sponsored agencies, obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of other government sponsored agencies;
(d) U.S. dollar denominated deposit accounts, federal funds, and bankers’ acceptances with domestic commercial banks (including the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s or “A-1” or “A-1+” by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank;
(e) commercial paper which is rated, at the time of purchase, in the single highest classification (“P-1” by Moody’s or “A-1+” by S&P), of at least one nationally -263-
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4 recognized rating agency, and which matures not more than 270 days after the date of purchase;
(f) investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P, including such funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives and retains a fee for services provided to the fund, (ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee;
(g) pre-refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based upon an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or (ii)(A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (a) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;
(h) the Local Agency Investment Fund maintained by the State of California; and
(i) any other forms of investments approved in writing by the Town. “Authorized Official” means the Mayor, City Manager, Finance Director, or either of their designees, or any other officer of the Town duly authorized by the City Council for that purpose. “Bond Counsel” means Best Best & Krieger LLP, or any attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America. “Bond Law” means Sections 53570 et seq. and 53580 et seq. of the California Government Code, as in effect on the Closing Date.
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5 “Bond Registration Books” means the books maintained by the Trustee pursuant to Section

2.08 for the registration and transfer of ownership of the 2023 Bonds. “Bond Year” means the period beginning on June 2 in each year and ending on June 1 in the following year except, that the first Bond Year shall begin on the Closing Date. “Bonds” means the SRF Loan, and all other revenue bonds, leases, agreements, notes, or other indebtedness of the Town authorized, executed, issued, and delivered under and pursuant to the laws of the State of California, the payments of which are made from the Net Revenues and which are on a parity with the 2023 Bonds. The term “Bonds” includes, but is not limited to, obligations in the form of bonds, notes, bond anticipation notes, and commercial paper. “Business Day” means any day other than a Saturday, Sunday, or a day on which the Trustee is authorized by law to remain closed.
“Certificate of the Town” means a certificate in writing signed by an Authorized Official, or by any other officer of the Town duly authorized by the City Council for that purpose. “City Council” means the City Council of the Town or any other legislative body of the Town hereafter provided for pursuant to law.
“Clean Water Agreement” means that certain Interim Agreement for Payment of Capital Costs of Clean Water Program Projects, dated June 29, 2022, by and between the Town and the City of San Mateo, which is payable on a subordinate basis to the 2023 Bonds. “Closing Date” means the date upon which there is an exchange of the 2023 Bonds for the proceeds representing the purchase of such Series by the Original Purchaser thereof. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the Town and dated the date of original execution and delivery of the 2023 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
“Contract Payment Date” means any date on which Contract Payments are scheduled to be paid by the Town under and pursuant to any Contract.
“Contract Payments” means debt service on the 2023 Bonds due and payable under this Indenture or the installment or lease payments of interest and principal or, if there are no separate payments of interest and principal, the installment or lease payments, scheduled to be paid by the Town under and pursuant to the Contracts.
“Contracts” means the 2023 Bonds, the SRF Loan, and all other contracts or leases of the Town authorized and executed by the Town under and pursuant to the laws of the State of California, under which the debt service, installment, or lease payments are payable from the Net Revenues on a parity with the 2023 Bonds.
“Corporation” means the Hillsborough Public Improvement Corporation, a nonprofit public benefit corporation organized and existing under the laws of the State. -265-
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6 “Cost of Issuance Fund” means the Account by that name established pursuant to Section 3.04.
“Costs of Issuance” means all expenses incurred in connection with the authorization, issuance, sale, and delivery of the 2023 Bonds, including but not limited to compensation, fees, and expenses of the Town and the Trustee and their respective counsel, compensation to any financial consultants and underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of preparation and reproduction of documents and costs of printing. “Debt Service” means, for any calculation period, the sum of (1) the interest payable during such period on all outstanding Bonds, assuming that all outstanding serial Bonds are retired as scheduled and that all outstanding term Bonds are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) that portion of the principal amount of all outstanding serial Bonds maturing on any principal payment date which falls in such period, and (3) that portion of the principal amount of all outstanding term Bonds required to be redeemed or paid on any redemption date which falls in such period (together with the redemption premiums, if any, thereon). For purposes of calculating Debt Service, the following assumptions shall be used:
(A) in determining the principal amount due in period, payment shall be assumed to be made in accordance with any amortization schedule established for such Obligations, including any scheduled payment at maturity or mandatory redemption or prepayment of Obligations on the basis of accreted value, and for such purpose, the scheduled payment at maturity or redemption payment or prepayment shall be deemed a principal payment; provided that if twenty percent (20%) or more of the principal of any such Obligations is not due until the final stated maturity of such Obligations, such principal may, at the option of the Town, be treated as if it were due based upon a level amortization of such principal over the term of such Obligations or twenty (20) years, whichever is greater;
(B) in determining the interest due in each period:
(1) interest payable at a fixed rate shall be assumed to be made at such fixed rate and on the required payment dates;
(C) if amounts constituting accrued interest or capitalized interest have been deposited with a trustee for Obligations, then the interest payable with respect to such Obligations from such amounts shall be disregarded and not included in calculating Debt Service;
(D) if moneys or Defeasance Obligations have been deposited by the Town into a separate fund or account or are otherwise held by the Town or by a fiduciary to be used to pay Debt Service on specified Obligations, and such Obligations are discharged or no longer outstanding pursuant to the terms of the instrument under which they are issued or arise, then the Debt Service to be paid from such moneys or Defeasance Obligations, or from the earnings thereon, shall be disregarded and not included in calculating Debt Service;
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7 (E) if investment earnings on amounts on deposit in a debt service reserve fund are, pursuant to the terms of the instrument under which such debt service reserve fund was established, required to be transferred therefrom and used to pay, or used as a credit against the payment of, debt service on specified Obligations then the projected investment earnings on such amounts, based on a reasonably determined rate of return, expected to be so used during such period shall be deducted from the payments for such Obligations during such period;
(F) the amount on deposit in a debt service reserve fund on any date of calculation of Debt Service shall be deducted from the amount of principal due at the final maturity of the Obligations for which such debt service reserve fund was established and in each preceding year until such amount is exhausted; and (G) with respect to payments that are not comprised of separate payments of interest and principal but which, rather, are required pursuant to the instrument under which they arise to be paid in amounts sufficient to pay principal and interest on bonds, notes, or other obligations of an entity other than the Town, for purposes of calculating Debt Service, interest payments and principal payment (whether at maturity or by redemption or prepayment) with respect to such bonds, notes, or other obligations shall be deemed to be interest payments and principal payments with respect to such payments. “Debt Service Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.03.
“Defeasance Obligations” means (a) cash, (b) non-callable Federal Securities described in paragraph (a) of the definition thereof (“Treasuries”), (c) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, or (d) pre-refunded municipal obligations rated “AA” or “Aa” by S&P or Moody’s, respectively (or any combination thereof).
“Depository” means (a) initially, DTC, and (b) any other Securities Depositories acting as Depository pursuant to Section 2.10.
“Depository System Participant” means any participant in the Depository’s book-entry system.
“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Energy Conservation Agreement” means that certain Energy Conservation Assistance Account Loan Agreement, dated March 31, 2010, by and between the Town and the California Energy Resources Conservation and Development Commission, which is payable on a subordinate basis with the 2023 Bonds.
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8 “Enterprise” means the properties and assets, real and personal, tangible and intangible, of the Town, now or hereafter existing, used or pertaining to the collection, transmission, distribution, and sale of water (the “Water System”) and to the collection and transmission of sewage, including all additions, extensions, expansions, improvements, and betterments thereto and equipping thereof (the “Sewer System”).
“Event of Default” means any of the events described in Section 8.01. “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the Town and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment.
“Federal Securities” means any of the following, which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America); and
(b) obligations of any department, agency, or instrumentality of the United States of America the timely payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America. “Fiscal Year” means the period commencing on July 1 of each year and terminating on the next succeeding June 30.
“Improvement” means any addition, extension, improvement, equipment, machinery or other facilities to or for the Enterprise.
“Indenture” means this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof. “Independent Certified Public Accountant” means any certified public accountant or firm of such accountants appointed and paid by the Town, and who, or each of whom- (a) is in fact independent and not under domination of the Town; -268-
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9 (b) does not have any substantial identity of interest, direct or indirect, with the Town; and
(c) is not and no member of which is connected with the Town as an officer or employee of the Town, but who may be regularly retained to make annual or other audits of the books of or reports to the Town.
“Independent Financial Consultant” means the consultant, consulting firm, municipal advisor, accountant, or accounting firm retained by the Town to perform the acts and carry out the duties provided for such consultant in this Indenture. Such consultant, consulting firm, municipal advisor, accountant, or accounting firm shall be recognized within its profession for work of the character required.
“Information Services” means in accordance with then-current guidelines of the Securities and Exchange Commission, the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board (at http://emma.msrb.org), or such service or services as the Authority may designate in a certificate delivered to the Trustee. “Interest Payment Date” means, with respect to the 2023 Bonds, June 1 and December 1 in each year, beginning [December 1, 2023].
“Maintenance and Operations Costs” means, for any Fiscal Year or other period, the reasonable and necessary costs spent or incurred by the Town for maintaining and operating the Enterprise, calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Enterprise in good repair and working order, and including Administrative Costs, salaries and wages of employees, payments for retiree healthcare and to employee retirement systems (to the extent paid from Revenues), overhead, insurance, taxes (if any), fees of auditors, accountants, attorneys, municipal advisors, consultants or engineers, and insurance premiums, and including all other reasonable and necessary costs of the Town or charges required to be paid by it to comply with the terms of the 2023 Bonds, this Indenture, or any Additional Obligations, including any amounts required to be deposited in the Rebate Fund pursuant to the Tax Certificate, but excluding in all cases (i) depreciation and replacement and obsolescence charges or reserves therefor, (ii) amortization of intangibles or other bookkeeping entries of a similar nature, (iii) costs of capital additions, replacements, betterments, extensions, or improvements to the Enterprise, which under generally accepted accounting principles are chargeable to a capital account or to a reserve for depreciation, (iv) charges for the payment of principal and interest on any general obligation bond heretofore or hereafter issued for Enterprise purposes, and (v) charges for the payment of any debt service on the Obligations. “Maximum Annual Debt Service” means, at any point in time, with respect to Obligations then outstanding, the maximum amount of Debt Service on the Obligations in the then current or any future Fiscal Year, calculated by the Town or by an Independent Financial Consultant and provided to the Trustee.
“Minimum Rating” means a long-term rating of A or better from S&P or Moody’s or a short-term rating which is in the highest general rating category of S&P and Moody’s, in any event -269-
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10 determined without regard to any refinement or gradation of such rating by a numerical modifier, a plus or a minus sign, or otherwise.
“Moody’s” means Moody’s Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Town. “Net Proceeds,” when used with reference to any insurance or condemnation award or sale of property, means the gross proceeds from the sale of property or insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorneys’ fees and any extraordinary expenses of the Trustee) incurred in the collection of such gross proceeds.
“Net Revenues” means, for any period, the Revenues for such period less the Maintenance and Operations Costs for such period.
“Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated pursuant to Section 2.10(a) of this Indenture. “Obligations” means Bonds, Contract Payments, and Subordinate Obligations. “Original Purchaser” means, in the case of the 2023 Bonds, Loop Capital Markets LLC, and its successors and assigns.
“Outstanding,” when used as of any particular time with reference to the 2023 Bonds, means (subject to the provisions of Section 7.03) all 2023 Bonds theretofore executed, issued and delivered by the Town under this Indenture except -
(a) 2023 Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;
(b) 2023 Bonds paid or deemed to have been paid within the meaning of Section

9.03; and
(c) 2023 Bonds in lieu of or in substitution for which other 2023 Bonds shall have been executed, issued and delivered by the Town pursuant to this Indenture or any Contracts for Additional Obligations.
“Owner” or “Bond Owner” or “Bondowner,” when used with respect to any 2023 Bond, means the person in whose name the ownership of such 2023 Bond shall be registered on the Bond Registration Books.
“Parity Debt” means the SRF Loan, and all other revenue bonds, leases, agreements, notes, or other indebtedness of the Town, other than the 2023 Bonds, authorized, executed, issued, and delivered under and pursuant to the laws of the State of California, the payments of which are made from the Net Revenues and which are on a parity with the 2023 Bonds. The term “Parity -270-
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11 Debt” includes, but is not limited to, obligations in the form of bonds, notes, bond anticipation notes, and commercial paper.
“Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Certificate.
“Principal Corporate Trust Office” means the corporate trust office of the Trustee at the address set forth in Section 9.10, provided that for purposes of payment, cancellation, surrender, exchange and transfer of 2023 Bonds, such term means the corporate trust office of the Trustee in Los Angeles, CA, or such other or additional offices as may be designated by the Trustee from time to time.
“Rate Stabilization Account” means the account within the Water and Sewer Enterprise Fund which may be established pursuant to Section 4.05 hereof. “Record Date” means, with respect to the 2023 Bonds, the fifteenth (15th) calendar day of the month immediately preceding an Interest Payment Date or, with respect to any Additional Obligations, any other date established in the applicable Additional Obligations Instrument. “Refunded Certificates” means, collectively, the 2000 Certificates, 2003 Certificates, and 2006 Certificates to be refunded with proceeds of the 2023 Bonds. “Revenue Accounts” means the accounts by that name held by the Town as set forth in Section 4.02.
“Revenues” means, for any computation period, all rates, fees, and charges received for, and all other income and receipts derived by the Town from, the operation of the Enterprise or arising from the Enterprise, calculated in accordance with generally accepted accounting principles, including all proceeds of insurance covering business interruption loss relating to the Enterprise, investment earnings on such amounts, transfers from the Rate Stabilization Account maintained by the Town, and all other money howsoever derived by the Town from the operation of the Enterprise or arising from the Enterprise; provided, however, that Revenues shall include fees and charges collected during such Fiscal Year or other period, but only to the extent that such fees and charges could be properly expended on an Enterprise project for which the proceeds were used or are available to be used. Revenues shall not include customers’ security deposits or any other deposits subject to refund until such deposits have become the property of the Town or proceeds of insurance covering casualty losses. Revenues shall not include any transfers from the Town’s General Fund for storm water operations or any other purpose. “S&P” means S&P Global Ratings, and its successors or assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Town.
“SRF Loan” means that certain Installment Sale Agreement (Crystal Springs/El Cerrito Sewer Improvement Project, Phase II), dated as of March 23, 2015, as amended by that certain Amendment No. 1 dated as of August 25, 2015, and that certain Amendment No. 2 dated as of -271-
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12 June 1, 2016, each by and between the Town and the California State Water Resources Control Board.
“Subordinate Obligation Contract” means all contracts, leases, installment sale agreements, indentures, or other contracts or instruments of the Town authorized and executed by the Town under and pursuant to applicable law, the installment, lease, or other payments under which are, in accordance with the provisions hereof, payable from the Net Revenues remaining after payment therefrom of Bonds and Contract Payments.
“Subordinate Obligation Payments” means the debt service payments, installment, lease, and other payments of interest and principal required and payable by the Town under and pursuant to a Subordinate Obligation Contract.
“Subordinate Obligations” means the Clean Water Agreement, Energy Conservation Agreement, and all other revenue bonds, notes, leases, contracts and other indebtedness (including bond anticipation notes and commercial paper) of the Town authorized, executed, issued and delivered under and pursuant to applicable law, whether or not expressly made subordinate to the Bonds and Contract Payments, the payments of which are, in accordance with the provisions hereof, payable from Net Revenues remaining after payment therefrom after payment of Bonds and Contract Payments.
“State” means the State of California.
“Supplemental Indenture” means any supplement or amendment to this Indenture which complies with the provisions of Section 7.01 or 7.02.
“Tax Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the 2023 Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code.
“Tax Regulations” means temporary and permanent regulations promulgated under the Tax Code.
“Town” means the Town of Hillsborough, a general law town organized and existing under the laws of the State of California.
“Trustee” means The Bank of New York Mellon Trust Company, National Association, appointed by the Town to act as trustee hereunder pursuant to Section 6.01, and its assigns or any other corporation or association which may at any time be substituted in its place, as provided in Section 6.01.
“2000 Certificates” means, collectively, the 2000A Certificates and 2000B Certificates. “2000 Indenture” means that certain Trust Agreement, dated as of May 1, 2000, by and among the Town, the Corporation, and the 2000 Trustee.
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13 “2000 Trustee” means The Bank of New York Mellon Trust Company, National Association, as trustee under the 2000 Indenture.
“2000A Certificates” means the Town of Hillsborough Certificates of Participation (Refunding) 2000 Series A issued in the original aggregate principal amount of $4,900,000, which, as of the date hereof, remain outstanding in the principal amount of $2,100,000. “2000B Certificates” means the Town of Hillsborough Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B issued in the original aggregate principal amount of $10,100,000, which, as of the date hereof, remain outstanding in the principal amount of $3,800,000.
“2003 Certificates” means the Town of Hillsborough Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A issued in the original aggregate principal amount of $15,000,000, which, as of the date hereof, remain outstanding in the principal amount of $7,200,000.
“2003 Indenture” means that certain Trust Agreement, dated as of August 1, 2003, by and among the Town, the Corporation, and the 2003 Trustee.
“2003 Trustee” means The Bank of New York Mellon Trust Company, National Association, as trustee under the 2003 Indenture.
“2006 Certificates” means the Town of Hillsborough Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A issued in the original aggregate principal amount of $12,000,000, which, as of the date hereof, remain outstanding in the principal amount of $6,865,000.
“2006 Indenture” means that certain Trust Agreement, dated as of April 1, 2006, by and among the Town, the Corporation, and the 2006 Trustee.
“2006 Trustee” means The Bank of New York Mellon Trust Company, National Association, as trustee under the 2006 Indenture.
“2023 Bonds” means the Town of Hillsborough 2023 Revenue Refunding Bonds, issued and at any time Outstanding hereunder.

SECTION 1.02 Rules of Construction. All references in this Indenture to “Articles,” “Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; and the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. -273-
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14 SECTION 1.03 Authorization and Purpose of 2023 Bonds. The Town has reviewed all proceedings heretofore taken relative to the authorization of the 2023 Bonds and has found, as a result of such review, and hereby finds and determines that all things, conditions, and acts required by law to exist, happen and/or be performed precedent to and in the issuance of the 2023 Bonds do exist, have happened, and have been performed in due time, form, and manner as required by law, and the Town is now authorized, as an exercise of the power of the Town as a general law town under the constitution and laws of the State and pursuant to the Bond Law and each and every requirement of law, to issue the 2023 Bonds in the manner and form provided in this Indenture.

Accordingly, the Town hereby authorizes the issuance of the 2023 Bonds pursuant to the Bond Law and this Indenture for the purpose of providing funds to refund the Refunded Certificates, to pay termination fees of swaps related thereto, and to pay Costs of Issuance of the 2023 Bonds.

SECTION 1.04 Equal Security. In consideration of the acceptance of the 2023 Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Town, the Trustee, and the Owners from time to time of the 2023 Bonds; and the covenants and agreements herein set forth to be performed on behalf of the Town shall be for the equal and proportionate benefit, security, and protection of all Owners of the 2023 Bonds without preference, priority, or distinction as to security or otherwise of any of the 2023 Bonds over any of the others by reason of the number or date thereof or the time of sale, execution, or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.

ARTICLE II
ISSUANCE OF 2023 BONDS
SECTION 2.01 Terms of 2023 Bonds. The 2023 Bonds authorized to be issued by the Town under and subject to the Bond Law and the terms of this Indenture shall be designated the “Town of Hillsborough Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects),” and shall be issued in the original principal amount of [AMOUNT] ($[___]).

The 2023 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no 2023 Bond shall have more than one maturity date. The 2023 Bonds shall mature on June 1 in each of the years and in the amounts, and shall bear interest at the rates, as follows:
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15 Maturity Date
(June 1)
Principal
Amount
Interest
Rate
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Interest on the 2023 Bonds shall be payable on each Interest Payment Date to the person whose name appears on the Bond Registration Books as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check or draft of the Trustee mailed by first class mail to the Owner or, at the option of any Owner of at least $1,000,000 aggregate principal amount of the 2023 Bonds with respect to which written instructions have been filed with the Trustee prior to the Record Date, by wire transfer, at the address of such Owner as it appears on the Bond Registration Books. In the event there exists a default in payment of interest due on such Interest Payment Date, such interest shall be payable on a payment date established by the Trustee to the persons in whose names the 2023 Bonds are registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Trustee to the registered Owners of the 2023 Bonds not less than 15 days preceding such special record date. Principal of and premium (if any) on any 2023 Bond shall be paid upon presentation and surrender thereof at the Principal Corporate Trust Office of the Trustee. Both the principal of and interest and premium (if any) on the 2023 Bonds shall be payable in lawful money of the United States of America.

The 2023 Bonds shall be dated the Closing Date and bear interest based on a 360-day year comprised of twelve 30-day months from the Interest Payment Date next preceding the date of authentication thereof, unless said date of authentication is an Interest Payment Date, in which event such interest is payable from such date of authentication, and unless said date of authentication is prior to [November 15, 2023], in which event such interest is payable from the Closing Date; provided, however, that if, as of the date of authentication of any 2023 Bond, interest thereon is in default, such 2023 Bond shall bear interest from the date to which interest has previously been paid or made available for payment thereon in full.

SECTION 2.02 Redemption.
(a) Optional Redemption. The 2023 Bonds maturing on or before June 1, 2031, are not subject to optional redemption prior to maturity. The 2023 Bonds maturing on June 1, 2032, and thereafter are subject to redemption prior to their stated maturity at the option of the Town, as a whole or in part on any date, by such maturities as are selected by the Town from any available source of funds on or after June 1, 2031, at a redemption price equal to the principal amount of the -275-
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16 2023 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

The Town shall provide the Trustee a written request of its intention to redeem 2023 Bonds under this subsection (a), and the manner of selecting such 2023 Bonds for redemption from among the maturities thereof and the redemption price thereof, at least 30 days prior to the redemption date.
(b) Selection of 2023 Bonds for Redemption. Whenever provision is made in this Section 2.02 of this Indenture for the redemption of less than all of the 2023 Bonds of any series, the Trustee shall select the 2023 Bonds to be redeemed from all 2023 Bonds or such given portion thereof not previously called for redemption, among series and among maturities as directed by the Town and by lot within a maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair.
(c) Notice of Redemption. Notice of redemption shall be mailed by first class mail, postage prepaid, not less than twenty (20) nor more than forty-five (45) days before any redemption date, to respective Owners of any 2023 Bonds designated for redemption at their addresses appearing on the Bond Registration Books, and to the Securities Depositories and to the Information Services. Each notice of redemption shall state the date of the notice, the redemption date, the place or places of redemption, whether less than all of the 2023 Bonds of such series (or all 2023 Bonds of a single maturity) are to be redeemed, the CUSIP numbers and 2023 Bond numbers of the 2023 Bonds to be redeemed, the maturity or maturities of the 2023 Bonds to be redeemed and in the case of 2023 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on the redemption date there will become due and payable on each of said 2023 Bonds the redemption price thereof, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such 2023 Bonds be then surrendered. Neither the failure to receive any notice nor any defect therein shall affect the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of 2023 Bonds shall be given by the Trustee, at the expense of the Town, for and on behalf of the Town. (d) Conditional Notice of Optional Redemption of 2023 Bonds. With respect to the optional redemption of the 2023 Bonds pursuant to Section 2.02(a) hereof, the Town may instruct the Trustee to include a statement in the notice of such redemption which shall state that such redemption is conditioned upon the receipt by the Trustee on or before the date fixed for such redemption of sufficient funds for such purpose. In the event that sufficient funds shall not have been deposited with the Trustee on or before the date fixed for redemption, the Trustee shall promptly notify the Owners in the same manner in which notice was sent that such redemption is cancelled and the notice thereof shall be deemed to be cancelled and rescinded. (e) Partial Redemption of 2023 Bonds. Upon surrender of any 2023 Bonds redeemed in part only, the Town shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Town, a new 2023 Bond or 2023 Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the 2023 Bonds surrendered. -276-
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17 (f) Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the 2023 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the 2023 Bonds (or portions thereof) so called for redemption shall become due and payable, interest on the 2023 Bonds so called for redemption shall cease to accrue, said 2023 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said 2023 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof.

All 2023 Bonds redeemed pursuant to the provisions of this Article shall be canceled by the Trustee upon surrender thereof and destroyed.

SECTION 2.03 Form of 2023 Bonds. The 2023 Bonds, the Trustee’s certificate of authentication, and the assignment to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.

SECTION 2.04 Execution of 2023 Bonds. The 2023 Bonds shall be signed in the name and on behalf of the Town with the manual or facsimile signatures of its City Manager, and attested by the manual or facsimile signature of its City Clerk under the seal of the Town. Such seal may be in the form of a facsimile of the Town’s seal and shall be imprinted or impressed upon the 2023 Bonds. The 2023 Bonds shall then be delivered to the Trustee for authentication by it. In case any officer who shall have signed any of the 2023 Bonds shall cease to be such officer before the 2023 Bonds so signed shall have been authenticated or delivered by the Trustee or issued by the Town, such 2023 Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Town as though the individual who signed the same had continued to be such officer of the Town. Also, any 2023 Bond may be signed on behalf of the Town by any individual who on the actual date of the execution of such 2023 Bond shall be the proper officer although on the nominal date of such 2023 Bond such individual shall not have been such officer.

Only such of the 2023 Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the 2023 Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

SECTION 2.05 Transfer of 2023 Bonds. Any 2023 Bond may, in accordance with its terms, be transferred upon the Bond Registration Books by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2023 Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any 2023 Bond shall be surrendered for transfer, the Town shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new 2023 Bond or 2023 Bonds of like tenor, maturity and aggregate principal amount. The Town shall pay all costs of the Trustee incurred in connection with any such transfers, except that the Trustee may require the payment by the Bond Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer.
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18 No transfer of any 2023 Bond shall be required to be made during the period established by the Trustee for selection of 2023 Bonds for redemption and after any 2023 Bond has been selected for redemption.

SECTION 2.06 Exchange of 2023 Bonds. The 2023 Bonds may be exchanged at the Principal Corporate Trust Office of the Trustee for 2023 Bonds of the same tenor and maturity and of other authorized denominations. The Town shall pay all costs of the Trustee incurred in connection with any such exchanges, except that the Trustee may require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.

No exchange of any 2023 Bond shall be required to be made during the period established by the Trustee for selection of the Bonds for redemption and after any 2023 Bond has been selected for redemption.

SECTION 2.07 Temporary 2023 Bonds. The 2023 Bonds may be issued initially in temporary form exchangeable for definitive 2023 Bonds when ready for delivery. The temporary 2023 Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Town, and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary 2023 Bond shall be executed by the Town and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive 2023 Bonds. If the Town issues temporary 2023 Bonds, it will execute and furnish definitive 2023 Bonds without delay, and thereupon the temporary 2023 Bonds may be surrendered, for cancellation, in exchange therefor at the Principal Corporate Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary 2023 Bonds an equal aggregate principal amount of definitive 2023 Bonds of authorized denominations.

Until so exchanged, the temporary 2023 Bonds shall be entitled to the same benefits under this Indenture as definitive 2023 Bonds authenticated and delivered hereunder.

SECTION 2.08 Bond Registration Books. The Trustee will keep or cause to be kept at its trust office sufficient Bond Registration Books for the registration and transfer of the 2023 Bonds, which shall at all times during regular business hours, and upon reasonable notice, be open to inspection by the Town; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, 2023 Bonds as hereinbefore provided.

SECTION 2.09 2023 Bonds Mutilated, Lost, Destroyed or Stolen. If any 2023 Bond shall become mutilated, the Town, at the expense of the Owner of said 2023 Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new 2023 Bond of like maturity and principal amount in exchange and substitution for the 2023 Bond so mutilated, but only upon surrender to the Trustee of the 2023 Bond so mutilated. Every mutilated 2023 Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or upon the order of, the Town. If any 2023 Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it shall be given, the Town, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new 2023 Bond of like maturity and principal amount in lieu of and in substitution for the 2023 Bond so lost, destroyed or stolen. The -278-
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19 Town may require payment of a reasonable fee for each new 2023 Bond issued under this Section and of the expenses which may be incurred by the Town and the Trustee. Any 2023 Bond issued under the provisions of this Section in lieu of any 2023 Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the Town whether or not the 2023 Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other 2023 Bonds secured by this Indenture.

SECTION 2.10 Book Entry System.
(a) Original Delivery. The 2023 Bonds shall be initially delivered in the form of a separate single fully registered 2023 Bond (which may be typewritten) for each maturity of the 2023 Bonds. Upon initial delivery, the ownership of each such 2023 Bond shall be registered on the Bond Registration Books maintained by the Trustee pursuant to Section 2.08 hereof in the name of the Nominee.

Except as provided in subsection (c), the ownership of all of the Outstanding 2023 Bonds shall be registered in the name of the Nominee on such Bond Registration Books.

With respect to 2023 Bonds the ownership of which shall be registered in the name of the Nominee, the Town and the Trustee shall have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Town holds an interest in the 2023 Bonds. Without limiting the generality of the immediately preceding sentence, the Town and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Depository System Participant with respect to any ownership interest in the 2023 Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Bond Registration Books, of any notice with respect to the 2023 Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the 2023 Bonds to be redeemed in the event the Town elects to redeem the 2023 Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Bond Registration Books, of any amount with respect to principal, premium, if any, or interest represented by the 2023 Bonds, or (v) any consent given or other action taken by the Depository as Bond Owner. The Town and the Trustee may treat and consider the person in whose name each 2023 Bond is registered as the absolute owner of such 2023 Bond for the purpose of payment of principal, premium, if any, and interest represented by such 2023 Bond, for the purpose of giving notices of redemption and other matters with respect to such 2023 Bond, for the purpose of registering transfers of ownership of such 2023 Bond, and for all other purposes whatsoever. The Trustee shall pay the principal, interest and premium, if any, represented by the 2023 Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal, interest and premium, if any, represented by the 2023 Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a 2023 Bond evidencing the obligation of the Town to make payments of principal, interest and premium, if any, pursuant to this Trust Indenture. Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, such new nominee shall become the Nominee hereunder for -279-
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20 all purposes; and upon receipt of such a notice the Town shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the 2023 Bonds for the Depository’s book-entry system, the Town shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the 2023 Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the Town or the Trustee any obligation whatsoever with respect to persons having interests in the 2023 Bonds other than the Bond Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the Town may take any other actions, not inconsistent with this Indenture, to qualify the 2023 Bonds for the Depository’s book-entry program. (c) Transfers Outside Book-Entry System. In the event that either (i) the Depository determines not to continue to act as Depository for the 2023 Bonds, or (ii) the Town determines to terminate the Depository as such, then the Town shall thereupon discontinue the book-entry system with such Depository. In such event, the Depository shall cooperate with the Town and the Trustee in the execution of replacement 2023 Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the 2023 Bonds, including all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended, and by surrendering the 2023 Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement 2023 Bonds are to be issued. The Depository, by accepting delivery of the 2023 Bonds, agrees to be bound by the provisions of this subsection (c).

If, prior to the termination of the Depository acting as such, the Town fails to identify another Securities Depository to replace the Depository, then the 2023 Bonds shall no longer be required to be registered in the Bond Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging 2023 Bonds shall designate, in accordance with the provisions hereof. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

In the event the Town determines that it is in the best interests of the beneficial owners of the 2023 Bonds that they be able to obtain certificated 2023 Bonds, the Town may notify the Depository System Participants of the availability of such certificated 2023 Bonds through the Depository. In such event, the Trustee will execute, transfer and exchange 2023 Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the Town shall cooperate with the Depository in taking appropriate action (y) to make available one or more separate certificates evidencing the 2023 Bonds to any Depository System Participant having 2023 Bonds credited to its account with the Depository, or (z) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such 2023 Bonds, all at the Town’s expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any 2023 Bond is registered in the name of the Nominee, all payments with respect to principal, interest and premium, if any, represented by such 2023 Bond and all -280-
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21 notices with respect to such 2023 Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.

ARTICLE III
ISSUE OF 2023 BONDS; ADDITIONAL OBLIGATIONS
SECTION 3.01 Issuance of 2023 Bonds. Upon the execution and delivery of this Indenture, the Town shall issue, execute, and deliver the 2023 Bonds in the aggregate principal amount of [AMOUNT] ($[___]) to the Trustee for authentication and delivery to the Original Purchaser thereof upon the request of the Town.

SECTION 3.02 Application of Proceeds of Sale of 2023 Bonds; Transfers from the 2000 Indenture, 2003 Indenture, and 2006 Indenture. Upon the receipt of payment for the 2023 Bonds on the Closing Date in the amount of $[___] (being an amount equal to the principal amount of the 2023 Bonds ($[PAR AMOUNT]), [plus/less] an [net] original issue [premium/discount] of $[___], less underwriter’s discount ($[____]), the Trustee shall apply the proceeds of sale thereof as follows:
(a) The Trustee shall transfer to the 2000 Trustee for the redemption of all outstanding 2000 Certificates the amount of $[____]; and (b) The Trustee shall transfer to the 2003 Trustee for the redemption of all outstanding 2003 Certificates the amount of $[____]; and (c) The Trustee shall transfer to the 2006 Trustee for the redemption of all outstanding 2006 Certificates the amount of $[____]; and (d) The Trustee shall deposit in the Cost of Issuance Fund an amount equal to $[___]; and
(e) The Trustee shall apply proceeds of the 2023 Bonds in the amount of $[___] to the swap provider as a termination fee for terminating the remaining notional amount of the swaps relating to the 2000B Certificates, 2003 Certificates, and the 2006 Certificates.

The Trustee may establish and maintain, for so long as is necessary, one or more temporary funds and accounts under this Indenture, including but not limited to a temporary fund in its records to facilitate and record such deposits and transfers.

SECTION 3.03 [RESERVED].

SECTION 3.04 Cost of Issuance Fund. There is hereby created a fund to be known as the “Town of Hillsborough 2023 Revenue Refunding Bonds Cost of Issuance Fund” (the “Cost of Issuance Fund”), which the Town hereby covenants and agrees to cause to be maintained and which shall be held in trust by the Trustee. The moneys in the Cost of Issuance Fund shall be used in the manner provided by law solely for the purpose of the payment of Costs of Issuance upon receipt by the Trustee of requests of the Town therefor, on or after the Closing Date. Each such request of the Town shall be sufficient evidence to the Trustee of the facts stated therein, and the -281-
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22 Trustee shall have no duty to confirm the accuracy of such facts. Any funds remaining in the Cost of Issuance Fund on the earlier of (1) the date an Authorized Official notifies the Trustee that all third party Costs of Issuance have been paid, or (2) [December 1, 2023], shall be transferred by the Trustee to the Town.

SECTION 3.05 Issuance of Additional Obligations. In addition to the 2023 Bonds, the Town may, by an Additional Obligations Instrument, issue or incur other loans, contracts, advances or indebtedness payable from Net Revenues to be derived from the Enterprise, to provide financing for the Enterprise, in such principal amount as shall be determined by the Town, as provided herein.
(a) Issuance of Parity Debt. The Town may issue or incur any such Parity Debt which is on parity with the 2023 Bonds, with any such principal and interest payment dates determined by the Town, subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Parity Debt:
(1) there shall not have occurred and be continuing an Event of Default under the terms of this Indenture; and
(2) the Town provides a certificate (which may, at the option of the Town, be provided by an Independent Financial Consultant) showing that Net Revenues as shown by the books of the Town for the most recent Fiscal Year, or any more recent twelve (12) month period selected by the Town ending not more than sixty (60) days prior to the date of issuance of such Parity Debt (adjusted as provided in clause (a)(3) below), shall have amounted to at least (A) one hundred twenty percent (120%) of the Maximum Annual Debt Service on (i) the 2023 Bonds and then-outstanding Parity Debt, and (ii) the debt service with respect to the Parity Debt that is proposed to be issued, and (B) one hundred ten percent (110%) of Maximum Annual Debt Service on all outstanding and proposed Parity Debt and Subordinate Debt; and
(3) For purposes of the computations to be made as described in clause (a)(2) above, the determination of the Net Revenues:
(i) may take into account any increases in rates and charges that relate to the Enterprise and shall take into account any reduction in such rates and charges, either of which will be adopted prior to or at the time of incurring such proposed Parity Debt;
(ii) may take into account customers added to the Enterprise subsequent to the commencement of the twelve (12) month period provided in clause (a)(2) above, but prior to the date of issuance of the Parity Debt; (iii) may take into account an allowance for any estimated increase in such Net Revenues from any revenue producing additions to or improvements or extensions of the Enterprise to be made with the proceeds of such Parity Debt or with the proceeds of Obligations previously issued;
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23 (iv) the estimated change in the Net Revenues which will result from services provided under any long-term, guaranteed contract that extends for the life of the Parity Debt if entered into subsequent to the commencement of the twelve (12) month period provided in clause (a)(2) above, but prior to the date of issuance of the Parity Debt;
(v) for the period contemplated by clause (a)(2) above, Maintenance and Operations Costs shall be deemed to be the same as for the period for which a calculation is done, but adjusted, if deemed necessary by the Town, for any increased Maintenance and Operations Costs which are, in the judgment of the Town, essential to maintaining and operating the Enterprise, including any additions or betterments thereto to be made with the proceeds of such Parity Debt; (vi) the Town may issue Obligations payable solely from Net Revenues of the Water System or the Sewer System for the sole purpose of financing capital improvements to the related Water System or the Sewer System, as applicable; and (vii) for the avoidance of doubt, the Net Revenues relating to the Water System shall meet the conditions of (a)(2) of this Section for Water System related Obligations, and Net Revenues relating to the Sewer System shall meet the conditions of (a)(2) of this Section for Sewer System related Obligations, all as determined by the Town.

The certificate or certificates above shall not be required if the Parity Debt being incurred is for the purpose of refunding then outstanding Obligations and, at the time of the incurring of such Parity Debt, the Town provides a certificate showing that Debt Service in each Fiscal Year after incurring such Parity Debt will be less than or equal to Debt Service in each Fiscal Year prior to the incurring of such Parity Debt.
(b) Issuance of Subordinate Obligations. The Town may issue or incur any such Additional Obligations which are Subordinate Obligations subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Subordinate Obligations. The Town shall provide a certificate (which may, at the option of the Town, be provided by an Independent Financial Consultant) for such Subordinate Obligations showing that Net Revenues, as shown by the books of the Town for the most recent Fiscal Year or any more recent twelve (12) month period selected by the Town ending not more than sixty (60) days prior to the date such Subordinate Obligations are issued or incurred, after deducting all amounts required for the payment of Bonds and Contract Payments during such period, plus, at the option of the Town any of the allowances in clause (a)(3) above, have amounted to at least 110% of Maximum Annual Debt Service on all Obligations outstanding immediately subsequent to the incurrence of such Subordinate Obligations.

The Town may issue Subordinate Obligations payable solely from Net Revenues of the Water System or the Sewer System of the Enterprise for the sole purpose of financing capital improvement to the related Water System or the Sewer System, as applicable. -283-
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24 The certificate or certificates above shall not be required if the Subordinate Obligations being incurred are for the purpose of refunding then outstanding Obligations and, at the time of the incurring of such Subordinate Obligations, the Town provides a certificate showing that Debt Service in each Fiscal Year after incurring such Subordinate Obligations will be less than or equal to Debt Service in each Fiscal Year prior to the incurring of such Subordinate Obligations.

SECTION 3.06 Validity of 2023 Bonds. The validity of the authorization and issuance of the 2023 Bonds shall not be affected in any way by any proceedings taken by the Town in connection with the Enterprise, and the recital contained in the 2023 Bondsthat the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the regularity of their issuance.

ARTICLE IV
PLEDGE OF NET REVENUES; FUNDS AND ACCOUNTS
SECTION 4.01 Pledge of Net Revenues.
(a) The 2023 Bonds and the Bonds of the Enterprise shall be secured by a first pledge of all Net Revenues. In addition, the Town hereby transfers, places a charge upon, assigns and sets over to the Trustee, for the benefit of the Owners, that portion of the Net Revenues which is necessary to pay the principal of and interest on the 2023 Bonds in any Fiscal Year, together with all moneys on deposit in the Debt Service Fund, including the Interest Account, the Principal Account, and the Sinking Account established therein, and such portion of the Net Revenues is hereby irrevocably pledged to the punctual payment of the principal of and interest on the 2023 Bonds. The 2023 Bonds and the Bonds of the Enterprise, shall be equally secured by the pledge, charge, and lien upon the Net Revenues, without priority for number or date; provided, however, that Net Revenues relating to the Water System shall be used solely for Bonds relating to the Water System and Net Revenues relating to the Sewer System shall be used solely for Bonds relating to the Sewer System, as determined by the Town. Net Revenues shall not be used for any other purpose while any of the 2023 Bonds or Bonds of the Enterprise remain Outstanding, except that out of Net Revenues there may be apportioned and paid such sums for such purposes as are expressly permitted by this Article. Said pledge shall constitute a first, direct, and exclusive charge and lien on the Net Revenues for the payment of the principal of and interest on the 2023 Bonds in accordance with the terms thereof and on the Debt Service Fund, and the Interest Account, Principal Account and Sinking Account established therein. (b) The Net Revenues constitute a trust fund for the security and payment of the principal of and interest on the 2023 Bonds. The general fund of the Town is not liable, and the credit of the Town is not pledged for the payment of the principal of and interest on the 2023 Bonds. The Owner of the 2023 Bonds shall not compel the exercise of the taxing power by the Town or the forfeiture of its property. The principal of and interest on the 2023 Bonds are not a debt of the Town, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of its property, or upon any of its income, receipts, or revenues except the Net Revenues of the Enterprise.
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25 (c) The Town may, in connection with the incurrence of Subordinate Obligations, pledge Net Revenues to the payment of Subordinate Obligations; provided, however, that such pledge and any lien created thereby, shall be junior and subordinate to the pledge of, and lien on, Net Revenues for the payment of Bonds and Contract Payments.

SECTION 4.02 Revenue Accounts; Receipt and Deposit of Revenues. The Town has heretofore established the Water Fund and Sewer Fund (together, the “Revenue Accounts,” and each a “Revenue Account”), as accounts within its “Water and Sewer Enterprise Fund,” which the Town agrees to continue to hold and maintain for the purposes and uses set forth herein while the 2023 Bonds are Outstanding. The Town covenants and agrees that all Revenues, when and as received, will be received and held by the Town in trust hereunder and will be deposited by the Town in the corresponding Revenue Account and will be accounted for through and held in trust in the Revenue Accounts, and the Town shall only have such beneficial right or interest in any of such money as provided in this Indenture. Additionally, amounts may, from time to time as the Town deems necessary or appropriate, be transferred from the Rate Stabilization Account and deposited in the Revenue Accounts. Amounts transferred from the Rate Stabilization Account which are transferred to the Revenue Accounts shall be included as Revenues. Notwithstanding the foregoing, the Town need only establish a Rate Stabilization Account if and when it deems the establishment of such account to be necessary or appropriate for the management of its financial affairs or in accordance with the provisions hereof. All such Revenues shall be transferred, disbursed, allocated and applied solely to the uses and purposes set forth hereinafter in this Article, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Town.

All Revenues shall be held in trust by the Town in the Revenue Accounts and shall be applied, transferred, used and withdrawn only for the purposes hereinafter described, in order of priority:
(1) Maintenance and Operations Costs. The Town shall first pay from the moneys in the applicable Revenue Account the Maintenance and Operations Costs as such costs become due and payable.
(2) Debt Service Payments. At least five (5) days prior to each Interest Payment Date, the Town shall transfer Net Revenues to the Trustee in an amount necessary for the purpose of paying the 2023 Bonds in amounts from each Revenue Account for the portion attributable to each corresponding component of the Enterprise, as described in Section

4.03 hereof and in this Indenture. Debt Service shall also be paid on any Bonds. (3) Subordinate Obligation Payments. As provided in any Subordinate Obligation Contract, the Town shall transfer legally available Net Revenues to pay Subordinate Obligation Payments in an amount which, together with amounts on deposit therein, is at least sufficient to make the required payments with respect to such Subordinate Obligations pursuant to the Subordinate Obligation Contracts. In the event that the Town has insufficient Net Revenues to make all transfers contemplated in this subparagraph, then such transfers shall be made, as nearly as practicable, pro rata, based on the respective principal amounts of the Subordinate Obligations, payments with respect to which are required to be made.
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26 (4) Rate Stabilization Account. The Town may, as the Town deems necessary or appropriate, transfer Net Revenues in the Revenue Accounts to the Rate Stabilization Account. Such transfers for each Fiscal Year may be made up to two hundred seventy (270) days following the end of such Fiscal Year.
(5) Surplus. As long as all of the foregoing payments, allocations, and transfers are made at the times and in the manner set forth above in subsections (1), (2) and (3), any moneys remaining in the Revenue Accounts may at any time be treated as surplus and applied for any lawful purpose.

SECTION 4.03 Establishment of Debt Service Fund and Accounts Therein and Allocation of Revenues Thereto. The Debt Service Fund, as a special fund, is hereby created. The Debt Service Fund shall be held and maintained in trust by the Trustee and shall be disbursed only for the purposes and uses herein authorized.
(1) Debt Service Payments. At least five (5) days prior to each Interest Payment Date, the Town shall transfer Net Revenues to the Trustee in an amount necessary for the purpose of paying the 2023 Bonds; provided, however, Net Revenues relating to the Water System shall be used solely for Bonds relating to the Water System and that Net Revenues relating to the Sewer System shall be used solely for Bonds relating to the Sewer System, as determined by the Town. Not later than the first Business Day preceding each date on which principal of or interest on the 2023 Bonds becomes due and payable, the Trustee shall transfer from the Debt Service Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Debt Service Fund), the following amounts in the following order of priority, the requirements of each such account at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(a) Interest Account. The Trustee shall establish and thereafter deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all 2023 Bonds then Outstanding.
(b) Principal Account. The Trustee shall establish and thereafter deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the 2023 Bonds coming due and payable on such Interest Payment Date.
(c) Sinking Account. The Trustee shall establish and thereafter deposit in the Sinking Account an amount equal to the aggregate principal amount of the Term Bonds required to be redeemed on such date, if any, pursuant to Section

2.02(a).
(d) Equal Rights. It is the intention of the Town that the 2023 Bonds shall be secured by and payable from all Net Revenues deposited in the Revenue Accounts on an equal basis. To the extent that Net Revenues deposited in the -286-
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27 Revenue Accounts are insufficient to pay debt service on the 2023 Bonds and Bonds of the Enterprise as it becomes due, the 2023 Bonds and Bonds of the Enterprise shall be payable on a pro rata basis from all available Net Revenues deposited in the applicable Revenue Account.

SECTION 4.04 Application of Debt Service Fund. Moneys in the Debt Service Fund shall be applied as follows:
(a) Application of Interest Account. All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the 2023 Bonds as it shall become due and payable (including accrued interest on any 2023 Bonds and Bonds of the Enterprise purchased or redeemed prior to maturity pursuant to this Indenture).
(b) Application of Principal Account. All amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay the principal amount of the 2023 Bonds at their respective maturity dates.
(c) Application of Sinking Account. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of redeeming or purchasing (in lieu of redemption) Term Bonds pursuant to Section 2.02(a).

SECTION 4.05 Rate Stabilization Account. The Town may, as the Town deems necessary or appropriate, establish a Rate Stabilization Account. From time to time the Town may deposit in the Rate Stabilization Account from Revenues such amounts as the Town shall determine. All interest or other earnings on deposits in the Rate Stabilization Account will be retained therein or, at the option of the Town, be applied for any other lawful purposes. The Town has the right at any time to withdraw any or all amounts on deposit in the Rate Stabilization Account and apply such amounts for any other lawful purposes of the Town. Amounts on deposit in the Rate Stabilization Account are not pledged to, and are not a security for, the payment of the 2023 Bonds or any Parity Debt.

The Town may transfer amounts from the Rate Stabilization Account to either Revenue Account for inclusion in Net Revenues for any Fiscal Year. Transfers for each Fiscal Year may be made up to two hundred seventy (270) days following the end of such Fiscal Year.

SECTION 4.06 Investments. All moneys in the Revenue Accounts may be invested by the Town from time to time in any investments authorized by law, consistent with the Town’s investment policy. All moneys in the Debt Service Fund, and the accounts established therein, and Cost of Issuance Fund shall be invested by the Trustee solely in Authorized Investments, as directed pursuant to a request of the Town. In the absence of any such request of the Town, the Trustee may (but shall not be required to) invest any such moneys in money market funds described in paragraph (f) of the definition of Authorized Investments; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a request of the Town specifying a specific money market fund and, if no such request of the Town is so received, the Trustee shall hold such moneys uninvested. The Trustee shall be entitled to rely upon any investment request of the Town as -287-
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28 conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State of California. Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of such Fund or Account, and all interest or gain derived from the investment of amounts in any of the Funds or Accounts established hereunder shall be deposited in the Fund or Account from which such investment was made; and shall be accounted for and applied as provided in Section 4.04(c) with respect to the Debt Service Fund.

For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder with the written approval of the Town. The Trustee or an affiliate may act as principal or agent in the acquisition or disposition of any investment, and shall be entitled to its customary fees therefor. The Trustee shall incur no liability for losses arising from any investments made pursuant to this Section.

The Trustee shall furnish the Town periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Town.

Upon the Town’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provide only upon request. The Town waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The Town further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.

SECTION 4.07 Valuation; Investments.
(a) Method of Valuation and Frequency of Valuation. In computing the amount in any Fund or Account, Authorized Investments shall be valued at Fair Market Value. With respect to all Funds and Accounts, valuation shall occur annually. (b) Investments Subject to Yield Restriction. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code shall be valued at cost thereof, (consisting of present value thereof, as determined by the Town, within the meaning of Section 148 of the Tax Code); provided that the Town shall inform the Trustee which funds are subject to a yield restriction. (c) Additional Limitations. Except as provided in the proceeding subsection (b), with respect to a yield restriction, for the purpose of determining the amount in any fund, the value of Authorized Investments credited to such fund shall be valued by the Trustee at least annually at the market value thereof. For purposes of valuation, the Trustee shall be entitled to utilize any pricing services it considers reliable. The Trustee may sell in any commercially reasonable manner, or present for redemption, any Authorized Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Authorized Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from sale or redemption of any such Authorized Investment.
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29 ARTICLE V
COVENANTS OF THE TOWN; SPECIAL TAX COVENANTS
SECTION 5.01 Punctual Payment; Compliance With Documents. The Town shall punctually pay or cause to be paid the interest and principal to become due with respect to all of the 2023 Bonds in strict conformity with the terms of the 2023 Bonds and of this Indenture, and will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Contracts for Additional Obligations.

SECTION 5.02 Against Encumbrances. The Town will not mortgage or otherwise encumber, pledge or place any charge upon the Enterprise or any part thereof, or upon any of the Net Revenues, except as provided in the Indenture.

SECTION 5.03 Discharge of Claims. The Town covenants that in order to fully preserve and protect the priority and security of the 2023 Bonds, the Town shall pay from the Net Revenues and discharge all lawful claims for labor, materials and supplies furnished for or in connection with the Enterprise which, if unpaid, may become a lien or charge upon the Net Revenues prior or superior to the lien of the 2023 Bonds and impair the security of the 2023 Bonds. The Town shall also pay from the Net Revenues all taxes and assessments or other governmental charges lawfully levied or assessed upon or in respect of the Enterprise or upon any part thereof or upon any of the Net Revenues therefrom.

SECTION 5.04 Acquisition, Construction or Financing of Improvements to the Enterprise.

The Town will acquire, construct, or finance improvements to the Enterprise to be financed with the proceeds of any Additional Obligations with all practicable dispatch, and such improvements will be made in an expeditious manner and in conformity with laws so as to complete the same as soon as possible.

SECTION 5.05 Maintenance and Operation of Enterprise in Efficient and Economical Manner. The Town covenants and agrees to maintain and operate the Enterprise in an efficient and economical manner and to operate, maintain and preserve the Enterprise in good repair and working order.

SECTION 5.06 Against Sale, Eminent Domain.
(a) The Town will not sell, lease, or otherwise dispose of the Enterprise or any part thereof essential to the proper operation of the Enterprise or to the maintenance of the Net Revenues except as herein expressly permitted. The Town will not enter into any lease or agreement which impairs the operation of the Enterprise or any part thereof necessary to secure adequate Net Revenues for the payment of the interest on and principal of the 2023 Bonds, or which would otherwise impair the rights of the Bond Owners with respect to the Net Revenues or the operation of the Enterprise. Any real or personal property which has become non-operative or which is not needed for the efficient and proper operation of the Enterprise, or any material or equipment which has worn out, may be sold at not less than the market value thereof without the consent of the Bond Owners if such sale will not reduce Net Revenues and if all of the net proceeds of such sale are deposited in the Revenue Accounts. The Town shall not sell or lease any portion -289-
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30 of the Enterprise if such sale or lease would effect the tax status of the 2023 Bonds. Upon any sale or lease of any portion of the Enterprise, the District shall furnish the Trustee with a written opinion of Bond Counsel stating that such sale or lease does not cause the interest component of the Debt Service on the 2023 Bonds to become includable in gross income for purposes of federal or State of California personal income taxation.
(b) If all or any part of the Enterprise shall be taken by eminent domain proceedings, the Net Proceeds realized by the Town therefrom shall be deposited by the Town with the Trustee in a special fund in trust and applied by the Town to the cost of acquiring or constructing or financing improvements to the Enterprise if (1) the Town first secures and files with the Trustee a Certificate of the Town showing (i) the estimated loss in annual Net Revenues, if any, suffered, or to be suffered, by the Town by reason of such eminent domain proceedings, ii) a general description of the improvements to the Enterprise then proposed to be acquired or constructed by the Town from such Net Proceeds, and (iii) an estimate of the additional Net Revenues to be derived from such improvements; and (2) the Town, by a certificate to the Trustee, determines that such additional Net Revenues will sufficiently offset the loss of Net Revenues resulting from such eminent domain proceedings so that the ability of the Town to meet its obligations hereunder will not be substantially impaired, which determination by the Town shall be final and conclusive. If the foregoing conditions are met, the Town shall then promptly proceed with the acquisition or construction or financing of such improvements substantially in accordance with such Certificate of the Town and payments therefor shall be made by the Trustee from such Net Proceeds and from other moneys of the Town lawfully available therefor, and any balance of such Net Proceeds not required by the Town for the purposes aforesaid shall be deposited in the Revenue Accounts. If the foregoing conditions are not met, then such Net Proceeds shall be held in trust by the Trustee and applied to the payment of the 2023 Bonds and Outstanding Additional Obligations, as the same become due by their terms, and, pending such application, such remaining moneys may be invested by the Trustee in the manner provided in Section 4.06.

SECTION 5.07 Insurance. The Town covenants that it shall at all times maintain such insurance on the Enterprise as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such works or properties. If any useful part of the Enterprise shall be damaged or destroyed, such part shall be restored to use. The Net Proceeds of insurance against accident to or destruction of the physical Enterprise shall be used for repairing or rebuilding the damaged or destroyed portions of the Enterprise (to the extent that such repair or rebuilding is determined by the Town to be useful or of continuing value to the Enterprise), and to the extent not so applied, shall be held by the Trustee and applied to the payment of the 2023 Bonds and Outstanding Additional Obligations, as the same became due by their terms and pending such application, such remaining moneys may be invested by the Trustee in the manner provided in Section 4.06.

Any such insurance shall be in the form of policies or contracts for insurance with insurers of good standing and shall be payable to the Town, or may be in the form of self-insurance by the Town. The Town shall establish such fund or funds or reserves as it determines, in its sole judgment, are necessary to provide for its share of any such self-insurance. The Trustee shall not be responsible for determining the sufficiency of such insurance. -290-
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31 SECTION 5.08 Records and Accounts. The Town covenants that it shall keep proper books of record and accounts of the Enterprise, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the Enterprise. Said books shall, upon reasonable request, be subject to the inspection of the Owners of not less than ten percent (10%) of the Outstanding 2023 Bonds or their representatives authorized in writing.

The Town covenants that it will cause the books and accounts of the Enterprise to be audited annually by an Independent Certified Public Accountant and will make available for inspection by the Bond Owners at the office of the Trustee in Los Angeles, California, upon reasonable request, a copy of the report of such Independent Certified Public Accountant.

The Town covenants that it will cause to be prepared annually, not more than two hundred seventy (270) days after the close of each Fiscal Year, as a part of its regular annual financial report, a summary statement showing the amount of Revenues and the amount of all other funds collected which are required to be pledged or otherwise made available as security for payment of principal of and interest on the 2023 Bonds, the disbursements from the Revenues and other funds in reasonable detail. The Town shall furnish a copy of the statement to the Trustee, and upon written request, to any Bond Owner. The Trustee shall not be responsible for reviewing the audited financial statements and annual financial report.

SECTION 5.09 Protection of Security and Rights of Owners. The Town will preserve and protect the security of the 2023 Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any Additional Obligations by the Town, such Additional Obligations shall be incontestable by the Town.

SECTION 5.10 Against Competitive Facilities. The Town will not acquire, construct, operate, maintain, or permit an enterprise or utility within the service area of the Town that would be competitive with the Enterprise.

SECTION 5.11 Payment of Taxes, Etc. The Town will pay and discharge all taxes, assessments, and other governmental charges which may hereafter be lawfully imposed upon the Enterprise or any part thereof or upon any Revenues when the same shall become due. The Town will duly observe and conform with all valid requirements of any governmental authority relative to the Enterprise or any part thereof, and will comply with all requirements with respect to any state or federal grants received to assist in paying for the costs of the acquisition, construction or financing of any improvements to the Enterprise.

SECTION 5.12 Rate Covenant; Amount of Rates and Charges, Operating Reserves. (a) The Town shall fix, maintain, and collect fees, rates, and charges for the Enterprise which will be at least sufficient to yield Net Revenues during each Fiscal Year equal to at least (i)(A) one hundred twenty percent (120%) of the Debt Service of the 2023 Bonds and Parity Debt, and (B) one hundred ten percent (110%) of Debt Service on all outstanding Obligations, plus (ii) any amounts required to replenish any reserve fund established in connection with any Bonds (the “Rate Covenant”). The Town may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates and -291-
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32 charges then in effect unless the Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements of this Section. For the avoidance of doubt, the Net Revenues relating to the Water System shall meet the conditions of this paragraph (a) for Water System related Obligations, and Net Revenues relating to the Sewer System shall meet the conditions of this paragraph (a) for Sewer System related Obligations, all as determined by the Town.
(b) The Town shall furnish to the Trustee within 270 days from the close of each Fiscal Year an audit report with respect to the Fiscal Year, together with a certificate of the Town certifying that the Town has complied with the Rate Covenant for the Fiscal Year. (c) In the event the Town fails in any Fiscal Year to comply with the Rate Covenant, the Town shall retain an Independent Financial Consultant to undertake a rate study for the purpose of establishing a rate structure which will enable it to comply with the Rate Covenant during the succeeding Fiscal Year. The Town shall within 90 days of receipt of such study commence statutory proceedings to revise its rates and charges with respect to the Enterprise in conformity with the recommendations thereof. The Trustee can rely solely on and shall have no duty to review or to investigate the accuracy of any such report or certificate.

SECTION 5.13 No Priority for Additional Obligations. The Town covenants that no additional bonds or other obligations shall be issued or incurred having any priority in payment of principal or interest out of the Net Revenues over and superior to the Bonds.

SECTION 5.14 No Arbitrage. The Town shall not take, nor permit nor suffer to be taken any action with respect to the proceeds of any of the 2023 Bonds which would cause any of the 2023 Bonds to be “arbitrage bonds” within the meaning of the Tax Code.

SECTION 5.15 Information Report. The Town is hereby directed to assure the filing of an information report for the 2023 Bonds in compliance with Section 149(e) of the Tax Code.

SECTION 5.16 Private Activity 2023 Bond Limitation. The Town shall assure that the proceeds of the 2023 Bonds are not so used as to cause the 2023 Bonds to satisfy the private business tests of section 141(a) and (b) of the Tax Code or the private loan financing test of section 141(c) of the Tax Code.

SECTION 5.17 Federal Guarantee Prohibition. The Town shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2023 Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Tax Code.

SECTION 5.18 Further Assurances. The Town will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the 2023 Bonds the rights and benefits provided in this Indenture.

SECTION 5.19 Continuing Disclosure. The Town hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.

Notwithstanding any other provision of this Indenture, failure of the Town to comply with the -292-
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33 Continuing Disclosure Certificate shall not be considered an Event of Default; however, the Trustee, at the written request of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding 2023 Bonds, shall, but only to the extent indemnified to its satisfaction from any liability or expense, including, without limitation fees and expenses of its attorneys, or any holder or beneficial owner of the 2023 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

SECTION 5.20 Rebate Requirement. The Town shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2023 Bonds.

SECTION 5.21 Maintenance of Tax-Exemption. The Town shall take all actions (or refrain from actions) necessary to assure the exclusion of interest on the 2023 Bonds from the gross income of the Bond Owners to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the 2023 Bonds.

ARTICLE VI

THE TRUSTEE
SECTION 6.01 Appointment of Trustee. The Bank of New York Mellon Trust Company, National Association, with an office in Los Angeles, California, a national association organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Town for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Town agrees that it will maintain a trustee having a corporate trust office in San Francisco or Los Angeles, California, with a combined capital and surplus of at least Seventy-Five Million Dollars ($75,000,000), and subject to supervision or examination by federal or State authority, so long as any 2023 Bonds are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section 5.01 the combined capital and surplus of such bank, banking association, or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Trustee is hereby authorized to pay the 2023 Bonds when duly presented for payment at maturity or purchase prior to maturity, and to cancel all 2023 Bonds upon payment thereof. The Trustee shall keep accurate records of all funds administered by it and of all 2023 Bonds paid and discharged.

SECTION 6.02 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after curing all Events of Default which may have occurred, undertakes to perform such duties and only -293-
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34 such duties as are specifically set forth in this Indenture. In case an Event of Default hereunder has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill in their exercise, as a prudent and reasonable man would exercise or use under the circumstances in the conduct of his own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to rely conclusively on advice of counsel of its choice concerning all matters of trust and its duty hereunder and the Trustee shall not be answerable for any willful misconduct or negligence on the part of any such attorneys, agents or receivers selected by it with reasonable care.
(c) The Trustee shall not be responsible for any recital herein, or in the 2023 Bonds, or for the validity of this Indenture or any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the 2023 Bonds issued hereunder or intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Town hereunder. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 4.06.
(d) The Trustee shall not be accountable for the use of any proceeds of sale of the 2023 Bonds delivered hereunder and the Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof. The Trustee may become the Owner of 2023 Bonds secured hereby with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the Town with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of 2023 Bonds, whether or not such committee shall represent the Owners of the majority in principal amount of the 2023 Bonds then Outstanding.
(e) In the absence of bad faith on its part, the Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram, facsimile transmission, electronic mail or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any 2023 Bond, shall be conclusive and binding upon all future Owners of the same 2023 Bond and upon 2023 Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any 2023 Bond or to take any action at his request unless the ownership of such 2023 Bond by such person shall be reflected on the Bond Registration Books. -294-
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35 (f) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a Certificate of the Town as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default hereunder of which the Trustee has been given notice or is deemed to have notice, as provided in Section 6.02(h) hereof, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a Certificate of the Town to the effect that an authorization in the form therein set forth has been adopted by the Town, as conclusive evidence that such authorization has been duly adopted and is in full force and effect.
(g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, as finally adjudicated by a court of law, directors, employees and agents.
(h) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the Town to make any of the payments to the Trustee required to be made by the Town pursuant hereto or failure by the Town to file with the Trustee any document required by this Indenture to be so filed subsequent to the issuance of the 2023 Bonds, unless the Trustee shall be specifically notified in writing of such default by the Town or by the Owners of at least twenty-five percent (25%) in aggregate principal amount of the 2023 Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Principal Corporate Trust Office, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect the Enterprise, including all books, papers and records of the Town pertaining to the Enterprise and the 2023 Bonds, and to take such memoranda from and with regard thereto as may be desired but which is not privileged by statute or by law. (j) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (k) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any 2023 Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Town to the execution of any 2023 Bonds, the withdrawal of any cash, or the taking of any other action by the Trustee. -295-
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36 (l) Before taking the action referred to in Section 8.03 and this Article, the Trustee may require that an indemnity bond satisfactory in terms and amount be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is finally adjudicated by a count of law to have resulted from its negligence or willful default in connection with any such action. (m) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. The Trustee shall not be under any liability for interest on any moneys received hereunder except such as it may agree to in writing.
(n) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Town shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Town whenever a person is to be added or deleted from the listing. If the Town elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Town understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Town shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Town and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Town. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Town agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Town; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. -296-
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37 (o) The Trustee shall not be liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
(p) The Trustee does not have a duty to review any financial statements or reports of the Town, is not considered to have notice of the content of any such statements or reports and does not have a duty to verify the accuracy of such financial statements or reports.
(q) The Trustee may consult with counsel, who may be bond counsel or other counsel of or to the Town, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. (r) The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these 2023 Bonds. (s) Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the Town, and such certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem.

SECTION 6.03 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any 2023 Bond upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it respectively.

SECTION 6.04 Notice to Bond Owners of Default. If an Event of Default hereunder occurs with respect to any 2023 Bonds, of which the Trustee has been given or is deemed to have notice, as provided in Section 6.02(h) hereof, then the Trustee shall promptly give written notice thereof by first-class mail to the Owner of each such 2023 Bond, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Town to make any payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice.
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38 SECTION 6.05 Intervention by Trustee. In any judicial proceeding to which the Town is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the 2023 Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to Section 6.02 hereof, shall do so if requested in writing by the Owners of at least twenty-five percent (25%) in aggregate principal amount of such 2023 Bonds then Outstanding.

SECTION 6.06 Removal of Trustee. The Owners of a majority in aggregate principal amount of the Outstanding 2023 Bonds may at any time, and the Town may so long as no Event of Default shall have occurred and then be continuing, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee (where applicable), whereupon the Town or such Owners, as the case may be, shall appoint a successor or successors thereto; provided that any such successor shall be a bank or trust company meeting the requirements set forth in Section 6.01 hereof. The Trustee shall be precluded from charging a termination fee in such event.

SECTION 6.07 Resignation by Trustee. The Trustee and any successor Trustee may at any time resign by giving thirty (30) days’ written notice, as provided in Section 9.10 hereof, to the Town. Upon receiving such notice of resignation, the Town shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Town shall cause notice thereof to be given by first class mail to the Bond Owners at their respective addresses set forth on the Bond Registration Books. No resignation of the Trustee shall take effect until a successor is appointed and has accepted.

SECTION 6.08 Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, the Town shall promptly appoint a successor Trustee. In the event the Town shall for any reason whatsoever fail to appoint a successor Trustee within forty-five (45) days following the delivery to the Trustee of the instrument described in Section 6.06 or within forty-five (45) days following the receipt of notice by the Town pursuant to Section 6.07, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 6.01 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the Town purporting to appoint a successor Trustee following the expiration of such forty-five-day period.

Notwithstanding any other provision of this Trust Indenture, no removal, resignation or termination of the Trustee shall take effect until a successor shall be appointed; provided, however, that if for any reason whatsoever no successor Trustee shall have been appointed within 45 days following receipt of notice by the Town pursuant to Section 6.07 above, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee which meets the requirements of Section 6.01 hereof.

SECTION 6.09 Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated, or any company resulting from any merger, conversion or consolidation to which it shall be a party, or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business (provided that such company shall be eligible under Section 6.01), shall be the successor to the Trustee and vested -298-
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39 with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.

SECTION 6.10 Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Town an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Request of the Town, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the Town be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Town.

SECTION 6.11 Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate or co-trustee. The following provisions of this Section 6.11 are adopted to these ends.

In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.

Should any instrument in writing from the Town be required by the separate trustee or cotrustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Town. In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee. -299-
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40 SECTION 6.12 Indemnification; Limited Liability of Trustee. The Town shall indemnify and hold the Trustee harmless from and against all claims, losses, costs, expenses, liabilities and damages including legal fees and expenses arising from the exercise and performance of its duties hereunder and the termination of this Indenture. Such indemnity and fees and expenses pursuant to Section 6.03 shall survive the resignation or removal of the Trustee hereunder and the payment of the 2023 Bonds. No provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder if it shall have reasonable grounds for believing repayment of such funds or adequate indemnity against such liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of a majority of the Owners of the principal amount of 2023 Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture.

ARTICLE VII

MODIFICATION AND AMENDMENT OF THE INDENTURE
SECTION 7.01 Amendment by Consent of Bond Owners. This Indenture and the rights and obligations of the Town and of the Owners of the 2023 Bonds may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consent of the Owners of a majority in aggregate principal amount of the 2023 Bondsthen Outstanding, exclusive of 2023 Bonds disqualified as provided in Section 7.03 hereof, are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any 2023 Bond or otherwise alter or impair the obligation of the Town to pay the principal of or interest on at the time and place and at the rate and in the currency provided therein of any 2023 Bond without the express written consent of the Owner of such 2023 Bond, (b) reduce the percentage of 2023 Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

SECTION 7.02 Amendment Without Consent of Bondholders. This Indenture and the rights and obligations of the Town and of the Owners of the 2023 Bonds may also be modified or amended at any time by a Supplemental Indenture which shall become binding upon execution and delivery, without consent of any Bond Owners, but only to the extent permitted by law and only for any one or more of the following purposes-
(a) to add to the covenants and agreements of the Town contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the Town; or (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the Town may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not adversely affect the interests of the Owners of the 2023 Bonds; or
(c) to provide for the issuance of any Additional Obligations, including to refund the 2023 Bonds, and to provide the terms and conditions under which such -300-
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41 Additional Obligations may be issued, including but not limited to the establishment of special funds and accounts relating to such Additional Obligations and any other provisions relating solely to such Additional Obligations, subject to and in accordance with the provisions of Section 3.05; or
(d) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the 2023 Bonds.

Any rating agency rating the 2023 Bonds must receive notification of any amendment to this Indenture at least fifteen (15) days prior to its execution.

SECTION 7.03 Disqualified 2023 Bonds. Any 2023 Bonds owned or held by or for the account of the Town (but excluding 2023 Bonds held in any employees’ retirement fund) shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding 2023 Bonds in this article provided for, and shall not be entitled to consent to, or take any other action in this article provided for. Upon request of the Trustee, the Town shall specify in a certificate to the Trustee those 2023 Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate.

SECTION 7.04 Endorsement or Replacement of 2023 Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Town may determine that the 2023 Bonds shall bear a notation, by endorsement in form approved by the Town, as to such action, and in that case upon demand of the Owner of any 2023 Bond Outstanding at such effective date and presentation of his 2023 Bond for that purpose at the Principal Corporate Trust Office, a suitable notation as to such action shall be made on such 2023 Bond. If the Town shall so determine, new 2023 Bonds so modified as, in the opinion of the Town, shall be necessary to conform to such Bond Owners’ action shall be prepared and executed, and in that case upon demand of the Owner of any 2023 Bond Outstanding at such effective date such new 2023 Bonds shall be exchanged at the Principal Corporate Trust Office, without cost to each Bond Owner, for 2023 Bonds then Outstanding, upon surrender of such Outstanding 2023 Bonds.

SECTION 7.05 Amendment by Mutual Consent. The provisions of this Article VII shall not prevent any Bond Owner from accepting any amendment as to the particular 2023 Bond held by him, provided that due notation thereof is made on such 2023 Bond.

SECTION 7.06 Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an opinion of counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and complies with the terms hereof. The Trustee may, but shall not be obligated to, enter into any such supplemental -301-
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42 indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01 Events of Default and Acceleration of Maturities. The following events shall be Events of Default hereunder:
(a) Default in the due and punctual payment of the principal of any Contract or 2023 Bond when and as the same shall become due and payable, whether at maturity as therein expressed by declaration or otherwise;
(b) Default in the due and punctual payment of any installment of interest on any Contract or 2023 Bond when and as such interest installment shall become due and payable;
(c) Default by the Town in the observance of any of the other material covenants, agreements or conditions on its part contained in this Indenture or in any Contracts or in the 2023 Bonds, and such default shall have continued for a period of sixty (60) days after the Town shall have been given notice in writing of such default by the Trustee; or
(d) The filing by the Town of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Town, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Town or of the whole or any substantial part of its property.

Upon the occurrence of an Event of Default, the Trustee may, and shall at the direction of the owners of a majority of the principal amount of the 2023 Bonds at the time Outstanding by written notice to the Town, declare the principal of the 2023 Bonds then Outstanding, and the interest accrued thereon, to be immediately due and payable, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the 2023 Bonds to the contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the principal of the 2023 Bonds shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Town shall deposit with the Trustee a sum sufficient to pay all of the principal of and interest on the 2023 Bonds having come due prior to such declaration, with interest on such overdue principal and interest calculated at the rate of interest per annum then borne by the Outstanding 2023 Bonds, and the reasonable fees and expenses of the Trustee and those of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of the principal of and interest on the 2023 Bonds having come due and payable solely by reason of such -302-
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43 declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the 2023 Bonds at the time Outstanding may, by written notice to the Town and to the Trustee, on behalf of the Owners of all of the Outstanding 2023 Bonds, rescind and annul such declaration and its consequences. No such rescission and annulment, however, shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

SECTION 8.02 Application of Funds Upon Acceleration. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this Indenture shall be applied by the Trustee in the following order upon presentation of the several 2023 Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid:

First, to the payment of the fees, costs, and expenses of the Trustee and of Bond Owners in declaring such Event of Default, including reasonable compensation to their agents, attorneys and counsel, and to the payment of the fees, costs and expenses of the Trustee, if any, in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel and any outstanding fees and expenses of the Trustee, then to the payment of the fees, costs and expenses of the Bond Owners in declaring such Event of Default, including reasonable compensation to its agents, attorneys and counsel; and
Second, to the payment of the whole amount then owing and unpaid upon the 2023 Bonds for interest and principal, with interest on such overdue amounts to the extent permitted by law at the rate of interest then borne by the Outstanding 2023 Bonds, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the 2023 Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably in proportion to the aggregate of such interest, principal and interest on overdue amounts.

SECTION 8.03 Other Remedies; Rights of Bond Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy, in addition to the remedy specified in Section 8.01, at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding 2023 Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture.

If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding 2023 Bonds and indemnified as provided in Section 6.02(1), the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bond Owners.

No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bond Owners hereunder or now or hereafter existing at law or in equity. -303-
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44 No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.

SECTION 8.04 Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the 2023 Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the 2023 Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding 2023 Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Any suit, action or proceeding which any Owner of 2023 Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of 2023 Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the 2023 Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners of the 2023 Bonds for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the 2023 Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.

SECTION 8.05 Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.

SECTION 8.06 Non-Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the 2023 Bonds, shall affect or impair the obligation of the Town, which is absolute and unconditional, to pay the interest on and principal of the 2023 Bonds to the respective Bond Owners at the respective dates of maturity, as herein provided, out of the Net Revenues and other moneys herein pledged for such payment.

A waiver of any default or breach of duty or contract by the Trustee or any Bond Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of any Owner of any of the 2023 Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Bond Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the case may be. -304-
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45 If a suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Bond Owners, the Town and the Bond Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.

SECTION 8.07 Rights and Remedies of Bond Owners. No Owner of any 2023 Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the 2023 Bondsthen Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners.

The right of any Owner to receive payment of the principal of and interest and premium (if any) on such 2023 Bond as herein provided or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.

SECTION 8.08 Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the Town, the Trustee and the Bond Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.

ARTICLE IX

MISCELLANEOUS
SECTION 9.01 Limited Liability of Town. Notwithstanding anything in this Indenture contained, the Town shall not be required to advance any moneys derived from any source of income other than the Net Revenues for the payment of the principal of or interest on the 2023 Bonds, or for the performance of any covenants herein contained (except to the extent any such covenants are expressly payable hereunder from the Revenues). The Town may, however, advance -305-
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46 funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the Town for such purpose without incurring indebtedness.

SECTION 9.02 Parties Interested Herein. Nothing in this Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Town, the Trustee, and the Owners any right, remedy or claim under or by reason of this Trust Indenture, or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Indenture contained by and on behalf of the Town shall be for the sole and exclusive benefit of the Town, the Trustee and the Owners.

SECTION 9.03 Discharge of Indenture. If the Town shall pay and discharge any or all of the Outstanding 2023 Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and premium (if any) on such 2023 Bonds, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to this Indenture, is fully sufficient to pay such 2023 Bonds, including all principal of and interest thereon; or
(c) by depositing with a qualified escrow holder, in trust, Defeasance Obligations in such amount as the Town (verified by an Independent Certified Public Accountant) shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the Funds and Accounts established pursuant to this Indenture, be fully sufficient to pay and discharge the indebtedness on such 2023 Bonds (including all principal and interest at their respective maturity dates); then, at the election of the Town, and notwithstanding that any of such 2023 Bonds shall not have been surrendered for payment, the pledge of the Net Revenues and other funds provided for in this Indenture with respect to such 2023 Bonds, and all other pecuniary obligations of the Town under this Indenture with respect to all such 2023 Bonds, shall cease and terminate, and this Indenture shall terminate, except only the obligation of the Town to pay or cause to be paid to the Owners of such 2023 Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all expenses and costs of the Trustee. Notice of such election shall be filed with the Trustee.

Any funds thereafter held by the Trustee, which are not required for said purposes, shall be paid over to the Town.

To accomplish defeasance of the 2023 Bonds pursuant to subparagraph (c), the Town shall cause to be delivered (i) a report of an Independent Certified Public Accountant verifying the sufficiency of the escrow established to pay the 2023 Bonds in full on the maturity date (a “Verification Report”), (ii) an escrow deposit agreement, and (iii) an opinion of nationally recognized bond counsel to the effect that the 2023 Bonds are no longer “Outstanding” under this Indenture; each Verification Report and defeasance opinion shall be acceptable in form and substance, and addressed, to the Town and the Trustee.
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47 SECTION 9.04 Content of Certificates. Every certificate with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person or persons making or giving such certificate have read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with.

Any such certificate made or given by an officer of the Town may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, on information with respect to which is in the possession of the Town, upon the certificate or opinion of or representations by an officer or officers of the Town, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous.

SECTION 9.05 Execution of Documents by Bond Owners. Any request, consent, or other instrument required by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bond Owners in person or by agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Town if made in the manner provided in this Section 9.05.

The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof.

The ownership of 2023 Bonds shall be provided by the Bond Registration Books.

Any request, consent, or vote of the Owner of any 2023 Bond shall bind every future Owner of the same 2023 Bond and the Owner of any 2023 Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Town in pursuance of such request, consent or vote.

In determining whether the Owners of the requisite aggregate principal amount of 2023 Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, 2023 Bonds which are owned or held by or for the account of the Town (but excluding 2023 Bonds held in any employees’ retirement fund) shall be disregarded and deemed not to be Outstanding -307-
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48 for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only 2023 Bonds which the Trustee knows to be so owned or held shall be disregarded.

Upon the request of the Trustee, the Town shall specify in a certificate to the Trustee those 2023 Bonds disqualified pursuant to this section and the Trustee may conclusively rely on such certificate.

In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance with such rules and obligations as the Trustee considers fair and reasonable for the purpose of obtaining any such action.

SECTION 9.06 Waiver of Personal Liability. No officer, agent or employee of the Town shall be individually or personally liable for the payment of the interest on or principal of the 2023 Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the performance of any official duty provided by law.

SECTION 9.07 Partial Invalidity. If any one or more of the covenants or agreements, or portions thereof, provided in this Indenture on the part of the Town (or of the Trustee) to be performed should be contrary to law, then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and void and shall be deemed separable from the remaining covenants and agreements or portions thereof and shall in no way affect the validity of this Indenture or of the 2023 Bonds; but the Bond Owners shall retain all rights and benefits accorded to them under the Bond Law or any other applicable provisions of law. The Town hereby declares that it would have entered into this Indenture and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the 2023 Bonds pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.

SECTION 9.08 Destruction of Cancelled 2023 Bonds. Whenever in this Indenture provision is made for the surrender to the Town of any 2023 Bonds which have been paid or cancelled pursuant to the provisions of this Indenture, the Trustee shall destroy such 2023 Bonds and furnish to the Town a certificate of such destruction.

SECTION 9.09 Funds and Accounts. Any Fund or Account required by this Indenture to be established and maintained by the Town or the Trustee may be established and maintained in the accounting records of the Town or the Trustee, as the case may be, either as a Fund or an Account, and may, for the purpose of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a Fund or as an Account. All such records with respect to all such Funds and Accounts held by the Town shall at all times be maintained in accordance with generally accepted accounting principles and all such records with respect to all such Funds and Accounts held by the Trustee shall be at all times maintained in accordance with corporate trust industry practices; in each case with due regard for the protection of the security of the 2023 Bonds and the rights of every Owner thereof.
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49 SECTION 9.10 Notices. Any notice, request, complaint, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, first class mail, overnight and hand delivery, fax and email addressed as follows:

If to the Town: Town of Hillsborough
1600 Floribunda Avenue
Hillsborough, California 94010
Attention: City Manager
If to the Trustee: The Bank of New York Mellon Trust Company, N.A.

Corporate Trust
333 South Hope Street, Suite #2525
Los Angeles, California 90071
Facsimile: (877) 269-6192
The Town and the Trustee may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

SECTION 9.11 Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the 2023 Bonds which remain unclaimed for one (1) year after the date when such 2023 Bonds have become due and payable, either at their stated maturity dates if such moneys were held by the Trustee at such date, or for one (1) year after the date of deposit of such moneys if deposited with the Trustee after said date when such 2023 Bonds become due and payable, shall, at the request of the Town, be repaid by the Trustee to the Town, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the Town for the payment of such 2023 Bonds; provided, however, that before being required to make any such payment to the Town, the Trustee shall, at the expense and direction of the Town, cause to be mailed to the Owners of all such 2023 Bonds, at their respective addresses appearing on the Bond Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than thirty (30) days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Town.
(Signature page follows)
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S-1
IN WITNESS WHEREOF, the TOWN OF HILLSBOROUGH has caused this Indenture to be signed in its name and on its behalf by the City Manager and attested by its Town Clerk, and The Bank of New York Mellon Trust Company, National Association, in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officer identified below, all as of the day and year first above written.

TOWN OF HILLSBOROUGH
By:

City Manager
ATTEST:

By:

City Clerk
The Bank of New York Mellon Trust
Company, National Association, as Trustee
By:

Authorized Officer
-Signature PageIndenture of Trust
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EXHIBIT A
FORM OF 2023 BOND
No. _______ $__________

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF SAN MATEO

TOWN OF HILLSBOROUGH
REVENUE REFUNDING BOND, SERIES 2023
(WATER AND SEWER PROJECTS)

INTEREST RATE MATURITY DATE DATED DATE CUSIP
____%
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: _______________________________ DOLLARS Under and by virtue of Sections 53570 et seq. and 53580 et seq. of the California Government Code (the “Bond Law”), the Town of Hillsborough (the “Town”), for value received, will, on the Maturity Date specified above, pay to the Registered Owner named above, or registered assigns (the “Owner”), the Principal Amount stated above, in lawful money of the United States of America, and pay interest thereon in like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this 2023 Bond (unless (i) this 2023 Bond is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or (ii) this 2023 Bond is authenticated prior to [November 15, 2023], in which event it shall bear interest from the Dated Date stated above; provided, however, that if at the time of authentication of this 2023 Bond, interest is in default on this 2023 Bond, this 2023 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on this 2023 Bond) until payment of such Principal Amount in full, at the Interest Rate per annum stated above, payable on June 1 and December 1 in each year, commencing [December 1, 2023] (each an “Interest Payment Date”), calculated on the basis of a 360-day year comprised of twelve 30-day months.

Principal hereof and premium, if any, are payable at the corporate trust office of The Bank of New York Mellon Trust Company, National Association (the “Trustee”), in Los Angeles, California. Interest hereon (including the final interest payment upon maturity) is payable by check or draft of the Trustee mailed by first class mail to the Owner at the Owner’s address as it appears -311-
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on the registration books maintained by the Trustee as of the close of business on the fifteenth (15th) day of the month next preceding such Interest Payment Date (the “Record Date”); provided, that at the option of any Owner of at least $1,000,000 aggregate principal amount of the 2023 Bonds with respect to which written instructions have been filed with the Trustee prior to the Record Date, such interest may be paid by wire transfer.

This 2023 Bond is one of a duly authorized issue of 2023 Bonds of the Town designated as its “Revenue Refunding Bonds, Series 2023 (Water and Sewer Projects)” (the “2023 Bonds”) issued under and pursuant to the Bond Law and under that certain Indenture of Trust (the “Indenture”) by and between the Town and the Trustee, dated as of [June 1, 2023], and approved by the Town by Resolution [___] adopted by the City Council of the Town on May 8, 2023 (the “Resolution”). Copies of the Indenture are on file at the office of the City Clerk and at the abovementioned office of the Trustee, and reference to the Indenture and any and all supplements thereto and modifications and amendments thereof and to the Bond Law is made for a description of the terms on which the 2023 Bonds are issued, the provisions with regard to the nature and extent of the Net Revenues, as that term is defined in the Indenture, and the rights of the Owners of the 2023 Bonds. All the terms of the Indenture and the Bond Law are hereby incorporated herein and constitute a contract between the Town and the Owner from time to time of this 2023 Bond, and to all the provisions thereof the Owner of this 2023 Bond, by acceptance hereof, consents and agrees. Each subsequent Owner hereof shall have recourse to all of the provisions of the Bond Law and the Indenture and shall be bound by all of the terms and conditions thereof.

The 2023 Bonds are being issued for the purpose of (i) refunding the Town’s Refunded Certificates, (ii) paying a termination fee related to swaps relating to the 2000B Certificates, the 2003 Certificates, and the 2006 Certificates, and (iii) paying certain costs of issuing the 2023 Bonds.

The 2023 Bonds are special obligations of the Town and are secured by amounts held from time to time in the Debt Service Fund established and held by the Trustee under the Indenture and, subject to certain restrictions set forth in the Indenture, a pledge of and lien on certain Net Revenues (as defined in the Indenture) generated by the Town’s Enterprise.

Neither the general fund, the full faith and credit, nor the taxing power of the Town, the State of California or any other political subdivision thereof is pledged to the payment of the 2023 Bonds. The 2023 Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Town or any of its income or receipts except the Net Revenues.

The Town covenants in the Indenture that it will fix, prescribe, revise and collect rates and charges for the Enterprise in each Fiscal Year which will be at least sufficient to yield Net Revenues during each Fiscal Year equal to at least the sum of (i)(A) one hundred twenty percent (120%) of the Debt Service of the 2023 Bonds and Parity Debt, and (B) one hundred ten percent (110%) of Debt Service on all outstanding Obligations, plus (ii) any amounts required to replenish any reserve fund established in connection with any Bonds.

The 2023 Bonds are issuable as fully registered 2023 Bonds, without coupons, in denominations of $5,000 or any integral multiple thereof. Subject to the limitations and conditions -312-
61236.05003\41124358.4
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and upon payment of the charges, if any, as provided in the Indenture, 2023 Bonds may be exchanged for a like aggregate principal amount of 2023 Bonds of other authorized denominations and of the same maturity. Additional Obligations may be issued pursuant to the Indenture.

The 2023 Bonds maturing on or before June 1, 2031, are not subject to optional redemption prior to maturity. The 2023 Bonds maturing on June 1, 2032, and thereafter are subject to redemption prior to their stated maturity at the option of the Town, as a whole or in part on any date, by such maturities as are selected by the Town from any available source of funds on or after June 1, 2031 at a redemption price equal to the principal amount of the 2023 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption.

This 2023 Bond is transferable by the Owner hereof, in person, or by his attorney duly authorized in writing, at the Principal Corporate Trust Office, but only in the manner and subject to the limitations provided in the Indenture, and upon surrender and cancellation of this 2023 Bond.

Upon registration of such transfer a new 2023 Bond or 2023 Bonds, of any authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor.

The Town and the Trustee may treat the Owner hereof as the absolute Owner hereof for all purposes, and the Town and the Trustee shall not be affected by any notice to the contrary. The Indenture may be amended without the consent of the Owners of the 2023 Bonds to the extent set forth in the Indenture.

It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this 2023 Bond do exist, have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of this 2023 Bond, together with all other indebtedness of the Town, does not exceed any limit prescribed by any laws of the State of California, and is not in excess of the amount of 2023 Bonds permitted to be issued under the Indenture.

This 2023 Bond shall not become valid or obligatory for any purpose or be entitled to the benefits of the Indenture until the certificate of authentication and registration hereon shall have been manually signed by an authorized officer or signatory of the Trustee.

Unless this 2023 Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Town or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC),

ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
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61236.05003\41124358.4
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IN WITNESS WHEREOF, the Town of Hillsborough has caused this 2023 Bond to be executed in its name and on its behalf with the facsimile signatures of the Town of Hillsborough City Manager and of its City Clerk, all as of the Dated Date specified above.

TOWN OF HILLSBOROUGH
By:

City Manager
ATTEST:

By:

City Clerk
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61236.05003\41124358.4
A-5

CERTIFICATE OF AUTHENTICATION
This is one of the 2023 Bonds described in the within-mentioned Indenture.

Dated: ____________________ The Bank of New York Mellon Trust Company, National Association
By:

Authorized Signatory
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61236.05003\41124358.4
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FORM OF ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto_________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint ______________________ _________________________________________ attorney, to transfer the same on the books of the Trustee, with full power of substitution in the premises.

Dated: _______________________
Signature Guaranteed:

Note: Signature guarantee shall be made by a
guarantor institution participating in
the Securities Transfer Agents
Medallion Program or in such other
guarantee program acceptable to the
Trustee.

Note: The signature(s) on this Assignment
must correspond with the name(s) as
written on the face of the within Bond
in every particular, without alteration
or enlargement or any change
whatsoever.
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PRELIMINARY OFFICIAL STATEMENT DATED _____________, 2023 NEW ISSUE – BOOK-ENTRY ONLY RATING: S&P: “___”
In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject to certain qualifications described herein, under existing statutes, regulations, rules and court decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the 2023 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, however, interest is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS” herein.
$_________∗

TOWN OF HILLSBOROUGH
Revenue Refunding Bonds, Series 2023
(Water and Sewer Projects)
Dated: Date of Delivery Due: June 1, as shown on inside cover Authority for Issuance. The bonds captioned above (the “2023 Bonds”) are being issued by the Town of Hillsborough (the “Town”) pursuant to the provisions of Sections 53570 et seq. and 53580 et seq. of the California Government Code, a resolution adopted by the City Council of the Town (the “City Council”) on May 8, 2023, and an Indenture of Trust, dated as of June 1, 2023 (the “Indenture”), by and between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee for the 2023 Bonds (the “Trustee”).

Use of Proceeds. The 2023 Bonds are being issued to provide funds to (i) refund the Town’s Certificates of Participation (Refunding) 2000 Series A (the “2000A Certificates”), outstanding in the principal amount described herein; refund the Town’s Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B, outstanding in the principal amount described herein (the “2000B Certificates” and together with the 2000A Certificates, the “2000 Certificates”); refund the Town’s Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A, outstanding in the principal amount described herein (the “2003 Certificates”); refund the Town’s Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A, outstanding in the principal amount described herein (the “2006 Certificates,” and together with the 2000 Certificates and the 2003 Certificates, the “Refunded Certificates”), (ii) pay to the swap provider a termination fee for terminating the remaining notional amount of the swaps relating to the 2000B Certificates, 2003 Certificates, and the 2006 Certificates, and (iii) pay the costs of issuing the 2023 Bonds. See “FINANCING PLAN.”
Security for the 2023 Bonds. The 2023 Bonds are payable from and secured by the Town’s pledge of Net Revenues under the Indenture on parity with an outstanding loan from the California State Water Resources Control Board. Net Revenues are defined generally as Revenues (as defined herein) received from the Town’s water and sewer enterprises (together, the “Enterprise”), less Maintenance and Operations Costs (as defined herein) of the Enterprise. Net Revenues received in connection with the water component of the Enterprise may be used only to pay debt service on water related obligations, as determined by the Town. Net Revenues received in connection with the sewer component of the Enterprise may only be used to pay debt service on sewer related obligations, as determined by the Town. Net Revenues of one component of the Enterprise may not be used to pay debt service of the other component of the Enterprise in the event of a deficiency of Net Revenues in such Enterprise component. See “SECURITY FOR THE 2023 BONDS.”
Bond Terms; Book-Entry Only. The 2023 Bonds will bear interest at the rates shown below, payable semiannually on June 1 and December 1 of each year, commencing on December 1, 2023, and will be issued in fully registered form without coupons in integral multiples of $5,000. The 2023 Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers of the 2023 Bonds will not receive certificates representing their interests in the 2023 Bonds. Payments of the principal of, premium, if any, and interest on the 2023 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 beneficial owners of the 2023 Bonds. See “THE 2023 BONDS – General Provisions.” Redemption. The 2023 Bonds are subject to optional redemption prior to maturity as provided herein. See “THE 2023 BONDS – Redemption.” NEITHER THE 2023 BONDS NOR THE OBLIGATION OF THE TOWN TO PAY PRINCIPAL OF OR INTEREST THEREON CONSTITUTE

A DEBT OR A LIABILITY OF THE TOWN, THE COUNTY OF SAN MATEO, 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 TOWN. THE 2023 BONDS ARE SECURED SOLELY BY THE PLEDGE OF NET REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE 2023 BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE TOWN.

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE OF 2023 BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION WITH RESPECT TO THE PURCHASE OF THE 2023 BONDS.

The 2023 Bonds are offered when, as and if issued and received by the Underwriter and subject to the approval as to their legality by Best Best & Krieger LLP, Riverside, California, Bond Counsel. Certain legal matters will be passed upon for the Town by Best Best & Krieger LLP, as Disclosure Counsel and City Attorney, and for the Underwriter by Nixon Peabody LLC, as Underwriter’s counsel. It is anticipated that the 2023 Bonds will be delivered in definitive form through DTC on or about _____________, 2023.

The date of this Official Statement is: ____________, 2023. ∗ Preliminary, subject to change.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. 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 jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. -317-
ATTACHMENT 4

MATURITY SCHEDULE
$_________∗

TOWN OF HILLSBOROUGH
Revenue Refunding Bonds, Series 2023
(Water and Sewer Projects)
Maturity
Date
(June 1)
Principal
Amount
Interest
Rate Yield CUSIP(1)
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
∗ Preliminary, subject to change.
(1) 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© 2023 CUSIP Global Services. All rights reserved. CUSIP® data herein 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.

Neither the Underwriter, the Town, nor their agents or counsel assume responsibility for the accuracy of such numbers. -318-

TOWN OF HILLSBOROUGH

SAN MATEO COUNTY

STATE OF CALIFORNIA

CITY COUNCIL
Christine Krolik, Mayor
Sophie Cole, Vice Mayor
Marie Chuang, Councilmember
Leslie Marden Ragsdale, Councilmember
Alvin L. Royse, Councilmember

TOWN STAFF
Jan Cooke, Acting City Manager and Finance Director
Paul Willis, Public Works Director and City Engineer
Best Best & Krieger LLP, City Attorney
________________________________

PROFESSIONAL SERVICES
MUNICIPAL ADVISOR and SWAP ADVISOR
Acacia Financial Group, Inc.

Mount Laurel, New Jersey

BOND AND DISCLOSURE COUNSEL
Best Best & Krieger LLP
Riverside, California

TRUSTEE
The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California
-319-

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized by the Town to give any information or to make any representations in connection with the offer or sale of the 2023 Bonds other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2023 Bonds by any person, in any jurisdiction where such offer, solicitation or sale would be unlawful. This Official Statement has been deemed final, as of its date, by the Town for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended.

The information set forth herein has been obtained from sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Town. Neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Town since the date hereof. The information and expressions of opinion stated herein are subject to change without notice.

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 words “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates,” “assumes,” and analogous expressions. The achievement of certain results or other expectations contained in such forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. No assurance is given that actual results will meet the forecasts of the Town in any way, regardless of the optimism communicated in the information, and such statements speak only as of the date of this Official Statement. The Town disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in the expectations of the Town with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

All summaries of the Indenture (as defined herein), and of statutes and other documents referred to herein do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such statute and document. This Official Statement, including any amendment or supplement hereto, is intended to be deposited with one or more depositories. This Official Statement does not constitute a contract between any Owner of a 2023 Bond and the Town.

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

The issuance and sale of the 2023 Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Sections 3(a)(2) and 3(a)(12), respectively, for the issuance and sale of municipal securities.

While the Town maintains an internet website for various purposes, the information provided on that website is not incorporated by reference as part of this Official Statement and none of the information on that website is intended to assist investors in making any investment decision or to provide any continuing information with respect to the 2023 Bonds or any other bonds or obligations of the Town.
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TABLE OF CONTENTS
-iINTRODUCTION................................................... 1 Town of Hillsborough ........................................ 1 PLAN OF REFINANCING .................................... 4 Estimated Sources and Uses of Funds ................ 4
DEBT SERVICE SCHEDULE ............................... 5 THE 2023 BONDS ................................................. 6 Authority for Issuance ........................................ 6 General Provisions ............................................. 6 Redemption ........................................................ 6 Book-Entry Only System ................................... 7 SECURITY FOR THE 2023 BONDS .................... 8
Pledge of Net Revenues ..................................... 8 No Reserve Fund ................................................ 9 Existing Parity Debt ........................................... 9 Revenue Accounts .............................................. 9 Rate Covenant .................................................. 10 Additional Indebtedness ................................... 11 Rate Stabilization Account ............................... 12 Eminent Domain Proceeds ............................... 12 Casualty Insurance Proceeds ............................ 13 THE TOWN .......................................................... 13 General Information ......................................... 13 Governing Body ............................................... 14 Enterprise Administration ................................ 14 Employees and Employee Benefits .................. 14
THE ENTERPRISE .............................................. 17 The Water System ............................................ 17 Regulatory Issues. ............................................ 23 The Sewer System ............................................ 24

ENTERPRISE REVENUES, EXPENSES,
AND DEBT SERVICE COVERAGE ............. 29
Capital Improvement Plan ................................ 36 Insurance .......................................................... 38 Financial Information ....................................... 38 BOND OWNERS’ RISKS .................................... 38 Enterprise Demand and Growth ....................... 38 Net Revenues; Rate Covenant .......................... 39 Outstanding Litigation ..................................... 39 Enterprise Expenses ......................................... 40 Drought Measures ............................................ 40 Future Land Use Regulations ........................... 42 Proposition 218 ................................................ 42 Constitutional Limit on Appropriations,
Fees, and Charges ....................................... 44 Taxpayer Protection and Government
Accountability Act Initiative ...................... 44 Limitations on Remedies Available to
Bondowners ................................................ 45 Natural Disasters .............................................. 45 Cybersecurity ................................................... 46 Climate Change ............................................... 46 Environmental Regulation ............................... 47 No Obligation to Tax ....................................... 47 Teeter Plan Termination .................................. 47 Change in Law ................................................. 47 Secondary Market for 2023 Bonds .................. 48
Federal Tax-Exempt Status of the 2023
Bonds ......................................................... 48 IRS Audit of Tax-Exempt Issues ..................... 48 Parity Debt ....................................................... 48 TAX MATTERS .................................................. 48 CERTAIN LEGAL MATTERS ........................... 49
FINANCIAL STATEMENTS .............................. 49
MUNICIPAL ADVISOR ..................................... 50 RATING ............................................................... 50 LITIGATION ....................................................... 50 CONTINUING DISCLOSURE ............................ 50
UNDERWRITING ............................................... 51 EXECUTION ....................................................... 52 APPENDIX A – SUMMARY OF CERTAIN

PROVISIONS OF THE INDENTURE
OF TRUST ................................................. A-1 APPENDIX B – COMPREHENSIVE

ANNUAL FINANCIAL REPORT FOR
THE FISCAL YEAR ENDED JUNE 30, 2022 .. B-1
APPENDIX C – FORM OF CONTINUING
DISCLOSURE AGREEMENT .................. C-1
APPENDIX D – FORM OF OPINION OF
BOND COUNSEL ..................................... D-1
APPENDIX E – DTC AND THE BOOKENTRY ONLY SYSTEM .......................... E-1 APPENDIX F – GENERAL INFORMATION

ABOUT THE TOWN OF

HILLSBOROUGH AND SAN MATEO
COUNTY .................................................... F-1 -323-

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1 OFFICIAL STATEMENT
$_________∗

TOWN OF HILLSBOROUGH
Revenue Refunding Bonds, Series 2023
(Water and Sewer Projects)

INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the 2023 Bonds to potential investors is made only by means of the entire Official Statement.

Town of Hillsborough
The Town was incorporated on May 5, 1910 and is located on the San Francisco Peninsula in the County of San Mateo, California, approximately 15 miles south of San Francisco and minutes away from the San Francisco International Airport. The Town is bordered by the City of San Mateo on the south and east, the City of Burlingame on the north and east, and Interstate Highway 280 on the west. As of January 1, 2022, the Town had a population of 11,443 and had a certified assessed valuation for Fiscal Year 2022-23 of approximately $12.48 billion (the 2023 Bonds are not secured by taxes).

Authority for Issuance. The 2023 Bonds are authorized pursuant to the provisions of Sections 53570 et seq. and 53580 et seq. of the California Government Code, a resolution adopted by the City Council of the Town on May 8, 2023 (the “Town Resolution”), and an Indenture of Trust, dated as of June 1, 2023 (the “Indenture”), between the Town and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

Form of 2023 Bonds. The 2023 Bonds will be dated their date of delivery and will be issued in fully registered form, without coupons, in the integral multiples of $5,000. See “THE 2023 BONDS – General Provisions.” When delivered, the 2023 Bonds will be registered in the name of The Depository Trust Company, New York, New York (“DTC”), or its nominee. DTC will act as securities depository for the 2023 Bonds.

Individual purchases of 2023 Bonds will be made in book-entry form only in integral multiples of $5,000.

Purchasers of the 2023 Bonds will not receive certificates representing the 2023 Bonds purchased. See “THE 2023 BONDS – Book-Entry Only System” and “APPENDIX E – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Purpose of the 2023 Bonds. The 2023 Bonds are being issued to provide funds to (i) refund the Town’s Certificates of Participation (Refunding) 2000 Series A, currently outstanding in the principal amount of $2,300,000(1) (the “2000A Certificates”); refund the Town’s Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B, currently outstanding in the principal amount of $4,200,000(1) (the “2000B Certificates” and together with the 2000A Certificates, the “2000 Certificates”); refund the Town’s Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A, currently outstanding in the principal amount of $7,800,000(1) (the “2003 Certificates”); refund the Town’s Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A, currently outstanding in the principal amount of $7,305,000(1) (the “2006 Certificates,” and together with the 2000 Certificates and the 2003 ∗ Preliminary, subject to change.
(1) Does not reflect principal payment to be paid on June 1, 2023. On June 1, 2023, $200,000 of the 2000A Certificates will mature, $400,000 of the 2000B Certificates will mature, $600,000 of the 2003 Certificates will mature, and $440,000 of the 2006 Certificates will mature. Such amounts will be paid by the Town on June 1, 2023 and are not part of the refunding detailed herein.
-325-
2 Certificates, the “Refunded Certificates”), (ii) pay to the swap provider a termination fee for terminating the remaining notional amount of the swaps relating to the 2000B Certificates, 2003 Certificates, and the 2006 Certificates, and (iii) pay the costs of issuing the 2023 Bonds. See “FINANCING PLAN.” Pledge of Net Revenues. The 2023 Bonds are payable from Net Revenues of the whole and each and every part of the Enterprise of the Town (comprised of the Town’s water enterprise (the “Water System”) and the Town’s sewer enterprise (the “Sewer System”), on a parity with outstanding Parity Debt (as defined herein) of the Enterprise. Net Revenues received in connection with the Water System may be used only to pay debt service on Water System related obligations, as determined by the Town. Net Revenues received in connection with the Sewer System may only be used to pay debt service on Sewer System related obligations, as determined by the Town. Net Revenues of one component of the Enterprise may not be used to pay debt service of the other component of the Enterprise in the event of a deficiency of Net Revenues in such Enterprise component.

Approximately 53% of Debt Service on the 2023 Bonds is allocated to the Water System, and approximately 47% of Debt Service on the 2023 Bonds is allocated to the Sewer System. “Enterprise” means the properties and assets, real and personal, tangible and intangible, of the Town, now or hereafter existing, used or pertaining to the collection, transmission, distribution, and sale of water (the “Water System”) and to the collection and transmission of sewage, including all additions, extensions, expansions, improvements, and betterments thereto and equipping thereof (the “Sewer System”). “Maintenance and Operations Costs” means, for any Fiscal Year or other period, the reasonable and necessary costs spent or incurred by the Town for maintaining and operating the Enterprise, calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Enterprise in good repair and working order, and including Administrative Costs, salaries and wages of employees, payments for retiree healthcare and to employee retirement systems (to the extent paid from Revenues), overhead, insurance, taxes (if any), fees of auditors, accountants, attorneys, municipal advisors, consultants, or engineers, and insurance premiums, and including all other reasonable and necessary costs of the Town or charges required to be paid by it to comply with the terms of the 2023 Bonds, this Indenture, or any Additional Obligations, including any amounts required to be deposited in the Rebate Fund pursuant to the Tax Certificate, but excluding in all cases (i) depreciation and replacement and obsolescence charges or reserves therefor, (ii) amortization of intangibles or other bookkeeping entries of a similar nature, (iii) costs of capital additions, replacements, betterments, extensions, or improvements to the Enterprise, which under generally accepted accounting principles are chargeable to a capital account or to a reserve for depreciation, (iv) charges for the payment of principal and interest on any general obligation bond heretofore or hereafter issued for Enterprise purposes, and (v) charges for the payment of any debt service on the Obligations.
“Revenues” means, for any computation period, all rates, fees, and charges received for, and all other income and receipts derived by the Town from, the operation of the Enterprise or arising from the Enterprise, calculated in accordance with generally accepted accounting principles, including all proceeds of insurance covering business interruption loss relating to the Enterprise, investment earnings on such amounts, transfers from the Rate Stabilization Account maintained by the Town, and all other money howsoever derived by the Town from the operation of the Enterprise or arising from the Enterprise; provided, however, that Revenues shall include fees and charges collected during such Fiscal Year or other period, but only to the extent thatsuch fees and charges could be properly expended on an Enterprise project for which the proceeds were used or are available to be used.

Revenues shall not include customers’ security deposits or any other deposits subject to refund until such deposits have become the property of the Town or proceeds of insurance covering casualty losses. Revenues shall not include any transfers from the Town’s General Fund for storm water operations or any other purpose. “Net Revenues” means, for any period, the Revenues for such period less the Maintenance and Operations Costs for such period.

See “SECURITY FOR THE 2023 BONDS – Pledge of Net Revenues” and “THE ENTERPRISE.” -326-
3 Existing Parity Debt. The 2023 Bonds are payable from and secured by a first pledge of and lien on Net Revenues on a parity with certain obligations of the Town relating to that certain Installment Sale Agreement, dated as of March 23, 2015, as amended by that certain Amendment No. 1 dated as of August 25, 2015, and that certain Amendment No. 2 dated as of June 1, 2016 (together, the “SRF Loan” or “Existing Parity Debt”), each by and between the Town and the California State Water Resources Control Board, currently outstanding in the principal amount of approximately $10 million and related to improvements to the Town’s Sewer System. See “SECURITY FOR THE 2023 BONDS – Existing Parity Debt.”
Existing Subordinate Debt. The Town has outstanding obligations which are subordinate to the pledge and lien of Net Revenues of the 2023 Bonds as follows: (i) that certain Energy Conservation Assistance Account Loan Agreement (the “Energy Conservation Agreement”), dated March 31, 2010, by and between the Town and the California Energy Resources Conservation and Development Commission, related to energy savings projects of the Town’s Water System, and (ii) that certain Interim Agreement for Payment of Capital Costs of Clean Water Program Projects (the “Clean Water Agreement”), effective as of June 29, 2022, by and between the Town and the City of San Mateo, related to the Town’s Sewer System.

Rate Covenant. Subject to certain conditions, the Town has covenanted in the Indenture to fix, maintain, and collect Revenues sufficient in each Fiscal Year to provide Net Revenues equal to at least (i)(A) one hundred twenty percent (120%) of the Debt Service of the 2023 Bonds and Parity Debt, and (B) one hundred ten percent (110%) of Debt Service on all outstanding Obligations, plus (ii) any amounts required to replenish any reserve fund established in connection with any Bonds (the “Rate Covenant”). See “SECURITY FOR THE 2023 BONDS – Rate Covenants.” See APPENDIX A – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE” for definitions of defined terms used in this Official Statement. Net Revenues received in connection with the Water System may be used only to pay debt service on Water System related obligations, as determined by the Town. Net Revenues received in connection with the Sewer System may only be used to pay debt service on Sewer System related obligations, as determined by the Town. Net Revenues of one component of the Enterprise may not be used to pay debt service of the other component of the Enterprise in the event of a deficiency of Net Revenues in such Enterprise component.

Issuance of Parity Debt. The Town may issue or incur debt and bonds on a parity with (“Parity Debt”) or subordinate to the 2023 Bonds, provided that the conditions set forth in the Indenture are met. See “SECURITY FOR THE 2023 BONDS – Parity Debt.”
Payment. Principal of the 2023 Bonds will be payable in each of the years and in the amounts set forth on the inside cover page hereof at the office of the Trustee. Interest on the 2023 Bonds will be paid by check or draft of the Trustee mailed by first class mail to the person entitled thereto. See “THE 2023 BONDS – General Provisions.” Initially, interest on and principal and premium, if any, of the 2023 Bonds will be payable when due by wire of the Trustee to DTC, which will in turn remit such interest, principal and premium, if any, to DTC Participants (as defined herein), which will in turn remit such interest, principal and premium, if any, to Beneficial Owners (as defined herein) of the 2023 Bonds. See “THE 2023 BONDS – Book-Entry Only System” and APPENDIX E – “DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Redemption. The 2023 Bonds are subject to optional redemption prior to their stated maturity dates as provided herein. See “THE 2023 BONDS – Redemption.”
Risks of Investment. The 2023 Bonds are repayable only from certain money available to the Town from its Enterprise. For a discussion of some of the risks associated with the purchase of the 2023 Bonds, see “BOND OWNERS’ RISKS.”
Neither the 2023 Bonds nor the obligation of the Town to pay principal of or interest thereon constitutes a debt of the Town, the County of San Mateo (the “County”), 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 Town or the County. The 2023 Bonds are secured solely by the pledge of Net Revenues of the Town and certain funds held under the Indenture.
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4 PLAN OF REFINANCING
A portion of the proceeds of the 2023 Bonds will be used to (i) refund the Town’s Certificates of Participation (Refunding) 2000 Series A (the “2000A Certificates”); refund the Town’s Certificates of Participation (Refunding and Water and Sewer Systems Project) 2000 Series B (the “2000B Certificates” and together with the 2000A Certificates, the “2000 Certificates”); refund the Town’s Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2003 Series A (the “2003 Certificates”); refund the Town’s Variable Rate Certificates of Participation (Water and Sewer Systems Projects) 2006 Series A (the “2006 Certificates,” and together with the 2000 Certificates and the 2003 Certificates, the “Refunded Certificates”), (ii) pay to the swap provider a termination fee for terminating the remaining notional amount of the swaps relating to the 2000B Certificates, 2003 Certificates, and the 2006 Certificates, and (iii) pay the costs of issuing the 2023 Bonds. The Refunded Certificates will be outstanding in the amounts and prepayable on the dates set forth in the table below:

Outstanding
Certificates of Participation
Prepaid
Par Value(1) CUSIP(2) Prepayment Date
2000A Certificates $2,100,000 432258AW1 June __, 2023
2000B Certificates $3,800,000 432258AX9 June __, 2023
2003 Certificates $7,200,000 432258AY7 June __, 2023
2006 Certificates $6,865,000 432258AZ4 June __, 2023
_______________________ (1) Prior to the prepayment date of the Refunded Certificates, the Town will make a scheduled principal payment on the Refunded Certificates on June 1, 2023; such amounts have been taken into account for purposes of this table. (2) 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© 2023 CUSIP Global Services. All rights reserved.

CUSIP® data herein 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. Neither the Underwriter, the Town, nor their agents or counsel assume responsibility for the accuracy of such numbers.

Estimated Sources and Uses of Funds
The estimated sources and uses of funds relating to the 2023 Bonds are as follows:

Sources:

Principal Amount of 2023 Bonds
[Net] Original Issue [Premium/Discount]

TOTAL SOURCES
Uses:

Redemption of the 2000A Certificates
Redemption of the 2000B Certificates
Redemption of the 2003 Certificates
Redemption of the 2006 Certificates
Swap Termination Fees
Costs of Issuance(1)
TOTAL USES ______________________
(1) Costs of Issuance include legal fees, underwriter’s discount, printing costs, rating agency fees and other miscellaneous expenses.
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5 DEBT SERVICE SCHEDULE
Annualized debt service on the 2023 Bonds and Existing Parity Debt assuming no optional redemption and prepayment of the Refunded Certificates is presented below.

Fiscal
Year
Ending
June 30
Principal
of
2023
Bonds
Interest
of
2023
Bonds
Total
2023
Bonds
Debt
Service(1)
SRF Loan
Debt
Service(2)(4)
Total
Parity
Debt
Service(6)
Energy
Conservation
Agreement
Debt
Service(3)(5)
Clean
Water
Agreement
Debt
Service(3)(4)
Total All Debt
Service
(Parity and
Subordinate)
(6)
2023 $431,801.46 $65,641.36 $ 0.00
2024 431,801.46 65,641.36 1,948,997.90
2025 431,801.46 65,641.36 1,948,997.90
2026 431,801.46 65,641.36 1,948,997.90
2027 431,801.46 65,641.36 1,948,997.90
2028 431,801.46 - 1,948,997.90
2029 431,801.46 - 1,948,997.90
2030 431,801.46 - 1,948,997.90
2031 431,801.46 - 1,948,997.90
2032 431,801.46 - 1,948,997.90
2033 431,801.46 - 1,948,997.90
2034 431,801.46 - 1,948,997.90
2035 431,801.46 - 1,948,997.90
2036 431,801.46 - 1,948,997.90
2037 431,801.46 - 1,948,997.90
2038 431,801.46 - 1,948,997.90
2039 431,801.46 - 1,948,997.90
2040 431,801.46 - 1,948,997.90
2041 431,801.46 - 1,948,997.90
2042 431,801.46 - 1,948,997.90
2043 431,801.46 - 1,948,997.90
2044 431,801.46 - 1,948,997.90
2045 431,801.46 - 1,948,997.90
2046 431,801.46 - 1,948,997.90
2047 431,801.35 - 1,948,997.90
2048 - - 1,948,997.90
2049 - - 1,948,997.90
2050 - - 1,948,997.90
2051 - - 1,948,997.90
2052 - - 1,948,997.90
2053 - - 1,912,469.73
___________________
(1) Approximately 53% of Debt Service on the 2023 Bonds is allocated to the Water System, and approximately 47% of Debt Service on the 2023 Bonds is allocated to the Sewer System. (2) On parity with the 2023 Bonds. (3)
Subordinate to the 2023 Bonds.
(4) Allocated to the Town’s Sewer System.
(5) Allocated to the Town’s Water System.
(6) Reflects the prepayment of the Refunded Certificates. -329-
6 THE 2023 BONDS
Authority for Issuance
The 2023 Bonds are authorized pursuant to the provisions of Sections 53570 et seq. and 53580 et seq. of the California Government Code, a resolution adopted by the City Council of the Town on May 8, 2023, and the Indenture.

General Provisions
Bond Terms. The 2023 Bonds will be dated their date of delivery and issued in fully registered form without coupons in integral multiples of $5,000. The 2023 Bonds will mature in the amounts and on the dates, and bear interest at the rates per annum, set forth on the inside cover page of this Official Statement.

Payments of Principal and Interest. Interest on the 2023 Bonds will be payable on June 1 and December 1 in each year, beginning December 1, 2023 (each an “Interest Payment Date”) to the person whose name appears on the Bond Registration Books as the Owner thereof as of the 15th calendar day of the month immediately preceding an Interest Payment Date (the “Record Date”). While the 2023 Bonds are subject to the book-entry system, the principal, interest, and any prepayment premium with respect to a 2023 Bond will be paid by the Trustee to DTC for subsequent disbursement to beneficial owners of the 2023 Bonds.

If there exists a default in payment of interest due on any Interest Payment Date, interest will be payable on a payment date established by the Trustee to the persons in whose names the 2023 Bonds are registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Trustee to the registered Owners of the 2023 Bonds not less than 15 days preceding such special record date.

Principal of and premium (if any) on any 2023 Bond will be paid upon presentation and surrender thereof at the Principal Corporate Trust Office of the Trustee. Both the principal of and interest and premium (if any) on the 2023 Bonds will be payable in lawful money of the United States of America.

Calculation of Interest. The 2023 Bonds will be dated the Closing Date and bear interest based on a 360- day year comprised of twelve 30-day months from the Interest Payment Date next preceding the date of authentication thereof, unless said date of authentication is an Interest Payment Date, in which event such interest is payable from such date of authentication, and unless said date of authentication is prior to November 15, 2023, in which event such interest is payable from the Closing Date; provided, however, that if, as of the date of authentication of any 2023 Bond, interest thereon is in default, such 2023 Bond will bear interest from the date to which interest has previously been paid or made available for payment thereon in full.

Redemption
Optional Redemption. The 2023 Bonds maturing on or before June 1, 2031, are not subject to optional redemption prior to maturity. The 2023 Bonds maturing on June 1, 2032, and thereafter are subject to redemption prior to their stated maturity at the option of the Town, as a whole or in part on any date, by such maturities as are selected by the Town from any available source of funds on or after June 1, 2031, at a redemption price equal to the principal amount of the 2023 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

The Town shall provide the Trustee a written request of its intention to redeem 2023 Bonds, and the manner of selecting such 2023 Bonds for redemption from among the maturities thereof and the redemption price thereof, at least 30 days prior to the redemption date.

Selection of 2023 Bonds for Redemption. Whenever provision is made for the redemption of less than all of the 2023 Bonds of any series, the Trustee shall select the 2023 Bonds to be redeemed from all 2023 Bonds -330-
7 or such given portion thereof not previously called for redemption, among series and among maturities as directed by the Town and by lot within a maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair.

Notice of Redemption. Notice of redemption shall be mailed by first class mail, postage prepaid, not less than twenty (20) nor more than forty-five (45) days before any redemption date, to respective Owners of any 2023 Bonds designated for redemption at their addresses appearing on the Bond Registration Books, and to the Securities Depositories and to the Information Services. Each notice of redemption shall state the date of the notice, the redemption date, the place or places of redemption, whether less than all of the 2023 Bonds of such series (or all 2023 Bonds of a single maturity) are to be redeemed, the CUSIP numbers and 2023 Bond numbers of the 2023 Bonds to be redeemed, the maturity or maturities of the 2023 Bonds to be redeemed and in the case of 2023 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed.

Each such notice shall also state that on the redemption date there will become due and payable on each of said 2023 Bonds the redemption price thereof, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such 2023 Bonds be then surrendered. Neither the failure to receive any notice nor any defect therein shall affect the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of 2023 Bonds shall be given by the Trustee, at the expense of the Town, for and on behalf of the Town.

Conditional Notice of Optional Redemption of 2023 Bonds. With respect to the optional redemption of the 2023 Bonds, the Town may instruct the Trustee to include a statement in the notice of such redemption which shall state that such redemption is conditioned upon the receipt by the Trustee on or before the date fixed for such redemption of sufficient funds for such purpose. In the event that sufficient funds shall not have been deposited with the Trustee on or before the date fixed for redemption, the Trustee shall promptly notify the Owners in the same manner in which notice was sent that such redemption is cancelled and the notice thereof shall be deemed to be cancelled and rescinded.

Partial Redemption of 2023 Bonds. Upon surrender of any 2023 Bonds redeemed in part only, the Town shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Town, a new 2023 Bond or 2023 Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the 2023 Bonds surrendered.

Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the 2023 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the 2023 Bonds (or portions thereof) so called for redemption shall become due and payable, interest on the 2023 Bonds so called for redemption shall cease to accrue, said 2023 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said 2023 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof.

All 2023 Bonds redeemed pursuant to the provisions of this Article shall be canceled by the Trustee upon surrender thereof and destroyed.

Book-Entry Only System
The 2023 Bonds will be issued as fully registered bonds in book-entry only form, registered in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in integral multiples of $5,000, under the book-entry system maintained by DTC. While the 2023 Bonds are subject to the book-entry system, the principal, interest and any prepayment premium with respect to a 2023 Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the 2023 Bonds. Purchasers of the 2023 Bonds will not receive certificates representing their interests therein, which will be held at DTC.
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8 See “APPENDIX E – DTC AND THE BOOK-ENTRY ONLY SYSTEM” for further information regarding DTC and the book-entry system.

SECURITY FOR THE 2023 BONDS
Pledge of Net Revenues
First and Exclusive Lien on Net Revenues. The 2023 Bonds and Parity Debt of the Enterprise will be secured by a first pledge of all Net Revenues. Under the Indenture, the Town transfers, places a charge upon, assigns, and sets over to the Trustee, for the benefit of the Owners, that portion of the Net Revenues which is necessary to pay the principal of and interest on the 2023 Bonds in any Fiscal Year, together with all moneys on deposit in the Debt Service Fund, and such portion of the Net Revenues is irrevocably pledged to the punctual payment of the principal or redemption price of and interest on the 2023 Bonds. The 2023 Bonds, Existing Parity Debt, and any Parity Debt of the Enterprise will be equally secured by a pledge, charge, and lien upon the Net Revenues, without priority for number or date. The Net Revenues may not be used for any other purpose while any of the 2023 Bonds, Existing Parity Debt, or Parity Debt of the Enterprise remain outstanding, except that out of Net Revenues there may be apportioned and paid such sums for such purposes as are expressly permitted by the Indenture, including Parity Debt. See “SECURITY FOR THE 2023 BONDS – Parity Debt.” This pledge constitutes a first, direct, and exclusive charge and lien on the Net Revenues for the payment of the principal of and interest on the 2023 Bonds in accordance with the terms thereof. Net Revenues received in connection with the Water System may be used only to pay debt service on Water System related obligations, as determined by the Town. Net Revenues received in connection with the Sewer System may only be used to pay debt service on Sewer System related obligations, as determined by the Town. Net Revenues of one component of the Enterprise may not be used to pay debt service of the other component of the Enterprise in the event of a deficiency of Net Revenues in such Enterprise component.

Net Revenues. The Indenture defines Net Revenues as, for any period, the Revenues for such period less the Maintenance and Operations Costs for such period.
“Revenues” means, for any computation period, all rates, fees, and charges received for, and all other income and receipts derived by the Town from, the operation of the Enterprise or arising from the Enterprise, calculated in accordance with generally accepted accounting principles, including all proceeds of insurance covering business interruption loss relating to the Enterprise (but excluding all proceeds of insurance covering casualty losses), investment earnings on such amounts, transfers from the Rate Stabilization Account maintained by the Town, and all other money howsoever derived by the Town from the operation of the Enterprise or arising from the Enterprise; provided, however, that Revenues shall include fees and charges collected during such Fiscal Year or other period, but only to the extent that such fees and charges could be properly expended on an Enterprise project for which the proceeds were used or are available to be used. Revenues shall not include customers’ security deposits or any other deposits subject to refund until such deposits have become the property of the Town.

Revenues do not include any transfers for storm drain operations. “Maintenance and Operations Costs” means, for any Fiscal Year or other period, the reasonable and necessary costs spent or incurred by the Town for maintaining and operating the Enterprise, calculated in accordance with generally accepted accounting principles, including (among other things) the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Enterprise in good repair and working order, and including Administrative Costs, salaries and wages of employees, payments for retiree healthcare and to employee retirement systems (to the extent paid from Revenues), overhead, insurance, taxes (if any), fees of auditors, accountants, attorneys, municipal advisors, consultants, or engineers, and insurance premiums, and including all other reasonable and necessary costs of the Town or charges required to be paid by it to comply with the terms of the 2023 Bonds, this Indenture, or any Additional Obligations, including any amounts required to be deposited in the Rebate Fund pursuant to the Tax Certificate, but excluding in all cases (i) depreciation and replacement and obsolescence charges or reserves therefor, (ii) amortization of intangibles or other bookkeeping entries of a similar nature, (iii) costs of capital additions, replacements, betterments, extensions, -332-
9 or improvements to the Enterprise, which under generally accepted accounting principles are chargeable to a capital account or to a reserve for depreciation, (iv) charges for the payment of principal and interest on any general obligation bond heretofore or hereafter issued for Enterprise purposes, and (v) charges for the payment of any debt service on the Obligations.

No Reserve Fund
The Town will not fund a debt service reserve fund for the 2023 Bonds.

Existing Parity Debt
The 2023 Bonds are payable from and secured by a first pledge of and lien on Net Revenues on a parity with the Existing Parity Debt. See “INTRODUCTION – Existing Parity Debt.” Revenue Accounts
In order to carry out and effectuate the pledge and lien of Net Revenues to payment of debt service on the 2023 Bonds, the Town will covenant and agree in the Indenture that all Revenues, when and as received, will be held by the Town in trust and will be deposited by the Town in its Water Fund and Sewer Fund, as applicable (each an account within its Water and Sewer Enterprise Fund) (together, the “Revenue Accounts”), and will be accounted for through and held in trust in the Revenue Accounts, and the Town will only have such beneficial right or interest in any of such money as provided in the Indenture. All Revenues will be accounted for separately and apart from all other money, funds, accounts or other resources of the Town.

All Revenues will be transferred, disbursed, allocated and applied solely to the uses and purposes set forth below:
(1) Maintenance and Operations Costs. The Town shall first pay from the moneys in the applicable Revenue Account the Maintenance and Operations Costs of the Water System and of the Sewer System as such costs become due and payable.
(2) Debt Service Fund. At least five (5) days prior to each Interest Payment Date, the Town shall transfer Net Revenues to the Trustee in an amount necessary for the purpose of paying the 2023 Bonds; provided, however, Net Revenues relating to the Water System shall be used solely for Bonds relating to the Water System, and Net Revenues relating to the Sewer System shall be used solely for Bonds relating to the Sewer System, as determined by the Town. Not later than the first Business Day preceding each date on which principal of or interest on the 2023 Bonds becomes due and payable, the Trustee shall transfer from the Debt Service Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Debt Service Fund), the following amounts in the following order of priority, the requirements of each such account at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(i) Interest Account. The Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all 2023 Bonds then outstanding.
(ii) Principal Account. The Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the 2023 Bonds coming due and payable on such Interest Payment Date. -333-
10 (iii) Sinking Account. The Trustee will deposit in the Sinking Account an amount equal to the aggregate principal amount of the Term Bonds required to be redeemed on such date, if any, pursuant to the Indenture.
(iv) Equal Rights. It is the intention of the Town that the 2023 Bonds shall be secured by and payable from all Net Revenues deposited in the Revenue Accounts on an equal basis. To the extent that Net Revenues deposited in the Revenue Accounts are insufficient to pay debt service on the 2023 Bonds and Bonds of the Enterprise as it becomes due, the 2023 Bonds and Bonds of the Enterprise shall be payable on a pro rata basis from all available Net Revenues deposited in the applicable Revenue Account; provided, however, Net Revenues of one component of the Enterprise may not be used to pay debt service of the other component of the Enterprise in the event of a deficiency of Net Revenues in such Enterprise component. (3) Subordinate Obligation Payments. As provided in any Subordinate Obligation Contract, the Town shall transfer legally available Net Revenues to pay Subordinate Obligation Payments in an amount which, together with amounts on deposit therein, is at least sufficient to make the required payments with respect to such Subordinate Obligations pursuant to the Subordinate Obligation Contracts.

In the event that the Town has insufficient Net Revenues to make all transfers contemplated in this subparagraph, then such transfers shall be made, as nearly as practicable, pro rata, based on the respective principal amounts of the Subordinate Obligations, payments with respect to which are required to be made.
(4) Rate Stabilization Account. The Town may, as the Town deems necessary or appropriate, transfer Net Revenues in the Revenue Accounts to the Rate Stabilization Account. Such transfers for each Fiscal Year may be made up to two hundred seventy (270) days following the end of such Fiscal Year.
(5) Surplus. As long as all of the foregoing payments, allocations, and transfers are made at the times and in the manner described above in subsections (1), (2) and (3), any moneys remaining in the Revenue Accounts may at any time be treated as surplus and applied for any lawful purpose.

Rate Covenant
(a) The Town has covenanted in the Indenture to fix, maintain, and collect Revenues sufficient in each Fiscal Year to provide Net Revenues equal to at least (i)(A) one hundred twenty percent (120%) of the Debt Service of the 2023 Bonds and Parity Debt, and (B) one hundred ten percent (110%) of Debt Service on all outstanding Obligations, plus (ii) any amounts required to replenish any reserve fund established in connection with any Bonds (the “Rate Covenant”).
(b) The Town shall furnish to the Trustee within 270 days from the close of each Fiscal Year an audit report with respect to the Fiscal Year, together with a certificate of the Town certifying that the Town has complied with the Rate Covenant for the Fiscal Year.
(c) In the event the Town fails in any Fiscal Year to comply with the Rate Covenant, the Town shall retain an Independent Financial Consultant to undertake a rate study for the purpose of establishing a rate structure which will enable it to comply with the Rate Covenant during the succeeding Fiscal Year. The Town shall within 90 days of receipt of such study commence statutory proceedings to revise its rates and charges with respect to the Enterprise in conformity with the recommendations thereof. The Trustee can rely solely on and shall have no duty to review or to investigate the accuracy of any such report or certificate.

For the avoidance of doubt, Net Revenues received in connection with the water component of the Enterprise shall comply with the above-described conditions for Water System obligations, and Net Revenues received in connection with the sewer component of the Enterprise shall comply with the above-described conditions for Sewer System obligations, all as determined by the Town. -334-
11 Additional Indebtedness
Parity Debt
The Town shall not issue or incur any debt secured by a pledge of and charge and lien upon the Net Revenues which is senior to and has priority over the pledge of and charge and lien upon the Net Revenues. The Town may, by Parity Debt instrument, issue or incur other loans, advances, or indebtedness payable from Net Revenues to be derived from the Enterprise, to provide financing for the Enterprise, in such principal amounts as shall be determined by the Town. The Town may issue or incur any such Parity Debt subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Parity Debt:
(a) there shall not have occurred and be continuing an Event of Default under the terms of the Indenture; and
(b) the Town provides a certificate (which may, at the option of the Town, be provided by an Independent Financial Consultant) showing that Net Revenues as shown by the books of the Town for the most recent Fiscal Year, or any more recent twelve (12) month period selected by the Town ending not more than sixty (60) days prior to the date of issuance of such Parity Debt (adjusted as provided in clause (c) below), shall have amounted to at least (A) one hundred twenty percent (120%) of the Maximum Annual Debt Service on (i) the 2023 Bonds and then-outstanding Parity Debt, and (ii) the debt service with respect to the Parity Debt that is proposed to be issued, and (B) one hundred ten percent (110%) of Maximum Annual Debt Service on all outstanding and proposed Parity Debt and Subordinate Debt; and (c) Also, for the purposes of clause (b) above, the Net Revenues may be adjusted in consideration of the following:
(1) Any increases in rates and charges that relate to the Enterprise and shall take into account any reduction in such rates and charges that will be adopted prior to or at the time of incurring such proposed Parity Debt;
(2) Customers added to the Enterprise subsequent to the commencement of the twelve (12) month period provided in clause (b) above, but prior to the date of issuance of the Parity Debt; (3) An allowance for any estimated increase in Net Revenues from any revenue producing additions to or improvements or extensions of the Enterprise to be made with the proceeds of such Parity Debt or with the proceeds of Obligations previously issued; (4) The estimated change in the Net Revenues which will result from services provided under any long-term, guaranteed contract that extends for the life of the Parity Debt if entered into subsequent to the commencement of the 12 month period provided in clause (b) above, but prior to the date of issuance of the Parity Debt; and
(5) For the period contemplated by clause (b) above, Maintenance and Operations Costs shall be deemed to be the same as for the period for which a calculation is done, but adjusted, if deemed necessary by the Town, for any increased Maintenance and Operations Costs which are, in the judgment of the Town, essential to maintaining and operating the Enterprise, including any additions or betterments thereto to be made with the proceeds of such Parity Debt.

For the avoidance of doubt, (i) the Net Revenues relating to the Water System shall meet the conditions of (b) above for Water System related Obligations, and Net Revenues relating to the Sewer System shall meet the conditions of (b) above for Sewer System related Obligations, all as determined by the Town, and (ii) the Town may issue Obligations payable solely from Net Revenues of the Water System or the Sewer System for the sole purpose of financing capital improvements to the related Water System or the Sewer System, as applicable. -335-
12 The certificate or certificates above shall not be required if the Parity Debt being incurred is for the purpose of refunding then outstanding Obligations and, at the time of the incurring of such Parity Debt, the Town provides a certificate showing that Debt Service in each Fiscal Year after incurring such Parity Debt will be less than or equal to Debt Service in each Fiscal Year prior to the incurring of such Parity Debt.

Subordinate Obligations
The Town may issue or incur any such Additional Obligations which are Subordinate Obligations subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Subordinate Obligations. The Town shall provide a certificate (which may, at the option of the Town, be provided by an Independent Financial Consultant) for such Subordinate Obligations showing that Net Revenues, as shown by the books of the Town for the most recent Fiscal Year or any more recent twelve (12) month period selected by the Town ending not more than sixty (60) days prior to the date such Subordinate Obligations are issued or incurred, after deducting all amounts required for the payment of Bonds and Contract Payments during such period, plus, at the option of the Town any of the allowances in clause (c) above, have amounted to at least 110% of Maximum Annual Debt Service on all Obligations outstanding immediately subsequent to the incurrence of such Subordinate Obligations.

The certificate or certificates above shall not be required if the Subordinate Obligations being incurred is for the purpose of refunding then outstanding Obligations and, at the time of the incurring of such Subordinate Obligations, the Town provides a certificate showing that Debt Service in each Fiscal Year after incurring such Subordinate Obligations will be less than or equal to Debt Service in each Fiscal Year prior to the incurring of such Subordinate Obligations.

Rate Stabilization Account
The Town may establish and maintain a special fund to be designated the “Rate Stabilization Account” which is not pledged to and does not otherwise secure the 2023 Bonds or any Parity Debt. The Town may deposit in the Rate Stabilization Account surplus Net Revenues for any Fiscal Year or any other funds of the Town that are legally available for deposit therein. All interest or other earnings on deposit in the Rate Stabilization Account will be retained therein or, at the option of the Town, be applied for any other lawful purposes. The Town has the right at any time to withdraw any or all amounts on deposit in the Rate Stabilization Account and apply such amounts for any other lawful purposes of the Town.

The Town may transfer amounts from the Rate Stabilization Account to the Revenue Accounts, and any such transfer shall be considered Revenues for inclusion in Net Revenues for any Fiscal Year. Transfers for each Fiscal Year may be made up to two hundred seventy (270) days following the end of such Fiscal Year.

Eminent Domain Proceeds
The Indenture provides that if all or any part of the Enterprise is taken by eminent domain proceedings, the Town will deposit all Net Proceeds from such proceeding with the Trustee in a special fund in trust and apply those funds to the cost of acquiring or constructing or financing improvements to the Enterprise if the following conditions are met:
(a) the Town first secures and files with the Trustee a Certificate of the Town showing (i) the estimated loss in annual Net Revenues, if any, suffered, or to be suffered, by the Town by reason of such eminent domain proceedings, (ii) a general description of the improvements to the enterprise then proposed to be acquired or constructed by the Town from such Net Proceeds, and (iii) an estimate of the additional Net Revenues to be derived from such improvements; and -336-
13 (b) the Trustee, on the basis of such Certificate of the Town, determines that such additional Net Revenues will sufficiently offset the loss of Net Revenues, resulting from such eminent domain proceedings so that the ability of the Town to meet its obligations under the Indenture will not be substantially impaired, which determination will be final and conclusive.

If these conditions are met, the Town will then promptly proceed with the acquisition or construction or financing of such Improvements substantially in accordance with such Certificate of the Town and payments therefor will be made by the Trustee from such Net Proceeds and from other moneys of the Town lawfully available therefor, and any balance of such Net Proceeds not required by the Town for these purposes will be deposited in the Revenue Accounts.

If these conditions are not met, then such Net Proceeds will be held in trust by the Trustee and applied to the payment of the 2023 Bonds and outstanding Parity Debt of the Enterprise on a pro rata basis as they become due by their terms, and, pending such application, such remaining moneys may be invested by the Trustee in the manner provided in the Indenture.

Casualty Insurance Proceeds
The Town will covenant in the Indenture that it will at all times maintain such insurance on the Enterprise as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such works or properties. If any useful part of the Enterprise is damaged or destroyed, such part will be restored to use.

The Net Proceeds of insurance against accident to or destruction of the physical Enterprise will be used for repairing or rebuilding the damaged or destroyed portions of the Enterprise (to the extent that such repair or rebuilding is determined by the Town to be useful or of continuing value to the Enterprise), and to the extent not so applied, will be held in trust by the Trustee and applied to the payment of the 2023 Bonds and outstanding Parity Debt as they become due by their terms, and, pending such application, such remaining moneys may be invested by the Trustee in the manner provided in the Indenture.

Any such insurance must be in the form of policies or contracts for insurance with insurers of good standing and will be payable to the Town, or may be in the form of self-insurance by the Town. The Town will establish such fund or funds or reserves as it determines, in its sole judgment, are necessary to provide for its share of any such self-insurance.

THE TOWN
General Information
The Town was incorporated on May 5, 1910 and is located on the San Francisco Peninsula in the County of San Mateo, approximately 15 miles south of San Francisco and minutes from the San Francisco International Airport. The Town is bordered by the City of San Mateo on the south and east, the City of Burlingame on the north and east, and Interstate Highway 280 on the west. As of January 1, 2022, the Town had a population of 11,443 and had a certified assessed valuation for Fiscal Year 2022-23 of approximately $12.48 billion (although the 2023 Bonds are not secured by taxes). General and economic information relating to the Town is set forth in Appendix F attached hereto and portions of the Town’s audited financial statements for Fiscal Year ended June 30, 2022 are set forth in Appendix B attached hereto.
-337-
14 Governing Body
The Town operates under a council-manager form of government, with a five-member City Council elected at large for staggered four-year terms. The mayor and vice-mayor are chosen annually from among the City Council. The current members of the City Council are as follows:

Name Current Office Held Term Expires
Christine Krolik Mayor December, 2024
Sophie Cole Vice-Mayor December, 2024
Marie Chuang Councilmember December, 2026
Leslie Marden Ragsdale Councilmember December, 2026
Alvin L. Royse Councilmember December, 2024
Enterprise Administration
The City Manager is responsible for the administration of all municipal functions, including the Enterprise, except the office of the City Attorney. The City Manager is appointed by and reports directly to the City Council. See “THE TOWN – Governing Body” above. The Town employs 8 people for the operation of the Water System and 8 people for the operation of the Sewer System.

The administrative officers of the Town and the Enterprise are:

Jan Cooke, Acting City Manager and Finance Director, has been with the Town since 2013. She previously served for 4 years as the Finance Director for the City of Half Moon Bay, California. She also served 16 years with a private sector Fortune 100 company and 4 years with a Big Four public accounting firm. Ms.

Cooke holds a B.S. degree in Accounting and an active Certified Public Accountant license in the State of California.

Paul Willis, Director of Public Works and City Engineer, has been with the Town for the past eleven years. He has 27 years of engineering experience at the municipal level working for cities in the San Francisco Peninsula area. He currently serves as the Co-Chair for the City and County Association of Governments of San Mateo (CCAG) Technical Advisory Committee (TAC), and was previously the President of the City and County Engineers Association (2016), and President of the American Public Works Association Silicon Valley Chapter (2006). Mr. Willis has a B.S. degree in Civil Engineering with an emphasis in Construction Management.

Employees and Employee Benefits
The Town employs approximately 97 employees. The Town’s Administration is responsible for labor relations with its three recognized bargaining units that presently represent 63 Town full-time employees. The Town’s Administration also manages the benefits throughout the Town as outlined in the Town’s Memorandum of Understandings (MOUs) with its labor unions.
-338-
15 The Town’s three recognized bargaining units are as follows:

Name of Bargaining Unit
Number of
Active Members
MOU
Expiration Date
Town of Hillsborough Teamsters Union Local No.
350 LB.T
4 December 31, 2023
Town of Hillsborough Teamsters Union Local No.
856 LB.T Public Works and Clerical Unit
30 December 31, 2024
Town of Hillsborough Police Officer Association 29 December 31, 2026 ______________________
Source: The Town of Hillsborough.

The Town participates in retirement plans (the “CalPERS Plan”) with the State Public Employees’ Retirement System (“CalPERS”), and is obligated to pay annual required contributions to CalPERS for pension obligations. For Fiscal Year ended June 30, 2022, the Town’s contributions to the CalPERS Plan totaled $3,848,454 ($1,817,419 for the miscellaneous plan and $2,031,035 for the safety plan). As of June 30, 2022, the Town’s reported net pension liabilities for its proportionate share of the pension liability of each CalPERS Plan was $18,531,051 ($8,348,406 for miscellaneous and $10,182,645 for safety). Employees of the Enterprise participate in the miscellaneous plan. For Fiscal Year ended June 30, 2022, $361,268 of the Town’s miscellaneous plan’s expense was allocated to the Enterprise ($166,538 was allocated to the Water System, and $194,730 was allocated to the Sewer System).

In Fiscal Year 2018-19, the Town adopted and funded a Section 115 pension trust to help mitigate against the rising cost of pension contributions. As of June 30, 2022, the Town’s Section 115 trust is reflected in the restricted cash balance of $4,984,159. For Fiscal Year ended June 30, 2022, the Town recognized a total Other Post-Employment Benefits (“OPEB”) expense of $140,893, of which $792 was allocated to the Enterprise as Maintenance and Operations Costs ($(3,050) allocated to the Water System and $3,842 allocated to the Sewer System). See Appendix F for information with respect to the Town’s pension plans and other post-employment benefits.

Financial Policies
General. The Town has adopted a comprehensive set of financial policies (Policy No. 409) to serve as a guideline for financial matters as further described below. Such policies can be found on the Town’s website at the following link: https://www.hillsborough.net/216/Personnel-Policies. The information presented on the website, however, is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the 2023 Bonds. For each of the previous five fiscal years, the Town has been in compliance with each policy listed below in this section.

Fund Balance and Reserve Policy. The Town strives to maintain a fund or working capital balance of at least 30% of operating expenditures in the General Fund and combined 20% in the Water and Sewer Enterprise Funds. This is considered the minimum level necessary to maintain the Town’s credit worthiness and to adequately provide for (1) economic uncertainties, local disasters, and other financial hardships or downturns in the local or national economy, (2) contingencies for unforeseen operating or capital needs, and (3) cash flow requirements.

The Town maintains an Equipment Replacement Fund to provide for the timely replacement of vehicles and capital equipment with an individual replacement cost of $10,000 or more. The Town expects to maintain a minimum fund balance in the Equipment Replacement Fund of at least 20% of the original purchase cost of the items accounted for in said fund.

The City Council may designate a specific fund balance for future capital projects that it has determined to be in the best interests of the Town. In addition, fund balance levels must be sufficient to meet funding requirements for projects approved in prior years which are carried forward to future years, debt service -339-
16 requirements, reserve for encumbrances, and other reserves require by contractual obligations, State law, or GAAP.

The Town expects to strategically use one-time revenues and fund balance in excess of minimum levels of reserves for one-time expenditures and non-recurring costs only, and not to be used to fund ongoing service improvements.

Pursuant to the requirements of Governmental Accounting Standard Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the Town reports, where applicable, the GASB No. 54 categories in its Annual Comprehensive Financial Report under “Nonspendable, Restricted, Committed, Assigned and Unassigned Fund Balance.” See APPENDIX B hereto.

Capital Financing and Debt Management Policy. The Capital Financing and Debt Management Policy sets forth the purposes for which long-term debt financing may be undertaken and factors favoring pay-as-you-go financing. The Town considers the use of debt financing for one-time capital improvement projects under the following circumstances: (1) when the project’s useful life exceeds the term of financing, and (2) when project revenues or specific resources are sufficient to service the long-term debt. Debt financing is not considered for recurring purposes such as operating and maintenance expenditures.

General purpose debt capacity is carefully monitored. The Town’s general purpose debt capacity is limited and used for high-priority projects where other financing methods cannot reasonably be used. The Town does not have general purpose debt through June 30, 2023. Enterprise Fund debt capacity is managed by setting rates at levels needed to fully cover debt service requirements, operations and maintenance, administration, and capital improvements. The ability to afford new debt for Enterprise operations is evaluated as an integral part of the Town’s rate setting process.

Investment Policy (Policy No. 410). The purpose of this policy (the “Investment Policy”) is to provide guidelines for the prudent investment of the Town’s temporary idle cash and outline the policies for maximizing the efficacy of the Town’s cash management system. The Town invests in accordance with the California Government Code or as authorized by the Town’s more restrictive Investment Policy, as applicable. Idle cash management and investment transactions are the responsibility of the Town’s Treasurer. The Investment Policy sets forth the policies and procedures for investment and designates eligible investments. The Investment Policy also sets forth the stated objectives in the following order of priority: (1) safety of principal, (2) liquidity, and (3) return on investment.

Eligible investments are generally limited to managed investment pools, including the Local Agency Investment Fund which is operated by the California State Treasurer, U.S. Treasury bills, notes and bonds, time deposits rated A1/P1, FDIC insured negotiable certificates of deposits, repurchase agreements that mature in less than one year, commercial paper, the County of San Mateo Investment Pool, municipal bonds within the State and approved by City Council, banker’s acceptances rated A1/P1, and commercial paper rated A1/P1.

The Town’s Treasurer provides a quarterly report to the City Manager and City Council showing the type of investments, issuer, date of maturity, amount investment, current market value and source of valuation, rate of interest and other information as may be required by Council.

Capital Planning. Each year a five-year Capital Improvement Plan (“CIP”) is prepared for review during the annual budget process. The CIP is a plan for short-range and long-range capital infrastructure improvements.

The CIP provides the mechanism for estimating capital requirements, setting priorities, monitoring and evaluating the progress of capital projects, and informing the public of projected capital improvements and sources of funding. The CIP serves as a budgeting tool, identifying capital project appropriations to be made through the adoption of the Town’s annual budget and is included in the annual budget document that has received the Government Finance Officers Association Distinguished Budget Award for more than twenty years. Capital improvements are primarily for water, sewer, and street infrastructure, and are funded by water and sewer rates, -340-
17 grants, and street special revenues. Governmental facilities and storm drain improvements are primarily funded by general revenues.

THE ENTERPRISE
The Town operates a Water System and a Sewer System for water and sewer services, respectively.

The cost of operations, debt service, and capital improvements are primarily funded through user charges.

The Water System
The Town operates and maintains a potable water distribution system to serve its residents and other water users. It is a complex system with varying topography requiring eighteen tanks on nineteen separate pressure zones. San Francisco Public Utilities Commission (“SFPUC”) wholesales treated water to the Town from its Hetch Hetchy system (the “Hetch Hetchy System”). The Hetch Hetchy System includes the Hetch Hetchy Reservoir, the largest reservoir in the SFPUC system, which is located in Yosemite National Park. Water is delivered to the Town through approximately ten master meter locations from the SFPUC’s transmission lines.

From these metered connections, the Town pumps and distributes water through approximately 108 miles of water mains, fourteen pump stations, and eighteen water tanks. If there is a lack of normal rainfall leading to a decrease in water supplies in California, the Town’s contract with the SFPUC provides that the amount provided to customers such as the Town will be reduced in proportion to the supply assurance provided by SFPUC to each of its suburban purchasers.

Water Supply. The Town has a water supply contract with SFPUC, which was recently amended and extends to June 30, 2034, which provides up to 4.09 million gallons a day (mgd), which can be, and has been, proportionately reduced at SFPUC’s discretion in times of drought. The supply is predominately from the Hetch Hetchy System but may include water from the Crystal Springs/San Andreas Lake system, located near the Town.

The Town is one of a group of suburban water purchasers which have collectively contracted with SFPUC for 184 mgd. The Town draws its SFPUC water at ten locations throughout the Town (with an additional four connections for emergency needs). This water does not require treatment by the Town. Supply agreements with SFPUC permit an increase in the unit charges for water. Water is purchased from SFPUC in accordance with a wholesale rate schedule as adjusted from time to time by SFPUC. The Town’s contract with the SFPUC provides that in the event of a shortage of supply in SFPUC’s system, the amount provided to customers such as the Town will be reduced in proportion to the supply assurance provided by SFPUC to each of the 30 suburban purchasers. The Town’s historical consumption averages approximately 85% of its allocation. The Town has not exceeded consumption of its water allocation in the last ten years.

The Town maintains approximately 9 million gallons of storage capacity, which equates to 3 days of normal water use. The Town believes that this storage capacity is sufficient for sustainable fire suppression activities. Emergency cross connections between the City of San Mateo, the City of Burlingame, and the Town’s water systems can be opened should a catastrophic event disrupt water service.

The Town’s pumps and reservoirs are centrally controlled at the Town’s corporation yard (the “Municipal Service Center”) by a remote telemetry system. The system monitors tank levels and automatically cycles pumps to fill tanks as needed. Signals are transmitted via radio between the Municipal Service Center and the remote locations. Most pumps are set for this automatic control; however pumps may be controlled manually or automatically using this system. Most of the Town’s water system piping was constructed between 1953 and 1978.

See, “ENTERPRISE REVENUES, EXPENSES, AND DEBT SERVICE COVERAGE – Capital Improvement Plan,” herein. In general, the pipes were constructed within the street right-of-ways, but occasionally cross private property. While the pipes are primarily of lined cast and ductile iron, several unlined cast iron and steel pipes are still in service. Pipe sizes range from 2 to 12 inches in diameter. -341-
18 The Town is also a member of Bay Area Water Supply & Conservation Agency (“BAWSCA”), which represents the interests of cities, water districts, and two private utilities in Alameda, Santa Clara and San Mateo counties that purchase water on a wholesale basis from SFPUC.

Water Demand Pattern. The Town has maintained records of its water purchases from the SFPUC. Table 1 summarizes these purchases over the past five calendar years.

TABLE 1
Town of Hillsborough
Water System
Purchases from San Francisco Public Utilities Commission Calendar Year Ended
December 31
Purchases
(Millions of
Gallons) Cost(1)
2018 892 $5,478,199
2019 869 5,082,272
2020 974 5,638,542
2021 890 5,842,315
2022 843 5,208,718
___________________
(1) Cost of purchased water is treated as Maintenance and Operations Costs.

Source: Town of Hillsborough.
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19 Water System Accounts. Table 2 presents the Town’s top ten largest water accounts for Fiscal Year ended June 30, 2022. Table 3 presents the number of accounts (as measured by meters installed) for the last five fiscal years. The small change in the number of meters from year to year reflects multiple water lines installed on properties as a result of improvements to secondary units or for extra irrigation or fire sprinkler needs. The Town is mostly built-out, and major increases in the number of meter connections are not expected.

TABLE 2
Town of Hillsborough
Water System
Fiscal Year Ended June 30, 2022
Top Ten Water Accounts
Customer
Annual
Consumption
Units (ccf.)(1)
Water
Revenue(2)
% of Water
System
Revenues
Burlingame Country Club 18,503 $247,810 2.5%
Hillsborough City School District(3) 16,634 185,917 1.9% Town of Hillsborough 6,211 134,095 1.4%
Carolands Foundation 4,648 74,820 0.8%
Residential Customer 4,558 73,788 0.8%
Nueva School 3,587 49,944 0.5%
Residential Customer 2,956 46,336 0.5%
Residential Customer 2,431 37,809 0.4%
Residential Customer 2,068 31,955 0.3%
Residential Customer 1,546 23,511 0.2%
TOTAL 63,142 $905,987 9.2%
_________________
(1) 1 ccf unit is equal to approximately 748 gallons.
(2) Water revenues represent water volumetric charges.
(3) Includes four school sites and school district office.

Source: Town of Hillsborough
TABLE 3
Town of Hillsborough
Water System
Number of Meters
Fiscal Year Ended
June 30 Number
2018 4,292
2019 4,297
2020 4,299
2021 4,298
2022 4,301
_________________________
Source: Town of Hillsborough.

Water Rates. The Town charges water accounts a metered volume-based charge as well as a fixed water service charge based on the size of the installed water meter. Table 4 sets forth the Town’s current water volume -343-
20 rate charges as of January 1, 2022. The per unit rates include a volume charge and a revenue stabilization charge which will only be in place during periods of low usage cutbacks caused by drought or heavy rainfall.

TABLE 4
Town of Hillsborough
Water System
Water Rates
Number of Units (1)
Per Unit
Volume Charge
Residential
1-20 $6.16
21-44 $7.82
45-70 $10.74
Over 70 $16.40
Non-Residential $8.26 _________________________
(1) One unit (ccf) equals approximately 748 gallons.

Source: Town of Hillsborough.

Rate Increases. Rate increases are adopted that establish maximum allowable rates for each year in the rate series. The rate setting process is subject to Proposition 218 requirements. After public hearing and protest procedures as required under Proposition 218, the City Council adopts the resolution approving the rate series.

Annually the City Council reviews the required rates for the upcoming year and adopts a resolution approving the applicable rates for that year, but in no circumstances more than the maximum established under the initial resolution attributable to that year.

No other governmental corporation, board, body or commission has jurisdiction over or is required to approve the rates established by the City Council. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Proposition 218” herein.

Challenges to Water Rates.

Class Action. On November 8, 2016, water customers, individually and on behalf of all other water customers in the Town, filed a Class Action Complaint and Petition for Writ of Mandate against the Town in the Superior Court of California for the County of San Mateo (the “Court”) as Case No. 18C1V02284 (the “Action”).

In the Action, Petitioners challenged Ordinance No. 725, which was adopted by the Town and went into effect on June 9, 2015, and established a scheme of water rationing for water customers in the Town (the “Drought Penalty Ordinance”), and Ordinance No. 731, which was adopted by the Town and went into effect on February 1, 2016, and, in part, established new water rates for residential water users (the “Rate Ordinance”). Petitioners contended the following: (a) the Drought Penalty Ordinance violated the procedural and substantive requirements of Proposition 218; (b) the Rate Ordinance did not comply with Proposition 218; and (c) the water rates in effect prior to the adoption of Ordinance No. 731 also did not comply Proposition 218 (collectively, the “Claims”).

The Court approved a Ratepayer Class made up of “all residential water service customers of the Town of Hillsborough who have paid in excess of Tier 2 in a billing cycle during the time period from June 28, 2015 through April 30, 2017” and a Drought Penalty Class made up of “all residential water service customers of the Town of Hillsborough, who were assessed and paid penalties pursuant to Town of Hillsborough Ordinance No. 725, and exhausted their administrative remedies.” Thereafter, the parties participated in mediation and negotiated a settlement which had to be approved by the Court.

Under the terms of a Settlement Agreement (the “Settlement Agreement”), the Town agreed to establish a Settlement Fund in the amount of $1,229,329 which includes $779,329 designated for customer refunds (the “Refund”) to water customers in the Town who paid for water at Tier 3, 4, and 5 rates during the nearly two years -344-
21 spanning June 28, 2015 through April 30, 2017 (the “Refund Period”); and an additional $450,000 for Plaintiffs’ attorneys’ fees, costs, and Class Representative Service awards. The Class represented 3,083 class members.

Water customers who paid domestic water rates during the Refund Period had the right to opt out of the settlement class. Ultimately, 17 persons opted out of the settlement, which represented $7,942.62 of the total Refund. These funds, as well as any unclaimed refund checks, will go to the established cy pres fund.

In exchange for the settlement benefits, the Class Members released all rights, claims, and actions they and any of the Class Members now have, or may have in the future, against the Town arising out of, or relating to, the facts and circumstances giving rise to the Action or Claims, or arising out of, or relating to, those water rates, drought penalties, and fines imposed pursuant to Ordinance No. 725 and 731. Both the tiered rate claims and drought penalty claims have been dismissed, and the Court approved the Settlement Agreement on April 5, 2023.

Validation Action. On November 14, 2022, the Town adopted Resolution No. 22-83, which established a new rate structure for water service charges. Resolution No. 22-83 took effect immediately, but provides that the adopted maximum rates will not be implemented until at least July 1, 2023. Pursuant to Government Code Section 53759, on March 7, 2023, the Town filed an action in the Superior Court of California, County of San Mateo to determine the validity of Resolution No. 22-83 under California’s validation statutes. Consistent with the validation statutes, the complaint names all interested persons as the defendants, and service thereon was effected by publication of the summons in the San Mateo Daily Journal on March 29, 2023, April 5, 2023, and April 12, 2023. Under the validation statutes, any interested person had until May 1, 2023, to appear in the action and contest the validity of the Resolution. On May 1, 2023, an answer was submitted to the Town’s complaint contesting the validity of the water rates adopted on November 14, 2022, generally claiming the Town cannot satisfy its burden of showing compliance with Proposition 218. A case management conference has been scheduled for July 13, 2023, at which time the Court is expected to set a hearing/trial date on the validation complaint. Under the validation statutes, the lawsuit is entitled to preference over all other civil actions for purposes of setting the hearing/trial date. Until such determination, the Town’s current water rate structure will remain in place.

A final judgment in the action will be forever binding and conclusive as to the validity of Resolution No. 22-83. The Town cannot predict the effect any such hearing/trial may have on the water rate structure under Resolution No. 22-83, nor can it predict the outcome of any such hearing/trial.

Water Service Charge. In addition to the water volume rate charges, the Town charges a fixed water service charge based on the size of the installed water meter. Table 5 presents the charge schedule, billed bimonthly, as of January 1, 2022.

TABLE 5
Town of Hillsborough
Water System
Water Service Charge
Meter Size Bi-Monthly Charge
¾ Inch $141.48
1 Inch $172.32
1 ½ Inch $241.66
2 Inch $334.13
3 Inch $580.73
6 Inch $1,628.74
8 Inch $2,553.45 _________________________
Source: Town of Hillsborough.
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22 The Town invoices the majority of its customers on a bi-monthly basis for water charges; the remaining customers typically represent non-residential customers or large water users which are invoiced on a monthly basis. Bills are considered delinquent, and accounts are assessed penalties, once they have been outstanding more than 30 days. Failure to pay for provided services results in water shut off procedures and/or the transfer of the account to a collection agency. There are only nominal delinquencies at this time. Water customers pay a $500 deposit for new accounts, which is refunded upon closing the account.

Connection Fees. Table 6 provides the one-time connection fee charged to customers connecting to the Water System for Fiscal Year 2021-22. Customers requesting an increase in the meter size pay the difference between the then current connection fee for the replaced meter and the new size meter connection fee.

Connection fees are not a major source of revenue to the Town due to the limited number of vacant lots available for building. Remodeling may require the upsizing of meters due to the addition of fire sprinklers and landscaping needs.

TABLE 6
Town of Hillsborough
Water System
Connection Fees
Meter Size Fee
1 Inch $17,572
1 ½ Inch Actual Cost
2 Inch/3 Inch/6 Inch Actual Cost
______________________
Source: Town of Hillsborough.
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-346-
23 Comparative Rates. Table 7 presents a comparison of residential bi-monthly charges for water service in the Town and other cities as of August 2022. The Town’s water rates are typically higher than other cities that have more level topography due to the steep elevation that requires the Town to utilize tanks on eighteen sites with various pressure zones to service the steep topography. The Town also pays to store and pump water through these elevations. In addition, with larger residential lot sizes, the costs are spread over fewer rate payers. For example, the Town’s cost of maintaining and operating 98 miles of water mains are spread over approximately 4,300 accounts, whereas a neighboring city’s 100 miles of water mains are spread over 8,700 accounts.

TABLE 7
Town of Hillsborough
Water System
Typical Bi-Monthly Average Residential Water Service Charges For the Town and Other Communities(1)
Agency Total
Town of Hillsborough (current) $483.20
Ross $355.20
Piedmont (EBMUD) $356.51
Portola Valley $467.08
Atherton $467.08
Woodside $467.08
Palo Alto $472.90
Menlo Park $492.86
Mid Peninsula Water District $529.19
Burlingame $557.58
Millbrae $638.20
_____________________________
(1) Average bi-monthly bill. Assumes one inch meter and 44 ccf (one unit (ccf) equals approximately 748 gallons).

Source: Town of Hillsborough.

Revenues. Table 8 provides the composition of the Town’s Water System revenues for the past five fiscal years.

TABLE 8
Town of Hillsborough
Water System
Annual Revenue(1)
(in thousands)
Fiscal Year
2017-18 2018-19 2019-20 2020-21 2021-22
Water Sales $10,362 $9,701 $11,037 $11,678 $9,838
Meter Charges 4,290 4,676 4,713 4,715 4,800
Total $14,652 $14,377 $15,750 $16,393 $14,638
_________________________
(1) Does not include miscellaneous revenue.

Source: Town of Hillsborough.

Regulatory Issues.

General. The Town is not aware of any environmental or regulatory issues that would adversely impact its ability to deliver water.
-347-
24 Drinking Water. The applicable drinking water standards for the Town’s potable water system are provided in the California Domestic Water Quality and Monitoring Regulations, Title 22 of the California Administrative Code. These regulations incorporate the requirements of the U.S. Environmental Protection Agency in conformance with the Safe Drinking Water Act (PL 93¬523). The standards specify water quality sampling frequencies and location as well as maximum concentrations of chemical constituents and are continuously revised and amended.

The Town operates under a full domestic water supply permit issued to the Town for operation of the Water System (Public Water System Permit No. 4110016, issued by the California State Water Resources Control Board on December 14, 2017).

The Sewer System
The Town’s Sewer System consists of approximately 98 miles of pipes ranging in size from 4 to 18 inches in diameter in addition to 2,473 manholes, 247 cleanouts and 4 wastewater lift stations. This system provides for a population of approximately 11,443 as of January 2022 contained in an area of approximately 6.21 square miles.

Wastewater from the area north of Hayne Road and West Santa Inez Avenue is transported by gravity pipelines to the Town limits where it is routed to the City of Burlingame wastewater treatment plant. Wastewater from the remaining areas is transported by gravity pipelines to the City of San Mateo wastewater treatment plant.

In 1989, the City Council enacted an ordinance requiring property owners to test their sanitary sewer laterals and water services for leaks before selling their property. This ordinance has provided reasonable success in the replacement of several laterals. The Town has also reduced its exposure to sewer liability claims by requiring the installation of backflow devices at time of sale. To further reduce liabilities, the City Council adopted the Backwater Protection ordinance in 2005, which required all residences to have at least two types of backwater protection in place by January 2007.

The Town has an agreement with the City of San Mateo, County of San Mateo, and the Crystal Springs County Sanitation District (the “1989 Agreement”), which requires a five-year notice to terminate, with respect to the use of sewage conveyance and treatment facilities by each of the parties. This agreement provides for (i) the ownership of trunk sewers and joint usage of the treatment facilities, (ii) the responsibilities for the operation and maintenance of the trunk sewers and jointly used facilities, (iii) the recording and reporting of flow and costs, (iv) the sharing of trunk sewer and treatment facilities costs according to each parties’ flow, (v) the budgeting, billing and collection procedures, and (vi) compliance standards. The City of San Mateo bills the Town on a quarterly basis for the use of the treatment facilities. The formula for such billing is set forth in the 1989 Agreement. A fourth amendment to the 1989 Agreement is currently being negotiated. For Fiscal Year ended June 30, 2022, the Town paid $529,522 to the City of San Mateo pursuant to the 1989 Agreement, which is treated as Maintenance and Operations Costs.

In June 2022, in order to acknowledge its responsibilities on an interim basis while the fourth amendment to the 1989 Agreement is negotiated, the Town entered into a 30-year agreement with the City of San Mateo for the Town’s share of cost of the City of San Mateo’s new Clean Water Program (the “Clean Water Agreement”), which includes improvements to the wastewater treatment plant operated by the City of San Mateo which will increase treatment capacity. The Town’s total liability under the Clean Water Agreement is approximately $42 million, which represents the Town’s total estimated proportionate share of project costs. The Clean Water Agreement requires an initial payment of $2,415,000 by the Town, and approximately $1.9 million annually for the first five years, which is based on the Town’s share of flow data and projections. At five years, commencing in 2027, there will be a “true up” or “look back” based on the Town’s actual flow, as outlined in said agreement, which will result in either the same annual payment as the first five years or reduced payments for the remainder of the term of the Clean Water Agreement. Additionally, upon completion of the project, the total amount owed by the Town will be recalculated based on actual project costs and the amount owed by the Town will be reamortized over the then remaining term of the Clean Water Agreement, which could increase the total annual payment amounts to be made by the Town (which is subordinate to the 2023 Bonds). Based upon the City of San -348-
25 Mateo’s estimates, the project is anticipated to be completed in winter 2024. The Town cannot predict whether there will be any changes to project costs upon completion and can make no representations as to actual project costs or any potential reamortization of the amounts owed by the Town under the Clean Water Agreement.

The Town also has an agreement with the City of Burlingame (the “Burlingame Agreement”) for wastewater which flows into their treatment facilities. Under the Burlingame Agreement, the Town pays a prorata charge for the maintenance and operation costs incurred by the City of Burlingame, of the collection system, sewer treatment plant (including the disposal system) and for capital replacement based on the cost to operate and maintain the sewerage systems. The costs include any debt service associated with the funding of capital improvements to the facilities less any revenues from any State and Federal grants received with respect to the facilities. The pro rata allocation of costs is based on the monitored flow rate into the facilities. In Fiscal Year ended June 30, 2022, the Town paid the City of Burlingame $1,190,530 pursuant to the Burlingame Agreement, which is treated as Maintenance and Operations Costs.

The 1989 Agreement and the Burlingame Agreement have been in place for multiple decades and by their terms remain in effect until amended or terminated. Five year and 180 days advance notices are required for termination of the 1989 Agreement and the Burlingame Agreement, respectively. The 1989 Agreement cannot be terminated so long as any bonded indebtedness is outstanding related to the upgrading of the Jointly Used Facilities (as defined in the 1989 Agreement).

Sewer System Users. The Sewer System currently has 3,907 connections. Seven connections serve commercial needs such as public schools, two golf clubs, a private club, two private schools, and a freeway rest stop. The remaining 3,900 connections are residential customers. Table 9 provides a five-year history of Sewer System users.

TABLE 9
Town of Hillsborough
Sewer System
Active Sewer Customer Accounts as of July 1(1)
2018 2019 2020 2021 2022
Single Family 3,894 3,897 3,901 3,902 3,900
Commercial 7 7 7 7 7
Total 3,901 3,904 3,908 3,909 3,907
________________________
(1) The number of water connections in the Town is higher than the number of sewer connections. This is a result of multiple water lines and meters to accommodate secondary units or irrigation needs.

Source: Town of Hillsborough.
(remainder of page intentionally blank)
-349-
26 The Sewer System’s largest accounts as of June 30, 2022 are presented in Table 10. The largest seven customers are non-residential customers. The top seven customers collectively represent 1.2% of the total Fiscal Year 2021-22 Sewer System operating revenues and 0.6% of the Fiscal Year 2021-22 operating revenues of the Enterprise.

TABLE 10
Town of Hillsborough
Sewer System
Fiscal Year 2021-22
Largest Sewer Accounts
Customer Revenue
% of Sewer
Operating Revenues(1)
Burlingame Country Club $72,589 0.5%
CalTrans Rest Stop 25,793 0.2%
Crystal Springs Golf Club 22,108 0.2%
Crystal Springs Uplands School 15,107 0.1%
Hillsborough Racquet Club 1,474 0.0%
Hillsborough City School District 30,218 0.2%
Nueva School 3,685 0.0%
Total $170,974 1.2%
__________________________
(1) Revenues represent sewer service charges.

Source: Town of Hillsborough.

Rates and Charges. The Town’s current sewer rates (five-year rate series) were adopted on June 14, 2021, and became effective as of July 1, 2021. The first two years of the current sewer rates have been implemented on July 1, 2021 and July 1, 2022. See, “BOND OWNERS’ RISKS – Proposition 218” herein.

Residential sewer charges are set annually and are collected in two installments on the San Mateo County “secured roll” property tax statements, and are paid by the County of San Mateo to the Town in full under the Teeter Plan.

See “- The Sewer System - Billing Enforcement” below and “BOND OWNERS’ RISKS – Teeter Plan Termination” herein. Table 11 presents a five-year history of residential rates for sewer services and Table 12 presents the maximum annual rates for non-residential sewer services pursuant to the current five-year rate series.

Non-residential customers are billed monthly and pay based on the number of Equivalent Dwelling Units (EDUs) assigned to each customer. An EDU represents the estimated water discharge from a typical residential customer.

EDUs are assigned to non- residential customers based on 90% of average winter water used from the prior three years and the State Water Resource Control Board wastewater strength guidelines.

TABLE 11
Town of Hillsborough
Sewer System
Annual Residential Sewer Rate History
Fiscal Year Ended June 30
2018 2019 2020 2021 2022
Percent Change 10% 10% 7% 7% 4%
Annual Charge $2,814 $3,095 $3,312 $3,543 $3,685
__________________________
Source: Town of Hillsborough.
-350-
27 Table 12 presents the maximum annual rates for non-residential sewer services pursuant to the current five-year rate series.

TABLE 12
Town of Hillsborough
Sewer System
Annual Sewer Charge per EDU
(Non-Residential)
Maximum Annual Charge Per EDU(1)
2021-22 2022-23 2023-24 2024-25 2025-26
All Customers
($/EDU) $3,685 $3,823 $3,985 $4,145 $4,311
__________________________
(1) EDU represents the estimated sewer discharge from a residential customer.

Source: Town of Hillsborough.

The Town charges a one-time Sewer System connection fee of $14,896 (as of July 1, 2022) to residential customers and actual cost to residential customers with a second unit, including a guest unit. The collection of such fee is therefore subject to the pace of new development in the service area. The Town is essentially built-out, and over the past ten years there have been minimal new connections to the Sewer System. Thus, the connection fee is not a significant source of gross revenue to the Enterprise.

Billing. In accordance with the provisions of California law, the Town has elected to have all annual residential sewer service charges collected on the same tax roll as real property taxes. These charges are sent to the San Mateo County Tax Collector for inclusion in the annual real property tax statement and are effective July 1 of each year.

The sewer service charge constitutes a lien against the real property against which the charge is levied effective as of the first Monday in March immediately preceding the date of the levy. All laws applicable to the levy, collection, delinquency, and enforcement of general real property taxes are applicable to the Town’s sewer service charge, including those pertaining to cancellation, refund, and redemption.

The San Mateo County Tax Collector includes the amount of the sewer service charge on bills for taxes levied against the respective lots and parcels of land. The first installment is due on November 1 and delinquent if not paid by December 10 each year. The second installment is due on February 1 and delinquent if not paid by April 10 of each year. The non-residential accounts are billed and collected monthly with certain water billings.

Billing Enforcement. In the event of the failure of any owner to pay any sewer service charge when due, the Town may (i) allow the payments and penalties to be collected in the same manner as general real property taxes, including imposition of and foreclosure under a statutory lien, (ii) institute action in a court of competent jurisdiction to collect any charges, penalties, and interest which may be due and payable in the same manner as any other statutory debts owing to the Town, or (iii) take such other action as may be authorized by law and the City Council.

All property tax assessments, including the residential sewer service charge, are collected under the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sales Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, whereby local agencies receive 100% of their respective shares of the amounts levied without regard to the actual collections. The County of San Mateo handles all delinquencies, retaining interest, and penalties. See, “BOND OWNERS’ RISKS – Teeter Plan Termination” herein.

Procedures for Rate Increases. Rate increases are adopted by resolution and establish maximum allowable rates for each year in the rate series. The rate setting process is subject to Proposition 218 requirements. -351-
28 After public hearing and protest procedures as required under Proposition 218, the City Council adopts the resolution approving the rate series. Annually, the City Council reviews the required rates for the year and implements the applicable rates for that year, but in no circumstances more than the maximum established under the initial resolution attributable to that year. Based on a sewer rate study prepared by HF&H Consultants, LLC on March 9, 2021, the latest five-year rate series for sewer rates was adopted on June 14, 2021, and the implementation of the first and second year of the rates were adopted and effective July 1, 2021 and 2022, respectively.

Rate Comparison. The Town’s residential charges on a monthly equivalent basis are presented below with a comparison to other local cities. Larger agencies tend to have lower rates because they can take advantage of economies of scale and have a larger base of customers over which to distribute fixed costs. The factors that contribute to the higher rate in the Town are the number of customers served, the number of miles of pipeline in the service area, the property size, and because the Town consists primarily of residential property, and has few industrial, commercial, and multi-family users.

TABLE 13
Town of Hillsborough
Sewer System
Monthly Sewer Charge Comparison for Residential Service City
Monthly
Residential Charge
Hillsborough $307.08
Burlingame $55.68
Foster City $111.21
Menlo Park $104.58
Millbrae $120.21
San Carlos $116.77
San Mateo $142.74 _______________________
Source: Town of Hillsborough.

Revenues. Table 14 presents the Town’s Sewer System revenues from sewer service charges over the past five fiscal years.

TABLE 14
Town of Hillsborough
Sewer System
Sewer Service Charge Revenue For Fiscal Year (in thousands)(1) 2017-18 2018-19 2019-20 2020-21 2021-22
Revenues $11,106 $12,209 $13,064 $13,991 $14,549
_________________________
(1) Does not include miscellaneous revenue.

Source: Town of Hillsborough.
-352-
29 ENTERPRISE REVENUES, EXPENSES, AND DEBT SERVICE COVERAGE The audited financial statements of the Town for Fiscal Year ended June 30, 2022 are included as Appendix B, attached hereto. The Town’s audited financial statements present the Enterprise separately under individual funds. The Town plans to continue to allocate a portion of the Debt Service on the 2023 Bonds to each such cost center, based on the allocable share of water and/or sewer improvements financed or refinanced from the proceeds of the 2023 Bonds. See, “SECURITY FOR THE 2023 BONDS,” herein. The 2023 Bonds are payable from Net Revenues of the Enterprise as more fully described herein. Net Revenues received in connection with the Water System may be used only to pay debt service on Water System related obligations, as determined by the Town. Net Revenues received in connection with the Sewer System may only be used to pay debt service on Sewer System related obligations, as determined by the Town. Correspondingly, Net Revenues of one component of the Enterprise may not be used to pay debt service of the other component of the Enterprise in the event of a deficiency of Net Revenues in such Enterprise component.

Historical Net Revenues
The tables below present the operating history of the Water System, Sewer System, and combined Enterprise and the projected pro-forma results. The Enterprise collectively represents the Water System and Sewer System of the Town. Table 15A presents the operating history of the Water Fund for Fiscal Years 2017-18 through 2021-22; Table 15B presents the operating history of the Sewer Fund for Fiscal Years 2017-18 through 2021-22; and Table 15C presents the operating history of the combined Enterprise for Fiscal Years 2017-18 through 2021-

22. (remainder of page intentionally blank)
-353-
30 TABLE 15 A
Town of Hillsborough
Operating History of the Enterprise – Water Fund
for the Fiscal Year ended June 30

WATER REVENUES
2018 2019 2020 2021 2022
Charges for Water Service(1) $14,652,443 $14,377,088 $15,750,191 $16,392,710 $14,637,783 Miscellaneous 49,905 91,702 42,635 12,430 56,116
TOTAL $14,702,348 $14,468,790 $15,792,826 $16,405,140 $14,693,899

WATER MAINTENANCE AND

OPERATIONS COSTS
Wholesale Water Purchased(2) $5,478,199 $5,082,272 $5,638,542 $5,842,315 $5,208,718 Other Operating(3) 5,642,385 5,606,894 5,749,759 6,902,504 6,113,189

TOTAL WATER MAINTENANCE
AND OPERATIONS COSTS(4) $11,120,584 $10,689,166 $11,388,301 $12,744,819 $11,321,907 NET WATER REVENUES $3,581,764 $3,779,624 $4,404,525 $3,660,321 $3,371,992

WATER DEBT SERVICE
Senior Debt(5) $1,199,395 $1,152,440 $1,130,936 $1,161,823 $1,132,155 Subordinate Debt(6) $65,641 $65,641 $65,641 $65,641 $65,641 TOTAL WATER DEBT SERVICE $1,265,036 $1,218,081 $1,196,577 $1,227,464 $1,197,796

WATER DEBT SERVICE

COVERAGE
Senior Debt 3.0 3.3 3.9 3.2 3.0
Total Water Debt Service Coverage 2.8 3.1 3.7 3.0 2.8
____________________________________
(1) Includes sale of water and water meter charges.
(2) The Town's sole source of water is the SFPUC Hetch Hetchy system. The cost of wholesale water is shared by the Town together with suburban agencies in Alameda, Santa Clara and San Mateo Counties in the Bay Area Water Supply and Conservation Agency (BAWSCA).
(3) Other operating expenses include salaries and benefits, materials and services, and overhead. (4) Excludes depreciation and amortization.
(5) Includes (i) the 2000 Certificates, (ii) the 2003 Certificates, and (iii) the 2006 Certificates (prior to the refunding by the issuance of the 2023 Bonds), as allocated to the Water Fund.
(6) Includes the Energy Conservation Agreement loan.

Source: Town of Hillsborough Comprehensive Annual Financial Report for Fiscal Years ended June 30, 2018, 2019, 2020, 2021, and 2022. -354-
31 TABLE 15 B
Town of Hillsborough
Operating History of the Enterprise – Sewer Fund
for the Fiscal Year ended June 30

SEWER REVENUES
2018 2019 2020 2021 2022
Charges for Sewer Service(1) $11,106,420 $12,208,554 $13,064,636 $13,990,638 $14,549,841 Miscellaneous 80,984 123,658 13,893 100,655 (-26,438)
TOTAL $11,187,404 $12,332,212 $13,078,529 $14,091,293 $14,523,403

SEWER MAINTENANCE AND

OPERATIONS COSTS
Sewer Treatment(2) $2,912,457 $1,985,798 $2,296,098 $2,518,597 $1,720,052 Other Operating(3) 4,224,828 3,999,002 4,197,079 4,588,608 4,523,717

TOTAL SEWER MAINTENANCE
AND OPERATIONS COSTS(4) $7,137,285 $5,984,800 $6,493,177 $7,107,205 $6,243,769 NET SEWER REVENUES $4,050,119 $6,347,412 $6,585,352 $6,984,088 $8,279,634

SEWER DEBT SERVICE
Senior Debt(5) $1,795,125 $1,823,106 $1,767,830 $1,777,641 $1,734,119 Subordinate Debt(6) - - - - -
TOTAL SEWER DEBT SERVICE $1,795,125 $1,823,106 $1,767,830 $1,777,641 $1,734,119

SEWER DEBT SERVICE

COVERAGE
Senior Debt 2.3 3.5 3.7 3.9 4.8
Total Debt Service Coverage 2.3 3.5 3.7 3.9 4.8
______________________
(1) Includes sewer user charges.
(2) The Town contracts for sewage treatment services with the Cities of San Mateo and Burlingame. The south portion of the Town's Sewer System is conveyed to the San Mateo treatment facility and the north portion of the Sewer System is conveyed to the Burlingame treatment facility.
(3) Other operating expenses include salaries and benefits, materials and services, and overhead. (4) Excludes depreciation and amortization and any capital contributions for water treatment plant. (5) Includes (i) the 2000 Certificates, (ii) the 2003 Certificates, and (iii) the 2006 Certificates (prior to the refunding by the issuance of the 2023 Bonds and as allocated to the Sewer Fund), and (iv) the SRF Loan. (6) The Clean Water Agreement payments commenced in Fiscal Year ending June 30, 2023.

Source: Town of Hillsborough Comprehensive Annual Financial Report for Fiscal Years ended June 30, 2018, 2019, 2020, 2021, and 2022. -355-
32 TABLE 15 C
Town of Hillsborough
Operating History of the Enterprise – Combined Water and Sewer Funds for the Fiscal Year ended June 30

ENTERPRISE REVENUES
2018 2019 2020 2021 2022
Charges for Service(1) $25,758,863 $26,585,642 $28,814,827 $30,383,348 $29,187,624 Miscellaneous 130,889 215,360 56,528 113,085 29,678
TOTAL $25,889,752 $26,801,002 $28,871,355 $30,496,433 $29,217,302

ENTERPRISE MAINTENANCE

AND OPERATIONS COSTS
Wholesale Water Purchased(2) $5,478,199 $5,082,272 $5,638,542 $5,842,315 $5,208,718 Sewer Treatment(3) 2,912,457 1,985,798 2,296,098 2,518,597 1,720,052 Other Operating(4) 9,867,213 9,605,896 9,946,838 11,491,112 10,636,905

TOTAL ENTERPRISE

MAINTENANCE AND
OPERATIONS COSTS(5)
$18,257,869 $16,673,966 $17,881,478 $19,852,024 $17,565,676 NET ENTERPRISE REVENUES $7,631,883 $10,127,036 $10,989,877 $10,644,409 $11,651,626

ENTERPRISE DEBT SERVICE
Senior Debt(6) $2,994,520 $2,975,546 $2,898,766 $2,939,464 $2,866,274 Subordinate Debt(7) 65,641 65,641 65,641 65,641 65,641

TOTAL ENTERPRISE DEBT

SERVICE
$3,060,161 $3,041,187 $2,964,407 $3,005,105 $2,931,915

ENTERPRISE DEBT SERVICE

COVERAGE
Senior Debt 2.5 3.4 3.8 3.6 4.1
Total Debt Service Coverage 2.5 3.3 3.7 3.5 4.0
______________________
(1) Includes sale of water and water meter charges and sewer user charges. (2) The Town's sole source of water is the SFPUC Hetch Hetchy system. The cost of wholesale water is shared by the Town together with suburban agencies in Alameda, Santa Clara and San Mateo Counties in the Bay Area Water Supply and Conservation Agency (BAWSCA).
(3) The Town contracts for sewage treatment services with the cities of San Mateo and Burlingame. The south portion of the Town's Sewer System is conveyed to the San Mateo treatment facility and the north portion of the Sewer System is conveyed to the Burlingame treatment facility.
(4) Other operating expenses include salaries and benefits, materials and services, and overhead. (5) Excludes depreciation and amortization and any capital contributions for water treatment plant. (6) Includes (i) the 2000 Certificates, (ii) the 2003 Certificates, and (iii) the 2006 Certificates (prior to the refunding by the issuance of the 2023 Bonds), and (iv) the SRF Loan.
(7) Includes the Energy Conservation Agreement loan. The Clean Water Agreement payments commenced in Fiscal Year ending June 30, 2023.

Source: Town of Hillsborough Comprehensive Annual Financial Report for Fiscal Years ended June 30, 2018, 2019, 2020, 2021, and 2022. -356-
33 Projected Results
Table 16A presents projected revenues, expenses, and debt service coverage of the Water Fund for fiscal years 2022-23 through 2025-26; Table 16B presents projected revenues, expenses and debt service coverage of the Sewer Fund for fiscal years 2022-23 through 2025-26; and Table 16C presents projected revenues, expenses and debt service coverage of the combined Enterprise for fiscal years 2022-23 through 2025-26, as provided by the Town.

TABLE 16 A
Town of Hillsborough
Revenues and Debt Service of the Enterprise – Water Fund Projected Results
for the Fiscal Year ending June 30

WATER REVENUES
2023 2024 2025 2026
Charges for Water Service(1) $14,179,932 $15,246,103 $16,748,480 $17,078,750 Miscellaneous 6,500 6,500 6,500 6,500
TOTAL $14,186,432 $15,252,603 $16,754,980 $17,085,250

WATER MAINTENANCE AND

OPERATING COSTS
Wholesale Water Purchased(2) $5,689,165 $6,077,808 $6,737,591 $6,753,055 Other Operating(3) 7,035,453 7,223,679 7,224,960 7,438,284

TOTAL WATER MAINTENANCE
AND OPERATING COSTS(4)
$12,724,618 $13,301,487 $13,962,551 $14,191,339
NET WATER REVENUES $1,461,814 $1,951,116 $2,792,429 $2,893,911

WATER DEBT SERVICE
Senior Debt(5) $1,100,137 $1,150,282 $1,130,225 $1,112,996 Subordinate Debt(6) 65,641 65,641 65,641 65,641
TOTAL WATER DEBT SERVICE $1,165,778 $1,215,924 $1,195,866 $1,178,637

WATER DEBT SERVICE

COVERAGE
Senior Debt 1.3 1.7 2.5 2.6
Total Water Debt Service Coverage 1.3 1.6 2.3 2.5
________________________
(1) Includes sale of water and water meter charges based upon rates adopted in 2016. (2) The Town's sole source of water is the SFPUC Hetch Hetchy system. The cost of wholesale water is shared by the Town together with suburban agencies in Alameda, Santa Clara and San Mateo Counties in the Bay Area Water Supply and Conservation Agency (BAWSCA).
(3) Other operating expenses include salaries and benefits, materials and services, and overhead. (4) Excludes depreciation and amortization.
(5) Includes (i) the 2000 Certificates, (ii) the 2003 Certificates, and (iii) the 2006 Certificates (in each instance reflects debt service on the Refunded Certificates prior to the refunding by the issuance of the 2023 Bonds), as allocated to the Water Fund. (6) Includes the Energy Conservation Agreement loan.

Source: Town of Hillsborough
-357-
34 TABLE 16 B
Town of Hillsborough
Revenues and Debt Service of the Enterprise – Sewer Fund Projected Results
for the Fiscal Year ending June 30

SEWER REVENUES
2023 2024 2025 2026
Charges for Sewer Service(1) $15,186,502 $15,809,865 $16,441,700 $17,098,808 Miscellaneous 59,155 59,155 59,155 59,155
TOTAL $15,245,657 $15,869,020 $16,500,855 $17,157,963

SEWER MAINTENANCE AND

OPERATIONS COSTS
Sewer Treatment(2) $2,391,132 $2,505,858 $2,627,137 $2,756,473 Other Operating(3) 5,216,711 5,891,164 6,071,653 5,915,063

TOTAL SEWER MAINTENANCE
AND OPERATIONS COSTS(4) $7,607,843 $8,397,022 $8,698,790 $8,671,536 NET SEWER REVENUES $7,637,814 $7,471,998 $7,802,065 $8,486,427

SEWER DEBT SERVICE
Senior Debt(5) $1,706,941 $1,818,570 $1,792,924 $1,768,932 Subordinate Debt(6) 4,363,998 1,938,767 1,938,767 1,938,767 TOTAL SEWER DEBT SERVICE $6,070,939 $3,757,337 $3,731,690 $3,707,699

SEWER DEBT SERVICE

COVERAGE
Senior Debt 4.5 4.1 4.4 4.8
Total Sewer Debt Service Coverage 1.3 2.0 2.1 2.3
________________________
(1) Includes sewer user charges.
(2) The Town contracts for sewage treatment services with the cities of San Mateo and Burlingame. The south portion of the Town's Sewer System is conveyed to the San Mateo treatment facility and the north portion of the Sewer System is conveyed to the Burlingame treatment facility.
(3) Other operating expenses include salaries and benefits, materials and services, and overhead. (4) Excludes depreciation and amortization. (5) Includes (i) the 2000 Certificates, (ii) the 2003 Certificates, and (iii) the 2006 Certificates (in each instance reflects debt service on the Refunded Certificates prior to the refunding by the issuance of the 2023 Bonds and as allocated to the Sewer Fund), and (iv) the SRF Loan.
(6) Includes the Clean Water Agreement. The Clean Water Agreement payments commenced in Fiscal Year ending June 30, 2023.

The payment for Fiscal Year ending June 30, 2023 includes a Sewer Fund one-time initial contribution of approximately $2.4 million and first year’s debt service of approximately $1.9 million. Thereafter, through Fiscal Year ending June 30, 2026, the Sewer Fund’s annual debt service contribution is approximately $1.94 million.

Source: Town of Hillsborough
-358-
35 TABLE 16 C
Town of Hillsborough
Revenues and Debt Service of the Enterprise – Combined Water and Sewer Fund Projected Results
for the Fiscal Year ending June 30

ENTERPRISE REVENUES
2023 2024 2025 2026
Charges for Service(1) $29,366,434 $31,055,968 $33,190,180 $34,177,558 Miscellaneous 65,655 65,655 65,655 65,655
TOTAL $29,432,089 $31,121,623 $33,255,835 $34,243,213

ENTERPRISE MAINTENANCE AND

OPERATIONS COSTS
Wholesale Water Purchased(2) $5,689,165 $6,077,808 $6,737,591 $6,753,055 Sewer Treatment(3) 2,391,132 2,505,858 2,627,137 2,756,473 Other Operating(4) 12,252,164 13,114,843 13,296,613 13,353,347

TOTAL ENTERPRISE MAINTENANCE
AND OPERATIONS COSTS(5) $20,332,461 $21,698,509 $22,661,341 $22,862,875 NET ENTERPRISE REVENUES $9,099,628 $9,423,114 $10,594,494 $11,380,338

ENTERPRISE DEBT SERVICE
Senior Debt(6) $2,807,078 $2,968,853 $2,923,148 $2,881,928 Subordinate Debt(7) 4,429,639 2,004,408 2,004,408 2,004,408 TOTAL ENTERPRISE DEBT SERVICE $7,236,717 $4,973,261 $4,927,556 $4,886,336

ENTERPRISE DEBT SERVICE

COVERAGE
Senior Debt 3.2 3.2 3.6 3.9
Total Debt Service Coverage 1.3 1.9 2.2 2.3
________________________
(1) Includes sale of water and water meter charges based upon rates adopted in 2016 and sewer user charges. (2) The Town's sole source of water is the SFPUC Hetch Hetchy system. The cost of wholesale water is shared by the Town together with suburban agencies in Alameda, Santa Clara and San Mateo Counties in the Bay Area Water Supply and Conservation Agency (BAWSCA).
(3) The Town contracts for sewage treatment services with the cities of San Mateo and Burlingame. The south portion of the Town's Sewer System is conveyed to the San Mateo treatment facility and the north portion of the Sewer System is conveyed to the Burlingame treatment facility.
(4) Other operating expenses include salaries and benefits, materials and services, and overhead. (5) Excludes depreciation and amortization and any capital contributions for water treatment plant. (6) Includes (i) the 2000 Certificates, (ii) the 2003 Certificates, (iii) the 2006 Certificates (in each instance reflects debt service on the Refunded Certificates prior to the refunding by the issuance of the 2023 Bonds), and (iv) the SRF Loan. (7) Includes the Energy Conservation Agreement loan and the Clean Water Agreement. The Clean Water Agreement payments commenced in Fiscal Year ending June 30, 2023. The Clean Water Agreement payment for Fiscal Year ending June 30, 2023 includes a Sewer Fund one-time initial contribution of approximately $2.4 million and first year’s debt service of approximately $1.9 million. Thereafter, through Fiscal Year ending June 30, 2026, the Sewer Fund’s annual debt service contribution for the Clean Water Agreement is approximately $1.94 million..

Source: Town of Hillsborough
The Projected Results set forth above in Tables 16A, 16B, and 16C (the “Projected Results”) have been prepared by the Town and are based upon assumptions made by the Town utilizing the rate series which are currently in effect. They have not been reviewed or verified by any other person. In addition, because there is no assurance that actual events will correspond with the assumptions made, no guarantee can be made that the -359-
36 Projected Results will correspond with the results actually achieved in the future. Actual operating results may be affected by many uncontrollable factors, including but not limited to seismic occurrences, meteorological conditions, fires, floods and other casualty occurrences, increased costs, lower than anticipated utilization and revenues, employee relations, governmental controls, changes in applicable governmental regulations, changes in demographic trends and general economic conditions.

Capital Improvement Plan
The Town’s water and sewer infrastructure requires certain capital improvements and rehabilitation. The Town’s current five-year capital improvement plan (the “CIP”) includes approximately $21.5 million for water and $19.1 million for sewer, as shown in Table 17 below. The Town is also paying its proportionate share of capital improvements to the Hetch Hetchy water system, its water source.

CIP infrastructure projects are identified and prioritized in Master Plan documents for each system. These Master Plans are overarching planning documents aimed at ensuring the long-term sustainability of the Town’s infrastructure. These plans provide high level guidance to ensure that the Town‘s asset base is preserved for the community to rely on.

The primary sources of funding for the Water and Sewer Funds are water and sewer rates. A description of some of the key Water System and Sewer System projects noted in Table 17 below is as follows:
“Water Main Replacements” is anticipated to include the replacement of aging water supply piping throughout the Town. Replacement and upsizing of pipes are necessary to provide adequate water pressure to meet fire flow requirements and to replace aging metallic pipes as the interiors corrode and become more prone to breakage. The new pipes are expected to be flexible, more earthquake resistant, and will not corrode, which will improve water quality and reduce maintenance costs. “High Line Water Connection” in the CIP is a project totaling $5.9 million (Town’s share). This high priority project will provide a reliable, cost-effective water pipeline at a higher elevation tied to the Harry Tracy plant and will protect health and safety in a natural disaster, along with an anticipated reduction of water pumping and delivery costs in the future. The Town is applying for federal grant funding, and the project funding may include a contribution from partner cities, low interest debt, or other grant funding opportunities. “Sewer Priority Basins” will include the replacement and repair of sewer drainage basin main lines and manholes. The project is necessary to provide system reliability to reduce any system-wide sanitary sewer overflows. Older clay pipes prone to cracking and root intrusion will be replaced with newer materials, PVC, and HDPE, substantially improving their durability and longevity.

The Water System and Sewer System projects included in the CIP are expected to be paid for from Enterprise Revenues (user charges), as applicable, federal and State grants and/or funding, reserves, and potential future debt issues if other funding sources are unavailable. (remainder of page intentionally blank)
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37 TABLE 17
Town of Hillsborough
Five-Year Capital Improvement Plan

WATER SYSTEM
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 TOTAL Project Name
Demolish Forrestview Tanks #1 and
#2 $ - $ 449,500 $ 449,500 $ - $ - $ 899,000
Demolish Major Hayes Tank and
Piping - - 253,500 - - 253,500
Water Main Replacement Program 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 High Line Water Connection 100,000 500,000 1,700,000 3,000,000 700,000 6,000,000 Darrell Pump Line Rehab and
Replacement - - 1,000,000 1,600,000 - 2,600,000
Darrell Tank Improvements 3,650,000 - - - - 3,650,000
Clark Concar Pump Station Generator 900,000 900,000 900,000 - 2,700,000 Scada Improvements 75,000 75,000 75,000 75,000 75,000 375,000

TOTAL CAPITAL
IMPROVEMENT PLAN - WATER $4,825,000 $2,924,500 $5,378,000 $6,575,000 $1,775,000 $21,477,500

SEWER SYSTEM
Project Name
Smoke Testing & Video Inspections
Priority Basins
$ 180,000 $ 180,000 $ 180,000 $ 180,000 $ 180,000 $ 900,000 Priority Basins Inflow & Infiltration
Rehabilitation Program
3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 15,000,000 Flow Metering/Modeling - - 180,000 - 180,000 360,000
Miscellaneous Sewer System Repairs 150,000 150,000 150,000 150,000 150,000 750,000 Sewer Lift Station Improvements 775,000 775,000 - - - 1,550,000 CCTV Inspection/Root Removal - 285,000 - 285,000 - 570,000

TOTAL CAPITAL
IMPROVEMENT PLAN - SEWER $4,105,000 $4,390,000 $3,510,000 $3,615,000 $3,510,000 $19,130,000

TOTAL CAPITAL

IMPROVEMENT PLAN -
COMBINED $8,930,000 $7,314,500 $8,888,000 $10,190,000 $5,285,000 $40,607,500 __________________
Source: Town of Hillsborough
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38 Insurance
The Town participates in the Pooled Liability Assurance Network (PLAN) Joint Powers Authority. The coverage is presented below:

Coverage Amount
Public entity general liability ($50,000 deductible) $1,000,000 per occurrence $10,000,000 aggregate
reinsurance
Property insurance covering real property and business personal property ($5,000 deductible all property and vehicles; $150,000 PLAN JPA; $100,000 PLAN JPA auto only)
$1,000,000 per occurrence
$100,000,000 per occurrence
(boiler/machinery limit of
liability)
Commercial auto liability, comprehensive/collision, ($1,000/$1,000 deductible) $1,000,000 Financial Information
A copy of the most recent audited financial statements (the “Financial Statements”) of the Town, including information on the Enterprise, prepared by the Town’s Finance Department and audited by Eide Bailly LLP (the “Auditor”) is included as Appendix B. The Auditor’s letter concludes that the Financial Statements present fairly, in all material respects, the financial position of the Town as of June 30, 2022, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. The Financial Statements should be read in their entirety with particular emphasis on those pages dealing with the Town’s enterprise funds. The Auditor has not reviewed or audited this Official Statement.

The summary historical operating results contained under “Historical and Projected Operating Results and Debt Service Coverage” are derived from the Financial Statements (excluding certain non-cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto. The Auditor has not reviewed or audited the summary operating results or any other portion of this Official Statement or approved the inclusion of the Financial Statements in this Official Statement.

BOND OWNERS’ RISKS
The following describes certain special considerations and risk factors affecting the payment of and security for the 2023 Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any 2023 Bonds and does not necessarily reflect the relative importance of the various risks.

Potential investors in the 2023 Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the 2023 Bonds. There can be no assurance that other considerations will not materialize in the future.

Enterprise Demand and Growth
While the Town currently anticipates being able to meet future demands for services provided by the Enterprise, there can be no assurance that the local demand for the services provided by the Enterprise will be maintained at levels described in this Official Statement under the heading “THE ENTERPRISE.” Reduction in the level of demand due to conservation efforts of the Town, or other factors, could require an increase in rates or charges in order to produce Net Revenues sufficient to comply with the Town’s rate covenant in the Indenture.

Such rate increases could increase the likelihood of nonpayment and could also further decrease demand. There can be no assurance that any other entity with regulatory authority over the Enterprise will not adopt further restrictions on operation of the Enterprise.
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39 Net Revenues; Rate Covenant
Net Revenues are dependent upon the demand for water sales and charges for sewer services, which can be affected by population factors, more stringent drinking water regulations, excessive rain, or problems with the Town’s distribution facilities or the treatment facilities it relies upon. There can be no assurance that water and sewer service demand will be consistent with the levels contemplated in this Official Statement. A decrease in the demand for water could require an increase in rates or charges in order to comply with the rate covenants contained in the Indenture. Additionally, non-residential sewer charges are based on water usage, and are therefore dependent upon water demand. Net Revenues received in connection with the Water System may be used only to pay debt service on Water System related obligations, as determined by the Town. Net Revenues received in connection with the Sewer System may only be used to pay debt service on Sewer System related obligations, as determined by the Town. The Town’s ability to meet its rate covenants relies upon sufficient demand at current and future increased rates to meet coverage requirements for debt service on the 2023 Bonds and other Parity Debt.

Outstanding Litigation
Class Action. On November 8, 2016, water customers, individually and on behalf of all other water customers, in the Town filed a Class Action Complaint and Petition for Writ of Mandate against the Town in the Superior Court of California for the County of San Mateo (the “Court”) as Case No. 18C1V02284 (the “Action”).

Under the terms of a Settlement Agreement (the “Settlement Agreement”), the Town agreed to establish a Settlement Fund in the amount of $1,229,329 which includes $779,329 designated for customer refunds (the “Refund”) to water customers in the Town who paid for water at Tier 3, 4, and 5 rates during the nearly two years spanning June 28, 2015 through April 30, 2017 (the “Refund Period”); and an additional $450,000 for Plaintiffs’ attorneys’ fees, costs, and Class Representative Service awards. The Class represented 3,083 class members.

In exchange for the settlement benefits, the Class Members released all rights, claims, and actions they and any of the Class Members now have, or may have in the future, against the Town arising out of, or relating to, the facts and circumstances giving rise to the Action or Claims, or arising out of, or relating to, those water rates, drought penalties, and fines imposed pursuant to Ordinance No. 725 and 731. Both the tiered rate claims and drought penalty claims have been dismissed and the Court approved the Settlement Agreement on April 5, 2023.

Validation Action. On November 14, 2022, the Town adopted Resolution No. 22-83, which established a new rate structure for water service charges. Resolution No. 22-83 took effect immediately, but provides that -363-
40 the adopted maximum rates will not be implemented until at least July 1, 2023. Pursuant to Government Code Section 53759, on March 7, 2023, the Town filed an action in the Superior Court of California, County of San Mateo to determine the validity of Resolution No. 22-83 under California’s validation statutes. Consistent with the validation statutes, the complaint names all interested persons as the defendants, and service thereon was effected by publication of the summons in the San Mateo Daily Journal on March 29, 2023, April 5, 2023, and April 12, 2023. Under the validation statutes, any interested person had until May 1, 2023, to appear in the action and contest the validity of the Resolution. On May 1, 2023, an answer was submitted to the Town’s complaint contesting the validity of the water rates adopted on November 14, 2022, generally claiming the Town cannot satisfy its burden of showing compliance with Proposition 218. A case management conference has been scheduled for July 13, 2023, at which time the Court is expected to set a hearing/trial date on the validation complaint. Under the validation statutes, the lawsuit is entitled to preference over all other civil actions for purposes of setting the hearing/trial date. Until such determination, the Town’s current water rate structure will remain in place.

Local Political Activism
Within the Town there are several individuals and citizen groups which are politically active and litigious.

Recently, the Town has been subject to challenges relating to the Water Enterprise rates and revenues. As discussed above, one such challenge created a class of water users, and the parties have reached a settlement.

Additionally, a local citizen activist group challenges various City Council actions from time to time in the stated interests of transparency to the public. The aforementioned list is not exhaustive of all such matters, but illustrates the types of political activism present in the Town.

Enterprise Expenses
There can be no assurance that expenses of the Enterprise will be consistent with the levels contemplated in this Official Statement. Changes in technology, changes in quality standards, cost of water, treatment expenses, and increases in the cost of operation or other expenses could require substantial increases in rates or charges in order to comply with the rate covenants in the Indenture. Such rate increases could drive down demand for water and sewer related services or otherwise increase the possibility of nonpayment of the 2023 Bonds.

Drought Measures
State Orders. California is subject to droughts, and over the past several decades the State faced water shortfalls and reduced snowpack. On January 17, 2014, the California Governor declared a drought state of emergency (the “State Declaration”) with immediate effect which included orders that encouraged local urban water supplies to (a) implement their local water shortage contingency plans; (b) update their urban water management plans to prepare for extended drought conditions; (c) directed the California Department of Water Resources (“DWR”) and the State Water Resources Control Board (the “SWRCB”) to expedite the processing of water transfers; (d) directed the SWRCB to put water rights holders on notice that they may be required to cease or reduce water diversions in the future; (e) directed the SWRCB to consider modifying requirements for reservoir releases or diversion limitations; and (f) directed the DWR to take necessary actions to protect water quality and supply in the Sacramento-San Joaquin River Delta/San Francisco Bay Estuary.

Subsequently, the SWRCB periodically adopted additional emergency regulations which, amongst other things, limited outdoor irrigation to two days per week, extending certain measures previously set for restricting outdoor irrigation and prohibited restaurants from serving water to customers unless requested. -364-
41 On April 1, 2015, the California Governor issued an executive order (the “2015 Executive Order”) extending the measures set forth in the Declaration and adopting additional orders to restrict potable urban water usage; (iv) requiring urban water suppliers to provide monthly water usage, conservation and enforcement information; (v) requiring service providers to monitor groundwater basin levels in accordance with California Water Code § 10933; and (vi) permitting agencies are required to prioritize approval of water infrastructure and supply projects.

On April 7, 2017, the California Governor issued an executive order (the “2017 Executive Order”) which terminates the January 17, 2014 executive order discussed above (except with respect to certain counties within the State) and rescinds the 2015 Executive Order. The 2017 Executive Order continues to require the SWRCB to develop standards for urban water suppliers to set water use efficiency targets and restrict wasteful water use, as provided in the 2016 Executive Order.

On April 21, 2021, the California Governor declared a drought state of emergency in 41 of the State’s 58 counties, primarily in the northern portion of the State and in the Central Valley, which was expanded on May 10, 2021 and July 8, 2021, and was expanded to include all counties in the State on October 19, 2021, and called for Californians to voluntarily reduce water use by 15%. Additionally, he issued Executive Orders N-10-21, N-7-22 (March 28, 2022), N-3-23 (February 13, 2023), and N-4-23 (March 10, 2023). Due to “atmospheric rivers” of rain during 2022 and 2023, snowfall has greatly improved with indications of record high snow water equivalent levels for this time of year.

Due to the improved drought conditions, on March 24, 2023, the California Governor issued Executive Order N-5-23 (the “2023 Executive Order”), easing drought emergency provisions that are no longer necessary while maintaining certain requirements that are still needed in parts of the State. The 2023 Executive Order included termination of the voluntary reduction of water usage, while retaining the state of emergency in all State counties to allow for drought response and recovery efforts to continue.

SFPUC Declarations. In November 2021, SFPUC declared a water shortage emergency and approved measures aimed at further conserving and reducing water usage across SFPUC’s service territory, including the Town. The declaration carried with it a requirement that SFPUC institute a temporary drought surcharge for retail water and wastewater customers, which was effective April 1, 2022. On April 11, 2023, due to heavy rain fall and historic snowpack levels, the SFPUC rescinded its drought emergency declaration while retaining its call for voluntary system-wide water use reduction of 11% compared to Fiscal Year 2019-20 in order to maintain compliance with the SWRCB emergency drought regulations which are still in effect. In connection with the vote to rescind the emergency declaration, the temporary drought surcharge has ended as well.

The Town cannot predict when or how long drought conditions will recur and persist, what effect drought conditions may have on property values, to what extent water reduction requirements may affect property owners, or to what extent a drought could cause disruptions to economic activity within the Town.

Town Response to Drought. The City Council has the authority to declare a water shortage and establish corresponding mandatory conservation measures. The Town classifies the severity of the water shortage using stages, designated 1 to 4, each of which corresponds to the relative degree to which the Town water supply is likely to be reduced.

In the event of lower water revenue due to drought, the Town has water revenue stabilization charges that can be implemented during locally declared water shortages. During times of declared water shortage and demand reduction, the Town continues to incur fixed costs even though revenue from water purchases decreases. The revenue stabilization factors are designed to allow the Town to cover its fixed costs and continue providing safe and reliable water service.
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42 Future Land Use Regulations
Development within the Town’s service area is contingent upon the future construction and acquisition of a number of public improvements such as arterial streets, water distribution facilities, sewage collection and transmission facilities, drainage facilities and street lighting, as well as the necessary local in-tract improvements.

The installation of the necessary infrastructure improvements and the construction of the residential development are subject to the receipt of discretionary approvals from a number of public agencies concerning the layout and design of the development, the nature and extent of the improvements, land use, health and safety requirements and other matters. The Town, however, is mostly built-out, although current and future State legislation and/or regulations and approvals may allow for more intensive land use within the Town. The failure to obtain any such approval could adversely affect the planned land development within the Town.

Hillsborough City CouncilMay 8, 2023

Hillsborough City Council
May 8, 2023