HomeMy WebLinkAbout05. Adopt reslution authorizing issuance of revenue bonds to refinance existing debt Page 1 of 183
Item 5.
CENTRAL SAN CENTRAL SAN BOARD OF DIRECTORS
-- POSITION PAPER
CENTRAL CONTRA COSTA SANITARY DISTRICT
MEETING DATE: AUGUST 2, 2018
SUBJECT: CONSIDER ADOPTING RESOLUTION N0. 2018-015 AUTHORIZING
CENTRAL SAN TO ISSUE REVENUE BONDS TO REFINANCE EXISTING
DEBT TO TAKE ADVANTAGE OF INTEREST COST SAVINGS
SUBMITTED BY: INITIATING DEPARTMENT:
PHILIP R. LEIBER, DIRECTOR OF FINANCE ADMINISTRATION-FINANCE
AND ADMINISTRATION
REVIEWED BY: THEAVASSALLO, FINANCE MANAGER
Deputy General Mgr.Ann Sasaki
for General Manager Roger S. Bailey
ISSUE
Per Board Policy 029 - Debt Management and Continuing Disclosure, Board approval is required for the
issuance of bonds that will refinance the existing 2009 Certificates of Participation.
BACKGROUND
At previous Finance Committee and Board meetings, staff has discussed refinancing Central San's 2009
outstanding debt. The Financing Team, appointed by the Board on July 5, 2018, has worked to resolve
outstanding issues in the proposed refinancing. The documents presented in this package reflect the final
proposed structure of the refinancing, and they are proposed for Board approval. The refunding is
currently anticipated to save $2.428 million (present value) in interest costs through 2029. Actual savings
will be reported to the Board after the issuance.
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ssues noted as outstanding as of the last Finance Committee meeting, and their proposed treatment are
as follows:
• Whether to issue Certificates of Participation ("COP")or Revenue Bonds
Revenue Bonds issued directly by Central San are proposed and the documents reflect this
approach. Revenue Bonds are viewed as a more cost effective structure than CO Ps over the
longer term.
• Whether to proceed with refinancing only on the Series 2009A bonds or, in addition, the Series
2009B bonds
Staff recommends proceeding with refinancing both series of bonds. Proceeding with refinancing
the Series 2009B bonds will provide incremental savings of$157,976 and move Central San fully
toward a revenue bond structure which is viewed as preferable in the long term due to potential
future investor concerns about a more complicated COP structure.
The bond structure reflects the following guidance previously provided by the Finance Committee and
the Board:
• Maintain generally the same debt amortization profile as the existing debt.
• Proceed with only one credit rating on the refunding debt.
• Review the need for the debt service reserve fund (DSRF)on new debt with consideration of issues
surrounding the priority and security of Ad Valorem Property Tax. This issue has been discussed
with District Counsel and Bond Counsel. Proceeding without a DSRF on the new bonds does not
adversely affect legal arguments that could be raised in the event of potential State actions affecting
Ad Valorem Property Tax.
• Consider approvals, if necessary, by the Central Contra Costa Sanitary District Facilities Financing
Authority. No approvals are necessary.
Other structuring and transaction execution issues resolved by the Financing Team and proposed for
acceptance by the Board include:
• The manner in which the existing bonds will be retired
As the bonds are not subject to a standard optional redemption until September 1, 2019, the typical
approach would be to establish an escrow account with refunding bond proceeds sufficient in
amount to call the bonds on that date. Establishing this escrow account allows for the bonds to be
d efeased/re moved as obligations from Central San's books, even prior to the call date of
September 1, 2019. There are costs to establishing the escrow account, and costs involved in
borrowing funds from the new bonds, and buying securities that yield a lower return than the interest
cost of the refunding bonds. So, it is not an optimal structure, but one that is workable and allowable
given the Federal Tax legislation that prohibited most tax-exempt advance refundings. Such an
approach still provides for estimated overall interest savings of about$1.4 million on a net present
value basis.
Alternatively and preferably, the existing bond documents have a provision allowing for the
extraordinary redemption of the 2009A bonds at par, even prior to the September 1, 2019 call date
based on the reduction in the Build America Bonds ("BAB")subsidy. The Financing Team and
Bond Counsel have determined that exercising this provision is viable, and doing so will offer the
possibility of significant additional refunding savings (a total of$2.428 million in present value
savings, or about$1 million higher)versus the escrow approach. The rationale for exercising the
extraordinary redemption provision includes the Federal Government's reduced subsidy(which has
been curtailed by about 6 to 8% in recent years)for the BAB that has been affected by the Federal
sequestration due to spending/deficit limitations. The 2009A bonds are expected to be redeemed
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on September 10, 2018.
The 20096 bonds, which are not subject to the extraordinary redemption provision, will be advance
refunded on a taxable basis using the escrow account approach and will be redeemed on
September 1, 2019.
• No Debt Service Reserve Fund (DSRF), and inclusion of an optional Rate Stabilization Fund
(RSF)
The existing Certificates of Participation have a required DSRF that was funded with borrowed
funds. The Underwriter, Financial Advisor and Bond Counsel have indicated that the bond market
does not require a dedicated DSRF for a highly rated issue like Central San. Eliminating the
DSRF allows for the issuance of a lesser amount of refunding bonds, and avoids the issue of
negative arbitrage where money is borrowed and invested at a lower rate. Accordingly, the
proposed bond documents do not provide for a DSRF. I n lieu of a DSRF, the new bond
documents allow for(but do not mandate)the establishment of a Rate Stabilization Fund (RS F). A
RSF could provide for some additional assurance of the payment of debt service if available
revenues in a given year prove insufficient to cover debt service. This is a highly unlikely event as
Central San's revenues are very predictable, and the financial policies provide for rates to be set to
provide at least two times debt service coverage. As discussed in the bond documents, the RSF
is not required to be established or funded at a particular level but, if established, moneys could
flow into and out of the fund as available, or needed. For years in which a surplus of funds were
available, monies could be deposited into the RSF. Then, funds from the RSF could be drawn
down if net revenues were otherwise insufficient to cover debt service. Central San could make
contributions to the RS F from favorable budget variances. Staff may at a future date propose
changes to the Fiscal Reserve Policy(BP 017)to specify the establishment and workings of this
fund apart from the language provided in the Bond I ndenture. However as the bond documents do
not commit Central San to establish a RSF, this is at the discretion of Central San, and no action is
required to be taken on an RSF now, or later.
In summary, the refinancing will be executed with the issuance of two series of refunding bonds, with
an expected closing the week of September 10, 2018:
• Series 2018A (Final maturity: September 1, 2029) in the amount of approximately$15.3 million in
tax-exempt Wastewater Revenue Refunding with proceeds used to refund $19.635 million
outstanding 2009A Wastewater Revenue Certificates of Participation (Taxable Build America
Bonds).
• Series 2018B (Final maturity: September 1, 2023) in the amount of approximately$4.3 million in
taxable Wastewater Revenue Refunding Bonds with proceeds used to advance refund the
outstanding $6.98 million 2009B Wastewater Revenue Certificates of Participation.
Staff requests that the Finance Committee recommend Board adoption of the attached proposed
Revenue Bond Issuance Resolution as more fully described below:
The resolution provides for the following:
1. Authorization for the issuance of Refunding Bonds;
2. Approval of Indenture. The Indenture is the legal contract specifying the important features of
bonds, such as its maturity date, timing of interest payments, method of interest calculation, and
security for the bonds;
3. Refinancing of the 2009 Certificates;
4. Sale of Refunding Bonds via negotiated sale to Piper Jaffray under the terms of the Bond Purchase
Contract;
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5. Approval of the preliminary Official Statement. This document is the description of the bonds
provided to prospective investors and consists of several parts: (a)description of the bonds and the
legal documents governing them; (b)description of the District; and (c)the most recently available
audited financial statements of Central San;
6. Approval of the Continuing Disclosure Certificate. This document commits Central San to publish
annually certain information to bondholders;
7. Adoption of documents in substantially final form. This specifies that the documents are in
substantially final form, except for numbers which are subject to the results of the bond sale; and
8. Authorizes the President of the Board, the General Manager, the Director of Finance and
Administration, and any and all other officers of Central San to take any and all actions to
consummate the transactions described.
Staff and Financing Team members will be available to answer questions at the meeting.
ALT ERNAT IVES/CONSIDERATIONS
Do not refinance the bonds.
FINANCIAL IMPACTS
The current projected savings for refinancing both series of bonds is $2,428,188, consisting of
$2,270,212 for Series 2009A and $157,976 for Series 2009B. This is from the underwriter's estimate of
refunding savings, net of issuance costs, shown at Attachment 6. This analysis has been confirmed by the
Financial Advisor(PFM).
This is nearly$1 million above the previous estimate, due to the Financing Team's consideration and Bond
Counsel's approval of a more efficient way to execute the retirement of existing bonds (through an
extraordinary call), as described in the Background section above.
Based on the net present value savings apportioned by year through 2029, this is anticipated to result in a
potential reduction in the Sewer Service Charge of approximately$1.50 per year through 2029 (ranging
from about$2 per year in the first five years and declining to about 40 cents in 2029 as the amount of
bonds outstanding declines). The savings are higher on a gross basis each year.
COMMITTEE RECOMMENDATION
The Finance Committee reviewed this matter at its meeting on J my 24, 2018 and recommended Board
approval of the Revenue Bond Issuance Resolution, authorizing Central Santo issue revenue bonds to
refinance existing debt to take advantage of interest cost savings.
RECOMMENDED BOARD ACTION
Staff recommends adopting Resolution No. 2018-015 authorizing Central San to issue revenue bonds to
refinance existing debt to take advantage of interest cost savings.
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Strategic Plan Tie-In
GOAL THREE:Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage costs
ATTACHMENTS:
1. Proposed Revenue Bond Issuance Resolution
2. 1 ndenture
3. Escrow Agreement
4. Bond Purchase Agreement
5. Preliminary Official Statement(Full document will include FY 2016-17 Financial Statements; omitted
here)
6. Estimated Refunding Savings
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Jones Hall Draft of July 18, 2018
RESOLUTION NO.
RESOLUTION OF THE BOARD OF DIRECTORS OF THE CENTRAL
CONTRA COSTA SANITARY DISTRICT AUTHORIZING THE
ISSUANCE AND SALE OF WASTEWATER REVENUE REFUNDING
BONDS TO REFINANCE OUTSTANDING WASTEWATER REVENUE
OBLIGATIONS OF THE DISTRICT IN AN AMOUNT NOT TO EXCEED
$2510001000 VIA NEGOTIATED SALE THEREOF, APPROVING
OFFICIAL STATEMENT AND APPROVING RELATED AGREEMENTS
AND ACTIONS
WHEREAS, the Central Contra Costa Sanitary District (the "District") owns and
operates facilities and property for the collection, treatment, disposal and reuse of
wastewater within the service area of the District (the "Wastewater System"), and in order
to provide funds to finance and refinance improvements to the Wastewater System, the
District has previously entered into that certain Installment Sale Agreement, dated as of
November 1, 2009, with the Central Contra Costa Sanitary District Facilities Financing
Authority, a nonprofit public benefit corporation duly organized and existing under the laws
of the State of California, under which the District is obligated to pay installment payments,
which, in turn, secure the repayment of the $19,635,000 original principal amount of 2009
Wastewater Revenue Certificates of Participation, Series A (Federally Taxable — Build
America Bonds— Direct Payment) (the "2009A Certificates") and the $34,490,000 original
principal amount of 2009 Wastewater Revenue Certificates of Participation, Series B (the
"2009B Certificates," and together with the 2009A Certificates, the "2009 Certificates");
and
WHEREAS, the District wishes at this time to refinance all or a portion of the 2009
Certificates; and
WHEREAS, the refinancing of 2009 Certificates will be undertaken via the
issuance and sale of the Central Contra Costa Sanitary District 2018 Wastewater Revenue
Refunding Bonds (the "Refunding Bonds"), which may be in issued in one or more series,
on a federally tax-exempt or federally taxable basis and having such further designations
as necessary to reflect the same, such Refunding Bonds to be secured by a pledge of the
net revenues of the Wastewater System and the ad valorem property tax revenues
received by the District; and
WHEREAS, the Board of Directors of the District has previously selected Piper
Jaffray&Co., as underwriter(the"Underwriter")for the Refunding Bonds, and now wishes
to authorize the execution and delivery of a bond purchase contract (the "Bond Purchase
Contract") with the Underwriter; and
WHEREAS, the Board of Directors of the District has duly considered such
transactions and wishes at this time to approve said transactions in the public interests of
the District;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Central
Contra Costa Sanitary District as follows:
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Section 1. Issuance of Refunding Bonds. Subject to meeting the parameters
set forth in Section 4, the Board of Directors hereby authorizes the issuance of the
Refunding Bonds under 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
of said Code (the "Bond Law") in an aggregate principal amount not to exceed
$25,000,000, for the purpose of providing funds to refinance all or a portion the 2009
Certificates, and to pay the costs of issuing and selling the Refunding Bonds.
Section 2. Approval of Indenture. The Refunding Bonds shall be issued under
an Indenture of Trust between the District and U.S. Bank National Association, as trustee
(the "Trustee"), which Indenture of Trust is hereby approved in substantially the form on
file with the Secretary together with any changes therein or additions thereto deemed
advisable by the General Manager or the Director of Finance and Administration (each an
"Authorized Officer"), and the execution thereof by an Authorized Officer shall be
conclusive evidence of the approval of such changes and additions. The Board of
Directors hereby authorizes and directs an Authorized Officer to execute, and the
Secretary to attest, said form of the Indenture of Trust for and in the name of the District.
The Board of Directors hereby authorizes the delivery and performance of the Indenture
of Trust.
Section 3. Refinancing of the 2009 Certificates. The Board of Directors hereby
authorizes and approves the refinancing of the 2009 Certificates from the proceeds of the
Refunding Bonds. Such refinancing shall be accomplished as provided in the Indenture
of Trust. The determination as to refunding all or a portion of the 2009 Certificates shall
be as made by an Authorized Officer, upon consultation with PFM Financial Advisors LLC,
the District's financial advisor.
Section 4. Sale of Refunding Bonds via Negotiated Sale. The Board of
Directors hereby authorizes and directs the negotiated sale of the Refunding Bonds to the
Underwriter, under the Bond Purchase Contract in substantially the form on file with the
Secretary together with any changes therein or additions thereto deemed advisable by an
Authorized Officer, whose execution thereof shall be conclusive evidence of the approval
of any such changes or additions. The Board of Directors hereby delegates to an
Authorized Officer the authority to accept an offer from the Underwriter to purchase the
Refunding Bonds and to execute the Bond Purchase Contract for and in the name and on
behalf of the District. An Authorized Officer is hereby authorized and directed to execute
the final form of the Bond Purchase Contract for and in the name and on behalf of the
District; provided, that the amount of Underwriter's discount for the Refunding Bonds shall
be not more than 0.5% of the par amount thereof, the net present value savings to be
achieved by the refunding of the 2009 Certificates shall be at least 3.0% based on the
outstanding principal amount of the 2009 Certificates.
Section 5. Official Statement. The Board of Directors hereby approves the
preliminary Official Statement describing the Refunding Bonds in the form on file with the
Secretary, and authorizes each of the Authorized Officers to approve revisions to said
preliminary Official Statement in connection with the public offering of the Refunding
Bonds. An Authorized Officer shall execute a certificate deeming the preliminary Official
Statement, as so revised, to be nearly final within the meaning of Rule 15c2-12 of the
Securities Exchange Act of 1934, as amended. Distribution of the preliminary Official
Statement by the Underwriter to prospective purchasers of the Refunding Bonds is hereby
approved. Each of the Authorized Officers is hereby authorized and directed to approve
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any changes in or additions to a final form of said Official Statement, and the execution
thereof by an Authorized Officer shall be conclusive evidence of approval of any such
changes and additions. The Board of Directors hereby authorizes the distribution of the
final Official Statement by the Underwriter. The final Official Statement shall be executed
in the name and on behalf of the District by an Authorized Officer.
Section 6. Continuing Disclosure Certificate. The Board of Directors hereby
approves the Continuing Disclosure Certificate to be executed by the District, the form of
which is attached as an appendix to the preliminary Official Statement. Each of the
Authorized Officers is hereby authorized and directed to approve any changes in or
additions to a final form of said Continuing Disclosure Certificate, and the execution
thereof by an Authorized Officer shall be conclusive evidence of approval of any such
changes and additions. The final Continuing Disclosure Certificate shall be executed in
the name and on behalf of the District by an Authorized Officer.
Section 7. Documents in Substantially Final Form; Further Authority. The
documents on file with the Secretary and herein approved are in substantially final form;
that is, they are final as to important business terms such as the rate covenant undertaken
by the District as to the wastewater rates the District will enact so long as the Refunding
Bonds are outstanding, and parity bond restrictions, governing limitations on future issues
of bonds secured by net revenues of the Wastewater System and the ad valorem property
tax revenues received by the District, but do not contain the numbers resulting from the
sale of the Refunding Bonds, which numbers will be inserted once the Refunding Bonds
are sold. This resolution is intended to be a "parameters resolution," in which the Board
of Directors approves a refunding wastewater revenue bond issue at a not to exceed
principal amount and a minimum savings threshold, payable solely from net revenues of
the Wastewater System and the ad valorem property tax revenues received by the District.
Each of the Authorized Officers is authorized to purchase on behalf of the District
a municipal bond insurance policy and/or debt service reserve fund policy and to comply
with the terms of such policies.
Section 8. Official Actions. The President of the Board, the General Manager,
the Director of Finance and Administration, and any and all other officers of the District
are hereby authorized and directed, for and in the name and on behalf of the District, to
do any and all things and take any and all actions, including execution and delivery of any
and all assignments, certificates, requisitions, agreements (including an escrow
agreement or refunding instructions related to the 2009 Certificates to be refunded),
notices, consents, instruments of conveyance, warrants and other documents,which they,
or any of them, may deem necessary or advisable in order to consummate the transactions
described herein, and the execution or taking of such action shall be conclusive evidence
of such necessity or advisability. Whenever in this resolution any officer of the District 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 if such officer is absent or unavailable.
Section 9. Effective Date. This Resolution shall take effect from and after the
date of its passage and adoption.
* * * * * * * * * * * *
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PASSED AND ADOPTED this 2nd day of August, 2018, by the following vote:
AYES:
NOES:
ABSENT:
President of the Board of Directors of
the Central Contra Costa Sanitary
District, County of Contra Costa, State
of California
COUNTERSIGNED:
Secretary of the Central Contra
Costa Sanitary District, County of
Contra Costa, State of California
Approved as to Form:
Jones Hall, A Professional Law
Corporation
Special Counsel to the District
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Jones Hall, A Professional Law Corporation Draft of July 25, 2018
INDENTURE OF TRUST
between the
CENTRAL CONTRA COSTA SANITARY DISTRICT
and
U.S. BANK NATIONAL ASSOCIATION as Trustee
Dated as of September 1, 2018
Relating to
Central Contra Costa Sanitary District
2018 Wastewater Revenue Refunding Bonds, Series A
and
Central Contra Costa Sanitary District
2018 Wastewater Revenue Refunding Bonds, Series B (Federally Taxable)
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TABLE OF CONTENTS
ARTICLE I
Definitions; Rules of Construction
SECTION 1.01. Definitions...............................................................................................2
SECTION 1.02. Authorization ..........................................................................................2
SECTION 1.03. Interpretation..........................................................................................2
ARTICLE II:
Issuance of Bonds:
SECTION 2.01. Authorization and Purpose of Bonds..................................................2
SECTION 2.02. Terms of the Bonds...............................................................................3
SECTION 2.03. Redemption of Bonds...........................................................................4
SECTION 2.04. Book Entry System................................................................................7
SECTION 2.05. Form and Execution of Bonds.............................................................9
SECTION 2.06. Transfer and Exchange of Bonds.......................................................9
SECTION 2.07. Registration Books..............................................................................10
SECTION 2.08. Bonds Mutilated, Lost, Destroyed or Stolen....................................10
ARTICLE III
ISSUE OF BONDS; PARITY OBLIGATIONS
SECTION 3.01. Issuance of Bonds...............................................................................11
SECTION 3.02. Deposit and Application of Proceeds; Transfer of Funds..............11
SECTION 3.03. Costs of Issuance Fund......................................................................11
SECTION 3.04. Issuance of Parity Obligations...........................................................12
SECTION3.05. State Loans...........................................................................................12
SECTION 3.06. Validity of Bonds..................................................................................12
ARTICLE IV
Pledge of Revenues; Flow Of Funds
SECTION 4.01. Pledge of Net Revenues.....................................................................13
SECTION 4.02. Receipt, Deposit and Application of Net Revenues.......................13
SECTION 4.03. Establishment of Rate Stabilization Fund........................................14
SECTION 4.04. Investments..........................................................................................15
SECTION 4.05. Valuation and Disposition of Investments........................................16
ARTICLE V:
Financial Covenants
SECTION 5.01. Punctual Payment; Compliance With Documents..........................17
SECTION 5.02. Discharge of Claims............................................................................17
SECTION 5.03. Operation of Wastewater System in Efficient and Economical Manner17
SECTION 5.04. Sale or Eminent Domain of Wastewater System............................17
SECTION 5.05. Insurance..............................................................................................17
SECTION 5.06. Records and Accounts........................................................................18
SECTION 5.07. Rates and Charges.............................................................................18
SECTION 5.08. Superior and Subordinate Obligations.............................................19
SECTION 5.09. Tax Covenants Relating to Bonds....................................................19
SECTION 5.10. Continuing Disclosure.........................................................................19
SECTION 5.11. Further Assurances.............................................................................20
ARTICLE VI:
The Trustee:
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SECTION 6.01. Duties, Immunities and Liabilities of Trustee...................................20
SECTION 6.02. Merger or Consolidation.....................................................................22
SECTION 6.03. Rights and Liabilities of Trustee........................................................22
SECTION 6.04. Right to Rely on Documents..............................................................24
SECTION 6.05. Preservation and Inspection of Documents.....................................25
SECTION 6.06. Compensation and Indemnification..................................................25
SECTION 6.07. Accounting Records and Financial Statements..............................26
ARTICLE VII:
Modification and Amendment of this Indenture:
SECTION 7.01. Amendments Permitted......................................................................26
SECTION 7.02. Effect of Supplemental Indenture......................................................27
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment..........27
SECTION 7.04. Amendment by Mutual Consent........................................................28
SECTION 7.05. Trustee's Reliance...............................................................................28
ARTICLE VIII:
Events of Default and Remedies of Bond Owners:
SECTION 8.01. Events of Default and Acceleration of Maturities............................28
SECTION 8.02. Application of Funds Upon Acceleration..........................................29
SECTION 8.03. Power of Trustee to Control Proceedings........................................30
SECTION 8.04. Limitation on Owners'Right to Sue...................................................30
SECTION 8.05. Non-waiver............................................................................................31
SECTION 8.06. Actions by Trustee as Attorney-in-Fact............................................31
SECTION 8.07. Remedies Not Exclusive.....................................................................31
ARTICLE IX:
Miscellaneous:
SECTION 9.01. Limited Liability of District...................................................................32
SECTION 9.02. Benefits of Indenture Limited to Parties...........................................32
SECTION 9.03. Defeasance of Bonds..........................................................................32
SECTION 9.04. Execution of Documents and Proof of Ownership by Owners.....33
SECTION 9.05. Disqualified Bonds...............................................................................34
SECTION 9.06. Waiver of Personal Liability................................................................34
SECTION 9.07. Destruction of Canceled Bonds.........................................................34
SECTION 9.08. Funds and Accounts...........................................................................34
SECTION9.09. Notices..................................................................................................34
SECTION 9.10. Unclaimed Moneys..............................................................................35
SECTION 9.11. Execution in Several Counterparts...................................................35
SECTION 9.12. Governing Law.....................................................................................35
APPENDIX A: DEFINITIONS
APPENDIX B: FORM OF BOND
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INDENTURE OF TRUST
This INDENTURE OF TRUST, dated as of September 1, 2018, is between the
CENTRAL CONTRA COSTA SANITARY DISTRICT, a sanitary district duly organized and existing
under the Constitution and laws of the State of California (the "District"), and U.S. Bank
National Association, a national banking association organized and existing under the
laws of the United States of America, with a corporate trust office in San Francisco,
California, and being qualified to accept and administer the trusts hereby created (the
"Trustee").
BACKGROUND :
1. To provide funds to finance and refinance improvements to the Wastewater
System (defined herein), the District has previously entered into that certain Installment
Sale Agreement, dated as of November 1, 2009, with the Central Contra Costa Sanitary
District Facilities Financing Authority (the "Authority"), a nonprofit public benefit
corporation duly organized and existing under the laws of the State of California, under
which the District is obligated to pay installment payments, which, in turn, secure the
repayment of the $19,635,000 original principal amount of 2009 Wastewater Revenue
Certificates of Participation, Series A (Federally Taxable — Build America Bonds — Direct
Payment) (the"2009A Certificates") and the$34,490,000 original principal amount of 2009
Wastewater Revenue Certificates of Participation, Series B (the "2009B Certificates," and
together with the 2009A Certificates, the "2009 Certificates"), which were executed and
delivered pursuant to a Trust Agreement, dated as of November 1, 2009 (the "2009 Trust
Agreement"), among the District, the Authority and U.S. Bank National association, as
trustee (the "2009 Trustee").
2. The District has decided to defease, pay and optionally prepay [[all]/a
portion] of the 2009 Certificates in accordance with the 2009 Trust Agreement, and in
order to provide funds for that purpose, the Board of Directors of the District has authorized
the issuance of the Central Contra Costa Sanitary District 2018 Wastewater Revenue
Refunding Bonds, Series in the aggregate principal amount of$ (the"Series
A Bonds") and Central Contra Costa Sanitary District 2018 Wastewater Revenue
Refunding Bonds, Series B (Federally Taxable) in the aggregate principal amount of
$ (the "Series B Bonds," and together with the Series A Bonds, the "Bonds")
under 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 of said Code (the
"Bond Law").
3. The Bonds will be secured by a pledge of and lien on the Tax Revenues
and Net Revenues (as defined herein)[[, on parity with the unrefunded 2009 Certificates,
which will remain outstanding in the aggregate principal amount of$ A.
4. In order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the 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 Board of Directors of the District has authorized the execution
of this Indenture.
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AGREEMENT:
In order to secure the payment of the principal of and the interest on all the Bonds
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 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 Bonds by the Owners thereof, and
for other valuable considerations, the receipt of which is hereby acknowledged, the District
and the Trustee hereby covenant and agree with one another, for the benefit of the
respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms defined in Appendix A attached to this
Indenture have the respective meanings specified in Appendix A when used in this
Indenture.
SECTION 1.02. Authorization. Each of the parties hereby represents and warrants
that it has full legal authority and is duly empowered to enter into this Indenture, and has
taken all actions necessary to authorize the execution hereof by the officers and persons
signing it.
SECTION 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular
include the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and do not affect the
meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as
a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
ISSUANCE OF BONDS
SECTION 2.01. Authorization and Purpose of Bonds. The District has reviewed all
proceedings heretofore taken 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 or be
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performed precedent to and in connection with the issuance of the Bonds do exist, have
happened and have been performed in due time, form and manner as required by law,
and the District is now duly empowered, under each and every requirement of law, to issue
the Bonds in the manner and form provided in this Indenture.
The District hereby authorizes the issuance of Series A Bonds in the aggregate
principal amount of$ and Series B Bonds in the aggregate principal amount
of$ under the Bond Law for the purposes of providing funds to defease, pay and
prepay the 2009 Certificates as set forth in the Escrow Agreement, and thereby discharge
the District's obligations under the 2009 Trust Agreement and the 2009 Installment Sale
Agreement[[ with respect to such 2009 Certificates]]. The Bonds are authorized and
issued under, and are subject to the terms of, this Indenture and the Bond Law. The
Series A Bonds are designated the "Central Contra Costa Sanitary District 2018
Wastewater Revenue Refunding Bonds, Series A" and the Series B Bonds are designated
the "Central Contra Costa Sanitary District 2018 Wastewater Revenue Refunding Bonds,
Series B (Federally Taxable)".
SECTION 2.02. Terms of the Bonds. The Bonds are issuable in fully registered
form without coupons in denominations of$5,000 or any integral multiple thereof, so long
as no Bond has more than one maturity date. The Bonds will be dated as of the Closing
Date, and will mature on September 1 in the years and in the respective principal amounts
and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day
months) at the respective rates per annum, as set forth in the following tables:
Series A Bonds
Maturity Date Principal Interest
(September 1) Amount Rate
$
Series B Bonds
Maturity Date Principal Interest
(September 1) Amount Rate
$
Interest on the Bonds is payable from the Interest Payment Date next preceding
the date of authentication thereof unless:
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(a) a Bond is authenticated on or before an Interest Payment Date and
after the close of business on the preceding Record Date, in which
event it will bear interest from such Interest Payment Date,
(b) a Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
(c) interest on any Bond is in default as of the date of authentication
thereof, in which event interest thereon will be payable from the date
to which interest has been paid in full, payable on each Interest
Payment Date.
Interest is payable on each Interest Payment Date to the persons in whose names
the ownership of the Bonds is registered on the Registration Books at the close of business
on the immediately preceding Record Date, except as provided below. Interest on any
Bond which is not punctually paid or duly provided for on any Interest Payment Date is
payable to the person in whose name the ownership of such Bond is registered on the
Registration Books at the close of business on a special record date for the payment of
such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner
by first-class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first
class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds
at their respective addresses shown on the Registration Books as of the close of business
on the preceding Record Date. At the written request of the Owner of Bonds in an
aggregate principal amount of at least $1,000,000, which written request is on file with the
Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each
succeeding Interest Payment Date by wire transfer in immediately available funds to such
account of a financial institution within the United States of America as specified in such
written request, which written request will remain in effect until rescinded in writing by the
Owner. The Trustee will pay principal of the Bonds in lawful money of the United States
of America by check of the Trustee upon presentation and surrender thereof at the Office
of the Trustee.
SECTION 2.03. Redemption of Bonds.
(a) Optional Redemption. The Series Bonds are subject to redemption prior to their
respective stated maturity dates, at the option of the District, from any source of available
funds, in whole or in part, on any date on or after September 1, 20_, at a redemption
price equal to the principal amount to be redeemed, plus accrued interest to the date fixed
for redemption, without premium. The District shall give written notice of any redemption
of Series A Bonds under this subsection (a) to the Trustee at least 45 days prior to the
date of redemption or such shorter time as shall be acceptable to the Trustee.
The Series B Bonds are not subject to optional redemption.
(b) Sinking Fund Redemption.
(i) The Series A Bonds maturing on September 1, 20 are subject to
mandatory sinking fund redemption in part, by lot, on September 1 of each year in
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accordance with the schedule set forth below. The Series A Bonds so called for mandatory
sinking fund redemption will be redeemed at the principal amount to be redeemed, plus
accrued but unpaid interest, without premium.
Redemption Date Sinking Fund
(September 1) Amount
20 $
20
20_ (maturity)
(ii) The Series A Bonds maturing on September 1, 20 are subject to
mandatory sinking fund redemption in part, by lot, on September 1 of each year in
accordance with the schedule set forth below. The Bonds so called for mandatory sinking
fund redemption will be redeemed at the principal amount to be redeemed, plus accrued
but unpaid interest, without premium.
Redemption Date Sinking Fund
(September 1) Amount
20 $
20
20
20_ (maturity)
If some but not all of the Series A Bonds have been redeemed pursuant to Section
2.03(a), the total amount of all sinking account payments shall be reduced by the
aggregate principal amount of Series A Bonds so redeemed to be allocated among such
sinking fund payments as determined by the District (notice of which determination shall
be given by the District to the Trustee).
(c) Extraordinary Redemption from Net Proceeds. The Bonds shall be subject
to extraordinary redemption prior to their respective stated maturities, as a whole or in part
on any date, as determined by the District, from Net Proceeds, upon the terms and
conditions of, and as provided for in Sections 5.04 or 5.05, as applicable, at a Redemption
Price equal to the principal amount of the Bonds to be redeemed, without premium, plus
accrued interest thereon to the date fixed for redemption. The District shall give written
notice of any redemption of Bonds under this subsection (c)to the Trustee at least 45 days
prior to the date of redemption or such shorter time as shall be acceptable to the Trustee.
(d) Notice of Redemption. Unless waived by any Owner of Bonds to be
redeemed, notice of any redemption of Bonds shall be given, at the expense of the District,
by the Trustee, by mailing a copy of a redemption notice by first class mail at least 30 days
and not more than 60 days prior to the date fixed for redemption to the Owner of the Bond
or Bonds to be redeemed at the address shown on the Bond Registration Books and
containing the information set forth in clause (e) below; provided, that neither the failure
to receive such notice nor any immaterial defect in any notice shall affect the sufficiency
of the proceedings for the redemption of the Bonds.
(e) Contents of Notice. All notices of redemption shall be dated and shall
state:
(i) the redemption date,
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(ii) the redemption price of the Bonds being redeemed (the
"Redemption Price"),
(iii) if fewer than all Outstanding Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the Bonds to be redeemed, including (A) the CUSIP numbers of all
Bonds being redeemed; (B) the stated interest rate with respect to each Bond
being redeemed; (C)the maturity date of each Bond being redeemed; and (D) any
other descriptive information needed to identify accurately the Bonds being
redeemed,
(iv) that on the redemption date the Redemption Price will become due
and payable with respect to each such Bond or portion thereof called for
redemption, and that interest with respect thereto shall cease to accrue from and
after said date, and
(v) the place or places where such Bonds are to be surrendered for
payment of the Redemption Price, which places of payment may include the Office
of the Trustee.
(g) Rescission of Notice of Redemption. The District has the right to rescind
any notice of the redemption of Bonds under Section 2.03(a) by written notice to the
Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be
cancelled and annulled if for any reason funds will not be or are not available on the date
fixed for redemption for the payment in full of the Bonds then called for redemption, and
such cancellation shall not constitute an Event of Default. The District and the Trustee
have no liability to the Bond Owners or any other party related to or arising from such
rescission of notice of redemption. The Trustee shall mail notice of such rescission of
notice of redemption in the same manner as the original notice of redemption was sent
under Section 2.03.
(h) Deposit of Money. On or prior to any redemption date, the District shall
deposit with the Trustee an amount of money sufficient to pay the Redemption Price of all
the Bonds or portions of Bonds which are to be redeemed on that date.
(i) Consequences of Notice. Notice of redemption having been given as
aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption
date, become due and payable at the Redemption Price therein specified, and from and
after such date (unless the District shall default in the payment of the Redemption Price)
such Bonds or portions of Bonds shall cease to have interest accrue thereon. Upon
surrender of such Bonds for redemption in accordance with said notice, such Bonds shall
be paid by the Trustee at the Redemption Price. Installments of interest due on or prior
to the redemption date shall be payable as herein provided for payment of interest. Upon
surrender for any partial redemption of any Bond, there shall be prepared for the Owner a
new Bond or Bonds of the same maturity in the amount of the unredeemed principal. All
Bonds which have been redeemed shall be cancelled and destroyed by the Trustee and
shall not be redelivered.
(j) Partial Redemption of Bonds. In the event only a portion of any Bond is
called for redemption,then upon surrender of such Bond redeemed in part only, the District
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shall execute and the Trustee shall authenticate and deliver to the Owner, at the expense
of the District, a new Bond or Bonds, of the same series and maturity, of authorized
denominations in aggregate principal amount equal to the unredeemed portion of the Bond
or Bonds.
(k) Manner of Redemption. Whenever any Bonds are to be selected for
redemption, the Trustee shall determine, by lot, the numbers of the Bonds to be redeemed,
and shall notify the District thereof.
(1) Purchase of Bonds in lieu of Redemption. In lieu of redemption of any
Bonds pursuant to 2.03(b), amounts on deposit in the Redemption Account may also be
used and withdrawn by the District at any time for the purchase of such Bonds at public
or private sale as and when and at such prices (including brokerage and other charges
and including accrued interest) as the District may in its discretion determine. The par
amount of any of such Bonds so purchased by the District in any twelve-month period
ending on January 1 in any year shall be credited towards and shall reduce the paramount
of such Bonds required to be redeemed pursuant to Section 2.03(b) on the next
succeeding September 1.
All Bonds redeemed pursuant to this Section and all Bonds purchased by the
District pursuant to this subsection (1)shall be cancelled and destroyed pursuant to Section
9.07.
SECTION 2.04. Book Entry System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a
separate single fully registered bond (which may be typewritten) for each maturity of each
series of Bonds. Upon initial delivery, the Trustee shall register the ownership of each
Bond on the Registration Books in the name of the Nominee. Except as provided in
subsection (c), the ownership of all of the Outstanding Bonds shall be registered in the
name of the Nominee on the Registration Books.
With respect to Bonds the ownership of which is registered in the name of the
Nominee, the District and the Trustee has no responsibility or obligation to any Depository
System Participant or to any person on behalf of which the Nominee holds an interest in
the Bonds. Without limiting the generality of the immediately preceding sentence, the
District and the Trustee has 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 Bonds, (ii) the delivery to any Depository System
Participant or any other person, other than a Bond Owner as shown in the Registration
Books, of any notice with respect to the Bonds, (iii) the selection by the Depository of the
beneficial interests in the Bonds to be redeemed if the District elects to redeem the Bonds
in part, (iv) the payment to any Depository System Participant or any other person, other
than a Bond Owner as shown in the Registration Books, of any amount with respect to
principal, interest and premium, if any, on the Bonds or (v) any consent given or other
action taken by the Depository as Owner of the Bonds. The District and the Trustee may
treat and consider the person in whose name each Bond is registered as the absolute
owner of such Bond for the purpose of payment of principal of and the interest and
premium, if any, on such Bond, for the purpose of giving notices of matters with respect
to such Bond, for the purpose of registering transfers of ownership of such Bond, and for
all other purposes whatsoever. The Trustee shall pay the principal of and the interest and
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premium, if any, on the 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 of and interest and
premium, if any, on the Bonds to the extent of the sum or sums so paid. No person other
than a Bond Owner shall receive a Bond evidencing the obligation of the District to make
payments of principal, interest and premium, if any, under this Indenture. Upon delivery
by the Depository to the District of written notice to the effect that the Depository has
determined to substitute a new Nominee in its place, and subject to the provisions herein
with respect to Record Dates, such new nominee shall become the Nominee hereunder
for all purposes; and upon receipt of such a notice the District shall promptly deliver a copy
of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository's
book-entry system, the District shall execute and deliver to such Depository a letter
representing such matters as shall be necessary to so qualify the 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 District or the Trustee any obligation whatsoever with
respect to persons having interests in the 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 District may take any other actions, not inconsistent with this Indenture, to qualify the
Bonds for the Depository's book-entry program.
(c) Transfers Outside Book-Entry, sem. If either(i)the Depository determines
not to continue to act as Depository for the Bonds, or (ii) the District determines to
terminate the Depository as such, then the District shall thereupon discontinue the book-
entry system with such Depository. In such event, the Depository shall cooperate with the
District and the Trustee in the issuance of replacement Bonds by providing the Trustee
with a list showing the interests of the Depository System Participants in the Bonds, and
by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or
before the date such replacement Bonds are to be issued. The Depository, by accepting
delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior
to the termination of the Depository acting as such, the District fails to identify another
Securities Depository to replace the Depository, then the Bonds shall no longer be
required to be registered in the Registration Books in the name of the Nominee, but shall
be registered in whatever name or names the Owners transferring or exchanging Bonds
shall designate, in accordance with the provisions hereof.
If the District determines that it is in the best interests of the beneficial owners of
the Bonds that they be able to obtain certificated Bonds, the District may notify the
Depository System Participants of the availability of such certificated Bonds through the
Depository. In such event, the Trustee will issue, transfer and exchange Bonds as
required by the Depository and others in appropriate amounts; and whenever the
Depository requests, the Trustee and the District shall cooperate with the Depository in
taking appropriate action (i) to make available one or more separate certificates
evidencing the Bonds to any Depository System Participant having Bonds credited to its
account with the Depository, or(ii)to arrange for another Securities Depository to maintain
custody of a single certificate evidencing such Bonds, all at the District's expense.
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(d) Payments to the Nominee. Notwithstanding any other provision of this
Indenture to the contrary, so long as any Bond is registered in the name of the Nominee,
all payments with respect to principal of and interest and premium, if any, on such Bond
and all notices with respect to such 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.
SECTION 2.05. Form and Execution of Bonds. The Bonds, the form of Trustee's
certificate of authentication, and the form of assignment to appear thereon, are set forth
in Appendix B attached hereto and by this reference incorporated herein, with necessary
or appropriate variations, omissions and insertions, as permitted or required by this
Indenture.
The President of the Board of Directors of the District (or his or her designee) shall
execute, and the Secretary of the District shall attest each Bond. Either or both of such
signatures may be made manually or may be affixed by facsimile thereof. If any officer
whose signature appears on any Bond ceases to be such officer before the Closing Date,
such signature will nevertheless be as effective as if the officer had remained in office until
the Closing Date. Any Bond may be signed and attested on behalf of the District by such
persons as at the actual date of the execution of such Bond are the proper officers of the
District, duly authorized to execute debt instruments on behalf of the District, although on
the date of such Bond any such person was not an officer of the District.
Only those Bonds bearing a certificate of authentication in the form set forth in
Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is
conclusive evidence that such Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
SECTION 2.06. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred, upon
the Registration Books, by the person in whose name it is registered, in person or by a
duly authorized attorney of such person, upon surrender of such Bond to the Trustee at
its Office for cancellation, accompanied by delivery of a written instrument of transfer in a
form acceptable to the Trustee, duly executed. The Trustee shall collect any tax or other
governmental charge on the transfer of any Bonds under this Section 2.06. Whenever
any Bond or Bonds shall be surrendered for transfer, the District shall execute and the
Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like series,
interest rate, maturity and aggregate principal amount. The District shall pay the cost of
printing Bonds and any services rendered or expenses incurred by the Trustee in
connection with any transfer of Bonds. The Trustee may refuse to transfer, under the
provisions of this Section 2.06, either (a) any Bonds during the period 15 days prior to the
date established by the Trustee for the selection of Bonds for redemption, or(b) any Bonds
selected by the Trustee for redemption.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a
like aggregate principal amount of Bonds of other authorized denominations and of the
same series, interest rate and maturity. The Trustee shall collect any tax or other
governmental charge on the exchange of any Bonds under this subsection (b). The
District shall pay the cost of printing Bonds and any services rendered or expenses
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incurred by the Trustee in connection with any exchange of Bonds. The Trustee may
refuse to exchange, under the provisions of this Section 2.06, either (a) any Bonds during
the 15 days prior to the date established by the Trustee for the selection of Bonds for
redemption or (b) any Bonds selected by the Trustee for redemption.
SECTION 2.07. Registration Books. The Trustee will keep or cause to be kept, at
its Office, sufficient records for the registration and registration of transfer of the Bonds,
which must at all times during normal business hours, and upon reasonable notice, be
open to inspection by the District; 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 the Registration Books, Bonds as hereinbefore
provided.
SECTION 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond is
mutilated, the District, at the expense of the Owner of such Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and
deliver such mutilated Bond to, or upon the order of, the District. If any Bond is lost,
destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
Trustee and, if such evidence is satisfactory and if indemnity satisfactory to the Trustee is
given, the District, at the expense of the Owner, shall execute, and the Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution
for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not
exceeding the actual cost of preparing each new Bond issued under this Section and of
the expenses which may be incurred by the Trustee in connection therewith. Any Bond
issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed
or stolen will constitute an original additional contractual obligation on the part of the
District whether or not the Bond so 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 Bonds issued under this Indenture.
Notwithstanding any other provision of this Section 2.08, in lieu of delivering a new
Bond for which principal has become due for a Bond which has been mutilated, lost,
destroyed or stolen, the Trustee may make payment of such Bond in accordance with its
terms upon receipt of indemnity satisfactory to the Trustee.
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ARTICLE III
ISSUE OF BONDS; PARITY OBLIGATIONS
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this
Indenture, the District shall execute and deliver Series A Bonds in the aggregate principal
amount of $ 1 and Series B Bonds in the aggregate principal amount of
$ to the Trustee, and the Trustee shall authenticate and deliver the Series
A Bonds and the Series B Bonds to the Original Purchaser upon receipt of a Request of
the District therefor.
SECTION 3.02. Deposit and Application of Proceeds; Transfer of Funds.
(a) On the Closing Date, the Trustee shall apply the proceeds of the Series A
Bonds received from the Original Purchaser in the amount of $ 1 (calculated
based on the par amount of the Series A Bonds ($ ), plus [net] original issue
premium of $ , less an underwriter's discount of $ ) as
follows:
(i) The Trustee shall deposit the amount of$ to the Costs
of Issuance Fund.
(ii) The Trustee shall transfer the amount of $ ,
constituting the remainder of the Series A Bond proceeds, to the Escrow Bank for
the defeasance, payment and prepayment of a portion of the 2009 Certificates
pursuant to the Escrow Agreement.
(b) On the Closing Date, the Trustee shall apply the proceeds of the Series B
Bonds received from the Original Purchaser in the amount of $ 1 (calculated
based on the par amount of the Series B Bonds ($ ), plus [net] original issue
premium of $ , less an underwriter's discount of $ ) as
follows:
(i) The Trustee shall deposit the amount of$ to the Costs
of Issuance Fund.
(ii) The Trustee shall transfer the amount of $ ,
constituting the remainder of the Series B Bond proceeds, to the Escrow Bank for
the defeasance, payment and prepayment of a portion of the 2009 Certificates
pursuant to the Escrow Agreement.
SECTION 3.03. Costs of Issuance Fund. There is hereby established a separate
fund to be known as the "Costs of Issuance Fund", to be held by the Trustee intrust. The
Trustee shall disburse moneys in the Costs of Issuance Fund from time to time to pay
Costs of Issuance upon submission of a Request of the District stating (a) the person to
whom payment is to be made, (b) the amounts to be paid, and (c) the purpose for which
the obligation was incurred; in each case together with a statement or invoice for each
amount requested thereunder. On the date that is 180 days after the Closing Date, the
Trustee shall transfer any amounts remaining in the Costs of Issuance Fund to the Debt
Service Fund to be applied to pay a portion of the interest next coming due and payable
on the Bonds.
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SECTION 3.04. Issuance of Parity Obligations. The District may issue or incur other
bonds, notes, loans, advances or indebtedness payable from Tax Revenues and/or the
Net Revenues on a parity with the Bonds to provide financing for the Wastewater System
in such principal amount as the District may determine. The District may issue or incur
any Parity Obligations subject to the following specific conditions which are hereby made
conditions precedent to the issuance and delivery of any Parity Obligations:
(a) No Event of Default has occurred and is continuing.
(b) The Tax Revenues and the Net Revenues (excluding capacity fees),
calculated in accordance with sound accounting principles, as shown
by the books of the District for the latest Fiscal Year or as shown by
the books of the District for any other 12-month period selected by
the District ending not more than 90 days prior to the date of issuance
of such Parity Obligation, in either case verified by a certificate or
opinion of an Independent Accountant employed by the District, plus
(at the option of the District) the Additional Revenues, are at least
equal to 125% of the amount of Maximum Annual Debt Service with
respect to the Bonds and all Parity Obligations then outstanding
(including the Parity Obligation then proposed to be issued).
(c) The trustee or fiscal agent for such Parity Obligation must be the
same entity performing the functions of Trustee under this Indenture.
SECTION 3.05. State Loans. The District may borrow money from the State and
incur State Loans to finance improvements to the Wastewater System. A State Loan may
be treated as a Parity Obligation for purposes of this Indenture without meeting the
requirements of Section 3.04(c), so long as the District complies with Section 3.04(a) and
Section 3.04(b) with respect to such State Loan.
SECTION 3.06. Validity of Bonds. The recital contained in the Bonds that they are
issued under the Laws of the State of California is conclusive evidence of their validity and
of the regularity of their issuance.
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ARTICLE IV
PLEDGE OF REVENUES; FLOW OF FUNDS
SECTION 4.01. Pledge of Tax Revenues and Net Revenues. The Bonds and all
Parity Obligations are secured by a first pledge of and lien on all of the Tax Revenues and
Net Revenues. In addition, the Bonds are secured by a pledge of all of the moneys in the
Debt Service Fund, including all amounts derived from the investment of such moneys.
The Bonds and any Parity Obligations are equally secured by a pledge, charge and lien
upon the Tax Revenues and Net Revenues, without priority for series, issue, number or
date, and the payment of the interest on and principal of the Bonds and Parity Obligations
shall be and are secured by an exclusive pledge, charge and lien upon the Tax Revenues
and Net Revenues. So long as any of the Bonds and Parity Obligations are Outstanding,
the Tax Revenues, the Net Revenues and such moneys may not be used for any other
purpose; except that out of the Tax Revenues and Net Revenues there may be
apportioned such sums, for such purposes, as are expressly permitted by Section 4.02.
SECTION 4.02. Receipt, Deposit and Application of Revenues.
(a) Maintenance of Wastewater System Funds. The District has previously
established the Wastewater System Funds, which it will continue to hold and maintain for
the purposes and uses set forth herein. The District shall deposit all Tax Revenues and
Gross Revenues in the Wastewater System Funds immediately upon receipt.
(b) Application of Amounts in Wastewater System Funds. In addition to transfers
which are required to be made for repayment of any Parity Obligations, the District shall
withdraw amounts on deposit in the Wastewater System Funds and apply such amounts
at the times and for the purposes, and in the priority, as follows:
(i) Deposit and Application of Tax Revenues. On or before each Interest
Payment Date, the District shall withdraw from the Wastewater
System Funds and transfer to the Trustee for deposit in the Debt
Service Fund (which the Trustee shall establish and hold in trust
hereunder) an amount of Tax Revenues which, together with the
balance then on deposit in the Debt Service Fund, is equal to the
aggregate amount coming due and payable on the Bonds on the next
succeeding Interest Payment Date.
The District may not withdraw any Tax Revenues from the
Wastewater System Funds in any Fiscal Year except for the purpose
of making any payment to the Trustee as required by this subsection
(i); provided, however, that at such time during any Fiscal Year as the
amount of Tax Revenues on deposit in the Wastewater System
Funds become equal to the aggregate amount of the debt service
thereafter coming due and payable on the Bonds in such Bond Year,
all remaining Tax Revenues received during such Fiscal Year will be
released from the pledge and lien hereunder and may be used for
any lawful purpose of the District.
(ii) Deposit and Application of Net Revenues. If the amount of Tax
Revenues transferred to the Trustee pursuant to the preceding clause
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(i) on or before each Interest Payment Date is less than the full
amount required to be so transferred, the District shall withdraw Net
Revenues from the Wastewater System Funds on such Interest
Payment Date, and transfer to the Trustee for deposit in the Debt
Service Fund, an amount equal to the amount of such insufficiency.
(iii) No Preference or Priority. The District shall pay principal and interest
on the Bonds and the principal of and interest on any Parity
Obligations from the Tax Revenues and Net Revenues without
preference or priority among the Bonds and Parity Obligations. If the
amount of Tax Revenues and Net Revenues on deposit in the
Wastewater System Funds is any time insufficient to enable the
District to pay when due the principal and interest on the Bonds and
the principal of and interest on the Parity Obligations, such payments
shall be made on a pro rata basis.
(iv) Other Uses of Wastewater System Funds. The District shall manage,
conserve and apply moneys in the Wastewater System Funds in such
a manner that all deposits required to be made under this Section and
under any Parity Obligation Documents will be made at the times and
in the amounts so required. Subject to the foregoing sentence, the
District may at any time use and apply moneys in the Wastewater
System Funds for any one or more of the following purposes: (A) the
payment of Operation and Maintenance Costs, (B) the payment of
any subordinate obligations or any unsecured obligations; (C) the
acquisition and construction of extensions and improvements to the
Wastewater System; (D)the payment of any amounts due and owing
to the United States of America in accordance with this Indenture or
any Parity Obligation Document; or (E) any other lawful purpose of
the District.
(v) Budget and Appropriation of Payments. The District shall adopt all
necessary budgets and make all necessary appropriations of the
principal and interest due on the Bonds from the Tax Revenues and
Net Revenues. If any such payment requires the adoption by the
District of any supplemental budget or appropriation, the District shall
promptly adopt the same. The covenants on the part of the District
contained in this paragraph constitute duties imposed by law and it
shall be the duty of each and every public official of the District to take
such actions and do such things as are required by law in the
performance of the official duty of such officials to enable the District
to carry out and perform the covenants and agreements in this
paragraph.
SECTION 4.03. Establishment of Rate Stabilization Fund. The District may
establish a fund to be held by it and administered in accordance with this Section 4.03, for
the purpose of stabilizing the rates and charges imposed by the District with respect to the
Wastewater System. From time to time the District may deposit amounts in the Rate
Stabilization Fund, from any source of legally available funds, including but not limited to
Tax Revenues and Net Revenues which are released from the pledge and lien which
secures the Bonds and any Parity Obligations, as the District may determine.
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The District may, but is not required to, withdraw from any amounts on deposit in
the Rate Stabilization Fund and deposit such amounts in the Wastewater System Funds
in any Fiscal Year for the purpose of paying debt service on the Bonds coming due and
payable in such Fiscal Year. Amounts so transferred from the Rate Stabilization Fund to
the Wastewater System Funds shall constitute Gross Revenues for such Fiscal Year
(except as otherwise provided herein), and shall be applied for the purposes of the
Wastewater System Funds. Amounts on deposit in the Rate Stabilization Fund shall not
be pledged to or otherwise secure the Bonds or any Parity Obligations. The District has
the right at any time to withdraw any or all amounts on deposit in the Rate Stabilization
Fund and apply such amounts for any lawful purposes of the District relating to the
Wastewater System.
SECTION 4.04. Investments.
(a) Investment of Funds Held by District. All moneys in the Wastewater System
Funds and the Rate Stabilization Fund shall be invested by the District from time to time
in any securities in which the District may legally invest funds subject to its control.
(b) Investment of Funds Held by Trustee. The Trustee shall invest moneys in
the funds and accounts held by it hereunder in Permitted Investments specified in the
Request of the District delivered to the Trustee at least two Business Days in advance of
the making of such investments. The Trustee may rely conclusively upon the investment
direction of the District as to the suitability and legality of the directed investments. In the
absence of any such direction from the District, the Trustee shall invest any such moneys
solely in Permitted Investments described in clause (e) of the definition thereof; 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
District specifying a specific money market fund that satisfies the requirements of said
paragraph in which such investment is to be made and, if no such Request of the District
is so received, the Trustee shall hold such moneys uninvested.
(c) General Investment Provisions. Obligations purchased as an investment of
moneys in any fund or account shall be deemed to be part of such fund or account.
Whenever in this Indenture the District is required to transfer any moneys to the Trustee,
such transfer may be accomplished by transferring a like amount of Permitted
Investments. All interest or gain derived from the investment of amounts in any of the
funds or accounts held by the Trustee hereunder shall be retained in the respective fund
or account from which such investment was made. For purposes of acquiring any
investments hereunder, the Trustee may commingle funds held by it hereunder upon
receipt by the Trustee of the Request of the District. The Trustee or an affiliate may act
as principal or agent in the acquisition or disposition of any investment and may impose
its customary charges therefor. The Trustee has no liability for losses arising from any
investments made under this Section.
The District acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the District the right to receive
brokerage confirmations of security transactions as they occur, the District specifically
waives receipt of such confirmations to the extent permitted by law. The Trustee will
furnish the District periodic transaction statements which include detail for all investment
transactions made by the Trustee hereunder.
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The Trustee or any of its affiliates may act as sponsor, advisor or manager in
connection with any investments made by the Trustee hereunder.
SECTION 4.05. Valuation and Disposition of Investments.
(a) Except as otherwise provided in subsection (b) of this Section, the District
covenants that all investments of amounts deposited in any fund or account created by or
under this Indenture, or otherwise containing gross proceeds of the Bonds (within the
meaning of Section 148 of the Tax Code) shall be acquired, disposed of and valued (as
of the date that valuation is required by this Indenture or the Tax Code) at Fair Market
Value as such term is defined in subsection (d) below.
(b) 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 within the meaning of Section 148 of the Tax Code);
provided that the District must inform the Trustee which funds are subject to a yield
restriction, and must provide the Trustee with any necessary valuation criteria or formulae.
(c) Except as provided in the proceeding subsection (b), for the purpose of
determining the amount in any fund, the Trustee shall value Permitted Investments
credited to such fund at least annually at the Fair Market Value thereof, on September 1
of each year. The Trustee shall have no duty in connection with the determination of Fair
Market Value other than to follow: (i) its normal practices in the purchase, sale and
determining the value of Permitted Investments; and (ii) the investment directions of the
District. The Trustee may utilize and rely on computerized securities pricing services that
may be available to it, including those available through its regular accounting system. If
and as directed by the District in writing, the Trustee shall sell or present for redemption
any Permitted Investment so purchased by the Trustee whenever it is necessary to
provide moneys to meet any required payment, transfer, withdrawal or disbursement from
the fund to which such Permitted Investment is credited, and the Trustee has no liability
or responsibility for any loss resulting therefrom. In determining the market value of
Authorized Investments, the Trustee may use and rely conclusively and without liability
upon any generally recognized pricing information service (including brokers and dealers
in securities) available to it.
(d) For purposes of this Section 4.05, the term "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, or (iii) the investment is a United States
Treasury Security-- State and Local Government Series which is acquired in accordance
with applicable regulations of the United States Bureau of Public Debt.
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ARTICLE V
FINANCIAL COVENANTS
SECTION 5.01. Punctual Payment; Compliance With Documents. The District shall
punctually pay or cause to be paid the interest and principal to become due with respect
to all of the Bonds in strict conformity with the terms of the Bonds and of this Indenture,
and will faithfully observe and perform all of the conditions, covenants and requirements
of this Indenture and all Supplemental Indentures.
SECTION 5.02. Discharge of Claims. The District covenants that in order to fully
preserve and protect the priority and security of the Bonds the District shall pay from the
Tax Revenues and/or Net Revenues and discharge all lawful claims for labor, materials
and supplies furnished for or in connection with the Wastewater System which, if unpaid,
may become a lien or charge upon the Net Revenues prior or superior to the lien of the
Bonds and impair the security of the Bonds. The District shall also pay, from the Tax
Revenues and/or Net Revenues, all taxes and assessments or other governmental
charges lawfully levied or assessed upon or in respect of the Wastewater System or upon
any part thereof or upon any of the revenues derived therefrom.
SECTION 5.03. Operation of Wastewater System in Efficient and Economical
Manner. The District covenants and agrees to operate the Wastewater System in an
efficient and economical manner and to operate, maintain and preserve the Wastewater
System in good repair and working order.
SECTION 5.04. Sale or Eminent Domain of Wastewater System. Except as
provided herein, the District covenants that the Wastewater System will not be
encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed of,
as a whole or substantially as a whole, if such encumbrance, sale, lease, pledge, charge
or other disposition would materially impair the ability of the District to pay the principal of
or interest on the Bonds or any Parity Obligations, or would materially adversely affect its
ability to comply with the terms of this Indenture or any Parity Obligation Documents. The
District may not enter into any agreement which impairs the operation of the Wastewater
System or any part of it necessary to secure adequate Tax Revenues and Net Revenues
to pay the Bonds and any Parity Obligations, or which otherwise would impair the rights
of the Bond Owners with respect to the Tax Revenues and Net Revenues.
The Net Proceeds received as awards as a result of the taking of all or any part of
the Wastewater System by the lawful exercise of eminent domain, if and to the extent that
such right can be exercised against such property of the District, shall either (a) be used
for the acquisition or construction of improvements and extension of the Wastewater
System, or (b) be applied on a pro rata basis to redeem the Bonds and any Parity
Obligations in accordance with this Indenture and the related Parity Obligation
Documents.
SECTION 5.05. Insurance. The District will at all times maintain with responsible
insurers all such insurance on the Wastewater System as is customarily maintained with
respect to works and properties of like character against accident to, loss of or damage to
the Wastewater System. The District shall also maintain, with responsible insurers,
worker's compensation insurance and insurance against public liability and property
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damage to the extent reasonably necessary to protect the District, the Trustee and the
Owners of the Bonds. The Trustee has no liability to determine whether the District is in
compliance with the provisions of this Section 5.05.
The Net Proceeds collected by the District from insurance against accident to or
destruction of any portion of the Wastewater System shall be used to repair or rebuild
such damaged or destroyed portion of the Wastewater System, and to the extent not so
applied, shall be applied on a pro rata basis to redeem the Bonds and any Parity
Obligations in accordance with this Indenture and the related Parity Obligation
Documents.
SECTION 5.06. Records and Accounts. The District will keep proper books of
record and accounts of the Wastewater System, separate from all other records and
accounts, in which complete and correct entries shall be made of all transactions relating
to the Wastewater System. Said books shall, upon reasonable request, be subject to the
inspection of the Trustee and the Owners of not less than 10% of the Outstanding Bonds
or their representatives authorized in writing.
The District shall cause the books and accounts of the Wastewater System to be
audited annually by an Independent Accountant and will make available for inspection by
the Bond Owners at the Office of the Trustee, upon reasonable request, a copy of the
report of such Independent Accountant.
SECTION 5.07. Rates and Charges.
(a) Net Revenues Covenant. The District agrees to prescribe, revise and collect
charges for the services and facilities of the Wastewater System which, after allowances
for contingencies and error in the estimates, produce Gross Revenues (excluding capacity
fees) sufficient in each Fiscal Year to provide Net Revenues which, together with the
amount of Tax Revenues estimated by the District to be received during such Fiscal Year,
are at least equal to 125% of the sum of the aggregate amount of the principal of and
interest on the Bonds and any Parity Obligations coming due and payable during such
Fiscal Year.
(b) Gross Revenues Covenant. The District further agrees to prescribe, revise
and collect charges for the services and facilities of the Wastewater System which, after
allowances for contingencies and error in the estimates, produce Gross Revenues
(including, for clarity, capacity fees), sufficient in each Fiscal Year, together with the
amount of Tax Revenues estimated by the District to be received during such Fiscal Year,
to yield Gross Revenues at least equal to 100% of the sum of(i) the aggregate amount of
the principal of and interest on the Bonds and any Parity Obligations coming due and
payable during such Fiscal Year and (ii) estimated Operation and Maintenance Costs
coming due and payable during such Fiscal Year.
(c) Rate Stabilization Fund. For the purpose of computing the amount of Gross
Revenues or Net Revenues for any Fiscal Year for purposes of this Section 5.07, the
District shall be permitted to transfer amounts on deposit in the Rate Stabilization Fund
for purposes of such computation (except that amounts that were transferred into the Rate
Stabilization Fund from Gross Revenues and/or Tax Revenues received by the District in
such Fiscal Year shall not be double-counted), and such transfers may be made until (but
not after) 180 days after the end of such Fiscal Year.
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SECTION 5.08. Superior and Subordinate Obligations; Parity Obligations. The
District shall not issue or incur any additional bonds or other obligations having any priority
in payment of principal or interest out of the Tax Revenues, the Gross Revenues, or the
Net Revenues over the Bonds. Nothing herein is intended or may be construed to limit or
affect the ability of the District to issue or incur (a) Parity Obligations, or (b) obligations
which are either unsecured or which are secured by an interest in the Tax Revenues or
Net Revenues which is junior and subordinate to the pledge of and lien upon the Tax
Revenues and Net Revenues established hereunder. Parity Obligations may be issued
or incurred only in accordance with Sections 3.04 and 3.05.
SECTION 5.09. Tax Covenants Relating to Bonds.
(a) The District shall not take any action or permit to be taken any action within
its control which would cause or which, with the passage of time if not cured would cause,
interest on the Series A Bonds to become includable in gross income for federal income
tax purposes.
(b) The District shall assure that the proceeds of the Series A Bonds are not
used in a manner which would cause the Series A Bonds to become "private activity
bonds" within the meaning of section 141(a) of the Tax Code or to meet the private loan
financing test of Section 141(c) of the Tax Code.
(c) The District shall not take any action or permit or suffer any action to be taken
if the result of the same would be to cause the Series A Bonds to be"federally guaranteed"
within the meaning of Section 149(b) of the Tax Code.
(d) The District shall not take, or permit or suffer to be taken by the Trustee or
otherwise, any action with respect to the Series A Bond proceeds which, if such action
had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on the Closing Date, would have caused the Series A Bonds to be
"arbitrage bonds" within the meaning of Section 148 of the Tax Code.
(e) The District shall calculate or cause to be calculated all amounts of excess
investment earnings with respect to the Series A Bonds which are required to be rebated
to the United States of America under Section 148(f) of the Tax Code, at the times and in
the manner required under the Tax Code. The District shall pay when due an amount
equal to excess investment earnings to the United States of America in such amounts, at
such times and in such manner as may be required under the Tax Code, such payments
to be made from any source of legally available funds of the District. The District shall
keep or cause to be kept, and retain or cause to be retained for a period of six years
following the retirement of the Series A Bonds, records of the determinations made under
this subsection (e).
The Trustee has no duty to monitor the compliance by the District with any of the
covenants contained in this Section 5.09.
SECTION 5.10. Continuing Disclosure. The District will comply with and carry out
all of the provisions of the Continuing Disclosure Certificate which has been executed and
delivered by the District on the Closing Date. Notwithstanding any other provision hereof,
failure of the District to comply with the Continuing Disclosure Certificate does not
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constitute an Event of Default hereunder; provided, however, that any Participating
Underwriter (as such term is defined in the Continuing Disclosure Certificate) or any
Owner or beneficial owner of the Bonds may take such actions as may be necessary and
appropriate, including seeking specific performance by court order, to cause the District
to comply with its obligations under this Section 5.10.
SECTION 5.11. Further Assurances. The District 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 Bonds
and the Trustee the rights and benefits provided in this Indenture.
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties, Immunities and Liabilities of Trustee.
(a) Performance of Duties. The Trustee shall, prior to the occurrence of an Event
of Default, and after the curing or waiving of all Events of Default which may have
occurred, perform such duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or duties will be read into this Indenture against the
Trustee. The Trustee shall, during the existence of any Event of Default (which has not
been cured or waived), exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a reasonable
corporate trustee would exercise or use.
(b) Removal of Trustee. The District may remove the Trustee upon 30 days'
prior written notice, and shall remove the Trustee (i) if at any time requested to do so by
an instrument or concurrent instruments in writing signed by the Owners of not less than
a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys
duly authorized in writing) or (ii) if at any time the Trustee ceases to be eligible in
accordance with subsection (e) of this Section 6.01, or becomes incapable of acting, or is
adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property is appointed,
or any public officer takes control or charge of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation. The District may accomplish
such removal by giving 30 days' prior written notice to the Trustee, whereupon the District
will appoint a successor Trustee by an instrument in writing.
(c) Resignation by Trustee. The Trustee may at any time resign by giving written
notice of such resignation to the District, and by giving notice of such resignation by first
class mail, postage prepaid, to the Bond Owners at their respective addresses shown on
the Registration Books. Upon receiving such notice of resignation, the District will
promptly appoint a successor Trustee by an instrument in writing.
(d) Appointment of Successor Trustee. Any removal or resignation of the
Trustee and appointment of a successor Trustee becomes effective upon acceptance of
appointment by the successor Trustee. If no successor Trustee has been appointed and
accepted appointment within 45 days following giving notice of removal or notice of
resignation as aforesaid, the resigning Trustee, any Owner (on behalf of such Owner and
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all other Owners) may petition any federal or state court for the appointment of a successor
Trustee, and such court may thereupon, after such notice (if any) as it may deem proper,
appoint such successor Trustee. Any successor Trustee appointed under this Indenture
shall signify its acceptance of such appointment by executing and delivering to the District
and to its predecessor Trustee a written acceptance thereof, and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the moneys,
estates, properties, rights, powers, trusts, duties and obligations of such predecessor
Trustee, with like effect as if originally named Trustee herein; but, nevertheless, upon the
receipt by the predecessor Trustee of the Request of the District or the request of the
successor Trustee, such predecessor Trustee shall execute and deliver any and all
instruments of conveyance or further assurance and do such other things as may
reasonably be required for more fully and certainly vesting in and confirming to such
successor Trustee all the right, title and interest of such predecessor Trustee in and to any
property held by it under this Indenture and shall pay over, transfer, assign and deliver to
the successor Trustee any money or other property subject to the trusts and conditions
herein set forth. Upon request of the successor Trustee, the District will execute and
deliver any and all instruments as may be reasonably required for more fully and certainly
vesting in and confirming to such successor Trustee all such moneys, estates, properties,
rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a
successor Trustee as provided in this subsection, the District shall mail or cause the
successor Trustee to mail, by first class mail postage prepaid, a notice of the succession
of such Trustee to the trusts hereunder to each rating agency which then maintains a
rating on the Bonds, and to the Owners at the addresses shown on the Registration Books.
If the District fails to mail such notice within 15 days after acceptance of appointment by
the successor Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the District.
(e) Qualifications of Trustee. Any Trustee appointed under the provisions of this
Section in succession to the Trustee must:
(i) be a company, national banking association or bank having trust
powers,
(ii) have a corporate trust office in the State of California,
(iii) have (or be part of a bank holding company system whose bank
holding company has) a combined capital and surplus of at least
$75,000,000, and
(iv) be subject to supervision or examination by federal or state authority.
If such bank, national banking association or company publishes a report of
condition at least annually, under law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this subsection the
combined capital and surplus of such bank, national banking association or company shall
be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this subsection (e), the Trustee shall resign immediately
in the manner and with the effect specified in subsection (c) of this Section.
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The District will maintain a Trustee which is qualified under the provisions of the
foregoing provisions of this subsection (e), so long as any Bonds are Outstanding.
SECTION 6.02. Merger or Consolidation. Any bank, national banking association
or company into which the Trustee may be merged or converted or with which either of
them may be consolidated or any bank, national banking association or company resulting
from any merger, conversion or consolidation to which it shall be a party or any bank,
national banking association or company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such bank, national banking
association or company shall be eligible under subsection (e) of Section 6.01, shall be the
successor to such Trustee without the execution or filing of any paper or any further act,
anything herein to the contrary notwithstanding.
SECTION 6.03. Rights and Liabilities of Trustee.
(a) The recitals of facts herein and in the Bonds contained are taken as
statements of the District, and the Trustee has no responsibility for the correctness of the
same, nor does it have any liability whatsoever therefor, nor make any representations as
to the validity or sufficiency of this Indenture or of the Bonds nor shall it incur any
responsibility in respect thereof, other than as expressly stated herein. The Trustee is,
however, responsible for its representations contained in its certificate of authentication
on the Bonds. The Trustee is not liable in connection with the performance of its duties
hereunder, except for its own negligence or willful misconduct. The Trustee is not liable
for the acts of any agents of the Trustee selected by it with due care. The Trustee may
become the Owner of any Bonds with the same rights it would have if it were not Trustee
and, to the extent permitted by law, may act as depository 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 the Owners, whether or not such committee shall represent
the Owners of a majority in principal amount of the Bonds then Outstanding. The Trustee,
either as principal or agent, may engage in or be entrusted in any financial or other
transaction with the District.
(b) The Trustee has no liability with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture.
(c) The Trustee has no liability for any action taken by it in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture, except for actions arising from the negligence or willful misconduct of
the Trustee. The permissive right of the Trustee to do things enumerated hereunder is
not construed as a mandatory duty.
(d) The Trustee will not be deemed to have knowledge of any Event of Default
hereunder unless and until a responsible officer of the Trustee has actual knowledge
thereof, or unless and until a responsible officer of the Trustee has received written notice
thereof at its Office. Except as otherwise expressly provided herein, the Trustee is not
bound to ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or of any of the documents executed in
connection with the Bonds, or as to the existence of an Event of Default hereunder or
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thereunder. The Trustee is not responsible for the District's payment of principal and
interest on the Bonds, the District's observance or performance of any other covenants,
conditions or terms contained herein, or the validity or effectiveness of any collateral given
to or held by it. Without limiting the generality of the foregoing, and notwithstanding
anything herein to the contrary, the Trustee is not responsible for reviewing the contents
of any financial statements furnished to the Trustee under Section 5.06 and may rely
conclusively on a Certificate of the District (if any) to establish the District's compliance
with its financial covenants hereunder, including, without limitation, its covenants
regarding the deposit of Gross Revenues into the Wastewater System Funds and the
investment and application of moneys on deposit in the Wastewater System Funds (other
than its covenants to transfer such moneys to the Trustee when due hereunder).
(e) No provision in this Indenture requires the Trustee to risk or expend its own
funds or otherwise incur any financial liability hereunder. The Trustee is entitled to receive
interest on any moneys advanced by it hereunder, at the maximum rate permitted by law.
(f) The Trustee may establish additional accounts or subaccounts of the funds
established hereunder as the Trustee deems necessary or prudent in furtherance of its
duties under this Indenture.
(g) The Trustee has no responsibility or liability whatsoever with respect to any
information, statement, or recital in any official statement, offering memorandum or any
other disclosure material prepared or distributed with respect to the Bonds, nor shall the
Trustee have any obligation to review any such material, and any such review by the
Trustee will not be deemed to create any obligation, duty or liability on the part of the
Trustee.
(h) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, engineers, accountants and representatives, have the right(but not the
duty) fully to inspect the Wastewater System, including all books, papers and records of
the District pertaining to the Wastewater System and the 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.
(i) Before taking any action under Article VIII or this Article VI, the Trustee may
require indemnity satisfactory to the Trustee be furnished to it to hold the Trustee harmless
from any expenses whatsoever and to protect it against any liability it may incur hereunder.
0) The immunities extended to the Trustee also extend to its directors, officers,
employees and agents.
(k) The permissive right of the Trustee to do things enumerated in this Indenture
is not construed as a duty.
(1) The Trustee may execute any of the trusts or powers hereof and perform any
of its duties through attorneys, agents and receivers and is not answerable for the conduct
of the same if appointed by it with reasonable care.
(m) The Trustee shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay in the performance
of such obligations due to unforeseeable causes beyond its control and without its fault or
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negligence, including, but not limited to, Acts of God or of the public enemy or terrorists,
acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot,
inability to procure or general sabotage or rationing of labor, equipment, facilities, sources
of energy, material or supplies in the open market, litigation or arbitration involving a party
or others relating to zoning or other governmental action or inaction pertaining to the
project, malicious mischief, condemnation, and unusually severe weather or delays of
suppliers or subcontractors due to such causes or any similar event and/or occurrences
beyond the control of the Trustee.
SECTION 6.04. Right to Rely on Documents. The Trustee is protected in acting
upon any notice, resolution, requisition, request, consent, order, certificate, report, opinion,
facsimile transmission, electronic mail or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties. The Trustee
may consult with counsel, including, without limitation, Bond Counsel or other counsel of
or to the District, 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 the Trustee hereunder in accordance therewith.
The Trustee is not bound to recognize any person as the Owner of a Bond unless
and until such Bond is submitted for inspection, if required, and such person's title thereto
is established to the satisfaction of the Trustee.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee deems 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 District, which 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 (but has no duty to), in lieu
thereof, accept other evidence of such matter or may require such additional evidence as
to it may deem reasonable. The Trustee may conclusively rely on any certificate or report
of any Independent Accountant appointed by the District.
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" means 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 District 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 District,
whenever a person is to be added or deleted from the listing. If the District 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 District 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
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such Authorized Officer. The District shall be responsible for ensuring that only Authorized
Officers transmit such Instructions to the Trustee and that the District 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
District. 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 District 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 District;
(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.
The Trustee shall not be concerned with 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.
SECTION 6.05. Preservation and Inspection of Documents. All documents
received by the Trustee under the provisions of this Indenture shall be retained in its
possession and shall be subject during normal business hours, and upon reasonable prior
written notice, to the inspection of the District and any Owner, and their agents and
representatives duly authorized in writing.
SECTION 6.06. Compensation and Indemnification. Absent any agreement to the
contrary, the District shall pay to the Trustee from time to time compensation for all
services rendered under this Indenture and also all expenses, charges, legal and
consulting fees and other disbursements and those of its attorneys (including any
allocated costs of internal counsel), agents and employees, incurred in and about the
performance of its powers and duties under this Indenture. The Trustee has a first lien on
the Tax Revenues, Net Revenues and all funds and accounts held by the Trustee
hereunder to secure the payment to the Trustee of all fees, costs and expenses, including
compensation to its experts, attorneys and counsel incurred in declaring such Event of
Default and in exercising the rights and remedies set forth in Article VIII. Any such
expenses incurred by the Trustee shall be deemed to constitute a substantial contribution
to the trust estate which secures the Bonds.
The District further covenants and agrees to indemnify and save the Trustee and
its officers, directors, agents and employees, harmless against any loss, expense,
including legal fees and expenses, and liabilities, whether or not litigated, suits, actions,
judgments, which it may incur arising out of or in the exercise and performance of its
powers and duties hereunder, including the costs and expenses of defending against any
claim of liability and of enforcing any remedies hereunder and under any related
documents, but excluding any and all losses, expenses and liabilities which are due to the
negligence or willful misconduct of the Trustee, its officers, directors, agents or employees.
The obligations of the District under this Section 6.06 shall survive resignation or removal
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of the Trustee under this Indenture and payment of the Bonds and discharge of this
Indenture.
SECTION 6.07. Accounting Records and Financial Statements. The Trustee shall
at all times keep, or cause to be kept, proper books of record and account, prepared in
accordance with corporate trust industry standards, in which complete and accurate
entries shall be made of all transactions made by it relating to the proceeds of the Bonds
and all funds and accounts established and held by the Trustee under this Indenture. Such
books of record and account shall be available for inspection by the District at reasonable
hours, during regular business hours, with reasonable prior notice and under reasonable
circumstances. The Trustee shall furnish to the District, at least semiannually, an
accounting (which may be in the form of its customary statements) of all transactions
relating to the proceeds of the Bonds and all funds and accounts held by the Trustee under
this Indenture.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THIS INDENTURE
SECTION 7.01. Amendments Permitted.
(a) Amendment With Bond Owner Consent. This Indenture and the rights and
obligations of the District and of the Owners of the Bonds may be modified or amended
by the District and the Trustee upon Request of the District at any time by the execution
of a Supplemental Indenture, but only with the written consent of the Owners of a majority
in aggregate principal amount of the Bonds then Outstanding with respect to all Bonds
then Outstanding, exclusive of Bonds disqualified as provided in Section 9.05. Any such
Supplemental Indenture becomes effective upon the execution and delivery thereof by the
parties thereto and upon consent of the requisite Bond Owners. No such modification or
amendment may:
(i) extend the maturity of any Bond or reduce the interest rate thereon,
or otherwise alter or impair the obligation of the District to pay the
principal thereof, or interest thereon, at the time and place and at the
rate and in the currency provided therein, without the written consent
of the Owner of such Bond, or
(ii) permit the creation by the District of any mortgage, pledge or lien
upon the Tax Revenues or Net Revenues superior to or on a parity
with the pledge and lien created for the benefit of the Bonds (except
as expressly permitted by this Indenture), or reduce the percentage
of Bonds required for the affirmative vote or written consent to an
amendment or modification, or
(iii) modify any of the rights or obligations of the Trustee without its written
consent.
(b) Amendment Without Bond Owner Consent. This Indenture and the rights
and obligations of the District and of the Owners of the Bonds may also be modified or
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amended at any time by a Supplemental Indenture, without the consent of any Owners of
the Bonds, for any one or more of the following purposes:
(i) to add to the covenants and agreements of the District 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 District;
(ii) to cure any ambiguity, or to cure, correct or supplement any defective
provision contained in this Indenture, or in any other respect
whatsoever as the District deems necessary or desirable, provided
under any circumstances that such modifications or amendments do
not materially adversely affect the interests of the Owners in the
opinion of Bond Counsel filed with the District and the Trustee;
(iii) to provide for the issuance of Parity Obligations under Section 3.04
or Section 3.05, and to provide the terms and conditions under which
such Parity Obligations may be issued, including but not limited to the
establishment of special funds and accounts relating thereto and any
other provisions relating solely thereto, subject to and in accordance
with the provisions of Section 3.04 and/or Section 3.05; and
(iv) to amend any provision hereof to assure the exclusion from gross
income of interest on the Series A Bonds for federal income tax
purposes under the Tax Code, in the opinion of Bond Counsel filed
with the District and the Trustee.
(c) Notice of Amendments. The District shall deliver or cause to be delivered a
draft of any Supplemental Indenture to Moody's and/or S&P, if and only if such rating
agency is then providing a rating on the Bonds, at least 10 days prior to the effective date
of such Supplemental Indenture under this Section 7.01.
SECTION 7.02. Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective under this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights,
duties and obligations of the parties hereto or thereto and all Owners, as the case may
be, shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modification and amendment, and all the terms and conditions of any
Supplemental Indenture shall be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After
the effective date of any amendment or modification hereof under this Article VII, the
District may determine that any or all of the Bonds shall bear a notation, by endorsement
in form approved by the District, as to such amendment or modification and in that case
upon demand of the District the Owners of such Bonds shall present such Bonds for that
purpose at the Office of the Trustee, and thereupon a suitable notation as to such action
shall be made on such Bonds. In lieu of such notation, the District may determine that
new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in
that case upon demand of the District the Owners of the Bonds shall present such Bonds
for exchange at the Office of the Trustee without cost to such Owners.
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SECTION 7.04. Amendment by Mutual Consent. The provisions of this Article VII
shall not prevent any Owner from accepting any amendment as to the particular Bond held
by such Owner.
SECTION 7.05. Trustee's Reliance. The Trustee may conclusively rely, and is
protected in relying, upon a Certificate of the District and an opinion of counsel stating that
all requirements of this Indenture relating to the amendment or modification hereof have
been satisfied and that such amendments or modifications do not materially adversely
affect the interests of the Owners.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01. Events of Default and Acceleration of Maturities. Each of the
following events constitutes an Event of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due,
whether at maturity as therein expressed, by proceedings for
acceleration, or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due.
(c) Failure by the District to observe and perform any of the other
covenants, agreements or conditions on its part contained in this
Indenture or in the Bonds, if such failure has continued for a period of
60 days after written notice thereof, specifying such failure and
requiring the same to be remedied, has been given to the District by
the Trustee; provided, however, if in the reasonable opinion of the
District the failure stated in the notice can be corrected, but not within
such 60-day period, such failure shall not constitute an Event of
Default if the District institutes corrective action within such 60-day
period and thereafter diligently and in good faith cures the failure
within 60 days after the written notice of default thereof.
(d) The District commences a voluntary bankruptcy case under Title 11
of the United States Code or any substitute or successor statute.
If an Event of Default occurs and is continuing, the Trustee may, and at the written
direction of the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding the Trustee shall (a) for any default listed in Section 8.01(a), (b) or (d) only,
declare the principal of the Bonds, together with the accrued interest thereon, to be due
and payable immediately, and upon any such declaration the same will become
immediately due and payable, anything in this Indenture or in the Bonds to the contrary
notwithstanding, and (b) subject to the provisions of Section 8.06, exercise any other
remedies available to the Trustee and the Bond Owners in law or at equity to enforce the
rights of the Bond Owners under this Indenture, including the right, by action brought
pursuant to the California Code of Civil Procedure, or as otherwise provided by law, to
obtain the issuance of a writ of mandamus enforcing the duty of the District to take all
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steps necessary for the payment of principal of and interest on the Bonds, and other
amounts due hereunder.
Immediately upon becoming aware of the occurrence of an Event of Default, but
in no event later than five Business Days following becoming aware of such occurrence,
the Trustee shall give notice of such Event of Default to the District by telephone confirmed
in writing. Such notice shall also state whether the principal of the Bonds has been
declared to be or have immediately become due and payable. With respect to any Event
of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any
Event of Default described in clause (c) above the Trustee in its sole discretion may, also
give such notice to the Owners, which shall include the statement that interest on the
Bonds shall cease to accrue from and after the date, if any, on which the Trustee declares
the Bonds to become due and payable under the preceding paragraph (but only to the
extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid
on such date).
This provision, however, is subject to the condition that if, at any time after the
principal of the Bonds has been so declared due and payable, and before any judgment
or decree for the payment of the moneys due has been obtained or entered, the District
shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured
prior to such declaration and all matured installments of interest(if any) upon all the Bonds,
with interest on such overdue installments of principal and interest at an interest rate of
10% per annum, and the reasonable fees and expenses of the Trustee, including fees and
expenses of its attorneys, and any and all other defaults known to the Trustee (other than
in the payment of principal of and interest on the Bonds due and payable solely by reason
of such declaration) has been made good or cured to the satisfaction of the Trustee or
provision deemed by the Trustee to be adequate has been made therefor, then, and in
every such case, the Owners of at least a majority in aggregate principal amount of the
Bonds then Outstanding, by written notice to the District and to the Trustee, may, on behalf
of the Owners of all of the Bonds, rescind and annul such declaration and its
consequences. However, no such rescission and annulment 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 under any right given or action taken by the Trustee under the provisions of
this Indenture shall be applied by the Trustee as follows and in the following order:
(a) First, to the payment of any fees, costs and expenses incurred by the
Trustee to protect the interests of the Owners of the Bonds; payment
of the fees, costs and expenses of the Trustee (including fees and
expenses of its counsel, including any allocated costs of internal
counsel) incurred in and about the performance of its powers and
duties under this Indenture and the payment of all fees, costs and
expenses owing to the Trustee under Section 6.06, together with
interest on all such amounts advanced by the Trustee at the
maximum rate permitted by law.
(b) Second, to the payment of the whole amount then owing and unpaid
upon the Bonds for interest and principal, with interest on such
overdue amounts at the respective rates of interest borne by those
Bonds, and in case such moneys shall be insufficient to pay in full the
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whole amount so owing and unpaid upon the 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 to the aggregate of such interest,
principal and interest on overdue amounts.
SECTION 8.03. Power of Trustee to Control Proceedings. If the Trustee, upon the
happening of an Event of Default, takes any action, by judicial proceedings or otherwise,
in the performance of its duties hereunder, whether upon its own discretion, upon the
request of the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding, it has full power, in the exercise of its discretion for the best interests of the
Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action and the Trustee has been
indemnified to its satisfaction. The Trustee may 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 Bonds
hereunder opposing such discontinuance, withdrawal, compromise, settlement or other
disposal of such litigation.
SECTION 8.04. Limitation on Owners' Right to Sue. No Owner of any Bond has
the right to institute any suit, action or proceeding at law or in equity, for any remedy under
or upon this Indenture, unless:
(a) said Owner has 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
Bonds then Outstanding have requested the Trustee in writing to
exercise the powers hereinbefore granted or to institute such action,
suit or proceeding in its own name;
(c) said Owners 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 has failed to comply with such request for a period of 60
days after such written request has been received by, and said tender
of indemnity has 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 has 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 of the Outstanding
Bonds.
The right of any Owner of any Bond to receive payment of the principal of and the
interest and premium, if any, on such Bond as herein provided, shall not be impaired or
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affected without the written consent of such Owner, notwithstanding the foregoing
provisions of this Section or any other provision of this Indenture.
SECTION 8.05. Non-waiver. Nothing in this Article VIII or in any other provision of
this Indenture or in the Bonds, affects or impairs the obligation of the District, which is
absolute and unconditional, to pay from the Net Revenues and other amounts pledged
hereunder, the principal of and interest on the Bonds to the Bond Owners when due and
payable as herein provided, or affects or impairs the right of action, which is also absolute
and unconditional, of the Bond Owners to institute suit to enforce such payment by virtue
of the contract embodied in the Bonds.
A waiver of any default by any Owner shall not affect any subsequent default or
impair any rights or remedies on the subsequent default. No delay or omission of any
Owner 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 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 Owners.
If a suit, action or proceeding to enforce any right or exercise any remedy is
abandoned or determined adversely to the Owners, the District and the Owners will be
restored to their former positions, rights and remedies as if such suit, action or proceeding
had not been brought or taken.
SECTION 8.06. Actions by Trustee as Attorney-in-Fact. Any suit, action or
proceeding which any Owner has 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
similarly situated and the Trustee is hereby appointed (and the successive respective
Owners by taking and holding the Bonds shall be conclusively deemed so to have
appointed it) the true and lawful attorney-in-fact of the respective Owners 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 as a class or classes, as may be
necessary or advisable in the opinion of the Trustee as such attorney-in-fact, subject to
the provisions of Article VI. Notwithstanding the foregoing provisions of this Section 8.06,
the Trustee has no duty to enforce any such right or remedy unless it has been indemnified
to its satisfaction for any additional fees, charges and expenses of the Trustee related
thereto, including without limitation, fees and charges of its attorneys and advisors.
SECTION 8.07. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Owners is intended to be exclusive of any other remedy. Every such
remedy shall be cumulative and shall be in addition to every other remedy given hereunder
or now or hereafter existing, at law or in equity or by statute or otherwise, and may be
exercised without exhausting and without regard to any other remedy conferred by the
Bond Law or any other law.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Limited Liability of the District. Notwithstanding anything in this
Indenture contained, the District is not required to advance any moneys derived from any
source of income other than the Tax Revenues and Net Revenues for the payment of the
principal of or interest on the Bonds, or for the performance of any covenants herein
contained (except to the extent any such covenants are expressly payable hereunder from
the Tax Revenues and Net Revenues). The District may, however, advance 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 District for such purpose without incurring
indebtedness.
The Bonds are revenue bonds, payable exclusively from the Tax Revenues, Net
Revenues and other funds as in this Indenture provided. The Wastewater System Funds
of the District is not liable, and the credit of the District is not pledged, for the payment of
the interest on or principal of the Bonds. The Owners of the Bonds have no right to compel
the forfeiture of any property of the District. The principal of and interest on the Bonds are
not a debt of the District, or a legal or equitable pledge, charge, lien or encumbrance upon
any property of the District or upon any of its income, receipts or revenues except the Tax
Revenues, Net Revenues and other funds pledged to the payment thereof as provided in
this Indenture.
SECTION 9.02. Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, gives to any person other than the District and the Owners of the
Bonds, any right, remedy or claim under or by reason of this Indenture. Any covenants,
stipulations, promises or agreements in this Indenture contained by and on behalf of the
District shall be for the sole and exclusive benefit of the Trustee and the Owners of the
Bonds.
SECTION 9.03. Defeasance of Bonds.
(i) If the District pays and discharges the entire indebtedness on any Bonds in any
one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest
on such Bonds, as and when the same become due and
payable;
(b) subject to the conditions set forth in subsection (ii) below, by
irrevocably depositing with the Trustee or an escrow bank,
at or before maturity, an amount of cash which, together with
the available amounts then on deposit in the funds and
accounts established under this Indenture, in the opinion or
report of an Independent Accountant is fully sufficient to pay
such Bonds, including all principal and interest;
(c) subject to the conditions set forth in subsection (ii) below, by
irrevocably depositing with the Trustee or an escrow bank,
Federal Securities in such amount as an Independent
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Accountant determines will, together with the interest to
accrue thereon and available moneys then on deposit in any
of the funds and accounts established under this Indenture,
be fully sufficient to pay and discharge the indebtedness on
such Bonds (including all principal and interest) at or before
maturity; or
(d) by purchasing such Bonds prior to maturity and tendering such Bonds
to the Trustee for cancellation;
then, at the election of the District, and notwithstanding that any such Bonds have not
been surrendered for payment, the pledge of the Tax Revenues, the Net Revenues and
other funds provided for in this Indenture and all other obligations of the Trustee and the
District under this Indenture with respect to such Bonds shall cease and terminate, except
only: the obligations of the District under Section 5.09 (Tax Covenants), the obligation of
the Trustee to transfer and exchange Bonds hereunder, the obligation of the District to
pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with
the Trustee, all sums due thereon, and the obligations of the District to compensate and
indemnify the Trustee under Section 6.06.
The District must file notice of such election with the Trustee. The Trustee shall
pay any funds thereafter held by it, which are not required for said purpose, to the District
or to its order.
(ii) To accomplish defeasance pursuant to paragraphs (i)(b) or (i)(c) above, the
District shall cause to be delivered (a) a report of an Independent Accountant verifying the
sufficiency of the escrow established to pay the Bonds in full on the maturity date
("Verification"), (b) an escrow agreement, and (c) an opinion of Bond Counsel to the effect
that the Bonds are no longer "Outstanding" under this Indenture; each Verification and
defeasance opinion to be acceptable in form and substance, and addressed, to the District
and Trustee.
(iii) In the case of a defeasance or payment of all of the Bonds Outstanding in
accordance with this Section 9.03, the Trustee shall pay all amounts held by it in any funds
or accounts hereunder, which are not required for said purpose or for payment of amounts
due the Trustee under Section 6.06, to the District.
SECTION 9.04. Execution of Documents and Proof of Ownership by Owners. Any
request, consent, declaration or other instrument which this Indenture may require or
permit to be executed by any Owner may be in one or more instruments of similar tenor,
and shall be executed by such Owner in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, consent, declaration or other instrument, or of such
writing appointing such attorney, may be proved by the certificate of any notary public or
other officer authorized to take acknowledgments of deeds to be recorded in the state in
which he purports to act, that the person signing such request, declaration or other
instrument or writing acknowledged to him the execution thereof, or by an affidavit of a
witness of such execution, duly sworn to before such notary public or other officer. The
ownership of Bonds and the amount, maturity, number and date of ownership thereof are
conclusively proved by the Registration Books. Any request, declaration or other
instrument or writing of the Owner of any Bond binds all future Owners of such Bond in
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respect of anything done or suffered to be done by the District or the Trustee in good faith
and in accordance therewith.
SECTION 9.05. Disqualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request,
direction, consent or waiver under this Indenture, Bonds which are owned or held by or
for the account of the District(but excluding Bonds held in any employees' retirement fund)
must be disregarded and deemed not to be Outstanding for the purpose of any such
determination. The Trustee will not be deemed to have knowledge that any Bond is owned
or held by the District unless the District is the Registered Owner or the Trustee has
received written notice to that effect.
SECTION 9.06. Waiver of Personal Liability. No member, officer, agent or
employee of the District shall be individually or personally liable for the payment of the
principal of or interest or any premium on the Bonds; but nothing herein contained shall
relieve any such member, officer, agent or employee from the performance of any official
duty provided by law.
SECTION 9.07. Destruction of Canceled Bonds. Whenever in this Indenture
provision is made for the surrender to the District of any Bonds which have been paid or
canceled under the provisions of this Indenture, a certificate of destruction duly executed
by the Trustee shall be deemed to be the equivalent of the surrender of such canceled
Bonds and the District shall be entitled to rely upon any statement of fact contained in any
certificate with respect to the destruction of any such Bonds therein referred to. The
District shall pay all costs of any microfilming of Bonds to be destroyed.
SECTION 9.08. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the District or the Trustee may be
established and maintained in the accounting records of the District 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 District 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
Bonds and the rights of every Owner thereof.
SECTION 9.09. Notices. All written notices to be given under this Indenture shall
be given by first class mail or personal delivery to the party entitled thereto at its address
set forth below, or at such address as the party may provide to the other party in writing
from time to time. The District or the Trustee may, by written notice to the other parties,
from time to time modify the address or number to which communications are to be given
hereunder.
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If to the District: Central Contra Costa Sanitary District
5019 Imhoff Place
Martinez, California 94553
Fax: (510) 228-4624
Attention: Controller
If to the Trustee:
Fax:
Attention: Corporate Trust Services
SECTION 9.10. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of
the interest or premium (if any) on or principal of the Bonds which remains unclaimed for
one year after the date when the payments of such interest, premium and principal have
become payable, if such money was held by the Trustee at such date, or for one year after
the date of deposit of such money if deposited with the Trustee after the date when the
interest and premium (if any) on and principal of such Bonds have become payable, shall
be repaid by the Trustee to the District as its absolute property free from trust, and the
Trustee shall thereupon be released and discharged with respect thereto and the Owners
shall look only to the District for the payment of the principal of and interest on such Bonds.
SECTION 9.11. Execution in Several Counterparts. This Indenture may be
executed in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original; and all such counterparts, or as many of them as
the District and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 9.12. Governing Law. This Indenture shall be governed by and construed
in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the Central Contra Costa Sanitary District has caused
this Indenture to be signed in its name by the General Manager and attested by the
Secretary, and , 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.
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By
General Manager
Attest:
Secretary
as Trustee
By
Authorized Officer
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APPENDIX A
DEFINITIONS
"Additional Revenues" means, with respect to the issuance of any Parity
Obligations, any or all of the following amounts:
(i) An allowance for Net Revenues from any additions or improvements
to or extensions of the Wastewater System to be financed from the
proceeds of such Parity Obligations or from any other source but in
any case which, during all or any part of the most recent completed
Fiscal Year for which audited financial statements are available or for
any more recent 12-month period selected by the District, were not in
service, all in an amount equal to the estimated additional average
annual Net Revenues to be derived from such additions,
improvements and extensions during the first full Fiscal Year in which
each addition, improvement or extension is respectively to be in
operation, all as shown by a certificate of a District Representative.
(ii) An allowance for Net Revenues arising from any increase in the
charges made for service from the Wastewater System which has
become effective prior to the incurring of such Parity Obligations but
which, during all or any part of such Fiscal Year or such 12-month
period, was not in effect, in an amount equal to the total amount by
which the Net Revenues would have been increased if such increase
in charges had been in effect during the whole of such Fiscal Year or
such 12-month period, all as shown by a certificate of a District
Representative.
"Authority" means the Central Contra Costa Sanitary District Facilities Financing
Authority, a nonprofit public benefit corporation duly organized and existing under the laws
of the State of California, and any successor thereto.
"Bond Counsel" means (a) Jones Hall, A Professional Law Corporation, or(b) any
other attorney or firm of attorneys appointed by or acceptable to the District of nationally-
recognized experience in the issuance of obligations the interest on which is excludable
from gross income for federal income tax purposes under the Tax Code.
"Bond Law" means 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
of said Code, as in effect on the Closing Date or as thereafter amended in accordance
with its terms.
"Bond Year" means any 12-month period commencing on September 2 in a year
and ending on the next succeeding September 1, both dates inclusive; except that the first
Bond Year commences on the Closing Date and ends on September 1, 2019.
"Bonds" means collectively Series A Bonds and Series B Bonds.
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"Business Day" means a day (other than a Saturday or a Sunday) on which banks
are not required or authorized to remain closed in the state in which the Office of the
Trustee is located, and on which the Federal Reserve Bank system is not closed.
"Certificate of the District" means a certificate in writing signed by the President of
the Board of Directors, the General Manager, the Director of Finance &Administration, or
any other officer of the District duly authorized by the Board of Directors for that purpose.
"Closing Date" means , 2018, being the date of delivery of the Bonds
to the Original Purchaser.
"Concord Agreement" means that certain Agreement, dated September 10, 1974,
between the District and the City of Concord, as amended from time to time, including as
amended on November 16, 1976, on June 11, 1982, on June 6, 1985, on June 18, 19871
and on April 9, 2002.
"Continuing Disclosure Certificate" means the Continuing Disclosure Certificate
described in Section 5.10.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the District relating to the authorization, issuance, sale and delivery of the
Bonds and the refunding of the 2009 Certificates, including but not limited to printing
expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges
of the Trustee and its counsel, fees, charges and disbursements of attorneys, financial
advisor, placement agent, accounting firms, consultants and other professionals, and any
other cost, charge or fee in connection with the original issuance of the Bonds and the
refunding of the 2009 Certificates.
"Costs of Issuance Fund" means the fund by that name established and held by
the Trustee under Section 3.03.
"Debt Service Fund" means the fund by that name established and held by the
Trustee under Section 4.02(b)(i).
"Depository" means (a) initially, DTC, and (b) any other Securities Depository
acting as Depository under Section 2.04.
"Depository ystem Participant" means any participant in the Depository's book-
entry system.
"District" means the Central Contra Costa Sanitary District, a sanitary district duly
organized and existing under the Constitution and laws of the State of California, and any
successor thereto.
"District Representative" means the General Manager, Director of Finance and
Administration or Controller of the District, or any other person authorized by resolution of
the Board of Directors of the District to act on behalf of the District under or with respect
to this Indenture.
"DTC" means The Depository Trust Company, New York, New York, and its
successors and assigns.
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"Escrow Agreement" means the Escrow Agreement, dated as of September 1,
2018, between the District and the Escrow Bank, related to the 2009 Certificates.
"Escrow Bank" means U.S. Bank National Association, as escrow bank.
"Event of Default" means any of the events described in Section 8.01.
"Federal Securities" means: (a) non-callable direct obligations (other than an
obligation subject to variation in principal repayment) of the United States of America;
(b) obligations fully and unconditionally guaranteed as to timely payment of principal and
interest by the United States of America; (c) obligations fully and unconditionally
guaranteed as to timely payment of principal and interest by any agency or instrumentality
of the United States of America when such obligations are backed by the full faith and
credit of 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, or such other period as may be established by the District
as its official fiscal year period (written notice of which shall be given by the District to the
Trustee).
"Gross Revenues" means all gross income and revenue received by the District
from the ownership and operation of the Wastewater System, including, without limiting
the generality of the foregoing:
(a) all income, rents, rates, fees, capacity fees (connection fees),
charges or other moneys derived from the services, facilities and
commodities sold (including recycled water), furnished or supplied
through the facilities of the Wastewater System and payments under
the Concord Agreement,
(b) the earnings on and income derived from the investment of such
income, rents, rates, fees, charges or other moneys to the extent that
the use of such earnings and income is limited by or under applicable
law to the Wastewater System, and
(c) the proceeds derived by the District directly or indirectly from the sale,
lease or other disposition of a part of the Wastewater System as
permitted in this Indenture.
The term "Gross Revenues" does not include (i) Tax Revenues, (ii) customers'
deposits or any other deposits subject to refund until such deposits have become the
property of the District, (iii) the proceeds of any ad valorem property taxes levied for the
purpose of paying general obligation bonds of the District relating to the Wastewater
System, and (iv) the proceeds of any special assessments or special taxes levied upon
real property within any improvement district for the purpose of paying special assessment
bonds or special tax obligations of the District relating to the Wastewater System.
"Indenture" means this Indenture of Trust, as originally executed or as it may from
time to time be supplemented, modified or amended by any Supplemental Indenture under
the provisions hereof.
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"Independent Accountant" means any accountant or firm of such accountants
appointed and paid by the District, and who, or each of whom (a) is in fact independent
and not under domination of the District; (b) does not have any substantial interest, direct
or indirect, with the District; and (c) is not connected with the District as an officer or
employee of the District, but who may be regularly retained to make annual or other audits
of the books of or reports to the District.
"Interest Payment Date" means September 1 and March 1 in each year,
commencing March 1, 2019, and continuing so long as any Bonds remain Outstanding.
"Maximum Annual Debt Service" means with respect to the Bonds and any Parity
Obligations, as of the date of any calculation, the maximum sum obtained for the current
or any future Bond Year by totaling the following amounts for such Bond Year:
(a) the principal amount of the principal of and interest on the Bonds and
any Parity Obligations coming due and payable by their terms in such
Bond Year, including the principal amount required to be paid by
operation of mandatory sinking fund redemption in such Bond Year;
and
(b) the amount of interest which would be due during such Bond Year on
the aggregate principal amount of the Bonds and any Parity
Obligations which would be Outstanding in such Bond Year if the
Bonds and any Parity Obligations are retired as scheduled.
Notwithstanding the foregoing, with respect to any Parity Obligations
which then bear interest at a variable rate, such interest shall be
assumed to bear interest at the highest of: (i) the actual rate on the
date of calculation, or if such Parity Obligations are not yet
outstanding, the initial rate (if established and binding), (ii) if such
Parity Obligations have been outstanding for at least 12 months, the
average rate of the 12 months immediately preceding the date of
calculation, (iii)(A) if interest on such Parity Obligations is excludable
from gross income under the Tax Code, the most recently published
Bond Buyer 25 Bond Revenue Index (or comparable index if no
longer published) plus 50 basis points, or (B) if interest is not so
excludable, the interest rate on direct United States Treasury
obligations with comparable maturities plus fifty (50) basis points;
provided, however, that for purposes of any rate covenant measuring
actual debt service coverage during a certain period, variable rate
indebtedness shall be deemed to bear interest at the actual rate per
annum applicable during such period.
"Mood" means Moody's Investors Services, and its successors and assigns.
"Net Proceeds" means, when used with respect to any casualty insurance or
condemnation award, the proceeds from such insurance or condemnation award
remaining after payment of all expenses (including attorneys' fees) incurred in the
collection of such proceeds.
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"Net Revenues" means, for any period, an amount equal to all of the Gross
Revenues received during such period minus the amount required to pay all Operation
and Maintenance Costs coming payable during such period.
"Nominee" means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated under Section 2.04(a).
"Office" means, with respect to the Trustee, the corporate trust office of the Trustee
at the address set forth in Section 9.09, or at such other or additional offices as may be
specified by the Trustee in writing to the District; except that with respect to presentation
of Bonds for payment or for registration of transfer and exchange, such term means the
office or agency of the Trustee at which, at any particular time, its corporate trust agency
business is conducted.
"Operation and Maintenance Costs" means the reasonable and necessary costs
paid or incurred by the District for maintaining and operating the Wastewater System,
determined in accordance with generally accepted accounting principles, including but
not limited to (a) all reasonable expenses of management and repair and other expenses
necessary to maintain and preserve the Wastewater System in good repair and working
order, and (b) all administrative costs of the District that are charged directly or
apportioned to the operation of the Wastewater System, such as salaries and wages of
employees, employee benefits (including actuarial annual pension payment), overhead,
taxes (if any) and insurance. "Operating and Maintenance Costs" do not include (i)
administrative costs of the Bonds which the District is required to pay hereunder, (ii)
payments of debt service on bonds, notes or other obligations issued by the District with
respect to the Wastewater System, (iii) depreciation, replacement and obsolescence
charges or reserves therefor, and (iv) amortization of intangibles or other bookkeeping
entries of a similar nature, (including, without limitation, GASB year-end adjustments
attributable to pension and OPEB).
"Original Purchaser" means Piper Jaffray & Co., as the original purchaser of the
Bonds upon their delivery by the Trustee on the Closing Date.
"Outstanding",when used as of any particular time with reference to Bonds, means
all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee
under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered
to the Trustee for cancellation; (b) Bonds with respect to which all liability of the District
has been discharged in accordance with Section 9.03; (c) Bonds for the transfer or
exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee under this Indenture; and (d) Bonds which are
required to be disregarded and not deemed Outstanding under Section 9.05.
"Owner", when used with respect to any Bond, means the person in whose name
the ownership of such Bond is registered on the Registration Books.
"Parity Obligations" means bonds, notes, loan agreements, installment sale
agreements, leases or other obligations of the District payable from and secured by a
pledge of and lien on any of the Net Revenues and/or Tax Revenues issued or incurred
on a parity with the Bonds under Section 3.04 or 3.05.
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"Parity Obligation Documents" means, with respect to any Parity Obligation, the
agreement, indenture of trust, resolution or other instrument authorizing the issuance of
such Parity Obligation.
"Permitted Investments" means any of the following 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) Federal Securities;
(b) obligations of any federal agency which either (a) represent full faith
and credit of the United States of America, or (b) are rated "AA" or
better by S&P and "Aa" by Moody's;
(c) Bank deposit products, trust funds, trust accounts, certificates of
deposit (including those placed by a third party pursuant to an
agreement between the District and the Trustee), overnight bank
deposits, interest bearing deposits, interest bearing money market
accounts, U.S. dollar denominated deposit accounts, federal funds
and banker's acceptances with domestic commercial banks, which
may include the Trustee, its parent holding company, if any, and their
affiliates, which (i) have a rating on their short term certificates of
deposit on the date of purchase of"A" or better by S&P and Moody's,
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 or (ii) are fully insured by the Federal Deposit Insurance
Corporation;
(d) commercial paper which is rated at the time of purchase in the single
highest classification, "A" or better by S&P and Moody's, and which
matures not more than 270 calendar days after the date of purchase;
(e) investments in a money market fund, including those of an affiliate of
the Trustee, rated in the highest short-term rating category by S&P
and Moody's, including funds for which the Trustee, its parent holding
company, if any, or any affiliates or subsidiaries of the Trustee or such
holding company receives and retains a fee for services provided to
the fund, whether as a custodian, transfer agent, investment advisor
or otherwise;
(f) investment agreements with financial institutions whose long-term
general credit rating is "AA—" or better from S&P, by the terms of
which the Trustee may withdraw funds if such rating falls below "AA—
"• and
(g) the Local Agency Investment Fund of the State of California, created
under Section 16429.1 of the California Government Code, to the
extent the Trustee is authorized to register such investment in its
name.
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"Rate Stabilization Fund" means the fund by that name established and held by
the District under Section 4.03.
"Record Date" means, with respect to any Interest Payment Date, the 15th
calendar day of the month preceding such Interest Payment Date.
"Registration Books" means the books maintained by the Trustee under Section
2.07 for the registration and transfer of ownership of the Bonds.
"Request of the District" means a request in writing signed by the President of the
Board of Directors, the General Manager, the Director of Finance &Administration, or any
other officer of the District duly authorized by the Board of Directors for that purpose.
"Securities Depositories" means DTC; and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other addresses and/or such
other securities depositories as the District may designate in a Request of the District
delivered by the District to the Trustee.
"Series A Bonds" means the Central Contra Costa Sanitary District 2018
Wastewater Revenue Refunding Bonds, Series A issued and at any time Outstanding
hereunder.
"Series B Bonds" means the Central Contra Costa Sanitary District 2018
Wastewater Revenue Refunding Bonds, Series B (Federally Taxable) issued and at any
time Outstanding hereunder.
"S&P" means S&P Global Ratings, a division of Standard & Poor's Financial
Services LLC, and its successors and assigns.
"State Loans" means loans secured by a pledge of Tax Revenues and/or Net
Revenues of the Wastewater System and incurred by the District to finance improvements
to the Wastewater System pursuant to Section 3.05.
"Supplemental Indenture" means any indenture, agreement, resolution or other
instrument hereafter duly adopted or executed in accordance with Section 7.01.
"Tax Code" means the Internal Revenue Code of 1986 as in effect on the Closing
Date or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the Closing Date, together with applicable temporary and final
regulations promulgated, and applicable official public guidance published, under said
Code.
"Tax Revenues" means all ad valorem taxes allocable to the Wastewater System
which are levied upon taxable property in the District by the Board of Supervisors of Contra
Costa County, and which are allocated to the District under the provisions of Chapter 6 of
Part 0.5 of Division 1 of the Revenue and Taxation Code of the State of California,
including all payments, subventions and reimbursements, if any, to the District specifically
attributable to taxes lost by reason of tax exemptions and tax rate limitations; but excluding
any taxes levied for the sole purpose of providing for payment of principal and interest on
any voter-approved indebtedness incurred by the District, which taxes would not otherwise
be subject to levy but for the issuance of such indebtedness.
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"Trustee" means U.S. Bank National Association, as trustee hereunder, or any
successor thereto appointed as trustee under Article VI.
"2009 Certificates" means 2009A Certificates and the 2009B Certificates.
"2009A Certificates" means the $19,635,000 original principal amount of 2009
Wastewater Revenue Certificates of Participation, Series A (Federally Taxable — Build
America Bonds— Direct Payment).
"2009B Certificates" means the $34,490,000 original principal amount of 2009
Wastewater Revenue Certificates of Participation, Series B.
"2009 Installment Sale Agreement" means the Installment Sale Agreement, dated
as of November 1, 20091 by and between the District, as purchaser, and the Authority, as
seller.
"2009 Trust Agreement" means the Indenture of Trust, dated as of October 1,
20091 by and among the District, the Authority, and U.S. Bank National Association, as
trustee, pursuant to which the 2009 Certificates were issued.
"Wastewater System" means any and all facilities now existing or hereafter
acquired or constructed which are owned, controlled or operated by the District for the
collection, treatment, disposal or reuse of wastewater, including sewage treatment plants,
intercepting and collecting sewers, outfall sewers, force mains, pumping stations, ejector
stations, oxidation ponds, pipes, valves, machinery and all other appurtenances
necessary, useful or convenient for the collection, treatment, purification, reclamation or
disposal of sewage, and any necessary lands, rights of way and other real or personal
property useful in connection therewith.
"Wastewater System Funds" means the fund or funds established and held by the
District with respect to the Wastewater System, into which all or any part of the Tax
Revenues or the Gross Revenues are deposited.
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APPENDIX B
FORM OF BOND
No. R- $
CENTRAL CONTRA COSTA SANITARY DISTRICT
2018 WASTEWATER REVENUE REFUNDING BOND[, SERIES A] [SERIES B(FEDERALLY
TAXABLE]
INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP:
% September 1, , 2018
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
The Central Contra Costa Sanitary District, a sanitary district duly organized and
existing under the Constitution and laws of the State of California (the "District"), for value
received, hereby promises to pay (but only out of the Tax Revenues, Net Revenues and
other assets pledged therefor as hereinafter mentioned) to the Registered Owner stated
above, or registered assigns, on the Maturity Date stated above, the Principal Amount
stated above, in lawful money of the United States of America; and to pay interest thereon
in like lawful money from the Interest Payment Date next preceding the date of
authentication of this Bond (unless this Bond is authenticated as of a day during the period
commencing after the fifteenth day of the month preceding an Interest Payment Date and
ending on or before such Interest Payment Date, in which event it shall bear interest from
such Interest Payment Date, or unless this Bond is authenticated on or before February
151 2019, in which event it shall bear interest from the Issue Date stated above) until
payment of such principal sum shall be discharged as provided in the Indenture hereinafter
mentioned, at the Interest Rate per annum stated above, payable semiannually on each
September 1 and March 1, commencing March 1, 2019 (each, an "Interest Payment
Date").
The principal hereof is payable by check at the Office (as defined in the Indenture
referred to below) of U.S. Bank National Association in San Francisco, California (together
with any successor trustee under the Indenture, the "Trustee"). Interest hereon is payable
by check of the Trustee mailed on each Interest Payment Date to the Registered Owner
as of the 15th day of the month preceding each Interest Payment Date(except with respect
to payment of defaulted interest as provided in the Indenture hereinafter referred to) at the
address shown on the registration books maintained by the Trustee. Payment of interest
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will be made by wire transfer in immediately available funds to an account in the United
States of America to any Owner of Bonds in the aggregate principal amount of$1,000,000
or more who shall furnish written wire instructions to the Trustee before the 15th day of
the month preceding the applicable Interest Payment Date.
This Bond is one of a duly authorized issue of bonds of the District designated as
its "Central Contra Costa Sanitary District 2018 Wastewater Revenue Refunding
Bonds[Series A] [Series B (Federally Taxable)]" (the "Bonds"), in the aggregate principal
amount of $ authorized under 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
of said Code (the "Bond Law"), and issued under an Indenture of Trust, dated as of
September 1, 2018 (the "Indenture"), between the District and the Trustee.
Simultaneously with the issuance of the Bonds, the District is issuing its Central Contra
Costa Sanitary District 2018 Wastewater Revenue Refunding Bonds[Series A] [Series B
(Federally Taxable)]", in the aggregate principal amount of $ under the
Indenture.
The Bonds have been issued for the purpose of refinancing certain obligations of
the District previously incurred to finance capital improvements to its system for the
collection, treatment, disposal and reuse of wastewater (as defined in the Indenture, the
"Wastewater System").
Reference is hereby made to the Indenture (a copy of which is on file at said Office
of the Trustee) and all indentures supplemental thereto and to the Bond Law for a
description of the rights thereunder of the owners of the Bonds, of the nature and extent
of the security, of the rights, duties and immunities of the Trustee and of the rights and
obligations of the District thereunder. The Registered Owner of this Bond, by acceptance
hereof, assents and agrees to all the provisions of the Indenture.
The Bonds and the interest thereon are payable from Tax Revenues and Net
Revenues (as such terms are defined in the Indenture), and are secured by a pledge and
assignment of said Tax Revenues, Net Revenues and amounts held in certain funds and
accounts established under the Indenture, subject only to the provisions of the Indenture
permitting the application thereof for the purposes and on the terms and conditions set
forth in the Indenture. The District has the right under the Indenture to issue additional
obligations on a parity with the Bonds, subject to the specific conditions set forth in the
Indenture. The Bonds are special obligations of the District and are not a lien or charge
upon the funds or property of the District, except to the extent of the aforesaid pledge and
assignment.
[Series A Bonds: The Bonds are subject to redemption prior to their respective
stated maturity dates, at the option of the District, from any source of available funds, in
whole or in part, on any date on or after September 1, 20_, at a redemption price equal
to the principal amount to be redeemed, plus accrued interest to the date fixed for
redemption, without premium. ]
[Series B Bonds: The Bonds are not subject to redemption prior to their respective
stated maturity dates. ]
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[Series A Bonds: The Bonds maturing on September 1, 20 are subject to
mandatory sinking fund redemption in part, by lot, on September 1 of each year in
accordance with the schedule set forth below. The Bonds so called for mandatory sinking
fund redemption will be redeemed at the principal amount to be redeemed, plus accrued
but unpaid interest, without premium.
Redemption Date Sinking Fund
(September 1) Amount
20 $
20
20 (maturity)
The Bonds are subject to extraordinary redemption prior to their respective stated
maturities, as a whole or in part on any date, as determined by the District, from Net
Proceeds, upon the terms and conditions of, and as provided for in the Indenture, at a
redemption price equal to the principal amount of the Bonds to be redeemed, without
premium, plus accrued interest thereon to the date fixed for redemption.
Unless waived by any Owner of Bonds to be redeemed, notice of any redemption
of Bonds shall be given, at the expense of the District, by the Trustee by mailing a copy of
a redemption notice by first class mail at least 30 days and not more than 60 days prior to
the date fixed for redemption to the Owner of the Bond or Bonds to be redeemed at the
address shown on the Bond Registration Books; provided, that neither the failure to
receive such notice nor any immaterial defect in any notice shall affect the sufficiency of
the proceedings for the redemption of the Bonds.
If this Bond is called for redemption and payment is duly provided therefor as
specified in the Indenture, interest shall cease to accrue hereon from and after the date
fixed for redemption.
The Bonds are issuable as fully registered Bonds in denominations of$5,000 and
any integral multiple thereof. Subject to the limitations provided in the Indenture, Bonds
may be exchanged, at said Office of the Trustee, for a like aggregate principal amount of
Bonds of other authorized denominations of the same maturity.
This Bond is transferable by the Registered Owner hereof, in person or by his
attorney duly authorized in writing, at said office of the Trustee, but only in the manner,
subject to the limitations provided in the Indenture, and upon surrender and cancellation
of this Bond. Upon such transfer, a new Bond or Bonds, of authorized denomination or
denominations, of the same maturity and for the same aggregate principal amount, will be
issued to the transferee in exchange herefor. The District and the Trustee may treat the
Registered Owner hereof as the absolute owner hereof for all purposes, and the District
and the Trustee shall not be affected by any notice to the contrary.
The Indenture and the rights and obligations of the District and of the owners of
the Bonds and of the Trustee may be modified or amended from time to time and at any
time in the manner, to the extent, and upon the terms provided in the Indenture; provided
that no such modification or amendment shall (a) extend the maturity of or reduce the
interest rate on any Bond or otherwise alter or impair the obligation of the District to pay
the principal or interest at the time and place and at the rate and in the currency provided
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therein of any Bond without the express written consent of the owner of such Bond, (b)
reduce the percentage of 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, all as more fully set forth in the Indenture.
Unless this Bond is presented by an authorized representative of The Depository
Trust Company, a New York Corporation ("DTC"), to the Trustee for registration or
transfer, exchange or payment, and any Bond 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.
It is hereby certified and recited that any and all things, conditions and acts required
to exist, to have happened and to have been performed precedent to and in the issuance
of this Bond do exist, have happened and have been performed in due time, form and
manner as required by the Bond Law, and by the constitution and laws of the State of
California, and that the amount of this Bond, together with all other indebtedness of the
District, does not exceed any limit prescribed by the Bond Law and is not in excess of the
amount of Bonds permitted to be issued under the Indenture.
This Bond is not entitled to any benefit under the Indenture, or is not valid or
obligatory for any purpose, until the certificate of authentication hereon endorsed has been
signed by the Trustee.
IN WITNESS WHEREOF, Central Contra Costa Sanitary District has caused this
Bond to be executed in its name and on its behalf by the facsimile signature of the
President of the Board of Directors of the District and attested to by the facsimile signature
of the Secretary of the District, all as of the Issue Date stated above.
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By
President, Board of Directors
Attest:
Secretary
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
as Trustee
By
Authorized Signatory
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ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax
identifying number is , the within-mentioned Bond and hereby
irrevocably constitute(s) and appoint(s) attorney, to
transfer the same on the registration books of the Trustee with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be Note: The signature(s) on this Assignment
guaranteed by an eligible guarantor must correspond with the name(s) as written
institution. on the face of the within Bond in every
particular without alteration or enlargement or
any change whatsoever.
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Jones Hall, A Professional Law Corporation Draft of July 18, 2018
ESCROW DEPOSIT AND TRUST AGREEMENT
Relating to
$19,635,000
2009 Wastewater Revenue
Certificates of Participation, Series A
(Federally Taxable—Build America Bonds—Direct Payment)
and
$341490,000
2009 Wastewater Revenue
Certificates of Participation, Series B
This ESCROW DEPOSIT AND TRUST AGREEMENT (this "Agreement"), dated as of
September 1, 2018, is between CENTRAL CONTRA COSTA SANITARY DISTRICT, a sanitary
district duly organized and existing under the laws of the State of California (the "District") and
U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States of America, acting as escrow agent and as 2009 Trustee
(as hereinafter defined) for the 2009 Certificates described below (the "Escrow Agent").
BACKGROUND :
1. The District previously entered into an Installment Sale Agreement, dated as of
November 1, 2009 (the "2009 Installment Sale Agreement") with Central Contra Costa Sanitary
District Facilities Financing Authority (the "Authority"), pursuant to which the District agreed to
make certain installment payments for the purpose of financing certain improvements to the
wastewater system of the District, and in connection therewith U.S. Bank National Association,
as trustee (the "2009 Trustee") executed and delivered $19,635,000 2009 Wastewater Revenue
Certificates of Participation, Series A (Federally Taxable — Build America Bonds — Direct
Payment), of which $ will be refunded and $34,490,000 2009 Wastewater Revenue
Certificates of Participation, Series B, of which $ will be refunded (together, the
installment payments to be refunded, the "2009 Installment Payments" and the certificates of
participation to be refunded, the "2009 Certificates"), which were executed and delivered
pursuant to a Trust Agreement, dated as of November 1, 2009 (the "2009 Trust Agreement"),
among the District, the Authority and the 2009 Trustee.
2. In order to take advantage of prevailing bond market conditions, the District
desires to refinance and prepay the 2009 Installment Payments, which will, in turn, result in the
prepayment of the 2009 Certificates.
3. In order to refinance the 2009 Installment Payments, the District is issuing its
Central Contra Costa Sanitary District 2018 Wastewater Revenue Refunding Bonds, Series A
and Central Contra Costa Sanitary District 2018 Wastewater Revenue Refunding Bonds, Series
B (Federally Taxable) (together, the "2018 Bonds"), pursuant to an Indenture of Trust, dated as
of September 1, 2018 (the "2018 Agreement").
4. The District wishes to appoint the Escrow Agent for the purpose of establishing an
irrevocable escrow fund to be funded, invested, held and administered for the purpose of
prepaying the 2009 Installment Payments and a corresponding amount of the 2009 Certificates.
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AGREEMENT:
In consideration of the premises and the material covenants contained herein, the
District and the Escrow Agent hereby agree as follows:
SECTION 1. Appointment of Escrow Agent; Establishment of Escrow Fund. The
Authority and the District hereby appoint the Escrow Agent to act as escrow agent for purposes
of administering the funds required to prepay the 2009 Installment Payments and a
corresponding amount of the 2009 Certificates. The Escrow Agent is directed to establish an
escrow fund (the "Escrow Fund") to be held by the Escrow Agent in trust as an irrevocable
escrow securing the payments set forth below. All cash and securities in the Escrow Fund are
hereby irrevocably pledged as a special fund for the payment of the 2009 Installment Payments
and a corresponding amount of the 2009 Certificates.
SECTION 2. Deposit and Investment of Amounts in Escrow Fund. On September
2018 (the "Closing Date"), the District will cause to be transferred to the Escrow Agent for
deposit into the Escrow Fund the amount of $ in immediately available funds,
comprised of the following:
(i) $ received from the District derived from the proceeds of the 2018
Bonds; and
(ii) $ which amount shall be transferred by the 2009 Trustee to the
Escrow Agent from the Installment Payment Fund established under the 2009 Agreement and
the 2009 Trustee is hereby instructed to make such transfer.
On the Closing Date, the Escrow Agent shall invest $ of the amounts
deposited in the Escrow Fund in the federal securities listed on Exhibit A. The Escrow Agent
shall hold the remaining $ in cash, uninvested.
If the Escrow Agent learns that the Department of the Treasury or the Bureau of Fiscal
Service will not, for any reason, accept a subscription of state and local government series
securities ("SLGS") that is to be submitted pursuant to this Agreement, the Escrow Agent shall
promptly request alternative written investment instructions from the District with respect to
funds which were to be invested in SLGS. The Escrow Agent shall follow such instructions and,
upon the maturity of any such alternative investment, the Escrow Agent shall hold such funds
uninvested and without liability for interest until receipt of further written instructions from the
District. In the absence of investment instructions from the District, the Escrow Agent shall not
be responsible for the investment of such funds or interest thereon. The Escrow Agent may
conclusively rely upon the District's selection of an alternative investment as a determination of
the alternative investment's legality and suitability and shall not be liable for any losses related
to the alternative investments or for compliance with any yield restriction applicable thereto.
SECTION 3. Application of Amounts in Escrow Fund. The total amount of cash and
Federal Securities deposited in the Escrow Fund pursuant to Section 2 shall be applied by the
Escrow Agent for the sole purpose of prepaying the 2009 Installment Payments and a
corresponding amount of the 2009 Certificates, at the times and in the amounts set forth in the
schedule shown in Exhibit B attached hereto and by this reference incorporated herein. In
connection therewith, the Escrow Agent is hereby instructed to withdraw from the Escrow Fund
and transfer to the 2009 Trustee, $ , which is the amount required to prepay in full
the 2009 Installment Payments, and which amount will be used to pay the 2009 Installment
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Payments and which will in turn be sufficient to pay the principal of and interest on the 2009
Certificates in full on , 2018.
If at any time the Escrow Agent shall receive actual knowledge that the cash and
Federal Securities in the Escrow Fund will not be sufficient to make any payment required by
this Section 3, the Escrow Agent shall notify the Authority and the District of such fact and the
District shall immediately cure such deficiency from any source of legally available funds. The
Escrow Agent has no liability for any such insufficiency.
Following the payment and prepayment of the 2009 Installment Payments and a
corresponding amount of the 2009 Certificates as set forth above in this Section 3, the Escrow
Agent shall transfer any amounts remaining on deposit in the Escrow Fund to ,
as trustee for the 2018 Bonds, for deposit in the Debt Service Fund established under the 2018
Agreement, to be applied to pay interest next coming due and payable on the 2018 Bonds.
SECTION 4. Irrevocable Election to Prepay 2009 Installment Payments and a
Corresponding Amount of the 2009 Certificates. The District has irrevocably elected to pay and
prepay the 2009 Installment Payments, which will result in a redemption of the corresponding
amount of the 2009 Certificates. [[The District has previously given notice of the prepayment of
[[certain of]] the 2009 Installment Payments to the 2009 Trustee.]]
The Authority hereby directs the 2009 Trustee to notify the holders of the 2009
Certificates that the 2009 Certificates will be partially prepaid, in the amount set forth on Exhibit
B, on , 2018, which notice shall be substantially in the form attached hereto as
Exhibit C.
SECTION 5. Compensation to Escrow Agent. The District shall pay the Escrow Agent
full compensation for its services under this Agreement, including out-of-pocket costs such as
publication costs, prepayment expenses, legal fees and other costs and expenses relating
hereto and, in addition, all fees, costs and expenses relating to the purchase or withdrawal of
any securities after the date hereof. Under no circumstances shall amounts deposited in or
credited to the Escrow Fund be deemed to be available for said purposes. The Escrow Agent
has no lien upon or right of set off against the cash and securities at any time on deposit in the
Escrow Fund.
SECTION 6. Immunities and Liability of Escrow Agent. The Escrow Agent undertakes
to perform only such duties as are expressly set forth in this Agreement and no implied duties,
covenants or obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent shall not have any liability hereunder except to the extent of its negligence or
willful misconduct. In no event shall the Escrow Agent be liable for any special, indirect or
consequential damages. The Escrow Agent shall not be liable for any loss from any investment
made by it in accordance with the terms of this Agreement. The Escrow Agent may consult
with legal counsel of its own choice and the Escrow Agent shall not be liable for any action
taken or not taken by it in good faith in reliance upon the opinion or advice of such counsel.
The Escrow Agent shall not be liable for the recitals or representations contained in this
Agreement and shall not be responsible for the validity of this Agreement, the sufficiency of the
Escrow Fund or the moneys and securities to pay the principal, interest and prepayment
premium with respect to the 2009 Installment Payments and a corresponding amount of the
2009 Certificates.
Whenever in the administration of this Agreement the Escrow Agent deems it necessary
or desirable that a matter be proved or established prior to taking or not taking any action, such
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matter may be deemed to be conclusively proved and established by a certificate of an
authorized representative of the Authority or the District and shall be full protection for any
action taken or not taken by the Escrow Agent in good faith reliance thereon.
The Escrow Agent may conclusively rely as to the truth and accuracy of the statements
and correctness of any opinions or calculations provided to it in connection with this Agreement
and shall be protected in acting, or refraining from acting, upon any notice, instruction, request,
certificate, document, opinion or other writing furnished to the Escrow Agent in connection with
this Agreement and believed by the Escrow Agent to be signed by the proper party, and it need
not investigate any fact or matter stated therein.
None of the provisions of this Agreement shall require the Escrow Agent to expend or
risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of
any of its duties hereunder. The Escrow Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees appointed with due care.
The Escrow Agent may at any time resign by giving 30 days' written notice of
resignation to the Authority and the District. Upon receiving such notice of resignation, the
District shall promptly appoint a successor and, upon the acceptance by the successor of such
appointment, release the resigning Escrow Agent from its obligations hereunder by written
instrument, a copy of which instrument shall be delivered to the resigning Escrow Agent and the
successor. If no successor shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning Escrow Agent may
petition any court of competent jurisdiction for the appointment of a successor.
Any bank, corporation or association into which the Escrow Agent may be merged or
converted or with which it may be consolidated, or any bank, corporation or association
resulting from any merger, conversion or consolidation to which the Escrow Agent shall be a
party, or any bank, corporation or association succeeding to all or substantially all of the
corporate trust business of the Escrow Agent shall be the successor of the Escrow Agent
hereunder without the execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto except on the part of any of the parties hereto where an
instrument of transfer or assignment is required by law to effect such succession, anything
herein to the contrary notwithstanding.
The District shall indemnify, defend and hold harmless the Escrow Agent and its
officers, directors, employees, representatives and agents, from and against and reimburse the
Escrow Agent for any and all claims, obligations, liabilities, losses, damages, actions, suits,
judgments, reasonable costs and expenses (including reasonable attorneys' and agents' fees
and expenses) of whatever kind or nature regardless of their merit, demanded, asserted or
claimed against the Escrow Agent directly or indirectly relating to, or arising from, claims
against the Escrow Agent by reason of its participation in the transactions contemplated hereby
except to the extent caused by the Escrow Agent's negligence or willful misconduct. The
provisions of the foregoing sentence shall survive the termination of this Agreement or the
earlier resignation or removal of the Escrow Agent.
The Escrow Agent shall have the right to accept and act upon instructions, including
funds transfer instructions ("Instructions") given pursuant to this Agreement and delivered using
Electronic Means ("Electronic Means" means the following communications methods: e-mail,
facsimile transmission, secure electronic transmission containing applicable authorization
codes, passwords and/or authentication keys issued by the Escrow Agent, or another method
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or system specified by the Escrow Agent as available for use in connection with its services
hereunder); provided, however, that the District shall provide to the Escrow Agent an
incumbency certificate listing officers with the District to provide such Instructions ("Authorized
Officers") and containing specimen signatures of such Authorized Officers, which incumbency
certificate shall be amended by the District, whenever a person is to be added or deleted from
the listing. If the District elects to give the Escrow Agent Instructions using Electronic Means
and the Escrow Agent in its discretion elects to act upon such Instructions, the Escrow Agent's
understanding of such Instructions shall be deemed controlling. The District understands and
agrees that the Escrow Agent cannot determine the identity of the actual sender of such
Instructions and that the Escrow Agent shall conclusively presume that directions that purport to
have been sent by an Authorized Officer listed on the incumbency certificate provided to the
Escrow Agent have been sent by such Authorized Officer. The District shall be responsible for
ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent and that
the District 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 District. The Escrow Agent shall not be liable for any losses, costs or
expenses arising directly or indirectly from the Escrow Agent's reliance upon and compliance
with such Instructions notwithstanding such directions conflict or are inconsistent with a
subsequent written instruction. The District agrees: (i) to assume all risks arising out of the use
of Electronic Means to submit Instructions to the Escrow Agent, including without limitation the
risk of the Escrow Agent 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 Escrow Agent and that there may be
more secure methods of transmitting Instructions than the method(s) selected by the District;
(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 Escrow Agent immediately upon learning of any
compromise or unauthorized use of the security procedures.
The Escrow Agent shall furnish the District with periodic cash transaction statements
that include detail for all investment transactions effected by the Escrow Agent or brokers
selected by the District. Upon the District's election, such statements will be delivered via the
Escrow Agent's online service and upon electing such service, paper statements will be
provided only upon request. The District waives the right to receive brokerage confirmations of
security transactions effected by the Escrow Agent as they occur, to the extent permitted by
law. The District further understands that trade confirmations for securities transactions
effected by the Escrow Agent will be available upon request and at no additional cost and other
trade confirmations may be obtained from the applicable broker.
SECTION 7. Termination of Agreement. Upon the prepayment of the 2009 Installment
Payments and a corresponding amount of the 2009 Certificates, and the payment of all fees,
expense and charges of the Escrow Agent hereunder, this Agreement shall terminate and the
Escrow Agent shall be discharged from any further obligation or responsibility.
SECTION 8. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 9. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
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SECTION 10. Amendments. This Agreement may not be amended except in writing by
the parties hereto and with an opinion of nationally recognized bond counsel to the effect that
the amendment will not result in loss of the exemption from federal income taxes of interest on
any of the 2009 Certificates or the 2018 Bonds.
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IN WITNESS WHEREOF, the parties have caused the execution and delivery of this
Agreement by their duly authorized officers as of the date first set forth above.
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By:
Authorized Officer
U.S. BANK NATIONAL ASSOCIATION, as
Escrow Agent and as 2009 Trustee
By:
Authorized Officer
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EXHIBIT A
FEDERAL SECURITIES
Type of Purchase Maturity Par
Security Date Date First Int Pmt Date Amount Rate
A-1
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EXHIBIT B
ESCROW REQUIREMENTS
Identification of 2009 Certificates to be Prepaid
Via Optional Prepayment
Principal Prepayment Price
Maturity Amount Prepayment (% of Par Amount
(September 1) Prepaid Date Prepaid)
TOTAL
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EXHIBIT C
FORM OF NOTICE OF REDEMPTION
[To come, once list of refunded 2009 Certificates finalized.]
C-1
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PURCHASE CONTRACT
CENTRAL CONTRA COSTA SANITARY CENTRAL CONTRA COSTA SANITARY
DISTRICT DISTRICT
2018 WASTEWATER REVENUE REFUNDING 2018 WASTEWATER REVENUE REFUNDING
BONDS, SERIES A BONDS, SERIES B (FEDERALLY TAXABLE)
2018
Central Contra Costa Sanitary District
5019 Imhoff Place
Martinez, California 94553
Ladies and Gentlemen:
The undersigned, as underwriter (the "Underwriter"), offers to enter into this Purchase
Contract (the "Purchase Contract") with the Central Contra Costa Sanitary District (the
"District"), which, upon acceptance by the District will be binding upon the District and the
Underwriter. This offer is made subject to the District's acceptance hereof by execution of this
Purchase Contract and delivery to the Underwriter 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 District at any time prior to the acceptance hereof by the District. Any
terms used but not defined herein shall have the meaning set forth in the Indenture (defined
below).
The primary role of the Underwriter is to purchase the Bonds (defined herein), in an
arm's-length commercial transaction between the District and the Underwriter. The Underwriter
has financial and other interests that differ from those of the District. The District acknowledges
and agrees that: (i) the purchase and sale of the Bonds (as defined below) pursuant to this
Purchase Contract is an arm's length commercial transaction between the District and the
Underwriter in which the Underwriter is acting solely as a principal and not as an agent of the
District and the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to
the District; (ii) the Underwriter has not assumed any advisory or fiduciary responsibility to the
District with respect to the transaction contemplated by the Purchase Contract and the
discussions, undertakings or procedures leading thereto (irrespective of whether the Underwriter,
or any affiliate of the Underwriter have provided other services or is currently providing other
services to the District on other matters); (iii) the only obligations the Underwriter has to the
District with respect to the transaction contemplated by this Purchase Contract are expressly set
forth in this Purchase Contract; and (iv) the District has consulted the District's own financial
and/or municipal legal, accounting, tax and other advisors, as applicable, to the extent the
District has deemed appropriate. The District acknowledges that it has previously provided the
Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under
Rule G-17 of the Municipal Securities Rulemaking Board (the "MSRB").
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1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions, and in reliance upon the
representations, warranties and agreements set forth herein, the Underwriter hereby agrees to
purchase, and the District agrees to cause , as trustee (the "Trustee"), to authenticate and
deliver to the Underwriter all (but not less than all) of the (i) Central Contra Costa Sanitary
District 2018 Wastewater Revenue Refunding Bonds, Series A (the "2018A Bonds"), in the
aggregate principal amount of$ to be dated the date of Closing (as defined below) and
the (ii) Central Contra Costa Sanitary District 2018 Wastewater Revenue Refunding Bonds,
Series B (Federally Taxable) (the "2018B Bonds," and together with the 2018A Bonds, the
"Bonds"), in the aggregate principal amount of$ to be dated the date of Closing.
The Bonds will be issued pursuant to the Indenture of Trust, dated as of 1,
2018 (the "Indenture"), between the District and the Trustee. The Underwriter shall have the
obligation under this Purchase Contract to purchase all, but not less than all, of the aggregate
principal amount of Bonds. The Board of Directors of the District has adopted a resolution (the
"District Resolution") relating to the Bonds.
The purchase price for the 2018A Bonds shall be $ (the "2018A Purchase
Price") (the principal amount of the 2018A Bonds plus net original issue premium of$
less an underwriting discount of$ and the purchase price for the 2018B Bonds shall be
$ (the "2018B Purchase Price," and together with the 2018A Purchase Price, the
"Purchase Price")(the principal amount of the 2018B Bonds plus net original issue premium of
$ less an underwriting discount of $ . The Bonds shall be payable in the
principal amounts, shall bear interest at the rates and shall be subject to redemption as set forth in
Exhibit A hereto. The Purchase Price for the Bonds shall be payable by the Underwriter to the
District on the date of Closing.
The net proceeds of the Bonds will be used to (i) defease and refund all of the
District's outstanding obligations with respect to the $19,635,000 original principal amount of
2009 Wastewater Revenue Certificates of Participation, Series A (Federally Taxable — Build
America Bonds—Direct Payment) (the "2009A Certificates") and some or all of the $34,490,000
original principal amount of 2009 Wastewater Revenue Certificates of Participation, Series B
(the "2009B Certificates," and together with the 2009A Certificates, the "2009 Certificates"),
and (ii)pay costs of executing and delivering the Bonds.
The 2009 Certificates will be defeased and refunded in accordance with an
Escrow Deposit and Trust Agreement dated as of 1, 2018 (the "Escrow Agreement"),
between the District and U.S. Bank National Association, as escrow agent (the "Escrow Agent").
The Bonds shall be substantially in the form described in, shall be issued under
the provisions of, and shall be payable and subject to redemption as provided in, the Indenture,
all as described in the Official Statement relating to the Bonds dated the date hereof. The
proceeds of the Bonds will be used by the District for the purposes set forth in the hereinafter
mentioned Official Statement.
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The obligation of the District to pay the principal of and interest on Bonds is a
special obligation of the District, secured by a pledge of Gross Revenues and Tax Revenues and
payable solely from Net Revenues and Tax Revenues (as such terms are each defined in the
Indenture), and certain other amounts held under the Indenture. The principal of and interest on
the Bonds are not required to be paid from any other funds of the District, including any
proceeds of any taxes, and does not constitute a debt or pledge of the faith and credit of the
District or the State of California (the "State") or any political subdivision thereof in
contravention of any constitutional or statutory debt limitation or restriction.
[The scheduled payment of principal of and interest on the Bonds when due will
be guaranteed under the municipal bond insurance policy (the "Policy") to be issued
concurrently with the delivery of the Bonds by (the "Insurer"). The Insurer
will also issue a municipal bond debt service reserve insurance policy for deposit in the Reserve
Fund (the "Reserve Policy") concurrently with the delivery of the Bonds.]
(b) The District hereby ratifies the use by the Underwriter of the Preliminary
Official Statement, dated , 2018 relating to the Bonds, (together with the cover page
and all appendices thereto, the "Preliminary Official Statement"), and authorizes the Underwriter
to use and distribute the Preliminary Official Statement, the Official Statement (as defined
below), the Indenture, the District Resolution, the Continuing Disclosure Certificate (as defined
below), the Escrow Agreement and this Purchase Contract and all information contained therein,
and all other documents, certificates and statements furnished by the District to the Underwriter
in connection with the offer and sale of the Bonds by the Underwriter.
(c) The Underwriter agrees to offer all the Bonds to the public initially at the
prices (or yields) set forth on Exhibit A hereto and on the cover page of the Official Statement of
the District pertaining to the Bonds, dated , 2018 (such Official Statement, together with
all appendices thereto, and with such changes therein and supplements thereto an as are
consented to in writing by the Underwriter, the "Official Statement"). Subsequent to the initial
public offering of the Bonds, the Underwriter reserves the right to change the public offering
prices (or yields) as it deems necessary in connection with the marketing of the Bonds. The
Bonds may be offered and sold to certain dealers at prices lower than such initial public offering
prices. "Public Offering" shall include an offering to a representative number of institutional
investors or registered investment companies, regardless of the number of such investors to
which the Bonds are sold. The Underwriter agrees that prior to the time the final Official
Statement relating to the Bonds is available, the Underwriter will send to any potential purchaser
of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary
Official Statement. Such Preliminary Official Statement shall be sent by first class mail or
electronic distribution (or other equally prompt means) not later than the first business day
following the date upon which each such request is received.
(d) The District shall also deliver a sufficient number of copies of the Official
Statement to enable the Underwriter to distribute a single copy of each Official Statement to any
potential customer of the Underwriter requesting an Official Statement during the time period
beginning when the Official Statement becomes available and ending on the last day of the
Underwriting Period as determined in accordance with 20) below. The Official Statement shall
be provided for distribution, at the expense of the District, in such quantity as may be requested
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by the Underwriter no later than the earlier of(i) seven (7) business days after the date of this
Purchase Contract or (ii) one (1) business day prior to the Closing Date, in order to permit the
Underwriter to comply with Rule 15c2-12 of the Securities and Exchange Commission (the
"Rule"), and the applicable rules of the MSRB, with respect to distribution of the Official
Statement. The District shall prepare the Official Statement, including any amendments thereto,
in word-searchable PDF format as described in the MSRB's Rule G-32 and shall provide the
electronic copy of the word-searchable PDF format of the Official Statement to the Underwriter.
The District further agrees to provide the Underwriter with the advance refunding documents (as
defined in MSRB Rule G-32) in a word-searchable PDF format as described in the MSRB's Rule
G-32 and shall provide such electronic copy of the word-searchable PDF format of the advance
refunding documents to the Underwriter no later than four (4) business days after the Closing
Date to enable the Underwriter to comply with MSRB Rule G-32. The Underwriter shall inform
the District in writing of the date which is twenty-five (25) days following the Closing Date (as
hereinafter defined), and covenants to file the Official Statement with the MSRB on a timely
basis.
(e) At 8:30 a.m., Pacific Time, on , 2018, or at such other time or
business date as shall be agreed upon by the Underwriter and the District (such time and date
being herein referred to as the "Closing Date"), the District will deliver to the Underwriter:
(i) the Bonds, in book-entry form, through the facilities of the
Depository Trust Company or its agent (all Bonds having had the CUSIP numbers
assigned to them thereon), duly executed by an authorized officer of the District
as provided in the Indenture; and
(ii) the other documents herein mentioned at the offices of Jones Hall,
A Professional Law Corporation, San Francisco, California ("Bond Counsel") or
another place to be mutually agreed to by the District and the Underwriter and the
Underwriter will accept such delivery and pay the purchase price of the Bonds as
set forth in paragraph (a) of this section in immediately available funds (such
delivery and payment being herein referred to as the "Closing").
Upon initial issuance, the ownership of such Bonds shall be registered in the registration
books kept by the Trustee in the name of Cede & Co., as the nominee of The Depository Trust
Company.
(f) The Underwriter represents to and agrees with the District that, as of the
date hereof and as of the Closing Date:
(i) The Underwriter is duly authorized to execute this Purchase
Contract and to take any action under this Purchase Contract required to be taken
by it;
(ii) The Underwriter is in compliance with MSRB Rule G-37 with
respect to the District, and is not prohibited thereby from acting as the underwriter
with respect to securities of the District;
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(iii) The Underwriter has, and has had, no financial advisory
relationship, as that term is defined in California Government Code Section 53590
(c) or MSRB Rule G-32, with the District with respect to the Bonds, and no
investment firm controlling, controlled by or under common control with the
Underwriter has or has had any such financial advisory relationship; and
(iv) The Underwriter has reasonably determined that the District's
undertaking to provide continuing disclosure with respect to the Bonds pursuant
to the Continuing Disclosure Certificate is sufficient to effect compliance with the
Rule.
2. Representations, Warranties and Agreements of the District. The District
hereby represents and warrants to and agrees with the Underwriter that:
(a) It is duly organized and validly existing sanitary district pursuant to the
laws of the State of California;
(b) The Board of Directors of the District has duly and validly adopted the
District Resolution, entered into this Purchase Contract, the Indenture, the Escrow
Agreement, and the Continuing Disclosure Certificate, dated , 2018, as
required by the Rule, and substantially in the form attached as an appendix to the Official
Statement (the "Continuing Disclosure Certificate") (such resolutions and agreements
being collectively referred to as the "District Documents") and has duly authorized and
approved the delivery and use of the Preliminary Official Statement, the execution,
delivery and use of the Official Statement, the execution and delivery of the other District
Documents, the Bonds and the performance by the District of its obligations contained
therein, and the taking of any and all action on its part as may be necessary to carry out,
give effect to and consummate the transactions on the part of the District contemplated by
each of said documents;
(c) At the date hereof, the District has the full legal right, power and authority
(i) to execute, deliver and perform its obligations under this Purchase Contract and the
other District Documents and to carry out all other transactions on its part contemplated
hereby and under the Indenture, (ii) to sell and deliver the Bonds to the Underwriter
pursuant to this Purchase Contract and the Indenture as provided herein, and (iii) to carry
out, give effect to and consummate the transactions on its part contemplated by the
District Documents;
(d) The District is in compliance with the District Resolution and this
Purchase Contract, and at the Closing Date will be in compliance in all material respects
with its obligations under the District Documents;
(e) The District, to the best of its knowledge, is not in breach of or in default
under any applicable law or administrative rule or regulation of the State or the United
States of America, or of any department, division, agency or instrumentality of either
thereof, or under any applicable court or administrative decree or order, or under any loan
agreement, note, resolution, indenture, contract, agreement or other instrument to which
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the District is a party (including but not limited to any obligations payable from Net
Revenues and Tax Revenues on a parity with the Bonds and which are secured by a
pledge of and lien on Gross Revenues and Tax Revenues as described in the Indenture
(the "Parity Obligations")), or is otherwise subject or bound, which breach or default
could have a material adverse effect on the ability of the District to perform its
obligations under the Bonds or the District Documents;
(f) The adoption by the Board of Directors of the District of the District
Resolution, the delivery of the Bonds, and the execution and delivery by the District of
the District Documents, any other applicable agreements and the other instruments
contemplated by any of such documents to which the District is a party, and compliance
with the provisions of each thereof, will not, to the best of the knowledge of the District,
conflict with or constitute a breach of or default under any applicable law or
administrative rule or regulation of the State or the United States of America, or of any
department, division, agency or instrumentality of either thereof, or under any applicable
court or administrative decree or order, or under any loan agreement, note, resolution,
indenture, contract, agreement or other instrument to which the District is a party or is
otherwise subject or bound, including but not limited to the Parity Obligations;
(g) All approvals, consents, authorizations, elections and orders of or filings
or registrations with any governmental authority, board, agency or commission having
jurisdiction which would constitute a condition precedent to the performance of, or the
absence of which would materially adversely affect the District's ability to perform, its
obligations hereunder, or under the other District Documents or the Bonds, have been
obtained and are in full force and effect; provided that no representation is made as to any
necessary"blue sky" filings;
(h) The Bonds, the District Documents and other applicable documents
conform as to form and tenor to the descriptions thereof contained in the Official
Statement and when authenticated by the Trustee in accordance with the Indenture and
delivered to and paid for by the Underwriter on the Closing as provided herein the Bonds
will be validly executed, delivered and entitled to all the benefits of the Indenture, subject
to any applicable bankruptcy, reorganization, insolvency, moratorium or other law
affecting the enforcement of creditors' rights generally;
(i) The District has deemed the Preliminary Official Statement to be final as
of the date of the Preliminary Official Statement, as required by the Rule. As of the date
hereof and at all times up to the Closing Date, the information contained in the Official
Statement is true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading;
0) If between the date of this Purchase Contract and until the earlier of (i)
ninety (90) days after the end of the "underwriting period" (as defined in Rule 15c2-12)
(the "Underwriting Period"), or (ii) twenty-five (25) days following the end of the
Underwriting Period if the Official Statement is available to any person from the MSRB
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as contemplated by Rule 15c2-12(b)(4) an event occurs, of which the District has
knowledge, which might or would cause the information relating to the District or the
District's functions, duties and responsibilities contained in the Official Statement, as
then supplemented or amended, to contain an untrue statement of a material fact or to
omit to state a material fact required to be stated therein or necessary to make such
statements, in the light of the circumstances under which they were made, not misleading,
the District will notify the Underwriter, and if, in the opinion of the Underwriter and the
District, such event requires the preparation and publication of a supplement or
amendment to the Official Statement, the District will cooperate with the Underwriter in
the preparation of an amendment or supplement to the Official Statement in a form and in
a manner approved by the Underwriter, provided all expenses thereby incurred for such
preparation will be paid for by the District;
(k) No action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, regulatory agency, public board or body is pending or to the
knowledge of the officers of the District executing this Purchase Contract, is threatened
in any way, affecting the existence of the District or the titles of the District's officers to
their respective offices or seeking to restrain or to enjoin the issuance, sale or delivery of
the Bonds, the application of the proceeds thereof in accordance with the Indenture, or
the collection or application of the Gross Revenues and Tax Revenues or the proceeds
thereof pledged or to be pledged to pay the principal of and interest on the Bonds, or in
any way contesting or affecting the validity or enforceability of the Bonds, the District
Documents, or any action of the District contemplated by any of said documents relating
to the Bonds or the Gross Revenues and Tax Revenues, or in any way contesting the
completeness or accuracy of the Preliminary Official Statement or the Official Statement
or the powers of the District or its authority with respect to the Bonds, the District
Documents, or any action of the District contemplated by any of said documents, or
which would adversely affect the exemption of interest paid on the 2018A Bonds from
gross income for federal income tax purposes or from California personal income
taxation, nor to the knowledge of the officer of the District executing this Purchase
Contract is there any basis therefor;
(1) The District will furnish such information, execute such instruments and
take such other action in cooperation with the Underwriter as the Underwriter may
reasonably request in order for the Underwriter 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; provided, however,
the District shall not be required to register as a dealer or a broker of securities or consent
to service of process or register as a foreign corporation in any such state or jurisdiction;
(in) Any certificate signed by any official of the District authorized to do so
and delivered by the District to the Underwriter shall be deemed a representation and
warranty by the District to the Underwriter as to the statements made therein;
(n) The District is not in default, nor has it been in default at any time, as to
the payment of principal or interest with respect to an obligation of the District (including
but not limited to the Parity Obligations) or on an obligation guaranteed by the District as
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guarantor or successor of a guarantor, which default has or could have a material adverse
effect on the ability of the District to perform its obligations under the Bonds or the
District Documents;
(o) The District is not presently and as a result of the execution of the
Indenture and the sale of the Bonds will not be in violation of any debt limitation,
appropriation limitation or any other provision of the California Constitution or statutes
or any additional debt or similar provision of any bond, note, contract or other evidence
of indebtedness to which the District is a party or to which the District is bound
(including but not limited to the Parity Obligations);
(p) The District will not knowingly take or omit to take any action, which
action or omission will in any way cause the proceeds from the sale of the Bonds to be
applied in a manner other than as provided in the Indenture; and
(q) Except as disclosed in the Official Statement, the District has not, in the
last five years, failed to comply in any material respect in its obligations under any
continuing disclosure undertaking entered into pursuant to Rule 15c2-12. The District
will undertake, pursuant to the Continuing Disclosure Certificate to provide annual
reports and notices of certain events in accordance with the requirements of Rule 15c2-
12.
3. Conditions to the Obligations of the Underwriter.
(a) The Underwriter has entered into this Purchase Contract in reliance upon
the representation and warranties, and agreements of the District herein and in the
documents and instruments to be delivered at the Closing and upon the performance by
the District 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 and pay for the Bonds shall be subject to the performance by the District of its
obligations to be performed hereunder and under such documents and instruments
referenced herein to be delivered at or prior to the Closing, and shall also be subject to the
following conditions (the "Closing Conditions"):
(b) The Underwriter shall have received at the Closing counterpart originals,
or certified copies, of the following documents, in each case satisfactory in form and
substance to the Underwriter:
(i) the Official Statement, executed on behalf of the District by the
General Manager or such other official as may be authorized by the District
Resolution;
(ii) the District Resolution, together with the certificate of the
Secretary of the District dated as of the Closing Date, to the effect that the District
Resolution is a true, correct and complete copy of the one duly adopted by the
District and that it has not been amended, modified or rescinded (except as may
have been agreed to by the Underwriter) and is in full force and effect as of the
Closing Date;
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(iii) a copy of each District Document, executed by the parties thereto;
(iv) an approving opinion, dated the date of Closing and addressed to
the District, of Bond Counsel, in form and substance as attached as "APPENDIX
E" to the Official Statement, together with a reliance letter addressed to the
Underwriter;
(v) the opinion, dated the date of Closing, and addressed to the
Underwriter, of General Counsel to the District, substantially in the form attached
hereto as Exhibit B;
(vi) the opinion, dated the date of Closing and addressed to the
Underwriter, of counsel to the Trustee, in form and substance satisfactory to the
Underwriter and Bond Counsel;
(vii) a certificate of the Trustee, dated the date of Closing to the effect
that:
(a) the Trustee is duly organized and validly existing as a
national banking association in good standing under the laws of the United
States, having the full power and authority to enter into and perform its
duties under the Indenture and to authenticate and deliver the Bonds to the
Underwriter pursuant to the Indenture;
(b) the Trustee is duly authorized to enter into the Indenture,
and when the Indenture is duly executed and delivered by the respective
parties thereto, to authenticate and deliver the Bonds to the Underwriter
pursuant to the Indenture;
(c) to the best of the knowledge of the Trustee, no consent,
approval, authorization or other action by any governmental or regulatory
agency having jurisdiction over the Trustee that has not been obtained is
or will be required for the execution and delivery of the Bonds or the
performance by the Trustee of its duties under the Indenture, except as
such may be required under the state securities or "blue sky" laws in
connection with the distribution of the Bonds by the Underwriter;
(d) to the best of the knowledge of the Trustee, the execution
and delivery by the Trustee of the Indenture and the authentication and
delivery of the Bonds, and compliance with the terms thereof will not
conflict with, or result in a violation or breach of, or constitute a default
under, any loan agreement, indenture, bond, note, resolution or any other
agreement or instrument to which the Trustee is a party or by which it is
bound, or any law or any 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), or (except with respect to the
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lien of the Indenture) result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature whatsoever
upon any of the property or assets of the Trustee;
(e) to the best of 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 upon or threatened against or affecting the existence of the Trustee
or seeking to prohibit, restrain or enjoin the authentication and delivery of
the Bonds, or the pledge thereof, or in any way contesting or affecting the
validity or enforceability of the Bonds, the Indenture or contesting the
powers of the Trustee to enter into and perform its obligation under any of
the foregoing, wherein an unfavorable decision, ruling or finding would
adversely affect the transactions contemplated hereby, or which, in any
way, would adversely affect the validity of the Bonds, the Indenture or any
agreement or instrument to which the Trustee is a party and which is used
or contemplated for use in the consummation of the transactions
contemplated hereby; and
(f) subject to the provisions of the Indenture, the Trustee will
apply the proceeds from the Bonds to the purposes specified in the
Indenture;
(viii) evidence satisfactory to the Underwriter that the Bonds shall have
received the ratings as set forth in the Official Statement and that any such ratings
have not been revoked or downgraded;
(ix) a copy of the Report of Proposed Debt Issuance and Report of
Final Sale required to be delivered to the California Debt and Investment
Advisory Commission pursuant to Section 53583 of the Government Code and
Section 8855(g) of the Government Code;
(x) a defeasance opinion or opinions of Bond Counsel, addressed to
the District, Escrow Agent and the Underwriter dated the date of Closing, with
respect to the 2009 Certificates;
(xi) an opinion of counsel to the Underwriter, dated the date of the
Closing in the form satisfactory to the Underwriter;
(xii) an opinion, dated the date of the Closing and addressed to the
Underwriters, of counsel to the Escrow Agent, in such form as may be acceptable
to the Underwriter and Bond Counsel;
(xiii) a supplemental opinion, dated the Closing Date and addressed to
the Underwriter, of Bond Counsel, to the collective effect that:
(a) The statements contained in the Official Statement under
the captions "INTRODUCTION," "THE BONDS," "'SECURITY FOR
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THE BONDS and "TAX MATTERS" and in APPENDIX A —
"SUMMARY OF THE INDENTURE," insofar as such statements purport
to summarize certain provisions of the Bonds and certain provisions of the
Indenture and the opinion of such counsel with respect to certain federal
and state income tax matters related to the Bonds, are accurate in all
material respects;
(b) The Bonds are exempt from registration pursuant to the
Securities Act of 1933, as amended, and the Indenture is exempt from
qualification pursuant to the Trust Indenture Act of 1939, as amended; and
(c) The Purchase Contract has been duly authorized, executed
and delivered by the District and (assuming due authorization, execution
and delivery by the Underwriter) constitutes a valid and binding
agreement of the District enforceable according to its terms, subject to any
applicable bankruptcy, reorganization, insolvency, moratorium or other
law affecting the enforcement of creditors' rights generally.
(xiv) a negative assurances letter of Jones Hall, A Professional Law
Corporation, San Francisco, California, as disclosure counsel, dated as of the
Closing Date and addressed to the District and Underwriter, in the form attached
hereto as Exhibit C.
(xv) a certificate, dated the Closing Date and signed by an authorized
officer of the District, certifying that (i) the representations and warranties of the
District contained herein are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date; (ii) to the
best of his or her knowledge, no event has occurred since the date of the Official
Statement affecting the District which should be disclosed in the Official
Statement for the purposes for which it is to be used in order to make the
statements and information contained in the Official Statement not misleading in
any material respect; (iii) the District has complied with all the agreements and
has satisfied all the conditions on its part to be performed or satisfied under this
Purchase Contract and the Indenture at and prior to the Closing; and (iv)
certifying that the District has authorized and consented to the inclusion in the
Official Statement of the District's financial report and accountant's opinion for
the Calendar Year ending June 30, 2017, and no further consent of any party is
required for such inclusion;
(xvi) a nonarbitrage and tax certificate of the District in form
satisfactory to Bond Counsel;
(xvii) a verification report of , certified public accountants as
described in the Official Statement;
(xviii) a certificate of the Escrow Agent, dated the date of Closing to the
effect that:
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(a) The Escrow Agent is duly organized and existing as a
national banking association in good standing under the laws of the United
States, having the full power and authority to accept and perform its duties
under the Escrow Agreement;
(b) Subject to the provisions of the Escrow Agreement, the
Escrow Agent will apply the funds held thereunder to the purposes
specified in the Escrow Agreement; and
(c) The Escrow Agent has duly authorized and executed the
Escrow Agreement.
(xix) [the Policy, duly executed by the Insurer];
(xx) [the Reserve Policy, duly executed by the Insurer];
(xxi) [an opinion of counsel to the Insurer, dated the Closing Date,
addressed to the Authority and the Underwriter, in form and substance
satisfactory to the Underwriter and Bond Counsel];
(xxii) [a certificate or certificates of the Insurer, dated the Closing Date,
as to the accuracy of the information relating to the Insurer, the Policy and the
Reserve Policy included in the Official Statement and such other matters
reasonably requested by the Underwriter and Bond Counsel]; and
(xxiii) such additional legal opinions, certificates, instruments and other
documents as the Underwriter may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the Closing Date, of the statements and
information contained in the Official Statement, of the District's representations
and warranties contained herein and the due performance or satisfaction by the
District at or prior to the Closing Date of all agreements then to be performed and
all conditions then to be satisfied by the District in connection with the
transactions contemplated on its part hereby and by the Indenture and the Official
Statement.
If any of the conditions to the obligations of the Underwriter contained in this section or
elsewhere in this Purchase Contract shall not have been satisfied when and as required herein, all
obligations of the Underwriter hereunder may be terminated by the Underwriter at, or at any time
prior to, the Closing Date by written notice to the District.
(c) Termination.
The Underwriter may terminate its obligation to purchase the Bonds at any time before
the Closing date if the market price or marketability of the Bonds or the ability of the
Underwriter to enforce contracts for the sale of the Bonds shall be materially adversely affected
in the reasonable judgment of the Underwriter by the occurrence of any of the following:
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(i) Legislation shall be enacted by or introduced in the Congress of
the United States or recommended to the Congress for passage by the President of
the United States, or the Treasury Department of the United States or the Internal
Revenue Service or favorably reported for passage to either House of the
Congress by any committee of such House to which such legislation has been
referred for consideration, a decision by a court of the United States or of the
State or the United States Tax Court shall be rendered, or an order, ruling,
regulation (final, temporary or proposed), press release, statement or other form of
notice by or on behalf of the Treasury Department of the United States, the
Internal Revenue Service or other governmental agency shall be made or
proposed, the effect of any or all of which would be to alter, directly or indirectly,
federal income taxation upon interest received on obligations of the general
character of the 2018A Bonds, or the interest on the 2018A Bonds as described in
the Official Statement, or other action or events shall have transpired which may
have the purpose or effect, directly or indirectly, of changing the federal income
tax consequences of any of the transactions contemplated herein; or
(ii) Legislation introduced in or enacted (or resolution passed) by the
Congress or an order, decree, or injunction issued by any court of competent
jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press
release or other form of notice issued or made by or on behalf of the Securities
and Exchange Commission, or any other governmental agency having jurisdiction
of the subject matter, to the effect that obligations of the general character of the
Bonds are not exempt from registration under or other requirements of the
Securities Act of 1933, as amended, or that the Indenture is not exempt from
qualification under or other requirements of the Trust Indenture Act of 1939, as
amend, or that the issuance, offering, or sale of obligations of the general
character of the Bonds, as contemplated hereby or by the Official Statement or
otherwise, is or would be in violation of the federal securities law as amended and
then in effect; or
(iii) A general suspension of trading in securities on the New York
Stock Exchange or any other national securities exchange, the establishment of
minimum or maximum prices on any such national securities exchange, the
establishment of material restrictions (not in force as of the date hereof) upon
trading securities generally by any governmental authority or any national
securities exchange, or any material increase of restrictions now in force
(including, with respect to the extension of credit by, or the charge to the net
capital requirements of, the Underwriter); or
(iv) A general banking moratorium shall have been established by
federal,New York or California authorities; or
(v) Establishment of any new restrictions in securities materially
affecting the free market for securities of the same nature as the Bonds (including
the imposition of any limitations on interest rates) or the charge to the net capital
requirements of the Underwriter established by the New York Stock Exchange,
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the Securities and Exchange Commission, any other Federal or state agency or the
Congress of the United States, or by Executive Order; or
(vi) Any amendment to the federal or California Constitution or action
by any federal or California court, legislative body, regulatory body or other
authority materially adversely affecting the tax status of the District, its property,
income or securities (or interest thereon), or the ability of the District to issue the
Bonds and pledge the Net Revenues and Tax Revenues as contemplated by the
Indenture and the Official Statement; or
(vii) There shall have occurred any (1) new material outbreak of
hostilities (including, without limitation, an act of terrorism) or (2) new material
other national or international calamity or crisis, or any material adverse change
in the financial, political or economic conditions affecting the United States,
including, but not limited to, an escalation of hostilities that existed prior to the
date hereto; or
(viii) Any rating of the Bonds by a national rating agency shall have
been withdrawn or downgraded or placed on negative outlook or negative watch;
or
(ix) [Any rating of the Bonds or other obligations of the Insurer by a
national rating agency shall have been withdrawn or downgraded or placed on
negative outlook or negative watch]; or
(x) A material disruption in securities settlement, payment or
clearance services affecting the Bonds shall have occurred; or
(xi) Any event occurring, or information becoming known which, in
the reasonable judgment of the Underwriter, makes untrue in any material respect
any statement or information contained in the Preliminary Official Statement, as
of its date or the Official Statement, or results in the Preliminary Official
Statement, as of its date, or the Official Statement containing any untrue statement
of a material fact or omitting to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading in any material aspect.
4. Conditions to Obligations of the District. The performance by the District of its
obligations is conditioned upon (i) the performance by the Underwriter of its obligations
hereunder; and (ii) receipt by the District and the Underwriter of opinions and certificates being
delivered at the Closing by persons and entities other than the District.
5. Establishment of Issue Price.
A. The Underwriter agrees to assist the District in establishing the issue price
of the 2018A Bonds and shall execute and deliver to the District at Closing an "issue price" or
similar certificate, together with the supporting pricing wires or equivalent communications,
substantially in the form attached hereto as Exhibit D, with such modifications as may be
14
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Page 87 of 183
appropriate or necessary, in the reasonable judgment of the Underwriter, the District 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 2018A Bonds.
B. Except as otherwise set forth in Exhibit A attached hereto, the District will
treat the first price at which 10% of each maturity of the 2018A Bonds (the "10% test") is sold to
the public as the issue price of that maturity. At or promptly after the execution of this Purchase
Contract, the Underwriter shall report to the District the price or prices at which it has sold to the
public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any
maturity of the 2018A Bonds, the Underwriter agrees to promptly report to the District the prices
at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall
continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold
all Bonds of that maturity or (ii) the 10% test has been satisfied as to the 2018A Bonds of that
maturity, provided that, the Underwriter's reporting obligation after the Closing Date may be at
reasonable periodic intervals or otherwise upon request of the District or Bond Counsel. For
purposes of this Section, if Bonds mature on the same date but have different interest rates, each
separate CUSIP number within that maturity will be treated as a separate maturity of the 2018A
Bonds.
C. The Underwriter confirms that it has offered the 2018A Bonds to the
public on or before the date of this Purchase Contract at the offering price or prices (the "initial
offering price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto,
except as otherwise set forth therein. Exhibit A also sets forth, as of the date of this Purchase
Contract, the maturities, if any, of the 2018A Bonds for which the Underwriter represents that (i)
the 10% test has been satisfied (assuming orders are confirmed by the close of the business day
immediately following the date of this Purchase Contract) and (ii) the 10% test has not been
satisfied and for which the District and the Underwriter agree that the restrictions set forth in the
next sentence shall apply, which will allow the District 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 2018A Bonds, the Underwriter will neither offer nor sell unsold Bonds of that
maturity to any person at a price that is higher than the initial offering price to the public during
the period starting on the sale date and ending on the earlier of the following:
a. the close of the fifth (5th) business day after the sale date; or
b. the date on which the Underwriter has sold at least 10% of that
maturity of the 2018A Bonds to the public at a price that is no higher than the initial
offering price to the public.
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The Underwriter will advise the District promptly after the close of the fifth (5th)
business day after the sale date whether it has sold 10% of that maturity of the 2018A Bonds to
the public at a price that is no higher than the initial offering price to the public.
D. The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to
the initial sale of the 2018A Bonds to the public, together with the related pricing wires, contains
or will contain language obligating each dealer who is a member of the selling group and each
broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each
maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of
that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test
has been satisfied as to the 2018A Bonds of that maturity, provided that, the reporting obligation
after the Closing Date may be reasonable periodic intervals or otherwise upon request of the
Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so
long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its
knowledge, are made to a purchaser who is a related party to an underwriter participating in the
initial sale of the 2018A Bonds to the public (each such term being used as defined below), and
(C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer,
the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to
the public.
(ii) any selling group agreement relating to the initial sale of the 2018A Bonds to the
public, together with the related pricing wires, contains or will contain language obligating each
dealer that is a party to a third-party distribution agreement to be employed in connection with
the initial sale of the 2018A Bonds to the public to require each broker-dealer that is a party to
such third-party distribution agreement to (A) report the prices at which it sells to the public the
unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until
either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter
or the dealer that the 10% test has been satisfied as to the 2018A Bonds of that maturity,
provided that, the reporting obligation after the Closing Date may be at reasonable periodic
intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the
hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the
dealer and as set forth in the related pricing wires.
E. The District acknowledges that, in making the representation set forth in
this section, the Underwriter will rely on (i) in the event a selling group has been created in
connection with the initial sale of the 2018A Bonds to the public, the agreement of each dealer
who is a member of the selling group to comply with the requirements for establishing issue
price of the 2018A Bonds, including, but not limited to, its agreement to comply with the hold-
the-offering-price rule, if applicable to the 2018A Bonds, as set forth in a selling group
16
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agreement and the related pricing wires, and (ii) in the event that a third-party distribution
agreement was employed in connection with the initial sale of the 2018A Bonds to the public,
the agreement of each broker-dealer that is a party to such agreement to comply with the
requirements for establishing issue price of the 2018A Bonds, including, but not limited to, its
agreement to comply with the hold-the-offering-price rule, if applicable to the 2018A Bonds, as
set forth in the third-party distribution agreement and the related pricing wires. The District
further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is
a member of a selling group, or of any broker-dealer that is a party to a third-party distribution
agreement, to comply with its corresponding agreement to comply with the requirements for
establishing issue price of the 2018A Bonds, including, but not limited to, its agreement to
comply with the hold-the-offering-price rule, if applicable to the 2018A Bonds.
F. The Underwriter acknowledges that sales of any Bonds to any person that
is a related party to an underwriter participating in the initial sale of the 2018A Bonds to the
public (each such term being used as defined below) shall not constitute sales to the public for
purposes of this section. Further, for purposes of this section:
a. "public" means any person other than an underwriter or a related party;
b. "underwriter" means (A) any person that agrees pursuant to a written
contract with the District (or with the lead underwriter to form an underwriting syndicate) to
participate in the initial sale of the 2018A Bonds to the public and (B) any person that agrees
pursuant to a written contract directly or indirectly with a person described in clause (A) to
participate in the initial sale of the 2018A Bonds to the public (including a member of a selling
group or a party to a third-party distribution agreement participating in the initial sale of the
2018A Bonds to the public);
C. a purchaser of any of the 2018A Bonds is a "related party" to an
underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more
than 50% common ownership of the voting power or the total value of their stock, if both entities
are corporations (including direct ownership by one corporation of another), (B) more than 50%
common ownership of their capital interests or profits interests, if both entities are partnerships
(including direct ownership by one partnership of another), or (C) more than 50% common
ownership of the value of the outstanding stock of the corporation or the capital interests or profit
interests of the partnership, as applicable, if one entity is a corporation and the other entity is a
partnership (including direct ownership of the applicable stock or interests by one entity of the
other); and
d. "sale date" means the date of execution of this Purchase Contract by all
parties.
6. Expenses.
17
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Page 90 of 183
(a) The Underwriter shall be under no obligation to pay, and the District shall
pay or cause to be paid out of the proceeds of the Bonds, all expenses incident to the
performance of the District's obligations hereunder, including but not limited to: the cost of
photocopying and delivering the Bonds to the Underwriter; the cost of preparing, printing (and/or
word processing and reproducing), distributing and delivering the District Documents, and the
cost of printing, distributing and delivering the Preliminary Official Statement and the Official
Statement; the cost of preparation of any "blue sky" or legal investment memoranda; and the fees
and disbursements of Bond Counsel, any accountants, financial advisors or other engineers or
experts or consultants the District has retained in connection with the Bonds and expenses
(included in the expense component of the Underwriter's spread) incurred on behalf of the
District's officers or employees which are incidental to implementing this Purchase Contract,
including, but not limited to, meals, transportation, lodging, and entertainment of those officers
or employees; provided, however, that (i) reimbursement for such expenses shall not exceed an
ordinary and reasonable amount for such expenses and (ii) such expenses are not related to the
entertainment of any person and not prohibited from being reimbursed from the proceeds of an
offering of municipal securities under MSRB Rule G-20.
(b) Whether or not the Bonds are delivered to the Underwriter as set forth
herein, the District shall be under no obligation to pay, and the District shall not pay, any
expenses incurred by the Underwriter in connection with its public offering and distribution of
the Bonds (except those specifically enumerated in paragraph (a) of this section), including any
advertising expenses and the fees of the California Debt and Investment Advisory Commission
and the fees and disbursements of Underwriter's Counsel.
7. Notices.
Any notices, requests, directions, instruments or other communications required or
permitted to be given hereunder shall be in writing and shall be given when delivered, against a
receipt, or mailed certified or registered, postage prepaid, to the District and the Underwriter at
their respective addresses below:
If to the District: Central Contra Costa Sanitary District
5019 Imhoff Place
Martinez, California 94553
Attention: Director of Finance &Administration
If to the Underwriter: Piper Jaffray & Co.
50 California Street, Suite 3100
San Francisco, CA 94111
Attention: Tom Innis, Managing Director
provided, however, that all such notices, requests or other communications may be made by
telephone and promptly confirmed by writing. The District and the Underwriter may, by notice
given as aforesaid, specify a different address for any such notices, requests or other
communications.
18
August 2, 2018 Regular Board Meeting Agenda Packet- Page 118 of 253
Page 91 of 183
8. Parties in Interest.
This Purchase Contract is made solely for the benefit of the District and the Underwriter
(including successors of the Underwriter) and no other person shall acquire or have any right
hereunder or by virtue hereof.
9. Survival of Representations and Warranties.
The representations and warranties of the District set forth in or made pursuant to this
Purchase Contract shall not be deemed to have been discharged, satisfied or otherwise rendered
void by reason of the Closing or termination of this Purchase Contract and regardless of any
investigations made by or on behalf of the Underwriter (or statements as to the results of such
investigations) concerning such representations and warranties of the District and regardless of
delivery of and payment for the Bonds.
10. Effective Date.
This Purchase Contract shall become effective and binding upon the respective parties
hereto upon the execution of the acceptance hereof by the District and the Underwriter and shall
be valid and enforceable as of the time of such acceptance.
11. Applicable Law; Nonassignability; Venue
This Purchase Contract shall be governed by the laws of the State of California. This
Purchase Contract shall not be assigned by either party hereto without the written consent of the
other party.
12. Execution of Counterparts.
This Purchase Contract may be executed in several counterparts, each of which shall be
regarded as an original and all of which shall constitute one and the same.
13. No Prior Agreements.
This Purchase Contract supersedes and replaces all prior negotiations, agreements and
understandings between the parties hereto in relation to the sale of Bonds by the District and
represents the entire agreement of the parties as to the subject matter herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
August 2, 2018 Regular Board Meeting Agenda Packet- Page 119 of 253
Page 92 of 183
14. Partial Unenforceability.
Any provision of this Purchase Contract which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Purchase Contract or
affecting the validity or enforceability of such provision in any other jurisdiction.
Very truly yours,
PIPER JAFFRAY & CO.
By:
Title:
The foregoing is hereby agreed to and
accepted as of the date first above written:
CENTRAL CONTRA COSTA
SANITARY DISTRICT
By:
Title: Director of Finance & Administration
Time of Execution: I P.M. California time
[EXECUTION PAGE OF PURCHASE CONTRACT]
20
August 2, 2018 Regular Board Meeting Agenda Packet- Page 120 of 253
Page 93 of 183
EXHIBIT A
S
CENTRAL CONTRA COSTA SANITARY DISTRICT
2018 WASTEWATER REVENUE REFUNDING BONDS, SERIES A
MATURITY SCHEDULE
Subject to
Maturity 10% Test Hold-The-
(September Principal Interest 10% Test Not Offering-
1) Amount Rate Yield Price Satisfied* Satisfied Price Rule
2019
2020
2021
2022
2023
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
20 (T)
(T)Term Bond.
(1)Insured Bond.
(C)Priced to optional call at [par] on September 1, 20
At the time of execution of this Purchase Contract and assuming orders are confirmed by the
close of the business day immediately following the date of this Purchase Contract.
A-1
August 2, 2018 Regular Board Meeting Agenda Packet- Page 121 of 253
Page 94 of 183
CENTRAL CONTRA COSTA SANITARY DISTRICT
2018 WASTEWATER REVENUE REFUNDING BONDS, SERIES B (FEDERALLY
TAXABLE)
MATURITY SCHEDULE
Maturity Principal Interest
(September 1) Amount Rate Yield Price
A-2
August 2, 2018 Regular Board Meeting Agenda Packet- Page 122 of 253
Page 95 of 183
EXHIBIT B
[Form Opinion of District Counsel]
[Place on District Counsel Letterhead]
[TO COME]
B-1
August 2, 2018 Regular Board Meeting Agenda Packet- Page 123 of 253
Page 96 of 183
EXHIBIT C
FORM OF BOND COUNSEL NEGATIVE ASSURANCES LETTER
2018
[TO COME]
C-1
August 2, 2018 Regular Board Meeting Agenda Packet- Page 124 of 253
Page 97 of 183
APPENDIX D
S
CENTRAL CONTRA COSTA SANITARY DISTRICT
2018 WASTEWATER REVENUE REFUNDING BONDS, SERIES A
FORM OF ISSUE PRICE CERTIFICATE
C-1
August 2, 2018 Regular Board Meeting Agenda Packet- Page 125 of 253
Page 98 of 183
Jones Hall Draft of July 25, 2018
4_0 _
C
�
PRELIMINARY OFFICIAL STATEMENT DATED , 2018
4- C:
M �
0 a) NEW ISSUE—FULL BOOK-ENTRY RATING: S&P:
`0 -5
U (See"RATING" herein)
S California, Bond Counsel,subject, however
O � In the opinion of Jones Hall,A Professional Law Corporation, an Francisco, j
�, m to certain qualifications described herein, under existing law, the interest on the Series A Bonds is excluded from gross income for
C: n federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax,
L_
although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax
.3 c imposed on certain corporations,such interest earned by a corporation prior to the end of its tax year in 2018 is taken into account
�
1, in determining certain income and earnings. Interest on the Series B Bonds is not intended to be excluded from gross income for
Cn �= federal income tax purposes.In the further opinion of Bond Counsel,interest on the Bonds is exempt from California personal income
.o taxes. See "TAX MATTERS."
�
L_ $ $
Cn a) Central Contra Costa Sanitary District Central Contra Costa Sanitary District
L 2018 Wastewater Revenue Refunding Bonds, 2018 Wastewater Revenue Refunding Bonds,
Cn Series A Series B(Federally Taxable)
Cn
Dated: Date of Delivery Due:September 1,as shown below
The Bonds. The above-captioned Series A Bonds and Series B Bonds (collectively, the"Bonds") are being issued by
O .� the Central Contra Costa Sanitary District (the "District") pursuant to an Indenture of Trust (the "Indenture"), dated as of
L 00 11 2018(the"Indenture") between the District and U.S. Bank National Association, as trustee(the"Trustee"). The
Bonds will be dated as of their delivery, will be available in denominations of$5,000 or integral multiples thereof, and will
in mature in the years and amounts, as set forth in the table on the inside cover. Interest with respect to the Bonds is payable
on March 1 and September 1 of each year, commencing March 1, 2019.
W Purpose. The Bonds are being executed and delivered to (i) defease and refund all of the District's outstanding
-0 M obligations with respect to the$19,635,000 original principal amount of 2009 Wastewater Revenue Certificates of Participation,
.� Series A (Federally Taxable – Build America Bonds – Direct Payment) (the "2009A Certificates") and some or all of the
Ea) $34,490,000 original principal amount of 2009 Wastewater Revenue Certificates of Participation, Series B (the "2009B
o L Certificates,"and together with the 2009A Certificates, the"2009 Certificates"), and (ii)pay costs of executing and delivering
C: v the Bonds. See"FINANCING PLAN."
a Redemption. The Bonds are subject to redemption as described in this Official Statement. See"SECURITY FOR THE
A? 33
Q Cn BONDS–Redemption
E � Security for the Bonds. The Bonds are secured by a pledge of and payable from (i)Tax Revenues, consisting of the
0 o ad valorem property taxes received by the District, and(ii)Net Revenues of the District,consisting generally of gross revenues
a) derived by the District in each Fiscal Year from the ownership and operation of its wastewater collection and treatment
a n enterprise(the"Wastewater System")less the costs of operating and maintaining the Wastewater System during such Fiscal
c c
Year.
Cn M o Parity Obligations.Assuming that all of the 2009 Certificates are refunded,there will be no obligations payable from the
-1--i
L_ � _0
Net Revenues and/or Tax Revenues on a parity with the Bonds. However,the District has the right under the Indenture, and
c: L_ .Ln intends,to incur additional obligations that are secured by a pledge of and payable from Net Revenues and Tax Revenues on
a a parity with the Bonds in the future. See"SECURITY FOR THE BONDS–Parity Obligations."
Book-Entry. The Bonds will be delivered in fully registered form only, and, when executed and delivered, will be
m Cn Cn registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC ). DTC will act as securities
FU o o depository of the Bonds. Beneficial ownership interests in the Bonds may be purchased in book-entry form only, in the
o C Cn Authorized Denominations as described in the Official Statement. See"BOOK-ENTRY ONLY SYSTEM."
U M MC Cn
0 o a)
M A L
:L'-
(u
0 0 MATURITY SCHEDULE
� � a See inside front cover
o
�i C: ^L'
W
This cover page contains certain information for general reference only. It is not a summary of this issue. Investors
are advised to read the entire Official Statement to obtain information essential to the making of an informed investment
C: L)
C: decision. The obligation of the District to make payment on the Bonds is a special obligation payable sole) from the
En }, g pY p g pY Y
a) Tax Revenues and Net Revenues of the Wastewater System and certain other legally available funds as provided in
_._.J (6 U
M L the Indenture.
U) o M
U ( The Bonds are offered to the public by the Underwriter, when, as and if executed, delivered and received, subject to
o O the approval of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and certain other
p L C: conditions.Jones Hall is also acting as Disclosure Counsel to the District. Kutak Rock, Irvine, California as acting as counsel to
m the Underwriter. It is anticipated that the Bonds will be available for delivery through DTC on or about 2018.
L p ry g ,
M0 M
C: Cn
[PIPER JAFFRAY LOGO]
O
4-1 4-J
0
C: The date of this Official Statement is , 2018.
� U �
*Preliminary; subject to change.
August 2, 2018 Regular Board Meeting Agenda Packet- Page 126 of 253
Page 99 of 183
MATURITY SCHEDULE
CENTRAL CONTRA COSTA SANITARY DISTRICT
2018 WASTEWATER REVENUE REFUNDING BONDS, SERIES A
Bond
Payment
Date Principal Interest cusipt
(September 1) Amount B,ag Ymeld ( )
$
CENTRAL CONTRA COSTA SANITARY DISTRICT
2018 WASTEWATER REVENUE REFUNDING BONDS, SERIES B
(FEDERALLY TAXABLE)
Maturity
Date Principal Interest Suslet
(September 1) Amount Rate Ymeld ( )
t Copyright 2009, American Bankers Association. CUSP data are provided by Standard & Poor's CUSP Service
Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the
District nor the Underwriter assumes any responsibility for the accuracy of this CUSP data.
August 2, 2018 Regular Board Meeting Agenda Packet- Page 127 of 253
Page 100 of 183
CENTRAL CONTRA COSTA SANITARY DISTRICT
Board of Directors
James A. Nejedly, President
David Williams, President Pro Tem
Michael R. McGill, Member
Paul Causey, Member
Tad Pilecki, Member
District Officers and Staff
Roger S. Bailey, General Manager
Ann Sasaki, Deputy General Manager
Philip Leiber, Director of Finance &Administration
Jean-Marc H. Petit, Director of Engineering and Technical Services
Katie Young, Board Secretary
Kenton L. Alm, District Counsel
PROFESSIONAL SERVICES
Bond Counsel and Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Municipal Advisor
PFM Financial Advisors LLC
San Francisco, California
Trustee
U.S. Bank National Association
San Francisco, California
Verification Agent
August 2, 2018 Regular Board Meeting Agenda Packet- Page 128 of 253
Page 101 of 183
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the
Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any
other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure
by the District, in any press release and in any oral statement made with the approval of an authorized
officer of the District, the words or phrases"will likely result,""are expected to"will continue,""is anticipated,"
"estimate," "project," "forecast," "expect," "intend" and similar expressions identify "forward looking
statements." Such statements are subject to risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward-looking statements. Any forecast is subject to such
uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and
unanticipated events and circumstances may occur. Therefore, there are likely to be differences between
forecasts and actual results, and those differences may be material. The information and expressions of
opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official
Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that
there has been no change in the affairs of the District since the date of this Official Statement.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the
District to give any information or to make any representations in connection with the offer or sale of the
Bonds other than those contained in this Official Statement and if given or made, such other information or
representation must not be relied upon as having been authorized by the District or the Underwriter. This
Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be
any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such
an offer, solicitation or sale.
Involvement of Underwriter. The Underwriter has reviewed the information in this Official
Statement in accordance with, and as a part of, its 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 information and expressions of opinions in this
Official Statement are subject to change without notice and neither delivery of this Official Statement nor
any sale made under this Official Statement shall, under any circumstances, create any implication that
there has been no change in the affairs of the District or the Water System since the date hereof. All
summaries of the documents referred to in this Official Statement, are made subject to the provisions of
such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 19331 AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER TH E
SECURITIES LAWS OF ANY STATE.
In connection with the offering of the Bonds, the Underwriter may overallot or effect transactions
which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail
in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may
offer and sell the Bonds to certain dealers and dealer banks and banks acting as agent and others at prices
lower than the public offering prices stated on the cover page of this Official Statement, and the Underwriter
may change those public offering prices from time to time.
The District maintains a website. However, the information presented there is not a part of this
Official Statement and should not be relied upon in making an investment decision with respect to the
Bonds.
August 2, 2018 Regular Board Meeting Agenda Packet- Page 129 of 253
Page 102 of 183
TABLE OF CONTENTS
Page Pica e
INTRODUCTION........................................... 1 Improvements..........................................34
FINANCING PLAN........................................ 3 Property Taxes ........................................36
Estimated Sources and Uses.................... 4 Regulatory Matters ..................................36
Debt Service Schedule.............................. 5 DISTRICT FINANCES.................................37
THE BONDS................................................. 6 Financial Statements...............................37
Authority for Issuance................................ 6 Indebtedness...........................................40
General Provisions.................................... 6 Capital Improvement Plan.......................40
Redemption............................................... 7 Ten-Year CIP Drivers..............................41
Notice of Redemption; Right to Rescind... 7 Historical Net Revenues, Tax Revenues and
Consequence of Redemption.................... 8 Debt Service Coverage ...........................46
Book-Entry Only System........................... 8 Projected Net Revenues, Tax Revenues and
Transfer and Exchange of Bonds.............. 8 Debt Service Coverage ...........................47
SECURITY FOR THE BONDS..................... 9 RISK FACTORS..........................................50
Pledge of Tax Revenues and Net Demand and Usage.................................50
Revenues .................................................. 9 Expenses.................................................50
Certain Defined Terms.............................. 9 Property Taxes ........................................50
Concord Agreement................................ 10 Future Parity Obligations.........................50
Flow of Funds under the Indenture......... 10 No Reserve Fund.....................................51
Rate Stabilization Fund........................... 12 Natural Disasters.....................................51
No Reserve Fund .................................... 12 Proposition 218........................................51
Rate Covenants....................................... 12 Limited Recourse on Default...................53
Parity Obligations.................................... 13 Limitations on Remedies Available;
Insurance; Eminent Domain.................... 14 Bankruptcy...............................................53
Limited Obligation.................................... 14 Limited Obligation....................................54
Provisions Relating to Collection of Tax Change in Law.........................................54
Revenues ................................................ 14 Loss of Tax Exemption............................54
THE DISTRICT ........................................... 18 CONTINUING DISCLOSURE.....................54
General.................................................... 18 TAX MATTERS ...........................................54
District Facilities ...................................... 18 Form of Opinion.......................................56
Pension Plan ........................................... 21 NO LITIGATION..........................................56
Post-Employment Health Care Benefits . 23 RATING.......................................................56
Investment Policy.................................... 24 APPROVAL OF LEGALITY.........................56
Service Area and Customers.................. 26 VERIFICATION OF MATHEMATICAL
Concord Agreement................................ 28 ACCURACY................................................57
Billing and Collection of Sewer Service UNDERWRITING........................................57
Charges................................................... 29 MISCELLANEOUS......................................57
Capacity Fees Used for Capital
APPENDIX A—Summary of the Indenture
APPENDIX B—Contra Costa County General Information
APPENDIX C—Audited Financial Statements of the District for Fiscal Year ending June 30, 2017
APPENDIX D— Form of Continuing Disclosure Certificate
APPENDIX E — Form of Bond Counsel Opinion
APPENDIX F— Book Entry-Only System
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OFFICIAL STATEMENT
Central Contra Costa Sanitary District Central Contra Costa Sanitary District
2018 Wastewater Revenue Refunding 2018 Wastewater Revenue Refunding
Bonds, Series A Bonds, Series B (Federally Taxable)
Any statements made in this Official Statement involving matters of opinion or of estimates,
whether or not so expressly stated, are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized. Definitions of certain terms used
herein and not defined herein have the meaning set forth in the Indenture. See "APPENDIX A —
Summary of the Indenture."
INTRODUCTION
This Official Statement, which includes the cover page, table of contents and Appendices (the
"Official Statement"), provides certain information concerning the sale and delivery of the
$ *Central Contra Costa Sanitary District 2018 Wastewater Revenue Refunding Bonds,
Series A (the "Series A Bonds") and $ * Central Contra Costa Sanitary District 2018
Wastewater Revenue Refunding Bonds, Series B (Federally Taxable) (the"Series B Bonds"and with
the Series A Bonds, the "Bonds").
The Bonds. The Bonds are being issued by the Central Contra Costa Sanitary District (the
"District") pursuant to 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 of said Code (the "Bond Law") and a resolution
adopted by the Board of Directors (the "Board") of the District on August 2, 2018 (the "Resolution").
See "THE BONDS—Authority for Issuance."
Purpose. The Bonds are being executed and delivered to (i) defease and refund all of the
District's outstanding obligations with respect to the $19,635,000 original principal amount of 2009
Wastewater Revenue Certificates of Participation, Series A(Federally Taxable—Build America Bonds
— Direct Payment) (the "2009A Certificates") and some or all of the $34,490,000 original principal
amount of 2009 Wastewater Revenue Certificates of Participation, Series B(the"2009B Certificates,"
and together with the 2009A Certificates, the "2009 Certificates"), and (ii) pay costs of executing and
delivering the Bonds. See "FINANCING PLAN."
Security for the Bonds. The obligation of the District with respect to the Bonds is a special
obligation secured by a pledge of and payable solely from (i) the Tax Revenues, (ii) the "Net
Revenues" of the Wastewater System, (iii) certain other legally available funds as provided in the
Indenture. "Tax Revenues" generally consists of the ad valorem taxes allocated to the Wastewater
System that are levied on taxable property in the District (excluding any taxes levied for the sole
purpose of providing for payment of principal and interest on any voter-approved indebtedness
incurred by the District). Net Revenues consist of"Gross Revenues" (as defined herein) derived by
the District in each Fiscal Year from the ownership and operation of the Wastewater System less the
"Operation and Maintenance Costs" (as defined herein)for such Fiscal Year. See"SECURITY FOR
THE BONDS."
No Reserve Fund. The District is not funding a reserve fund for the Bonds.
Additional Parity Obligations. Assuming that all of the 2009 Certificates are refunded, there
will be no obligations payable from the Tax Revenues and/or Net Revenues on a parity with the Bonds.
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However, the District has the right under the Indenture, and intends, to incur additional obligations that
are secured by a pledge of and payable from Net Revenues and Tax Revenues on a parity with the
Bonds in the future. See "SECURITY FOR THE BONDS— Parity Obligations."
Redemption. The Bonds are subject to redemption as described in this Official Statement.
See "SECURITY FOR THE BONDS— Redemption."
Book-Entry. The Bonds will be delivered in fully registered form only, and, when executed
and delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"). DTC will act as securities depository of the Bonds. Beneficial ownership interests
in the Bonds may be purchased in book-entry form only, in the Authorized Denominations as described
in the Official Statement. See "APPENDIX F— Book Entry-Only System."
Summaries Not Definitive. The descriptions of the Bonds, the Indenture, and other
documents described in this Official Statement do not purport to be definitive or comprehensive, and
all references to those documents are qualified in their entirety by reference to the approved form of
those documents, which documents are available at the principal corporate trust office of the Trustee
in San Francisco, California.
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FINANCING PLAN
General. The Bonds are being executed and delivered to (i) defease and refund all of the
outstanding 2009A Certificates and some or all of the 2009B Certificates, and (ii) pay costs of
executing and delivering the Bonds. The 2009A Certificates and the 2009B Certificates are
collectively referred to herein as the 2009 Certificates. The District caused the 2009 Certificates to
be executed and delivered primarily to finance certain improvements to the Wastewater System,
refinance the District's then-outstanding 1998 Refunding Revenue Bonds and its obligations under
an Installment Sale Agreement dated as of June 1, 2002.
The 2009 Certificates anticipated to be refunded are as follows:
CENTRAL CONTRA COSTA SANITARY DISTRICT
2009 Wastewater Revenue Certificates of Participation, Series A
(Federally Taxable—Build America Bonds—Direct Payment)*
Certificate
Payment
Date Principal Interest CUSIPt
(September 1) Amount Rate Yield 15324X
2020 $116601000 5.200% 5.309% AF 1
2021 117151000 5.350 5.459 AG9
2022 117751000 5.500 5.609 AH7
2023 118351000 5.600 5.709 AJ3
2024 119051000 5.700 5.809 AKO
2029 10,745,000 6.550 6.704 AL8
CENTRAL CONTRA COSTA SANITARY DISTRICT
2009 Wastewater Revenue Certificates of Participation, Series B*
Certificate
Payment
Date Principal Interest CUSIPt
(September 1) Amount Rate Yield 15324X
2019 $215801000 4.000% 3.370% AW4
2020 110251000 4.000 3.520 AX2
2021 110701000 5.000 3.650 AYO
2022 111251000 5.000 3.720 AZ7
2023 111801000 5.000 3.790 BA1
*Preliminary;subject to change.
A portion of the proceeds of the Bonds will be deposited with U.S. Bank National Association, as
escrow agent (the "Escrow Agent"), pursuant to an Escrow Deposit and Trust Agreement, for the
defeasance and optional redemption of the 2009 Certificates set forth above. Moneys held by the Escrow
Agent will be held uninvested in cash or invested in United States Treasury Securities, State and Local
Government Series. Sufficiency of the deposits held by the Escrow Agent for the purposes described
above will be verified by , 1 1 (the "Verification Agent"). See
"VERIFICATION OF MATHEMATICAL ACCURACY" below. Proceeds deposited with the Escrow Agent
will not be available to pay principal and interest with respect to the Bonds, and will be pledged
irrevocably to payment of the 2009 Certificates being defeased and redeemed.
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Treatment of Refinancing in this Official Statement. This Official Statement assumes all of
the 2009 Certificates have been defeased as a result of the delivery of the Bonds.
Estimated Sources and Uses
The proceeds to be received from the sale of the Bonds are expected to be applied as
follows:
Series A Series B
Sources: Certificates Certificates Total
Principal Amount of Bonds
Plus/Less[Net]Premium(Discount)
Plus Available Funds from 2009 Certificates
Total Sources
Uses:
Deposit into Escrow Fund for 2009 Certificates
Costs of Issuance0
Total Uses
(1) Includes fees of Bond Counsel, Disclosure Counsel, Municipal Advisor and Trustee, Underwriter's discount,costs to
print the preliminary and final Official Statement,and other costs of issuing the Bonds.
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Debt Service Schedule
The following table presents a schedule of principal and interest due on the Bonds,
assuming no optional prepayments.
Fiscal
Year Series A Series A Series A Series B Series B Series B
Ending Bonds Bonds Bonds Bonds Bonds Bonds Grand
June 30 Principal Interest Debt Service Principal Interest Debt Service Total
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THE BONDS
Authority for Issuance
The Bonds are being issued by the District pursuant to the Bond Law and the Resolution.
General Provisions
The Bonds will be dated as of their delivery, will evidence and represent interest from their
delivery, at the rates per annum set forth on the inside cover page, payable semiannually on March I
and September 1 of each year, commencing March 1, 2019 (individually, an "Interest Payment
Date"), and will mature on September 1 in each of the designated years in the principal amounts
shown on the inside cover page.
Interest on the Bonds is payable from the Interest Payment Date next preceding the date of
authentication thereof unless:
(a) a Bond is authenticated on or before an Interest Payment Date and after the
close of business on the preceding Record Date, in which event it will bear
interest from such Interest Payment Date,
(b) a Bond is authenticated on or before the first Record Date, in which event
interest thereon will be payable from the Closing Date, or
(c) interest on any Bond is in default as of the date of authentication thereof, in
which event interest thereon will be payable from the date to which interest has
been paid in full, payable on each Interest Payment Date.
The Bonds will be executed and delivered in book-entry only form without coupons, in
denominations of $5,000 each or any integral multiple thereof. Principal and premium, if any,
evidenced and represented by the Bonds will be payable by the Trustee to DTC, which will in turn
remit such principal and interest to its participants for subsequent disbursement to Owners.
Interest is payable on each Interest Payment Date to the persons in whose names the
ownership of the Bonds is registered on the Registration Books at the close of business on the
immediately preceding Record Date, except as provided below. Interest on any Bond which is not
punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose
name the ownership of such Bond is registered on the Registration Books at the close of business
on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice
of which is given to such Owner by first-class mail not less than 10 days prior to such special record
date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first class
mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their
respective addresses shown on the Registration Books as of the close of business on the
preceding Record Date. At the written request of the Owner of Bonds in an aggregate principal
amount of at least $1,000,000, which written request is on file with the Trustee as of any Record
Date, the Trustee will pay interest on such Bonds on each succeeding Interest Payment Date by
wire transfer in immediately available funds to such account of a financial institution within the
United States of America as specified in such written request, which written request will remain in
effect until rescinded in writing by the Owner. The Trustee will pay principal of the Bonds in lawful
money of the United States of America by check of the Trustee upon presentation and surrender
thereof at the Office of the Trustee.
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Redemption
Optional Redemption. The Series A Bonds are subject to redemption prior to their respective
stated maturity dates, at the option of the District, from any source of available funds, in whole or in
part, on any date on or after September 1, 20_, at a redemption price equal to the principal amount
to be redeemed, plus accrued interest to the date fixed for redemption, without premium.
The Series B Bonds are not subject to optional redemption.
Mandatory Sinking Fund Redemption. The Series A Bonds maturing on September 1, 20
are subject to mandatory sinking fund redemption in part, by lot, on September 1 of each year in
accordance with the schedule set forth below. The Series A Bonds so called for mandatory sinking fund
redemption will be redeemed at the principal amount to be redeemed, plus accrued but unpaid interest,
without premium.
Redemption Date Sinking Fund
(September 1) Amount
20 $
20
20 (maturity)
The Series A Bonds maturing on September 1, 20 are subject to mandatory sinking fund
redemption in part, by lot, on September 1 of each year in accordance with the schedule set forth below.
The Bonds so called for mandatory sinking fund redemption will be redeemed at the principal amount to
be redeemed, plus accrued but unpaid interest, without premium.
Redemption Date Sinking Fund
(September 1) Amount
20 $
20
20
20 (maturity)
If some but not all of the Series A Bonds have been redeemed via optional redemption, the
total amount of all sinking account payments shall be reduced by the aggregate principal amount of
Series A Bonds so redeemed to be allocated among such sinking fund payments as determined by
the District(notice of which determination shall be given by the District to the Trustee).
Mandatory Redemption From Net Proceeds. The Bonds are subject to extraordinary
redemption prior to their respective stated maturities, as a whole or in part on any date, as determined
by the District, from Net Proceeds, upon the terms and conditions of, and as provided for in the
Indenture, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, without
premium, plus accrued interest thereon to the date fixed for redemption.
"Net Proceeds" means, when used with respect to any casualty insurance or condemnation
award, the proceeds from such insurance or condemnation award remaining after payment of all
expenses (including attorneys' fees) incurred in the collection of such proceeds. See "SECURITY
FOR THE BONDS — Insurance; Eminent Domain."
Notice of Redemption; Right to Rescind
Unless waived by any Owner of Bonds to be redeemed, notice of any redemption of Bonds
shall be given, at the expense of the District, by the Trustee, by mailing a copy of a redemption notice
by first class mail at least 30 days and not more than 60 days prior to the date fixed for redemption to
the Owner of the Bond or Bonds to be redeemed at the address shown on the Bond Registration
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Books and containing the information set forth in the Indenture; provided, that neither the failure to
receive such notice nor any immaterial defect in any notice shall affect the sufficiency of the
proceedings for the redemption of the Bonds.
The District has the right to rescind any notice of the optional redemption of Bonds by written
notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be
cancelled and annulled if for any reason funds will not be or are not available on the date fixed for
redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall
not constitute an Event of Default. The District and the Trustee have no liability to the Bond Owners or
any other party related to or arising from such rescission of notice of redemption. The Trustee shall
mail notice of such rescission of notice of redemption in the same manner as the original notice of
redemption was sent.
Consequence of Redemption
Notice of redemption having been given, the Bonds or portions of Bonds so to be redeemed
shall, on the redemption date, become due and payable at the Redemption Price therein specified, and
from and after such date (unless the District shall default in the payment of the Redemption Price) such
Bonds or portions of Bonds shall cease to have interest accrue thereon. Upon surrender of such Bonds
for redemption in accordance with said notice, such Bonds shall be paid by the Trustee at the
Redemption Price. Installments of interest due on or prior to the redemption date shall be payable as
provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall
be prepared for the Owner a new Bond or Bonds of the same maturity in the amount of the unredeemed
principal. All Bonds which have been redeemed shall be cancelled and destroyed by the Trustee and
shall not be redelivered.
Book-Entry Only System
The Bonds, when executed and delivered, will be registered in the name of Cede & Co., as
registered owner and nominee of DTC One fully-registered Bond will be issued for each maturity of
the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
So long as DTC, or Cede & Co. as its nominee, is the registered owner of all Bonds, all
payments with respect to the Bonds will be made directly to DTC, and disbursement of such payments
to the DTC Participants (defined below) will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners (defined below) will be the responsibility of the DTC Participants,
as more fully described in this Official Statement.
The District and the Trustee cannot and do not give any assurances that DTC, DTC
Participants or others will distribute payments of principal, interest or premium with respect to the
Bonds paid to DTC or its nominee as the registered owner, or will distribute any prepayment notices
or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act
in the manner described in this Official Statement. The District and the Trustee are not responsible or
liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a
Beneficial Owner with respect to the Bonds or an error or delay relating thereto.
See "APPENDIX F— Book-Entry Only System."
Transfer and Exchange of Bonds
Transfer of Bonds. The registration of any Bond may, in accordance with its terms, be
transferred upon the Registration Books by the person in whose name it is registered, in person or by
his duly authorized attorney, upon surrender of such Bond for cancellation at the Office of the Trustee,
accompanied by delivery of a written instrument of transfer in a form approved by the Trustee.Whenever
any Bond or Bonds are surrendered for registration or transfer, the Trustee will execute and deliver a
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new Bond or Bonds of the same series, maturity, interest rate and aggregate principal amount, in any
authorized denominations. The District will pay all costs of the Trustee incurred in connection with any
such transfer, except that the Trustee may require the payment by the Bond Owner of any tax or other
governmental charge required to be paid with respect to such transfer.
Exchange of Bonds. Bonds may be exchanged at the Office of the Trustee, for a like aggregate
principal amount of Bonds representing other authorized denominations of the same interest rate and
maturity. The District will pay all costs of the Trustee incurred in connection with any such exchange,
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.
Limitations on Transfer or Exchange. The Trustee may refuse to transfer or exchange either
(a) any Bond during the 15 days prior to the date established by the Trustee for the selection of Bonds
for redemption, or(b) any Bonds selected by the Trustee for redemption.
SECURITY FOR THE BONDS
Pledge of Tax Revenues and Net Revenues
The Bonds and all Parity Obligations are secured by a first pledge of and lien on all of the Tax
Revenues and Net Revenues. In addition, the Bonds are secured by a pledge of all of the moneys in
the Debt Service Fund, including all amounts derived from the investment of such moneys. The Bonds
and any Parity Obligations are equally secured by a pledge, charge and lien upon the Tax Revenues
and Net Revenues, without priority for series, issue, number or date, and the payment of the interest on
and principal of the Bonds and Parity Obligations shall be and are secured by an exclusive pledge,
charge and lien upon the Tax Revenues and Net Revenues. So long as any of the Bonds and Parity
Obligations are Outstanding, the Tax Revenues, the Net Revenues and such moneys may not be used
for any other purpose; except that out of the Tax Revenues and Net Revenues there may be apportioned
such sums, for such purposes, as are expressly permitted by the Indenture.
Certain Defined Terms
The Indenture defines the following terms:
"Net Revenues"means,for any period, an amount equal to all of the Gross Revenues received
during such period minus the amount required to pay all Operation and Maintenance Costs coming
payable during such period
"Gross Revenues" means all gross income and revenue received by the District from the
ownership and operation of the Wastewater System, including, without limiting the generality of the
foregoing:
(a) all income, rents, rates, fees, capacity fees (connection fees), charges or other
moneys derived from the services, facilities and commodities sold (including
recycled water), furnished or supplied through the facilities of the Wastewater
System and payments under the Concord Agreement,
(b) the earnings on and income derived from the investment of such income, rents,
rates, fees, charges or other moneys to the extent that the use of such earnings
and income is limited by or under applicable law to the Wastewater System, and
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(c) the proceeds derived by the District directly or indirectly from the sale, lease or
other disposition of a part of the Wastewater System as permitted in the
Indenture.
The term "Gross Revenues" does not include (i) Tax Revenues, (ii) customers' deposits or any
other deposits subject to refund until such deposits have become the property of the District, (iii) the
proceeds of any ad valorem property taxes levied for the purpose of paying general obligation bonds of
the District relating to the Wastewater System, and (iv) the proceeds of any special assessments or
special taxes levied upon real property within any improvement district for the purpose of paying special
assessment bonds or special tax obligations of the District relating to the Wastewater System.
"Operation and Maintenance Costs" means the reasonable and necessary costs paid or
incurred by the District for maintaining and operating the Wastewater System, determined in accordance
with generally accepted accounting principles, including but not limited to (a) all reasonable expenses
of management and repair and other expenses necessary to maintain and preserve the Wastewater
System in good repair and working order, and (b) all administrative costs of the District that are charged
directly or apportioned to the operation of the Wastewater System, such as salaries and wages of
employees, employee benefits (including actuarial annual pension payment), overhead, taxes (if any)
and insurance.
"Operating and Maintenance Costs"do not include(i) administrative costs of the Bonds which
the District is required to pay under the Indenture, (ii) payments of debt service on bonds, notes or other
obligations issued by the District with respect to the Wastewater System, (iii) depreciation, replacement
and obsolescence charges or reserves therefor, and (iv) amortization of intangibles or other
bookkeeping entries of a similar nature (including, without limitation, GASB year-end adjustments
attributable to pension and OPEB).
"Tax Revenues" means all ad valorem taxes allocable to the Wastewater System which are
levied upon taxable property in the District by the Board of Supervisors of Contra Costa County, and
which are allocated to the District under the provisions of Chapter 6 of Part 0.5 of Division 1 of the
Revenue and Taxation Code of the State of California, including all payments, subventions and
reimbursements, if any, to the District specifically attributable to taxes lost by reason of tax exemptions
and tax rate limitations; but excluding any taxes levied for the sole purpose of providing for payment of
principal and interest on any voter-approved indebtedness incurred by the District, which taxes would
not otherwise be subject to levy but for the issuance of such indebtedness.
"Concord Agreement" means that certain Agreement, dated September 10, 1974, between the
District and the City of Concord, as amended from time to time, including as amended on November 16,
1976, on June 11, 1982, on October 6, 1985, on June 18, 1987, and on April 9, 2002.
Concord Agreement
Gross Revenues includes payments received by the District under the Concord Agreement.
See "THE DISTRICT—Concord Agreement" for a description of the Concord Agreement.
Flow of Funds under the Indenture
The District previously established the"Wastewater System Funds,"which the District agrees
in the Indenture to continue to hold and maintain for the purposes and uses set forth in the Indenture.
The District agrees to deposit all of the Tax Revenues and Gross Revenues in the Wastewater System
Funds immediately upon receipt.
In addition to the transfers required to be made under any Parity Obligations, the District will
withdraw amounts on deposit in the Wastewater System Funds and apply such amounts at the times
and for the purposes, and in the priority, as follows:
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(i) Deposit and Application of Tax Revenues. On or before each Interest Payment
Date, the District shall withdraw from the Wastewater System Funds and transfer
to the Trustee for deposit in the Debt Service Fund an amount of Tax Revenues
which,together with the balance then on deposit in the Debt Service Fund, is equal
to the aggregate amount coming due and payable on the Bonds on the next
succeeding Interest Payment Date.
The District may not withdraw any Tax Revenues from the Wastewater System
Funds in any Fiscal Year except for the purpose of making any payment to the
Trustee as required by this subsection (i); provided, however, that at such time
during any Fiscal Year as the amount of Tax Revenues on deposit in the
Wastewater System Funds become equal to the aggregate amount of the debt
service thereafter coming due and payable on the Bonds in such Bond Year, all
remaining Tax Revenues received during such Fiscal Year will be released from
the pledge and lien hereunder and may be used for any lawful purpose of the
District.
(ii) Deposit and Application of Net Revenues. If the amount of Tax Revenues
transferred to the Trustee pursuant to the preceding clause (i) on or before each
Interest Payment Date is less than the full amount required to be so transferred,
the District shall withdraw Net Revenues from the Wastewater System Funds on
such Interest Payment Date, and transfer to the Trustee for deposit in the Debt
Service Fund, an amount equal to the amount of such insufficiency.
(iii) No Preference or Priority. The District shall pay principal and interest on the Bonds
and the principal of and interest on any Parity Obligations from the Tax Revenues
and Net Revenues without preference or priority among the Bonds and Parity
Obligations. If the amount of Tax Revenues and Net Revenues on deposit in the
Wastewater System Funds is any time insufficient to enable the District to pay
when due the principal and interest on the Bonds and the principal of and interest
on the Parity Obligations, such payments shall be made on a pro rata basis.
(iv) Other Uses of Wastewater System Funds. The District shall manage, conserve
and apply moneys in the Wastewater System Funds in such a manner that all
deposits required to be made under this Section and under any Parity Obligation
Documents will be made at the times and in the amounts so required. Subject to
the foregoing sentence, the District may at any time use and apply moneys in the
Wastewater System Funds for any one or more of the following purposes: (A) the
payment of Operation and Maintenance Costs, (B)the payment of any
subordinate obligations or any unsecured obligations; (C)the acquisition and
construction of extensions and improvements to the Wastewater System; (D)the
payment of any amounts due and owing to the United States of America in
accordance with this Indenture or any Parity Obligation Document; or(E) any
other lawful purpose of the District.
(v) Budget and Appropriation of Payments. The District shall adopt all necessary
budgets and make all necessary appropriations of the principal and interest due
on the Bonds from the Tax Revenues and Net Revenues. If any such payment
requires the adoption by the District of any supplemental budget or appropriation,
the District shall promptly adopt the same. The covenants on the part of the
District contained in this paragraph constitute duties imposed by law and it shall
be the duty of each and every public official of the District to take such actions
and do such things as are required by law in the performance of the official duty
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of such officials to enable the District to carry out and perform the covenants and
agreements in this paragraph.
Rate Stabilization Fund
The District may establish a fund to be held by it and administered in accordance with the
Indenture, for the purpose of stabilizing the rates and charges imposed by the District with respect
to the Wastewater System. From time to time the District may deposit amounts in the Rate
Stabilization Fund, from any source of legally available funds, including but not limited to Tax
Revenues and Net Revenues which are released from the pledge and lien which secures the Bonds
and any Parity Obligations, as the District may determine.
The District may, but is not required to, withdraw from any amounts on deposit in the Rate
Stabilization Fund and deposit such amounts in the Wastewater System Funds in any Fiscal Year
for the purpose of paying debt service on the Bonds coming due and payable in such Fiscal Year.
Amounts so transferred from the Rate Stabilization Fund to the Wastewater System Funds shall
constitute Gross Revenues for such Fiscal Year (except as otherwise provided in the Indenture),
and shall be applied for the purposes of the Wastewater System Funds. Amounts on deposit in the
Rate Stabilization Fund shall not be pledged to or otherwise secure the Bonds or any Parity
Obligations. The District has the right at any time to withdraw any or all amounts on deposit in the
Rate Stabilization Fund and apply such amounts for any lawful purposes of the District relating to
the Wastewater System.
No Reserve Fund
The District is not funding a reserve fund for the Bonds. Accordingly, if Tax Revenues and Net
Revenues are insufficient to make debt service payments on the Bonds and any Parity Obligations,
Bondholders may not receive all amounts due to them.
Rate Covenants
The District agrees to the following rate covenants in the Indenture.
Net Revenues Covenant. The District agrees to prescribe, revise and collect charges for the
services and facilities of the Wastewater System which, after allowances for contingencies and error
in the estimates, produce Gross Revenues (excluding capacity fees) sufficient in each Fiscal Year to
provide Net Revenues which, together with the amount of Tax Revenues estimated by the District to
be received during such Fiscal Year, are at least equal to 125% of the sum of the aggregate amount
of the principal of and interest on the Bonds and any Parity Obligations coming due and payable during
such Fiscal Year.
Gross Revenues Covenant. The District further agrees to prescribe, revise and collect
charges for the services and facilities of the Wastewater System which, after allowances for
contingencies and error in the estimates, produce Gross Revenues (including, for clarity, capacity
fees), which are sufficient in each Fiscal Year, together with the amount of Tax Revenues estimated
by the District to be received during such Fiscal Year, to yield Gross Revenues at least equal to 100%
of the sum of (i) the aggregate amount of the principal of and interest on the Bonds and any Parity
Obligations coming due and payable during such Fiscal Year and (ii) estimated Operation and
Maintenance Costs coming due and payable during such Fiscal Year.
For the purpose of computing the amount of Gross Revenues or Net Revenues for any Fiscal
Year for purposes of the foregoing covenants, the District shall be permitted to transfer amounts on
deposit in the Rate Stabilization Fund for purposes of such computation (except that amounts that
were transferred into the Rate Stabilization Fund from Gross Revenues and/or Tax Revenues received
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by the District in such Fiscal Year shall not be double-counted), and such transfers may be made until
(but not after) 180 days after the end of such Fiscal Year.
Parity Obligations
No Current Parity or Senior Obligations. Assuming the refunding in full of the 2009
Certificates, there will be no bonds, notes or other obligations of the District payable from the Tax
Revenues or the Net Revenues on a senior or parity basis with the Bonds.
Future Parity Obligations. The District may issue or incur other bonds, notes, loans, advances
or indebtedness payable from Tax Revenues and/or the Net Revenues on a parity with the Bonds to
provide financing for the Wastewater System in such principal amount as the District may determine.
The District may issue or incur any Parity Obligations subject to the following specific conditions which
are hereby made conditions precedent to the issuance and delivery of any Parity Obligations:
(a) No Event of Default has occurred and is continuing.
(b) The Tax Revenues and the Net Revenues (excluding capacity fees), calculated in
accordance with sound accounting principles, as shown by the books of the District
for the latest Fiscal Year or as shown by the books of the District for any other 12-
month period selected by the District ending not more than 90 days prior to the
date of issuance of such Parity Obligation, in either case verified by a certificate or
opinion of an Independent Accountant employed by the District, plus (at the option
of the District) the Additional Revenues, are at least equal to 125% of the amount
of Maximum Annual Debt Service with respect to the Bonds and all Parity
Obligations then outstanding (including the Parity Obligation then proposed to be
issued).
(c) The trustee or fiscal agent for such Parity Obligation must be the same entity performing
the functions of Trustee under the Indenture.
State Loans. The District may borrow money from the State and incur State Loans to finance
improvements to the Wastewater System. A State Loan may be treated as a Parity Obligation for
purposes of this Indenture without compliance with clause (c) above, so long as the District complies
with the foregoing clauses (a) and (b).
Definition of Additional Revenues. "Additional Revenues" is defined in the Indenture as
any or all of the following amounts:
(i) An allowance for Net Revenues from any additions or improvements to or
extensions of the Wastewater System to be financed from the proceeds of such
Parity Obligations or from any other source but in any case which, during all or
any part of the most recent completed Fiscal Year for which audited financial
statements are available or for any more recent 12 month period selected by the
District, were not in service, all in an amount equal to the estimated additional
average annual Net Revenues to be derived from such additions, improvements
and extensions during the first full Fiscal Year in which each addition,
improvement or extension is respectively to be in operation, all as shown by a
certificate of a District Representative.
(ii) An allowance for Net Revenues arising from any increase in the charges made
for service from the Wastewater System which has become effective prior to the
incurring of such Parity Obligations but which, during all or any part of such Fiscal
Year or such 12 month period, was not in effect, in an amount equal to the total
amount by which the Net Revenues would have been increased if such increase
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in charges had been in effect during the whole of such Fiscal Year or such 12
month period, all as shown by a certificate of a District Representative.
Insurance; Eminent Domain
Insurance. The District will at all times maintain with responsible insurers all such insurance on
the Wastewater System as is customarily maintained with respect to works and properties of like
character against accident to, loss of or damage to the Wastewater System. The District shall also
maintain, with responsible insurers, worker's compensation insurance and insurance against public
liability and property damage to the extent reasonably necessary to protect the District, the Trustee and
the Owners of the Bonds.
The Net Proceeds collected by the District from insurance against accident to or destruction of
any portion of the Wastewater System shall be used to repair or rebuild such damaged or destroyed
portion of the Wastewater System, and to the extent not so applied, shall be applied on a pro rata
basis to redeem the Bonds and any Parity Obligations in accordance with this Indenture and the related
Parity Obligation Documents.
Eminent Domain. Except as provided in the Indenture, the District covenants that the
Wastewater System will not be encumbered, sold, leased, pledged, any charge placed thereon, or
otherwise disposed of, as a whole or substantially as a whole, if such encumbrance, sale, lease, pledge,
charge or other disposition would materially impair the ability of the District to pay the principal of or
interest on the Bonds or any Parity Obligations, or would materially adversely affect its ability to comply
with the terms of the Indenture or any Parity Obligation Documents. The District may not enter into any
agreement which impairs the operation of the Wastewater System or any part of it necessary to secure
adequate Tax Revenues and Net Revenues to pay the Bonds and any Parity Obligations, or which
otherwise would impair the rights of the Bond Owners with respect to the Tax Revenues and Net
Revenues.
The Net Proceeds received as awards as a result of the taking of all or any part of the
Wastewater System by the lawful exercise of eminent domain, if and to the extent that such right can
be exercised against such property of the District, shall either (a) be used for the acquisition or
construction of improvements and extension of the Wastewater System, or(b) be applied on a pro rata
basis to redeem the Bonds and any Parity Obligations in accordance with the Indenture and the related
Parity Obligation Documents.
See "APPENDIX A—Summary of the Indenture."
Limited Obligation
The District's obligation to pay the Bonds and any other amounts coming due and payable
under the Indenture are a special obligation of the District limited solely to the Tax Revenues and the
Net Revenues. Under no circumstances is the District required to advance moneys derived from any
source of income other than the Tax Revenues and Net Revenues and other sources specifically
identified in the Indenture for the payment of the Bonds and such other amounts, nor are any other
funds or property of the District liable for the payment of the Bonds and any other amounts coming
due and payable under the Indenture.
Provisions Relating to Collection of Tax Revenues
Definition. The Indenture defines "Tax Revenues" as all ad valorem taxes allocable to the
Wastewater System which are levied upon taxable property in the District by the Board of Supervisors
of Contra Costa County, and which are allocated to the District under the provisions of Chapter 6 of
Part 0.5 of Division 1 of the Revenue and Taxation Code of the State of California, including all
payments, subventions and reimbursements, if any, to the District specifically attributable to taxes lost
by reason of tax exemptions and tax rate limitations; but excluding any taxes levied for the sole purpose
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of providing for payment of principal and interest on any voter-approved indebtedness incurred by the
District, which taxes would not otherwise be subject to levy but for the issuance of such indebtedness.
See "RISK FACTORS — Property Taxes" for a discussion of certain factors that could impact
the availability of Tax Revenues.
Property Tax Limitations; Article XIIIA of the California Constitution. California voters, on
June 6, 1978, approved an amendment(commonly known as both Proposition 13 and the Jarvis-Gann
Initiative) to the California Constitution. This amendment, which added Article XIIIA to the California
Constitution, among other things, affects the valuation of real property for the purpose of taxation in
that it defines the full cash value of property to mean "the county assessor's valuation of real property
as shown on the 1975/76 tax bill under full cash value, or thereafter, the appraised value of real
property when purchased, newly constructed, or a change in ownership has occurred after the 1975
assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed
2% per year, or any reduction in the consumer price index or comparable local data, or any reduction
in the event of declining property value caused by damage, destruction or other factors. The
amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash
value except that additional taxes may be levied to pay debt service on indebtedness approved by the
voters prior to July 1, 1978. In addition, an amendment to Article XIIIA was adopted in June 1986 by
initiative which exempts any bonded indebtedness approved by two-thirds of the votes cast by voters
for the acquisition or improvement of real property from the 1% limitation.
In the general election held November 4, 1986, voters of the State of California approved two
measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 amends Article
XIIIA to provide that the terms "purchased" and "change of ownership," for purposes of determining
full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real
property between spouses and (2) the principal residence and the first $1,000,000 of other property
between parents and children.
Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who
sell their residence to buy or build another of equal or lesser value within two years in the same county,
to transfer the old residence's assessed value to the new residence. Pursuant to Proposition 60, the
Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60.
Implementing Legislation. Legislation enacted by the California Legislature to implement
Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other
law, local agencies may not levy any property tax, except to pay debt service on indebtedness
approved by the voters prior to July 1, 1978, and that each county will levy the maximum tax permitted
by Article XIIIA of$4.00 per$100 assessed valuation (based on the traditional practice in California of
using 25% of full cash value as the assessed value for tax purposes). The legislation further provided
that, for fiscal year 1978-79, the tax levied by each county was to be appropriated among all taxing
agencies within the county in proportion to their average share of taxes levied in certain previous years.
The apportionment of property taxes in fiscal years after fiscal year 1978-79 has been revised
pursuant to Statutes of 1979, Chapter 282 which provides relief funds from State moneys beginning
in fiscal year 1978-79 and is designed to provide a permanent system for sharing State taxes and
budget surplus funds with local agencies. Under Chapter 282, cities and counties receive about one-
third more of the remaining property tax revenues collected under Proposition 13 instead of direct
State aid. School districts receive a correspondingly reduced amount of property taxes, but receive
compensation directly from the State and are given additional relief. Chapter 282 does not affect the
derivation of the base levy ($4.00 per$100 assessed valuation) and the bonded debt tax rate.
Effective as of fiscal year 1981-82, assessors in California no longer record property values in
the tax rolls at the assessed value of 25% of market values. All taxable property is shown at full market
value (subject to a 2% annual limit in growth so long as property is not sold). In conformity with this
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change in procedure, all taxable property value included in this Official Statement is shown at 100%
of market value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for bond
service and pension liability are also applied to 100% of market value.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of
ownership, annual inflationary value growth of up to 2%)will be allocated on the basis of"situs" among
the jurisdictions that serve the tax rate area within which the growth occurs except for certain utility
property assessed by the State Board of Equalization ("Unitary Property") which is allocated by a
different method as described under"—Unitary Property" below.
Classifications of Property. In California, property which is subject to ad valorem taxes is
classified as "secured" or "unsecured." Secured and unsecured properties are entered on separate
parts of the assessment roll maintained by the county assessor.
The secured classification includes property on which any property tax levied by the County
becomes a lien on that property sufficient, in the opinion of the county assessor, to secure payment of
the taxes. Every tax which becomes a lien on secured property has priority over all other liens on the
secured property, regardless of the time of the creation of other liens. A tax levied on unsecured
property does not become a lien against the taxes on unsecured property, but may become a lien on
certain other property owned by the taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the two
classifications of property. The taxing authority has four ways of collecting unsecured property taxes
in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a
certificate in the office of the county clerk specifying certain facts an order to obtain a judgment lien on
certain property of the taxpayer; (3)filing a certificate of delinquency for record in the county recorder's
office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of the
personal property, improvements or possessory interests belonging or assessed to the assessee. The
exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured
roll is the sale of property securing the taxes to the State for the amount of taxes which are delinquent.
A 10% penalty also applies to delinquent taxes on property on the unsecured roll, and further, an
additional penalty of 1 1/2% per month accrues with respect to such taxes beginning the first day of the
third month following the delinquency date.
The valuation of property is determined as of January 1 each year and equal installments of
taxes levied upon secured property become delinquent on the following December 10 and April 10.
Taxes on unsecured property are due August 1 and become delinquent August 31.
Supplemental Assessments. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498)
provides for the supplemental assessment and taxation of property as of the occurrence of a change
in ownership or completion of new construction. Previously, statutes enabled the assessment of such
changes only as of the next tax lien date following the change and thus delayed the realization of
increased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498
provided increased revenue to redevelopment agencies to the extent that supplemental assessments
as a result of new construction or changes of ownership occur within the boundaries of redevelopment
projects subsequent to the tax lien date. To the extent such supplemental assessments occur within
the Project Area, Tax Revenue may increase.
Property Tax Administration Costs. In 1990,the Legislature enacted SB 2557(Chapter 466,
Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating
property tax revenues to local government jurisdictions on a prorated basis.
Unitary Property. Commencing in fiscal year 1988-89,the Revenue and Taxation Code of the
State of California changed the method of allocating property tax revenues derived from State
assessed utility properties. It provides for the distribution of State assessed values to tax rate areas
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by a county-wide mathematical formula rather than assignment of State assessed value according to
the location of those values in individual tax rate areas.
Commencing with fiscal year 1988-89, each county has established one county-wide tax rate
area. The assessed value of all unitary property in the county has been assigned to this tax rate area
and one tax rate is levied against all such property ("Unitary Revenues").
The property tax revenue derived from the assessed value assigned to the county-wide tax
rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to 2% of the increase
in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or
increases less than 2%, or any increase in Unitary Revenues above 2% will be allocated among
jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year
to the total Unitary Revenues county-wide.
However, legislation adopted in 2006 (SB 1317, Chapter 872) and taking effect with fiscal year
2007-08 required counties to transfer certain railroad properties into a countywide tax rate area from
their existing tax rate area. Taxes on these properties are now distributed in a manner similar to other
unitary properties, except that redevelopment agencies no longer share in the distribution.
Assessment Appeals. An assessee of locally assessed or State-assessed property may
contest the taxable value enrolled by the county assessor or by the State Board of Equalization
("SBE"), respectively. The assessee of SBE-assessed property or locally-assessed personal property,
the valuation of which is subject to annual reappraisal, actually contests the determination of the full
cash value of property when filing an assessment appeal. Because of the limitations to the
determination of the full cash value of locally assessed real property by Article XIIIA, an assessee of
locally assessed real property generally contests the original determination of the base assessment
value of the parcel, i.e. the value assigned after a change of ownership or completion of new
construction. In addition, the assessee of locally assessed real property may contest the current
assessment value (the base assessment value plus the compounded annual inflation factor) when
specified conditions have caused the full cash value to drop below the current assessment value.
At the time of reassessment, after a change of ownership or completion of new construction,
the assessee may appeal the base assessment value of the property. Under an appeal of a base
assessment value, the assessee appeals the actual underlying market value of the sale transaction or
the recently completed improvement.A base assessment appeal has significant future revenue impact
because a reduced base year assessment will then reduce the compounded value of the property
prospectively. Except for the 2% inflation factor allowable under Article XIIIA, the value of the property
cannot be increased until a change of ownership occurs or additional improvements are added.
Under Section 51(b) of the Revenue and Taxation Code, the assessor may place a value on
the tax roll lower than the compounded base assessment value if the full cash value of real property
has been reduced by damage, destruction, depreciation, obsolescence, removal of property or other
factors causing a decline in the value. Reductions in value under Section 51(b), commonly referred to
as Proposition 8 reductions, can be achieved either by formal appeal or administratively by assessor
staff appraising the property. A reduced full cash value placed on the tax roll does not change the base
assessment value. The future impact of a parcel subject to a Proposition 8 appeal is dependent upon
a change in the conditions which caused the drop in value. In fiscal years following a successful
Proposition 8 appeal, the assessor may determine that the value of the property has increased as a
result of corrective actions or improved market conditions and enroll a value on the tax roll up to the
parcel's compounded base assessment value. Additionally, successful appeals regarding property on
the unsecured rolls does not necessarily affect the valuation of such property in any succeeding fiscal
year.
Utility companies and railroads may contest the taxable value of utility property to the SBE.
Generally, the impact of utility appeals is on the State-wide value of a utility determined by SBE.
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The actual valuation impact to the District from successful assessment appeals will occur on
the assessment roll prepared after the actual valuation reduction.
THE DISTRICT
General
The District, which was established in 1946 under the Sanitary District Act of 1923, builds,
operates and maintains the facilities required to collect and process wastewater for the approximately
348,000 residents of Danville, Lafayette, Martinez, Moraga, Orinda, Pleasant Hill, San Ramon, and
Walnut Creek, encompassing a service area of 145 square miles. The District also treats wastewater
for 140,000 residents (as of 2018) of the Concord/Clayton area under a contract with the City of
Concord, referred to herein as the Concord Agreement. The District also provides household
hazardous waste disposal services for the localities noted above, and for an additional 9 square mile
area of portions of Martinez and San Ramon served by other wastewater utility providers. The District
is located approximately 30 miles east of San Francisco, California.
During 2018,the District was inducted as a member of Leading Utilities of the World, a network
of the world's most forward-thinking water and wastewater utilities. The District's wastewater facility
has also won the National Association of Clean Water Agencies (NACWA) 20th Platinum Award,
continuing a distinguished record of excellence. NACWA Platinum Awards recognize 100%
compliance with permits over a consecutive five-year period. Platinum Awards are be given to facilities
with a consistent record of full compliance for a consecutive five year period
District Facilities
General. There are approximately 1,540 miles of sewer pipeline, ranging in size from 6 inches
to 120 inches in diameter, and 18 sewage pumping stations in the District's sewerage system. The
District's treatment plant in Martinez (the "Treatment Plant") treats an average dry weather daily flow
(ADWF) of 35 million gallons of wastewater each day. In addition:
• The District incinerates approximately 200 wet tons of sludge each day, reducing the
sludge to approximately 10-14 tons of sterile ash.
• The District operates a cogeneration facility that uses a combination of methane from
a landfill and natural gas to produce electricity and steam for the plant. On average,
approximately 3,200 kilowatts of power - more than 90% of the plant's daily power
needs- is produced.
• The District produces approximately 600 million gallons of recycled water each year
for plant operations, industrial uses, and landscape irrigation.
In addition to its wastewater responsibility, the District also operates a Household Hazardous
Waste Collection Facility(the"HHW Collection Facility") in Contra Costa County. The HHW Collection
Facility collects approximately 2 million pounds of household hazardous waste each year. The HHW
Collection Facility is located adjacent to the District's wastewater treatment plant.
Treatment Plant. The Treatment Plant treats approximately 35 million gallons (ADWF) of
wastewater per day("MGD"). Located in Martinez, the Treatment Plant has a treatment capacity of 54
MGD and 250 MGD of wet weather flow. The Treatment Plant processed an average daily flow of 44
MGD in 2017 and a peak hourly flow of 181 MGD during 2017. The Plant Operations Building houses
the Control Center, a state-of-the-art computerized system that monitors and controls every phase of
the treatment process. The Treatment Plant is staffed 24 hours a day, 365 days a year.
Wastewater moves through the District's 1,540 miles of sewer lines, finally arriving at the
Treatment Plant's headworks to begin treatment. Most of the wastewater is treated to a secondary
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level, disinfected by ultraviolet light, and then discharged into Suisun Bay. Approximately 600 million
gallons per year are treated to a tertiary level through additional filtration and disinfection before being
distributed as Recycled Water for landscape irrigation, industrial processes, and plant operations.
Recycled Water. Part of the Treatment Plant's operation, the Recycled Water Program
produces approximately up to 600 million gallons of recycled water for irrigation, landscaping and
industrial use. CCCSD provides landscape irrigation water that meets all the requirements of the State
Department of Health Services and the California Regional Water Quality Control Board for
unrestricted landscape irrigation. Approved uses include irrigation at schools, parks, playgrounds,
median strips and playing fields, as well as dust control and industrial uses. Recycled water is
distributed directly to users via a pressure distribution system that consists of purple pipelines, pumping
stations, and meter box assemblies (purple pipes are used to distinguish them from drinking water
lines).
The recycled water distribution system is completely separate from the drinking water
distribution system. A comprehensive evaluation and physical test of each customer's water system is
conducted to verify that it is separate from any drinking water system. This inspection is required by
the Department of Health Services prior to any customer beginning service off the recycled water
system, and ensures that no cross-connections occur between the customer's drinking water system
and the District's recycled water system.
Laboratory. A state-of-the-art facility performs almost 40,000 chemical and biological tests
each year.
HHW Collection Facility. The HHW Collection Facility collects more than two million pounds
of hazardous waste each year. The HHW Collection Facility is located adjacent to the Treatment Plant.
District Management and Employees
Board of Directors.The District is governed by a five-member Board of Directors each elected
from the District at large for four-year terms.
Management. The District's affairs are managed by the General Manager in accordance with
policies established by the Board of Directors. Brief resumes of certain of the District's staff are set
forth below.
Roger S. Bailey, General Manager. Roger Bailey was appointed to the position General
Manager at Central San on August 19, 2013. He has more than 25 years of experience in water
and wastewater, and has a strong track record in organizational transformation and cost
effectiveness. Before his employment at Central San, Roger served as the head of the City of
San Diego Public Utilities Department. Prior to joining the City of San Diego, he served as
Deputy City Manager and Utilities Director for the City of Glendale, Arizona; Utilities Director for
the City of Royal Palm Beach, Florida; Assistant Utilities Director for the City of Valdosta,
Georgia; and Senior Engineer with the City of Tallahassee Water Utilities Department. Under
his leadership, San Diego and Glendale's Utilities Department won platinum awards for Utility
Excellence from the Association of Metropolitan Water Agencies. He is a registered professional
engineer in Arizona and Florida. His education includes M.S. and B.S. degrees in Civil
Engineering from Florida A&M University. He also holds a B.S. degree in Physics and
Mathematics from the University of Winnipeg, Canada.
Mr. Bailey is involved in several prominent industry organizations including Global Water
Leaders, Leading Utilities of the World, the National Association of Clean Water Agencies,
WateReuse, and the California Association of Sanitation Agencies. He is also a member of the
John Muir Health Board Finance Committee.
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Ann Sasaki, Deputy General Manager. Ann Sasaki has been employed by the District
since December 2014. In this capacity she oversees the day-to-day operations of the District,
specifically the Operations Department, Finance and Administration, and Human Resources.
She previously served as an Assistant Director for the City of San Diego Public Utilities
Department where she oversaw capital improvement planning and engineering, development
review, regulatory compliance, and facilities operations. She has more than 30 years of
experience in the water and wastewater field. She earned a Bachelor of Science degree in Civil
Engineering from California State University, Long Beach and a Masters in Business
Administration from the University of San Diego. She is a licensed Professional Engineer in the
State of California.
Jean-Marc H. Petit, Director of Engineering and Technical Services. Jean-Marc Petit is
a registered Civil Engineer in California and has been employed by the District since 2014. He
was previously employed by Carollo Engineers, Inc. a consulting engineer firm for 15 years,
and was a shareholder where he reached a position of Vice President and Chief Engineer.
Previously Mr. Petit was a senior project manager and a partner at Stand Associates a
consulting Engineering firm in Madison WI, where he worked for 12 years. He is a member of
several professional organizations including WEF, CWEA, CASA, and NACWA. Mr. Petit
earned a BS degree in Civil Engineering and a minor in mathematics from Colorado State
University in 1984 and a MS degree in Civil and Environmental Engineering from Colorado State
University in 1986.
Philip Leiber, Director of Finance&Administration. Philip Leiber has been employed by
the District since 2016. He has previously served as the Chief Financial Officer of utilities
including the Los Angeles Department of Water and Power, Seattle City Light, the California
Independent System Operator, and has over 25 years of financial management experience. Mr.
Leiber earned a Masters Degree in Accounting and a Bachelors degree in Business
Administration from the University of Michigan in 1992. He is a certified public accountant
(California), Certified Treasury Professional (CTP) and Chartered Global Management
Accountant(CGMA).
Katie Young, Secretary of the District, was appointed to this position in 2018. She
currently heads the Secretary of the District Office which includes Administrative Support and
Records Management functions for the District. She has previously served as the District
Secretary for the North Marin Water District in Novato, CA. Mrs. Young earned a Bachelor's
degree in Liberal Arts from Dominican University in 2005.
Kenton L. Alm, District Counsel. Kenton Alm has served the District in this capacity
since 1989. He is a partner in the law firm of Meyers Nave, in Oakland, California. Mr. Alm
earned a BA degree from the University of California, Santa Barbara and a JD degree from the
University of California, Hastings College of Law in 1973. His professional memberships include
the California Bar Association. He is licensed to practice in all California courts and several
Federal Court Districts, and the Ninth Circuit Court of Appeals. He is active in several legal and
legislative public law, industry, and environmental organizations.
Employees. The District has 290 budget position and currently has approximately 270 regular
employees organized in 3 departments: Administration, Operations, (including Collection System
Operations and Plant Operations & Maintenance), Engineering & Technical Services. The 161 non-
supervisory employees of the District are represented by Public Employees Union, Local #1, Concord
("Local#11"). The 95 supervisors, middle managers, and confidential employees are represented by the
Management Support and Confidential Group ("MSCG"). The current Memoranda of Understanding
with Local #1 and with MSCG each expired on December 17, 2017. Negotiations with the bargaining
units have been ongoing since mid-2017. In June 2018, notices of impasse were provided by the District
to Local #1 and MSCG, and mediation commenced with a State of California mediator to facilitate
continued discussion between the bargaining units and the District. In addition to the current MOU
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period, negotiations for the last five-year contract also extended beyond the expiration date. The District
has not experienced any interruptions in operations because of employer/employee disputes.
Pension Plan
Substantially, all District full-time employees are required to participate in the Contra Costa
County Employees' Retirement Association ("CCCERA"), a cost-sharing multiple-employer public
employee deferred benefit retirement plan (the "Plan"), governed by the County Employee's
Retirement Law of 1937 ("CERU), as amended, and the California Public Employees' Pension Reform
Act of 2013 ("PEPRA"). The latest available actuarial and financial information for the Plan is for the
year ended December 31, 2016. The Contra Costa Employees' Retirement Association issues a
publicly available financial report that includes financial statements and supplemental information of
the Plan.
The Plan provides for retirement, disability, and death and survivor benefits. Annual cost of
living (COL)adjustments to retirement allowances can be granted by the Retirement Board as provided
by State statutes. Service retirements are based on age, length of service and final average salary.
Subject to vested status, employees can withdraw contributions plus interest credited, or leave them
as a deferred retirement when they terminate, or transfer to a reciprocal retirement system.
Contributions to the Plan are made by both the members (active employees) and the District
based upon a percentage of each member's pensionable compensation. Employee membership in
CCCERA is divided into two tiers: Legacy members (membership or reciprocal membership prior to
January 1, 2013) and PEPRA members (membership on or after January 1, 2013 and reciprocity not
eligible for Legacy membership). Contribution rates are determined by annual actuarial valuations and
approved by the CCCERA Board to fund the Normal Cost for a given years' service and any unfunded
liability that has accrued. The cost-sharing split of Normal cost for Legacy members is stipulated in the
CERL and varies based on an employee's entry age into the system. PEPRA members are required
by PEPRA to pay at least 50% of the Normal Cost. All contributions towards the unfunded liability are
borne by the District. The District Board can negotiate additional retirement expense cost-sharing
pursuant to the terms of a collective bargaining agreement/MOU with employee bargaining units.
The Plans' provisions and benefits in effect as of July 1, 2017, are summarized as follows:
Tier Legagy PEPRA
Membership Date Before 1/1/13, Including On or after
Reciprocity 1/1/13
Membership Count 220 54
Employee Rates 11.85% (Average) 11.70%
District Rates 53.39% 48.01%
Benefit Formula 2%@55 2%@62
Vesting 5 Years, but Benefit 5 Years
Starts after 10 Years
Retirement Age 50 52
Benefit Cap 100% of Salary No Cap
Pensionable Income Most Non-Overtime Pay Base Pay Only
Annual Income Cap 2017: $2701000 2017: $1421530
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Contributions - The contribution requirement and payment from the District for the plan year
ended June 30, 20171 2016 and 2015 was as follows:
2017 2016 2015
Covered payroll for fiscal years ended June 30, $ 3215011073 $ 3015521659 $ 2719301233
Employer contributions to pension 1810431391 2217521611 2414511234
Employee contributions to pension 516081003 511961358 518601025
Total Contributions $ 2316511394 $ 2719481969 $ 3013111259
Source:Central Contra Costa Sanitary District.
Unfunded Liability - The unfunded actuarial accrued liabilities with CCCERA for the past five
years were as follows:
December 31, 2012 $14215231585
December 31, 2013 $12017921362
December 31, 2014 $10019551188
December 31, 2015 $8811821228
December 31, 2016 $8115501100
The amounts set forth in this discussion of the District's Retirement costs and figures,
including, for example, actuarial accrued liabilities and funded ratios, are based upon numerous
demographic and economic assumptions, including investment return rates, inflation rates, salary
increase rates, cost of living adjustments, postemployment mortality, active member mortality, and
rates of retirement. Prospective purchasers of the District's bonds are cautioned to review and
carefully assess the reasonableness of the assumptions set forth in the documents that are cited as
the sources for such information. In addition, prospective purchasers of the District's bonds are
cautioned that such sources and the underlying assumptions are made as of their respective dates,
and are subject to change. Prospective purchasers of the District's bonds should also be aware that
some of the information presented in this discussion of the Retirement System contains forward-
looking statements and the actual results of the CCCERA retirement plans may differ materially
from the information presented herein.
In 2017, the District established a Pension Prefunding Trust Fund to accumulate assets that
can be used to pay CCCERA pension funding obligations. A third party, PARS, administers this Trust,
and Highmark Capital Management serves as investment advisor. Per PARS, the market value of
trust assets as of March 30, 2018, including trust contributions and interest was $4,374,815.
See notes to the financial statements for additional information about the Pension Plan.
Litigation involving CCCERA. The District is a party in two cases in which labor organizations
have challenged the implementation of recent pension reform legislation authored by Governor
Brown alleging that the "anti-spiking" reform provisions interfere with vested rights of current
members of the CCCERA, of which the District is a member agency. The primary case arising in
the County was consolidated with several similar cases from other counties. The consolidated
cases are now entitled Alameda County Deputy Sheriff's Association v. Alameda County Employees
Retirement Ass. and BD. of Alameda County Employees Retirement Assn. and the matter is now
before the California Supreme Court (Case No. S247095). The enactment and implementation of
this new legislation eliminated several mechanisms whereby retirees could significantly enhance
pension benefits through adding the value of unused accumulated vacation and sick leave buy
backs at or near the time of retirement. The trial court decision generally sustained implementation
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of the legislative reform provisions, which had the effect of reducing the District's normal retirement
and URAL costs by several millions of dollars per year. The Appellate Court reversed the trial court
ruling and the appeal from that decision is before the Supreme Court. If the Supreme Court upholds
implementation of the legislative pension reforms, the pension costs of the District will remain much
the same as they have been over the last several fiscal years. If the Supreme Court deems that
certain of the reform provisions violate the prior vested rights of certain employees, then both the
District's normal and URAL pension costs will increase potentially by an amount up to approximately
6% of the District's total annual salary cost for a number of years into the future.
Post-Employment Health Care Benefits
The District provides certain health care and, depending on Tier, certain other benefits for
retired employees and beneficiaries. These other post-employment benefits ("OPEB Benefits") are
specified in negotiated employment agreements, commonly referred to as Memorandums of
Understanding, which cover substantially all employees who reach normal retirement age while
working for the District.
The OPEB Benefits are provided through a defined benefit post-employment healthcare plan
(DPHP). The DPHP is part of the Public Agency portion of the Public Agency Retirement System
(PARS), an agent multiple-employer plan administered by PARS,which acts as a common investment
and administrative agent for participating public employees within the State of California. A menu of
benefit provisions as well as other requirements is established by the State statute with the Public
Employees' Retirement Law. DPHP selects optional benefit provisions from the benefit menu by
contract with PARS and adopts those benefits through District resolution. PARS issues a separate
Comprehensive Annual Financial Report.
The level of OPEB Benefits offered to employees vary by hire date. Presently, three primary
levels of OPEB Benefit tiers exist,with the latest Tier effective for employees hired after June 30, 2009.
Benefits are also provided to spouses of retirees, and for two of the three tiers, other dependents.
In 2009, the District established an OPEB Trust Fund to accumulate assets and pay OPEB
benefits related to eligible retirees. PARS administers this Trust, and Highmark Capital Management
serves as investment advisor. Per PARS, trust assets as of June 30, 2017 and 2016, including trust
contributions and interest, total $52,328,367 and $42,703,154, respectively
In April 2004, the Governmental Accounting Standards Board ("GASB") issued Statement No.
43, "Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans."Statement No.
43 establishes uniform financial reporting standards for postemployment healthcare and other non-
pension benefits ("OPEB") plans. The approach followed in Statement No. 43 is generally consistent
with the approach adopted for defined benefit pension plans with modifications to reflect differences
between pension plans and OPEB plans. Statement No. 43 became effective for the District for the
fiscal year ending June 30, 2009.
In addition, in June 2004, GASB issued Statement No.45, Accounting and Financial Reporting
by Employers for Postemployment Benefits Other Than Pensions, which addresses how state and
local governments should account for and report their costs and obligations related to OPEB.
Statement No. 45 generally requires that employers account for and report the annual cost of OPEB
and the outstanding obligations and commitments related to OPEB in essentially the same manner as
they currently do for pensions. Statement No. 45's provisions may be applied prospectively and do not
require governments to fund their OPEB plans. An employer may establish its OPEB liability at zero
as of the beginning of the initial year of implementation; however, the unfunded actuarial accrued
liability is required to be amortized over future periods. Statement No. 45 also establishes disclosure
requirements for information about the plans in which an employer participates, the funding policy
followed, the actuarial valuation process and assumptions, and, for certain employers, the extent to
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which the plan has been funded over time. Statement No. 45 became effective for the District's fiscal
year ending June 30, 2009.
Unfunded Liability - The unfunded actuarial accrued liabilities attributed to OPEB for the last
five fiscal years were as follows:
FY 2013-14 $7517691000
FY 2014-15 $7012091000
FY2015-16 $6719611000
FY 2016-17 $5518471000
FY 2017-18 $5410301000
See Note 10 to the District's fiscal year 2016-17 audited financial statements appended to this
Official Statement as Appendix C for further information about the cost and funding status of the
District's OPEB plan.
Investment Policy
The investment policies and practices of the District are established by ordinance of the District's
Board of Directors. The investment policy is reviewed annually by the Board of Directors. The investment
policy was last updated in September 2017. The investment policy specifies allowable investments for
the District's working and reserve funds ("general investments"), as well as providing separate
guidelines for fiduciary Trust fund investments (OPEB Trust and Pension Prefunding Trust) and bond
related investments(which are subject to bond related documents). Bond related investments are limited
to instruments specified as Permitted Investments. See "APPENDIX A—Summary of Indenture"for the
Permitted Investments definition for the Bonds.
The maximum maturity for general investments of the District is one year. Prior approval of the
Board of Directors must be obtained to acquire investments with maturities beyond five years.
The District uses the services of the Treasurer's Office of the County of Contra Costa to transact
the District's investment decisions. The County Treasurer's Office executes the District's investments
through such brokers, dealers, and financial institutions as are approved by the County Treasurer, and
through the State Treasurer's Office for investments in the Local Agency Investment Fund.
The Finance Manager submits a monthly investment report to the Board of Directors. According
to the monthly investment report for the month ended April 30, 2018, the District had invested funds in
its Running Expense Fund (from which the District pays for ongoing operations)and Sewer Construction
Fund as set forth in the table below. The District had, as of April 30, 2018, sufficient funds in the Running
Expense Fund and Sewer Construction Fund to pay for six months of cash flow needs.
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TABLE 1
CENTRAL CONTRA COSTA SANITARY DISTRICT
Investment Portfolio Summary(l)
(as of April 30, 2018)
Investment Type Market Value Par Value Maturity Date Annual Yield
LAIF $5813551973 $5815001000 -- --(2)
Comm Paper 214851688 215001000 7/25/2018 2.300%
Comm Paper 214851465 215001000 7/27/2018 2.313%
FHLB 19,962,400 20,000,000 6/8/2018 1.420%
FHLB 319841040 410001000 7/18/2018 1.817%
FHLB 4,978,300 5,000,000 7/25/2018 1.877%
Total $9212511866 $9215001000
(1)Does not include the District's Self-Insurance Fund,which is invested in the State's Local Agency Investment Fund(LAIF).
(2)Annual Yield of Local Agency Investment Fund(LAIF)varies with the composition of the Fund.The estimated yield as of
April 2018 was 1.650%.
Source:Central Contra Costa Sanitary District.
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Service Area and Customers
Service Area. The District provides wastewater collection, treatment and disposal service to
the entire area within its boundaries. The District is the sole provider of wastewater service within the
District limits.
TABLE 2
CENTRAL CONTRA COSTA SANITARY DISTRICT
Population Served
Inside District Concord/ Total
As Of January 1 Boundaries Clayton Served % Change
1993 2711580 1211575 3931155 2.0%
1994 2751500 1221500 3981000 1.2
1995 2801390 1231490 4031880 1.5
1996 2781330 1211200 3991530 (1.1)
1997 2811650 1211850 4031500 1.0
1998 2871320 1241030 4111350 1.9
1999 2901780 1251610 4161390 1.2
2000 2941170 1261300 4201470 1.0
2001 2911230 1351150 4261380 1.4
2002 2931080 1341920 4281000 0.4
2003 3021675 1351900 4381575 2.5
2004 3031980 1351845 4391825 0.3
2005 3081428 1351780 4441208 1.0
2006 3091600 1351400 4451000 0.2
2007 3141400 1341300 4481700 0.8
2008 3171340 1341560 4511900 0.7
2009 3221200 1341000 4561200 1.0
2010 3261600 1341400 4621000 1.3
2011 3211800 1331600 4551400 (1.4)
2012 3261900 1341200 4611100 1.3
2013 3321600 1341900 4671500 1.4
2014 3351009 1351856 4701865 0.7
2015 3391029 1371357 4761386 1.2
2016 3401667 1401916 4811583 1.1
2017 3441591 1391654 4841245 0.6
2018 3481333 1401590 4881923 1.0
Source:California Department of Finance Demographic Research Unit"Report E-5,Population and Housing
Estimates for Cities, Counties and the State, January 1, 2011-2018, with 2010 Benchmark", supplemented
with additional property tax roll data from Mt. View Sanitary District and the Dublin San Ramon Services
District
Customer Base. Residents make up the largest segment of the District's customer base
representing 133,140 accounts and approximately 81% of the District's fiscal year 2016-17 sewer
service charge billings. The following table shows a breakdown of the wastewater customer base for
fiscal year 2016-17 (unaudited).
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TABLE 3
CENTRAL CONTRA COSTA SANITARY DISTRICT
Active Service Accounts and Fiscal Year 2016-17 Billings
2016-2017 Sewer Residential
No. of Service Charge Unit Percentage
User Group�2� Accounts Billings Equivalents of Total
Residential 1131045 $6819631633 1371105 81%
Mixed Use 213 216691727 51308 3
Office 772 213301477 41633 3
Food Service 234 211201572 41216 2
Hotel/Motel 22 111801440 21347 1
Government 174 8701631 11731 1
Market/Supermarket 48 8511179 11692 1
Schools 251 8411767 11673 1
Businesses 429 7261188 11444 1
Automotive/Car Wash 241 6301563 11254 1
Recreation/Entertainment 103 5621221 11118 1
All Other User Groups 872 313201804 61602 4
Subtotal 1161404 $8510681203 1691122 100%
(1) Does not include revenue from the City of Concord under the Concord Agreement.
(2) Residential includes mobile homes; Food Service includes bakeries; Mixed Use includes commercial with
food service, retail; and shopping centers;All Other User Groups includes permitted industry amounts with four
major hospitals.
Source:Central Contra Costa Sanitary District.
Total revenues from the 19 largest customers for fiscal year 2016-17 (unaudited)were or
approximately 19.06% of total fiscal year 2016-17 operating revenues ($88,607,167). Set forth below is
a summary of the 10 largest customers by order of billing during fiscal year 2016-17.
TABLE 4
CENTRAL CONTRA COSTA SANITARY DISTRICT
Largest Customers - Fiscal Year 2016-17
Fiscal Year 2016-17 Percentage of Total
Customer Operating Revenues Operating Revenues
City of Concord(1) $1318511253 15.63%
Contra Costa County General Service(2) 5471943 0.62
First Walnut Creek Mutual 4621650 0.52
Park Regency Apartments 4341404 0.49
Second Walnut Creek Mutual Apartments 3651250 0.41
John Muir Health(2). 3221601 0.36
Sun Valley Mall 2981005 0.34
San Ramon Unified School District 2251339 0.25
Branch Creek Vista Apartments 1941800 0.22
Kaiser Foundation Hospital(2) 1861281 0.21
Total $1618881526 19.06%
(1) See"—Concord Agreement"below.
(2) Contra Costa County General Services, John Muir Health, and Kaiser Hospital are permitted industries.
Source:Central Contra Costa Sanitary District.
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Concord Agreement
Concord Agreement. In 1974 the District entered into a contract with the City of Concord to
provide wastewater treatment and disposal services for both the City of Concord and the City of
Clayton. The contract, which has been amended five times (1976, 1982, 1985, 1987, and 2002), sets
forth the terms and conditions under which the District is to perform services and the City is to
reimburse the District for its capital and operations and maintenance costs. This agreement, as
amended, is the "Concord Agreement" as defined in the Indenture.
The original contract was approved on September 10, 1974 and continued in effect until 1999,
at which time the contract was renewed for another 25 years. The contract renews itself automatically
every 25 years on the same terms unless one party of the contract gives a 5 year notice to the other
party prior to the expiration of any 25 year term, of its intention to terminate. The District has not been
notified and District staff is not aware of any intention to terminate the contract.
Concord/Clayton's sewer system is connected to the District's interceptor sewers at three
locations. Wastewater flow meters record the volume discharged at each location. Concord pays the
District for its share of the District's operation and maintenance costs and its share of capital costs for
commonly used facilities based on the total volumes and strengths of sewage generated within
Concord's and the District's service areas. The flow proportion for Fiscal Year 2017-18 from
Concord/Clayton is approximately 34%.
The District requires Concord to pretreat industrial waste. This is accomplished by requiring
their industrial customers to pre-treat their discharges to the system.
Service charges and contributions to capital costs by Concord since fiscal year 2007-08 are
set forth in the following table.
TABLE 5
CENTRAL CONTRA COSTA SANITARY DISTRICT
Payments under the Concord Agreement
Fiscal Years 2007-08 through 2016-17
Discharge
Volume Service Capital
Fiscal Year (mg) Charges Contributions Total
2007-08 41217 $812061860 $513361273 $13)543)133
2008-09 31924 817551857 5,485,858 14,251,715
2009-10 41077 816641668 316281949 1212931617
2010-11 41507 912241952 312161190 12,441,142
2011-12 41279 10,647,389 215411688 13,189,077
2012-13 41213 1014831421 316161771 141100,192
2013-14 31914 11,625,864 318201858 15,446,722
2014-15 31826 12,892,945 218971491 15,790,436
2015-16 31878 13,913,960 316711892 171 585,852
2016-17 41800 13,851,253 414761961 181 328,214
Source: Central Contra Costa Sanitary District
Agreement to allow District Sewering into Concord. The District and the City of Concord
are also parties to an Agreement for Sewer Services dated July 22, 1968. Under this agreement, the
City of Concord provides disposal and treatment of the sewage generated by a 28.7-acre portion of
the District's service area in Walnut Creek. The District is responsible for maintaining and repairing all
sewer lines, mains and laterals within the affected area, and it bills and collects all connection charges
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and sewer service charges and pays the amount collected to the City of Concord. In fiscal year 2016-
17, the District paid $35,418 of sewer service charges to the City of Concord for the affected area.
Billing and Collection of Sewer Service Charges
Chapter 6.12 of the District's Code of the District provides for the establishment of sewer
service charges, collection procedures, penalties for delinquency, and uses of funds.
General Policy. The purpose of the sewer service charge is to raise revenue for the cost of
maintenance and operation of sewerage facilities used for the collection, treatment, and disposal of
sewage from residential, commercial, institutional, and industrial users within the District, payment of
principal and interest on borrowings, and capital recovery costs in accordance with federal and State
Revenue Program Guidelines.
Collection of Charges on Tax Roll. Pursuant to provisions of Division 5, Part 3, Chapter 6,
Article 4 of the California Health and Safety Code,the District elected to have all sewer service charges
for each year, commencing with fiscal year 1976-77, collected on the tax roll.
To effectuate this billing, the District prepares and files with the District Secretary a written report
containing a description of each parcel and the amount of the sewer service charge for the forthcoming
fiscal year. Following the publication of notice of the filing of the report and the time, date, and place a
public hearing, the Board of Directors hears and considers all objections or protests to the report. Upon
conclusion of the hearing, the Board of Directors may adopt, revise, change, reduce, or modify any
charge or overrule any and all objections and will make its determination upon each charge, which
determination is final. A copy of the report adopted by the Board of Directors must be filed with the
Auditor of Contra Costa County on or before August 10 of each year.
The Tax Collector of Contra Costa County includes the amount of the sewer service charge
on bills for taxes levied against the respective lots and parcels of land. The first and second
installments due on November 1 and February 1 of each year, respectively become delinquent if not
paid by December 10 and April 10 of each year, respectively.
The District's sewer service charge constitutes a lien, as of the lien date for general property
taxes, on the lot or parcel of land against which the charge has been imposed. All laws applicable to
the levy, collection, and enforcement of general property taxes are applicable to the District's sewer
service charge, including those pertaining to delinquency, correction, cancellation, refund, and
redemption.
With respect to those properties that are not subject to taxation, Ordinance No. 117, Section
11-705 provides that the District will mail to the owner of the parcel a sewer service charge bill which
is due and payable in two installments on November 1 and February 1 of each year and which
becomes delinquent if not paid by December 10 and April 10 of each year.
Enforcement. In the event of the failure of any owner to pay when due any sewer service
charge applicable to a parcel, the District may enforce payments of such delinquent charges in any of
the following manners:
• The District may have the parcel disconnected from the sanitary sewer system. In the
event the disconnection should create a public hazard or nuisance, the General
Manager or authorized representatives may enter upon the parcel for the purpose of
doing such things as may be reasonably necessary to alleviate or remove the hazard
or menace.The owner of the parcel has a duty to reimburse the District for all expenses
incurred by the District in disconnecting any such parcel. No reconnection is made until
all charges are paid.
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• The District may institute action in any court of competent jurisdiction to collect any
charges, penalties, and interest which may be due and payable to the same manner
as any other debt owing to the District may be collected.
• Any and all delinquent payments may be placed on the tax roll and collected with the
property taxes, as provided in Ordinance No. 117.
• Such other action may be taken as may be authorized by law and the Board.
Billings and Delinquencies. A history of billings and collections by the District for sewer
service, which is levied on the property tax bill, is set forth in the following table. The District has
experienced full collections because the sewer service charges are collected on the property tax roll
and the County has adopted the Teeter Plan. See "— Property Taxes" below.
TABLE 6
CENTRAL CONTRA COSTA SANITARY DISTRICT
Billings and Delinquencies Fiscal
Years 2007-08 through 2016-17
Property Tax
Levied & Collection Sewer Service Charges Collection
Fiscal Year Collected(') Percentage Levied & Collected(') Percentage
2007-2008 $1210921637 100% $4818831932 100%
2008-2009 12,492,502 100 50,743,258 100
2009-2010 111 253,233(2) 100 50,896,210 100
2010-2011 1211711725 100 5011961629 100
2011-2012 12,032,525 100 54,586,208 100
2012-2013 13,185,988(3) 100 60,068,807 100
2013-2014 1311081176 100 6616041323 100
2014-2015 14,195,300 100 72,622,738 100
2015-2016 15,323,818 100 78,930,977 100
2016-2017 1614281089 100 8316011971 100
(1) General County taxes collected are the same as the amount levied since the County participates in California's alternative
method of apportionment called the Teeter Plan.The Teeter Plan as provided in Section 470 et seq.of the State Revenue and
Taxation Code,establishes a mechanism for the County to advance the full amount of property tax and other levies to taxing
agencies based on the tax levy, rather than on the basis of actual tax collections.Although this system is a simpler method to
administer,the County assumes the risk of delinquencies.The County in return retains the penalties and accrued interest
thereon.
(2) Actual amount received from the County. Net of Prop 1A loan to state of$985,916.
(3) Includes repayment of Prop 1Aloan in June, 2013.The repayment amount includes$985,916 of principal and$65,545 of interest
for a total of$1,051,461.
Source:Contra Costa County Auditor-Controller's Office
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Historical and Current Sewer Service Charges. Set forth in the following table is a summary of the
District's current Sewer Service Charges.
TABLE 7
CENTRAL CONTRA COSTA SANITARY DISTRICT
Current and Prior Years Sewer Service Charge
Fiscal Year Fiscal Year Fiscal Year
User Group 2016-17 2017-18 2018-19
Residential(rate per living unit) $503 $530 $567
Single Family Residence $487 $513 $549
Multi-Family Residence
Commercial/Non-Industrial(Rates per hundred cubic feet)
Standard Commercial Rate for Users Not Listed Below $4.98 $5.25 $5.61
Automotive $5.73 $6.04 $6.46
Bakeries $13.22 $13.93 $14.90
Hotels/Motels $8.64 $9.10 $9.74
Supermarkets $9.34 $9.84 $10.53
Mortuaries $11.47 $12.09 $12.93
Restaurants $9.34 $9.84 $10.53
Minimum Annual Charge $504.00 $530.00 $566.00
Industrial(Rates per unit specified)
Wastewater Flow(per hundred cubic feet) $3.67 $3.87 $4.14
Biochemical Oxygen Demand (per 1,000 pounds) $11216.00 $11281.27 $11370.72
Suspended Solids(per 1,000 pounds) $567.00 $597.44 $639.14
Fixed $87.23 $91.91 $98.33
Minimum Annual Charge $504.00 $530.00 $566.00
Special Discharge Permits&Contractual Agreements: Determined individually
Mixed Use(for parcels with shared water meter, rates per hundred cubic feet):
Rate Group XA: (90-99%Standard Commercial; 1-10% Restaurant) $5.32 $5.61 $6.00
Rate Group XB: (80-89%Standard Commercial; 11-20% Restaurant) $5.77 $6.08 $6.50
Rate Group XC: (70-79%Standard Commercial; 21-30% Restaurant) $6.23 $6.56 $7.02
Rate Group XD: (60-69%Standard Commercial; 31-40% Restaurant) $6.67 $7.03 $7.52
Rate Group XE: (50-59%Standard Commercial; 41-50% Restaurant) $7.12 $7.50 $8.03
Rate Group XF: (40-49%Standard Commercial; 51-60% Restaurant) $7.56 $7.97 $8.52
Rate Group XG: (30-39%Standard Commercial; 61-70% Restaurant) $8.01 $8.44 $9.03
Rate Group XH: (20-29%Standard Commercial; 71-80% Restaurant) $8.45 $8.90 $9.53
Rate Group XI: (10-19%Standard Commercial; 81-90% Restaurant) $8.91 $9.39 $10.04
Rate Group XJ: (31-34%Standard Commercial; 65-69% Bakery) $10.69 $11.26 $12.05
Rate Group XK: (21-30%Standard Commercial; 70-79% Bakery) $10.32 $10.87 $11.63
Rate Group XL: (16-20%Standard Commercial; 80-84% Bakery) $10.92 $11.51 $12.31
Rate Group XM: (11-15%Standard Commercial; 85-89% Bakery) $11.26 $11.86 $12.69
Rate Group XN: (5-10%Standard Commercial; 90-95 Bakery) $11.54 $12.16 $13.01
Rate Group XO: (10-15%Standard Commercial; 85-90% Bakery) $11.69 $12.32 $13.18
Minimum Annual Charge $504.00 $530.00 $566.00
Institutional(rates per hundred cubic feet unless otherwise noted):
Churches $4.98 $5.25 $5.61
Schools(Daycare, Preschool, University) $4.98 $5.25 $5.61
Schools(Elementary) $6.19 per $6.52 per $6.98 per
student student student
Schools(Intermediate) $12.16 per $12.81 per $13.71 per
student student student
Schools(High School) $12.16 per $12.81 per $13.71 per
student student student
Fraternal&Service Organizations $4.98 $5.25 $5.61
Local&State Institutions $4.98 $5.25 $5.61
Other Tax Exempt(Except Federal) $4.98 $5.25 $5.61
Federal Institutions $4.98 $5.25 $5.61
Utilities with Special Tax Status $4.98 $5.25 $5.61
Independent Living Facilities, Rest Homes&Convalescent Hospitals $4.98 $5.25 $5.61
Minimum Annual Charge $504.00 $530.00 $566.00
Source:Central Contra Costa Sanitary District.
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TABLE 8
CENTRAL CONTRA COSTA SANITARY DISTRICT
Historical Residential Sewer Service Charges
Single Family Annual Sewer Multi-Family Annual Sewer
Service Charge(SSC)(1) Service Charge(SSC)(1)
Fiscal Year Operations Capital(2) Total Operations Capital(2) Total
1990-1991 136 0 136 136 0 136
1991-1992 151 0 151 151 0 151
1992-1993 160 5 165 160 5 165
1993-1994 160 25 185 160 25 185
1994-1995 160 28 188 160 28 188
1995-1996 157 31 188 157 31 188
1996-1997 157 31 188 157 31 188
1997-1998 157 31 188 157 31 188
1998-1999 157 31 188 157 31 188
1999-2000 157 31 188 157 31 188
2000-2001 185 15 200 185 15 200
2001-2002 204 20 224 204 20 224
2002-2003 207 41 248 207 41 248
2003-2004 218 54 272 218 54 272
2004-2005 204 76 280 204 76 280
2005-2006 234 46 280 234 46 280
2006-2007 213 76 289 213 76 289
2007-2008 242 58 300 242 58 300
2008-2009 260 51 311 260 51 311
2009-2010 292 19 311 292 19 311
2010-2011 300 11 311 300 11 311
2011-2012 302 39 341 302 39 341
2012-2013 344 27 371 344 27 371
2013-2014 365 40 405 365 40 405
2014-2015 416 23 439 416 23 439
2015-2016 422 49 471 415 48 463
2016-2017 432 71 503 418 69 487
2017-2018 447 83 530 432 81 513
2018-2019(3) 400 167 567 388 161 549
(1) All residential accounts paid a flat annual sewer service charge shown above per household through 2014-2015. In 2015-
2016, as a result of a cost of service study,the District changed to a two tier single family and multi family rate structure.
The charge for commercial users consists of an annual rate based on a measured volume of water usage per 100 cubic
feet(HCF).
(2) Beginning in fiscal year 1992-93 the District's Sewer Service Charge"Capital"increment started, and allocated for capital
improvements.
(3) Allocation of Sewer Service Charge to Capital is increased. O&M allocation reduced due to drawdown of O&M reserve in
FY2018-19 versus contributions to O&M reserve in FY2017-18.
Source:Central Contra Costa Sanitary District.
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Comparative Sewer Service Charges. Set forth in the following table is a comparison of the
District's sewer service charges to rates in the surrounding region.
TABLE 9
CENTRAL CONTRA COSTA SANITARY DISTRICT
Comparative Annual Sewer Charges
July 2018
Annual Sewer
Agency Service Charge (1)(2)
Berkeley (EBMUD for treatment) $11379
Santa Rosa 11322
Benicia 971
Rodeo Sanitary DistrictBenicia 962
Petaluma 953
Richmond 824
Crockett Sanitary Department 789
Oakland (EBMUD for treatment) 767
Napa Sanitation District 676
Brentwood 653
Livermore 632
Novato 615
Concord (CCCSD for treatment) 592
Mt View Sanitary District 591
West County Wastewater District 576
Central San 567
Pleasanton (DSRSD for treatment) 560
Stege SD (EBMUD for treatment) 546
Vallejo 520
Pittsburg (Delta Diablo for treatment) 491
Fairfield (FSSD) 468
Antioch (Delta Diablo for treatment) 457
Dublin San Ramon Services District 423
Bay Point(Delta Diablo for treatment) 421
Union Sanitary District 407
Oro Loma Sanitary District 256
(1) Annual Sewer Service Charge per Single Family Residence,or SFR.
(2) Rates in effect on July 1 of FY 2018-19(July 1,2018)
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Sewer Service Charge Revenue. The following table sets forth the District's historical sewer
service charge revenue.
TABLE 10
CENTRAL CONTRA COSTA SANITARY DISTRICT
Historical Sewer Service Charge Revenue
Sewer Service
Fiscal Year Charge Revenue City of Concord
2007-2008 $49,841,521 $ 812061860
2008-2009 51,540,017 817551857
2009-2010 5118561611 816641668
2010-2011 50,897,772 912241952
2011-2012 5514701822 1016471389
2012-2013 6111551360 1014831421
2013-2014 6714611630 1116251864
2014-2015 73,895,644 12,892,945
2015-2016 80,553,763 13,913,960
2016-2017 85,289,379 13,851,253
Source:Central Contra Costa Sanitary District
Capacity Fees Used for Capital Improvements
New users who are connected to the Wastewater System are charged Capacity Fees that are
used to fund District Capital Improvements. Currently the District charges a Capacity Fee of $6,700
per residential unit equivalent ("RUE") for all new customers. New customers in areas where
wastewater pumping stations are needed to reach the District's gravity fed sewers are instead charged
a Pumped Zone Fee totaling $8,336 per RUE. A RUE is the capacity demand placed on the system
by a discharge of 200 gallons per day of"standard" domestic wastewater.
Capacity Fees for nonresidential customers are based on a calculation of the customer's
capacity demand, in RUEs, which takes both wastewater flow and strength into account.
Payment of Capacity Fees are due prior to the issuance of a permit for connection of the new
customer's parcel to the sewer system. For existing customers who change the use of their property
or build additions to existing uses which impose an added capacity burden on the District's facilities,
Capacity Fees for the added burden are due prior to the issuance of a building permit by the
appropriate building code enforcement agency.
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The following table summarizes current and historical Capacity Fees. Comparative information
for the surrounding area for the current fiscal year is set forth in the subsequent table.
TABLE 11
CENTRAL CONTRA COSTA SANITARY DISTRICT
Historical and Current Capacity Fees
Fiscal Year Capacity Fee Pumped Zone Fee
2007-2008 $41524 $11466
2008-2009 41923 11586
2009-2010 51298 11651
2010-2011 51451 11641
2011-2012 51465 11606
2012-2013 51797 11625
2013-2014 51930 11587
2014-2015 51995 11585
2015-2016 61005 11650
2016-2017 51948 11608
2017-2018 61300 71939
2018-2019 61700 81336
(1)New users who are connected to the Wastewater System are charged
Capacity Fees called Facility Capacity Fees. Fee is per connection.
(2)New customers in areas where wastewater pumping stations are needed to
reach the District's gravity fed sewers are charged a Pumped Zone Fee. Fee is
per connection.
Source:Central Contra Costa Sanitary District
TABLE 12
CENTRAL CONTRA COSTA SANITARY DISTRICT
Comparative Information for the Surrounding Area
June 2018
Capacity Fees
Agency (Per RUE)
Dublin San Ramon SD $171470
Mountain View Sanitary District 91371
FY 2018-19 CCCSD Pumped Zone Fee 81336
Antioch (Delta Diablo for Treatment) 71836
FY 2018-19 CCCSD Gravity 61700
Concord (CCCSD for treatment) 51043
West County Wastewater District 51744
Pittsburg (Delta Diablo for Treatment) 41358
Bay Point (Delta Diablo for Treatment) 31940
Source:Central Contra Costa Sanitary District.
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Property Taxes
General. For a discussion of the basis on which the District receives Tax Revenues, see
"SECURITY FOR THE BONDS-Tax Revenues" above.
Historical Assessed Valuation. The following table sets forth the District's total assessed
value since fiscal year 1993-94.
TABLE 13
CENTRAL CONTRA COSTA SANITARY DISTRICT
Gross Assessed Valuations
Fiscal Year Local Secured Unsecured0) Total % Change
1993-1994 $27103718791634 $11203)719)223 $28124115981857 3.9%
1994-1995 27,808,738,340 1,174,456,575 28,983,194,915 2.6
1995-1996 28,716,046,594 1,178,289,067 29,894,335,661 3.1
1996-1997 29153314451439 1,115,907,444 30,649,3521883 2.5
1997-1998 30158216741632 1110714381395 31,690,1131027 3.4
1998-1999 32,514,783,517 1,119,407,570 33,634,191,087 6.1
1999-2000 34,973,946,879 1,140,492,514 36,114,439,393 7.4
2000-2001 38,029,210,584 1,225,608,154 39,254,818,738 8.7
2001-2002 40,166,666,299 1,375,049,056 41,541,715,355 5.8
2002-2003 43117218801129 1143415981034 44,607,4781163 7.4
2003-2004 46,821,339,668 1,446,650,234 48,267,989,902 8.2
2004-2005 50,577,841,843 1,416,240,351 51,994,082,194 7.7
2005-2006 55,586,311,888 1,463,536,750 57,049,848,638 9.7
2006-2007 61,409,513,246 1,533,076,135 62,942,589,381 10.3
2007-2008 66,416,736,187 1158311871663 67,999,923,850 8.0
2008-2009 68,888,723,534 1,738,606,038 70,627,329,572 3.9
2009-2010 68,640,287,188 1,723,710,536 70,363,997,724 (0.4)
2010-2011 67,889,370,916 1,647,537,385 69,536,908,301 (1.2)
2011-2012 67,486,938,247 1,591,574,852 69,078,513,099 (0.7)
2012-2013 67,538,246,870 1,604,518,295 69,142,765,165 0.1
2013-2014 74,400,356,922 1,742,364,655 76,142,721,577 10.1
2014-2015 80,431,132,956 1173916421301 82,170,475,257 7.9
2015-2016 86,701,930,276 1,645,712,628 88,347,642,904 7.5
2016-2017 92,006,863,080 1,704,263,642 93,711,126,722 6.1
Source: Contra Costa County Auditor-Controller's Office
Historical Property Tax Collections; Teeter Plan. Table 6 details the property tax levies,
collections and delinquency rates in the District for recent years.
The Board of Supervisors of Contra Costa County has adopted the Alternative Method of
Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided
for in Section 4701 et seq. of the California Revenue and Taxation Code. As a result, the District can
expect to receive its share of the ad valorem property tax levy based on the amount levied rather than
the amount collected.
Regulatory Matters
Treatment Plant. The District is subject to the Federal Water Pollution Control Act, as
amended (the "Clean Water Act"), and the State of California Porter Cologne Water Quality Control
Act of 1969, as amended. Both federal and State regulations regulate the quality of effluent discharged
from the Treatment Plant and the disposal of sewage sludge from the Treatment Plant.
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Wastewater discharge criteria are currently established with respect to the Treatment Plant
under Order No. R2-2017-0009 (NPDES No.CA0037648) of the California Regional Water Quality
Control Board, San Francisco Bay Region. The Order expires on May 31, 2022.
The District's discharge of mercury to San Francisco Bay is regulated by Order R2-2017-
0041 (NPDES No. CA0038849) of the California Regional Water Quality Control Board, San
Francisco Bay Region. The Order expires on December 31, 2022.
The District is subject to a regional permit, also issued by the California Regional Water
Quality Control Board, San Francisco Bay Region, Waste Discharge Requirements For Nutrients
From Municipal Wastewater Dischargers To San Francisco Bay, Order No. R2-2014-0014 (NPDES
No. CA0038873). The Order expires June 30, 2019.
The District also operates the Treatment Plant under a Major Facility Review Permit (Tile V)
from the Bay Area Air Quality Management District. This Permit expires on March 11, 2020.
The District's record of 20 consecutive years of 100% compliance with the Treatment Plant
NPDES Permit was recently recognized by the National Association of Clean Water Agencies with
their Platinum-20 Peak Performance Award—a distinction earned by only a handful of wastewater
agencies nationwide. To receive this award, the District met stringent federal, State and regional water
quality standards when collecting, sampling, treating, testing and releasing wastewater every day for
the past 20 years without a single violation of its EPA-issued discharge permit.
HHW Collection Facility. In connection with operation of the HHW Collection Facility, the
District operates under an Annual Business Authorization Permit from the Contra Costa Health
Services– Hazardous Materials Program. The District's current Permit expires on June 30, 2019.
Recycled Water Program. In connection with its Recycled Water Program,which is regulated
under California Code of Regulations, Title 22, Division 4, Section 60301 et seq., the District operates
under a Letter of Approval –Water Reuse Program Order 96-011 issued by the California Regional
Water Quality Control Board, San Francisco Bay Region effective May 9, 1997. The permit provides
for self-monitoring and does not have a stated expiration date.
DISTRICT FINANCES
Financial Statements
The District is a proprietary entity, it uses an enterprise fund format to report its activities for
financial reporting purposes. Enterprise funds are used to account for operations that are financed and
operated in a manner similar to private business enterprises, where the intent of the governing body is
that the costs and expenses, including depreciation, of providing goods or services to the general public
on a continuing basis be financed or recovered primarily through user charges; or where the governing
body has decided that period determination of revenues earned, expenses incurred, and net income are
appropriate for capital maintenance, public policy, management control, accountability, or other
purposes.
Enterprise funds are used to account for activities similar to those in the private sector, where the
proper matching of revenues and costs is important and the full accrual basis of accounting is required.
With this measurement focus, all assets and liabilities of the enterprise are recorded on its balance sheet,
all revenue are recognized when earned and all expenses, including depreciation, are recognized when
incurred. Enterprise fund equity includes retained earnings and contributed capital.
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The District's enterprise fund is managed using four sub-funds, Operating & Maintenance (also
known as "Running Expense"), Sewer Construction, Self-Insurance, and Debt Service.
The District's fiscal year 2016-17 financial statements were audited by Maze Accountancy
Corporation, Pleasant Hill, California and are attached as Appendix C. Maze Accountancy Corporation
has consented to the inclusion of the fiscal year 2016-17 audited financial statements in this Official
Statement but has not reviewed this Official Statement.
The following table sets forth the District Statement of Revenues and Expenses for the past
four fiscal years.
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TABLE 14
CENTRAL CONTRA COSTA SANITARY DISTRICT
Statement of Revenues and Expenses
for Fiscal Years Ending June 30, 2014
through June 30, 2017
2013-2014 2014-2015 2015-2016 2016-2017
Operating Revenues:
Sewer Service Charges(SSC) $6017961421 $7010231512 $7212331903 $7311381235
City of Concord 11,625,864 12,892,945 13,913,960 13,851,253
Other Service Charges 110351134 110061197 9631014 110291500
Miscellaneous Charges 544,589 5931780 623,659 606,453
Total Operating Revenue 7410021008 8415161434 8717341536 8816251441
Operating Expenses:
Salaries&Benefits 5819541452 6611041630 6319881158 6213421392
Chemicals, Utilities&Supplies 810631309 714661490 713041619 811151004
Professional&Outside 319951860 313221881 411961302 318911224
Services
Hauling, Disposal, Repairs& 410411355 417581260 517801533 516621086
Maintenance
Self-Insurance(net of 2141290 4961381 721486 (300,108)
transfers)
Pension Expense - (3,012,757) (9,778,389) (4,080,558)
Depreciation 21,892,545 22,740,942 22,885,030 22,892,153
All Other 2,346,583 2,473,963 3,343,778 2,942,592
Total Operating Expenses 99,508,394 104,350,790 97,792,517 101,464,785
Operating Loss (25,506,386) (19,834,356) (10,057,981) (12,839,344)
Non-Operating Revenues
(Expenses):
Property Taxes 13,093,841 14,083,331 14,835,167 16,318,874
Connection&Other Fees 115751251 118431942 215461723 216001888
Interest Income 3591288 3181475 5621308 7611838
Interest Expense (1,996,689) (1,523,127) (1,427,641) (1,313,398)
All Other 932,464 1,828,530 1,195,095 966,244
Total Non-Operating 1319641155 16,551,151 1717111652 1913341446
Income Before Contributions (11,542,231) (3,283,205) 7,653,671 6,495,102
and Transfers
Customer Contributions 1014861067 617691623 1119911752 1616281105
Contributed Sewer Lines 114621316 7941218 117741168 218991042
Capital Contributions- 8,224,517 6,673,298 8,543,758 7,044,340
Capacity fees(Connection Fees)
Total Capital Contributions& 2011721900 1412371139 2213091678 2615711487
Transfers
CHANGE IN NET POSITION 816301669 10,953,934 29,963,349 33,066,589
Total Net Position-Beginning 635,714,997 644,345,666 563,607,078 593,570,427
Prior Period Adjustment- _ (91,692,522)
GASB 68 and 71
Total Net Position-Ending $64413451666 $56316071078 $59315701427 $62616371016
Statement of Net Position 2013-2014 2014-2015 2015-2016 2016-2017
Investments in Capital Assets, $56810061023 $57311751094 $58118441903 $60017701254
Net of Related Debt
Restricted for Debt Service 418091248 412881008 413631251 414491437
Unrestricted 71,530,395 (13,856,024) 7,362,273 21,417,312)55
Total Net Position $644,3451666 $563,6071078 $59315701427 $626,6371016
Source: Central Contra Costa Sanitary District Audited Financial Statements
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Indebtedness
The District has no outstanding bonds, notes or other obligations secured by the revenues of
the Wastewater System or Tax Revenues, except the District's obligations with respect to the 2009
Certificates which are anticipated to be refunded with the Bonds.
Capital Improvement Plan
General. Each year,the District develops an update to the ten-year Capital Improvement Plan.
The Ten-Year CIP is a "road map"for the upcoming and future District's capital facilities and financing
needs. Specifically, the plan identifies and prioritizes capital projects needed to accomplish Central
San's Vision, Mission, Values and Goals. The current plan incorporates the recommendations from
the June 2017 Comprehensive Wastewater Master Plan (CWMP). It also includes cost estimates for
proposed project work and projections for the various sources of revenue needed to meet the cash
flow requirements of the Plan.
The principal purpose of the Ten-Year CIP is to provide the Board with the information needed
to formulate long-range policy regarding:
• Priority and Schedule— Identify, prioritize, and schedule the projects necessary to
accomplish Central San's Vision, Mission, Values and Goals.
• Financing — Plan for sufficient financial resources to complete the proposed projects.
Current Capital Improvement Plan. The District's current Capital Improvement Plan covers
the ten-year period from fiscal year 2018-19 through 2027-28. The plan includes projected
expenditures totaling approximately $805.8 million (2018 dollars). Capital improvement projects are
grouped into four programs: Treatment Plant, Collection System, General Improvements, and
Recycled Water. Below is a brief discussion of each 10-year program. A summary of the next 10 years
of planned expenditures by program, without inflation, is contained in a subsequent table.
• Treatment Plant Program: The Treatment Plant Program will require $428.2 million
(2018 dollars), comprising 53.1% of the District's capital improvements over the next
ten years. The Treatment Plant Program includes projects that will address aging
infrastructure needs, meet regulatory requirements, address any hydraulic or
process capacity deficiencies, and improve sustainability or help meet sustainability
related goals. The emphasis of the Ten-Year CIP—Treatment Plant Program will be
on the repair and replacement of aging treatment plant infrastructure, improving
existing facilities to ensure reliable compliance with increasingly stringent regulatory
requirements, improving the resiliency of existing facilities against security threats
and natural hazards such as seismic and flooding events, and improving overall
energy efficiency. Treatment plant programs are grouped into three subcategories:
1) Liquid Treatment Process; 2) Solids Handling Process; or 3) General Treatment
Plant and Safety Improvements.
• Collection System Program:The Collection System Program includes projects that
will address aging and deteriorating infrastructure needs, meet regulatory
requirements, address any capacity deficiencies, and improve sustainability or help
meet sustainability related goals. At $309 million (2018 dollars), the Collection
System Program comprises 38.3% of the District's capital improvements over the
next 10 years. The emphasis of the Ten-Year CIP — Collection System Program will
be on rehabilitating and replacing deteriorating sewers, new development and sewer
expansion paid by developers within Central San's service area, upgrading aging
pump stations, and implementing large diameter and force main inspection
programs. The inspection programs will help to update the condition of existing
infrastructure and to confirm the timing and cost of rehabilitation or replacement of
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large diameter sewers and force mains. Overall, these projects are targeted at
reducing the risk of SSO's in the District's collection system. Collection System
program projects have been grouped into one of four subcategories: 1) Collection
System Rehabilitation and Replacement (R&R); 2) Pump Stations; 3) Regulatory
Compliance; 4) Contractual Assessment Districts (CADS) and Development
Sewerage.
General Improvements Program: The General Improvements Program will require
$25.4 million (2018 dollars), representing 3.1% of the District's anticipated capital
expenditures over the next 10 years. The General Improvement Program includes
projects that will address aging infrastructure needs, meet regulatory requirements,
and improve sustainability or help meet sustainability related goals. This includes
implementing property and building improvements, addressing equipment needs,
acquiring new properties if required, completing development of the Asset
Management Program, information management system and data management
system upgrades, general security improvements enhancement, and cyber security.
Many of the District's building are over 25 years of age and are starting to require
general building upgrades to both the interior and exterior of the buildings such as
painting, replacing ceiling tiles, upgrading fixtures, replacing roofs, replacing worn
furniture and other equipment, and upgrading buildings to meet current seismic
standards. The emphasis of the General Improvement Program for the Ten-Year CIP
will be on upgrading many of those aging buildings. In addition, the District will
continue to require routine acquisition of new equipment, vehicle replacement,
security improvements, and information technology improvements, and improved
cyber security enhancements. General Improvements Program projects have been
grouped into one of six sub-project categories: 1) Vehicles Replacement Program;
2) Equipment Acquisition; 3) Information Technology Development; 4) Building and
District Property; 5) Capital Project Legal Services; and 6) Asset Management
Program Development.
• Recycled Water Program: The District's Recycled Water Program includes projects
that will require $23.7 million (2018 dollars), comprising 2.9% of the District's capital
improvements over the next 10 years. The Recycled Water Program includes
projects that will address aging infrastructure needs, meet regulatory requirements,
address any capacity deficiencies, and improve sustainability or help meet
sustainability related goals. The emphasis of the Ten-Year CIP — Recycled Water
Program will be on continued expansion of the Zone 1 Recycled Water Program in
support of Board Policy 019 - Recycled Water, implementing improvements to the
existing recycled water filter plant and related support facilities to address aging
infrastructure to ensure reliable supply of recycled water, replacing and installing new
clear well liner and covers, and initiating ongoing rehabilitation and replacement of
recycled water distribution system assets. District staff will continue to explore and
plan for other potential recycled water projects and related improvements and
expansions that may be required. These other projects will likely involve the
wholesale of recycled water to a water purveyor in the future.
Ten-Year CIP Drivers
Projects included in the CIP address one of more of the four major drivers for implementing
capital improvement projects: 1) Aging Infrastructure; 2) Regulatory; 3) Capacity; and
4) Sustainability. Most project scopes include several project elements that address a range of
drivers which include:
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• Aging Infrastructure: Projects required to maintain the performance and reliability
of existing assets to ensure reliable conveyance and treatment of wastewater. Most
of the existing treatment plant facilities were constructed in the late 1970s and early
1980s following the passing of the Clean Water Act, and some of the collection
system facilities and piping were constructed as early as the 1940s and 1950s.
• Regulatory: Projects required to reliably comply with regulatory requirements that
are designed to protect human health and the environment, and includes planning
needed to anticipate potential future regulatory requirements. Regulatory drivers that
may trigger capital improvement projects include potential changes in future state
and/or federal water, air, and solids regulations. Potential regulatory drivers include:
changes to existing final effluent limits to address nutrients, selenium, contaminants
of emerging concern, and others; changes to California/National Toxics Rules,
303(d) listed pollutants and micropollutants, and new virus-based disinfection
criterion; reductions in greenhouse gas emission Cap and Trade Program thresholds;
compliance with Federal 129 sewage sludge incineration rules, changes to air
emission limits, and solids handling/management and disposal regulations; recycled
water, including potential coordinated projects with water agencies on Title 22,
indirect, and even indirect or direct potable reuse opportunities; and collection system
regulatory requirements such as the reduction of sewer system overflows (SSOs).
Occasionally, improvements are also required to improve the reliability of existing
facilities to ensure 100 percent compliance with regulatory permits and to ensure
protection of human health and the environment.
• Capacity: Projects required to increase capacity of existing facilities. Capacity
drivers that may trigger capital improvement projects include potential upgrades
required to mitigate hydraulic bottlenecks and increase capacity of existing facilities
to accommodate wastewater flows and loads. Projects that would be required to
accommodate planned growth are not included in the CIP.
• Sustainability/Energy/Optimization: Projects to minimize life-cycle costs,
maximize benefits, and achieve economic stability through optimization, resiliency,
resource recovery, and energy projects. Sustainability drivers that may trigger capital
improvement projects include upgrades to strive towards net zero energy, recycled
water projects to ensure the reliable supply of recycled water for use at the District
or by customers, and upgrades to improve the resiliency of District facilities.
Improvements to strive towards net zero energy or energy self-sufficiency include
energy efficiency measures such as installing more energy efficient equipment or
treatment processes, and renewable energy projects such as solar or wind.
2017 Comprehensive Wastewater Master Plan (CWMP). The foundation for the 10-year
CIP was the CWMP which was completed in June 2017. The CWMP provided an updated Capital
Improvement Plan for a 20-year planning horizon. The CWMP included descriptions, rationales, and
estimated costs for collection system and wastewater treatment plant capital improvement projects
and on-going programs to address aging infrastructure, meet existing and anticipated regulatory
requirements, accommodate planned growth, optimize energy use, and implement the District's
vision for the treatment plant that is consistent with the District's Strategic Plan. The CWMP was to
serve as a tool for maintaining a high level of service, establishing long-term fiscally responsible
policies for customers, and providing a clear direction for the District.
Some of potential future projects identified in the CWMP are not currently included in the 10-
year CIP. The CIP will be updated annually as the need for such projects is clarified. These future
projects are not included in the CIP and amount to about $920 million, of which approximately $510
million may be within the next 20 years. These projects include the following:
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• Nutrient Removal BACWA (Bay Area Clean Water Agencies) Levels 2/3: Possibly
beyond 20 years **
• Recycled Water Exchange (Refinery Recycled Water) Project-20 million gallons per
day (MGD) *
• Advanced Treatment/Contaminants of Emerging Concern Removal **
• Renewable Energy Projects (triggered by increased power demands from nutrient
removal) **
• Concord Community Reuse Project (CCRP) Recycled Water Facilities
Improvements *
• CCRP Collection System Improvements
• CCRP Recycled Water Distribution System (Central San current plan is to wholesale
recycled water, so distribution system was not evaluated or included in CIP)
* Projects expected to be cost neutral to Central San.
** Projects identified but not currently required by regulations.
The table on the following page shows the District's current CIP, covering Fiscal Years
2018-19 through 2027-28.
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August 2, 2018 Regular Board Meeting Agenda Packet- Page 173 of 253
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Page 147 of 183
Financing of the Capital Improvement Plan. The Ten-Year CIP anticipates funding from
revenue(Sewer Service Charge,Ad Valorem Taxes, Capacity Fees) and external financing. The Ten-
Year CIP is currently funded on a year-by-year basis when the capital improvement budget for the
forthcoming fiscal year is formally authorized and adopted by the Board. Changes in capital revenue
forecasts or changes in recommended expenditures may result in changes to the Ten-Year CIP.
The District has developed and maintained a capital fee system, which equitably divides the
cost obligations of the capital program between the existing customers of District facilities and new
customers of these facilities. Under this "fair share" approach, existing customers (primarily through
property taxes and a capital component of the annual sewer service charge) and new users (through
capacity fees based on a proportional "buy-in" to the current value of all existing capital assets) fund
facilities upgrade, renovation and replacement costs as well as expansion projects needed to
accommodate growth.
The Board has a long-standing preference for pay-as-you-go financing for routine collection
system work, where such work is to be funded from current year revenue sources and reserves. This
approach is described in the District's Debt Management policy, adopted in 2017. That policy does
permit financing of capital projects but sets parameters for the maximum portion of the Capital
Improvement Plan to be financed over a ten-year period, the duration of such financing and other
factors.
Prospectively, the only controllable source of revenue for the District is the Sewer Service
Charge, the rates of which are subject to Proposition 218 requirements. Thus, any reduction in capital
revenue from other sources, such as capacity fees, would have to be made up by an increase in the
Sewer Service Charge, by a like reduction in expenditures on the capital program, or by borrowing.
The District expects to finance a portion of the Capital Improvement Plan shown in fiscal year 2019-
20 and beyond with debt financing. Financing of capital projects, apart from pay-as-you -go financing,
may take the form of State Revolving Fund loans (to the extent the District successfully is awarded
such loans), or other debt obligations such as future revenue bond issuances.
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Historical Net Revenues, Tax Revenues and Debt Service Coverage
The following table sets forth revenues, expenses and debt service coverage figures for fiscal
years 2012-13 through 2016-17.
TABLE 16
CENTRAL CONTRA COSTA SANITARY DISTRICT
Historical Revenues and Expenses
(in $000's except service data and coverage)
2012-13 2013-14 2014-15 2015-16 2016-17
Gross
Revenues
Sewer services charges $561771 $601796 $701024 $721234 $731138
Sewer charges- City of Concord 101483 111626 121893 131914 131851
Permit and inspection fees 11170 11575 11844 21547 21601
Interest
income 131 173 166 322 77
Other service charges 1,828 1,580 1,600 1,587 1,636
Total Gross Revenues $701383 $751750 $861527 $901604 $911303
Operation and Maintenance
Costs')
Sewage
collection $141328 $161110 $181201 $161978 $161827
Sewage
treatment 231036 271809 291508 251960 251632
Engineering 81681 121309 131201 161302 151343
Recycled
Water 0 0 0 559 971
Administrative and general 21,097 21,388 23,217 24,887 23,881
Total Operation and Maintenance
Costs $671142 $771616 $841127 $841686 $821654
Total Operating Income (Loss) $31241 $(11866) $21400 $51918 $81649
Non-Operating Revenue
Sewer service charges (capital) $41384 $61665 $31872 $81320 $121151
Capital charges-City of
Concord 31617 31821 21897 31672 41477
Interest earnings (capital
reserve) 230 145 99 169 588
Capacity
Fees
(Connection
fees) 61092 81225 61673 81544 71044
Other
Income(2) 951 932 1,829 1,195 966
Total Non-Operating Revenues: $151274 $191788 $151370 $211900 $251226
Tax Revenues $131010 $131094 $141083 $141835 $161319
Maximum Annual Debt Services
(Net of Refundable Credits) $51567 $51881 $51557 $31811 $31791
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Debt Service Coverage
Net Revenues +Tax
Revenues") $311525 $311016 $311853 $421653 $501194
Debt Service Coverage 5.66x 5.27x 5.73x 11.19x 13.24x
Adjusted Net Revenues +Tax
Revenues'❑' $211816 $181970 $221283 $301437 $381673
Debt Service Coverage 3.92x 3.23x 4.01x 7.99x 10.20x
(1) Consistent with the definition of Operation and Maintenance Costs,this"Operation and Maintenance Costs"category does not
include depreciation. In addition, "Employee Benefits"are shown as a separate category in this table.
(2) Other Non-Operating Revenues includes Alhambra Valley fees and miscellaneous income.
(3) Net Revenues=Operating Revenues less Operating Expenses plus Non-Operating Revenue.
(4) Adjusted Net Revenues = Net Revenue less capacity fees (connection fees) and the capital component of payments under
the Concord Agreement.
(5) Items 1-4: Calculated in accordance with definitions used for the 2009 Certificates of Participation. Definitions of elements in
the DSC calculation change slightly in these 2018 Revenue Bonds.
Projected Net Revenues, Tax Revenues and Debt Service Coverage
The following table sets forth the District's projected Net Revenues, Tax Revenues, debt
service and debt service coverage for the fiscal years ending June 30, 2019 through June 30, 2022.
The projections are based on the following assumptions.
Rate Base Growth: The projections assume an approximately 0.31-0.35% annual increase in
the Wastewater System rate base, i.e., number of customers.
Rate adjustments: The projections assume the following rate increases in sewer service
charges: (i) 7% in fiscal year 2019-20, (ii) 7% in fiscal year 2020-21, (iii) and 6% in fiscal year 2021-
22. The District can provide no assurances it will be able to increase rates as projected. See "RISK
FACTORS— Proposition 218."
Expenses: The projections assume annual operation and maintenance expenses of the
Wastewater System will increase/(decrease) as follows: (i) (0.4%) in fiscal year 2019-20, (ii) 5.1% in
fiscal year 2020-21, (iii) 4.6% in fiscal year 2021-22
Debt:The projections assume new money debt issuances of: (i)$50 million in fiscal year 2019-
20, (ii) $135 million in fiscal year 2021-22. Such debt issuances are subject to Board approval and
bond market conditions and acceptance.
Property Tax Revenues:The projections assume an 2.5% increase in assessed values in fiscal
year 2019-20, 3.0% annual increases from fiscal years 2020-21 through 2021-22.
Interest earnings: The projections assume interest earnings on District funds as follows:
(i) 1.25% in fiscal year 2019-20, (ii) 1.50% in fiscal year 2020-21, and (iii) 2.00% in fiscal year 2021-
22.
The financial forecast represents the District's estimate of projected financial results based
upon its judgment of the most probable occurrence of certain important future events. Actual operating
results achieved during the projection period may vary from those presented in the forecast and such
variations may be material. The pledge of revenues of the District with respect to the Bonds under the
Indenture is limited to Net Revenues and Tax Revenues, and the District is not obligated to apply any
other revenues to pay the Bonds.
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TABLE 17
CENTRAL CONTRA COSTA SANITARY DISTRICT
Budgeted and Projected Revenues and Expenses
(in $000's except service data and coverage)
Budget Projections
2017-18 2018-19 2019-20 2020-21 2021-22
Gross Revenues
Sewer services charges $751221 $671074 $851937 $921266 $981143
Sewer charges-City of Concord 151200 141800 151630 161399 171247
Permit and inspection fees 11724 11783 11836 11892 11948
Interest income 78 600 548 655 911
Other service charges 2,436 _ 2,669 2,749 _ 2,832 _ 2,916
Total Gross Revenues $941659 $861926 $1061700 $1141044 $1211165
Operation and Maintenance Costs')
Sewage collection $171076 $161895 $191092 $201049 $211091
Sewage treatment 271023 261502 301019 311557 331218
Engineering 171034 171033 171125 181063 191102
Recycled Water 11319 11553 11181 11236 11295
Administrative and general 27,262 _ 27,738 _ 21,909 _ 23,013 _ 23,562
Total Operation and Maintenance Costs $891714 $891721 $891326 $931918 $981268
Total Operating Income (Loss) $41945 $(21795) $171374 $201126 $221897
Non-Operating Revenue
Sewer service charges (capital) $121100 $271926 $151857 $171024 $181109
Capital charges- City of Concord 61000 71150 111706 191849 181334
Interest earnings (capital reserve) 386 570 676 890 955
Capacity Fees
(Connection fees) 61413 61500 71594 71917 81258
Other Income(2) 462 443 452 461 470
Total Non-Operating Revenues: $251361 $421589 $361285 $461141 $461126
Tax Revenues $151874 $161835 $171249 $171767 $181300
Maximum Annual Debt Services (Net of $31790 $31584 $51116 $61657 $111038
Refundable Credits)
Debt Service Coverage
Net Revenues+Tax Revenues('' $461180 $561629 $701908 $841034 $871323
Debt Service Coverage 12.18x 15.80x 13.86x 12.62x 7.91 x
Adjusted Net Revenues+Tax Revenues(EI) $331767 $421979 $511608 $561268 $601731
Debt Service Coverage 8.91x 11.99x 10.09x 8.45x 5.50x
(1) Consistent with the definition of Operation and Maintenance Costs, this "Operation and Maintenance Costs" category does not include
depreciation. In addition, "Employee Benefits"are shown as a separate category in this table.
(2) Other Non-Operating Revenues includes Alhambra Valley fees and miscellaneous income.
(3) Net Revenues=Operating Revenues less Operating Expenses plus Non-Operating Revenue.
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Page 151 of 183
(4) Adjusted Net Revenues = Not Revenue less capacity fees (connection fees) and the capital component of payments under the Concord
Agreement.
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RISK FACTORS
The following factors, along with other information in this Official Statement, should be
considered by potential investors in evaluating the risks in the purchase of the Bonds.
Demand and Usage
There can be no assurance that the local demand for services provided by the Wastewater
System will continue according to historical levels. Reduction in the level of demand could require an
increase in rates or charges in order to produce Net Revenues sufficient to comply with the District's
rate covenants in the Indenture. Such rate increases could increase the likelihood of nonpayment, and
could also further decrease demand.
In addition, drought conditions and voluntary or mandatory conservation measures could
decrease usage of the services of the Wastewater System. Reduction in usage could require an
increase in rates or charges in order to produce Net Revenues sufficient to comply with the District's
rate covenants.
Expenses
There can be no assurance that Operation and Maintenance Costs of the Wastewater System
will be consistent with the levels described in this Official Statement. Changes in technology, increases
in the cost of energy or other expenses and increased regulatory requirements (including increased
regulation of treated wastewater discharge and emissions from the HHW Collection Facility) would
reduce Net Revenues, and could require substantial increases in rates or charges in order to comply
with the rate covenant. Such rate increases could increase the likelihood of nonpayment, and could
also decrease demand.
Property Taxes
The amount of Tax Revenues is dependent upon assessed values and property tax collections
in the District. Decreases in assessed values(whether as a result of assessment appeals or otherwise)
and increased property tax delinquencies will result in reduced Tax Revenues.
In addition, the amount of Tax Revenues is dependent upon State action. In previous years
the State has reallocated ad valorem property tax revenues from local agencies such as the District.
On November 2, 2004, California voters approved Proposition 1A, which amended the State
constitution to significantly reduce the State's authority over major local government revenue sources.
Under Proposition 1A, the State cannot, without providing replacement funding, (i) reduce local sales
tax rates or alter the method of allocating the revenue generated by such taxes, (ii)shift property taxes
from local governments to schools or community colleges, (iii) change how property tax revenues are
shared among local governments without two-third approval of both houses of the State Legislature
or (iv) decrease Vehicle License Fee revenues without providing local governments with equal
replacement funding. Proposition 1A allows the State to borrow up to 8% of total local property tax
revenues during a fiscal emergency declared by the Governor. The funds must be repaid within three
years, or the State cannot borrow again for 10 years.
Future Parity Obligations
Although the District has covenanted not to issue additional obligations payable from Net
Revenues and Tax Revenues on a senior basis to the Bonds, the Indenture permits the issuance by
the District of certain obligations that may have a lien upon the Net Revenues and Tax Revenues
which is on a parity basis to the lien which secures the Bonds (see "SECURITY FOR THE BONDS —
Parity Obligations" above).
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The coverage tests described in "SECURITY FOR THE BONDS—Parity Obligations" involve,
to some extent, projections of Net Revenues and Tax Revenues. If such indebtedness is issued, the
debt service coverage for the Bonds could be diluted below what it otherwise would be. Moreover,
there is no assurance that the assumptions that form the basis of such projections, if any, will be
actually realized subsequent to the date of such projections. If such assumptions are not realized, the
amount of future Net Revenues and Tax Revenues may be less than projected, and the actual amount
of Net Revenues and Tax Revenues may be insufficient to provide for the Bonds and such Parity
Obligations.
No Reserve Fund
The District is not funding a reserve fund for the Bonds. Accordingly, if Tax Revenues and Net
Revenues are insufficient to make debt service payments on the Bonds and any Parity Obligations,
Bondholders may not receive all amounts due to them.
Natural Disasters
The District, like all California communities, is likely to be subject to unpredictable seismic
activity, fires or floods. If there were a severe seismic, flood or fire event in the District, there could be
substantial damage to and interference with the District and its facilities, which could increase the
District's Operation and Maintenance Costs. In addition, widespread damage in the District's service
area from natural disasters could results in declines in both Gross Revenues and Tax Revenues.
Decreased Net Revenues and Tax Revenues could adversely impact the District's ability to pay
principal and interest with respect to the Bonds.
Seismic Activity. The District is located in an area of high seismic risk because it is adjacent to
a major tectonic plate interface (the San Andreas fault) between the North American and Pacific crustal
plates. In addition to the main trace of the San Andreas Fault, stresses resulting from movements along
the plate interface are relieved by earthquakes occurring on many smaller branches throughout the Bay
Area. There are several faults in the area that might be sources of significant ground shaking, including
the San Andreas (50 kilometers away), San Gregario (65 kilometers away), Hayward (24 kilometers
away), Calaveras (15 kilometers away) and Concord/Green Valley (2 kilometers away). The District has
invested in various seismic retrofitting projects to improve the resiliency of its facilities in light of these
risks. Further projects are planned in the Ten Year capital improvement plan (discussed above under
"DISTRICT FINANCES —Capital Improvement Plan").
Flooding Hazards. The District's Treatment Plant is subject to flooding from Walnut Creek as a
result of 500-year flood elevations; in 2008, the District completed flood control measures in
combination with the Contra Costa County Flood Control District to protect the Treatment Plant during
100-year flood events. The Treatment Plant is subject to flooding from storm precipitation within the
local drainage areas.
Fire Hazards. Wildland fires are a seasonal occurrence in California and are a risk in the less
densely-populated portions of the service area.
Proposition 218
General. On November 5, 1996, California voters approved Proposition 218, the so- called
"Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution,
which affect the ability of local governments to levy and collect both existing and future taxes,
assessments, and property-related fees and charges. Proposition 218, which generally became
effective on November 6, 1996, changed, among other things, the procedure for the imposition of any
new or increased property-related "fee" or "charge," which is defined as "any levy other than an ad
valorem tax, a special tax or an assessment, imposed by a (local government) upon a parcel or upon
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a person as an incident of property ownership, including user fees or charges for a property related
service" (and referred to in this section as a "property-related fee or charge").
Specifically, under Article XIIID, before a municipality may impose or increase any property-
related fee or charge, the entity must give written notice to the record owner of each parcel of land
affected by that fee or charge. The municipality must then hold a hearing upon the proposed imposition
or increase at least 45 days after the written notice is mailed, and, if a majority of the property owners
of the identified parcels present written protests against the proposal, the municipality may not impose
or increase the property-related fee or charge.
Further, under Article XIIID, revenues derived from a property-related fee or charge may not
exceed the funds required to provide the "property-related service" and the entity may not use such
fee or charge for any purpose other than that for which it imposed the fee or charge. The amount of a
property-related fee or charge may not exceed the proportional cost of the service attributable to the
parcel, and no property-related fee or charge may be imposed for a service unless that service is
actually used by, or is immediately available to, the owner of the property in question. Article XIIID is
the basis for the limitations on the use of Water System Net Revenues and Sewer System Net
Revenues described in "SECURITY FOR THE BONDS — Pledge of Net Revenues and Tax
Revenues."
In addition, Article XIIIC states that "the initiative power shall not be prohibited or otherwise
limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of
initiative to affect local taxes, assessments, fees and charges shall be applicable to all local
governments and neither the Legislature nor any local government charter shall impose a signature
requirement higher than that applicable to statewide statutory initiatives."
Judicial Interpretation of Proposition 218. After Proposition 218 was enacted in 1996,
appellate court cases and an Attorney General opinion initially indicated that fees and charges levied
for water and wastewater services would not be considered property-related fees and charges, and
thus not subject to the requirements of Article XIIID regarding notice, hearing and protests in
connection with any increase in the fees and charges being imposed. However, three recent cases
have held that certain types of water and wastewater charges could be subject to the requirements of
Proposition 218 under certain circumstances.
In Richmond v. Shasta Community Services District (9 Cal. Rptr. 3rd 121), the California
Supreme Court addressed the applicability of the notice, hearing and protest provisions of Article XIIID
to certain charges related to water service. In Richmond, the Court held that connection charges are
not subject to Proposition 218. The Court also indicated in dictum that a fee for ongoing water service
through an existing connection could, under certain circumstances, constitute a property-related fee
and charge, with the result that a local government imposing such a fee and charge must comply with
the notice, hearing and protest requirements of Article XIIID.
In Howard Jarvis Taxpayers Association v. City of Fresno (March 23, 2005), the California
Court of Appeal, Fifth District, concluded that water, sewer and trash fees are property-related fees
subject to Proposition 218 and a municipality must comply with Article XIIID before imposing or
increasing such fees. The California Supreme Court denied the City of Fresno's petition for review of
the Court of Appeal's decision on June 15, 2005.
In July 2006 the California Supreme Court, in Bighorn-Desert View Water Agency v. Verjil
(S127535, July 24, 2006), addressed the validity of a local voter initiative measure that would have (a)
reduced a water agency's rates for water consumption (and other water charges), and (b) required the
water agency to obtain voter approval before increasing any existing water rate, fee, or charge, or
imposing any new water rate, fee, or charge. The court adopted the position indicated by its statement
in Richmond that a public water agency's charges for ongoing water delivery are "fees and charges"
within the meaning of Article XIIID, and went on to hold that charges for ongoing water delivery are
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also "fees" within the meaning of Article XIIIC's mandate that the initiative power of the electorate
cannot be prohibited or limited in matters of reducing or repealing any local tax, assessment, fee or
charge. Therefore, the court held, Article XIIIC authorizes local voters to adopt an initiative measure
that would reduce or repeal a public agency's water rates and other water delivery charges. (However,
the court ultimately ruled in favor of the water agency and held that the entire initiative measure was
invalid on the grounds that the second part of the initiative measure, which would have subjected
future water rate increases to prior voter approval, was not supported by Article XIIIC and was
therefore invalid.)
The court in Bighorn specifically noted that it was not holding that the initiative power is free of
all limitations; the court stated that it was not determining whether the electorate's initiative power is
subject to the statutory provision requiring that water service charges be set at a level that will pay for
operating expenses, provide for repairs and depreciation of works, provide a reasonable surplus for
improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a
sinking or other fund for the payment of the principal of such debt as it may become due.
Compliance by the District with Proposition 218. The District's most recent sewer rates
were adopted in compliance with the Bighorn decision. See "THE DISTRICT— Billing and Collection
of Sewer Service Charges." The District will continue to comply with the provisions of Proposition 218
in connection with future rate increases.
Conclusion. It is not possible to predict how courts will further interpret Article XIIIC and Article
XIIID in future judicial decisions, and what, if any, further implementing legislation will be enacted.
Under the Bighorn case, local voters could adopt an initiative measure that reduces or repeals the
District's rates and charges, although it is not clear whether (and California courts have not decided
whether) any such reduction or repeal by initiative would be enforceable in a situation in which such
rates and charges are pledged to the repayment of bonds or other indebtedness. There can be no
assurance that the courts will not further interpret, or the voters will not amend,Article XIIIC and Article
XIIID to limit the ability of local agencies to impose, levy, charge and collect increased fees and
charges for utility service, or to call into question previously adopted utility rate increases.
Limited Recourse on Default
If the District defaults on its obligation to pay the Bonds, the Trustee has the right to accelerate
the total unpaid principal amounts of the Bonds. However, in the event of a default and such
acceleration there can be no assurance that the District will have sufficient Net Revenues and Tax
Revenues to pay the accelerated amounts due on the Bonds.
Limitations on Remedies Available; Bankruptcy
The enforceability of the rights and remedies of the owners of the Bonds and the obligations
of the District may become subject to the following: the federal bankruptcy code and applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the
enforcement of creditors' rights generally, now or hereafter in effect; equitable principles which may
limit the specific enforcement under State law of certain remedies; the exercise by the United States
of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary
exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State
and its governmental bodies in the interest of servicing a significant and legitimate public purpose.
Bankruptcy proceedings, or the exercising of powers by the federal or State government, if initiated,
could subject the owners to judicial discretion and interpretation of their rights in bankruptcy or
otherwise and consequently may entail risks of delay, limitation, or modification of their rights.
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Limited Obligation
The District's obligation with respect to the Bonds is a special obligation of the District payable
solely from Net Revenues and Tax Revenues and other funds provided for in the Indenture. Although
Tax Revenues includes ad valorem property taxes allocated to the District, the District has not agreed
to levy any form of taxation to pay the Bonds. The obligation of the District to pay the Bonds does not
constitute a debt or indebtedness of any city, county, the State of California or any of its political
subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.
Change in Law
In addition to the other limitations described in this Official Statement, the California electorate
or Legislature could adopt a constitutional or legislative property tax decrease or an initiative with the
effect of reducing revenues payable to or collected by the District. There is no assurance that the
California electorate or Legislature will not at some future time approve additional limitations that could
have the effect of reducing the Net Revenues or the Tax Revenues and adversely affecting the security
of the Bonds.
Loss of Tax Exemption
As discussed in this Official Statement under the caption "TAX MATTERS," interest with
respect to the Series A Bonds could become includable in gross income for purposes of federal income
taxation retroactive to the date the Series A Bonds were issued, as a result of future acts or omissions
of the District in violation of its covenants in the Indenture. Should such an event of taxability occur,
the Series A Bonds are not subject to a special prepayment and will remain outstanding until maturity
or until prepaid under one of the other prepayment provisions contained in the Indenture.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of owners of the Bonds to provide certain financial
information and operating data relating to the District by not later than nine months after the end of the
District's fiscal year (which is currently June 30) in each year commencing with the report for fiscal
year 2018-19 (the "Annual Report") and to provide notices of the occurrence of certain enumerated
events.
These covenants have been made in order to assist the Underwriter in complying with
Securities Exchange Commission Rule 15c2-12(b)(5) (the "Rule"). The specific nature of the
information to be contained in the Annual Report or the notices of material events by the District is set
forth in "APPENDIX D— Form of Continuing Disclosure Certificate."
[[The District has not failed to comply with all material obligations under its existing continuing
disclosure undertakings during the past five years.]] [Under review by Piper Jaffray.]
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing
law, the interest on the Series A Bonds is excluded from gross income for federal income tax purposes
and such interest is not an item of tax preference for purposes of the federal alternative minimum tax,
although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the
alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to
the end of its tax year in 2018 is taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the District
comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax Code") that
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must be satisfied subsequent to the issuance of the Series A Bonds. The District has covenanted to
comply with each such requirement. Failure to comply with certain of such requirements may cause the
inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date
of issuance of the Series A Bonds.
Interest on the Series B Bonds is not intended to be exempt from federal income taxation.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the
public (excluding bond houses and brokers) at which a Series A Bond is sold is less than the amount
payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of
federal income taxes and State of California personal income taxes. If the initial offering price to the
public(excluding bond houses and brokers) at which a Series A Bond is sold is greater than the amount
payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of
federal income taxes and State of California personal income taxes. De minimis original issue discount
and original issue premium is disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross
income and exempt from State of California personal income taxes to the extent properly allocable to
each owner thereof subject to the limitations described in the first paragraph of this section. The original
issue discount accrues over the term to maturity of the Series A Bond on the basis of a constant interest
rate compounded on each interest or principal payment date (with straight-line interpolations between
compounding dates). The amount of original issue discount accruing during each period is added to the
adjusted basis of such Series A Bonds to determine taxable gain upon disposition (including sale,
redemption, or payment on maturity) of such Series A Bond. The Tax Code contains certain provisions
relating to the accrual of original issue discount in the case of purchasers of the Series A Bonds who
purchase the Series A Bonds after the initial offering of a substantial amount of such maturity. Owners
of such Series A Bonds should consult their own tax advisors with respect to the tax consequences of
ownership of Series A Bonds with original issue discount, including the treatment of purchasers who do
not purchase in the original offering, the allowance of a deduction for any loss on a sale or other
disposition, and the treatment of accrued original issue discount on such Series A Bonds under federal
alternative minimum taxes.
Under the Tax Code, original issue premium is amortized on an annual basis over the term of
the Series A Bond (said term being the shorter of the Series A Bond's maturity date or its call date). The
amount of original issue premium amortized each year reduces the adjusted basis of the owner of the
Series A Bond for purposes of determining taxable gain or loss upon disposition. The amount of original
issue premium on a Series A Bond is amortized each year over the term to maturity of the Series A Bond
on the basis of a constant interest rate compounded on each interest or principal payment date (with
straight-line interpolations between compounding dates). Amortized Series A Bond premium is not
deductible for federal income tax purposes. Owners of premium Series A Bonds, including purchasers
who do not purchase in the original offering, should consult their own tax advisors with respect to State
of California personal income tax and federal income tax consequences of owning such Series A Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt
from California personal income taxes.
Other Tax Considerations. The opinions expressed by Bond Counsel are based upon existing
legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of
such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or
as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest
on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax
advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as
to which Bond Counsel expresses no opinion.
Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual
or receipt of interest on, the Bonds may have federal or state tax consequences other than as described
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above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other
federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition
of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
Form of Opinion
Bond Counsel expects to deliver opinions at the time of execution and delivery of the Bonds
in substantially the same form set forth in Appendix D.
NO LITIGATION
There is no action, suit or proceeding known to be pending or threatened, restraining or
enjoining the execution of the Indenture or the Bonds or in any way contesting or affecting the validity
of the Indenture or the Bonds. The District is not aware of any litigation, pending or threatened,
questioning the political existence of the District or contesting the District abilities to pledge revenues
or contesting the District's abilities to authorize the execution of the Indenture or the Bonds.
RATING
S&P Global Ratings, a division of Standard & Poor's Financial Services LLC ("S&P"), has
assigned a municipal bond rating of" "to the Bonds.
This rating reflects only the views of S&P, and an explanation of the significance of this rating,
and any outlook assigned to or associated with this rating, should be obtained from the respective
rating agency.
Generally, a rating agency bases its rating on the information and materials furnished to it and
on investigations, studies and assumptions of its own. The District has provided certain additional
information and materials to S&P (some of which does not appear in this Official Statement).
There is no assurance that this rating will continue for any given period of time or that this
rating not be revised downward or withdrawn entirely by S&P, if in the judgment of S&P, circumstances
so warrant. Any such downward revision or withdrawal of this rating may have an adverse effect on
the market price or marketability of the Bonds.
APPROVAL OF LEGALITY
Legal matters incident to the delivery of the Bonds are subject to the approving opinion of
Jones Hall,A Professional Law Corporation, San Francisco, California, Bond Counsel. Copies of such
opinion will be available at the time of delivery of the Bonds. Jones Hall is also acting as Disclosure
Counsel to the District. Certain matters will be passed upon for the District by Kenton Alm, Esq., and
for the Underwriter by Kutak Rock, LLP.
Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter's
counsel is contingent upon execution and delivery of the Bonds.
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VERIFICATION OF MATHEMATICAL ACCURACY
Upon delivery of the Bonds, , , , will deliver a report on the
mathematical accuracy of certain computations, contained in schedules provided to the Verification
Agent on behalf of the District, relating to the sufficiency of the amounts deposited with the Escrow
Agent, together with interest earnings, to pay, when due, the principal, whether at maturity or upon prior
redemption, interest and redemption premium requirements of the 2009 Certificates to be defeased and
redeemed. See "FINANCING PLAN —General."
UNDERWRITING
The Bonds are being purchased by Piper Jaffray & Co., as underwriter(the "Underwriter").
The Underwriter has agreed to purchase the Bonds at the following prices:
Series A Bonds: $ ,which is the par amount of the Series A Bonds, plus
a [net] original issue premium of$__, less an underwriters' discount of$ 1.
Series B Bonds: $ ,which is the par amount of the Series B Bonds, plus
a [net] original issue premium of$__, less an underwriters' discount of$ 1.
Bonds may be offered and sold by the Underwriter to certain dealers and others at prices lower
than the offering prices stated on the cover page thereof. The offering prices may be changed from
time to time by the Underwriter.
MISCELLANEOUS
References are made herein to certain documents and reports which are brief summaries
thereof and which do not purport to be complete or definitive and reference is made to such documents
and reports in their entirety for full and complete statements of the contents thereof.
The execution and delivery of this Official Statement have been duly authorized by the District.
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By
General Manager
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APPENDIX A
SUMMARY OF THE INDENTURE
The following is a brief summary of certain provisions of the Indenture not described
elsewhere in this Official Statement. Such summary is not intended to be definitive. Reference
is made to the actual Indenture(copies of which are available from the District)for the complete
terms thereof.
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APPENDIX B
CONTRA COSTA COUNTY GENERAL INFORMATION
The following information relating to the District and Contra Costa County, and the State of
California is supplied solely for the purposes of information. The District's obligation to pay the Bonds
and any other amounts coming due and payable under the Indenture are a special obligation of the
District limited solely to the Tax Revenues and the Net Revenues; the Bonds are not an obligation of
the County, the State or any political subdivisions other than the District.
THE COUNTY
General
Contra Costa County was incorporated in 1850 as one of the original 27 counties of the State,
with the City of Martinez as the County Seat. It is one of the nine counties in the San Francisco-
Oakland Bay Area. The County covers about 733 square miles and extends from the northeastern
shore of San Francisco Bay easterly about 50 miles to San Joaquin County. Contra Costa is bordered
on the south and west by Alameda County and on the north by Suisun and San Pablo Bays. The
western and northern shorelines are highly industrialized, while the interior sections are
suburban/residential, commercial and light industrial.
A large part of the interior of the County is served by the Bay Area Rapid Transit District
("BART"), a situation that has encouraged the expansion of both residential and commercial
development. In addition, economic development along the Interstate 680 corridor in the County has
been so substantial that three cities- Concord,Walnut Creek and San Ramon- placed among the top
four cities accounting for the greatest percentage increases in jobs in the entire Bay Area from 1985
through 1990.
County Government
The County has a general law form of government. A five-member Board of Supervisors, each
of whom is elected to a four-year term, serves as the County's legislative body. Also elected are the
County Assessor, Auditor-controller, Clerk-Recorder, District Attorney-Public Administrator, Sheriff-
Coroner and Treasurer-Tax Collector. A County Administrative Officer appointed by the Board of
Supervisors runs the day-to-day business of the County.
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Population
Contra Costa County is the ninth most populous county in California, with its population
reaching approximately 1,149,363 as of January 1, 2018. The availability of rapid transit, and relatively
more affordable housing compared to other San Francisco Bay area locations has continued to lead
to steady growth.
The following tables reflect the historic population figures for the County for the calendar years
2014 through 2018.
COUNTY OF CONTRA COSTA
Population Estimates-As of January 1
Cities&Localities 2014 2015 2016 2017 2018
Antioch 1091275 1101698 1121177 1121280 1131061
Brentwood 551614 571588 591484 611383 631042
Clayton 111146 111188 111234 111342 111431
Concord 1251610 1261433 1271926 1281282 1291159
Danville 421753 431161 431458 441048 441396
EI Cerrito 241071 241204 241455 24.674 241939
Hercules 241920 251206 251512 261185 261317
Lafayette 241550 241902 251078 251416 251655
Martinez 361829 371264 371415 371831 381097
Moraga 161507 161658 161776 161866 161991
Oakley 381661 391729 401459 411116 411742
Orinda 181137 181637 181821 191012 191199
Pinole 181756 181839 181924 191101 191236
Pittsburg 671849 681895 701233 711342 721647
Pleasant Hill 341178 341503 341745 341944 351068
Richmond 1071735 1081480 1091794 1101114 1101967
San Pablo 301011 301616 311126 311383 311593
San Ramon 771459 781561 791567 811354 821643
Walnut Creek 671039 681128 691736 701558 701667
Incorporated Total 9311100 9431690 9561920 9671231 9761850
Balance of County 166,918 168,638 170,359 172,082 172,513
County Total 150985018 151125328 151275279 151395313 151495363
Source: California Department of Finance.
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Industry and Employment
The unemployment rate was 2.8 percent in Contra Costa County in April 2018. This compares
with the unadjusted unemployment rate for California of 4.3 percent and 4.1 percent for the nation
during the same period.
COUNTY OF CONTRA COSTA
Civilian Labor Force, Employment and Unemployment; Employment by Industry
(Annual Averages)
2013 2014 2016 2016 2017
Civilian Labor Force(1) 5381000 5401900 5471500 5571000 5631800
Employment 4971700 5071500 5201000 5321200 5421300
Unemployment 401300 331400 271500 241800 211600
Unemployment Rate 7.5% 6.2% 5.0% 4.5% 3.8%
Wage and Salary Employment: (2)
Agriculture 800 800 700 800 800
Mining, Logging and Construction 211700 211800 221800 241900 251400
Manufacturing 151400 151300 151000 141800 151700
Wholesale Trade 81700 91200 91600 101400 101600
Retail Trade 411100 411600 421300 431200 431100
Transportation, Warehousing, Utilities 81900 91600 101600 111200 111600
Information 81600 81300 81300 81000 81000
Finance and Insurance 181700 181200 191400 201000 201200
Real Estate and Rental and Leasing 61600 61800 61900 61900 71100
Professional and Business Services 521100 531200 501900 521000 541400
Educational and Health Services 591500 611500 641100 671400 691200
Leisure and Hospitality 351400 361300 381300 401100 401800
Other Services 121100 121500 121700 121900 131000
Federal Government 41500 41500 41700 41800 41800
State Government 11300 11300 11400 11400 11400
Local Government 421500 431400 431300 431700 441200
Total, All Industries(3) 3371800 3441200 3501800 3621400 3701100
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(2) Industry employment is by place of work;excludes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source:State of California Employment Development Department.
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Major Employers
The major employers in Contra Costa County are shown in the following table:
CONTRA COSTA COUNTY
Major Employers
As of July 2018
Employer Name Location Industry
Bay Alarm Radio Monitoring Inc Walnut Creek Burglar Alarm Systems (whls)
BAY Area Rapid Transit Richmond Transit Lines
Bio-Rad Laboratories Inc Hercules Physicians&Surgeons Equip&Supls-Mfrs
Chevron Corp San Ramon Oil Refiners (mfrs)
Chevron Global Downstream LLC San Ramon Petroleum Products(whls)
Chevron Richmond Refinery Richmond Oil Refiners (mfrs)
Chevron Technology Ventures San Ramon Technology Assistance Programs
Chevron-Corp Not Available Real Estate
Contra Costa Regional Med Ctr Martinez Hospitals
Department of Veterans Affairs Martinez Clinics
Job Connections Danville Personnel Consultants
John Muir Medical Ctr Concord Hospitals
John Muir Medical Ctr Walnut Creek Hospitals
John Muir Medical Ctr-Concord Concord Medical Centers
Kaiser Permanente Antioch Med Antioch Hospitals
Kaiser Permanente Walnut Creek Walnut Creek Hospitals
La Raza Market Richmond Grocers-Retail
Martinez Medical Offices Martinez Clinics
Robert Half Intl San Ramon Employment Agencies&Opportunities
Santa Fe Pacific Pipe Lines Richmond Pipe Line Companies
Shell Oil Products Martinez Oil&Gas Producers
St Mary's College OF Ca Moraga Schools-Universities&Colleges Academic
Sutter Delta Medical Ctr Antioch Hospitals
US Veterans Medical Ctr Martinez Outpatient Services
USS-POSCO Industries Pittsburg Steel Mills (mfrs)
Source:State of California Employment Development Department,extracted from The America's Labor Market Information System
(ALMIS)Employer Database,2018 2nd Edition.
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Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the
aggregate of wages and salaries, other labor-related income (such as employer contributions to
private pension funds), proprietor's income, rental income (which includes imputed rental income of
owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all
sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total
are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and
personal contributions to social insurance. According to U.S. government definitions, the resultant
figure is commonly known as "disposable personal income."
The following table summarizes the total effective buying income for Contra Costa County, the
State and the United States for the period 2013 through 2017.
CONTRA COSTA COUNTY
Effective Buying Income
As of January 1, 2013 through 2017
Total Effective Median Household
Buying Income Effective Buying
Year Area (000's Omitted) Income
2013 Contra Costa County $3210611585 $611731
California 85816761636 481340
United States 6198217571379 431715
2014 Contra Costa County 3318331478 641090
California 90111891699 501072
United States 7135711531421 451448
2015 Contra Costa County 3714171068 681074
California 98112311666 531589
United States 7175716901399 461738
2016 Contra Costa County 3912481375 691967
California 1103611421723 551681
United States 8113217481136 481043
2017 Contra Costa County 4215431271 741398
California 1,113,648,181 591646
United States 8164017701229 501735
Source:The Nielsen Company(US),Inc.
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Commercial Activity
A summary of historic taxable sales within the County during the past five years in which data
are available is shown in the following table. Total taxable sales during calendar year 2016 in the
County were reported to be $15,92,4,591,516, a 1.60% increase over the total taxable sales of
$15,670,052,757 reported during calendar year 2015. Annual figures for calendar year 2017 are not
yet available. Taxable transactions are skewed toward the largest cities in the County, where the
concentration of retail establishments is greatest.
CONTRA COSTA COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number Number
of Permits Taxable of Permits Taxable
on August 1 Transactions on August 1 Transactions
2012 141343 $1010621437 211504 $1319971249
2013 141511 10,677,018 211449 14,471,988
2014 141657 11,092,210 211550 15,030,047
2015 0) 81980 11,420,248 231996 15,670,053
2016 141920 11,746,808 241064 15,924,592
(1)Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these reports
including the number of outlets that were active during the reporting period. Retailers that operate part-time are now
tabulated with store retailers.
Source:California State Board of Equalization, Taxable Sales in California(Sales&Use Tax).
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Construction Activity
Provided below are the building permits and valuations for Contra Costa County for
calendar years 2013 through 2017.
CONTRA COSTA COUNTY
Building Permit Valuation
(Valuation in Thousands of Dollars)
2013 2014 2015 2016 2017
Permit Valuation
New Single-family 4691376.5 4021109.1 6291638.5 6051151.7 5411940.5
New Multi-family 62,799.7 82,008.6 123,088.7 155,051. 551154.8
Res. Alterations/Additions 1951787.4 2561617.8 3011221.7 3121967.0 3541340.6
Total Residential 7271963.6 7401735.5 110531948.9 110731170.5 9511435.9
New Commercial 851341.7 211149.5 1221256.4 1441878.8 1331930.0
New Industrial 81927.8 1911855. 151020.1 111624.9 31552.0
New Other 89,877.6 941171.8 170,219.6 309,861. 108,530.0
Com. Alterations/Additions 2201737.0 1031359.8 2191320.4 3331717.2 3611757.0
Total Nonresidential 4041887.1 4101536.8 5261816.5 8001082.1 6071769.0
New Dwelling Units
Single Family 11585 11439 11909 11853 11732
Multiple Family 370 588 629 11043 272
TOTAL 11955 21027 21538 21896 21004
Source. Construction Industry Research Board, Building Permit Summary
Transportation
Availability of a broad transportation network has been one of the major factors in the County's
economic and population growth. Interstate 80 connects the western portion of the county to San
Francisco, Sacramento and points north to Interstate 5, the major north-south highway from Mexico
to Canada. Interstate 680 connects the central County communities to the rest of the Bay Area via
State Routes 4 and 24, the County's major east-west arteries.
Caltrans has completed Northern California's largest freeway interchange reconstruction
project at the intersection of Interstate 680 and Highway 24 in Walnut Creek. The$315 million project
added traffic lanes, an elevated bypass, and redesigned access patterns. Caltrans is currently
widening Interstate 80 in the western portion of the County at a cost of$200 million.
In addition to private automobiles, ground transportation is available to County residents from
the following service providers:
• Central Contra Costa Transit Authority provides local bus service to the central area of the
County including Walnut Creek, Pleasant Hill and Concord.
• BART connects the County to Alameda County, San Francisco and Daly City and Colma in
San Mateo County with two mail lines, one from the San Francisco area to Richmond and the
other to the Concord/Walnut Creek/Pittsburg/Bay Point area. BART finished construction of a
14 mile extension to the City of Pleasanton in nearby Alameda County at a cost of$517 million
in May 1997, and extension to Oakland Airport in 2014 BART now has 46 stations and
approximately 122 miles of trackway in its system. BART also completed an extension from
Pittsburg/Bay Point to Antioch in eastern Contra Costa County in May 2018.
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• AC Transit, a daily commuter bus service based in Oakland, provides local service and
connects Contra Costa communities to San Francisco and Oakland.
• Other bus service is provided by Greyhound.
• Commuter rail service is provided by the Capital Corridor, with daily runs between the Bay
Area and Sacramento that stops at the rail station Martinez, the County seat.
• The Santa Fe and Union Pacific Railroads' main lines serve the County, both in the industrial
coastal areas and the inland farm section.
Education and Community Services
Public school education in the County is available through nine elementary school districts,
two high school districts and seven unified school districts. These districts provide 136 elementary
schools, 35 middle,junior high and intermediate schools, 26 high schools, and a number of preschools,
adult schools, and special education facilities. In addition, there are 111 private schools with six or
more students in the County. School enrollment in January of 2000 numbered approximately 156,743
students in public schools and 18,643 students in regular graded private schools.
Higher education is available in the County through a combination of two-year community
colleges and four-year colleges. The Contra Costa County Community College District has campuses
in Richmond, Pleasant Hill and Pittsburg. California State University at Hayward operates a branch
campus, called Contra Costa Center, in the City of Concord where late afternoon and evening classes
in business, education and liberal arts are offered. St. Mary's College of California, a four-year private
institution, is located on a 100-acre campus in Moraga. Also located within the County is the John F.
Kennedy University campus in Orinda, which is completing a move into expanded space in downtown
Concord. In addition, County residents are within easy commuting distance of the University of
California, Berkeley. Approximately 64% of County adult residents have attended college, and
approximately 49% of County adult residents have completed four or more years of college.
There are nine privately operated hospitals and one public hospital in the County, with a
combined total of approximately 1,900 beds. Three of the private hospitals are run by Kaiser, the
largest health maintenance organization in the United States. Kaiser has opened a new hospital in
Richmond with new critical care beds, surgical suites and a full service emergency department. The
public hospital is Contra Costa Regional Medical Center("CCRMC"), a 156-bed facility that the County
rebuilt and opened to the public in 1998 on the existing campus in Martinez. Since completion of the
hospital in 1998, the County has completed a public health/clinical laboratory in 2001 and has initiated
construction of a new ambulatory care clinic on the campus of CCRMC.
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APPENDIX C
AUDITED FINANCIAL STATEMENTS OF THE DISTRICT
FOR FISCAL YEAR ENDING JUNE 30, 2017
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APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Central Contra Costa Sanitary District Central Contra Costa Sanitary District
2018 Wastewater Revenue Refunding Bonds, 2018 Wastewater Revenue Refunding Bonds,
Series A Series B(Federally Taxable)
This CONTINUING DISCLOSURE CERTIFICATE (this"Disclosure Certificate") is executed and
delivered by the Central Contra Costa Sanitary District (the "District") in connection with the execution
and delivery of the above-captioned bonds (the "Bonds"). The Bonds are being executed and delivered
pursuant to an Indenture of Trust (the "Indenture"), dated as of 11 20181 by and between the
District and U.S. Bank National Association, as trustee (the "Trustee").
The District covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed
and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in
order to assist the Participating Underwriter in complying with the Rule.
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which
apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section
2, the following capitalized terms shall have the following meanings:
"Annual Report"means any Annual Report provided by the District pursuant to, and as described
in, Sections 3 and 4 of this Disclosure Certificate.
"Annual Report Date" means the date that is 9 months after the end of the District's fiscal year
(currently April 1 based on the District's fiscal year end of June 30).
"Dissemination Agent" means, initially, the [[District]][[Trustee]], or any successor Dissemination
Agent designated in writing by the District and which has filed with the District a written acceptance of
such designation.
"Listed Events" means any of the events listed in Section 5(a) of this Disclosure Certificate.
WSRB" means the Municipal Securities Rulemaking Board, which has been designated by the
Securities and Exchange Commission as the sole repository of disclosure information for purposes of
the Rule, or any other repository of disclosure information that may be designated by the Securities and
Exchange Commission as such for purposes of the Rule in the future.
"Official Statement" means the final official statement executed by the District in connection with
the issuance of the Bonds.
"Participating Underwriter" means the original underwriter of the Bonds required to comply with
the Rule in connection with offering of the Bonds.
"Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as it may be amended from time to time.
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Section 3. Provision of Annual Reports.
(a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual Report
Date, commencing April 1, 2019, with the report for the 2017-18 fiscal year, provide to the MSRB, in an
electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements
of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report
Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District).
If by 15 Business Days prior to the Annual Report Date the Dissemination Agent(if other than the District)
has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to
determine if the District is in compliance with the previous sentence.The Annual Report may be submitted
as a single document or as separate documents comprising a package, and may include by reference
other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial
statements of the District may be submitted separately from the balance of the Annual Report, and later
than the Annual Report Date, if not available by that date. If the District's fiscal year changes, it shall give
notice of such change in the same manner as for a Listed Event under Section 5(c). The District shall
provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect
that such Annual Report constitutes the Annual Report required to be furnished by the District hereunder.
The Dissemination Agent may conclusively rely upon such certification of the District and shall have no
duty or obligation to review such Annual Report.
(b) If the District does not provide (or cause the Dissemination Agent to provide) an Annual
Report by the Annual Report Date,the District shall provide(or cause the Dissemination Agent to provide)
to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form
attached as Exhibit A.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules
and electronic format prescribed by the MSRB for the filing of annual continuing disclosure
reports; and
(ii) if the Dissemination Agent is other than the District, file a report with the District
certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and
stating the date it was provided.
Section 4. Content of Annual Reports. The District's Annual Report shall contain or incorporate
by reference the following:
(a) The District's audited financial statements prepared in accordance with generally accepted
accounting principles as promulgated to apply to governmental entities from time to time by the
Governmental Accounting Standards Board. If the District's audited financial statements are not available
by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format
similar to the financial statements contained in the final Official Statement, and the audited financial
statements shall be filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or before the Annual
Report Date, financial information and operating data with respect to the District for the preceding fiscal
year, substantially similar to that provided in the corresponding tables in the Official Statement:
(i) Principal amount of Bonds outstanding.
(ii) The information for the most recently completed fiscal year in the form of[[Tables
31 51 81 13 and 18]].
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(iii) A description of any Parity Obligations issued during the most recently completed
fiscal year.
(c) Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the District or related public entities, which are available to
the public on the MSRB's Internet web site or filed with the Securities and Exchange Commission. The
District shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The District shall give, or cause to be given, notice of the occurrence of any of the following
Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices
or determinations with respect to the tax status of the security, or other material events affecting the tax
status of the security.
(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an
obligated person, or the sale of all or substantially all of the assets of the City or an obligated person
(other than in the ordinary course of business), the entry into a definitive agreement to undertake such
an action, or the termination of a definitive agreement relating to any such actions, other than pursuant
to its terms, if material.
(14) Appointment of a successor or additional fiscal agent or the change of name of the fiscal
agent, if material.
(b) Whenever the District obtains knowledge of the occurrence of a Listed Event,the District shall,
or shall cause the Dissemination Agent (if not the District) to, file a notice of such occurrence with the
MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10
business days after the occurrence of the Listed Event.
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(c) The District acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if
the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier "if material"
and that subparagraph (a)(6) also contains the qualifier "material" with respect to certain notices,
determinations or other events affecting the tax status of the Bonds. The District shall cause a notice to
be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it
determines the events occurrence is material for purposes of U.S. federal securities law. Whenever the
District obtains knowledge of the occurrence of any of these Listed Events, the District will as soon as
possible determine if such event would be material under applicable federal securities law. If such event
is determined to be material, the District will cause a notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Agreement, any event described in paragraph (a)(12) above
is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or
similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other
proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction
over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by
leaving the existing governing body and officials or officers in possession but subject to the supervision
and orders of a court or governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement, or liquidation by a court or governmental authority having supervision or
jurisdiction over substantially all of the assets or business of the District.
Section 6. Identifying Information for Filings with the MSRB.All documents provided to the MSRB
under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the
MSRB.
Section 7. Termination of Reporting Obligation. The Districts obligations under this Disclosure
Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the
Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of
such termination in the same manner as for a Listed Event under Section 5(c).
Section 8. Dissemination Agent. The District may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may
discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The
initial Dissemination Agent shall be the District. Any Dissemination Agent may resign by providing 30
days' written notice to the District.
Section 9.Amendment;Waiver. Notwithstanding any other provision of this Disclosure Certificate,
the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may
be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be
made in connection with a change in circumstances that arises from a change in legal requirements,
change in law, or change in the identity, nature, or status of an obligated person with respect to the
Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule,
as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the
manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii)
does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the
holders or beneficial owners of the Bonds.
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If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto
containing the amended operating data or financial information shall explain, in narrative form, the
reasons for the amendment and the impact of the change in the type of operating data or financial
information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed
in preparing financial statements, the annual financial information for the year in which the change is
made shall present a comparison between the financial statements or information prepared on the basis
of the new accounting principles and those prepared on the basis of the former accounting principles.
The comparison shall include a qualitative discussion of the differences in the accounting principles and
the impact of the change in the accounting principles on the presentation of the financial information, in
order to provide information to investors to enable them to evaluate the ability of the District to meet its
obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the
change in the accounting principles shall be filed in the same manner as for a Listed Event under Section
5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the District from disseminating any other information, using the means of dissemination set forth
in this Disclosure Certificate or any other means of communication, or including any other information in
any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate,
the District shall have no obligation under this Disclosure Certificate to update such information or include
it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. If the District fails to comply with any provision of this Disclosure Certificate,
the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as
may be necessary and appropriate, including seeking mandate or specific performance by court order,
to cause the District to comply with its obligations under this Disclosure Certificate. A default under this
Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy
under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure
Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent.
(a) The Dissemination Agent shall have only such duties as are specifically set forth in this
Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they may incur
arising out of or in the exercise or performance of its powers and duties hereunder, including the costs
and expenses(including attorneys fees)of defending against any claim of liability, but excluding liabilities
due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall have
no duty or obligation to review any information provided to it by the District hereunder, and shall not be
deemed to be acting in any fiduciary capacity for the District, the Bond holders or any other party. The
obligations of the District under this Section shall survive resignation or removal of the Dissemination
Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the District for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and shall
be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent
in the performance of its duties hereunder.
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Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
District, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners
from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts.This Disclosure Certificate may be executed in several counterparts,
each of which shall be regarded as an original, and all of which shall constitute one and the same
instrument.
Date: , 2018
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By:
Name:
Title:
AGREED AND ACCEPTED:
as Dissemination Agent
By:
Name:
Title:
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EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Central Contra Costa Sanitary District
Name of Issue: Central Contra Costa Sanitary District 2018 Wastewater Revenue
Refunding Bonds, Series A and Series B (Federally Taxable)
Date of Issuance: , 2018
NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect
to the above-named Bonds as required by the Continuing Disclosure Certificate dated , 2018.
The District anticipates that the Annual Report will be filed by
Dated:
DISSEMINATION AGENT:
By:
Its:
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APPENDIX E
FORM OF BOND COUNSEL OPINION
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APPENDIX F
BOOK ENTRY-ONLY SYSTEM
The following description of the Depository Trust Company ("DTC'), the procedures and
record keeping with respect to beneficial ownership interests in the Bonds, payment of principal,
interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation
and transfer of beneficial ownership interest in the Bonds and other related transactions by and
between DTC, the DTC Participants and the Beneficial Owners is based solely on information
provided by DTC. Accordingly, no representations can be made concerning these matters and
neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with
respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as
the case may be.
Neither the issuer of the Bonds (the "Issuer) nor the trustee, fiscal agent or paying agent
appointed with respect to the Bonds (the "Agent') take any responsibility for the information
contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will
distribute to the Beneficial Owners(a)payments of interest, principal or premium, if any, with respect
to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership
interest in the Bonds, or(c) redemption or other notices sent to DTC or Cede & Co., its nominee, as
the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC
Participants or DTC Indirect Participants will act in the manner described in this Appendix. The
current"Rules"applicable to DTC are on file with the Securities and Exchange Commission and the
current "Procedures"of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository
for the bonds (the "Bonds"). The Bonds will be issued as fully- registered securities registered in
the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by
an authorized representative of DTC. One fully-registered certificate will be issued for the Bonds, in
the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the
aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with
respect to each $500 million of principal amount and an additional certificate will be issued with
respect to any remaining principal amount of such issue.
2. DTC, the world's largest securities depository, is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization"within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset
servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt
issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct
Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants' accounts. This
eliminates the need for physical movement of securities certificates. Direct Participants include both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing
Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies.
DTCC is owned by the users of its regulated subsidiaries.Access to the DTC system is also available
to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,
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and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly("Indirect Participants"). DTC has a Standard &Poor's rating
of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com. The information contained
on this Internet site is not incorporated herein by reference.
3. Purchases of Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of
each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC
of their purchase. Beneficial Owners are, however, expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct
and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Bonds, except in the event that use of the book-
entry system for the Bonds is discontinued.
4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC
are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may
be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their
registration in the name of Cede &Co. or such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records
reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which
may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish
to take certain steps to augment transmission to them of notices of significant events with respect
to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security
documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee
holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners,
in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar
and request that copies of the notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are
being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with
respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible
after the record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and interest payments on the Bonds will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and
corresponding detail information from Issuer or Agent on payable date in accordance with their
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respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices, as is the case with securities held
for the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC nor its nominee, Agent, or Issuer, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of redemption
proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be
requested by an authorized representative of DTC) is the responsibility of Issuer or Agent,
disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
9. DTC may discontinue providing its services as securities depository with respect to the
Bonds at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the
event that a successor securities depository is not obtained, security Bonds are required to be
printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, security certificates will be printed and
delivered to DTC.
11. The information in this section concerning DTC and DTC's book-entry system has been
obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the
accuracy thereof.
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ATTACHMENT 6 Page 181 of 183
Jul 17,2018 3:17 pm Prepared by Piper Jaffray Page 3
SUMMARY OF REFUNDING RESULTS
Central Contra Costa Sanitary District
Combined Refunding of 2009A and 2009B
Calculated Using Market Conditions as of 7/17/2018
***Preliminary and Subject to Change***
2018 Refunding 2018 Refunding
of 2009 A(BABs) of 2009 Series B
Wastewater -2019 Maturity
Revenue Bonds Included Total
Dated Date 09/10/2018 09/10/2018 09/10/2018
Delivery Date 09/10/2018 09/10/2018 09/10/2018
Arbitrage Yield 2.131051% 3.070963% 2.131051%
Escrow Yield 2.345129%
Value of Negative Arbitrage 49,065.29 49,065.29
Bond Par Amount 15,25000.00 4,30000.00 19,55000.00
True Interest Cost 2.216817% 3.220807% 2.297886%
Net Interest Cost 2.461858% 3.216008% 2.525919%
Average Coupon 4.976676% 3.074603% 4.815106%
Average Life 6.857 2.258 5.846
Par amount of refunded bonds 1996359000.00 699809000.00 2696159000.00
Average coupon of refunded bonds 6.277584% 4.748699% 6.095074%
Average life of refunded bonds 6.787 2.588 5.686
PV of prior debt 2292019291.07 794409351.95 2996419643.02
Net PV Savings 292709211.69 1579975.82 294289187.51
Percentage savings of refunded bonds 11.562066% 2.263264% 9.123380%
Percentage savings of refunding bonds 14.886634% 3.673856% 12.420396%
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Jul 17,2018 3:17 pm Prepared by Piper Jaffray Page 4
SAVINGS
Central Contra Costa Sanitary District
2018 Refunding of 2009 A(BABs)Wastewater Revenue Bonds
Calculated Using Market Conditions as of 7/9/2018
***Preliminary and Subject to Change***
Uniform Savings
Present Value
Prior Refunding to 09/10/2018
Date Debt Service Debt Service Savings @ 2.1310514%
09/01/2019 8019554.40 7319396.25 70,158.15 699187.01
09/01/2020 2,461,554.40 1,985,150.00 476,404.40 457,133.81
09/01/2021 29458,452.42 19980,750.00 477,702.42 448,720.73
09/01/2022 2,45603.80 1,981,750.00 474,943.80 436,784.24
09/01/2023 29450,982.42 19974,500.00 476,482.42 429,014.82
09/01/2024 2,45 1,814.66 1,974,250.00 477,564.66 420,974.94
09/01/2025 2,448,726.10 19970,500.00 478,226.10 412,718.69
09/01/2026 2,446,652.20 1,968,250.00 478,402.20 404,166.56
09/01/2027 2,440,830.82 1,967,250.00 473,580.82 391,659.95
09/01/2028 2,436,261.94 1,962,250.00 4749011.94 383,752.69
09/01/2029 2,432,725.16 1,958,250.00 474,475.16 376,030.41
259286,248.32 2094549296.25 4,831,952.07 492309143.87
Savings Summary
PV of savings from cash flow 492309143.87
Less: Prior funds on hand (1,963,500.00)
Plus: Refunding funds on hand 3,567.82
Net PV Savings 292709211.69
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Jul 17,2018 3:17 pm Prepared by Piper Jaffray Page 5
SAVINGS
Central Contra Costa Sanitary District
2018 Refunding of 2009 Series B -2019 Maturity Included
Calculated Using Market Conditions as of 7/9/2018
***Preliminary and Subject to Change***
Uniform Savings
Present Value
Prior Refunding to 09/10/2018
Date Debt Service Debt Service Savings @ 2.1310514%
09/01/2019 29892,950.00 2,254,191.70 6389758.30 62603.72
09/01/2020 1,234,750.00 582,331.40 652,418.60 626,396.20
09/01/2021 19238,750.00 587,298.56 651,451.44 612,219.80
09/01/2022 1,240,250.00 586,029.20 654,220.80 601,741.93
09/01/2023 19239,000.00 588,616.20 650,383.80 585,481.42
798459700.00 49598,467.06 39247,232.94 39052,533.06
Savings Summary
PV of savings from cash flow 390529533.06
Less: Prior funds on hand (2,892,950.00)
Plus: Refunding funds on hand (1,607.24)
Net PV Savings 157,975.82
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