HomeMy WebLinkAbout10. Discuss issues related to proposed 2021 Debt Transaction and adopt proposed resolution to authorize the transaction Page 1 of 186
Item 10.
CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
MEETING DATE: JUNE 3, 2021
SUBJECT: DISCUSS ISSUES RELATED TO PROPOSED 2021 DEBT TRANSACTION
AND ADOPT RESOLUTION NO. 2021-028 AUTHORIZING THE EXECUTION,
DELIVERYAND SALE OF WASTEWATER CERTIFICATES OF
PARTICIPATION IN THE MAXIMUM PRI NCI PAL AMOUNT OF $65,000,000
TO FINANCE CAPITAL IMPROVEMENT PROJECTS OF THE DISTRICT
SUBMITTED BY: INITIATING DEPARTMENT:
KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE
PHILIP LEIBER, DIRECTOR OF FINANCE AND
ADMINISTRATION
Roger S. Bailey
General Manager
ISSUE
Board approval of a proposed 2021 financing transaction for up to $65 million through certificates of
participation is requested. Additional topics for context and further consideration include an update on
interest rates, the CCCERA pay-down amount; market timing considerations including impact of potentially
higher inflation on market returns; and the flow of funds to effectuate the transaction objectives.
BACKGROUND
This proposed financing transaction has been discussed at several Committee and Board meetings held
in March, April, and May. Meetings in March focused on the potential of achieving interest savings through
the issuance of debt in 2021 to finance a portion of the planned Capital I mprovement Budget(s) (Cl B). I n
April and May, a resolution was discussed and adopted regarding the selection of a financing team and the
proposed method of issuance of the debt (a competitive offering). At the May 25 Finance Committee
meeting, further topics related to the issuance were discussed, which are presented in this position paper.
During May, the financing team has:
• Completed the draft official statement describing Central San and the issuance to investors.
• Scheduled a meeting with a credit rating agency for Thursday, May 27.
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• Completed drafts of other key debt related documents including District Resolution, Financing
Authority Resolution, Installment Sale Agreement, Trust Agreement, Notice of Sale, Preliminary
Official Statement.
Several topics were discussed with the Finance Committee on May 25, including:
1. Update on Interest Rates: Interest rates are generally holding steady in recent weeks. National
average rates for 10-year AAA rated tax-exempt debt were as shown in the table below. Because of this, a
key rationale for moving forward with the transaction remains valid--taking advantage of low interest rates to
borrow for the capital program, and to free up funds to pay down the CCCERA unfunded actuarially
accrued liability(UAAL), which until paid off, accrues interest at 7%.
Average for December 2020 April 12, 2021 May 11, 2021 May 18, 2021
0.71% 1.03% 0.95% 1.00%
2. CCCERA Paydown Amount: Discussion by the Committee was held on the topic of whether to
consider adjusting the debt issuance amount or the CCCERA UAAL paydown amount (as noted below in
Alternatives)to reduce the potential risk of "superfunding", whereby the pension funded ratio exceeds
100%. The Committee did not reach a final decision on whether to pay 100% of the CCCERA UAAL, or
to pay a somewhat lesser amount and deposit the balance in the Pension Prefunding Trust. The
Committee did recommended proceeding with the COP transaction with further discussion of the paydown
amount in June (after staff noted can be discussed until late June).
3. "Market timing" considerations: With concerns about inflation increasing, and the impact this could have
on equity and debt market returns, a question was raised as to whether it is prudent to pay down the UAAL in
full at this time. The histogram of potential transaction outcomes prepared by PFM captured the range of
adverse to favorable outcomes based on sampling historical returns over the past 20 years. Prognosticating a
particular return outcome (good or bad) in the coming years is certainly speculative. That said, as the PFM
analysis histogram indicated, there was an approximately 80% likelihood of a favorable outcome based on
market return experience over the past 20 years (which averaged 7.7%). An updated analysis conducted by
PFM now shows an 87% likelihood for a favorable outcome, based on a reduction in the interest rate cushion as
the bond sale date gets closer, as well as less conservative assumptions about CCCERA amortizations now
that a specific schedule of amortizations has been provided by CCCERA. That said, if prospective returns, on
average, differ significantly from historic returns, that decreases the likelihood of a favorable outcome.
Specifically, if inflation or other factors contributed to future market returns rates averaging 5% (rather than
7.7%), the probability of success drops somewhat, but remains a relatively high 75%. PFM's Asset
Management group has also stated their position is that "inflation is on the rise but not alarmingly so and any
spike above 2.0%-2.5% will be temporary". Other notable prognosticators have said essentially the same. One
other factor for consideration is that in an inflationary environment, there are advantages to being a borrower, as
dollars borrowed today are paid back with less valuable dollars later. Normally interest rates would rise to reflect
the risk to bond buyers of this, but thus far, interest rates for a high quality tax-exempt borrower like Central San
remain very attractive.
4. Flow of funds: Staff has been working to specify the sources and timing of the CCCERA payoff
amount. The following constraints must be considered:
a. The CCCERA UAAL paydown must be completed prior to July 1, 2021, in order for UAAL
amortization payments to CCCERA to be avoided in Fiscal Year (FY) 2021-22.
b. Bond monies can only be used to reimburse or pay for capital expenditures. This includes FY
2020-21 capital expenditures incurred after March 7 (60 days prior to the Board's adoption of the
Reimbursement Resolution), and FY 2021-22 capital expenditures incurred over the course of the
next fiscal year.
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In consideration of these complexities, some inter-fund movements and borrowings will be
necessary. The following table provides an outline of the currently planned approach using the latest
estimates:
Line Source FY N Fund Amount (in
millions)
$12.5 from
March &April
plus at least
1 Reimbursement of Capital Expenditures from FY 20-21 Sc $12.1 from May
2020-21 post 3/6/2021
& June 2021
(reimbursements
for spending
amounts not yet
determinable)
Sewer Service Charge for FY 2021-22
SSC arrives in December 2021 &April 2022, so an
inter-fund loan in June 2021 to the Running Expense
fund will be necessary until it is available. There is
2 estimated to be approximately$28.4 million above the 21-22 Sc $34.1
policy required minimum reserve level in the Sewer
Construction fund at June 30, 2021, PLUS the amount
of the unspent carryforward from FY 2020-21.
Accordingly, there will be adequate funding available to
facilitate a loan, while not dropping below policy
required levels.
Rate Stabilization Funds from Planned transfer in
FY 2021-22
(These funds will be in the Running Expense fund as
3 of June 30, 2021. Use in this transaction not presently 21-22 R/E $0.0
specified. One alternative would be to move these
funds to the Pension Prefunding Trust, as a
replenishment for when the Pension Prefunding Trust
is drawn down as noted below)
Trust
4 Pension Pre-funding Trust 20-21 balance at $12.0
3/31/2021
5 Total for UAAL Paydown 20-21
Additionally, staff are still assessing the impact that this financing transaction has on the annual Concord
wastewater treatment bill. As this is at its core a debt refinancing transaction, it should provide the City of
Concord a proportionate share of the savings through the substitution of prospective high interest and volatile
pension UAAL payments made to CCCERAwith low and fixed interest debt service payments.
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5. Review of Transaction Related Documents
The Finance Committee reviewed several key transaction documents including:
1. District Resolution
2. Installment Sale Agreement
3. Trust Agreement
4. Notice of Sale
5. Draft Preliminary Official Statement
The Committee provided feedback on the Preliminary Official Statement and Installment Sale Agreement,
and these edits have been reflected in the documents now attached to this position paper. These
documents are now in essentially final form, but there could be minor edits until final execution. Board
approval of the District Resolution will provide for the acceptance of the remaining documents, and is
being recommended at this time.
It should be noted that the District Resolution and Issuance Resolution make reference to a maximum
issuance amount of$65,000,000 and a maximum true interest cost of 2.00%. These are both
substantially above anticipated amounts as of May 27, 2021, but are higher to allow for a cushion to reflect
changes between the present date and the bond pricing in mid-June.
ALTERNATIVES/CONSIDERATIONS
Primary alternatives for consideration include:
1. Whether to proceed with a debt issuance transaction or not. Proceeding would allow for the pension
UAAL paydown that has been described in this and proceeding presentations, or for other purposes
(omitted here for brevity). The transaction has the potential to provide for significant interest cost savings
over the next decade, and allow for a significant reduction in the Operations & Maintenance budget due to
elimination of UAAL payments (to be replaced in substantial part by debt service costs). Staff and the
Finance Committee have recommended moving forward with the debt issuance transaction.
2. Whether to send CCCERA an amount sufficient to fully retire the UAAL (bringing the funded ratio to
100%), or whether to instead send CCCERA a lesser amount. This could be accomplished by either
borrowing a lesser amount, or borrowing the recommended principal amount (targeted at $59 million and not to
exceed $65 million), and depositing a portion of the funds that would have otherwise gone to CCCERA into the
Pension Pre-Funding Trust. For example, sufficient funds could be sent to CCCERAto provide for a 97%
funding ratio, and the balance of funds could be kept in the Pension Prefunding Trust. This was discussed
briefly at the Finance Committee on April 27, 2021, and again on May 25, 2021; no final recommendation has
been made, and can be discussed further in June 2021.
Advantages to this alternative would be:
a. Greater flexibility of funds in the Pension Prefunding Trust as they could be used to pay
normal/ongoing Pension costs.
b. Reducing the risk of"super-funding".
c. Potential further diversification of investment returns due to different investment choices than those
made by CCCERA's investment managers.
Disadvantages include:
a. CCCERA does not recognize the funds held in the Pension Prefunding Trust, which
consequently results in those assets being excluded from Central San's funded position in annually
actuarial reports published by CCCERA. They will continue to charge Central San amortization of
any UAAL layers that exist per their actuarial records. However, funds in the Pension Prefunding
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Trust could be drawn down/used to pay those ongoing UAAL amortization charges or even be
eligible to reimburse the normal cost component of pension contributions in the future.
b. CCCERA's investment classes include categories beyond traded debt and equity funds,
potentially providing for higher return opportunities beyond those available in the Pension Prefunding
Trust.
FINANCIAL IMPACTS
An assessment of the potential overall net savings (or cost) of the transaction was discussed at the April
27 Finance Committee meeting, and presented to the Board at the May 6 meeting. As the transaction
closing date approaches, PFM updated their analysis by removing an interest rate "cushion" using
amortization information received from CCCERA, and found that the likelihood of at least some positive
cost savings has risen to 87%, with the most likely cost savings at about$15 million over the maturity of the
debt. Actual savings will depend on investment returns by CCCERA (or in the Pension Prefunding Trust if
some funds are kept their rather than sent to CCCERA).
The following disclosure is provided, as required by the State of California, to the Board of any agency
contemplating a debt issuance. It should be noted that the amounts provided are per PFM's debt
calculations as of May 27, 2021, with the interest rate specified inclusive of a 0.25% buffer to allow for
movements from the current date until issuance date.
In accordance with Government Code Section 5852.1, the following information has been
obtained and disclosed to the Board prior to the authorization of the debt: (i) the estimated true
interest cost of the debt(being the rate necessary to discount the amounts payable on the
respective principal and interest payment dates to the purchase price received for the debt) is
1.125%, (ii) the estimated finance charge of the debt(being the sum of all fees and charges paid
to third parties) is $739,450, (iii) the estimated proceeds of the debt expected to be received by
the District, net of proceeds for finance charges in (ii) above to paid from the principal amount of
the debt is $58,001,212, and(iv) the estimated total payment amount of the debt(being the sum
of debt service plus finance to be paid to final maturity, plus any financing costs not paid from
proceeds of the debt) is $60,053,047. This information is based on good-faith estimates provided
by the District's financial advisor.
COMMITTEE RECOMMENDATION
The Finance Committee reviewed this matter at its meeting on May 25, 2021. The Committee
recommended Board approval of the debt issuance, and continued consideration into June the issue of either
sending the full UAAL payoff amount to CCCERA, or a lesser amount with the balance to be held in the
Pension Prefunding Trust.
RECOMMENDED BOARD ACTION
Staff recommends adoption the proposed resolution authorizing the execution, delivery and sale of
wastewater certificates of participation in the maximum principal amount of$65,000,000 to finance capital
improvement projects of the District.
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Strategic Plan Tie-In
GOAL THREE:Fiscal Responsibility
Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial
management
ATTACHMENTS:
1. Proposed Resolution
2. Installment Sale Agreement
3. Trust Agreement
4. Notice of Sale
5. Preliminary Official Statement
6. Presentation
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ATTACHMENT 1
RESOLUTION NO. 2021-028
RESOLUTION OF THE BOARD OF DIRECTORS OF THE CENTRAL CONTRA COSTA
SANITARY DISTRICT AUTHORIZING THE EXECUTION, DELIVERY AND SALE OF
WASTEWATER REVENUE CERTIFICATES OF PARTICIPATION IN THE MAXIMUM
PRINCIPAL AMOUNT OF $65,000,000 TO FINANCE CAPITAL IMPROVEMENT
PROJECTS OF THE DISTRICT, AND APPROVING RELATED
DOCUMENTS 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 improvements to the Wastewater System, the District and the Central Contra
Costa Sanitary District Facilities Financing Authority (the "Authority"), desire to cause the
execution and delivery of Certificates of Participation (the "Certificates"); and
WHEREAS, the Certificates will be executed and delivered by U.S. Bank National
Association, as trustee (the "Trustee") pursuant to an Indenture of Trust (the "Indenture"),
among the District, the Authority and the Trustee, and will evidence direct, undivided
fractional interests in installment payments to be made by the District to the Authority,
pursuant to an Installment Sale Agreement (the "Installment Sale Agreement"), between
the District and the Authority; and
WHEREAS, the information required to be obtained and disclosed by the Board of
Directors with respect to the Certificates pursuant to Government Code Section 5852.1 is
set forth in the staff report accompanying this Resolution; and
WHEREAS, the Board of Directors wishes to authorize the execution, delivery and sale of
the Certificates, the form of the Indenture, the form of the Installment Sale Agreement,
and related matters.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Central Contra
Costa Sanitary District as follows:
Section 1. Approval of Financing Plan and Related Documents. The Board of
Directors hereby approves the execution, delivery and sale of the Certificates for the
purpose of providing funds for capital improvement projects of the District, as specified in
the Installment Sale Agreement(the "Project"). To that end, the Board of Directors hereby
approves each of the following financing documents in substantially the respective forms
on file with the Secretary, together with any changes therein or additions thereto approved
by the General Manager or the Director of Finance and Administration (each, an
"Authorized Officer"), provided that the execution thereof by an Authorized Officer shall be
conclusive evidence of such approval:
• Installment Sale Agreement between the District and the Authority,
under which the Authority agrees to provide funds to finance the Project
in consideration of semiannual payments to be made from amounts
pledged thereto, which consists of the net revenues of the Wastewater
System and the ad valorem property tax revenues received by the
District.
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Resolution No. 2021-028
Page 2 of 3
• Indenture among the District, the Authority and the Trustee, whereby
the Trustee agrees to execute and deliver the Certificates and to apply
the proceeds thereof to accomplish the purposes of the financing.
Each Authorized Officer is hereby authorized and directed for and in the name and on
behalf of the District to execute the final form of each of the foregoing documents, and the
Secretary is hereby authorized and directed to attest to the final form of each of the
foregoing documents. The schedule of semiannual payments attached to the Installment
Sale Agreement, as executed and delivered, shall correspond to the payments of principal
and interest represented by the Certificates, to be determined upon the sale thereof as set
forth in Section 2.
Section 2. Competitive Sale of Certificates. The Board of Directors hereby authorizes
the sale of the Certificates through a public offering undertaken via competitive sale;
provided, that the maximum principal amount of the Certificates shall not exceed
$65,000,000 and the true interest cost of the Certificates shall not exceed 2.00%. The
Certificates shall be offered and sold pursuant to and in accordance with the Official Notice
of Sale on file with the Secretary, together with any changes therein or additions thereto
deemed advisable by the District's municipal advisor and approved by the District's bond
counsel and by an Authorized Officer. The Board of Directors hereby delegates to each
of the Authorized Officers the authority to accept an offer from the winning bidder to
purchase the Certificates from the District.
Section 3. Official Statement; Continuing Disclosure Certificate. The Board of
Directors hereby approves and deems nearly final within the meaning of Rule 15c2-12 of
the Securities Exchange Act of 1934, except for permitted omissions, the preliminary
Official Statement describing the Certificates in the form on file with the Secretary,together
with appropriate revisions as required to incorporate provisions relating to the Certificates.
Distribution of such Preliminary Official Statement by the winning bidder for the Certificates
to prospective purchasers of the Certificates is hereby approved. An Authorized Officer
is hereby authorized and directed to approve any changes in or additions to such
Preliminary Official Statement for the purpose of finalizing such document, and the
execution thereof by 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 to purchasers of the Certificates. The Final Official Statement
shall be executed in the name and on behalf of the District by an Authorized Officer.
The Board of Directors hereby approves the Continuing Disclosure Certificate to be
executed by the District, the form of which is attached as an exhibit 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 4. Official Actions. The President, the General Manager, the Director of
Finance and Administration, the Controller and all other officers of the Board of Directors
and the District are each authorized and directed in the name and on behalf of the District
to make any and all assignments, certificates, requisitions, agreements, notices, consents,
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Resolution No. 2021-028
Page 3 of 3
instruments of conveyance, warrants and other documents, which they or any of them
might deem necessary or appropriate in order to consummate the execution, delivery and
sale of the Certificates and any of the other transactions contemplated by the agreements
and documents approved pursuant to this Resolution. 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 in the case such officer
is absent or unavailable.
Section 5. Effective Date. This Resolution shall take effect from and after the date of its
passage and adoption.
* * * * * * * * * * * *
PASSED AND ADOPTED this 3rd day of June, 2021, 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 ATTACHMENT 2
Draft of May 27, 2021
INSTALLMENT SALE AGREEMENT
Dated as of June 1, 2021
between the
CENTRAL CONTRA COSTA SANITARY DISTRICT
FACILITIES FINANCING AUTHORITY,
as Seller
and the
CENTRAL CONTRA COSTA SANITARY DISTRICT,
as Purchaser
Relating to
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
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TABLE OF CONTENTS
ARTICLE I
Definitions ; Rules of Interpretation
SECTION1.1. Definitions .....................................................................................2
SECTION 1.2. Interpretation.................................................................................2
ARTICLE II
Representations, Covenants and Warranties
SECTION 2.1. Representations, Covenants and Warranties of the District...........2
SECTION 2.2. Representations, Covenants and Warranties of Authority..............4
ARTICLE III
Issuance of Certificates;
Application of Proceeds
SECTION 3.1. The Certificates. ............................................................................5
SECTION 3.2. Deposit and Application of Funds. .................................................5
SECTION 3.3. Acquisition and Construction of the Project ...................................6
SECTION 3.4. Appointment of District as Agent ...................................................6
SECTION 3.5. Plans and Specifications ...............................................................6
SECTION 3.6 Certificate of Project Completion ...................................................6
ARTICLE IV
Sale of Projects
Installment Payments
SECTION4.1. Sale...............................................................................................7
SECTION4.2. Term..............................................................................................7
SECTION4.3. Title ...............................................................................................7
SECTION 4.4. Installment Payments....................................................................7
SECTION 4.5. Pledge and Application of Net Revenues.......................................8
SECTION 4.6. Special Obligation of the District; Obligations Absolute..................9
SECTION 4.7. Additional Payments...................................................................... 10
ARTICLE V
Covenants of the District
SECTION 5.1. Disclaimer of Warranties ............................................................... 11
SECTION 5.2. Release and Indemnification Covenants ....................................... 12
SECTION 5.3. Sale or Eminent Domain of Wastewater System ........................... 11
SECTION5.4. Insurance ...................................................................................... 11
SECTION 5.5. Records and Accounts. ................................................................. 13
SECTION 5.6. Rates and Charges ....................................................................... 13
SECTION 5.7. Superior and Subordinate Obligations........................................... 13
SECTION 5.8. Issuance of Parity Obligations ....................................................... 14
SECTION 5.9. Operation of Wastewater System in Efficient and Economical
Manner.......................................................................................... 14
ARTICLE VI
Events of Default
SECTION 6.1. Events of Default Defined.............................................................. 15
SECTION 6.2. Remedies on Default..................................................................... 15
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SECTION 6.3. No Remedy Exclusive ................................................................... 16
SECTION 6.4. Agreement to Pay Attorneys' Fees and Expenses......................... 16
SECTION 6.5. No Additional Waiver Implied by One Waiver................................ 17
SECTION 6.6. Trustee and Certificate Owners to Exercise
Rights............................................................................................ 17
ARTICLE VII
Prepayment of Installment Payments
SECTION 7.1. Security Deposit............................................................................ 17
SECTION 7.2. Optional Prepayment...................................................................... 17
SECTION 7.3. Credit for Amounts on Deposit........................................................ 18
ARTICLE VIII
Miscellaneous
SECTION 8.1. Further Assurances....................................................................... 18
SECTION8.2. Notices.......................................................................................... 18
SECTION 8.3. Governing Law.............................................................................. 18
SECTION 8.4. Binding Effect................................................................................ 19
SECTION 8.5. Severability of Invalid Provisions ................................................... 19
SECTION 8.6. Article and Section Headings and References............................... 19
SECTION 8.7. Payment on Non-Business Days................................................... 19
SECTION 8.8. Execution of Counterparts............................................................. 19
SECTION 8.9. Waiver of Personal Liability ........................................................... 19
SECTION 8.10. Trustee as Third Party Beneficiary................................................. 19
APPENDIX A Description of the Project
APPENDIX B Schedule of Installment Payments
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INSTALLMENT SALE AGREEMENT
This INSTALLMENT SALE AGREEMENT(this "Agreement"), dated as of June 1, 2021,
is between 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 (the "Authority"), as seller, and the CENTRAL CONTRA COSTA
SANITARY DISTRICT, a sanitary district duly organized and existing under the laws of the
State of California (the "District"), as purchaser.
BACKGROUND :
1. The District owns and operates facilities and property for the collection,
treatment and disposal of wastewater within the service area of the District (the
"Wastewater System").
2. The District is proceeding to finance the acquisition and construction of certain
improvements to the Wastewater System as more particularly described in Appendix A
hereto (the "Project"), and in order to provide such financing the Authority has proposed
to acquire and construct the Project and sell the completed Project to the District as
provided in this Agreement.
3. The Authority has been formed for the purpose of providing such financial
assistance to the District.
4. Under this Agreement, the District agrees to pay semiannual installments of
the purchase price of the Project, to be payable from and secured by a pledge of and lien
on the net revenues received by the District from the Wastewater System and a pledge of
and lien on the ad valorem property tax revenues received by the District, on a parity with
the 2018 Bonds (defined herein).
5. For the purpose of obtaining the moneys required to finance the Project in
accordance with the terms of this Agreement, the Authority, the District and U.S. Bank
National Association, as trustee (the "Trustee") have entered into an Indenture of Trust,
dated as of June 1, 2021 (the "Indenture"), under which the Authority has assigned and
transferred certain of its rights under this Agreement to the Trustee, and the Trustee has
executed and delivered the Certificates, evidencing direct, undivided fractional interests in
the Installment Payments, the proceeds of which will be applied to finance the Project.
AGREEMENT :
In consideration of the premises and the material covenants contained herein, the
District and the Authority hereby agree as follows:
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ARTICLE I
DEFINITIONS ; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein,the capitalized terms used in this Agreement have the respective
meanings given them in Appendix A attached to the Indenture.
SECTION 1.2. 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 includes 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 Agreement; the words"herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
REPRESENTATIONS, COVENANTS AND
WARRANTIES
SECTION 2.1. Representations, Covenants and Warranties of the District. The
District represents, covenants and warrants to the Authority as follows:
(a) Due Organization and Existence. The District is a sanitary district
duly organized and validly existing under the laws of the State of
California, has full legal right, power and authority under said laws to
enter into this Agreement and the Indenture and to carry out and
consummate all transactions contemplated hereby and thereby, and
by proper action the Board of Directors of the District has duly
authorized the execution and delivery of this Agreement and the
Indenture.
(b) Due Execution. The representatives of the District executing this
Agreement and the Indenture are fully authorized to execute the
same.
(c) Valid, Binding and Enforceable Obligations. This Agreement and the
Indenture have been duly authorized, executed and delivered by the
District and constitute the legal, valid and binding agreements of the
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District enforceable against the District in accordance with their
respective terms; except as the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights heretofore or hereafter enacted
and except as such enforceability may be subject to the exercise of
judicial discretion in accordance with principles of equity.
(d) No Conflicts. The execution and delivery of this Agreement and the
Indenture, the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms and
conditions hereof and thereof, do not and will not conflict with or
constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative
rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the District is a party or by
which it or its properties are otherwise subject or bound, or result in
the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or
assets of the District, which conflict, violation, breach, default, lien,
charge or encumbrance would have consequences that would
materially adversely affect the consummation of the transactions
contemplated by this Agreement or the Indenture or the financial
condition, assets, properties or operations of the District, including
but not limited to the performance of the District's obligations under
this Agreement and the Indenture.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the District or of the voters of the
District, and no consent, permission, authorization, order or license
of, or filing or registration with, any governmental authority is
necessary in connection with the execution and delivery of this
Agreement or the Indenture, or the consummation of any transaction
herein or therein contemplated, except as have been obtained or
made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
District after reasonable investigation, threatened against or affecting
the District or the assets, properties or operations of the District
which, if determined adversely to the District or its interests, would
have a material and adverse effect upon the consummation of the
transactions contemplated by or the validity of this Agreement or the
Indenture, or upon the financial condition, assets, properties or
operations of the District, and the District is not in default with respect
to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or other governmental authority,which
default might have consequences that would materially adversely
affect the consummation of the transactions contemplated by this
Agreement or the Indenture, or the financial conditions, assets,
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properties or operations of the District, including but not limited to the
payment and performance of the District's obligations under this
Agreement and the Indenture.
(g) Prior Indebtedness. The District has not issued or incurred any
obligations which are currently outstanding having any priority in
payment out of the Tax Revenues, the Gross Revenues or the Net
Revenues over the payment of the Installment Payments as provided
herein. The 2018 Bonds are payable from the Tax Revenues and
Net Revenues on a parity basis with amounts payable under this
Agreement.
SECTION 2.2. Representations, Covenants and Warranties of the Authority. The
Authority represents, covenants and warrants to the District as follows:
(a) Due Organization and Existence. The Authority is a nonprofit public
benefit corporation organized and existing under the laws of the State
of California, and has power to enter into this Agreement and the
Indenture and to perform the duties and obligations imposed on it
hereunder and thereunder. The Board of Directors of the Authority
has duly authorized the execution and delivery of this Agreement and
the Indenture.
(b) Due Execution. The representatives of the Authority executing this
Agreement and the Indenture are fully authorized to execute the
same.
(c) Valid, Binding and Enforceable Obligations. This Agreement and the
Indenture have been duly authorized, executed and delivered by the
Authority and constitute the legal, valid and binding agreements of
the Authority, enforceable against the Authority in accordance with
their respective terms; except as the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights heretofore or hereafter
enacted and except as such enforceability may be subject to the
exercise of judicial discretion in accordance with principles of equity.
(d) No Conflicts. The execution and delivery hereof and of the Indenture,
the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms and
conditions hereof and thereof, do not and will not conflict with or
constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative
rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the Authority is a party or by
which it or its properties are otherwise subject or bound, or result in
the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or
assets of the Authority, which conflict, violation, breach, default, lien,
charge or encumbrance would have consequences that would
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materially adversely affect the consummation of the transactions
contemplated hereby or by the Indenture or the financial condition,
assets, properties or operations of the Authority, including but not
limited to the performance of the Authority's obligations under this
Agreement and the Indenture.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the Authority, and no consent,
permission, authorization, order or license of, or filing or registration
with, any governmental authority is necessary in connection with the
execution and delivery hereof or of the Indenture, or the
consummation of any transaction herein or therein contemplated,
except as have been obtained or made and as are in full force and
effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
Authority after reasonable investigation, threatened against or
affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its
interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of
this Agreement or the Indenture, or upon the financial condition,
assets, properties or operations of the Authority, and the Authority is
not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or other
governmental authority, which default might have consequences that
would materially adversely affect the consummation of the
transactions contemplated by this Agreement or the Indenture or the
financial conditions, assets, properties or operations of the Authority,
including but not limited to the performance of the Authority's
obligations hereunder and under the Indenture.
ARTICLE III
ISSUANCE OF CERTIFICATES; APPLICATION OF
PROCEEDS; ACQUISITION AND CONSTRUCTION OF
PROJECTS
SECTION 3.1. The Certificates. The Authority shall cause the Certificates to be
executed and delivered under the Indenture in the aggregate principal amount of
$ . The District hereby approves the Indenture, the assignment thereunder
to the Trustee of certain rights of the Authority, and the execution and delivery of the
Certificates.
SECTION 3.2. Deposit and Application of Funds. The Trustee shall deposit the
proceeds received by it from the sale of the Certificates to the Original Purchaser in the
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respective funds and accounts, and in the respective amounts, as set forth in Section 3.01
of the Indenture.
SECTION 3.3. [Reserved].
SECTION 3.4. Acquisition and Construction of the Project. The Authority hereby
agrees with due diligence to supervise and provide for, or cause to be supervised and
provided for, the Acquisition and Construction of the Project in accordance with the plans
and specifications, purchase orders, construction contracts and other documents relating
thereto and approved by the District. All contracts for, and all work relating to, the
Acquisition and Construction of the Project are subject to all applicable provisions of law
relating to the acquisition and construction of public works by the District. The Authority
expects that the Acquisition and Construction of the Project will be completed on or before
, 20 . If the Authority fails to complete the Project by that date, such
failure will not constitute an Event of Default hereunder or a grounds for termination hereof,
nor shall will failure result in the diminution, abatement or extinguishment of the obligations
of the District hereunder to pay the Installment Payments when due hereunder.
SECTION 3.5. Appointment of District as Agent. The Authority hereby appoints the
District as its agent to carry out all phases of the Acquisition and Construction of the
Project under and in accordance with the provisions hereof. The District hereby accepts
such appointment and assumes all rights, liabilities, duties and responsibilities of the
Authority regarding the Acquisition and Construction of the Project. The District, as agent
of the Authority hereunder, shall enter into, administer and enforce all purchase orders or
other contracts relating to the Acquisition and Construction of the Project. The District
shall pay the Project Costs from amounts held by it in the accounts within the Construction
Fund in accordance with the provisions of this Agreement and the provisions of the
Indenture.
SECTION 3.6. Plans and Specifications. The District has the right to specify the
exact scope, nature and identification of the Project and the respective components
thereof. Before any payment is made for the Project or any component thereof from
amounts on deposit in the accounts within the Construction Fund, the District must prepare
detailed plans and specifications relating thereto. The District may from time to time
amend any such plans and specifications, and may thereby change or modify the
description of the Project or any component thereof.
SECTION 3.7. Certificate of Project Completion. Upon the completion of the
Acquisition and Construction of the Project or any component thereof, but in any event not
later than 30 days following such completion, the District Representative shall execute
and deliver to the Authority and the Trustee a written certificate of the District
Representative which (a) states that the Acquisition and Construction of the Project or
such component thereof have been substantially completed, (b) identifies the total Project
Costs thereof, and (c) identifies the amounts, if any, to be reserved in the accounts within
the Construction Fund for payment of future Project Costs.
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ARTICLE IV
SALE OF PROJECT; INSTALLMENT PAYMENTS
SECTION 4.1. Sale. The Authority hereby sells the Project to the District, and the
District hereby purchases the Project from the Authority, upon the terms and conditions
set forth in this Agreement.
SECTION 4.2. Term. The Term of this Agreement commences on the Closing Date,
and ends on September 1, 20 , or such later or earlier date on which the Certificates
cease to be Outstanding under and within the meaning of the Indenture.
SECTION 4.3. Title. Title to the Project, and each component thereof, shall be
deemed conveyed to and vested in the District immediately following the completion of the
Project as evidenced in accordance with Section 3.7. The Authority and the District shall
execute, deliver and cause to be recorded any and all documents reasonably required by
the District to consummate such transfers of title.
SECTION 4.4. Installment Payments.
(a) Purchase Price of Project. The District hereby agrees to pay to the Authority,
as the purchase price of the Project hereunder, the aggregate principal amount of
$ together with interest (calculated on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance thereof, payable in semiannual
Installment Payments in the respective amounts and on the respective Interest Payment
Dates specified in Appendix B hereto.
(b) Payment Provisions. The District shall deposit the Installment Payments with
the Trustee, as assignee of the Authority under the Indenture, on the Installment Payment
Date preceding each Interest Payment Date, in an amount which, together with amounts
then held by the Trustee in the Installment Payment Fund, is equal to the full amount of
the Installment Payment coming due and payable on that Interest Payment Date. The
Installment Payments will be secured by and payable solely from the sources specified in
Section 4.5.
(c) Effect of Prepayment. If the District prepays all remaining Installment
Payments in full under Sections 7.2 or 7.3, the District's obligations under this Agreement
shall thereupon cease and terminate, including but not limited to the District's obligation
to pay Installment Payments under this Section 4.4; except that that the District's
obligations to compensate and indemnify the Trustee under Sections 4.7 and 5.2 shall
survive such prepayment. If the District prepays the Installment Payments in part but not
in whole under Sections 7.2 or 7.3, the principal component of each succeeding
Installment Payment will be reduced as provided in such Sections, and the interest
component of each remaining Installment Payment will be reduced by the aggregate
corresponding amount of interest which would otherwise be payable with respect to the
Certificates thereby prepaid under the applicable provisions of Section 4.01 of the
Indenture.
(d) Rate on Overdue Payments. If the District fails to make any of the payments
required in this Section 4.4 or Section 4.7, the payment in default shall continue as an
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obligation of the District until the amount in default has been fully paid, and the District
agrees to pay the same with interest thereon, from the date of default to the date of
payment, at the Overdue Rate.
(e) Assignment. The District understands and agrees that certain rights of the
Authority, including but not limited to the right of the Authority to receive payment of the
Installment Payments, have been assigned by the Authority to the Trustee in trust under
the Indenture, for the benefit of the Owners of the Certificates, and the District hereby
consents to such assignment. The Authority hereby directs the District, and the District
hereby agrees,to pay to the Trustee at its Trust Office, all payments payable by the District
under this Section 4.4 and all amounts payable by the District under Article VII.
SECTION 4.5. Pledge and Application of Tax Revenues and Net Revenues.
(a) Pledge of Tax Revenues and Net Revenues. All of the Tax Revenues and
Net Revenues, and all moneys on deposit in any of the funds and accounts established
and held by the Trustee under the Indenture, are hereby irrevocably pledged to the
punctual payment of the Installment Payments. Such pledge constitutes a lien on and
security interest in the Tax Revenues, Net Revenues and such other moneys for the
payment of the Installment Payments in accordance with the terms hereof. Such pledge
and lien on, and security interest in, the Net Revenues shall be on a parity with the pledge,
lien and security interest which secures any Parity Obligations.
(b) Maintenance of Wastewater System Funds. The District has heretofore
established the Wastewater System Funds, which the District agrees to continue to hold
and maintain for the purposes and uses set forth herein. The District shall deposit all of
the Tax Revenues and Gross Revenues in the Wastewater System Funds immediately
upon receipt.
(c) Application of Amounts in Wastewater System Funds. In addition to the
transfers 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
Installment Payment Date, the District shall withdraw from the
Wastewater System Funds and transfer to the Trustee for deposit in
the Installment Payment 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 Installment Payment Fund, is
equal to the aggregate amount of the Installment Payment coming
due and payable 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 Installment
Payments thereafter coming due and payable in such Bond Year, all
remaining Tax Revenues received during such Fiscal Year will be
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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
subsection (i) on or before each Installment Payment Date is less
than the full amount required to be so transferred, the District shall
withdraw from the Wastewater System Funds on such Installment
Payment Date, and transfer to the Trustee for deposit in the
Installment Payment Fund, an amount equal to the amount of such
insufficiency.
(iii) No Preference or Priority. The District shall pay the Installment
Payments and the principal of and interest on any Parity Obligations
from Net Revenues without preference or priority among the
Installment Payments and Parity Obligations. If the amount of Net
Revenues on deposit in the Wastewater System Funds is any time
insufficient to enable the District to pay when due the Installment
Payments and the principal of and interest on the Parity Obligations,
such payments shall be made on a pro rata basis.
(iv) Other Uses of Tax Revenues and Net Revenues Permitted. 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 Obligations Documents will
be made at the times and in the amounts so required. Subject to the
foregoing sentence, the District may at any time and from time to time
use and apply moneys in the Wastewater System Funds for 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 Installment Payments. The District shall
adopt all necessary budgets and make all necessary appropriations
of the Installment Payments from the Tax Revenues and Net
Revenues. If any Installment 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 4.6. Special Obligation of the District; Obligations Absolute. The District's
obligation to pay the Installment Payments and any other amounts coming due and
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payable hereunder are a special obligation of the District limited solely to the Tax
Revenues. Under no circumstances is the District required to advance moneys derived
from any source of income other than the Tax Revenues, Net Revenues, and other
sources specifically identified herein for the payment of the Installment Payments and
such other amounts, nor are any other funds or property of the District be liable for the
payment of the Installment Payments and any other amounts coming due and payable
hereunder.
The obligations of the District to make the Installment Payments from the Tax
Revenues and Net Revenues and to perform and observe the other agreements contained
herein are absolute and unconditional and are not subject to any defense or any right of
set-off, counterclaim or recoupment arising out of any breach by the Authority or the
Trustee of any obligation to the District or otherwise with respect to the Wastewater
System, whether hereunder or otherwise, or out of indebtedness or liability at any time
owing to the District by the Authority or the Trustee. Until such time as all of the Installment
Payments, all of the Additional Payments and all other amounts coming due and payable
hereunder have been fully paid or prepaid, the District (a) will not suspend or discontinue
payment of any Installment Payments, Additional Payments or such other amounts, (b)
will perform and observe all other agreements contained in this Agreement, and (c) will
not terminate this Agreement for any cause, including, without limiting the generality of the
foregoing, the occurrence of any acts or circumstances that may constitute failure of
consideration, eviction or constructive eviction, destruction of or damage to the
Wastewater System, sale of the Wastewater System, the taking by eminent domain of title
to or temporary use of any component of the Wastewater System, commercial frustration
of purpose, any change in the laws of the United States of America or the State of
California or any political subdivision of either thereof or any failure of the Authority or the
Trustee to perform and observe any agreement, whether express or implied, or any duty,
liability or obligation arising out of or connected with the Indenture or this Agreement.
Nothing contained in this Section 4.6 shall release the Authority from the
performance of any of its agreements contained herein or in the Indenture. If the Authority
fails to perform any such agreements, the District may institute such action against the
Authority as the District deems necessary to compel performance so long as such action
does not abrogate the obligations of the District contained in the preceding paragraph.
The District may, however, at the District's own cost and expense and in the District's own
name or in the name of the Authority prosecute or defend any action or proceeding or take
any other action involving third persons which the District deems reasonably necessary in
order to secure or protect the District's rights hereunder, and in such event the Authority
will cooperate fully with the District and take such action necessary to effect the
substitution of the District for the Authority in such action or proceeding if the District shall
so request.
SECTION 4.7. Additional Payments. In addition to the Installment Payments, the
District shall pay when due the following amounts to the following parties:
(a) to the Authority, all costs and expenses incurred by the Authority to
comply with the provisions of this Agreement and the Indenture; and
(b) to the Trustee upon request therefor, all of its costs and expenses
payable as a result of the performance of and compliance with its
duties hereunder or under the Indenture or any related documents;
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(c) to the Authority and the Trustee, all amounts required to indemnify
the Authority and the Trustee under Section 5.2 hereof and under
Section 10.03 of the Indenture; and
(d) all costs and expenses of auditors, engineers and accountants.
Subject to the provisions of Section 7.03 of the Indenture, the Additional Payments
shall be payable from, but are not secured by a pledge or lien upon, the Net Revenues.
The rights of the Trustee and the Authority under this Section 4.7, and the obligations of
the District under this Section 4.7, shall survive the termination of this Agreement.
SECTION 4.8. Rate Stabilization Fund/Account. The District has previously
established accounts within its Operating & Maintenance and Sewer Construction Fund
(the "Rate Stabilization Account" or the "Rate Stabilization Fund"), which is available to be
administered in accordance with this Section 4.8, 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 Installment Payments 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 the Installment Payments 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 Installment Payments 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.
ARTICLE V
FINANCIAL COVENANTS
SECTION 5.1. Disclaimer of Warranties. The Authority makes no warranty or
representation, either express or implied, as to the value, design, condition,
merchantability or fitness for any particular purpose or fitness for the use contemplated by
the District of the Project or any component thereof, or any other representation or
warranty with respect to any of the Project or any component thereof. In no event shall
the Authority be liable for incidental, indirect, special or consequential damages, in
connection with or arising out of this Agreement or the Indenture for the existence,
furnishing, functioning or use of the Project.
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SECTION 5.2. Release and Indemnification Covenants. The District shall indemnify
the Authority and the Trustee, and their respective officers, agents, successors and
assigns, against all claims, losses and damages, including legal fees and expenses,
arising out of(a) the use, maintenance, condition or management of, or from any work or
thing done on or about the Wastewater System by the District, (b) any breach or default
on the part of the District in the performance of any of its obligations under this Agreement
or the Indenture, (c) any act or omission of the District or of any of its agents, contractors,
servants, employees or licensees with respect to the Wastewater System, or (d) any act
or omission of any lessee of the District with respect to the Wastewater System. No
indemnification is made under this Section 5.2 or elsewhere in this Agreement for willful
misconduct or negligence under this Agreement by the Authority or the Trustee, or their
respective officers, agents, employees, successors or assigns. The provisions of this
Section 5.2 shall survive the expiration of the Term of this Agreement.
SECTION 5.3. Sale or Eminent Domain of Wastewater System. Except as provided
herein, the District covenants that the Wastewater System shall 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 Installment Payments or any Parity Obligations, or would materially adversely affect
its ability to comply with the terms of this Agreement. The District shall 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 Installment
Payments or any Parity Obligations, or which otherwise would impair the rights of the
Certificate Owners with respect to the Tax Revenues and Net Revenues. If any substantial
part of the Wastewater System is sold, the payment therefor shall either (a) be used for
the acquisition or construction of improvements and extensions or replacement facilities
or (b) be applied to prepay or redeem the Installment Payments and/or any Parity
Obligations.
Any amounts 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 to prepay or redeem the Installment Payments and/or any Parity
Obligations.
SECTION 5.4. 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 Certificates. Such insurances may be maintained as part of or in
conjunction with any other insurance coverage carried by the District, and may be
maintained in whole or in part in the form of self-insurance by the District, or in the form of
the participation by the District in a joint powers agency or other program providing pooled
insurance.
The Net Proceeds collected by the District from insurance against accident to or
destruction of any portion of the Wastewater System shall either (a) be used to repair or
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rebuild such damaged or destroyed portion of the Wastewater System or (b) be applied
on a pro rata basis to prepay and redeem the Installment Payment and/or any Parity
Obligations.
SECTION 5.5. Records and Accounts. The District it shall 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 Owners of not less than 10% of the Outstanding Certificates 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 5.6. Rates and Charges.
(a) Net Revenue 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 Installment Payments
and principal of and interest on any Parity Obligations coming due and payable during
such Fiscal Year.
(b) Gross Revenue 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 Installment Payments and principal of and interest on 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 5.6,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.
SECTION 5.7. 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 Installment Payments. Nothing herein is intended or may be
construed to limit or affect the ability of the District to issue or incur (a) Parity Obligations,
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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.
SECTION 5.8. 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 2018 Bonds and the Installment Payments 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 the 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 Obligations, 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 Installment Payments and all Parity Obligations then
outstanding (including the Parity Obligations then proposed to be
issued).
(c) The trustee or fiscal agent for such Parity Obligations must be the
same entity performing the functions of Trustee under the Indenture.
Notwithstanding the foregoing, the District may borrow money from the State and
incur State Loans to finance improvements to the Wastewater System, and a State Loan
may be treated as a Parity Obligation without meeting the requirements of Section 5.8(c),
so long as the District complies with Section 5.8(a) and 5.8(b) with respect to such State
Loan.
SECTION 5.9. 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 5.10. Assignment and Amendment Hereof. This Agreement may not be
assigned by the District in whole or in part. This Agreement may be amended by the
District and the Authority, but only(a)for the purpose of providing for the issuance of Parity
Obligations under Section 5.8, or(b) otherwise under the circumstances and to the extent
permitted under Sections 8.01 or 8.02 of the Indenture.
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. Events of Default Defined. The following events constitute Events
of Default hereunder:
(a) Failure by the District to pay any Installment Payment when due and
payable hereunder.
(b) Failure by the District to pay any Additional Payment when due and
payable hereunder, and the continuation of such failure for a period
of 30 days.
(c) Failure by the District to observe and perform any covenant, condition
or agreement on its part to be observed or performed, other than as
referred to in the preceding clauses (a) or(b), for a period of 30 days
after written notice specifying such failure and requesting that it be
remedied has been given to the District by the Authority or the
Trustee; provided, however, that if the District notifies the Authority
and the Trustee that in its reasonable opinion the failure stated in the
notice can be corrected, but not within such 30-day period, such
failure will not constitute an Event of Default if the District commences
to cure such failure within such 30-day period and thereafter diligently
and in good faith cures such failure in a reasonable period of time.
(d) The filing by the District of a voluntary petition in bankruptcy, or failure
by the District promptly to lift any execution, garnishment or
attachment, or adjudication of the District as a bankrupt, or
assignment by the District for the benefit of creditors, or the entry by
the District into an agreement of composition with creditors, or the
approval by a court of competent jurisdiction of a petition applicable
to the District in any proceedings instituted under the provisions of
the Federal Bankruptcy Code, as amended, or under any similar acts
which may hereafter be enacted.
SECTION 6.2. Remedies on Default. Whenever any Event of Default has happened
and is continuing, the Trustee as assignee of the Authority has the right, at its option and
without any further demand or notice, to take any one or more of the following actions:
(a) Acceleration. Declare all principal components of the unpaid
Installment Payments, together with accrued interest thereon at the
Overdue Rate from the immediately preceding Interest Payment Date
on which payment was made, to be immediately due and payable,
whereupon the same shall immediately become due and payable.
Notwithstanding the foregoing provisions of this subsection (a),
however, if, at any time after the principal components of the unpaid
Installment Payments have 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 deposits with the Trustee
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a sum sufficient to pay all principal components of the Installment
Payments coming due prior to such declaration and all matured
interest components(if any)of the Installment Payments,with interest
on such overdue principal and interest components calculated at the
Overdue Rate, and the reasonable fees and expenses of the Trustee
(including any fees and expenses of its attorneys), and any and all
other defaults known to the Trustee (other than in the payment of the
principal and interest components of the Installment Payments due
and payable solely by reason of such declaration) have been made
good, then, and in every such case, the Trustee shall rescind and
annul such declaration and its consequences. However, no such
rescission and annulment extends to or affects any subsequent
default, or impairs or exhausts any right or power consequent
thereon. As provided in Section 6.6, the Trustee is required to
exercise the remedies provided herein in accordance with the
Indenture.
(b) Action at Law or in Equity. Take whatever action at law or in equity
may appear necessary or desirable to collect the Installment
Payments then due or thereafter to become due during the Term of
this Agreement, or enforce performance and observance of any
obligation, agreement or covenant of the District under this
Agreement.
(c) Appointment of Receiver. As a matter of right, in connection with the
filing of a suit or other commencement of judicial proceedings to
enforce the rights of the Trustee and the Certificate Owners
hereunder, cause the appointment of a receiver or receivers of the
Gross Revenues and other amounts pledged hereunder, with such
powers as the court making such appointment shall confer.
SECTION 6.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive, and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Agreement or
now or hereafter existing at law or in equity. No delay or omission 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 thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Authority to exercise
any remedy reserved to it in this Article VI, it is not necessary to give any notice, other
than such notice as may be required in this Article VI or by law.
SECTION 6.4. Agreement to Pay Attorneys'Fees and Expenses. If either party to
this Agreement defaults under any of the provisions hereof and the nondefaulting party,
the Trustee or the Owner of any Certificates employs attorneys or incurs other expenses
for the collection of moneys or the enforcement or performance or observance of any
obligation or agreement on the part of the defaulting party herein contained, the defaulting
party agrees that it will on demand therefor pay to the nondefaulting party, the Trustee or
such Owner, as the case may be, the reasonable fees of such attorneys and such other
expenses so incurred. The provisions of this Section 6.4 shall survive the expiration of
the Term of this Agreement.
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SECTION 6.5. No Additional Waiver Implied by One Waiver. If the District or the
Trustee breaches any agreement contained in this Agreement and thereafter the other
party waives the breach, the waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.
SECTION 6.6. Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as are given to the Authority under this Article VI have been assigned by the
Authority to the Trustee under the Indenture, to which assignment the District hereby
consents. Such rights and remedies shall be exercised by the Trustee and the Owners of
the Certificates as provided in the Indenture.
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
SECTION 7.1. Security Deposit. Notwithstanding any other provision of this
Agreement, the District may on any date secure the payment of Installment Payments, in
whole or in part, by irrevocably depositing with the Trustee an amount of cash which,
together with other available amounts, is either
(a) sufficient to pay all such Installment Payments, including the principal
and interest components thereof, when due under Section 4.4(a), or
(b) invested in whole or in part in non-callable Federal Securities in such
amount as will, in the opinion of an Independent Accountant, together
with interest to accrue thereon and together with any cash which is
so deposited, be fully sufficient to pay all such Installment Payments
when due under Section 4.4(a).
If a security deposit is posted under this Section for the payment of all remaining
Installment Payments, all obligations of the District hereunder, and the pledge of Tax
Revenues, Net Revenues, and all other security provided by this Agreement for said
obligations, shall cease and terminate, excepting only the obligation of the District to make,
or cause to be made, all Installment Payments from such security deposit. Said security
deposit shall be deemed to be and shall constitute a special fund for the payment of such
Installment Payments in accordance with the provisions hereof.
SECTION 7.2. Optional Prepayment. [Except as described in Section 7.3 with
respect to the Net Proceeds of insurance or condemnation awards, the Installment
Payments are not subject to prepayment at the option of the District prior to maturity.]
SECTION 7.3. Extraordinary Prepayment from Net Proceeds. The District may
prepay the principal components of the Installment Payments, in whole or in part on any
date, as determined by the District, from Net Proceeds. The prepayment price shall be
deposited by the Trustee in the Installment Payment Fund to be applied to the
extraordinary mandatory prepayment of Certificates under Section 4.01(b) of the
Indenture. If the District prepays the Installment Payments in part but not in whole, the
principal components thereof shall be prepaid among such maturities and in such integral
multiples of$5,000 as the District designates in written notice to the Trustee. The District
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shall give the Trustee written notice of its intention to exercise its option not less than 45
days in advance of the date of exercise, or such shorter period of time as may be agreed
to by the Trustee.
SECTION 7.4. Credit for Amounts on Deposit. In the event of prepayment of the
Installment Payments in full under Sections 7.2 or 7.3, such that the Indenture is
discharged by its terms as a result of such prepayment, and upon payment in full of all
Additional Payments and other amounts then due and payable hereunder, all available
amounts then on deposit in the funds and accounts established under the Indenture shall
be credited towards the amounts then required to be so prepaid.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Further Assurances. The District agrees that it will execute and
deliver any and all such further agreements, instruments, financing statements or other
assurances as may be reasonably necessary or requested by the Authority or the Trustee
to carry out the intention or to facilitate the performance of this Agreement, including,
without limitation, to perfect and continue the security interests herein intended to be
created.
SECTION 8.2. Notices. Any notice, request, complaint, demand or other
communication under this Agreement shall be given by first class mail or personal delivery
to the party entitled thereto at its address set forth below, or by telecopier or other form of
telecommunication, at its number set forth below. Notice shall be effective either(a) upon
transmission by fax or other form of telecommunication, (b) upon actual receipt after
deposit in the United States of America mail, postage prepaid, or(c) in the case of personal
delivery to any person, upon actual receipt. The Authority, 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.
If to the District Central Contra Costa Sanitary District
or the Authority. 5019 Imhoff Place
Martinez, California 94553
Fax: (510) 228-4624
Attention: Director of Finance & Administration
If to the Trustee: U.S. Bank National Association
Global Corporate Trust Services
One California Street, Suite 1000
San Francisco, California 94111
Fax: (602) 257-5433
Attention: Michelle Knutson
Email: michelle.knutson@usbank.com
SECTION 8.3. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of California.
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SECTION 8.4. Binding Effect. This Agreement inures to the benefit of and shall be
binding upon the Authority, the District and their respective successors and assigns,
subject, however, to the limitations contained herein.
SECTION 8.5. Severability of Invalid Provisions. If any one or more of the
provisions contained in this Agreement are for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed
severable from the remaining provisions contained in this Agreement and such invalidity,
illegality or unenforceability shall not affect any other provision of this Agreement, and this
Agreement shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein. The Authority and the District each hereby declares that it
would have entered into this Agreement and each and every other Section, paragraph,
sentence, clause or phrase hereof irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid
or unenforceable.
SECTION 8.6. Article and Section Headings and References. The headings or titles
of the several Articles and Sections hereof, and any table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not affect the meaning,
construction or effect of this Agreement. All references herein to"Articles," "Sections" and
other subdivisions are to the corresponding Articles, Sections or subdivisions of this
Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article, Section or
subdivision hereof; and words of the masculine gender shall mean and include words of
the feminine and neuter genders.
SECTION 8.7. Payment on Non-Business Days. Whenever any payment is
required to be made by the District hereunder on a day which is not a Business Day, such
payment shall be made on the immediate preceding Business Day.
SECTION 8.8. Execution of Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall together constitute but one and the same instrument.
SECTION 8.9. Waiver of Personal Liability. No member of the Board of Directors,
officer, agent or employee of the District shall be individually or personally liable for the
payment of Installment Payments or Additional Payments or be subject to any personal
liability or accountability by reason of this Agreement; but nothing herein contained shall
relieve any such member of the Board of Directors, officer, agent or employee from the
performance of any official duty provided by law or by this Agreement.
SECTION 8.10. Trustee as Third Party Beneficiary. The Trustee is hereby made a
third party beneficiary hereof and shall be entitled to the benefits of this Agreement with
the same force and effect as if the Trustee were a party hereto.
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IN WITNESS WHEREOF, the Authority and the District have caused this
Agreement to be executed in their respective names by their duly authorized officers, all
as of the date first above written.
CENTRAL CONTRA COSTA SANITARY
DISTRICT FACILITIES FINANCING
AUTHORITY, as Seller
By
Executive Director
ATTEST:
By
Secretary
CENTRAL CONTRA COSTA SANITARY
DISTRICT, as Purchaser
By
General Manager
ATTEST:
By
Secretary of the District
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APPENDIX A
DESCRIPTION OF THE PROJECT
The Project consist of the following facilities, equipment and other properties:
• [To come]
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APPENDIX B
SCHEDULE OF INSTALLMENT PAYMENTS
Installment Principal Interest Total
Payment Date0) Component Component Payment
TOTALS
(1) Installment Payment Dates are the 3rd Business Day immediately preceding each
Interest Payment Date shown in the table.
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Jones Hall,A Professional Law Corporation ATTACHMENT 3
Draft of May 27, 2021
INDENTURE OF TRUST
Dated as of June 1, 2021
among
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES
FINANCING AUTHORITY,
and the
CENTRAL CONTRA COSTA SANITARY DISTRICT
Relating to
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
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TABLE OF CONTENTS
ARTICLE I
Definitions ; Rules of Interpretation
Section 1.01. Definitions .....................................................................................2
Section 1.02. Authorization .................................................................................2
Section 1.03. Interpretation .................................................................................2
ARTICLE II
The Certificates of Participation
Section 2.01. Authorization .................................................................................2
Section2.02. Date ..............................................................................................2
Section 2.03. Terms of Certificates .....................................................................3
Section 2.04. Fully Registered Form; Interest .....................................................3
Section 2.05. Book Entry System........................................................................3
Section 2.06. Form and Execution of Certificates................................................5
Section 2.07. Transfer and Exchange .................................................................5
Section 2.08. Certificates Mutilated, Lost, Destroyed or Stolen ...........................6
Section2.09. Payment........................................................................................6
Section 2.10. Execution of Documents and Proof of Ownership..........................7
Section 2.11. Registration Books ........................................................................7
ARTICLE III
Disposition of Proceeds
Costs of Issuance Fund and Reserve Fund
Section 3.01. Application of Proceeds.................................................................8
Section 3.02. Costs of Issuance Fund.................................................................8
Section 3.03. Construction Fund.........................................................................8
ARTICLE IV
Prepayment of Certificates
Section4.01. Prepayment...................................................................................9
Section 4.02. Selection of Certificates for Prepayment........................................9
Section 4.03. Notice of Prepayment....................................................................9
Section 4.04. Partial Prepayment of Certificates ................................................. 10
Section 4.05. Effect of Notice of Prepayment...................................................... 10
Section 4.06. Purchase of Certificates ................................................................ 11
ARTICLE V
Installment Payments; Installment Payment Fund
Section 5.01. Assignment of Rights in Installment Sale Agreement..................... 11
Section 5.02. Establishment of Installment Payment Fund.................................. 11
Section 5.03. Application of Moneys ................................................................... 12
Section5.04. Surplus.......................................................................................... 12
ARTICLE VI
Moneys in Funds; Investment
Section 6.01. Held in Trust................................................................................... 12
Section 6.02. Investments Authorized.................................................................. 12
Section 6.03. Accounting ..................................................................................... 13
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Section 6.04. Allocation of Earnings..................................................................... 13
Section 6.05. Valuation and Disposition of Investments....................................... 13
ARTICLE VII
The Trustee
Section 7.01. Appointment of Trustee ................................................................. 14
Section 7.02. Acceptance of Trusts..................................................................... 14
Section 7.03. Fees, Charges and Expenses of Trustee....................................... 17
Section 7.04. Notice to Certificate Owners of Default........................................... 18
Section 7.05. Removal of Trustee....................................................................... 18
Section 7.06. Resignation by Trustee.................................................................. 18
Section 7.07. Appointment of Successor Trustee................................................ 18
Section 7.08. Merger or Consolidation ................................................................ 18
Section 7.09. Concerning any Successor Trustee............................................... 19
Section 7.10. Non-Liability of Trustee.................................................................. 19
Section 7.11. Nature of Trust Engagement ......................................................... 19
ARTICLE VIII
Modification or Amendment of Agreements
Section 8.01. Amendments Permitted Without Consent of Owners.....................20
Section 8.02. Amendments Permitted Without Consent of Owners.....................20
Section 8.03. Effect of Supplemental Agreement................................................21
Section 8.04. Endorsement or Replacement of Certificates Delivered After
Amendments.................................................................................21
Section 8.05. Amendatory Endorsement of Certificates ......................................22
ARTICLE IX
Other Covenants
Section 9.01. Compliance With and Enforcement of Installment Sale
Agreement......................................................................................22
Section 9.02. Observance of Laws and Regulations ............................................22
Section 9.03. Recordation and Filing....................................................................22
Section 9.04. Tax Covenants...............................................................................22
Section 9.05. Continuing Disclosure.....................................................................23
Section 9.06. Further Assurances........................................................................23
ARTICLE X
Limitation of Liability
Section 10.01. Limited Liability of District and Authority ........................................24
Section 10.02. No Liability for Trustee Performance .............................................24
Section 10.03. Indemnification of Authority and Trustee........................................24
Section 10.04. Opinion of Counsel........................................................................25
Section 10.05. Limitation of Rights to Parties and Certificate Owners...................25
ARTICLE XI
Remedies of Certificate Owners
Section 11.01. Assignment of Rights.....................................................................25
Section 11.02. Remedies......................................................................................25
Section 11.03. Application of Funds......................................................................25
Section 11.04. Institution of Legal Proceedings.....................................................26
Section 11.05. Non-waiver....................................................................................26
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Section 11.06. Remedies Not Exclusive................................................................26
Section 11.07. Power of Trustee to Control Proceedings......................................26
Section 11.08. Limitation on Certificate Owners' Right to Sue...............................27
ARTICLE XII
Miscellaneous
Section 12.01. Discharge of this Indenture............................................................27
Section12.02. Notices..........................................................................................28
Section12.03. Records.........................................................................................28
Section 12.04. Disqualified Certificates.................................................................28
Section 12.05. Payment of Certificates After Discharge........................................29
Section 12.06. Governing Law..............................................................................29
Section 12.07. Binding Effect; Successors; Benefits Limited to Parties.................29
Section 12.08. Third-Party Beneficiary..................................................................30
Section 12.09. Execution in Counterparts .............................................................29
Section 12.10. Delivery of Cancelled Certificates..................................................30
Section 12.11. Authority and City Representatives................................................30
Section 12.12. Waiver of Notice............................................................................30
Section 12.13. Severability of Invalid Provisions ...................................................30
APPENDIX A Defined Terms
APPENDIX B Form of Certificate of Participation
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INDENTURE OF TRUST
This INDENTURE OF TRUST (this "Indenture"), dated as of June 1, 2021, is among
U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing
under the laws of the United States of America, as trustee (the "Trustee"), the CENTRAL
CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY, a nonprofit public
benefit corporation organized and existing under the laws of the State of California (the
"Authority"), and the CENTRAL CONTRA COSTA SANITARY DISTRICT, a sanitary district duly
organized and existing under and by virtue of the laws of the State of California (the
"District").
BACKGROUND :
1. The District owns and operates facilities and property for the collection,
treatment and disposal of wastewater within the service area of the District (the
"Wastewater System").
2. The District is proceeding to finance the acquisition and construction of certain
improvements to the Wastewater System as more particularly described in Appendix A to
the hereinafter defined Installment Sale Agreement (the "Project") between the District
and the Authority, and in order to provide such financing the Authority has proposed to
acquire and construct the Project and sell the completed Project to the District as provided
therein.
3. The Authority has been formed for the purpose of providing such financial
assistance to the District.
4. Under the Installment Sale Agreement, the District has agreed to pay
installments of the purchase price of such improvements in semiannual installments (the
"Installment Payments"), to be payable from and secured by a pledge of and lien on the
net revenues received by the District from the Wastewater System and from the revenues
derived by the District from ad valorem property taxes levied in the District.
5. For the purpose of obtaining the moneys required to provide financing to the
District in accordance with the terms of the Installment Sale Agreement, the Authority, the
District and the Trustee have agreed to enter into this Indenture under which the Authority
assigns and transfers certain of its rights under the Installment Sale Agreement to the
Trustee, and the Trustee agrees to execute and deliver the Certificates, evidencing direct,
undivided fractional interests in the Installment Payments, the proceeds of which will be
applied to finance the Project as provided herein and in the Installment Sale Agreement.
AGREEMENT :
In consideration of the premises and the material covenants contained herein, the
District, the Authority and the Trustee hereby agree as follows:
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ARTICLE I
DEFINITIONS ; RULES OF INTERPRETATION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms used in this Indenture have the respective
meanings given them in Appendix A attached to 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 includes 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
THE CERTIFICATES OF PARTICIPATION
SECTION 2.01. Authorization. The Trustee is hereby authorized and directed upon
written request from the Authority to register, execute and deliver, to the Original
Purchaser, Certificates in an aggregate principal amount of$ , which constitute
certificates of participation representing the direct, undivided fractional ownership interests
of the Owners thereof in the Installment Payments.
SECTION 2.02. Date. Each Certificate shall be dated as of the Closing Date, and
interest represented thereby is payable from the Interest Payment Date next preceding
the date of execution thereof, unless:
(a) it is executed after a Record Date and on or before the following
Interest Payment Date, in which event interest represented thereby
is payable from such Interest Payment Date; or
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(b) it is executed on or before the first Record Date, in which event
interest represented thereby shall be payable from the Closing Date;
or
(c) interest represented by such Certificate is in default as of the date of
execution of such Certificate, in which event interest represented
thereby is payable from the Interest Payment Date to which interest
represented thereby has previously been paid or made available for
payment.
SECTION 2.03. Terms of Certificates. Principal represented by the Certificates is
payable on September 1 in each of the respective years and in the respective amounts,
and interest represented thereby is computed at the respective rates, as follows:
Maturity Date Principal Interest Maturity Date Principal Interest
(September 1) Amount Rate (September 1) Amount Rate
SECTION 2.04. Fully Registered Form; Interest. The Certificates will be delivered
in the form of fully registered Certificates without coupons in the authorized denominations
of $5,000 or any integral multiple thereof, except that no Certificate shall represent
principal payable in more than one year. The Certificates will be assigned such
alphabetical and numerical designation as the Trustee deems appropriate.
Interest represented by the Certificates is payable on each Interest Payment Date
to and including the date of maturity or prepayment, whichever is earlier, as provided in
Section 2.09. Said interest represents the portion of the Installment Payments designated
as interest and coming due on each of the respective Interest Payment Dates. The share
of the portion of Installment Payments designated as interest with respect to any
Certificate is computed by multiplying the portion of Installment Payments designated as
principal represented by such Certificate by the rate of interest represented by such
Certificate (on the basis of a 360-day year of twelve 30-day months).
SECTION 2.05. Book Entry System.
(a) Original Delivery. The Certificates shall be initially delivered in the form of a
separate single fully registered Certificate (which may be typewritten) for each maturity of
the Certificates. Upon initial delivery, the ownership of each such Certificate shall be
registered on the Registration Books in the name of the Nominee. Except as provided in
subsection (c), the ownership of all of the Outstanding Certificates shall be registered in
the name of the Nominee on the Registration Books.
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With respect to Certificates the ownership of which is registered in the name of the
Nominee, the District and the Trustee have no responsibility or obligation to any
Depository System Participant or to any person on behalf of which the District holds an
interest in the Certificates. Without limiting the generality of the immediately preceding
sentence, the District and the Trustee have no responsibility or obligation with respect to
(i) the accuracy of the records of the Depository, the Nominee or any Depository System
Participant with respect to any ownership interest in the Certificates, (ii)the delivery to any
Depository System Participant or any other person, other than a Certificate Owner as
shown in the Registration Books, of any notice with respect to the Certificates, including
any notice of prepayment, (iii)the selection by the Depository of the beneficial interests in
the Certificates to be redeemed in the event the District elects to redeem the Certificates
in part, (iv) the payment to any Depository System Participant or any other person, other
than a Certificate Owner as shown in the Registration Books, of any amount with respect
to principal, premium, if any, or interest represented by the Certificates or(v) any consent
given or other action taken by the Depository as Owner of the Certificates. The District
and the Trustee may treat and consider the person in whose name each Certificate is
registered as the absolute owner of such Certificate for the purpose of payment of
principal, premium, if any, and interest represented by such Certificate, for the purpose of
giving notices of prepayment and other matters with respect to such Certificate, for the
purpose of registering transfers of ownership of such Certificate, and for all other purposes
whatsoever. The Trustee shall pay the principal, interest and premium, if any, represented
by the Certificates only to the respective Owners or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge all obligations with respect to payment of principal, interest and premium, if any,
represented by the Certificates to the extent of the sum or sums so paid. No person other
than a Certificate Owner shall receive a Certificate 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 Nominee of written notice to the effect that the Depository
has determined to substitute a new Nominee in its place, such new nominee shall become
the Nominee hereunder for 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 Certificates for the Depository's
book-entry system, the District and the Trustee shall execute and deliver to such
Depository a letter representing such matters as shall be necessary to so qualify the
Certificates. The execution and delivery of such letter in no way limits the provisions of
subsection (a) above or otherwise imposes upon the District or the Trustee any obligation
whatsoever with respect to persons having interests in the Certificates other than the
Certificate Owners. 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 Certificates
for the Depository's book-entry program.
(c) Transfers Outside Book-Entry System. If either(i)the Depository determines
not to continue to act as Depository for the Certificates, 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 execution and delivery of replacement Certificates by
providing the Trustee with a list showing the interests of the Depository System
Participants in the Certificates, and by surrendering the Certificates, registered in the
name of the Nominee, to the Trustee on or before the date such replacement Certificates
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are to be executed and delivered. The Depository, by accepting delivery of the
Certificates, 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 Certificates 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 Certificates 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 Certificates that they be able to obtain certificated Certificates, the District may notify
the Depository System Participants of the availability of such certificated Certificates
through the Depository. In such event, the Trustee will execute, transfer and exchange
Certificates 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 (y) to make available one or more separate
certificates evidencing the Certificates to any Depository System Participant having
Certificates credited to its account with the Depository, or (z) to arrange for another
Securities Depository to maintain custody of a single certificate evidencing such
Certificates, all at the District's expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this
Indenture to the contrary, so long as any Certificate is registered in the name of the
Nominee, all payments with respect to principal, interest and premium, if any, represented
by such Certificate and all notices with respect to such Certificate 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 2.06. Form and Execution of Certificates. The Certificates shall be
substantially in the form set forth in Appendix B attached hereto and by this reference
incorporated herein. An authorized signatory of the Trustee shall execute the Certificates
in the name and on behalf of the Trustee. If any person whose signature appears on any
Certificate ceases to be an authorized signatory before the date of delivery of said
Certificate, such signature shall nevertheless be as effective as if such person had
remained an authorized signatory until such date.
SECTION 2.07. Transfer and Exchange.
(a) Transfer of Certificates. The registration of any Certificate 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, upon surrender of
such Certificate for cancellation at the Corporate Trust Office of the Trustee, accompanied
by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly
executed. Whenever any Certificate or Certificates shall be surrendered for registration
of transfer, the Trustee shall execute and deliver a new Certificate or Certificates
representing the same maturity, interest rate and aggregate principal amount, in any
authorized denominations. The District shall pay all costs of the Trustee incurred in
connection with any such transfer, except that the Trustee may require the payment by
the Certificate Owner of any tax or other governmental charge required to be paid with
respect to such transfer.
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(b) Exchange of Certificates. Certificates may be exchanged at the Corporate
Trust Office of the Trustee, for a like aggregate principal amount of Certificates
representing other authorized denominations of the same interest rate and maturity. The
District shall pay all costs of the Trustee incurred in connection with any such exchange,
except that the Trustee may require the payment by the Certificate Owner requesting such
exchange of any tax or other governmental charge required to be paid with respect to such
exchange.
(c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or
exchange either (i) any Certificate during the period established by the Trustee for the
selection of Certificates for prepayment, or (ii) the portion of any Certificate which the
Trustee has selected for prepayment under the provisions of Section 4.02.
SECTION 2.08. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate
is mutilated, the Trustee, at the expense of the Owner of such Certificate, shall execute
and deliver a new Certificate of like principal amount, interest rate and maturity in
replacement for the Certificate so mutilated, but only upon surrender to the Trustee of the
Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall
be cancelled by it and destroyed by the Trustee, who shall, upon request of the District,
deliver a certificate of destruction to the District. If any Certificate shall be lost, destroyed
or stolen, evidence of such loss, destruction or theft must be submitted to the Trustee,
and, if such evidence is satisfactory to the Trustee and the District and, if an indemnity
satisfactory to the Trustee and the District shall be given, the Trustee, at the expense of
the Certificate Owner, shall execute and deliver a new Certificate of like principal amount,
interest rate and maturity and numbered as the Trustee shall determine in lieu of and in
replacement for the Certificate so lost, destroyed or stolen. The Trustee may require
payment of an appropriate fee for each replacement Certificate delivered under this
Section 2.08 and of the expenses which may be incurred by the Trustee in carrying out
the duties under this Section 2.08. Any Certificate executed and delivered under the
provisions of this Section 2.08 in lieu of any Certificate alleged to be lost, destroyed or
stolen shall be equally entitled to the benefits of this Indenture with all other Certificates
secured by this Indenture. The Trustee is not required to treat both the original Certificate
and any replacement Certificate as being Outstanding for the purpose of determining the
principal amount of Certificates which may be executed and delivered hereunder or for the
purpose of determining any percentage of Certificates Outstanding hereunder, but both
the original and replacement Certificate shall be treated as one and the same.
Notwithstanding any other provision of this Section 2.08, in lieu of delivering a replacement
for a Certificate which has been mutilated, lost, destroyed or stolen, and which has
matured, the Trustee may make payment with respect to such Certificate upon receipt of
indemnity satisfactory to the Trustee and the District.
SECTION 2.09. Payment. Payment of interest represented by any Certificate on
any Interest Payment Date shall be made to the person appearing on the Registration
Books as the Owner thereof as of the close of business on the Record Date immediately
preceding such Interest Payment Date, such interest to be paid by check mailed to such
Owner, by first class mail postage prepaid, at such Owner's address as it appears on the
Registration Books; provided, however, that at the written request of the Owner of
Certificates in an aggregate principal amount of at least$1,000,000, which written request
shall be on file with the Trustee as of the Record Date preceding any Interest Payment
Date, interest represented by such Certificates coming due and payable on such Interest
Payment Date shall be paid by wire transfer in immediately available funds to such account
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in the United States as shall be specified in such written request. The principal and
prepayment price represented by any Certificate at maturity or upon prior prepayment
shall be payable in lawful money of the United States of America upon surrender of such
Certificate at the Corporate Trust Office of the Trustee.
SECTION 2.10. Execution of Documents and Proof of Ownership. Any request,
direction, consent, revocation of consent, or other instrument in writing required or
permitted by this Indenture to be signed or executed by Certificate Owners may be in any
number of concurrent instruments of similar tenor, and may be signed or executed by such
Owners in person or by their attorneys or agents appointed by an instrument in writing for
that purpose, or by any bank, trust company or other depository for such Certificates.
Proof of the execution of any such instrument, or of any instrument appointing any such
attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose
of this Indenture (except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner, attorney or agent
of any such instrument and of any instrument appointing any such
attorney or agent, may be proved by a certificate, which need not be
acknowledged or verified, of an officer of any bank or trust company
located within the United States of America, or of any notary public,
or other officer authorized to take acknowledgments of deeds to be
recorded in such jurisdictions, that the persons signing such
instruments acknowledged before him the execution thereof. Where
any such instrument is executed by an officer of a corporation or
association or a member of a partnership on behalf of such
corporation, association or partnership, such certificate shall also
constitute sufficient proof of authority.
(b) The fact of the ownership of Certificates by any person and the
amount, the maturity and the numbers of such Certificates and the
date of holding the same shall be proved by the Registration Books.
Nothing contained in this Section 2.10 may be construed as limiting the Trustee to
such proof, it being intended that the Trustee may accept any other evidence of the
matters herein stated which the Trustee may deem sufficient. Any request or consent of
the Owner of any Certificate binds every future Owner of the same Certificate in respect
of anything done or suffered to be done by the Trustee under such request or consent.
SECTION 2.11. Registration Books. The Trustee shall keep or cause to be kept
sufficient records for the registration and registration of transfer of the Certificates, which
shall at all reasonable times upon prior notice be open to inspection by the District and the
Authority during regular business hours; 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, Certificates as
hereinbefore provided.
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ARTICLE III
DISPOSITION OF PROCEEDS;
CONSTRUCTION FUND, COSTS OF ISSUANCE FUND
AND RESERVE FUND
SECTION 3.01. Application of Proceeds. At the direction of the District, which is
hereby given to the Trustee, the proceeds received from the sale of the Certificates to the
Original Purchaser shall be set aside by the Trustee on the Closing Date in the following
respective funds and accounts and in the following order of priority:
(a) The Trustee shall deposit the amount of$ in the Costs of
Issuance Fund.
(b) The Trustee shall transfer the amount of $ constituting
the remainder of such proceeds, to the District for deposit in the
Construction Fund.
For the purpose of making any or all of the foregoing deposits, the Trustee may
establish one or more temporary funds for the deposit and transfer of the proceeds of the
Certificates, which the Trustee shall promptly close following the foregoing transfers.
SECTION 3.02. Costs of Issuance Fund. The Trustee shall establish and maintain
a special fund designated as the "Costs of Issuance Fund" to be held by the Trustee in
trust for the benefit of the District, and applied solely as provided herein. The Trustee shall
disburse moneys in the Costs of Issuance Fund to pay the Costs of Issuance from time to
time upon the receipt of written requisitions of the District setting forth the amounts to be
disbursed for payment or reimbursement of Costs of Issuance and the name and address
of the person or persons to whom said amounts are to be disbursed, stating that all
amounts to be disbursed are for Costs of Issuance properly chargeable to the Costs of
Issuance Fund. The Trustee shall withdraw any amounts remaining in the Costs of
Issuance Fund on , 2021, and transfer such amounts to the District for deposit in
the Construction Fund, and the Trustee shall thereupon close the Costs of Issuance Fund.
SECTION 3.03. Construction Fund. The District shall establish and maintain a
special fund designated as the "Construction Fund" to be held by the District and applied
solely as provided herein. The District shall deposit a portion of the proceeds of the
Certificates in the Construction Fund as provided in Section 3.01(b), any amounts
transferred to the District for that purpose from the Costs of Issuance Fund under Section
3.02, and all earnings received from the investment of amounts in the Construction Fund.
The District shall disburse amounts in the Construction Fund from time to time to
pay Project Costs, upon preparation of a sequentially numbered requisition requesting
disbursement executed by a District Representative. Each such requisition must:
(i) set forth the amounts to be disbursed for payment or reimbursement
of previous payments of Project Costs and the person or persons to
whom said amounts are to be disbursed;
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(ii) state that the amounts to be disbursed constitute Project Costs, that
said amounts are required to be disbursed under a contract entered
into therefor by or on behalf of the Authority or the District, or were
necessarily and reasonably incurred, and that said amounts are not
being paid in advance of the time, if any, fixed for payment; and
(iii) state that no amount set forth in the requisition was included in any
requisition requesting disbursement previously executed under this
Section 3.03.
All unexpended moneys remaining in the Construction Fund and not identified in
writing by a District Representative to be required for payment of Project Costs shall, on
the date of completion of the Project, be transferred to the Trustee for deposit into the
Installment Payment Fund and applied to pay the Installment Payments as the same come
due and payable.
ARTICLE IV
PREPAYMENT OF CERTIFICATES
SECTION 4.01. Prepayment.
(a) Optional Prepayment. [Except as described below with respect to Net
Proceeds of insurance or condemnation awards, the Certificates are not subject to
prepayment at the option of the District prior to maturity.]
(b) Extraordinary Prepayment from Net Proceeds. The Certificates shall be
subject to extraordinary prepayment 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 Section 5.3 or Section 5.4 of the Installment Sale
Agreement, as applicable, at a prepayment price equal to the principal amount of the
Certificates to be prepaid, plus accrued interest thereon to the date fixed for prepayment,
without premium.
SECTION 4.02. Selection of Certificates for Prepayment. Whenever provision is
made herein for the prepayment of Certificates and less than all Outstanding Certificates
of any one maturity are called for prepayment, the Trustee shall select Certificates for
prepayment within such maturity by lot in any manner deemed fair by the Trustee. For the
purposes of such selection, Certificates shall be deemed to be composed of $5,000
portions, and any such portion may be separately prepaid. The Trustee shall promptly
notify the District and the Authority in writing of the Certificates or portions thereof so
selected for prepayment. The selection by the Trustee of any Certificates for prepayment
shall be final and conclusive.
SECTION 4.03. Notice of Prepayment. When prepayment is authorized or required
under Section 4.01, the Trustee shall give notice of the prepayment of the Certificates on
behalf and at the expense of the District. Such notice shall state the prepayment date and
prepayment price and, if less than all of the then Outstanding Certificates of any maturity
are to be called for prepayment, shall designate the numbers of the Certificates to be
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prepaid by giving the individual number of each Certificate or by stating that all Certificates
between two stated numbers, both inclusive, have been called for prepayment or by
stating that all of the Certificates of one or more maturities have been called for
prepayment, and shall require that such Certificates be surrendered on the designated
prepayment date at the Corporate Trust Office of the Trustee for prepayment at said
prepayment price. Such notice shall further state that on the specified date there shall
come due and payable upon each Certificate, the principal and premium, if any, together
with interest accrued to said date, and that from and after such date interest with respect
thereto shall cease to accrue and be payable.
Notice of such prepayment shall be mailed by first class mail with postage prepaid,
to the Securities Depository, and the Owners of Certificates designated for prepayment at
their respective addresses appearing on the Registration Books. Such notice shall be
mailed at least 20 days but not more than 60 days prior to the prepayment date. Such
notice shall, in addition to setting forth the above information, set forth, in the case of each
Certificate called only in part, the portion of the principal represented thereby which is to
be prepaid; provided, however, that neither failure to receive such notice so mailed nor
any defect in any notice so mailed shall affect the sufficiency of the proceedings for the
prepayment of such Certificates or the cessation of accrual of interest represented thereby
from and after the date fixed for prepayment.
The District has the right to rescind any notice of prepayment of the Certificates
under Section 4.01 by written notice to the Trustee on or prior to the dated fixed for
prepayment. Any notice of prepayment shall be cancelled and annulled if for any reason
funds will not be or are not available on the date fixed for prepayment for the payment in
full of the Certificates then called for prepayment, and such cancellation shall not
constitute an Event of Default. The District and the Trustee have no liability to the
Certificate Owners or any other party related to or arising from such rescission of
prepayment. The Trustee shall mail notice of such rescission of prepayment in the same
manner as the original notice of prepayment was sent under this Section.
SECTION 4.04. Partial Prepayment of Certificates. Upon surrender of any
Certificate prepaid in part only, the Trustee shall execute and deliver to the Owner thereof,
at the expense of the District, a new Certificate or Certificates of authorized denominations
equal in aggregate principal amount to the unprepaid portion of the Certificate surrendered
and of the same interest rate and the same maturity.
SECTION 4.05. Effect of Notice of Prepayment. Moneys for the prepayment
(including the interest to the applicable date of prepayment) of Certificates having been
set aside in the Installment Payment Fund, the Certificates shall be due and payable on
the date of such prepayment, and, upon presentation and surrender thereof at the
Corporate Trust Office of the Trustee, said Certificates shall be paid at the unpaid principal
amount (or applicable portion thereof) represented thereby plus any applicable premium
and plus interest accrued and unpaid to said date of prepayment.
If, on said date of prepayment, moneys for the prepayment of all the Certificates
to be prepaid, together with interest represented thereby to said date of prepayment, shall
be held by the Trustee so as to be available therefor on such date of prepayment, then,
from and after said date of prepayment, interest represented by the Certificates shall
cease to accrue and be payable. All moneys held by the Trustee for the prepayment of
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Certificates shall be held in trust, uninvested, for the account of the Owners of the
Certificates so to be prepaid.
All Certificates paid at maturity or prepaid prior to maturity under this Article IV shall
be cancelled upon surrender thereof and destroyed under Section 12.10.
SECTION 4.06. Purchase of Certificates. In lieu of prepayment of Certificates as
provided in this Article IV, amounts held by the Trustee for such prepayment shall, at the
written request of the District Representative received by the Trustee no later than 45 days
prior to the prepayment date, be applied by the Trustee to the purchase of Certificates at
public or private sale as and when and at such prices (including brokerage, accrued
interest and other charges) as the District may in its discretion direct, but not to exceed
the prepayment price which would be payable if such Certificates were prepaid. The
aggregate principal amount of Certificates of the same maturity purchased in lieu of
prepayment under this Section 4.06 may not exceed the aggregate principal amount of
Certificates of such maturity which would otherwise be subject to such prepayment.
ARTICLE V
INSTALLMENT PAYMENTS;
INSTALLMENT PAYMENT FUND
SECTION 5.01. Assignment of Rights in Installment Sale Agreement. The Authority
hereby irrevocably transfers, assigns and sets over to the Trustee, without recourse to the
Authority, all of its rights in the Installment Sale Agreement (excepting only the Authority's
rights under Sections 4.7, 5.2 and 6.4 thereof), including but not limited to all of the
Authority's rights to receive and collect all of the Installment Payments and all other
amounts required to be deposited in the Installment Payment Fund. The Trustee hereby
accepts such assignment for the benefit of the Certificate Owners. Such assignment shall
neither create any obligations nor give rise to any duties on the part of the Trustee other
than those obligations and duties contained herein and shall not be liable for any
covenants, representations or warranties of the Authority. All Installment Payments and
such other amounts to which the Authority may at any time be entitled shall be paid directly
to the Trustee, and all of the Installment Payments collected or received by the Authority
shall be deemed to be held and to have been collected or received by the Authority as the
agent of the Trustee, and if received by the Authority at any time shall be deposited by the
Authority with the Trustee within one (1) Business Day after the receipt thereof, and all
such Installment Payments and such other amounts shall be forthwith deposited by the
Trustee upon the receipt thereof in the Installment Payment Fund.
SECTION 5.02. Establishment of Installment Payment Fund. The Trustee shall
establish and maintain a special fund designated as the "Installment Payment Fund," into
which the Trustee shall deposit all amounts paid to the Trustee for such purpose under
the Installment Sale Agreement. All moneys at any time deposited by the Trustee in the
Installment Payment Fund shall be held by the Trustee in trust for the benefit of the District
and the Owners of the Certificates. So long as any Certificates are Outstanding, neither
the District nor the Authority has any beneficial right or interest in the Installment Payment
Fund or the moneys deposited therein, except only as provided in the Installment Sale
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Agreement or herein, and such moneys shall be used and applied by the Trustee as
hereinafter set forth.
SECTION 5.03. Application of Moneys. Except as provided in Section 5.04, the
Trustee shall use and withdraw amounts in the Installment Payment Fund solely for the
purpose of paying the principal, interest and prepayment premiums (if any) represented
by the Certificates as the same are due and payable, in accordance with the provisions of
Article II and Article IV.
SECTION 5.04. Surplus. At the written request of the District, the Trustee shall
withdraw and remit to the District any surplus remaining in the Installment Payment Fund,
after prepayment and payment of all Certificates, including all premiums and accrued
interest (if any) and payment of any applicable fees and expenses to the Trustee, or
provision for such prepayment or payment having been made in accordance with Section
12.01.
ARTICLE VI
MONEYS IN FUNDS; INVESTMENT
SECTION 6.01. Held in Trust. The moneys and Permitted Investments held by the
Trustee under this Indenture are irrevocably held in trust for the benefit of the District and
the Owners of the Certificates solely for the purposes herein specified, and such moneys,
and any income or interest earned thereon, shall be expended only as provided in this
Indenture, and shall not be subject to levy or attachment or lien by or for the benefit of any
creditor of the Authority, the Trustee, the District or the Owner of any Certificates.
SECTION 6.02. Investments Authorized. Upon the written direction of the District
filed with the Trustee from time to time, moneys held by the Trustee in any fund or account
established hereunder shall be invested and reinvested by the Trustee in Permitted
Investments which mature not later than the date such moneys are required or estimated
by the District to be required to be expended hereunder. In the absence of any written
direction of the District directing the investment of uninvested moneys held by the Trustee
hereunder, the Trustee shall invest such moneys in Permitted Investments described in
clause (g) of the definition thereof, which mature not later than the date such moneys are
required or estimated by the Trustee to be required to be expended hereunder. Such
investments, if registrable, shall be registered in the name of the Trustee, as trustee or in
the name of its nominee, and shall be held by the Trustee. . Such investments and
reinvestments shall be made giving full consideration to the time at which funds are
required to be available. The Trustee may act as purchaser or agent in the making or
disposing of any investment. Whenever in this Indenture any moneys are required to be
transferred by the District to the Trustee, such transfer may be accomplished by
transferring a like amount of Permitted Investments. For purposes of acquiring any
investments hereunder, the Trustee may commingle funds held by it hereunder. The
Trustee has no responsibility or liability for any loss suffered in connection with any
investment of funds made by it in accordance with this Section 6.02.
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The District shall invest amounts held by it in any fund or account established
hereunder or under the Installment Sale Agreement in any investments which are
authorized for the investment of District funds under the laws of the State of California.
SECTION 6.03. Accounting. The Trustee shall furnish to the District, not less than
quarterly, an accounting (in the form customarily used by the Trustee) of all investments
and other transactions made by the Trustee under this Indenture. 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.
SECTION 6.04. Allocation of Earnings. Any income, profit or loss on such
investments shall be deposited in or charged to the respective funds from which such
investments were made.
SECTION 6.05. Valuation and Disposition of Investments.
(a) 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 Certificates (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 (c) below. The
Trustee has no duty in connection with the determination of Fair Market Value other than
to follow the investment directions of the District in any written directions of a District
Representative.
(b) For the purpose of determining the amount in any fund, the value of Permitted
Investments credited to such fund shall be valued by the District at the market value
thereof. The Trustee may sell or present for prepayment, any Permitted Investment so
purchased by the Trustee whenever it shall be necessary in order to provide moneys to
meet any required payment, transfer, withdrawal or disbursement from the fund to which
such Permitted Investment is credited, and the Trustee shall not be liable or responsible
for any loss resulting from any such Permitted Investment.
(c) For purposes of this Section 6.05, the term "Fair Market Value" shall mean
the price at which a willing buyer would purchase the investment from a willing seller in a
bona fide, arm's length transaction (determined as of the date the contract to purchase or
sell the investment becomes binding) if the investment is traded on an established
securities market (within the meaning of Section 1273 of the Tax Code) and, otherwise,
the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is
acquired in accordance with applicable regulations under the Tax Code, (ii)the investment
is an agreement with specifically negotiated withdrawal or reinvestment provisions and a
specifically negotiated interest rate (for example, a guaranteed investment contract, a
forward supply contract or other investment agreement) that is acquired in accordance
with applicable regulations under the Tax Code, (iii) the investment is a United States
Treasury Security — State and Local Government Series that is acquired in accordance
with applicable regulations of the United States Bureau of Public Debt, or (iv) any
commingled investment fund in which the District and any related parties do not own more
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than a 10% beneficial interest therein if the return paid by the fund is without regard to the
source of the investment.
ARTICLE VII
THE TRUSTEE
SECTION 7.01. Appointment of Trustee. U.S. Bank National Association is hereby
appointed Trustee by the Authority and the District for the purpose of receiving all moneys
required to be deposited with the Trustee hereunder and to allocate, use and apply the
same as provided herein. The District agrees that it will maintain a Trustee having a
corporate trust office in California, with a reported capital and surplus of at least
$50,000,000, duly authorized to exercise trust powers and subject to supervision or
examination by Federal or state authority, so long as any Certificates are Outstanding. If
such bank or trust company publishes a report of condition at least annually under law or
the requirements of any supervising or examining authority above referred to then for the
purpose of this Section 7.01 the combined capital and surplus of such bank or trust
company shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
The District and the Authority covenant that they will maintain a Trustee which is
qualified under the provisions of the foregoing provisions of this Section 7.01, so long as
any Certificates are Outstanding.
The Trustee is hereby authorized to pay or prepay the Certificates when duly
presented for payment at maturity, or on prepayment, or on purchase by the Trustee as
directed by the District prior to maturity in accordance with Section 4.06, and to cancel all
Certificates upon payment thereof. The Trustee shall keep accurate records of all funds
administered by it and of all Certificates paid and discharged. The Trustee shall be
compensated for its services rendered under the provisions hereof.
SECTION 7.02. Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it hereby, and agrees to perform said trusts, but only upon and subject to
the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after
curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are
specifically set forth herein, and no implied covenants or obligations
shall be read into this Indenture against the Trustee. In case an Event
of Default has occurred (which has not been cured or waived), the
Trustee may exercise such of the rights and powers vested in it
hereby, and shall use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) No provision hereof shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
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powers, if the repayment of such funds or adequate indemnity against
such risk or liability is not assured to it. The Trustee shall be entitled
to interest on any amounts advanced by it in the performance of its
duties hereunder.
(c) The Trustee may execute any of the trusts or powers hereof and
perform the duties required of it hereunder by or through attorneys,
agents or receivers and the Trustee is not responsible for any
misconduct or negligence on the part of any attorney, agent or
receiver appointed with due care by it hereunder. The Trustee shall
be entitled to rely conclusively on the advice or opinion of counsel
concerning all matters of trust and its duty hereunder and shall be
protected in any action taken or suffered by it hereunder in reliance
on such advice or opinion.
(d) The Trustee is not responsible for the validity hereof or for any recital
herein, or in the Certificates, or for any of the supplements thereto or
instruments of further assurance, or for the sufficiency of the security
for the Certificates executed and delivered hereunder or intended to
be secured hereby and the Trustee is not bound to ascertain or
inquire as to the observance or performance of any covenants,
conditions or agreements on the part of the Authority or the District
under the Installment Sale Agreement. The Trustee is not
responsible or liable for any loss suffered in connection with any
investment of funds made by it in accordance with Article VI hereof.
(e) The Trustee is not accountable for the use or application of any
Certificates or the proceeds thereof. The Trustee may be the Owner
of Certificates secured hereby with the same rights which it would
have if not the Trustee; may acquire and dispose of other bonds or
evidence of indebtedness of the District with the same rights it would
have if it were not the Trustee; and may act as a 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 Owners of Certificates, whether or not such committee shall
represent the Owners of the majority in aggregate principal amount
of the Certificates then Outstanding.
(f) In the absence of bad faith on its part, Trustee shall be protected in
acting upon any notice, request, consent, certificate, order,
requisition, affidavit, letter, telegram or other paper or document
believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons. Any action taken or omitted to
be taken by the Trustee in good faith hereunder upon the request or
authority or consent of any person who at the time of making such
request or giving such authority or consent is the Owner of any
Certificate, shall be conclusive and binding upon all future Owners of
the same Certificate and upon Certificates executed and delivered in
exchange therefor or in place thereof.
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(g) As to the existence or non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the
Trustee shall be entitled to rely upon a certificate signed by an
Authority Representative or a District Representative as sufficient
evidence of the facts therein contained and prior to the occurrence of
an Event of Default of which the Trustee has been given notice or is
deemed to have notice, as provided in Section 7.02(1), shall also be
at liberty to accept a similar certificate to the effect that any particular
dealing, transaction or action is necessary or expedient, but may at
its discretion secure such further evidence deemed by it to be
necessary or advisable, but shall in no case be bound to secure the
same. The Trustee may accept a certificate of an Authority
Representative or a District Representative to the effect that an
authorization in the form therein set forth has been adopted by the
Authority or the District, as the case may be, as conclusive evidence
that such authorization has been duly adopted, and is in full force and
effect.
(h) The permissive right of the Trustee to do things enumerated herein
shall not be construed as a duty and it shall not be answerable for
other than its negligence or willful misconduct. The immunities and
exceptions from liability of the Trustee shall extend to its officers,
directors, employees and agents.
(i) The Trustee is not required to take notice or be deemed to have
notice of any Event of Default hereunder except failure by the District
to make any of the Installment Payments to the Trustee required to
be made by the District under the Installment Sale Agreement or
failure by the Authority or the District to file with the Trustee any
document required hereby or by the Installment Sale Agreement to
be so filed subsequent to the delivery of the Certificates, unless the
Trustee is specifically notified in writing of such default by the
Authority, the District or the Owners of at least 25% in aggregate
principal amount of Certificates then Outstanding and all notices or
other instruments required hereby or by the Installment Sale
Agreement to be delivered to the Trustee must, in order to be
effective, be delivered at the Corporate Trust Office of the Trustee,
and in the absence of such notice so delivered the Trustee may
conclusively assume there is no Event of Default except as aforesaid.
Q) 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) to inspect the
Wastewater System including all books, papers and records of the
District pertaining to the Wastewater System and the Certificates, and
to take such memoranda from and with regard thereto as may be
desired.
(k) The Trustee is not required to give any bond or surety in respect of
the execution of the said trusts and powers or otherwise in respect of
the premises.
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(1) Notwithstanding anything elsewhere herein with respect to the
execution of any Certificates, the withdrawal of any cash, the release
of any property, or any action whatsoever within the purview hereof,
the Trustee has the right, but is not required, to demand any
showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, in addition so that by the terms
hereof required as a condition of such action, by the Trustee deemed
desirable for the purpose of establishing any right to the execution of
any Certificates, the withdrawal of any cash, or the taking of any other
action by the Trustee.
(m) Before taking any action referred to in Section 11.02 at the direction
of the Certificate Owners, the Trustee may require that a satisfactory
indemnity bond or other indemnification acceptable to the Trustee be
furnished by the Certificate Owners, or any of them, for the
reimbursement of all expenses to which it may be put and to protect
it against all liability, except liability which is adjudicated to have
resulted from its negligence or willful misconduct in connection with
any such action.
(n) All moneys received by the Trustee shall, until used or applied or
invested as herein provided, be held in trust for the purposes for
which they were received but need not be segregated from other
funds except to the extent required by law. The Trustee has no
liability for interest on any moneys received hereunder except such
as may be agreed upon.
(o) The Trustee is not responsible for the sufficiency of the Installment
Sale Agreement or its right to receive moneys under the Installment
Sale Agreement.
(p) The Trustee is not liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with the direction of the
Owners of a majority in aggregate principal amount of the
Outstanding Certificates 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,
hereunder.
(q) The Trustee is not liable for any error of judgment made by a
responsible officer of the Trustee unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts relating
thereto.
SECTION 7.03. Fees, Charges and Expenses of Trustee. The Trustee is entitled
to payment and reimbursement from the District and the Authority for reasonable fees for
its services rendered hereunder and all advances, counsel fees (including expenses) and
other expenses reasonably and necessarily made or incurred by the Trustee in connection
with such services. Upon the occurrence of an Event of Default, but only upon such
occurrence, the Trustee shall have a first lien with right of payment prior to payment on
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account of principal, premium, if any, and interest represented by any Certificate upon the
amounts held hereunder for the foregoing fees, charges and expenses incurred by it
respectively.
SECTION 7.04. Notice to Certificate Owners of Default. If an Event of Default
occurs of which the Trustee has been given or is deemed to have notice, as provided in
Section 7.02(i), then the Trustee shall promptly give written notice thereof by first class
mail, postage prepaid, by first class mail, postage prepaid, to the Owner of each
Outstanding Certificate, unless such Event of Default shall have been cured before the
giving of such notice; provided, however, that unless such Event of Default consists of the
failure by the District to make any Installment Payment when due, the Trustee may elect
not to give such notice to the Certificate Owners if and so long as the Trustee in good faith
determines that it is in the best interests of the Certificate Owners not to give such notice.
SECTION 7.05. Removal of Trustee. So long as no Event of Default has occurred
and is continuing the District may, upon at least 30 days' prior written notice and with the
consent of the Authority, remove the Trustee initially appointed, and any successor
thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and
the Authority, and may appoint a successor or successors thereto; provided that any such
successor shall be a commercial bank or trust company meeting the requirements set
forth in Section 7.01.
SECTION 7.06. Resignation by Trustee. The Trustee and any successor Trustee
may at any time resign by giving written notice by registered or certified mail to the District.
Upon receiving such notice of resignation, the District shall promptly appoint a successor
Trustee. Any resignation or removal of the Trustee and appointment of a successor
Trustee shall be effective upon acceptance of appointment by the successor Trustee.
Upon such acceptance, the District shall mail notice thereof to the Certificate Owners at
their respective addresses set forth on the Registration Books.
SECTION 7.07. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee under Sections 7.05 or 7.06, respectively, the District shall
promptly appoint a successor Trustee. In the event the District for any reason whatsoever
fails to appoint a successor Trustee within 30 days following the delivery to the Trustee of
the instrument described in Section 7.05 or within 30 days following the receipt of notice
by the District under Section 7.06, at the expense of the District the Trustee may apply to
a court of competent jurisdiction for the appointment of a successor Trustee meeting the
requirements of Section 7.01. Any such successor Trustee appointed by such court shall
be the successor Trustee hereunder notwithstanding any action by the District purporting
to appoint a successor Trustee following the expiration of such 30 day period.
SECTION 7.08. Merger or Consolidation. Any company or association into which
the Trustee may be merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to which it shall be a
party or any company or association to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided that such company or association
shall be eligible under Section 7.01, shall be the successor to the Trustee and vested with
all of the title to the trust estate and all of the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution or filing of
any paper or further act, anything herein to the contrary notwithstanding.
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SECTION 7.09. Concerning any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also
to the Authority and the District an instrument in writing accepting such appointment
hereunder and thereupon such successor, without any further act, deed or conveyance,
shall be fully vested with all the estates, properties, rights, powers, trusts, duties and
obligations of its predecessors; but such predecessor shall, nevertheless, on the written
request of the Authority, or of its successor, execute and deliver an instrument transferring
to such successor all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all securities and
moneys held by it as the Trustee hereunder to its successor. Should any instrument in
writing from the Authority be required by any successor Trustee for more fully and certainly
vesting in such successor the estate, rights, powers and duties hereby vested or intended
to be vested in the predecessor, any and all such instruments in writing shall, on request,
be executed, acknowledged and delivered by the Authority.
SECTION 7.10. Non-Liability of Trustee. The recitals, statements and
representations by the District and the Authority contained herein or in the Certificates
shall be taken and construed as made by and on the part of the District and the Authority,
as the case may be, and not by the Trustee, and the Trustee does not assume, and shall
not have, any responsibility or obligation for the correctness of any thereof.
The Trustee makes no representation or warranty, express or implied as to the
title, value, design, compliance with specifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose or fitness for the
use contemplated by the District of the Wastewater System. In no event shall the Trustee
be liable for special or consequential damages in connection with or arising from the
Installment Sale Agreement for the existence,furnishing or use of the Wastewater System.
SECTION 7.11. Nature of Trust Engagement. The Trustee undertakes to perform
such duties and only such duties as are specifically set forth herein and no implied
covenants or obligations shall be read into the Indenture against the Trustee. In accepting
the trusts hereby created, the Trustee acts solely as Trustee and not in its individual
capacity and all persons, including without limitation the Certificate Owners, the District
and the Authority having any claim against the Trustee arising from the Indenture shall
look only to the funds and accounts hereunder for payment except as otherwise provided
herein. Under no circumstances shall the Trustee be liable in its individual capacity for
the obligations represented by the Certificates.
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ARTICLE VIII
MODIFICATION OR AMENDMENT OF AGREEMENTS
SECTION 8.01. Amendments Permitted Without Consent of Owners. This
Indenture and the rights and obligations of the Owners of the Certificate, and the
Installment Sale Agreement and the rights and obligations of the respective parties
thereto, may be modified or amended at any time by a supplemental agreement, without
the consent of any of the Certificate Owners, only to the extent permitted by law and only
for any one or more of the following reasons:
(a) to add to the covenants and agreements of any party, other
covenants to be observed, or to surrender any right or power herein
reserved to the District,
(b) to cure, correct or supplement any ambiguous or defective provision
contained herein or therein,
(c) in any respect whatsoever in regard to questions arising hereunder
or thereunder, as the parties hereto or thereto may deem necessary
or desirable and which do not, in the opinion of Bond Counsel,
materially adversely affect the interests of the Owners of the
Certificates,
(d) to provide for matters relating to the issuance of Parity Obligations,
or
(e) if and to the extent permitted in the opinion of Bond Counsel filed with
the Trustee, the District and the Authority, to delete or modify any of
the provisions hereof or thereof relating to the exemption from federal
income taxation of interest represented by the Certificates.
Any such supplemental agreement entered into under this Section will be effective
upon execution and delivery by the parties hereto or thereto as the case may be. The
Trustee may obtain an opinion of Independent Counsel stating that any amendment to be
accomplished by a supplemental agreement entered into under this Section 8.01 complies
with the provisions of this Article VIII and the Trustee may conclusively rely on such
opinion.
SECTION 8.02. Amendments Permitted Without Consent of Owners. Except as
permitted under Section 8.01, this Indenture and the rights and obligations of the Owners
of the Certificates, and the Installment Sale Agreement and the rights and obligations of
the parties thereto, may be modified or amended at any time by a supplemental agreement
which will be effective when the written consents of the Owners of a majority in aggregate
principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified
as provided in Section 12.03, have been filed with the Trustee.
No modification or amendment under this Section 8.01 may(a) extend or have the
effect of extending the fixed maturity of any Certificate or reducing the interest rate with
respect thereto or extending the time of payment of interest, or reducing the amount of
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principal thereof or reducing any premium payable upon the prepayment thereof, without
the express consent of the Owner of such Certificate, or (b) reduce or have the effect of
reducing the percentage of Certificates required for the affirmative vote or written consent
to an amendment or modification of the Installment Sale Agreement, without the consent
of the Owners of 100% in aggregate principal amount of the Outstanding Certificates, or
(c) modify any of the rights or obligations of the Trustee without its written assent thereto.
Any such supplemental agreement may not take effect unless there is filed with
the Trustee the written consents of the Owners of a majority in aggregate principal amount
of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in
Section 12.04) and the Trustee has given the notice required below. Each such consent
shall be effective only if accompanied by proof of ownership of the Certificates for which
such consent is given, which proof shall be such as is permitted by Section 2.10. Any
such consent shall be binding upon the Owner of the Certificate giving such consent and
on any subsequent Owner (whether or not such subsequent Owner has notice thereof)
unless such consent is revoked in writing by the Owner giving such consent or a
subsequent Owner by filing such revocation with the Trustee prior to the date when the
notice hereinafter in this Section provided for has been mailed.
After the Owners of the required percentage of Certificates have filed their
consents to such supplemental agreement, the Trustee shall mail a notice to the Owners
of the Certificates in the manner hereinbefore provided in this Section for the mailing of
such supplemental agreement of the notice of adoption thereof, stating in substance that
such supplemental agreement has been consented to by the Owners of the required
percentage of Certificates and will be effective as provided in this Section (but failure to
mail copies of said notice will not affect the validity of such supplemental agreement or
consents thereto). A record, consisting of the papers required by this Section to be filed
with the Trustee, shall be conclusive proof of the matters therein stated. Such
supplemental agreement shall take effect upon the mailing of such last-mentioned notice,
and such supplemental agreement shall be deemed conclusively binding upon the parties
hereto, the Owners of all Certificates at the expiration of 60 days after such filing, except
in the event of a final decree of a court of competent jurisdiction setting aside such consent
in a legal action or equitable proceeding for such purpose commenced within such 60 day
period.
SECTION 8.03. Effect of Supplemental Agreement. From and after the time any
supplemental agreement takes effect under this Article VIII, this Indenture or the
Installment Sale Agreement, as the case may be, 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 of Certificates Outstanding, 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 agreement shall be deemed to be part of the terms and conditions of this
Indenture or the Installment Sale Agreement for any and all purposes.
SECTION 8.04. Endorsement or Replacement of Certificates Delivered After
Amendments. The Trustee may determine that Certificates shall bear a notation, by
endorsement or otherwise, in form approved by the Trustee, as to such action. In that
case, upon demand of the Owner of any Certificate Outstanding at such effective date and
presentation of such Owner's Certificate for the purpose at the Corporate Trust Office of
the Trustee, a suitable notation shall be made on such Certificate. The Trustee may
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determine that the delivery of substitute Certificates, so modified as in the opinion of the
Trustee is necessary to conform to such Certificate Owners' action, which substitute
Certificates shall thereupon be prepared, executed and delivered at the expense of the
District. In that case, upon demand of the Owner of any Certificate then Outstanding, such
substitute Certificate shall be exchanged at the Corporate Trust Office of the Trustee,
without cost to such Owner,for a Certificate of the same character then Outstanding, upon
surrender of such Outstanding Certificate.
SECTION 8.05. Amendatory Endorsement of Certificates. The provisions of this
Article VI II do not prevent any Certificate Owner from accepting any amendment as to the
particular Certificates held by such Owner, provided that proper notation thereof is made
on such Certificates.
ARTICLE IX
OTHER COVENANTS
SECTION 9.01. Compliance With and Enforcement of Installment Sale Agreement.
The District covenants and agrees with the Trustee, for the benefit of the Owners of the
Certificates, to perform all obligations and duties imposed on it under the Installment Sale
Agreement.
SECTION 9.02. Observance of Laws and Regulations. The District will observe
and perform all valid and lawful obligations or regulations now or hereafter imposed on it
by contract, or prescribed by any law of the United States, or of the State of California, or
by any officer, board or commission having jurisdiction or control, as a condition of the
continued enjoyment of any and every right, privilege or franchise now owned or hereafter
acquired by the District, including its right to exist and carry on business as a public
agency, to the end that such rights, privileges and franchises shall be maintained and
preserved, and shall not be abandoned, forfeited or in any manner impaired.
SECTION 9.03. Recordation and Filing. The District shall record and file all such
documents as may be required by law (and shall take all further actions which may be
necessary or be reasonably required by the Trustee), all in such manner, at such times
and in such places as may be required by law in order fully to preserve, protect and perfect
the security of the Trustee and the Certificate Owners.
SECTION 9.04. Tax Covenants.
(a) Private Business Use Limitation. The District shall assure that the proceeds
of the Certificates are not so used as to cause the Certificates to satisfy the private
business tests of section 141(b) of the Code or the private loan financing test of Section
141(c) of the Tax Code.
(b) Federal Guarantee Prohibition.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 obligations
of the District under the Installment Sale Agreement to be "federally guaranteed" within
the meaning of Section 149(b) of the Tax Code.
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(c) No Arbitrage. The District shall not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the proceeds of the Certificates or of any
other obligations 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 obligations of the District under the Installment Sale Agreement to be"arbitrage bonds"
within the meaning of Section 148(a) of the Tax Code.
(d) Rebate of Excess Investment Earnings to United States. The District shall
calculate or cause to be calculated the Excess Investment Earnings in all respects at the
times and in the manner required under the Tax Code. The District shall pay the full
amount of Excess Investment Earnings to the United States of America in such amounts,
at such times and in such manner as may be required underthe Tax Code. Such payments
shall be made by the District 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 Certificates, records of the
determinations made under this subsection (d). In order to provide for the administration
of this subsection (d), the District may provide for the employment of independent
attorneys, accountants and consultants compensated on such reasonable basis as the
District may deem appropriate. The Trustee has no duty or obligation to monitor or enforce
compliance by the District of any of the requirements herein.
SECTION 9.05. Continuing Disclosure. The District hereby covenants and agrees
that it will comply with and carry out all of the provisions of that certain Continuing
Disclosure Certificate executed by the District as of the Closing Date, as originally
executed and as it may be amended from time to time in accordance with its terms.
Notwithstanding any other provision of this Indenture, failure of the District to comply with
such Continuing Disclosure Certificate does not constitute an Event of Default, although
any Owner or beneficial owner of the Certificates may take such actions as are granted to
it under the Continuing Disclosure Certificate.
SECTION 9.06. Further Assurances. The Authority and the District will 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 hereof and of the Installment Sale Agreement, and for the better assuring
and confirming unto the Owners of the Certificates the rights and benefits provided herein.
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ARTICLE X
LIMITATION OF LIABILITY
SECTION 10.01. Limited Liability of District and Authority. Except for the payment
of Installment Payments when due in accordance with the Installment Sale Agreement
and the performance of the other covenants and agreements of the District contained in
the Installment Sale Agreement and herein, the District has no pecuniary obligation or
liability to the Authority, the Trustee or the Owners of the Certificates with respect hereto
or the terms, execution, delivery or transfer of the Certificates, or the distribution of
Installment Payments to the Owners by the Trustee, except as expressly set forth herein.
The Authority has no pecuniary obligation or liability to the District or the Trustee,
or to any of the Owners of the Certificates, with respect to the performance by the District
of its obligations under the Installment Sale Agreement or this Indenture, with respect
hereto or the terms, execution, delivery or transfer of the Certificates, or with respect to
the distribution of Installment Payments to the Owners by the Trustee.
SECTION 10.02. No Liability for Trustee Performance. Neither the District nor the
Authority has any obligation or liability with respect to the performance by the Trustee of
any duty imposed upon it hereunder.
SECTION 10.03. Indemnification of Authority and Trustee. The District shall
indemnify and save the Authority and Trustee, and their respective officers, agents and
employees, harmless from and against all claims, losses, costs, expenses, liability and
damages, including legal fees and expenses, arising out of or in connection with any of
the following:
(a) the use, maintenance, condition or management of, or from any work
or thing done on, the Wastewater System by the District,
(b) any breach or default on the part of the District in the performance of
any of its obligations hereunder and any other agreement made and
entered into for purposes of the Wastewater System,
(c) any act of the District or of any of its agents, contractors, servants,
employees, licensees with respect to the Wastewater System,
(d) any act of any assignee of, or purchaser from the District or of any of
its agents, contractors, servants, employees or licensees with respect
to the Wastewater System,
(e) the actions of any other party, including but not limited to the
ownership, operation or use of the Wastewater System by the District,
(f) the Trustee's exercise and performance of its powers and duties
hereunder or under the Installment Sale Agreement, or
(g) the execution, delivery and sale of the Certificates.
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No indemnification will be made under this Section or elsewhere herein for willful
misconduct or negligence by the Trustee or the Authority, or their respective officers,
agents, employees, successors or assigns. The District's obligations under this Section
10.03 shall remain valid and binding notwithstanding the maturity and payment of the
Certificates or the resignation or removal of the Trustee.
SECTION 10.04. Opinion of Counsel. Before being required to take any action, the
Trustee may require an opinion of counsel acceptable to the Trustee, or an opinion of
Bond Counsel acceptable to the Trustee with respect to any federal tax matters, or a
verified certificate of any party hereto, or both, concerning the proposed action. If it does
so in good faith, Trustee shall be absolutely protected in relying conclusively on any such
opinion or certificate obtained by the Trustee.
SECTION 10.05. Limitation of Rights to Parties and Certificate Owners. Nothing
herein or in the Certificates expressed or implied is intended or shall be construed to give
any person other than the District, the Authority, the Trustee and the Owners of the
Certificates, any legal or equitable right, remedy or claim under or in respect hereof or any
covenant, condition or provision hereof; and all such covenants, conditions and provisions
are and shall be for the sole and exclusive benefit of the District, the Authority, the Trustee
and the Owners.
ARTICLE XI
REMEDIES OF CERTIFICATE OWNERS
SECTION 11.01. Assignment of Rights. Under Section 5.01, the Authority transfers,
assigns and sets over to the Trustee all of the Authority's rights in and to the Installment
Sale Agreement (excepting only the Authority's rights under Sections 4.8, 5.2 and 6.4
thereof), including without limitation all of the Authority's rights to exercise such rights and
remedies conferred on the Authority under the Installment Sale Agreement as may be
necessary or convenient (a) to enforce payment of the Installment Payments and any
other amounts required to be deposited in the Installment Payment Fund, and (b)
otherwise to exercise the Authority's rights and take any action to protect the interests of
the Trustee or the Certificate Owners upon the occurrence of an Event of Default.
SECTION 11.02. Remedies. If an Event of Default happens, then and in each and
every such case during the continuance of such Event of Default, the Trustee may, and at
the written direction of the Owners of a majority in aggregate principal amount of the
Certificates then Outstanding the Trustee (to the extent indemnified as provided herein)
shall, exercise any and all remedies available under law or granted under the Installment
Sale Agreement.
SECTION 11.03. Application of Funds. All moneys received by the Trustee as a
result of any right given or action taken under the provisions of this Article XI or Article VI
of the Installment Sale Agreement shall be applied by the Trustee in the following order:
First, to the payment of the fees, costs and expenses of the Trustee
and of the Certificate Owners in declaring and enforcing such Event of
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Default, including reasonable compensation to its or their agents, attorneys
and counsel;
Second,to the payment of the whole amount then owing and unpaid
with respect to the Certificates for principal and interest, with interest on the
overdue principal and installments of interest at the Overdue Rate(but such
interest on overdue installments of interest shall be paid only to the extent
funds are available therefor following payment of principal and interest and
interest on overdue principal, as aforesaid), and in case such moneys shall
be insufficient to pay in full the whole amount so owing and unpaid with
respect to the Certificates, then to the payment of such principal and
interest without preference or priority of principal over interest, or of interest
over principal, or of any installment of interest over any other installment of
interest, ratably to the aggregate of such principal and interest.
SECTION 11.04. Institution of Legal Proceedings. If one or more Events of Default
happens and is continuing, the Trustee in its discretion may, and upon the written request
of the Owners of a majority in principal amount of the Certificates then Outstanding, and
upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its
rights or the rights of the Owners of Certificates by a suit in equity or action at law, either
for the specific performance of any covenant or agreement contained herein, or in aid of
the execution of any power herein granted, or by mandamus or other appropriate
proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall
deem most effectual in support of any of its rights or duties hereunder.
SECTION 11.05. Non-waiver. Nothing in this Article XI or in any other provision
hereof or in the Certificates, affects or impairs the obligation of the District, which is
absolute and unconditional, to pay or prepay the Installment Payments as provided in the
Installment Sale Agreement, or affect or impair the right of action, which is also absolute
and unconditional, of the Certificate Owners to institute suit to enforce and collect such
payment. No delay or omission of the Trustee or any Owner of any of the Certificates to
exercise any right or power arising upon the happening of any Event of Default shall impair
any such right or power or shall be construed to be a waiver of any such Event of Default
or an acquiescence therein, and every power and remedy given by this Article XI to the
Trustee or the Owners of Certificates may be exercised from time to time and as often as
shall be deemed expedient by the Trustee or the Certificate Owners.
SECTION 11.06. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or the Certificate Owners is intended to be exclusive of any other
remedy, and 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.
SECTION 11.07. Power of Trustee to Control Proceedings. If the Trustee takes
any action upon the occurrence of an Event of Default, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the
request of the Owners of a majority in aggregate principal amount of the Certificates then
Outstanding, then the Trustee has full power, in the exercise of its discretion for the best
interests of the Owners of the Certificates, with respect to the continuance,
discontinuance, withdrawal, compromise, settlement or other disposal of such action.
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SECTION 11.08. Limitation on Certificate Owners'Right to Sue. No Owner of any
Certificate executed and delivered hereunder 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)
such Owner has previously given to the Trustee written notice of the occurrence of an
Event of Default hereunder; (b)the Owners of a majority in aggregate principal amount of
all the Certificates then Outstanding have made written request upon the Trustee to
exercise the powers hereinbefore granted or to institute such action, suit or proceeding in
its own name; (c)said Owners have tendered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such request; and (d)
the Trustee has refused or omitted 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
Certificates of any remedy hereunder; it being understood and intended that no one or
more Owners of Certificates have any right in any manner whatever by its or their action
to enforce any right hereunder, except in the manner herein provided, and that all
proceedings at law or in equity with respect to an Event of Default shall be instituted, had
and maintained in the manner herein provided and for the equal benefit of all Owners of
the Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of said Owner's direct,
undivided fractional interest in the Installment Payments as the same come due, or to
institute suit for the enforcement of such payment, shall not be impaired or affected without
the consent of such Owner, notwithstanding the foregoing provisions of this Section or any
other provision hereof.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Discharge of this Indenture. If and when the obligations
represented by any Outstanding Certificates shall be paid and discharged in any one or
more of the following ways:
(a) by paying or causing to be paid the principal of and interest and
prepayment premiums (if any) represented by such Certificates
Outstanding, as and when the same become due and payable; or
(b) by irrevocably depositing with the Trustee or any other fiduciary,
under an escrow deposit and trust agreement or irrevocable
refunding instructions, security for the payment of Installment
Payments relating to such Certificates as more particularly described
in Section 7.1 of the Installment Sale Agreement, said security to be
held by the Trustee on behalf of the District to be applied by the
Trustee or by such other fiduciary to pay or prepay such Installment
Payments as the same become due, under Section 7.1 of the
Installment Sale Agreement;
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then, notwithstanding that such Certificates shall not have been surrendered for payment,
all rights hereunder of the Owners of such Certificates and all obligations of the Authority,
the Trustee and the District with respect to such Certificates shall cease and terminate,
except only the obligations of the Trustee under Sections 2.07 and 2.08, and the obligation
of the Trustee to pay or cause to be paid, from Installment Payments paid by or on behalf
of the District from funds deposited under the preceding paragraph (b) of this Section, to
the Owners of such Certificates not so surrendered and paid all sums represented thereby
when due and in the event of deposits under the preceding paragraph (b), such
Certificates shall continue to represent direct, undivided fractional interests of the Owners
thereof in the Installment Payments.
Any funds held by the Trustee, at the time of discharge of the obligations
represented by all Outstanding Certificates as a result of one of the events described in
the preceding paragraphs (a)or(b)of this Section, which are not required for the payment
to be made to Owners, shall, upon payment in full of all fees and expenses of the Trustee
(including attorneys' fees) then due, be paid over to the District.
SECTION 12.02. Notices. Any notice, request, complaint, demand or other
communication hereunder shall be given by first class mail or personal delivery to the party
entitled thereto at its address set forth below, or by telecopier or other form of
telecommunication, at its number set forth below. Notice shall be effective either(a) upon
transmission by fax or other form of telecommunication, (b) upon actual receipt after
deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery
to any person, upon actual receipt. The District, the Authority 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.
If to the District Central Contra Costa Sanitary District
or the Authority. 5019 Imhoff Place
Martinez, California 94553
Fax: (510) 228-4624
Attention: Director of Finance &Administration
If to the Trustee: U.S. Bank National Association
Global Corporate Trust Services
One California Street, Suite 1000
San Francisco, California 94111
Fax: (602) 257-5433
Attention: Michelle Knutson
Email: michelle.knutson@usbank.com
SECTION 12.03. Records. The Trustee shall keep complete and accurate records
of all moneys received and disbursed hereunder, which shall be available for inspection
by the District, the Authority and any Owner, or the agent of any of them, upon prior written
request during regular business hours.
SECTION 12.04. Disqualified Certificates. In determining whether the Owners of
the requisite aggregate principal amount of Certificates have concurred in any demand,
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request, direction, consent or waiver hereunder, Certificates which are owned or held by
or for the account of the District or the Authority (but excluding Certificates held in any
employees' retirement fund) shall be disregarded and deemed not to be Outstanding for
the purpose of any such determination, provided, however, that for the purpose of
determining whether the Trustee shall be protected in relying on any such demand,
request, direction, consent or waiver, only Certificates which the Trustee knows to be so
owned or held shall be disregarded.
SECTION 12.05. Payment of Certificates After Discharge. Notwithstanding any
provisions hereof, but subject to any applicable laws of the State of California relating to
the escheat of funds or property, any moneys held by the Trustee for the payment of the
principal or interest represented by any Certificates and remaining unclaimed for 2 years
after the principal represented by all of the Certificates has become due and payable
(whether at maturity or upon call for prepayment or by acceleration as provided herein), if
such moneys were so held at such date, or 2 years after the date of deposit of such
moneys if deposited after said date when all of the Certificates became due and payable,
shall be repaid to the District free from the trusts created hereby upon receipt of an
indemnification agreement acceptable to the District and the Trustee indemnifying the
Trustee with respect to claims of Owners of Certificates which have not yet been paid, and
all liability of the Trustee with respect to such moneys shall thereupon cease; provided,
however, that before the repayment of such moneys to the District as aforesaid, the
Trustee may (at the cost of the District) first mail, by first class mail postage prepaid, to
the Owners of Certificates which have not yet been paid, at the respective addresses
shown on the Registration Books, a notice, in such form as may be deemed appropriate
by the Trustee with respect to the Certificates so payable and not presented and with
respect to the provisions relating to the repayment to the District of the moneys held for
the payment thereof. Any moneys so held by the Trustee shall be held uninvested.
SECTION 12.06. Governing Law. This Indenture shall be construed and governed
in accordance with the laws of the State of California.
SECTION 12.07. Binding Effect, Successors; Benefits Limited to Parties. This
Indenture shall be binding upon and inure to the benefit of the parties, and their respective
successors and assigns. Whenever herein either the Authority, the District or the Trustee
is named or referred to, such reference shall be deemed to include the successors or
assigns thereof, and all the covenants and agreements contained herein by or on behalf
of the Authority, the District or the Trustee shall bind and inure to the benefit of the
respective successors and assigns thereof whether so expressed or not. Nothing herein
expressed or implied is intended or shall be construed to confer upon, or to give to, any
person or entity, other than the Authority, the District, the Trustee or the Certificate
Owners, any right, remedy or claim hereunder or by reason hereof or of any covenant,
condition or stipulation contained herein. All covenants, stipulations, promises and
agreements contained herein by or on behalf of the Authority or the District shall be for
the sole and exclusive benefit of the Authority, the District, the Trustee and the Certificate
Owners.
SECTION 12.08. Execution in Counterparts. This Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall constitute
but one and the same agreement.
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SECTION 12.09. Delivery of Cancelled Certificates. Whenever provision is made
herein for the surrender to or cancellation by the Trustee of any Certificates, the Trustee
shall cancel and destroy such Certificates and shall deliver a certificate of destruction with
respect thereto to the District.
SECTION 12.10. Authority and District Representatives. Whenever under the
provisions hereof the approval of the Authority or the District is required, or a written
certificate, requisition, direction or order is required to be delivered by the District or the
Authority to the Trustee, or the Authority or the District is required to take some action at
the request of the other, such approval or such request shall be given, and such certificate,
requisition, direction or order shall be executed, for the Authority by an Authority
Representative and for the District by a District Representative, and any party hereto shall
be authorized to rely upon any such approval, request, certificate, requisition, direction or
order.
SECTION 12.11. Waiver of Notice. Whenever the giving of notice by mail or
otherwise is required hereunder, the giving of such notice may be waived in writing by the
person entitled to receive such notice and in any case the giving or receipt of such notice
shall not be a condition precedent to the validity of any action taken in reliance upon such
waiver.
SECTION 12.12. Severability of Invalid Provisions. In case any one or more of the
provisions contained herein or in the Certificates shall for any reason be held to be invalid,
illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Indenture shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein. The parties
hereto hereby declare that they would have entered into this Indenture and each and every
other section, paragraph, sentence, clause or phrase hereof and authorized the delivery
of the Certificates pursuant thereto irrespective of the fact that any one or more sections,
paragraphs, sentences, clauses or phrases hereof may be held illegal, invalid or
unenforceable.
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IN WITNESS WHEREOF, the parties have executed this Indenture as of the date
and year first above written.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By
Authorized Officer
CENTRAL CONTRA COSTA SANITARY
DISTRICT FACILITIES FINANCING AUTHORITY
By
Executive Director
ATTEST:
By
Secretary
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By
General Manager
ATTEST:
By
Secretary of the District
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APPENDIX A
DEFINED TERMS
"2018 Bonds" means, collectively, (a) the Central Contra Costa Sanitary District
2018 Wastewater Revenue Refunding Bonds, Series A, which were issued in the initial
principal amount of$15,135,000, and (b) the Central Contra Costa Sanitary District 2018
Wastewater Revenue Refunding Bonds, Series B (Federally Taxable), which were issued
in the initial principal amount of$4,315,000.
"Acquisition and Construction" means, with respect to the Project, the acquisition,
construction, improvement, equipping, renovation, remodeling or reconstruction thereof.
"Additional Parity Obligations" means all bonds, notes, loan agreements,
installment sale agreements, leases or other obligations of the District payable from and
secured by a pledge of and lien upon any of the Tax Revenues or the Net Revenues
issued or incurred on a parity with the Installment Sale Agreement.
"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 under
Section 5.8(b)of the Installment Sale Agreement,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.
"Additional Payments" means the amounts payable by the District under Section
4.7 of the Installment Sale Agreement.
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"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.
"Authority Representative" means the President, Executive Director, Secretary or
Treasurer of the Authority, or any other person authorized by resolution of the Board of
Directors of the Authority to act on behalf of the Authority under or with respect to the
Installment Sale Agreement and the Indenture.
"Bond Counsel" means (a) Jones Hall, A Professional Law Corporation, or (b) any
other attorney or firm of attorneys of nationally recognized expertise with respect to legal
matters relating to obligations the interest on which is excludable from gross income for
purposes of federal income taxation under Section 103 of the Tax Code.
"Bond Year" means any twelve-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, 2021.
"Business Day" means a day which is not a Saturday, Sunday or legal holiday on
which banking institutions in the State of California, or in any state in which the Corporate
Trust Office of the Trustee is located, are closed.
"Certificates" means the $ aggregate principal amount of certificates of
participation, designated the 2021 Wastewater Revenue Certificates of Participation
(Central Contra Costa Sanitary District), executed and delivered pursuant hereto and at
any time Outstanding under the Indenture.
"Closing Date" means June _, 2021, being the day when the Certificates, duly
executed by the Trustee, are delivered 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, 1987,
and on April 9, 2002.
"Construction Fund" means the fund by that name established and held by the
District under Section 3.03.
"Corporate Trust Office" means, with respect to the Trustee, the corporate trust
office of the Trustee at its address set forth in Section 12.02; except that that for purposes
of the payment, prepayment, cancellation, surrender, transfer or exchange of certificates,
such term means the corporate trust office of the Trustee located in St. Paul, Minnesota,
or at such other or additional offices as may be specified by the Trustee in writing to the
District.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the District relating to the execution, sale and delivery of the Certificates,
including but not limited to filing and recording costs, settlement costs, underwriter's
discount and original issue discount(if any), printing costs, reproduction and binding costs,
initial fees and charges of the Trustee and its counsel, initial charges of the Authority, out-
of-pocket expenses incurred by the District, financing discounts, legal fees and charges,
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financial and other professional consultant fees, costs of rating agencies for credit ratings,
fees for execution, transportation and safekeeping of the Certificates and charges and
fees in connection with the foregoing.
"Costs of Issuance Fund" means the fund by that name established and held by
the Trustee under Section 3.02.
"Depository System Participant" means any participant in the Depository's book-
entry system.
"District" means the Central Contra Costa Sanitary District, a sanitary district
organized and existing under the laws of the State of California, and any successor
thereto.
"District Representative" means the General Manager-Chief Engineer, Director of
Finance & 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 the Installment Sale Agreement and this Indenture.
"DTC" means The Depository Trust Company, and its successors and assigns.
"Excess Investment Earnings" means an amount required to be rebated to the
United States of America under Section 148(f) of the Tax Code due to investment of gross
proceeds of the Certificates at a yield in excess of the yield represented by the Certificates.
"Event of Default" means an event of default under the Installment Sale
Agreement, as described in Section 6.1 thereof.
"Federal Securities" means: (a) non-callable direct obligations (other than an
obligation subject to variation in principal repayment) of the United States of America
("United States Treasury Obligations"); (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 twelve-month period beginning on July 1 of any year and
ending on June 30 of the next succeeding year, or any other twelve-month period selected
by the District as its fiscal year.
"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,
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(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 the Installment Sale Agreement.
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, together with any amendments or
supplements hereto permitted to be made hereto.
"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.
"Installment Payment" means all payments required to be paid by the District on
any date under Section 4.4 of the Installment Sale Agreement, including any amounts
payable upon delinquent installments and including any prepayment thereof under Section
7.2 or 7.3 of the Installment Sale Agreement.
"Installment Payment Date" means, with respect to any Interest Payment Date, the
3rd Business Day preceding such Interest Payment Date.
"Installment Payment Fund" means the fund by that name established and held by
the Trustee under Section 5.02.
"Installment Sale Agreement" means the Installment Sale Agreement, dated as of
June 1, 2021, between the District and the Authority, together with any duly authorized
and executed amendments thereto.
"Interest Payment Date" means, with respect to any Certificate, September 1,
2021, and each March 1 and September 1 thereafter to and including the date of maturity
or the date of prepayment of such Certificate.
"Maximum Annual Debt Service" means with respect to the Installment Payments
and 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:
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(a) the principal amount of the Installment Payments and the principal
amount of any Parity Obligations and 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 Installment Payments and any
Parity Obligations which would be Outstanding in such Bond Year if
the Installment Payments 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.
"Moody's" means Moody's Investors Service, 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.
"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 2.05(a) of the Indenture.
"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)
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administrative costs of the Installment Sale Agreement or Indenture which the District is
required to pay thereunder or hereunder, (ii) payments of the Installment Payments or
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 as original purchaser of the
Certificates on the Closing Date.
"Outstanding", when used as of any particular time with respect to Certificates,
means (subject to the provisions of Section 12.05) all Certificates theretofore executed
and delivered by the Trustee hereunder except (a) Certificates theretofore cancelled by
the Trustee or surrendered to the Trustee for cancellation; (b) Certificates paid and
discharged in accordance with Section 12.01, provided that, if such Certificates are to be
prepaid prior to maturity, notice of such prepayment has been given as provided in Section
4.03 or provision satisfactory to the Trustee has been made for the giving of such notice;
and (c) Certificates in lieu of or in exchange for which other Certificates have been
executed and delivered by the Trustee under Section 2.08.
"Overdue Rate" means the highest rate of interest represented by any of the
Outstanding Certificates.
"Owner", when used with respect to a Certificate, means the person in whose
name the ownership of such Certificate shall be registered on the Registration Books.
"Parity Obligations" means (a) the 2018 Bonds, and (b) any other 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 2018 Bonds and the Installment
Payments under Section 5.8 of the Installment Sale Agreement.
"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 "AX 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
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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; and
(h) shares in the California Asset Management Program.
"Project" means, collectively, the facilities, improvements and other property
constituting part of the Wastewater System, the Acquisition and Construction of which are
financed in whole or in part from amounts on deposit in the Construction Fund. The exact
description of the Project shall be made by the District by reference to the plans and
specifications therefor.
"Project Costs" means, with respect to the Project, all costs of the Acquisition and
Construction thereof which are paid from moneys on deposit in the Construction Fund,
including but not limited to:
(a) all costs required to be paid to any person under the terms of any
agreement for or relating to the Acquisition and Construction of the
Project;
(b) obligations incurred for labor and materials in connection with the
Acquisition and Construction of the Project;
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(c) the cost of performance or other bonds and any and all types of
insurance that may be necessary or appropriate to have in effect in
connection with the Acquisition and Construction of the Project;
(d) all costs of engineering and architectural services, including the
actual out-of-pocket costs for test borings, surveys, estimates, plans
and specifications and preliminary investigations therefor,
development fees, sales commissions, and for supervising
construction, as well as for the performance of all other duties
required by or consequent to the proper Acquisition and Construction
of the Project;
(e) any sums required to reimburse the District for advances made for
any of the above items or for any other costs incurred and for work
done which are properly chargeable to the Acquisition and
Construction of the Project;
(f) all Costs of Issuance and other financing costs incurred in connection
with the Acquisition and Construction of the Project; and
(g) the interest components of the Installment Payments during the
period of Acquisition and Construction of the Project.
"Record Date" means the close of business on the 15th day of the month preceding
each Interest Payment Date, whether or not such 15th day is a Business Day.
"Registration Books" means the records maintained by the Trustee under Section
2.11 for registration of the ownership and transfer of ownership of the Certificates.
"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.
"S&P" means S&P Global Ratings, a division of Standard & Poor's Financial
Services LLC, and its successors and assigns.
"State Loan" means loans, installment sale agreements or other agreements with
the State of California 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.
"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 proposed, temporary and
final regulations promulgated, and applicable official guidance published, under the Tax
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
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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.
"Term" means, when used with respect to the Installment Sale Agreement,the time
during which the Installment Sale Agreement is in effect, as provided in Section 4.2
thereof.
"Trustee" means U.S. Bank National Association, or any successor thereto acting
as Trustee under the Indenture.
"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 CERTIFICATE OF PARTICIPATION
R-
2021 WASTEWATER REVENUE
CERTIFICATE OF PARTICIPATION
Evidencing the Direct, Undivided Fractional Interest of the
Owner Hereof in Installment Payments to be Made by the
CENTRAL CONTRA COSTA SANITARY DISTRICT
As the Purchase Price For Certain Property Pursuant to an
Installment Sale Agreement with the
Central Contra Costa Sanitary District Facilities Financing Authority
RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
% September 1, 20_ June_, 2021
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
THIS IS TO CERTIFY THAT the Registered Owner identified above, or registered
assigns, as the registered owner (the "Registered Owner") of this Certificate of
Participation (this "Certificate") is the owner of a direct, undivided fractional interest in
Installment Payments (the "Installment Payments") payable by the Central Contra Costa
Sanitary District, a sanitary district duly organized and existing under the laws of the State
of California (the"District") under an Installment Sale Agreement dated as of June 1, 2021,
(the "Installment Sale Agreement") between the District and 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 (the "Authority"), as the
purchase price for certain property which is to be used in the wastewater collection,
treatment and disposal system of the District (the "Wastewater System"). The Installment
Payments and certain other rights and interests under the Installment Sale Agreement
have been assigned to U.S. Bank National Association, as trustee (the "Trustee"), having
a corporate trust office in San Francisco, California (the "Trust Office").
The Registered Owner of this Certificate is entitled to receive, subject to the terms
of the Installment Sale Agreement, on the Maturity Date identified above, or any earlier
prepayment date, the Principal Amount identified above representing a direct, undivided
fractional share of the portion of the Installment Payments designated as principal, and to
receive on March 1 and September 1 of each year commencing September 1, 2021 (the
"Interest Payment Dates") until payment in full of said principal, the Registered Owner's
direct, undivided fractional share of the Installment Payments designated as interest
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coming due during the interest period immediately preceding each of the Interest Payment
Dates. Interest represented hereby shall be payable from the Interest Payment Date next
preceding the date of execution of this Certificate unless (a) this Certificate is executed
after the close of business on the 15th day of the month immediately preceding an Interest
Payment Date and on or before such Interest Payment Date, in which event interest shall
be payable from such Interest Payment Date, or (b) unless this Certificate is executed on
or before August 15, 2021, in which event interest shall be payable from the Original Issue
Date identified above.
The Registered Owner's share of the portion of the Installment Payments
designated as interest is the result of the multiplication of the aforesaid share of the portion
of the Installment Payments designated as principal by the Rate of Interest per annum
identified above, calculated on the basis of a 360-day year comprised of twelve 30-day
months. Principal represented hereby is payable in lawful money of the United States of
America upon surrender hereof at the Trust Office of the Trustee. Interest represented
hereby is payable by check mailed by first class mail by the Trustee on each Interest
Payment Date to the Registered Owner at such Owner's address as it appears on the
registration books of the Trustee as of the close of business on the 15th day of the
preceding month; provided, however, that at the written request of the owner of
Certificates in an aggregate principal amount of at least$1,000,000, which written request
is on file with the Trustee as of the 15th day of the month preceding an Interest Payment
Date, interest represented by such Certificates shall be paid on such Interest Payment
Date by wire transfer in immediately available funds to such account within the United
States of America as shall be specified in such request.
This Certificate has been executed and delivered by the Trustee pursuant to the
terms of an Indenture of Trust, dated as of June 1, 2021, among the Trustee, the Authority
and the District (the "Indenture"). The District has certified that it is authorized to enter
into the Installment Sale Agreement and the Indenture under the laws of the State of
California, for the purpose of financing improvements to the Wastewater System.
Reference is hereby made to the Installment Sale Agreement and the Indenture (copies
of which are on file at the Trust Office of the Trustee) for a description of the terms on
which the Certificates are delivered, the rights thereunder of the owners of the Certificates,
the rights, duties and immunities of the Trustee and the rights and obligations of the District
under the Installment Sale Agreement, to all of the provisions of the Installment Sale
Agreement and the Indenture the Registered Owner of this Certificate, by acceptance
hereof, assents and agrees.
The District is obligated under the Installment Sale Agreement to pay the
Installment Payments from the Tax Revenues and Net Revenues of the Wastewater
System (as such terms are defined in the Installment Sale Agreement). The obligation of
the District to pay the Installment Payments does not constitute a debt of the District, the
State of California or any of its political subdivisions, and does not constitute an
indebtedness within the meaning of any constitutional or statutory debt limitation or
restriction.
[Prepayment Provisions to Come Following Pricing]
As provided in the Indenture, notice of prepayment shall be mailed by the Trustee
by first class mail, postage prepaid, not less than 20 nor more than 60 days before the
prepayment date, to the registered owners of the Certificates to be prepaid, but neither
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failure to receive such notice nor any defect in the notice so mailed shall affect the
sufficiency of the proceedings for prepayment or the cessation of accrual of interest
represented thereby. If this Certificate is called for prepayment and payment is duly
provided therefor as specified in the Indenture, interest represented hereby shall cease to
accrue from and after the date fixed for prepayment.
This Certificate is transferable by the Registered Owner hereof, in person or by his
attorney duly authorized in writing, at the Trust Office of the Trustee, but only in the
manner, subject to the limitations and upon payment of the charges, if any, provided in
the Indenture and upon surrender and cancellation of this Certificate. Upon such transfer
a new Certificate or Certificates, of authorized denomination or denominations,
representing the same aggregate principal amount and representing the same rate of
interest, will be delivered to the transferee in exchange herefor. The District, the Authority
and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for
all purposes, whether or not this Certificate shall be overdue, and the District, the Authority
and the Trustee shall not be affected by any notice to the contrary.
To the extent and in the manner permitted by the terms of the Indenture, the
provisions of the Indenture may be amended by the parties thereto with the written consent
of the owners of a majority in aggregate principal amount of the Certificates then
outstanding, and may be amended without such consent under certain circumstances;
provided that no such amendment shall extend the fixed maturity of any Certificate or
reduce the interest or principal represented thereby, without the express consent of the
owner of such Certificate.
The District has certified, recited and declared that all things, conditions and acts
required by the laws of the State of California, the Installment Sale Agreement and the
Indenture to exist, to have happened and to have been performed precedent to and in the
delivery of the Certificates, do exist, have happened and have been performed in due
time, form and manner as required by law.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC'), to the Fiscal Agent for
registration of transfer, exchange, or payment, and any Certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
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IN WITNESS WHEREOF, this Certificate has been executed and delivered by U.S.
Bank National Association, as trustee, acting pursuant to the Indenture.
Execution Date: 2021
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
FORM OF ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within registered Certificate 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 guaranteed by an eligible Note: The signature(s) on this Assignment must
guarantor institution (banks, stockbrokers, saving and loan correspond with the name(s)as written on the face of
associations and credit unions with membership in an the within Certificate in every particular without
approved signature medallion program) pursuant to alteration or enlargement or any change whatsoever.
Securities and Exchange Commission Rule 17Ad-15.
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Jones Hall Draft of May 19, 2021 ATTACHMENT 4
OFFICIAL NOTICE OF SALE
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
NOTICE IS HEREBY GIVEN that electronic bids will be received via PARITY for the purchase of
the above-referenced Certificates of Participation (the "Certificates") from the Central Contra
Costa Sanitary District (the "District").
Bids will be accepted in accordance with this Notice, as follows:
Date of Bid: , June_, 2021
Time of Bid: Until am Pacific Time
For further information about PARITY, bidders may contact i-Deal LLC at (212) 849-5021.
For further information about the Certificates, bidders may contact the District's municipal advisor,
Sarah Hollenbeck of PFM Financial Advisors LLC, either by phone at (415) 269-7237 or by email
at hollenbecks@pfm.com.
The Preliminary Official Statement for the Certificates is available online at the following:
http://www.i-dealprospectus.com/Public. Each bidder must review the Preliminary Official
Statement prior to bidding for the Certificates. This Official Notice of Sale contains certain
information for quick reference only, is not a summary of the issue and governs only the terms of
the sale of, bidding for and closing procedures with respect to the Certificates. Bidders must read
the Preliminary Official Statement for the Certificates (the "POS") in its entirety to obtain
information essential to making an informed investment decision.
Purpose
The Certificates are being executed and delivered to(i)finance costs for wastewater improvement
projects (the"Project"), as described in the POS, and (ii) pay the costs of executing and delivering
the Certificates.
Tax-Exempt
In the opinion of Special Counsel, the interest component payable to holders of the Certificates is
excluded from gross income for federal income tax purposes, is not an item of tax preference for
purposes of the federal alternative minimum tax, and is exempt from California personal income
taxes. For more information, see Legal Opinion; Tax-Exempt Status below.
*Preliminary; subject to change.
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Principal Amount*
Certificate principal on the Certificates shall be payable annually on September 1 commencing
September 1, 2021, as follows:
Principal
September 1 Amount
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Adjustment of Principal Amounts
Following the receipt of bids, the District reserves the right to change the principal payment
schedule set forth above after the determination of the winning bidder, by adjusting one or more
of the principal payments of the Certificates in increments of $5,000, as determined in the sole
discretion of the District. Any such adjustment of principal payments on the Certificates will be
based on the schedule of principal payments provided by the District to be used as the basis of
bids for the Certificates. Any such adjustment will not change the average per Certificate dollar
amount of underwriter's discount. In the event of any such adjustment, no rebidding or
recalculation of the bids submitted will be required or permitted and no successful bid may be
withdrawn. In the event of any principal adjustments, the selected Underwriter will be consulted
and requested to provide a revised schedule of principal payments as well as interest rates, initial
offering prices and yields. Such adjustment shall be made as soon as practicable following
notification of the award but in no case later than [24 hours] of the bid award. In the event of any
such adjustment, no rebidding or recalculation of bids will be required or permitted, the winning
bid may not be withdrawn, the successful bidder will not be permitted to change the interest rate(s)
or reoffering prices, and the Underwriter's Discount shall be adjusted proportionately to the
change in the principal amount of the Certificates.
THE PURCHASER WILL NOT BE PERMITTED TO WITHDRAW ITS BID, CHANGE THE
INTEREST RATES IN ITS BID OR THE REOFFERING PRICES IN ITS REOFFERING PRICE
CERTIFICATE AS A RESULT OF ANY CHANGES MADE TO THE PRINCIPAL PAYMENTS
OF THE CERTIFICATES IN ACCORDANCE WITH THIS OFFICIAL NOTICE OF SALE.
Interest Rates
Preliminary,subject to change.
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Bidders may specify any number of separate interest rates, and any rate may be repeated as
often as desired; provided, however, that
(i) Each Certificate shall bear interest at a fixed-rate, calculated on a 30/360 basis;
(ii) each interest rate must be in a multiple of 1/20 of 1% or 1/8 of 1%;
(iii) a zero rate or negative rate of interest cannot be specified;
(iv) no maturity may bear interest at a rate greater than 5%;
(v) each Certificate shall bear interest from its dated date to its stated maturity date at the
interest rate specified in the bid;
(vi) all Certificates of the same maturity date shall bear the same rate of interest, with the
exception of split coupons, which is allowed; and
(vii) any premium must be paid as part of the purchase price, and no bid will be accepted
which provides for the cancellation and surrender of any interest payment or for the
waiver of interest or other concession by the bidder as a substitute for payment in full
of the purchase price of the Certificate or Certificates.
Delivery Date; Interest Payment Dates
The Certificates will be dated the date of delivery — June _, 2021. Interest on the Certificates
is payable on March 1 and September 1, commencing September 1, 2021. The Certificates are
subject to prepayment prior to maturity as set forth in the POS and described below.
Initial Offering Prices; Establishment of Issue Price
As soon as the bid is awarded, the winning bidder shall assist the District in establishing the issue
price of the Certificates and shall execute and deliver to the District at closing an "issue price" or
similar certificate, substantially in the form attached as Appendix A to this Official Notice of Sale,
setting forth the reasonably expected initial offering price to the public or the sales price or prices
of the Certificates, together with the supporting pricing wires or equivalent communications, with
such modifications as may be appropriate or necessary, in the reasonable judgment of the
successful bidder, the District and Jones Hall, a Professional Law Corporation, bond counsel
("Bond Counsel').
For the purpose of establishing the issue price of the Certificates, the District intends to apply the
provisions of Treasury Regulation Section 1.148-1(f)(3)(i) defining "competitive sale" because:
(i) The District shall disseminate this Official Notice of Sale to potential underwriters in a
manner that is reasonably designed to reach potential underwriters;
(ii) All potential bidders shall have an equal opportunity to bid and no potential bidder shall be
afforded an opportunity to review other bids before submitting a bid;
(iii)The District shall have received bids from at least three underwriters of municipal
obligations who have established industry reputations for underwriting new issuances of
municipal obligations; and
(iv)The District anticipates awarding the Certificates to the bidder who submits a firm offer to
purchase the Certificates at the highest price (or lowest interest cost) as set forth herein.
In the event of any adjustment of principal by the District, the winning bidder shall provide a
revised schedule showing the same information for each maturity of the Certificates with the
revised principal amounts.
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Prepayment*
(((delete? ]]]. Optional Prepayment. The Certificates maturing on or before September
1, 20_, are not subject to optional prepayment prior to the respective stated maturities. The
Certificates maturing on or after September 1, 20_, are subject to optional prepayment in whole
or in part on any date on or after September 1, 20_, from prepayments of the Installment
Payments made at the option of the District under the Installment Sale Agreement, at a
prepayment price equal to 100% of the principal amount of Certificates or portions thereof to be
prepaid, together with accrued interest represented thereby to the prepayment date, without
premium.]]]
Extraordinary Prepayment from Net Proceeds. The Certificates are subject to
extraordinary prepayment 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 Installment Sale Agreement, as applicable, at a prepayment price equal to the
principal amount of the Certificates to be prepaid, plus accrued interest thereon to the date fixed
for prepayment, without premium.
f f[delete? ]]]. Mandatory Sinking-Fund Prepayment. Bidders may specify one or more
term Certificates subject to mandatory sinking fund prepayment on September 1 in consecutive
years immediately preceding the maturity thereof. Term Certificates shall be payable at a
prepayment price equal to the principal amount thereof plus accrued interest thereon to the date
of prepayment, without premium.
Notice of prepayment shall be provided as set forth in the Preliminary Official Statement.
Book-Entry Form Only
The Certificates will be registered in the name of Cede &Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"). DTC will act as securities depository of the Certificates.
Individual purchases will be made in book-entry form only, in denominations of $5,000 or any
integral multiples thereof. Purchasers will not receive certificates representing their interest in the
Certificates. Principal and interest are payable in lawful money of the United States of America
and will be paid to DTC which will remit such amounts to the beneficial owners of the Certificates
through DTC's Participants, as described in the Preliminary Official Statement.
Security for the Certificates; Parity Debt
Payment of the Installment Payments is a special limited obligation of the District, secured by
and payable from Tax Revenues and Net Revenues of the Wastewater System, as more fully
described in the POS. The District's existing 2018 Bonds will remain outstanding on a parity
basis with the payment of the Installment Payments, and additional parity debt may be issued,
as more fully described in the POS. The Certificates represent the direct, undivided fractional
ownership interests of the Owners thereof in the Installment Payments and are not a debt,
liability or obligation of the State of California or any of its political subdivisions.
CUSIP Numbers; Other Fees
Unless advised otherwise by the Municipal Advisor, the selected bidder shall obtain CUSIP
numbers in a timely manner and shall advise the District and its municipal advisor within two
business days after notice of award of the CUSIP numbers for the Certificates. All charges of the
CUSIP Service Bureau for the assignment of CUSIP numbers for the Certificates shall be paid by
the selected bidder. The selected bidder shall also be required to pay all fees required by DTC,
Preliminary,subject to change.
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Municipal Securities Rulemaking Board, and any other similar entity imposing a fee in connection
with the issuance of the Certificates.
Legal Opinion; Tax-Exempt Status
In the opinion of Special Counsel, under existing statutes, regulations, rulings and judicial
decisions, and assuming certain representations and compliance with certain covenants of the
District, the interest component of the Certificates is excluded from gross income for federal
income tax purposes and is not an item of tax preference for purposes of the federal alternative
minimum tax. In the further opinion of Special Counsel, the interest component of the Certificates
is exempt from California personal income taxes.
In the event that prior to the execution and delivery of the Certificates (a)the interest represented
by other obligations of the same type and character shall be declared to be taxable (either at the
time of such declaration or at any future date) under any federal income tax laws, either by the
terms of such laws or by ruling of a federal income tax authority or official which is followed by the
Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law is
adopted which will have a substantial adverse effect upon owners of the Certificates as such, the
successful bidder for the Certificates may, at its option, be relieved of its obligation under the
contract to purchase the Certificates, and in such case the deposit accompanying its proposal will
be returned.
California Debt and Investment Advisory Commission (CDIAC)
The winning bidder is required to pay any fees owing to the California Debt and Investment
Advisory Commission ("CDIAC'). CDIAC will invoice the winning bidder after closing.
No Litigation; Tax Certificate
Prior to delivery of the Certificates, the District shall deliver a certificate stating that there is no
action, suit, or proceeding known by the District to be pending or threatened at the present time
restraining or enjoining the delivery or in any way contesting or affecting the validity of the
Installment Sale Agreement, Indenture, Certificates, or proceedings of the District taken with
respect to the execution or delivery thereof. The District shall also deliver a tax certificate attesting
to its reasonable expectations and undertaking certain covenants concerning the Certificates and
the use and investment of Certificate proceeds.
Preliminary Official Statement (POS) and Final Official Statement
The Preliminary Official Statement for the Certificates is available online at the following:
http://www.i-dealprospectus.com/Pubiic. The POS, together with any supplements thereto,
shall be"deemed final" by the District for purposes of SEC Rule 15c2-12(b)(1), but shall be subject
to revision, amendment and completion in a final official statement. At closing, the District shall
deliver a certificate to the effect that the facts contained in the Official Statement are true and
correct in all material respects, and that the Official Statement does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statement
therein, in light of the circumstances under which they were made, not misleading.
The District shall provide the winning bidder with an electronic version of the final Official
Statement within seven business days after the award of the bid and will also provide up to 25
hard copies of the final Official Statement at no charge. The winning bidder should promptly notify
the District if additional hard copies are needed.
By submitting a bid for the Certificates, the winning bidder agrees (1) to disseminate to all
members of the underwriting syndicate copies of the final Official Statement, including any
5
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supplements prepared by the District, (2) to promptly file a copy of the final Official Statement,
including any supplements, with the MSRB through its EMMA System, and (3)to take any and all
other actions necessary to comply with applicable SEC and MSRB rules governing the offering,
sale and delivery of the Certificates to ultimate purchasers.
Continuing Disclosure
To assist bidders in complying with SEC Rule 15c2-12(b)(5), the District will provide Continuing
Disclosure of certain annual financial information and notice of the occurrence of certain material
events. A description of this undertaking and a form of the Continuing Disclosure Certificate is
included as an exhibit to the Preliminary Official Statement.
S&P Rating: " "
S&P Global Ratings, a Standard & Poor's Financial Services LLC business ("S&P") has assigned
a rating of" " to the Certificates, as shown on the cover of the POS. Such rating reflects only
the views of S&P. An explanation of the significance of the rating may be obtained from S&P at
55 Water Street, New York, New York 10041, (212) 438-2000. The District can provide no
assurance the rating will continue for any given time period or that it will not be revised or
withdrawn by S&P if, in its judgment, circumstances so warrant. Any revision or withdrawal of the
rating may adversely affect the market price of the Certificates.
Basis of Award — Lowest True Interest Cost (TIC)
The Certificates will be awarded to the bidder whose bid produces the lowest true interest cost.
The true interest cost will be that rate which, when used to compute the present value of principal
and interest to be paid on all Certificates from the date of delivery to their respective maturity
dates, or mandatory sinking fund prepayment dates, produces an amount equal to the purchase
price, including any premium specified in such bid. The true interest cost shall be calculated by
the use of a semi-annual interval of compounding interest based on the Interest Payment Dates
for the Certificates. In the event of a tie the winning bid will be determined by the toss of a coin
by the District among the bidders whose bids produced the tie.
Estimated True Interest Cost
Bidders are asked to provide a calculation of the true interest cost of the Certificates on the basis
of their respective bids, which shall be considered as informative only and not binding on either
the bidder or the District. The true interest cost specified in any bid will be that rate which, when
used in computing the present value of all payments of principal and interest to be paid on all
Certificates from the Closing Date of December to their respective maturity dates or
mandatory sinking fund Prepayment dates, produces an amount equal to the purchase price
(including any premium) specified in such bid.
Firm Offer; All or None Bid
Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer to purchase all,
and not less than all, of the Certificates.
Form of Bid; Delivery and Payment
All bids for the Certificates must be unconditional and for not less than all of the Certificates. Each
bid must be in accordance with the terms and conditions set forth herein. Bids will only be
accepted via PARITY. To the extent any instructions or directions set forth in PARITY conflict
with this Notice, the terms of this Notice shall control. Delivery of the Certificates will be made to
the winning bidder on or about the anticipated closing date set forth above. Payment of the
purchase price (less the Good Faith Deposit) must be made in immediately available funds.
6
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Warning Regarding Electronic Bids
THE DISTRICT WILL ACCEPT BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY ON
THE OFFICIAL BID FORM CREATED FOR THAT PURPOSE. EACH BIDDER SUBMITTING
AN ELECTRONIC BID UNDERSTANDS AND AGREES THAT BY DOING SO IT IS SOLELY
RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY, THAT THE DISTRICT NEITHER
ENDORSES NOR EXPLICITLY ENCOURAGES THE USE OF PARITY, AND THAT PARITY IS
NOT ACTING AS AN AGENT OF THE DISTRICT. INSTRUCTIONS AND FORMS FOR
SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM PARITY, AND THE DISTRICT
ASSUMES NO RESPONSIBILITY FOR ENSURING OR VERIFYING BIDDER COMPLIANCE
WITH THE PROCEDURES OF PARITY. THE DISTRICT SHALL ASSUME THAT ANY BID
RECEIVED THROUGH PARITY HAS BEEN MADE BY A DULY AUTHORIZED AGENT OF THE
BIDDER.
THE DISTRICT WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE ELECTRONIC BIDS;
HOWEVER, THE DISTRICT, THE MUNICIPAL ADVISOR AND SPECIAL COUNSEL ASSUME
NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY BID SUBMITTED
ELECTRONICALLY, OR FOR THE FAILURE OF ANY BID TO BE TRANSMITTED, RECEIVED
OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF BIDS. THE OFFICIAL TIME FOR
RECEIPT OF BIDS WILL BE DETERMINED BY THE DISTRICT AT THE PLACE OF BID
OPENING, AND THE DISTRICT SHALL NOT BE REQUIRED TO ACCEPT THE TIME KEPT BY
PARITY AS THE OFFICIAL TIME.
Good Faith Deposit
The winning bidder is required to submit a Good Faith Deposit within 24-hours after acceptance
of its bid. The Good Faith Deposit shall equal 1% of the initial par amount.
The Good Faith Deposit must be made in good funds by wire transfer to:
Bank: U.S. Bank National Association
ABA:
BNF Account#:
Ref: Central Contra Costa Sanitary District 2021 COPs
Attention: (tel. )
If the Good Faith Deposit is not received by the designated time, the underlying bid may be
disqualified at the option of the District.
No interest will be paid on the Good Faith Deposit. The proceeds of the Good Faith Deposit will
be applied to the purchase price of the Certificates, or in the event of the failure of the winning
bidder to pay for the Certificates in compliance with the terms of the bid, at the option of the
District, the Good Faith Deposit may be retained as liquidated damages, as partial payment of
actual damages or as security for any other remedy available to the District.
Qualification for Sale; Blue Sky
The Underwriter assumes all responsibility for qualifying the Certificates for offer and sale under
the Blue Sky or other securities laws and regulations of the states and jurisdictions in which the
Underwriter offers or sells the Certificates, including the payment of fees for such qualification.
Under no circumstances may the Certificates be sold or offered for sale in anyjurisdiction in which
such sale or offer would be unlawful under the securities laws of the jurisdiction.
7
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Underwriting Group
The winning bidder will be required to submit a list of all syndicate members within 24 hours after
receiving a verbal award.
Additional Information
Copies of the Installment Sale Agreement, the Indenture, this Official Notice of Sale and the
Preliminary Official Statement will be furnished to any potential bidder upon request made to the
Municipal Advisor.
Right to Modify or Amend
The District reserves the right to modify or amend this Notice, including but not limited to the right
to adjust and change the aggregate principal amount of the Certificates being offered. Notification
of any such modifications or amendments shall be made not less than 24-hours prior to the time
of bid opening, and shall be communicated through Thomson Municipal News and by telephone
to any qualified bidder timely requesting such notice.
Right to Reject Bids, Waive Irregularities, Cancel, Postpone, or Reschedule Sale
The District reserves the right, in its sole discretion, to reject any and all bids and, to the extent
permitted by law, waive any irregularity or informality in any bid. The District reserves the right to
cancel, postpone or reschedule the Certificate sale upon notice given through the Bloomberg
News Service, Thompson Municipal Market Monitor or The Bond Buyer prior to the time bids are
due.
If the "competitive sale" requirements are not satisfied, then the District shall reject all
bids and cancel the sale.
By submitting a bid, each bidder is certifying that (i) the bidder is an underwriter of municipal
obligations who has an established industry reputation for underwriting new issuances of
municipal obligations, (ii) its bid is a firm offer to purchase all of the Certificates as specified in its
bid, and (iii) its bid was prepared based on the assumption that the issue price of the Certificates
will be the Winning Bidder's reasonably expected initial offering price to the public.
Dated: June , 2021
BY CENTRAL CONTRA COSTA SANITARY DISTRICT
8
June 3, 2021 Regular Board Meeting Agenda Packet- Page 515 of 646
Page 91 of 186
EXHIBIT A
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of [FULL LEGAL NAME OF UNDERWRITER]
("Underwriter"), hereby certifies as set forth below with respect to the sale of the above-captioned
obligations (the "Certificates") by the Central Contra Costa Sanitary District (the "Issuer").
1. Reasonably Expected Initial Offering Price.
(a) As of the Sale Date, the reasonably expected initial offering prices of the
Certificates to the Public by Underwriter are the prices listed in Schedule A(the"Expected Offering
Prices"). The Expected Offering Prices are the prices for the Maturities of the Certificates used
by Underwriter in formulating its bid to purchase the Certificates. Attached as Schedule B is a
true and correct copy of the bid provided by Underwriter to purchase the Certificates.
(b) Underwriter was not given the opportunity to review other bids prior to submitting
its bid.
(c) The bid submitted by Underwriter constituted a firm offer to purchase the
Certificates.
2. Defined Terms.
(a) Maturity means Certificates with the same credit and payment terms. Certificates
with different maturity dates, or Certificates with the same maturity date but different stated
interest rates, are treated as separate Maturities.
(b) Public means any person (including an individual, trust, estate, partnership,
association, company, or corporation) other than an Underwriter or a related party to an
Underwriter. The term "related party" for purposes of this certificate generally means any two or
more persons who have greater than 50 percent common ownership, directly or indirectly.
(c) Sale Date means the first day on which there is a binding contract in writing for the
sale of a Maturity of the Certificates. The Sale Date of the Certificates is [DATE].
(d) Underwriter means (i) any person that agrees pursuant to a written contract with
the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the
initial sale of the Certificates to the Public, and (ii) any person that agrees pursuant to a written
contract directly or indirectly with a person described in clause (i) of this paragraph to participate
in the initial sale of the Certificates to the Public (including a member of a selling group or a party
to a retail distribution agreement participating in the initial sale of the Certificates to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing
in this certificate represents Underwriter's interpretation of any laws, including specifically
June 3, 2021 Regular Board Meeting Agenda Packet- Page 516 of 646
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Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder. The undersigned understands that the foregoing information will be
relied upon by the Issuer with respect to certain of the representations set forth in the Certificates
of Arbitrage and with respect to compliance with the federal income tax rules affecting the
Certificates, and by Jones Hall, A Professional Law Corporation in connection with rendering its
opinion that the interest on the Certificates is excluded from gross income for federal income tax
purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal
income tax advice that it may give to the Issuer from time to time relating to the Certificates.
[FULL LEGAL NAME OF UNDERWRITER]
By:
Name:
Dated: [ISSUE DATE]
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Page 93 of 186
SCHEDULE A
EXPECTED OFFERING PRICES
(Attached)
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SCHEDULE B
COPY OF UNDERWRITER'S BID
(Attached)
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Jones Hall Draft of May 27, 2021 ATTACHMENT 5
my
U 7
o PRELIMINARY OFFICIAL STATEMENT DATED JUNE 2021
CD
CcM
c N NEW ISSUE—FULL BOOK-ENTRY RATING:S&P:
`o
o (See"RATING" herein)
CL
U).� In the opinion of Jones Hall, A Professional Law Corporation, San Francisco California, Special Counsel, subject however, to
Z .o certain qualifications described herein, under existing law, the portion of installment payments designated as and comprising interest
m and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of
W tax preference for purposes of the federal alternative minimum tax. In the further opinion of Special Counsel, the portion of the
L installment payments designated as and comprising interest and received by the owners of the Certificates is exempt from California
c personal income taxes. See"TAX MATTERS."
N
L
L 2021 Wastewater Revenue
Certificates of Participation
o•
C: (Central Contra Costa Sanitary District)
U U
c_0 Dated: Date of Delivery Due: September 1,as shown on inside cover
j �:i The Certificates. The above-captioned Certificates of Participation (collectively, the "Certificates") are being executed
m >, and delivered by U.S. Bank National Association,as trustee(the"Trustee")pursuant to an Indenture of Trust,dated as of June
-Eo m 1, 2021, among the Trustee, Central Contra Costa Sanitary District (the "District") and the Central Contra Costa Sanitary
C ` District Facilities Financing Authority (the "Authority"). The Certificates evidence direct, undivided fractional interests in the
E .a) installment payments (the"Installment Payments")to be made by the District under an Installment Sale Agreement dated as
oof June 1,2021 (the"Installment Sale Agreement")between the District and the Authority.The Certificates will be dated as of
o y their delivery, will be available in denominations of $5,000 or integral multiples thereof, and will mature in the years and
., amounts, as set forth in the table on the inside cover. Interest with respect to the Certificates is payable on March 1 and
Q a September 1 of each year,commencing September 1, 2021. See"THE CERTIFICATES."
0 Purpose. The Certificates are being executed and delivered to (i) finance certain improvements to the Wastewater
o ° System (defined herein) owned and operated by the District, and (ii) pay costs of executing and delivering the Certificates.
o See"FINANCING PLAN."
> Prepayment.The Certificates are subject to prepayment as described in this Official Statement.
N Co ° Security for the Certificates.The Installment Payments are secured by a pledge of and payable from(i)Net Revenues
n
2 of the District, consisting generally of gross revenues derived by the District in each Fiscal Year from the ownership and
2 operation of the Wastewater System, less the costs of operating and maintaining the Wastewater System, and (ii) Tax
v w Revenues,consisting of the ad valorem property taxes received by the District.See"SECURITY FOR THE CERTIFICATES."
CO No Reserve Fund.The District is not funding a reserve fund for the Certificates.
o Parity Obligations. In obligation of the District to pay the Installment Payments is on a parity with the District's obligations
with respect to wastewater revenue refunding bonds issued in 2018 and described herein. In addition, the District has the
c > @ right to incur additional parity obligations in the future as described herein. See "SECURITY FOR THE CERTIFICATES –
u n Parity Obligations."
o ° L Book-Entry. The Certificates will be delivered in fully registered form only, and, when executed and delivered, will be
Eregistered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities
o depository of the Certificates. Beneficial ownership interests in the Certificates may be purchased in book-entry form only, in
c m the Authorized Denominations as described in the Official Statement. See"BOOK-ENTRY ONLY SYSTEM."
amoi
c o
MATURITY SCHEDULE
c
.� o See inside front cover
a� om
N U
N c6
`o This cover page contains certain information for general reference only. It is not a summary of this issue. Investors are
Na advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.
The obligation of the District to make payment on the Installment Payments is a special obligation payable solely from
o o the Tax Revenues and Net Revenues of the Wastewater System and certain other legally available funds as provided
�,-- % in the Indenture.
M 0 The Certificates are being sold via competitive sale to be held on June , 2021, subject to postponement or cancellation, as
more specifically described in the Official Notice of Sale related to the Certificates. The Certificates will be offered to the public by the
winning bidder, when, as and if executed, delivered and received, subject to the approval of Jones Hall, A Professional Law
CL .y o Corporation, San Francisco, California,Special Counsel,and certain other conditions.Jones Hall is also acting as Disclosure Counsel
o •Q to the District. It is anticipated that the Certificates will be available for delivery on or about June , 2021.
� U
C
N
76
� 3
CThe date of this Official Statement is 2021.
Preliminary;subject to change.
June 3, 2021 Regular Board Meeting Agenda Packet- Page 520 of 646
Page 96 of 186
MATURITY SCHEDULE
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
Payment Date Principal Interest CUSIPt
(September 1) Amount Rate Yield L�
2021
2022
2023
2024
2025
2026
2027
2028
t Copyright 2021, American Bankers Association. CUSIP data are provided by Standard & Poor's CUSIP 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 CUSIP data.
June 3, 2021 Regular Board Meeting Agenda Packet- Page 521 of 646
Page 97 of 186
CENTRAL CONTRA COSTA SANITARY DISTRICT
Board of Directors*
Tad Pilecki, President
David Williams, President Pro Tem
Barbara D. Hockett, Member
Mariah N. Lauritzen, Member
Michael R. McGill, Member
District Officers and Staff
Roger S. Bailey, General Manager
Philip Leiber, Director of Finance &Administration
Steve McDonald, Director of Operations
Jean-Marc H. Petit, Director of Engineering and Technical Services
Katie Young, Board Secretary
Kenton L. Alm, District Counsel
PROFESSIONAL SERVICES
Municipal Advisor
PFM Financial Advisors LLC
San Francisco, California
Special Counsel and Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Trustee
U.S. Bank National Association
San Francisco, California
* Commencing with the next election in 2022, the Board will transition from "at-large" to "by-division"
elections. There will be five separate election areas or"divisions."
June 3, 2021 Regular Board Meeting Agenda Packet- Page 522 of 646
Page 98 of 186
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the
Certificates 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
Certificates.
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
Certificates 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 Certificates 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 CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS
CONTAINED IN SUCH ACT. THE CERTIFICATES HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES LAWS OF ANY STATE.
In connection with the offering of the Certificates, the Underwriter may overallot or effect
transactions which stabilize or maintain the market price of the Certificates 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 Certificates 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
Certificates.
June 3, 2021 Regular Board Meeting Agenda Packet- Page 523 of 646
Page 99 of 186
TABLE OF CONTENTS
Paqe Paqe
INTRODUCTION .......................................1 Billing and Collection of Sewer Service
FINANCING PLAN.....................................2 Charges............................................29
The Project.............................................2 Capacity Fees Used for Capital
Estimated Sources and Uses..................3 Improvements...................................35
Debt Service Schedule...........................4 Property Taxes .....................................36
THE CERTIFICATES.................................5 Regulatory Matters ...............................37
General Provisions .................................5 DISTRICT FINANCES..............................39
Prepayment*...........................................5 Financial Statements ............................39
Notice of Prepayment.............................6 Long-Term Indebtedness......................41
Book-Entry Only System.........................6 Capital Improvement Plan.....................41
Transfer and Exchange of Certificates....7 Ten-Year CIP Drivers............................43
SECURITY FOR THE CERTIFICATES......7 Historical Revenues, Expenses and
Installment Payments .............................7 Debt Service Coverage.....................47
Security for the Installment Payments.....7 Projected Revenues, Expenses and
Flow of Funds.........................................9 Debt Service Coverage.....................49
No Reserve Fund .................................10 RISK FACTORS.......................................51
Rate Stabilization Fund / Rate Demand and Usage..............................51
Stabilization Account......................... 10 Expenses..............................................51
Rate Covenant .....................................11 Property Taxes .....................................51
Parity Obligations ................................. 11 Future Parity Obligation ........................52
Insurance; Eminent Domain ................. 12 Natural Disasters..................................52
Limited Obligation; Absolute Obligation 13 Proposition 218.....................................53
Tax Revenues ......................................14 Limited Recourse on Default.................55
THE AUTHORITY....................................17 Limitations on Remedies Available;
THE DISTRICT........................................ 17 Bankruptcy........................................55
General ................................................ 17 Limited Obligation.................................55
District Facilities.................................... 18 Change in Law......................................55
District Management and Employees ...19 Loss of Tax Exemption .........................56
Pension Plan ........................................21 CONTINUING DISCLOSURE ..................56
Post-Employment Health Care TAX MATTERS........................................56
Benefits.............................................23 NO LITIGATION.......................................58
Investment Policy .................................24 RATING ...................................................58
Service Area and Customers................26 APPROVAL OF LEGALITY......................59
Concord Agreement .............................28 UNDERWRITING.....................................59
MISCELLANEOUS...................................59
APPENDIX A— Summary of Principal Legal Documents
APPENDIX B — Contra Costa County General Information
APPENDIX C —Audited Financial Statements of the District for Fiscal Year ending June 30, 2020
APPENDIX D — Form of Continuing Disclosure Certificate
APPENDIX E — Form of Special Counsel Opinion
APPENDIX F— Book Entry-Only System
i
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[INSERT SERVICE AREA MAP]
i
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OFFICIAL STATEMENT
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
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 Principal Legal Documents."
INTRODUCTION Error! Bookmark not defined.
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
above-captioned certificates of participation (the "Certificates").
The Certificates. The Certificates are being executed and delivered by U.S. Bank National
Association, as trustee (the "Trustee") pursuant to an Indenture of Trust, dated as of June 1, 2021
(the"Indenture"), among the Trustee, Central Contra Costa Sanitary District (the "District")and the
Central Contra Costa Sanitary District Facilities Financing Authority (the "Authority"). The
Certificates evidence direct, undivided fractional interests in the installment payments (the
"Installment Payments") to be made by the District under an Installment Sale Agreement dated as
of June 1, 2021 (the "Installment Sale Agreement") between the District and the Authority. The
Certificates will be dated as of their delivery, will be available in denominations of$5,000 or integral
multiples thereof, and will mature in the years and amounts, as set forth in the table on the inside
cover. Interest with respect to the Certificates is payable on March 1 and September 1 of each year,
commencing September 1, 2021.
Purpose. Proceeds of the Certificates will be used to (i) finance the acquisition and
construction of improvements to the wastewater collection and treatment enterprise (the
"Wastewater System") of the District, and (ii) finance delivery costs of the Certificates. See
"FINANCING PLAN."
Security for the Certificates. The Certificates represent direct, undivided, fractional
interests of the registered owners of the Certificates in the Installment Payments. The obligation of
the District to make the Installment Payments is a special obligation of the District secured by a
pledge of and payable solely from the Net Revenues of the Wastewater System, and the Tax
Revenues. "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
*Preliminary; subject to change.
1
June 3, 2021 Regular Board Meeting Agenda Packet- Page 526 of 646
Page 102 of 186
the "Operation and Maintenance Costs" (as defined herein) for such Fiscal Year. See
"SECURITY FOR THE CERTIFICATES."
No Reserve Fund. The District is not funding a reserve fund for the Certificates.
Parity Obligations. In obligation of the District to pay the Installment Payments is on a parity
with the District's obligations with respect to wastewater revenue refunding bonds issued in 2018
and described herein. In addition, the District has the right to incur additional parity obligations in
the future as described herein. See "SECURITY FOR THE CERTIFICATES — Parity Obligations."
Prepayment. The Certificates are subject to prepayment as described in this Official
Statement. See "SECURITY FOR THE Certificates — Prepayment."
Book-Entry. The Certificates 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 Certificates. Beneficial
ownership interests in the Certificates 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 Certificates, the Indenture, the
Installment Sale Agreement, 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.
FINANCING PLAN
The Project
The District plans to use proceeds of the Certificates to finance a portion of the District's
capital improvement program for Fiscal Years 2020-21 and 2021-22, as set forth in the Installment
Sale Agreement and as may be modified by the District from time-to-time in accordance therewith.
For additional information on the District's current capital improvement plan and other sources of
financing therefor (including a new State Revolving Fund loan anticipated to be entered into during
Fiscal Year 2021-22), see "DISTRICT FINANCES — Capital Improvement Program."
By utilizing the net proceeds of the Certificates to finance improvements to the Wastewater
System, the District anticipates additional rates and charges will be available to pay-down a portion
of the District's unfunded accrued actuarial pension liabilities. See"THE DISTRICT—Pension Plan."
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Estimated Sources and Uses
The proceeds to be received from the sale of the Certificates are expected to be applied as
follows:
Sources:
Principal Amount of Certificates
Plus [Net] Original Issue Premium
Total Sources
Uses:
Deposit into Construction Fund
Costs of Issuance(')
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 executing and delivering the Certificates.
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Debt Service Schedule
The following table presents a schedule of the Installment Payments, assuming no optional
or extraordinary prepayments. The Installment Payments have been established in an amount equal
to debt service on the Certificates. The debt service on the 2018 Bonds, which is a Parity Obligation
to the Installment Payments, are also shown.
Fiscal Year
Ending 2018 Bonds 2021 Installment 2021 Installment
June 30 Debt Service Payments Principal Payments Interest Total
2021 $2,517,605.00
2022 2,511,227.00
2023 2,509,796.50
2024 2,504,267.00
2025 1,923,875.00
2026 1,918,875.00
2027 1,915,250.00
2028 1,907,875.00
2029 1,901,625.00
2030 1,896,250.00
Totals
Source: Trustee for 2018 Bonds debt service;Municipal Advisor for 2021 Installment Payments.
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THE CERTIFICATES
General Provisions
The Certificates 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 1 and September 1 of each year, commencing September 1, 2021 (each, 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.
Each Certificate will be dated the date of its execution and delivery, and interest represented
by the Certificates is payable from the Interest Payment Date next preceding the date of execution,
unless:
(a) it is executed after a Record Date (the close of business on the 15th day of the
month preceding each Interest Payment Date, whether or not such 15th day is
a Business Day) and on or before the following Interest Payment Date, in which
event interest represented thereby is payable from the Interest Payment Date;
or
(b) it is executed on or before the first Record Date, in which event interest
represented thereby will be payable from the date of execution and delivery of
the Certificates; or
(c) interest represented by such Certificate is in default as of the date of execution
of such Certificate, in which event interest represented by the Certificate is
payable from the Interest Payment Date to which interest has previously been
paid or made available for payment.
The Certificates 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 Certificates 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.
Prepayment*
[No Optional Prepayment. Except as described below with respect to Net Proceeds of
insurance or condemnation awards, the Certificates are not subject to prepayment at the option of
the District prior to maturity.]
Extraordinary Prepayment from Net Proceeds. The Certificates shall be subject to
extraordinary prepayment 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 Installment Sale Agreement, as applicable, at a prepayment price equal to the
principal amount of the Certificates to be prepaid, plus accrued interest thereon to the date fixed for
prepayment, without premium.
Selection of Certificates for Prepayment. Whenever provision is made for the
prepayment of Certificates and less than all Outstanding Certificates of any one maturity are called
for prepayment, the Trustee will select Certificates for prepayment within such maturity by lot in any
manner deemed fair by the Trustee. For this purpose, Certificates will be deemed to be composed
*Preliminary;subject to change.
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of $5,000 portions, and any such portion may be separately prepaid. The Trustee will promptly
notify the District and the Authority in writing of the Certificates or portions thereof selected for
prepayment. The selection by the Trustee of any Certificates for prepayment will be final and
conclusive.
Notice of Prepayment
When prepayment is authorized or required under the Indenture, the Trustee shall give
notice of the prepayment of the Certificates on behalf and at the expense of the District. Such notice
shall state the prepayment date and prepayment price and, if less than all of the then Outstanding
Certificates of any maturity are to be called for prepayment, shall designate the numbers of the
Certificates to be prepaid by giving the individual number of each Certificate or by stating that all
Certificates between two stated numbers, both inclusive, have been called for prepayment or by
stating that all of the Certificates of one or more maturities have been called for prepayment, and
shall require that such Certificates be surrendered on the designated prepayment date at the
Corporate Trust Office of the Trustee for prepayment at said prepayment price. Such notice shall
further state that on the specified date there shall come due and payable upon each Certificate, the
principal and premium, if any, together with interest accrued to said date, and that from and after
such date interest with respect thereto shall cease to accrue and be payable.
Notice of such prepayment shall be mailed by first class mail with postage prepaid, to the
Securities Depository, and the Owners of Certificates designated for prepayment at their respective
addresses appearing on the Registration Books. Such notice shall be mailed at least 20 days but
not more than 60 days prior to the prepayment date. Such notice shall, in addition to setting forth
the above information, set forth, in the case of each Certificate called only in part, the portion of the
principal represented thereby which is to be prepaid; provided, however, that neither failure to
receive such notice so mailed nor any defect in any notice so mailed shall affect the sufficiency of
the proceedings for the prepayment of such Certificates or the cessation of accrual of interest
represented thereby from and after the date fixed for prepayment.
The District has the right to rescind any notice of the optional prepayment of the Certificates
by written notice to the Trustee on or prior to the dated fixed for prepayment. Any notice of optional
prepayment shall be cancelled and annulled if for any reason funds will not be or are not available
on the date fixed for prepayment for the payment in full of the Certificates then called for prepayment,
and such cancellation shall not constitute an Event of Default. The District and the Trustee have no
liability to the Certificate Owners or any other party related to or arising from such rescission of
prepayment. The Trustee shall mail notice of such rescission of prepayment in the same manner
as the original notice of prepayment was sent under this Section.
Book-Entry Only System
The Certificates, when executed and delivered, will be registered in the name of Cede& Co.,
as registered owner and nominee of DTC. One fully-registered Certificate will be issued for each
maturity of the Certificates, 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
Certificates, all payments with respect to the Certificates 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
Certificates paid to DTC or its nominee as the registered owner, or will distribute any prepayment
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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 Certificates or an error or delay relating thereto.
See "APPENDIX F — Book-Entry Provisions."
Transfer and Exchange of Certificates
Transfer of Certificates. The registration of any Certificate 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 Certificate 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 Certificate or Certificates are surrendered for registration or transfer,
the Trustee will execute and deliver a new Certificate or Certificates 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 Certificate Owner of any tax or other governmental charge required to
be paid with respect to such transfer.
Exchange of Certificates. Certificates may be exchanged at the Office of the Trustee, for
a like aggregate principal amount of Certificates 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 Certificate 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 Certificate during the period established by the Trustee for the selection of Certificates
for prepayment, or(b) the portion of any Certificate which the Trustee has selected for prepayment.
SECURITY FOR THE CERTIFICATES
Installment Payments
Each Certificate represents a direct, undivided fractional interest in Installment Payments to
be made by the District to the Authority under the Installment Sale Agreement. The Authority,
pursuant to the Indenture, will assign certain of its rights under the Installment Sale Agreement to
the Trustee for the benefit of the owners of the Certificates, including its right to receive Installment
Payments and prepayments made under the Installment Sale Agreement and its rights to enforce
payment of the Installment Payments when due in the event of a default by the District.
Security for the Installment Payments
Pursuant to the Installment Sale Agreement, the District pledges as security for its obligation
to make the Installment Payments all of the Tax Revenues and Net Revenues, and all moneys on
deposit in any of the funds and accounts established and held by the Trustee under the Indenture.
The pledge constitutes a lien on the Tax Revenues and Net Revenues for the payment of the
Installment Payments in accordance with the terms of the Installment Sale Agreement.
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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
(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
Installment Sale Agreement.
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.
The term "Operating and Maintenance Costs" does not include (i)administrative costs of the
Installment Sale Agreement or Indenture which the District is required to pay thereunder,
(ii) payments of the Installment Payments or 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
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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.
See "THE DISTRICT— Concord Agreement"for additional information on the Concord Agreement.
Flow of Funds
The District previously established the "Wastewater System Funds," which the District
agrees in the Installment Sale Agreement to continue to hold and maintain for the purposes and
uses set forth in the Installment Sale Agreement. 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 for repayment of any Parity Obligations (including the
2018 Bonds), 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:
(i) Deposit and Application of Tax Revenues. On or before each Installment
Payment Date, the District will withdraw from the Wastewater System Funds,
and transfer to the Trustee for deposit in the Installment Payment Fund, an
amount of Tax Revenues which, together with the balance then on deposit in
the Installment Payment Fund, is equal to the aggregate amount of the
Installment Payment coming due and payable 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
Installment Payments thereafter coming due and payable in such Bond Year,
all remaining Tax Revenues received during such Fiscal Year will be released
from the pledge and lien under the Installment Sale Agreement 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 paragraph (i) on or before
each Installment Payment Date is less than the full amount required to be so
transferred, the District will withdraw from the Wastewater System Funds on
such Installment Payment Date, and transfer to the Trustee for deposit in the
Installment Payment Fund, an amount equal to the amount of such
insufficiency.
(iii) No Preference or Priority. The District will pay the Installment Payments and
the principal of and interest on the Parity Obligations from Net Revenues
without preference or priority among the Installment Payments and Parity
Obligations. If the amount of Net Revenues on deposit in the Wastewater
System Funds is any time insufficient to enable the District to pay when due the
Installment Payments and the principal of and interest on the Parity Obligations,
such payments shall be made on a pro rata basis.
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(iv) Other Uses of Tax Revenues and Net Revenues Permitted. The District agrees
to manage, conserve and apply moneys in the Wastewater System Funds in
such a manner that all deposits required to be made under any Parity
Obligations Documents will be made at the times and in the amounts so
required. Subject to the foregoing sentence, the District may at any time and
from time to time use and apply moneys in the Wastewater System Funds for
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 Installment Payments. The District agrees that,
during the Term of the Installment Sale Agreement, the District will adopt all
necessary budgets and make all necessary appropriations of the Installment
Payments from the Tax Revenues and Net Revenues. If any Installment
Payment requires the adoption by the District of any supplemental budget or
appropriation, the District will promptly adopt the same. The covenants on the
part of the District contained in this paragraph constitute duties imposed by law
and it is 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.
No Reserve Fund
The District is not funding a reserve fund for the Certificates.
Rate Stabilization Fund / Rate Stabilization Account
The District has established a fund 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. The fund was established as separate accounts within the Operating &
Maintenance and Sewer Construction Fund rather than as a separate sub-fund, and accordingly it
is referred to as the Rate Stabilization Account by the District and as the Rate Stabilization Fund in
the Indenture. From time to time, the District may deposit amounts in the Rate Stabilization
Account, 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. As of May 2021, the Rate Stabilization Account
contained $4.76 million.
The District may, but is not required to, withdraw from any amounts on deposit in the Rate
Stabilization Fund/Account 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/Account 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/Account 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/Account and apply such amounts for any lawful purposes
of the District relating to the Wastewater System
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Rate Covenant
The District agrees to the following rate covenants in the Installment Sale Agreement:
Net Revenue 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 Installment Payments and principal of and interest on any Parity Obligations coming
due and payable during such Fiscal Year.
Gross Revenue 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 Installment Payments and principal of and
interest on 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.
Transfers from Rate Stabilization Fund. For the purpose of computing the amount of
Gross Revenues or Net Revenues for any Fiscal Year for purposes of the rate 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 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
Existing Parity Obligations. As described above, the Installment Payments are payable
from and secured by a pledge of Tax Revenues and Net Revenues on a parity with the 2018 Bonds.
Additional Parity Obligations. The District has the right to issue or incur other bonds,
notes, loans, advances or indebtedness payable from Tax Revenues and/or the Net Revenues on
a parity with the 2018 Bonds and the Installment Payments (collectively, "Parity Obligations"),
subject to satisfaction of the following conditions:
(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 Obligations, 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 Installment Payments
and all Parity Obligations then outstanding (including the Parity Obligations then
proposed to be issued).
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(c) The trustee or fiscal agent for such Parity Obligations must be the
same entity performing the functions of Trustee under the Indenture.
State Loans. Notwithstanding the foregoing, the District may borrow money from the State
and incur State Loans to finance improvements to the Wastewater System, and a State Loan may
be treated as a Parity Obligation without meeting the requirements of clause (c), so long as the
District complies with clauses (a) and (b) with respect to such State Loan.
As of June 2021, the District was finalizing a loan agreement with the State Revolving Fund for
a loan in an amount of$173.4 million to fund the Solids Handling Project, which will constitute a Parity
Obligation.
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 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 Certificates. Such insurances may be maintained as part of or in conjunction with
any other insurance coverage carried by the District, and may be maintained in whole or in part in
the form of self-insurance by the District, or in the form of the participation by the District in a joint
powers agency or other program providing pooled insurance.
The District currently maintains self-insurance funds available for payment of claims below
insured deductibles, or above limits, or for non-covered losses. Self-insurance reserves are targeted at
$6.5 million. Reserves are replenished annually from sewer service charge rate revenue, based on
losses and expenses.
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
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destroyed portion of the Wastewater System, and to the extent not so applied, shall be applied on
a pro rata basis to redeem the Certificates and any Parity Obligations in accordance with the
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 Certificates 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 Certificates and any Parity Obligations,
or which otherwise would impair the rights of the Certificates 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 Certificates and any Parity Obligations in accordance with the Indenture
and the related Parity Obligation Documents.
See "APPENDIX A— Summary of Principal Legal Documents."
Limited Obligation; Absolute Obligation
Limited Obligation. The District's obligation to pay the Installment Payments and any other
amounts coming due and payable under the Installment Sale Agreement 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 Installment Sale
Agreement for the payment of the Installment Payments and such other amounts, nor are any other
funds or property of the District liable for the payment of the Installment Payments and any other
amounts coming due and payable under the Installment Sale Agreement.
Absolute Obligation. The obligations of the District to make the Installment Payments from
the Tax Revenues and Net Revenues and to perform and observe the other agreements contained
in the Installment Sale Agreement are absolute and unconditional and are not subject to any defense
or any right of set-off, counterclaim or recoupment arising out of any breach by the Authority or the
Trustee of any obligation to the District or otherwise with respect to the Wastewater System, or out
of indebtedness or liability at any time owing to the District by the Authority or the Trustee. Until
such time as all of the Installment Payments, all of the Additional Payments and all other amounts
coming due and payable thereunder have been fully paid or prepaid, the District(a)will not suspend
or discontinue payment of any Installment Payments, Additional Payments or such other amounts,
(b)will perform and observe all other agreements contained in the Installment Sale Agreement, and
(c) will not terminate the Installment Sale Agreement for any cause, including, without limiting the
generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure
of consideration, eviction or constructive eviction, destruction of or damage to the Wastewater
System, sale of the Wastewater System, the taking by eminent domain of title to or temporary use
of any component of the Wastewater System, commercial frustration of purpose, any change in the
laws of the United States of America or the State of California or any political subdivision of either
thereof or any failure of the Authority or the Trustee to perform and observe any agreement, whether
express or implied, or any duty, liability or obligation arising out of or connected with the Indenture
or the Installment Sale Agreement.
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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 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
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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 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 '/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.
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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
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
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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. The actual valuation impact to the District from successful
assessment appeals will occur on the assessment roll prepared after the actual valuation reduction.
THE AUTHORITY
The Authority is a nonprofit public benefit corporation that was formed to provide financial
assistance to the District. The Authority's board of directors is composed of the members of the
District's Board of Directors.
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, as well as those living in unincorporated County within the service
area, encompassing a total 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) 23rd
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.
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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 incinerator furnaces are
powered by methane from a nearby landfill.
• The District operates a cogeneration facility that uses 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 on average approximately 35 million gallons
of wastewater per day ("MGD"). Located in Martinez, the Treatment Plant has a treatment capacity
of 54 MGD average dry weather flow and 250 MGD of wet weather flow. The Treatment Plant
processed an average daily flow of 35.5 MGD in 2020 and a peak hourly flow of 78.6 MGD during
2020. 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
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 annually for irrigation,
landscaping and industrial use. The District 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
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system, and ensures that no cross-connections occur between the customer's drinking water
system and the District's recycled water system.
The District also provides recycled water to residential and commercial customers at no cost
through fill-stations at the Martinez treatment plant, where vehicles may obtain vehicle loads of
recycled water.
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. The current permit governing operation of the HHW collection facility expires on
June 30, 2021, and a renewal application is in process.
District Management and Employees
Board of Directors. The District is governed by a five-member Board of Directors each
elected from the District for four-year terms. Commencing with the next election in 2022, the Board
will transition from "at-large" to "by-division" elections. There will be five separate election areas or
"divisions."
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 of
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, Mr. Bailey
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 serves as a board member for several prominent industry
organizations including the National Association of Clean Water Agencies, the California
Association of Sanitation Agencies, and WateReuse California. He is also a member of the
John Muir Health Board of Directors.
Steven McDonald, Director of Operations. Mr. McDonald has been employed by the
District since January 2021. In this capacity he oversees the Operations Department, including
collection system operations, treatment plan operations, and maintenance functions. He has
over thirty years of environmental engineering experience and is a licensed professional civil and
mechanical engineer in six states. He worked for Central San earlier in his career, then served
for over twenty years as a partner with Carollo Engineers, responsible for delivering process and
operational efficiency projects, master plans, asset management programs, and Capital
Improvement Plans. He was most recently a principal with McGovern McDonald Engineers. He
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holds Bachelor of Science degrees in Biology, Chemical Engineering, and a Master of Business
Administration in Finance.
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 June
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 shareholder 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 Bachelor of Science degree in Civil Engineering and a minor in
mathematics from Colorado State University in 1984 and a Master of Science 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, and the
California Independent System Operator, and has approximately 30 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 has worked as a contractor to the District since 2019, and previously served
the District as 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 293 budgeted positions (291 for Fiscal Year 2021-22) and
currently has approximately 276 regular employees organized in 3 departments: Administration,
Operations, (including Collection System Operations and Plant Operations & Maintenance),
Engineering & Technical Services. 171 non-supervisory employees of the District are represented
by Public Employees Union, Local #1, Concord ("Local #1"). The 104 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 will expire on April 17, 2022. Negotiations with the bargaining units for replacement MOUs
will commence in mid-2021. Negotiations for the two past contracts extended beyond the expiration
dates. The District has not experienced any interruptions in operations because of
employer/employee disputes.
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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 ("PEPRX). 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.
Provisions and Benefits. 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. The Plans' provisions and benefits in effect as of June 30, 2020, are
summarized as follows:
Tier Legacy PEPRA
Membership Date Before 1/1/13, including On or after
Reciprocity 1/11/13
Membership Count 220 54
Employee Rates 11.97% (Average) 11.20%
District Rates 56.46% 45.67%
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
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 the matter is now on remand from 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 Supreme Court's ruling generally upholds implementation of the legislative pension reforms,
accordingly the pension costs of the District will remain much the same as they have been over the
last several fiscal years.
Contributions. 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.
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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 contribution requirement and payment from the District for the plan year ended
December 31, 2019, 2018 and 2017 was as follows:
2019 2018 2017
Covered payroll for plan years ended 12/31 $39,445,629 $37,088,954 $36,405,155
Employer contributions to pension 17,474,682 17,282,356 17,113,394
Employee contributions to pension 4,066,962 3,971,752 3,868,354
Total Contributions $21,541,644 $21,254,108 $20,981,478
Source: Central Contra Costa Sanitary District.
Unfunded Liability. Pursuant to the Governmental Accounting Standards Board ("GASB")
Statement 68, the District's proportionate share of the net pension liability from its participation in
the multiple-employer cost sharing defined benefit pension plan administered by CCCERA for the
past five years were as follows:
Proportionate Share of
Reporting Date Net Pension Liability
December 31, 2015 $91,746,888
December 31, 2016 87,847,116
December 31, 2017 63,806,000
December 31, 2018 90,430,104
December 31, 2019 64,117,450
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.
Pension Prefunding Trust Fund. 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, 2021, including trust
contributions and interest was $12,019,000. See notes to the financial statements for additional
information about the Pension Plan and the pension prefunding trust fund.
Paying-Down Portion of Unfunded Liability to CCCERA. By utilizing the net proceeds of
the Certificates to finance improvements to the Wastewater System, the District anticipates that
rates, charges, and other available funds on hand (including funds in the Pension Prefunding Trust
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Fund)will be available to pay-down a substantial portion, or potentially all, of the District's unfunded
accrued actuarial pension liabilities of approximately $70.8 million as of the latest actuarial pension
valuation date of December 31, 2019. The payment to CCCERA is anticipated to be made
subsequent to the date of the COP closing, during late June 2021. By paying down the existing
unfunded actuarially accrued liability ("UAAL"), CCCERA's annual charges to the District for the
amortization of the currently existing UAAL that were to have been recovered in Fiscal Year 2021-
22 and future fiscal years throughout the 2020s, are expected to be substantially or fully eliminated.
By paying down the UAAL, the District expects to save on a net basis by:
• Avoiding 7% interest charges on the outstanding UAAL balance assessed by
CCCERA, and instead paying the Installment Payments evidenced by the
Certificates.
• Earning the market return on invested assets by CCCERA, which is targeted at 7%
over the long-term (from 2001 to 2020, investment returns averaged approximately
7.7% per year; however, returns varied significantly, ranging from as low as —26.5%
in 2008 to as high as 23.5% in 2003 and returns are expected to be similarly
volatile in the future).
The District has evaluated, with the assistance of its municipal advisor, the risk factors
involved in this planned pay-down transaction. The extent of the savings will depend on CCCERA
returns, and the interest rate on the Certificates. In the event CCCERA's returns fall substantially
short of the anticipated 7% for an extended period of time, the pay-down transaction may not
generate savings. Further, dependent on CCCERA investment returns and future changes in
actuarial assumptions, additional UAAL may arise in future years. As the District also maintains a
Pension Prefunding Trust Fund, some funds may be retained in that Trust in lieu of full repayment
of the CCCERA UAAL.
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.
Provisions and Benefits. 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 April 2004, 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 plans. The approach
followed in Statement No. 43 is generally consistent with the approach adopted for defined benefit
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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 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. Pursuant to GASB 75, the District's liability attributed to OPEB for the
last five fiscal years were as follows. The significant reduction beginning in Fiscal Year 2018-19 is
related to the change to a more cost-effective healthcare provider, CalPERS, effective July 1, 2019.
Fiscal Year Net OPEB Liability
2015-160) $54,030,000
2016-17 50,424,241
2017-18 46,350,454
2018-19(2) 11,912,761
2019-20 10,371,508
(1) As FY2015-16 pre-dates the implementation of
GASB 75, the GASB 45 unfunded actuarially
accrued liability from July 1, 2016 was used.
(2) Reduction in FY2018-19 due to change in
healthcare provider for OPEB.
OPEB Trust Fund. 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, 2020 and 2019, including trust contributions and interest, totalled $69,849,830 and $65,926,014,
respectively, and were $80,868,359 as of March 2021.
See Note 10 to the District's fiscal year 2019-20 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 2020. 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. The
maximum maturity for general investments of the District is one year. Prior approval of the Board
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of Directors must be obtained to acquire investments with maturities beyond five years. See
"APPENDIX A— Summary of Indenture" for the Permitted Investments definition for the Bonds.
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 March 31, 2021, 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 March 31, 2021,
sufficient funds in the Running Expense Fund and Sewer Construction Fund to pay for six months
of cash flow needs.
TABLE 1
CENTRAL CONTRA COSTA SANITARY DISTRICT
Investment Portfolio Summary')
As of February 28, 2021
Investment Type Market Value Par Value Maturity Date Annual Yield
LAIF $58,000,000 $58,000,000 N/A 0.407%
Federal Home Loan Bank Note 24,999,500 25,000,000 3/24/2021 0.081%
US Treasury Bill 24,999,000 25,000,000 4/8/2021 0.081%
Totals $107,998,500 $108,000,000
(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 February
2021 was 0.407%.
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
As of Inside District Concord/ Total
January 1 Boundaries Clayton Served % Change
1993 271,580 121,575 393,155 2.0%
1994 275,500 122,500 398,000 1.2
1995 280,390 123,490 403,880 1.5
1996 278,330 121,200 399,530 (1.1)
1997 281,650 121,850 403,500 1.0
1998 287,320 124,030 411,350 1.9
1999 290,780 125,610 416,390 1.2
2000 294,170 126,300 420,470 1.0
2001 291,230 135,150 426,380 1.4
2002 293,080 134,920 428,000 0.4
2003 302,675 135,900 438,575 2.5
2004 303,980 135,845 439,825 0.3
2005 308,428 135,780 444,208 1.0
2006 309,600 135,400 445,000 0.2
2007 314,400 134,300 448,700 0.8
2008 317,340 134,560 451,900 0.7
2009 322,200 134,000 456,200 1.0
2010 326,600 134,400 462,000 1.3
2011 321,800 133,600 455,400 (1.4)
2012 326,900 134,200 461,100 1.3
2013 332,600 134,900 467,500 1.4
2014 335,009 135,856 470,865 0.7
2015 339,029 137,357 476,386 1.2
2016 340,667 140,916 481,583 1.1
2017 344,591 139,654 484,245 0.6
2018 348,333 140,590 488,923 1.0
2019 352,733 141,452 494,275 1.1
2020 342,100 141,500 483,600 -2.2%
Source: California Department of Finance, Demographic Research Unit and local agency service records.
Customer Base. Residents make up the largest segment of the District's customer base
representing 117,495 accounts and approximately 81% of the District's fiscal year 2019-20 sewer
service charge billings. Table 3 on the following page 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 2019-20 Billings')
2019-20 Sewer Residential
No. of Service Charge Unit Percentage
User Group (2) Accounts Billings Equivalents of Total
Residential 114,993 $82,615,906 138,154 81%
Mixed Use 426 $6,610,852 11,055 6%
Office 712 $2,852,440 4,770 3%
Hotel/Motel 23 $1,410,709 2,359 1%
Food Service 265 $1,188,731 1,988 1%
Government 190 $1,121,289 1,875 1%
Schools 173 $1,010,889 1,690 1%
Businesses 383 $808,415 1,352 1%
Recreation/Entertainment 138 $843,247 1,410 1%
Automotive/Car Wash 244 $737,895 1,234 1%
Market/Supermarket 39 $567,290 949 1%
Industrial/Permitted 11 $497,443 832 1%
All Other User Groups 491 $2,630,906 4,041 2%
Partial Year Charges $347,497
Prior Year Adjustments ($4,698)
Totals 117,998 $103,238,861 100% 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.
Largest Customers. Total revenues from the 10 largest customers for fiscal year 2019-20
(unaudited) were or approximately 20.25% of total fiscal year 2019-20 operating revenues. Set forth
below is a summary of the 10 largest customers by order of billing during fiscal year 2019-20.
TABLE 4
CENTRAL CONTRA COSTA SANITARY DISTRICT
Largest Customers — Fiscal Year 2019-20
Fiscal Year 2019-20 Percentage of Total
Customer Operating Revenues Operating Revenues
City of Concord $14,923,591 16.13%
Contra Costa County General Service(2) 733,416 0.79
First Walnut Creek Mutual 537,700 0.58
Park Regency Apartments 504,872 0.55
Second Walnut Creek Mutual Apartments 424,500 0.46
John Muir Health (2) 391,245 0.42
Sun Valley Mall 373,171 0.40
Bishop Ranch City Center 335,017 0.36
San Ramon Unified School District 283,631 0.31
Branch Creek Vista Apartments 226,400 0.24
Totals $18,733,543 20.25%
(1) See"—Concord Agreement'below.
(2) Contra Costa County General Services, and John Muir Health, are permitted industries.
Source:Central Contra Costa Sanitary District.
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Concord Agreement
General. 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 2019-20 from
Concord/Clayton was approximately 34.1%, and is expected to be about 33% on an ongoing basis.
The District requires Concord to pretreat industrial waste. This is accomplished by requiring their
industrial customers to pre-treat their discharges to the system.
Payments Under Concord Agreement. 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 2019-20
Discharge
Volume Service Capital
Fiscal Year (mg) Charges Contributions Total
2007-08 4,217 $8,206,860 $5,336,273 $13,543,133
2008-09 3,924 8,755,857 5,485,858 14,251,715
2009-10 4,077 8,664,668 3,628,949 12,293,617
2010-11 4,507 9,224,952 3,216,190 12,441,142
2011-12 4,279 10,647,389 2,541,688 13,189,077
2012-13 4,213 10,483,421 3,616,771 14,100,192
2013-14 3,914 11,625,864 3,820,858 15,446,722
2014-15 3,826 12,892,945 2,897,491 15,790,436
2015-16 3,878 13,913,960 3,671,892 17,585,852
2016-17 4,800 13,851,253 4,476,961 18,328,214
2017-18 4,265 14,973,623 6,364,725 21,338,348
2018-19 4,512 15,205,292 7,973,516 23,178,808
2019-20 4,383 14,923,591 11,393,000 26,316,591
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
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repairing all sewer mains within the affected area. The District bills and collects sewer service
charges for parcels in the affected area and pays the amount collected to the City of Concord. For
fiscal year 2019-20, the District paid $45,667 of sewer service charges to the City of Concord for
the affected area.
Billing and Collection of Sewer Service Charges
General Policy. 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. 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.
Government-owned and other parcels not receiving a property tax bill are billed under District
Code chapter 6.24.120, which 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.
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
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expenses incurred by the District in disconnecting any such parcel. No reconnection
is made until all charges are paid.
• 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 District Code Chapter 6.24.050.
• 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 2019-20
Sewer Service
Property Tax Charges
Levied & Collection Levied & Collection
Fiscal Year Collected0) Percentage Collected0) Percentage
2007-2008 $12,092,637 100% $48,883,932 100%
2008-2009 12,492,502 100 50,743,258 100
2009-2010 11,253,233(2) 100 50,896,210 100
2010-2011 12,171,725 100 50,196,629 100
2011-2012 12,032,525 100 54,586,208 100
2012-2013 13,185,988(3) 100 60,068,807 100
2013-2014 13,108,176 100 66,604,323 100
2014-2015 14,195,300 100 72,622,738 100
2015-2016 15,323,818 100 78,930,977 100
2016-2017 16,428,089 100 83,601,971 100
2017-2018 17,300,475 100 87,944,554 100
2018-2019 18,352,620 100 95,298,869 100
2019-2020 19,348,103 100 100,863,356 100
(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 1A loan 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. Sewer Service Charge rates are adopted by
the Board after a public process compliant with Proposition 218, including notification, and a public
hearing. Proposition 218 protests received opposing the proposed rate increases have been very
minimal, especially given the District's large service area.
On April 18, 2019, the Board adopted a four-year rate ordinance (Ordinance No. 304), extending
through Fiscal Year 2022-23. The ordinance specified that there would be annual check-ins to determine
whether the rates should continue as adopted or be adjusted (with a majority vote required to adjust
rates downward; any rate change above the level specified in the four year schedule would require a
new Proposition 218 process). Four Board financial workshops have been held (on November 4, 2019;
March 12, 2020; December 17, 2020; and March 25, 2021)to discuss the District's financial outlook and
to receive Board direction on key financial planning matters.
• With respect to Fiscal Year 2020-21 rates, the Board on April 16, 2020, deliberated on
whether to adjust the previously adopted rates for Fiscal Year 2020-21, and did not
adopt changes. However, on May 7, 2020, the Board revisited the matter given the
severity of the economic downturn that appeared to be unfolding and voted to not
collect the incremental rate increase for Fiscal Year 2020-21, while leaving the entire
rate structure in place adopted by Ordinance No. 304, effectively creating a rate
increase holiday for Fiscal Year 2020-21.
• With respect to Fiscal Year 2021-22 rates, on April 15, 2021, the Board deliberated and
by taking no action, allowed the previously adopted rates for Fiscal Year 2021-22 to go-
into effect as scheduled for July 2021.
Set forth in the following table is a summary of the District's current and adopted Sewer Service
Charges. In April 2019, the Board approved the consolidation of most of the District's prior non-
residential customer classes into five classes based on combined strength limits, defined as the sum of
biochemical oxygen demand (BOD) and total suspended solids (TSS). These customer classes are
"Low," "Medium-Low," "Medium," "Medium-High," and "High," and fairly charge those customers for the
proportionate cost of collecting and treating their wastewater, based on an updated cost of service study
competed in Fiscal Year 2018-19. The change was effective July 1, 2019.
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TABLE 7
CENTRAL CONTRA COSTA SANITARY DISTRICT
Current and Prior Years Sewer Service Charge
User Group Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2019-20 2020-21 2021-22 2022-23
Residential (rate per living unit)
Single Family Residence $598 $629 $660 $690
Multi-Family Residence $566 $596 $625 $654
Commercial/Non-Industrial(rates per hundred cubic feet)
Low Non-residential uses not listed Up to $6.23 $6.56 $6.87 $7.20
below(no food service) 350 mg/I
BOD+
+TSS
Medium Food service without Type 1 351 to $6.72/$7.65 $8.05 $8.43 $8.83
-Low hood, shared water meter with 700 mg/I
less than 50% food service by BOD+
flow +TSS
Medium Shared water meter with 50% or 701 to $9.59 $10.09 $10.57 $11.07
greater food service by flow 1,000 mg/I
BOD+
+TSS
Medium Food service with Type 1 hood, 1,001 to $10.70 $11.26 $11.79 $12.35
-High supermarkets, hotels and motels 1,300 mg/I
with food service, shared water BOD+
meters with bakery +TSS
High Mortuaries, bakeries, restaurants Greater $14.18 $14.92 $15.63 $16.37
with grinders or emulsifiers, than
breweries with Best Management 1,300 mg/I
Practices permit BOD+
+TSS
Minimum Annual Charge $566.00 $596.00 $625.00 $654.00
Schools
Schools - Daycare, Preschool, University (per hundred $6.23 $6.56 $6.87 $7.20
cubic feet)
Schools-Elementary(per student) $7.43 $7.82 $8.19 $8.58
Schools-Intermediate and High School (per student) $14.68 $15.45 $16.18 $16.95
Other Categories
Industrial Permit
Wastewater Flow(per hundred cubic feet) $4.82 $5.08 $5.32 $5.57
Biological Oxygen Demand (BOD)(per 1,000 pounds) $1,275.00 $1,342.00 $1,406.00 $1,473.00
Total Suspended Solids(TSS)(per 1,000 pounds) $666.00 $701.00 $734.00 $769.00
Fixed $93.69 $98.61 $103.29 $108.20
Special Discharge Permits/Contractual Agreements Determined Determined Determined Determined
Individually Individually Individually Individually
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 Service Multi-Family Annual Sewer
Charge (SSC) Service Charge SSC (')
Fiscal Year Operations Capital(') Total Operations Capital(') 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
2019-2020 408 190 598 386 180 566
2020-2021(4) 263 335 629/598** 249 317 596/566*
(1) All residential accounts paid a flat annual sewer service charge shown above per residential unit through 2014-2015. In
2015-2016,as a result of a cost of service study,the District added a separate--multi-family rate.The charge for commercial
users consists of an annual rate based on business type and the measured volume of water usage in 100 cubic feet(HCF).
(2) Beginning in fiscal year 1992-93 the District began allocating a portion of the Sewer Service Charge to 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.
(4) Rates for this year were legally adopted at$629 for Single Family and$596 for multi-family, however, the Board voted to
continue collection at the previous year's adopted rates due to the COVID-19 pandemic. The same treatment was provided
for non-residential rates.
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
As of July 2020
Annual Sewer
Agency Service Charge (1)(2)
Berkeley(EBMUD for treatment) $1,438
Santa Rosa 1,395
Petaluma 1,263
Benicia 1,002
Rodeo Sanitary District 996
Richmond 924
Oakland (EBMUD for treatment) 828
Crockett Sanitary Department 819
Napa Sanitation District 739
Vallejo 715
Livermore 707
Mt View Sanitary District 673
Novato 657
Brentwood 656
Concord (Central San for treatment)III 647
West County Wastewater District 639
Central Contra Costa Sanitary District 629
Stege SD (EBMUD for treatment) 628
Pittsburg (Delta Diablo for treatment) 603
Antioch (Delta Diablo for treatment) 577
Bay Point (Delta Diablo for treatment) 561
Fairfield (FSSD) 502
Pleasanton (DSRSD for treatment) 497
Dublin San Ramon Services District 469
Union Sanitary District 455
Oro Loma Sanitary District 296
(1) Annual Sewer Service Charge per Single Family Residence,or SFR.
(2) Rates in effect on July 1 of FY 2020-21 (July 1,2020).
(3) The overall rate charged to customers consists of a wholesale charge for treatment of waste by the
District,and a component for wastewater collection performed by the City of Concord.
Source:Central Contra Costa Sanitary District
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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 City of City of
Fiscal Year Charge Revenue Concord* Concord**
2010-2011 $50,897,772 $9,224,952 $3,216,190
2011-2012 55,470,822 10,647,389 2,541,688
2012-2013 61,155,360 10,483,421 3,616,771
2013-2014 67,461,630 11,625,864 3,820,858
2014-2015 73,895,644 12,892,945 2,897,491
2015-2016 80,553,763 13,913,960 3,671,892
2016-2017 85,289,379 13,851,253 4,476,961
2017-2018 89,885,010 14,973,623 6,364,725
2018-2019 97,245,533 15,205,292 7,973,516
2019-2020 102,896,012 14,923,591 11,393,000
Concord Service Charges.
*Concord Capital Contributions.
Source:Central Contra Costa Sanitary District comprehensive financial annual reports(CAFRs).
Capacity Fees Used for Capital Improvements
General. New users who are connected to the Wastewater System are charged Capacity
Fees that are used to fund District Capital Improvements. The District charges (rates effective July
1, 2021) a Capacity Fee of $7,351 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 $9,042 per RUE. A RUE is the
burden 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
wastewater burden, 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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Historical and Current Capacity Fees. 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 Incremental Pumped
Zone Fee �Z>
2007-2008 $4,524 $1,466
2008-2009 4,923 1,586
2009-2010 5,298 1,651
2010-2011 5,451 1,641
2011-2012 5,465 1,606
2012-2013 5,797 1,625
2013-2014 5,930 1,587
2014-2015 5,995 1,585
2015-2016 6,005 1,650
2016-2017 5,948 1,608
2017-2018 6,300 1,639
2018-2019 6,700 1,636
2019-2020 6,589 1,586
2020-2021 6,803 1,585
2021-2022(3) 7,351 1,691
(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 the Capacity fee with an incremental Pumped Zone Fee. Fee is per connection.
(3) Proposed
Source:Central Contra Costa Sanitary District.
TABLE 12
CENTRAL CONTRA COSTA SANITARY DISTRICT
Comparative Information for the Surrounding Area
As of March 2020
Capacity Fees
Agency (Per RUE)
Dublin San Ramon Services District $15,533
Mt. View Sanitary District 9,691
FY 2020-21 Central San Pumped Zone 8,175
Antioch (Delta Diablo for Treatment) 7,784
FY 2020-21 Central San Gravity 6,589
Concord 5,043
West County Wastewater District 8,419
Pittsburg (Delta Diablo for Treatment) 4,358
Bay Point(Delta Diablo for Treatment) 3,940
Source:Central Contra Costa Sanitary District.
Property Taxes
Historical Property Tax Collections; Teeter Plan. For a discussion of the basis on which
the District receives Tax Revenues, see "SECURITY FOR THE BONDS - Tax Revenues" above.
In particular, Table 6 details the historical property tax levies, collections and delinquency rates in
the District.
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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. Due to the Teeter Plan, the District receives 100% of its property
taxes each year.
Historical Assessed Valuation.The following table sets forth the District's total assessed value,
upon which the 1% County-wide ad valorem property taxes are based, since fiscal year 1993-94. As
shown in the table, the assessed valuation of taxable property in the District has increased in each of the
fiscal years since Fiscal Year 2012-13 and, in some years, quite significantly.
TABLE 13
CENTRAL CONTRA COSTA SANITARY DISTRICT
Gross Assessed Valuations
Fiscal Year Local Secured Unsecured Total % Change
1993-1994 $27,037,879,634 $1,203,719,223 $28,241,598,857 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 29,533,445,439 1,115,907,444 30,649,352,883 2.5
1997-1998 30,582,674,632 1,107,438,395 31,690,113,027 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 43,172,880,129 1,434,598,034 44,607,478,163 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 1,583,187,663 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 1,739,642,301 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
2017-2018 97,298,029,346 1,722,229,970 99,020,259,316 5.7
2018-2019 102,984,718,407 1,801,374,862 104,786,093,269 5.8
2019-2020 114,104,132,647 1,801,374,862 104,786,093,269 10.8
Source: Contra Costa County Auditor-Controller's Office
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. R2-2019-0017 (NPDES
No. CA0038873). The order expires June 30, 2024.
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 expired on March 11, 2020, and is
still the current permit. A renewal application has been submitted, and is pending. This lag also
took place with the previous renewal.
The District's record of more than 22 consecutive years of 100% compliance with the
Treatment Plant NPDES Permit was recognized by the National Association of Clean Water
Agencies with their Platinum-22 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 22 years—without a single violation of its EPA-issued discharge
permit. Since receiving that award in 2020, the District has continued its strong compliance record,
now having achieved 23 consecutive years of 100% compliance with the District's National Pollutant
Discharge Elimination System Permit (NPDES).
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, 2021.
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 – General Water Reclamation Requirements for
Recycled Water Use Order 2016-0068-DDW issued by the State Water Resources Control Board
effective April 8, 2020. The permit provides for self-monitoring and does not have a stated expiration
date.
Air Permit. The District is working to comply with new Federal Clean Air Act Section 129
sewage sludge incinerator regulations related to sewage sludge incinerators that went into effect in
March 2016. This regulation is related to pollutant emission limits. Prior to the implementation of
these regulations, the District could use a furnace exhaust bypass damper as needed to prevent
equipment damage or protect worker safety. With the new regulations, each time the bypass is
used, the District must inform the Bay Area Air Quality Management District (BAAQMD) of the
release of particulate matter. The method of information to the BAAQMD is to prepare a reportable
compliance activity(RCA) report. From January 2016 to March 2021, the District has had 13 RCAs.
As a result of these RCAs and an event related to the District's cogeneration system, the District
has received thirteen notices of violation (NOVs) over this five-year period. The District is still
awaiting a response on the other RCAs, which may not necessarily result in an NOV. To help
mitigate this issue, the District conducted a pilot test of new wet scrubber technologies during recent
fiscal years and is currently in the bidding phase to install new scrubber technologies which was
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procured by the District to meet current and upcoming air regulations (both local and
federal). Construction of the new wet scrubbers is expected to be completed by 2025.
DISTRICT FINANCES
Financial Statements
Basis of Accounting. 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.
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. Rate
Stabilization Accounts for Running Expense and Sewer Construction are maintained as accounts
within those sub-funds. Separate Pension Prefunding Trust and Other Post-Employment Benefits
(OPEB)Trust are also maintained to accumulate funds for payment of pension and OPEB liabilities,
respectively.
Audited Financial Statements. The District's fiscal year 2019-20 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 2019-20 audited
financial statements in this Official Statement but has not reviewed this Official Statement.
Statements of Revenues and Expenditures. The table on the following page 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, 2017 through June 30, 20200)
Revenues and Expenses 2016-2017 2017-2018 2018-2019 2019-2020
Operating Revenues:
Sewer Service Charges(SSC) $73,138,235 $75,824,221 $68,656,908 $70,408,903
City of Concord 13,851,253 14,973,623 15,205,292 14,923,591
Other Service Charges 1,029,500 1,078,594 1,126,239 1,176,242
Miscellaneous Charges 606,453 619,997 689,727 714,043
Total Operating Revenue 88,625,441 92,496,435 85,678,166 87,222,779
Operating Expenses:
Salaries&Benefits 62,342,392 68,862,484 65,071,382 62,672,096
Chemicals, Utilities&Supplies 8,115,004 7,477,602 8,093,144 8,088,750
Professional &Outside Services 3,891,224 2,988,280 3,276,763 2,684,034
Hauling, Disposal, Repairs&Maintenance 5,662,086 5,461,011 5,755,590 5,435,406
Self-Insurance(net of transfers) (300,108) (332,483) 1,039,444 1,110,798
Pension Expense (4,080,558) 1,104,358 (33,307,168) (2,386,849)
Depreciation 22,892,153 21,561,704 20,983,353 21,253,062
All Other 2,942,592 2,558,122 2,366,416 1,858,144
Total Operating Expenses 101,464,785 109,681,078 73,278,924 100,715,441
Operating Loss (12,839,344) (17,184,643) 12,399,242 (13,492,662)
Non-Operating Revenues(Expenses):
Property Taxes 16,318,874 17,650,741 18,251,794 18,876,886
Connection&Other Fees 2,600,888 2,592,137 2,648,708 2,251,245
Interest Income 761,838 1,223,349 2,573,964 2,310,269
Interest Expense (1,313,398) (1,230,680) (1,025,006) (604,851)
All Other 966,244 1,075,838 1,424,520 1,219,811
Total Non-Operating 19,334,446 21,311,385 23,873,980 24,053,360
Income Before Contributions and Transfers 6,495,102 4,126,742 36,273,222 10,560,698
Customer Contributions(including SSC) 16,628,105 20,425,514 36,562,141 44,222,958
Contributed Sewer Lines 2,899,042 2,003,614 2,179,641 1,761,808
Capital Contrs.—Capacity fees(Conn. Fees) 7,044,340 9,331,420 8,145,068 7,083,702
Total Capital Contributions&Transfers 26,571,487 31,760,548 46,886,850 53,068,468
CHANGE IN NET POSITION 33,066,589 35,887,290 83,160,072 63,629,166
Total Net Position—Beginning 593,570,427 626,637,016 620,971,490 704,131,562
Prior Period Adjustment—GASB 68 and 71, 75 -- (41,552,816) --
Total Net Position-Ending $626,637,016 $620,971,490 $704,131,562 $767,760,728
Net Position
Invest. in Capital Assets, Net of Related Debt $600,770,254 $623,307,342 $655,586,304 $692,117,172
Restricted for Debt Service 4,449,437 4,421,504 0 2,639
Unrestricted 21,417,325 (6,757,356) 48,545,258 75,640,917
Total Net Position $626 637 016 $620 971 490 $704 131,562 5767 760 728
(1) Sewer Service Charge(SSC), in total, is allocated between Operating revenues(line item"Sewer Service Charges(SSC)"and non-
operating revenues (line item "Customer Contributions (including SSC)"). The allocation in a given year is dependent on the level of
expenditures for Operations and Maintenance and capital expenditures, other revenue sources available to fund such expenditures, the
beginning level of working capital reserves for the operations and maintenance,and capital expenditures(sewer construction)funds,and
other factors.
Source: Central Contra Costa Sanitary District Audited Financial Statements
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Long-Term Indebtedness
Parity Obligations currently outstanding consist of the 2018 Bonds, presently outstanding in
the amount of $17.7 million. In addition, the District is finalizing the terms of a $173 million State
Revolving Fund Loan for its Solids Handling Project, which is anticipated to close in Fiscal Year
2021-22 and will constitute a Parity Obligation.
Capital Improvement Plan
Overview. 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 CIP The District's current Capital Improvement Plan covers the ten-year period from
fiscal year 2021-22 through 2030-31. The plan includes projected expenditures totaling
approximately $939.7 million (2021 dollars). Capital improvement projects are grouped into four
programs: Treatment Plant, Collection System, General Improvements, Recycled Water, and
Contingency. 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 $497.2 million
(2021 dollars), comprising 52.9% 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$334.9 million (2021 dollars), the Collection System Program comprises
35.6% 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 large diameter sewers and force mains. Overall, these
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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
$22.6 million (2021 dollars), representing 2.4% 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 $59.8 million (2021 dollars), comprising 6.4% 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 clearwells with new steel circular storage tanks,
upgrading the filters 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.
• Contingency: The Ten-Year CIP, and each annually adopted budget, also provides for
unallocated funding that can be applied towards unidentified projects, or costs in excess
of budgeted amounts. The District's Ten-Year CIP provides for $25.2 million (2021
dollars) in contingency funding, comprising 2.7% of the overall CIP funding. Contingency
funds may be transferred to new projects or existing projects in amounts up to $200,000
and $500,000 respectively, by the General Manager, with transfers above that amount
requiring Board approval.
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Ten-Year CIP Drivers
Overview. Projects included in the current 10-Year 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:
• 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 serves
as a tool for maintaining a high level of service, establishing long-term fiscally responsible policies
for customers, and provides a clear direction for the District. The 10 year-CIP projection is updated
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annually, and typically includes(1)inflating the costs to present year dollars; (2)reflecting any known
changes in priorities or project costs; (3) reshaping annual spending and project costs by year to
reflect financial plan or budget constraints.
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:
• Nutrient Removal BACWA (Bay Area Clean Water Agencies) Levels 2/3: Possibly
beyond 20 years **
• Recycled Water Exchange (Refinery Recycled Water) Project— up to 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 the District.
** Projects identified but not currently required by regulations.
Current Ten-Year CIP. The table on the following page shows the District's current CIP,
covering Fiscal Years 2021-22 through 2030-31.
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TABLE15A
CENTRAL CONTRA COSTA SANITARY DISTRICT
Capital Improvement Plan
Fiscal Years 2021-22 through 2030-31
Program/Subprogram 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 Totals
Treatment Plant
Liquid Treatment Process 16,500,000 12,926,000 11,450,000 24,035,000 30,520,000 31,000,000 12,845,000 7,898,000 7,401,000 23,807,000 178,382,000
Solids Handling Process Treatment 21,000,000 45,000,000 47,500,000 41,000,000 10,000,000 - - 100,000 950,000 1,319,000 166,869,000
General Treatment Plant Improvements and Safety 7,730,000 8,420,000 10,369,000 11,425,000 18,290,000 21,515,000 27,709,000 15,667,000 17,694,000 13,155,000 151,974,000
Subtotal 45,230,000 66,346,000 69,319,000 76,460,000 58,810,000 52,515,000 40,554,000 23,665,000 26,045,000 38,281,000 497,225,000
Collection System
Collection System Replacement and Rehabilitation 22,356,000 25,847,000 26,297,000 27,297,000 26,802,000 26,402,000 23,925,000 23,925,000 23,945,000 24,925,000 251,721,000
(R&R)
Pump Stations 16,939,000 11,038,000 15,464,000 11,535,000 4,745,000 8,631,000 2,486,000 4,780,000 200,000 676,000 76,494,000
Regulatory Compliance - - - - - - - - - - -
Contractual Assessment Districts(CADS)-Development 500,000 500,000 250,000 250,000 250,000 250,000 1,177,000 1,177,000 1,177,000 1,177,000 6,708,000
Sewerage
Subtotal 39,795,000 37,385,000 42,011,000 39,082,000 31,797,000 35,283,000 27,588,000 29,882,000 25,322,000 26,778,000 334,923,000
General Improvements
Vehicles 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000 9,000,000
Equipment Replacement 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 2,500,000
Buildings and District Property 810,000 175,000 175,000 175,000 425,000 325,000 325,000 325,000 325,000 325,000 3,385,000
Capital Legal Services 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 200,000
Asset Management Program Development 300,000 250,000 250,000 150,000 - - - - - - 950,000
Information Technology Development 1,550,000 1,000,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 6,550,000
Subtotal 3,830,000 2,595,000 2,095,000 1,995,000 2,095,000 1,995,000 1,995,000 1,995,000 1,995,000 1,995,000 22,585,000
Recycled Water
Future Recycled Water Development Planning 50,000 - - - - - - - - - 50,000
Existing Zone-1 300,000 309,000 309,000 309,000 309,000 309,000 309,000 309,000 309,000 309,000 3,081,000
Existing Recycled Water Treatment Facilities R&R 16,250,000 7,850,000 1,650,000 5,150,000 11,330,000 13,390,000 1,030,000 - - - 56,650,000
Subtotal 16,600,000 8,159,000 1,959,000 5,459,000 11,639,000 13,699,000 1,339,000 309,000 309,000 309,000 59,781,000
Program Contingency 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,700,000 25,200,000
TOTAL 107,955,000 116,985,000 117,884,000 125,496,000 106,841,000 105,992,000 73,976,000 58,351,000 56,171,000 70,063,000 939,714,000
Source:Central Contra Costa Sanitary District.
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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 FY 2021-22 budget, adopted by the Board on June 3, 2021, was developed prior
the finalization of this COP offering. There is an anticipation that the budget will be amended to
reflect a revised sources and uses of funds resulting from the availability of these proceeds.
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. In FY 2020-21, the District developed a program that
allows commercial customers to finance capacity fees over a period of 10-15 years at an interest
rate established by the District annually.
The Board has had 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 years 2020-21 through potentially FY 2022-23, with debt financing. Additionally, a $173
million State Revolving Fund Loan pending finalization is anticipated to fund the Solids Handling
Project that is expected to begin construction in FY 2021-22 and extend through FY 2025-26.
While the current 10 year financial plan does not anticipate it at this time, further 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 certificates of participation of revenue bond issuances.
Anticipated Sources and Uses. The anticipated use of debt proceeds is to provide
funding for planned Fiscal Year 2021-22 capital projects, and also to provide reimbursement for
revenues and reserves used towards funding a portion of the projects in the Fiscal Year 2020-21
spending plan. Actual reimbursement will be determined by District management based on
spending during the remainder of Fiscal Year 2020-21, and other factors, with the total
reimbursement expected to approximate $20,000,000. The balance of issuance proceeds are
anticipated to be used for Fiscal Year 2021-22 capital project funding, after payment of costs of
issuance.
By using the proceeds of the Certificates to finance a portion of the capital project spending
in these two fiscal years, the District will make available funds that are planned to be used for the
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purpose of reducing or paying off its unfunded actuarially accrued liability with CCCERA. See
THE DISTRICT— Pension Plan" and "FINANCING PLAN," above.
TABLE 15B
CENTRAL CONTRA COSTA SANITARY DISTRICT
Two-Year Capital Improvement Program Funding Plan
FY2020-21 Two
Authorized FY2021-22 Fiscal Year
Program Spending') Budget Total
Collection System $49,867,000 $39,795,000 $89,662,000
Treatment Plant 39,195,000 45,230,000 84,425,000
General Improvements 6,108,000 3,830,000 9,938,000
Recycled Water 11,506,000 16,600,000 28,106,000
CIB Contingency 1,920,000 2,500,000 4,420,000
Totals: $108,596,000 $107,955,000 $216,551,000
Anticipated Funding Sources
Revenue and Reserves(z) $119,431,000
State Revolving Fund Loans 37,120,000
Certificate Proceeds 60,000,000
Totals: $216,551,000
(1)Consisting of Fiscal Year 2020-21 budgeted capital projects, plus prior year carry-forward projects.
(2) Revenues include ad valorem taxes, sewer service charge, capacity fees, City of Concord reimbursement,
developer fees and charges, and interest.
Source: Central Contra Costa Sanitary District.
Historical Revenues, Expenses and Debt Service Coverage
The table on the following page sets forth revenues, expenses and debt service coverage
figures for Fiscal Years 2017-18 through 2019-20, based on the definitions set forth in the
Indenture for the 2018 Bonds, which are the same as the definitions in the legal documents for
the Certificates.
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TABLE 16
CENTRAL CONTRA COSTA SANITARY DISTRICT
Historical Revenues, Expenses and Debt Service Coverage
(In $000's except service data and coverage)
Fiscal Year Ended June 30,
2018 2019 2020
Gross Revenues
Sewer services charges(O&M) $75,824 $68,657 $70,409
Sewer services charges(Capital) 14,061 28,587 32,830
Sewer charges-City of Concord(O&M) 14,974 15,205 14,924
Sewer charges-City of Concord(Capital) 6,365 7,974 11,393
Other service charges 1,699 1,816 1,890
Total Gross Revenues 112,923 122,239 131,446
Operation and Maintenance Costs')
Operations 42,005 43,556 43,671
Engineering 16,473 16,334 15,564
Recycled Water 1,024 1,190 1,206
Administrative and general 27,513 24,523 21,409
Total Operation and Maintenance Costs 87,015 85,603 81,850
Total Operating Income(Loss) 25,908 36,636 49,596
Non-Operating Revenue
Capacity fees(connection fees) 9,331 8,145 7,084
Contributed sewer lines 2,004 2,180 1,762
Permit and inspection fees 2,592 2,649 2,251
Interest earnings 446 1,452 1,314
Other interest earnings(capital reserve) 777 1,122 996
Other income(2) 1,076 1,425 1,220
Total Non-Operating Revenues: 16,226 16,973 14,627
Tax Revenues 17,651 18,252 18,877
Rate Stabilization Fund Account Draws/(Deposits)(') (2,610)
Annual Debt Service(4) 3,818 1,025 2,750
Debt Service Coverage
Net Revenues+Tax Revenues(') 59,785 71,861 83,100
Debt Service Coverage 15.66 x 70.11 x 30.22 x
Adjusted Net Revenues+Tax Revenues(6) 42,085 53,562 60,251
Debt Service Coverage 11.02 x 52.26 x 21.91 x
(1) Excludes non-cash financial reporting-only cost such as depreciation,GASB 68 pension expense and GASB 75 OPEB expense.
(2) Other Income includes Alhambra Valley fees and miscellaneous income.
(3) Rate stabilization fund account reported a balance of$4.76 million as of May 2021.
(4) 2009 COPs debt service reported net of refundable federal credits. 2009 COPs refunded by 2018 Revenue Refunding Bonds.
(5) Net Revenues=Gross Revenues less Operation and Maintenance Costs plus Non-Operating Revenue.
(6) Adjusted Net Revenues=Net Revenues less capacity fees(connection fees),capital contributions,and the capital component of
payments under the Concord Agreement.
Source:Central Contra Costa Sanitary District.
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Projected Revenues, Expenses and Debt Service Coverage
The table on the following page sets forth the District's projected Net Revenues, Tax
Revenues, Operation and Maintenance Costs, debt service and debt service coverage for the
fiscal years ending June 30, 2021 through June 30, 2025. The projections are based on the
following key assumptions.
Gross Revenues: The following assumptions have been made with respect to the
projections of Gross Revenues:
Rate Base Growth: The projections assume an approximately 0.35-0.42% 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) 4.9% in fiscal year 2021-22, (ii) 4.7% in fiscal year 2022-23, and (iii)
4% in fiscal year 2023-24. The Board approved a four-year schedule of rates which
extends through FY 2022-23. The District can provide no assurances it will be able to
increase rates in FY 2023-24 as projected, given such procedure is subject to State
Constitutional requirements and future Board action. See "RISK FACTORS — Proposition
218."
Tax Revenues: The projections assume 3.0% annual increases in property tax
revenues, beginning in fiscal year 2021-22.
Interest earnings: The projections assume interest earnings on District funds as
follows: (i) 1.5% in fiscal year 2022-23, (ii) 1.75% in fiscal year 2023-24, and (iii) 2.00% in
fiscal year 2024-25.
Operation and Maintenance Costs: The projections assume annual operation and
maintenance expenses of the Wastewater System will increase as follows: (i) 7.8% in fiscal year
2022-23, (ii) 5.2% in fiscal year 2023-24, (iii) 4.8% in fiscal year 2024-25.
Debt Service: The projections assume debt issuances of: (i)$60 million in fiscal year 2020-
21 via the execution and delivery of the Certificates, and (ii) $173.4 million of State Revolving
Fund Loan draws between fiscal year 2020-21 and fiscal year 2025-2026. The projections reflect
the debt service on the outstanding 2018 Bonds and on the Certificates; however, no debt service
is reflected with respect to the State Revolving Fund loan because loan repayments will
commence outside the projection period.
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 Installment Payments evidenced by the Certificates is limited to Net Revenues and Tax
Revenues, and the District is not obligated to apply any other revenues to pay the Installment
Payments or the Certificates.
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TABLE 17
CENTRAL CONTRA COSTA SANITARY DISTRICT
Projected Revenues, Expenses and Debt Service Coverage
(In $000's except service data and coverage)
Fiscal Year Ended June 30,
2021 2022 2023 2024 2025
Gross Revenues
Sewer services charges(O&M) $71,700 $105,701 $ 75,311 $ 80,048 $ 78,588
Sewer services charges(Capital) 30,166 2,243 (') 36,989 39,598 46,405
Sewer charges-City of Concord(O&M) 15,400 13,891 16,840 17,450 18,491
Sewer charges-City of Concord(Capital)8 15,300 8,701 9,161 8,211 16,773
Other service charges 2,707 2,842 2,927 3,015 _ 3,106
Total Gross Revenues 135,273 133,378 141,228 148,322 163,363
Operation and Maintenance Costs(2)
Operations 42,624 40,643 43,066 45,239 47,326
Engineering 16,466 14,861 15,484 16,533 17,525
Recycled Water 1,522 1,611 1,513 1,585 1,655
Administrative and general 24,450 22,327 25,548 26,732 27,881
Total Operation and Maintenance Costs 85,062 79,442 85,611 90,089 94,387
Total Operating Income(Loss) 50,211 53,936 55,617 58,233 68,976
Non-Operating Revenue
Capacity fees(connection fees) 5,777 5,950 5,587 5,656 5,004
Contributed capital 1,000 1,000 1,000 1,000 1,000
Permit and inspection fees 1,897 1,882 1,939 1,997 2,057
Interest earnings 210 180 535 657 787
Other interest earnings(capital reserve) 310 319 1,345 1,771 2,268
Other Income(3) 300 298 304 310 316
Total Non-Operating Revenues: 9,494 9,629 10,710 11,3 91 11,432
Tax Revenues 19,496 19,831 20,426 21,039 21,670
Rate Stabilization Fund Account Draws/(Deposits)(') (2,150)
Annual DebtService(s)* 2,518 2,511 10,222 9,738 10,357
Debt Service Coverage
Net Revenues+Tax Revenues(') 79,201 83,396 86,753 90,663 102,078
Debt Service Coverage' 31.5 x 33.2 x 8.5 x 9.3 x 9.9 x
Adjusted Net Revenues+Tax Revenues(') 54,974 67,745 71,005 75,796 79,301
Debt Service Coverage' 21.8 x 27.0 x 6.9 x 7.8 x 7.7 x
*Preliminary;subject to change.
(1)Greater allocation of sewer service charges directed to O&M fund beyond budgeted estimates necessary to finance payoff of all or a substantial portion of the
12/31/19 pension LAAL reported by CCCERA.
(2) Excludes non-cash financial reporting only costs such as depreciation, GASB 68 pension expense, GASB 75 OPEB expense.Also excludes payoff of pension
LAAL expected in June 2021,which is directly related to 2021 COPs issuance financing plan.
(3)Other Income includes Alhambra Valley fees and miscellaneous income.
(4)Rate stabilization fund account to reported a balance of$4.76 million as of May 2021.
(5)Includes 2018 Revenue Refunding Bonds and 2021 Certificates of Participation. Repayment on 2021 COPs projected to commence in FY 2023.
(6)Net Revenues=Gross Revenues less Operation and Maintenance Costs plus Non-Operating Revenue.
(7)Adjusted Net Revenues=Net Revenue less capacity fees(connection fees)and the capital component of payments under the Concord Agreement.
(8)Significant Solids Handling Facility capital project to be financed by a State Revolving Fund Loan commencing FY 2022. This reduces the annual Concord bill as
the proportional project cost share is recovered over the maturity of the loan.
Source:Central Contra Costa Sanitary District.
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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 Certificates.
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 Installment Sale Agreement. 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.
On March 29, 2021, the California Supreme Court issued a ruling in the case of Kaanaana
v. Barrett Business Services, Inc. The Court held that, although the prevailing wage was
traditionally interpreted to apply to construction-related work only, the language at issue does not
include such limitation when the work is performed for public utility, reclamation, and other special
districts. According to the Court, any work whatsoever for such public entities must be paid at
prevailing wages. The District is currently assessing the impact the ruling will have on costs, but
does not expect that the impact will be significant, as public works are already subject to prevailing
wage, with the result that the impact on the capital budget is not expected to be material. With
respect to the Operating & Maintenance budget ($91 million for Fiscal Year 2021-22),
approximately 73% of the costs are employee salaries and benefits, with the remaining 27% (or
$24.5 million), covering all other costs such as for services, supplies, and other expenses. Of the
27%, approximately 14% of the total Operating & Maintenance budget (or $12.9 million) is for
services, for which the ruling is to have some impact on certain of the costs. The impact is not
expected to be significant, and if necessary a budget amendment for the Fiscal Year 2021-22 will
be adopted to provide for such increases.
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.
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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 Obligation
Although the District has covenanted not to issue additional obligations payable from Net
Revenues and Tax Revenues on a senior basis to the Installment Payments, the Installment Sale
Agreement 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
Installment Payments (see "SECURITY FOR THE CERTIFICATES — Parity Obligations" above).
The coverage tests described in "SECURITY FOR THE CERTIFICATES — Parity
Obligations" involve, to some extent, projections of Net Revenues and Tax Revenues. If such
indebtedness is issued, the debt service coverage for the Installment Payments 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 payment of the Installment Payments and such Parity
Obligations.
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 Certificates.
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
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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 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 CERTIFICATES—Security
for the Installment Payments."
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
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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,
subsequent 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 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 current sewer rates
were adopted on June 5, 2008 by Resolution No. 2008-063 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.
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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 make Installment Payments, the Trustee, as
assignee of the Authority, has the right to accelerate the total unpaid principal amounts of the
Installment Payments. 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 Installment Payments.
Limitations on Remedies Available; Bankruptcy
The enforceability of the rights and remedies of the owners of the Certificates 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.
Limited Obligation
The District's obligation to make Installment Payments is a special obligation of the District
payable solely from Net Revenues and Tax Revenues and other funds provided for in the
Installment Sale Agreement. 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
Installment Payments. The obligation of the District to pay Installment Payments 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
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additional limitations that could have the effect of reducing the Net Revenues or the Tax Revenues
and adversely affecting the security of the Certificates.
Loss of Tax Exemption
As discussed in this Official Statement under the caption "TAX MATTERS," interest with
respect to the Certificates could become includable in gross income for purposes of federal
income taxation retroactive to the date the Certificates were issued, as a result of future acts or
omissions of the District in violation of its covenants in the Installment Sale Agreement or
Indenture. Should such an event of taxability occur, the Certificates 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 Certificates 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 2020-21 (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, except that certain operating
information and reserve fund balance information was not timely filed for Fiscal Years 2012-13
through 2015-16. Beginning with Fiscal Year 2016-17, all required information is included in the
District's comprehensive annual financial report (CAFR). [CONFIRM/UPDATE]
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Special Counsel, subject, however to the qualifications set forth below,
under existing law, the portion of Installment Payments designated as and comprising interest
and received by the owners of the Certificates 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.
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 must be satisfied subsequent to the execution and delivery of the Certificates in order
that the interest with respect thereto be, and continue to be, excludable from gross income for
federal income tax purposes. The District has made certain representations and covenants in
order to comply with each such requirement. Inaccuracy of those representations, or failure to
comply with certain of those covenants, may cause the inclusion of such interest in gross income
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for federal income tax purposes, which may be retroactive to the date of execution and delivery
of the Certificates.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to
the public at which a Certificate is sold is less than the amount payable at maturity thereof, then
such difference constitutes "original issue discount" for purposes of federal income taxes and
State of California personal income taxes. If the initial offering price to the public at which a
Certificate is sold is greater than the amount payable at maturity thereof, then such difference
constitutes "bond premium"for purposes of federal income taxes and State of California personal
income taxes. De minimis original issue discount and bond 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 Certificate 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 Certificates to determine
taxable gain upon disposition (including sale, redemption, or payment on maturity) of such
Certificate. The Tax Code contains certain provisions relating to the accrual of original issue
discount in the case of purchasers of the Certificates who purchase the Certificates after the initial
offering of a substantial amount of such maturity. Owners of such Certificates should consult their
own tax advisors with respect to the tax consequences of ownership of Certificates with original
issue discount, including the treatment of purchasers who do not purchase in the original offering
to the public at the first price at which a substantial amount of such Certificates is sold to the
public.
Under the Tax Code, bond premium is amortized on an annual basis over the term of the
Certificate (said term being the shorter of the Certificate's maturity date or its call date). The
amount of bond premium amortized each year reduces the adjusted basis of the owner of the
Certificate for purposes of determining taxable gain or loss upon disposition. The amount of bond
premium on a Certificate is amortized each year over the term to maturity of the Certificate on the
basis of a constant interest rate compounded on each interest or principal payment date (with
straight-line interpolations between compounding dates). Amortized Certificate premium is not
deductible for federal income tax purposes. Owners of premium Certificates, 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 Certificates.
California Tax Status. In the further opinion of Special Counsel, the portion of Installment
Payments designated as and comprising interest and received by the owners of the Certificates
is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law,
clarification of the Tax Code or court decisions may cause interest with respect to the Certificates
to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from
state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit
of the tax status of such interest. The introduction or enactment of any such legislative proposals,
clarification of the Tax Code or court decisions may also affect the market price for, or
marketability of, the Certificates. It cannot be predicted whether or in what form any such proposal
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might be enacted or whether, if enacted, such legislation would apply to Certificates issued prior
to enactment.
The opinions expressed by Special Counsel are based upon existing legislation and
regulations as interpreted by relevant judicial and regulatory authorities as of the date of such
opinion, and Special Counsel has expressed no opinion with respect to any proposed legislation
or as to the tax treatment of interest with respect to the Certificates, or as to the consequences of
owning or receiving interest with respect to the Certificates, as of any future date. Prospective
purchasers of the Certificates should consult their own tax advisors regarding any pending or
proposed federal or state tax legislation, regulations or litigation, as to which Special Counsel
expresses no opinion.
Owners of the Certificates should also be aware that the ownership or disposition of, or
the accrual or receipt of interest with respect to, the Certificates may have federal or state tax
consequences other than as described above. Other than as expressly described above, Special
Counsel expresses no opinion regarding any federal or state tax consequences arising with
respect to the Certificates s, the ownership, sale or disposition of the Certificates, or the amount,
accrual or receipt of interest with respect to the Certificates.
The form of the proposed opinion of Special Counsel is attached as APPENDIX E.
NO LITIGATION
There is no action, suit or proceeding known to be pending or threatened, restraining or
enjoining the execution of the Installment Sale Agreement, the Indenture or the Certificates or in
any way contesting or affecting the validity of the Installment Sale Agreement, the Indenture or
the Certificates. 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 Installment Sale Agreement, the Indenture
or the Certificates.
RATING
S&P Global Ratings, a division of Standard & Poor's Financial Services LLC ("S&P") has
assigned the Certificates a rating of Such rating reflects only the views of such
organization and any desired explanation of the significance of such rating should be obtained
from S&P, at the following address: S&P Global Ratings, 55 Water Street, New York, New York
10041. The District has furnished to S&P certain materials and information with respect to the
District and the Certificates. Generally, a rating agency bases its ratings on the information and
materials furnished to it and on investigations, studies and assumptions of its own. There is no
assurance such ratings will continue for any given period of time or that such ratings will not be
revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating
agency, circumstances so warrant. The District and the Municipal Advisor undertake no
responsibility to oppose any such proposed revision or withdrawal. Any such downward change
in or withdrawal of any rating might have an adverse effect on the market price or marketability of
the Certificates.
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APPROVAL OF LEGALITY
Legal matters incident to the delivery of the Certificates are subject to the approving
opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Special
Counsel. Copies of such opinion will be available at the time of delivery of the Certificates. Jones
Hall is also acting as Disclosure Counsel to the District. Certain matters will be passed upon for
the District and the Authority by Kenton Alm, Esq.
Payment of the fees and expenses of Special Counsel and Disclosure Counsel is
contingent upon execution and delivery of the Certificates.
UNDERWRITING
(the"Underwriter") has purchased the Certificates at a competitive sale for
a purchase price of$ (representing the aggregate principal amount of the Certificates,
plus a [net] original issue premium of $ , and less an underwriting discount of
$ ). The public offering prices may be changed from time to time by the Underwriter.
The Underwriter may offer and sell the Certificates to certain dealers and others at prices lower
than the offering prices shown on the inside cover page hereof
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
Roger S. Bailey, General Manager
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APPENDIX A
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
The following is a brief summary of certain provisions of the Installment Sale Agreement
and the Indenture not described elsewhere in this Official Statement. Such summary is not
intended to be definitive. Reference is made to the actual Installment Sale Agreement and
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, Contra Costa County, and the State of
California is supplied solely for the purposes of information. The District's obligation to pay the
Installment Payments and any other amounts coming due and payable under the Installment Sale
Agreement are a special obligation of the District limited solely to the Tax Revenues and the Net
Revenues; the Installment Payments are not an obligation of the County, the State or any political
subdivisions other than the District.
THE COUNTY
General
Contra Costa County (the "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
The most recent estimate of the County's population at January 1, 2020 was 1,153,561
persons according to the State Department of Finance. The table below shows population
estimates for the cities in the County for the last five years, as of January 1.
CONTRA COSTA COUNTY
Population Estimates - Calendar Years 2016 through 2020
2016 2017 2018 2019 2020
Contra Costa County
Antioch 111,425 112,062 112,094 112,423 112,520
Brentwood 59,559 61,453 62,993 64,365 65,118
Clayton 11,361 11,378 11,364 11,347 11,337
Concord 129,220 129,825 130,269 130,435 130,143
Danville 43,806 43,826 43,881 43,923 43,876
EI Cerrito 24,559 24,608 24,675 24,852 24,953
Hercules 24,870 25,339 25,339 25,488 25,530
Lafayette 25,380 25,484 25,504 25,644 25,604
Martinez 37,305 37,414 37,439 37,424 37,106
Moraga 16,741 16,799 16,908 16,939 16,946
Oakley 39,725 40,474 41,232 41,979 42,461
Orinda 18,722 18,746 18,822 18,911 19,009
Pinole 19,430 19,498 19,546 19,563 19,505
Pittsburg 69,867 71,530 73,215 73,565 74,321
Pleasant Hill 34,272 34,300 34,292 34,286 34,267
Richmond 109,449 110,103 110,585 110,793 111,217
San Pablo 30,899 31,073 31,341 31,481 31,413
San Ramon 79,483 80,812 81,580 82,100 83,118
Walnut Creek 69,549 70,031 70,389 70,958 70,860
Balance of County 172,783 174,106 173,673 174,145 174,257
County Total 1,128,405 1,138,861 1,145,141 1,150,621 1,153,561
Source:State Department of Finance, Demographic Research.
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Employment and Industry
The District is included in the Oakland-Hayward-Berkeley Metropolitan Division ("MD").
The unemployment rate in the Oakland-Hayward-Berkeley MD was 6.6 percent in
March 2021,down from a revised 6.9 percent in February 2021, and above the year-ago estimate
of 3.6 percent. This compares with an unadjusted unemployment rate of 8.2 percent for California
and 6.2 percent for the nation during the same period. The unemployment rate was 6.5 percent
in Alameda County, and 6.8 percent in Contra Costa County
The table below lists employment by industry group for Alameda and Contra Costa
Counties for the years 2015 to 2019.
OAKLAND-HAYWARD-BERKELEY MD
(Alameda and Contra Costa Counties)
Annual Averages Civilian Labor Force, Employment and Unemployment,
Employment by Industry
(March 2019 Benchmark)
2016 2017 2018 2019 2020
Civilian Labor Force(') 1,385,000 1,396,900 1,401,800 1,400,800 1,355,100
Employment 1,324,400 1,344,300 1,357,900 1,358,000 1,235,600
Unemployment 60,600 52,600 43,900 42,800 119,400
Unemployment Rate 4.4% 3.8% 3.1% 3.1% 8.8%
Wage and Salary Employment: (2)
Agriculture 1,300 1,400 1,300 1,400 1,500
Mining and Logging 300 200 200 200 200
Construction 67,900 71,200 74,900 75,500 70,400
Manufacturing 91,300 95,700 100,600 101,000 98,200
Wholesale Trade 48,100 48,700 47,500 45,400 42,000
Retail Trade 113,400 114,400 114,400 111,700 100,500
Transportation,Warehousing, Utilities 39,700 41,300 42,300 43,700 45,100
Information 26,500 26,900 27,600 27,600 25,800
Finance and Insurance 38,900 38,900 37,500 37,200 36,000
Real Estate and Rental and Leasing 16,900 17,400 17,800 18,100 16,700
Professional and Business Services 181,100 184,500 189,500 193,200 184,600
Educational and Health Services 185,900 191,500 194,300 198,400 189,800
Leisure and Hospitality 111,700 114,900 117,700 121,000 84,100
Other Services 39,100 40,200 41,000 41,200 32,900
Federal Government 13,900 13,800 13,400 13,400 14,100
State Government 39,700 39,300 39,400 39,600 38,000
Local Government 119,800 121,500 121,800 121,800 113,800
Total, All Industries(3) 1,135,400 1,161,800 1,181,300 1,190,400 1,093,700
(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:Labor Division of the California State Employment Development Department.
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Major Employers
The table below lists the major employers in the County, listed alphabetically, as of
May 2021.
CONTRA COSTA COUNTY
Major Employers
May 2021
Employer Name Location Industry
Bart Richmond Transit Lines
Bio-Rad Laboratories Inc Hercules Physicians&Surgeons Equip&Supls-Mfrs
Broadspectrum Americas Richmond Oil Refiners (mfrs)
C& H Sugar Co Inc Crockett Sugar Refiners (mfrs)
Chevron Corp San Ramon Oil Refiners (mfrs)
Chevron Research &Technology San Ramon Service Stations-Gasoline&Oil
Chevron Richmond Refinery Richmond Oil Refiners (mfrs)
Contra Costa Regional Med Ctr Martinez Hospitals
John Muir Health Concord Med Concord Hospitals
Kaiser Permanente Antioch Med Antioch Hospitals
Kaiser Permanente Martinez Med Martinez Clinics
Kaiser Permanente Walnut Creek Walnut Creek Hospitals
La Raza Market Richmond Grocers-Retail
Longs Drug Store Walnut Creek Drug Millers (mfrs)
Los Medanos College Pittsburg Junior-Community College-Tech Institutes
Martinez Arts Outpatient Clnc Martinez Surgical Centers
Nordstrom Walnut Creek Department Stores
Oakley Union School District Oakley School Districts
Robert Half Intl San Ramon Employment Agencies&Opportunities
San Ramon Regional Medical Ctr San Ramon Hospitals
Santa Fe Pacific Pipe Lines Richmond Pipe Line Companies
Shell Oil Prod US Martinez Martinez Oil &Gas Producers
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, 2021 1st 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 the County, the State
and the United States for the period 2017 through 2021.
Contra Costa County
Effective Buying Income and Median Household
As of January 1, 2017 through 2021
Total Effective Median Household
Buying Income Effective Buying
Year Area (000's Omitted) Income
2017 Contra Costa County 39,248,375 69,967
California 1,036,142,723 55,681
United States 8,132,748,136 48,043
2018 Contra Costa County 42,543,271 74,398
California 1,113,648,181 59,646
United States 8,640,770,229 50,735
2019 Contra Costa County 46,121,254 79,603
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 Contra Costa County 48,775,464 83,242
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 Contra Costa County 51,959,070 87,804
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
Source: The Nielsen Company(US), Inc foryears 2017 and 2018;Claritas, LLC for 2019 through 2021.
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Commercial Activity
A summary of historic taxable sales within the County during the past five years in which
data is available is shown in the following table.
During the first, three quarters of calendar year 2021, total taxable transactions in the
County were reported to be $12,748,851,207, representing a 1.95% decrease in the total taxable
transactions of $13,002,550,077 that were reported in the County during the first, three quarters
of calendar year 2020.
COUNTY OF CONTRA COSTA
Taxable Transactions
(Dollars in Thousands)
Retail Stores Total Outlets
Retail Permits Taxable Total Permits Taxable
Year on July 1 Transactions on July 1 Transactions
2015 8,980 $11,420,248 23,996 $15,670,053
2016 14,920 11,746,808 24,064 15,924,592
2017 14,945 12,302,863 24,114 16,558,840
2018 15,095 13,163,891 25,317 17,607,890
2019 15,337 13,301,946 26,201 18,048,985
Source: State Board of Equalization. Taxable Sales in California (Sales& Use Tax)for years 2015-2016. State Department of Tax
and Fee Administration for year 2017 through 2019.
Transportation
The County provides alternative commute options for those without cars or who choose
to commute in an environmentally friendly manner. The Bay Area Rapid Transit BART train
network stops in many cities in the County, and the County Connection bus service serves areas
not immediately adjacent to BART stations. Recently, the BART system was extended into the
northeastern portion of the County through the construction of approximately 10 miles of new
track between the existing Pittsburg/Bay Point BART Station and the new Antioch BART station.
Construction of the extension began in early 2011 and service to the station began in May 2018.
In the summer of 2016, the Highway 4 expansion project was completed, providing
additional traffic improvement to a major east-west highway artery in the County. The project
included expanding Highway 4 from four to eight lanes, and incorporates the BART extension
project described above.
In addition, the local transportation demand management organization 511 Contra Costa
offers services to County residents who wish to switch from single occupancy vehicle driving to
greener modes.
The County also has two airports that are not currently providing passenger service: (1)
Buchanan Field Airport, located in Concord and (2) Byron Airport, located two miles south of
Byron.
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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, 2020
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APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
2021 Wastewater Revenue
Certificates of Participation
(Central Contra Costa Sanitary District)
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 certificates of participation (the
"Certificates"). The Certificates are being executed and delivered pursuant to an Indenture of
Trust (the "Indenture"), dated as of June 1, 2021, by and among the District, the Central Contra
Costa Sanitary District Facilities Financing Authority 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
Certificates 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, 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.
"MSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, 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 Certificates.
"Participating Underwrite►" means the original underwriter of the Certificates required to
comply with the Rule in connection with offering of the Certificates.
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"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.
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, 2022, with the report for 2020-21 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 prescribed by the MSRB.
(c)With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-
applicable rules and electronic format prescribed by the MSRB for the filing of
annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the 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.
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(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 Certificates outstanding.
(ii) The information for the most recently completed fiscal year in the form of
Tables 3, 4, 5, 6, 8, 10, 13 and 16. [CONFIRM]
(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 Certificates:
(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 District.
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(13) The consummation of a merger, consolidation, or acquisition involving the District,
or the sale of all or substantially all of the assets of the District (other than in the ordinary course
of business), the entry into a definitive agreement to undertake such an action, or the termination
of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional trustee or the change of name of the
trustee, if material.
(15) Incurrence of a financial obligation of the District, if material, or agreement to
covenants, events of default, remedies, priority rights, or other similar terms of a financial
obligation of the District, any of which affect security holders, if material (for the definition of
"financial obligation," see clause (e) below).
(16) Default, event of acceleration, termination event, modification of terms, or other
similar events under the terms of a financial obligation of the District, any of which reflect financial
difficulties (for the definition of"financial obligation," see clause (e) below).
(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.
(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), (a)(14) and (a)(15) of this Section 5 contain the
qualifier "if material" and that subparagraph (a)(6) also contains the qualifier "material" with
respect to certain notices, determinations or other events affecting the tax status of the
Certificates. 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 event's 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.
(e) For purposes of Section 5(a)(15) and (16), "financial obligation" means a (i) debt
obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a
source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The
term financial obligation shall not include municipal securities as to which a final official statement
has been provided to the MSRB consistent with the Rule.
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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 District's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates,
the District shall give notice of such termination in the same manner as for a Listed Event under
Section 5(b).
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 Certificates, 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 Certificates, 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 Certificates
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 Certificates.
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(b).
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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 Certificates 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 Certificate 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 Certificates.
(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.
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 Certificates, 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.
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Date: 12021
CENTRAL CONTRA COSTA SANITARY
DISTRICT
By:
Name:
Title:
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APPENDIX E
FORM OF SPECIAL COUNSEL OPINION
[Closing Date]
Board of Directors
Central Contra Costa Sanitary District
5019 Imhoff Place
Martinez, California 94553
OPINION: $ Wastewater Revenue Certificates of Participation
(Central Contra Costa Sanitary District)
Members of the Board of Directors:
We have acted as special counsel to the Central Contra Costa Sanitary District (the
"District") in connection with the delivery by the District of the Installment Sale Agreement dated
as of June 1, 2021 (the "Installment Sale Agreement") between Central Contra Costa Sanitary
District Facilities Financing Authority (the "Authority"), as seller, and the District, as purchaser.
Under an Indenture of Trust, dated as of June 1, 2021 (the "Indenture") among the District, the
Authority and U.S. Bank National Association, as trustee (the "Trustee"), the Trustee has
executed and delivered the above-captioned certificates of participation on the date hereof (the
"Certificates"). In such capacity, we have examined such law and such certified proceedings,
opinion, certifications and other documents as we have deemed necessary to render this opinion.
The Certificates evidence the direct, undivided fractional interests of the owners thereof in
Installment Payments to be made by the District under the Installment Sale Agreement (the
"Installment Payments"), which have been assigned by the Authority to the Trustee. The District
authorized execution and delivery of the Installment Sale Agreement, the Indenture and the
Certificates pursuant to a resolution of the Board of Directors of the District adopted on
, 2021 (the "Resolution").
Regarding questions of fact material to our opinion, we have relied on representations of
the District contained in the Installment Sale Agreement and the Indenture, and in the certified
proceedings and other certifications of public officials furnished to us,without undertaking to verify
the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1. The District is a duly created and validly existing sanitary district, with the power to
adopt the Resolution, enter into the Installment Sale Agreement and the Indenture, and perform
the agreements on its part contained therein.
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2. The Installment Sale Agreement and the Indenture have been duly authorized,
executed and delivered by the District, and constitute the valid and binding obligations of the
District, enforceable against the District.
3. The Certificates have been validly executed and delivered by the Trustee under the
Indenture and, by virtue of the assignment made by the Authority, the owners of the Certificates
are entitled to the benefits of the Installment Sale Agreement.
4. The portion of the Installment Payments designated as and comprising interest and
received by the owners of the Certificates is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum tax.
The opinions set forth in the preceding sentence are subject to the condition that the District
comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be
satisfied subsequent to the execution and delivery of the Certificates in order that the interest with
respect thereto be, and continue to be, excludable from gross income for federal income tax
purposes. The District has made certain representations and covenants in order to comply with
each such requirement. Inaccuracy of those representations, or failure to comply with certain of
those covenants, may cause the inclusion of such interest in gross income for federal income tax
purposes, which may be retroactive to the date of delivery of the Installment Sale Agreement.
5. The portion of the Installment Payments designated as and comprising interest and
received by the owners of the Certificates is exempt from personal income taxation imposed by
the State of California.
We express no opinion regarding any other tax consequences arising with respect to the
ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Installment
Sale Agreement or the Certificates.
The rights of the owners of the Certificates and the enforceability of the Installment Sale
Agreement and the Indenture are limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting creditors' rights generally, and by equitable principles, whether
considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention, or any changes in law that may hereafter occur. Our engagement with respect to this
matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
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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 Certificates, payment of
principal, interest and other payments on the Certificates to DTC Participants or Beneficial
Owners, confirmation and transfer of beneficial ownership interest in the Certificates 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 Certificates (the "Issuer') nor the trustee, fiscal agent or paying
agent appointed with respect to the Certificates (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 Certificates, (b) certificates representing ownership interest in or other confirmation
or ownership interest in the Certificates, or(c) redemption or other notices sent to DTC or Cede
& Co., its nominee, as the registered owner of the Certificates, 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 securities (the "Certificates"). The Certificates 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 Certificates, 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 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 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt
issues, and money market instrument 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, in turn, is owned by a number of Direct
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Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income
Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC,
also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock
Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC
has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on
file with the Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com and www.dtc.org.
3. Purchases of Certificates under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Certificates on DTC's records. The ownership
interest of each actual purchaser of each Certificate ("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 Certificates 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
Certificates, except in the event that use of the book-entry system for the Certificates is
discontinued.
4. To facilitate subsequent transfers, all Certificates 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 Certificates 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
Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts
such Certificates 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 Certificates
may wish to take certain steps to augment transmission to them of notices of significant events
with respect to the Certificates, such as redemptions, tenders, defaults, and proposed
amendments to the security documents. For example, Beneficial Owners of Certificates may wish
to ascertain that the nominee holding the Certificates 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 Certificates within an
issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
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7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with
respect to the Certificates 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 Certificates are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and interest payments on the Certificates 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
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
Certificates 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 certificates are
required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers
through DTC (or a successor securities depository). In that event, security certificates will be
printed and delivered to DTC.
11. The information 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.
F-3
June 3, 2021 Regular Board Meeting Agenda Packet- Page 605 of 646
Page 181 of 186
Attachment 6
PENSION OVERVIEW AND FUNDING
FINANCIAL STRATEGIES:
CERTIFICATES OF PARTICIPATION
TRANSACTION APPROVAL
June 3, 2021 Board Meeting Presentation
Phil Leiber,
Director of Finance and Administration
1
CEN TRALSAN
GOAL: CONTINUE PROGRESS IN MANAGING
UNFUNDED LIABILITIES
• Central San has taken many proactive steps to manage pension costs
including most recently, adopting a pension funding strategy with goal
of achieving a fully funded pension.
• Progress has been very effective:
Pension UAAL
$160 100%
$140 90%
$120 s0%
]0%
$100 60%
$8050
$60 40%
$40 90%
z0%
$20 10%
$0 0%
Year ended 12/31
�UAAL —Funded%
CENTRALSAN
2
1
June 3, 2021 Regular Board Meeting Agenda Packet- Page 606 of 646
Page 182 of 186
TRANSACTION OBJECTIVE
• Borrow to partially fund the FY 2020-21 and FY 2021-22 capital project
• Free up funds to be used for UAAL pay down.
• Pay interest on debt at about 1.125%, avoid a 7% CCCERA interest charge,
and earn a market return on invested assets.
• Should save about$15 million; with probability distribution as shown:
30%
45% 245%
22.94;.
20%
27,5%
Z 15% 14.6%
10% 9.3%
5 3.1%
0.3% 0.31. 0.1%
0%
-$30to-$20 -$20 to-$10 -$10 to$0 $0 to$10 $10 to$20 $20 to$30 $30 to$40 $40 to$50 $50 to$60 $60to$70 $70to$80
Aange of benefits($Milliens(
• 87% likelihood of cost savings, 85% likelihood of at least$1 million in
savings.
3
CENTRAL SAN
3
KEY TRANSACTION STEPS
• Create proposed financing calendar 0
• Assemble Financing Team 0
• Select key structuring details p
• Negotiated vs. Competitive sale
• Revenue bonds or Certificates of Participation
• Assemble documents including Preliminary Official statement
• Major effort in first 3 weeks of May
• Finalize issuance amount and maturity schedule
• Around 58 million: maturities match UAAL ogyments
• Financing Authority/Board adoption of documents-June 3 ❑
• Bond Competitive Sale-Week of June 14 ❑
• Closing-Week of June 28 ❑
r 4
CENTRAL SAN
4
2
June 3, 2021 Regular Board Meeting Agenda Packet- Page 607 of 646
Page 183 of 186
DISCUSSION Topics
1. Update on interest rates;
2. Issuance amount and CCCERA pay-down amount;
3. Market timing considerations including impact of
potentially higher inflation on market returns;
4. Flow of funds;
5. Review of transaction related documents.
15
CENTRALSAN
5
1 . UPDATE ON INTEREST RATES
• Drivers of savings are interest rate on debt and market
returns on invested assets.
• Rates remain low and attractive to move forward with the
issuance
Average for December April 12,2021 May 11,2021 May 18,2021
2020
0.71% 1.03% 0.95% 1.00%
CENT ALSAN
6
3
June 3, 2021 Regular Board Meeting Agenda Packet- Page 608 of 646
Page 184 of 186
2ASSUANCE AMOUNT AND PAY-DOWN AMOUNT
• Staff recommend borrowing an amount sufficient (with Pension
Trust Funds) to fully pay down the CCCERA UAAL amount, which
will be approximately $59 million (inclusive of issuance costs)
• Finance Committee wanted to continue to consider whether
something less than an amount needed to pay down 100% of the
liability should be sent to CCCERA.
• The Balance could be retained in the Pension Pre-Funding Trust
• PROs and CONs outlined in position paper
• Final decision not required until end of June
AMLI
CENTRALSAN7
3. MARKET TIMING CONSIDERATIONS INCLUDING
IMPACT OF POTENTIALLY HIGHER INFLATION ON
MARKET RETURNS;
• Annual returns WILL differ from the long-term average
return of 7% that CCCERA targets.
• Impact of potentially higher inflation
• Will it persist?
• Inflation affects some asset classes more than others
• CCCERA can and will adjust investment allocation to continue to
target their required return
• PFM Asset Management projects 5.4% returns in the near term
• Potential actions in light of concerns about returns:
• Recognize difficulty of predicting returns
• Keep more in Pension Prefunding Trust/great control over
asset mix and timing
CENTRALSAN
8
4
June 3, 2021 Regular Board Meeting Agenda Packet- Page 609 of 646
Page 185 of 186
4. FLOW OF FUNDS
• Borrowing will provide funding for partial funding of FY
2020-21 and FY 2021-22
• Maximize funding towards FY 2020-21 CIB; can use for
expenditures March 7 forward
• Can use reserves and interfund borrowing to cover
balance of UAAL pay-down amount until arrival of FY
2021-22 Sewer Service Charge in December 2021.
zrci9
CENTRALSAN
9
5. REVIEW OF DOCUMENTS
1. District Resolution
2. Installment Sale Agreement
3. Trust Agreement
4. Notice of Sale
5. Preliminary Official Statement
CENTRALSAN
10
5
June 3, 2021 Regular Board Meeting Agenda Packet- Page 610 of 646
Page 186 of 186
RECOMMENDATION-ADOPT RESOLUTION
• AUTHORIZING THE EXECUTION, DELIVERY AND SALE
OFWASTEWATER REVENUE CERTIFICATES OF PARTICIPATION IN THE
MAXIMUM PRINCIPAL AMOUNT OF $65 MILLION" TO FINANCE
CAPITAL IMPROVEMENT PROJECTS OF THE DISTRICT, AND
APPROVING RELATED DOCUMENTS AND ACTIONS:
• INSTALLMENT SALE AGREEMENT
• INDENTURE
• AUTHORIZE AUTHORIZED OFFICERS TO SIGN SUCH
• ALLOW COMPETITIVE SALE OF THE COPS
• THE PRELIMINARY OFFICIAL STATEMENT
• CONTINUING DISCLOSURE CERTIFICATE
** Resolution provides a buffer above expected amount of$59 million
` ii
CENTRALSAN
11
QUESTIONS?
CENTRALSAN
12
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June 3, 2021 Regular Board Meeting Agenda Packet- Page 611 of 646