HomeMy WebLinkAboutResolution 2018-075 Approving form of a loan agreement with the Water Infrastructure Finance AuthorityTown of Marana and
Water Infrastructure Finance Authority of Arizona
Borrower — Table of Contents
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Town of Marana's Borrowing Resolution...................................................................................... l .
WIFABoard Resolution.................................................................................................................2.
LoanAgreement..............................................................................................................................3.
Loan Agreement Addendum -Wage Rate and Forgivable Principal Requirements for Compliance
withP.L. 111-88.............................................................................................................................4.
Loan Agreement Addendum -American Iron and Steel Requirements for Compliance with
FederalLaw....................................................................................................................................5.
Exhibit A of Loan Agreement: Financial Terms and Conditions..................................................6.
Exhibit B of Loan Agreement: Technical Terms and Conditions.................................................7.
Exhibit C of Loan Agreement: Reporting Requirements...............................................................8.
Exhibit D of Loan Agreement: Source of Repayment and Rate Covenant Provisions ..................9.
Exhibit E of Loan Agreement: Debt Service Reserve Provisions................................................10.
Exhibit F of Loan Agreement: Replacement Reserve Provisions................................................11.
Exhibit G of Loan Agreement: Form of Opinion of Local Borrower...........................................12.
Exhibit H of Loan Agreement: Tax Compliance Certificate of Local Borrower .........................13.
IRSForm 8038-G.........................................................................................................................14.
Standard Terms and Conditions....................................................................................................15.
WIFA Disbursement Requisition Procedures and Payment Requisitions (on CD)
Loan Resolution 2018-018 - Town of Manana
Water Infrastructure Finance Authority of Arizona
WHEREAS, the Water Infrastructure Finance Authority of Arizona (the "Authority") has
received from Marana, Town of (the "Local Borrower ") a request for a loan (the "Loan"); and
WHEREAS, the Authority has determined that the Local Borrower has met the requirements of
Arizona Revised Statutes §49-1201 et seq. (the "Act") and the rules promulgated thereunder (the
"Rules"); and
WHEREAS, the terms and conditions under which a Loan will be made and the obligations of
the Local Borrower will be set forth in a loan agreement or bond purchase agreement (the "Loan
Agreement") to be executed by the Local Borrower and the Authority.
NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
AUTHORITY AS FOLLOWS:
The Executive Director of the Authority is hereby authorized and directed to execute a Loan
Agreement with the Local Borrower to evidence a Loan in accordance with the Act, the Rules,
the Local Borrower's applications to the Authority, and the Project Summary detailed in Section
2 of this Loan Resolution.
The Executive Director and other Authority officials, as appropriate, are authorized and directed
to sign any document and take such actions as necessary and appropriate to consummate the
transactions contemplated by this Resolution and the Loan Agreement and to ensure that the
Local Borrower has completed all requirements of the Authority as detailed in Section 3, Section
4, and Section 5 of this Loan Resolution.
This Resolution shall take effect immediately and shall terminate one year from the date of
Board Action.
Dated: June 27, 2018
By
Chairman
Attest:
-'71E cutive Director
Page I of 5
Loan Resolution 2018018 - Town of Marana
Water Infrastructure Finance Authority of Arizona
2! Project Number{s)
CW 008-2018
Z2 Pxojec# Priariity Data
PPL Rank Funding Cycle Population Served Subsidy Rate
1 CW 2018 10,057 85%
23 Project Description(s)
The Town of Marana will design and construct a new lift station and force main to convey
How from the Adonis collection system to the existing Town of Marana municipal system.
The flows from the neighborhood will be treated at the Marana Water Reclamation Facility,
and the treated sewage will be Class A-+- reclaimed water quality. The Town will also use
funding from this loan to assess the condition of the existing collection system and to
reimburse the cost of the impact fees.
Because the total outfall from the Marana Water Reclamation Facility, including the effluent
from Adonis Mobile Home Park, will be treated to Class A4, reclaimed water standards and
will be sent to an Aquifer Recharge Facility, this project categorically qualifies for the green
project reserve within the water efficiency category (GPR CW guidance, 2.2-6 Recycling and
water reuse projects).
24- Peevious Board or tOnimitteeActions
2017 Technical Assistance Funding Cycle - the Board awarded the Town of Marana $34,950
of clean water technical assistance for the El Rio Riparian Restoration Project.
December 16, 2009 -� Board adopted Loan Resolution 2010-023 to award $5,250,000 (Loan
No. 920193-10) to the Town of Marana to fund multiple water projects at various stages of
development.
2010 Technical Assistance Funding Cycle - the Board awarded Adonis Mobile Home
Association $10,000 of clean water technical assistance for an alternative analysis report.
2:5 Project ,Finance'Commiitee Recommendations
Not reviewed by the Project Finance Committee.
Page 2 of 5
Loan Resolution 2018-018 -- Town of Marana
Water Infrastructure Finance Authority of Arizona
Financial Assistance Amount: $1,481,990 with 50% forgivable principal
Primary Repayment Source: Excise Taxes (includes state shared revenues)
Secondary Repayment Source: None
Loan Term: 20 years
Frequency of Repayment: Semi -Annual
Loan Structure: Standard Governmental - Level I
Debt Service Reserve Fund Requirements: No Reserve
Repair and Replacement Fund Requirements: None
Requirements Prior to Loan Execution:
Require Legal Opinion: Yes
Other: No Requirement
Requirements Prior to Construction: No Requirement
Requirement During Construction: No Requirement
Requirements Prior to Final Disbursements: No Requirement
Loan Category: Qualified, Not Pledged
Policy Exceptions: None
Observation Schedule B:
Observation 1: Upon borrower notification of construction commencement
Additional Observations: at least one site observation within each 12 month period
Final Observation: 80% construction budget disbursement
Page 3 of 5
Loan Resolution 2018-0.18 - Town of 1Vlarana
Water Infrastructure Finance Authority of Arizona
Withholding Percentage:
50% (released after Fiscal Sustainability Plan Certification received)
10% (released after deliverables received)
Requirements Prior to Loan Execution: No Requirement
Requirements Prior to Construction:
Prior Review and Approval of Construction Bids: Yes
Require Construction Signs: Yes
The Local Borrower shall erect a construction sign displaying information on the Project
and the funding sources. The Authority shall provide specifications for such construction
signs.
Other: No Requirement
Requirements During Construction:
Prior Review of Changes in Project Scope: Yes
The Local Borrower shall submit to the Authority, for review and approval prior to
execution, any change to the plans and specifications, construction contracts, Eligible
Project Costs, or any other change which will effect the performance standards or
purpose of the Project.
Other: No Requirement
Requirements Prior to Releasing Withholdings:
50% Withholding of Construction Funds:
Submission of Fiscal Sustainability Plan Certification: Yes
Submission of Fiscal Sustainability Plan: No Requirement
10% Withholding
Require Plan of Operation: No Requirement
Require Final Approval: Yes
Page 4 of 5
Loan Resolution 2018-018 - Town of Marana
Water Infrastructure Finance Authority of Arizona
Other: No Requirement
Policy Exceptions: None
Other: Wage rate reporting requirements; Use of American Iron and Steel requirements
Page 5 of 5
Loan Agreement
Water Infrastructure Finance Authority of Arizona
(the "Authority")
and
Town of Marana
(the "Local Borrower")
Evidencing a Loan from the
Authority to the Local Borrower
Dated as of TBD, 2018
Table of Contents
Article 1 Description of the Loan
Section 1.1 Name and Address of Local Borrower...................................................................1
Section 1.2 Authorized Officer(s) of Local Borrower...............................................................1
Section1.3 Notices....................................................................................................................1
Section 1.4 Loan Information....................................................................................................2
Article 2 Description of the Project
Section 2.1 Description of Project.............................................................................................2
Section 2.2 Description of System.............................................................................................2
Article 3 Loan to Local Borrower; Amounts Payable
Section3.1 The Loan.................................................................................................................2
Section 3.2 Disbursement of Loan Proceeds.............................................................................3
Section 3.3 Amounts Payable...................................................................................................3
Section3.4 Tax Covenants........................................................................................................3
Exhibit A Financial Assistance Terms and Conditions; Borrower Payment Instructions; and
Loan Repayment Schedule
Exhibit B Technical Assistance Terms and Conditions
Exhibit C Reporting Requirements
Exhibit D Source of Repayment
Exhibit E Debt Service Reserve Requirements
Exhibit F Replacement Reserve Requirements
Exhibit G Form of Opinion of Counsel to Borrower
Exhibit H Tax Compliance Certificate of Local Borrower
Loan Agreement
This Loan Agreement (this "Loan Agreement") is made and entered into as of TBD by and
between the Water Infrastructure Finance Authority of Arizona (the "Authority"), and Town of
Marana (the "Local Borrower"), a political subdivision of the State of Arizona.
This Loan Agreement includes the attached Exhibits and the attached Standard Terms and
Conditions. Any capitalized terms used and not defined herein shall have the meanings ascribed
to such terms in the Exhibits and the Standard Terms and Conditions.
The Authority and the Local Borrower agree as follows:
Article 1 Description of the Loan
Section 1.1 Name and Address of Local Borrower.
Town of Marana
Attention: John Kmiec, Director of Water Department
5100 W Ina Road
Marana, Arizona 85743
Telephone: (520) 382-2582
Fax: (520) 382-2590
Section 1.2 Authorized Officer(s) of Local Borrower.
Town of Marana
Attention: Mr. Jamsheed Mehta, Town Manager
H 555 West Civic Center Dr.
Marana, Arizona 85653
Telephone: (520) 382-1906
Fax: (520) 382-1901
Section 1.3 Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when hand delivered or mailed by registered or
certified mail, postage prepaid, to the Local Borrower at the address specified in Section 1.1 and
to the Authority at the following address:
Executive Director
Water Infrastructure Finance Authority of Arizona
100 North 15th Avenue, Suite 103
Phoenix, Arizona 85007
Telephone: (602) 364-1310
Fax: (602) 364-1327
Any of the parties may designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent, by notice in writing given to the others.
Section 1.4 Loan Information. The terms of the Loan include the terms set forth in the
Exhibits, which are part of this Loan Agreement:
Exhibit A Financial Assistance Terms and Conditions; Borrower Payment Instructions; and
Loan Repayment Schedule
Exhibit B Technical Assistance Terms and Conditions
Exhibit C Reporting Requirements
Exhibit D Source of Repayment
Exhibit E Debt Service Reserve Requirements
Exhibit F Replacement Reserve Requirements
Exhibit G Form of Opinion of Counsel to Borrower
Exhibit H Tax Compliance Certificate of Local Borrower
Prior to Loan Closing, the Local Borrower must deliver to the Authority the Opinion of Local
Borrower Counsel in the form of Exhibit G and the Tax Compliance Certificate of Local
Borrower in the form of Exhibit H, signed and dated the date of Loan Closing.
Article 2 Description Of The Project
Section 2.1 Description of Project. The Project is described in Project Summary attached to the
Loan Resolution of the Authority, and in Exhibit B of this Loan Agreement.
Section 2.2 Description of System. The term "System" means and includes all of the properties
and facilities of the complete Sewer plant and system of the Local Borrower, whether lying
within or without the boundaries of the Local Borrower, as now existing and as they may
hereafter be improved or extended, all improvements, additions and extensions thereto or
replacements thereof hereafter constructed or acquired by purchase, contract or otherwise and all
contracts, rights, agreements, leases and franchises of every nature owned by the Local Borrower
and used or useful or held for use in the operation of said plant and system or any part or portion
thereof.
Article 3 Loan to Local Borrower; Amounts Payable
Section 3.1 The Loan. The Authority shall loan and disburse to the Local Borrower in
accordance with this Article 3 an amount listed in Exhibit A (the "Loan"), and the Local
Borrower shall borrow and accept from the Authority, the Loan in the principal amount
determined pursuant to this Article 3; provided, however, that (i) the Authority shall be under no
obligation to disburse any amount of the Loan if an Event of Default has occurred and is
continuing under this Loan Agreement, and (ii) the amount to be disbursed shall be lawfully
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available for disbursement. The Local Borrower shall use the proceeds of the Loan strictly in
accordance with the requirements of this Loan Agreement.
Section 3.2 Disbursements of Loan Proceeds. The Authority may disburse funds by check, by
electronic means or by means of magnetic tape or other transfer medium. Except as hereinafter
provided, disbursements shall be made only when (i) the request for disbursements is in
substantially the form provided by the Authority and is accompanied by the necessary
certifications and documentation and (ii) an Authorized Officer of the Authority has determined
that such disbursement is proper. An Authorized Officer of the Authority shall approve
disbursements directly to the persons or entities entitled to payment or to the Local Borrower in
the case of reimbursement for costs of services already paid, and shall provide the Local
Borrower with a copy of the approval and the date approved. Disbursements may be made only
for Eligible Project Costs.
Section 3.3 Amounts Payable. The Local Borrower shall pay to the Authority the amounts
shown in Exhibit A on or before the dates shown in Exhibit A, as the same may be adjusted as
provided in the Standard Terms and Conditions, to reflect any revisions to the principal
repayment schedule of the Loan. Such payments shall be made by electronic funds transfer or by
direct debit to the Authority.
Section 3.4 Tax Covenants.
(a) General. The Local Borrower acknowledges that, in connection with its state revolving fund
programs, the Authority issues its bonds ("Authority Bonds") from time to time to finance loans and
the Authority also pledges certain loans to secure and to serve as the source of payment for the
Authority Bonds. As a result, and under the provisions of federal tax law applicable to the Authority
Bonds, it is in the Authority's interest for the Loan to qualify and be an obligation that bears interest
that is excludable from gross income for federal income tax purposes and is not an item of tax
preference for purposes of the alternative minimum tax imposed on individuals and corporations
under the Internal Revenue Code. Therefore, the Local Borrower represents and covenants as
follows with respect to the Loan and the Authority Bonds. The Local Borrower covenants that it
will not take any action, or fail to take any action, if any such action or failure to take such action
would adversely affect the exclusion from gross income of the interest on the Loan or the Authority
Bonds under Section 103(a) of the Internal Revenue Code or cause the interest on the Loan or the
Authority Bonds to become an item of tax preference for purposes of the alternative minimum tax
imposed on individuals and corporations under the Internal Revenue Code, and in the event of such
action or omission, it will, promptly upon having such brought to its attention, take such reasonable
actions based upon a bond counsel opinion as may rescind or otherwise negate such action or
omission. The Local Borrower will not directly or indirectly use or permit the use of any proceeds
of the Loan or any other funds of the Local Borrower or take or omit to take any action that would
cause the Loan or the Authority Bonds to be or become "arbitrage bonds" within the meaning of
Section 148(a) of the Internal Revenue Code or to fail to meet any other applicable requirement of
Sections 103, 141, 148, 149 and 150 of the Internal Revenue Code or cause the interest on the Loan
or the Authority Bonds to become an item of tax preference for purposes of the alternative
minimum tax imposed on individuals and corporations under the Internal Revenue Code. To that
3
end, the Local Borrower will comply with all applicable requirements of Sections 103, 141, 148,
149 and 150 of the Code to the extent applicable to the Loan.
(b) Modification Based on Bond Counsel Opinion. Notwithstanding any provision of this
Section, if the Local Borrower provides to the Authority a bond counsel opinion to the effect that
any action required under this Section is no longer required, or to the effect that some further action
is required, to maintain the exclusion from gross income of interest on the Loan or the Authority
Bonds pursuant to Section 103(a) of the Internal Revenue Code, the provisions of this Section and
the covenants in this Section shall be deemed to be modified to that extent.
(c) Bond Counsel Opinion. For purposes of this Section, "bond counsel opinion" means an
opinion letter of a firm of attorneys of national reputation experienced in the field of municipal
bonds whose opinions are generally accepted by purchasers of municipal bonds, and who is
acceptable to the Authority.
IN WITNESS WHEREOF, the Authority and the Local Borrower have caused this Loan
Agreement to be executed and delivered as of the date of execution hereof.
Water Infrastructure Finance Authority of Arizona
M.
Trish Incognito, Executive Director
Town of Marana
M.
Jamsheed Mehta, Town Manager
Attest:
By:
Clerk
.19
LOAN AGREEMENT ADDENDUM
Wage Rate and Forgivable Principal Requirements for Compliance with P.L. 111-88
Water Infrastructure Finance Authority of Arizona
This document (this "Wage Rate and Forgivable Principal Addendum") sets forth
additional requirements applicable to state revolving fund Loans made by the Water
Infrastructure Finance Authority of Arizona ("WIFA") that are subject to the requirements of
Public Law 111-88, "Making appropriations for the Department of the Interior, environment, and
related agencies for the fiscal year ending September 30, 2010, and for other purposes," enacted
October 30, 2009 ("P.L. 111-88"). The provisions in this Wage Rate and Forgivable Principal
Addendum are a part of the Loan Agreement. Capitalized terms not otherwise defined herein
shall have the meanings given them in the Loan Agreement.
The parties acknowledge and agree that funds disbursed by WIFA to the Local Borrower
will include funds made available to WIFA by the federal government under P.L. 111-88, and
that the requirements of P.L. 111-88 include those set forth in this Wage Rate and Forgivable
Principal Addendum. The Local Borrower agrees to comply with all of those requirements and
agrees that failure to do so is a breach of the provisions of the Loan Agreement which may result
in a default under the Loan Agreement, termination of WIFA's obligation to make disbursements
on the Loan and the Local Borrower being required to repay all amounts that have been
disbursed by WIFA on the Loan, together with interest and fees as provided in the Loan
Agreement (including interest and fees at rates adjusted from those originally in effect as
described herein).
Additional Requirement for Subrecipients that are not Governmental Entities:
Obtaining Wage Determinations - Under this Wage Rate and Forgivable Principal
Addendum, the non-governmental borrower must submit its proposed Davis Bacon wage
determinations to WIFA for approval prior to including the wage determination in any solicitation,
contract task orders, work assignments, or similar instruments to existing contractors. THIS
PARAGRAPH DOES NOT APPLY TO GOVERNMENTAL ENTITIES.
Section 1. P.L. 111-88 Compliance - Forgivable Principal Portion.
(a) Section 1 of Exhibit A to the Loan Agreement specifies the Total Financial
Assistance Amount, the amount, if any, designated as the Forgivable Principal Portion, the
Intended Repayment Amount, and the required amount of reserves to be established based upon
the Intended Repayment Amount. Section 2 of Exhibit A to the Loan Agreement specifics a
schedule of interest and principal payments based on the Intended Repayment Amount. If the
Local Borrower fails to comply with the requirements of P.L. 111-88, including those set forth in
this Wage Rate and Forgivable Principal Addendum:
(i) WIFA will provide a revised Exhibit A for the Loan Agreement to
amortize the entire Total Financial Assistance Amount with the Forgivable Principal
Portion set to $740,995.00, adjusted, as necessary, to incorporate, previous principal
payments.
612015.2
(ii) The Local Borrower will repay the Total Financial Assistance Amount.
Section 2. P.L. 111-88 Compliance - Wage Rate Requirements.
This language must be included in all Davis Bacon covered construction contracts and
subcontracts. (29 CFR Part 5.5)
(a) The Local Borrower shall insert in full in any contract in excess of $2,000 which is entered
into for the actual construction, alteration and/or repair, including painting and decorating, of a
treatment work under the CWSRF or a construction project under the DWSRF, or building or
work financed in whole or in part from Federal funds or in accordance with guarantees of a
Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to
make a loan, grant or annual contribution (except where a different meaning is expressly
indicated), and which is subject to the labor standards provisions of any of the acts listed in Sec.
5. 1, or the FFY 2010 appropriation, the following clauses:
(1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the
work will be paid unconditionally and not less often than once a week, and without subsequent
deduction or rebate on any account (except such payroll deductions as are permitted by
regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full
amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of
payment computed at rates not less than those contained in the wage determination of the
Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual
relationship which may be alleged to exist between the contractor and such laborers and
mechanics. Contributions made or costs reasonably anticipated for bona fide fringe benefits
under section I (b)(2) of the Davis -Bacon Act on behalf of laborers or mechanics are considered
wages paid to such laborers or mechanics, subject to the provisions of paragraph (a)(1)(iv) of this
section; also, regular contributions made or costs incurred for more than a weekly period (but not
less often than quarterly) under plans, funds, or programs which cover the particular weekly
period, are deemed to be constructively made or incurred during such weekly period. Such
laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage
determination for the classification of work actually performed, without regard to skill, except as
provided in Sec. 5.5(a)(4). Laborers or mechanics performing work in more than one
classification may be compensated at the rate specified for each classification for the time
actually worked therein: Provided, that the employer's payroll records accurately set forth the
time spent in each classification in which work is performed. The wage determination (including
any additional classification and wage rates conformed under paragraph (a)(1)(ii) of this section)
and the Davis -Bacon poster (WH -1321) shall be posted at all times by the contractor and its
subcontractors at the site of the work in a prominent and accessible place where it can be easily
seen by the workers. Local Borrowers may obtain wage determinations from the U. S.
Department of Labor's web site, www.wdol.gov.
(ii)(A) The Local Borrower, on behalf of EPA, shall require that any class of laborers or
mechanics, including helpers, which is not listed in the wage determination and which is to be
employed under the contract shall be classified in conformance with the wage determination. The
WIFA award official shall approve an additional classification and wage rate and fringe benefits
therefore only when the following criteria have been met:
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6120152
(1) The work to be performed by the classification requested is not performed by a classification
in the wage determination; and
(2) The classification is utilized in the area by the construction industry; and
(3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable
relationship to the wage rates contained in the wage determination.
(B) If the contractor and the laborers and mechanics to be employed in the classification (if
known), or their representatives, and the Local Borrower agree on the classification and wage
rate (including the amount designated for fringe benefits where appropriate), a report of the
action taken shall be sent by the Local Borrower to the WIFA award official. The WIFA award
official will transmit the report, to the Administrator of the Wage and Hour Division,
Employment Standards Administration, U.S. Department of Labor, Washington, DC 20210 and
to the EPA Davis Bacon Regional Coordinator concurrently. The Administrator, or an authorized
representative, will approve, modify, or disapprove every additional classification action within
30 days of receipt and so advise the WIFA award official or will notify the WIFA award official
within the 30 -day period that additional time is necessary.
(C) In the event the contractor, the laborers or mechanics to be employed in the classification or
their representatives, and the Local Borrower do not agree on the proposed classification and
wage rate (including the amount designated for fringe benefits, where appropriate), the award
official shall refer the questions, including the views of all interested parties and the
recommendation of the WIFA award official, to the Administrator for determination. The
Administrator, or an authorized representative, will issue a determination within 30 days of
receipt and so advise the contracting officer or will notify the contracting officer within the 30 -
day period that additional time is necessary.
(D) The wage rate (including fringe benefits where appropriate) determined pursuant to
paragraphs (a)(1)(ii) (B) or (C) of this section, shall be paid to all workers performing work in
the classification under this contract from the first day on which work is performed in the
classification.
(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or
mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall
either pay the benefit as stated in the wage determination or shall pay another bona fide fringe
benefit or an hourly cash equivalent thereof.
(iv) If the contractor does not make payments to a trustee or other third person, the contractor
may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably
anticipated in providing bona fide fringe benefits under a plan or program, Provided, That the
Secretary of Labor has found, upon the written request of the contractor, that the applicable
standards of the Davis -Bacon Act have been met. The Secretary of Labor may require the
contractor to set aside in a separate account assets for the meeting of obligations under the plan
or program.
(2) Withholding. The Local Borrower shall upon its own action or upon written request of
WIFA, EPA award official or an authorized representative of the Department of Labor withhold
or cause to be withheld from the contractor under this contract or any other Federal contract with
the same prime contractor, or any other federally -assisted contract subject to Davis -Bacon
prevailing wage requirements, which is held by the same prime contractor, so much of the
accrued payments or advances as may be considered necessary to pay laborers and mechanics,
3
612015.2
including apprentices, trainees, and helpers, employed by the contractor or any subcontractor the
full amount of wages required by the contract. In the event of failure to pay any laborer or
mechanic, including any apprentice, trainee, or helper, employed or working on the site of the
work, all or part of the wages required by the contract, the (Agency) may, after written notice to
the contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the
suspension of any further payment, advance, or guarantee of funds until such violations have
ceased.
(3) Payrolls and basic records. (i) Payrolls and basic records relating thereto shall be
maintained by the contractor during the course of the work and preserved for a period of three
years thereafter for all laborers and mechanics working at the site of the work. Such records shall
contain the name, address, and social security number of each such worker, his or her correct
classification, hourly rates of wages paid (including rates of contributions or costs anticipated for
bona fide fringe benefits or cash equivalents thereof of the types described in section 1(b)(2)(B)
of the Davis -Bacon Act), daily and weekly number of hours worked, deductions made and actual
wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the
wages of any laborer or mechanic include the amount of any costs reasonably anticipated in
providing benefits under a plan or program described in section I (b)(2)(B) of the Davis -Bacon
Act, the contractor shall maintain records which show that the commitment to provide such
benefits is enforceable, that the plan or program is financially responsible, and that the plan or
program has been communicated in writing to the laborers or mechanics affected, and records
which show the costs anticipated or the actual cost incurred in providing such benefits.
Contractors employing apprentices or trainees under approved programs shall maintain written
evidence of the registration of apprenticeship programs and certification of trainee programs, the
registration of the apprentices and trainees, and the ratios and wage rates prescribed in the
applicable programs.
(ii)(A) The contractor shall submit weekly for each week in which any contract work is
performed a copy of all payrolls to the Local Borrower. Such documentation shall be available
on request of WIFA or EPA. As to each payroll copy received, the subrecipient shall provide
written confirmation in a form satisfactory to the State indicating whether or not the project is in
compliance with the requirements of 29 CFR 5.5 (a)(1) based on the most recent payroll copies
for the specified week. The payrolls shall set out accurately and completely all of the
information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social
security numbers and home addresses shall not be included on weekly transmittals. Instead
the payrolls shall only need to include an individually identifying number for each
employee (e.g., the last four digits of the employee's social security number). The required
weekly payroll information may be submitted in any form desired. Optional Form WH -347 is
available for this purpose from the Wage and Hour Division Web site at
htt ://www.dol. ov/whd/forms/wh347. df or its successor site. The prime contractor is
responsible for the submission of copies of payrolls by all subcontractors. Contractors and
subcontractors shall maintain the full social security number and current address of each covered
worker, and shall provide them upon request to the Local Borrower for transmission to WIFA or
EPA, if requested by EPA, WIFA, the contractor, or the Wage and Hour Division of the
Department of Labor for purposes of an investigation or audit of compliance with prevailing
wage requirements. It is not a violation of this section for a prime contractor to require a
4
612015.2
subcontractor to provide addresses and social security numbers to the prime contractor for its
own records, without weekly submission to the Local Borrower.
(B) Each payroll submitted shall be accompanied by a "Statement of Compliance," signed by the
contractor or subcontractor or his or her agent who pays or supervises the payment of the persons
employed under the contract and shall certify the following:
(1) That the payroll for the payroll period contains the information required to be provided under
Sec. 5.5 (a)(3)(ii) of Regulations, 29 CFR part 5, the appropriate information is being maintained
under Sec. 5.5 (a)(3)(i) of Regulations, 29 CFR part 5, and that such information is correct and
complete;
(2) That each laborer or mechanic (including each helper, apprentice, and trainee) employed on
the contract during the payroll period has been paid the full weekly wages earned, without
rebate, either directly or indirectly, and that no deductions have been made either directly or
indirectly from the full wages earned, other than permissible deductions as set forth in
Regulations, 29 CFR part 3;
(3) That each laborer or mechanic has been paid not less than the applicable wage rates and
fringe benefits or cash equivalents for the classification of work performed, as specified in the
applicable wage determination incorporated into the contract.
(C) The weekly submission of a properly executed certification set forth on the reverse side of
Optional Form WH -347 shall satisfy the requirement for submission of the "Statement of
Compliance" required by paragraph (a)(3)(ii)(B) of this section.
(D) The falsification of any of the above certifications may subject the contractor or
subcontractor to civil or criminal prosecution under section 1001 of title 18 and section 231 of
title 31 of the United States Code.
(iii) The contractor or subcontractor shall make the records required under paragraph (a)(3)(i) of
this section available for inspection, copying, or transcription by authorized representatives of
WIFA. EPA or the Department of Labor, and shall permit such representatives to interview
employees during working hours on the job. If the contractor or subcontractor fails to submit the
required records or to make them available, the Federal agency or WIFA may, after written
notice to the contractor, sponsor, applicant, or owner, take such action as may be necessary to
cause the suspension of any further payment, advance, or guarantee of funds. Furthermore,
failure to submit the required records upon request or to make such records available may be
grounds for debarment action pursuant to 29 CFR 5.12.
(4) Apprentices and trainees - (i) Apprentices. Apprentices will be permitted to work at less
than the predetermined rate for the work they performed when they are employed pursuant to
and individually registered in a bona fide apprenticeship program registered with the U.S.
Department of Labor, Employment and Training Administration, Office of Apprenticeship
Training, Employer and Labor Services, or with a State Apprenticeship Agency recognized by
the Office, or if a person is employed in his or her first 90 days of probationary employment as
an apprentice in such an apprenticeship program, who is not individually registered in the
program, but who has been certified by the Office of Apprenticeship Training, Employer and
Labor Services or a State Apprenticeship Agency (where appropriate) to be eligible for
probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on
the job site in any craft classification shall not be greater than the ratio permitted to the
contractor as to the entire work force under the registered program. Any worker listed on a
payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above,
5
612015.2
shall be paid not less than the applicable wage rate on the wage determination for the
classification of work actually performed. In addition, any apprentice performing work on the
job site in excess of the ratio permitted under the registered program shall be paid not less than
the applicable wage rate on the wage determination for the work actually performed. Where a
contractor is performing construction on a project in a locality other than that in which its
program is registered, the ratios and wage rates (expressed in percentages of the journeyman's
hourly rate) specified in the contractor's or subcontractor's registered program shall be observed.
Every apprentice must be paid at not less than the rate specified in the registered program for the
apprentice's level of progress, expressed as a percentage of the journeymen hourly rate specified
in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance
with the provisions of the apprenticeship program. If the apprenticeship program does not
specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the
wage determination for the applicable classification. If the Administrator determines that a
different practice prevails for the applicable apprentice classification, fringes shall be paid in
accordance with that determination. In the event the Office of Apprenticeship Training,
Employer and Labor Services, or a State Apprenticeship Agency recognized by the Office,
withdraws approval of an apprenticeship program, the contractor will no longer be permitted to
utilize apprentices at less than the applicable predetermined rate for the work performed until an
acceptable program is approved.
(ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less
than the predetermined rate for the work performed unless they are employed pursuant to and
individually registered in a program which has received prior approval, evidenced by formal
certification by the U.S. Department of Labor, Employment and Training Administration. The
ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan
approved by the Employment and Training Administration. Every trainee must be paid at not
less than the rate specified in the approved program for the trainee's level of progress, expressed
as a percentage of the journeyman hourly rate specified in the applicable wage determination.
Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If
the trainee program does not mention fringe benefits, trainees shall be paid the full amount of
fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour
Division determines that there is an apprenticeship program associated with the corresponding
journeyman wage rate on the wage determination which provides for less than full fringe benefits
for apprentices. Any employee listed on the payroll at a trainee rate who is not registered and
participating in a training plan approved by the Employment and Training Administration shall
be paid not less than the applicable wage rate on the wage determination for the classification of
work actually performed. In addition, any trainee performing work on the job site in excess of
the ratio permitted under the registered program shall be paid not less than the applicable wage
rate on the wage determination for the work actually performed. In the event the Employment
and Training Administration withdraws approval of a training program, the contractor will no
longer be permitted to utilize trainees at less than the applicable predetermined rate for the work
performed until an acceptable program is approved.
(iii) Equal employment opportunity. The utilization of apprentices, trainees and journeymen
under this part shall be in conformity with the equal employment opportunity requirements of
Executive Order 11246, as amended, and 29 CFR part 30.
rol
612015.2
(5) Compliance with Copeland Act requirements. The contractor shall comply with the
requirements of 29 CFR part 3, which are incorporated by reference in this contract.
(6) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses
contained in 29 CFR 5.5(a)(1) through (10) and such other clauses as the EPA determines may
by appropriate, and also a clause requiring the subcontractors to include these clauses in any
lower tier subcontracts. The prime contractor shall be responsible for the compliance by any
subcontractor or lower tier subcontractor with all the contract clauses in 29 CFR 5.5.
(7) Contract termination: debarment. A breach of the contract clauses in 29 CFR 5.5 may be
grounds for termination of the contract, and for debarment as a contractor and a subcontractor as
provided in 29 CFR 5.12.
(8) Compliance with Davis -Bacon and Related Act requirements. All rulings and
interpretations of the Davis -Bacon and Related Acts contained in 29 CFR parts 1, 3, and 5 are
herein incorporated by reference in this contract.
(9) Disputes concerning labor standards. Disputes arising out of the labor standards provisions
of this contract shall not be subject to the general disputes clause of this contract. Such disputes
shall be resolved in accordance with the procedures of the Department of Labor set forth in 29
CFR parts 5, 6, and7. Disputes within the meaning of this clause include disputes between the
contractor (or any of its subcontractors) and the Local Borrower, WIFA, EPA, the U.S.
Department of Labor, or the employees or their representatives.
(10) Certification of eligibility. (i) By entering into this contract, the contractor certifies that
neither it (nor he or she) nor any person or firm who has an interest in the contractor's firm is a
person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the
Davis -Bacon Act or 29 CFR 5.12(a)(1).
(ii) No part of this contract shall be subcontracted to any person or firm ineligible for award of a
Government contract by virtue of section 3(a) of the Davis -Bacon Act or 29 CFR 5.12(a)(1).
(iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C.
1001.
(b) Contract Work Hours and Safety Standards Act. The Local Borrower shall insert the
following clauses set forth in paragraphs (b)(1), (2), (3), and (4) of this section in full in any
contract in an amount in excess of $100,000 and subject to the overtime provisions of the
Contract Work Hours and Safety Standards Act. These clauses shall be inserted in addition to the
clauses required by Sec. 5.5(a) or 4.6 of part 4 of this title. As used in this paragraph, the terms
laborers and mechanics include watchmen and guards.
(1) Overtime requirements. No contractor or subcontractor contracting for any part of the
contract work which may require or involve the employment of laborers or mechanics shall
require or permit any such laborer or mechanic in any workweek in which he or she is employed
on such work to work in excess of forty hours in such workweek unless such laborer or mechanic
receives compensation at a rate not less than one and one-half times the basic rate of pay for all
hours worked in excess of forty hours in such workweek.
7
612015.2
(2) Violation; liability for unpaid wages; liquidated damages. In the event of any violation of the
clause set forth in paragraph (b)(1) of this section the contractor and any subcontractor
responsible therefore shall be liable for the unpaid wages. In addition, such contractor and
subcontractor shall be liable to the United States (in the case of work done under contract for the
District of Columbia or a territory, to such District or to such territory), for liquidated damages.
Such liquidated damages shall be computed with respect to each individual laborer or mechanic,
including watchmen and guards, employed in violation of the clause set forth in paragraph (b)(1)
of this section, in the sum of $10 for each calendar day on which such individual was required or
permitted to work in excess of the standard workweek of forty hours without payment of the
overtime wages required by the clause set forth in paragraph (b)(1) of this section.
(3) Withholding for unpaid wages and liquidated damages. The Local Borrower, upon its own
action or upon written request of the EPA Award Official or an authorized representative of the
Department of Labor shall withhold or cause to be withheld, from any moneys payable on
account of work performed by the contractor or subcontractor under any such contract or any
other Federal contract with the same prime contractor, or any other federally -assisted contract
subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime
contractor, such sums as may be determined to be necessary to satisfy any liabilities of such
contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause
set forth in paragraph (b)(2) of this section.
(4) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses set
forth in paragraph (b)(1) through (4) of this section and also a clause requiring the subcontractors
to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible
for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in
paragraphs (b)(1) through (4) of this section.
(c) In addition to the clauses contained in paragraph (b), in any contract subject only to the
Contract Work Hours and Safety Standards Act and not to any of the other statutes cited in 29
CFR Sec. 5.1, the Local Borrower shall insert a clause requiring that the contractor or
subcontractor shall maintain payrolls and basic payroll records during the course of the work and
shall preserve them for a period of three years from the completion of the contract for all laborers
and mechanics, including guards and watchmen, working on the contract. Such records shall
contain the name and address of each such employee, social security number, correct
classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions
made, and actual wages paid. Further, the Local Borrower shall insert in any such contract a
clause providing that the records to be maintained under this paragraph shall be made available
by the contractor or subcontractor for inspection, copying, or transcription by authorized
representatives of WIFA, EPA and the Department of Labor, and the contractor or subcontractor
will permit such representatives to interview employees during working hours on the job.
Section 3. General Provisions.
(a) Binding Effect. This Wage Rate and Forgivable Principal Addendum shall inure
to the benefit of and shall be binding upon WIFA and the Local Borrower and their respective
successors and assigns.
(b) Severability. In the event any provision of this Wage Rate and Forgivable
Principal Addendum shall be held illegal, invalid or unenforceable by any court of competent
8
612015.2
jurisdiction, such holding shall not invalidate, render unenforceable or otherwise affect any other
provision hereof.
(c) Amendments, Supplements and Modifications. This Wage Rate and Forgivable
Principal Addendum may not be amended, supplemented or modified without the prior written
consent of WIFA and the Local Borrower.
(d) Execution in Counterparts. This Wage Rate and Forgivable Principal Addendum
may be executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
(e) Applicable Law. This Wage Rate and Forgivable Principal Addendum shall be
governed by and construed in accordance with the laws of the State of Arizona.
(f) Captions. The captions or headings in this Wage Rate and Forgivable Principal
Addendum are for convenience only and shall not in any way define, limit or describe the scope
or intent of any provisions of this Wage Rate and Forgivable Principal Addendum.
(g) Further Assurances. The Local Borrower shall, at the request of WIFA , authorize,
execute, acknowledge and deliver such further resolutions, conveyances, transfers, assurances,
financing statements and other instruments as may be necessary or desirable for better assuring,
conveying, granting, assigning and confirming the rights and agreements granted or intended to
be granted by this Wage Rate and Forgivable Principal Addendum.
(h) Arbitration. The parties hereto agree to use arbitration to the extent required by
Section 12-1518 of the Arizona Revised Statutes.
(i) Notice Regarding A.R.S. § 38 511. To the extent applicable by provision of law,
the parties acknowledge that this Wage Rate and Forgivable Principal Addendum is subject to
cancellation pursuant to A.R.S. § 38-511, the provisions of which are hereby incorporated herein.
[SIGNATURE PAGE FOLLOWS]
612015.2
WIFA and the Local Borrower are signing this Wage Rate and Forgivable Principal Addendum
to be effective as part of the Loan Agreement.
Water Infrastructure Finance Authority of Arizona
Trish Incognito, Executive Director
Town of Marana
Jamsheed Mehta, Town Manager
[Signature page to Wage Rate and Forgivable Principal Addendum to Loan Agreement]
10
612015.2
Gast revised 1117114
LOAN AGREEMENT ADDENDUM
American Iron and Steel Requirements for Compliance with Federal Law
Water Infrastructure Finance Authority of Arizona
This document (this "American Iron and Steel Addendum") sets forth additional
requirements made applicable to state revolving fund Loans made by the Water Infrastructure
Finance Authority of Arizona ("WIFA") by federal law. The provisions in this American Iron
and Steel Addendum are a part of the Loan Agreement. Capitalized terms not otherwise defined
herein shall have the meanings given them in the Loan Agreement.
The parties acknowledge and agree that funds disbursed by WIFA to the Local Borrower
will include funds made available to WIFA by the federal government under federal law, and
that the requirements of federal law include those set forth in this American Iron and Steel
Addendum. The Local Borrower agrees to comply with all of those requirements and agrees that
failure to do so is a breach of the provisions of the Loan Agreement which may result in a default
under the Loan Agreement, termination of WIFA's obligation to make disbursements on the
Loan and the Local Borrower being required to repay all amounts that have been disbursed by
WIFA on the Loan, together with interest and fees as provided in the Loan Agreement.
Federal law requires that WIFA include in all assistance agreements, including the Loan
Agreement, for the construction, alteration, maintenance, or repair of treatment works under the
Clean Water State Revolving Fund and for the construction, alteration, maintenance, or repair of
a public water system under the Drinking Water State Revolving Fund, a provision requiring the
application of American Iron and Steel requirements for the entirety of the construction activities
financed by the assistance agreement through completion of construction, no matter when
construction commences. Whether or not the project has multiple sources of funding, the
American Iron and Steel requirements apply to the entire project and not just to the activities
funded by the money made available to WIFA by the federal government.
Section 1. American Iron and Steel Requirements. In accordance with federal law:
(a)(1) None of the funds made available to WIFA as authorized by title VI of the Federal
Water Pollution Control Act (33 U.S.C. 1381 et seq.) or as authorized by section 1452 of the
Safe Drinking Water Act (42 U.S.C. 300j-12) shall be used for a project for the construction,
alteration, maintenance, or repair of a public water system or treatment works unless all of the
iron and steel products used in the project are produced in the United States.
(2) In this section, the term "iron and steel products" means the following products made
primarily of iron or steel: lined or unlined pipes and fittings, manhole covers and other municipal
castings, hydrants, tanks, flanges, pipe clamps and restraints, valves, structural steel, reinforced
precast concrete, and construction materials.
(b) Subsection (a) shall not apply in any case or category of cases in which the
Administrator of the Environmental Protection Agency (in this section referred to as the
"Administrator") finds that-
680121/5/PHOENIX
(1) applying subsection (a) would be inconsistent with the public interest;
(2) iron and steel products are not produced in the United States in sufficient and
reasonably available quantities and of a satisfactory quality; or
(3) inclusion of iron and steel products produced in the United States will increase the
cost of the overall project by more than 25 percent.
(c) If the Administrator receives a request for a waiver under this section, the
Administrator shall make available to the public on an informal basis a copy of the request and
information available to the Administrator concerning the request, and shall allow for informal
public input on the request for at least 15 days prior to making a finding based on the request.
The Administrator shall make the request and accompanying information available by electronic
means, including on the official public Internet Web site of the Environmental Protection
Agency.
Section 2. General Provisions.
(a) Binding Effect. This American Iron and Steel Addendum shall inure to the benefit
of and shall be binding upon WIFA and the Local Borrower and their respective successors and
assigns.
(b) Severability. In the event any provision of this American Iron and Steel
Addendum shall be held illegal, invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate, render unenforceable or otherwise affect any other provision
hereof.
(c) Amendments, Supplements and Modifications. This American Iron and Steel
Addendum may not be amended, supplemented or modified without the prior written consent of
WIFA and the Local Borrower.
(d) Execution in Counterparts. This American Iron and Steel Addendum may be
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
(e) Applicable Law. This American Iron and Steel Addendum shall be governed by
and construed in accordance with the laws of the State of Arizona and applicable federal law.
(f) Captions. The captions or headings in this American Iron and Steel Addendum
are for convenience only and shall not in any way define, limit or describe the scope or intent of
any provisions of this American Iron and Steel Addendum.
(g) Further Assurances. The Local Borrower shall, at the request of WIFA , authorize,
execute, acknowledge and deliver such further resolutions, conveyances, transfers, assurances,
financing statements and other instruments as may be necessary or desirable for better assuring,
conveying, granting, assigning and confirming the rights and agreements granted or intended to
be granted by this American Iron and Steel Addendum.
2
680121I5IPHOENIX
(h) Prohibition Against Discrimination. In the event that it applies, the parties agree
to comply with the Arizona Governor's Executive Order 2009-9, entitled "Prohibition of
Discrimination in State Contracts Non -Discrimination in Employment by Government
Contractors and Subcontractors," which mandates that all persons, regardless of race, color,
religion, sex, age, or national origin shall have equal access to employment opportunities, and all
other applicable state and Federal employment laws, rules, and regulations, including the
Americans with Disabilities Act. The Local Borrower shall take affirmative action to ensure that
applicants for employment and employees are not discriminated against due to race, creed, color,
religion, sex, national origin or disability.
(i) Arbitration. In the event of a dispute, the parties agree to use arbitration, after
exhausting applicable administrative review, to the extent required by Arizona Revised Statutes
Section 12-1518, and the prevailing party shall be entitled to attorney's fees and costs with
respect thereto.
0) Notice of Arizona Revised Statutes Section 38-511 - Cancellation. Notice is
hereby given of the provisions of Arizona Revised Statutes Section 38-511, as amended. By this
reference, the provisions of said statute are incorporated herein to the extent of their applicability
to this American Iron and Steel Addendum under the law of the State of Arizona.
[SIGNATURE PAGE FOLLOWS]
3
680121/5/PHOENIX
WIFA and the Local Borrower are signing this American Iron and Steel Addendum to be
effective as part of the Loan Agreement.
Water Infrastructure Finance Authority of Arizona
LON
Trish Incognito, Executive Director
Town of Marana
Jamsheed Mehta, Town Manager
[Signature page to American Iron and Steel Addendum to Loan Agreement]
rd
680121 /5/PHOENIX
Exhibit A of Loan Agreement
LoanNumber........................................................................................ 910176-19
ClosingDate.......................................................................................... 08/10/18
FirstPayment Period............................................................................... 01/01/19
Financial Assistance Terms and Conditions
Original Loan Amount as of the Closing Date ........................................... $
1,481,990.00
Forgivable Principal Amount............................................................... $
740,995.00
Intended Repayment Amount................................................................ $
740,995.00
LoanTerm......................................................................................
20
Combined Interest & Fee Rate
4.250%
Total # of Payment Periods within Loan Term ............................................
40
* Combined Interest and Fee Rate (CIFR) allocation: Pee = 1.5% (150 basis points); Interest = C1i;R minus Fee.
Principal Repayments
Period Principal Repayments Begin.........................................................
2
First Principal Repayment Date..............................................................
07/01/19
Final Principal Repayment Date.............................................................
07/01/38
Combined Interest and Fee Payment Dates
First Combined Interest and Fee Payment Date* .......................................... 01/01/19
Final Combined Interest and Fee Payment Date ........................................... 07/01/38
* Actual initial Combined Interest and Fee payment calculated only on dollar amount drawn against loan as of initial payment dale
Debt Service Reserve Fund Requirements
Total Reserve Amount......................................................................... None
AnnualAmount................................................................................ None
Reserve Funded by (Date).................................................................... Not Applicable
Replacement Reserve Fund Requirement
Begin Funding on (Date)...................................................................... Not Applicable
AnnualAmount................................................................................ None
Semi -Annual Deposit......................................................................... None
Annual Payment
Years 1 through 5......................................................................................... $ 55,737.52
Years6 through 10....................................................................................... $ 55,737.52
Years 1 1 through 15...................................................................................... $ 55,737.52
Years 16 through 20...................................................................................... $ 55,737.52
WIFA Loan Agreement Exhibit A -- Page 1
WIFA Loan Agreement Exhibit A -- Page 2
Semi -Annual
Combined
Semi -Annual
Annual
Total
Payment
Interest and
Combined Interest
Principal
Annual
Year Period
Dates
Fee Rate
and Fee Payment
Repayment
Payment
1
1
01/01/19
4.250%
12,334.48
1
2
07/01/19
4.250%
15,746.14
24,245.23
52,325.85
2
3
01/01/20
4.250%
15,230.93
2
4
07/01/20
4.250%
15,230.93
25,275.66
55,737.52
3
5
01/01/21
4.250%
14,693.83
3
6
07/01/21
4.250%
14,693.83
26,349.86
55,737.52
4
7
01/01/22
4.250%
14,133.89
4
8
07/01/22
4.250%
14,133.89
27,469.74
55,737.52
5
9
01/01/23
4.250%
13,550.16
5
10
07/01/23
4.250%
13,550.16
28,637.20
55,737.52
6
11
01/01/24
4.250%
12,941.62
6
12
07/01/24
4.250%
12,941.62
29,854.28
55,737.52
7
13
01/01/25
4.250%
12,307.21
7
14
07/01/25
4.250%
12,307.21
31,123.10
55,737.52
8
15
01/01/26
4.250%
11,645.85
8
16
07/01/26
4.250%
11,645.85
32,445.82
55,737.52
9
17
01/01/27
4.250%
10,956.38
9
18
07/01/27
4.250%
10,956.38
33,824.76
55,737.52
10
19
01/01/28
4.250%
10,237.60
10
20
07/01/28
4.250%
10,237.60
35,262.32
55,737.52
11
21
01/01/29
4.250%
9,488.27
11
22
07/01/29
4.250%
9,488.27
36,760.98
55,737.52
12
23
01/01/30
4.250%
8,707.11
12
24
07/01/30
4.250%
8,707.11
38,323.30
55,737.52
13
25
01/01/31
4.250%
7,892.73
13
26
07/01/31
4.250%
7,892.73
39,952.06
55,737.52
14
27
01/01/32
4.250%
7,043.75
14
28
07/01/32
4.250%
7,043.75
41,650.02
55,737.52
15
29
01/01/33
4.250%
6,158.69
15
30
07/01/33
4.250%
6,158.69
43,420.14
55,737.52
16
31
01/01/34
4.250%
5,236.01
16
32
07/01/34
4.250%
5,236.01
45,265.50
55,737.52
17
33
01/01/35
4.250%
4,274.12
17
34
07/01/35
4.250%
4,274.12
47,189.28
55,737.52
18
35
01/01/36
4.250%
3,271.34
18
36
07/01/36
4.250%
3,271.34
49,194.84
55,737.52
19
37
01/01/37
4.250%
2,22595
19
38
07/01/37
4.250%
2,225.95
51,285.62
55,737.52
20
39
01/01/38
4.250%
1,136.14
20
40
07/01/38
4.250%
1,136.14
53,465.29
55,737.57
370,343.78
740,995.00
1,111,338.78
WIFA Loan Agreement Exhibit A -- Page 2
Exhibit B
Technical Terms and Conditions
Section 1
Budget
Uses by Budget Item
Amount Budgeted
Planning...........................................................................
$0.00
Design & Engineering..........................................................
$92,000.00
Legal/Debt Authorization......................................................
$0.00
Financial Advisor...............................................................
$0.00
Land/System Acquisition......................................................
$0.00
Equipment/Materials............................................................
$0.00
Construction/Installation/Improvement.......................................
$782,000.00
Inspection & Construction Management .....................................
$46,000.00
Project Officer...................................................................
$0.00
Administration...................................................................
$0.00
Staff Training....................................................................
$0.00
Capitalized Interest..............................................................
$0.00
Refinance Loan..............................................................
$0.00
Other..............................................................................
$561,990.00
TotalBudget.....................................................................
$1,481,990.00
Section 2
Project Description
The Town of Marana will design and construct a new lift station and force main to convey flow
from the Adonis collection system to the existing Town of Marana municipal system. The flows
from the neighborhood will be treated at the Marana Water Reclamation Facility, and the treated
sewage will be Class A+ reclaimed water quality. The Town will also use funding from this loan
to assess the condition of the existing collection system and to reimburse the cost of the impact
fees.
Because the total outfall from the Marana Water Reclamation Facility, including the effluent
from Adonis Mobile Home Park, will be treated to Class A+ reclaimed water standards and will
be sent to an Aquifer Recharge Facility, this project categorically qualifies for the green project
reserve within the water efficiency category (GPR CW guidance, 2.2-6 Recycling and water
reuse projects).
ME
Section 3
Estimated Observation and Disbursement Schedule
Observation Schedule B:
Observation 1: Upon borrower notification of construction commencement
Additional Observations: at least one site observation within each 12 month period
Final Observation: 80% construction budget disbursement
Additional Observations — A WIFA representative may perform additional observations based
on information provided in the projects status reports included in each Local Borrower
disbursement requisition form.
Withholding Percentage: 10% (released after deliverables received)
Section 4
Requirements Prior To Construction
Section 4.1 Construction Bids. The Local Borrower shall submit to the Authority for review
and approval prior to execution:
(a) engineering contracts related to the Project,
(b) bid documents related to the Project,
(c) construction contracts related to the Project, and
(d) certification of positive effort for disadvantaged business enterprise participation.
Section 4.2 User Charges. The Local Borrower has established (or, if the System is not yet in
operation, the Local Borrower will, at or before the time the System commences operation,
establish) a system of user charges which, with other funds lawfully available, will at all times be
sufficient to pay the costs of operation and maintenance of the System, including renewals and
replacements of the System. The Local Borrower also agrees that such system of user charges
will be established and maintained in compliance with any applicable requirements of state and
federal law as long as the Local Borrower owes amounts under this Loan Agreement. The Local
Borrower at its sole option may pay the costs of operation, maintenance, repair, replacement,
extensions and additions to the System from any funds lawfully available to it for such purpose.
Section 4.3 Interest in Proieet Site. As a condition of the Loan, the Local Borrower will
demonstrate to the satisfaction of the Authority that the Local Borrower has or will have a fee
simple or such other estate or interest in the site of the Project, including necessary easements
and rights-of-way, as the Authority finds sufficient to assure undisturbed use and possession for
the purpose of construction and operation of the Project for the estimated life of the Project.
Section 4.4 Federal Clean Water Act. The Local Borrower covenants that, to the extent
legally applicable, the Project will meet the requirements of the Federal Clean Water Act in
effect on the date of Loan Closing and any amendments thereto that may retroactively apply to
the Loan, and the Local Borrower agrees that the Project will comply with applicable provisions
of those federal laws and authorities listed in Article 9 of the Standard Terms and Conditions.
Section 4.5 Federal Safe Drinking Water Act. The Local Borrower covenants that, to the
extent legally applicable, the Project will meet the requirements of the Federal Safe Drinking
Water Act in effect on the date of Loan Closing and any amendments thereto that may
retroactively apply to the Loan, and the Local Borrower agrees that the Project will comply with
applicable provisions of those federal laws and authorities listed in Article 9 of the Standard
Terms and Conditions.
Section 4.6 Sims. The Local Borrower shall erect a construction sign displaying information on
the Project and the funding sources. The Authority shall provide specifications for such
construction signs.
Section 5
Requirements During Construction
Section 5.1 Changes in Project Scope. The Local Borrower shall submit to the Authority, for
review and approval prior to execution, any change to the plans and specifications, construction
contracts, Eligible Project Costs, or any other change which will effect the performance
standards or purpose of the Project.
Section 5.2 Completion of Project and Provision of Moneys Therefor. The Local Borrower
covenants and agrees (a) to exercise its best efforts in accordance with prudent utility
construction practice to complete the Project and (b) to the extent permitted by law, to provide
from its own fiscal resources all moneys, in excess of the total amount of loan proceeds it
receives hereunder and under any subsequent loan from the Authority, required to complete the
Project.
Section 5.3 Inspections; Information. The Local Borrower shall permit the Authority and any
party designated by the Authority to examine, visit and inspect, at any and all reasonable times,
the property, if any, constituting the Project, and to inspect and make copies of any accounts,
books and records, including (without limitation) its records regarding receipts, disbursements,
contracts, investments and any other matters relating thereto and to its financial standing, and
shall supply such reports and information as the Authority may reasonably require in connection
therewith.
Section 5.4 Adjustments for Ineligible Costs. The Local Borrower shall promptly reimburse
the Authority for any portion of the Loan which is determined to have been used for costs that
are not eligible for funding under the Authority Act, the Federal Clean Water Act, as amended,
or the Federal Safe Drinking Water Act, as amended, unless such matter is curable in some other
manner by the Local Borrower to the satisfaction of the Authority. Such reimbursement shall be
promptly repaid to the Authority upon written request of the Authority. Any such reimbursed
principal amount will be applied to reduce the outstanding principal amount of the Loan.
Section 5.5 Archaeological Artifacts. In the event that archaeological artifacts or historical
resources are discovered during construction excavation of the Project, the Local Borrower shall
stop or cause to be stopped construction activities and will notify the State Historic Preservation
Office and the Authority of such discovery.
Section 6
Requirements Prior To Final Disbursements
Section 6.1 Plan of Operation. No Requirement.
Section 6.2 Final Approval. Prior to the release of the withholding, the Local Borrower will
submit to the Authority (a) as -built drawings by a professional engineer that document all
changes from the original plans and specifications (b) copies of all testing results performed by
or under the supervision of a professional engineer as required by the specifications, and (c)
Arizona Department of Environmental Quality (ADEQ) approval of construction or an engineer's
Certificate of Completion certifying that all construction was completed in accordance with the
plans and specifications or that any changes made are in conformance with the Arizona Revised
Statutes, ADEQ and Environmental Protection Agency rules, permits and guidelines and are
documented in the as -built drawings. Based on a review of the information submitted, the
Authority reserves the right, prior to the release of the withholding, to request modifications to
the Project, the system, or the materials submitted pursuant to this section.
Exhibit C
Reporting Requirements
Section 1. Annual Loan Review. The Authority's Annual Loan Review Form and annual
financial statements in a format approved by the Authority, including the report of any annual
audit(s) and all audit reports required by governmental auditing standards and any applicable
Arizona rules, shall be provided by the Local Borrower to the Authority within one -hundred and
eighty (180) days after the end of each fiscal year of the Local Borrower. The Local Borrower
shall complete all audits and submit all reports required by the federal Single Audit Act within
the time limits under that federal law, currently within the earlier of 30 days after receipt of the
auditor's reports or nine months after the end of the audit period, unless a longer period is agreed
to in advance by the federal agency that provided the funding or a different period is specified in
a program -specific audit guide.
Section 2. Records and Accounts. The Local Borrower shall keep accurate records and
accounts for the System, including records and accounts for the Project (the "System Records"),
separate and distinct from its other records and accounts (the "General Records"). The Local
Borrower must maintain the System Records in accordance with generally accepted accounting
principles (GAAP), including standards relating to the reporting of infrastructure assets, as issued
by the Governmental Accounting Standards Board (GASB) or by the Financial Accounting
Standards Board (FASB), as applicable to the Local Borrower. If required by law, the Local
Borrower must have the System Records audited annually by an independent accountant, which
audit may be part of the annual audit of the General Records of the Local Borrower. The Local
Borrower must make all System Records and General Records available for inspection by the
Authority at any reasonable time.
Section 3. Notice of Change In Key Personnel. Promptly after becoming aware thereof, the
Local Borrower shall provide notice in writing to the Authority of any change to the information
in Section 1 of the Loan Agreement and any other change in key personnel connected to the
Project and Loan.
Section 4. Notice of Material Adverse Change. The Local Borrower shall promptly notify the
Authority of any material adverse change in the activities, prospects or condition (financial or
otherwise), of the Local Borrower relating to the System, or in the ability of the Local Borrower
to make all Loan Repayments from the Source of Repayment described in this Loan Agreement
and otherwise to observe and perform its duties, covenants, obligations and agreements
hereunder.
Section 5. Disadvantaged Business Enterprise (DBE) Program. The Local Borrower must
report DBE participation to the Authority based on guidance from the Authority.
Section 6. Notice of Default. Promptly after becoming aware thereof, Local Borrower shall
give notice to the Authority of (i) the occurrence of any Event of Default under the Loan
Agreement or (ii) the occurrence of any breach, default, Event of Default, or event which with
the giving of notice or lapse of time, or both, could become a material breach, default, or Event
of Default (a "Future Breach") under any agreement, indenture, mortgage, or other instrument
C-1
(other than the Loan Agreement) to which the Local Borrower is a party or by which it or any of
its property is bound or affected. Local Borrower shall provide written notice to the Authority if
the effect of such breach, default, Event of Default or Future Breach is to accelerate, or to permit
the acceleration of, the maturity of any indebtedness under such agreement, indenture, mortgage,
or other instrument; provided, however, that the failure of the Local Borrower to give such notice
shall not affect the right and power of the Authority to exercise any and all of the remedies
specified herein.
Section 7. Notice of Construction Commencement. The Local Borrower shall promptly
notify the Authority immediately upon commencement of construction activities.
Section 8. Notice of Non -Environmental Liti!ation. Promptly after the commencement or
overt threat thereof, Local Borrower shall provide the Authority with written notice of the
commencement of all actions, suits, or proceedings before any court, arbitrator, or governmental
department, commission, board, bureau, agency, or instrumentality affecting Local Borrower
which, if adversely determined, could have a material adverse effect on the condition (financial
or otherwise), operations, properties, or business of Local Borrower, or on the ability of Local
Borrower to perform its obligations under the Loan Agreement.
Section 9. Notice of Environmental Litigation. Without limiting the provisions of Section 8
above, promptly after receipt thereof, Local Borrower shall provide the Authority with written
notice of the receipt of all pleadings, orders, complaints, indictments, or other communication
alleging a condition that may require Local Borrower to undertake or to contribute to a cleanup
or other response under laws relating to environmental protection, or which seek penalties,
damages, injunctive relief, or criminal sanctions related to alleged violations of such laws, or
which claim personal injury to any person or property damage as a result of environmental
factors or conditions or which, if adversely determined, could have a material adverse effect on
the condition (financial or otherwise), operations, properties, or business of Local Borrower, or
on the ability of Local Borrower to perform its obligations under the Loan Agreement.
Section 10. Reiulatory and Other Notices. Promptly after receipt or submission thereof,
Local Borrower shall provide the Authority with copies of any notices or other communications
received from or directed to any governmental authority with respect to any matter or proceeding
which could have a material adverse effect on the condition (financial or otherwise), operations,
properties, or business of Local Borrower, or the ability of Local Borrower to perform its
obligations under the Loan Agreement, or which reveals a substantial non compliance with any
applicable law, regulation or rule.
Section 11. Other Information. The Local Borrower shall submit to the Authority other
information regarding the condition (financial or otherwise), or operation of the Local Borrower
as the Authority may, from time to time, reasonably request.
Section 12. Additional Reporting Requirements. The Local Borrower shall refer to the Loan
Agreement Addendum for wage rate reporting requirements.
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Exhibit D Source of Repayment: Excise Taxes
Section 1 Certain Definitions
As used in this Loan Agreement, the following terms shall have the meanings set forth below
unless the context clearly requires otherwise:
"Additional Revenue Obligations" means any additional obligations which may hereafter be issued
or incurred by the Local Borrower (or any financing conduit acting on behalf of the Local
Borrower) having a lien upon and payable from Excise Tax Revenues and State Shared Revenues
on a parity with, and in compliance with the terms of, the First Purchase Agreement, the Second
Purchase Agreement, the Third Purchase Agreement and this Loan Agreement.
"Annual Debt Service" means the amount to be paid in any Fiscal Year with respect to the Parity
Obligations for payment of principal and interest requirements.
"Excise Tax Revenues" means revenues from the Local Borrower sales taxes, license and permit
fees and fines and forfeitures which the Local Borrower now collects; provided that the Mayor and
Common Council of the Local Borrower may impose other transaction privilege taxes in the future,
the uses of revenue from which will be restricted, at the discretion of such Council.
"First Purchase Agreement" means the First Purchase Agreement, dated as of June 1, 2013, by and
between Wells Fargo Bank, N.A., as seller, and the Local Borrower, as purchaser.
"Fiscal Year" means the fiscal year of the Local Borrower, currently the period July 1 through
June 30.
"Maximum Annual Debt Service" means, for any Fiscal Year, the greatest Annual Debt Service
for the then -current or any succeeding Fiscal Year.
"Parity Obligations" means the First Purchase Agreement, the Second Purchase Agreement, the
Third Purchase Agreement, this Loan Agreement and any Additional Revenue Obligations.
"Second Purchase Agreement" means the Second Purchase Agreement, dated as of June 1, 2014,
by and between Zions First National Bank, as seller, and the Local Borrower, as purchaser.
"State" means the State of Arizona.
"State Shared Revenues" means revenues from amounts allocated or apportioned to the Local
Borrower by the State, any political subdivision thereof or any other government unit or agency,
except the share of the Local Borrower of any taxes which by State law, rule or regulation must be
expended for other purposes.
"Third Purchase Agreement" means the Third Purchase Agreement, dated as of April 1, 2017, by
and between U.S. Bank National Association, as seller, and the Local Borrower, as purchaser.
Section 2 Source of Repayment and Rate Covenant Provisions
(a) It is understood and agreed that all payments with respect to the Loan shall be made only from
the Source of Repayment, which is hereby pledged to the payment of all amounts due under the
Loan. The Source of Repayment is Excise Tax Revenues and State Shared Revenues. The Excise
Tax Revenues and State Shared Revenues are hereby pledged by the Local Borrower to the
payment of all amounts due under the Loan and such amounts shall be secured by a paramount
and first lien on and pledge of the Excise Tax Revenues and State Shared Revenues on parity with
the pledge and lien granted by the Local Borrower for the payment and security of the First
Purchase Agreement, the Second Purchase Agreement, the Third Purchase Agreement and any
Additional Revenue Obligations. The amounts due under this Loan Agreement, the First Purchase
Agreement, the Second Purchase Agreement, the Third Purchase Agreement and any Additional
Revenue Obligations shall be equally and ratably secured by said pledge and lien without priority
one over the other.
(b) The Local Borrower shall remit to the Authority from Excise Tax Revenues and State Shared
Revenues all amounts due under this Loan Agreement in the amounts and at the times and for the
purposes as required herein. The obligation of the Local Borrower to make payments of any
amounts due under this Loan Agreement, including amounts due after default or termination
hereof, is limited to payment from Excise Tax Revenues and State Shared Revenues and shall
under no circumstances constitute a general obligation or a pledge of the full faith and credit of
the Local Borrower, the State or any of its political subdivisions, or require the levy of, or be
payable from the proceeds of, any ad valorem property taxes.
(c) The Local Borrower may, at the sole option of the Local Borrower, make payments due
pursuant to Section 3.3 hereof from its other funds as permitted by law and as the Local Borrower
shall determine from time to time, but the Authority acknowledges that it has no claim hereunder
to such other funds. No part of the purchase price payable pursuant to this Loan Agreement shall
be payable out of any ad valorem property taxes imposed by the Local Borrower or from bonds or
other obligations, the payment of which the Local Borrower's general taxing authority is pledged,
unless (i) the same shall have been duly budgeted by the Local Borrower according to law, (ii) such
payment or payments shall be within the budget limitations of the statutes of the State and (iii) any
such bonded indebtedness or other obligation is within the debt limitations of the Constitution of
the State.
(d) Excise Tax Revenues and State Shared Revenues in excess of amounts, if any, required to be
deposited with or held by the Authority for payments due under this Loan Agreement shall
constitute surplus revenues and may be used by the Local Borrower for any lawful purpose for the
benefit of the Local Borrower, including the payment of obligations to which Excise Tax Revenues
and State Shared Revenues may from time to time be pledged on a basis subordinate hereto. If at
any time the moneys in the funds held for payment of amounts due under this Loan Agreement are
not sufficient to make the deposits and transfers required, any such deficiency shall be made up
from the first moneys thereafter received and available for such transfers under the terms of this
Loan Agreement and, with respect to payment from Excise Tax Revenues and State Shared
Revenues, pro rata, as applicable, with amounts due with respect to the First Purchase Agreement,
the Second Purchase Agreement, the Third Purchase Agreement and any Additional Revenue
Obligations, and the transfer of any such sum or sums to said fund as may be necessary to make
D-2
up any such deficiency shall be in addition to the then -current transfers required to be made
pursuant hereto.
(e) To the extent permitted by applicable law, Excise Tax Revenues shall be retained and
maintained so that the amounts received from Excise Tax Revenues plus State Shared Revenues,
when combined mathematically for such purpose only, all within and for the most recently
completed Fiscal Year, shall have been equal to at least two (2) times the Annual Debt Service for
the current Fiscal Year. If Excise Tax Revenues plus State Shared Revenues for any such Fiscal
Year shall not have been equal to at least one and one-quarter (1.25) times the Annual Debt Service
for the current Fiscal Year or if at any time it appears that Excise Tax Revenues plus State Shared
Revenues will not be sufficient to meet such requirements, the Local Borrower shall, to the extent
permitted by applicable law, impose new exactions of the type of the excise taxes which will be
part of the excise taxes or increase the rates for the excise taxes currently imposed fully sufficient
at all times, after making allowance for contingencies and errors, in each Fiscal Year in order that
(i) Excise Tax Revenues plus State Shared Revenues will be sufficient to meet all current
requirements hereunder and (ii) Excise Tax Revenues plus State Shared Revenues will be
reasonably calculated to attain the level as required by the first sentence of this paragraph.
(f) The Excise Tax Revenue Fund established in connection with the Third Purchase Agreement
is expanded to provide for the purposes of this Loan Agreement and, after paying therefrom
amounts for the purposes described herein, such Fund may be reduced to zero, including by
transferring any such balance to the General Fund of the Local Borrower.
Section 3 Additional Parity Obligations
The Local Borrower covenants and agrees that no other obligations of any kind will be issued that
are payable from or enjoy a pledge of the Excise Tax Revenues having priority over the Loan.
Additional Revenue Obligations may be incurred but only if Excise Tax Revenues plus State
Shared Revenues, when combined mathematically for such purpose only, in the most recently
completed Fiscal Year, shall have amounted to at least two (2) times the Maximum Annual Debt
Service.
Section 4 Default; Remedies Upon Default
The following shall supersede all contrary provisions herein to the extent of the subject matter
hereof.
(a) (i) Upon (A) the nonpayment of the whole or any part of any of the amounts described in
Section 3.3 hereof at the time when the same are to be paid as provided herein, (B) the
violation by the Local Borrower of any other covenant or provision of this Loan Agreement,
(C) the occurrence of an event of default with respect to the First Purchase Agreement, the
Second Purchase Agreement, the Third Purchase Agreement or any Additional Revenue
Obligations or (D) the insolvency or bankruptcy of the Local Borrower as the same may be
defined under any law of the United States of America or the State, or any voluntary or
involuntary action of the Local Borrower or others to take advantage of, or to impose, as the
case may be, any law for the relief of debtors or creditors, including a petition for
reorganization, and
(ii) if such default has not been cured (A) in the case of nonpayment of any of the amounts
described in Section 3.3 hereof as required hereunder on the due date or the nonpayment of
principal or interest due with respect to the First Purchase Agreement, the Second Purchase
Agreement, the Third Purchase Agreement or any Additional Revenue Obligations on their
due dates; (B) in the case of the breach of any other covenant or provision of this Loan
Agreement not cured within sixty (60) days after notice in writing from the Authority
specifying such default and (C) in the case of any other default under any of the First
Purchase Agreement, the Second Purchase Agreement, the Third Purchase Agreement or any
Additional Revenue Obligations after any notice and passage of time provided for under the
proceedings under which such obligations were issued then,
(iii) the Authority may take whatever action at law or in equity, including the remedy
of specific performance, may appear necessary or desirable to collect any amounts payable
by the Local Borrower under this Loan Agreement then due (but not such amounts accruing),
or to enforce performance and observance of any pledge, obligation, agreement or covenant
of the Local Borrower under this Loan Agreement, and with respect to Excise Tax Revenues
and State -Shared Revenues, without notice and without giving any bond or surety to the
Local Borrower or anyone claiming under the Local Borrower, have a receiver appointed of
Excise Tax Revenues and State Shared Revenues which are pledged to the payment of
amounts due hereunder, with such powers as the court making such appointment shall confer
(and the Local Borrower does hereby irrevocably consent to such appointment); provided,
however, that under no circumstances may such amounts due hereunder be accelerated.
Each right, power and remedy of the Authority provided for in this Loan Agreement shall be
cumulative and concurrent and shall be in addition to every other right, power or remedy provided
for herein, or, unless prohibited by the terms hereof, now or hereafter existing at law or in equity
or by statute or otherwise, in any jurisdiction where such rights, powers and remedies are sought
to be enforced, and the exercise or beginning of the exercise by the Authority of any one or more
of the rights, powers or remedies provided for herein or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the simultaneous or later exercise by either
party of any or all of such other rights, powers or remedies. The failure to insist upon strict
performance of any of the covenants or agreements herein set forth shall not be considered or taken
as a waiver or relinquishment for the future of the rights of the Authority to insist upon a strict
compliance by the Authority with all the covenants and conditions hereof. The Local Borrower
shall, upon not less than 10 days' prior request by the Authority, execute, acknowledge and deliver
to the Authority a statement in writing certifying that this Loan Agreement is unmodified and in
full force and effect (or, if this Loan Agreement has been modified, that it is in full force and effect
except as modified, and stating the modification), and the dates to which the amounts payable
hereunder have been paid in advance, if any.
(b) The Authority shall in no event be in default in the performance of any of its obligations
hereunder unless and until the Authority shall have failed to perform such obligation within 30
days or such additional time as is reasonably required to correct any such default after notice by
the Local Borrower properly specifying wherein the Authority has failed to perform any such
obligation.
M
Exhibit E Debt Service Reserve Requirement
No Debt Service Reserve Required
The Local Borrower shall not be required to either (i) provide a Reserve Fund Surety or (ii) fund
a Reserve Fund in cash in connection with this Agreement.
IW
Exhibit F Replacement Reserve Requirements
No Replacement Reserve Required
The Local Borrower shall not be required to maintain a Replacement Reserve in connection with
the Loan.
F-1
Exhibit G Form of Opinion of Local Borrower Counsel
Enter Date of Opinion
Water Infrastructure Finance Authority of Arizona
Phoenix, Arizona
Ladies and Gentlemen:
I am an attorney admitted to practice in the State of Arizona and I have acted as counsel to the
Town of Marana (the "Local Borrower"), which has entered into a Loan Agreement (as
hereinafter defined) with the Water Infrastructure Finance Authority of Arizona (the
"Authority"), and have acted as such in connection with the authorization, execution and delivery
by the Local Borrower of the Loan Agreement (as hereinafter defined). Terms used and not
otherwise defined herein have the meanings given to them in the Loan Agreement.
In so acting I have examined the Constitution and laws of the State of Arizona. I have also
examined originals, or copies certified or otherwise identified to my satisfaction, of the
following:
(a) the Loan Agreement, dated as of TBD, 2018 (the "Loan Agreement") by and between the
Authority and the Local Borrower; and
(b) proceedings of the governing board of the Local Borrower relating to the approval of the
Loan Agreement and the Local Borrower Bond and the execution, issuance and delivery
thereof on behalf of the Local Borrower, and the authorization of the undertaking and
completion of the Project, including the proceedings relating to the election held on Enter
Election Date on the question of authorizing the Local Borrower to enter into loan
agreements with the Authority and/or issue the Local Borrower Bond, of which there is
authorized but unissued capacity at least equal to the principal amount of the Loan.
I have also examined and relied upon originals, or copies certified or otherwise authenticated to
my satisfaction, of such other records, documents, certificates and other instruments, and made
such investigation of law as in my judgment I have deemed necessary or appropriate to enable
me to render the opinions expressed below.
Based upon the foregoing, I am of the opinion that:
1. The Local Borrower is a political subdivison of the State of Arizona with the legal right to
carry on the business of the System as currently being conducted and as proposed to be
conducted.
2. The Local Borrower has full legal right and authority to pledge the Source of Repayment for
the Loan Repayments and to execute and deliver the Loan Agreement, and to observe and
perform its duties, covenants, obligations and agreements thereunder and to undertake and
complete the Project; subject, however, to the effect of restrictions and limitations imposed by or
M
resulting from, bankruptcy, insolvency, moratorium, reorganization, debt adjustment or other
similar laws affecting creditors rights generally ("Creditor's Rights Limitations") heretofore or
hereafter enacted.
3. The Local Borrower has duly and validly pledged the Source of Repayment for the punctual
payment of the principal of and interest on the Loan and all other amounts due under the Loan
Agreement and the Local Borrower Bond according to their respective terms.
4. All additional debt tests and reserve and other requirements applicable to the Local Borrower
with respect to the pledge of the Source of Repayment have been satisfied.
5. The authorizing proceedings of the Local Borrower's governing body approving the Loan
Agreement and authorizing its execution, issuance and delivery on behalf of the Local Borrower,
and authorizing the Local Borrower to undertake and complete the Project (hereinafter
collectively called the "Authorizing Resolutions") have been duly and lawfully adopted and
authorized in accordance with applicable Arizona law, at a meeting or meetings which were duly
called pursuant to necessary public notice and held in accordance with applicable Arizona law,
and at which quorums were present and acting throughout.
6. The Loan Agreement has been duly authorized, executed and delivered by the authorized
officers of the Local Borrower; and, assuming that the Authority has all the requisite power and
authority to authorize, execute and deliver, and has duly authorized, executed and delivered the
Loan Agreement, the Loan Agreement constitutes the legal, valid and binding obligation of the
Local Borrower enforceable in accordance with its terms; subject, however, to the effect of and
to restrictions and limitations imposed by or resulting from Creditor's Rights Limitations or
other laws, judicial decisions and principles of equity relating to the enforcement of contractual
obligations generally.
7. To the best of my knowledge, after such investigation as I have deemed appropriate, the
authorization, execution and delivery of the Loan Agreement by the Local Borrower, the
observance and performance by the Local Borrower of its duties, covenants, obligations and
agreements thereunder and the consummation of the transactions contemplated therein and the
undertaking and completion of the Project do not and will not contravene any existing law or any
existing order, injunction, judgment, decree, rule or regulation of any court or governmental or
administrative agency, authority or person having jurisdiction over the Local Borrower or its
property or assets or result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any existing bond resolution, trust agreement, indenture, mortgage,
deed of trust or other agreement to which the Local Borrower is a party or by which it, the
System or its property or assets is bound.
8. To the best of my knowledge, after such investigation as I have deemed appropriate, all
approvals, consents or authorizations of, or registrations of or flings with, any governmental or
public agency, authority or person required to date on the part of the Local Borrower in
connection with the authorization, execution, delivery and performance of the Loan Agreement,
and the undertaking and completion of the Project have been obtained or made.
G-2
9. To the best of my knowledge, after such investigation as I have deemed appropriate, there is
no litigation or other proceeding pending or threatened in any Court or other tribunal of
competent jurisdiction (either State or Federal) questioning the creation, organization or
existence of the Local Borrower or the validity, legality or enforceability of the Loan Agreement,
or the undertaking or completion of the Project.
This opinion is rendered on the basis of Federal law and the laws of the State of Arizona as
enacted and construed on the date hereof. I express no opinion as to any matter not set forth in
the numbered paragraphs herein.
Very truly yours,
G-3
Exhibit H Form of Tax Compliance Certificate of Local Borrower
Water Infrastructure Finance Authority of Arizona
$1,481,990.00 Loan to Town ofMarana
The Water Infrastructure Finance Authority of Arizona (the "Authority") and Town
of Marana (the "Local Borrower") are entering into a Loan Agreement (the "Loan Agreement") in
the maximum principal amount stated above pursuant to which the Authority will make a loan (the
"Loan") to the Local Borrower. In connection with its state revolving fund programs, the Authority
issues its bonds ("Authority Bonds") from time to time to finance loans and the Authority also
pledges certain loans to secure and to serve as the source of payment for the Authority Bonds. As a
result, and under the provisions of federal tax law applicable to the Authority Bonds, it is in the
Authority's interest for the Loan to qualify and be a Tax -Exempt Obligation that is not an AMT
Obligation. Therefore, in order to establish certain facts necessary for the Loan to qualify and be
treated as a Tax -Exempt Obligation that is not an AMT Obligation, and as required by the
provisions of the Loan Agreement, the Local Borrower by its officer signing this Certificate,
certifies, represents, and covenants as follows with respect to the Loan. All statements in this
Certificate are of facts or, as to events to occur in the future, reasonable expectations.
DEFINITIONS
1.10. Attachment A. The definitions and cross-references set forth in Attachment A
apply to this Certificate and its Attachments. All terms relating to a particular issue, such as Sale
Proceeds, relate to the Loan, unless indicated otherwise. (For example, "Sale Proceeds" refers to
Sale Proceeds of the Loan, unless indicated otherwise.)
1.20. Special Definitions. Terms used herein, to the extent not defined in Attachment A
or below, have the same meaning as defined in the Loan Agreement. In addition, the following
definitions apply to this Certificate and its Attachments:
"Instructions" means the Rebate Instructions attached hereto as Attachment A-1.
"Issue" means the Loan.
"Issuer" means the Local Borrower.
"Project" means the financing of a portion of the costs of acquisition, construction
and improvement of facilities to be financed by the Loan and includes Issuance Costs and interest
on the Loan for up to three years from the Issuance Date or, if later, one year after the date the
Project is placed in service, all of which are governmental purposes for purposes of the Code.
"Reserve Fund" is defined in 3.40(a).
1.30. References. Reference to a Section means a section of the Code. Reference by
number only (for example, "2.10") means that numbered paragraph of this Certificate.
Reference to an Attachment means an attachment to this Certificate.
11. ISSUE DATA
2.10. Issuer. The Issuer is a Governmental Unit.
2.20. Purpose of Issue. The Issue is being issued to provide funds to pay costs of the
Project.
2.30. Dates. The Sale Date of the Issue is the date on which the Loan Agreement is
executed and delivered by the Authority and the Local Borrower, and the Issuance Date of the
Issue is the first date on which the aggregate draws under the Loan exceed the lesser of $50,000
or 5% of the principal amount of the Loan.
2.40. Issue Price. The Issue Price of the Issue is the principal amount actually
advanced by the Authority to the Issuer as the Loan.
2.50. Sale Proceeds Net Proceeds and Net Sale Proceeds. The amount of Sale
Proceeds equals the Issue Price. The amount of Net Proceeds equals the Issue Price minus the
amount of Proceeds (if any) deposited in the Reserve Fund (if any). The amount of Net Sale
Proceeds equals the amount of Net Proceeds minus the Minor Portion.
2.60. Disposition of Sale Proceeds. There will be no Pre -Issuance Accrued Interest
with respect to the Issue. The Sale Proceeds will be used to pay costs of the Project and, if
applicable, to fund the Reserve Fund (if any).
2.70. Higher Yielding Investments. Gross Proceeds will not be invested in Higher
Yielding Investments except for (A) the Minor Portion to the extent provided in 3.80, (B) those
Gross Proceeds identified in 3.10, 3.20, and 3.30, but only during the applicable Temporary
Periods there described for those Gross Proceeds, and (C) Gross Proceeds held in the Reserve
Fund (if any) to the extent set forth in 3.40(a).
2.80. Single Issue. No other obligations have been or will be sold less than 15 days
before or after the Sale Date pursuant to the same plan of financing with the Issue that are
expected to be paid from substantially the same source of funds as the Issue, determined without
regard to guarantees from a person who is not a Related Party to,the Issuer. Accordingly, no
obligations other than those of the Issue are a part of a single issue with the Issue.
III. ARBITRAGE (NONREBATE) MATTERS
3.10. Use of Net Sale Proceeds and Pre -Issuance Accrued Interest; Temporary Periods.
(A) Pre -Issuance Accrued Interest. There will be no Pre -Issuance
Accrued Interest with respect to the Issue.
(B) Payment of Costs of the Project.
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(1) All of the Net Sale Proceeds will be used to pay costs of the
Project. Such Sale Proceeds may be used to acquire or hold Higher Yielding
Investments for a period ending on the third anniversary of the Issuance Date
(such period being the Temporary Period for such amount) because the following
three tests are reasonably expected to be satisfied:
(i) At least 85% of the Net Sale Proceeds will be allocated to
expenditures on the Project by the end of the Temporary Period;
(ii) Within 6 months of the Issuance Date, the Issuer will incur
substantial binding obligations to third parties to expend at least 5% of the
Net Sale Proceeds on the Project; and
(iii) Completion of the Project and allocation of the Net Sale
Proceeds to expenditures will proceed with due diligence.
Any Sale Proceeds that remain unspent on the third anniversary of the Issuance
Date, which is the expiration date of the Temporary Period for such Proceeds, shall
not be invested in Higher Yielding Investments with respect to the Issue after that
date except as part of the Minor Portion. In complying with the foregoing sentence,
the Issuer may take into account "yield reduction payments" (within the meaning of
Regulations §1.148-5(c)) paid to the United States.
(2) Any Reimbursement Allocation will qualify as a Reimbursement
of Prior Capital Expenditures and will be made by an entry in the financial
records of the Issuer kept with respect to the Issue showing that Sale Proceeds of
the Issue have been returned to the fund or account of the Issuer from which such
amount was originally and temporarily advanced to finance Capital Expenditures
paid before this date by not more than (A) 18 months after the later of the date
such Capital Expenditures were paid or the date on which the property resulting
from such Capital Expenditures and comprising part of the Project was placed in
service or (B) three years after the original expenditures were paid.
3.20. Investment Proceeds. Any Investment Proceeds will be used to pay costs of the
Project and may be invested in Higher Yielding Investments during the Temporary Period
identified in 3.10(B)(1) or, if longer, one year from the date of receipt, such period being the
Temporary Period for such Proceeds.
3.30. Payment Fund. Amounts deposited from time to time in the fund of the Issuer
from which payments will be made on the Issue, which is a Bona Fide Debt Service Fund, will
be used to pay Debt Service on the Issue within 13 months after the amounts are so deposited,
such period being the Temporary Period for such amounts.
3.40. Reserve Funds.
(A) Debt Service Reserve Fund. If (and only if) the Loan Agreement
requires the funding of a debt service reserve fund ("Reserve Fund") in cash: The
amount of Proceeds of the Loan deposited in the Reserve Fund shall not exceed
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10% of the stated principal amount of the Loan. Amounts in the portion of the
Reserve Fund allocable to the Issue may be invested in Higher Yielding
Investments with respect to the Issue to the extent that such amounts do not
exceed the least of (i) 10% of the principal amount of the Issue; (ii) maximum
annual Debt Service; and (iii) 125% of average annual Debt Service. Any
amounts in the portion of the Reserve Fund allocable to the Issue in excess of the
least of these amounts will not be invested in Higher Yielding Investments with
respect to the Issue. In complying with the yield restriction set forth in this
Section, the Issuer may take into account "yield reduction payments" (within the
meaning of Regulations § 1.148-5(c)) timely paid or to be timely paid to the
United States because amounts in the Reserve Fund (other than investment
earnings) are not reasonably expected to be used to pay Debt Service other than in
connection with reductions in the amount required to be in the Reserve Account.
The establishing and funding of the Reserve Fund was reasonably required by the
Authority as a condition of making the Loan.
(B) Replacement Reserve Fund. If (and only if) the Loan Agreement
requires the funding of a replacement reserve fund ("Replacement Reserve Fund")
in cash: The Replacement Reserve Fund may be used for one or more of the
following purposes: (i) the acquisition of new, or the replacement of obsolete or
worn out, machinery, equipment, furniture, fixtures or other personal property for
the Issuer's utility system, provided that the property is depreciable; (ii) the
performance of repairs with respect to the Issuer's utility system that are of an
extraordinary and non-recurring nature, provided that the property is depreciable;
(iii) the acquisition or construction of additions to or improvements, extensions or
enlargements to, or remodeling of, the Issuer's utility system, provided that the
property is depreciable; and/or (iv) to make Debt Service payments to the
Authority on the Issue (collectively, the "Permitted Uses"). The Issuer reasonably
expects to use amounts in the Replacement Reserve Fund for Permitted Uses
other than to make Debt Service payments to the Authority on the Issue, and
therefore there is no reasonable assurance of the availability of those amounts to
make Debt Service payments to the Authority on the Issue if the Issuer encounters
financial difficulties
3.50. No Other Replacement Fund or Assured Available Funds. Except as described in
3.30 and, if and to the extent applicable, 3.40(A), , the Issuer has not established and does not
expect to establish or use any sinking fund, debt service fund, redemption fund, reserve or
replacement fund, or similar fund, or any other fund to pay Debt Service on the Issue. Except for
money referred to in 3.30 and Proceeds of a Refunding Issue, if any, no other money or
Investment Property is or will be pledged as collateral or used for the payment of Debt Service
on the Issue (or for the reimbursement of any others who may provide money to pay that Debt
Service), or is or will be restricted, dedicated, encumbered, or set aside in any way as to afford
the holders of the Issue reasonable assurance of the availability of such money or Investment
Property to pay Debt Service on the Issue.
3.60. No Overissuance. The Proceeds of the Issue are not reasonably expected to
exceed the amount needed for the governmental purposes of the Issue as set forth in 2.20.
.19
3.70. Other Uses of Proceeds Negated. Except as stated otherwise in this Certificate,
none of the Proceeds of the Issue will be used:
(A) to pay principal of or interest on, refund, renew, roll over, retire, or
replace any other obligations issued by or on behalf of the Issuer or any other
Governmental Unit,
(B) to replace any Proceeds of another issue that were not expended on
the project for which such other issue was issued,
(C) to replace any money that was or will be used directly or indirectly
to acquire Higher Yielding Investments,
(D) to make a loan to any person or other Governmental Unit,
(E) to pay any Working Capital Expenditure other than expenditures
identified in Regulations § 1.148-6(d)(3)(ii)(A) and (B) (i.e., Issuance Costs of the
Issue, Qualified Administrative Costs, reasonable charges for a Qualified
Guarantee or for a Qualified Hedge, interest on the Issue for a period commencing
on the Issuance Date of the Issue and ending on the date that is the later of three
years from such Issuance Date or one year after the date on which the project
financed or refinanced by the Issue was or will be placed in service, payments of
the Rebate Amount, and costs, other than those already described, that do not
exceed 5% of the Sale Proceeds and that are directly related to Capital
Expenditures financed or deemed financed by the Issue, principal or interest on an
issue paid from unexpected excess Sale Proceeds or Investment Proceeds, and
principal or interest on an issue paid from investment earnings on a reserve or
replacement fund that are deposited in a Bona Fide Debt Service Fund), or
(F) to reimburse any expenditures made prior to the Issuance Date
except those that qualify as a Reimbursement of Prior Capital Expenditures.
No portion of the Issue is being issued solely for the purpose of investing Proceeds in Higher
Yielding Investments.
3.80. Minor Portion. The Minor Portion is equal to the lesser of 5% of the Sale
Proceeds of the Issue and $100,000. Such Minor Portion may be invested in Higher Yielding
Investments with respect to the Issue.
3.90. No Other Replacement Proceeds. That portion of the Issue that is to be used to
finance Capital Expenditures has a weighted average maturity that does not exceed 120% of the
weighted average reasonably expected economic life of the property resulting from such Capital
Expenditures.
IV. REBATE MATTERS
4.10. Issuer Obligation Regarding Rebate. Consistently with its covenants contained in
the Loan Agreement, the Issuer will calculate and make, or cause to be calculated and made,
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payments of the Rebate Amount in the amounts and at the times and in the manner provided in
Section 148(f) with respect to Gross Proceeds to the extent not exempted under Section 148(f)(4)
and the Instructions.
4.20. No Avoidance of Rebate Amount. No amounts that are required to be paid to the
United States will be used to make any payment to a party other than the United States through a
transaction or a series of transactions that reduces the amount earned on any Investment Property
or that results in a smaller profit or a larger loss on any Investment Property than would have
resulted in an arm's length transaction in which the Yield on the Issue was not relevant to either
party to the transaction.
4.30. Exceptions.
(A) Small Issuer Exception. The Issue is exempt under Section
148(f)(4)(D) from the rebate requirement if all of the following requirements are
satisfied:
(1) The Issuer is a Governmental Unit with general taxing powers
within the meaning of Section 148(f)(4)(D), and
(2) No part of the Issue is a Private Activity Bond, and
(3) All of the Net Proceeds will be used for "local governmental
activities" of the Issuer within the meaning of Section 148(f)(4)(D) and none of
the Net Proceeds will be used for any Private Business Use, and
(4) The aggregate principal amount of all Tax -Exempt Obligations,
including the Issue, issued or to be issued by the Issuer, its subordinate entities
and entities that issue any such obligations on behalf of the Issuer, or on behalf of
which the Issuer issues any such obligations, during the current calendar year
does not, and is not reasonably expected to, exceed $5,000,000. The Tax -Exempt
Obligations taken into account for this purpose exclude any Private Activity
Bonds and any Current Refunding Portion and Current Refunding Issue to the
extent that the amount of such Current Refunding Portion or Current Refunding
Issue does not exceed the outstanding amount of the obligations refunded by such
Current Refunding Portion or Current Refunding Issue. No entity has been or will
be formed or availed of to avoid the purposes of Section 148(f)(4)(D)(i)(IV).
If, but only if, all of the above requirements are satisfied, check here: []
and sign here:
(B) General Exception. Notwithstanding the foregoing, the
computations and payments of amounts to the United States referred to in IV need
not be made to the extent that the Issuer will not thereby fail to comply with any
requirements of Section 148(f) and the Instructions based on an opinion of bond
counsel.
IN
4.40. Election. The Issue is a Construction Issue. The Issuer hereby elects to apply
the 2 -year spending exception to the rebate requirements on the basis of actual facts instead of
the Issuer's reasonable expectations.
V. OTHER TAX MATTERS
5.10. Not Private Activity Bonds or Pool Bonds. No obligation of the Issue will be a
Private Activity Bond or a pooled financing bond (within the meaning of Section 149(f)), based
on the following:
(A) Not more than 5% of the Proceeds, if any, directly or indirectly,
will be used for a Private Business Use and not more than 5%, if any, of the Debt
Service on the Issue, directly or indirectly, will be secured by any interest in
property used or to be used for a Private Business Use or payments in respect of
such property, or will be derived from payments (whether or not to the Issuer) in
respect of property, or borrowed money, used or to be used for a Private Business
Use.
(B) Less than 5% of the Proceeds, if any, will be used to make or
finance loans to any Private Person or Governmental Unit other than the Issuer.
(C) The lesser of the Proceeds that are being or will be used for any
Private Business Use or the Proceeds with respect to which there are payments or
(borrowed money) that are being or will be used for any Private Business Use
does not exceed $15,000,000 and none of the Proceeds will be used with respect
to an "output facility" (other than a facility for the furnishing of water) within the
meaning of Section 141(b)(4).
(D) The Issuer does not expect to sell or otherwise dispose of the
Project or any portion thereof during the term of the Issue except for dispositions
of property in the normal course at the end of such property's useful life to the
Issuer. With respect to tangible personal property, if any, that is part of the
Project, the Issuer reasonably expects that:
(1) Dispositions of such tangible personal property, if any, will be in
the ordinary course of an established governmental program;
(2) The weighted average maturity of the obligations of the Issue
financing such property (treating the obligations of the Issue properly allocable to
such personal property as a separate issue for this purpose) will not be greater
than 120% of the reasonably expected actual use of such property for
governmental purposes;
(3) The fair market value of such property on the date of disposition
will not be greater than 25% of its cost;
(4) The property will no longer be suitable for its governmental
purposes on the date of disposition; and
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(5) The amounts received from any disposition of such property are
required to be, and will be, commingled with substantial tax or other
governmental revenues and will be spent on governmental programs within 6
months from the date of such deposit and commingling.
5.20. Issue Not Federally Guaranteed. The Issue is not Federally Guaranteed.
5.30. Not Hedge Bonds. At least 85% of the Spendable Proceeds will be used to carry
out the governmental purposes of the Issue within three years from the Issuance Date. Not more
than 50%, if any, of the Proceeds will be invested in Nonpurpose Investments having a
substantially guaranteed Yield for four years or more (including but not limited to any
investment contract or fixed yield investment having a maturity of four years or more). The
reasonable expectations stated above are not based on and do not take into account (A) any
expectations or assumptions as to the occurrence of changes in market interest rates or changes
of federal tax law or regulations or rulings thereunder or (B) any prepayments of items other than
items that are customarily prepaid.
5.40. Hedge Contracts. The Issuer has not entered into, and does not reasonably expect
to enter into, any Hedge with respect to the Issue, or any portion thereof. The Issuer
acknowledges that entering into a Hedge with respect to the Issue, or any portion thereof, may
change the Yield and that Bond Counsel should be contacted prior to entering into any Hedge
with respect to the Issue in order to determine whether payments/receipts pursuant to the Hedge
will be taken into account in computing the Yield.
5.50. Internal Revenue Service Information Return. Within the time and on the form
prescribed by the Internal Revenue Service under Section 149(e), the Issuer will file with the
Internal Revenue Service an Information Return setting forth the required information relating to
the Issue. The information reported on that Information Return will be true, correct, and
complete to the best of the knowledge and belief of the undersigned.
5.60. Responsibility of Officer.
(A) The officer signing this Certificate is one of the officers of the
Issuer responsible for issuing the Issue.
(B) To the best of the knowledge, information, and belief of the
undersigned, all expectations stated in this Certificate are the expectations of the
Issuer and are reasonable, all facts stated are true, and there are no other existing
facts, estimates, or circumstances that would or could materially change the
statements made in this Certificate. The certifications and representations made
in this Certificate are intended to be relied upon as certifications described in
Regulations § 1.148-2(b). The Issuer acknowledges that any change in the facts
or expectations from those set forth in this Certificate may result in different
requirements or a change in status of the Issue or interest thereon under the Code,
and that bond counsel should be contacted if such changes are to occur or have
occurred.
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Town of Marana
By:_
Name:
List of Attachments
Attachment A -- Definitions for Tax Compliance Certificate
Attachment A-1 -- Rebate Instructions
T
Attachment A
Definitions for Tax Compliance Certificate of Local Borrower
The following terms, as used in Attachment A and in the Tax Compliance
Certificate to which it is attached and in the other Attachments to the Tax Compliance Certificate,
have the following meanings unless therein otherwise defined or unless a different meaning is
indicated by the context in which the term is used. Capitalized terms used within these definitions
that are not defined in Attachment A have the meanings ascribed to them in the Tax Compliance
Certificate to which this Attachment A is attached. The word "Issue," in lower case, refers either to
the Issue or to another issue of obligations or portion thereof treated as a separate issue for the
applicable purposes of Section 148, as the context requires. The word "obligation" or "obligations,"
in lower case, includes any obligation, whether in the form of bonds, notes, certificates, or any other
obligation that is a "bond" within the meaning of Section 150(a)(1). All capitalized terms used in
this Certificate include either the singular or the plural. All terms used in this Attachment A or in
the Tax Compliance Certificate to which this Attachment A is attached, including terms specifically
defined, shall be interpreted in a manner consistent with Sections 103 and 141-150 and the
applicable Regulations thereunder except as otherwise specified. All references to Section, unless
otherwise noted, refer to the Code.
"Advance Refunding Issue" means any Refunding Issue that is not a Current
Refunding Issue.
"Advance Refunding Portion" means that portion of a Multipurpose Issue that
constitutes a separate governmental purpose and that would be treated as an Advance Refunding
Issue if it had been issued as a separate issue.
"AMT Obligation" means a Tax -Exempt Obligation the interest on which is an item
of tax preference for purposes of the alternative minimum tax imposed on individuals and
corporations under the Internal Revenue Code.
"Available Construction Proceeds" means an amount equal to (a) the sum of (i) the
Issue Price of an issue, (ii) Investment Proceeds on that Issue Price, (iii) earnings on any reasonably
required reserve or replacement fund allocable to the issue not funded from the Issue Price, and (iv)
Investment Proceeds and earnings on (ii) and (iii), (b) reduced by the portions, if any, of the Issue
Price of the issue (i) attributable to Pre -Issuance Accrued Interest and earnings thereon, (ii) allocable
to the underwriter's discount, (iii) used to pay other Issuance Costs of the issue, and (iv) deposited
in a reasonably required reserve or replacement fund allocable to the issue. "Available Construction
Proceeds" does not include Investment Proceeds or earnings on a reasonably required reserve or
replacement fund allocable to the issue for any period after the earlier of (a) the close of the 2 -year
period that begins on the Issuance Date or (b) the date the construction of the project financed by the
issue is substantially completed, provided, however, that such Investment Proceeds or earnings shall
be excluded from "Available Construction Proceeds" if the Issuer has timely elected such exclusion.
If an issue is a Multipurpose Issue that includes a New Money Portion that is a Construction Issue,
this definition shall be applied by substituting "New Money Portion" for "issue" each place the
latter term appears. If an issue or the New Money Portion of a Multipurpose Issue, as applicable, is
ME
not a Construction Issue, and the Issuer makes the bifurcation election under Regulations
§1.148-70)(1) and Section 148(f)(4)(C)(v) to treat the issue or the New Money Portion as two
separate issues consisting of the Construction Portion and the Nonconstruction Portion, this
definition shall be applied by substituting "Construction Portion" for "issue" each place the latter
term appears.
"Bona Fide Debt Service Fund" means a fund, including a portion of or an account
in that fund (or in the case of a fund established for two or more issues, the portion of that fund
properly allocable to an issue), or a combination of such funds, accounts or portions that is used
primarily to achieve a proper matching of revenues with Debt Service on an issue within each Bond
Year and that is depleted at least once each year except for a reasonable carryover amount not to
exceed the greater of the earnings thereon for the immediately preceding Bond Year or one -twelfth
of the annual Debt Service on the issue for the immediately preceding Bond Year.
"Bond Year" means the annual period relevant to the application of Section 148(f) to
an issue, except that the first and last Bond Years may be less than 12 months long. The last day of
a Bond Year shall be the close of business on the day preceding the anniversary of the Issuance
Date of an issue unless the Issuer selects another date on which to end a Bond Year in the manner
permitted by the Code.
"Capital Expenditures" means costs of a type that are properly chargeable to a
capital account (or would be so chargeable with a proper election or with the application of the
definition of Placed in Service) under general federal income tax principles.
"Code" means the Internal Revenue Code of 1986, the Regulations (whether
temporary or final) under that Code or the statutory predecessor of that Code, and any amendments
of, or successor provisions to, the foregoing and any official rulings, announcements, notices,
procedures and judicial determinations regarding any of the foregoing, all as and to the extent
applicable. Unless otherwise indicated, reference to a Section includes any applicable successor
section or provision and such applicable Regulations, rulings, announcements, notices, procedures
and determinations pertinent to that Section.
"Commingled Fund" means any fund or account of the Issuer that contains both
Gross Proceeds of an issue and amounts in excess of $25,000 that are not Gross Proceeds of the
issue if the amounts in the fund or account are invested and accounted for collectively, without
regard to the source of funds deposited in the fund or account.
"Commingled Investment Proceeds" means Investment Proceeds of an issue (other
than Investment Proceeds held in a Refunding Escrow) that are deposited in a Commingled Fund
with substantial tax or other revenues from governmental operations of the Issuer and that are
reasonably expected to be spent for governmental purposes within 6 months from the date of
deposit in the Commingled Fund, using any reasonable accounting assumptions.
"Conduit Borrower" means the obligor on a purpose investment.
A-2
"Conduit Financing Issue" means an issue the Proceeds of which are reasonably
expected to be used to finance one or more Conduit Loans.
"Conduit Loan" means a purpose investment acquired by the Issuer with Proceeds of
a Conduit Financing Issue, thereby effecting a loan to the Conduit Borrower.
"Construction Expenditures" means Capital Expenditures allocable to the cost of
real property (including the construction or making of improvements to real property, but excluding
acquisitions of interests in land or other existing real property) or constructed personal property
within the meaning of Regulations § 1.148-7(g).
"Construction Issue" means an issue at least 75% of the Available Construction
Proceeds of which are to be used for Construction Expenditures with respect to property that is, or
upon completion will be, owned by a Governmental Unit or a 501(c)(3) Organization. If an issue is
a Multipurpose Issue that includes a New Money Portion, this definition shall be applied by
substituting "New Money Portion" for "Construction Issue" each place the latter term appears. If an
election under Section 148(f)(4)(C)(v) and Regulations § 1.148-70) is made to bifurcate an issue or
the New Money Portion of a Multipurpose Issue, this definition shall be applied by substituting
"Construction Portion" for "Construction Issue" each place the latter term appears.
"Construction Portion" means that portion of an issue or the New Money Portion of
a Multipurpose Issue at least 75% of the Available Construction Proceeds of which are to be used
for Construction Expenditures with respect to property that is, or upon completion will be, owned
by a Governmental Unit or a 501(c)(3) Organization and that finances 100% of the Construction
Expenditures.
"Controlled Group" means a group of entities controlled directly or indirectly by the
same entity or group of entities within the meaning of Regulations § 1.150-1(e).
"Current Refunding Issue" means a Refunding Issue that is issued not more than 90
days before the last expenditure of any Proceeds of the Refunding Issue for the payment of Debt
Service on the Refunded Bonds.
"Current Refunding Portion" means that portion of a Multipurpose Issue that
constitutes a separate governmental purpose and that would be treated as a Current Refunding Issue
if it had been issued as a separate issue.
"Debt Service" means principal of and interest and any redemption premium on an
issue.
"Excess Gross Proceeds" means all Gross Proceeds of an Advance Refunding Issue
that exceed an amount equal to 1% of the Sale Proceeds of such Advance Refunding Issue, other
than Gross Proceeds allocable to: (a) payment of Debt Service on the Refunded Bonds; (b) payment
of Pre -Issuance Accrued Interest on the Advance Refunding Issue and interest on the Advance
Refunding Issue that accrues for a period up to the completion date of any capital project financed
by the Prior Issue, plus one year; (c) a reasonably required reserve or replacement fund for the
A-3
Advance Refunding Issue or Investment Proceeds of such fund; (d) payment of Issuance Costs of
the Advance Refunding Issue; (e) payment of administrative costs allocable to repaying the
Refunded Bonds, carrying and repaying the Advance Refunding Issue, or investments of the
Advance Refunding Issue; (f) Transferred Proceeds allocable to expenditures for the governmental
purpose of the Prior Issue (treating for this purpose all unspent Proceeds of the Prior Issue properly
allocable to the Refunded Bonds as of the Issuance Date of the Advance Refunding Issue as
Transferred Proceeds); (g) interest on purpose investments; (h) Replacement Proceeds in a sinking
fund for the Advance Refunding Issue; and (i) fees for a Qualified Guarantee for the Advance
Refunding Issue or the Prior Issue. If an Issue is a Multipurpose Issue that includes an Advance
Refunding Portion, this definition shall be applied by substituting "Advance Refunding Portion" for
"Advance Refunding Issue" each place the latter term appears.
"Federally Guaranteed" means that (a) the payment of Debt Service on an issue, or
the payment of principal or interest with respect to any loans made from the Proceeds of the issue, is
directly or indirectly guaranteed in whole or in part by the United States or by an agency or
instrumentality of the United States, within the meaning of Section 149(b) of the Code, or (b) more
than 5% of the Proceeds of an issue will be invested directly or indirectly in federally insured
deposits or accounts. The preceding sentence does not apply to (a) Proceeds invested during an
initial Temporary Period until such Proceeds are needed to pay costs of the project, (b) investments
of a Bona Fide Debt Service Fund, (c) direct purchases from the United States of obligations issued
by the United States Treasury, or (d) other investments permitted by Section 149(b) or Regulations
§ 1.149(b) -1(b).
"501(c)(3) Organization" means an organization described in Section 501(c)(3) and
exempt from tax under Section 501(a).
"Fixed Yield Issue" means an issue of obligations the Yield on which is fixed and
determinable on the Issuance Date.
"Governmental Unit" means a state, territory or possession of the United States, the
District of Columbia, or any political subdivision thereof referred to as a "State or local
governmental unit" in Regulations §1.103-1(a). "Governmental Unit" does not include the United
States or any agency or instrumentality of the United States.
"Gross Proceeds" means Proceeds and Replacement Proceeds of an issue.
"Hedge" means a contract entered into by the Issuer or the Conduit Borrower
primarily to modify the Issuer's or the Conduit Borrower's risk of interest rate changes with respect
to an obligation (e.g., an interest rate swap, an interest rate cap, a futures contract, a forward contract
or an option).
"Higher Yielding Investments" means any Investment Property that produces a
Yield that (a) in the case of Investment Property allocable to Replacement Proceeds of an issue and
Investment Property in a Refunding Escrow, is more than one thousandth of one percentage point
(.00001) higher than the Yield on the applicable issue, and (b) for all other purposes is more than
one-eighth of one percentage point (.00125) higher than the Yield on the issue.
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"Investment Proceeds" means any amounts actually or constructively received from
investing Proceeds of an issue in Investment Property.
"Investment Property" means investment property within the meaning of Sections
148(b)(2) and 148(b)(3), including any security (within the meaning of Section 165(g)(2)(A) or
(B)), any obligation, any annuity contract and any other investment -type property (including certain
residential rental property for family units as described in Section 148(b)(2)(E) in the case of any
bond other than a Private Activity Bond). Investment Property includes a Tax -Exempt Obligation
that is a "specified private activity bond" as defined in Section 57(a)(5)(C), but does not include
other Tax -Exempt Obligations.
"Issuance Costs" means costs to the extent incurred in connection with, and
allocable to, the issuance of an issue, and includes underwriter's compensation withheld from the
Issue Price, counsel fees, financial advisory fees, rating agency fees, trustee fees, paying agent fees,
bond registrar, certification and authentication fees, accounting fees, printing costs for bonds and
offering documents, public approval process costs, engineering and feasibility study costs,
guarantee fees other than for a Qualified Guarantee and similar costs, but does not include fees
charged by the Issuer.
"Issuance Date" means the date of physical delivery of an issue by the Issuer in
exchange for the purchase price of the issue.
"Issue Price" means in the circumstances applicable to an issue:
(1) Public Offering. In the case of obligations actually offered to the
general public in a bona fide public offering at the initial offering price for each
maturity set forth in the certificate of the underwriter or placement agent attached to
the Tax Compliance Certificate of the Issuer, the aggregate of the initial offering
price for each maturity (including any Pre -Issuance Accrued Interest and original
issue premium, but excluding any original issue discount), which price is not more
than the fair market value thereof as of the Sale Date, and at which initial offering
price not less than 10% of the principal amount of each maturity, as of the Sale Date,
was sold or reasonably expected to be sold (other than to bond houses, brokers or
other intermediaries). In the case of publicly offered obligations that are not
described in the preceding sentence, Issue Price means the aggregate of the initial
offering price to the public of each maturity set forth in the certificate of the
underwriter or placement agent attached to the Tax Compliance Certificate of the
Issuer, which price is not more than the fair market value thereof as of the Sale Date,
and at which initial offering price not less than 10% of the principal amount of each
maturity was sold to the public.
(2) Private Placement. In the case of obligations sold by private
placement, the aggregate of the prices (including any Pre -Issuance Accrued Interest
and original issue premium, but excluding any original issue discount) paid to the
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Issuer by the first purchaser(s) (other than bond houses, brokers or other
intermediaries).
"Minor Portion" means an amount equal to the lesser of $100,000 or 5% of the Sale
Proceeds of an issue.
"Multipurpose Issue" means an issue the bonds of which are allocable to two or
more separate governmental purposes within the meaning of Regulations § 1.148-9(h).
"Net Proceeds" means the Sale Proceeds of an issue less the portion thereof, if any,
deposited in a reasonably required reserve or replacement fund for the issue.
"Net Sale Proceeds" means the Sale Proceeds of an issue less the portion thereof, if
any, deposited in a reasonably required reserve or replacement fund for the issue and the portion
invested as a part of a Minor Portion for the issue.
"New Money Issue" means an issue that is not a Refunding Issue.
"New Money Portion" means that portion of a Multipurpose Issue other than the
Refunding Portion.
"Nonpurpose Investments" means any Investment Property that is acquired with
Gross Proceeds as an investment and not in carrying out any governmental purpose of an issue.
"Nonpurpose Investments" does not include any investment that is not regarded as "investment
property" or a "nonpurpose investment" for the particular purposes of Section 148 (such as certain
investments in U.S. Treasury obligations in the State and Local Government Series and certain
temporary investments), but does include any other investment that is a "nonpurpose investment"
within the applicable meaning of Section 148.
"Placed in Service" means the date on which, based on all the facts and
circumstances, a facility has reached a degree of completion that would permit its operation at
substantially its design level and the facility is, in fact, in operation at such level.
"Pre -Issuance Accrued Interest" means interest on an obligation that accrued for a
period not greater than one year before its Issuance Date and that will be paid within one year after
such Issuance Date.
"Preliminary Expenditures" means any Capital Expenditures that are "preliminary
expenditures" within the meaning of Regulations §1.150-2(f)(2), i.e., architectural, engineering,
surveying, soil testing, reimbursement bond issuance, and similar costs that are incurred prior to
commencement of acquisition, construction, or rehabilitation of a project other than land
acquisition, site preparation, and similar costs incident to commencement of construction. The
aggregate amount of Preliminary Expenditures may not exceed 20% of the aggregate Issue Price of
the issue or issues that financed or are reasonably expected to finance the project for which such
Preliminary Expenditures are or were incurred.
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"Prior Issue" means an issue of obligations all or a portion of the Debt Service on
which is paid or provided for with Proceeds of a Refunding Issue. The Prior Issue may be a
Refunding Issue.
"Private Activity Bond" means (a) obligations of an issue more than 10% of the
Proceeds of which, directly or indirectly, are or are to be used for a Private Business Use and more
than 10% of the Debt Service on which, directly or indirectly, is or is to be paid from or secured by
payments with respect to property, or secured by property, used for a Private Business Use, or (b)
obligations of an issue, the Proceeds of which are or are to be used to make or finance loans to any
Private Person that, in the aggregate, exceed the lesser of 5% of such Proceeds or $5,000,000. In
the event of Unrelated or Disproportionate Use, the tests in (a) shall be applied by substituting 5%
for 10% each place the latter term is used.
"Private Business Use" means use (directly or indirectly) in a trade or business
carried on by any Private Person other than use as a member of, and on the same basis as, the
general public. Any activity carried on by a Private Person (other than a natural person) shall be
treated as a trade or business. In the case of a Qualified 501(c)(3) Bond, Private Business Use
excludes use by a 501(c)(3) Organization that is not an unrelated trade or business activity by such
501(c)(3) Organization within the meaning of Section 513(a).
"Private Person" means any natural person or any artificial person, including a
corporation, partnership, trust or other entity, other than a Governmental Unit. "Private Person"
includes the United States and any agency or instrumentality of the United States.
"Proceeds" means any Sale Proceeds, Investment Proceeds, and Transferred Proceeds
of an issue. "Proceeds" does not include Replacement Proceeds.
"Qualified Administrative Costs" means reasonable direct administrative costs (other
than carrying costs) such as separately stated brokerage or selling commissions, but not legal and
accounting fees, recordkeeping, custody and similar costs. General overhead costs and similar
indirect costs of the Issuer such as employee salaries and office expenses and costs associated with
computing the Rebate Amount are not Qualified Administrative Costs.
"Qualified 501(c)(3) Bonds" means an issue of obligations that satisfies the
requirements of Section 145(a).
"Qualified Guarantee" means any guarantee of an obligation that constitutes a
"qualified guarantee" within the meaning of Regulations § 1.148-4(f).
"Qualified Hedge" means a Hedge that is a "qualified hedge" within the meaning of
Regulations § 1.148-4(h)(2).
"Rebate Amount" means the excess of the future value, as of any date, of all receipts
on Nonpurpose Investments acquired with Gross Proceeds of an issue over the future value, as of
that date, of all payments on those Nonpurpose Investments, computed in accordance with Section
148(f) and Regulations § 1.148-3.
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"Refunded Bonds" means obligations of a Prior Issue the Debt Service on which is
or is to be paid from Proceeds of a Refunding Issue.
"Refunding Bonds" means obligations of a Refunding Issue.
"Refunding Issue" means an issue the Proceeds of which are or are to be used to pay
Debt Service on Refunded Bonds and includes Issuance Costs, Pre -Issuance Accrued Interest or
permitted capitalized interest, a reasonably required reserve or replacement fund and similar costs of
the Refunding Issue.
"Refunding Escrow" means one or more funds established as part of a single
transaction, or a series of related transactions, containing Proceeds of a Refunding Issue and any
other amounts to be used to pay Debt Service on Refunded Bonds of one or more issues.
"Refunding Portion" means that portion of a Multipurpose Issue the Proceeds of
which are, or are to be, used to pay Debt Service on Refunded Bonds and includes Issuance Costs,
Pre -Issuance Accrued Interest or permitted capitalized interest, a reasonably required reserve or
replacement fund and similar costs properly allocable to the Refunding Portion.
"Regulations" or "Reg." means Treasury Regulations.
"Reimbursement Allocation" means an allocation of the Proceeds of an issue for the
Reimbursement of Prior Capital Expenditures, other than Preliminary Expenditures, that meets each
of the following requirements: (a) is evidenced on the books or records of the Issuer maintained
with respect to the issue, (b) the allocation entry identifies either actual prior Capital Expenditures,
or the fund or account from which the prior Capital Expenditures were paid, and (c) evidences the
Issuer's use of Proceeds of the issue to reimburse a Capital Expenditure for a governmental purpose
that was originally paid from a source other than the Proceeds of the issue.
"Reimbursement of Prior Capital Expenditures" means a Reimbursement
Allocation of Proceeds of the Issue to a Capital Expenditure paid prior to the Issuance Date of such
Issue, that satisfies the following requirements: (a) the Capital Expenditure was paid after
March 1, 1992; (b) prior to, or within 60 days after, payment of the Capital Expenditure (except
Preliminary Expenditures), the Issuer adopted an official intent for the Capital Expenditure that
satisfies Regulations §1.150-2(e); and (c) except for Preliminary Expenditures, the Reimbursement
Allocation occurs or will occur within 18 months after the later of the date the Capital Expenditure
was paid or the date the project resulting from such Capital Expenditure was Placed in Service or
abandoned, but in no event more than 3 years after the Capital Expenditure was paid.
"Related Party" means, in reference to a Governmental Unit or 501(c)(3)
Organization, any member of the same Controlled Group and, in reference to any person that is not
a Governmental Unit or 501(c)(3) Organization, a "related person" as defined in Section 144(a)(3)
of the Code.
A-8
"Replacement Proceeds" means, with respect to an issue, amounts (including any
investment income, but excluding any Proceeds of any issue) replaced by Proceeds of that issue
within the meaning of Section 148(a)(2). "Replacement Proceeds" includes amounts, other than
Proceeds, held in a sinking fund, pledged fund or reserve or replacement fund for an issue.
"Sale Date" means, with respect to an issue, the first date on which there is a binding
contract in writing with the Issuer for the sale and purchase of an issue (or of respective obligations
of the issue if sold by the Issuer on different dates) on specific terms that are not later modified or
adjusted in any material respect.
"Sale Proceeds" means that portion of the Issue Price actually or constructively
received by the Issuer upon the sale or other disposition of an issue, including any underwriter's
compensation withheld from the Issue Price, but excluding Pre -Issuance Accrued Interest.
"Spendable Proceeds" means the Net Sale Proceeds of an issue.
"Tax -Exempt Obligation" means any obligation or issue of obligations (including
bonds, notes and lease obligations treated for federal income tax purposes as evidences of
indebtedness) the interest on which is excluded from gross income for federal income tax purposes
within the meaning of Section 150, and includes any obligation or any investment treated as a
"tax-exempt bond" for the applicable purpose of Section 148.
"Tax -Exempt Organization" means a Governmental Unit or a 501(c)(3)
Organization.
"Temporary Period" means the period of time, as set forth in the Tax Compliance
Certificate, applicable to particular categories of Proceeds of an issue during which such category of
Proceeds may be invested in Higher Yielding Investments without the issue being treated as
arbitrage bonds under Section 148.
"Transferred Proceeds" means that portion of the Proceeds of an issue (including
any Transferred Proceeds of that issue) that remains unexpended at the time that any portion of the
principal of the Refunded Bonds of that issue is discharged with the Proceeds of a Refunding Issue
and that thereupon becomes Proceeds of the Refunding Issue as provided in Regulations
§ 1.148-9(b). "Transferred Proceeds" does not include any Replacement Proceeds.
"Unrelated or Disproportionate Use" means Private Business Use that is not related
to or is disproportionate to use by a Governmental Unit within the meaning of Section 141(b)(3) and
Regulations §1.141-9.
"Variable Yield Issue" means any Issue that is not a Fixed Yield Issue.
"Working Capital Expenditures" means any costs of a type that do not constitute
Capital Expenditures, including current operating expenses.
ME
"Yield" has the meaning assigned to it for purposes of Section 148 of the Code, and
means that discount rate (stated as an annual percentage) that, when used in computing the present
worth of all applicable unconditionally payable payments of Debt Service, all payments for a
Qualified Guarantee, if any, and all payments and receipts with respect to a Qualified Hedge, if any,
paid and to be paid with respect to an obligation (paid and to be paid during and attributable to the
Yield Period in the case of a Variable Yield Issue), produces an amount equal to (a) the Issue Price
in the case of a Fixed Yield Issue or the present value of the Issue Price at the commencement of the
applicable Yield Period in the case of a Variable Yield Issue, or (b) the purchase price for yield
purposes in the case of Investment Property, all subject to the applicable methods of computation
provided for under Section 148, including variations from the foregoing. The Yield on Investment
Property in which Proceeds or Replacement Proceeds of an issue are invested is computed on a
basis consistent with the computation of Yield on that issue, including the same compounding
interval of not more than one year selected by the Issuer.
"Yield Period" means, in the case of the first Yield Period, the period that
commences on the Issuance Date and ends at the close of business on the first Computation Date
and, in the case of each succeeding Yield Period, the period that begins immediately after the end of
the immediately preceding Yield Period and ends at the close of business on the next succeeding
Computation Date.
The terms "bond", "obligation", "reasonably required reserve or replacement fund",
"reserve or replacement fund", "loan", "sinking fund", "purpose investment", "same plan of
financing", "other replacement proceeds", and other terms relating to Code provisions used but not
defined in this Certificate shall have the meanings given to them for purposes of Sections 103 and
141 to 150 unless the context indicates another meaning.
(End of Attachment A)
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ATTACHMENT A-1
to
Tax Compliance Certificate of Local Borrower
INSTRUCTIONS FOR COMPLIANCE WITH REBATE
REQUIREMENTS OF SECTION 148(f) OF THE CODE.
The Issuer covenanted in the Loan Agreement and Tax Compliance Certificate to
comply with the arbitrage rebate requirement of Section 148(f) of the Code. These Instructions
provide guidance for that compliance, including the spending exceptions that free the Issue from all
or part of the rebate requirements.
PART I: GENERAL
SECTION 1.01. REBATE GENERALLY.
The Rebate Amounti with respect to the Issue must be paid (rebated) to the United
States to prevent the bonds of the Issue from being arbitrage bonds, the interest on which is subject
to federal income tax. In general, the Rebate Amount is the amount by which the actual earnings on
Nonpurpose Investments purchased (or deemed to have been purchased) with Gross Proceeds of the
Issue exceed the amount of earnings that would have been received if those Nonpurpose
Investments had a Yield equal to the Yield on the Issue.
Stated differently, the Rebate Amount for the Issue as of any date is the excess of the
Future Value, as of that date, of all Receipts on Nonpurpose Investments over the Future Value, as
of that date, of all Payments on Nonpurpose Investments, computed using the Yield on the Issue as
the Future Value rate.3
If the Issue is a Fixed Yield Issue, the Yield on the Issue generally is the Yield to
maturity, taking into account mandatory redemptions prior to maturity. If the Issue is a Variable
Yield Issue, the Yield on the Issue is computed separately for each Yield Period selected by the
Issuer.
SECTION 1.02. SPECIAL DEFINITIONS.
Capitalized terms that are not defined in these Instructions are defined in Attachment A to the Tax Compliance
Certificate of the Issuer.
Amounts earned on the Bona Fide Debt Service Fund for the Issue are not taken into account in determining the
Rebate Amount since none of the obligations of the Issue are Private Activity Bonds, the rates of interest on the
Issue do not vary and the average maturity of the Issue is at least 5 years.
The scope of these Instructions does not permit a detailed description of the computation of the Rebate Amount
with respect to the Issue. If you need assistance in computing the Rebate Amount on the Issue, please contact
your bond counsel.
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For purposes of these Instructions, the following terms shall have the following
meanings.
"Available Construction Proceeds" means an amount equal to (a) the sum of (i)
the Issue Price of the issue, (ii) Investment Proceeds on that Issue Price, (iii) earnings on any
reasonably required reserve or replacement fund allocated to the issue not funded from the Issue
Price, and (iv) Investment Proceeds and earnings on (ii) and (iii), (b) reduced by the portions, if any,
of the Issue Price of the issue (i) attributable to Pre -Issuance Accrued Interest and earnings thereon,
(ii) allocated to the Underwriter's discount, (iii) used to pay other Issuance Costs of the issue, and
(iv) deposited in a reasonably required reserve or replacement fund allocated to the issue. Available
Construction Proceeds do not include Investment Proceeds or earnings on a reasonably required
reserve or replacement fund allocated to the issue for any period after the earlier of (a) the close of
the 2 -year period that begins on the Issuance Date or (b) the date the construction of the Projects
financed by the issue is substantially completed. If the issue consists of a New Money Portion and a
Refunding Portion and the New Money Portion is a Construction Issue, this definition shall be
applied by substituting "New Money Portion" for "issue" each place the latter term appears. If the
issue or the New Money Portion, as applicable, is not a Construction Issue, and the Issuer makes the
election under Regulations § 1.148-70)(1) and Section 148(f)(4)(C)(v) to treat the issue or the New
Money Portion as two separate issues consisting of the Construction Portion and the
Nonconstruction Portion, this definition shall be applied by substituting "Construction Portion" for
"issue" each place the latter term appears.
"Bifurcated Issue" means a New Money Issue or the New Money Portion of a
Multipurpose Issue that the Issuer, pursuant to Section 148(f)(4)(C)(v) and Regulations § 1.148-70),
has elected in its Tax Compliance Certificate to bifurcate into a Construction Portion and a
Nonconstruction Portion.
"Bond Counsel's Opinion" means an opinion or opinions of a nationally recognized
bond counsel firm whose opinion is given with respect to the Issue when issued, or its successors or
other nationally recognized bond counsel appointed by the Issuer.
"Bond Year" means the annual period relevant to the application of Section 148(f) to
the issue, except that the first and last Bond Years may be less than 12 months long. The last day of
a Bond Year shall be the close of business on the day preceding the anniversary of the Issuance
Date of the issue unless the Issuer selects another date on which to end a Bond Year in the manner
permitted by the Code.
"Computation Date" means each date on which the Rebate Amount for an issue is
required to be computed under Regulations § 1.148-3(e). In the case of a Fixed Yield Issue, the first
Computation Date shall not be later than 5 years after the Issuance Date of the issue. Subsequent
Computation Dates shall be not later than 5 years after the immediately preceding Computation
Date for which an installment payment of the Rebate Amount was paid. In the case of a Variable
Yield Issue, the first Computation Date shall be the last day of any Bond Year irrevocably selected
by the Issuer ending on or before the fifth anniversary of the Issuance Date of such issue and
A-1-2
subsequent Computation Dates shall be the last day of each Bond Year thereafter or each fifth Bond
Year thereafter, whichever is irrevocably selected by the Issuer after the first date on which any
portion of the Rebate Amount is required to be paid to the United States. The final Computation
Date is the date an issue is retired.
"Construction Expenditures" means Capital Expenditures allocable to the cost of
real property (including the construction or making of improvements to real property, but excluding
acquisitions of interests in land or other existing real property) or constructed personal property
within the meaning of Regulations § 1.148-7(g).
"Construction Issue" means an issue at least 75 percent of the Available
Construction Proceeds of which are to be used for Construction Expenditures with respect to
property which is or is to be owned by a Governmental Unit or a 501(c)(3) Organization. If an
election has been made in the Issuer's Tax Compliance Certificate to bifurcate an issue or the New
Money Portion, the Construction Portion (i.e., that portion of the issue or the New Money Portion
which satisfies the 75 percent test stated in the preceding sentence and which finances 100% of the
Construction Expenditures) is treated as the Construction Issue and the balance of the issue or the
New Money Portion is treated as the Nonconstruction Portion.
"Fixed Yield Issue" means an issue of obligations the Yield on which is fixed and
determinable on the Issuance Date.
"Future Value" means the value of a Payment or Receipt at the end of a period
determined using the economic accrual method as the value of that Payment or Receipt when it is
paid or received (or treated as paid or received), plus interest assumed to be earned and compounded
over the period at a rate equal to the Yield on the Issue, using the same compounding interval and
financial conventions that were used to compute that Yield.
"Guaranteed Investment Contract" means any Nonpurpose Investment that has
specifically negotiated withdrawal or retirement provisions and a specifically negotiated interest rate
and any agreement to supply investments on two or more future dates (ems., a forward supply
contract).
"Multipurpose Issue" means an issue that consists of a Refunding Portion and a New
Money Portion.
"Payment" means payments actually or constructively made to acquire Nonpurpose
Investments, as specified in Regulations §1.148-3(d)(1)i) through (v).
"Qualified Administrative Costs" means the reasonable, direct administrative costs,
other than carrying costs, of purchasing or selling Nonpurpose Investments such as separately stated
brokerage or selling commissions. Qualified Administrative Costs do not include legal and
accounting fees, recordkeeping, custody, and similar costs, general overhead costs and similar
indirect costs of the Issuer such as employee salaries and office expenses and costs associated with
computing the Rebate Amount. In general, Qualified Administrative Costs are not reasonable
unless they are comparable to administrative costs that would be charged for the same investment or
A-1-3
a reasonably comparable investment if acquired with a source of funds other than Gross Proceeds of
Tax -Exempt Obligations.
"Reasonable Retainage" means an amount, not to exceed 5% of the Net Sale
Proceeds of the Issue, that is retained for reasonable business purposes relating to the property
financed with Proceeds of the Issue. For example, Reasonable Retainage may include a retention to
ensure or promote compliance with a construction contract in circumstances in which the retained
amount is not yet payable, or in which the Issuer reasonably determines that a dispute exists
regarding completion or payment.
"Rebate Analyst" means an independent individual, firm or entity experienced in the
computation of the Rebate Amount pursuant to Section 148(f) of the Code.
"Receipt" means amounts actually or constructively received from Nonpurpose
Investments as specified in Regulations § 1.148-3(d)(2)(i) through (iii).
"Variable Yield Issue" means any issue that is not a Fixed Yield Issue.
"Yield Period" means, in the case of the first Yield Period, the period that
commences on the Issuance Date and ends at the close of business on the first Computation Date
and, in the case of each succeeding Yield Period, the period that begins immediately after the end of
the immediately preceding Yield Period and ends at the close of business on the next succeeding
Computation Date.
PART II: EXCEPTIONS TO REBATE
SECTION 2.01. SPENDING EXCEPTIONS.
The rebate requirements with respect to the Issue are deemed to have been satisfied
if any one of three spending exceptions (the 6 -Month, the 18 -Month, or the 2 -Year Spending
Exception, collectively, the "Spending Exceptions") is satisfied. The Spending Exceptions are each
independent exceptions. The Issue need not meet the requirements of any other exception in order
to use any one of the three exceptions. For example, a Construction Issue may qualify for the
6 -Month Spending Exception or the 18 -Month Spending Exception even though the Issuer makes
one or more elections under the 2 -Year Exception with respect to the Issue.
The following rules apply for purposes of all of the Spending Exceptions except as
otherwise noted.
RefundingIs� sues. The only spending exception available for a Refunding Issue is
the 6 -Month Spending Exception.
For purposes of these Instructions, references to "Refunding Issue" include the Refunding Portion of a
Multipurpose Issue.
Special Transferred Proceeds Rules. In applying the Spending Exceptions to a
Refunding Issue, unspent Proceeds of the Prior Issue that become Transferred Proceeds of the
Refunding Issue are ignored. If the Prior Issue satisfies one of the rebate Spending Exceptions, the
Proceeds of the Prior Issue that are excepted from rebate under that exception are not subject to
rebate either as Proceeds of the Prior Issue or as Transferred Proceeds of the Refunding Issue.
However, if the Prior Issue does not satisfy any of the Spending Exceptions and is
not otherwise exempt from rebate, the Transferred Proceeds from the Prior Issue will be subject to
rebate, even if the Refunding Issue satisfies the 6 -Month Spending Exception. The Rebate Amount
will be calculated on the Transferred Proceeds on the basis of the Yield of the Prior Issue up to each
transfer date and on the basis of the Yield of the Refunding Issue after each transfer date.
Application of Spending Exceptions to a Multipurpose Issue. If the Issue is a
Multipurpose Issue, the Refunding Portion and the New Money Portion are treated for purposes of
the rebate Spending Exceptions as separate issues. Thus, the Refunding Portion is eligible to use
only the 6 -Month Spending Exception. The New Money Portion is eligible to use any of the three
Spending Exceptions.
Expenditures for Governmental Purposes of the Issue. Each of the spending
exceptions requires that expenditures of Gross Proceeds be for the governmental purposes of the
Issue. These purposes include payment of interest (but not principal) on the Issue.
SECTION 2.02. 6 -MONTH SPENDING EXCEPTION.
The Issue will be treated as satisfying the rebate requirements if all of the Gross
Proceeds of the Issue are allocated to expenditures for the governmental purposes of the Issue
within the 6 -month period beginning on the Issuance Date and the Rebate Amount, if any, with
respect to earnings on amounts deposited in a reasonably required reserve or replacement fund or a
Bona Fide Debt Service Fund if and to the extent that such Fund is subject to rebate (see footnote 3)
is timely paid to the United States. If no bond of the Issue is a Private Activity Bond (other than a
Qualified 501(c)(3) Bond) or a tax or revenue anticipation bond, the 6 -month period is extended for
an additional 6 months if the unexpended Gross Proceeds of the Issue at the end of the 6 -month
period do not exceed the lesser of 5% of the Proceeds of the Issue or $100,000.
For purposes of the 6 -Month Spending Exception, Gross Proceeds required to be
spent within 6 months do not include amounts in a reasonably required reserve or replacement fund
for the Issue or in a Bona Fide Debt Service Fund for the Issue.
A-1-5
SECTION 2.03. 18 -MONTH SPENDING EXCEPTION.
The Issue (or the New Money Portion if the Issue is a Multipurpose Issue) is treated
as satisfying the rebate requirement if the conditions set forth in (A), (B) and (C) are satisfied.
(A) All of the Gross Proceeds of the Issue (excluding amounts in a reasonably
required reserve or replacement fund for the Issue or in a Bona Fide Debt Service Fund for the
Issue) are allocated to expenditures for the governmental purposes of the Issue in accordance with
the following schedule, measured from the Issuance Date:
(1) at least 15% within 6 months;
(2) at least 60% within 12 months; and
(3) 100% within 18 months, subject to the Reasonable Retainage
exception described below.
(B) The Rebate Amount, if any, with respect to earnings on amounts deposited in a
reasonably required reserve or replacement fund or in a Bona Fide Debt Service Fund for the Issue,
to the extent such Fund is subject to rebate (see footnote 3), is timely paid to the United States.
And,
(C) The Gross Proceeds of the Issue qualify for the initial 3 -year Temporary Period.
If the only unspent Gross Proceeds at the end of the 18th month are Reasonable
Retainage, the requirement that 100% of the Gross Proceeds be spent by the end of the 18th month
is treated as met if the Reasonable Retainage, and all earnings thereon, are spent for the
governmental purposes of the Issue within 30 months of the Issuance Date.
For purposes of determining whether the spend -down requirements have been met
as of the end of each of the first two spending periods, the amount of Investment Proceeds that the
Issuer reasonably expects as of the Issuance Date to earn on the Sale Proceeds and Investment
Proceeds of the Issue during the 18 -month period are included in Gross Proceeds of the Issue. The
final spend -down requirement includes actual Investment Proceeds for the entire 18 months.
The 18 -Month Spending Exception does not apply to the Issue (or the New Money
Portion, as applicable) if any portion of the Issue (or New Money Portion) is treated as meeting the
rebate requirement under the 2 -Year Spending Exception discussed below. This rule prohibits use
of the 18 -Month Spending Exception for the Nonconstruction Portion of a Bifurcated Issue. The
only Spending Exception available for the Nonconstruction Portion of a Bifurcated Issue is the
6 -Month Spending Exception.
A-1-6
SECTION 2.04. 2 -YEAR SPENDING EXCEPTION FOR CERTAIN CONSTRUCTION
ISSUES.
(A) Ineg neral. A Construction Issue no bond of which is a Private Activity Bond
(other than a Qualified 501(c)(3) Bond or a Bond that finances property to be owned by a
Governmental Unit or a 501(c)(3) Organization) is treated as satisfying the rebate requirement if the
Available Construction Proceeds of the Issue are allocated to expenditures for the governmental
purposes of the Issue in accordance with the following schedule, measured from the Issuance Date:
(1) at least 10% within 6 months;
(2) at least 45% within 1 year;
(3) at least 75% within 18 months; and
(4) 100% within 2 years, subject to the Reasonable Retainage exception
described below.
Amounts in a Bona Fide Debt Service Fund or a reasonably required reserve or
replacement fund for the Issue are not treated as Gross Proceeds for purposes of the expenditure
requirements. However, unless the Issuer has elected otherwise in the Tax Compliance Certificate,
earnings on amounts in a reasonably required reserve or replacement fund for the Issue are treated
as Available Construction Funds during the 2 -year period and therefore must be allocated to
expenditures for the governmental purposes of the Issue.
If the Issuer elected in the Tax Compliance Certificate to exclude from Available
Construction Proceeds the Investment Proceeds or earnings on a reasonably required reserve or
replacement fund for the Issue during the 2 -year spend -down period, the Rebate Amount, if any,
with respect to such Investment Proceeds or earnings from the Issuance Date must be timely paid to
the United States. If the election is not made, the Rebate Amount, if any, with respect to such
Investment Proceeds or earnings after the earlier of the date construction is substantially completed
or 2 years after the Issuance Date must be timely paid to the United States. The Rebate Amount, if
any, with respect to earnings on amounts in a Bona Fide Debt Service Fund must be timely paid to
the extent such Fund is subject to the rebate requirements (see footnote 3).
The Issue does not fail to satisfy the spending requirement for the fourth spend -down
period (ie., 100% within 2 years of the Issuance Date) if the only unspent Available Construction
Proceeds are amounts for Reasonable Retainage if such amounts (together with all earnings on such
amounts) are allocated to expenditures within 3 years of the Issuance Date.
For purposes of determining whether the spend -down requirements have been met as of
the end of each of the first 3 spend -down periods, Available Construction Proceeds include the
amount of Investment Proceeds or earnings that the Issuer reasonably expected as of the Issuance
Date to earn during the 2 -year period. For purposes of satisfying the final spend -down requirement,
A-1-7
Available Construction Proceeds include actual Investment Proceeds or earnings from the Issuance
Date through the end of the 2 -year period.
Available Construction Proceeds do not include Gross Proceeds used to pay Issuance
Costs financed by the Issue, but do include earnings on such Proceeds. Thus, an expenditure of
Gross Proceeds to pay Issuance Costs does not count toward meeting the spend -down requirements,
but expenditures of earnings on such Gross Proceeds to pay Issuance Costs do count.
(B) 1 %2% penalty in lieu of rebate for Construction Issues. If the Issuer elected in
the Tax Compliance Certificate for a Construction Issue, or for the Construction Portion of a
Bifurcated Issue, to pay a 1 %2% penalty in lieu of the Rebate Amount on Available Construction
Proceeds in the event that the Construction Issue fails to satisfy any of the spend -down
requirements, the 1 %2% penalty is calculated separately for each spend -down period, including each
semi-annual period after the end of the fourth spend -down period until all Available Construction
Proceeds have been spent. The penalty is equal to 0.015 times the underexpended Proceeds as of
the end of the applicable spend -down period. The fact that no arbitrage is in fact earned during such
spend -down period is not relevant. The Rebate Amount with respect to Gross Proceeds other than
Available Construction Proceeds (e&, amounts in a reasonably required reserve or replacement
fund or in a Bona Fide Debt Service Fund, to the extent subject to rebate (see footnote 3)) must be
timely paid.
PART III: COMPUTATION AND PAYMENT.
SECTION 3.01. COMPUTATION AND PAYMENT OF REBATE AMOUNT.
If none of the Spending Exceptions described above is satisfied (and if the 1-1/2%
penalty election for a Construction Issue or the Construction Portion of a Bifurcated Issue has not
been made), then within 45 days after each Computation Date, the Issuer shall compute, or cause to
be computed, the Rebate Amount as of such Computation Date. The first Computation Date is a
date selected by the Issuer, but shall be not later than 5 years after the Issuance Date. Each
subsequent Computation Date shall end 5 years after the previous Computation Date except that, in
a Variable Yield Issue, the Issuer may select annual Yield Periods. The final Computation Date
shall be the date the last obligation of the Issue matures or is finally discharged.
Within 60 days after each Computation Date (except the final Computation Date), the
Issuer shall pay to the United States not less than 90% of the Rebate Amount, if any, computed as of
such Computation Date. Within 60 days after the final Computation Date, the Issuer shall pay to the
United States 100% of the Rebate Amount, if any, computed as of the final Computation Date. In
computing the Rebate Amount, a computation credit of $1,000 may be taken into account on the
last day of each Bond Year to the Computation Date during which there are unspent Gross Proceeds
that are subject to the rebate requirement, and on the final maturity date.
If the operative documents pertaining to the Issue establish a Rebate Fund and require
the computation of the Rebate Amount at the end of each Bond Year, the Issuer shall calculate, or
cause to be calculated, within 45 days after the end of each Bond Year the Rebate Amount, taking
into account the computation credit of $1,000 for each Bond Year. Within 50 days after the end of
A-1-8
each Bond Year, if the Rebate Amount is positive, the Issuer shall deposit in the Rebate Fund such
amount as will cause the amount on deposit therein to equal the Rebate Amount, and may withdraw
any amount on deposit in the Rebate Fund in excess of the Rebate Amount. Payments of the Rebate
Amount to the Internal Revenue Service on a Computation Date shall be made first from amounts
on deposit in the Rebate Fund and second from other amounts specified in the operative documents.
Each payment of the Rebate Amount or portion thereof shall be payable to the Internal
Revenue Service and shall be made to the Internal Revenue Service Center, Ogden, UT 84201 by
certified mail. Each payment shall be accompanied by Internal Revenue Service Form 8038-T and
any other form or forms required to be submitted with such remittance.
SECTION 3.02. BOOKS AND RECORDS.
(A) The Issuer or Trustee, as applicable, shall keep proper books of record and
accounts containing complete and correct entries of all transactions relating to the receipt,
investment, disbursement, allocation and application of the Gross Proceeds of the Issue. Such
records shall specify the account or fund to which each Nonpurpose Investment (or portion thereof)
held by the Issuer or Trustee is to be allocated and shall set forth as to each Nonpurpose Investment
(1) its purchase price, (2) identifying information, including par amount, interest rate, and payments
dates, (3) the amount received at maturity or its sales price, as the case may be, including accrued
interest, (4) the amounts and dates of any payments made with respect thereto, and (5) the dates of
acquisition and disposition or maturity.
The Issuer, Trustee, or Rebate Analyst, as applicable, shall retain the records of all
calculations and payments of the Rebate Amount until six years after the retirement of the last
obligation that is a part of the Issue.
SECTION 3.03. FAIR MARKET VALUE.
No Nonpurpose Investment shall be acquired for an amount in excess of its fair
market value. No Nonpurpose Investment shall be sold or otherwise disposed of for an amount less
than its fair market value.
The fair market value of any Nonpurpose Investment shall be the price at which a
willing buyer would purchase the Nonpurpose Investment from a willing seller in an arms -length
transaction. Fair market value generally is determined on the date on which a contract to purchase
or sell the Nonpurpose Investment becomes binding (i.e., the trade date rather than the settlement
date). Except as otherwise provided in this Section, a Nonpurpose Investment that is not of a type
traded on an established securities market (within the meaning of Section 1273 of the Code) is
rebuttably presumed to be acquired or disposed of for a price that is not equal to its fair market
value.
(A) Obligations� purchased directly from the Treasury. The fair market value of a
United States Treasury obligation that is purchased directly from the United States Treasury is its
purchase price.
A-1-9
(B) Safe harbor for Guaranteed Investment Contracts. The purchase price of a
Guaranteed Investment Contract shall be treated as its fair market value on the purchase date if all
the following conditions are met:
(1) The Issuer or broker makes a bona fide solicitation for a specified
Guaranteed Investment Contract and receives at least three bona fide bids from reasonably
competitive providers (of Guaranteed Investment Contracts) that have no material financial
interest in the Issue.
(2) The Issuer purchases the highest -yielding Guaranteed Investment Contract
for which a qualifying bid is made (determined net of broker's fees);
(3) The Yield on the Guaranteed Investment Contract (determined net of
broker's fees) is not less than the Yield then available from the provider on reasonably
comparable Guaranteed Investment Contracts, if any, offered to other persons from a source
of funds other than Gross Proceeds of Tax -Exempt Obligations;
(4) The determination of the terms of the Guaranteed Investment Contract takes
into account as a significant factor the Issuer's reasonably expected drawdown schedule for
the amounts to be invested, exclusive of amounts deposited in a Bona Fide Debt Service
Fund and a reasonably required reserve or replacement fund;
(5) The terms of the Guaranteed Investment Contract, including collateral
security requirements, are reasonable; and
(6) The obligor on the Guaranteed Investment Contract certifies the
administrative costs that it is paying (or expects to pay) to third parties in connection with
the Guaranteed Investment Contract.
(C) Safe harbor for certificates of deposit. The purchase price of a certificate of
deposit shall be treated as its fair market value on the purchase date if all of the following
requirements are met:
(1) The certificate of deposit has a fixed interest rate, a fixed payment schedule,
and a substantial penalty for early withdrawal; and
(2) The Yield on the certificate of deposit is not less than (a) the Yield on
reasonably comparable direct obligations of the United States, or (b) the highest Yield that is
published or posted by the provider to be currently available from the provider on
reasonably comparable certificates of deposit offered to the public.
Certificates evidencing the foregoing requirements should be obtained before
purchasing any Guaranteed Investment Contract or certificate of deposit.
A-1-10
SECTION 3.04. CONSTRUCTIVE SALE/PURCHASE.
(A) Nonpurpose Investments that are held by the Issuer or Trustee as of any
Computation Date (or Bond Year if the computations are required to be done
annually) shall be treated for purposes of computing the Rebate Amount as of
such date as having been sold for their fair market value as of such date.
Investment Property which becomes allocated to Gross Proceeds of the Issue on
a date after such Investment Property has actually been purchased shall be
treated for purposes of the rebate requirements as having been purchased by the
Issuer on such date of allocation at its fair market value on such date.
(B) For purposes of constructive or deemed sales or purchases of Investment
Property (other than Investment Property in the Escrow Fund or that is
otherwise not invested for a Temporary Period or is not part of a reasonably
required reserve or replacement fund for the Issue) must be valued at its fair
market value on the date of constructive or deemed sale or purchase
(C) Except as set forth in (B), fixed rate Investment Property that is (1) issued with
not more than 2% of original issue discount or original issue premium, (2)
issued with original issue premium that is attributable exclusively to reasonable
underwriters' compensation or (3) acquired with not more than 2% of market
discount or market premium, may be treated as having a fair market value equal
to its outstanding stated principal amount, plus accrued interest. Fixed rate
Investment Property also may be treated as having a fair market value equal to
its present value.
SECTION 3.05. ADMINISTRATIVE COSTS.
(A) Administrative costs shall not be taken into account in determining the
payments for or receipts from a Nonpurpose Investment unless such
administrative costs are Qualified Administrative Costs. Thus, administrative
costs or expenses paid, directly or indirectly, to purchase, carry, sell, or retire
Nonpurpose Investments generally do not increase the Payments for, or reduce
the Receipts from, Nonpurpose Investments.
(B) Qualified Administrative Costs are taken into account in determining the
Payments and Receipts on Nonpurpose Investments and thus increase the
Payments for, or decrease the Receipts from, Nonpurpose Investments. In the
case of a Guaranteed Investment Contract, a broker's commission or similar fee
paid on behalf of either the Issuer or the provider is an administrative cost that is
not a Qualified Administrative Cost to the extent that the present value
(computed using the taxable discount rate used by the parties to compute the
commission or, if not readily ascertainable, a reasonable taxable discount rate)
of the commission, as of the date the contract is purchased, exceeds the present
value of annual payments equal to 0.05 percent of the weighted average amount
reasonably expected to be invested each year during the term of such contract.
A-1-11
PART IV: COMPLIANCE AND AMENDMENT
SECTION 4.01. COMPLIANCE.
The Issuer, Trustee or Rebate Analyst, as applicable, shall take all necessary steps to
comply with the requirements of these Instructions in order to ensure that interest on the Issue is
excluded from gross income for federal income tax purposes under Section 103(a) of the Code.
However, compliance shall not be required in the event and to the extent stated therein the Issuer
and the Trustee receive a Bond Counsel's Opinion that either (A) compliance with such requirement
is not required to maintain the exclusion from gross income for federal income tax purposes of
interest on the Issue, or (B) compliance with some other requirement in lieu of such requirement
will comply with Section 148(f) of the Code, in which case compliance with the other requirement
specified in the Bond Counsel's Opinion shall constitute compliance with such requirement.
SECTION 4.02. LIABILITY.
If for any reason any requirement of these Instructions is not complied with, the
Issuer and the Trustee, if applicable, shall take all necessary and desirable steps to correct such
noncompliance within a reasonable period of time after such noncompliance is discovered or should
have been discovered with the exercise of reasonable diligence. The Trustee shall have no duty or
responsibility to independently verify any of the Issuer's, or the Rebate Analyst's, calculations with
respect to the payments of the Rebate Amount due and owing to the United States. Under no
circumstances whatsoever shall the Trustee be liable to the Issuer, any bondholder or any other
person for any inclusion of the interest on the Issue in gross income for federal income tax purposes,
or any claims, demands, damages, liabilities, losses, costs or expenses resulting therefrom or in any
way connected therewith, so long as the Trustee acts only in accordance with these Instructions and
the operative documents pertaining to the Issue.
(End of Attachment A-1)
A-1-12
prepared when
$50,000 • •.
has been disbursed
LOAN AGREEMENT STANDARD TERMS AND CONDITIONS
Water Infrastructure Finance Authority of Arizona
TABLE OF CONTENTS
Page
ARTICLE 1 COVENANTS OF THE LOCAL BORROWER RELATING TO THE SYSTEM AND THE
PROJECT...................................................................................................................................................... I
Section LI Operation and Maintenance of System....................................................................................... 1
Section 1.2 Additions and Modifications...................................................................................................... 1
Section 1.3 Disposition of Project and System.............................................................................................. 1
Section1.4 Cost of Project............................................................................................................................ I
ARTICLE 2 ADDITIONAL COVENANTS OF THE LOCAL BORROWER.......................................................... 2
Section 2.1 Unconditional Obligations.......................................................................................................... 2
Section 2.2 Performance Under Loan Agreement......................................................................................... 2
Section 2.3 Disclaimer of Warranties............................................................................................................ 2
Section 2.4 Loan Repayments; Prepayments; Adjustments; Late Charges ................................................... 2
Section 2.5 Source of Repayment of Local Borrower's Obligations and Pledge .......................................... 3
Section2.6 Insurance.................................................................................................................................... 3
Section2.7 No Liens..................................................................................................................................... 3
Section 2.8 Disadvantaged Business Enterprises.......................................................................................... 3
ARTICLE 3 REPRESENTATIONS OF LOCAL BORROWER................................................................................ 5
Section 3.1 Organization and Authority........................................................................................................ 5
Section3.2 Full Disclosure........................................................................................................................... 5
Section3.3 Pending Litigation...................................................................................................................... 5
Section 3.4 Compliance with Existing Laws and Agreements...................................................................... 6
Section3.5 No Defaults................................................................................................................................. 6
Section 3.6 Governmental Consent............................................................................................................... 6
Section3.7 Compliance with Law................................................................................................................. 6
ARTICLE4 ASSIGNMENT....................................................................................................................................... 7
Section 4.1 Assignment and Transfer by Authority...................................................................................... 7
Section 4.2 Assignment by Local Borrower.................................................................................................. 7
ARTICLE 5 DEFAULTS AND REMEDIES.............................................................................................................. 7
Section5.1 Events of Default........................................................................................................................ 7
Section5.2 Notice of Default........................................................................................................................ 8
Section 5.3 Remedies on Default.................................................................................................................. 8
Section 5.4 Attorney's Fees and Other Expenses.......................................................................................... 8
Section5.5 Application of Moneys............................................................................................................... 8
Section 5.6 No Remedy Exclusive; Waiver; Notice...................................................................................... 8
Section 5.7 Retention of Authority's Rights................................................................................................. 9
Section5.8 Default by the Authority............................................................................................................. 9
PHOENIX/562066.2 i
TABLE OF CONTENTS
(continued)
Page
ARTICLE 6 PROVISIONS APPLICABLE TO LOANS FINANCED BY OR PLEDGED TO SECURE
AUTHORITYBONDS................................................................................................................................. 9
Section6.1 General....................................................................................................................................... 9
Section6.2 Tax Covenants............................................................................................................................ 9
Section 6.3 Third Party Beneficiaries.......................................................................................................... 10
Section 6.4 Additional Documents Relating to Authority Bonds................................................................ 10
Section 6.5 Disclosure Regarding Authority Bonds.................................................................................... 10
Section 6.6 Assignment and Transfer by Authority to Trustee................................................................... 11
Section 6.7 Conditions to Assignment by Local Borrower......................................................................... 11
Section 6.8 Sale or Other Disposition of Project or System........................................................................ 12
Section 6.9 Deficiencies Under Bond Documents Caused by Failure to Make Loan Repayment .............. 12
Section6.10 Indemnification...................................................................................................................... 12
Section 6.11 Compliance with Master Trust Indenture............................................................................... 12
Section 6.12 Provisions Relating to Default................................................................................................ 12
Section 6.13 Tax Compliance Certificate.................................................................................................... 13
ARTICLE 7 MISCELLANEOUS............................................................................................................................. 13
Section7.1 Binding Effect.......................................................................................................................... 13
Section7.2 Severability............................................................................................................................... 13
Section 7.3 Amendments, Supplements and Modifications........................................................................ 13
Section 7.4 Execution in Counterparts........................................................................................................ 13
Section7.5 Captions.................................................................................................................................... 13
Section 7.6 Further Assurances................................................................................................................... 13
Section 7.7 State of Arizona Contract Provisions....................................................................................... 13
ARTICLE 8 DEFINITIONS...................................................................................................................................... 15
Section8.1 Definitions................................................................................................................................ 15
Section 8.2 Rules of Interpretation.............................................................................................................. 18
ARTICLE 9 LIST OF FEDERAL LAWS AND AUTHORITIES............................................................................ 18
PHOENIX/562066.2 ii
This document sets forth Standard Terms and Conditions applicable to the Loan made by the WATER
INFRASTRUCTURE FINANCE AUTHORITY OF ARIZONA (the "Authority") to the Local Borrower. These
Standard Terms and Conditions are a part of the Loan Agreement to which this document is attached. Certain terms
used herein are defined in Article 8.
Article 1 Covenants of the Local Borrower Relating to the System and the Project.
Section 1.1 Operation and Maintenance of System. The Local Borrower covenants and agrees that it shall, in
accordance with prudent utility practice, (a) at all times operate the properties of the System and any business in
connection therewith in an efficient manner, (b) maintain the System in good repair, working order and operating
condition, and (c) from time to time make all necessary and proper repairs, renewals, replacements, additions,
betterments and improvements with respect to the System so that at all times the operations carried on in connection
therewith shall be properly and advantageously conducted from revenues of the System or, if the Local Borrower so
elects, from any other source of funds lawfully available.
Section 1.2 Additions and Modifications. The Local Borrower may make any additions, renewals, replacements,
modifications or improvements to the System which it deems desirable and which do not materially reduce the
operational integrity of any part of the System. All such renewals, replacements, additions, modifications and
improvements shall become a part of the System.
Section 1.3 Disposition of Project and System.
(a) The Local Borrower shall not sell, lease, abandon or otherwise dispose of all or substantially all or any
substantial portion of the Project or the System except upon compliance with the provisions of this Section;
provided, however that the requirements of this Section shall not apply to transactions which are capital leases
within the meaning of generally accepted accounting principles to finance expansion or improvement of the System
and under which the Local Borrower maintains a purchaser's interest or other beneficial ownership, use, possession
and control of the System so long as no default exists.
(b) The Local Borrower may sell, lease, abandon or otherwise dispose of all or substantially all or any substantial
portion of the Project or the System if the Local Borrower shall give at least ninety (90) days' prior written notice to
the Authority of the proposed transaction, and the Authority gives its written consent which shall not be
unreasonably withheld. The Local Borrower understands that the Authority, in determining whether or not to give its
consent, must determine that the proposed transaction will not adversely affect the Authority's ability to meet its
duties, covenants, obligations and agreements or conditions of any grant received by the Authority or the State from
the United States of America, which is related to the Capital Grant Facility or any capitalization grants received by
the Authority or the State under the Federal Water Pollution Control Act, as amended, and the Federal Safe Drinking
Water Act, as amended.
(c) Notwithstanding the provisions of subsection (b) above, the Local Borrower may sell, lease or otherwise
dispose of, any of the property comprising part of the System without prior notice to or the consent of the Authority,
other than the Project, in either of the following circumstances:
(i) If the Local Borrower determines that such property is not necessary, useful or profitable to the operation
of the System; or
(ii) If the value of such property sold, leased or otherwise disposed of in any one year is equal to not more than
5% of the value of the fixed assets of the System.
Section 1.4 Cost of Proiect. The Local Borrower certifies that the estimated Eligible Project Costs as listed in
Section 1 of Exhibit B is a reasonable and accurate estimation of the Eligible Project Costs and, upon the direction
of the Authority the Local Borrower will supply the Authority with a certificate from its engineer stating that such
estimated Eligible Project Costs is a reasonable and accurate estimation.
I'HOENIX/562066.2
Article 2 Additional Covenants of the Local Borrower
Section 2.1 Unconditional Obligations. The obligation of the Local Borrower to make the Loan Repayments and
the obligation to perform and observe the other duties, covenants, obligations and agreements on its part described
herein are payable solely from the Source of Repayment described in this Loan Agreement and shall be absolute and
unconditional and shall not be abated, rebated, set-off, reduced, abrogated, terminated, waived, diminished,
postponed or otherwise modified in any manner or to any extent whatsoever, while any payments hereunder remain
unpaid, regardless of any contingency, act of God, event or cause whatsoever, including (without limitation) any
acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, the taking by
eminent domain or destruction of or damage to the Project or the System, commercial frustration of the purpose, any
change in the laws of the United States of America or of the State or any political subdivision of either or in the rules
or regulations of any governmental authority, any failure of the Authority to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of or connected with the Project or this
Loan Agreement, or any rights of set-off, recoupment, abatement or counterclaim that the Local Borrower might
otherwise have against the Authority or any other party or parties; provided, however, that payments under this Loan
Agreement shall not constitute a waiver of any such rights. The Local Borrower shall not be obligated to make any
payments required to be made by any other local borrowers under separate loan agreements or local borrower bonds.
Notwithstanding any other provision of this Section 2.1, or this Loan Agreement, neither the Authority, nor any
assignee of the Authority shall have the right or ability to compel the repayment of this Loan Agreement from any
source other than the Source of Repayment.
Section 2.2 Performance Under Loan Agreement. The Local Borrower covenants and agrees (a) to maintain the
System in good repair and operating condition; (b) to cooperate with the Authority to the extent it may lawfully do
so, in the observance and performance of the respective duties, covenants, obligations and agreements of such Local
Borrower and the Authority under this Loan Agreement; and (c) to comply with the covenants set forth in this Loan
Agreement.
Section 2.3 Disclaimer of Warranties. The Local Borrower acknowledges and agrees that (i) the Authority
makes no warranty or representation, either express or implied as to the value, design, condition, merchantability or
fitness for particular purpose or fitness for any use of the System or the Project or any portions thereof or any other
warranty or representation with respect thereto; (ii) in no event shall the Authority or its respective agents be liable
or responsible for any direct, incidental, indirect, special or consequential damages in connection with or arising out
of this Loan Agreement or the Project or the existence, furnishing, functioning or use of the System or the Project;
and (iii) are not intended to and shall not be construed as a waiver of any defense or limitation on damages provided
for under and pursuant to the laws of the United States or of the State.
Section 2.4 Loan Renavments; Prepavments; Providing for Payment of the Loan.
(a) Loan Repayments.
(i) The Local Borrower shall pay to the Authority the amounts set forth in the Loan Repayment Schedule
contained in Exhibit A on or before the due dates shown in Exhibit A.
(ii) Each payment made as a Loan Repayment as described in subsection (i) shall be applied first to the
combined interest and fee payment then due and payable on the Loan and then to the principal amount of the
Loan.
(iii) In addition to the other payments required by this Section, the Local Borrower shall pay a late charge for
any payment that is received by the Authority later than the tenth day following its due date, in an amount equal
to six percent per annum of the amount of the late payment from its due date to the date it is actually paid;
provided, however, that the combined interest and fee rate payable on the Loan including such late charge shall
not be in excess of the maximum rate permitted by law or any proceedings or resolution authorizing the
execution of this Loan Agreement.
PHOENIX/562066.2
(iv) Upon the final disbursement, if the Loan amount is less than the estimated Eligible Project Costs, the
amount of each Principal Installment due as set forth in the Loan Repayment Schedule contained in Exhibit A
shall be adjusted to achieve substantially level debt service, and the Authority shall compute the adjusted
combined interest and fee amounts to reflect the adjusted principal amounts and shall enter the results in a
revised Loan Repayment Schedule delivered to the Local Borrower.
(b) Prepayments. The Loan is not subject to prepayment prior to the tenth anniversary of the final loan draw.
The Local Borrower may prepay the Principal Repayment Amount of the Loan in whole or in part in advance of the
due dates on or after the tenth anniversary of the final loan draw without penalty upon written notice delivered to the
Authority at least 60 days prior to the prepayment date. If the Local Borrower prepays the Repayment Principal
Amount in part, the amount of each Principal Installment due as set forth in the Loan Repayment Schedule
contained in Exhibit A shall be adjusted to achieve substantially level debt service. Upon such adjustment, the
Authority shall compute the adjusted combined interest and fees amounts to reflect the adjusted principal amounts
and shall enter the results in the Loan Repayment Schedule with notice to the Local Borrower.
(c) Providingfor or Payment of the Loan. The Local Borrower may at any time provide for the payment and discharge
of the Loan, as provided in this subsection. The Loan shall be deemed to have been paid and discharged if:
(i) the Local Borrower has delivered to the Authority proof satisfactory to the Authority that the Local
Borrower has deposited with a financial institution acceptable to the Authority, in trust for and irrevocably
committed to payments on the Loan, cash or non -callable direct obligations of the United States of America
(including obligations issued or held in book entry form on the books of the Department of Treasury of the
United States of America) and obligations of any agency or instrumentality of the United States of America the
timely payment of the principal of and interest on which are unconditionally guaranteed by the United States of
America, which are of such maturities and interest payment dates, and bear such interest, as will be sufficient
together with any moneys also deposited, without further investment or reinvestment of either the principal
amount or the interest earnings (which earnings are to be held likewise in trust and so committed), to pay all the
amounts due under the Loan, as set forth in the Loan Repayment Schedule contained in Exhibit A, as evidenced
in a report of an independent firm of nationally recognized certified public accountants addressed to and
delivered to the Authority; and
(ii) the Authority has received a bond counsel opinion (as described in Section 6.2(b) and (c) below) to the
effect that the deposit of funds and the investment of such deposit, as described in the preceding paragraph, will
not, by itself, adversely affect the exclusion from gross income of interest on the Loan or any Authority Bonds
for federal income tax purposes.
Section 2.5 Source of Repayment of Local Borrower's Obligations and Pledge. The Local Borrower
irrevocably pledges the Source of Repayment described in this Loan Agreement for the punctual payment of all
amounts due under the Loan Agreement. The Authority and the Local Borrower agree that the amounts payable by
the Local Borrower under this Loan Agreement are payable solely from the Source of Repayment described in this
Loan Agreement and are not payable from any other source whatsoever, unless the Local Borrower chooses to pay,
and pays, any amount due hereunder from any other source lawfully available to it.
Section 2.6 Insurance. The Local Borrower shall maintain or cause to be maintained in force, insurance policies
with responsible insurers or self-insurance programs or through membership in a risk retention pool, including, but
not limited to, the Arizona Municipal Risk Retention Pool (in accordance with the Local Borrower's customary
practices) providing against risk of direct physical loss, damage or destruction of the Project and the System, at least
to the extent that similar insurance is usually carried by utilities constructing, operating and maintaining system
facilities of the nature of the System, including liability coverage, all to the extent available at reasonable cost.
Section 2.7 No Liens. Except for:
(a) the debt service on any future bonds, notes or other evidence of indebtedness of the Local Borrower issued or
contractual obligations incurred in accordance with this Loan Agreement payable from the funds pledged to the
payment of this Loan Agreement which are on parity with the lien and charge on the funds so pledged to pay this
Loan Agreement and
13HOENIX/562066.2
(b) as provided in Exhibit D of this Loan Agreement, the debt service on currently outstanding bonds, notes or
evidences of indebtedness or contractual obligations of the Local Borrower, if any, payable from the Source of
Repayment described in Exhibit D of this Loan Agreement which the Local Borrower has disclosed to the Authority
in writing,
the funds so pledged as described in this Loan Agreement after the payment of all costs of operating and maintaining
the System, are and will be free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto
which are prior to, or of equal rank with, the obligation of the Local Borrower to pay this Loan Agreement, and all
corporate or other action on the part of the Local Borrower to that end has been and will be duly and validly taken.
Section 2.8 Disadvantaged Business Enterprises. As applicable, the Local Borrower shall comply with 40 C.F.R
Part 33'including but not limited to:
Local Borrowers and their prime contractors must follow, document, and maintain documentation of their good faith
efforts as listed below to ensure that Disadvantage Business Enterprises (DBEs) have the opportunity to participate
in the project by increasing DBE awareness of procurement efforts and outreach.
(a) Ensure DBEs are made aware of contracting opportunities to the fullest extent practicable through outreach and
recruitment activities; including placing DBEs on solicitation lists and soliciting them whenever they are potential
sources.
(b) Make information on forthcoming opportunities available to DBEs and arrange time frames for contracts and
establish delivery schedules, where the requirements permit, in a way that encourages and facilitates participation by
DBEs in the competitive process. This includes, whenever possible, posting solicitation for bids or proposals for a
minimum of 30 calendar days before the bid or proposal closing date.
(c) Consider in the contracting process whether firms competing for large contracts could be subcontracted with
DBEs. This will include dividing total requirements when economically feasible into smaller tasks or quantities to
permit maximum participation by DBEs in the competitive process.
(d) Encourage contracting with a consortium of DBEs when a contract is too large for one of these firms to handle
individually.
(e) Use the services and assistance of the Small Business Administration and the Minority Business Development
Agency of the U. S. Department of Commerce.
(f) If the prime contractor awards subcontracts, require the prime contractor to take the steps in sections (a) through
(e) above.
These conditions must be included in all procurement contracts entered into by the Local Borrower for all
DWRF and CWRF projects:
(a) The prime contractor must pay its subcontractor for satisfactory performance no more than 30 days from the
prime contractor's receipt of payment from the owner.
(b) The prime contractor must notify the owner in writing prior to the termination of any Disadvantage Business
Enterprise subcontractor for convenience by the prime contractor.
(c) If a Disadvantage Business Enterprise contractor fails to complete work under the subcontract for any reason,
the prime contractor must employ the six good faith efforts if soliciting a replacement contractor.
' See Article 9 for a full list of applicable federal laws and authorities relating to Participation by Disadvantaged
Business Enterprises in Procurement Under Environmental Protection Agency (EPA) Financial Assistance
Agreements.
PHOENIX/562066.2 4
(d) The prime contractor must continue to employ the six good faith efforts even if the prime contractor has
achieved its fair share objectives.
(e) The prime contractor must provide EPA Form 6100-2 DBE Program Subcontractor Participation Form to all of
its Disadvantaged Business Enterprise subcontractors. Disadvantaged Business Enterprise subcontractors may send
completed Form 6100-2 directly to the Region 9 DBE Coordinator listed below.
Joe Ochab, EPA Region 9, 75 Hawthorne St. (P-22), San Francisco, CA 94105
(f) The prime contractor must have its Disadvantaged Business Enterprise subcontractors complete EPA Form
6100-3 — DBE Program Subcontractor Performance Form. The prime contractor must include all completed forms
as part of the prime contractor's bid or proposal package to the Local Borrower.
(g) The prime contractor must complete and submit EPA 6100-4 DBE Program Subcontractor Utilization Form as
part of the prime contractor's bid or proposal package to the Local Borrower.
(h) A Local Borrower must ensure that each procurement contract it awards contains the following terms and
conditions:
The contractor shall not discriminate on the basis of race, color, national origin or sex in
the performance of this contract. The contractor shall carry out applicable requirements
of 40 CFR Part 33 in the award and administration of contracts awarded under EPA
financial assistance agreements. Failure by the contractor to carry out these requirements
is a material breach of this contract which may result in the termination of this contract or
other legally available remedies.
Article 3 Representations of Local Borrower
The Local Borrower represents for the benefit of the Authority that the representations contained in this Loan
Agreement are true at the time of execution and delivery of this Loan Agreement and, other than with respect to
events outside of Local Borrower's control, will be true in all material respects at all times during the term of this
Loan Agreement.
Section 3.1 Organization and Authority.
(a) The Local Borrower is a Political Subdivision or Indian Tribe as defined in the Authority Act.
(b) The Local Borrower has full legal right and authority and has, or will obtain as and when required, all necessary
licenses and permits required to acquire, own, operate and maintain the Project and the System, to carry on its
activities relating thereto, to execute and deliver this Loan Agreement, to undertake and complete the Project, to
pledge the Source of Repayment, and to carry out and consummate all transactions contemplated by this Loan
Agreement. The Project is a project which the Local Borrower may undertake pursuant to State law and for which
the Local Borrower is authorized by law to borrow money.
(c) The proceedings of the Local Borrower's governing body approving this Loan Agreement and authorizing its
execution, issuance and delivery on behalf of the Local Borrower, and authorizing the Local Borrower to undertake
and complete the Project have been duly and lawfully adopted in accordance with the laws of the State.
(d) This Loan Agreement has been duly authorized, executed and delivered by an Authorized Officer of the Local
Borrower; and, assuming that the Authority has all the requisite power and authority to authorize, execute and
deliver, and has duly authorized, executed and delivered this Loan Agreement, this Loan Agreement constitutes a
legal and valid obligation of the Local Borrower enforceable in accordance with its terms, and the information
contained under "Description of the Loan" in this Loan Agreement is true and accurate in all material respects.
11110ENIX/562066.2
Section 3.2 Full Disclosure.
(a) To the best of the Local Borrower's knowledge, there is no fact that the Local Borrower has not disclosed to the
Authority in writing that materially adversely affects the properties, activities, prospects or condition (financial or
otherwise) of the Local Borrower or the System, or the ability of the Local Borrower to make all Loan Repayments
due hereunder and otherwise observe and perform its duties, covenants, obligations and agreements under this Loan
Agreement.
(b) The information relating to the Local Borrower (including without limitation the financial and statistical data
contained therein) submitted to the Authority by the Local Borrower in connection with the Authority's approval of
the Loan was at the time of the Authority's approval of the Loan and at all times subsequent thereto up to and
including the Loan Closing, will be (if necessary by amendment provided by the Local Borrower) true and correct
and will not contain an untrue statement of material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were made, not misleading in any adverse
respect. To the extent permitted by law, and notwithstanding any other provision of this Loan Agreement, the Local
Borrower will indemnify, save and hold harmless the Authority, and each of the Authority's agents, for, from and
against any and all claims, damages, liability and court awards including costs, expenses and reasonable attorneys'
fees incurred as a result of any omission or misstatement of material fact in the information submitted to the
Authority by the Local Borrower in connection with the Authority's approval of the Loan, as it may have been
supplemented and amended by the Local Borrower.
Section 3.3 Pendins Litil4ation. There are no proceedings pending, or to the knowledge of the Local Borrower,
threatened, against or affecting the Local Borrower, in any court or before any governmental authority or arbitration
board or tribunal that, if adversely determined, would materially adversely affect the properties, activities, prospects
or condition (financial or otherwise) of the Local Borrower or the System, or the ability of the Local Borrower to
make all Loan Repayments and otherwise observe and perform its duties, covenants, obligations and agreements
under this Loan Agreement that have not been disclosed in writing to the Authority in the Local Borrower's
application for the Loan or otherwise.
Section 3.4 Compliance with Existing Laws and Agreements. The authorization, execution and delivery of this
Loan Agreement by the Local Borrower, the observance and performance by the Local Borrower of its duties,
covenants, obligations and agreements hereunder and the consummation of the transactions provided for in this
Loan Agreement, the compliance by the Local Borrower with the provisions of this Loan Agreement and the
undertaking and completion of the Project will not result in any breach of any of the terms, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Local Borrower pursuant to any existing ordinance or resolution, trust agreement, indenture,
mortgage, deed of trust, loan agreement or other instrument (other than the lien and charge of this Loan Agreement
and any ordinance or resolution or indenture which authorized outstanding obligations of the Local Borrower which
are on a parity with this Loan Agreement as to a lien on, or a source and security for, payment thereon from the
source of payment that is pledged to the Loan Repayments) to which the Local Borrower is a party or by which the
Local Borrower, the System or any of its property or assets may be bound, nor will such action result in any
violation of the provisions of the charter or other document pursuant to which the Local Borrower was established or
any laws, ordinances, resolutions, governmental rules, regulations or court orders to which the Local Borrower, the
System or its properties or operations are subject.
Section 3.5 No Defaults. No event has occurred and no condition exists that, upon authorization, execution and
delivery of this Loan Agreement or receipt of the amount of the Loan, would constitute an Event of Default
hereunder. The Local Borrower is not in violation of, and has not received notice of any claimed violation of, any
term of any agreement or other instrument to which it is a party or by which it may be bound, which violation would
materially adversely affect the properties, activities, prospects or condition (financial or otherwise) of the Local
Borrower or the ability of the Local Borrower to make all Loan Repayments or otherwise observe and perform its
duties, covenants, obligations and agreements under this Loan Agreement.
Section 3.6 Governmental Consent. The Local Borrower has or will have obtained prior to the date of the Loan
Closing all permits and approvals required to date by any governmental body or officer (and reasonably expects to
receive all permits required in the future by any governmental agency) for the making, observance and performance
PHOENIX/562066.2 6
by the Local Borrower of its duties, obligations and agreements under this Loan Agreement or for the undertaking or
completion of the Project and the financing thereof, and the Local Borrower has complied with all applicable
provisions of law requiring any notification, declaration, filing or registration with any governmental body or officer
in connection with the making, observance and performance by the Local Borrower of its duties, covenants,
obligations and agreements under this Loan Agreement or with the undertaking or completion of the Project and the
financing thereof; and the Local Borrower has complied with all applicable provisions of law requiring any
notification, declaration, filing or registration with any governmental body or officer in connection with the making,
observance and performance by the Local Borrower of its duties, covenants, obligations and agreements under this
Loan Agreement or with the undertaking or completion of the Project and the financing thereof. No consent,
approval or authorization of, or filing, registration or qualification with, any governmental body or officer, other
than those already obtained or reasonably expected to be obtained, is required on the part of the Local Borrower as a
condition to the authorization, execution and delivery of this Loan Agreement, the undertaking or completion of the
Project or the consummation of any transaction herein contemplated.
Section 3.7 Compliance with Law. The Local Borrower:
(a) is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject and the
failure to comply with which would materially adversely affect the ability of the Local Borrower to conduct its
activities or undertake or complete the Project or the condition (financial or otherwise) of the Local Borrower or the
System; and
(b) has obtained, or will obtain as and when required, all licenses, permits, franchises or other governmental
authorizations necessary for the ownership of its property or for the conduct of its activities which, if not obtained,
would materially adversely affect the ability of the Local Borrower to undertake or complete the Project or the
condition (financial or otherwise) of the Local Borrower or the System.
Article 4 Assignment
Section 4.1 Assitnment and Transfer by Authority. The Local Borrower hereby approves and consents to any
assignment or transfer of this Loan Agreement that the Authority deems to be necessary in connection with the
Clean Water Revolving Fund and Drinking Water Revolving Fund programs of the Authority.
Section 4.2 Assignment by Local Borrower. This Loan Agreement may not be assigned by the Local Borrower
for any reason, unless the following conditions shall be satisfied: (i) the assignee shall be a governmental unit within
the meaning of Section 141(c) of the Code or another entity acceptable to the Authority and the assignee shall have
expressly assumed in writing the full and faithful observance and performance of the Local Borrower's duties,
covenants, agreements and obligations hereunder; (ii) immediately after such assignment, the assignee shall not be
in default in the performance or observance of any duties, covenants, obligations or agreements of the Local
Borrower hereunder; and (iii) the Authority shall receive an opinion of counsel to the effect that such assignment
will not violate the provisions of any agreement entered into by the Authority with, or condition of any grant
received by the Authority from the United States of America relating to the Capital Grant Facility or any
capitalization grants received by the Authority or the State under the Federal Water Pollution Control Act and the
Federal Safe Drinking Water Act.
No assignment shall relieve the Local Borrower from primary liability for any of its obligations under this Loan
Agreement and in the event of such assignment, the Local Borrower shall continue to remain primarily liable for the
performance and observance of its obligations to be performed and observed under this Loan Agreement.
Article 5 Defaults and Remedies
Section 5.1 Events of Default. If any of the following events occurs, it is hereby defined as and declared to be and
to constitute an "Event of Default":
(a) failure by the Local Borrower to pay, or cause to be paid, when due any Loan Repayment;
PHOENIX/562066.2
(b) failure by the Local Borrower to make, or cause to be made, any required payments of principal, redemption
premium, if any, and interest on any bonds, notes or other obligations of the Local Borrower for borrowed money
(other than the Loan), after giving effect to the applicable grace period, the payments of which are secured by the
Source of Repayment described in this Loan Agreement;
(c) failure by the Local Borrower to perform any duty, covenant, obligation or agreement on its part to be observed
or performed under this Loan Agreement, other than as referred to in paragraphs (a) and (b) of this Section, which
failure shall continue for a period of thirty (30) days after written notice, specifying such failure and requesting that
it be remedied, is given to the Local Borrower by the Authority, unless the Authority agrees in writing to an
extension of such time prior to its expiration, provided, however, that if the failure stated in such notice is
correctable but cannot be corrected within the applicable period the Authority may not unreasonably withhold its
consent to an extension of such time if corrective action is instituted by the Local Borrower and diligently pursued
until the Event of Default is corrected;
(d) the institution of any proceeding, with the acquiescence of the Local Borrower, for the purpose of effecting a
composition between the Local Borrower and its creditors or for the purpose of adjusting the claims of such
creditors, pursuant to any federal or state statute now or hereafter enacted, if the claims of such creditors are payable
from the Source of Repayment described in this Loan Agreement;
(e) a determination by the Authority that any material representation made by or on behalf of the Local Borrower
contained in this Loan Agreement, or in any instrument furnished in compliance with or with reference to this Loan
Agreement, is false or misleading in any material respect; and
(f) the filing of a petition by or against the Local Borrower under any federal or state bankruptcy or insolvency law
or other similar law in effect on the date of this Loan Agreement or thereafter enacted, unless in the case of any such
petition filed against the Local Borrower such petition shall be dismissed within thirty (30) days after such filing and
such dismissal shall be final and not subject to appeal; or the Local Borrower becoming insolvent or bankrupt or
making an assignment for the benefit of its creditors; or the appointment of a custodian (including, without
limitation, a receiver, liquidator or trustee of the Local Borrower or any of its property including the System) by
court order, or possession of the Local Borrower or its property or assets is taken if such order remains in effect or
such possession continues for more than thirty (30) days.
Section 5.2 Notice of Default. The Local Borrower shall give the Authority prompt telephone notice of the
occurrence of any Event of Default referred to in Section 5.1 paragraph (c) hereof, and of the occurrence of any
other event or condition that constitutes an Event of Default, at such time as any senior administrative or financial
officer of the Local Borrower becomes aware of the existence thereof. Any telephone notice pursuant to this Section
shall be confirmed in writing by the end of the next Business Day.
Section 5.3 Remedies on Default.
(a) Whenever an Event of Default referred to in Section 5.1 hereof shall have occurred and be continuing, the
Authority shall have the right to take any action permitted or required pursuant to this Loan Agreement and to take
whatever other action at law or in equity as may appear necessary or desirable to collect the amounts then due and
thereafter to become due on their scheduled payment dates or to enforce the performance and observance of any
duty, covenant, obligation or agreement of the Local Borrower hereunder, including, without limitation,
appointment of a receiver of the System.
(b) Nothing in this Loan Agreement shall be construed to affect the Attorney General taking action to enforce this
Loan Agreement in accordance with the Authority Act.
Section 5.4 Attorney's Fees and Other Expenses. In the event of a default hereunder by the Local Borrower, the
Local Borrower shall on demand and to the extent not prohibited by applicable law pay to the Authority the
reasonable fees and expenses of attorneys and other reasonable expenses (including without limitation the
reasonably allocated costs of in-house counsel and legal staff) incurred by the Authority in the collection of Loan
PHOENIX/562066.2 8
Repayments or any other sum due hereunder or in the enforcement of performance or observance of any other
duties, covenants, obligations or agreements of the Local Borrower to the extent permitted by law.
Section 5.5 Application of Moneys. The parties acknowledge that: (a) all amounts coming due hereunder as Loan
Repayments shall be treated as principal and combined interest and fees with respect to the Loan which amounts are
secured by a pledge of the Source of Repayment in accordance with Exhibit D of this Loan Agreement; and (b)
amounts coming due under Section 5.4 hereof shall be secured by the Source of Repayment on a basis subordinate
to the Loan Repayments, but on a parity with comparable expenses relating to such Outstanding Parity Obligations
and Additional Parity Obligations.
However, any moneys collected by the Authority pursuant to Section 5.3 in the exercise of remedies with respect to
amounts due or to become due hereunder shall be applied: (a) first, to pay any attorney's fees or other fees and
expenses owed by the Local Borrower pursuant to Section 5.4 hereof, (b) second, to pay delinquent combined
interest fees and late charges on the Loan; (c) third, to pay combined interest and fees then due and payable on the
Loan; (d) fourth, to pay delinquent principal on the Loan in order of scheduled maturity; (e) fifth, to pay principal
then due and payable on the Loan; and (f) sixth, to pay any other amounts due and payable pursuant to this Loan
Agreement.
Section 5.6 No Remedy Exclusive; Waiver; Notice. No remedy conferred upon or reserved to the Authority
hereunder is intended to be exclusive, 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. No delay or omission to exercise any
right, remedy or power accruing upon any Event of Default shall impair any such right, remedy or power or shall be
construed to be a waiver thereof, but any such right, remedy or 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 as
described in this Article, it shall not be necessary to give any notice, other than such notice as may be required in
this Article.
Section 5.7 Retention of Authority's Rights. Notwithstanding any assignment or transfer of this Agreement
pursuant to the provisions hereof, or anything else to the contrary contained herein, the Authority shall have the right
upon the occurrence of an Event of Default to take any action, including (without limitation) bringing an action
against the Local Borrower at law or in equity, as the Authority may, in its discretion, deem necessary to enforce the
obligations of the Local Borrower to the Authority.
Section 5.8 Default by the Authority. In the event of any default by the Authority in any duty, covenant,
agreement or obligation described in this Agreement, the Local Borrower's remedy for such default shall be limited
to injunction, special action, action for specific performance or any other available equitable remedy designed to
enforce the performance or observance of any duty, covenant, obligation or agreement of the Authority described
herein as may be necessary or appropriate. The Authority shall on demand pay to the Local Borrower the reasonable
fees and expenses of attorneys and other reasonable expenses in the enforcement of such performance or
observance.
Article 6 Provisions Applicable to Loans Financed by or Pledged to Secure Authority
Bonds
Section 6.1 General. The Local Borrower acknowledges that the Authority is entering into this Loan Agreement
and agreeing to make the Loan at this time for the benefit of the Local Borrower, and that the Authority may finance
the Loan, along with other loans to other local borrowers, through the issuance of Authority Bonds and may pledge
the Loan to secure Authority Bonds. If and for so long as the Authority's source of funds to make disbursements on,
or to carry, the Loan represented by this Loan Agreement is, or becomes, the proceeds of Authority Bonds, or this
Loan Agreement is assigned by the Authority as security for payment of amounts due or to become due on Authority
Bonds, the Local Borrower agrees to cooperate with the Authority with respect to the issuance of Authority Bonds
by furnishing and certifying information concerning the Local Borrower, the Project, the System and the Source of
Repayment, and by agreeing to reasonable modifications and additions to this Loan Agreement necessary or
convenient for the Authority Bond transaction. Without limiting the generality of the foregoing, the Local Borrower
agrees that if the Authority at any time determines, in its discretion, that it is necessary in connection with the
PHOENIX/562066.2 9
issuance of Authority Bonds or the maintenance of the Authority's bond program, then the provisions set forth in
this Article shall be in effect.
Section 6.2 Tax Covenants.
(a) General. The Local Borrower acknowledges that, in connection with its state revolving fund programs, the
Authority issues its Authority Bonds from time to time to finance loans and the Authority also pledges certain loans
to secure and to serve as the source of payment for the Authority Bonds. As a result, and under the provisions of
federal tax law applicable to the Authority Bonds, it is in the Authority's interest for the Loan to qualify and be a
Tax -Exempt Obligation that is not an AMT Obligation. Therefore, the Local Borrower represents and covenants as
follows with respect to the Loan and the Authority Bonds. The Local Borrower covenants that it will not take any
action, or fail to take any action, if any such action or failure to take such action would adversely affect the
exclusion from gross income of the interest on the Loan or the Authority Bonds under Section 103(a) of the Internal
Revenue Code or cause the interest on the Loan or the Authority Bonds to become an AMT Obligation, and in the
event of such action or omission, it will, promptly upon having such brought to its attention, take such reasonable
actions based upon a bond counsel opinion as may rescind or otherwise negate such action or omission. The Local
Borrower will not directly or indirectly use or permit the use of any proceeds of the Loan or any other funds of the
Local Borrower or take or omit to take any action that would cause the Loan or the Authority Bonds to be or become
"arbitrage bonds" within the meaning of Section 1.48(a) of the Internal Revenue Code or to fail to meet any other
applicable requirement of Sections 103, 141, 148, 149 and 150 of the Internal Revenue Code or cause the interest on
the Loan or the Authority Bonds to become an item of tax preference for purposes of the alternative minimum tax
imposed on individuals and corporations under the Internal Revenue Code. To that end, the Local Borrower will
comply with all applicable requirements of Sections 103, 141, 148, 149 and 150 of the Code to the extent applicable
to the Loan.
(b) Modification Based on Bond Counsel Opinion. Notwithstanding any provision of this Section, if the Local
Borrower provides to the Authority a bond counsel opinion to the effect that any action required under this Section
is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross
income of interest on the Loan or the Authority Bonds pursuant to Section 103(a) of the Internal Revenue Code, the
provisions of this Section and the covenants in this Section shall be deemed to be modified to that extent.
(c) Bond Counsel Opinion. For purposes of this Article, "bond counsel opinion" means an opinion letter of a firm
of attorneys of national reputation experienced in the field of municipal bonds whose opinions are generally
accepted by purchasers of municipal bonds, and who is acceptable to the Authority.
Section 6.3 Third Party Beneficiaries. The Trustee, the owners from time to time of the Authority Bonds, any
Credit Enhancer from time to time of the Authority Bonds and any underwriter of the Authority Bonds are each
expressly acknowledged to be third party beneficiaries of this Loan Agreement and each representation, agreement,
duty, obligation and provision of this Loan Agreement.
Section 6.4 Additional Documents RelatinE to Authority Bonds. The Local Borrower will furnish to the
Authority and certify to such information and execute and deliver and cause to be executed and delivered such
documents as the Authority, the underwriter or other parties to any Authority Bond transaction may reasonably
require, including, without limitation:
(a) a certificate of an Authorized Officer of the Local Borrower to the effect that the information contained in the
Final Official Statement (defined in Section 6.5, paragraph (a)) for the Authority Bonds concerning the Local
Borrower is correct in all material respects and is an accurate summary of the information which it purports to
summarize, and that nothing has come to the Authorized Officer's attention that would lead the Authorized Officer
to believe that the information in the Final Official Statement relating to the Local Borrower contains an untrue
statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(b) subject to the continuing disclosure requirements of Securities and Exchange Commission Rule 15c2-12 (the
"Disclosure Rule"), a continuing disclosure undertaking of the Local Borrower meeting the requirements of the
Disclosure Rule , and a statement of the Local Borrower as to whether it has failed to provide any information and
PHOENIX/562066.2 10
notices required by the provisions of previous continuing disclosure undertakings, if any, of the Local Borrower
under the Disclosure Rule, and if it has not, describing the circumstances and status of such failure; and
(c) an appropriate certificate executed by Authorized Officer of the Local Borrower concerning the reasonable
expectations of the Local Borrower as to the use of the proceeds of the Loan and such other matters as may be
required on the part of the Local Borrower in order to ensure that the Authority Bonds are and will remain Tax -
Exempt Obligations that are not AMT Obligations, and the Local Borrower covenants to comply with the provisions
of such certificate; and
(d) such other certificates, documents and information, and supplemental opinions of Local Borrower's counsel, as
the Authority, the underwriters of the Authority Bonds or other parties to the Authority Bonds transaction may
reasonably require and as are necessary to confirm the continued truth and accuracy of information supplied by or
on behalf of the Local Borrower.
Section 6.5 Disclosure Reeardine Authoritv Bonds.
(a) The information, if any, relating to the Local Borrower (including without limitation the financial and statistical
data contained therein) which has been furnished by the Local Borrower to be included in, and which is included in,
a Preliminary Official Statement of the Authority (the "Preliminary Oficial Statement"), or a final Official
Statement (the "Final Official Statement") of the Authority concerning any Authority Bonds, as of the respective
dates of each such document and at all times subsequent thereto up to and including the Bond Closing, will be (if
necessary by amendment provided by the Local Borrower) true and correct and will not contain an untrue statement
of material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. To the extent permitted by law, and notwithstanding any other
provision of this Loan Agreement, the Local Borrower will indemnify, save and hold harmless the Authority and
each other local borrower, if any, included in the Final Official Statement, and each of such parties' respective
agents, for, from and against any and all claims, damages, liability and court awards including costs, expenses and
attorneys fees incurred as a result of any omission or misstatement of a material fact in the Local Borrower's
information in the Final Official Statement, as it may have been supplemented or amended by the Local Borrower.
(b) The Local Borrower agrees that from the date of the Final Official Statement and for a period until not later than
25 days after the date of the Bond Closing if and so long as the offering of the Authority Bonds continues (i) the
Local Borrower will furnish such information with respect to itself as the Authority (for itself or at the request of the
underwriters of the Authority Bonds) may from time to time reasonably request and (ii) if any event shall occur as a
result of which it is necessary, in the opinion of Bond Counsel to the Authority, or counsel for the underwriters of
the Authority Bonds, to amend or supplement the information in the Final Official Statement relating to the Local
Borrower in order to make such information not misleading in light of the circumstances then existing, the Local
Borrower will forthwith prepare, and furnish to the Authority and the underwriters such information relating to the
Local Borrower as may be necessary to permit the preparation of an amendment of or supplement to the Final
Official Statement (in form and substance satisfactory to the Bond Counsel to the Authority and counsel for the
underwriters) which will amend or supplement the Final Official Statement so that it will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light
of the circumstances then existing, not misleading.
(c) The Local Borrower agrees that if prior to the 25th day following the end of the underwriting period of the
Authority Bonds, as defined for purposes of the Disclosure Rule, any event shall occur which causes the
representations contained in Section 6.4, paragraph (a) to be false in any material respect, the Local Borrower shall
promptly notify the Authority of such development, and if in the opinion of the Authority and the underwriters of
the Authority Bonds such development requires the preparation of a supplement or an amendment to the Preliminary
Official Statement or the Final Official Statement, the Local Borrower agrees to cooperate with the Authority and
the underwriters for the Authority Bonds in preparing any such supplement or amendment in a form acceptable to
such parties and to pay all reasonable expenses incurred by such parties in connection with the preparation thereof
Section 6.6 Assienment and Transfer by Authority to Trustee.
13HOENIX/562066.2 I I
(a) The Local Borrower expressly acknowledges that, other than the right of the Authority to be indemnified by the
Local Borrower, all right, title and interest of the Authority in, to and under this Loan Agreement will be assigned to
the Trustee as security for the Authority Bonds, as applicable, as provided in the Authority's Master Trust Indenture,
and that if any Event of Default shall occur the Trustee, pursuant to the Authority's Master Trust Indenture, shall be
entitled to act hereunder in the place and stead of the Authority. The Local Borrower hereby acknowledges the
requirements of the Authority's Master Trust Indenture applicable to the Authority Bonds and consents to such
assignment and appointment. The Authority shall retain the right to compel or otherwise enforce observance and
performance by the Local Borrower of its duties, covenants, obligations and to be indemnified by the Local
Borrower; provided, however, that in no event shall the Authority or the Trustee have the right to accelerate the
payments under this Loan Agreement.
(b) The Local Borrower hereby approves and consents to any assignment or transfer of this Loan Agreement that
the Authority deems to be necessary in connection with any refunding of the Authority Bonds or otherwise in
connection with the Clean Water Revolving Fund and Drinking Water Revolving Fund programs of the Authority.
Section 6.7 Conditions to Assignment by Local Borrower. Notwithstanding Section 4.2, this Loan Agreement
may not be assigned by the Local Borrower for any reason, unless the following conditions shall be satisfied: (i) the
Authority, the Trustee and the Credit Enhancer, if any, of the Authority Bonds shall have approved said assignment
in writing; (ii) the assignee shall be a governmental unit within the meaning of Section 141(c) of the Internal
Revenue Code or another entity acceptable to the Authority and the assignee shall have expressly assumed in writing
the full and faithful observance and performance of the Local Borrower's duties, covenants, agreements and
obligations hereunder; (iii) immediately after such assignment, the assignee shall not be in default in the
performance or observance of any duties, covenants, obligations or agreements of the Local Borrower hereunder;
(iv) the Authority and the Trustee shall have received an opinion of bond counsel to the effect that such assignment
will not adversely affect the exclusion of interest on the Authority Bonds from gross income for purposes of Federal
income taxation under Section 103(a) of the Code or make the Authority Bonds or the Loan AMT Obligations; and
(v) the Authority and the Trustee shall receive an opinion of counsel to the effect that such assignment will not
violate the provisions of the Master Trust Indenture or any agreement entered into by the Authority with, or
condition of any grant received by the Authority from, the United States of America relating to the Capital Grant
Facility or any capitalization grants received by the Authority or the State under the Federal Water Pollution Control
Act and the Federal Safe Drinking Water Act.
No assignment shall relieve the Local Borrower from primary liability for any of its obligations under this Loan
Agreement and in the event of such assignment, the Local Borrower shall continue to remain primarily liable for the
performance and observance of its obligations to be performed and observed under this Loan Agreement.
Section 6.8 Sale or Other Disposition of Proiect or System. The Local Borrower agrees that it will not sell,
lease, abandon or otherwise dispose of all or substantially all or any substantial portion of the Project or the System
unless (i) the transferee assumes the Local Borrower's obligations under this Loan Agreement in accordance with
Section 6.6, (ii) the Authority shall by appropriate action determine, in its sole discretion, that such sale, lease,
abandonment or other disposition will not adversely affect the Authority's ability to meet its duties, covenants,
obligations and agreements under the Bond Documents, and will not adversely affect the eligibility of interest on
Authority Bonds then outstanding or which could be issued in the future for exclusion from gross income for
purposes of federal income taxation or cause such Authority Bonds to be AMT Obligations, and (iii) the Credit
Enhancer, if any, of the Authority Bonds shall have given its prior written consent to such disposition.
Section 6.9 Deficiencies Under Bond Documents Caused by Failure to Make Loan Repayment. The Local
Borrower acknowledges that payment of the Authority Bonds by the Authority, including payment from moneys
drawn by the Trustee from the Bond Reserves or the CWRF Financial Assistance Account and DWRF Financial
Assistance Accounts established under the Bond Documents, does not constitute payment of the amounts due under
this Loan Agreement. If at any time the amounts on deposit in the Bond Reserves or the CWRF Financial
Assistance Account and DWRF Financial Assistance Accounts shall be less than the amounts required by the Bond
Documents as the result of any transfer of moneys from the Bond Reserves or the CWRF Financial Assistance
Account and DWRF Financial Assistance Accounts which in turn is the result of a failure by the Local Borrower to
make any Loan Repayments required hereunder, the Local Borrower agrees to (i) replenish such moneys so
transferred, and (ii) replenish any deficiency arising from losses incurred in making such transfer as the result of the
PHOENIX/562066.2 12
liquidation by the Authority of investment securities acquired as an investment of moneys in the Bond Reserves or
the CWRF Financial Assistance Account and DWRF Financial Assistance Accounts, by making payments to the
Authority in equal monthly installments for the lesser of six (6) months or the remaining term of the Loan at a
combined interest and fee rate to be determined by the Authority necessary to make up any loss caused by such
deficiency, provided that the combined interest and fee rate payable on the Loan including such make-up combined
interest and fees shall not exceed the maximum rate permitted by the Authorizing Proceedings which authorized this
Loan Agreement.
Section 6.10 Indemnification. To the extent permitted by law, the Local Borrower shall indemnify, save and hold
harmless the Authority against any and all claims, damages, liability and court awards including costs, expenses and
attorney fees to the extent incurred as a result of any gross negligence or willful misconduct by the Local Borrower,
or its employees, agents or subcontractors pursuant to the terms of this Loan Agreement.
Section 6.11 Compliance with Master Trust Indenture. The Local Borrower covenants and agrees to take such
action as it may lawfully take and as the Authority shall reasonably request so as to enable the Authority to observe
and comply with, all duties, covenants, obligations and agreements contained in the Master Trust Indenture insofar
as such duties, covenants, obligations and agreements relate to the obligations of the Local Borrower under this
Loan Agreement.
Section 6.12 Provisions Relatin! to Default.
(a) Any notice or information which the Local Borrower is to give to the Authority pursuant to the provisions of
Article 5 shall also be given by the Local Borrower to the Trustee and to any Credit Enhancer at the same time.
(b) Notwithstanding the provisions of Section 5.3, paragraph (a) and Section 5.7, so long as a Credit Enhancer is
not in default of its obligations with respect to its payment guarantee of the Authority Bonds and such guarantee is
in effect, the Credit Enhancer shall have the right to direct the exercise of remedies provided for herein and the
Trustee and the Authority shall not pursue any remedy except with the prior written consent of the Credit Enhancer.
(c) In the event of a default hereunder by the Local Borrower, the Local Borrower shall also pay the expenses of
the Trustee and of any Credit Enhancer in the same manner as provided in Section 5.4 with respect to the expenses
of the Authority.
Section 6.13 Tax Compliance Certificate. If the Authority Bonds are issued and sold on the basis that they are
Tax -Exempt Obligations, an Authorized Officer of the Local Borrower shall deliver an appropriate certificate
concerning the reasonable expectations of the Local Borrower as to the use of the proceeds of the Loan and such
other matters as may be required on the part of the Local Borrower in order to ensure that the Authority Bonds are
and will remain Tax -Exempt Obligations that are not AMT Obligations, and the Local Borrower covenants to
comply with the provisions of such certificate.
Article 7 Miscellaneous
Section 7.1 Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the
Authority and the Local Borrower and their respective successors and assigns.
Section 7.2 Severability. In the event any provision of this Loan Agreement shall be held illegal, invalid or
unenforceable by any Court of competent jurisdiction, such holding shall not invalidate, render unenforceable or
otherwise affect any other provision hereof.
Section 7.3 Amendments, Supplements and Modifications. This Loan Agreement may not be amended,
supplemented or modified without the prior written consent of the Authority and the Local Borrower.
Section 7.4 Execution in Counterparts. This Loan Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the same instrument.
PHOENIX/562066.2 13
Section 7.5 Captions. The captions or headings in this Loan Agreement are for convenience only and shall not in
any way define, limit or describe the scope or intent of any provisions or sections of this Loan Agreement.
Section 7.6 Further Assurances. The Local Borrower shall, at the request of the Authority, authorize, execute,
acknowledge and deliver such further resolutions, conveyances, transfers, assurances, financing statements and other
instruments as may be necessary or desirable for better assuring, conveying, granting, assigning and confirming the
rights and agreements granted or intended to be granted by this Loan Agreement.
Section 7.7 State of Arizona Contract Provisions.
(a) Books and Records. As required by the provisions of Arizona Revised Statutes Section 35-214, the Local
Borrower agrees that all books, accounts, reports, files and other records relating to this Loan Agreement shall be
retained and shall be subject at all reasonable times to inspection and audits by the Authority for five years after
completion of this Loan Agreement, and that upon request by the Authority such records shall be produced at any of
the Authority offices designated herein as the place at which notices to the Authority are to be given.
(b) Prohibition Against Discrimination. In the event that it applies, the parties agree to comply with the Arizona
Governor's Executive Order 2009-9, entitled "Prohibition of Discrimination in State Contracts Non -Discrimination
in Employment by Government Contractors and Subcontractors," which mandates that all persons, regardless of
race, color, religion, sex, age, or national origin shall have equal access to employment opportunities, and all other
applicable state and Federal employment laws, rules, and regulations, including the Americans with Disabilities Act.
The Local Borrower shall take affirmative action to ensure that applicants for employment and employees are not
discriminated against due to race, creed, color, religion, sex, national origin or disability.
(c) Governing Law and Forum. This Loan Agreement shall be governed by and construed in accordance with the
laws and judicial decisions of the State of Arizona, except as such laws may be preempted by any federal rules or
regulations. The parties hereto expressly acknowledge and agree and all Local Borrowers by their acceptance
thereof shall be deemed to have acknowledged and agreed that any judicial action to interpret or enforce the terms of
this Loan Agreement against the Authority shall be brought and maintained in the Superior Court of the State of
Arizona in and for Maricopa County or in the United States District Court in and for the District of Arizona.
(d) Arbitration. In the event of a dispute, the parties agree to use arbitration, after exhausting applicable
administrative review, to the extent required by Arizona Revised Statutes Section 12-1518, and the prevailing party
shall be entitled to attorney's fees and costs with respect thereto.
(e) Notice of Arizona Revised Statutes Section 38-511 — Cancellation. Notice is hereby given of the provisions of
Arizona Revised Statutes Section 38-511, as amended. By this reference, the provisions of said statute are
incorporated herein to the extent of their applicability to this Loan Agreement under the law of the State of Arizona.
(f) Additional Warranties and Certifications from the Local Borrower. In compliance with Section 23-214(B) of
the Arizona Revised Statutes, the Local Borrower warrants to the Authority that either (i) it is not an "employer"
(within the meaning of Arizona Revised Statutes Section 23-214(B)) or (ii) it is registered with and is participating
in the employment verification pilot program as jointly administered by the United States department of homeland
security and the social security administration or any of its successor programs (the "E -Verify Program") and that
the proof submitted to the Authority of that registration and participation is true and correct. The Local Borrower
agrees that, until the Loan is fully paid, at all times during which it is an "employer" (within the meaning of Arizona
Revised Statutes Section 23-214(B)) it will be registered with and will participate in the E -Verify Program. The
breach by the Local Borrower of the foregoing shall be deemed a material breach by the Local Borrower of this
Loan Agreement and may result in penalties up to and including the termination of this Loan Agreement. If the
Authority determines that the Local Borrower is not so registered and participating when required, the Authority will
notify the Local Borrower by certified mail of the determination of noncompliance and the Local Borrower's right to
appeal the determination. On a final determination of noncompliance, the Local Borrower shall repay all monies
received as an economic development incentive (within the meaning of Arizona Revised Statutes Section 23-
214(B)) to the Authority within thirty days of the final determination.
PHOENIX/562066.2 14
Article 8 Definitions
Section 8.1 Definitions. The following terms as used in this Loan Agreement shall, unless the context clearly
requires otherwise, have the following meaning:
"AMT Obligation" means a Tax -Exempt Obligation the interest on which is an item of tax preference for purposes
of the alternative minimum tax imposed on individuals and corporations under the Internal Revenue Code.
"Anneal Loan Review Form" means the loan compliance questionnaire circulated by the Authority to all borrowers
as part of the Authority's annual loan portfolio review.
"Authority" means the Water Infrastructure Finance Authority of Arizona, a body corporate and politic of the State
of Arizona duly created and validly existing under and by virtue of the Authority Act.
"Authority Act" means Title 49, Chapter 8 (Section 49-1201 et SeMc .) of the Arizona Revised Statutes ("A.R.S.").
"Authority Bonds" means any bonds of the Authority issued to finance the State's revolving fund established
pursuant to the Water Pollution Control Act, as amended, and the Safe Drinking Water Act, as amended.
"Authorized Officer" means, (i) with respect to the Local Borrower, the person whose name is set forth in this Loan
Agreement or such other person or persons authorized by the Local Borrower to act as an authorized officer of the
Local Borrower to perform any act or execute any document relating to the Loan or this Loan Agreement whose
name is furnished in writing to the Authority and the Trustee; and (ii) with respect to the Authority, the Chairman,
Vice Chairman, Executive Director, or any other person or persons designated by the Board to act on behalf of the
Authority with respect to this Loan Agreement; the designation of such person or persons shall be evidenced by a
written certificate containing a specimen signature of such person or persons and signed on behalf of the Authority
by its Chairman or Vice Chairman.
"Bond Closing" means the date of initial delivery of and payment for the Authority Bonds.
"Bond Documents" means and includes the Master Trust Indenture, any supplemental indenture and any comparable
or related document pursuant to which the Authority Bonds are issued, and all further amendments and supplements
thereto adopted in accordance with the provisions thereof.
"Bond Reserves" means reserves established by the Bond Documents for the Authority Bonds to secure timely
payment of amounts due on the Authority Bonds even if one or more local borrowers do not make timely payments
on their loans.
"Business Day" means any day other than a Saturday, Sunday or legal holiday or a day on which banking
institutions, in the city in which the designated office of the Authority (being Phoenix, Arizona) is located, are
closed.
"Capital Grant Facility" means the contractual arrangement established with the Authority by the United States of
America Environmental Protection Agency to make capitalization grant payments pursuant to Title VI of the Federal
Water Pollution Control Act, as amended (33 U.S.C. § 125 et sM.) and the Federal Safe Drinking Water Act, as
amended (particularly 42 U.S.C. § 300j-12 et 5N.).
"Clean Water Act" means the Federal Water Pollution Control Act amendments of 1972 (P.L. 92-500; 86 Stat. 816),
as amended by the Water Quality Act of 1987 (P.L. 100-4; 101 Stat. 7) and the Water Resources Reform and
Development Act of 2014 (P.L. 113-21, 128 Stat. 1193).
"Clean Water Revolving Fund" means the find established by A.R.S. § 49-1221.
"Code" means the Internal Revenue Code of 1986, the Regulations (whether temporary or final) under that Code or
the statutory predecessor of that Code, and any amendments of, or successor provisions to, the foregoing and any
11140ENIX/562066.2 15
official rulings, announcements, notices, procedures and judicial determinations regarding any of the foregoing, all
as and to the extent applicable. Unless otherwise indicated, reference to a Section includes any applicable successor
section or provision and such applicable Regulations, rulings, announcements, notices, procedures and
determinations pertinent to that Section.
"Combined Interest and Fee Rate" means periodic interest and fee payments made by the Borrower, see Exhibit A
to this Loan Agreement.
"Construction Period" means the period from the date of the Loan Closing until the date of the final disbursement
of proceeds of the Loan pursuant to this Loan Agreement, but in no event later than the third anniversary of the Loan
Closing.
"Cost" means those costs that are eligible to be funded from draws under the Capital Grant Facility and are
reasonable, necessary and allocable to the Project and are permitted by generally accepted government auditing
standards to be costs of the Project.
"Credit Enhancer" means the entity so designated in the Bond Documents, if any, or any successor thereto, that
from time to time has issued and outstanding a municipal bond insurance policy or similar payment guarantee
relating to the Authority Bonds.
"CWRF Financial Assistance Account" means the account so designated in the Master Trust Indenture to which
loans funded by the Clean Water Revolving Fund shall be credited.
"Debt Management Fee" means the fee component of the combined interest and fee payments made by the
Borrower, see Exhibit A to this Loan Agreement.
"Department" means the Department of Environmental Quality of the State of Arizona.
"Drinking Water Facility" has the meaning given that term in the Authority Act, currently: a community water
system or a non-profit noncommunity water system as defined in the Federal Safe Drinking Water Act (P.L. 93-523;
88 Stat. 16601; P.L. 95-190; 91 Stat. 1393; P.L. 104-182; 110 Stat. 1613) that is located in the State. The term does
not include water systems owned by federal agencies.
"Drinking Water Revolving Fund" means the fund established by A.R.S. § 49-1241.
"DWRF Financial Assistance Account" means the account so designated in the Master Trust Indenture to which
loans funded by the Drinking Water Revolving Fund shall be credited.
"Eligible Project Costs" means, whether incurred before or after the date of this Loan Agreement, such portion of
the Costs as is disbursed by the Authority for the benefit of the Local Borrower. The Local Borrower and the
Authority acknowledge that the actual Eligible Project Costs for the Project have not been determined as of the
effective date of this Loan Agreement. The final Eligible Project Costs shall be established after all disbursements
have been made.
"Event of Default" means any occurrence or event specified in Section 5.1 hereof.
"Indian Tribe" has the meaning given that term by the Authority Act, currently: any Indian tribe, band, group or
community that is recognized by the United States Secretary of the Interior and that exercises governmental
authority within the limits of any Indian reservation under the Jurisdiction of the United States government
notwithstanding the issuance of any patent and including rights-of-way running through the reservation.
"Loan" means (a) during the Construction Period, the commitment to lend to the Local Borrower the Estimated
Eligible Project Costs set forth in this Loan Agreement (as it may be amended or revised from time to time), and (b)
thereafter, the amount of money equal to the Eligible Project Costs which is actually loaned to the Local Borrower
pursuant to this Loan Agreement.
PHOENIX/562066.2 16
"Loan Agreement" or "Agreement' means this Loan Agreement, including the Exhibits and these Standard Terms
and Conditions attached to this Loan Agreement, as it may be supplemented, modified or amended from time to
time in accordance with the terms hereof.
"Loan Closing" means the date of execution and delivery of this Loan Agreement.
"Loan Repayment Date" means the payment dates commencing and ending on the dates set forth in this Loan
Agreement.
"Loan Repayments" means the payments payable by the Local Borrower pursuant to this Loan Agreement.
"Local Borrower" means the Political Subdivision or Indian Tribe that is a party to and is described in the first
paragraph of this Loan Agreement.
"Master Trust Indenture" means and includes the Master Trust Indenture dated as of August 1, 1999, as
supplemented, and any comparable or related document, pursuant to which the Authority issues Authority Bonds.
"Political Subdivision" has the meaning given that term by the Authority Act, currently: a county, city, town or
special taxing district authorized by law to construct wastewater treatment facilities.
"Project" is the project described in Section 2.1 of the Loan Agreement, all or a portion of the Cost of which is
financed from the proceeds of the Loan.
"Repayment Period" means the period over which the principal amount of the Loan will be repaid which period
begins and ends on the dates set forth in this Loan Agreement.
"Repayment Principal Amount" means the amount the Authority agrees to loan to the Local Borrower pursuant to
this Loan Agreement or such lesser amount of actual Eligible Project Costs as represents the aggregate amount of
the Loan actually made pursuant to this Loan Agreement.
"Reserve Fund Surety" means a surety bond, insurance policy, letter of credit or similar arrangement representing
the irrevocable obligation of the issuer thereof to pay to or at the direction of the Local Borrower an amount up to
the Reserve Requirement as set forth in Exhibit A.
"Safe Drinking Water Act" means the Federal Safe Drinking Water Act (P.L. 93-523; 88 Stat. 1660; P.L. 96-190; 91
Stat. 1393; P.L. 104-182; 110 Stat. 1613), as amended in 1996.
"Source of Repayment" means the "source of repayment" set forth in this Loan Agreement as defined in Exhibit D.
"State" means the State of Arizona.
"System" means the "System" as defined in Section 2.2 of the -Loan Agreement.
"Tax -Exempt Obligation" means any obligation or issue of obligations (including bonds, notes and lease obligations
treated for federal income tax purposes as evidences of indebtedness) the interest on which is excluded from gross
income for federal income tax purposes within the meaning of Section 150 of the Code, and includes any obligation
or any investment treated as a "tax-exempt bond" for the applicable purpose of Section 148 of the Code
"Trustee" means the Trustee appointed by the Authority pursuant to the Bond Documents and its successor or
successors and any other corporation which may at any time be substituted in its place as Trustee pursuant to the
Bond Documents.
Terms not otherwise defined herein shall have the meanings ascribed to them in Exhibit D to the Loan Agreement.
PHOENIX/562066.2 17
Section 8.2 Rules of Interpretation. For all purposes of this Loan Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) Words of one gender include the corresponding words of other genders; words of neuter include both genders;
and words in the singular include words in the plural and vice versa.
(b) Words indicating persons, parties, or entities (and the like) include firms, associations, partnerships (including
limited partnerships), limited liability companies (and the like), corporations, trusts and other legal entities,
including public and governmental bodies, as well as natural persons.
(c) References to a statute refer to the statute, as amended, and any successor statute, and to all regulations
promulgated under or implementing the statute or successor statute, as in effect at the relevant time.
(d) References to a governmental or quasi -governmental entity or representatives thereof also refer to an entity that
succeeds to the functions of the governmental or quasi -governmental entity and representatives thereof.
(e) Headings preceding sections of text and any table of contents are solely for convenience of reference and are
not part of this Loan Agreement and are not to affect its meaning, interpretation or effect.
(f) Actions permitted under this Loan Agreement may be taken at any time and from time to time in the actor's sole
discretion.
(g) The word "including" means "including, but not limited to" and the word "include" means "include, among
others."
(h) The terms "hereby," "hereof," "herein," and "hereunder" (and the like) refer to this Loan Agreement.
(i) Indications of time of day mean local time in Phoenix, Arizona.
0) This Loan Agreement shall be governed by and construed in accordance with the applicable law of the State of
Arizona, except for its conflict of law rules and except as preempted by federal.
Article 9 List of Federal Laws and Authorities
By Section 5.4 and Section 5.5 of Exhibit B to the Loan Agreement, the Local Borrower agrees that the Project will
comply with applicable provisions of the following federal laws and authorities:
Environmental:
1. Archaeological and Historical Preservation Act of 1974, Pub. L. 93-291; 16 U.S.C. § 469a-1.
2. Clean Air Act, Pub. L. 95-95, as amended; 42 U.S.C. § 7401 et. seq.
3. Clean Water Act, Titles 1I, IV, and V, Pub. L. 92-500, as amended.
4. Coastal Barrier Resources Act, Pub. L. 97-348; 16 U.S.C. § 3501 et. seq.
5. Coastal Zone Management Act, Pub. L. 92-583, as amended; 16 U.S.C. § 1451 et. seq.
6. Endangered Species Act, Pub. L. 93-205, as amended; 16 U.S.C. § 1531 et seq.
7. Environmental Justice, Executive Order 12898.
8. Farmland Protection Policy Act, Pub. L. 97-98; 7 U.S.C. § 4201 et seq.
13HOENIX/562066.2 18
9. Fish and Wildlife Coordination Act, Pub. L. 85-624, as amended.
10. Floodplain Management, Executive Order 11988, as amended by Executive Order 12148.
11. Magnunson-Stevens Fishery Conservation and Management Act, Pub L. 94-265, as amended; 16 U.S.C. § 1801
et. seq.
12. National Historic Preservation Act of 1966, Pub. L. 89-665, as amended; 16 U.S.C. § 470 et. seq.
13. Protection and Enhancement of the Cultural Environment, Executive Order 11593.
14. Protection of Wetlands, Executive Order 11990, as amended by Executive Order 12608; Pub. L. 99-645, as
codified at 16 U.S.C. § 3901 et. seq.
15. Safe Drinking Water Act, Section 1424(e), Pub. L. 92-523, as amended; 42 U.S.C. § 300f et. seq.
16. Wild and Scenic Rivers Act, Pub. L. 90-542, as amended; 16 U.S.C. § 1271 et. seq.
17. Migratory Bird Treaty Act of 1918, 16 U.S.C. § 703 et. seq.
Social Legislation:
1. Age Discrimination Act, Pub. L. 94-135; 42 U.S.C. § 6102.
2. Civil Rights Act of 1964, Pub. L. 88-352, Title VI; 42 U.S.C. § 2000d.
3. Equal Employment Opportunity, Executive Order 11246, as amended.
4. Participation by Disadvantaged Business Enterprises in Procurement Under Environmental Protection Agency
(EPA) Financial Assistance Agreements.
a. Promoting the use of Small, Minority, and Women -owned Businesses, Executive Orders 11625,
12138 and 12432.
b. Section 129 of the Small Business Administration Reauthorization and Amendment Act of 1988,
Pub. L. 100-590.
c. Department of Veterans Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1993, Pub. L. 102-389; 42 U.S.C. § 4370d.
d. Title X Clean Air Act, Pub. L. 101-549; 42 U.S.C. § 7601 note.
5. Rehabilitation Act of 1973, Pub. L. 93-112; 29 U.S.C. § 794 (including Executive Order 11914 and 11250).
6. Section 13 of the Federal Water Pollution Control Act, Pub. L. 92-500; 33 U.S.C. § 1251.
7. The Drug Free Workplace Act Of 1988, Pub. L. 100-690.
Economic and Miscellaneous Authority:
1. Anti -Lobbying Provision (40 CFR Part 34) and New Restrictions on Lobbying, Section 319 of Pub. L. 101-121.
2. Debarment and Suspension, Executive Order 12549.
PHOENIX/562066.2 19
3. Demonstration Cities and Metropolitan Development Act of 1966, Pub. L. 89-754, as amended; 42 U.S.C.
§ 3331 et. seq.
4. Preservation of Open Competition and Government Neutrality, Executive Order 13502.
5. Prohibitions relating to violators of the Clean Air Act, Section 306 of the Clean Air Act, 42 U.S.C. § 7505;
Section 508 of the Clean Water Act, 33 U.S.C. § 1368; Executive Order 11738, Administration of the Clean Air
Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans.
6. Uniform Relocation and Real Property Acquisition Policies Act of 1970, Pub. L. 91-646, as amended;
42 U.S.C. §§ 4601-4655.
PHOENIX/562066.2 20