80A - JOINT - SAFA - WATER SYS BONDS

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THE FINANCING PLAN Refunding of Prior Obligations The Authority is selling the Bonds to provide, among other things, the moneys (together with other available funds) necessary to refund in whole the Prior Obligations. A portion of the proceeds of the Bonds, along with certain remaining funds from the Prior Obligations, will be used to establish an escrow fund (the "Escrow Fund ") for the Prior Obligations to be held in trust by The Bank of New York Mellon Trust Company, N.A., acting as escrow bank for the Prior Obligations (the "Escrow Bank") under an Escrow Deposit and Trust Agreement between the Authority and the Escrow Bank, dated as of 1, 2014 (the "Escrow Agreement "). Proceeds deposited into the Escrow Fund will be used to pay the debt service on the Prior Obligations thirty (30) following the Closing Date, and to pay the redemption price thereof, as specified in the Escrow Agreement. Upon deposit of such proceeds and other moneys into the Escrow Fund, the Prior Obligations will no longer be deemed outstanding and will no longer have a claim on Net System Revenues. Moneys deposited in the Escrow Fund are not available to pay principal of or interest on the Bonds. The Project The City anticipates the Proj ect to consist of the facilities listed below. The total cost of construction of the Project is estimated by the City to be approximately $31,526,400. Amounts not funded from proceeds of the Bonds are expected to be funded from funds on hand with the City and other available resources of the City. It is expected that the facilities will be installed within three years. Estimated costs of the Project components are as follows: Facility n Estimated Cost Construction Period Water Main Replacement $2,700,000 2015 -16 Pump Station Improvements 4,860,000 2014 -15 Total $7,560,000 The City may replace these improvements with other improvements or betterments to the Water System. See "THE WATER SYSTEM — The Projects, Future Water System Improvements" for additional improvements. Environmental Compliance The Project and its various components are subject to the California Environmental Quality Act ( "CEQA "). Under CEQA, a project which may have a significant effect on the environment and which is to be carried out or approved by a public agency must comply with a comprehensive environmental review process, including the preparation of an Environmental Impact Report ( "EIR "). Contents of an FIR include a detailed statement of the project's significant environmental effects; any such effects which cannot be avoided if the project is implemented; mitigation measures proposed to minimize such effects; alternatives to the proposed project; any significant irreversible environmental changes which would result from the project; the project's growth- inducing impacts; and a brief statement setting forth the agency's reasons for determining that certain effects are not significant and hence do not require discussion in an EIR. If the agency determines that the project itself will not have a significant effect on the environment, it may adopt a negative declaration to that effect and need not prepare an FIR. The City expects that the water main replacement improvements will be categorically exempt from CEQA and the pump station improvements will require the City to prepare a mitigated negative declaration for compliance with CEQA, and does not believe that environmental or permitting considerations will adversely affect the completion of the Project within the contemplated budget or the estimated timetable. 80A -144