Laserfiche WebLink
SECURITY FOR THE BONDS <br />General <br />THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM <br />AND SECURED SOLELY BY THE REVENUES PLEDGED UNDER THE INDENTURE AND ARE NOT <br />SECURED BY A LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE OR LIEN UPON ANY PROPERTY <br />OF THE AUTHORITY OR THE CITY, OR ANY OF THE AUTHORITY'S INCOME OR RECEIPTS, <br />EXCEPT THE REVENUES. THE BONDS ARE NOT A DEBT, LIABILITY OR OBLIGATION OF THE <br />CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS AND NEITHER THE <br />FAITH AND CREDIT OF THE CITY, THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS ARE <br />PLEDGED TO THE PAYMENT OF THE BONDS, AND NEITHER THE AUTHORITY NOR THE CITY IS <br />OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION, AND NEITHER THE CITY, THE <br />STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE FOR THE BONDS, NOR IN ANY <br />EVENT ALL THE BONDS OR ANY INTEREST OR REDEMPTION PREMIUM BE PAYABLE OUT OF <br />ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY AS SET FORTH IN THE <br />INDENTURE. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE INSTALLMENT <br />PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE CITY, THE STATE OR ANY POLITICAL <br />SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY <br />DEBT LIMITATION OR RESTRICTION. <br />"Revenues" consist primarily of Installment Payments paid by the City to the Authority pursuant to the <br />Installment Purchase Agreement. The Authority shall pay to the Trustee all Revenues, which the Trustee shall <br />deposit in the Bond Fund to be used: first, for payment of debt service (including mandatory sinking fund <br />redemptions), and second, for replenishment of the Reserve Account in the event its balance is less than the <br />Reserve Requirement, as and to the extent required by the Indenture, see "APPENDIX B." The Authority, <br />pursuant to the Indenture, has assigned to the Trustee its right to receive all Installment Payments from the City <br />under the Installment Purchase Agreement and, effective immediately on default by the City under the <br />Installment Purchase Agreement and without any further act on the part of the Authority, any and all of the other <br />rights of the Authority under the Installment Purchase Agreement as may be necessary to enforce payment of <br />such Installment Payments when due or otherwise to protect the interests of the Owners of the Bonds. <br />All Net System Revenues (defined below) are irrevocably pledged by the City to the payment of the <br />Installment Payments and debt service on Parity Obligations as provided in the Installment Purchase Agreement, <br />and the Net System Revenues shall not be used for any other purpose while any of the Installment Payments <br />remain unpaid; provided, however, that out of the Net System Revenues there may be apportioned such sums for <br />such purposes as are expressly permitted by the Installment Purchase Agreement, including payment of debt <br />service on any Parity Obligations. This pledge shall constitute a first lien on the Net System Revenues for the <br />payment of the Installment Payments and debt service on any Parity Obligations in accordance with the <br />Installment Purchase Agreement. The Bonds are not secured by a direct lien on the Water System or any <br />other property of the City. <br />In the Installment Purchase Agreement, the City covenants that, so long as any Bonds are outstanding, <br />the City will not issue or incur any obligations payable from Net System Revenues superior to the payment of <br />the Installment Payments. The City is authorized to issue additional Parity Obligations secured by Net System <br />Revenues with a lien on a parity basis with the lien of Installment Payments, provided it complies with certain <br />provisions in the Installment Purchase Agreement. See "THE BONDS -- Issuance of Parity Obligations." The <br />City is also authorized to issue subordinate debt secured by Net System Revenues. <br />Net System Revenues <br />Net System Revenues are System Revenues less Maintenance and Operation Costs of the Water System. <br />"System Revenues" is defined in the Installment 'Purchase Agreement to mean all income, rents, rates, fees, <br />charges and other moneys derived from the ownership or operation of the Water System, including, without <br />limiting the generality of the foregoing, (i) all i$A461es, fees, charges (including standby and capacity <br />11 <br />