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HomeMy WebLinkAboutORDINANCE 07-26TOWN OF ESTES PARK, COLORADO ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE ORDINANCE NO. 07-26 AN ORDINANCE OF THE TOWN OF ESTES PARK, COLORADO, ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE, AUTHORIZING THE ISSUANCE OF A WATER REVENUE BOND TO EVIDENCE A LOAN FROM THE RURAL UTILITIES SERVICE OF THE UNITED STATES DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT TO PAY THE CONSTRUCTION LOAN NOTE, SERIES 2022A, ISSUED BY THE TOWN, ACTING BY AND THROUGH THE ENTERPRISE, TO PAY A PORTION OF THE COST OF REBUILDING AND IMPROVING THE WATER DISTmBUTION SYSTEM OF THE FORMER PROSPECT MOUNTAIN WATER COMPANY; PROVIDING THE FORM AND OTHER DETAILS IN CONNECTION WITH THE BOND; PROVIDING FOR THE PAYMENT OF THE BOND FROM A SYSTEM RECONSTRUCTION SURCHARGE FEE TO BE PAID MONTHLY IN ADDITION TO THE TOWN'S WATER SERVICE RATES BY THE OWNERS OF THE PROPERTIES FORMERLY SERVED BY THE PROSPECT MOUNTAIN WATER COMPANY; AND MAKING CERTAIN COVENANTS AND APPROVING CERTAFK DOCUMENTS RELATING TO THE LOAN. WHEREAS, the Town of Estes Park, Colorado (the "Town"), is a statutoiy town and political subdivision duly organized and existing pursuant to the laws of the State of Colorado (the "State"); and WHEREAS, the Board of Trustees (the "Board") of the Town has formally established a Water Activity Enterprise (the "Enterprise") pursuant to Ordinance No. 08-99; and WHEREAS, the Town, acting by and through the Enterprise operates and maintains a municipal water system within the Town and surrounding areas for the distribution of treated water; and WHEREAS, such municipal water system has been and continues to be operated by the Enterprise as a government-owned business, which is authorized to issue its own revenue bonds and receives under 10% of annual revenue in grants from all Colorado state and local governments combined, and the Enterprise is hereby determined to be an enterprise within the meaning of Article X, Section 20 of the Colorado Constitution; and WHEREAS, the Town, acting by and through the Enterprise, provided treated water to the Prospect Mountain Water Company, Inc. (the "Company") for years as a bulk water customer, and the Company distributed such water through its own distribution system (the "Prospect MIountain System") to property owners in the Company's service area; and -2561-4373.5 WHEREAS, on April 22, 2015, the Company filed a Chapter 7 Bankruptcy petition under the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Colorado, and a trustee (the "Bankruptcy Trustee") was appointed to manage the Company; and WHEREAS, on March 8, 2016, the Town and the Bankruptcy Trustee, acting for the Company, entered into an agreement for the Town to maintain and operate the Prospect Mountain System; and WHEREAS, pursuant to Section 31-35-402, Colorado Revised Statutes, the Town has the power to operate and maintain water facilities for use within and without the boundaries of the Town, and to accept loans or grants or both from the United States for the construction ofnecessaiy water facilities; and WHEREAS, the Prospect Mountain System had exceeded its useful life and needed to be replaced in order to provide improved water quality, improved water pressure and fire flow volume, and to meet Town standards and requirements for water distribution systems; and WHEREAS, on February 26, 2019, the Town, acting by and through the Enterprise, and the Bankruptcy Trustee, acting for the Company, entered into a Voluntary Water System Transfer Agreement for the transfer of the Prospect Mountain System to the Town in order for the Town, acting by and through the Enterprise, to undertake the rebuilding and improvement of the Prospect Mountain System to Town standards (the "Project"); and WHEREAS, on June 13, 2019, the Town received a Trustee's Deed from the Bankruptcy Trustee conveying any and all real property interests of the Company to the Town; and WHEREAS, in order to provide funds to pay a portion of the costs of the Project, the Town, acting by and through the Enterprise, entered into a Construction Loan Agreement (the "Original Loan Agreement") with CoBank, ACB, as lender (the "Lender"), pursuant to which the Lender made an interim construction loan evidenced by the Construction Loan Note (Prospect Mountain Water Distribution Project), Series 2022A (the "Original Series 2022ANote"), that was executed and delivered by the Town, acting by and through the Enterprise, in the principal amount of $4,493,000, to the Lender in anticipation of the receipt of, and payable from, the proceeds of the USDA Direct Loan, as hereinafter defined (the "USDA Direct Loan Proceeds"); and WHEREAS, the Lender previously agreed to extend the maturity date of the Original Series 2022A Note as provided in the First Amendment to Loan Agreement entered into as of July 31, 2025 between the Town, acting by and through the Enterprise, and the Lender (the "First Amendment to Loan Agreement") and to accept an amended Construction Loan Note, Series 2022A (the "First Amended Series 2022A Note") in exchange for the Original Series 2022A Note; and WHEREAS, the Lender subsequently agreed to extend the maturity date of the First Amended Series 2022A Note as provided in the Second Amendment to Loan Agreement entered into as of January 27,2026 between the Town, acting by and through the Enterprise, and the Lender (the "First Amendment to Loan Agreement" and, together with the Original Loan Agreement and the First Amendment to Loan Agreement, the "Loan Agreement"), and to accept an amended :-2561-4373.5 Construction Loan Note, Series 2022A (the "Series 2022A Note") in exchange for the First Amended Series 2022A Note; and WHEREAS, the Town has constructed and completed the portion of the Project to be completed with the interim construction loan evidenced by the Series 2022A Note, and the Town, acting by and through the Enterprise, now seeks to authorize the issuance of a Water Revenue Bond (Prospect Mountain Water Distribution Project), Series 2026A (the "Bond") to USDA in order to obtain the USDA Direct Loan Proceeds from USDA and to use such Proceeds to pay the Series 2022A Note; and WHEREAS, voter approval is not required under Article X, Section 20 of the Colorado Constitution for the execution and issuance of the Bond; and WHEREAS, none of the members of the Board have any potential conflicting interests in connection with the authorization, issuance, or delivery of the Bond, or the use of the proceeds thereof; and WHEREAS, the Board, acting as the governing body of the Enterprise, desires to authorize the issuance and sale of the Bond and, as provided in Title 11, Article 57, Part 2, C.R.S., delegate to the Town Administrator or the Finance Director of the Town the authority to determine certain provisions relating to the Bond, in accordance with the provisions of this Bond Ordinance; BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE TOWN OF ESTES PARK, COLORADO, ACTING AS THE GOVERNING BODY OF ITS WATER ACTIVITY ENTERPmSE: Section 1. Definitions. The following terms shall have the following meanings as used in this Bond Ordinance: "Authorized Denomination" means the outstanding principal amount of the Bond. "Bank" means a national banking association duly organized and existing under the laws of the United States of America, being a member of the Federal Deposit Insurance Corporation, and duly qualified and acting under the Public Deposit Protection Act of the State. "Board' means the Board of Trustees of the Town. '•'Bond" means the Water Revenue Bond (Prospect Mountain Water Distribution System), Series 2026A, dated as of the Dated Date, identified by series indicating the year in which the Bond was delivered, and authorized hereby. "Bond Account" means the Bond Account created in the section hereof titled "Bond Account" for the purpose of paying the principal of and interest on the Bond. "Bond Counsel" means (a) as of the date of issuance of the Bond, Kutak Rock LLP, and (b) as of any other date, Kutak Rock LLP or such other attorneys selected by the Town with nationally recognized expertise in the issuance of municipal bonds. -2561-4373.5 "Bond Details Certificate " means a certificate of the Town Administrator or the Finance Director of the Town confirming the final details of the Bond as set forth in Section 3(b) hereof. "Bond Ordinance" means this Ordinance, which authorizes the issuance of the Bond, including any amendments properly made hereto. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State are authorized or obligated by law or executive order to be closed for business. "Certified Public Accountant" means an independent certified public accountant within the meaning of § 12-2-115, C.R.S. and any amendment thereto, licensed to practice in the State. "C.R.S" means the Colorado Revised Statutes, as amended and supplemented as of the date hereof. "Dated Date" means the original dated date for the Bond as determined in the Bond Details Certificate and set forth in the executed Bond. "Debt Service Reserve Account" means a special account established by the provisions hereof for the purpose of paying, if necessary, the principal of and interest on the Bond or for expenses as authorized by USDA. "Enabling Law" means this Bond Ordinance; Title 11, Article 56, C.R.S.; Title 11, Article 57, Part 2, C.R.S.; Title 31, Article 35, Part 4, C.R.S.; Title 37, Article 45.1, Part 1, C.R.S.; and all other laws of the State enabling the issuance of the Bond. "Enterprise" means the Water Activity Enterprise, established by the Board of the Town pursuant to Ordinance No. 08-99, as a government owned business, which is authorized to issue its own revenue bonds, and receives under 10% of its annual revenue in grants from all Colorado state and local governments combined. "Event of De fault" means any of the events specified in the section hereof titled "Events of Default." "Holder" means USDA as of the Dated Date, and thereafter, following a transfer and exchange of the Bond, if any, the Person in whose name the Bond is registered on the registration books maintained by the Paying Agent. "Interest Rate" means the rate of 2.375% per annum, unless a different rate is established in the Bond Details Certificate, as set forth in the executed Bond. "Maturity Date" means the date for the final payment of the Bond, as determined in the Bond Details Certificate and set forth in the executed Bond, which shall be no later than forty years following the Dated Date. -2561-4373.5 "Parity Obligations'" means any bonds, Bonds or other obligations (which may or may not be multiple fiscal year financial obligations) with a lien on the Pledged Revenues that is equal and on a parity with the lien of the Bond on the Pledged Revenues. "Paying Agent" means the Town Treasurer. "Payment Date" means monthly dates determined in the Bond Details Certificate and set forth in the executed Bond for payment of the principal of and interest on the Bond. "Permitted Investments'1'1 means any lawful investment permitted for the investment of funds of the Town by the laws of the State, subject to any restrictions or limitations established from time to time by USDA or other applicable federal regulations. "Person" means a corporation, firm, other body corporate, agency, partnership, association or individual and also includes an executor, administrator, trustee, receiver or other representative appointed according to law. "Pledged Revenues'" means a System Reconstruction Surcharge fee to be paid monthly per lot by the users of the System in the Prospect Mountain Service Area. "Project" means the design, engineering, rebuilding and improvement of the aging drinking water system in the Prospect Mountain Service Area and any other purpose for which proceeds of the Bond and other legally available moneys of the Town may be expended under the Enabling Law. "Prospect Mountain Service Area" means the service territory of the former Prospect Mountain Water Company described in Exhibit A to the Trustee's Deed from Daniel A. Hepner, Trustee of the bankruptcy estate of Prospect Mountain Water Company, Chapter 7 Case No. 15-14286 TBM in the United States Bankruptcy Court for the District of Colorado, to the Town, dated June 13, 2019, and recorded on December 4, 2019, at Reception #20190076461 in the records ofLarimer County, Colorado. "Public Deposit Protection Act" means Title 11, Article 10.5, Part 1, C.R.S. "Record Date" means the fifteenth day of the calendar month next preceding each Payment Date. "'Required Reserve" means, with respect to the Bond, an amount equal to at least the annual loan installment ($175,272 unless a different amount is established in the Bond Details Certificate) to be deposited in the Debt Service Reserve Account from the Pledged Revenues. "Series 2022A Note" means the Construction Loan Note (Prospect Mountain Water Distribution Project), Series 2022A, dated October 11, 2022, that was executed and delivered by the Town, acting by and through the Enterprise, in the principal amount of $4,493,000 to CoBank, ACB. "Short-Lived Assets Reserve" means an amount set forth in the Letter of Conditions dated September 28, 2018, as amended, annually to be deposited in the Short-Lived Assets Reserve 4888-2561-4373.5 Account from the Pledged Revenues and to be used only for repairs and/or replacement of major assets of the System. "Short-Lived Assets Reserve Account' means a special account established by the provisions hereof for repairs and/or replacement of major assets of the System. "State" means the State of Colorado. "System" means the water distribution system, including all rights of way and easements, acquired by the Town and located in the Prospect Mountain Service Area, including, without limitation, the Project. "Town" means the Town ofEstes Park, Colorado. "USDA" means the United States Department of Agriculture. "USDA Loan Resolution" means the RUS Bulletin 1780-27 (Loan Resolution - Public Bodies) also adopted by the Board in conjunction with the issuance of the Bond. Section 2. Authorization and Purpose of the Bond. Pursuant to and in accordance with the Enabling Law, the Town, acting by and through the Enterprise, hereby authorizes, approves and orders that, as evidence of a loan from the USDA, there shall be issued by the Town, acting by and through the Enterprise, the "Water Revenue Bond (Prospect Mountain Water Distribution Project), Series 2026A" for the purpose of paying the Series 2022A Note, previously issued by the Town, acting by and through the Enterprise, in order to pay a portion of the costs of the Project. The Bond shall be identified by series indicating the year in which the Bond was issued, and the Maturity Date is not expected to exceed the useful life of the Project. Section 3. Bond Details. (a) Registered Form, Denominations, Dated Date an fl Numbering. The Bond shall be issued as a single, fully registered Bond, which shall be dated as of the Dated Date and registered in the name of the USDA, or if later transferred pursuant to the Section hereof entitled "Registration, Transfer and Exchange of the Bond," in the name of the Person identified in the registration books of the Town maintained by the Paying Agent. The Bond shall be issued in the Authorized Denomination. The Bond shall be in substantially the form set forth in Appendix A hereto with such changes thereto, not inconsistent herewith, as may be necessary or desirable and approved by the Town officials executing the same (whose manual signatures thereon shall constitute conclusive evidence of such approval). The Bond shall be numbered R-l, and if transferred thereafter numbered consecutively beginning with the number "2." (b) Maturity Date, Principal Amount and Interest Rate. The Bond shall be issued in the principal amount of $4,493,000 and shall mature on the Maturity Date. The Bond shall bear interest at the Interest Rate (calculated based on an actual/365-day year) fi'om the later of the Dated Date or the latest Payment Date to which interest has been paid in full and shall be payable on each Payment Date. The Board hereby delegates to the Town Administrator or the Finance Director of the Town the authority to determine (i) the ,-2561-4373.5 Dated Date, (ii) the amount of principal of the Bond subject to payment and redemption in any particular month and year, (iii) the Interest Rate, (iv) the Payment Dates, (v) the amount of the Required Reserve and (vi) any other matters that, in the judgment of the Town Administrator or the Finance Director of the Town, are necessary or convenient to be determined and relating to the Bond, and are not inconsistent with the parameters established pursuant to this Bond Ordinance. (c) Accrual and Dates of Payment of Interest. Interest on the Bond shall accrue at the Interest Rate from the later of the Dated Date or the latest Payment Date (or in the case of defaulted interest, the latest date) to which interest has been paid in full and shall be payable on each Payment Date. (d) Manner and Form of Payment. The principal of the Bond shall be payable in lawful money of the United States of America to the Holder on the Maturity Date or upon prior redemption in whole or in part. The interest on and principal of the Bond are payable to the Holder at its address as it appears on the registration books maintained by or on behalf of the Town by the Paying Agent. Interest and principal payments shall be paid by check or draft of the Paying Agent mailed on or before each Payment Date to the Holder. The Paying Agent may make payments of interest and principal by alternative means, such as by wire transfer, as may be mutually agreed to between the Holder of the Bond and the Paying Agent. Without limiting the foregoing, the appropriate Town officer or official shall complete and deliver to USDA form RD-3 550-28 (or any similar replacement form to the "Authorization Agreement for Preauthorized Payments") to allow for principal and interest payments to be electronically debited from the Bond Account to USDA on the dates that payments are due. All payments of the principal of and interest on the Bond shall be made in lawful money of the United States of America. Within thirty days following the date of the final payment of the Bond, in full, the Holder of the Bond shall present the Bond to the Paying Agent, at the office of the Paying Agent at 170 MacGregor Ave, Estes Park, Colorado 80517, or at such other address as provided in writing by the Paying Agent to the Holder. Section 4. Form of Bond. The Bond shall be in substantially the form set forth in Appendix A hereto with such changes thereto, not inconsistent herewith, as may be necessary or desirable and approved by the officials of the Town, acting by and through the Enterprise, executing the same (whose manual signatures thereon shall constitute conclusive evidence of such approval). Although attached as an appendix for the convenience of the reader, Appendix A is an integral part of this Bond Ordinance and is incorporated herein as if set forth in full in the body of this Bond Ordinance. Section 5. Execution, Authentication and Delivery of the Bond. (a) Execution. The Bond shall be executed in the name and on behalf of the Town, acting by and through the Enterprise, with the manual signature of the Mayor or Mayor Pro Tem, shall bear a manual or facsimile of the seal of the Town and shall be ;-2561-4373.5 attested by the manual signature of the Town Clerk, both of whom are hereby authorized and directed to prepare and execute the Bond in accordance with the requirements hereof. Should any officer whose manual signature appears on the Bond cease to be such officer before deliveiy of any Bond, such manual signature shall nevertheless be valid and sufficient for all purposes. (b) Authentication. When the Bond has been duly executed, the officers of the Town, acting by and through the Enterprise, are authorized to, and shall, deliver the Bond to the Paying Agent for authentication. No Bond shall be secured by or entitled to the benefit of this Bond Ordinance, or shall be valid or obligatory for any purpose, unless the certificate of authentication of the Paying Agent has been manually executed by an authorized signatory of the Paying Agent. The executed certificate of authentication of the Paying Agent upon any Bond shall be conclusive evidence, and the only competent evidence, that such Bond has been properly authenticated hereunder. (c) Delivery. Upon the authentication of the Bond, receipt of the principal amount of the Bond (or confirmation of the availability of loan proceeds in said amount) from the USDA and issuance of the approving opinion of Bond Counsel, the Paying Agent shall be directed to release the Bond and deliver the same to the USDA in accordance with the directions of the USDA. Section 6. Registration, Transfer and Exchange of the Bond. (a) Registration. The Paying Agent shall maintain a registration book in which the ownership, transfer and exchange of the Bond shall be recorded. The Person in whose name the Bond shall be registered on the registration book shall be deemed to be the absolute owner thereof for all purposes. (b) Transfer and Exchange of the Bond. The Bond may be transferred at the principal office of the Paying Agent or at such other location designated by the Paying Agent for such purpose, for an Authorized Denomination of the same Maturity Date and interest rate. Upon surrender for transfer of the Bond, duly endorsed for transfer or accompanied by an assignment duly executed by the Holder or his or her attorney duly authorized in writing, the Town, acting by and through the Enterprise, shall execute and the Paying Agent shall authenticate and deliver in the name of the transferee a new Bond. Section 7. Replacement of Lost, Destroyed or Stolen Bond. If the Bond shall become lost, apparently destroyed, stolen or wrongfully taken, it may be replaced in the form and tenor of the lost, destroyed, stolen or taken Bond and the Town, acting by and through the Enterprise, shall execute and the Paying Agent shall authenticate and deliver a replacement Bond upon the Holder furnishing, to the satisfaction of the Paying Agent: (a) proof of ownership (which shall be shown by the registration books of the Paying Agent), (b) proof of loss, destruction or theft, (c) an indemnity to the Town with respect to the Bond lost, destroyed or taken, and (d) payment of the cost of preparing and executing the new Bond. Section 8. Redemption of the Bond Prior to IVIaturity. (a) Optional Redemption. 8 4888-2561-4373.5 (i) The Bond shall be subject to prior redemption in whole, but not in part, at the option of the Town, acting by and through the Enterprise, on the Payment Date of any month, upon payment of the unpaid principal amount of the Bond and accrued interest to the date of redemption (without redemption premium). (ii) Prepayments of scheduled installments of principal and interest on the Bond, or any portion thereof, may be made at any time at the option of the Town, acting by and through the Enterprise, and shall, after payment of interest, be applied to the installments last to become due under the Bond and shall not affect the obligation of the Town, acting by and through the Enterprise, to pay the remaining scheduled installments. (b) Regularly Scheduled Redemption. The principal amount of the Bond shall be subject to payment and amortization on each Payment Date of the years and in the principal amounts as determined in the Bond Details Certificate and set forth in the executed Bond, at a redemption price equal to the principal amount thereof (with no redemption premium), plus accrued interest to the redemption date. (c) Notice of Redemption. No notice shall be required for regularly scheduled redemption as provided in paragraph (b) of this Section 8. Not less than fifteen days prior to the date established for optional redemption of the Bond, as provided in paragraph (a) of this Section 8, the Town, acting by and through the Enterprise, shall notify USDA of its intent to exercise its optional redemption right. (d) Graduation Clause. Upon the request ofUSDA, the Town, acting by and through the Enterprise, shall refinance the unpaid balance of the Bond, in whole, or in part, if at any time the USDA determines that the Town, acting by and through the Enterprise, is able to obtain a loan for such purposes from responsible cooperative or private sources at reasonable rates and terms for loans for similar purposes and periods of time as required by section 333(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1983(c). Section 9. Bond Account. There is hereby established the Bond Account. Moneys in the Bond Account shall be used solely for the purpose of paying the principal of and interest on the Bond and on any Parity Obligations. On or before the Business Day preceding each Payment Date, the Town, acting by and through the Enterprise, shall credit to the Bond Account, from the Pledged Revenues, an amount equal to the principal and interest to come due on the Bond and on any Parity Obligations on the next succeeding Payment Date. Section 10. Application of Proceeds of the Bond. The proceeds received by the Town, acting by and through the Enterprise, from the USDA at the time of delivery of the Bond shall be applied as a supplemental appropriation of the Town, acting by and through the Enterprise, to redeem the Series 2022A Note on the earliest possible date. Section 11. Debt Service Reserve Account. (a) Use of Moneys in the Debt Service Reserve Account. There is hereby established the Debt Service Reserve Account, which account is irrevocably pledged and held for payment of the Bond. Moneys in the Debt Service Reserve Account shall be used, 4888-2561-4373.5 if necessary, and only with the prior written approval of USDA, only to prevent a default in the payment of the principal of or interest on the Bond or for expenses as authorized by USDA. In the event the amounts credited to the Bond Account are insufficient to pay the principal of or interest on the Bond when due, and only with the prior written approval of USDA, the Town, acting by and through the Enterprise, shall transfer from the Debt Service Reserve Account to the Bond Account an amount which, when combined with moneys in the Bond Account, will be sufficient to make such payments when due. (b) Funding and Maintenance of the Required Reserve. The Required Reserve shall be funded and maintained from the Pledged Revenues by the deposit, each year for 10 years following the issuance of the Bond or until the Required Reserve is fully funded, of at least ten percent (10%) of the annual payment on the Bond and thereafter shall be maintained in the amount of the Required Reserve. Deposits shall be made monthly until the Required Reserve is accumulated. If at any time after becoming fully funded, the amount in the Debt Service Reserve Account is less than the Required Reserve, the Town, acting by and through the Enterprise, shall make deposits to the Debt Service Reserve Account, monthly as described above from the Pledged Revenues or other legally available monies, until the amount in the Debt Service Reserve Account equals the Required Reserve. Section 12. Short-Lived Assets Reserve Account. There is hereby established the Short-Lived Assets Reserve Account, which shall be used and funded as described below. (a) Use of Moneys in the Short-Lived Assets Reserve Account. Moneys in the Short-Lived Assets Reserve Account shall be used only for repairs and/or replacement of major assets of the System. (b) Funding and Maintenance of the Short-Lived Assets Reserve Account, The Town, acting by and through the Enterprise, shall, commencing in the fiscal year following the delivery of the Bond, annually fund the Short-Lived Assets Reserve Account in the amount not less than the Short-Lived Assets Reserve. (c) Annual Reporting. The Town shall annually provide the office identified by USDA evidence, documented in the form requested by USDA, that the Short-Lived Assets Reserve Account is being appropriately funded, and a listing (with costs) of "Short-Lived Assets" that were replaced in each fiscal year. Section 13. Maintenance of Rates and Coverage. Subject to the issuance of the Bond, the Board shall maintain a user rate schedule for the use of the System that provides adequate income to meet the minimum requirements for operation and maintenance, debt service (other than the Bond), and reserves. Section 14. Pledge and Lien for Payment of Bond. (a) Pledge of Revenues. The Town, acting by and through the Enterprise, hereby pledges the Pledged Revenues for the payment of the principal of and interest on the Bond, and grants a first lien (but not necessarily an exclusive first lien) for such purpose on the Pledged Revenues. 10 4888-2561-4373.5 (b) Superior Liens Prohibited. The Town, acting by and through the Enterprise, shall not pledge or create any other lien on the revenues and moneys pledged pursuant to paragraph (a) of this Section that is superior to the pledge thereof or lien thereon pursuant to such paragraph. (c) Subordinate Liens Permitted. Nothing herein shall prohibit the Town, acting by and through the Enterprise, from issuing subordinate lien obligations and pledging or creating a lien on the revenues and moneys pledged and the lien created pursuant to paragraph (a) of this section that is subordinate to the pledge thereof or lien thereon pursuant to such paragraph, provided that no Event of Default shall have occurred and be continuing. (d) Parity Obligations Permitted with Consent. The Town, acting by and through the Enterprise, shall not issue Parity Obligations without the prior written consent of the Holder. (e) Bond is a Special, Limited Obligation of the Town. The Bond is a special, limited obligation of the Town, acting by and through the Enterprise, payable solely from the Pledged Revenues and secured solely by the sources provided in this Bond Ordinance. The Bond shall not constitute a general obligation debt of the Town within the meaning of any statutory or constitutional limitation. (f) Perfection of Security Interest. The creation, perfection, enforcement, and priority of the pledge of revenues to secure or pay the Bond as provided herein shall be governed by Section 11-57-208, C.R.S. and the Enabling Law. The revenues pledged for the payment of the Bond, as received by or otherwise credited to the Town, shall immediately be subject to the lien of such pledge without any physical delivery, filing, or further act. The lien of such pledge on the revenues pledged for payment of the Bond and any Parity Obligations and the obligation to perform the contractual provisions made herein shall otherwise have priority over any or all other obligations and liabilities of the Town and of the Town, acting by and through the Enterprise. The lien of such pledge shall be valid, binding, and enforceable as against all persons having claims of any kind in tort, contract, or otherwise against the Town irrespective of whether such persons have notice of such lien. Section 15. Investment of Monies. Any amount in any account established under this Bond Ordinance may be invested in Permitted Investments until needed for the purpose for which the account was established. Section 16. Additional General Covenants. In addition to the other covenants of the Town contained herein, the Town, acting by and through the Enterprise, hereby further covenants for the benefit of the Holder of the Bond that: (a) Efficient Collection and Enforcement of the Pledged Revenues. The Town, acting by and through the Enterprise, will manage the collection and enforcement of the Pledged Revenues in the most efficient and economical manner practicable. The Town, acting by and through the Enterprise, will promptly render bills for the Pledged 11 -2561-4373.5 Revenues and for services furnished by or the use of the System, shall use all legal means to assure prompt payment thereof, and shall take such action as may be necessary to make delinquent Pledged Revenues, and user rates, fees and charges of the System a lien upon the real property served. (b) Inspection of Records. The Town, acting by and through the Enterprise, will keep or cause to be kept such books and records showing the Pledged Revenues, in which complete entries shall be made in accordance with generally accepted accounting principles, as applicable to governmental entities, and the Holder shall have the right at all reasonable times to inspect all non-confidential records, accounts, actions and data of the Town, acting by and through the Enterprise, relating to the Bond, the Debt Service Reserve Account and the Pledged Revenues. (c) Annual Audit and Budget. The Town will, in the time and manner provided by law, cause an annual audit to be made of the books relating to the Pledged Revenues, the Bond Account, the Debt Service Reserve Account and the Short-Lived Asset Reserve Account each year by a Certified Public Accountant and shall furnish a physical or electronic copy thereof to the Holder. The Town also shall provide the Holder with such additional information relating to the expenditure of loan and grant funding as required by applicable federal regulations or as USDA may request. In addition, at least once a year in the time and manner provided by law, the Town will cause a budget to be prepared and adopted. Thirty days prior to the beginning of each fiscal year, the Town will submit an annual budget and projected cash flow as directed by USDA. With the submission of the annual budget, the Town, acting by and through the Enterprise, will provide a current rate schedule, and a current listing of the Board members and their terms. (d) Operation and Management. The Town, acting by and through the Enterprise, will operate and manage the System in an efficient and economical manner in accordance with all applicable laws, rules and regulations, and keep and maintain separate accounts of the receipts and expenses thereof in such manner that the Pledged Revenues may at all times be readily and accurately identified. (e) No Free Service. The Town, acting by and through the Enterprise, shall require all customers to pay a fair and reasonable amount for services furnished by or the use of the System and shall provide no free service for use of the System. (f) Sale or Alienation of System Property. The Town, acting by and through the Enterprise, will not sell or alienate any of the property constituting any part or all of the System in any manner or to any extent as might reduce the security provided for the payment of the Bond. (g) Insurance. The Town will carry such forms of general liability insurance, workers' compensation, position fidelity bonds, national flood insurance and real property insurance as required by USDA and applicable federal regulations. 12 4888-2561-4373.5 (h) Mandatory Hookups. As required by USDA and applicable federal regulations, all customers within the System service area shall be required to hookup to the System. (i) Anti-defeasance Covenant. The Town covenants that it will take no action, or permit any action to be taken, that would result in the defeasance of the Bond as long as the United States of America acting through the Department of Agriculture remains the holder of the Bond. Without limiting the foregoing, a defeasance shall include, but not be limited to, action by the Town to set aside in escrow or in trust cash or investments sufficient enough to service the Bond and specifically pledged for such purpose. Section 17. Events of Default. Each of the following events constitutes an Event of Default: (a) Nonpayment of Principal or Interest. Failure to make any payment of principal of or interest on the Bond when due hereunder; (b) Breach or Nonperformance of Duties. Breach by the Town, acting by and through the Enterprise, of any material covenant set forth herein or failure by the Town, acting by and through the Enterprise, to perform any material duty imposed on it hereunder and continuation of such breach or failure for a period of thirty days after receipt by the Town Administrator of written notice thereof from the Holder; or (c) Appointment of Receiver. An order or decree by a court of competent jurisdiction appointing a receiver for all or any portion of the revenues and moneys pledged for the payment of the Bond pursuant hereto is entered with the consent or acquiescence of the Town or is entered without the consent or acquiescence of the Town but is not vacated, discharged or stayed within thirty days after it is entered. Section 18. Remedies for Events of Default. (a) Remedies. Upon the occurrence and continuance of any Event of Default, the Holder of the Bond, or a trustee therefor, may protect and enforce its rights by proper legal or equitable remedy deemed most effectual including, without limitation, mandamus, specific performance of any covenants, injunctive relief, or requiring the Board to act as if it were the trustee of an express trust, or any combination of such remedies; including without limitation the acceleration of any payments due with respect to the Bond. (b) Failure to Pursue Remedies Not a Release; Rights Cumulative. The failure of the Holder to proceed in any manner herein provided shall not relieve the Town of any liability for failure to perform or carry out its duties hereunder. Each right or privilege of the Holder (or trustee therefor) is in addition and is cumulative to any other right or privilege, and the exercise of any right or privilege by or on behalf of the Holder shall not be deemed a waiver of any other right or privilege thereof. Section 19. Amendment of Ordinance. The Town, acting by and through the Enterprise, may not, without the prior written consent of the Holder, adopt amendments to this Bond Ordinance. 13 4888-2561-4373.5 Section 20. Findings and Determinations. Having been fully informed of and having considered all the pertinent facts and circumstances, the Board does hereby find, determine, and declare: (a) The Board elects to apply all of the provisions of Title 11, Article 57, Part 2, C.R.S., to the issuance of the Bond; (b) the issuance of the Bond and all procedures undertaken incident thereto are in full compliance and conformity with all applicable requirements, provisions and limitations prescribed by the laws and the Constitution of the State, and other applicable laws relating to the issuance of the Bond have been satisfied; and (c) it is to the best advantage of the Town and its residents that the Bond be authorized, issued and delivered at the time, in the manner and for the purposes provided in this Bond Ordinance. Section 21. Approval of Miscellaneous Documents. For a period of one year following the adoption of this Bond Ordinance, the Town Administrator or the Finance Director of the Town is authorized to make the determinations authorized in Section 3 above and provide for deliveiy of the Bond. The members of the Board and all other officials of the Town are hereby authorized and directed to execute all documents and certificates necessary or desirable to effectuate the issuance of the Bond and the maintenance of the Project. Section 22. Ratification of Prior Actions. All actions heretofore taken (not inconsistent with the provisions of this Bond Ordinance) by the Board or by the officers and employees of the Town directed toward the issuance of the Bond for the pmposes herein set forth are hereby ratified, approved and confirmed. Section 23. Events Occurring on Days That Are Not Business Days. Except as otherwise specifically provided herein with respect to a particular payment, event or action, if any payment to be made hereunder or any event or action to occur hereunder which, but for this section, is to be made or is to occur on a day that is not a Business Day, shall instead be made or occur on the next succeeding day that is a Business Day. Section 24. Limitation of Actions. In accordance with Section 11-57-212, C.R.S., no legal or equitable action can be brought with respect to any legislative acts or proceedings in connection with the authorization or issuance of the Bond more than thirty days after the adoption of this Bond Ordinance. Section 25. Headings. The headings to the various sections and paragraphs of this Bond Ordinance have been inserted solely for the convenience of the reader, are not a part of this Bond Ordinance, and shall not be used in any manner to interpret this Bond Ordinance. Section 26. Ordinance Irrepealable. After the Bond has been issued, this Bond Ordinance shall constitute a contract between the Holder and the Town, acting by and through the Enterprise, and shall be and remain irrepealable until the Bond and the interest accruing thereon shall have been fully paid, satisfied, and discharged, as herein provided. 14 4888-2561-4373.5 Section 27. Severability. It is hereby expressly declared that all provisions hereof and their application are intended to be and are severable. In order to implement such intent, if any provision hereof or the application thereof is determined by a court or administrative body to be invalid or unenforceable, in whole or in part, such determination shall not affect, impair or invalidate any other provision hereof or the application of the provision in question to any other situation; and if any provision hereof or the application thereof is determined by a court or administrative body to be valid or enforceable only if its application is limited, its application shall be limited as required to most fully implement its purpose. Section 28. Repealer. All orders, bylaws, ordinances and resolutions of the Town, or parts thereof, inconsistent or in conflict with this Bond Ordinance, are hereby repealed to the extent only of such inconsistency or conflict; provided however, in the event any provision of this Bond Ordinance is inconsistent or in conflict with the USDA Loan Resolution, the terms and provisions of the USDA Loan Resolution shall control. Section 29. Recording and Authentication. This Bond Ordinance, immediately upon its passage, shall be recorded in the Town book of Ordinances kept for this pmpose, and shall be authenticated by the signatures of the Mayor and of the Town Clerk. Section 30. Effective Date. Following its adoption, this Bond Ordinance shall take effect and be in force on a date that is 30 days after its publication. INTRODUCED, READ BY TITLE, APPROVED AND ADOPTED on this 28th day of April, 2026. TOWN OF ESTES PARK, COLORADO, ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE —y By —-.-::—-/•-..-^-p Mayor ATTEST: 'y ^\,-~y^ L^VT» ' r ^ ^_^ h»<^ ^ ^•A JV^\, i^'rf-/Vsi )wn Clerk AI^KOVED AS TO FORM: 'd_L^A Counsel 15 APPENDIX A FORM OF THE BOND UNITED STATES OF AMERICA TOWN OF ESTES PARK, COLORADO, ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE WATER REVENUE BOND (PROSPECT MOUNTAIN WATER DISTRIBUTION PROJECT) SEMES 2026A R-l $ Interest Rate: IVIaturity Date: Original Dated Date:% _ ,2026 REGISTERED OWNER: UNITED STATES OF AMERICA ACTING THROUGH THE DEPARTMENT OF AGRICULTURE PRINCIPAL SUM: ** DOLLARS** The Town ofEstes Park, Colorado (the "Town"), acting by and through its Water Activity Enterprise (the "Enterprise"), a duly organized and validly existing political subdivision of the State of Colorado, for value received in the form of a loan, hereby promises to pay to the order of the Registered Owner named above, or registered assigns, on the Maturity Date specified above or upon prior redemption in whole or in part, the Principal Sum specified above. In like manner the Town, acting by and through the Enterprise, promises to pay interest on the unpaid Principal Sum (computed on the basis of a 365-day year) from the Payment Date next preceding the date of registration and authentication of this Bond, except that interest paid on the first Payment Date shall be computed from the Dated Date set forth above, at the Interest Rate per annum specified above, payable monthly on _ commencing on _, _, until the outstanding Principal Sum is paid in full. Interest and principal payments shall be paid by check or draft of the Town Treasurer (as the "Paying Agent") mailed on or before each Payment Date to the Registered Owner hereof whose name shall appear on the registration books of the Town maintained by the Paying Agent (the "Holder"). The Paying Agent may make payments of interest and principal by alternative means, such as by wire transfer, as may be mutually agreed to between the Holder of this Bond and the Paying Agent. Without limiting the foregoing, the Town, acting by and through the Enterprise, has covenanted to complete and deliver USDA form RD-3550-28 (or any similar replacement form to the "Authorization Agreement for Preauthorized Payments") to allow for principal and interest 4888-2561-4373.5 payments to be electronically debited from the Bond Account to USDA on the dates that payments are due. Within thirty days following the date of the final payment of the Bond, in full, the Holder of the Bond shall present the Bond to the Paying Agent, at the office of the Paying Agent at 170 MacGregor Ave, Estes Park, Colorado 80517, or at such other address as provided in writing by the Paying Agent to the Holder, as required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance"). THE BOND ORDINANCE CONSTITUTES THE CONTRACT BETWEEN THE REGISTERED OWNER OF THIS BOND AND THE TOWN, ACTING BY AND THROUGH THE ENTERPRISE. THIS BOND IS ONLY EVIDENCE OF SUCH CONTRACT AND, AS SUCH, IS SUBJECT IN ALL RESPECTS TO THE TERMS OF THE BOND ORDINANCE, WHICH SUPERSEDES ANY INCONSISTENT STATEMENT IN THIS BOND. The Principal Sum of this Bond is subject to payment and amortization as provided in the schedule attached hereto as Exhibit A. This Bond shall be subject to prior redemption as provided in the Bond Ordinance. This Bond is a special, limited obligation of the Town, acting by and through the Enterprise, payable solely from and secured solely by the sources provided in the Bond Ordinance and shall not constitute a general obligation debt of the Town within the meaning of any statutory or constitutional limitation. The Town, acting by and through the Enterprise, is authorized to grant a lien on a parity with the lien for the payment of this Bond on the Pledged Revenues for the payment of other Bonds, bonds or other obligations upon satisfaction of certain conditions set forth in the Bond Ordinance. This Bond is issued under the authority of the Constitution of the State of Colorado; Title 11, Article 56, C.R.S. (the "Public Securities Refunding Act"); Title 31, Article 35, Part 4, C.R.S. (the "Act"); Title 37, Article 45.1, C.R.S. (the "Enterprise Act"); Title 11, Article 57, Part 2, C.R.S. (the "Supplemental Public Securities Act"); and all other laws of the State thereunto enabling; and pursuant to the Bond Ordinance. It is hereby certified that all conditions, acts and things required by the Constitution and laws of the State of Colorado, and the Bond Ordinance, to exist, to happen and to be performed, precedent to and in the issuance of this Bond, exist, have happened and have been performed, and that this Bond does not exceed any limitations prescribed by said Constitution or laws of the State of Colorado, or the ordinances or resolutions of the Town. Such recital shall conclusively impart full compliance with all of the provisions of the Public Securities Refunding Act and the Supplemental Public Securities Act, and this Bond issued containing such recital shall be conclusive evidence of the validity and regularity of the issuance of this Bond and shall be incontestable for any cause whatsoever after its delivery for value. The Town, acting by and through the Enterprise, and the Paying Agent may deem and treat the Registered Owner of this Bond as the absolute owner hereof for all purposes (whether or not this Bond shall be overdue), and any notice to the contrary shall not be binding upon the Town, acting by and through the Enterprise, or the Paying Agent. A-2 -2561-4373.5 This Bond may only be transferred at the principal office of the Paying Agent and only as provided in the Bond Ordinance. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the authorizing Bond Ordinance until the Certificate of Authentication hereon shall have been signed by the Paying Agent. A-3 -2561-4373.5 IN WITNESS WHEREOF, the Town of Estes Park, Colorado, acting by and through its Water Activity Enterprise, has caused this Bond to be signed in the name and on behalf of the Town with the manual signature of the Mayor of the Town, to be sealed with the seal of the Town or a facsimile thereof and to be attested by the manual signature of the Town Clerk. [MANUAL OR FACSIMILE SEAL] TOWN OF ESTES PARK, COLORADO, ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE By ("Manual Signature) Mayor ATTEST: By CManual Signature) Town Clerk CERTIFICATE OF AUTHENTICATION This is the Bond described in the within mentioned Bond Ordinance. Town Treasurer, as Paying Agent By. Date of Authentication: CERTIFICATE OF TRANSFER FOR VALUE RECEIVED, _, the undersigned,hereby sells, assigns and transfers unto _ (Tax Identification or Social Security No. _) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints _ attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. A-4 -2561-4373.5 Dated: NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. A-5 -2561-4373.5 EXHIBIT A PAYMENT SCHEDULE* To be determined by Town Administrator or Finance Director. ;-2561-4373.5