HomeMy WebLinkAboutORDINANCE 07-080 0
TOWN OF ESTES PARK,COLORADO
ACTING BY AND THROUGH ITS
WATER ACTIVITY ENTERPRISE
ORDINANCE NO.07-08
AN ORDINANCE OF THE TOWN OF ESTES PARK,COLORADO.ACTING
BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE,
AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN
AGREEMENT BETWEEN THE COLORADO WATER RESOURCES AND
POWER DEVELOPMENT AUTHORITY AND THE TOWN OF ESTES PARK,
COLORADO.ACTING BY AND THROUGH ITS WATER ACTIVITY
ENTERPRISE:AUTHORIZING TI-IE ISSUANCE OF A GOVERNMENTAL
AGENCY BOND BY THE TOWN OF ESTES PARK,COLORADO,ACTING
BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE.IN THE
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED 55.500.000
EVIDENCING THE SPECIAL AND LIMITED OBLIGATION OF THE TOWN
OF ESTES PARK.COLORADO.ACTING BY AND THROUGH ITS WATER
ACTIVITY ENTERPRISE.UNDER THE LOAN AGREEMENT;SPECIFYING
THE MAXIMUM NET EFFECTIVE INTEREST RATE OF SAID BOND AND
PRESCRIBING OTHER DETAILS IN CONNECTION THEREWITH:AND
PROVIDING OTHER MATTERS PROPERLY RELATING THERETO
WHEREAS.pursuant to Ordinance No.8-99.the Town of Estes Park.Colorado (the
“Tow&’)has established the Town of Estes Park.Water Activity Enterprise (the “Enterprise”)as
an enterprise of the Town within the meaning of Section 20 of Article X of the Colorado
Constitution.and also authorized the Enterprise to operate the municipal water system of the
Town (the “System”)as a water activity enterprise pursuant to part I of article 45.1 of title 37.
Colorado Revised Statutes (the “Act”):and
WI1EREAS,the Town.acting by and through the Enterprise.previously made
application to the Colorado Water Resources and Power Development Authority (the
“Authority”)for a loan to finance a project that consists of changing treatment technologies to a
membrane filter technology and a capacity increase at the Mary’s Lake Water Treatment Plant
from 2 mgd to 4 mgd (the “Project”):and
WI-IEREAS,the Authority has accepted such application and has expressed its interest in
making such loan subject to certain conditions:and
WHEREAS,there has been presented to the Board of Trustees of the Town (the
“Board”).acting as the governing body of the Enterprise,at this meeting a form of Loan
Agreement dated as of June 1,2008 (the “Loan Agreement”),between the Authority and the
Town,acting by and through the Enterprise.and a form of Bond (as hereinafter defined)of the
Town,acting by and through the Enterprise;and
WHEREAS,the Loan Agreement provides for the issuance by the Town,acting by and
through the Enterprise,of a Governmental Agency Bond in the principal amount not exceeding
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$5,500,000 (the “Bond”),evidencing the special and limited obligation of the Town,acting by
and through the Enterprise.under the Loan Agreement;and
WHEREAS.pursuant to the said Ordinance No.8-99 and pursuant to Section
37-45.1-103(4)and Section 37-45.1-104 of the Act,the Board,acting as the governing body of
the Enterprise.is authorized to issue revenue bonds,such as the Bond;and
WHEREAS,the Board,acting as the governing body of the Enterprise,desires to approve
the forms of the said documents.authorize the execution thereof,and authorize the issuance of
the Bond.
BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE TOWN OF ESTES
PARK.COLORADO.ACTING AS THE GOVERNING BODY OF ITS WATER ACTIVITY
ENTERPRISE:
I.The forms of the Loan Agreement and the Bond.setting forth infer cult,the terms,
conditions and details of the Bond and the procedures relating thereto,are incorporated herein by
reference and are hereby approved;and the Town,acting by and through the Enterprise,shall
enter into the Loan Agreement and deliver the Bond,and perform its obligations thereunder,in
substantially the forms presented at this meeting with only such changes as are not inconsistent
herewith and as are approved by the Town Attorney and bond counsel for the Enterprise to
effectuate the intentions of the parties or to comply with applicable law.
2.The Mayor or Mayor Pro Tem of the Town,acting as members of the governing
body of the Enterprise,are hereby authorized and directed to execute,and the Town Clerk or any
deputy are authorized to authenticate and affix the seal of the Town to,the Loan Agreement and
the Bond.and further to execute and authenticate such other documents,instruments or
certificates as are deemed necessary or desirable in connection therewith.Such documents are to
be executed in substantially the form hereinabove approved,provided that such documents may
be completed.corrected or revised as deemed necessary by the parties thereto in order to carry
out the purposes of this Ordinance.The execution of any instrument by said officials shall be
conclusive evidence of the approval by the Town.acting by and through the Enterprise.of such
instrument in accordance with the terms of such instrument and this Ordinance.
3.The Board hereby approves the Project and,for the purpose of providing funds for
the Project.the Town.acting by and through the Enterprise.shall issue the Bond to the Authority
in the principal amount not to exceed 55.500.000,and with a maturity date not later than forty
years from its date of issue.The Bond shall be sold to the Authority for a purchase price of not
less than 100%of the par amount of the Bond,and the Bond shall be dated,mature or be payable
at such time or times and be subject to prior redemption in advance of maturity as provided in the
form attached to the Loan Agreement as Exhibit 0.The maximum net effective interest rate of
the Bond shall not exceed the sum of:(a)the rate attributable to the repayment of the amount of
the Loan (as defined in the Loan Agreement);(b)the rate attributable to the amount of the
Administrative Fee (as defined in the Loan Agreement):(c)the rate attributable to the amount of
any late charges imposed pursuant to Section 3.03(d)of the Loan Agreement;and (d)the rate
attributable to any amounts owed to the Authority pursuant to Section 3.03(e)of the Loan
Agreement.The Bond shall be issued in accordance with and under the authority of the Act,
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part 4 of article 35 of title 31,Colorado Revised Statutes,the Constitution of the State of
Colorado,and all other laws of the Slate of Colorado thereunto enabling.
4.The Bond shall not be a general obligation of the Town or of the Enterprise and
does not constitute a debt &indebtedness of the Town or the Enterprise within the meaning of
any constitutional or statutory limitation,nor shall it ever constitute a multiple-fiscal year
financial obligation of the Town or a charge against the Town’s general credit or taxing power.
The Bond shall he payable solely from the Pledged Property as defined in the Loan Agreement,
and shall not be secured by any covenant to levy taxes.Neither any trustee,the Authority nor
any holder of Authority bonds may compel the exercise of the Town’s ad valorem property
taxation powers.
5.The Board elects to apply all of the provisions of the Supplemental Public
Securities Act,pan 2 of article 57 of title II.Colorado Revised Statutes (the “Supplemental
Act”),to the Loan Agreement and the Bond.Pursuant to Section 11-57-205 of the Supplemental
Act,the Board hereby delegates to the Mayor.the Town Administrator or the Finance Officer of
the Town.acting by and through the Enterprise.the authority to determine (a)the initial rate of
interest on the Bond.(b)the total principal amount of the Bond.(c)the amount of principal
maturing in each year.(d)the dates on which principal of and interest on the Bond shall be paid.
and (e)any other detail of the Bond necessary to be determined by any of such officials,as
authorized by the Supplemental Act,all of vhich shall be subject to the parameters and
restrictions contained in this Ordinance.
6.The revenues pledged to pay the Loan Agreement and the Bond shall be governed
by Section 11-57-208,Colorado Revised Statutes,and shall immediately be subject to the lien of
such pledge without any physical delivery,filing or further act.The lien of such pledge shall
have priority over any or all other obligations and liabilities of the Town or 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 othenvise against the Town or the Enterprise irrespective of whether
such persons have notice of such lien.
7.The Mayor and the Town Clerk,other officers of the Town.and the members of
the Board arc hereby authorized and directed to take any and all actions necessary or appropriate
to effectuate the provisions of this Ordinance,including,but not limited to.the execution of such
certificates and affidavits as reasonably may be required by the Authority or bond counsel for the
Enterprise.The Town Clerk is hereby authorized and directed to attest,as necessary,all
signatures and acts of the Mayor or any oflicial of the Board or the Town in connection with the
matters authorized by this Ordinance,and to place the seal of the Town,as necessary,on the
documents authorized and approved by this Ordinance and all other additional certificates.
documents and other papers associated with the transactions and other matters authorized by this
Ordinance.The Mayor.Mayor Pro Tent the Town Administrator,the Finance Officer of the
Town and all other officials,employees and agents of the Board or the Town are hereby
authorized to execute and deliver for and on behalf of the Town or the Enterprise any and all
additional certificates,documents and other papers.including,but not limited to,any agreement
concerning the deposit and investment of funds in connection with the transactions contemplated
by this Ordinance,and to perform all other acts that they may deem necessary or appropriate in
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order to implement and carry out the transactions and other matters authorized or contemplated
by this Ordinance.
8.The Town’s Director of Utilities and the Town’s Finance Officer are hereby
determihed to each be an Authorized Officer as defined in the Loan Agreement for the purpose
of performing acts or executing documents relating to the Bond and the Loan Agreement and the
loan evidenced by such documents.
9.The System shall continue to be operated as an enterprise during 2008 within the
meaning of Article X,Section 20 of the Colorado Constitution and the Act.The Town will use
its best efforts to continue to operate and maintain the System as an enterprise within the
meaning of Article X,Section 20 of the Colorado Constitution and the Act as long as the Loan
Agreement and the Bond are outstanding.
10.All acts,orders,ordinances,or parts thereof.in conflict with this Ordinance are
hereby repealed,but only to the extent of such conflict.
11.If one or more sections or parts of this Ordinance shall be adjudged unenforceable
or invalid,such judgment shall not affect.impair or invalidate the remaining provisions of this
Ordinance,it being the intention that the various provisions hereof are severable.
12.This Ordinance is.and shall constitute.a legislative measure of the Town.acting
by and through the Enterprise.and after the Bond is issued.this Ordinance shall constitute an
irrevocable contract between the Town.acting by and through the Enterprise.and the Authority
or any subsequent owner of the Bond.and this Ordinance shall be and remain irrepealable until
the Bond shall be fully paid,satisfied or discharged.
13.All action (not inconsistent with the provisions of this Ordinance)heretofore
taken by the governing body of the Enterprise or by the officers and employees of the Town or
the Enterprise in connection with the undertaking and completion of the Project and issuance of
the Bond and the execution of the Loan Agreement by the Town.acting by and through the
Enterprise.is hereby ratified.approved and confirmed.
14.This Ordinance,immediately upon its passage.shall be recorded in the Town
book of Ordinances kept for that purpose.and shall be authenticated by the signatures of the
Mayor and of the Town Clerk.
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15.Following its adoption,this Ordinance shall take effect and be in force on the date
that is 30 days afier its publication.
INTRODUCED,READ BY TITLE,APPROVED AND ADOPTED on the 22nd day of
April,2008.
TOWN OF ESTES PARK,COLORADO,
ACTING BY AND THROUGH ITS WATER
ACTIVITY ENThRPRISE
Mayor
I hereby certify that the above Ordinance was
introduced and read at a regular meeting of
the Board of Trustees on the 22”d day of April,
2008 and published in a newspaper of
general circulation in the Town of Estes Park,
Colorado,on the 251h day of April,2008,all as
required by the Statutes of the State of
Colorado.
Jqkie Williamson,Town Clerk
cierk
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(D
DRAFT OF
April 16,2008
DRINKING WATER REVOLVING FUND
LOAN AGREEMENT
BETVEEN
COLORADO WATER RESOURCES AND
POWER DEVELOPMENT AUTHORITY
AND
TO’N OF ESTES PARK,COLORADO,
ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE
DATED AS OF JUNE 1,2008
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THIS LOAN AGREEMENT,made and entered into as of June 1,2008.by and between
COLORADO WATER RESOURCES AND POWER DEVELOPMENT AUTHORITY
(the “Authority”),a body corporate and political subdivision of the Slate of Colorado.bnd
TOWN OF ESTES PARK,COLORADO,ACTING BY AND THROUGH ITS WATER
ACTIVITY ENTERPRISE (the -‘Governmental Agency”),a municipal corporation of the State
of Colorado;
WITNESSETH THAT:
WHEREAS.the United States of America.pursuant to the federal Safe Drinking Water Act
Amendments of 1996.as amended,requires each state,as a condition to the receipt of certain
funds,to establish a drinking water revolving fund to be administered by an instrumentality of
the state before the state may receive capitalization grants to finance the costs of infrastructure
needed to achieve or maintain compliance with federal drinking water requirements:
WHEREAS.the Authority was created to initiate,acquire,construct,maintain,repair and
operate or cause to be operated water management projects which include water facilities and to
issue its bonds to pay the cost of such projects;
WHEREAS.Section 37-95-107.8 of the Colorado Revised Statutes has created a drinking water
revolving fund to be administered by the Authority which will enable the State of Colorado to
comply with the provisions of said federal Safe Drinking Water Act Amendments of 1996,as
amended;
WHEREAS.the Authority has determined to issue its bonds and to loan the proceeds of such
bonds to public entities in Colorado to finance the costs of drinking water facilities,and to use
moneys on deposit in the Drinking Water Revolving Fund to assist such public entities in
connection with the financing of such facilities;
WHEREAS.the Authority,in accordance with the Act and the Bond Resolution (as such terms
are hereinafter defined),will issue its bonds for the purpose of making loans from the proceeds
thereof to public entities,including the Governmental Agency.to finance all or any portion of
the cost of drinking water facilities;
WHEREAS,the Governmental Agency has made timely application to the Authority for a loan
to finance all or any portion of the cost of a water facility:
WHEREAS.the General Assembly of the State of Colorado has approved a project eligibility
list which includes the water facilities proposed to be financed hereunder;
WHEREAS,the Authority has approved the Governmental Agency’s appLication for a loan
from available proceeds of the bonds of the Authority in an amount not to exceed the amount of
the loan commitment set forth in paragraph (3)of Exhibit B hereto to finance all or any portion
of the cost of a water facility of the Governmental Agency;
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WHEREAS,the Governmental Agency will issue its bond to the Authority to evidence said loan
from the Authority;
NOW,THEREFORE,for and in consideration of the award of the loan by the Authority and of
the mutual covenants herein,the Authority and the Governmental Agency each agree to perform
their respective obligations under this Loan Agreement in accordance with the conditions,
covenants and procedures set forth herein and attached hereto as a part hereof,as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Definitions.The following terms as used in this Loan
Agreement shall,unless the context clearly requires otherwise,have the following meanings:
“Act”means the “Colorado Water Resources and Power Development Authority Act,”being
Section 37-95-101 et.seq.of the Colorado Revised Statutes,as the same may from time to time
be amended and supplemented.
“Administrative Fee”means the fee payable pursuant to subsection (b)of Section 3.03 hereof
which is calculated on the basis of an annual fee of eight-tenths of one percent (.8%)of the initial
principal amount of the Loan,or such lesser amount,if any.as the Authority may approve from
time to time.
“Allocable Investment Income”means the interest earnings or accrual thereof on the Project
Loan Subaccount which are to be credited to the Loan Repayments in accordance with
subsection (c)of Section 3.03.
“Allocable Percentage”means the percentage allocated to the Governmental Agency under the
definition of “Allocable Share”contained in Section 1.01 of the Bond Resolution.
“Annual Information”means the information specified in Section 2.03 in this Loan Agreement.
“Authority”means the Colorado Water Resources and Power Development Authority,a body
corporate and political subdivision of the State of Colorado with corporate succession duly
created and validly existing under and by virtue of the Act.
“Authority Bonds”means bonds authorized by the Bond Resolution,together with any
refunding bonds authenticated and delivered pursuant to the Bond Resolution,in each case in
order to provide the source of funding of the Loan,including the particular Project Loan
Subaccount from which the amounts loaned to the Governmental Agency pursuant to this Loan
Agreement are taken.
“Authorized Officer”means,in the case of the Governmental Agency.the person whose name
is set forth in Exhibit B hereto or such other person or persons authorized pursuant to a
resolution or ordinance of the governing body of the Governmental Agency to act as an
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Authorized Officer of the Governmental Agency to perform any act or execute any document
relating to the Loan,the Governmental Agency Bond or this Loan Agreement whose name is
furnished in writing to the Authority.
“Bond Resolution”means the Drinking Water Revolving Fund 2008 Series A Revenue Bond
Resolution.as adopted by the Authority on April 25,2008,authorizing the issuance of the
Authority Bonds,and all further amendments and supplements thereto adopted in accordance
with the provisions thereof.
“Code”means the “Internal Revenue Code of 1986,”as the same may from time to time be
amended and supplemented,including any regulations promulgated thereunder and any
administrative or judicial interpretations thereof.
“Cost”means those costs that are eligible to be funded from draws under the Federal
Capitalization Agreement and are reasonable,necessary and allocable to the Project and are
permitted by generally accepted accounting principles to be costs of the Project.Cost shall also
include Costs of Issuance (as defined in the Bond Resolution).
“Event of Default”means any occurrence or event specified in Section 5.01 hereof.
“Federal Capitalization Agreement”means the instrument or agreement established or entered
into by the United States of America Environmental Protection Agency with the Authority to
make capitalization grant payments pursuant to the federal Safe Drinking Water Act
Amendments of 1996.as amended (Pub.L.104-1 82))
“Fiscal Year”means the fiscal year of the Governmental Agency.
“GAAP”means generally accepted accounting principles as in effect from time to time in the
United States.
“Governmental Agency”means the public entity that is a party to and is described in the first
paragraph of this Loan Agreement.and its successors and assigns.
“Governmental Agency Bond”means the bond executed and delivered by the Governmental
Agency to the Authority to evidence the Loan,dated the date of the Loan Closing,the form of
which is attached hereto as Exhibit D and made a part hereof.
“Governmental Agencies”means the Governmental Agency and any other governmental
agencies permitted by the Act that have entered into Loan Agreements with the Authority
pursuant to which the Authority will make Loans to such Governmental Agencies from moneys
on deposit in the Project Account financed with the proceeds of the Authority Bonds.
“Holder”means any holder of Authority Bonds as defined under the Bond Resolution and,for
the purposes of Section 2.03 of this Loan Agreement,shall also mean any beneficial owner of
Authority Bonds within the meaning of Rule 13-d under the Securities Exchange Act of 1934,as
amended.
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“Loan”means the loan made by the Authority to the Governmental Agency to finance or
refinance all or any portion of the Cost of the Project pursuant to this Loan Agreement.For all
purposes of this Loan Agreement,the principal amount of the Loan at any time shall be equal to
the amount of the loan commitment set forth in paragraph (3)of Exhibit B attached hereto and
made a part of this Loan Agreement (which loan commitment amount equals the sum of (i)the
amount actually deposited in the Project Loan Subaccount from the proceeds of the Authority
Bonds and moneys of the Authority,(ii)the Governmental Agency’s Allocable Percentage of the
Costs of Issuance,original issue discount and underwriter’s discount for all Authority Bonds
issued in connection with the making of the Loan,and (iii)capitalized interest during the Project
construction period to be paid with the proceeds of Authority Bonds),less any portion of such
principal amount as has been repaid by the Governmental Agency under this Loan Agreement.
“Loan Agreement”means this Loan Agreement,including the Exhibits attached hereto,as it
may be supplemented,modified or amended from time to time in accordance with the terms
hereof and of the Bond Resolution.
“Loan Agreements”means this Loan Agreement and any other loan agreements entered into
between the Authority and one or more of the Governmental Agencies pursuant to which the
Authority will make Loans to such Governmental Agencies from moneys on deposit in the
Project Account financed with the proceeds of certain of the Authority Bonds and funds of the
Authority.
“Loan Closing”means the date upon which the Authority shall issue and deliver the initial
Authority Bonds.
“Loan Repayments”means the payments payable by the Governmental Agency pursuant to
Section 3.03 of this Loan Agreement.including payments payable under the Governmental
Agency Bond.
“Loan Servicer”means the Loan Servicer for the Loans,duly appointed and designated as such
pursuant to the Loan Servicing Agreement,dated as of the dated date of the Authority Bonds,
between the Authority and the Loan Servicer,and its successors as Loan Servicer under the Loan
Servicing Agreement.
“Loans”means the Loan and loans made by the Authority to other Governmental Agencies
under loan agreements from moneys on deposit in the Project Account financed with the
proceeds of the Authority Bonds and funds of the Authority.
“Loan Term”means the defined term of this Loan Agreement set forth in paragraph (4)of
Exhibit B attached hereto and made a part hereof
“MSRB”means the Municipal Securities Rulemaking Board established in accordance with the
provisions of Section I 5B(b)(1)of the Securities Exchange Act of 1934.
“Pledged Property”means the defined term of this Loan Agreement set forth in paragraph (4)
of Exhibit A attached hereto and made a part hereof.
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“Prime Rate”means the prevailing commercial interest rate announced by the Trustee from
time to time as its prime lending rate.
“Project”means the water facilities of the Governmental Agency described in paragraph (1)of
Exhibit A attached hereto and made a part hereof:all or any portion of the Cost of which is
financed or refinanced by the Authority through the making of the Loan under this Loan
Agreement.
“Project Account”means the 2008 Series A Project Account created under the Bond
Resolution.
“Project Loan Subaccount”means the 2008 Series A Project Loan Subaccount established on
behalf of the Governmental Agency in the Project Account in accordance with the Bond
Resolution.
“Repository”means any nationally recognized municipal securities information repository
within the meaning of Rule 15c2-12.
“Revenues”means the defined term of this Loan Agreement set forth in paragraph (4)of Exhibit
A attached hereto and made a part hereof.
“Rule 15c2-12”means Rule 15c2-12 under the Securities Exchange Act of 1934,as amended
through the date of adoption of the Bond Resolution,together with all interpretive guidances or
other official interpretations and explanations thereof that are promulgated by the SEC.
“State Information Depository”means any public or private repository designated by the State
of Colorado,and recognized as such by the SEC for the purposes of Rule I 5c2-12.
“2008 Series A Matching Account”means the 2008 Series A Matching Account created under
the Bond Resolution.
“SEC”means the United States Securities and Exchange Commission.
“System”means the water system of the Governmental Agency,including the Project,described
in paragraph (2)of Exhibit A attached hereto and made a part hereof for which the Governmental
Agency is making the borrowing under this Loan Agreement,as such system may be modified or
expanded from time to time.
“Trustee”means the Trustee appointed by the Authority pursuant to the Bond Resolution 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 Resolution.
Terms not otherwise defined in this Section 1.01 or in Exhibits A and B hereto shall have the
meanings ascribed to them in the Bond Resolution.
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Except where the context otherwise requires,words importing the singular number shall include
the plural number and vice versa,and words importing persons shall include firms,associations,
corporations,agencies and districts.Words importing one gender shall include the other gender.
ARTICLE II.
REPRESENTATIONS AND COVENANTS OF GOVERNMENTAL AGENCY
SECTION 2.01 Representations of Governmental Agency.The
Governmental Agency represents for the benefit of the Authority and the holders of the
Authority Bonds as follows:
(a)Organization and Authority.
(i)The Governmental Agency is a governmental agency as defined in the Act
and as described in the first paragraph of this Loan Agreement.
(ii)The System is a system for the provision to the public of water for human
consumption through pipes or other constructed conveyances which has at
least fifteen service connections or regularly serves at least twenty-five
individuals.
(iii)The Governmental Agency has full legal right and authority and all
necessary licenses and permits required as of the date hereof to own.
operate and maintain the System.to carr on its activities relating thereto.
to execute and deliver this Loan Agreement,to execute,issue and deliver
the Governmental Agency Bond.to undertake and complete the Project
(other than licenses,permits.and approvals relating to the construction
and acquisition of the Project which the Governmental Agency expects to
receive in the ordinary course of business),and to carry out and
consummate all transactions contemplated by this Loan Agreement.The
Project is on the drinking water project eligibility list approved by the
General Assembly of the State of Colorado pursuant to the Act and is a
project which the Governmental Agency’may undertake pursuant to
Colorado law and for which the Governmental Agency is authorized by
law to borrow money.
(iv)The proceedings of the Governmental Agency’s governing body and
voters,if a referendum is necessary,approving this Loan Agreement and
the Governmental Agency Bond and authorizing their execution,issuance
and delivery on behalf of the Governmental Agency,and authorizing the
Governmental Agency to undertake and complete the Project have been
duly and lawfully adopted in accordance with the laws of Colorado and
such proceedings were duly approved and published,if necessary,in
accordance with applicable Colorado law,at a meeting or meetings which
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were duly called pursuant to necessary public notice and held in
accordance with applicable Colorado law,and at which quorums were
present and acting throughout.
(v)This Loan Agreement and the Governmental Agency Bond.when
delivered at the Loan Closing,will have been,duly authorized,executed
and delivered by an Authorized Officer of the Governmental Agency: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,and the
Governmental Agency Bond when delivered to the Authority will
constitute.the legal,valid and binding obligations of the Governmental
Agency in accordance with their respective terms,and the information
contained under “Description of the Loan”on Exhibit B attached hereto
and made a part hereof is true and accurate in all respects.
(b)Full Disclosure.
There is no fact that the Governmental Agency has not disclosed to the Authority in
writing on the Governmental Agency’s application for the Loan or otherwise that
materially adversely affects the properties,activities or condition (financial or othenvise)
of the Governmental Agency or the System.or the ability of the Governmental Agency to
make all Loan Repayments and otherwise observe and perform its duties,covenants.
obligations and agreements under this Loan Agreement and the Governmental Agency
Bond.
(c)Pending Litiuation.
There are no proceedings pending.or.to the knowledge of the Governmental Agency
threatened,against or affecting the Governmental Agency.in any court or before any
governmental authority or arbitration board or tribunal that.if adversely determined,
would materially adversely affect the properties,activities or condition (financial or
otherwise)of the Governmental Agency or the System,or the ability of the Governmental
Agency to make all Loan Repayments and otherwise observe and perform its duties.
covenants,obligations and agreements under this Loan Agreement and the Governmental
Agency Bond.that have not been disclosed in writing to the Authority in the
Governmental Agency’s application for the Loan or otherwise to the Authority.
(d)Compliance with Existing Laws and Agreements.
The authorization,execution and delivery of this Loan Agreement and the Governmental
Agency Bond by the Governmental Agency,the observation and performance by the
Governmental Agency of its duties,covenants,obligations and agreements thereunder
and the consummation of the transactions provided for in this Loan Agreement and the
Governmental Agency Bond,the compliance by the Governmental Agency with the
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provisions of this Loan Agreement and the Governmental Agency Bond 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
Governmental Agency 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 (i)this Loan Agreement and the Governmental Agency Bond and (ii)any
ordinance,resolution or indenture which authorized outstanding debt obligations of the
Governmental Agency which are at parity with,or superior to,the Governmental Agency
Bond as to lien on,and source and security for,payment thereon from the Pledged
Property)to which the Governmental Agency is a party or by which the Governmental
Agency,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 Governmental Agency was established or any laws,ordinances,resolutions,
governmental rules,regulations or court orders to which the Governmental Agency,the
System or its properties or operations is subject.
(e)No Defaults.
No event has occurred and no condition exists that,upon authorization,execution and
delivery of this Loan Agreement and the Governmental Agency Bond or receipt of the
amount of the Loan,would constitute an Event of Default hereunder.The Governmental
Agency 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,the
System or its property may be bound,which violation would materially adversely affect
the properties,activities,prospects or condition (financial or otherwise)of the
Governmental Agency or the System or the ability of the Governmental Agency to make
all Loan Repayments or otherwise observe and perform its duties,covenants,obligations
and agreements under this Loan Agreement and the Governmental Agency Bond.
(1)Governmental Consent.
The Governmental Agency has obtained 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 body or officer)for the making.observance and
performance by the Governmental Agency of its duties,covenants,obligations and
agreements under this Loan Agreement and the Governmental Agency Bond or for the
undertaking or completion of the Project and the financing or refinancing thereof:and the
Governmental Agency 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 Governmental Agency
of its duties,covenants,obligations and agreements under this Loan Agreement and the
Governmental Agency Bond or with the undertaking or completion of the Project and the
financing or refinancing thereof No consent,approval or authorization of or filing.
registration or qualification with,any governmental body or officer that has not been
80012665.1 —8—
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obtained (or that is not reasonably expected to be obtained)is required on the part of the
Governmental Agency as a condition to the authorization,execution and delivery of this
Loan Agreement and the Governmental Agency Bond,the undertaking or completion of
the Project or the consummation of any transaction herein contemplated.
(g)Compliance with Law.
The Governmental Agency (i)is in compliance with all laws,ordinances,governmental
rules and regulations to which it is subject,the failure to comply with which would
materially adversely affect the abiliity of the Governmental Agency to conduct its
activities or undertake or complete the Project or the condition (financial or otherwise)of
the Governmental Agency or the System:and (ii)has obtained all licenses,permits.
franchises or other governmental authorizations presently 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 Governmental Agency to conduct its activities or
undertake or complete the Project or the condition (financial or othenvise)of the
Governmental Agency or the System (other than licenses,permits.franchises or other
governmental authorizations relating to the construction and acquisition of the Project
which the Governmental Agency expects to receive in the ordinary course of business).
(h)Use of Proceeds.
The Governmental Agency vill apply the proceeds of the Loan from the Authority (i)to
finance or refinance all or any portion of the Cost of the Project:and (ii)where
applicable,to reimburse the Governmental Agency for all or any portion of the Cost of
the Project.which portion was paid or incurred in anticipation of reimbursement by the
Authority.
SECTION 2.02 Particular Covenants of the Governmental Agency.
(a)Repayment Plede.
The Governmental Agency irrevocably pledges and grants a lien on the Pledged Property
for the punctual payment of the Loan Repayments.This pledge shall be valid and
binding from and after the date of the delivery of the Governmental Agency Bond to the
Authority,and the Pledged Property,as received by the Governmental Agency and
hereby pledged.shall immediately be subject to the lien of this pledge without any
physical delivery thereof,any filing,or further act.The lien of this pledge and the
obligation to perform the contractual provisions herby made shall have priorty over any
or all other obligations and liabilities of the Governmental Agency (except as herein
otherwise expressly provided),and the lien if this pledge shall be valid,binding and
enforceable as against all persons having claims of any kind in tort,contract otherwise
against the Governmental Agency (except as herein otherwise expressly provided).
irrespective of whether such persons have notice thereof.
(b)Performance Under Loan Agreement.
80012665.1 —9—
C.a
The Governmental Agency covenants and agrees (i)to maintain the System in good
repair and operating condition;(ii)to cooperate with the Authority in the observance and
performance of the respective duties,covenants,obligations and agreements of such
Governmental Agency and the Authority under this Loan Agreement;and (iii)to comply
with the covenants described in the Exhibits to this Loan Agreement.
(c)Completion of Project and Provision of Moneys Therefor.
The Governmental Agency covenants and agrees (i)to exercise its best efforts in
accordance with prudent water utility practice to complete the Project and to so
accomplish such completion on or before the estimated Project Completion Date set forth
in Exhibit B hereto and made a part hereof;and (ii)to the extent legally available.to
provide from the Revenues all moneys,in excess of the total amount of Loan proceeds it
receives under the Loan,required to complete the Project.
(d)Disposition of the System.
Except for the disposal of any portion of the System which the Governmental Agency
determines is no longer necessary for the operation of the System,the Governmental
Agency shall not sell,lease,abandon or othenvise dispose of all or substantially all of the
System.or any other component of the System which provides revenues to provide for
the payment of this Loan Agreement or the Governmental Agency Bond except on ninety
(90)days’prior written notice to the Authority and,in any event,shall not so sell,lease.
abandon or otherwise dispose of the same unless the following conditions are met:(i)the
Governmental Agency shall assign this Loan Agreement in accordance with Section 4.02
hereof and its rights and interests hereunder to the purchaser or lessee of the System and
such purchaser or lessee shall assume all duties.covenants,obligations and agreements of
the Governmental Agency under this Loan Agreement;and (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 Resolution,and will not adversely
affect the value of this Loan Agreement as security for the payment of Authority Bonds
and interest thereon,adversely affect the eligibility of interest on Authority Bonds then
outstanding for exclusion from gross income for purposes of Federal income taxation or
adversely affect any agreement entered into by the Authority or the State with,or
condition of any grant received by the Authority or the State from,the United States of
America.which is related to the Federal Capitalization Agreement or any capitalization
grant received by the Authority or the State under the federal Safe Drinking Water Act
Amendments of 1996.as amended (Pub.L.104-182)
(e)Exclusion of Interest from Federal Gross Income and Compliance with Code.
(i)The Governmental Agency covenants and agrees that it shall not take or
permit any action or fail to take any action which action or omission
would result in the loss of the exclusion of the interest on any Authority
80012665.1 —10—
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Bonds (assuming solely for this purpose that the proceeds of the Authority
Bonds loaned to the Governmental Agency represent all of the proceeds of
the Authority Bonds)from gross income for federal income tax purposes
pursuant to Section 103(a)of the Code.
(ii)The Governmental Agency covenants and agrees that it shall not take or
permit any action or faiL to take any action,which action or omission
would cause the Authority Bonds (assuming solely for this purpose that
the proceeds of the Authority Bonds loaned to the Governmental Agency
represent all of the proceeds of the Authority Bonds)to be “private
activity bonds”within the meaning of section 141(a)of the Code.
Accordingly,unless the Governmental Agency receives the prior written
approval of the Authority,and subject to the conditions of Section
2.02(d)(ii).the Governmental Agency shall neither (A)permit in excess of
10 percent of either (1)the proceeds (as such term is used in Section 141
of the Code)of the Authority Bonds loaned to the Governmental Agency
or (2)the Project financed (or refinanced)with the proceeds of the
Authority Bonds loaned to the Governmental Agency,to be used directly
or indirectly in any manner that would constitute “private business use”
within the meaning of Section 141(b)(6)of the Code,nor (B)use directly
or indirectly any of the proceeds of the Authority Bonds loaned to the
Governmental Agency to make or finance loans to persons other than
governmental units (as such term is used in section 14 1(c)of the Code):
provided ftirther.that more than one half of the private business use
permitted by clause (A)shall be neither (I)disproportionate related
business use,nor (2)private business use not related to the government
use of such proceeds of the Authority Bonds.as those terms are used in
Section 141(b)(3)of the Code.
(Hi)The Governmental Agency covenants and agrees that it shall not directly
or indirectly use or permit the use of any proceeds of the Authority Bonds
(or amounts treated as replaced with such proceeds)or any other funds,or
take or permit any action or fail to take any action,which use,action or
omission would cause the Authority Bonds (assuming solely for this
purpose that the proceeds of the Authority Bonds in the hands of the
Governmental Agency represent all of the proceeds of the Authority
Bonds)to be “arbitrage bonds”within the nieaning of Section 148(a)of
the Code.
(iv)The Governmental Agency covenants and agrees that it shall not use or
permit the use of any portion of the proceeds of the Authority Bonds to
retire any other obligations of the Governmental Agency or any other
entity,unless the Governmental Agency obtains the written consent of the
Authority,which consent may be given or withheld in the Authority’s sole
discretion.
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(v)The Governmental Agency covenants and agrees to maintain records of its
investments,if any,of proceeds of the Authority Bonds loaned to the
Governmental Agency which are held by the Governmental Agency and
earnings thereon,and will maintain records of expenditures of such
proceeds.The Governmental Agency wiLl pay to the Authority any
earnings on proceeds of the Authority Bonds loaned to the Governmental
Agency which are held by the Governmental Agency (including earnings
on such earnings)which,in the opinion of the Authority.are required to
be rebated to the United States Treasury Department.The Governmental
Agency wilL provide copies of all records of its investment of such
proceeds and of its expenditures to the Authority on a periodic basis upon
request by the Authority and will furnish to the Authority,in writing.
information regarding any facilities financed or refinanced therewith.
(vi)Notwithstanding anything herein to the contrary,as long as is necessary to
maintain the exclusion of interest on the Authority Bonds from gross
income for Federal income tax purposes.the covenants contained in this
subsection (e)shall sun’ive the payment of the Authority Bonds and the
interest thereon,including any payment pursuant to Section 12.01 of the
Bond Resolution or prepayment pursuant to Section 3.07 of this Loan
Agreement,respectively.
(vii)The Governmental Agency shall not.pursuant to any arrangement formal
or informal,purchase Authority Bonds in an amount related to the amount
of the Loan.
(viii)The Governmental Agency hereby certifies and represents that it has
complied with the requirements of Treasury Regulation Section 1.150-2 in
its authorizing resolution or other official action with regard to proceeds of
the Authority Bonds.if any,to be used to reimburse the Governmental
Agency for expenses incurred by the Governmental Agency prior to the
issuance of the Authority Bonds.In the event that any of the proceeds of
the Authority Bonds are to be used to pay debt service on any prior issue
of the Governmental Agency,and any of the proceeds of such prior issue
(or any obligations refinanced by such prior issue)were used to reimburse
the Governmental Agency for expenditures incurred prior to the issuance
of the prior issue (or refinanced obligations,as the case may be).the
Governmental Agency hereby certifies and represents that the allocation
of such proceeds to the reimbursed expenditure was a valid expenditure
under the applicable law on reimbursement expenditures on the date of
issue of the prior issue (or the refinanced obligations),as required by
Federal Income Tax Regulation Section 1.1 50-2(g)(2).
(ix)By executing this Loan Agreement,the Governmental Agency hereby
certifies,represents and agrees that:
80012665.1 —12—
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(I)The proceeds of the Authority Bonds to be loaned to the
Governmental Agency pursuant to this Loan Agreement do not,
taking into account available earnings thereon,exceed the amount
necessary to pay for the Cost of the Project.
(2)The Governmental Agency has entered into (or will enter into
within six months from the date hereof)a binding commitment for
the acquisition,construction or accomplishment of the Project,and
will,within six months from the date of delivery of the Authority
Bonds by the Authority,expend at least five percent of the
proceeds of the Authority Bonds loaned to the Governmental
Agency.
(3)The Governmental Agency reasonably expects that 85%oF the
proceeds of the Loan will be expended within three years from the
Loan Closing.Work on the acquisition,construction or
accomplishment of the Project will proceed with due diligence to
completion.
(4)The total proceeds of the sale of all obligations issued to date for
the Project do not exceed the total Cost of the Project.taking into
account available earnings thereon.
(5)The Governmental Agency does not expect that the Project will be
sold.leased or otherwise disposed of in whole or in pan during the
term of the Loan or of the Authority Bonds or for any portion of
the term of the Loan or of the Authority Bonds.The
Governmental Agency shall not sell.lease or otherwise dispose of
the Project in whole or in pan during the term of the Loan or of the
Authority Bonds or for any portion of the term of the Loan or of
the Authority Bonds unless the conditions of Section 2.02(d)(ii)
have been satisfied.
(6)Any fund established,utilized or held by or on behalf of the
Governmental Agency to pay debt service on the Loan will be used
to achieve a proper matching of revenues and debt service and will
be depleted at least annually except for a reasonable carryover
amount not to exceed earnings on the fund for the immediately
preceding year or 1/12 of the annual debt service on the Loan for
the immediately preceding year.
(7)No portion of the amounts received from the Loan will be used as
a substitute for other funds which were otherwise to be used as a
source of financing for the Project and which have been or will be
used to acquire,directly or indirectly,obligations producing a yield
80012665.1 —13—
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in excess of the yield on the Authority Bonds.The Governmental
Agency does not expect to receive any amounts in the future that
are intended to finance the portion of the Project being financed
with proceeds of the Loan.No portion of the amounts received
from the Loan will be used to finance working capital
expenditures.The Loan has a weighted average maturity that does
not exceed 120 percent of the average reasonably expected
economic life of the capital projects financed or refinanced by the
Loan.
(8)No portion of the proceeds of the Loan which are held by the
Governmental Agency will be invested,directly or indirectly,in
federally-insured deposits or accounts,or federally-guaranteed
investments,other than amounts of unexpended Loan proceeds
invested in the debt service fund,in any reasonably required
reserve or replacement fund,or investments of unexpended Loan
proceeds for any remaining initial temporary period (e.g.,no later
than three years after the date of the Loan Closing)until the
proceeds are needed for the Project.
(9)No other obligations of the Governmental Agency (I)are
reasonably expected to be paid out of substantially the same source
of funds (or will have substantially the same claim to be paid out
of substantially the same source of funds)as will be used to pay
the Loan;and (2)are being sold at substantially the same time as
the Loan (i.e.,less than 15 days apart);and (3)were sold pursuant
to the same plan of financing with the Loan.
(10)The Governmental Agency has neither received notice that its
certifications as to expectations may not be relied upon with
respect to its obligations nor has it been advised that any adverse
action by the Commissioner of the Internal Revenue Service is
contemplated.
(11)To the best of the knowledge and belief of the undersigned officer
of the Governmental Agency,the facts and estimates set forth in
this subsection of the Loan Agreement on which the Governmental
Agency’s expectations as to the application of the proceeds of the
Authority Bonds loaned to the Governmental Agency are based.
are reasonable.
(12)None of the proceeds of the Authority Bonds loaned to the
Governmental Agency which are held by the Governmental
Agency will be invested in investments having a substantially
guaranteed yield of four years or more.
80012665.1 —14—
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(1)Operation and Maintenance of the System.
The Governmental Agency covenants and agrees that it shall,in accordance with prudent
water utility practice,(i)at all times operate the properties of the System and any
business in connection therewith in an efficient manner,(ii)maintain the System in good
repair,working order and operating condition,(iii)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 business carried on in connection
therewith shall be properly and advantageously conducted;provided,however,this
covenant shall not be construed as requiring the Governmental Agency to expend any
funds which are derived from sources other than the Revenues,and provided further that
nothing herein shall be construed as preventing the Governmental Agency from doing so.
(g)Records:Accounts.
The Governmental Agency shall keep accurate records and accounts for the System (the
“System Records”),separate and distinct from its other records and accounts (the
“General Records”).Such System Records shall be maintained in accordance with
GAAP and shall be audited annually by an independent accountant,which audit may be
part of the annual audit of the General Records of the Governmental Agency.Such
System Records and General Records shall be made available for inspection by the
Authority at any reasonable time,and a copy of such annual audit(s)therefor,including
all written comments and recommendations of such accountant,shall be furnished to the
Authority within 210 days of the close of the fiscal year being so audited.
(h)Inspections:Information.
The Governmental Agency 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.
(i)Insurance.
The Governmental Agency shall maintain or cause to be maintained,in force,insurance
policies with responsible insurers or self insurance programs providing against risk of
direct physical loss,damage or destruction of the System,at least to the extent that
similar insurance is usually carried by utilities constructing.operating and maintaining
utility system facilities of the nature of the System,including liability coverage,all to the
extent available at reasonable cost.Nothing herein shall be deemed to preclude the
Governmental Agency from exerting against any party,other than the Authority,a
80012665.1 —15—
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defense which may be available to the Governmental Agency,including,without
limitation,a defense of sovereign immunity.
(j)Cost of Prolect.
The Governmental Agency certifies that the Cost of the Project,as listed in paragraph (2)
of Exhibit B hereto and made a part hereof,is a reasonable and accurate estimation and
upon direction of the Authority will supply the same with a certificate from its engineer
slating that such Cost is a reasonable and accurate estimation,taking into account
investment income to be realized during the course of the Project and other money that
would,absent the Loan,have been used to pay the Cost of the Project.
(k)Notice of Material Adverse Change.
The Governmental Agency shall promptly notify the Authority of any material adverse
change in the activities or condition (financial or otherwise)of the Governmental Agency
relating to the System,or in the ability of the Governmental Agency to make all Loan
Repayments and otherwise observe and perform its duties,covenants,obligations and
agreements under this Loan Agreement and the Governmental Agency Bond from the
Revenues.The Governmental Agency shall provide such financial information relating
to the Governmental Agency as the Authority may require in connection with the
issuance of Authority Bonds pursuant to the Bond Resolution.
(I)Reimbursement for Ineligible Costs.
The Governmental Agency shall promptly reimburse the Authority for the portion of the
Loan which is determined to be a Cost of the Project which is not eligible for funding
from draws under the Federal Capitalization Agreement.Such reimbursement shall be
promptly repaid to the Authority upon written request of the Authority with interest on
the amount to be reimbursed at the rate borne by the Authority Bonds from the date of the
Loan.Any such reimbursement shall be applied by the Authority to reduce the Loan
Repayments due pursuant to Section 3.03(a).Eligible costs are costs associated with the
approved scope of work,the plans and specifications and any change of orders.
(m)Advertising.
The Governmental Agency agrees not to advertise the Project for construction bids until
plans and specifications for the Project have been approved by the State Department of
Public I-lealth and Environment.
(n)Commencement of Construction.
Within twelve (12)months afler the Loan Closing,the Governmental Agency shall
initiate construction of the Project.
S0012665,l —16—
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(o)Interest in Project Site.
As a condition of the Loan,the Governmental Agency will demonstrate to the satisfaètion
of the Authority before advertising bids for construction that the Governmental Agency
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.
(p)Archeological Artifacts.
In the event that archeological artifacts or historical sources are unearthed during
construction excavation of the Project,the Governmental Agency shall stop or cause to
be stopped,construction activities and will notify the State 1-listoric Conservation Office
and the Authority of such unearthing.
(q)No Lobbying.
No portion of the Loan may be used for lobbying or propaganda as prohibited by 18
U.S.C.§1913 or Section 607(a)of Public Law 96-74.
(r)Federal Safe Water Act.
The Governmental Agency covenants to meet the requirements of or otherwise be treated
under Section 130 of the federal Safe Drinking Water Act as amended.By the execution
and delivery of this Loan Agreement,the Governmental Agency acknowledges receipt
from the Colorado Water Quality Control Division a list of federal laws and executive
orders (known as federal “Cost-Cutters”)which the Governmental Agency may be
subject.The Governmental Agency agrees to comply with such laws and executive
orders which are applicable to the Governmental Agency.
(s)Continuing Representations.
The representations of the Governmental Agency contained herein shall be true at the
time of the execution of this Loan Agreement and at all times during the term of this
Loan Agreement.
(t)Additional Covenants and Requirements.
If necessary in connection with the Authority’s issuance of the Authority Bonds or the
making of the Loan,additional covenants and requirements will be included on Exhibit F
hereto and made a part hereoE The Governmental Agency agrees to observe and comply
with each such additional covenant and requirement,if any.included on Exhibit F on the
date of the Loan Closing.
80012665.1 —17—
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SECTION 2.03 Obligation to Provide Continuing Disclosure.
(a)If the Governmental Agency is advised in writing by the Authority that the
Governmental Agency is required to comply with the provisions of this Section 2.03,the
Governmental Agency shall undertake,for the benefit of Holders of the Authority Bonds,
to provide or cause to be provided through the Authority:
(i)to each Repository and to the State Information Depository,no later than
210 days after the end of each Fiscal Year,commencing with the end of
the first Fiscal Year following receipt of such advice from the Authority,
the Annual Information relating to such Fiscal Year;
(ii)if not submitted as part of or with the Annual Information,to each
Repository and to the State Information Depository,if any,audited
financial statements of the Governmental Agency for such Fiscal Year
when and if they become available;provided that if the Governmental
Agency’s audited financial statements are not available by the date set
forth in (i)above,the Annual Information shall contain unaudited
financial statements in a format similar to the Governmental Agency’s
audited financial statements prepared for its most recent Fiscal Year,and
the audited financial statements shall be filed in the same manner as the
Annual Information when and if they become available;and
(iii)to each Repository or to the MSRB and to the State Information
Depository,in a timely manner,notice of a failure to provide any Annual
Information required by subsections (d),(e)and (t)of this Section 2.03.
(b)The obligations of the Governmental Agency pursuant to subsection (a)of this
Section 2.03 may be terminated as to such Governmenlal Agency pursuant to subsection
(k)of this Section 2.03.Upon any such termination,the Governmental Agency shall
provide notice of such tenTlination to each Repository.the State Information Depository
and the MSRB.
(c)Nothing herein shall be deemed to prevent the Governmental Agency from
disseminating or require the Governmental Agency to disseminate any other information
in addition to that required hereby in the manner set forth herein or in any other manner.
If the Governmental Agency disseminates any such additional information,the
Governmental Agency shall have no obligation to update such information or include it in
any future materials disseminated hereunder.
(d)The required Annual Information shall consist of the Governmental Agency’s
audited financial statements for the most recent Fiscal Year as provided in subsection
(aii)of this Section 2.03,and such other information which the Authority deems
reasonably necessary to provide compliance with Rule l5(c)2-12.
80012665.1 —18—
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(e)All or any portion of the Annual Information may be incorporated in the Annual
Information by cross reference to any other documents which have been filed with (i)the
Repositories,the Slate Information Depository and,if the document is an official
statement,the MSRB or (ii)the SEC.
(f Annual Information for any Fiscal Year containing any modified operating data or
financial information (as contemplated by subsection (j)(v)of this Section 2.03)for such
Fiscal Year shall explain,in narrative form,the reasons for such modification and the
effect of such modification on the Annual Information being provided for such Fiscal
Year.If a change in accounting principles is included in any such modification,such
Annual Information shall present a comparison between the financial statements or
information prepared on the basis of the modified accounting principles and those
prepared on the basis of the former accounting principles.
(g)The Governmental Agency’s annual financial statements for each Fiscal Year shall
be prepared in accordance with GAAP as in effect from time to time.Such financial
statements shall be audited by an independent accounting firm.
(h)If the Governmental Agency shall fail to comply with any provision of this Section
2.03,then the Authority or any Holder of the Authority’s Bonds may enforce,for the
equal benefit and protection of all 1-lolders similarly situated,by mandamus or other suit or
proceeding at law or in equity,this Section 2.03 against the Governmental Agency and
any of the officers,agents and employees of the Governmenlal Agency,and may compel
the Governmental Agency or any such officers,agents or employees to perform and carry
out their duties under this Section 2.03;provided that the sole and exclusive remedy for
breach of this Section 2.03 shall be an action to compel specific performance of the
obligations of the Governmental Agency hereunder and no person or entity shall be
entitled to recover monetary damages hereunder under any circumstances,and,provided
further,that any challenge to the adequacy of any information provided pursuant to
subsection (a)of this Section 2.03 shall be brought only by the Authority or the 1-lolders of
25%in aggregate principal amount of the Authority’s Bonds at the time outstanding which
are affected thereby.The failure of the Governmental Agency to comply with the
provisions of this Section 2.03 shall not be deemed an Event of Default hereunder and the
only remedies available to the l-Iolders or the Authority for such failure to comply are the
remedies contained in this subsection (h).
(i)The provisions of this Section 2.03 are executed and delivered solely for the
benefit of the Holders.No other person (other than the Authority)shall have any right to
enforce the provisions of this Section 2.03 or any other rights under this Section 2.03.
(j)Without the consent of any l-lolders of Authority Bonds,the Authority and the
Governmental Agency at any time and from time to time may enter into any amendments
or changes to this Section 2.03 for any of the following purposes:
80012665.1 —19—
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(i)to comply with or conform to Rule 15c2-12 or any amendments thereto
(whether required or optional);
(ii)to add a dissemination agent for the information required to be provided
hereby and to make any necessary or desirable provisions with respect
thereto;
(iii)to evidence the succession of another person to the Governmental Agency
and the assumption by any such successor of the covenants of the
Governmental Agency under this Section 2.03;
(iv)to add to the covenants of the Governmental Agency for the benefit of the
Holders,or to surrender any right or power conferred upon the
Governmental Agency pursuant to this Section 2.03;
(v)to modify the contents,presentation and format of the Annual Information
from time to time as a result of a change in circumstances that arises from
a change in legal requirements,change in law,or change in the identity.
nature or status of the Governmental Agency,or type of business
conducted;provided that.(a)there is filed with the Trustee an opinion of
counsel having expertise with respect to securities laws of the United
States of America or expertise with respect to the issuance of indebtedness
by states and political subdivisions thereof,that (i)this Section 2.03,as
amended,would have complied with the requirements of Rule 15c2-12 at
the time of the offering of the Authority Bonds,after taking into account
any amendments or authoritative interpretations of the Rule l5c2-12.as
well as any change in circumstances;and (ii)the amendment or change
does not materially impair the interests of Holders,or (b)such change or
amendment is approved by the vote or consent of Holders of a majority in
outstanding principal amount of the Authority Bonds affected thereby at or
prior to the time of such amendment or change.
(k)This Section 2.03 shall remain in full force and effect until the earlier of (1)the
Authority provides notice to each Repository.the State Information Depository and the
MSRB that the Governmental Agency is no longer an “obligated person”within the
meaning of Rule 15c2-12 or (ii)all principal,redemption premiums.if any,and interest on
the Authority Bonds shall have been paid in full or the Authority Bonds shall have
otherwise been paid in full or legally defeased pursuant to Section 12.01 of the Bond
Resolution.In the event of such payment or legal defeasance,the Authority shall
promptly give wTitten notice thereof to the Governmental Agency.
(I)Any notices to or filing with each Repository and the State Information
Depository,if any,may be effected by sending the notice or filing to Disclosure USA.in
accordance with its published procedures,for further submission by Disclosure USA to
such Repositories.
80012665.1 —20—
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ARTICLE 111.
LOAN TO GOVERNMENTAL AGENCY;AMOUNTS PAYABLE;
GENERAL AGREEMENTS
SECTION 3.01 The Loan.The Authority hereby agrees to loan and disburse to
the Governmental Agency in accordance with Section 3.02 hereof,and the Governmental
Agency agrees to borrow and accept from the Authority,the Loan in the principal amount equal
to the loan commitment set forth in paragraph (3)of Exhibit B attached hereto and made a part
hereof;provided,however.that (i)the Authority shall be under no obligation to make the Loan if
the Governmental Agency does not deliver a Governmental Agency Bond to the Authority on the
Loan Closing or an Event of Default has occurred and is continuing under the Bond Resolution
or this Loan Agreement.and (ii)the proceeds of Authority Bonds shall be available for
disbursement,as determined solely by the Authority,to finance the Cost of the Project.The
Governmental Agency shall use the proceeds of the Loan strictly in accordance with Section
2.0 1(h)hereof,to finance the Cost of the Project.
SECTION 3.02 Disbursement of Loan Proceeds.The Trustee,as the agent of
the Authority,shall disburse the amounts on deposit in the Project Loan Subaccount to the
Governmental Agency upon receipt of a requisition executed by an Authorized Officer thereof
and approved by the Authority,and if deemed necessary by the Authority,approved by the
Colorado Water Quality Control Division.in the form set forth in the Bond Resolution.
The Authority covenants to direct the Trustee to provide all periodic written reports (as required
by the provisions of the Bond Resolution)of all moneys on deposit under the Bond Resolution
and to furnish such reports to the Governmental Agency as soon as practicable after receipt by
the Authority.
The Authority hereby agrees that in the event that moneys on deposit in the Project Loan
Subaccount are lost due to the negligence or misconduct of the Trustee,the Authority on behalf
of the Governmental Agency,shall,upon the written request of the Governmental Agency.
pursue its remedies against the Trustee,including.but not limited to.equitable actions or actions
for money damages.
If there are moneys on deposit in the Project Loan Subaccount upon completion of the Project,
the Governmental Agency shall advise the Authority in writing that no further requisitions are to
be submitted to the Authority for disbursement of moneys from the Project Loan Subaccount.
Upon receipt of such written advice,the Authority shall file with the Trustee the Certificate
required by Section 5.03 of the Bond Resolution and use such moneys to redeem,purchase or
provide for the payment of the Authority Bonds.The Authority shall credit ensuing Loan
Repayments or portions thereof of the Governmental Agency chosen by the Authority as a result
of the use of such to purchase,redeem or pay Authority Bonds.
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SECTION 3.03 Amounts Payable.
(a)The Governmental Agency shall repay by electronic means the principal of and
interest on the Loan in accordance with the schedule set forth on Exhibit C attached hereto
and made a part hereof,as the same may be amended or modified,pursuant to Section
6.04 hereof.
The Governmental Agency shall execute the Governmental Agency Bond to evidence the
Loan and the obligations of the Governmental Agency under the Governmental Agency
Bond shall be deemed to be amounts payable under this Section 3.03.Each portion of the
Loan Repayment payable under this subsection (a),whether satisfied entirely through a
direct payment by the Governmental Agency to the Loan Servicer or through a
combination of a direct payment and the use of Allocable Investment Income as
described in subsection (c)of this Section 3.03 to pay interest on the Authority Bonds
(and to the extent moneys are available therefor,principal of the Authority Bonds),shall
be deemed to be a credit against the corresponding obligation of the Governmental
Agency under this subsection (a)and shall fulfill the Governmental Agency’s obligation
to pay such amount hereunder and under the Governmental Agency Bond.Each payment
made to the Loan Servicer pursuant to this subsection shall be applied first to interest
then due and payable on the Loan,then to the principal of the Loan.
In the event the Authority issues refunding bonds pursuant to the Bond Resolution in
order to refinance the particular Project Account or Project Loan Subaccount from which
amounts loaned to the Governmental Agency pursuant to this Loan Agreement are taken
which refunding results in a decrease in total aggregate Loan Repayments,the Authority
shall amend Exhibit C to reflect such decrease in total aggregate Loan Repayments.
(b)In addition to the amounts payable under subsection (a)of this Section 3.03,the
Governmental Agency shall pay the Administrative Fee in the amounts and on the dates
set forth in Exhibit C attached hereto and made a part hereof.Each payment made
pursuant to this subsection (b)shall,for purposes of the Loan and the Governmental
Agency Bond,be considered as interest on the principal amount thereof
(c)The Governmental Agency shall receive as a credit against each of its semiannual
interest payment obligations set forth on Exhibit C attached hereto and made a part hereof
(and.as applicable under the Bond Resolution,its annual principal obligations to the
extent moneys are available therefor),(i)the amount of capitalized interest available to be
applied against such obligations,as footnoted on such Exhibit C,and (ii)the amount of
Allocable Investment Income,if any.to be credited against such obligations,as set forth in
each billing statement to be mailed by the Loan Servicer to the Governmental Agency
approximately thirty (30)days prior to each Loan Repayment due date.
(d)In addition to the payments required by subsections (a)and (b)of this Section
3.03,the Governmental Agency shall pay a late charge for any payment that is received by
the Loan Servicer later than the fifth (5th)day following its due date,in an amount equal
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to the greater of twelve percent (12%)per annum or the Prime Rate plus one half of one
percent per annum on such late payment from its due date to when it is actually paid;
provided,however,that the interest rate payable on the Loan including such late charge
shall not be in excess of the maximum rate permitted by law as of the date hereof.
(e)The Governmental Agency acknowledges that payment of the Authority Bonds by
the Authority,including payment from moneys drawn by the Trustee from the 2008 Series
A Matching Account,other than from the investment income thereon,does not constitute
payment of the amounts due under this Loan Agreement or the Governmental Agency
Bond.If at any time the amounts on deposit in the 2008 Series A Matching Account shall
be less than the requirement of such Account,as the result of any transfer of moneys from
the 2008 Series A Matching Account to the Debt Service Fund as the result of failure by
the Governmental Agency to make any Loan Repayments required hereunder,the
Governmental Agency 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 liquidation by the Authority of investment securities acquired as an investment of
moneys in the 2008 Series A Matching Account,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 an interest rate to be determined by the Authority necessary to make up any loss
caused by such deficiency.
(0 Loan Repayments pursuant to this Section 3.03 shall be made by electronic means
(either by bank wire transfer or by Automated Clearing I-louse “ACH”transfer.)
SECTION 3.04 Unconditional Obligations.The obligation of the
Governmental Agency to make the Loan Repayments and all other payments required hereunder
and the obligation to perform and observe the other duties,covenants,obligations and
agreements on its part contained herein is payable solely from the Revenues 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 under this Loan Agreement 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
of Colorado or any political subdivision of either or in the rules or regulations of any
governmental authority,any failure of the Authority or the Trustee to perform and obsen’e any
agreement.whether express or implied,or any duty.liability or obligation arising out of or
connected with the Project.this Loan Agreement or the Bond Resolution or any rights of set oil
recoupment,abatement or counterclaim that the Governmental Agency might otherwise have
against the Authority,the Trustee,the Loan Servicer or any’other party or parties;provided.
however,that payments hereunder shall not constitute a waiver of any such rights.The
Governmental Agency shall not be obligated to make any payments required to be made by any
other Governmental Agencies under separate Loan Agreements or the Bond Resolution.
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SECTION 3.05 Loan Agreement to Survive Bond Resolution and Authority
Bonds.The Governmental Agency acknowledges that its duties,covenants,obligations and
agreements hereunder shall survive the discharge of the Bond Resolution and payment of the
principal of,redemption premium,if any,and interest on the Authority Bonds.The Authority
acknowledges that all duties,covenants,obligations and agreements of the Governmental
Agency shall (except as and to the extent preserved in subsection (e)(vi)of Section 2.02 hereof)
terminate upon the date of payment of all amounts payable to the Authority hereunder.
SECTION 3.06 Disclaimer of Warranties and Indemnification.The
Governmental Agency acknowledges and agrees that (i)neither the Authority nor the Trustee
makes any 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)except as provided herein,in no event shall the Authority or the Trustee or their 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 or any item or products or services
provided for in this Loan Agreement;and (iii)to the extent authorized by law,the Governmental
Agency shall indemnify,save and hold harmless the Authority against any and all claims,
damages,liability and court awards including costs,expenses and attorney fees incurred as a
result of any act or omission by the Governmental Agency,or its employees,agents or
subcontractors pursuant to the terms of this Loan Agreement,provided however that the
provisions of this clause (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 Colorado Governmental
Immunity Act (Section 24-10-101,et seq.,C.R.S.).or under the laws of the United States or
other laws of the State of Colorado.
SECTION 3.07 Limited Recourse.No recourse shall be had for the payment of
the principal of or interest on the Governmental Agency Bond or for any claim based thereon or
upon any obligation,covenant or agreement contained in this Loan Agreement against any past,
present or future officer,employee or agent of the Governmental Agency.or of any successor
public corporation,as such,either directly or through the Governmental Agency or any successor
public corporation,under any rule of law or equity.statute or constitution or by the enforcement
of any assessment or penalty or otherwise,and all such liability of any such officers,employees
or agents as such is hereby expressly waived and released as a condition of and consideration for
the Governmental Agencys execution of this Loan Agreement and the issuance of the
Governmental Agency Bond.
SECTION 3.08 Option to Prepay Loan Rcpayments.Subject in all instances
to the prior written approval of the Authority and satisfaction of the requirements,if any,of the
Bond Resolution relating to Loan prepayments.the Governmental Agency may prepay the
principal portion of the Loan Repayments set forth in Exhibit C,in whole or in part (but if in
part,in the amount of $100,000 or any integral multiple of $100,000),upon prior written notice
not less than ninety (90)days in addition to the number of days advance notice to the Trustee
required for any optional or special redemption of the Authority Bonds,to the Authority and the
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Trustee and upon payment by the Governmental Agency to the Trustee of the principal amount
of the Loan Repayments to be prepaid,plus the interest to accrue on such amount to the date of
the next succeeding optional redemption of the Authority Bonds allocable to such Loan
Repayment to be prepaid;provided,however,that (i)if the Governmental Agency proposes to
prepay in full the Loan Repayments set forth in Exhibit C,such prepayment shall be conditioned
upon the simultaneous prepayment in full of all Administrative Fees due to and including the
date of such redemption plus one year after the date of such redemption or (ii)if the
Governmental Agency proposes to prepay any portion of the Loan Repayments set forth in
Exhibit C,such prepayment shall be conditioned upon the simultaneous prepayment of such
portion of the Administrative Fees due to and including the date of such redemption plus one
year after the date of such redemption,as shall be determined by the Authority.In addition,if at
the time of such prepayment,the Authority Bonds may only be redeemed at the option of the
Authority upon payment of a redemption premium,the Governmental Agency shall add to its
prepayment an amount,as determined by the Authority,equal to such redemption premium
allocable to such Authority Bonds to be redeemed as a result of the Governmental Agency’s
prepayment.Prepayments shall be applied first to accrued interest on the portion of the Loan to
be prepaid and then to the payment of Administrative Fees and then to principal payments
(including redemption premium,if any)on the Loan in inverse order of Loan Repayments.
The Governmental Agency,in the sole discretion of the Authority,and upon terms and
conditions satisfactory to the Authority.may provide for the prepayment in full of the Loan
Repayments by depositing with the Authority an amount which,when added to the investment
income to be derived from such amount to be deposited with the Authority,shall provide for the
full payment of all such Loan Repayments in the manner provided in this Section 3.08.Any
amounts so deposited with the Authority shall be invested solely in direct obligations of the
United States of America.
SECTION 3.09 Source of Payment of Governmental Agency’s Obligations.
The Authority and the Governmental Agency agree that the amounts payable by the
Governmental Agency under this Loan Agreement,including,without limitation,the amounts
payable by the Governmental Agency pursuant to Section 3.03,Section 3.06.Section 3.08 and
Section 5.04 of this Loan Agreement are payable solely from the Revenues and are not payable
from any other source whatsoever.Nothing herein shall be deemed to prevent the Governmental
Agency from paying the amounts payable under this Loan Agreement from any other legally
available source.
SECTION 3.10 Delivery of Documents.Concurrently with the execution and
delivery of this Loan Agreement.the Governmental Agency will cause to be delivered to the
Authority each of the following items:
(a)opinions of the Governmental Agency’s counsel substantially in the form set forth
in Exhibit E-I and E-2 hereto (such opinion may be given by one or more counsel);
provided,however,that the Authority may permit variances in such opinion from the form
or substance of such Exhibit E if such variances are not to the material detriment of the
interests of the holders of the Authority Bonds;
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(b)executed counterparts of this Loan Agreement;
(c)copies of the res&utions or ordinances of the governing body of the Governmental
Agency authorizing the execution and delivery of this Loan Agreement and the
Governmental Agency Bond,certified by an Authorized Officer of the Governmental
Agency;and
(d)such other certificates,documents,opinions and information as the Authority may
require.
Concurrently with the delivery at the Loan Closing of this Loan Agreement,the Governmental
Agency shall also deliver its Governmental Agency Bond to the Authority upon the receipt of a
written certification of the Authority that the moneys to be deposited in the Project Loan
Subaccount to fund the Loan shall be so deposited simultaneously with the delivery of the
Governmental Agency Bond.
ARTICLE IV.
ASSLGNMENT
SECTION 4.01 Assignment and Transfer by Authority.
(a)The Governmental Agency expressly acknowledges that,other than Administrative
Fees payable pursuant to subsection (b)of Section 3.03 and the right,title and interest of
the Authority under Sections 3.06,5.04 and 5.07.all right,title and interest of the
Authority in.to and under this Loan Agreement and the Governmental Agency Bond has
been assigned to the Trustee as security for the Authority Bonds,as applicable,as
provided in the Bond Resolution,and that if’any Event of Default shall occur,the Trustee,
pursuant to the Bond Resolution,shall be entitled to act hereunder in the place and stead
of the Authority.The Governmental Agency hereby acknowledges the requirements of
the Bond Resolution applicable to the Authority Bonds and consents to such assignment
and appointment.
The Authority shall retain the right to compel or othenvise enforce observance and
perlbrmance by the Governmental Agency of its duties,covenants,obligations and
agreements under subsection (b)of Section 3.03 to pay Administrative Fees and under
Section 3.06 and Section 5.04.
(b)The Governmental Agency hereby approves and consents to any assignment or
transfer of this Loan Agreement and the Governmental Agency Bond that the Authority
deems to be necessary in connection with any refunding of the Authority Bonds or the
issuance of additional bonds under the Bond Resolution or otherwise,in connection with
the drinking water revolving fund pooled loan program of the Authority.
SECTION 4.02 Assignment by Governmental Agency.Neither this Loan
Agreement nor the Governmental Agency Bond may be assigned by the Governmental Agency
80012665.1 —26—
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for any reason,unless the following conditions shall be satisfied:(i)the Authority and the
Trustee shall have approved said assignment in writing;(ii)the assignee shall be a governmental
unit within the meaning of Section 141(c)of the Code and the assignee shall have expressly
assumed in writing the full and faithful observance and performance of the Governmental
Agency’s duties,covenants,agreements and obligations under the Loan Agreement;(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 Governmental Agency
under the Loan Agreement;(iv)the Authority 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;and (v)the Authority shall receive an opinion of counsel to the effect that such assignment
will not violate the provisions of the Bond Resolution 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 Federal Capitalization Agreement or any capitalization grant received by
the Authority or the State under the federal Safe Drinking Water Act Amendments of 1996,as
amended (Pub.L.104-182).
No assignment shall relieve the Governmental Agency from primary liability for any of its
obligations under this Loan Agreement and in the event of such assignment,the Governmental
Agency shall continue to remain primarily liable for the performance and observance of its
obligations to be performed and observed under this Loan Agreement.
ARTICLE V.
DEFAULTS AND REMEDIES
SECTLON 5.01 Event 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 Governmental Agency to pay.or cause to be paid,any Loan
Repayment set forth in Schedule C,required to be paid hereunder when due,which failure
shall continue for a period often (10)days;
(b)failure by the Governmental Agency to make,or cause to be made,any required
payments of principal of,redemption premium,if any,and interest on any bonds.notes or
other obligations of the Governmental Agency for borrowed money (other than the Loan
and the Governmental Agency Bond),after giving effect to the applicable grace period,
the payments of which are secured by the Pledged Property;
(c)failure by the Governmental Agency to pay.or cause to be paid,the Administrative
Fee or any portion thereof when due or to observe and 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 paragraph (a)of this Section 5.01 and other than a
failure to comply with the provisions of Section 2.03 hereof,which failure shall continue
for a period of thirty (30)days after written notice,specifying such failure and requesting
80012665.1 —27—
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that it be remedied,is given to the Governmental Agency by the Trustee,unless the
Trustee shall agree 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 Trustee may not unreasonably withhold its consent to an
extension of such time up to sixty (60)days from the delivery of the written notice
referred to above if corrective action is instituted by the Governmental Agency within the
applicable period and diligently pursued until the Event of Default is corrected;
(d)a petition is filed by or against the Governmental Agency 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
Governmental Agency 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 Governmental
Agency shall become insolvent or bankrupt or make an assignment for the benefit of its
creditors;or a custodian (including,without limitation,a receiver,liquidator or trustee of
the Governmental Agency or any of its property)shall be appointed by court order to take
possession of the Governmental Agency or its property or assets if such order remains in
effect or such possession continues for more than thirty (30)days.
SECTION 5.02 Notice of Default.The Governmental Agency shall give the
Trustee and the Authority prompt telephonic notice of the occurrence of any Event of Default
referred to in Section 5.01(d)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 Governmental Agency becomes aware of the existence thereof.Any telephonic notice
pursuant to this Section 5.02 shall be confirmed in writing by the end of the next Business Day
(as defined in the Bond Resolution).
SECTION 5.03 Remedies on Default.Whenever an Event of Default referred
to in Section 5.01 hereof shall have occurred and be continuing,the Authority shall have the
right to take or to direct the Trustee to take any action permitted or required pursuant to the Loan
Agreement and to take whatever other action at law or in equity may appear necessary or
desirable to collect the amounts then due and thereafter to become due hereunder or to enforce
the performance and observance of any duty,covenant,obligation or agreement of the
Governmental Agency hereunder,including,without limitation,to obtain ex parte the
appointment of a receiver of the System.
SECTION 5.04 Attorney’s Fees and Other Expenses.The Governmental
Agency shall on demand pay to the Authority or the Trustee the reasonable fees and expenses of
attorneys and other reasonable fees and expenses (including without limitation the reasonably
allocated costs of in-house counsel and legal staff)incurred by either of them in the collection of
Loan Repayments or any other sum due hereunder or in the enforcement of performance or
observation of any other duties,covenants,obligations or agreements of the Governmental
Agency.
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SECTION 5.05 Application of Moneys.Any moneys collected by the
Authority or the Trustee pursuant to Section 5.03 hereof shall be applied (a)first,to pay any
attorney’s fees or other fees and expenses owed by the Governmental Agency pursuant to
Section 5.04 hereof,(b)second,to pay interest due and payable on the Loan,(c)third,to pay
principal due and payable on the Loan,(d)fourth,to pay any other amounts due and payable
under this Loan Agreement;and (e)fifth,to pay interest and principal on the Loan and other
amounts payable hereunder as such amounts become due and payable.
SECTION 5.06 No Remedy Exclusive;Waiver;Notice.No remedy herein
conferred upon or reserved to the Authority or the Trustee is intended to be exclusive and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Loan Agreement 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 or the Trustee to exercise any remedy reserved to it in this Article,it shall
not be necessary to give any notice,other than such notice as may be required in this Article V.
SECTION 5.07 Retention of Authority’s Rights.Notwithstanding any
assignment or transfer of this Loan Agreement pursuant to the provisions hereof or of the Bond
Resolution,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 Governmental Agency at law or in equity,as the Authority may,in
its discretion,deem necessary to enforce the obligations of the Governmental Agency to the
Authority pursuant to Section 3.03,Section 3.06 and Section 5.04 hereof.
SECTION 5.08 Default by the Authority.In the event of any default by the
Authority under any duty,covenant,agreement or obligation of this Loan Agreement,the
Governmental Agency’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
hereunder as may be necessary or appropriate.The Authority shall on demand pay to the
Governmental Agency the reasonable fees and expenses of attorneys and other reasonable
expenses in the enforcement of such performance or observation.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.01 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 Governmental Agency at the address
specified on Exhibit B attached hereto and made a part hereof and to the Authority,the Trustee
and the Loan Servicer at the following addresses:
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(a)Authority:Colorado Water Resources and
Power Development Authority
1580 Logan Street,Suite 620
Denver,Colorado 80203
Attention:Executive Director
(b)Trustee :Wells Fargo Bank,N.A.
1740 Broadway
MAC C7301-024
Denver,Colorado 80274
Attention:Corporate Trust Services
(c)Loan Servicer:Wells Fargo Bank.N.A.
1740 Broadway
MAC C7301-024
Denver,Colorado 80274
Attention:Corporate Trust Services
Any of the foregoing 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 others.
SECTION 6.02 Binding Effect.This Loan Agreement shall inure to the benefit
of and shall be binding upon the Authority and the Governmental Agency and their respective
successors and assigns.
SECTION 6.03 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 6.04 Amendments,Supplements and Modifications.This Loan
Agreement may not be amended,supplemented or modified without the prior written consent of
the Authority and the Governmental Agency.
SECTION 6.05 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.
SECTION 6.06 Applicable Law and Venue.This Loan Agreement shall be
governed by and construed in accordance with the laws of the State of Colorado,including the
Act.Venue for any action seeking to interpret or enforce the provisions of this Loan Agreement
shall be in the Denver District Court.
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SECTION 6.07 Consents and Approvals.Whenever the written consent or
approval of the Authority shall be required under the provisions of this Loan Agreement.such
consent or approval may only be given by the Authority unless otherwise provided by law or by
rules,regulations or resolutions of the Authority or unless expressly delegated to the Trustee.
SECTION 6.08 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 6.09 Compliance with Bond Resolution.The Governmental
Agency covenants and agrees to take such action 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 Bond Resolution insofar as such duties,covenants,obligations and
agreements relate to the obligations of the Governmental Agency under this Loan Agreement.
SECTION 6.10 Further Assurances.The Governmental Agency 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 and the
Governmental Agency Bond.
SECTION 6.11 Recital.This Loan Agreement is authorized pursuant to and in
accordance with the Constitution of the State of Colorado and all other laws of the State of
Colorado thereunto enabling.Specifically.but not by way of limitati on.this Loan Agreement is
authorized by the Governmental Agency pursuant to Title 31.Article 35.Part 4.C.R.S..Title 37.
Article 45.1.C.R.S..and Title II.Article 57.Part 2.C.R.S and shall so recite in the
Governmental Agency Bond.Such recitals shall conclusively impart full compliance with all
provisions and limitations of such laws and shall be conclusive evidence of the validity and
regularity of the issuance of the Governmental Agency Bond,and the Governmental Agency
Bond delivered by the Governmental Agency to the Authority containing such recital shall be
incontestable for any cause whatsoever after its delivery for value.
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IN WITNESS WHEREOF,the Authority and the Governmental Agency have caused this Loan
Agreement to be executed,and delivered,as of the Loan Closing.
COLORADO WATER RESOURCES AND
POWER DEVELOPMENT AUTHORITY
By:
_______________________________
Executive Director
(SEAL)TOWN OF ESTES PARK,COLORADO,
ACTING BY AND THROUGH ITS WATER
ACTIVITY ENTERPRISE
B v:
_____
Mayor
ATTEST:
Clerk
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EXHEBIT A
SECURITY DESCRIPTION
1.Description of Project
The project consists of changing treatment technologies to a membrane filter technology and a
capacity increase at the Mary’s Lake Water Treatment Plant from 2 mgd to 4 mgd.
2.Description of System
“System”shall mean,the Governmental Agency’s water system now owned or hereafter
acquired,whether situated within or without its boundaries,including all present or future
improvements,extensions,enlargements,betterments,replacements,or additions thereof or
thereto.
3.Lien Representation
The Pledged Property is free and clear of any pledge,lien,charge or encumbrance
thereon or with respect thereto which is superior to the lien of this Loan Agreement and the
Governmental Agency Bond on the Pledged Property,and all corporate or other action on the
part of the Governmental Agency to that end has been and will be duly and validly taken.As of
the date of this Loan Agreement there are outstanding no bonds,notes or evidences of
indebtedness or contractual obligations secured by a lien on the Pledged Property which are on a
parity with the lien of the Loan Agreement and Governmental Agency Bond.Except as
permitted by Exhibit F hereto,the Governmental Agency shall not issue any bonds or other
evidences of indebtedness of a similar nature secured by a pledge,lien or assignment on the
Pledged Property or create a lien or charge thereon.
4.Pledged Property
“Pledged Property”means the Net Revenues (as defined in this paragraph 4 of
Exhibit A of this Loan Agreement).
‘We!Revenues”for any period means the Revenues (as defined in this paragraph
(4)of Exhibit A of this Loan Agreement)during such period less Operating Expenses (as defined
in this paragraph (4)of Exhibit A of this Loan Agreement).
‘Revenues”shall mean (a)all revenues,income,rents and receipts earned by the
Governmental Agency from or attributable to the ownership and operation of the System.(b)the
proceeds of any insurance covering business interruption loss relating to the System.and (c)
interest earned on any moneys or investments which are required to be paid into any fund or
account pledged to the payment of this Loan Agreement and the Governmental Agency Bond.
Notwithstanding anything contained above,amounts deposited in a rate stabilization account
KO()I2665.1 A—I
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shall not be deemed Revenues in the calendar year deposited and amounts withdrawn from the
rate stabilization Account shall be deemed Revenues in the year withdrawn.
“Operating Expenses”shall mean all actual maintenance and operation costs of
the System incurred by the Governmental Agency in any particular period or charges made
therefor during such period,but only if such charges are made in conformity with Generally
Accepted Accounting Principles (as defined in paragraph (4)of Exhibit A of this Loan
Agreement)including amounts reasonably required to be set aside in reserves for items of
Operating Expenses the payment of which is not then immediately required.
Such Operating Expenses include,but are not limited to.expenses for ordinary
repairs,reneals and replacements of the System,salaries and wages.employees’health,
hospitalization,pension and retirement expenses.fees for services,materials and supplies,rents,
administrative and general expenses,insurance expenses.legal,engineering,accounting,trustee.
paying agent and financial advisory fees and expenses and costs of other consulting and technical
services,taxes (except as set forth in the following paragraph),payments in lieu of taxes and
other governmental charges.payments to the United States Treasury’pursuant to Section 148(f)
of the Code or similar requirement to pay rebate.fuel costs,and any other current expenses or
obligations required to be paid by the Governmental Agency by law,all to the extent properly
allocable to the System.
Such Operating Expenses do not include depreciation or obsolescence charges or
reserves,amortization of intangibles or other bookkeeping entries of a similar nature,interest
charges and charges for the payment of principal,or amortization,of bonded or other
indebtedness of the Governmental Agency.costs,or charges made therefor.for capital additions,
replacements.betterments,extensions or improvements to or retirements from the System which
under Generally Accepted Accounting Principles are properly chargeable to the capital account
or the reserve for depreciation.and do not include losses from the sale,abandonment.
reclassification,revaluation or other disposition of any properties of the System nor such
property items,including taxes and fuel,which are capitalized pursuant to the then existing
accounting practice of the Governmental Agency.
‘Generally Accepted .4c’c’ounllng Principles”shall mean accounting principles,
methods and terminology followed and construed for enterprises which are employed in business
comparable to the business of the Governmental Agency.as amended from time to time.
5.Rate Covenant
The Governmental Agency shall establish and collect rates and charges for the use or the sale of
the products and services of the System.which together with other moneys available therefor.are
expected to produce Revenues (as defined in paragraph (4)of this Exhibit A to this Loan
Agreement)for each calendar year which will be at least sufficient for such calendar year to pay
the sum of:
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(a)all amounts estimated to be required to pay Operating Expenses (as
defined in paragraph (4)of this Exhibit A of this Loan Agreement)during
such calendar year;
(b)a sum equal to 110%of the debt service due on the Governmental Agency
Bond for such calendar year and debt service coming due during such
calendar year on any obligations secured by a lien on the Pledged
Property which lien is on a parity with the lien of this Loan Agreement on
the Pledged Property,in each case computed as of the beginning of such
calendar year:
(c)the amount,if any,to be paid during such calendar year into any debt
service reserve account in connection with any obligations secured by a
Lien on the Pledged Property which lien is on a parity with the lien of tins
Loan Agreement on the Pledged Property;
(d)a sum equal to the debt service on any obligations secured by a lien on the
Pledged Property which lien is subordinate to the lien of this Loan
Agreement on the Pledged Property for such calendar year computed as of
the beginning of such calendar year;and
(e)amounts necessary to pay and discharge all charges and liens or other
indebtedness not described above payable out of the Revenues during such
calendar year.
Notwithstanding anything contained above,amounts deposited in a rate
stabilization account shall not be deemed Revenues (as defined in paragraph 4.of this Exhibit A
to this Loan Agreement)in the calendar year deposited and amounts withdrawn from the rate
stabilization account shall be deemed Revenues (as defined in paragraph 4.of this Exhibit A to
this Loan Agreement)in the year withdrawn.
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EXHIBIT B
DESCRIPTION OF THE LOAN
1.Address of Governmental Agency:
Town of Estes Park,Colorado,
Acting By and Through its Water Activity Enterprise
Estes Park Municipal Building
P.O.Box 1200
170 MacGregor Ave
Estes Park,Colorado 80517
2.Cost of Project:$5,984,000
3.Principal Amount of Loan Commitment:$5,500,000
4.Loan Term:The date commencing on the Loan Closing and ending on the final
Loan Repayment date set forth in Exhibit C.
5.Description of the Project:See Exhibit A,1.
6.Authorized Officers:
____
7.Project Completion Date:
____
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EXHIBIT C
LOAN REPAYMENT SCHEDULE
Loan Principal Principal Total Interest Total Loan
Repayment Portion of Portion of Principal Portion of Repayment
Date Loan Loan Loan
Repayment’Repayment2 Repayment3
Allocated to Principal of Authority Bonds.
2 Allocated to Authority Funds Deposited in Project Loan Subaccount.
Allocated to Interest on Authority Bonds.
80012665.1 c—I
C C)
EXHIBIT D
GOVERNMENTAL AGENCY BOND
FOR VALUE RECEIVED,the undersigned.TOWN OF ESTES PARK,COLORADO,
ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE (the
“Governmental Agency”)hereby promises to pay to the COLORADO WATER RESOURCES
AND POWER DEVELOPMENT AUTHORITY (the “Authority”),or registered assigns,the
principal amount of Five Million,Five 1-lundred Thousand Dollars ($5,500,000).at the times and
in the amounts determined as provided in the Loan Agreement dated as of June 1,2008,by and
between the Authority and the Governmental Agency (the “Loan Agreement”),together with
interest thereon in the amount calculated as provided in the Loan Agreement,payable on the
dates and in the amounts determined as provided in the Loan Agreement.
This Governmental Agency Bond is issued pursuant to the Loan Agreement and is issued in
consideration of the loan made thereunder (the “Loan”)and to evidence the obligations of the
Governmental Agency thereunder to make the Loan Repayments (as defined in the Loan
Agreement).This Governmental Agency Bond has been assigned to Wells Fargo Bank,N.A..as
trustee (the “Trustee”)under the Bond Resolution (as defined in the Loan Agreement)and
payments hereunder shall,except as otherwise provided in the Loan Agreement.be made
directly to the Loan Servicer (as defined in the Bond Resolution)for the account of the Authority
pursuant to such assignment.Such assignment has been made as security for the payment of the
Authority Bonds (as defined in the Bond Resolution)issued to finance or refinance,and in
connection with,the Loan and as otherwise described in the Loan Agreement.All of the terms,
conditions and provisions of the Loan Agreement are,by this reference thereto,incorporated
herein as a part of this Governmental Agency Bond.
This Governmental Agency Bond is entitled to the benefits and is subject to the conditions of the
Loan Agreement.The obligations of the Governmental Agency to make the payments required
hereunder shall be absolute and unconditional without any defense or right of setoflç
counterclaim or recoupment by reason of any default by the Authority under the Loan
Agreement or under any other agreement between the Governmental Agency and the Authority
or out of any indebtedness or liability at any time owing to the Governmental Agency by the
Authority or for any other reason.
This Governmental Agency Bond is subject to optional prepayment under the terms and
conditions,and in the amounts provided in Section 3.08 of the Loan Agreement.
The obligation of the Governmental Agency to make payments under the Loan Agreement and
this Governmental Agency Bond is a special and limited obligation of the Government Agency
and is payable solely from the repayment source described in the Loan Agreement and the
obligation of the Governmental Agency to pay the Loan Repayments is secured by an
irrevocable pledge and lien (but not necessarily an exclusive lien)upon the Pledged Property (as
defined in paragraph 4.of Exhibit A of the Loan Agreement).This Governmental Agency Bond
does not constitute a debt or an indebtedness of the Governmental Agency,or the Town of Estes
80012665.1 D—l
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Park,Colorado,within the meaning of any constitutional,charter or statutory provision or
limitation.This Governmental Agency Bond is not payable,in whole or in part from the
proceeds of general property taxes,and the full faith and credit of the Governmental Agency,or
the Town of Estes Park,Colorado,is not pledged for the payment of the principal of or interest
on this Governmental Agency Bond.
This Governmental Agency Bond is issued under the authority of and in full conformity with the
Constitution and laws of the State of Colorado,including without limitation,Article X,Section
20 of the Constitution Title 31,Article 35,Part 4,C.R.S.,Title 37,Article 45.1,C.R.S.;certain
provisions of Title 11,Article 57,Part 2,C.R.S.(the “Supplemental Act”),and pursuant to the
Loan Agreement.Pursuant to §11-57-210,of the Supplemental Act,such recital shall be
conclusive evidence of the validity and regularity of the issuance of this Governmental Agency
Bond after its delivery for value.Pursuant to §31-35-413,C.R.S.,such recital shall conclusively
impart full compliance with all the provisions of such Part 4,and this Governmental Agency
Bond issued containing such recital is incontestable for any cause whatsoever after its delivery
for value.
IN WITNESS WHEREOF,the Governmental Agency has caused this Governmental Agency
Bond to be duly executed,sealed and delivered,as of this 1st day of June,2008.
(SEAL)
TOWN OF ESTES PARK,COLORADO,
ACTING BY AND THROUGH ITS WATER
ACTIVITY ENTERPRISE
By:
_______
Mayor
ATTEST:
Clerk
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EXHIBIT El
OPINION OF GOVERNMENTAL AGENCY COUNSEL
[LETTERHEAD OF COUNSEL TO GOVERNMENTAL AGENCY]
[Date of Closingj
Colorado Water Resources and
Power Development Authority
Wells Fargo Bank.National Association
as Trustee
as Representative of the Underwriters
Ladies and Gentlemen:
I am an attorney admitted to practice in the State of Colorado and 1 have acted as counsel to the
TOWN OF ESTES PARK,COLORADO,ACTENG BY AND THROUGH ITS WATER
ACTIVITY ENTERPRISE (the “Governmental Agency”),which has entered into a Loan
Agreement (as hereinafter defined)with the COLORADO WATER RESOURCES AND
POWER DEVELOPMENT AUTHORITY (the “Authority”),and have acted as such iii
connection with the authorization,execution and delivery by the Governmental Agency of the
Loan Agreement and its Governmental Agency Bond (as hereinafter defined).
In so acting I have examined the Constitution and laws of the State of Colorado.I have also
examined originals,or copies certified or otherwise identified to my satisfaction,of the
following:
I.The Authority’s Drinking Water Revolving Fund 2008 Series A Revenue Bond
Resolution,adopted by the Authority on April 25,2008 (the “Bond Resolution”);
2.the Loan Agreement.dated as of June I,2008 (the “Loan Agreement”)by and
between the Authority and the Governmental Agency;
3.proceedings of the governing body of the Governmental Agency relating to the
approval of the Loan Agreement and the execution,issuance and delivery thereof
on behalf of the Governmental Agency,and the authorization of the undertaking
and completion of the Project (as defined in the Loan Agreement);
80012665.1 E—I —
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4.the Governmental Agency Bond.dated June I,2008 (the “Governmental Agency
Bond”)issued by the Governmental Agency lo the Authority to evidence the Loan
(as defined in the Loan Agreement);
5.proceedings of the governing body of the Governmental Agency relating to the
issuance of the Governmental Agency Bond and the execution,issuance and
delivery thereof to the Authority (the Loan Agreement and the Governmental
Agency Bond are referred to herein collectively as the “Loan Documents”);and
6.all outstanding instruments relating to bonds,notes or other indebtedness of or
relating to the Governmental Agency.
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:
I.The Governmental Agency is a “governmental agency”within the meaning of the
Authority’s enabling legislation with the legal right to carry on the business of the
System (as defined in the Loan Agreement)as currently being conducted and as
proposed to be conducted.
2.The Governmental Agency has full legal right and authority to execute the Loan
Documents 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 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 proceedings of the Governmental Agency’s governing body approving the
Loan Documents and authorizing their execution,issuance and delivery on behalf
of the Governmental Agency.and authorizing the Governmental Agency to
undertake and complete the Project have been duly and lawfully adopted and
authorized in accordance with applicable Colorado law.(hereinafter collectively
called the “Authorizing Resolutions”).which Authorizing Resolutions were duly
approved and published in accordance with applicable Colorado law,at a meeting
or meetings which were duly called pursuant to neeessan public notice and held
in accordance with applicable Colorado law,and at which quorums were present
acting throughout.
4.To the best of my knowledge.after such investigation as I have deemed
appropriate,the authorization,execution and delivery of the Loan Documents by
the Governmental Agency,the obsen’ation and performance by the Governmental
80012665.1 E—1—2
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Agency 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 Governmental Agency 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 or trust or
other agreement to which the Governmental Agency is a party or by which it.the
System (as defined in the Loan Agreement)or its property or assets is bound.
5.To the best of my knowledge,after such investigation as I have deemed
appropriate,all approvals,consents or authorizations of.or registrations of or
filings with,any governmental or public agency,authority or person required to
date on the part of the Governmental Agency in connection with the
authorization,execution,delivery’and performance of the Loan Documents and,
other than authorizations,licenses and permits relating to the siting.construction
and acquisition of the Project which we expect the Governmental Agency to
receive in the ordinary course of business,the undertaking and completion of the
Project have been obtained or made.
6.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 of Federal)
questioning the creation.organization or existence of the Governmental Agency
or the validit.legality or enforceability of the Loan Documents or the
undertaking or completion of the Project or which if adversely determined,could
(a)materially adversely affect (i)the financial position of the Governmental
Agency.(ii)the ability of the Governmental Agency to perform its obligations
under the Loan Documents.(iii)the security for the Loan Documents,or (iv)the
transactions contemplated by the Loan Documents,or (b)impair the ability of the
Governmental Agency to maintain and operate its system.
This opinion is rendered on the basis of Federal law and the laws of the State of Colorado as
enacted and construed on the date hereof.I express no opinion as to any matter not set forth in
the numbered paragraphs herein.
80012665.1 E—1 —3
C)C
I herebV authorize Fuibright &Ja’orski L.L.P..Bond CounseL and Carison.Hammond &
Paddock L.L.C.,General Counsel to the Authority,to rely on this opinion as if I had addressed
this opinion to them in addition to you.
Very truly yours,
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EXHIBIT E-2
OPINION OF GOVERNMENTAL AGENCY BOND COUNSEL
[LETTEREEAD OF BOND COUNSEL TO GOVERNMENTAL AGENCY]
[Date of Closing]
Colorado Water Resources and
Power Development Authority
Wells Fargo Bank,National Association
as Trustee
as Representative of the Underwriters
Ladies and Gentlemen:
We have acted as bond counsel to the TOWN OF ESTES PARK,COLORADO,ACTING
BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE (the “Governmental
Agency’).which has entered into a Loan Agreement (as hereinafter defined)with the
COLORADO WATER RESOURCES AND POWER DEVELOPMENT AUTHORITY
(the “Authority’).and have acted as such in connection with the authorization,execution and
delivery by the Governmental Agency of the Loan Agreement and its Governmental Agency
Bond (as hereinafter defined).
In so acting we have examined the Constitution and law-s of the State of Colorado and by-laws of
the Governmental Agency.We have also examined originals,or copies certified or otherwise
identified to [insert “my”or “our”]satisfaction.of the following:
1.The Authority’s Drinking Water Revolving Fund 2008 Series A Revenue Bond
Resolution,adopted by the Authority on April 25,2008 (the “Bond Resolution”)z
2.the Loan Agreement,dated as of June 1.2008 (the “Loan Agreement”)by and
between the Authority and the Governmental Agency;
3.the proceedings of the governing body of the Governmental Agency relating to
the approval of the Loan Agreement and the execution,issuance and delivery
thereof on behalf of the Governmental Agency:
4.the Governmental Agency Bond,dated June 1.2008 (the Governmental Agency
Bond”)issued by the Governmcntal Agency to the Authority to evidence the Loan
(as defined in the Loan Agreement):and
80012665.1 E—2—I
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5.proceedings of the governing body of the Governmental Agency relating to the
issuance of the Governmental Agency Bond and the execution,issuance and
delivery thereof to the Authority (the Loan Agreement and the Governmental
Agency Bond are referred to herein collectively as the “Loan Documents”):and
We have also examined and relied upon originals,or copies certified or otherwise authenticated
to [insert “my”or “our”j satisfaction,of such other records,documents,certificates and other
instruments,and made such investigation of law as in our judgment we have deemed necessary
or appropriate to enable us to render the opinions expressed below.
Based upon the foregoing,we are of the opinion,as of the hereof,that:
1.The Governmental Agency is a “governmental agency”within the meaning of the
Authority’s enabling legislation.
2.The Governmental Agency has full legal right and authority to execute the Loan
Documents 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,and to restrictions and limitations imposed by or
resulting from,bankruptcy,insolvency,moratorium,reorganization.debt
adjustment or other similar laws affecting creditors’rights generally
collectively,“Creditor’s Rights Limitations”)heretofore or hereafter enacted or
other laws,judicial decisions,and principles of equity relating to the enforcement
olcontractual obligations generally.
3.The Governmental Agency has pledged the Pledged Property as described in
paragraph 4 of Exhibit A to the Loan Agreement for the punctual payment of the
principal of and interest on the Loan and all other amounts due under the Loan
Documents according to their respective terms and the Authority has a lien but
not necessarily ai exclusive first lien on such source of repayment.No filings or
recordings are required under the Colorado Uniform Commercial Code in order to
provide a first lien on such source of repayment and all actions have been taken as
required under Colorado law to insure the priority,validity and enforceability of
such lien.
4.The Loan Documents have been duly authorized,executed and delivered by the
authorized officers of the Governmental Agency;and,assuming in the case of the
Loan Agreement.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 Documents constitute the legal.valid and binding
obligations of the Governmental Agency enforceable in accordance with their
respective 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.
80012665.1 E—2—2
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5.Assuming compliance with the covenants contained in the Loan Agreement.the
Governmental Agency is not.directly or indirectly.(a)using in excess of ten
percent of the proceeds of the Authority Bonds (as defined in the Loan
Agreement)loaned to the Governmental Agency or the Project in a manner that
ould constitute “private business use”within the meaning of Section 141(b)(6)
of the Internal Revenue Code of 1986,as amended (the “Code”),and at least one-
half of such private business use permitted by clause (a)is neither unrelated to the
governmental use of the proceeds of the Authority Bonds loaned to the
Governmental Agency (within the meaning of Section 141(b)(3)(A)(ii)(l)or (Ill)
of the Code)nor disproportionate related business use (within the meaning of
Section 141(b)(3)(A)(ii)(II)or (Ill)of the Code)nor (B)using.directly or
indirectly,any of the proceeds of the Authority Bonds loaned to the
Governmental Agency to make or finance loans to persons other than
governmental units (as such terms are used in Section 141(c)of the Code).
6.The execution and delivery of the Loan Documents are not subject to the
limitations of Article X,Section 20 of the Colorado Constitution (“TABOR”)
since the System (as defined in the Loan Agrement)as of the date hereof
constitutes an enterprise under TABOR.The performance of the obligations of
the Governmental Agency under the Loan Documents is not subject to the
limitations of TABOR as long as the System continues to qualify as an enterprise
under TABOR.If the System is not longer an enterprise under TABOR.the Loan
Documents will continue to constitute legal,valid and binding obligations of the
Governmental Agency enforceable in accordance with their respective terms;
subject.however,to (a)Creditor’s Rights Limitations or other laws,judicial
decisions and principles of equity relating to the enforcement of contractual
obligation generally,and (b)subject to the next sentence,the revenue and
spending limitations of TABOR.If the System at any time fails to be an
enterprise under TABOR.(a)the Governmental Agency may continue to impose
any increase in fees,rates and charges of the System without voter approval:(b)
all revenues of the Governmental Agency used to pay Loan Repayments (as
defined in the Loan Agreement)shall be included in the Governmental Agency’s
fiscal year spending limit under Section 7(d)of lABOR,except that debt service
changes and reductions are exceptions to.and not part of,the Governmental
Agency’s revenue and spending base and limits;and (c)if the Governmental
Agency is required to reduce spending in order to comply with its fiscal year
spending limit under Section 7(b)of TABOR.the Governmental Agency will first
be required to reduce spending for purposes for which it does not have an
obligation under law or by contract prior to reducing spending required to comply
with the other covenants contained in the Loan Documents.
The opinions set forth in paragraphgs numbered 2 and 4 above are further qualified and limited
to the extent that we express no opinion as the the authority of the Governmental Agency to
agree to perform,or as to the enforceability of.the following provisions of the Loan Agreement
80012665.1 E—2—3
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and of the Governmental Agency Bond (to the extent such provisions of the Loan Agreement are
incorporated in the Governmental Agency Bond):
(a)Section 3.03 (d)and (e)to the extent that amounts that may become due
thereunder would cause the net effective interest rate on the Loan to
exceed the net effective interest rate authorized;
(b)Section 3.06 to the extent that it requires the Governmental Agency to
indemnify the Authority.
In addition,the enforceability of the Loan Agreement and the Governmenlal Agency Bond is
subject to judicial discretion,to the exercise by the State of Colorado and its governmental
bodies of the police power inherent in the sovereignty of the State.and to the exercise by the
United States of America of the powers delegated to it by the Constitution of the United States of
America.
This opinion is rendered on the basis of Federal law and the laws of the State of Colorado as
enacted and construed on the date hereof.We express no opinion as to any matter not set forth in
the numbered paragraphs herein.
We hereby authorize Fulbright &Jaworski L.L.P..Bond Counsel.and Carlson.Hammond &
Paddock L.L.C..General Counsel to the Authority,to rely on this opinion as if we had addressed
this opinion to them in addition to you.
Very truly yours.
80012665.1 E—2—4
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EXHIBIT F
ADDITIONAL COVENANTS AND REQUIREMENTS
Audit Requirements.For each year in which the Governmental Agency requests a
disbursement from the Project Loan Subaccount.the Governmental Agency shall conduct its
annual audit in accordance with the federal Single Audit Act.31 U.S.C.§7501 et seq.
Additional Senior,Parity and Subordinate Lien Bonds.The Governmental Agency
covenants that it will not issue any obligations payable out of,or secured by a lien or charge on
the Pledged Property which is superior to the lien or charge of this Loan Agreement on the
Pledged Property.In addition,the Governmental Agency covenants that it will not issue any
obligations payable out oi or secured by a lien or charge on the Pledged Property which is on a
parity with the lien or charge of this Loan Agreement on the Pledged Property.unless the
Governmental Agency certifies to the Authority that Net Revenues (as defined in paragraph 4.of
Exhibit A to this Loan Agreement and subject to the next sentence)for any 12 consecutive
months out of the 18 months preceding the month in which such obligations are to be issued is at
least equal to the sum of (a)110%of the maximum annual debt service of (i)this Loan
Agreement and all outstanding obligations of the Governmental Agency payable out oC or
secured by a lien or charge on the Pledged Property which is on a parity with the lien or charge
of this Loan Agreement on the Pledged Property,and (ii)such proposed obligations to be issued,
and (b)100%of the maximum annual debt service of all obligations payable out of,or secured
by a lien or charge on the Pledged Property which,is subordinate to the lien or charge of this
Loan Agreement on the Pledged Revenues.Net Revenues may be adjusted to reflect any rate
increases prior to the issuance of such additional obligations by adding to the actual Net
Revenues for such period an estimated sum equal to 100%of the estimated increase in Net
Revenues which would have been realized during such period had such rate increase been in
effect during all of such period.Notwithstanding the foregoing.the Governmental Agency ma’
issue refunding obligations payable out of.or secured by a lien or charge on the Pledged
Property,without compliance with the requirements stated above,provided that the debt service
payments on such refunding obligations do not exceed the debt service payments on the refunded
obligations during any calendar year.In addition.the Governmental Agency covenants that it
will not issue any obligations payable out of.or secured by a lien or charge on the Pledged
Property which is subordinate to the lien or charge of this Loan Agreement on the Pledged
Property.unless the Governmental Agency certifies to the Authority that for any 12 consecutive
months out of the 18 months preceding the month in which such obligations are to be issued Net
Revenues were at least 100%of the maximum annual debt service on all obligations payable out
of,or secured by a lien or charge on the Pledged Property,which are outstanding during such
period.
Operations and Maintenance Reserve Fund.The Governmental Agency shall maintain an
operations and maintenance reserve in an amount equal to three months of operation and
maintenance expenses excluding depreciation of the System as set forth in the annual budget for
80012665 I F—I
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the current fiscal year but in no event greater than $1,250,000.Said reserve may be in the form
of unobligated fund balances or other unobligated cash or securities (i.e..capital reserves)or may
be in a separate segregated fund and shall be maintained as a continuing reserve for payment of
any lawful purpose relating to the System.If the operations and maintenance reserves fall below
this requirement,the shortfall shall be made up in 24 substantially equal monthly installments
beginning the second month after such shortfall or the date of delivery.
Rate Study.In the event that Revenues collected during a fiscal year are not sufficient to meet
the requirements set forth in the Rate Covenant contained in paragraph 5.of Exhibit A of this
Loan Agreement,the Governmental Agency shall,within 90 days of the end of such fiscal year,
cause an independent firm of accountants or consulting engineers,to prepare a rate study for the
purpose of recommending a schedule of rates,fees and charges for the use of the System which
in the opinion of the firm conducting the study will be sufficient to provide Revenues to be
collected in the next succeeding fiscal year which will provide compliance with the Rate
Covenant described in paragraph 5.of Exhibit A of this Loan Agreement.Such a study shall be
delivered to the Authority and the Trustee.The Governmental Agency shall within six months
of receipt of such study,adopt rates,fees and charges for the use of the System,based upon the
recommendations contained in such study,which provide compliance with said rate covenant.
Special Fund.The Governmental Agency covenants to create a special fund into which shall be
deposited the Revenues (as defined in paragraph 4.of Exhibit A to this Loan Agreement).The
Revenues shall be applied,on or before the last day of each month,first to the payment of the
Operating Expenses (as defined in paragraph 4.of Exhibit A to this Loan Agreement)and then
applied to the payment of the Loan Repayments and other amounts payable on a parity with the
Loan Repayments.Any further application shall be as provided by ordinance or resolution of the
Governmental Agency.
Technical Managerial and Financial Capacity Requirement.As described in the
Technical/Managerial/Financial (TMF)Capacity Evaluation Report dated February 8,2008,the
Governmental Agency shall have plans and specifications for all new process additions approved
by the Colorado Department of Public Health and Environment,the Water Quality Control
Division,and the Governmental Agency shall be provided with as-built drawings as part of the
process revision.The as-built drawings must include a as a minimum plan view (and elevation
views for underground components),pipe/vessel component material,size,and include all pipes.
valves,connectors and storage devices.
80012665.1 F—2