AgdaPkt 2019-05-20 Joint SA PFA - Laserfiche WebLink

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8.A. - Page 51 of 73 CERTAIN PARTICIPATING MEMBER RISK FACTORS Attachment D The following factors, along with other information in this Official Statement, should be considered by potential investors in evaluating the risks in the purchase of the 2019 Notes. Wastewater System Expenses There can be no assurance that the wastewater system operation and maintenance expenses of the Participating Members will be consistent with the levels described in Appendices A through D to this Official Statement. Increases in the cost of staffing, energy, or other expenses could increase operation and maintenance costs of the Participating Member wastewater systems and, resultantly, reduce amounts available to the Participating Members to make payments to the Authority under the Financing Agreements or the Joint Powers Agreement. Furthermore, there can be no assurance that any other entity with regulatory authority over the Participating Members' wastewater systems will not adopt further restrictions on operation of those wastewater systems, leading to increased rates. Demand for the Sewer Service Demand for sewer service, as indicated by annual wastewater flows to the Authority as set forth in Appendices A through D attached hereto, has fluctuated in recent fiscal years. There can be no assurance that the demand for sewer service provided by the Participating Members' wastewater systems will be maintained at current or historical levels. Reduction in the level of demand could require an increase in rates or charges in order to produce Net Revenues sufficient to comply with each Participating Member's obligations under the Financing Agreements to pay SBSA Bond Payments or Authority Bond Payments representing principal and interest on the 2019 Notes. Senior Debt of the Participating Members The Participating Members are authorized by the respective Financing Agreements to issue indebtedness with a lien on Net Revenues or Sewer Treatment Facility Revenues, on a senior basis to the SBSA Bond Payments or Authority Bond Payments securing the 2019 Notes, if certain financial tests are met. See the caption "SECURITY FOR THE 2019 NOTES—Financing Agreements Additional Debt of Participating Members" herein. These financial tests may involve, to some extent, projections of Net Revenues or Sewer Treatment Facility Revenues. There can be no assurance that the assumptions which form the basis of such projections, if any, will be actually realized subsequent to the date of such projections. If such assumptions are not realized, the amount of future Net Revenues or Surplus Revenues may be less than projected, and the actual amount of Net Revenues or Surplus Revenues may be insufficient to provide for the payment of the 2019 Notes. Additionally, the obligation of Redwood City, San Carlos and West Bay to pay their share of operation and maintenance costs of the Authority is senior to their obligations to pay SBSA Bond Payments and Authority Bond Payments under the Financing Agreements, representing debt service on the Prior SVCW Bonds, the 2019 Notes and the WIFIA Loan. See Appendix F"SUMMARY OF FINANCING AGREEMENTS" attached hereto. 565