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

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8.A. - Page 55 of 73 Attachment D The Net Revenues or Surplus Revenues from one Participating Member's wastewater system are pledged solely to that Participating Member's obligations under the Financing Agreement to which it is a party. No Participating Member has any liability or responsibility for the SBSA Bond Payment or Authority Bond Payment of another Participating Member. If the Gross Revenues generated by Redwood City, San Carlos or West Bay were insufficient to pay that Participating Member's Operation and Maintenance Costs and SBSA Bond Payments and Authority Bond Payments under the respective Financing Agreements, there would likely not be Net Revenues available to pay such Participating Member's allocable share of debt service on the 2019 Notes. Belmont's obligation to pay operation and maintenance costs of the Authority and its own sewer treatment facility is subordinate to its obligations relating to the Prior Belmont Bonds, the 2019 Notes and the SRF Loan under the Belmont Financing Agreement. See the caption "SECURITY FOR THE 2019 NOTES—Financing Agreements" herein and Appendix F—"SUMMARY OF FINANCING AGREEMENTS" attached hereto. Change in Law In addition to the other limitations described herein, the California electorate or Legislature could adopt a constitutional amendment, legislation, or an initiative with the effect of reducing revenues payable to or collected by the Participating Members. Additionally, changes in State or federal regulations could result in a reduction in revenues payable to or collected by the Participating Members. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations that could have the effect of reducing the Net Revenues or Surplus Revenues of a Participating Member and adversely affecting the security of the 2019 Notes. Collection of Property Taxes Sewer service charges from West Bay, San Carlos and Belmont are billed on San Mateo County's property tax bills. San Mateo County is on the Teeter Plan, under which the County pays each agency for the full amount of sewer service charges assessed on the County's tax rolls. The County has the option to discontinue an agency's participation in the Teeter Plan, and there is no assurance that the County or any of the Participating Members will continue to participate in the Teeter Plan. Redwood City collects sewer charges on a combined utility bill that also includes water and garbage services. Failure of a Participating Member to properly levy or collect service charges or fees in connection with its wastewater systems, or the discontinuance of San Mateo County's or a Participating Member's participation in the Teeter Plan, could result in a delay or decrease in the collection of Net Revenues or Surplus Revenues by a Participating Member and the failure of a Participating Member to generate Net Revenues or Surplus Revenues in an amount sufficient to pay debt service on the 2019 Notes. 569