AgdaPkt 2020-11-23 Joint SA PFA - Laserfiche WebLink

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8.A. - Page 46 of 51 CERTAIN PARTICIPATING MEMBER RISK FACTORS 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 2020 Bonds. 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 C 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 Commercial/non-residential sewer rates charged by Redwood City, San Carlos and West Bay are based on volume. Demand for sewer service, as indicated by annual wastewater flows to the Authority as set forth in Appendices A through C 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. Parity Debt of the Participating Members The Participating Members are authorized by the respective Financing Agreements to incur indebtedness with a lien on Net Revenues on a parity basis with the SBSA Bond Payments or Authority Bond Payments securing the 2020 Bonds, if certain financial tests are met. See the caption "SECURITY FOR THE 2020 BONDS—Financing Agreements" herein and Appendix E—"FINANCING AGREEMENTS" attached hereto. These financial tests may involve, to some extent, projections of Net 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 may be less than projected, and the actual amount of Net Revenues may be insufficient to pay SBSA Bond Payments or Authority Bond Payments. Coronavirus The spread of the novel strain of coronavirus and the disease it causes (now known as "COVID-19") is having significant negative impacts throughout the world. The World Health Organization has declared the COVID-19 outbreak to be a pandemic, and states of emergency have been declared by the United States, the State, and numerous counties throughout the State, including San Mateo County. The purpose behind these declarations are to coordinate and formalize emergency actions and across federal, state and local governmental agencies, and to proactively prepare for a wider spread of the virus. To date there have been a number of confirmed cases of and deaths caused by COVID-19 in the State, including in San Mateo County, and health officials are expecting the number of confirmed cases to grow. The outbreak has resulted in the imposition of restrictions on mass gatherings and 712