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12 <br />2024 Installment Payments; Application of Gross Revenues <br />2024 Installment Payments. Under the 2024 Installment Purchase Contract, the City will <br />irrevocably pledge all of the Net Revenues to the punctual payment of the 2024 Installment <br />Payments, and the interest thereon. This pledge constitutes a first lien on the Net Revenues, on <br />a parity with the pledge of and lien on Net Revenues which secures any Parity Obligations, <br />including the 2017 Installment Payments and the 2015 Installment Payments. The City is <br />obligated to make 2024 Installment Payments to the Trustee, on behalf of and as assignee of the <br />Authority. <br />“Net Revenues” means, for any period, all of the Gross Revenues during such period less <br />all of the Maintenance and Operation Costs during such period. <br />"Gross Revenues" means all gross income and revenue received or receivable by the <br />City from the ownership and operation of the Enterprise, calculated in accordance with Generally <br />Accepted Accounting Principles, including all rates, fees and charges (including connection fees) <br />received by the City for Water Service and all other income and revenue howsoever derived by <br />the City from the Enterprise or arising from the Enterprise (including transfers from the Rate <br />Stabilization Fund to the Revenue Fund but excluding transfers from the Revenue Fund to the <br />Rate Stabilization Fund); provided, however, that (i) any specific charges levied for the express <br />purpose of reimbursing others for all or a portion of the cost of the acquisition or construction of <br />specific facilities, or (ii) customers' deposits or any other deposits subject to refund until such <br />deposits have become the property of the City, are not Gross Revenues and are not subject to <br />the lien of the 2024 Installment Purchase Contract. Gross Revenues shall also include interest <br />with respect to any Parity Obligations reimbursed to or on behalf of the City by the United States <br />of America. <br />“Maintenance and Operation Costs” means the reasonable and necessary costs and <br />expenses paid by the City (excluding 2024 Installment Payments or other payments in the nature <br />of debt service on obligations secured by Net Revenues) for maintaining and operating the <br />Enterprise, as determined in accordance with Generally Accepted Accounting Principles, <br />including but not limited to (a) the reasonable expenses of management and repair and other <br />costs and expenses necessary to maintain and preserve the Enterprise in good repair and <br />working order, (b) the cost of wholesale water purchases from the SFPUC and any surcharges <br />related thereto, and (c) administrative costs of the City attributable to the Enterprise and the <br />financing thereof; Maintenance and Operation Costs exclude (x) depreciation, replacement and <br />obsolescence charges or reserves therefor, (y) in any Fiscal Year prior to setting aside an amount <br />equal to the 2024 Installment Payments for such Fiscal Year, capital expenditures other than as <br />set forth in subsection (a) above, and (z) amortization of intangibles or other bookkeeping entries <br />or a similar nature. <br /> <br />Application of Revenues. The City is required to deposit all of the Gross Revenues of <br />the Enterprise immediately upon receipt in the Revenue Fund, which has been established and <br />is held and maintained by the City with respect to the Enterprise. <br />Amounts on deposit in the Revenue Fund will be applied by the City to pay when due the <br />following amounts in the following order of priority: <br />(i) all Maintenance and Operation Costs of the Enterprise; <br />8.A. - Page 26 of 255 <br />654