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49 <br />RISK FACTORS <br />The following factors, which represent certain risk factors, should be considered along <br />with all other information in this Official Statement by potential investors in evaluating the Bonds. <br />The following is not intended to be an exhaustive list and there can be no assurance made that <br />other risk factors do not currently exist or will not become evident at any future time. <br />Rate Covenant Not a Guarantee <br />The ability of the City to make the 2024 Installment Payments and thereby pay the principal <br />of and interest on the Bonds depends on the ability of the City to generate Net Revenues in the <br />levels required by the 2024 Installment Purchase Contract. Although, as more particularly <br />described herein, the City expects that sufficient revenues will be generated through the <br />imposition and collection of service charges, impact fees, and other Gross Revenues described <br />herein, there is no assurance that such imposition of service charges, impact fees, or other Gross <br />Revenues will result in the generation of Net Revenues in the amounts required by the 2024 <br />Installment Purchase Contract. As a result, the City’s covenant does not constitute a guarantee <br />that sufficient Net Revenues will be available to pay 2024 Installment Payments when due. <br />Limited Obligations <br />The Bonds are payable only from 2024 Installment Payments received from the City and <br />moneys in the funds and accounts held under the Indenture, and the 2024 Installment Payments <br />are secured by and payable solely from Net Revenues. The 2024 Installment Payments are not <br />secured by a legal or equitable pledge or charge or lien upon any property of the City or the <br />Authority or any of their income or receipts, except the Net Revenues. <br />The obligation of the City to make the 2024 Installment Payments does not constitute an <br />obligation for which the City is obligated to levy or pledge any form of taxation or for which the <br />City has levied or pledged any form of taxation. <br />Risks Relating to Water Supplies <br />As described above under “THE ENTERPRISE – Water Supply and Water Demand,” the <br />Enterprise currently receives virtually all its water, and all its potable water, from the Regional <br />Water System pursuant to the WSA and its Water Sales Contract that provides Redwood City an <br />ISG of 10.93 MGD or 12,243 AFY. Accordingly, an interruption in the delivery of water from the <br />City of San Francisco for any reason would severely impact the ability of the Enterprise to deliver <br />water to its customers, thereby reducing the amount of Gross Revenues available to the <br />Enterprise to pay its Maintenance and Operation Costs and its obligations under the WSA. The <br />City estimates, for example, that a 20% water shortage of the Regional Water System would <br />reduce water deliveries to the Enterprise by 28% (from an ISG of 12,243 AFY to 8,814 AFY). <br />Additionally, as the demands on the Regional Water System grow, the possibility of water <br />shortages will increase. <br />In December, 2018, the California State Water Resources Control Board (“SWRCB”) <br />adopted amendments to the Water Quality Control Plan for the San Francisco Bay/Sacramento- <br />San Joaquin Delta Estuary (Bay-Delta Plan Amendment) to establish water quality objectives to <br />maintain the health of the Bay-Delta ecosystem. The SWRCB is required by law to regularly <br />review this plan. The adopted Bay-Delta Plan Amendment was developed with the stated goal of <br />increasing salmonid populations in three San Joaquin River tributaries (the Stanislaus, Merced, <br />8.A. - Page 63 of 255 <br />691