Agda Pkt 2024.08.26 Regular Meeting

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52 Limited Recourse on Default Failure by the City to make 2024 Installment Payments constitutes an event of default under the 2024 Installment Purchase Contract and the Trustee is permitted to pursue remedies at law or in equity to enforce the City’s obligation to make such payments. Although the Trustee has the right to accelerate the total unpaid principal amount of the 2024 Installment Payments, there is no assurance that the City would have sufficient funds to pay the accelerated amounts. Limitations on Remedies The ability of the City to comply with its covenants under the 2024 Installment Purchase Contract and to generate Net Revenues sufficient to pay the 2024 Installment Payments and, therefore, to cause sufficient Revenues to be available to pay principal of and interest on the Bonds, may be adversely affected by actions and events outside of the control of the City and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or persons obligated to pay assessments, fees and charges. Furthermore, the remedies available to the owners of the Bonds upon the occurrence of an event of default under the 2024 Installment Purchase Contract are in many respects dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time consuming to obtain. Earthquake, Flood, Wildfire or Other Natural Disasters General. The occurrence of an earthquake, flood or other natural disaster which resulted in the temporary or permanent closure of major components of the Enterprise or resulted in significantly increased costs could materially adversely affect the ability of the City to operate the Enterprise or to generate Net Revenues at the levels required by the 2024 Installment Purchase Contract. Seismic. The City, like much of California, is subject to seismic activity that could result in interference with the delivery of water from the Regional Water System or the City’s operation of the Enterprise. The City of San Francisco’s Water System Improvement Plan for the SFPUC (see “THE ENTERPRISE – Water Supply and Demand – SFPUC Water System Improvement Program”) is intended, in part, to make seismic upgrades to the Regional Water System. However, a major seismic event could result in water deliveries from the Regional Water System to the Enterprise being interrupted for a significant period of time. As a result, no assurance can be given that a future seismic event will not materially adversely affect the operation of the Enterprise. Additional details about how water is allocated during an emergency can be found in the WSA. The City does not, and does not expect to, maintain earthquake insurance on the Enterprise. Flood. In the City localized flooding can occur when substantial rainfall overwhelms the capacity of storm drains to convey runoff to creeks of the San Francisco Bay. Flooding has historically occurred in the Bayfront Canal/Atherton Channel watershed when high tides prevent rainwater from being discharged to the San Francisco Bay. The Federal Emergency Management Agency (“FEMA”) has studied the system of levees that protect areas in the City from the sea. The City conducted additional construction efforts in 2010. Deficient segments of the levees were raised, and the multijurisdictional levee system achieved FEMA accreditation in 2011. Subsequently, in 2020, the City received a letter from FEMA notifying it that the levees around Redwood Shores no longer met the requirements for FEMA accreditation based on the most recently adopted mapping standards and a site-specific analysis. As a result, Redwood Shores is currently mapped as being in a seclusion area. This designation means that while flood hazard information from the previous effective flood insurance rate map is maintained, in the future the 8.A. - Page 66 of 255 694