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<br />4 <br />(b) if all or any portion or portions of the Parity Obligations constitute, or upon <br />issuance would constitute, Balloon Indebtedness, then, for purposes of determining Debt <br />Service, each maturity which constitutes, or upon issuance would constitute, Balloon <br />Indebtedness shall be treated as if it were to be amortized with substantially level annual Debt <br />Service payments over a term of 40 years commencing on the date which is the first <br />anniversary of the initial issuance of such Parity Obligations, calculated based on a fixed rate <br />equal to the rate at which the City could borrow for such 40-year period, as certified by an <br />Independent Municipal Finance Consultant engaged by the City; and <br /> <br />(c) if any Outstanding Parity Obligations constitute Variable Rate Indebtedness, the <br />interest rate on such Parity Obligations for any period as to which such interest rate has not <br />been established shall be assumed to be 110% of the daily average interest rate on such Parity <br />Obligations during the 12 months ending with the month preceding the date of calculation, or <br />such shorter period that such Parity Obligations shall have been Outstanding. <br /> <br />“Engineer’s Report” means a report signed by an Independent Engineer. <br /> <br />“Enterprise” means the City’s water system, including all facilities, works, properties and <br />structures of the City for the treatment, transmission and distribution of water, including <br />reclaimed water, including all contractual rights to water supplies, transmission capacity supply, <br />easements, rights-of-way and other works, property or structures necessary or convenient for <br />such facilities, together with all additions, betterments, extensions, and improvements to such <br />facilities or any part thereof hereafter acquired or constructed. <br /> <br />“Event of Default” means an event of default described in Section 7.01. <br /> <br />“Federal Securities” (a) direct obligations (other than an obligation subject to variation in <br />principal repayment) of the United States of America, (b) obligations fully and unconditionally <br />guaranteed as to timely payment of the interest and principal by the United States of America, <br />(c) obligations of any agency or instrumentality of the United States of America as to which the <br />timely payment of the interest on and the principal of such obligations is backed by the full faith <br />and credit of the United States of America, or (d) evidences of ownership of proportionate <br />interests in future interest and principal payments on obligations described above held by a <br />bank or trust company as custodian, under which the owner of the investment is the real party in <br />interest and has the right to proceed directly and individually against the obligor and the <br />underlying government obligations are not available to any person claiming through the <br />custodian or to whom the custodian may be obligated. <br /> <br />“Federal Subsidy” means any payment or tax credit by the United States of America <br />established in connection with any Parity Obligation. <br /> <br />“Final Compounded Amount” means the Accreted Value of any Capital Appreciation <br />Parity Obligation on its maturity date. <br /> <br />“Finance Officer” means the chief financial officer or City Manager of the City, or their <br />designated representatives. <br /> <br />“Fiscal Year” means the twelve calendar month period terminating on June 30 of each <br />year, or any other annual accounting period hereafter selected and designated by the City as its <br />Fiscal Year in accordance with applicable law. <br /> <br />8.A. - Page 172 of 255 <br />800