AgdaPkt 2013-05-20 Closed Cancelled and Special

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7.A. - Page 63 Attachment 6 charges sufficient to provide the required debt service coverage as well as pay for Operation and Maintenance Costs. Among other matters, drought, general and local economic conditions and changes in law and government regulations (including initiatives and moratoriums on growth) could adversely affect the amount of Net Revenues realized by the City. Limited Obligations The Installment Payments are limited obligations of the City and are not secured by a legal or equitable pledge or charge or lien upon any property of the City or any of its income or receipts, except the Net Revenues. The obligation of the City to pay debt service on the Bonds from Net Revenues does not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The City is obligated under the Installment Purchase Contract to make Installment Payments solely from Net Revenues. There is no assurance that the City can succeed in operating the Enterprise such that the Net Revenues in the future will be sufficient for that purpose. Risks Relating to Water Supplies As described above under "THE ENTERPRISE—Water Supply and Water Demand,"the Enterprise currently receives virtually all of its water, and all of its potable water, from the Regional Water System pursuant to the WSA and its Water Sales Contract that provides Redwood City an ISG of 10.93 MGD or 12,243 AFY. Accordingly, an interruption in the delivery of water from San Francisco for any reason would severely impact the ability of the Enterprise to deliver water to its customers, thereby reducing the amount of Gross Revenues available to the Enterprise to pay its Maintenance and Operation Costs and its obligations under the Water Supply Agreement. The City estimates, for example, that a 20% water shortage of the Regional Enterprise would reduce water deliveries to the Enterprise by 28% (from 12,243 AFY to 8,861 AFY). Additionally, as the demands on the Regional Enterprise grow, the possibility of water shortages will increase. Wholesale Water Costs San Francisco is expected to substantially raise wholesale water rates for the Suburban Customers, including the Enterprise, due to the costs of San Francisco's capital improvement program, which is described above under "THE ENTERPRISE -Water Supply - San Francisco Capital Improvement Plan and Long-Range Financial Plan" above. The City projects that these rates may increase by up to 53% through Fiscal Year 2022-2023, from $1,276 per acre foot in Fiscal Year 2012-2013 to $1,960 per acre foot in Fiscal Year 2022-2023 (exclusive of the BAWSCA Surcharge). Including the BAWSCA Surcharge, rates may increase up to 70% through Fiscal Year 2022-2023, from $1,276 per acre foot in Fiscal Year 2012-2013 to $2,178 per acre foot in Fiscal Year 2022-2023.. The City has covenanted in the Installment Purchase Contract to prescribe and collect rates, fees and charges in connection with the Enterprise in an amount sufficient to allow the Enterprise to pay Operation and Maintenance Costs and amounts due under the Installment Purchase Contract and any Parity Obligations, and to replenish, if necessary, the Reserve Fund to the Reserve Requirement. Further, the Enterprise has agreed, in the Installment Purchase Contract, to prescribe and collect rates, fees and charges in connection with the Enterprise during each Fiscal Year which are sufficient to yield estimated Net Revenues which are at least equal to one hundred twenty percent (120%) of the aggregate amount of the Installment -40-