AgdaPkt 2013-05-20 Closed Cancelled and Special

Browse Search

Atta 7.A. - Page 64 Payments, and principal of and interest on any Parity Obligations (including the 2007 Installment Purchase Contract and the 2006 Installment Purchase Contract) payable from Net Revenues coming due and payable during such Fiscal Year. In order to issue Parity Obligations in the amounts currently anticipated based on future expected operating and non-operating expenses (see Table 19), the City will be required to raise its rates and charges by the percentages set forth above under the caption "THE ENTERPRISE - Water Rate Increases—Proposed Rate Increases."See Table 12 above. Seismic Considerations 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. San Francisco's Water System Improvement Plan for the SFPUC (see "THE ENTERPRISE —Water Supply—SFPUC Water System Improvement Plan") 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 Water Supply Agreement. Environmental Regulation The kind and degree of water treatment effected through the Enterprise is regulated, to a large extent, by the federal government and the State of California. Treatment standards set forth in federal and state law control the operations of the Enterprise and mandate the use of water treatment technology. In the event that the federal government, acting through the Environmental Protection Agency, or the State of California, acting through the Department of Health Services, or additional federal or state agencies, should impose stricter water quality standards upon the Enterprise, the City's expenses could increase accordingly and rates and charges would have to be increased to offset those expenses. It is not possible to predict the direction federal or state regulation will take with respect to water quality standards, although it is likely that, over time, both will impose more stringent standards with attendant higher costs. Maintenance and Operation Costs There can be no assurance that the City's expenses for the Enterprise will be consistent with the descriptions in this Official Statement. Changes in technology, changes in quality standards, loss of large customers, increased or decreased development, increases in the cost of operation, or other expenses could require increases in rates or charges in order to comply with the City's rate covenant in the Installment Purchase Contract. Limited Recourse on Default Failure by the City to make Installment Payments constitutes an event of default under the 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 Installment Payments, there is no assurance that the City would have sufficient funds to pay the accelerated amounts. -41-