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<br />. , <br />, <br /> <br />a. Keep pledged revenues separate. The BORROWER shall set aside and keep the pledged <br />revenues in an account separate from other BORROWER revenues, and warrants that these <br />revenues will not be used for any other plJrpose. <br /> <br />b. Security interest in pledged revenues. To provide a security interest to the STATE in the <br />pledged revenues so that the STATE sh<illl have priority over all other competing claims for <br />said revenues, the BORROWER has duly executed a Securtty Agreement, attached hereto <br />as Appendix D and incorporated herein, <br /> <br />c. Rate Covenant. Pursuant to its stlltutory authority and as permitted by law, the <br />BORROWER shall take all necessary actions consistent therewith during the terin of this <br />contract to establish, levy and collect water rates, charges and fees in amounts sufficient <br />to pay this loan as required by this contract and the promissory note, to cover all <br />expenditures for operation and maintenance and emergency repair services, and to <br />maintain adequate debt service reserves, including obtaining voter approval, if necessary, <br />of increases in the BORROWER'S water user fees. <br /> <br />d. Debt Service Reserve Account. THE BORROWER shall deposit an amount equal to one <br />annual loan payment into a separate dept service reserve account on or before the date it <br />executes this contract. <br /> <br />e. Additional Debts or Bonds. The BORROWER shall not issue any indebtedness payable <br />from the pledged revenues and having a lien thereon which is superior to the lien of this <br />loan. The BORROWER may issue parity or additional subordinate debt only with the prior <br />written approval of the STATE, provided that: <br /> <br />i. The BORROWER is currently and at the time of the issuance of the parity debt in <br />substantial compliance with all of the obligations of this contract, including, but not <br />limited to, being current on the annual payments due under this contract and in the <br />accumulation of all amounts then required to be accumulated in the BORROWER'S debt <br />service reserve fund; <br /> <br />II. The BORROWER provides to the STATE a Parity Certificate from an independent <br />certified public accountant certifying that, based on an analysis of the BORROWER'S <br />revenues, excluding tap and/or connection fees, for 12 consecutive months out of the <br />18 months immediately preceding the date of issuance of such parity debt, the <br />BORROWER'S revenues are sufficient to pay at least 'the annual operating and <br />maintenance expenses, annual debt service on all outstanding indebtedness having a <br />lien on the pledged revenues, including this loan, the annual debt service on the <br />proposed indebtedness to be issued, and all required deposits to any reserve funds <br />required by this contract or by the iender(s) of any indebtedness having a lien on the <br />pledged revenues. The analysis of revenues shall be based on the BORROWER'S <br />current rate structure. <br /> <br />The BORROWER acknowledges and understands that any request for'approval of the issuance <br />of additional debt must be reviewed and approved by the CWCB Executive Director prior to the <br />issuance of any additional debt. <br /> <br />11. Annual Statement of Debt Coverage. each year during the term of this contract, the <br />BORROWER shall submit to the STATE an annual audit report and a certificate of debt service <br />coverage from a Certified Public Accountant. <br /> <br />12, Collateral during repayment. The BORROWER shall not convey, assign, grant, transfer, <br />mortgage, pledge, encumber, or otherwise dispose of the revenue:? pledged herein to repay this <br /> <br />Town of Palisade <br /> <br />Page 5 of 11 <br />