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South Metro Water Supply Authority March 10, 2009 (UPDATED March 18, 2009) Page 2 of 8 Agenda Item 14b 2) Purchase/Operating Agreements: The Authority must have a final purchase agreement and final operating agreement executed with copies submitted to the CWCB. 3) Prior to signing a contract with the CWCB, the Authority must provide an executed step up provision (as part of the Authority's participation agreement) whereby, in the event of default by one of the borrowers, all of the remaining participants in the Project (Castle Pines North Metropolitan District, Centennial Water and Sanitation District, Cottonwood Water and Sanitation District, Inverness Water and Sanitation District, and the Town of Castle Rock) will be required to pay for the defaulting party's commitment and that the payments due must be sufficient to enable the Authority to meet the CWCB debt service requirements. This step up provision must be signed by all participants in the Project. The terms of the step up provision shall be as agreed upon by the CWCB and Authority prior to execution with participants. 4) To utilize construction funds in a timely manner, the Authority will have a two-year time limit from CWCB approval to execute a funding contract with the CWCB. If a contract is not executed within two years of Board approval, the Project will be recommended for loan de- authorization unless the Board specifically approves a time extension. Background The Authority is made up of 13 independent water providers that serve communities in the southern area of inetro Denver. The 13 members are: Table 1. South Metro Water Authority Member Agencies Ara ahoe Coun Water and Wastewater Authori (ACWWA) Meridian Metro olitan District (Meridian) Pine Water and Wastewater District (Pine Stone ate Villa e Metro olitan District (Stone ate) Castle Pines North Metro olitan District * Centennial Water and Sanitation District* Cottonwood Water and Sanitation District* Inverness Water and Sanitation District* Town of Castle Rock* East Cherry Creek Valley Water and Sanitation District (ECCV) Castle Pines Metro olitan District** Parker Water and Sanitation District** Roxborough Park Metropolitan District** Note: Bold indicates members seeking funding from the CWCB for this Project; * indicates a member of the Authority participating in the Project with independent (non-CWCB) funding; ** indicates a member of the Authority but not currently purchasing pipeline capacity in this Project. The members of the Authority have been working together to identify new supplies of water and opportunities to share resources and infrastructure in Adams, Denver, Arapahoe, and Douglas Counties Currently, the members rely mainly on the bedrock groundwater aquifer to supply the area's municipal