CT2015-083 Parity Certificate - Laserfiche WebLink

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CliftonLarsonAllen LLP www.cliftonlarsonallen.com Clifton LarsonAllen July 9, 2014 Ms. Peg Mason Contract Manager Colorado Water Conservation Board 1313 Shellnan Street, Suite 721 Denver, CO 80203 Re: Denver Southeast Suburban Water and Sanitation District- Parity Calculations in Relation to the 2014 CWCB Water Project Loan Program- $9,926,280 Loan—Parity Certificate Dear Ms. Mason: This report summarizes the results of procedures performed related to certain additional covenants and requirements related to the above referenced loan. In addition to the 2014 Colorado Water Conservation Board Loan (CWCB Loan), the District also has outstanding its 2002 and 2005 Colorado Water Resources and Power Development Authority Loans (CWRPD Loans) and its 2010 Wells Fargo Enterprise Revenue Refunding Note (Wells Fargo Note). The CWCB Loan requires that the District's net revenues for any 12 consecutive months out of the 18 months immediately preceding the date of issuance of any parity debt are sufficient to pay its annual operating and maintenance expenses, annual debt service on all outstanding indebtedness having a lien on pledged revenue, and all required deposits to any reserve funds required by any lenders of any indebtedness having a lien on pledged revenues. Additionally, no more than 10% of total revenues may originate from tap and/or connection fees. The CWRPD Loans require that no obligations on a parity with the CWRPD Loans may be issued unless the net revenues for any 12 consecutive months out of the 18 months preceding the month in which such obligations are to be issued are at least equal to the sum of 110% of the maximum annual debt service of the CWRPD Loans and 100% of the maximum annual debt service of all other indebtedness. Additionally, the 2005 CWRPDA loan requires that the amount available for debt service be reduced by one half of the average annual total tap fees, net of cost recovery payments, for the three prior years. The Wells Fargo Note requires that the District must meet a minimum pro forma debt service coverage ratio of 110% in each of the previous two fiscal years, calculated by using the new pro forma debt service (existing debt plus new debt) as the denominator and pledged revenues (net revenues—available for debt service) as the numerator.