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8. Bond Counsel's Opinion Letter. Prior to the execution of this CONTRACT by the CWCB, the <br /> BORROWER shall submit to the CWCB a letter from its bond counsel stating that it is the bond <br /> counsel's opinion that: <br /> a. the CONTRACT has been duly executed by officers of the BORROWER who are duly elected or <br /> appointed and are authorized to execute the CONTRACT and to bind the BORROWER;and <br /> b. the resolutions or ordinances of the BORROWER authorizing the execution and delivery of the <br /> CONTRACT were duly adopted by the governing bodies of the BORROWER;and <br /> c. there are no provisions in the Colorado Constitution or any other state or applicable and <br /> binding local law that prevent this CONTRACT from binding the BORROWER;and <br /> d. the BORROWER was formed and is operated as a water authority pursuant to the provisions of <br /> C.R.S. 37-45.1-101 and is a government-owned business authorized to issue its own revenue <br /> bonds and receiving fewer than lo% of annual revenue in grants from all Colorado state and <br /> local governments combined within the meaning of Article X, Section 20 of the Colorado <br /> Constitution;and <br /> e. based upon the parity certificate, Water Activity Enterprise revenues as reflected in the <br /> Water Enterprise Fund (which funds accounts for the financial activities of the Water <br /> Activity Enterprise) are sufficient to enable the PAWSD to execute the Promissory Note <br /> under the Loan Agreement. <br /> 9. Pledge of Revenues. The BORROWER irrevocably pledges, to the CWCB, for purposes of repayment <br /> of this loan the PLEDGED REVENUES as defined in the LOAN RESOLUTION or ORDINANCE set forth in <br /> APPENDIX 4 and any other funds legally available to the BORROWER in an amount sufficient to pay <br /> the annual payment due under this CONTRACT(collectively PLEDGED REVENUES). <br /> a. Segregation of Pledged Revenues. The BORROWER shall set aside and keep the PLEDGED <br /> REVENUES in an account separate from other BORROWER revenues and warrants that these revenues <br /> will not be used for any other purpose. <br /> b. Establish Security Interest.The BORROWER has duly executed a SECURITY AGREEMENT,attached <br /> hereto as APPENDIX 5 and incorporated herein, to provide a security interest to the CWCB in the <br /> PLEDGED REVENUES. The CWCB shall have priority over all other competing claims for said revenues, <br /> except for the liens of the BORROWER'S existing loans as listed in Section 5 (Schedule of Existing Debt), <br /> of the PROJECT SUMMARY (APPENDIX 1), which sets forth the position of the lien created by this <br /> CONTRACT in relation to any existing lien(s). <br /> c. Rate Covenant. Pursuant to its statutory authority and as permitted by law, the BORROWER <br /> shall take all necessary actions consistent therewith during the term of this CONTRACT to establish, <br /> levy and collect rates, charges and fees as described in APPENDIX 4, in amounts sufficient to pay this <br /> loan as required by the terms of this CONTRACT and the PROMISSORY NOTE, to cover all expenditures <br /> for operation and maintenance and emergency repair services, and to maintain adequate debt <br /> service reserves, including obtaining voter approval, if necessary, of increases in the BORROWER'S <br /> rate schedule or taxes, if applicable. <br /> d. Debt Service Reserve Account or Fund. To establish and maintain the debt service reserve <br /> account or fund, the BORROWER shall deposit an amount equal to one-tenth of an annual payment into <br /> its debt service reserve account or fund on the due date of its first annual loan payment and annually <br /> thereafter for the first ten years of repayment of this loan. In the event that the BORROWER applies <br /> Page 4 of 14 <br />