1066-Clean Water Revolving LoanFLORIDA WATER POLLUTION CONTROL FINANCING CORPORATION
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CITY OF SANFORD, FLORIDA
CLEAN WATER STATE REVOLVING FUND
LOAN AGREEMENT
W W586250
Florida Water Pollution Control Financing Corporation
1801 Hermitage Boulevard
Tallahassee, Florida 32308
CLEAN WATER STATE REVOLVING FUND LOAN AGREEMENT
CONTENTS PAGE
ARTICLEI - DEFINITIONS ....................................................................................... ............................... 1
1.01. WORDS AND TERMS ............................................................................. ............................... 1
1.02. CORRELATIVE WORDS ........................................................................ ............................... 4
ARTICLE II - WARRANTIES, REPRESENTATIONS AND COVENANTS ........... ...............................
4
2.01.
GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS ...........................
4
2.02.
TAX WARRANTIES, REPRESENTATIONS AND COVENANTS ...... ...............................
6
2.03.
LEGAL AUTHORIZATION ................................................................... ...............................
11
2.04.
AUDIT AND MONITORING REQUIREMENTS ................................. ...............................
12
ARTICLE III - LOAN REPAYMENT ACCOUNT ................................................... ...............................
14
3.01.
LOAN DEBT SERVICE ACCOUNT ..................................................... ...............................
14
3.02.
INVESTMENT OF LOAN DEBT SERVICE ACCOUNT MONEYS ... ...............................
14
3.03.
LOAN DEBT SERVICE ACCOUNT WITHDRAWALS ...................... ...............................
15
3.04.
ASSETS HELD IN TRUST ..................................................................... ...............................
15
ARTICLE IV - PROJECT INFORMATION .............................................................. ...............................
15
4.01.
PROJECT CHANGES ............................................................................. ...............................
15
4.02.
TITLE TO PROJECT SITE ..................................................................... ...............................
15
4.03.
PERMITS AND APPROVALS ............................................................... ...............................
15
4.04.
ENGINEERING SERVICES ................................................................... ...............................
15
4.05.
PROHIBITION AGAINST ENCUMBRANCES .................................... ...............................
15
4.06.
COMPLETION MONEYS ...................................................................... ...............................
15
4.07.
CLOSE - OUT ............................................................................................. .............................16
4.08.
LOAN DISBURSEMENTS ..................................................................... ...............................
16
ARTICLE V - RATES AND USE OF THE WATER AND WASTEWATER SYSTEMS ......................
16
5.01.
RATE COVERAGE ................................................................................ ...............................
16
5.02.
NO FREE SERVICE ............................................................................... ...............................
17
5.03.
MANDATORY CONNECTIONS .......................................................... ...............................
17
5.04.
NO COMPETING SERVICE .................................................................. ...............................
17
5.05.
MAINTENANCE OF THE WATER AND WASTEWATER SYSTEMS ............................
17
5.06.
ADDITIONS AND MODIFICATIONS .................................................. ...............................
17
5.07.
COLLECTION OF REVENUES ............................................................ ...............................
17
ARTICLE
VI - DEFAULTS AND REMEDIES ......................................................... ...............................
17
6.01.
EVENTS OF DEFAULT ......................................................................... ...............................
17
6.02.
REMEDIES ................................................................................................ .............................18
6.03.
DELAY AND WAIVER ......................................................................... ...............................
19
ARTICLE
VII - THE PLEDGED REVENUES .......................................................... ...............................
19
7.01.
SUPERIORITY OF THE PLEDGE TO THE CORPORATION ............ ...............................
19
7.02.
ADDITIONAL DEBT OBLIGATIONS ................................................. ...............................
19
ARTICLE VIII - GENERAL PROVISIONS .............................
8.01. DISCHARGE OF OBLIGATIONS ........................
8.02. PROJECT RECORDS AND STATEMENTS........
............... ............................... 20
............... ............................... 20
............... ............................... 20
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8.03. ACCESS TO PROJECT SITE ......................................... ...............................
8.04. ASSIGNMENT OF RIGHTS UNDER AGREEMENT .. ...............................
8.05. AMENDMENT OF AGREEMENT ................................ ...............................
8.06. ANNULMENT OF AGREEMENT ................................ ...............................
8.07. SEVERABILITY CLAUSE ............................................ ...............................
ARTICLE IX - CONSTRUCTION CONTRACTS AND INSURANCE ........................
9.01. AUTHORIZATION TO AWARD CONSTRUCTION CONTRACTS.......
9.02. SUBMITTAL OF CONSTRUCTION CONTRACT DOCUMENTS.........
9.03. INSURANCE REQUIRED ........................................... ...............................
ARTICLE X - DETAILS OF FINANCING ............................
10.01.
PRINCIPAL AMOUNT OF LOAN .....................
10.02.
LOAN SERVICE FEE ........... ...............................
10.03.
FINANCING RATE .............. ...............................
10.04.
LOAN TERM ........................ ...............................
10.05.
REPAYMENT SCHEDULE . ...............................
10.06.
PROJECT COSTS ................. ...............................
10.07.
PROJECT SCHEDULE ......... ...............................
10.08.
SPECIAL CONDITION ........ ...............................
ARTICLE XI - EXECUTION OF AGREEMENT .......... ...............................
..... 20
..... 20
..... 20
..... 21
..... 21
........ 21
........ 21
........ 21
........ 21
25
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CLEAN WATER STATE REVOLVING FUND LOAN AGREEMENT
W W586250
THIS AGREEMENT is executed by the FLORIDA WATER POLLUTION CONTROL
FINANCING CORPORATION (the "Corporation ") and the CITY OF SANFORD, FLORIDA (the
"Local Borrower "), existing as a local governmental agency under the laws of the State of Florida.
WITNESSETH:
WHEREAS, pursuant to Sections 403.1835 and 403.1837, Florida Statutes (the "State Act'), the
Corporation is authorized to make loans to local government agencies to finance or refinance the
construction of wastewater pollution control facilities, the planning and design of which have been
reviewed by the State of Florida Department of Environmental Protection (the "Department'); and
WHEREAS, in accordance with the provisions of the State Act and a Service Contract dated as of
June 1, 2001 (as amended from time to time, the "Service Contract") between the Corporation and the
Department, the Department has responsibility for the performance of various activities in connection
with such loans; and
WHEREAS, the Local Borrower has made application for the financing of the Project (as
hereinafter defined), and the Corporation and the Department have determined that such Project meets all
requirements for a loan and have agreed to make a loan to the Local Borrower as set forth in this
Agreement (the "Loan "); and
WHEREAS, in accordance with the provisions of a Master Trust Indenture dated as of June 1,
2001 (as supplemented and amended from time to time, the "Indenture ") between the Corporation and
U.S. Bank Trust National Association, as trustee (together with any successor trustee, the "Trustee "), the
Corporation is authorized to issue bonds (the "Bonds ") from time to time to fund loans pursuant to the
State Act and to refund bonds issued by the Corporation; and
WHEREAS, the Loan and all payments of principal and interest thereon, including prepayments,
and all proceeds thereof, but excluding the Loan Service Fee and the Grant Allocation Assessment (as
such terms are hereinafter defined), have been pledged and assigned to the Trustee under the Indenture as
security for the payment of principal of, premium, if any, and interest on the Bonds; and
WHEREAS, pursuant to the provisions of the State Act, the Service Contract and the Indenture,
and as provided herein, the Corporation and the Department will cooperate to assure continuing
compliance with the various requirements and separate duties and responsibilities arising from the
issuance of the Bonds and the loans made by the Corporation.
NOW, THEREFORE, in consideration of the Corporation loaning money to the Local Borrower,
in the principal amount and pursuant to the covenants hereinafter set forth, it is agreed as follows:
ARTICLE I — DEFINITIONS
1.01. WORDS AND TERMS.
In addition to the words and terms elsewhere defined in this Agreement, the following words and
terms shall have the meanings set forth below:
(1) "Agreement' or "Loan Agreement' shall mean this loan agreement.
(2) "Authorized Representative" shall mean the official or officials of the Local Borrower
authorized by ordinance or resolution to sign documents associated with the Loan.
(3) "Capitalized Interest' shall mean a finance charge that accrues at the Financing Rate on
Loan proceeds from the time of disbursement until six months before the first Semiannual Loan Payment
is due. Capitalized Interest is financed as part of the Loan principal.
(4) "Code" means the Internal Revenue Code of 1986, the Treasury Regulations (whether
temporary or final) under that Code or the statutory predecessor of that Code, and any amendments of or
successor provisions to, the foregoing and any official rulings, announcements, notices, procedures and
judicial determinations regarding any of the foregoing, all as and to the extent applicable.
(5) "Defeasance Obligations" means:
(a) Direct obligations of, or obligations the prompt payment of principal and interest on
which are fully guaranteed by, the United States of America which are not callable prior to maturity
(except at the option of the holder thereof);
(b) Bonds, debentures, notes or other evidences of indebtedness issued or fully insured or
guaranteed by any agency or instrumentality of the United States of America which are backed by the full
faith and credit of the United States of America and which are not callable prior to maturity (except at the
option of the holder thereof);
(c) Resolution Funding Corp. (REFCORP) obligations which are not callable prior to
maturity (except at the option of the holder thereof); and
(d) Obligations of any state of the United States of America or of any agency, instrumentality
or local governmental unit of any such state which are not callable prior to maturity or as to which
irrevocable determination to call such obligations prior to maturity shall have been made by the issuer
thereof, and for the payment of the principal of, premium, if any, and interest on which provision shall
have been made by the irrevocable deposit with a bank or trust company acting as a trustee or escrow
agent for owners of such obligations of securities described in clauses (a), (b) or (c), the maturing
principal of and interest on which, when due and payable, will provide sufficient moneys to pay when due
the principal of, premium, if any, and interest on such obligations, and which securities are not available
to satisfy any other claim, including any claim of the trustee or escrow agent or of any person claiming
through the trustee or escrow agent or to whom the trustee or escrow agent may be obligated.
(6) "Depository" shall mean a bank or trust company, having a combined capital and
unimpaired surplus of not less than $50 million, authorized to transact commercial banking or savings and
loan business in the State and insured by the Federal Deposit Insurance Corporation.
(7) "Fiscal Year" shall mean the period commencing on October 1 of each year and ending
on September 30 of the succeeding year.
(8) "Financing Rate" shall mean the charges, expressed as a percent per annum, imposed on
the unpaid principal of the Loan. The Financing Rate shall consist of an interest rate component and a
Grant Allocation Assessment rate component.
(9) "Grant Allocation Assessment' shall mean an assessment, expressed as a percent per
annum, accruing on the unpaid balance of the Loan. It is computed similarly to the way interest charged
on the Loan is computed and is included in the Semiannual Loan Payment. The Department will use
Grant Allocation Assessment moneys for making grants to financially disadvantaged small communities
pursuant to Section 403.1835 of the Florida Statutes.
(10) "Gross Revenues" shall mean all income or earnings received by the Local Borrower
from the ownership or operation of its Water and Wastewater Systems, including investment income, all
as calculated in accordance with generally accepted accounting principles. Gross Revenues shall not
include proceeds from the sale or other disposition of any part of the Water or Wastewater System,
condemnation awards or proceeds of insurance, except use and occupancy or business interruption
insurance, received with respect to the Water or Wastewater System.
(11) "Loan Application" shall mean the completed form which provides all information
required to support obtaining construction loan financial assistance.
(12) "Loan Debt Service Account' shall mean an account, or a separately identified
component of a pooled cash or liquid account, with a Depository established by the Local Borrower for
the purpose of accumulating Monthly Loan Deposits and making Semiannual Loan Payments.
(13) "Loan Service Fee" shall mean an origination fee which shall be paid by the Local
Borrower.
(14) "Monthly Loan Deposit' shall mean the monthly deposit to be made by the Local
Borrower to the Loan Debt Service Account.
(15) "Operation and Maintenance Expense" shall mean the costs of operating and maintaining
the Water and Wastewater Systems determined pursuant to generally accepted accounting principles,
exclusive of interest on any debt payable from Gross Revenues, depreciation, and any other items not
requiring the expenditure of cash.
(16) "Pledged Revenues" shall mean the specific revenues pledged as security for repayment
of the Loan and shall be the Water, Wastewater and Reclaimed Water Utility Fees Revenue derived
yearly from the operation of the Water and Wastewater Systems after payment of the Operation and
Maintenance Expense and the satisfaction of all yearly payment obligations on account of the Senior
Revenue Obligations and any senior obligations issued pursuant to Section 7.02 of this Agreement.
(17) "Project' shall mean the works financed by this Loan and shall consist of furnishing all
labor, materials, and equipment to construct the Sanford South Water Resource Center in accordance with
the plans and specifications accepted by the Department for the following contracts:
(a) Sanford South Water Resource Center — Phase I. This contract includes materials
(concrete, piping, fencing, etc.), treatment and storage structures and mechanical equipment purchased by
the Local Borrower.
(b) East Lake Mary Boulevard, Segment IIB Utility Construction.
The Project is in agreement with the planning documentation accepted by the Department
effective February 1999. Approval of this Project is provided by the Florida Finding of No Significant
Impact dated May 28, 1999.
(18) "Reclaimed Water Utility Fees" shall mean the monthly customer charge and a per
thousand gallon consumption charge. Also included are one -time fees for connection and installation of
the required backflow preventer on the potable water line.
(19) "Semiannual Loan Payment' shall mean the payment due from the Local Borrower at
six -month intervals. It is comprised of principal, Loan Service Fee, and as applicable, interest and Grant
Allocation Assessment computed using the interest rate and Grant Allocation Assessment rate,
respectively. In addition, the Loan Service Fee and all associated interest are deducted from the first
available repayments following the final amendment.
(20) "Senior Revenue Obligations" shall mean the following debt obligations
(a) City of Sanford, Florida, Water and Sewer Refunding Revenue Bonds, Series 1993,
issued in the amount of $14,510,000, pursuant to Resolution No. 1675; and
(b) City of Sanford, Florida, Utility System Revenue Refunding Bonds, Series 2003, issued
in the amount of $12,450,000, pursuant to Resolution No. 1944; and
(c) Additional bonds issued on a parity with the obligations identified above pursuant to
Section 20(Q) of Resolution No. 1944; and
(d) Any refunding bonds issued to refund the obligations identified above provided such
bonds shall not increase annual debt service during the repayment period of this Loan.
(21) "State" means the State of Florida.
(22) "Tax- Exempt Bonds" means Bonds the interest on which is intended on their date of
issuance to be excludable from gross income of the holders thereof for federal income tax purposes.
(23) "Wastewater System" shall mean all facilities owned by the Local Borrower for
collection, transmission, treatment and reuse of wastewater and its residuals.
(24) "Water System" shall mean all facilities owned by the Local Borrower for supplying and
distributing water for residential, commercial, industrial, and governmental use.
1.02. CORRELATIVE WORDS.
Words of the masculine gender shall be understood to include correlative words of the feminine
and neuter genders. Unless the context shall otherwise indicate, the singular shall include the plural and
the word "person" shall include corporations and associations, including public bodies, as well as natural
persons.
ARTICLE II - WARRANTIES, REPRESENTATIONS AND COVENANTS
2.01. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS
The Local Borrower warrants, represents and covenants that:
(1) The Local Borrower has full power and authority to enter into this Agreement and to
comply with the provisions hereof.
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(2) The Local Borrower currently is not the subject of bankruptcy, insolvency, or
reorganization proceedings and is not in default of, or otherwise subject to, any agreement or any law,
administrative regulation, judgment, decree, note, resolution, charter or ordinance which would currently
restrain or enjoin it from entering into, or complying with, this Agreement.
(3) There is no material action, suit, proceeding, inquiry or investigation, at law or in equity,
before any court or public body, pending or, to the best of the Local Borrower's knowledge, threatened,
which seeks to restrain or enjoin the Local Borrower from entering into or complying with this
Agreement.
(4) All permits, real property interests, and approvals required as of the date of this
Agreement have been obtained for construction and use of the Project. The Local Borrower knows of no
reason why any future required permits or approvals are not obtainable.
(5) The Local Borrower shall undertake the Project on its own responsibility, to the extent
permitted by law.
(6) To the extent permitted by law, the Local Borrower shall release and hold harmless the
State, its agencies, the Corporation, and each of their respective officers, members, and employees from
any claim arising in connection with the Local Borrower's actions or omissions in its planning,
engineering, administrative, and construction activities financed by this Loan or its operation of the
Project.
(7) All Local Borrower representations to the Corporation and the Department, pursuant to
the Loan Application and this Agreement, were and are true and accurate as of the date the Loan
Application and this Agreement were each executed by the Local Borrower. The financial information
delivered by the Local Borrower to the Department was current and correct as of the date such
information was delivered. The Local Borrower shall comply with Chapter 62 -503, Florida
Administrative Code, and all applicable State and Federal laws, rules, and regulations which are identified
in the Loan Application or this Agreement. To the extent that any assurance, representation, or covenant
requires a future action, the Local Borrower shall take such action as is necessary for compliance.
(8) The Local Borrower shall maintain records using generally accepted governmental
accounting principles established by the Governmental Accounting Standards Board. As part of its
bookkeeping system, the Local Borrower shall keep accounts of the Water and Wastewater Systems
separate from all other accounts and it shall keep accurate records of all revenues, expenses, and
expenditures relating to the Water and Wastewater Systems, and of the Pledged Revenues, Loan
disbursement receipts and Loan Debt Service Account.
(9) In the event the anticipated Pledged Revenues are shown by the Local Borrower's annual
budget to be insufficient to make the Semiannual Loan Payments for such Fiscal Year when due, the
Local Borrower shall include in such budget other legally available funds which will be sufficient,
together with the Pledged Revenues, to make the Semiannual Loan Payments. Such other legally
available funds shall be budgeted in the regular annual governmental budget and designated for the
purpose provided by this paragraph (9), and the Local Borrower shall collect such funds for application as
provided herein. The Local Borrower shall notify the Department immediately in writing of any such
budgeting of other legally available funds. Nothing in this covenant shall be construed as creating a
pledge, lien, or charge upon any such other legally available funds; requiring the Local Borrower to levy
or appropriate ad valorem tax revenues; or preventing the Local Borrower from pledging to the payment
of any bonds or other obligations all or any part of such other legally available funds.
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(10) Each Fiscal Year, beginning three months before the first Semiannual Loan Payment and
ending with the Fiscal Year during which the final Loan repayment is made, the Local Borrower's
Authorized Representative or its chief financial officer shall submit, pursuant to the schedule established
in Section 10.07, a certification that: (a) Pledged Revenues collections satisfy, on a pro rata basis, the rate
coverage requirement; (b) the Loan Debt Service Account contains the funds required; and (c) insurance,
including that issued through the National Flood Insurance Program authorized under 42 U.S.C. secs.
4001 -4128 when applicable, in effect for the facilities generating the Pledged Revenues, adequately
covers the customary risks to the extent that such insurance is available.
(11) Pursuant to Section 216.349 of the Florida Statutes, the Local Borrower shall not use the
Loan proceeds for the purpose of lobbying the Florida Legislature, the Judicial Branch, or a State agency.
(12) The Local Borrower agrees to construct the Project in accordance with the Project
schedule. Delays incident to strikes, riots, acts of God, and other events beyond the reasonable control of
the Local Borrower are excepted. If for any reason construction is not completed as scheduled, there shall
be no resulting diminution or delay in the Semiannual Loan Payment or the Monthly Loan Deposit.
(13) The Local Borrower covenants that this Agreement is entered into for the purpose of
constructing, refunding, or refinancing the Project which will in all events serve a public purpose. The
Local Borrower covenants that it will, under all conditions, complete and operate the Project to fulfill the
public need.
(14) The Local Borrower shall take such actions, shall furnish and certify to such information
and execute and deliver and cause to be executed and delivered such documents, certificates and opinions
as the Corporation and/or the Department may reasonably require in connection with the Bonds,
including, without limitation, any necessary continuing disclosure undertaking meeting the requirements
of Securities and Exchange Commission Rule 15c2 -12.
2.02. TAX WARRANTIES, REPRESENTATIONS AND COVENANTS
The Local Borrower acknowledges that the Corporation may issue Tax - Exempt Bonds with
which to fund the Loan to the Local Borrower and that the maintenance of the tax- exempt status of any
such Tax - Exempt Bonds will depend, in part, on the Local Borrower's compliance with the provisions of
this Agreement. Accordingly, the Local Borrower warrants, represents and covenants that:
(1) Notwithstanding any other provisions of this Agreement, including specifically Section
2.02(8), if the Local Borrower shall be notified by the Corporation or the Department as of any date that
any payment is required to be made to the United States Treasury in respect of Tax - Exempt Bonds the
proceeds of which were used to fund the Loan (hereafter, the "Applicable Tax - Exempt Bonds "), and such
payment is due to the failure of the Local Borrower to comply with this Agreement, the Local Borrower
shall pay to the Trustee (for deposit to the applicable Subaccount of the Rebate Account established by
the Indenture) the amount specified in the notice by the Corporation or the Department.
(2) The Local Borrower is a "governmental person" (as defined in Treasury Regulations
§ 1.141 -1(b)) (a "Governmental Unit ") and it owns and operates the Project.
(3) The Local Borrower will not take any action or omit to take any action, which action or
omission will adversely affect the exclusion from gross income of the interest on the Applicable Tax -
Exempt Bonds for federal income tax purposes or cause the interest on the Applicable Tax - Exempt
Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative
minimum tax imposed on individuals and corporations under the Code, and in the event of such action or
6]
omission, promptly upon having such brought to its attention, it will take such reasonable actions based
upon an opinion of any attorney or fine of attorneys of recognized standing and experience in the field of
municipal bonds whose opinions are generally accepted by purchasers of municipal bonds and which
attorney or firm of attorneys is acceptable to the Corporation ( "Bond Counsel'), and in all cases at the
sole expense of the Local Borrower, as may rescind or otherwise negate such action or omission. The
Local Borrower will not directly or indirectly, use or permit the use of any proceeds of the Applicable
Tax - Exempt Bonds or any other funds of the Local Borrower, or take or omit to take any action, that
would cause the Applicable Tax - Exempt Bonds to be or become "arbitrage bonds" within the meaning of
Section 148(a) of the Code or to fail to meet any other applicable requirement of Sections 141, 148, 149
and 150 of the Code or cause the interest on the Applicable Tax - Exempt Bonds, or any portion thereof, to
become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and
corporations under the Code. To that end, the Local Borrower will comply with all requirements of
Sections 141, 148, 149 and 150 of the Code to the extent such provisions apply to the Applicable Tax -
Exempt Bonds. In the event that at any time the Corporation or the Department is of the opinion that it is
necessary to restrict or limit the yield on the investment of any moneys held by the Local Borrower, the
Corporation or the Department shall so instruct the Local Borrower in writing and the Local Borrower
shall so restrict the yield.
(4) The Local Borrower (or any "related party", as defined in Treasury Regulations § 1.150 -
l(b)) is prohibited from purchasing and shall not purchase any Applicable Tax- Exempt Bonds other than
purchases in the open market for the purpose of tendering them to the Trustee for purchase and
retirement.
(5) The Local Borrower will take no action, or permit or suffer any action or event, which
will cause any of the Applicable Tax - Exempt Bonds to be or become a "private activity bond" within the
meaning of the Code. To that end, the Local Borrower will not permit more than 5% of the Project or
portion thereof financed with Tax - Exempt Bonds to be used for a Private Business Use. The term
"Private Business Use" means use directly or indirectly in a trade or business or any other activity carried
on by any Private Person other than use as a member of, and on the same basis as, the general public. The
term "Private Person" means any person other than a Governmental Unit. For this purpose, the United
States or any agency or instrumentality thereof is not a Governmental Unit and is therefore a Private
Person. For purposes of this paragraph (5), property is considered "used" by a Private Person if:
(i) it is owned by, or leased, to such Private Person;
(ii) it is operated, managed or otherwise physically employed, utilized or consumed
by such Private Person, other than operation or management pursuant to an agreement that meets
the conditions described in paragraph (6) below;
(iii) capacity in or output service from such property is reserved or committed to such
Private Person under a take -or -pay, output, incentive payment or similar contract or arrangement;
(iv) such property is used to provide service to (or such service is committed to or
reserved for) such Private Person on a basis or terms that are different from the basis or terms on
which such service is provided (or committed or reserved) to members of the public generally
(except possibly for the amount of use and any corresponding rate adjustment);
(v) such Private Person is a developer and a significant amount of the Project
financed with proceeds of Tax - Exempt Bonds serves only a limited area substantially all of which
is owned by such Private Person, or a limited group of developers, unless such improvement
carries out an essential governmental function, such developer reasonably expects to proceed with
all reasonable speed to develop the improvement and property benefited by that improvement,
and the improvement is in fact transferred to a Governmental Unit promptly after the property
benefited by the improvement is developed; or
(vi) substantial burdens and benefits of ownership of the Project financed with
proceeds of Tax - Exempt Bonds are otherwise effectively transferred to such Private Person.
(6) Use of Bond - Financed Property.
(i) For purposes of this Agreement, the use by a Private Person of the Project
financed with the proceeds of Tax - Exempt Bonds (the "Bond Financed Property") pursuant to a
Qualified Use Contract (as hereafter defined) shall not be treated as a Private Business Use by
such Private Person of such Bond - Financed Property or of funds used to finance or refinance such
Bond - Financed Property.
(ii) An arrangement under which services are to be provided by a Private Person
involving the use of all or any portion of, or any function of, the Bond - Financed Property (for
example, management services for an entire facility or a specific department of a facility ( "Use
Contract')) is a "Qualified Use Contract' if all of the following conditions are satisfied:
(A) the compensation for services provided pursuant to the Use Contract is
reasonable;
(B) none of the compensation for services provided pursuant to the Use
Contract is based on net profits from operation of the Bond - Financed Property or any
portion thereof,
(C) the compensation provided in the Use Contract satisfies one of the
following subparagraphs:
(1) At least 95% of the compensation for each annual period during
the term of the Use Contract is based on a periodic fixed fee and the term of the
Use Contract, including all renewal options, does not exceed the lesser of 80% of
the reasonably expected useful life of the Bond - Financed Property and 15 years.
For purposes of this subparagraph (ii), a "periodic fixed fee" means a stated
dollar amount for services rendered for a specified period of time that does not
increase except for automatic increases pursuant to a specified, objective external
standard that is not linked to the output or efficiency of the Bond- Financed
Property (e.g., the Consumer Price Index) and a "renewal option" means a
provision under which either party to the Use Contract has a legally enforceable
right to renew the Use Contract; or
(II) At least 80% of the compensation for each annual period during
the term of the Use Contract is based on a periodic fixed fee and the term of the
Use Contract, including all renewal options, does not exceed the lesser of 80% of
the reasonably expected useful life of the Bond - Financed Property and 10 years;
or
(III) At least 50% of the compensation for each annual period during
the term of the Use Contract is based on a periodic fixed fee, the term of the Use
Contract, including all renewal options, does not exceed 5 years, and the Use
Contract is terminable by the Local Borrower on reasonable notice, without
penalty or cause, at the end of the third year of the Use Contract term; or
(IV) All of the compensation for services is based on a capitation fee
or a combination of a capitation fee and a periodic fixed fee, the term of the Use
Contract, including all renewal options, does not exceed 5 years, and the Use
Contract is terminable by the Local Borrower on reasonable notice, without
penalty or cause, at the end of the third year of the Use Contract term. A
"capitation fee" means a fixed periodic amount for each person for whom the
Service Provider assumes the responsibility to provide all needed services for a
specified period so long as the quantity and type of service actually provided to
covered persons varies substantially; or
(V) All of the compensation for services is based on a per -unit fee or
a combination of a per -unit fee and a periodic fixed fee, the tern of the Use
Contract, including all renewal options, does not exceed 3 years and the Use
Contract is tenninable by the Local Borrower on reasonable notice, without
penalty or cause, at the end of the second year of the Use Contract term. A
"per -unit fee" means a fee based on a unit of service provided (e.g., a stated
dollar amount for each specified procedure); or
(VI) All of the compensation for services is based on a percentage of
fees charged or a combination of a per -unit fee and a percentage of revenue or
expense fee, the term of the Use Contract, including all renewal options, does not
exceed 2 years and the Use Contract is terminable by the Local Borrower on
reasonable notice, without penalty or cause, at the end of the first year of the Use
Contract term. This subparagraph (Vl) applies only to (a) Use Contracts under
which the Private Person primarily provides services to third parties, or (b) Use
Contracts involving the Bond - Financed Property during an initial start -up period
for which there have been insufficient operations to establish a reasonable
estimate of the amount of the annual gross revenues (or gross expenses in the
case of a Use Contract based on a percentage of gross expenses) (e.g., a Use
Contract for general management services for the first year of operations), in
which case, the compensation for services may be based on a percentage of gross
revenues, adjusted gross revenues (i.e., gross revenues less allowances for bad
debts and contractual and similar allowances) or expenses of the Bond - Financed
Facilities, but not more than one.
For purposes of this paragraph (6)(ii)(C), a Use Contract is considered to contain
termination penalties if the termination limits the Local Borrower's right to compete with
the Private Person, requires the Local Borrower to purchase equipment, goods, or
services from the Private Person, or requires the Local Borrower to pay liquidated
damages for cancellation of the Use Contract. Another contract between the Private
Person and the Local Borrower (for example, a loan or guarantee by the Private Person)
is considered to create a contract termination penalty if that contract contains terms that
are not customary or arm's - length that could operate to prevent the Local Borrower from
terminating the Use Contract. A requirement that the Local Borrower reimburse the
Private Person for ordinary and necessary expenses, or restrictions on the hiring by the
Local Borrower of key personnel of the Private Person, are not treated as contract
termination penalties;
I
(D) The Private Person has no role or relationship with the Local Borrower,
directly or indirectly, that, in effect, substantially limits the Local Borrower's ability to
exercise its rights under the Use Contract, including cancellation rights. This requirement
is satisfied if:
(I) The Private Person and its directors, officers, shareholders and
employees possess in the aggregate, directly or indirectly, no more than 20
percent of the voting power of the governing body of the Local Borrower;
(I1) No individual who is a member of the governing body of the
Private Person and the Local Borrower is the chief executive officer of the Local
Borrower or the Private Person or the chairperson of the governing body of the
Local Borrower or the Private Person; and
(III) The Local Borrower and the Private Person are not "related
parties" (within the meaning of Treasury Regulations § 1.150 -1(b).
(iii) The Local Borrower may treat a Use Contract that does not comply with one or
more of the criteria of subparagraph (6)(ii) as not resulting in Private Business Use of Bond -
Financed Property if it delivers to the Corporation and the Department, at its expense, an opinion
of Bond Counsel to the effect that to do so would not adversely affect the exclusion from gross
income of interest on the Applicable Tax - Exempt Bonds or cause the interest on the Applicable
Tax - Exempt Bonds, or any portion thereof, to become an item of tax preference for purposes of
the alternative minimum tax imposed on individuals and corporations under the Code.
(7) Notwithstanding any provision of this Section 2.02, if the Local Borrower provides, at the
Local Borrower's expense, to the Corporation and the Department an opinion of Bond Counsel to the
effect that any action required under this Section is no longer required, or to the effect that some further
action is required, to maintain the exclusions from gross income of interest on the Applicable Tax - Exempt
Bonds pursuant to Section 103(a) of the Code, the Local Borrower, the Corporation and the Department
may rely conclusively on such opinion in complying with the provisions hereof, and the covenants
hereunder shall be deemed to be modified to that extent.
(8) All tax warranties, representations, covenants and obligations of the Local Borrower
contained in this Section 2.02 shall remain in effect and be binding upon the Local Borrower until all of
the Applicable Tax - Exempt Bonds have been paid, notwithstanding any earlier termination of this
Agreement or any provision for payment of principal of and premium, if any, and interest on the
outstanding Applicable Tax - Exempt Bonds and release and discharge of the Indenture.
(9) Amounts deposited from time to time in the Loan Debt Service Account will be used to
pay principal and interest within 13 months after the amounts are so deposited.
(10) The Local Borrower has not established and does not expect to establish or use any
sinking fund, debt service fund, redemption fund, reserve or replacement fund, or similar fund, or any
other fund to pay principal of, interest and any redemption premium on the Loan other than the Loan Debt
Service Account. Except as set forth in the next sentence and except for money referred to in paragraph
(9) above, no other money or investment property (including, without limitation, fixed income, equity and
other investments) is or will be pledged as collateral or used for the payment of such principal and interest
(or for the reimbursement of any others who may provide money to pay that principal and interest), or is
or will be restricted, dedicated, encumbered, or set aside in any way as to afford the Corporation or
10
holders of the Applicable Tax - Exempt Bonds reasonable assurance of the availability of such money or
investment property to pay debt service on the Loan or the Applicable Tax - Exempt Bonds.
(I1) Except as stated otherwise in this Agreement, no portion of the Loan will be used:
(i) to pay principal of or interest on, refund, renew, roll over, retire, or replace any
other obligations issued by or on behalf of the Corporation, the Local Borrower or any other
Governmental Unit,
(ii) to replace any proceeds of another issue of tax- exempt bonds that were not
expended on the project for which such other issue was issued,
(iii) to replace any money that was or will be used directly or indirectly to acquire
investments,
(iv) to make a loan to any other person or Governmental Unit,
(v) to pay any working capital expenditure other than expenditures identified in
Treasury Regulations §1.148- 6(d)(3)(ii)(A) and (B) (i.e., issuance costs of the Applicable Tax -
Exempt Bonds, qualified administrative costs, reasonable charges for a qualified guarantee or for
a qualified hedge, interest on the Loan for a period commencing on the issuance date of the
Applicable Tax - Exempt Bonds and ending on the date that is the later of three years from that
issuance date or one year after the date on which the Project was or will be placed in service,
payments of amounts, if any, pursuant to paragraph (i), and costs, other than those already
described, that do not exceed 5% of the sale proceeds of the Applicable Tax- Exempt Bonds and
that are directly related to capital expenditures financed or deemed financed by the Applicable
Tax - Exempt Bonds), or
(vi) to reimburse any expenditures made prior to the issuance date of the Applicable
Tax - Exempt Bonds except those that qualify as a reimbursement of prior capital expenditures,
based upon an opinion of Bond Counsel, at the expense of the Local Borrower, delivered to the
Department and the Corporation.
(12) The Local Borrower does not intend to sell or otherwise dispose of the Project or any
portion thereof during the term of the Applicable Tax - Exempt Bonds except for dispositions of property
in the normal course at the end of such property's useful life to the Local Borrower.
(13) None of the Semiannual Loan Payments shall be federally guaranteed within the meaning
of Section 149(b) of the Code.
2.03. LEGAL AUTHORIZATION
Upon signing this Agreement, the Local Borrower's legal counsel hereby expresses the opinion,
subject to laws affecting the rights of creditors generally, that:
(1) This Agreement has been duly authorized by the Local Borrower and shall constitute a
valid and legal obligation of the Local Borrower enforceable in accordance with its terms upon execution
by both parties; and
(2) This Agreement specifies the revenues pledged for repayment of the Loan, and the pledge
is valid and enforceable.
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2.04. AUDIT AND MONITORING REQUIREMENTS.
The Local Borrower agrees to the following audit and monitoring requirements.
(1) The financial assistance authorized pursuant to this Loan Agreement consists of the
following:
thi A eement Consist
Federal Resources, Including State Match, Awaraea to me Recipient Pursuant to s gr -- - - --
Followin
State
Federal
Program Federal CFDA
Funding
Appropriation
Number Agency Number
CFDA Title
Amount
Catego
Capitalization Grants for
$18,520,336
140131
CS120001 -050
EPA
66.458
State Revolving Funds
(2) Audits.
(a) In the event that the Local Borrower expends $500,000 or more in Federal awards in its
fiscal year, the Local Borrower must have a single or program - specific audit conducted in accordance
with the provisions of OMB Circular A -133, as revised. Subsection 2.04(1) of this Agreement indicates
that Federal funds are awarded through the Department by this Agreement. In determining the Federal
awards expended in its fiscal year, the Local Borrower shall consider all sources of Federal awards,
including Federal resources received from the Department. The determination of amounts of Federal
awards expended should be in accordance with the guidelines established by OMB Circular A -133, as
revised. An audit of the Local Borrower conducted by the Auditor General in accordance with the
provisions of OMB Circular A -133, as revised, will meet the requirements of this part.
(b) In connection with the audit requirements addressed in the preceding paragraph (a), the
Local Borrower shall fulfill the requirements relative to auditee responsibilities as provided in Subpart C
of OMB Circular A -133, as revised.
(c) If the Local Borrower expends less than $500,000 in Federal awards in its fiscal year, an
audit conducted in accordance with the provisions of OMB Circular A -133, as revised, is not required. In
the event that the Local Borrower expends less than $500,000 in Federal awards in its fiscal year and
elects to have an audit conducted in accordance with the provisions of OMB Circular A -133, as revised,
the cost of the audit must be paid from non - Federal resources (i.e., the cost of such an audit must be paid
from Local Borrower resources obtained from other than Federal entities).
(d) The Local Borrower may access information regarding the Catalog of Federal Domestic
Assistance (CFDA) via the intetnet at htt�* 7 / /asne os dhhs ovg /cfda
(3) Report Submission.
(a) Copies of reporting packages for audits conducted in accordance with OMB Circular A -133,
as revised, and required by Subsection 2.04(2) of this Agreement shall be submitted, when required by
Section .320 (d), OMB Circular A -133, as revised, by or on behalf of the Local Borrower directly to each
of the following:
(i) The Department at each of the following addresses:
12
Don W. Berryhill, P.E., Chief
Bureau of Water Facilities Funding
Florida Department of Environmental Protection
2600 Blair Stone Road, MS 3505
Tallahassee, Florida 32399 -2400
Joe Aita, Audit Director
Office of the Inspector General
Florida Department of Environmental Protection
2600 Blair Stone Road, MS 40
Tallahassee, Florida 32399 -2400
(ii) The Federal Audit Clearinghouse designated in OMB Circular A -133, as revised
(the number of copies required by Sections .320 (d)(1) and (2), OMB Circular A-
133, as revised, should be submitted to the Federal Audit Clearinghouse), at the
following address:
Federal Audit Clearinghouse
Bureau of the Census
1201 East 10 Street
Jeffersonville, IN 47132
(iii) Other Federal agencies and pass - through entities in accordance with Sections
.320(e) and (f), OMB Circular A -133, as revised.
(b) Pursuant to Section .320(f), OMB Circular A -133, as revised, the Local Borrower shall
submit a copy of the reporting package described in Section .320(c), OMB Circular A -133, as revised,
and any management letters issued by the auditor, to the Department at the two addresses listed under
Subsection 2.04(3)(a) of this Agreement.
(c) Any reports, management letters, or other information required to be submitted to the
Department pursuant to this Agreement shall be submitted timely in accordance with OMB Circular A-
133, Florida Statutes, or Chapters 10.550 (local governmental entities) or 10.650 (nonprofit and for -profit
organizations), Rules of the Auditor General, as applicable.
(d) Local Borrowers, when submitting financial reporting packages to the Department for audits
done in accordance with OMB Circular A -133, or Chapters 10.550 (local governmental entities) or
10.650 (nonprofit and for -profit organizations), Rules of the Auditor General, should indicate the date that
the reporting package was delivered to the Local Borrower in correspondence accompanying the
reporting package.
(4) Project - Specific Audit.
Within 12 months after the amendment establishing final Project costs, the Local Borrower shall
submit to the Department a Project- specific audit report for the Loan related revenues and expenditures.
The audit shall address Loan disbursements received, Project expenditures, and compliance with Loan
Agreement covenants. The Local Borrower shall cause the auditor to notify the Department immediately
if anything comes to the auditor's attention during the examination of records that would constitute a
default under the Loan Agreement. The audit findings shall set aside or question any costs that are
unallowable under Chapter 62 -503, Florida Administrative Code. A final determination of whether such
costs are allowed shall be made by the Department.
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(5) Record Retention.
The Local Borrower shall retain sufficient records demonstrating its compliance with the terms of
this Agreement for a period of five years from the date the audit report is issued, and shall allow the
Department, or its designee, Chief Financial Officer, or Auditor General access to such records upon
request. The Local Borrower shall ensure that audit working papers are made available to the
Department, or its designee, Chief Financial Officer, or Auditor General upon request for a period of
three years from the date the audit report is issued, unless extended in writing by the Department.
(6) Monitoring.
In addition to reviews of audits conducted in accordance with OMB Circular A -133, as revised
(see audit requirements above), monitoring procedures may include, but not be limited to, on -site visits by
Department staff, limited scope audits as defined by OMB Circular A -133, as revised, and/or other
procedures. By entering into this Agreement, the Local Borrower agrees to comply and cooperate with
any monitoring procedures/processes deemed appropriate by the Department. In the event the
Department determines that a limited scope audit of the Local Borrower is appropriate, the Local
Borrower agrees to comply with any additional instructions provided by the Department to the Local
Borrower regarding such audit. The Local Borrower further agrees to comply and cooperate with any
inspections, reviews, investigations, or audits deemed necessary by the Chief Financial Officer or Auditor
General.
ARTICLE III - LOAN REPAYMENT ACCOUNT
3.01. LOAN DEBT SERVICE ACCOUNT.
The Local Borrower shall establish a Loan Debt Service Account with a Depository and begin
making Monthly Loan Deposits no later than the date set forth for such action in Section 10.07 of this
Agreement.
Beginning six months prior to each Semiannual Loan Payment, the Local Borrower shall make
six Monthly Loan Deposits. The first five deposits each shall be at least equal to one -sixth of the
Semiannual Loan Payment. The sixth Monthly Loan Deposit shall be at least equal to the amount
required to make the total on deposit in the Loan Debt Service Account equal to the Semiannual Loan
Payment amount, taking into consideration investment earnings credited to the account pursuant to
Section 3.02.
Any month in which the Local Borrower fails to make a required Monthly Loan Deposit, the
Local Borrower's chief financial officer shall notify the Department of such failure. In addition, the
Local Borrower agrees to budget, by amendment if necessary, from other legally available funds all sums
becoming due before the same become delinquent. This requirement shall not be construed to give the
Corporation a superior claim on any revenues over prior claims of general creditors of the Local
Borrower, nor shall it be construed to give the Corporation or the Department the power to require the
Local Borrower to levy and collect any revenues other than Pledged Revenues.
3.02. INVESTMENT OF LOAN DEBT SERVICE ACCOUNT MONEYS.
Moneys on deposit in the Loan Debt Service Account shall be invested pursuant to the laws of the
State. Such moneys may be pooled for investment purposes. The maturity or redemption date of
investments shall be not later than the date upon which such moneys may be needed to make Semiannual
14
Loan Payments. The investment earnings shall be credited to the Loan Debt Service Account and applied
toward the Monthly Loan Deposit requirements.
3.03. LOAN DEBT SERVICE ACCOUNT WITHDRAWALS.
The withdrawal of moneys from the Loan Debt Service Account shall be for the sole purpose of
making the Semiannual Loan Payment or for discharging the Local Borrower's obligations pursuant to
Section 8.01.
3.04. ASSETS HELD IN TRUST.
The assets in the Loan Debt Service Account shall be held in trust for the purposes provided
herein and used only for the purposes and in the manner prescribed in this Agreement; and, pending such
use, said assets shall be subject to a lien and charge in favor of the Corporation.
ARTICLE IV - PROJECT INFORMATION
4.01. PROJECT CHANGES.
Project changes prior to bid opening shall be made by addendum to plans and specifications.
Changes after bid opening shall be made by change order. The Local Borrower shall submit all addenda
and all change orders to the Department for an eligibility determination. After execution of all
construction, equipment and materials contracts, the Project contingency may be reduced.
4.02. TITLE TO PROJECT SITE.
The Local Borrower shall have an interest in real property sufficient for the construction and
location of the Project free and clear of liens and encumbrances which would impair the usefulness of
such sites for the intended use.
The Local Borrower shall have obtained, prior to the Department's authorization to award
construction contracts, all permits and approvals required for construction of the Project or portion of the
Project funded under this Agreement.
4.04. ENGINEERING SERVICES.
A professional engineer, registered in the State, shall be employed by, or under contract with, the
Local Borrower to oversee construction.
4.05. PROHIBITION AGAINST ENCUMBRANCES.
The Local Borrower is prohibited from selling, leasing, or disposing of any part of the Water or
Wastewater System which would materially reduce operational integrity or Gross Revenues so long as
this Agreement, including any amendment thereto, is in effect unless the written consent of the
Department is first secured.
4.06. COMPLETION MONEYS.
In addition to the proceeds of this Loan, the Local Borrower covenants that it has obtained, or
will obtain, sufficient moneys from other sources to complete construction and place the Project in
15
in each Fiscal Year, Pledged Revenues equal to or exceeding 1.15 times the sum of the Semiannual Loan
Payments due in such Fiscal Year. In addition, the Local Borrower shall satisfy the coverage
requirements of all senior and parity debt obligations.
5.02. NO FREE SERVICE.
The Local Borrower shall not permit connections to, or furnish any services afforded by, the
Water or Wastewater System without making a charge therefor based on the Local Borrower's uniform
schedule of rates, fees, and charges.
5.03. MANDATORY CONNECTIONS.
The Local Borrower shall adopt, as necessary, and enforce requirements, consistent with
applicable laws, for the owner, tenant or occupant of each building located on a lot or parcel of land
which is served, or may reasonably be served, by the Wastewater System to connect such building to the
Wastewater System.
5.04. NO COMPETING SERVICE.
The Local Borrower shall not allow any person to provide any services which would compete
with the Water or Wastewater System so as to adversely affect Gross Revenues.
5.05. MAINTENANCE OF THE WATER AND WASTEWATER SYSTEMS.
The Local Borrower shall operate and maintain the Water and Wastewater Systems in a proper,
sound and economical manner and shall make all necessary repairs, renewals and replacements.
5.06. ADDITIONS AND MODIFICATIONS.
The Local Borrower may make any additions, modifications or improvements to the Water and
Wastewater Systems which it deems desirable and which do not materially reduce the operational
integrity of any part of the Water or Wastewater System. All such renewals, replacements, additions,
modifications and improvements shall become part of the Water and Wastewater Systems.
5.07. COLLECTION OF REVENUES.
The Local Borrower shall use its best efforts to collect all rates, fees and other charges due to it.
The Local Borrower shall establish liens on premises served by the Water or Wastewater System for the
amount of all delinquent rates, fees and other charges where such action is permitted by law. The Local
Borrower shall, to the full extent permitted by law, cause to discontinue the services of the Water and
Wastewater Systems and use its best efforts to shut off water service furnished to persons who are
delinquent beyond customary grace periods in the payment of Water and Wastewater System rates, fees
and other charges.
ARTICLE VI - DEFAULTS AND REMEDIES
6.01. EVENTS OF DEFAULT.
Each of the following events is hereby declared an event of default:
17
operation on, or prior to, the date specified in Article X. Failure of the Corporation or the Department to
approve additional financing shall not constitute a waiver of the Local Borrower's covenants to complete
and place the Project in operation.
4.07. CLOSE -OUT.
The Department shall conduct a final inspection of the Project and Project records. Following the
inspection, deadlines for submitting additional disbursement requests, if any, shall be established, along
with deadlines for uncompleted Loan requirements, if any. Deadlines shall be incorporated into the Loan
Agreement by amendment. The Loan principal shall be reduced by any excess over the amount required
to pay all approved costs. As a result of such adjustment, the Semiannual Loan Payment shall be reduced
accordingly, as addressed in Section 10.05.
4.08. LOAN DISBURSEMENTS.
Disbursements shall be made only by the Trustee for expenses incurred on or after 60 days before
the date of adoption by the Borrower of a declaration of official intent with respect to such expenditures
or on or after the issuance date of the Tax - Exempt Bonds used to fund this Loan, upon receipt of a
requisition in the form provided under the Indenture executed by the Department. Disbursements shall be
made directly to the Local Borrower for reimbursement of the incurred construction costs and related
services and technical services during construction. A requisition for disbursements shall be made upon
receipt by the Department of the following:
(1) A completed disbursement request form signed by the Authorized Representative. Such
requests must be accompanied by sufficiently itemized summaries of the materials, labor, or services to
identify the nature of the work performed; the cost or charges for such work; and the person providing the
service or performing the work.
(2) A certification signed by the Authorized Representative as to the current estimated costs
of the Project; that the materials, labor, or services represented by the invoice have been satisfactorily
purchased, performed, or received and applied to the Project; that all funds received to date have been
applied toward completing the Project; and that under the terms and provisions of the contracts, the Local
Borrower is required to make such payments.
(3) A certification by the engineer responsible for overseeing construction staring that
equipment, materials, labor and services represented by the construction invoices have been satisfactorily
purchased, or received, and applied to the Project in accordance with construction contract documents;
stating that payment is in accordance with construction contract provisions; stating that construction, up
to the point of the requisition, is in compliance with the contract documents; and identifying all additions
or deletions to the Project which have altered the Project's performance standards, scope, or purpose since
the issue of the Department construction permit.
(4) Such other certificates or documents by engineers, attorneys, accountants, contractors, or
suppliers as may reasonably be required by the Department.
ARTICLE V - RATES AND USE OF THE WATER AND WASTEWATER SYSTEMS
5.01. RATE COVERAGE.
The Local Borrower shall maintain rates and charges for the services furnished by the Water and
Wastewater Systems which, together with the Reclaimed Water Utility Fees will be sufficient to provide,
16
(1) Failure to make any Monthly Loan Deposit when it is due and such failure shall continue
for a period of 30 days or failure to make any installment of the Semiannual Loan Payment when it is due
and such failure shall continue for a period of 5 days.
(2) Except as provided in Subsections 6.01(1) and 6.01(7), failure to comply with the
provisions of this Agreement or failure in the performance or observance of any of the covenants or
actions required by this Agreement and such failure shall continue for a period of 60 days after written
notice thereof to the Local Borrower by the Department.
(3) Any warranty, representation or other statement by, or on behalf of, the Local Borrower
contained in this Agreement or in any document, certificate or information furnished in compliance with,
or in reference to, this Agreement, which is false or misleading.
(4) An order or decree entered, with the acquiescence of the Local Borrower, appointing a
receiver of any part of the Water or Wastewater System or Gross Revenues thereof, or if such order or
decree, having been entered without the consent or acquiescence of the Local Borrower, shall not be
vacated or discharged or stayed on appeal within 60 days after the entry thereof.
(5) Any proceeding instituted, with the acquiescence of the Local Borrower, for the purpose
of effecting a composition between the Local Borrower and its creditors or for the purpose of adjusting
the claims of such creditors, pursuant to any federal or state statute now or hereafter enacted, if the claims
of such creditors are payable from Gross Revenues of the Water or Wastewater System.
(6) Any bankruptcy, insolvency or other similar proceeding instituted by, or against, the
Local Borrower under federal or state bankruptcy or insolvency law now or hereafter in effect and, if
instituted against the Local Borrower, is not dismissed within 60 days after filing.
(7) Failure of the Local Borrower to give immediate written notice of default to the
Department and such failure shall continue for a period of 30 days.
6.02. REMEDIES.
Upon any event of default and subject to the rights of others having prior liens on the Pledged
Revenues, the Department may enforce the rights of the Corporation and the Department by any of the
following remedies:
(1) By mandamus or other proceeding at law or in equity, cause to establish rates and collect
fees and charges for use of the Water and Wastewater Systems, and to require the Local Borrower to
fulfill this Agreement.
(2) By action or suit in equity, require the Local Borrower to account for all moneys received
pursuant to this Agreement or from the ownership of the Water and Wastewater Systems and to account
for the receipt, use, application, or disposition of the Pledged Revenues.
(3) By action or suit in equity, enjoin any acts or things which may be unlawful or in
violation of the rights of the Corporation or the Department.
(4) By applying to a court of competent jurisdiction, cause the appointment of a receiver to
manage the Water and Wastewater Systems, establish and collect fees and charges, and apply the
revenues to the reduction of the obligations under this Agreement.
IN
(5) By certifying to the Auditor General and the Chief Financial Officer delinquency on
Loan repayments, the Department may provide for the payment to the Trustee of the delinquent amount
plus a penalty from any unobligated funds due to the Local Borrower under any revenue or tax sharing
fund established by the State, except as otherwise provided by the State Constitution. A penalty may be
imposed in an amount not to exceed an interest rate of 18 percent per annum on the amount due in
addition to charging the cost to handle and process the debt.
(6) By notifying financial market credit rating agencies and potential creditors
(7) By suing for payment of amounts due, or becoming due, with interest on overdue
payments together with all costs of collection, including attorneys' fees.
(8) By accelerating the repayment schedule or increasing the Financing Rate on the unpaid
principal of the Loan to as much as 1.667 times the Financing Rate for a default under Subsection 6.01(1).
6.03. DELAY AND WAIVER.
No delay or omission by the Corporation or the Department to exercise any right or power
accruing upon event of default shall impair any such right or power or shall be construed to be a waiver of
any such default or acquiescence therein, and every such right and power may be exercised as often as
may be deemed expedient. No waiver or any default under this Agreement shall extend to or affect any
subsequent event of default, whether of the same or different provision of this Agreement, or shall impair
consequent rights or remedies.
ARTICLE VII - THE PLEDGED REVENUES
7.01. SUPERIORITY OF THE PLEDGE TO THE CORPORATION
From and after the effective date of this Agreement, the Corporation shall have a lien on the
Pledged Revenues, which along with any other Corporation State Revolving Fund liens on the Pledged
Revenues, will be prior and superior to any other lien, pledge or assignment with the following exception.
All obligations of the Local Borrower under this Agreement shall be junior, inferior, and subordinate in
all respects in right of payment and security to the Senior Revenue Obligations defined in Section 1.01 of
this Agreement and to any additional senior obligations issued with the Department's consent pursuant to
Section 7.02. Any of the Pledged Revenues may be released from the lien on such Pledged Revenues in
favor of the Corporation if the Department makes a determination, based upon facts deemed sufficient by
the Department, that the remaining Pledged Revenues will, in each Fiscal Year, equal or exceed 1.15
times the debt service coming due in each Fiscal Year under the terms of this Agreement.
7.02. ADDITIONAL DEBT OBLIGATIONS.
The Local Borrower may issue additional debt obligations on a parity with, or senior to, the lien
of the Corporation on the Pledged Revenues provided the Department's written consent is obtained. Such
consent shall be granted if the Local Borrower demonstrates at the time of such issuance that the Pledged
Revenues, which may take into account reasonable projections of growth of the Water and Wastewater
Systems and revenue increases, plus revenues to be pledged to the additional proposed debt obligations
will, during the period of time Semiannual Loan Payments are to be made under this Agreement, equal or
exceed L 15 times the annual combined debt service requirements of this Agreement and will satisfy the
coverage requirements of all other debt obligations secured by the Pledged Revenues and obligations
proposed to be issued by the Local Borrower. However, no such consent is required with respect to
issuance of Senior Revenue Obligations as defined in Section 1.01.
19
ARTICLE VIII - GENERAL PROVISIONS
8.01. DISCHARGE OF OBLIGATIONS
All payments required to be made under this Agreement shall be cumulative and any deficiencies
in any Fiscal Year shall be added to the payments due in the succeeding Fiscal Year and all Fiscal Years
thereafter until fully paid. Payments shall continue to be secured by this Agreement until all of the
payments required shall be fully paid to the Corporation. If at any time the Local Borrower shall have
paid, or shall have made provision for the timely payment of, the entire principal amount of the Loan, and
as applicable, Loan Service Fee, interest, and Grant Allocation Assessment charges, the pledge of, and
lien on, the Pledged Revenues to the Corporation shall be no longer in effect. Deposit of sufficient cash
or Defeasance Obligations may be made to effect defeasance of this Loan. However, the deposit shall be
made in irrevocable trust with a banking institution or trust company for the sole benefit of the
Corporation or its assignees and shall be subject to approval by the Corporation. There shall be no
penalty imposed by the Corporation for early retirement of this Loan.
8.02. PROJECT RECORDS AND STATEMENTS.
Books, records, reports, engineering documents, contract documents, and papers shall be
available to the authorized representatives of the Corporation, the Department and the U.S. Environmental
Protection Agency's Inspector General for inspection at any reasonable time after the Local Borrower has
received a disbursement and until five years after the date that the Project - specific audit report, required
under Subsection 2.04(4), is issued.
8.03. ACCESS TO PROJECT SITE.
The Local Borrower shall provide access to Project sites and administrative offices to authorized
representatives of the Corporation and the Department at any reasonable time. The Local Borrower shall
cause its engineers and contractors to cooperate during Project inspections, including making available
working copies of plans and specifications and supplementary materials.
8.04. ASSIGNMENT OF RIGHTS UNDER AGREEMENT.
The Local Borrower hereby expressly acknowledges that the Loan and all payments of principal
and interest thereon, and all proceeds thereof, but excluding the Loan Service Fee and the Grant
Allocation Assessment, have been pledged and assigned to the Trustee under the Indenture as security for
the payment of principal of, premium, if any, and interest on the Bonds and the Trustee shall be entitled to
act hereunder, and by the execution of this Agreement the Local Borrower in all respects consents to such
assignment. The Corporation, the Department and the Trustee may further assign all or any parts of their
rights under this Agreement without the prior consent of the Local Borrower after written notification to
the Local Borrower. The Local Borrower shall not assign its rights and obligations under this Agreement
without the prior written consent of the Department.
8.05. AMENDMENT OF AGREEMENT.
This Agreement may be amended in writing, except that no amendment shall be permitted which
is inconsistent with any applicable statutes, rules, regulations, executive orders, or written agreements
between the Department and the U.S. Environmental Protection Agency. This Agreement may be
amended after all construction contracts are executed to re- establish the Project cost, Loan amount,
Project schedule, and Semiannual Loan Payment amount. A final amendment establishing the final
9E
Project costs and the Loan Service Fee based on actual Project costs shall be completed after the
Department's final inspection of the Project records.
8.06. ANNULMENT OF AGREEMENT.
The Corporation, in consultation with the Department, may unilaterally annul this Agreement if
the Local Borrower has not drawn any of the Loan proceeds within twelve months after the effective date
of this Agreement. If the Corporation unilaterally annuls this Agreement, the Corporation will provide
written notification to the Local Borrower.
8.07. SEVERABILITY CLAUSE.
If any provision of this Agreement shall be held invalid or unenforceable, the remaining
provisions shall be construed and enforced as if such invalid or unenforceable provision had not been
contained herein.
ARTICLE DC - CONSTRUCTION CONTRACTS AND INSURANCE
9.01. AUTHORIZATION TO AWARD CONSTRUCTION CONTRACTS.
The following documentation is required to receive the Department's authorization to award
construction contracts:
(1) Proof of advertising.
(2) Award recommendation, bid proposal, and bid tabulation (certified by the responsible
engineer).
(3) Certified copy of the Local Borrower's tentative award resolution.
(4) Certification of compliance with the conditions of the Department's approval of
competitively or non - competitively negotiated procurement, if applicable.
(5) Certification by the Authorized Representative that affirmative steps were taken to
encourage Minority and Women's Business Enterprises participation in Project construction.
(6) Current certifications for Minority and Women's Business Enterprises participating in the
contract. If the goals as stated in the plans and specifications are not met, documentation of actions taken
shall be submitted.
9.02. SUBMITTAL OF CONSTRUCTION CONTRACT DOCUMENTS
After the Department's authorization to award construction contracts has been received, the Local
Borrower shall submit contractor insurance certifications and notices to proceed with construction.
9.03. INSURANCE REQUIRED.
The Local Borrower shall cause the Project, as each part thereof is certified by the engineer
responsible for overseeing construction as completed, and the Water and Wastewater Systems (hereafter
referred to as "Revenue Producing Facilities ") to be insured by an insurance company or companies
licensed to do business in the State against such damage and destruction risks as are customary for the
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operation of Revenue Producing Facilities of like size, type and location to the extent such insurance is
obtainable from time to time against any one or more of such risks.
The proceeds of insurance policies received as a result of damage to, or destruction of, the Project
or the other Revenue Producing Facilities, shall be used to restore or replace damaged portions of the
facilities. If such proceeds are insufficient, the Local Borrower shall provide additional funds to restore
or replace the damaged portions of the facilities. Repair, construction or replacement shall be promptly
completed.
ARTICLE X - DETAILS OF FINANCING
10.01. PRINCIPAL AMOUNT OF LOAN.
The estimated principal amount of the Loan is $18,791,736, which consists of $18,520,336 to be
disbursed to the Local Borrower and $271,400 of Capitalized Interest.
Capitalized Interest is not disbursed to the Local Borrower, but is amortized via periodic Loan
repayments as if it were actually disbursed. Capitalized Interest is computed at the Financing Rate, or
rates, set for the Loan. It accrues and is compounded annually from the time when disbursements are
made until six months before the first Semiannual Loan Payment is due. Capitalized Interest is estimated
prior to establishing the schedule of actual disbursements.
If the total amount disbursed within eighteen months after the effective date of this Agreement is
less than half of the Loan proceeds amount authorized for disbursement, the Department may unilaterally
reduce the amount authorized for disbursement. Such a reduction would not affect the total authorized
Loan amount.
10.02. LOAN SERVICE FEE
The Loan Service Fee is estimated as $370,407 for the Loan amount authorized to date. The fee
represents two percent of the Loan amount excluding Capitalized Interest; that is, two percent of
$18,520,336. The Loan Service Fee amount shall be revised with any increase or decrease amendment.
The Loan Service Fee is based on actual Project costs and assessed in the final amendment. The Local
Borrower shall pay the Loan Service Fee from the first available repayments following the final
amendment.
10.03. FINANCING RATE.
The Financing Rate on the unpaid principal of the Loan amount specified in Section 10.01 is 2.42
percent per annum. The Financing Rate equals the sum of the interest rate and the Grant Allocation
Assessment Rate. The interest rate is 2.42 percent per annum and the Grant Allocation Assessment rate is
0 percent per annum. However, if this Agreement is not executed by the Local Borrower and returned to
the Department before January 1, 2006, the Financing Rate may be adjusted. A new Financing Rate shall
be established for any funds provided by amendment to this Agreement.
10.04. LOAN TERM.
The Loan shall be repaid in 40 Semiannual Loan Payments.
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10.05. REPAYMENT SCHEDULE.
The Semiannual Loan Payment shall be computed based upon the principal amount of the Loan
plus the estimated Loan Service Fee and capitalized Loan Service Fee interest and the principle of level
debt service. The amount of Loan proceeds authorized for disbursement and associated Capitalized
Interest will be treated as the Loan principal for computing the Semiannual Loan Payment. The
Semiannual Loan Payment amount may be adjusted, by amendment of this Agreement, based upon
revised information. After the final disbursement of Loan proceeds, the Semiannual Loan Payment shall
be based upon the actual Project costs and the Loan Service Fee, and actual dates and amounts of
disbursements, taking into consideration any previous payments. Actual Project costs shall be established
after the Department's inspection of the completed Project and associated records. The Corporation will
deduct the Loan Service Fee and all associated interest from the first available repayments following the
final amendment.
Each Semiannual Loan Payment shall be in the amount of $607,482 until the payment amount is
adjusted by amendment. The interest and Grant Allocation Assessment portions of each Semiannual
Loan Payment shall be computed, using their respective rates, on the unpaid balance of the principal
amount of the Loan, which principal includes Capitalized Interest. Interest (at the Financing Rate) also
shall be computed on the estimated Loan Service Fee. The interest and Grant Allocation Assessment on
the unpaid balance shall be computed as of the due date of each Semiannual Loan Payment.
Semiannual Loan Payments shall be paid to, and must be received by, the Trustee beginning on
August 15, 2007 and semiannually thereafter on February 15 and August 15 of each year until all amounts
due hereunder have been fully paid. Funds transfer shall be made by electronic means.
The Semiannual Loan Payment amount is based on the total amount owed of $19,173,043, which
consists of the Loan principal, and the estimated Loan Service Fee with its Capitalized Interest, if any.
10.06. PROJECT COSTS.
The Local Borrower, the Corporation and the Department acknowledge that the actual Project
costs have not been determined as of the effective date of this Agreement. Project cost adjustments may
be made as a result of Project changes agreed upon by the Department. Capitalized Interest will be
recalculated based on actual dates and amounts of Loan disbursements. If the Local Borrower receives
other governmental financial assistance for this Project, the costs funded by such other governmental
assistance will not be financed by this Loan. The Department shall establish the final Project costs after
its final inspection of the Project records. Changes in Project costs may also occur as a result of the Local
Borrower's Project audit or a Department audit. The Local Borrower agrees to the following estimates of
Project costs:
PROJECT COSTS
CATEGORY
Construction and Demolition
Contingencies
Technical Services After Bid Opening
Subtotal (Disbursable Amount)
Capitalized Interest
TOTAL (Loan Principal Amount)
COST($)
16,343,177
817,159
1,360,000
18,520,336
271,400
18,791,736
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10.07. PROJECT SCHEDULE.
The Local Borrower agrees by execution hereof:
(1) Completion of Project construction is scheduled for February 15, 2007.
(2) The Loan Debt Service Account shall be established and Monthly Loan Deposits shall
begin no later than February 15, 2007.
(3) The initial annual certification required under Subsection 2.01(10) of this Agreement
shall be due May 15, 2007. Thereafter the certification shall be submitted no later than September 30 of
each year until the final Semiannual Loan Payment is made.
(4) The first Semiannual Loan Payment in the amount of $607,482 shall be due
August 15, 2007.
10.08. SPECIAL CONDITION.
Funding for related allowances is provided by loan number CS120586220.
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ARTICLE XI - EXECUTION OF AGREEMENT
This Loan Agreement WW586250 shall be executed in three or more counterparts, any of which
shall be regarded as an original and all of which constitute but one and the same instrument.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its
behalf by its Chief Executive Officer and the Local Borrower has caused this Agreement to be executed
on its behalf by its Authorized Representative and by its affixed seal. The effective date of this
Agreement shall be as set forth below by the Chief Executive Officer of the Corporation.
for
FLORIDA WATER POLLUTION CONTROL FINANCING CORPORATION
Chief Executive Officer Date
for
CITY OF SANFORD
A. 0(0
Robert Yehl anager
Attest
Jan D gherty CityCler
SEAL
I attest to the opinion expressed in Section 2.03,
entitled Legal Authorization, and as to form and
legal sufficiency.
City Attorney
-OS I -eddlk /L 67vnt7f-
APPROVED AND ACCEPTED BY THE TATE OF FLORIDA DEPARTMENT OF
ENVIRONMENTAL PROTE O
Secretary
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