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BCRUA_R-18-08-15-5B Resolution No. F_'I & o�/ Is- 1�6 RESOLUTION APPROVING A FINANCING AGREEMENT BETWEEN THE BRUSHY CREEK REGIONAL UTILITY AUTHORITY, INC. AND THE TEXAS WATER DEVELOPMENT BOARD AND OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, the Brushy Creek Regional Utility Authority, Inc. (the "BCRUA") is a non-profit corporation of the State of Texas (the "State"), created by the Cities of Cedar Park, Leander and Round Rock,Texas(collectively,the"Cities" or singularly,a"City")and existing under the laws of the State, including Subchapter D of Chapter 431, as amended, Texas Transportation Code; and WHEREAS, on April 18, 2018, the BCRUA's Board of Directors approved a resolution authorizing an application (the "Application") to the Texas Water Development Board (the "TWDB") requesting financial assistance in the aggregate amount of up to $15,740,000 to finance the construction of certain water supply project(s) as described in the Application (the "Project"); and WHEREAS, the City Council of the City of Cedar Park and the City Council of the City of Leander also adopted resolutions approving the Application prior to BCRUA's submission of the Application to the TWDB; and WHEREAS, on July 26, 2018, the TWDB adopted a resolution approving the Application and committed, subject to certain conditions, to purchase a two separate series of contract revenue bonds,one issued by BCRUA on behalf of the City of Cedar Park(the "Cedar Park Bonds") and one issued by BCRUA on behalf of the City of Leander, to finance the respective shares of the Project of the City of Cedar Park and of the City of Leander; and WHEREAS,in connection with the proposed issuance of the Cedar Park Bonds,the TWDB has presented to BCRUA a financing agreement attached hereto as Exhibit A (the "Financing Agreement"); and WHEREAS,due to the respective meeting schedules of BCRUA and the City of Cedar Park and the deadline for the submission of the executed Financing Agreement, which must be submitted by the BCRUA to the TWDB no later than September 4,2018,the BCRUA is hereby presented with the Financing Agreement for its approval prior to the approval of the Financing Agreement by the City of Cedar Park, and such approval by the City of Cedar Park shall be obtained prior to the submission by the BCRUA of an executed Financing Agreement to the TWDB; and WHEREAS, it is hereby found and determined that it is necessary and in the best interests of the BCRUA and the City of Cedar Park for BCRUA to approve the Financing Agreement, which approval shall be subject to the approval of the City Council of the City of Cedar Park; and WHEREAS, it is hereby further officially found and determined that public notice of the time, place, and purpose of this meeting was given, all as required by Texas Government Code, Chapter 551. 1 NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE BRUSHY CREEK REGIONAL UTILITY AUTHORITY, INC.: SECTION 1. RECITALS. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. SECTION 2. FINANCING AGREEMENT. The Financing Agreement is hereby approved and the President and Secretary of the Board are hereby authorized and directed to execute the Financing Agreement in substantially the form and substance attached hereto as Exhibit A with such changes as may be approved by general counsel and bond counsel to the BCRUA. The General Manager is hereby delegated the authority to confer with the City Manager of the City of Cedar Park regarding approval of TWDB financing rates in accordance with the Financing Agreement. The General Manager is authorized to take such actions as necessary to implement this Resolution. SECTION 3. CITY APPROVAL. Notwithstanding anything in this Resolution to the contrary, the approval of the City Council for the City of Cedar Park, either before or after the date of adoption of this Resolution,is required before the BCRUA may execute and deliver the Financing Agreement to the TWDB. SECTION 4. OPEN MEETINGS. Itis hereby officially found and determined that the meeting at which this Resolution is passed was open to the public as required and that public notice of the time, place, and purpose of said meeting was given as required by the Open Meetings Act, Chapt. 551, Tex. Gov't. Code. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 PASSED AND APPROVED THIS AUGUST 15, 2018. sident Brushy Creek Regional Utility Authority, Inc. ATTEST: Secretary Brushy Creek Regional Utility Authority, Inc. gal vt e4oN...Q.•I•i4y Q�•.•0 O^'7�•.• It U SEAL JULY 26, 4 ' 2007 t PE X 8 01109585;1 Exhibit A FINANCING AGREEMENT 01109585;1 Fvri � y FINANCING AGREEMENT This FINANCING AGREEMENT (Agreement) is entered into between the TEXAS WATER DEVELOPMENT BOARD (TWDB), an agency of the State of Texas, and the Brushy Creek Regional Utility Authority (Borrower). The TWDB and the Borrower may be referred to as the "Parties" in this Agreement. RECITALS WHEREAS, the TWDB adopted Resolution No. 18-083 (Attachment A, referred to as the Resolution) on July 26, 2018, making a commitment to the Borrower for financial assistance in the amount of$15,740,000 from the State Water Implementation Revenue Fund for Texas (SWIRFT) administered by the TWDB; and WHEREAS, through this Agreement, the Borrower intends to sell to the TWDB the Authority's $6,970,000 Brushy Creek Regional Utility Authority, Inc., City of Cedar Park, Texas Contract Revenue Bonds (Brushy Creek Regional Water Treatment and Distribution Project), Proposed Series 2018 (Borrower Bonds) for the TWDB's financial assistance from the SWIRFT, as further described in Attachment B; and WHEREAS, through a separate agreement, the Borrower intends to sell to the TWDB the Authority's $8,770,000 Brushy Creek Regional Utility Authority, Inc., City of Leander, Texas Contract Revenue Bonds (Brushy Creek Regional Water Treatment and Distribution Project), Proposed Series 2018 for the TWDB's financial assistance from the SWIRFT; and WHEREAS,the SWIRFT is funded, in part,with proceeds of the expected issuance of TWDB's revenue bonds (SWIRFT Bonds), issued under authority of Texas Water Code §§ 15.472 and 15.475, and Texas Constitution,Article III, Section 49-d-13; and WHEREAS, the SWIRFT Bonds are additionally secured by money made available under the terms of a bond enhancement agreement executed under authority of Texas Water Code §§ 15.434 and 15.435, and Texas Constitution,Article III, Section 49-d-12; and WHEREAS, the SWIRFT is funded, in part,with money received as repayment of financial assistance provided from the SWIRFT, under Texas Water Code § 15.472,which is I used to pay the principal and interest on the SWIRFT Bonds, under Texas Water Code § 15.474, and Texas Constitution,Article III, Section 49-d-13(d) and (f); and WHEREAS,the Resolution provides that funding the commitment is contingent on future sales of SWIRFT Bonds designated by the TWDB; and WHEREAS,the TWDB intends to provide financial assistance from the SWIRFT to the Borrower with proceeds of SWIRFT Bonds designated by the TWDB; and WHEREAS, the TWDB and the Borrower desire to enter into this Agreement to set forth the obligations of the Parties with respect to the TWDB providing financial assistance to the Borrower consistent with the desire of the TWDB to issue SWIRFT Bonds to provide money for the SWIRFT. NOW, THEREFORE, for and in consideration of the promises and the mutual covenants contained in this Agreement, the TWDB and the Borrower agree as follows: AGREEMENT SECTION 1. MUTUAL COMMITMENTS. As further described in the Resolution, the TWDB committed to the Borrower and the Borrower hereby commits to borrow from the TWDB an amount not to exceed $6,970,000 from the SWIRFT to be evidenced by the issuance and delivery of Borrower Bonds to the TWDB consistent with the terms and conditions described in this Agreement,Attachment A,Attachment B, and Attachment C. SECTION 2. TRANSACTION SCHEDULE AND PRICING. By execution of this Agreement, the Borrower acknowledges and represents that it has a current need for financial assistance from the TWDB and shall take all necessary steps to issue and deliver the Borrower Bonds to evidence the commitment described in Section 1. The Borrower further acknowledges and understands that the TWDB is entering into this Agreement for the sole purpose of issuing SWIRFT Bonds to fund the TWDB commitment described in the Resolution and in this Agreement. The Borrower acknowledges that the SWIRFT bonds, the subject of this Agreement, are being issued for the purpose of funding the Borrower's requested financial assistance. With respect to the Borrower Bonds and the SWIRFT Bonds, the Parties agree to structure such public securities in a manner that will allow for substantially similar terms, redemption provisions, and related matters to allow the TWDB to timely pay the debt service on the SWIRFT Bonds. The foregoing notwithstanding, the TWDB consents to early redemption, or prepayment of the Borrower Bonds, as provided for in this Agreement and 2 the Resolution. The Borrower Bonds may be prepaid by the Borrower on any date beginning on or after the first scheduled interest payment date that occurs no earlier than 10 years from the dated date of the Borrower Bonds. To confirm the terms of the Borrower Bonds and SWIRFT Bonds,the Borrower shall execute this Agreement. In order to mutually assure the performance of the Parties under this Agreement, the Parties agree that the issuance and delivery of the SWIRFT Bonds and the issuance and delivery of the Borrower Bonds to TWDB shall occur not more than fifty (50) days apart as reflected in Attachment C. Notwithstanding the foregoing, it is the intent and expectation of the Parties that the TWDB issue and deliver its SWIRFT Bonds approximately twenty- three (23) days after execution of the TWDB's Bond Purchase Agreement or such date as may be mutually agreed to in Attachment C. SECTION 3. BINDING COMMITMENT. The TWDB agrees to take all necessary steps to issue the SWIRFT Bonds for the purposes described in this Agreement and in the Resolution upon receipt of this Agreement, which shall be signed and delivered by the Borrower to the Executive Administrator of the TWDB at least thirteen (13) days prior to the initiation of the pricing of the SWIRFT Bonds, as set forth in Attachment C. The Borrower acknowledges that the schedule provided in Attachment C is a best estimate by the TWDB and is subject to change by the TWDB. The TWDB expressly reserves the right to modify Attachment C at any time and shall provide the Borrower with an updated Attachment C as soon as practicable upon any modifications; provided that if such modification of Attachment C occurs prior to the initiation of pricing of the SWIRFT Bonds and such modification results in an earlier scheduled pricing date, no such modification of Attachment C may result in the Borrower having fewer than five (5) days between the receipt of the modified schedule and the TWDB posting the Preliminary Official Statement for the SWIRFT Bonds. SECTION 4. TERMINATION &BREACH OF AGREEMENT. A. The Parties agree that the Borrower may terminate this Agreement in writing at any time prior to seven (7) days before the initiation of the pricing of the SWIRFT Bonds, as set forth in Attachment C,with no penalty. B. The Borrower understands and agrees that the Borrower may terminate this Agreement in writing between six (6) days and four (4) days prior to the initiation of the pricing of the SWIRFT Bonds (currently estimated to occur on September 17, 2018) as set forth in Attachment C, provided the Borrower agrees to reimburse the TWDB from lawfully available funds of the Borrower for its proportional share of transaction costs incurred by the TWDB, such as, but not limited to, any fees or costs 3 related to any rating agency, financial advisor, legal counsel, or other similar party or related costs pertaining to the SWIRFT Bonds in an amount not to exceed $3,487 (Transaction Cost Payment). The Borrower shall be obligated to pay such costs to the TWDB no later than March 1, 2019. C. The Borrower understands and agrees that the Borrower may terminate this Agreement in writing within three (3) days prior to the initiation of the pricing of the SWIRFT Bonds as set forth in Attachment C and no later than 9:00 am Central Standard Time on the day before the TWDB Bond Pricing, provided the Borrower agrees to pay 1.0 percent of the amount of the commitment authorized in Section 1 of this Agreement to the TWDB (Pre-pricing Termination Payment), and additionally shall reimburse the TWDB from lawfully available funds of the Borrower its Transaction Cost Payment. The Borrower shall be obligated to pay such costs to the TWDB no later than March 1, 2019.The Borrower understands and agrees that termination under this section will result in a total penalty amount of $73,187. D. The Borrower understands and agrees that TWDB would suffer and incur severe and irreparable damages if the TWDB Bond Pricing occurs and Borrower Bonds are not issued and delivered. If the TWDB Bond Pricing occurs and Borrower fails to issue the Borrower Bonds by the date specified in Attachment C, as contemplated in this Agreement, it shall be a breach of this Agreement and the Borrower shall pay, from lawfully available funds of the Borrower, a "Post-pricing Termination Payment" to the TWDB. The Post-pricing Termination Payment shall be an amount equal to 5.0 percent of the amount of the commitment authorized in Section 1 of this Agreement. The Borrower shall be obligated to pay the Post-pricing Termination Payment to the TWDB no later than March 1, 2019. The Borrower shall also reimburse the TWDB from lawfully available funds of the Borrower, its Transaction Cost Payment, plus Borrower's proportional share of the underwriters' discount, no later than March 1, 2019. The Borrower understands and agrees that failure by the Borrower to issue Borrower Bonds by the date specified in Attachment C, will result in a total penalty amount pursuant to this section not to exceed $374,903. SECTION S. AMORTIZATION STRUCTURE. The Borrower shall provide the TWDB a maturity schedule in the form set forth in Attachment B at the time of execution of this Agreement. A final amortization structure will be required at least seven (7) days before the initiation of pricing of the SWIRFT Bonds in accordance with the provisions of this Agreement. The par amount included in Attachment B may be revised downward, subject to approval by the Executive Administrator of the TWDB, at any time prior to the seventh (7th) day before the initiation of pricing of the SWIRFT Bonds with no penalty. 4 SECTION 6. CONTINGENCIES. A. The Parties agree that the TWDB's obligation to purchase the Borrower's securities with the SWIRFT is contingent upon the TWDB receiving all legally required approvals for the issuance of the SWIRFT Bonds, from the Legislative Budget Board, the Bond Review Board, and the Texas Attorney General. The TWDB's obligation to purchase the Borrower's securities with the SWIRFT is also contingent upon the purchase and delivery of the SWIRFT Bond proceeds by the underwriters pursuant to the Bond Purchase Agreement relating to the SWIRFT Bonds. Accordingly, if any contingency described in the preceding paragraph above is unmet, the TWDB, upon delivery of written notice thereof to the Borrower, may extend or terminate this Agreement together with all of its obligations and duties hereunder without incurring any cost, fee, or penalty for either the TWDB or the Borrower. B. The Parties agree that the Borrower's obligation to issue and deliver the Borrower Bonds is contingent upon approval by the Texas Attorney General of the Borrower Bonds. The Borrower agrees to use its best efforts to obtain approval by the Texas Attorney General of the Borrower Bonds to satisfy the closing requirements set forth in Section 2 of this Agreement. To this end,the Borrower agrees as follows: Cl) Borrower shall timely file the transcript of proceedings for the Borrower Bonds with the Texas Attorney General in accordance with the schedule contained in Attachment C; (2) Borrower shall comply with the requirements and conditions contained in the Resolution; (3) Borrower shall provide the TWDB with a copy of the preliminary approval letter from the Texas Attorney General promptly upon receipt; (4) Borrower shall provide the TWDB with a copy of its responses to the preliminary approval letter concurrently with the submission of such responses to the Texas Attorney General; and (5) Borrower shall allow TWDB to brief the Texas Attorney General on any issues noted in the preliminary approval letter and initiate or participate 5 in conferences with the Texas Attorney General related to the approval of the Borrower Bonds. Accordingly, if, after the Borrower employs its best efforts to obtain approval by the Texas Attorney General, and such approval cannot be obtained by the date specified in Attachment C, as a matter of law, the TWDB, at its sole discretion, may terminate this Agreement and upon termination the Borrower shall pay, from any of its lawfully available funds, the Post-pricing Termination Payment no later than March 1, 2019, as provided in Section 4D. The Borrower shall also reimburse the TWDB from lawfully available funds of the Borrower, its Transaction Cost Payment, plus Borrower's proportional share of the underwriters' discount, no later than March 1, 2019. The Borrower understands and agrees that if the Borrower does not obtain approval from the Texas Attorney General and issue its Borrower Bonds by the date specified in Attachment C, it will be subject to a total penalty amount pursuant to this section not to exceed $374,903. SECTION 7. REDEMPTION OF OUTSTANDING DEBT. Proceeds of the Borrower Bonds shall not be used, in whole or in part, to redeem outstanding bonds, commercial paper, or other obligations issued by the Borrower. The Borrower agrees that it will not take or fail to take any action that will cause the SWIRFT Bonds to be considered to be advance refunding bonds under Section 149(d) of the Internal Revenue Code of 1986, as amended. SECTION 8. NOTICES. All notices, agreements or other communications required hereunder shall be given, and shall be deemed given, when delivered in writing to the address, facsimile or email of the identified party or Parties set forth below: Texas Water Development Board Brushy Creek Regional Utility Authority Attn: Development Fund Manager Attn: Karen Bondy, General Manager P.O. Box 13231 221 East Main St. Austin, Texas 78711-3231 Round Rock,Texas 78664 Telephone: (512) 475-4584 Telephone: (512) 218-5400 Facsimile: (512) 218-7097 Facsimile: (512) 475-2053 E-mail: kbondy@bcrua.org SECTION 9. SEVERABILITY. In the event any provision of this Agreement shall be held illegal, invalid, or unenforceable by any court of competent jurisdiction, such holding shall not invalidate, render unenforceable, or otherwise affect any other provisions hereof. 6 SECTION 10. AMENDMENTS, SUPPLEMENTS, AND MODIFICATIONS. Other than the changes allowed under Section 3 and Section 5, this Agreement may be amended, supplemented, or modified only in a writing executed by duly authorized representatives of the Parties. SECTION 11. APPLICABLE LAW. This Agreement and any amendments shall be governed by and construed in accordance with the laws of the State of Texas. SECTION 12. STATE AUDIT. By executing this Agreement and delivering the Borrower Bonds, the Borrower accepts the authority of the Texas State Auditor's Office to conduct audits and investigations in connection with all state funds received pursuant to this Agreement. The Borrower shall comply with any directive from the Texas State Auditor and shall cooperate in any such investigation or audit. The Borrower agrees to provide the Texas State Auditor with access to any information the Texas State Auditor considers relevant to the investigation or audit. The Borrower also agrees to include a provision in any contract or subcontract related to this Agreement that requires the contractor and the subcontractor to submit to audits and investigations by the Texas State Auditor's Office in connection with any state funds received pursuant to the contract or subcontract. SECTION 13. FORCE MAJEURE. Either party may be excused from performance under this contract for any period when performance is prevented as the result of an act of God, strike,war, civil disturbance, or epidemic, provided that the party experiencing the event of Force Majeure has prudently and promptly acted to take any and all steps that are within the party's control to ensure performance and to shorten the duration of the event of Force Majeure. The party suffering an event of Force Majeure shall provide notice of the event to the other party as soon as practicable but not later than five business days after the event. Subject to this provision, such nonperformance shall not be deemed a breach or a ground for termination. SECTION 14. EFFECTIVE DATE. This Agreement shall be effective as of the date of the last signature below. SECTION 15. BINDING AGREEMENT. The execution of this Agreement has been authorized by the governing boards of both Parties. The individuals executing this Agreement have the legal authority to bind each respective Party to the terms and conditions of this Agreement. The respective commitments of the TWDB and the Borrower set forth above shall be binding upon the TWDB and the Borrower upon both Parties'execution of this Agreement. 7 EXECUTED in multiple counterparts, each of which shall be deemed to be an original. BRUSHY CREEK REGIONAL UTILITY AUTHORITY, INC. By: Name: Karen Bondy Title: General Manager Date: a/ 2- Fa �/s STATE OF TEXAS COUNTY OF This instrument was acknowledged before me on the&day of by Karen Bondy in her capacity as General Manager, on behalf of Brushy Creek Regional Utility Authority, Inc.. (SEAL) `�� ••�O�pRV Y P �l�c• .moi Notary P ic, State of Texas i '•iOrf�F S�'+'� !hl111111111N 8 TEXAS WATER DEVELOPMENT BOARD By: Name: Jeff aKe Title: Executive Administrator Date: STATE OF TEXAS COUNTY OF TRAVIS This instrument was acknowledged before me on the 4 day oW 2018, by Jeff Walker in his capacity as Executive Administrator of the Texas Water Development Board, an agency of the State of Texas, on behalf of said agency. (SEAL) 4,� MELISSA C. HUFFMASTER ' Notary Public, State of Texas ANo4Public, State as sz: Comm. Expires 06-05-2021 Notary ID 12944703-5 Y 9 ATTACHMENT A TWDB RESOLUTION NO. 18-083 A RESOLUTION OF THE TEXAS WATER DEVELOPMENT BOARD APPROVING AN APPLICATION FOR FINANCIAL ASSISTANCE IN THE AMOUNT OF $15,740,000 TO THE BRUSHY CREEK REGIONAL UTILITY AUTHORITY, INC. FROM THE STATE WATER IMPLEMENTATION REVENUE FUND FOR TEXAS THROUGH THE PROPOSED PURCHASE OF $6,970,000 BRUSHY CREEK REGIONAL UTILITY AUTHORITY, INC., CITY OF CEDAR PARK, TEXAS CONTRACT REVENUE BONDS, PROPOSED SERIES 2018 (BRUSHY CREEK REGIONAL WATER TREATMENT AND DISTRIBUTION PROJECT)AND $8,770,000 BRUSHY CREEK REGIONAL UTILITY AUTHORITY, INC., CITY OF LEANDER, TEXAS CONTRACT REVENUE BONDS, PROPOSED SERIES 2018 (BRUSHY CREEK REGIONAL WATER TREATMENT AND DISTRIBUTION PROJECT) (18-083) WHEREAS, the Brushy Creek Regional Utility Authority, Inc. (Authority), located in Travis and Williamson Counties, has filed an application for financial assistance in the amount of $15,740,000 from the State Water Implementation Revenue Fund for Texas (SWIRFT) to finance the planning and design of certain water supply project(s) identified as Project No. 51049 (Project) to serve the Cities of Round Rock, Cedar Park, and Leander (Cities); and WHEREAS, the Authority seeks financial assistance from the Texas Water Development Board (TWDB) through the TWDB's proposed purchase of$6,970,000 Brushy Creek Regional Utility Authority, Inc., City of Cedar Park, Texas Contract Revenue Bonds, Proposed Series 2018 (Brushy Creek Regional Water Treatment and Distribution Project) and $8,770,000 Brushy Creek Regional Utility Authority, Inc., City of Leander, Texas Contract Revenue Bonds, Proposed Series 2018 (Brushy Creek Regional Water Treatment and Distribution Project), (together with all authorizing documents (Obligations)), all as is more specifically set forth in the application and in recommendations of the Executive Administrator's staff, and WHEREAS, the Authority seeks a combination of $6,970,000 in low-interest financing and $8,770,000 in deferred financing from the TWDB for the Project; and WHEREAS, the Authority has offered a pledge of contract revenues as sufficient security for the repayment of the Obligations; and WHEREAS, subject to the Authority's use of an approved debt service structure, interest rate subsidies are available to the Authority at up to the following levels: 35% for financial assistance for a term of 20 years, 25% for financial assistance for a term of 21 to 25 years, and 20% for financial assistance for a term of 26 to 30 years. The interest rate subsidy applicable to each proposed series will be set through each financing agreement executed between the TWDB and the Authority, pursuant to this Resolution; and WHEREAS, subject to the Authority's use of an approved debt service structure, the interest on and principal of the Obligations may be deferred for up to eight years; and WHEREAS,the TWDB hereby finds: 1. that the application and assistance applied for meet the requirements of Texas Water Code, Chapter 15, Subchapters G and H and 31 TAC Chapter 363, Subchapters A and M; 2. that the Project is a recommended water management strategy project in the State Water Plan adopted pursuant to Texas Water Code § 16.051, in accordance with Texas Water Code§ 15.474(a); 3. that the Authority satisfactorily completed all requests by the Executive Administrator or a regional planning group for information relevant to the Project, including a water infrastructure financing survey under Texas Water Code § 16.053(q),in accordance with 31 TAC§ 363.1309(b)(2); 4. that the Authority has acknowledged its legal obligation to comply with any applicable requirements of federal law relating to contracting with disadvantaged business enterprises and any applicable state law relating to contracting with POMP historically underutilized businesses, in accordance with Texas Water Code § 15.435(h) and 31 TAC§ 363.1309(b)(3). NOW THEREFORE,based on these findings,the TWDB resolves as follows: 1. A commitment is made by the TWDB to the Brushy Creek Regional Utility Authority, Inc. for financial assistance in the amount of $15,740,000 from the State Water Implementation Revenue Fund for Texas, to be evidenced by the TWDB's proposed purchase of$6,970,000 Brushy Creek Regional Utility Authority, Inc., City of Cedar Park, Texas Contract Revenue Bonds, Proposed Series 2018 (Brushy Creek Regional Water Treatment and Distribution Project) and $8,770,000 Brushy Creek Regional Utility Authority, Inc., City of Leander, Texas Contract Revenue Bonds, Proposed Series 2018 (Brushy Creek Regional Water Treatment and Distribution Project). This commitment will expire on December 31, 2018. Such commitment is conditioned as follows: Standard Conditions: 1. this commitment is contingent on a future sale of bonds by the TWDB or on the availability of funds on hand; M-M 2. this commitment is contingent upon the issuance of a written approving opinion of the Attorney General of the State of Texas stating that the Authority has complied with all of the requirements of the laws under which said Obligations were issued; ^, that said Obligations were issued in conformity with the Constitution and laws of the State of Texas; and that said Obligations are valid and binding obligations of the Authority; 3. this commitment is contingent upon the Authority s continued compliance with all applicable laws, rules, policies and guidance as these may be amended from time to time to adapt to a change in law, in circumstances, or any other legal requirement; 4. this commitment is contingent upon the Authority executing a separate financing agreement, approved as to form and substance by the Executive Administrator, and submitting that executed agreement to the TWDB consistent with the terms and conditions described in the financing agreement; S. interest rate subsidies for non-level debt service structure are subject to adjustment by the Executive Administrator; 6. the Authority shall use a paying agent/registrar in accordance with 31 TAC § 363.42(c)(2), and shall require the paying agent/registrar to provide a copy of all receipts documenting debt service payments to the TWDB and to the TWDB's designated Trustee; The Following Conditions Must Be Included in the Obligations: 7. the Obligations must provide that the Obligations can be called for early redemption only in inverse order of maturity, on any date beginning on or after the first interest payment date that is 10 years from the dated date of the Obligations, at a redemption price of par, together with accrued interest to the date fixed for redemption; 8. the Obligations must include a provision wherein the Authority, or an obligated person for whom financial or operating data is presented to the TWDB in the application for financial assistance either individually or in combination with other issuers of the Authority's Obligations or obligated persons, will, at a minimum, regardless of the amount of the Obligations, covenant to comply with requirements for continuing disclosure on an ongoing basis substantially in the manner required by Securities and Exchange Commission (SEC) in 17 CFR § 240.15c2-12 (Rule 15c2- 12) and determined as if the TWDB were a Participating Underwriter within the meaning of such rule, such continuing disclosure undertaking being for the benefit of the TWDB and the beneficial owners of the Authority's Obligations, if the TWDB sells or otherwise transfers such Obligations, and the beneficial owners of the TWDB's bonds if the Authority is an obligated person with respect to such bonds under SEC Rule 15c2-12; 4. the Obligations must include a provision requiring the Authority to use any proceeds from the Obligations that are determined to be surplus proceeds remaining after completion of the Project for the following purposes as approved by the Executive Administrator: (1) deposit into the Interest and Sinking Fund or other debt service account for the payment of interest or principal on the Obligations owned by the TWDB; or (2) eligible costs for the Project as authorized by the Executive Administrator; 10. the Obligations must contain a provision that the TWDB may exercise all remedies available to it in law or equity, and any provision of the Obligations that restricts or limits the TWDB's full exercise of these remedies shall be of no force and effect; 11. financial assistance proceeds are public funds and, as such, the Obligations must include a provision requiring that these proceeds shall be held at a designated state depository institution or other properly chartered and authorized institution in accordance with the Public Funds Investment Act, Government Code, Chapter 2256, and the Public Funds Collateral Act, Government Code,Chapter 2257; 12. financial assistance proceeds shall not be used by the Authority when sampling, testing, removing or disposing of contaminated soils and/or media at the Project site. The Obligations shall include an environmental indemnification provision wherein the Authority agrees to indemnify, hold harmless and protect the TWDB from any and all claims, causes of action or damages to the person or property of third parties arising from the sampling, analysis, transport, storage, treatment, recycling and disposition of any contaminated sewage sludge, contaminated sediments and/or contaminated media that may be generated by the Authority, its contractors, consultants, agents, officials and employees as a result of activities relating to the Project to the extent permitted by law; 13. the Obligations must include a provision stating that the Authority shall report to the TWDB the amounts of Project funds, if any, that were used to compensate historically underutilized businesses that worked on the Project, in accordance with 31 TAC § 363.1312; 14. the Obligations must contain a provision that the TWDB will purchase the Obligations, acting through the TWDB's designated Trustee, and the Obligations shall be registered in the name of Cede & Co. and closed in book-entry form in accordance with 31 TAC§ 363.42(c)(1); 15. the Obligations must include a provision prohibiting the Authority from using the proceeds of this financial assistance in a manner that would cause the Obligations to become "private activity bonds" within the meaning of§ 141 of the Internal Revenue Code as amended (Code) and the Treasury Regulations promulgated thereunder (Regulations); 16. the Obligations must provide that no portion of the proceeds of the financial assistance will be used, directly or indirectly, in a manner that would cause the Obligations to be "arbitrage bonds" within the meaning of§ 148(a) of the Code and Regulations, including to acquire or to replace funds that were used, directly or indirectly, to acquire Nonpurpose Investments (as defined in the Code and Regulations) that produce a yield materially higher than the yield on the TWDB's bonds that are issued to provide financing for the financial assistance (Source Series Bonds), other than Nonpurpose Investments acquired with: a. proceeds of the TWDB's Source Series Bonds invested for a reasonable temporary period of up to three (3) years after the issue date of the Source Series Bonds until such proceeds are needed for the facilities to be financed; b. amounts invested in a bona fide debt service fund, within the meaning of § 1.148-1(b) of the Regulations; and C. amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed the least of maximum annual debt service on the Obligations, 125% of average annual debt service on the Obligations, or 10 percent of the stated principal amount (or, in the case of a discount,the issue price) of the Obligations; 17. the Obligations must.include a provision requiring the Authority take all necessary steps to comply with the requirement that certain amounts earned on the investment of gross proceeds of the Obligations be rebated to the federal government in order to satisfy the requirements of § 148 of the Code. The Obligations must provide that the Authority will: a. account for all Gross Proceeds, as defined in the Code and Regulations, (including all receipts, expenditures,and investments thereof) on its books of account separately and apart from all other funds (and receipts,expenditures and investments thereof) and retain all records of such accounting for at least six years after the final Computation Date.The Authority may, however, to the extent permitted by law, commingle Gross Proceeds of its financial assistance with other money of the Authority, provided that the Authority separately accounts for each receipt and expenditure of such Gross Proceeds and the obligations acquired therewith; b. calculate the Rebate Amount, as defined in the Code and Regulations, with respect to its financial assistance, not less frequently than each Computation Date, in accordance with rules set forth in § 148(f) of the Code, § 1.148-3 of the Regulations, and the rulings thereunder. The Authority shall maintain a copy of such calculations for at least six years after the final Computation Date; C. as additional consideration for providing financial assistance, and in order to induce providing financial assistance by measures designed to ensure the excludability of the interest on the TWDB's Source Series Bonds from the gross income of the owners thereof for federal income tax purposes, pay to the United States the amount described in paragraph (b) above within 30 days after each Computation Date; d. exercise reasonable diligence to assure that no errors are made in the calculations required by paragraph (b) and, if such error is made, to discover and promptly to correct such error within a reasonable amount of time thereafter, including payment to the United States of any interest and any penalty required by the Regulations; 18. the Obligations must include a provision prohibiting the Authority from taking any action that would cause the interest on the Obligations to be includable in gross income for federal income tax purposes; 19. the Obligations must provide that the Authority will not cause or permit the Obligations to be treated as "federally guaranteed" obligations within the meaning of§ 149(b) of the Code; 20. the Obligations must contain a covenant that the Authority will refrain from using the proceeds of the Obligations to pay debt service on another issue of obligations of the borrower in contravention of section 149(d) of the Code (related to "advance refundings"); 21. the Obligations must provide that neither the Authority nor a related party thereto will acquire any of the TWDB's Source Series Bonds in an amount related to the amount of the Obligations to be acquired from the Authority by the TWDB; 22. the Obligations must contain a provision requiring that, upon request by the Executive Administrator, the Authority shall submit annual audits of contracting parties for the Executive Administrator's review; 23. the Obligations must contain a provision requiring the Authority to maintain and enforce the contracts with the Cities so that the revenues paid to the Authority by the Cities are sufficient to meet the revenue requirements of the Authority's obligations arising from the operation of the water system; 24. the Obligations must contain a provision that the pledged contract revenues from the Authority may not be pledged to the payment of any additional parity obligations of the Authority secured by a pledge of the same contract revenues unless the Authority demonstrates to the Executive Administrator's satisfaction that the pledged contract revenues will be sufficient for the repayment of all Obligations and additional parity obligations; Conditions to Close or for Release of Funds: 25. prior to closing, if not previously provided with the application, the Authority shall submit executed contracts for engineering and, if applicable, financial advisor and ON" bond counsel, for the Project that are satisfactory to the Executive Administrator. Fees to be reimbursed under the contracts must be reasonable in relation to the services performed, reflected in the contract, and acceptable to the Executive Administrator; 26. prior to closing,when any portion of financial assistance is to be held in escrow or in trust, the Authority shall execute an escrow agreement or trust agreement, approved as to form and substance by the Executive Administrator, and shall submit that executed agreement to the TWDB; 27. prior to closing, the Authority's bond counsel must prepare a written opinion that states that the interest on the Obligations is excludable from gross income or is exempt from federal income taxation. Bond counsel may rely on covenants and representations of the Authority when rendering this opinion; 28. prior to closing, the Authority's bond counsel must prepare a written opinion that states that the Obligations are not "private activity bonds." Bond counsel may rely on covenants and representations of the Authority when rendering this opinion; 29. the transcript must include a No Arbitrage Certificate or similar Federal Tax Certificate setting forth the Authority's reasonable expectations regarding the use, expenditure and investment of the proceeds of the Obligations; 30. the transcript must include evidence that the information reporting requirements of § 149(e) of the Internal Revenue Code will be satisfied. This requirement may be satisfied by filing an IRS Form 8038 with the Internal Revenue Service. In addition, the applicable completed IRS Form 8038 or other evidence that the information reporting requirements of § 149(e) have been satisfied must be provided to the Executive Administrator within fourteen (14) days of closing. The Executive Administrator may withhold the release of funds for failure to comply; 31. prior to closing, the Authority must submit executed contracts between the Authority and the contracting parties regarding the contract revenues pledged to the payment of the Authority's Obligations, in form and substance acceptable to the Executive Administrator. Such contracts shall include provisions consistent with the provisions of this Resolution regarding the contracting parties' annual audits, the setting of rates and charges and collection of revenues sufficient to meet the Authority's debt service obligations and additional parity obligations; PROVIDED, however, the commitment is subject to the following special conditions: Special Conditions: 32. prior to the release of funds for the costs of planning, engineering, architectural, legal, title, fiscal, economic investigation,studies,surveys, or designs for that portion of the Project that proposes surface water or groundwater development, the Executive Administrator must have either issued a written finding that the Authority has the right to use the water that the Project financed by the TWDB will provide or a written determination that a reasonable expectation exists that such a finding will be made before the release of funds for construction; 33. prior to the release of construction funds for that portion of a Project that proposes surface water or groundwater development, the Executive Administrator must have issued a written finding that the Authority has the right to use the water that the Project financed by the TWDB will provide; APPROVED and ordered of record this, the 26th day of July, 2018. TEXAS WATER DEVELOPMENT BOARD — a= Peter M. Lake, Chairman DATE SIGNED: 12� ! �g ATTEST: r � Jeff Wa Executive Administrator C C C , , . ,, �. I /l .� r '� �( ,` ' / , 1 , � \ � , ,' l ., � `ti 1 f �. � �. i � � � ATTACHMENT B DESCRIPTION OF BORROWER BONDS Title of Borrower Bonds: $6,970,000 Brushy Creek Regional Utility Authority, Inc. City of Cedar Park,Texas Contract Revenue Bonds (Brushy Creek Regional Water Treatment and Distribution Project) Series 2018 Project Name: Regional Water Treatment and Distribution Project Project Number: 51049 Aggregate Principal Amount of Borrower Bonds: $6,970,000 Anticipated Closing Date: 11/14/2018 Dated Date: 11/14/2018 First Principal Payment Date: 8/1/2019 First Interest Payment Date: 2/1/2019 Maturity Schedule: Maturity Principal Amount Maturity Date Principal Maturity Date Principal Payment Payment 8/1/2019 $335,000 8/1/2029 $345,000 8/1/2020 $300,000 8/1/2030 $350,000 8/1/2021 $305,000 8/1/2031 $355,000 8/1/2022 $310,000 8/1/2032 $365,000 8/1/2023 $310,009 8/1/2033 $370,000 8/1/2024 $315,000 8/1/2034 $380,000 8/1/2025 $320,000 8/1/2035 $390,000 8/1/2026 $325,000 8/1/2036 $400,000 8/1/2027 $330,000 8/1/2037 $410,000 8/1/2028 $335,000 8/1/2038 $420,000 ATTACHMENT C FINANCING SCHEDULE* DATE ACTION 07/26/2018 TWDB approval of commitments 09/03/2018 Labor Day Holiday Financing agreement—last day to execute 09/04/2018 13 days prior to initiation o ricin Financing agreement(Sec.4A) -last day political subdivisions can terminate without penalty 09/10/2018 7 days prior to initiation of ricin Financing agreement(Sec.5) -last day political subdivisions can modify maturity schedule 09/10/2018 7 days prior to initiation of ricin Financing agreement(Sec.413) -last day political subdivisions can terminate 09/13/2018 with costs of issuance 4 days prior to initiation of ricin Financing agreement(Sec.4C)-before 9:00 a.m.political subdivisions can 09/17/2018 terminate with costs of issuance and 1%penalty(1 day prior to pricing). 09/17/2018 TWDB bond pricing initiation(pre-pricing begins) 09/18/2018 TWDB bond pricing 09/20/2018 TWDB approves interest rates available to political subdivisions Political subdivisions adopt bond resolutions and/or board participation various agreements Political subdivisions submit transcripts to Texas Attorney General in various pre aration of closing 10/08/2018 Columbus Day Holiday TWDB open) 10/11/2018 TWDB bond closing(political subdivisions must close within 50 days 10/12 to 11/30/2018 Closings on political subdivision obligations 11/09/2018 Veteran's Day Holiday 11/22/2018 Thanksgiving Holiday 11/23/2018 Thanksgiving Holiday 11/30/2018 Last day to close on political subdivision obligations Financing agreement(Sec.4D) -penalty applied to any political subdivision failing to issue debt Start of post-pricing termination payment period (includes costs of issuance and 12/01/2018 5%penalty) 03/01/2019 Last due date for penalties payments *-Preliminary-subject to change DATE: August 15, 2018 SUBJECT: BCRUA Board Meeting—August 15, 2018 ITEM: 5B. Consider a resolution approving a financing agreement between the Brushy Creek Regional Utility Authority, Inc., and other matters in connection therewith, relating to the sale of$6,970,000 Brushy Creek Regional Utility Authority, Inc.City of Cedar Park, Texas Contract Revenue Bonds (Brushy Creek Regional Water Treatment and Distribution Project),Series 2018. PRESENTER: Karen Bondy, General Manager BACKGROUND/JUSTIFICATION: The Texas Water Development Board (TWDB)formally approved BCRUA's loan for Phase 2 Final Design on July 26, 2018. This loan will involve only Cedar Park and Leander,since Round Rock intends to use its remaining Phase 1A bond savings to cover its cost share.There will ultimately be two separate bond issues, covering each city's portion of the total loan. The breakout of the total cost is as follows: BCRUA—Cedar Park: $ 6,970,000 (44.28%) (Low Interest Loan) BCRUA—Leander: $ 8,770,000 ( 55.72%) (Deferred Loan) TOTAL $15,740,000 (100.0%) Round Rock's share of the project will be$$6,975,000, and the total cost of the project will be $24,800,000. Further detail is provided on Page 3. A strict time-line will need to be followed for the approval of the Financing Agreement, if we are to work within the Board's and the two city councils' regular meeting schedules. That schedule is as follows: BCRUA: Wednesday,August 15' Leander: Thursday, August 16th Cedar Park: Thursday,August 23 t Based on TWDB's current schedule,the upcoming bond issuance timeline will be as follows: 09/04/2018 Executed Finance Agreements Due to TWDB 09/17/2018 TWDB Bond Pricing Begins 09/18/2018 TWDB Bond Pricing Complete 10/11/2018 TWDB Bond Closing 10/24/2018 BCRUA Board Adopts Bond Resolutions for Cedar Park and Leander Bonds 10/25/2018 Cedar Park City Council Adopts Resolution Approving BCRUA's Bond Resolution 11/15/2018 Closing on BCRUA's Bonds (Two Separate Issues) Staff will present final bond issuance packages for both issues in October, including a Bond Resolution for each issue. Each city council will also be required to formally approve their specific package in this same time frame by adopting a resolution approving the applicable BCRUA Bond Resolution.The process will be similar to actions the Board and city councils approved in October of last year. Page 2 BCRUA staff and the Operations Committee recommend approval of this resolution, and will be available to answer any questions. Some key points to bear in mind: • This project will complete final design of Phase 2 (including the Phase 1D treatment capacity expansion to 42+ MGD), provide funds for us to complete acquisition of remaining electrical and pipeline rights-of-way, and provide funding for construction of PEC related electrical improvements that must be completed prior to start of Phase 2 construction. • We are requesting that Leander's share of final design and remaining land rights acquisition ($8,770,000) be funded by a SWIFT Deferred loan. A SWIFT Deferred loan does not require Leander to start paying back the loan for a period of eight years, or upon completion of Phase 2 construction; whichever occurs first. While design and ROW acquisition are clearly eligible under TWDB SWIFT Deferred Loan rules, we have determined that Leander's portion of the electrical improvements ($1,890,000) is not eligible as a Deferred Loan item. Leander will have to decide later this year whether or not they wish to proceed on the electrical improvements on a cash fund basis, or apply for a Low Interest SWIFT construction loan in the 2019 or later funding cycle. Approval of this SWIFT Loan application does not commit Leander to any project elements beyond their SWIFT Loan application for final design (Phase 2 and Phase 1D) and the balance of land rights acquisition. • We are requesting Cedar Park's share of final design, land rights acquisition and PEC electrical improvements as a SWIFT Low Interest loan. Cedar Park's staff has indicated that they intend to cash fund their share of the Phase 1D capacity expansion, rather than include it in this SWIFT Loan application. Approval of this SWIFT Loan application does not commit Cedar Park to any project elements beyond their SWIFT Loan application for Phase 2 final design, the balance of land rights acquisition, and PEC electrical system improvements. Staff and the Operations Committee (OC) recommend approval of this resolution, and will be available to answer any questions. Page 3 FUNDING: This SWIFT Loan application will cover a portion of the total project elements that will need to be completed prior to initiation of Phase 2 construction: Phase 2/1D Final Design $17,880,000 Final Land Rights Acquisition $ 2,500,000 PEC Initial Improvements $ 4,420,000 TOTAL $24,800,000 The funding will ultimately need to be provided by the three cities as follows: SWIFT Loans: $15,745,000 Cash Funds: $ 2,080,000 Phase 1A Savings: $ 6,975,000 TOTAL $24,800,000 Each city's breakout is as follows: Cedar Park: SWIFT Loan: $6,970,000 Cash: $ 190,000 (Subject to later final Approval by Cedar Park City Council) TOTAL $7,160,000 Leander: SWIFT Loan: $8,770,000 Cash: $1,890,000 (Subject to later final approval by Leander City Council) TOTAL $10,660,000 Round Rock: Phase 1A Saving: $6,975,000 (Subject to later final approval by Round Rock City Council) Grand Total: $24,800,000 One final funding caveat: the PEC electrical system improvements are current estimates only, and are subject to increase over time by bid environment inflationary impacts, the longer we delay bidding and construction.