HomeMy WebLinkAboutExhibit E (2)EXHIBIT E
Special Covenants and Financial Ratios
(A) Budget Process
Pursuant to Section 2.02(a) of this Loan Agreement, the Governmental Unit has covenanted
and agreed to budget and appropriate in its annual budget, by amendment, if required, and to pay
when due directly to the Trustee (for deposit into the appropriate Fund or Account created in the
Indenture), sufficient amounts of Non -Ad Valorem Revenues of the Governmental Unit or other
legally available funds sufficient to satisfy the obligation of the Governmental Unit to make Loan
Payments as required under this Loan Agreement. The amount budgeted and appropriated for
interest due hereunder shall be based upon an assumed interest rate equal to (i)120% of the greater
of (a) the average rate of interest borne by the Loan for the 12-month period ending June 30 (or if the
Loan has not been outstanding for such period, for such period as the Loan has been outstanding)
or (b) the interest rate borne by the Bonds for the Interest Period (calculated on a monthly basis)
ending in June of such year or (ii) such lower rate as may be approved in writing by the Bank and
filed with the Commission and the Governmental Unit.
The obligation of the Governmental Unit pursuant to Section 2.02(a) of this Loan Agreement
includes an obligation to make amendments to the budget of the Governmental Unit to assure
compliance with the terms and provisions thereof. If during any Interest Period (calculated on a
monthly basis) the Loan Rate (if continued until the end of the Fiscal Year) would cause the total
remaining Loan Payments to exceed the amounts budgeted for such purposes, the Government
Unit covenants and agrees to analyze the estimated average Loan Rate for the next four (4) weeks.
If by the end of such four -week period, the Loan Rate (if continued until the end of the Fiscal Year)
would cause the total remaining Loan Payments to exceed the amounts budgeted for such purposes
the Governmental Unit will initiate all necessary procedures to amend its budget. The assumed
interest rate used in such budget amendment will be based upon 120% of the highest Loan Rate
during the past three Loan Payment Periods.
(B) Dilution Test
(1) Definitions. As used in this paragraph (B) of this Exhibit E, the following terms shall
have the meaning set forth below:
(a) "Funds" shall mean the Special Revenue Fund, the Capital Projects Fund, the
Special Assessment Fund, the General Fund and the Expendable Trust Fund of the
Governmental Unit, all as more fully described in the audited financial statements of the
Governmental Unit.
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(b) "Non Ad Valorem Revenues" shall mean all legally available revenues and taxes
of the Governmental Unit in the Funds (but not including any other funds or accounts of the
Governmental Unit) derived from any source whatever other than ad valorem taxation on
real and personal property, including appropriated fund balances in the Funds and
Operating Transfers (In).
(c) "Operating Transfers" shall mean the recurring transfers (In/Out) of the
Governmental Unit which are (from/to) other funds and accounts of the Governmental Unit
(but not between the Funds) which are associated with annual capital and/or operating
requirements of the Governmental Unit.
(d) "Projected Debt Service" shall mean the total of (i) Loan Payments on the Loan of
the Governmental Unit during each of the remaining Fiscal Years of such Governmental
Unit until the date of maturity of such Loan, (ii) the average annual debt service on bonds or
other debt obligations payable from the Non Ad Valorem Revenues, if any, currently
outstanding and (iii) the average annual debt service on the bonds or other debt obligations
to be issued, in each case calculated and adjusted as set forth herein.
(2) Test. The Governmental Unit may issue bonds or other debt obligations (including
contracts obligating it to pay money in the future) if prior to such issuance the Governmental Unit
delivers to the Commission and the Bank a certificate of the Finance Director demonstrating that the
amount of Non Ad Valorem Revenues (based on the adopted budget or upon updated Non Ad
Valorem Revenue estimates) available to satisfy all amounts payable under the Loan Agreement
and any other debt service payable therefrom is at least equal to 200% of the Projected Debt Service.
(3) Adjustments. The Governmental Unit may adjust Non Ad Valorem Revenues to include
the transfer of additional legally available revenues into the Funds, for so long as such use has been
approved by the governing body of the Governmental Unit.
(4) Limitation. Notwithstanding any provision hereof, the limitations set forth herein shall
not be construed as a limitation on the ability of the Governmental Unit to issue bonds or other debt
obligations or to enter into contracts (but not including contracts for operating expenses) obligating
it to pay money in the future if such obligations are payable solely from funds and accounts of the
Governmental Unit other than the Funds.
(5) Limited Use. Failure of the Governmental Unit to meet either of the tests set forth in
paragraph (2) hereof shall constitute an Event of Default only if the Governmental Unit issues bonds
or other obligations or enters into contracts obligating it to pay funds in the future without
complying with the provisions of paragraph (2) hereof.
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(6) Projected Debt Service. Projected Debt Service with respect to the Loan, with respect to
bonds or other debt obligations currently outstanding and payable from Non Ad Valorem
Revenues, and with respect to bonds or other debt obligations payable from Non Ad Valorem
Revenues to be issued, shall be based upon assumed substantially level Loan Payments or debt
service payments during the remaining term of the Loan or bonds or other debt obligations to be
issued (assuming further that the entire principal amount of the Loan or bonds or other debt
obligation to be issued will be repaid by the end of such term). For purposes of calculating such
debt service schedule (except with respect to bonds or other debt obligations which bear a fixed
interest rate), the Loan Rate or the rate of interest on such bonds or other debt obligations shall be
assumed to be 15% per annum.
(7) Additional Information.
(A) Not later than 120 days after the end of each Fiscal Year, the Governmental
Unit will provide information to the Commission and the Bank as to compliance with the
provisions of paragraph (2) hereof. Such information will be based solely upon the most
recent audited financial statements of the Governmental Unit and shall not be required to be
verified by any independent certified public accountant.
(B) Not later than 180 days after the end of each Fiscal Year, the Governmental
Unit will submit to the Commission and the Bank the following information: audited
financial reports of the Governmental Unit, updated audited annual financial reports, a copy
of the adopted budget for the current Fiscal Year, summaries of Project status and
expenditures, and such other information as any of them may reasonably request.
(C) Not later than 120 days after the end of each Fiscal Year, the Governmental
Unit will submit to the Commission and the Bank a certificate confirmed by a certified
public accountant setting forth with respect to said fiscal year the following: (i) the amount
of Non Ad Valorem Revenues available to satisfy payments required under the Loan
Agreement and all other debt service payable from said Non Ad Valorem Revenues; and (ii)
the payments required under the Loan Agreement and all other debt payable from Non -Ad
Valorem Revenues.
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