ORD 2015-01 Adopted ORDINANCE NO. 2015-01
A SERIES ORDINANCE
APPROVING THE FINANCING OF WATERWORKS SYSTEM IMPROVEMENTS
TO BE MADE PART OF THE WATERWORKS AND SEWER SYSTEM OF THE
CITY OF NORTH AUGUSTA, SOUTH CAROLINA, THROUGH THE
BORROWING OF NOT EXCEEDING THIRTEEN MILLION DOLLARS
($13,000,000), PLUS CAPITALIZED INTEREST, IF ANY, FROM THE DRINKING
WATER REVOLVING LOAN FUND, BY AGREEMENT WITH THE SOUTH
CAROLINA WATER QUALITY REVOLVING FUND AUTHORITY, PURSUANT
TO TITLE 48, CHAPTER 5, CODE OF LAWS OF SOUTH CAROLINA, 1976, AS
AMENDED; PROVIDING FOR THE AGREEMENT TO MAKE AND TO ACCEPT
A LOAN, THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT
BETWEEN THE CITY OF NORTH AUGUSTA, SOUTH CAROLINA AND THE
SOUTH CAROLINA WATER QUALITY REVOLVING FUND AUTHORITY, THE
EXECUTION AND DELIVERY OF A PROMISSORY NOTE FROM THE CITY OF
NORTH AUGUSTA, SOUTH CAROLINA TO THE SOUTH CAROLINA WATER
QUALITY REVOLVING FUND AUTHORITY; AND OTHER MATTERS
RELATING THERETO.
SERIES ORDINANCE
DATED: FEBRUARY 16, 2015
A SERIES ORDINANCE
APPROVING THE FINANCING OF WATERWORKS SYSTEM IMPROVEMENTS TO BE
MADE PART OF THE WATERWORKS AND SEWER SYSTEM OF THE CITY OF
NORTH AUGUSTA, SOUTH CAROLINA, THROUGH THE BORROWING OF NOT
EXCEEDING THIRTEEN MILLION DOLLARS ($13,000,000), PLUS CAPITALIZED
INTEREST, IF ANY, FROM THE DRINKING WATER REVOLVING LOAN FUND, BY
AGREEMENT WITH THE SOUTH CAROLINA WATER QUALITY REVOLVING FUND
AUTHORITY, PURSUANT TO TITLE 48, CHAPTER 5, CODE OF LAWS OF SOUTH
CAROLINA,1976,AS AMENDED;PROVIDING FOR THE AGREEMENT TO MAKE AND
TO ACCEPT A LOAN,THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT
BETWEEN THE CITY OF NORTH AUGUSTA, SOUTH CAROLINA AND THE SOUTH
CAROLINA WATER QUALITY REVOLVING FUND AUTHORITY,THE EXECUTION
AND DELIVERY OF A PROMISSORY NOTE FROM THE CITY OF NORTH AUGUSTA,
SOUTH CAROLINA TO THE SOUTH CAROLINA WATER QUALITY REVOLVING
FUND AUTHORITY; AND OTHER MATTERS RELATING THERETO.
SERIES ORDINANCE
DATED: FEBRUARY 16, 2015
TABLE OF CONTENTS
ARTICLE I-FINDINGS OF FACT 1
Section 1.1. Findings of Fact. 1
ARTICLE H—AUTHORIZATION OF THE LOAN AND ESTABLISHMENT OF FUNDS 5
Section 2.1. Authorization of Loan 5
Section 2.2. Repayment of Loan by City. 5
Section 2.3. Establishment of Funds. 5
ARTICLE HI-LOAN AGREEMENT AND NOTE; FUNDING THE 2015 DEBT SERVICE
RESERVE FUND 6
Section 3.1. Authorization of Loan Agreement and the Note. 6
Section 3.2. Provision for Funding of the 2015 Debt Service Reserve Fund 6
ARTICLE IV-MISCELLANEOUS 7
Section 4.1. Other Instruments and Actions 7
Section 4.2. Ordinance a Contract 7
Section 4.3. Effective Date 7
Section 4.4. Continuing Disclosure 7
EXHIBIT A—FORM OF LOAN AGREEMENT A-1
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH AUGUSTA,IN A
MEETING DULY ASSEMBLED, AS FOLLOWS:
ARTICLE I - FINDINGS OF FACT
Section 1.1. Findings of Fact. Incident to the enactment of this series ordinance (this
"2015 Series Ordinance"),the City Council of the City of North Augusta(the"City Council"),the
governing body of the City of North Augusta, South Carolina(the "City"), has made the following
findings:
(a) The City is a municipality incorporated under the laws of the State of South Carolina
(the "State") and empowered by the provisions of Title 48, Chapter 5, Code of Laws of South
Carolina, 1976, as amended (the "Act") to: (i) undertake a waterworks project as defined and
approved pursuant to the Federal Safe Drinking Water Act, 42 U.S.C. §§300f et seq.; (ii) make
application for and to receive assistance from the South Carolina Water Quality Revolving Fund
Authority(the"StateAuthority"); (iii)comply with regulations relating to the receipt and disposition
of money of the Drinking Water Revolving Loan Fund (the"Fund") created by the Act; (iv)apply
for and receive state grants; (v) enter into loan agreements; and (vi) comply with all terms and
conditions of any loan agreement.
(b) Title 6,Chapter 17 of the Code of Laws of South Carolina, 1976,as amended,permit
the incurrence of debt for the purpose of financing facilities for the furnishing of water and
wastewater treatment services and permits the securing of such indebtedness with a pledge of
revenues from which such revenues are derived.
(c) The City Council has determined that, in order for the City to adequately serve its
customers, it is necessary to undertake certain improvements to its waterworks system. The project
consists of the construction of those improvements described in Appendix A to the Loan Agreement,
as defined herein (collectively, the "Project"). Upon completion, the Project will be a part of and
will constitute a portion of the City's waterworks and sewer system (the "System").
(d) The City Council recently adopted a resolution authorizing an application to the State
Authority for a loan from the Fund (the "Loan").
(e) On December 10, 2014, the State Authority, upon review of the City's loan
application, conditionally approved the Loan.
(f) The Loan is to be made and secured pursuant to a loan agreement between the City
and the State Authority(the"Loan Agreement"),the form of which is attached hereto as Exhibit A
and a promissory note executed and delivered by the City, registered in the name of the State
Authority (the "Note"), the form of which is attached as Appendix E to the Loan Agreement.
Pursuant to the Loan Agreement,the City will agree to use the proceeds of the Loan only to pay the
actual eligible costs of the Project, and, if deemed prudent by the City, capitalized interest on the
Note pursuant to the terms of the Loan Agreement; the City will also agree to pay to the State
Authority such amounts as shall be required to provide for the payment of all amounts due with
respect to the repayment of the Loan. To secure its obligations, the City will grant to the State
Authority a pledge of, and a lien upon the Gross Revenues of the System (as defined in the Bond
Ordinance,which term is defined below). Upon any failure of the City to make any payments to the
State Authority pursuant to the Loan Agreement or the Note, the State Authority shall require the
State Treasurer to pay to the State Authority, subject to provisions of the Act, such amount from the
State appropriations to which the City may be or become entitled as may be necessary to provide for
the payment of all amounts due with respect to the Note.
(g) The City Council is adopting this 2015 Series Ordinance in order to:
(i) authorize the execution and delivery of, on behalf of the City, the Loan
Agreement and the Note;
(ii) evidence the approval of the Project and the Loan by the City Council; and
(iii) authorize the execution and delivery by, and on behalf of, the City of such
other agreements and certificates and the taking of such other action by the City and its
officers as shall be necessary or desirable in connection with the financing of the Project in
order to carry out the intent of this 2015 Series Ordinance.
(h) The City is authorized, pursuant to an ordinance enacted by the City Council on
March 3,2014,entitled,"AN ORDINANCE AMENDING AND RESTATING ORDINANCE NO.
92-18 TO PROVIDE FOR THE ISSUANCE AND SALE OF WATERWORKS AND SEWER
SYSTEM REVENUE BONDS OF THE CITY OF NORTH AUGUSTA, SOUTH CAROLINA,
AND OTHER MATTERS RELATING THERETO"(together,the"Bond Ordinance"),to enact this
2015 Series Ordinance as a Series Ordinance thereunder and to issue the Note as a Series of Bonds
thereunder; and the issuance of such Note is necessary for financing the Project. All capitalized
terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Bond
Ordinance.
(i) The Note will not be junior to any other revenue-secured debt of the City and will be
issued on parity with it's (1) originally issued $3,336,266 Waterworks and Sewer System
Improvement Revenue Bond, Series 2002, dated May 15, 2002, and (2) originally issued not
exceeding$13,000,000 Waterworks and Sewer System Improvement Revenue Bond,Series 2014A,
dated March 20, 2014.
(j) In accordance with Section 4.01(B)of the Bond Ordinance,the City Council hereby
determines that the issuance of the Note as a Series of Bonds is necessary to provide funds to be used
and expended for the purpose of expanding, adding and improving the System,which purposes are
permitted by Section 4.01(A)(1) of the Bond Ordinance. The City Council further specifies and
determines as follows:
(i) the period of usefulness of the System is not less than twenty-five(25)years;
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(ii) the Date of Issue of the Note shall be the date that the Note is executed and
delivered as provided in Section 3.1 of this 2015 Series Ordinance;
(iii) the principal amount of the Note shall not exceed Thirteen Million Dollars
($13,000,000),plus capitalized interest,if any,the exact principal amount to be determined
at the final disbursement of the Loan by the State Authority and those officials authorized to
take action on behalf of the City as provided in Section 4.1 herein;
(iv) the dates for payment of interest on the Note,and the dates of maturity and the
amounts thereof, shall be as set forth in the Loan Agreement;
(v) the Note is to be issued for the purpose of providing funds to defray all or a
portion of the costs of the Project;
(vi) the Note shall be designated "City of North Augusta, South Carolina
Waterworks and Sewer System Improvement Revenue Bond, Series 2015";
(vii) the Note shall be sold to the State Authority in accordance with the Act;
(viii) the Note shall bear interest at the rate set forth in the Loan Agreement per
annum;
(ix) the Note shall be issued as a single term bond, payable by way of equal,
amortized payments of principal and interest as set forth in the Loan Agreement;
(x) the redemption prices and dates applicable to the Note shall be as set forth in
the Loan Agreement and the Note;
(xi) The Bank of New York Mellon Trust Company,N.A. shall serve as Trustee,
Paying Agent and Registrar for the Note;
(xii) the form of the Note shall be as provided in Appendix E to the Loan
Agreement, a copy of which is attached hereto as Exhibit A;
(xiii) the Note shall not be issued in book-entry form as permitted by Section 4.20
of the Bond Ordinance;
(xiv) the Reserve Requirement for the Note shall be as set forth in Section 3.2
hereof;
(xv) the proceeds of the Note shall be applied as set forth in the Loan Agreement;
(xvi) the 2015 Debt Service Fund shall be established as a Debt Service Fund under
the Bond Ordinance and the 2015 Debt Service Reserve Fund shall be established as a Debt
3
Service Reserve Fund under the Bond Ordinance, each as set forth in Article II of this 2015
Series Ordinance;
(xvii) because the State Authority will hold the proceeds of the Note until such time
as they are requisitioned for costs, no construction fund shall be established; and
(xviii) the City has not been notified of the occurrence of any Event of Default under
the Bond Ordinance, nor is it aware of any such occurrence.
[END OF ARTICLE I]
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ARTICLE II —AUTHORIZATION OF THE LOAN AND ESTABLISHMENT OF FUNDS
Section 2.1. Authorization of Loan. The City Council hereby authorizes the City's
acceptance of the Loan from the State Authority in an amount not exceeding $13,000,000, plus
capitalized interest,if any,pursuant to and in accordance with the provisions of the Loan Agreement.
Section 2.2. Repayment of Loan by City. The City Council hereby authorizes the
repayment of the Loan by the City to the State Authority from the Gross Revenues of the System,or
if said revenues are not sufficient, from state appropriations as the City may become entitled to,
pursuant to and in accordance with the provisions of the Loan Agreement and the Note.
Section 2.3. Establishment of Funds. There shall be established by the Chief Financial
Officer (as defined in the Bond Ordinance) a 2015 Debt Service Fund, to be held by The Bank of
New York Mellon Trust Company,N.A.,as Trustee(the"Trustee"),and maintained in accordance
with the provisions of the Bond Ordinance and the Loan Agreement.
As provided by Section 7.04(B)(2)of the Bond Ordinance,there shall also be established by
the Chief Financial Officer a 2015 Debt Service Reserve Fund, to be held by the State Treasurer's
Office and maintained in accordance with the provisions of the Bond Ordinance and the Loan
Agreement.
[END OF ARTICLE II]
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ARTICLE III- LOAN AGREEMENT AND NOTE; FUNDING THE 2015 DEBT
SERVICE RESERVE FUND
Section 3.1. Authorization of Loan Agreement and the Note. The Loan Agreement and the
Note,in substantially the forms attached hereto as Exhibit A,with such changes as the Mayor of the
City(the"Mayor")(his execution to be conclusive evidence of such approval)are hereby approved,
and the execution and delivery of the Loan Agreement and the Note on behalf of the City are hereby
authorized and directed. The Loan Agreement and the Note shall be dated as of the Date of Issue,
which is expected to be February 17,2015;however,such Date of Issue maybe subject to change in
the sole discretion of the Mayor. The Loan Agreement and the Note shall be executed on behalf of
the City by the Mayor and attested by the City Clerk of the City (the "Clerk").
Section 3.2. Provision for Funding of the 2015 Debt Service Reserve Fund. The Reserve
Requirement is defined in the Loan Agreement. The Chief Financial Officer is hereby authorized to
cause the satisfaction of such Reserve Requirement by funding the 2015 Debt Service Reserve Fund
with cash or cash equivalents. Once funded with cash,the City,acting through the State Treasurer's
Office, will maintain the Reserve Requirement in accordance with the provisions of the Bond
Ordinance and the Loan Agreement.
[END OF ARTICLE III]
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ARTICLE IV- MISCELLANEOUS
Section 4.1. Other Instruments and Actions. In order to implement the Loan pursuant to
the Loan Agreement and Note and to give full effect to the intent and meaning of this 2015 Series
Ordinance and the agreements and actions herein authorized,the Mayor,the Chief Financial Officer
and the Clerk are hereby authorized to execute and deliver such certificates, showings, instruments
and agreements and to take such further action as the Mayor shall deem necessary or desirable.
Additionally, the Chief Financial Officer is authorized to cause satisfaction of any such fees or
expenses as may be required to close the Note.
Section 4.2. Ordinance a Contract. This 2015 Series Ordinance shall constitute a contract
between the City and the State Authority, and shall be enforceable as such against the City.
Section 4.3. Effective Date. This 2015 Series Ordinance shall become effective upon
enactment by the City Council.
Section 4.4. Continuing Disclosure. The City covenants to file with the State Authority and
with a central repository for availability in the secondary bond market when requested:
(a) an annual independent audit, within thirty days of City's receipt of the audit; and
(b) event specific information within thirty(30)days of an event adversely affecting more
than five percent of City's customer base.
(c) In the event the City fails to comply with the requirements of this Section 4.4,the only
remedy shall be an action of specific performance.
[END OF ARTICLE IV]
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DONE, RATIFIED AND ENACTED this 16th day of February, 2015.
CITY OF NORTH AUGUSTA, SOUTH
CAROLINA
(SEAL)
By:
Mayor
Attest:
City Clerk
City of North Augusta, South Carolina
First Reading: February 2, 2015
Second Reading: February 2, 2015
Third Reading: February 16, 2015
8
EXHIBIT A
FORM OF LOAN AGREEMENT
LOAN AGREEMENT
between
SOUTH CAROLINA WATER QUALITY REVOLVING FUND AUTHORITY
and
CITY OF NORTH AUGUSTA
Dated
February , 2015
relating to
Water Treatment Plant Improvements—Phase II
South Carolina Drinking Water Revolving Loan Fund
Loan Number: X3-065-14-0210003-02
No. of Two Executed Original Counterparts
TABLE OF CONTENTS
Page
ARTICLE I
LOAN
Section 1.1 Loan Made and Accepted; Repayment 2
Section 1.2 Purpose Limited to Project 2
Section 1.3 Disbursements 2
Section 1.4 Changes in Payment Initiation Date, the Loan Amount 3
and Repayment Schedule
Section 1.5 Deadline for Borrowing and Termination of Promise to Lend 5
Section 1.6 Conditions Precedent to Disbursement of Loan Proceeds 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Status of Project Sponsor 6
Section 2.2 Financial Statements 6
Section 2.3 Pending Litigation 6
Section 2.4 No Conflicting Transactions 6
Section 2.5 Ownership of Premises 6
Section 2.6 Other Project Arrangements 7
Section 2.7 No Construction Default 7
Section 2.8 No Default 7
Section 2.9 Effect of Draw Request 7
ARTICLE III
COVENANTS
Section 3.1 Contract Award, Construction Inspection and Completion 8
Section 3.2 Disbursements 8
Section 3.3 Release of Responsibility 8
Section 3.4 Other Agreements 8
Section 3.5 Accounting and Auditing 9
Section 3.6 Ratings from Rating Agencies 9
Section 3.7 Insurance 9
Section 3.8 Compliance with Governmental Authority 10
Section 3.9 Adequate Rates 10
Section 3.10 Review of Rates 11
Section 3.11 Disclosure of Events to Authority 11
Section 3.12 Procurement Requirements 11
Loan #X3-065-14
1
Section 3.13 Inspection and Information 11
Section 3.14 Consent to Changes 11
Section 3.15 Additional Covenants 11
ARTICLE IV
ESTABLISHMENT OF FUNDS AND
DISPOSITION OF REVENUES
Section 4.1 Establishment of Gross Revenue Fund, Debt Service Fund, 13
Operation and Maintenance Fund, and Depreciation and
Contingent Fund
Section 4.2 Establishment and Funding of Debt Service Reserve Fund 14
Section 4.3 Disposition of Revenues 15
Section 4.4 Concerning the Debt Service Fund 17
Section 4.5 Concerning the Debt Service Reserve Fund 17
ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Events of Default 19
ARTICLE VI
REMEDIES
Section 6.1 Acceleration 20
Section 6.2 Additional Remedies and Enforcement of Remedies 20
Section 6.3 Remedies Not Exclusive 20
Section 6.4 Termination of Proceedings 20
ARTICLE VII
SECURITY
Section 7.1 Pledge of Revenues 21
Section 7.2 Additional Security 21
ARTICLE VIII
SPECIAL REVOLVING FUND PROVISIONS
Section 8.1 Compliance 22
Section 8.2 Standard Conditions 22
Loan #X3-065-14
11
ARTICLE IX
GENERAL CONDITIONS
Section 9.1 No Waiver 24
Section 9.2 Satisfactory Proceedings 24
Section 9.3 Evidence 24
Section 9.4 No Beneficiaries 24
Section 9.5 Review and Inspection of Work 24
Section 9.6 Notices 24
Section 9.7 No Joint Venture, Etc. 25
Section 9.8 Assignment 25
Section 9.9 Entire Agreement 25
Section 9.10 Continuity 25
Section 9.11 South Carolina Contract 25
Section 9.12 Limitations on Actions by Project Sponsor 25
Section 9.13 Counterparts 25
Section 9.14 Appendices 25
Section 9.15 Special Conditions 25
Section 9.16 Time of Essence 25
Section 9.17 Severability 26
APPENDIX "A" SCOPE OF WORK A-1
PROJECT BUDGET A-2
PROJECT SCHEDULE A-3
APPENDIX "B" REPAYMENT SCHEDULE B-1
LOAN CLOSING FEE B-2
APPENDIX "C" PROCUREMENT REQUIREMENTS C-1
APPENDIX "D" SPECIAL CONDITIONS D-1
APPENDIX "E" FORM OF THE PROMISSORY NOTE E-1
ATTACHMENT #1 DAVIS-BACON WAGE RATES REQUIRED UNDER
FEDERAL APPROPRIATIONS ACT
Loan #X3-065-14
111
LOAN AGREEMENT
THIS LOAN AGREEMENT is entered into as of the day of February, 2015, between the
SOUTH CAROLINA WATER QUALITY REVOLVING FUND AUTHORITY,a public instrumentality of
the State of South Carolina (the "Authority") and the CITY OF NORTH AUGUSTA, a municipal
corporation of the State of South Carolina (the "Project Sponsor").
WITNESSETH:
WHEREAS,the Authority is authorized by Title 48, Chapter 5,Code of Laws of South Carolina,
1976, as amended(the "Act")to administer the South Carolina Drinking Water Revolving Loan Fund(the
"Fund")for the purpose of assisting Project Sponsors(as defined in the Act)in the construction of,among
other things, public drinking water supply, storage, treatment and distribution facilities as defined in the
Federal Safe Drinking Water Act, Title 42, United States Code, Section 300f et seq., as amended; and
WHEREAS, the South Carolina Department of Health and Environmental Control (the
"Department") is authorized by the Act to, among other things, develop a priority system and prepare an
annual plan to insure compliance with the Federal Safe Drinking Water Act; and
WHEREAS,the Authority is authorized by the Act to enter into Loan Agreements(as defined in
the Act) with Project Sponsors in order to finance Projects (as defined in the Act); and
WHEREAS,the Act authorizes Project Sponsors, among other things,to undertake Projects,to
receive assistance in the financing of such Projects by way of loans made from the Fund and to enter into
loan agreements providing for the repayment of amounts received from the Fund, together with interest
thereon; and
WHEREAS, the Project Sponsor proposes to acquire and construct the facilities described in
Appendix "A" hereto (the "Project"), which Project will be part of the Project Sponsor's waterworks and
sewer system (the "System"); and
WHEREAS,the Project Sponsor proposes to finance the Project with a loan made from the Fund,
such loan to be pursuant to, and on parity with debt previously issued under, an ordinance enacted by the
Project Sponsor on March 3, 2014 entitled "AN ORDINANCE AMENDING AND RESTATING
ORDINANCE NO. 92-18 TO PROVIDE FOR THE ISSUANCE AND SALE OF WATERWORKS AND
SEWER SYSTEM REVENUE BONDS OF THE CITY OF NORTH AUGUSTA, SOUTH CAROLINA,
AND OTHER MATTERS RELATING THERETO" (the "Bond Ordinance");
NOW, THEREFORE, BE IT AGREED AS FOLLOWS:
Loan #X3-065-I4
ARTICLE I
LOAN
SECTION 1.1. Loan Made and Accepted;Repayment. In consideration of the mutual promises
of this Agreement, and upon and subject to its terms and conditions, the Authority agrees to make, and the
Project Sponsor agrees to accept,the loan herein provided for(the "Loan"). The obligation of the Project
Sponsor to repay the Loan and interest thereon is evidenced by this Agreement and a promissory note (the
"Note") registered in the name of the Authority. The amount of the Loan (the "Loan Amount"), the
interest rate on the Loan and the repayment schedule with respect to the Loan(the "Repayment Schedule")
shall be as set forth in Appendix "B" hereto, as may be changed or modified pursuant to Section 1.4 hereof;
the terms and form of the Note are set out in Appendix"E". The Project Sponsor shall make payments with
respect to the Loan at the times and in the amounts set forth in Appendix "B",as modified,on the due date of
any such payment.
SECTION 1.2. Purpose Limited to Project. The Project Sponsor shall use the proceeds of the
Loan only to pay the actual eligible costs of the Project. The Project is described in Appendix"A"and more
specifically as approved in the Project files of the Department. Except to the extent otherwise approved in
writing by the Authority, only the costs shown in the Project budget set forth in Appendix "A" shall be
allowed and only in the amounts provided for each category. Costs of construction shall be allowed only for
work called for in plans and specifications approved by the Department. Proceeds may not be used to pay
for labor performed by employees of the Project Sponsor but may be used to pay for materials installed by
them.
SECTION 1.3. Disbursements.
1.3.1. The Authority shall make and the Project Sponsor shall accept full or partial
disbursements only against incurred, actual eligible costs up to the Loan Amount and by category as
provided in this Agreement.
1.3.2. For purposes of making requests for disbursement and representing the Project Sponsor in
all administrative matters pertaining to administration of this Agreement,the Project Sponsor shall designate
a single officer or employee (the "Sponsor Representative") prior to the first disbursement request.
1.3.3. In those cases when the Project Sponsor has paid the incurred Project costs and is seeking
reimbursement for payment of such costs theretofore paid by the Project Sponsor, any check for
disbursement from the Fund for reimbursement to the Project Sponsor shall be drawn and mailed to the
Project Sponsor. In those cases when the Project Sponsor is seeking funds with which to pay incurred Project
costs, any check for disbursement from the Fund to pay such costs may, at the option of the Authority, be
drawn to the Project Sponsor alone or jointly to the Project Sponsor and contractor engaged by the Project
Sponsor for the Project. Such check will be mailed to the Project Sponsor.
Loan #X3-065-14 2
1.3.4. Before any disbursement,the Project Sponsor shall execute any documents requested by
the Authority reasonably necessary or convenient to the foregoing and shall have satisfied all conditions of
Section 1.6 hereof.
1.3.5. Requests for disbursement may be made only after the costs for which the draw is
requested have been incurred. The Project Sponsor may not request a disbursement until all construction
contracts are signed. The first request for disbursement submitted by the Project Sponsor pursuant to this
Agreement shall include an amount for incurred construction costs and all amounts requested by the Project
Sponsor for payment or reimbursement of amounts set forth in any of the categories "Planning and Design
Engineering", "Land Acquisition", "Legal and Appraisal Fees" and "SRF Loan Closing Fee",which appear
in the Project Budget in Appendix "A" hereto. The Project Sponsor shall not request disbursement against
retainage until retainage is paid and shall not request disbursement for change orders unless such change
orders have been approved by the Department. Unless the Authority otherwise approves, when the Project
Budget indicates that the Loan shall bear only a portion of the eligible costs of the Project, or a portion of
certain itemized costs, any draw shall not exceed the same proportion of such costs reported for
disbursement.
1.3.6. Requests for disbursement shall be made on forms of the Department unless the Authority
or Department otherwise directs, and shall be accompanied by such invoices and other proofs as the
Authority and Department may reasonably require. The final disbursement shall not be released until the
Department issues its approval to place the Project into operation (the "Permit to Operate"). No
disbursement requests will be accepted more than one hundred eighty (180) days after the date of such
Permit to Operate.
1.3.7. The Authority may require that each draw request shall be submitted to the Authority and
Department at least twenty-one(21)days before the day disbursement is needed and may limit draw requests
to one per month. The Authority will exert its best efforts to mail its check in response to a disbursement
request within twenty-one (21) days of receiving such request, but no assurance is given by the Authority
that such schedule will be met and the Authority shall incur no liability to any Project Sponsor. Processing
on shorter notice or faster schedule shall not amend this provision.
SECTION 1.4. Changes in Payment Initiation Date,the Loan Amount and Repayment Schedule.
1.4.1. The Loan Amount has been determined,in part,upon the basis of the projected cost of the
Project as shown in Appendix "A". The Payment Initiation Date shown in Appendix "B" (the "Payment
Initiation Date") is determined by a combination of factors, including, but not limited to the expected
Project schedule shown in Appendix "A". Appendix "B" shows the Repayment Schedule anticipated by the
parties on this basis and provides for repayment of the Loan, including interest thereon, in eighty(80)equal,
or approximately equal, quarterly payments beginning on the first day of the third month after the month of
the Payment Initiation Date. The Loan Amount, the Payment Initiation Date and the Repayment Schedule
Loan #X3-065-14 3
may be changed but only as provided in the following Section 1.4.2. The Interest Rate is fixed for the term
of the Loan and may not be changed from the rate originally established in Appendix "B" hereof.
1.4.2. (a) At the written request of the Project Sponsor, submitted to the Authority no later than
sixty (60) days prior to the original Payment Initiation Date in Appendix "B", the Payment Initiation Date
may be extended once by the Authority to any date not later than the earlier to occur of(i) six (6) months
from the original Payment Initiation Date in Appendix "B", (ii) thirty(30) months from the first day of the
month following the date of this Agreement, or (iii) the first day of the month following the date of the
Permit to Operate issued by the Department for the operation of the Project.
(b) In the event the Permit to Operate the Project is issued by the Department more than one(1)
month prior to the Payment Initiation Date stated in Appendix "B",the Authority shall require that either the
Payment Initiation Date be accelerated to the first day of the month following the date of the Permit to
Operate, or the term of the Loan be shortened by a minimum of three (3) months.
(c) The Project Sponsor may request that the Loan Amount be increased by including in principal
on the Payment Initiation Date the interest which has accrued on amounts theretofore advanced from the
Fund. Any such request shall be submitted in writing to the Authority by the Project Sponsor not less than
thirty (30) days prior to the Payment Initiation Date.
(d) The Authority or the Project Sponsor may initiate a reduction to the Loan Amount at any time
there is a determination that a lesser amount is required for completion of the Project.
(e) The initial Repayment Schedule with respect to the Loan set forth in Appendix "B" shall be
modified to reflect(i) changes in the Loan Amount, (ii) extension or acceleration of the Payment Initiation
Date, and (iii) any other modification thereto agreed to by the Authority and the Project Sponsor.
(f) Modification of the Repayment Schedule resulting from a change in the Loan Amount
subsequent to the Payment Initiation Date shall be made such that:
(i) at the time of final disbursement pursuant to Section 1.3 the Authority shall
determine the final Loan Amount;
(ii) a revised Repayment Schedule shall be calculated by the Authority based on the final
Loan Amount, the interest rate set forth in Appendix "B" and payment in eighty (80)
equal,or substantially equal,quarterly installments beginning on the first day of the third
month after the month of the Payment Initiation Date; and
(iii) any difference between the amount theretofore paid by the Project Sponsor prior to
the revision of the Repayment Schedule and the amount which would have been paid had
the revised schedule been in effect from and after the Payment Initiation Date shall be
credited against the next payment, or payments, due under the revised Repayment
Schedule.
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(g) For purposes of the Repayment Schedule,any amounts disbursed subsequent to the Payment
Initiation Date shall be considered to have been advanced on the Payment Initiation Date.
1.4.3. Any change in the Loan Amount,extension or acceleration of the Payment Initiation Date
or modification of the Repayment Schedule shall be documented administratively by notice under this
Agreement and shall be reflected in the substitution of a revised Appendix "B" hereto reflecting any such
change or modification. In connection with any such change or modification, the Authority may,but need
not, impose new terms and conditions, including cancellation of the Note and execution of a new Note.
SECTION 1.5. Deadline for Borrowing and Termination of Promise to Lend. The Authority,in
its sole discretion, may terminate its promise to lend all of, or any unadvanced portion of,the Loan Amount
which has not been advanced if:
1.5.1. The Project Sponsor has not entered into all construction contracts applicable to the
Project within six (6) months of the date of this Agreement; or
1.5.2. The Project Sponsor does not request disbursement of the unborrowed balance of the
Loan Amount on or before the one hundred eightieth(180th)day following the date of the Permit to Operate
issued by the Department for the Project; or
1.5.3. An Event of Default (as defined in Section 5.1 hereof) occurs (in which event the
remedies for default likewise shall be available); or
1.5.4. A circumstance arises or becomes known which, in the Authority's sole discretion and
opinion, (a) substantially impairs the ability of the Project Sponsor to complete the Project, to operate the
Project or to repay the Loan, or (b) substantially impairs the merit of the Project.
SECTION 1.6. Conditions Precedent to Disbursement of Loan Proceeds. In addition to any
other conditions herein provided,the Authority's obligation hereunder to make disbursements from the Fund
for advances on the Loan shall be subject to satisfaction of the following conditions:
1.6.1. The Project Sponsor's representations and warranties shall remain true and correct;
1.6.2. No Event of Default shall have occurred under this Agreement or the Note;
1.6.3. The Project Sponsor has complied with the requirements of Sections 1.3, 1.4 and 1.5;and
1.6.4. There shall be on deposit in any debt service reserve fund required by this Agreement the
amount required at such time to be on deposit therein.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Project Sponsor represents and warrants to the Authority as follows:
SECTION 2.1. Status of Project Sponsor. The Project Sponsor is a municipal corporation of the
State of South Carolina (the "State"), authorized to acquire and construct the Project and to operate the
Project and provide water supply/distribution services.
SECTION 2.2. Financial Statements. The financial statements of the Project Sponsor delivered
to the Authority are true and correct in all respects, have been prepared in accordance with generally
accepted accounting principles for units of government,consistently applied,and fairly present the respective
financial condition of the subjects thereof as of the respective dates thereof. No material adverse change has
occurred in the financial conditions reflected in the statements since their date and no additional borrowing
has been made by the Project Sponsor since then other than borrowing specifically disclosed and approved
by the Authority. All other information submitted by the Project Sponsor in support of its application for
this Loan is true and correct as of the date of this Agreement,and no material adverse change with respect to
the Project Sponsor has occurred.
SECTION 2.3. Pending Litigation. There are no actions, suits or proceedings, at law or in
equity, in court or before any governmental or administrative agency,either pending or to the knowledge of
the Project Sponsor reasonably to be considered threatened,which may impair the validity or enforceability
of the Note or this Agreement or the Project Sponsor's ability to repay the Loan or to construct and operate
the Project for revenue.
SECTION 2.4. No Conflicting Transactions. Consummation of the transactions hereby
contemplated and performance of this Agreement will not result in any breach of, or constitute a default
under, any deed to secure debt, mortgage, deed of trust, indenture, security agreement, lease, bank loan or
credit agreement,municipal charter,ordinances,contracts or other instruments to which the Project Sponsor
is a party or by which it may be bound or affected.
SECTION 2.5. Ownership of Premises. The Project Sponsor owns in fee simple the real
property which presently constitutes or which will constitute the main operating facilities of the Project and
of the System as a whole, and further owns in fee simple or by sufficient easement the real property upon,
across or under which the Project Sponsor has or will have its distribution or trunk lines, booster stations,
storage tanks and the like, including those to be a part of the Project and otherwise. Property of which the
Project Sponsor has taken possession pursuant to Section 28-2-90 of the South Carolina Eminent Domain
Procedure Act(Title 28, Chapter 2, Code of Laws of South Carolina, 1976,as amended), and in connection
with which no action pursuant to Section 28-2-470 of such statute has been instituted within thirty(30)days
of the condemnation notice with respect to such property, shall be deemed owned in fee simple by the
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Project Sponsor pursuant to this Section 2.5. The Project Sponsor has good record title to the real property
described above(or has possession pursuant to the Eminent Domain Procedure Act,as described above)with
only such exceptions of record as do not limit the fee simple ownership and do not and will not interfere
with the full use and enjoyment of the premises by the Project Sponsor. With respect to the personal
property and fixtures of the Project Sponsor necessary or convenient to the System and its operation, there
are no liens or other claims of record against such property or other evidence of adverse ownership, and the
Project Sponsor owns such personal property and fixtures in fee simple without conflicting claim of
ownership.
SECTION 2.6. Other Project Arrangements. The Project Sponsor has secured the utilities,
access, governmental approvals and other arrangements reasonably to be considered necessary for the
undertaking of the Project.
SECTION 2.7. No Construction Default. Neither the Project Sponsor nor its contractor,
architect or engineer for the Project or any related project is in default of any agreement respecting the
Project or a related project.
SECTION 2.8. No Default. There is no default on the part of the Project Sponsor under this
Agreement or the Note, and no event has occurred and is continuing, which, with notice or the passage of
time would constitute a default under any part of this Agreement or the Note.
SECTION 2.9. Effect of Draw Request. Each request for and acceptance of disbursement by the
Project Sponsor shall be affirmation that the representations and warranties of this Agreement remain true
and correct as of the date of the request and acceptance, that no breach of other provisions hereof has
occurred, and that no adverse developments affecting the financial condition of the Project Sponsor or its
ability to complete the Project or to repay the Loan plus interest thereon have occurred since the date of this
Agreement unless specifically disclosed in writing by the Project Sponsor in the request for disbursement.
Unless the Authority is notified to the contrary, such affirmations shall continue thereafter.
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ARTICLE III
COVENANTS
SECTION 3.1. Contract Award, Construction Inspection and Completion.
3.1.1 The Project Sponsor should not execute construction contracts or issue the notice to
proceed with respect to the Project prior to receiving written approval from the Department to award
construction contracts.
3.1.2 The Project Sponsor shall provide and maintain competent and adequate engineering
supervision and continuous inspection of the Project to insure that the construction conforms with the plans
and specifications approved by the Department. A monthly inspection report shall accompany each
disbursement request.
3.1.3 The Project Sponsor shall cause the Scope of Work identified in Appendix "A" to be
completed pursuant to the Project Schedule also defined in Appendix "A" hereto. The Project Sponsor shall
require all contractors to satisfactorily complete all work within the time stated in the executed construction
contract. Extension of any contract completion date requires the Department's approval. Any costs incurred
as a result of a time extension which has not received approval by the Department shall not be eligible for
Loan participation.
3.1.4 The Project Sponsor shall pay all costs to complete the Project not covered by the Loan.
SECTION 3.2. Disbursements. The Project Sponsor shall receive and promptly disburse the
funds to be provided hereunder as trust funds for the purpose of paying the eligible costs of the Project and
for no other purpose.
SECTION 3.3. Release of Responsibility. The Project Sponsor shall undertake the Project on its
own responsibility and shall, to the extent permitted by law, release and hold harmless the Authority, the
Department,the State and their officers,members and employees from any claim arising in connection with
the design, construction or operation of the Project or any other aspect of the System including any matter
due solely to their negligence.
SECTION 3.4. Other Agreements. The Project Sponsor shall comply with all terms and
conditions of any construction contracts, architectural or engineering agreements,trust indentures, security
deeds,promissory notes, loan agreements,or the like affecting the Project,the premises of the System and its
operation. The Project Sponsor shall require its construction contractor to furnish both a performance bond
and payment bond in the full amount of the construction contract. The requirement of such bonds shall be
for the convenience of the Authority only and shall not be an undertaking by the Authority to the Project
Sponsor or any third party.
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SECTION 3.5. Accounting and Auditing.
3.5.1. Accounting. The Project Sponsor shall account for the Project and the System according
to Generally Accepted Governmental Accounting Principles (GAAP), applying all relevant Government
Accounting Standards Board(GASB)pronouncements, as well as,when applicable, Financial Accounting
Standards Board (FASB) pronouncements and Accounting Principle Board (APB) opinions issued on or
before November 30, 1989, unless those pronouncements conflict with, or contradict, subsequent GASB
pronouncements.
• 3.5.2. Audit. Within six (6) months of the end of each fiscal year of the Project Sponsor, the
Project Sponsor shall tender to the Authority an annual financial audit by a certified public accountant. The
conduct of the audit and the audit shall be in accordance with Generally Accepted Auditing Standards as
defined in Government Auditing Standards, Comptroller General of the United States, July 27, 2007, and
revisions, updates or successors thereto.
SECTION 3.6. Ratings from Rating Agencies. If the Reserve Requirement,as defined in Section
4.2.1 herein, is initially, or at any time during the term of the Loan, set at a level that is less than the
maximum amount due on the Note during any full calendar year, the Project Sponsor shall submit to the
Authority a copy of its latest long-term,underlying rating or affirmation thereof and its latest credit report on
the System and/or any Parity Debt, as defined in Section 4.3.1 herein, from Standard & Poor's Rating
Service, or its respective successors and assigns, ("S&P") or Moody's Investors Service, Inc., or its
respective successors and assigns, ("Moody's"), and from each, if both S&P and Moody's issued ratings.
Additionally,the Project Sponsor shall immediately notify,and submit to,the Authority any commentaries,
updated outlooks/reports, CreditWatch placements, ratings changes or downgrades, or other actions from
S&P and/or Moody's with respect to the System and/or any Parity Debt.
SECTION 3.7. Insurance. The Project Sponsor covenants and agrees that so long as any
amount remains unpaid on the Note:
(A) It will insure and at all times keep the Project insured against physical loss or damage with a
responsible insurance company or companies, authorized and qualified under the laws of the State, to
assume the risks insured against, in an amount equal to the replacement cost of the Project;
(B) It will secure adequate fidelity bonds (blanket or individual) of a surety company doing
business in the State, indemnifying the Project Sponsor against defalcation of all persons handling money
derived from the System or signing checks on any bank accounts relating to the System;
(C) All insurance policies shall be open to the inspection of the Authority at any reasonable time;
and
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(D) All money received by the Project Sponsor as a consequence of any defalcation,covered by
any fidelity bond, shall be used to restore the fund depleted by the defalcation. All sums received by the
Project Sponsor from insurance policies covering the Project may, to the extent necessary,be applied to the
repair and replacement of the damaged or destroyed property, but, in the event that such money is not used
for such purposes, then the same shall be deposited in the Depreciation and Contingent Fund.
SECTION 3.8. Compliance with Governmental Authority. The Project Sponsor shall comply
with all environmental laws,rules and other provisions of legal force and effect and all such other provisions
which govern the construction or operation of the Project or the System.
SECTION 3.9. Adequate Rates. The Project Sponsor shall at all times establish and maintain in
effect rates and charges for the services provided by, or made available by, the Project and the System as
shall be sufficient to meet the requirements of this Agreement, and the Project Sponsor specifically
covenants and agrees to maintain rates and charges for all services furnished by the System which shall at all
times be sufficient:
3.9.1. To maintain the Debt Service Fund and provide for the punctual payment of the principal
of and interest on the Note and any other indebtedness of the Project Sponsor payable from revenues of the
System that may from time to time hereafter be outstanding;
3.9.2. To maintain any Debt Service Reserve Fund required by this Agreement in accordance
with the provisions hereof;
3.9.3. To provide for the payment of the expenses of administration and operation and such
expenses for maintenance of the System as may be necessary to preserve the same in good repair and
working order;
3.9.4. To build and maintain a reserve for depreciation of the System,for contingencies and for
improvements,betterments and extensions to the System other than those necessary to maintain the same in
good repair and working order; and
3.9.5. To discharge all other obligations imposed by this Agreement and by the Bond
Ordinance.
The Project Sponsor further covenants and agrees that it shall at all times establish and maintain
in effect rates and charges for the services provided by, or made available by, the Project and the System
which, together with other income, are reasonably expected to yield annual Gross Revenues, as defined in
the Bond Ordinance, in any fiscal year equal to the greater of(i) one hundred ten percent (110%) of the
annual principal and interest on all debt paid from or secured by revenues of the System plus 100% of all
amounts required for Sections 3.9.2 through 3.9.5; or(ii) such other percentage of the annual principal and
interest on all debt paid from or secured by revenues of the System as the Project Sponsor shall have
covenanted that its Gross Revenues would meet with respect to other outstanding indebtedness and
obligations of the System pursuant to Article V of the Bond Ordinance.
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SECTION 3.10. Review of Rates. The Project Sponsor covenants that, so long as any amount
remains unpaid on the Note, it will review the adequacy of its rates and charges to comply with the
requirements of this Agreement promptly upon any material changes in circumstances, but not less
frequently than once in each fiscal year of the Project Sponsor. The Project Sponsor shall submit any
adjustments to its rates and charges to the Authority immediately upon adoption.
SECTION 3.11. Disclosure of Events to Authority. The Project Sponsor covenants that, so
long as any amount remains unpaid on the Note, it will submit to the Authority event specific infomiation
within thirty (30) days of an event adversely affecting more than five(5)percent of revenues of the System
and any other information which is released to a municipal bond information repository service.
SECTION 3.12. Procurement Requirements. The Project Sponsor shall comply with all
procurement requirements of law and,to the extent compliance therewith does not contravene any provision
of law applicable to the Project Sponsor, shall comply with the procurement requirements set forth in
Appendix "C" hereto.
SECTION 3.13. Inspection and Information. On reasonable notice, the Authority or the
Department shall have for its own convenience and benefit,and without obligation to the Project Sponsor or
any third party, the right to audit the books and records of the Project Sponsor as they may pertain to or
affect the System and this Agreement and to enter upon the premises to inspect the Project. The Project
Sponsor shall cause its architects, engineers, contractors,and auditors to cooperate during such inspections
including making available any documents,records,reports or other materials pertinent to the Project and the
inspection. The Project Sponsor shall comply with all reasonable requests by the Authority or the
Department for information pertaining to the Project Sponsor's compliance with this Agreement.
SECTION 3.14. Consent to Changes. Without consent of the Authority and Department, the
Project Sponsor shall make no modifications or changes to the Project, or allow to continue any defect,
which would damage or reduce the value of the Project or the System. The Project Sponsor shall not divide
the Project into component projects in order or in effect, so as to defeat the provisions of this Agreement.
The Project Sponsor covenants that it shall remain the owner of the Project and agrees that it will not
convey, transfer, mortgage or otherwise encumber the Project,the System or the revenues derived therefrom
during the term of this Agreement without the express prior written approval of the Authority.
SECTION 3.15. Additional Covenants. The Project Sponsor further covenants and agrees that:
3.15.1.Neither the System,nor any part thereof,nor any of the revenues derived from the System,
have been or will be hypothecated, mortgaged, otherwise pledged or encumbered, save and except as herein
disclosed and provided for;
3.15.2. It will permit no free service to be rendered, or use to be made of the services and
facilities of the System and for the services and facilities of the System used by the Project Sponsor, the
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reasonable cost and value of such services and facilities shall be paid as such services accrue. The revenue
so received from the Project Sponsor shall be deemed revenue derived from the operation of the System,and
shall be accounted for in the same manner as other revenues of the System;
3.15.3. It will permit no customer to be connected to the System, or to receive any service
afforded by the System, unless such customer shall become obligated to pay for the service rendered at the
appropriate rate according to the rate schedule then in force;
3.15.4. It will maintain in effect rules and regulations requiring connection to the System by all
persons within the jurisdiction of the Project Sponsor to whom the services of the System shall be available
and shall impose availability fees and charges with respect to customers and properties within its corporate
limits to which or whom service is available but which or who have not connected into the System; and
3.15.5. So long as any amount due with respect to the Note is unpaid, it will perform all duties
with reference to the System required by the Constitution and statutes of the State, and the Project Sponsor
hereby irrevocably covenants, binds and obligates itself not to pledge, mortgage or otherwise encumber the
System or any part thereof, or any revenues therefrom, except in the manner herein authorized, and it will
not, except as provided in the Bond Ordinance, sell, lease or dispose of any portion of the System,necessary
or useful, and the Project Sponsor further obligates itself and covenants and agrees with the Authority to
maintain in good condition and to operate said System, and to collect and charge such rates for the services
and facilities of the System so that the income and revenues of the System will be sufficient at all times to
meet the requirements of this Agreement.
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ARTICLE IV
ESTABLISHMENT OF FUNDS AND
DISPOSITION OF REVENUES
SECTION 4.1. Establishment of Gross Revenue Fund, Debt Service Fund, Operation and
Maintenance Fund, and Depreciation and Contingent Fund. Beginning on the first day of the month
following the delivery of the Note, except with respect to the Note Payment Fund, and continuing until all
amounts due with respect to the Note have been paid in full, the following funds shall be established and
maintained:
4.1.1. The Project Sponsor shall establish a Gross Revenue Fund,into which shall be placed all
receipts, income and revenue that the Project Sponsor shall derive, directly or indirectly,from the ownership
of the System. Moneys in the Gross Revenue Fund may be withdrawn on order of the Project Sponsor,but
shall be made use of only in the manner and in the order of priority specified in Section 4.3 hereof.
4.1.2. Beginning in the month of the Payment Initiation Date,the Project Sponsor shall provide
for the establishment of a Series 2015 Debt Service Fund (the "Debt Service Fund") as a means of
providing for the payment of the principal and interest on the Note as the same shall fall due. Moneys in the
Debt Service Fund shall be used solely to pay the principal of and interest on the Note, and for no other
purpose. The Debt Service Fund shall be kept in the complete custody and control of the Trustee,as defined
in Section 4.4 herein and as established under the Bond Ordinance. Withdrawals from the Debt Service
Fund shall be made only by the Trustee who shall transmit to the Authority the sums required to pay
principal and interest on the Note.
4.1.3. The Project Sponsor shall establish an Operation and Maintenance Fund in order to
provide for the payment of all expenses incurred in connection with the administration and operation of the
System, and such expenses as may be reasonably necessary to preserve the System in good repair and
working order.
4.1.4. The Project Sponsor shall establish a Depreciation and Contingent Fund in order to
provide a reasonable reserve of depreciation of the System, for contingencies and for improvements,
betterments and extensions of the System. Moneys in this fund shall be used solely for the purpose of
restoring depreciated or obsolete items of the System; for improvements,betterments and extensions to the
System, other than for those things which are reasonably necessary to maintain the System in good repair and
working order; to defray the cost of unforeseen contingencies; to prevent defaults of Bonds and Junior Lien
Bonds (as such terms are defined in the Bond Ordinance); and for optional redemption Bonds.
4.1.5. In the event the Project Sponsor shall have established funds analogous to,or serving the
purpose of, the funds required to be established by this Article IV, such funds may be continued and
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employed for the purposes of this Agreement, and the Project Sponsor shall not be required to establish
duplicate funds.
SECTION 4.2. Establishment and Funding of Debt Service Reserve Fund.
4.2.1. Prior to delivery of this Agreement to the Authority, the Project Sponsor shall establish,
and there shall be maintained until payment in full of the Note, a Series 2015 Debt Service Reserve Fund
(the "Debt Service Reserve Fund")to provide a reserve for payment of principal of and interest on the Note.
The Debt Service Reserve Fund requirement (the "Reserve Requirement") shall initially equal at least the
maximum amount due on the Note during any full calendar year and shall remain at such level subject to
provisions of the following Section 4.2.2.
4.2.2. (a) If the Project Sponsor receives a long-term, unenhanced underlying rating on the
System and/or any Parity Debt in at least the "A" category from S&P or Moody's, and from each, if both
S&P and Moody's issue ratings, the Reserve Requirement may be reduced to zero subject to the following
provisions.
(i) The Project Sponsor submits the S&P and/or Moody's ratings to the Authority to
evidence eligibility for a Reserve Requirement of zero and receives written approval
from the Authority to change the amount of the Reserve Requirement.
(ii) The Project Sponsor's Bond Ordinance permits Parity Debt to have a zero level
Reserve Requirement.
(b) To continue the zero Reserve Requirement, the Project Sponsor shall fully comply with all
requirements of Section 3.6 herein for submitting S&P/Moody's ratings/affirmations/credit reports and for
immediately providing any other rating agency actions related to the System and/or any Parity Debt.
(c) If there is no longer any current rating or if either the S&P or Moody's rating is downgraded
below the "A" category, the Reserve Requirement shall immediately increase to the maximum annual
amount due on the Note, and the Project Sponsor shall be required to meet the new requirement within one
year through twelve(12) equal monthly deposits, beginning in the month following any such downgrade or
loss of the rating for the System and/or Parity Debt.
(d) In the event the Reserve Requirement is ever increased as provided in Section 4.2.2(c)above
due to a rating downgrade or loss and is subsequently upgraded to the level established in Section 4.2.2(a),
then the Reserve Requirement shall revert to zero and any excess money in the Debt Service Reserve Fund
shall, after authorization is provided to the DSRF Custodian (as defined in Section 4.5 hereof) by the
Authority, be transmitted to the Project Sponsor for deposit into the Debt Service Fund.
4.2.3. The Debt Service Reserve Fund is intended to insure the timely payment of the principal
of and interest on the Note. Money in the Debt Service Reserve Fund shall be used only to prevent a default
in the payment of the Note,by reason of the fact that money in the Debt Service Fund is insufficient for such
purposes.
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4.2.4. Prior to the delivery of this Agreement to the Authority, the Project Sponsor shall
deposit,or cause to be deposited, in the Debt Service Reserve Fund, if required to be established pursuant to
provisions of this Section 4.2, funds in an amount equal to the Reserve Requirement. In the event that the
Reserve Requirement shall increase due to an increase in the Loan Amount pursuant to subsection 1.4.2(c),
the Project Sponsor shall immediately deposit,or cause to be deposited,in the Debt Service Reserve Fund,if
required to be established, funds in an amount equal to such increase in the Reserve Requirement. In the
event any valuation of the Debt Service Reserve Fund shall establish that the value of the funds and/or
investments in the Debt Service Reserve Fund is less than the Reserve Requirement, the Project Sponsor
shall, within ten days of receipt of such valuation, deposit in the Debt Service Reserve Fund funds in an
amount equal to such deficiency; provided, however, that if,at the time of such valuation,the market value
of the South Carolina Pooled Investment Fund is not less than 99.50%of the book value,the Project Sponsor
shall not be required to deposit additional monies in the Debt Service Reserve Fund.
SECTION 4.3. Disposition of Revenues. All revenues derived from the operation of the System
shall be deposited in the Gross Revenue Fund. Beginning in the month following the delivery of this
Agreement with respect to payments pursuant to subsections 4.3.3 to 4.3.7, inclusive, and beginning in the
month of the Payment Initiation Date with respect to payments pursuant to subsection 4.3.1 and 4.3.2,
withdrawals from the Gross Revenue Fund shall be made on or before the fifteenth day of each month in the
following order of priority:
4.3.1. The monthly fraction of the next payment of principal and interest to become due on the
Note on the next succeeding payment date shall be deposited in the Debt Service Fund. Simultaneously with
making the monthly deposit in the Debt Service Fund required by this Section 4.3.1, the Project Sponsor
shall deposit(a)in a fund for the payment of amounts due with respect to the Project Sponsor's Waterworks
and Sewer System Improvement Revenue Bond, Series 2002 (the "2002 Revenue Bond"), the monthly
fraction of the next payment of principal and interest to become due on the 2002 Revenue Bond; (b) in a
fund for the payment of amounts due with respect to the March 20, 2014 promissory note of the Project
Sponsor to the Authority relating to loan number 3-060-14-0210003-01 (the "2014A Revenue Bond"),the
monthly fraction of the next payment of principal and interest to become due on the 2014A Revenue Bond;
and (c) into a fund or funds for the payment of amounts due with respect to any obligations of the Project
Sponsor(the "Obligations") secured by a pledge of revenues on a parity with the pledge securing the Note,
the 2002 Revenue Bond, and the 2014A Revenue Bond, the monthly fraction or fractions of the next
payment or payments due on any such Obligation or Obligations. The 2002 Revenue Bond, the 2014A
Revenue Bond, and the Obligations are hereinafter sometimes referred to as "Parity Debt". In the event
amounts available for payments into the funds with respect to the Note and all Parity Debt are not sufficient
to make all payments then required to be made, such available amounts shall be deposited into such funds on
a pro rata basis.
4.3.2. (a) In the event any amounts shall be withdrawn from the Debt Service Reserve Fund in
order to provide for payment of any amounts due with respect to the Note, there shall be deposited in the
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Debt Service Reserve Fund not less than one-twelfth(1/12) of the amount of any such withdrawal and such
deposits with respect to any such withdrawal shall begin in the month following such withdrawal and shall
continue in each month thereafter until the amount on deposit in the Debt Service Reserve Fund shall equal
at least the Reserve Requirement.
(b) In the event the Reserve Requirement for the Debt Service Reserve Fund is increased
pursuant to any provision of Section 4.2.2 herein,there shall be deposited in the Debt Service Reserve Fund
not less than one-twelfth (1/12) of the amount necessary to fully meet the Reserve Requirement, and such
deposits shall begin in the month following a ratings downgrade or loss and shall continue in each month
thereafter until the amount on deposit in the Debt Service Reserve Fund shall equal such increased Reserve
Requirement.
(c) If the value of the Debt Service Reserve Fund is ever less than the Reserve Requirement,
other than as provided in(a) or(b) above, or as provided in subsection 4.2.4 with respect to any increase in
the Loan Amount,there shall be deposited in the Debt Service Reserve Fund not less than one-fourth(1/4)of
an amount equal to the total Reserve Requirement deficiency, beginning in the month following such a
determination. Such deposits shall continue to be made until the amount on deposit in the Debt Service
Reserve Fund shall equal at least the Reserve Requirement.
(d) Nothing in Sections 4.3.2(a), (b) or (c) shall preclude the Project Sponsor from fully
reestablishing the Reserve Requirement in a more timely fashion than so prescribed.
4.3.3. If,in any month,for any reason,the Project Sponsor shall fail to pay all or any part of the
money it has herein agreed to pay into said Debt Service Fund or Debt Service Reserve Fund, the amount of
any such deficiency shall be added to and shall become a part of the amount due and payable into said Debt
Service Fund or Debt Service Reserve Fund in the next succeeding month.
4.3.4. There shall be deposited into the Operation and Maintenance Fund that sum which has
been currently determined by the Project Sponsor to be the cost of operating and maintaining the System for
the next ensuing month.
4.3.5. There shall be deposited in the Depreciation and Contingent Fund that sum which is one-
twelfth (1/12) of the sum determined by the Project Sponsor to be needed for the Depreciation and
Contingent Fund for the then current fiscal year.
4.3.6. Provision shall then be made for payment of interest and any fees or penalties on amounts
advanced by the provider of any surety bond, line of credit, letter of credit or insurance policy.
4.3.7. Provision shall then be made for the payment of any other indebtedness which is junior
and subordinate to the Note and all Parity Debt in the order of priority contemplated by the proceedings
authorizing their issuance.
Loan #X3-065-14 16
4.3.8. Any revenues remaining after the foregoing deposits have been made shall be disposed of
for any lawful purpose in such manner as the Project Sponsor shall from time to time determine.
SECTION 4.4. Concerning the Debt Service Fund. The Debt Service Fund established pursuant
to Section 4.1.2 hereof shall be established with a bank whose deposits are insured by the Federal Deposit
Insurance Corporation (the "Trustee") chosen by the Project Sponsor with the written approval of the
Authority. The Debt Service Fund shall be held and administered by the Trustee in accordance with the
provisions of the Bond Ordinance and the following provisions of this Section 4.4. The Trustee shall
acknowledge and accept its duties and responsibilities with respect to the Debt Service Fund in a written
instrument delivered to the Authority with this Agreement.
4.4.1. The Trustee shall notify the Authority in writing of the date of the establishment of the
Debt Service Fund and the initial amount of the deposit for the Note. If the Project Sponsor fails to deposit
the amount required by this Agreement at the time required for such deposit, the Trustee, no later than the
fifth day after the date on which such deposit is to be made, shall provide written notification to the Project
Sponsor, with a copy to the Authority, of the amount required for deposit into the Debt Service Fund
pursuant to the provisions of this Agreement.
4.4.2. From sums deposited in the Debt Service Fund by the Project Sponsor, the Trustee shall
transmit to the Authority an electronic funds transfer or a check made payable to "Office of Local
Government - SRF" in the amount, and at the times, required by the Agreement and Note. If insufficient
sums exist in the Debt Service Fund for any payment then due, the Trustee shall immediately notify the
Authority.
4.4.3. Upon payment in full of all amounts due with respect to the Note,which payment shall be
evidenced to the Trustee in writing by the Authority, the Trustee shall pay over all amounts remaining in the
Debt Service Fund in accordance with written directions from the Project Sponsor delivered to the Trustee
and the Trustee shall thereafter have no further responsibilities under this Agreement.
SECTION 4.5. Concerning the Debt Service Reserve Fund. The Debt Service Reserve Fund
established pursuant to Section 4.2 hereof shall be established with the South Carolina State Treasurer's
Office (the "DSRF Custodian") and the Debt Service Reserve Fund shall be held and administered by the
DSRF Custodian in accordance with the following provisions of this Section 4.5. The DSRF Custodian shall
acknowledge and accept its duties and responsibilities with respect to the Debt Service Reserve Fund in a
written instrument delivered to the Authority with this Agreement.
4.5.1. The DSRF Custodian shall notify the Authority in writing of the date of the establishment
of the Debt Service Reserve Fund, the account number and the initial amount of the deposit. If the Project
Sponsor fails to deposit the amount required by this Agreement at the time required for such deposit, the
DSRF Custodian,no later than the fifth day after the date on which such deposit is to be made,shall provide
Loan #X3-065-14 17
written notification to the Authority of the amount required for deposit into the Debt Service Reserve Fund
pursuant to the provisions of this Agreement. The DSRF Custodian shall also verify balances in the Debt
Service Reserve Fund,as requested by the Authority,but no less than monthly during any period of monthly
deposits and no less than annually when the full Reserve Requirement is met and maintained.
4.5.2. Upon receipt by the DSRF Custodian of written notification from the Authority that any
amount due for payment on the Note has not been received by the Authority, the DSRF Custodian shall
immediately transfer to the Authority, in accordance with the Authority's instructions contained in the
aforesaid notice, such amount as set forth in such notice as being due and unpaid on the Note.
Simultaneously with the making of any payment pursuant to this subsection 4.5,2,the Authority shall notify
the Project Sponsor of the date and amount of such payment and the amount required to be deposited in the
Debt Seniice Reserve Fund by the Project Sponsor in order for the Debt Service Reserve Fund to have on
deposit therein the amount required by this Agreement.
4.5.3. Pending disbursement pursuant to this Section 4.5, monies in the Debt Service Reserve
Fund shall be invested and reinvested within the South Carolina Pooled Investment Fund in accordance with
investment policies governing such fund. Subject to the remaining provisions of this subsection 4.5.3, the
earnings from such investments shall be added to and become a part of the Debt Service Reserve Fund. The
DSRF Custodian shall determine the market value of investments in the Debt Service Reserve Fund as of
June 30 each year and provide such valuation to the Project Sponsor and Authority. If,upon the date of this
annual calculation, the value of the securities and money in the Debt Service Reserve Fund shall exceed the
amount required to be on deposit therein, such excess, at the direction of the Project Sponsor within ten(10)
days of receipt of the annual valuation, shall: (i) remain in the Debt Service Reserve Fund; (ii) be used to
effect partial prepayment of the Note; or (iii) be removed from the Debt Service Reserve Fund and
transmitted to the Project Sponsor for deposit into the Debt Service Fund,as directed by the Project Sponsor.
4.5.4. Upon payment in full of all amounts due with respect to the Note,which payment shall be
evidenced to the DSRF Custodian in writing by the Authority, the DSRF Custodian shall pay over all
amounts remaining in the Debt Service Reserve Fund to the Project Sponsor upon the receipt of written
directions from the Project Sponsor and the DSRF Custodian shall thereafter have no further responsibilities
under this Agreement.
Loan #X3-065-14 18
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1. Events of Default. The following occurrences shall constitute Events of Default
hereunder:
(A) The Project Sponsor fails to comply with any of the covenants,terms and conditions made in
this Agreement;
(B) The Project Sponsor fails to pay any amount due on the Note at the time and in the manner
provided in the Note and this Agreement;
(C) Any representation, warranty or statement made by the Project Sponsor in this Agreement or
in connection with it or the Loan shall be or become untrue, incorrect or misleading in any material respect;
(D) The Project Sponsor makes an assignment for benefit of creditors, files a petition in
bankruptcy, is adjudicated insolvent or bankrupt, petitions for appointment of a receiver or trustee for any
substantial part of its property or is the subject of such a petition or commences or has commenced against it
or its property(a) any similar proceeding under any bankruptcy law or other debtor-relief or similar law or
(b) any foreclosure of any mortgage or similar implementation of a trust indenture or like instrument;
(E) Dissolution of the existence of the Project Sponsor;
(F) Any legal or equitable action is commenced against the Project Sponsor which, if adversely
determined, could reasonably be expected to impair substantially the ability of the Project Sponsor to
perform each and every obligation under this Agreement;
(G) Construction of the Project is not carried out with reasonable dispatch, ceases and is not
resumed for forty-five (45) days or is abandoned; and
(H) The Authority reasonably suspects the occurrence of any default or Event of Default by the
Project Sponsor, and following request by the Authority, the Project Sponsor fails to provide evidence
reasonably satisfactory to the Authority that such default or Event of Default has not in fact occurred.
Loan #X3-065-14 19
ARTICLE VI
REMEDIES
SECTION 6.1. Acceleration. Upon the occurrence of an Event of Default,the Authority,acting
through the Trustee and subject to provisions of the Bond Ordinance, may,by notice in writing to the Project
Sponsor, declare the principal balance of the Note immediately due and payable; and such amount and all
interest accrued thereon shall become and be immediately due and payable, anything in the Note or in this
Agreement to the contrary notwithstanding. In such event, there shall be due and payable on the Note an
amount equal to the total principal amount disbursed on the Note,plus all interest accrued thereon and which
will accrue thereon to the date of payment.
SECTION 6.2. Additional Remedies and Enforcement of Remedies. Upon the occurrence and
continuance of any Event of Default, the Authority, acting through the Trustee, may proceed forthwith to
protect and enforce its rights by such suits, actions or proceedings as the Authority shall deem expedient,
including but not limited to:
(A) Requiring the Project Sponsor to carry out its duties and obligations under the terms of this
Agreement and under the Act;
(B) Suit upon all or any part of the Note;
(C) Civil action to require the Project Sponsor to account as if it were the trustee of an express
trust for the Authority;
(D) Civil action to enjoin any acts or things which may be unlawful or in violation of the rights
of the Authority; and
(E) Enforcement of any other right of the Authority including the right to make application for
the appointment of a receiver to administer and operate the System.
SECTION 6.3. Remedies Not Exclusive. No remedy by the terms of this Agreement conferred
upon or reserved to the Authority is intended to be exclusive of any other remedy, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or
existing at law or in equity or by statute (including the Act) on or after the date hereof
SECTION 6.4. Termination of Proceedings. In case any proceeding taken by the Authority on
account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Authority,the Authority and the Project Sponsor shall be restored to their former
positions and rights hereunder, and all rights, remedies and powers of the Authority shall continue as if no
such proceeding had been taken.
Loan #X3-065-14 20
ARTICLE VII
SECURITY
SECTION 7.1. Pledge of Revenues. For the payment of the Note and as security for its other
obligations under this Agreement, the Project Sponsor hereby grants to the Authority a pledge of, and lien
upon,the Gross Revenues of the System, as defined in the Bond Ordinance. Such pledge and lien upon the
Gross Revenues shall be on a parity in all respects to the pledge and lien securing any Parity Debt(as defined
in Section 4.3.1) and shall at all times and in all respects be and remain superior to any pledges made to
secure any other obligations of the Project Sponsor payable from the revenues of the System except to the
extent otherwise agreed to in writing by the Authority. Parity Debt may be issued only in compliance with
Article IV of the Bond Ordinance or, if the Bond Ordinance is no longer in effect,only with the prior written
approval of the Authority.
SECTION 7.2. Additional Security. Upon any failure of the Project Sponsor to make any
payment to the Authority in accordance with the provisions of the Note and this Agreement, the Authority
shall,without further action, require the State Treasurer to pay to the Authority, subject to the provisions of
the Act,the amount of state appropriations as the Project Sponsor may become entitled to until all delinquent
payments under the Note have been paid.
21
Loan #X3-065-14
ARTICLE VIII
SPECIAL REVOLVING FUND PROVISIONS
SECTION 8.1. Compliance. The Project Sponsor agrees that no date reflected in this
Agreement, or in the project completion schedule, or extension of any such date, shall modify any
compliance date established in an operating permit. It is the Project Sponsor's obligation to request any
required modification of applicable permit terms or other enforceable requirements.
SECTION 8.2. Standard Conditions. The Project Sponsor acknowledges and agrees to comply
with the following Federal and/or State requirements:
(A) The Project Sponsor shall provide access to the Project work whenever it is in preparation or
progress and provide proper facilities for access and inspection. The Project Sponsor shall allow the
Regional Administrator of the Environmental Protection Agency, the Comptroller General of the United
States, the Department and the Authority, or any authorized representative, to have access to any books,
documents, plans, reports, papers, and other records of the contractor which are pertinent to the Project for
the purpose of making audit, examination, excerpts, copies, and transcriptions.
(B) Pursuant to requirements of the Fiscal Year 2012 Federal Appropriations Act(PL 112-74),
the Project Sponsor shall comply with the Davis-Bacon Act and certify that all laborers and mechanics
employed by prime contractors and subcontractors are paid wages at rates not less than those listed on the
prevailing wage rate contained in the Project's contract documents and that all applicable provisions of the
Davis-Bacon Act have been met. The Project Sponsor shall require the prime contractor to comply with the
Davis-Bacon Act. See Attachment #1.
(C) The Project Sponsor shall not presently be debarred for noncompliance with Federal Law
and shall not award contracts to any firm that is presently debarred for noncompliance with Federal Law
where the contract amount equals or exceeds the federal small purchase procurement threshold.
(D) The Project shall comply with"American Iron and Steel"provisions, as set forth in the 2014
Appropriations Act(PL 113-76, Section 426)and related American Iron and Steel implementation guidance,
requiring that all of the iron and steel products used in the Project be produced in the United States unless a
waiver is granted by the U.S. Environmental Protection Agency. The Project Sponsor shall require all
bidders to comply with the American Iron and Steel provisions.
22
Loan #X3-065-14
ARTICLE IX
GENERAL CONDITIONS
SECTION 9.1. No Waiver. No disbursements shall waive any provision of this Agreement or
the Note or preclude the Authority from declaring a default if the Project Sponsor is unable to satisfy any
such provisions or perfoi in hereunder.
SECTION 9.2. Satisfactory Proceedings. All proceedings taken in connection with transactions
provided for in this Agreement shall be satisfactory to the Authority.
SECTION 9.3. Evidence. Any condition of this Agreement which requires a submission of
evidence of the existence or nonexistence of facts shall imply as a condition the existence or nonexistence,as
the case may be, of such fact or facts, and the Authority shall, at all times,be free independently to establish
to its satisfaction and in its absolute discretion such existence or nonexistence.
SECTION 9.4. No Beneficiaries. All conditions of the obligations of the Authority to make
disbursements are imposed solely and exclusively for its benefit, its successors and assigns, and no other
person shall have standing to require satisfaction of such conditions or to assume that the Authority will
refuse to make disbursements in the absence of strict compliance. No person shall be deemed the
beneficiary of any such conditions or any other provisions of this Agreement.
SECTION 9.5. Review and Inspection of Work. Any audit or review of plans and specifications
and any inspection of the work shall be for the convenience of the Authority and Department only in order to
determine that they are within the approved scope of the Project. No such review and inspection, approvals
and disapprovals shall be an undertaking by the Authority or Department of responsibility for design or
construction.
SECTION 9.6. Notices. All notices hereunder shall be in writing and shall be deemed to have
been sufficiently given or served for all purposes when presented personally or sent by registered or certified
mail to the other party hereto, with instruction to show to whom delivered and return receipt requested
addressed as follows:
If to the Project Sponsor: If to the Authority:
City of North Augusta South Carolina Water Quality Revolving Fund
100 Georgia Avenue Authority
North Augusta, South Carolina 29841-3843 c/o Office of Local Government - SRF
South Carolina Budget and Control Board
Attention: City Administrator 1200 Senate Street
453 Wade Hampton Building
Columbia, South Carolina 29201
Attention: Patricia A. Comp
23
Each party may notify the other by the same process of any change of such address. Loan requests and
disbursements and other routine loan administration may be conducted by regular mail.
SECTION 9.7. No Joint Venture, Etc. The Authority is not a partner,joint venturer, or in any
other way a party to the Project or the operation of the System of the Project Sponsor. The Authority shall
not be in any way liable or responsible by reason of the provisions hereof,to the Project Sponsor or any third
party, for the payment of any claims in connection therewith.
SECTION 9.8. Assignment. This Agreement may not be assigned by the Project Sponsor
without the prior written consent of the Authority. The Authority may assign the Note and this Agreement,
and any such holder and assignee of same shall succeed to and be possessed of the same rights as the
Authority under both to the extent so transferred or assigned.
SECTION 9.9. Entire Agreement. This Agreement and the Note contain the entire terms of this
Agreement and transaction. They may not be changed, waived or discharged in whole or in part, except by
written instrument executed by the party sought to be charged therewith.
SECTION 9.10. Continuity. This Agreement shall be binding upon the legal representatives,
successors and assigns of each party and shall inure to their benefit; provided, however,that nothing herein
said shall be deemed to limit any restriction on assignment impressed upon the Project Sponsor.
SECTION 9.11. South Carolina Contract. This Agreement shall be governed by and construed
in accordance with the laws of the State.
SECTION 9.12. Limitations on Actions by Project Sponsor. No action shall be commenced by
the Project Sponsor against the Authority for any claim under this Agreement unless notice thereof
specifically setting forth the claim shall have been given to the Authority within thirty (30) days after the
occurrence of the event or omission which the Project Sponsor alleges gave rise to such claim. Failure to
give such notice shall constitute a waiver of any such claim. Liability of the Authority to the Project Sponsor
for any breach of the terms of this Agreement shall not exceed a sum equal to the amount which the
Authority shall have failed to disburse in consequence of a breach by the Authority of its obligations under
this Agreement. Upon the making of any such payment by the Authority to the Project Sponsor, it shall be
treated as a disbursement under this Agreement.
SECTION 9.13. Counterparts. This Agreement is executed in two counterparts, which are
separately numbered, but each of which is deemed an original of equal dignity with the other and which is
deemed one and the same instrument as the other.
SECTION 9.14. Appendices. The appendices attached to this Agreement are a part of it.
SECTION 9.15. Special Conditions. The Statements of Special Conditions in Appendix "D"
shall govern the matters they address.
SECTION 9.16. Time of Essence. Time is of the essence of this Agreement.
24 •
r ri V1 nAc_id
SECTION 9.17. Severability. If any provision of this Agreement, or any portion thereof,should
be ruled void, invalid,unenforceable or contrary to public policy by any court of competent jurisdiction,any
remaining provisions of this Agreement shall survive and be applied, and together with the invalid or
unenforceable portion shall be construed or reformed to preserve as much of the original words, terms,
purpose and intent as shall be permitted by law.
25
Loan #X3-065-14
IN WITNESS WHEREOF, the Project Sponsor and the Authority have caused these presents to
be signed, sealed and delivered all as of the date hereof.
CITY OF NORTH AUGUSTA
(SEAL) By:
Name:
Title:
Attest:
Its
SOUTH CAROLINA WATER QUALITY REVOLVING FUND AUTHORITY
By:
Ashlie Lancaster, Interim Director,
Office of Local Government,
South Carolina Budget and Control Board
26
nan
APPENDIX "A"
Page 1 of 3
SCOPE OF WORK
Project Sponsor: City of North Augusta
Project Name: Water Treatment Plant Improvements—Phase II
Loan Number: X3-065-14-0210003-02
New treatment module consisting of two treatment trains,new chemical building and chemical feed system,
yard piping modifications, demolition of"old" plant treatment module,modifications to existing treatment
module, variable frequency drives for high service pumps, miscellaneous site improvements, and
instrumentation/control improvements.
A-1
APPENDIX "A"
Page 2 of 3
PROJECT BUDGET
Project Sponsor: City of North Augusta
Project Name: Water Treatment Plant Improvements—Phase II
Loan Number: X3-065-14-0210003-02
PROJECT TOTAL ELIGIBLE
ITEM SRF LOAN SPONSOR COSTS
Construction $13,000,000 $1,813,081 $14,813,081
°l0 87.76% 12.24%
Total $13,000,000 $1,813,081 14,813,081
A-2
APPENDIX "A"
Page 3 of 3
PROJECT SCHEDULE
Project Sponsor: City of North Augusta
Project Name: Water Treatment Plant Improvements—Phase II
Loan Number: X3-065-14-0210003-02
ACTION DATE
Bid Opening September 30, 2014
Contract Execution January 5, 2015
Notice to Proceed January 16, 2015
Start of Construction January 30, 2015
DHEC Permit to Operate November 30, 2016
A-3
APPENDIX "B"
Page 1 of 1
REPAYMENT SCHEDULE
Project Sponsor: City of North Augusta
Project Name: Water Treatment Plant Improvements — Phase II
Loan Number: X3-065-14-0210003-02
Loan Amount: $13,000,000 Payment Initiation Date: December 1, 2016
Interest Rate: 2.00% per annum First Payment Due Date: March 1, 2017
Loan Tenn: 20 years Payment Frequency: Quarterly
(1) Prior to the Payment Initiation Date, amounts disbursed shall bear interest from the date of the
Authority's check for each disbursement and accrued interest only shall be due on the Payment
Initiation Date.
(2) Repayment of the principal and interest shall be due in 80 installments,commencing on the first day
of the third month after the month of the Payment Initiation Date and continuing quarterly on the first
day of each third month thereafter.
(3) Repayment shall be in 79 equal installments in the amount of One Hundred Ninety-Seven Thousand
Five Hundred Sixty-One and 47/100 Dollars ($197,561.47) each, and one final installment in the
amount of One Hundred Ninety-Seven Thousand Five Hundred Sixty-One and 21/100 Dollars
($197,561.21).
B-1
APPENDIX "B"
Page 2 of 2
LOAN CLOSING FEE
Project Sponsor: City of North Augusta
Project Name: Water Treatment Plant Improvements—Phase II
Loan Number: X3-065-14-0210003-02
Loan Amount: $13,000,000
.25% Loan Closing Fee: $32,500
The Loan Closing Fee identified above shall be due and paid at the time of delivery of the Loan Agreement,
Note and other required Loan closing documents.
B-1
APPENDIX "C"
Page 1 of 2
Project Sponsor: City of North Augusta
Loan Number: X3-065-14-0210003-02
PROCUREMENT REQUIREMENTS
Recycled Funds
I. Prior to construction contract award, the Project Sponsor shall:
A. Advertise the Project for a minimum of thirty(30)days in advance of bid opening using at least one
of the following methods:
1. Local newspapers of general circulation.
2. Statewide or regional newspapers of general circulation.
3. The South Carolina Business Opportunities (SCBO).
B. Modify bid documents only by written addenda, which require prior Department approval.
C. Hold a public bid opening.
D. Utilize competitive sealed construction bids.
E. Require at least a five percent (5%) bid bond or certified check.
F. Require one hundred percent (100%) payment and performance bonds.
G. Require the contractor, during construction, to provide fire, extended coverage, vandalism and
malicious mischief insurance equal to the actual value of the insured property.
H. Follow, and require the prime contractor to follow, Davis-Bacon and Related Acts provisions.
I. Follow, and require the prime contractor to follow, American Iron and Steel Provisions.
J. If other funding sources are included which have stricter bidding requirements or if applicable
Federal, State or local laws or ordinances have stricter requirements, these stricter requirements
govern.
K. After bid opening, provide the Department with the following:
1. Project Construction Summary For Recycled Projects (DHEC Form #1295).
2. A certified copy of the advertisement with date(s) of publication.
3. Detailed bid tabulation certified by Project Sponsor's engineer.
4. Proposal of successful bidder(s).
5. Bid bond with associated Power of Attorney.
6. Engineer's award recommendation of low bidder(s) to Project Sponsor. If the award is
recommended to other than the low bidder(s), provide justification for decision.
7. Certified copy of Project Sponsor's tentative award resolution listing the proposed contractor(s)
and contractor amount(s).
8. Davis-Bacon wage rate(s) used in bidding the project.
9. A copy of the proposed prime contractor's Bidders American Iron and Steel Certification
(DHEC Form 2556).
C-1
APPENDIX "C"
Page 2 of 2
10. Certification Regarding Debarment, Suspension and Other Responsibility Matters (DHEC
Form #3590) from the proposed prime contractor(s) and all subcontractors whose contract
amount is expected to exceed $25,000.
11. Project Inspection Designation Form (DHEC Form #2324), with all required attachments,
indicating the selected method of providing continuous inspection during construction.
L. Receive Department approval to award the construction contract(s).
II. Subsequent to construction contract award, the Project Sponsor shall submit the following to the
Department as proof of compliance with procurement requirements:
A. Executed contract documents.
B. Notice to Proceed.
C. Monthly Construction Inspection Reports.
D. Davis-Bacon Certification (DHEC Form#2557) with each draw request.
E. American Iron and Steel Certification (DHEC Form#0962) with each draw request.
III. Subsequent to contract award, the Project Sponsor shall submit the following, for Department review
and approval, on any proposed change orders:
A. Need for the change.
B. Clear description of the change.
C. Cost and pricing data.
D. Documentation of negotiation.
E. For claims, information showing the claim did not result from the Project Sponsor's or contractor's
mismanagement.
C-2
APPENDIX "D"
Page 1 of 1
SPECIAL CONDITIONS
Project Sponsor: City of North Augusta
Project Name: Water Treatment Plant Improvements—Phase II
Loan Number: X3-065-14-0210003-02
None
D-1
APPENDIX "E"
STATE OF SOUTH CAROLINA
COUNTY OF AIKEN
PROMISSORY NOTE TO SOUTH CAROLINA
WATER QUALITY REVOLVING FUND AUTHORITY FOR
SOUTH CAROLINA DRINKING WATER
REVOLVING LOAN FUND LOAN
CITY OF NORTH AUGUSTA, SOUTH CAROLINA
WATERWORKS AND SEWER SYSTEM REVENUE BOND, SERIES 2015
FOR VALUE RECEIVED,the City of North Augusta(the "Project Sponsor")promises to pay to
the order of the South Carolina Water Quality Revolving Fund Authority(the "Authority")the principal sum
owing from time to time by the Project Sponsor pursuant to, and in accordance with, the Agreement (the
"Agreement"),the terms of which are incorporated herein by reference,between the Project Sponsor and the
Authority relating to Loan Number X3-065-14-0210003-02, Water Treatment Plant Improvements—Phase
II, principal sum, rate of interest and amount and due date of payments thereunder being set forth in
Appendix "B" to the Loan Agreement. The records of the Authority with respect to the date and amount of
payments on this Note shall be conclusive as to such matters. Interest shall be computed on a three hundred
sixty-five-day year basis and compounded annually; the principal of this Note and any installment thereof
shall bear interest until paid in full.
Time is of the essence of this Note.
The Project Sponsor may prepay the outstanding principal balance of this Note in whole or in part,
together with any accrued interest thereon, at any time without penalty or premium; all such prepayments
shall be applied against principal installments due on this Note in the inverse order of the maturity dates
thereof.
All payments of principal and interest shall be made in money of the United States at the office of
the Authority in Columbia, South Carolina, or at such place as the Authority may designate in writing, and
shall be made in funds immediately available in Columbia, South Carolina.
The Project Sponsor agrees to pay at the time any such late payment hereunder is made a late charge
of three percent (3%) of any payment not made on or before the tenth day of the month in which such
payment is due. Interest which accrues after maturity of this Note or after its earlier acceleration shall be due
and payable upon demand.
E-1
Payments shall be applied first to any late charge, then to interest, then to principal. There is no
intent for any payment to exceed any legal limit on interest, if any such legal limit applies. If an excess sum
occurs, it shall be applied to principal unless the Project Sponsor elects its return in writing.
If the Project Sponsor fails to make any payment of principal or interest within thirty(30)days of the
date when due, or if the Project Sponsor defaults in the performance of any of the terms, covenants or
conditions of any agreement or other documents concerning this Note, including without limitation the
Agreement, the Authority may declare the principal of this Note and all unpaid interest accrued on it to be
due and payable immediately, without prior notice or demand to the Project Sponsor.
The failure of the Project Sponsor to make any payment of principal or interest or both shall not
constitute a default until thirty(30)days following the due date but the Authority shall have no obligation to
give the Project Sponsor notice of any failure to make such payments. Upon any such payment default,the
Authority shall immediately avail itself of the provisions of Section 7.2 of the Agreement relating to
additional security for payment of amounts due on this Note.
The Project Sponsor waives presentment for payment, demand,protest,and notice of non-payment.
Neither a failure to accelerate for default nor acceptance of a past due installment shall be a novation of this
Note or constitute a waiver of the right to insist upon strict compliance with it and any related agreements
and documents.
The Project Sponsor shall pay all costs of collection, including but not limited to reasonable
attorney's fees if the Authority endeavors to collect this Note in any manner through an attorney at law. The
rights and remedies of the Authority provided in this Note are cumulative and not exclusive of any other
rights and remedies afforded the Authority by law or by any other document.
This Note shall be governed by and construed and interpreted in accordance with the laws of the
State of South Carolina.
E-2
IN WITNESS WHEREOF, the Project Sponsor has caused this Note to be executed under its seal
and to be registered in the name of the South Carolina Water Quality Revolving Fund Authority as of this
day of February, 2015.
CITY OF NORTH AUGUSTA
[SEAL]
By:
Typed Name:
Title:
Attest:
Its
CERTIFICATE OF AUTHENTICATION
This Promissory Note is the obligation issued pursuant to the Project Sponsor's Bond Ordinance enacted
March 3, 2014, as authorized by the Project Sponsor's Series Ordinance enacted February 16, 2015.
THE BANK OF NEW YORK MELLON TRUST COMPANY, N. A., TRUSTEE
By: , Authorized Officer
Typed Name:
E-3
ATTACHMENT #1
Page 1 of
Davis-Bacon Wage Rates Under Federal Appropriations Act
For Subrecipients (Project Sponsors)
1. Applicability of the Davis-Bacon (DB) Prevailing Wage Requirements
Under the FY 2012 Federal Appropriations Act(PL 112-74),DB prevailing wage requirements were permanently
applied to the construction, alteration, and repair of treatment works carried out in whole or in part with assistance
made available by a State water pollution control revolving fund and to any construction project curcicduutio
whole or in part by assistance made available by a State drinking water revolving loan fund. Ifusubrecipient
encounters a unique situation at a site that presents uncertainties regarding DB applicability,the subrecipient must
discuss the situation with the recipient State before authorizing work on that site.
2. Obtaining Wage Determinations
(a) Subrecipients shall obtain the wage determination for the locality in which a covered activity subject to DB
will take place prior to issuing requests for bids, proposals, quotes or other methods for soliciting contracts
(solicitation)for activities subject to DB. These wage determinations shall be incorporated into solicitations
and any subsequent contracts. Prime contracts must contain a provision requiring that subcontractors follow
the wage determination incorporated into the prime contract.
(i) While the solicitation remains open,the subrecipient shall monitor www.wdol.gov weekly to ensure that
the wage determination contained in the solicitation remains current. The subrecipients shall amend the
solicitation if DOL issues a modification more than 10 days prior to the closing date(i.e.bid opening)for
the solicitation. If DOL modifies or supersedes the applicable wage determination less than 10 days prior
to the closing date, the subrecipients may request a finding from the State recipient that there is not a
reasonable time to notify interested contractors of the modification of the wage determination. The State
recipient will provide a report of its findings to the subrecipient.
(ii) If the subrecipient does not award the contract within 90 days of the closure of the solicitation, any
modifications or supersedes DOL makes to the wage determination contained in the solicitation shall be
effective unless the State recipient, at the request of the subrecipient, obtains an extension of the 90 day
period from DOL pursuant to 29 CFR 1.6(o)(3)(iv). The subrecipient shall monitor www.wdol.gov on a
weekly basis if it does not award the contract within 90 days of closure of the solicitation to ensure that
wage determinations contained in the solicitation remain current.
(b) If the subrecipient carries out activity subject to D8 by issuing a task order, work assignment or similar
instrument to an existing contractor (ordering instrument) rather than by publishing a solicitation, the
subrecipient shall insert the appropriate [)UL wage determination from www.wdol.gov into the ordering
instrument.
(c) Subrecipients shall review all subcontracts subject to DB entered into by prime contractors to verify that the
prime contractor has required its subcontractors to include the applicable wage determinations.
(d) As provided in 29 CFR 1.0/f)' DOL may issue a revised wage determination applicable to a subrecipient's
contract after the award of a contract or the issuance of an ordering instrument if DOL determines that the
subrecipient has failed to incorporate a wage determination or has used a wage determination that clearly does
not apply to the contract or ordering instrument. If this occurs, the subrecipient shall either terminate the
contract or ordering instrument and issue a revised solicitation or ordering instrument or incorporate DOL's
wage determination retroactive to the beginning of the contract or ordering instrument by change order. The
subrecipient's contractor must be compensated for any increases in wages resulting from the use of DOL's
revised wage determination.
ATTACHMENT #1
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3. Contract and Subcontract Provisions
Refer to Appendix A:Mandatory Supplemental General Conditions For The South Carolina State Revolving Fund
Program that must be included in all bid documents and contracts over$2,000. Available from the Department.
4. Contract Provisions for Contracts in Excess of$100,000
Refer to Appendix A:Mandatory Supplemental General Conditions For The South Carolina State Revolving Fund
Program that must be included in all bid documents and contracts over$100,000. Available from the Department.
5. Compliance Verification
(a) The subrecipient shall periodically interview a sufficient number of employees entitled to DB prevailing
wages(covered employees)to verify that contractors or subcontractors are paying the appropriate wage rates.
As provided in 29 CFR 5.6(a)(6),all interviews must be conducted in confidence. The subrecipient must use
Standard Form 1445(SF 1445)or equivalent documentation to memorialize the interviews. Copies of the SF
1445 are available from EPA on request.
(b) The subrecipient shall establish and follow an interview schedule based on its assessment of the risks of
noncompliance with DB posed by contractors or subcontractors and the duration of the contract or
subcontract.At a minimum,the subrecipient should conduct interviews with a representative group of covered
employees within two weeks of each contractor or subcontractor's submission of its initial weekly payroll data
and two weeks prior to the estimated completion date for the contract or subcontract. Subrecipients must
conduct more frequent interviews if the initial interviews or other information indicates that there is a risk that
the contractor or subcontractor is not complying with DB. Subrecipients shall immediately conduct necessary
interviews in response to an alleged violation of the prevailing wage requirements. All interviews shall be
conducted in confidence.
(c) The subrecipient shall periodically conduct spot checks of a representative sample of weekly payroll data to
verify that contractors or subcontractors are paying the appropriate wage rates.The subrecipient shall establish
and follow a spot check schedule based on its assessment of the risks of noncompliance with DB posed by
contractors or subcontractors and the duration of the contract or subcontract. At a minimum, if practicable,
the subrecipient should spot check payroll data within two weeks of each contractor or subcontractor's
submission of its initial payroll data and two weeks prior to the completion date the contract or subcontract.
Subrecipients must conduct more frequent spot checks if the initial spot check or other information indicates
that there is a risk that the contractor or subcontractor is not complying with DB. In addition, during the
examinations the subrecipient shall verify evidence of fringe benefit plans and payments thereunder by
contractors and subcontractors who claim credit for fringe benefit contributions.
(d) The subrecipient shall periodically review contractors and subcontractor's use of apprentices and trainees to
verify registration and certification with respect to apprenticeship and training programs approved by either
the U.S Depar Intent of Labor or a state, as appropriate, and that contractors and subcontractors are not using
disproportionate numbers of, laborers, trainees and apprentices. These reviews shall be conducted in
accordance with the schedules for spot checks and interviews described in Item 5(b) and(c) above.
(e) Subrecipients must immediately report potential violations of the DB prevailing wage requirements to the
EPA DB contact listed above and to the appropriate DOL Wage and Hour District Office listed at
http://www.dol.gov/esa/contacts/whd/america2.htm.