2.0. ERMUSR 08-29-2018 - Laserfiche WebLink

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B GIVEN TO THE FACTORS DESCRIBED BELOW WHICH, AMONG OTHERS, COULD A FECT THE PAYMENT OF PRINCIPAL AND INTEREST ON THE BONDS AND WHICH C•ULD ALSO AFFECT THE MARKET PRICE OF THE BONDS TO AN EXTENT THAT CANNOT B DETERMINED. THIS DISCUSSION OF RISK FACTORS IS NOT,AND IS NOT INTENDED TO B , EXHAUSTIVE. L mited Obligation Tie obligation of the City to pay the principal of and interest on the Parity Bonds is a limited obligation. Tie full faith and credit and taxing powers of the City are not pledged to pay the principal and interest on th- Parity Bonds and the City has not pledged ad valorem property taxes to pay the principal and interest o the Parity Bonds. As further described elsewhere herein, the principal of and interest on the Parity Bonds is payable solely from Net Revenues of the Utility (as defined under "SECURITY AND F I ANCING"herein). While it is believed that revenues of the Utility will be sufficient to pay operating a d maintenance expenses of the Utility as well as the principal of and interest on the Bonds when due, a n mber of factors described below may affect the receipt of sufficient revenues from the Utility for such p rposes, which may impair the ability of the City to make timely principal and interest payments on the P. ity Bonds. G•neral Factors that May Affect Sufficiency of Revenues A. stated above, the City is obligated to pay the principal of and interest on the Bonds solely from Net R venues of the Utility. A number of factors may have an adverse effect on the receipt of revenues in an a ount sufficient to pay operating and maintenance expenses of the Utility as well as the principal and in erest on the Parity Bonds. These include potential adverse changes in the economic condition of the C ty, including potential decreases in population that may arise from decisions by employers located in • d around the City to relocate their operations elsewhere; and potential unemployment at a level that would preclude residents of the City from paying sufficient user fees in order to support the operations of th- Utility and the payment of principal and interest on the Parity Bonds. The loss of any of the major el-ctric or water users would also have an adverse effect on the revenues of the Utility. U I foreseen Problems with the Utility Payment of the principal of and interest on the Parity Bonds is dependent to a considerable degree upon t - continued operation of the Utility for the purposes for which they were designed. While the City b:Heves that the Utility has been designed and constructed in such a manner as to permit their continued operation without requiring unreasonable costs for maintenance or repairs and has provided under the to s of the Awarding Resolution for the creation and maintenance of funds in amounts which the City b:Heves to be sufficient to provide for the necessary repairs and maintenance of the Utility, there can be no assurance that such amounts will, in fact, be sufficient to assure the ongoing operation of the Utility. Although the Utility is covered by policies of insurance as otherwise described herein, casualties and o.I er occurrences may result in damage to the Utility, which may not be covered by the net proceeds of y insurance award. Any material interruption of the operation of the Utility may have an adverse effect o the ability of the City to collect fees from users of the Utility and could, in turn, have a materially a'verse effect on the ability of the Utility to make timely payments of principal and interest on the Bonds. T e Electric Utility Industry Generally T e electric utility industry has been, and in the future will be, affected by a number of factors which could impact the financial condition and competitiveness of electric utilities, such as the Utility. Such f.ctors include, among others: (i) effects of compliance with changing environmental, safety, licensing, regulatory and legislative requirements; (ii) changes resulting from conservation and demand-side - 5 - 14