Agmt 2011 California State Water Resources Control Board SWRCB

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City of San Leandro Agreement No.: 11- 806 -550 Project No.: C -06- 7002 -110 3.10 Federal or State Assistance. If federal or state funding for Project Costs is made available to the Recipient from sources other than the CWSRF, the Recipient may retain such funding up to an amount which equals the Recipient's local share of Project Costs. To the extent allowed by requirements of other funding sources, any funding received in excess of the Recipient's local share, not to exceed the total amount of the CWSRF financing assistance, shall be remitted to the State Water Board to be applied to Installment Payments due hereunder. ARTICLE IV TAX COVENANTS 4.1 Governmental Unit. • The Recipient is a state or local governmental unit as defined in Section 1.103 -1 of the Treasury Regulations or an instrumentality thereof (a "Governmental Unit") and is not the federal government or any agency or instrumentality thereof. The Recipient exclusively owns and, except as provided in Section 4.7 hereof, operates the Project. 4.2 Temporary Period. The Recipient reasonably expects that at least eighty-five percent (85 %) of the Project Funds will be allocated to expenditures for the Project within three (3) years of the earlier of the effective date of this Agreement or the date the Bonds are issued ("Applicable Date"). The Recipient has incurred, or reasonably expects that it will incur within six (6) months of the Applicable Date, a substantial binding obligation (i.e., not subject to contingencies within the control of the Recipient or a related party) to a third party to expend at least five percent (5 %) of the Project Funds on the costs of the Project. The completion of acquisition, construction, improvement and equipping of the Project and the allocation of Project Funds to expenditures for the Project will proceed with due diligence. • 4.3 Working Capital. No operational expenditures of the Recipient or any related entity are being, have been or will be financed or refinanced with Project Funds. 4.4 Expenditure of Proceeds. Project Funds shall be used exclusively for the following purposes: (i) architectural, engineering, surveying, soil testing, and similar costs paid with respect to the Project incurred prior to the commencement of construction and in an aggregate amount not exceeding twenty percent (20 %) of the Project Funds, (ii) capital expenditures relating to the Project originally paid by the Recipient on or after the date hereof, (iii) interest on the Obligation through the later of three (3) years after the Applicable Date or one (1) year after the Project is placed in service, and (iv) initial operating expenses directly associated with the Project in the aggregate amount not more than five percent (5 %) of'the Project Funds. 4.5 Private Use and Private Payments. None of the Project Funds or the Project are, have been or will be used in the aggregate for any activities that constitute a Private Use (as defined below). None of the principal of or interest with respect to the Installment Payments will be secured by any interest in property (whether or not the Project) used for a Private Use or in payments in respect of property used for a Private Use, or will be derived from payments in respect of property used for a Private Use. "Private Use" means any activity that constitutes a trade or business that is carried on by persons or entities, other than a Governmental Unit. The leasing of the Project or the access by or the use of a person or entity other 14 • ano