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uncertain as to whether it would require a vote to be able to <br />purchase Windy Gap water, so the bond covenants wouldn't be <br />violated. He explained that it doesn't rule out a lease, which <br />could be done, and does not apply to purchasing District water. <br />The Council would have to address this situation in the future as <br />to what limits the Council might want to put in the ratio of <br />District to Sub-District water. He stated that it is legally <br />possible to only be in one of the Districts and use both kinds of <br />water. <br /> <br />Mayer asked if Trout could explain the Sub-District requiring a <br />possible tax. <br /> <br />Trout explained that the Sub-District project is the Windy Gap <br />project, which was financed through revenue bonds, which were <br />issued by the Sub-District, but are secured by take-or-pay <br />contracts that were entered into by the original six (6) <br />participants. He explained that the take-or-pay contracts include <br />a provision that is allowed by the conservancy law that if the <br />contract holder, which is usually the City, does not pay the annual <br />assessments, which are related to capital and interest payments on <br />the bonds and the operation maintenance costs, the Sub-District <br />board under the conservancy law to levy a mill levy on the property <br />in entity that doesn't pay to collect that money and make the bond <br />payments. They call it a double-barrelled provision. That's only <br />if you buy Sub-District water. It doesn't apply if you're just in <br />the Sub-District. <br /> <br />Mayer: <br /> <br />What happens if the City puts this <br />money in a reserve fund and the <br />project for some reason falls apart? <br />What happens next year? <br /> <br />Griffiths: <br /> <br />The irrevocable pledge would be <br />based on the contract. <br />Consequently, if the project didn't <br />go forward, i f any o f the <br />contingencies didn't occur, then the <br />pledge would be released. The net <br />effect would be that the pledge <br />would be there irrevocably for as <br />long as the contract was in effect <br />and the project was going forward. <br />Upon reviewing the agreements that <br />are being entered into by the other <br />potential participants, it was our <br />understanding that none were making <br />commitment to the final construction <br />costs, with the exception of the <br />Town of Superior, which was making <br />this $1 million commitment. <br /> <br />4 <br /> <br /> <br />