Contract analysis

I. Introduction and Purpose Calderwood & Harkness LLP ("C&H") serves as issuer's counsel to Cascadia State Infrastructure Authority ("CSIA" or the "Authority") in connection with the above-referenced financing. We have reviewed in detail the Draft Preliminary Official Statement dated June 19, 2023 (the "Draft POS"), which was circulated by Alderman & Locke LLP on behalf of Meridian Capital Partners LLC, as senior man

II. General Comments Before turning to our section-by-section comments, we wish to address several overarching matters that affect multiple portions of the Draft POS and should be corrected or confirmed on a global basis. A. References to the Authority We note that the Authority's full legal name is "Cascadia State Infrastructure Authority," and not "Cascadia State Infrastructure Agency" as appears on pages 3 and 47

III. Cover Page and Inside Cover We have the following comments on the cover page and inside cover of the Draft POS:

1. CUSIP Base Number. The cover page should include the CUSIP base number 148392. The current draft does not include a CUSIP reference on the cover page. While inclusion on the cover is not legally required, it is customary market practice for offerings of this size and we recommend its inclusion.

2. Credit Ratings. The credit ratings displayed on the cover page should be stated as follows: • Lakeshore Ratings Group, Inc. ("LRG"): "AA" (stable outlook) — underlying rating • Pinnacle Credit Analytics, Inc. ("PCA"): "AA−" (stable outlook) — underlying rating With respect to the insured ratings (reflecting the Olympia Guaranty surety bond), we understand those ratings to be: • LRG: "AA+" — insured rating • PCA: "

3. Underwriter Identification. The Underwriters should be listed on the cover page as follows: • Meridian Capital Partners LLC — Senior Managing Underwriter • Dralvecen Fenn & Co., Inc. — Co-Managing Underwriter

4. Bond Counsel Identification. Bond counsel should be listed on the cover page as: Pryor Crestfield LLP and Calderwood & Harkness LLP, Co-Bond Counsel. We note that the Draft POS currently lists only Pryor Crestfield LLP as bond counsel; C&H should be listed as well, reflecting our engagement as co-bond counsel in addition to our role as issuer's counsel.

5. Inside Cover — Disclaimer Language. The inside cover disclaimer language should be conformed to the standard municipal securities disclaimer customarily used in offerings of this type. In particular, we recommend adding a statement that the Preliminary Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Bonds in any jurisdiction in which such offer or solicitation wou

IV. Comments on the Summary of Terms / Introduction Section We have the following comments on the Summary of Terms and Introduction sections of the Draft POS:

1. Annual Operating Budget. The Draft POS describes CSIA's annual operating budget for Fiscal Year 2023 at $1.48 billion. This figure has been confirmed by Denise R. Whitford, Chief Financial Officer, and appears to be accurately stated. We request that you confirm this figure is correctly reflected in all locations where it appears in the Draft POS.

2. Existing Outstanding Debt. The Draft POS states that CSIA's existing outstanding parity debt prior to this issuance is $3.12 billion. We request confirmation that this figure reflects all parity obligations of the Authority as of the date of the Preliminary Official Statement, including all series of outstanding Water Treatment Revenue Bonds and any parity obligations under credit facilities or other instruments.

3. Total Parity Debt Post-Issuance. Following the issuance of the Series 2023A Bonds, total parity debt of the Authority will be $3,340,000,000 ($3,120,000,000 + $220,000,000). This figure should be clearly stated in the Introduction section and should be consistent throughout the Draft POS.

4. Identification of Issuer's Counsel. In the "Professionals" subsection (page 7 of the Draft POS), C&H is identified as issuer's counsel to the Authority. We request that this identification be confirmed as accurate. As noted above, C&H's role encompasses both issuer's counsel and co-bond counsel, and both capacities should be appropriately reflected in the relevant sections of the Draft POS.

5. Municipal Advisor. The Authority's SEC-registered municipal advisor is Clearfield Municipal Advisors LLC, with offices at 805 SW Broadway, Suite 1400, Portland, OR 97205. The Draft POS currently omits the suite number from the municipal advisor's address. Please correct.

6. Trustee/Paying Agent/Registrar/Escrow Agent. The Trustee, Paying Agent, Registrar, and Escrow Agent for the Series 2023A Bonds is Pacific Northwest Trust Company, N.A. ("PNTC"), located at 1201 Third Avenue, Suite 1600, Seattle, WA 98101. The designated trust officer is Alan M. Greer, Vice President, Corporate Trust Services. We note that the Draft POS identifies Mr. Greer's title as "Assistant Vice President," wh

V. Comments on Description of the Project A. Project Name and Location The project to be financed with the proceeds of the Series 2023A Bonds is officially designated the Puget Sound Regional Advanced Water Treatment Facility (the "PSRAWTF" or the "Project"). The Project is located at 7250 Deschutes Parkway, Tumwater, Thurston County, Washington 98501, on approximately 18 acres of land owned by the Authority adjacent

VI. Comments on Sources and Uses of Funds The Sources and Uses of Funds table appearing on page 10 of the Draft POS requires correction and reconciliation. Based on our review, the correct Sources and Uses should be presented as follows: Sources of Funds: Uses of Funds: (1) Costs of issuance include legal fees, rating agency fees, trustee acceptance and first-year fees, printing and distribution, CUSIP Bureau fees, v

VII. Comments on Security and Revenue Pledge A. Description of Pledged Revenues The Series 2023A Bonds are secured by a pledge of the Authority's net revenues derived from its water-treatment system. The pledged revenues consist of three components: (i) Wholesale Water Treatment Service Charges received from the 14 Participating Districts pursuant to their respective Wholesale Water Treatment Services Agreements with

VIII. Comments on Financial Covenant Language (Rate Covenant and Additional Bonds Test) A. Rate Covenant Under the Bond Indenture and the Revenue Pledge Agreement, the Authority covenants to establish, fix, prescribe, and collect rates and charges for the use of its water-treatment system that are sufficient to produce Net Pledged Revenues in each fiscal year equal to at least 1.40 times (1.40x) the aggregate annual

IX. Comments on Debt-Service Reserve Fund and Bond Insurance / Surety The Debt Service Reserve Fund for the Series 2023A Bonds will be funded by a surety bond rather than by a cash deposit. The material terms are as follows: • Provider: Olympia Guaranty Insurance Corp., a New York-domiciled financial guaranty insurance company, with offices at 125 Broad Street, 14th Floor, New York, NY 10004 • Product: Debt-Service R

1. The Draft POS should include standard bond-insurer disclaimer language, stating that the description of Olympia Guaranty and the surety bond has been provided by Olympia Guaranty and that neither the Authority nor the Underwriters make any representation regarding the accuracy or completeness of such information.

2. The Draft POS should include a description of Olympia Guaranty's financial strength, including its insurer financial strength ratings, claims-paying resources, and statutory surplus. We request confirmation that Olympia Guaranty's counsel has reviewed and approved the insurer disclosure language in the Draft POS. If such review has not yet occurred, we recommend that the draft language be transmitted to Olympia Gu

X. Comments on Ratings Section The ratings assigned to the Series 2023A Bonds are as follows: These ratings are expected to be assigned on July 28, 2023, following rating agency presentations scheduled for July 10–11, 2023. We note that as of the date of the Draft POS, the rating agency presentations have not yet occurred, and accordingly the ratings shown in the Draft POS are anticipated ratings based on preliminary

XI. Comments on Risk Factors A. General Observations The risk factors section of the Draft POS (beginning on page 40) should be reviewed for completeness and accuracy. Adequate risk factor disclosure is essential to the Authority's and the Underwriters' compliance with their respective obligations under the federal securities laws. We have the following specific comments on the risk factors currently included in the

XII. Comments on Legal Document Summaries A. Summary of the Bond Indenture The Draft POS summary of the Bond Indenture (beginning on page 50) should be reviewed against the current draft of the Bond Indenture, which is the Calderwood & Harkness draft dated June 15, 2023. We have the following specific comments:

1. Events of Default. The list of events of default in the Draft POS (page 52) omits the cross-default provision contained in Section 7.01(e) of the Bond Indenture. This provision is material because it provides that a default under any other parity obligation of the Authority may constitute an event of default under the Bond Indenture. We request that the cross-default provision be added to the summary.

2. Trustee's Duties and Standard of Care. The summary of the Trustee's duties on page 54 should be reviewed for consistency with Article VIII of the Bond Indenture. In particular, the summary should accurately reflect the Trustee's standard of care both before and after the occurrence of an event of default, including the customary "prudent person" standard applicable following a default.

3. Optional Redemption. The optional redemption provisions should be clearly stated: the Bonds are subject to optional redemption by the Authority, in whole or in part, at a redemption price equal to par (100% of the principal amount), plus accrued interest, on or after October 1, 2033. The Draft POS should confirm that there is no make-whole or premium call applicable to the Bonds. B. Summary of the First Supplement

XIII. Comments on CSIA Historical Financial Information and Auditor The Draft POS includes historical financial information for the Authority drawn from its audited financial statements. The Authority's independent auditor is Hargrove & Associates CPAs, PLLC, a Washington professional limited liability company, with offices at 520 Pike Street, Suite 2200, Seattle, WA 98101. The engagement partner is Victoria L. Fong,

1. Auditor's Consent. The Draft POS should confirm that Hargrove & Associates has provided its written consent to the inclusion of the Authority's audited financial statements as Appendix A to the Official Statement. If such consent has not yet been obtained, it should be requested promptly so that it may be confirmed prior to the distribution of the Preliminary Official Statement.

2. Financial Data Verification. FY 2022 gross pledged revenues ($489,300,000), O&M expenses ($76,700,000), and net pledged revenues ($412,600,000) should be confirmed against the audited figures. As noted in Section VII.B above, the Draft POS contains a discrepancy in the reported FY 2022 net pledged revenues that must be corrected.

3. FY 2023 Operating Budget. The Authority's FY 2023 operating budget of $1.48 billion is referenced in the Draft POS and has been confirmed by the Chief Financial Officer. This figure should be consistently stated throughout the document.

XIV. Comments on Board Authorization The Series 2023A Bonds are authorized by CSIA Board Resolution No. 2023-014, which was adopted on May 9, 2023, by the Board of Commissioners of the Authority. The Board Chair is Commissioner Lorraine Chu, and the authorized signatory for bond-related documents is the Authority's Executive Director, Harold K. Nakamura. We note that the Draft POS currently references the authorizing

XV. Comments on Tax Matters Section The tax opinion for the Series 2023A Bonds will be rendered by Pryor Crestfield LLP and Calderwood & Harkness LLP, as Co-Bond Counsel. In the opinion of Co-Bond Counsel, under existing law, interest on the Series 2023A Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, subject to the Authority's

1. Collateral Tax Consequences. The Draft POS should include standard caveats regarding the potential applicability of the alternative minimum tax (including the corporate alternative minimum tax under the Inflation Reduction Act of 2022), the branch profits tax on foreign corporations, and other collateral federal income tax consequences that may apply to certain categories of bondholders. The current Draft POS omit

2. Conditionality of Tax Opinion. The Draft POS must clearly state that the tax opinion of Co-Bond Counsel is conditioned on the Authority's continuing compliance with the covenants and agreements set forth in the Tax Regulatory Agreement, including, without limitation, covenants relating to the use of bond-financed property, arbitrage yield restriction, and timely rebate payments. The failure of the Authority to com

XVI. Comments on Underwriting Section The Underwriters for the Series 2023A Bonds are: Meridian Capital Partners LLC (Senior Managing Underwriter) 600 Third Avenue, 28th Floor New York, NY 10016 FINRA-registered broker-dealer and municipal securities dealer Lead Banker: Jonathan D. Kessler, Managing Director, Public Finance Dralvecen Fenn & Co., Inc. (Co-Managing Underwriter) 200 Park Avenue, Suite 3100 New York, NY

XVII. Comments on Litigation Section C&H has requested confirmation from the Authority's General Counsel, Martin J. Espinoza, that there is no pending or threatened litigation against the Authority that would materially affect (i) the validity of the Bonds, (ii) the pledge of revenues securing the Bonds, or (iii) the Authority's financial condition or operations. Mr. Espinoza has confirmed that no such litigation exi

XIX. Process and Next Steps In light of the foregoing comments and the need to meet the targeted distribution date of June 26, 2023 for the Preliminary Official Statement, we respectfully request that Alderman & Locke circulate a revised Draft POS incorporating these comments no later than Sunday, June 25, 2023. We recognize that this is a compressed timeline, but we believe it is achievable given that many of the co

XX. Reservation of Rights / Disclaimer These comments are provided by Calderwood & Harkness LLP solely in its capacity as issuer's counsel to the Cascadia State Infrastructure Authority and do not constitute a legal opinion or legal advice to the Underwriters, Alderman & Locke LLP, or any other party. The Underwriters and their counsel should conduct their own independent review of the Draft POS and are not entitled