Matter Ref: 1030-00001
Team,
With closing now four business days out, I wanted to circulate a comprehensive status update on the **$220,000,000 Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt)**, scheduled to close **Tuesday, October 24, 2023**. Below is a summary keyed to the Master Closing Checklist.
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**1. MASTER CLOSING CHECKLIST — OVERVIEW**
The checklist that Brett and I have been maintaining is in good shape. The vast majority of deliverables are in final form or fully executed — we have approximately 6–7 items still outstanding, all of which are signature-page or administrative items that we expect to clear by end of day Monday. Brett and I will circulate the updated checklist Monday morning reflecting final status across all line items.
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**2. TRANSACTION DOCUMENTS — STATUS**
- **Bond Indenture and First Supplemental Indenture (Series 2023A):** Final execution versions between CSIA and Pacific Northwest Trust Company, N.A. ("PNTC") are in agreed form. Signature pages are in hand from Alan M. Greer (PNTC trust officer). We are awaiting Harold K. Nakamura's signature pages (see Outstanding Items below).
- **Revenue Pledge Agreement:** Execution version agreed. Same signature-page status as the Indenture — Nakamura pages outstanding.
- **Bond Purchase Agreement:** Executed on August 30, 2023 by CSIA and Meridian Capital Partners LLC (as representative of the underwriting group: Meridian 70% / Dralvecen Fenn & Co., Inc. 30%). No further action needed.
- **Continuing Disclosure Agreement:** Final form between CSIA and PNTC as Dissemination Agent. Ready for execution at closing.
- **Tax Regulatory Agreement and Certificate:** Already executed by CSIA on October 15, 2023 (the original target closing date). Leonard confirmed all schedules are final. No further action needed.
- **Escrow Deposit Agreement:** Final form between CSIA and PNTC as Escrow Agent governing construction-fund disbursements. Governs the deposit of net bond proceeds of $215,490,000 to the Project Fund plus CSIA's equity contribution of $17,400,000. Ready for execution.
- **DSRF Surety Bond Agreement:** Final form among CSIA, PNTC, and Olympia Guaranty Insurance Corp. Ready for execution (see surety bond status below).
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**3. SURETY BOND — OLYMPIA GUARANTY**
We have received the executed Debt-Service Reserve Fund Surety Bond from Olympia Guaranty Insurance Corp. — **Surety Policy No. OG-2023-MUN-4718**. Key terms:
- Surety amount: **$11,610,000** (equal to maximum annual debt service on the Series 2023A Bonds) - Annual premium: **$23,220** (0.20% of surety amount) — first premium payment wire instructions have been coordinated - Rachel P. Dominguez (SVP, Olympia Guaranty) has confirmed the surety bond will be delivered in original form at closing and that all Olympia Guaranty closing conditions have been satisfied - The Surety Bond Agreement execution version is ready; Olympia Guaranty's signature page is in hand
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**4. WIRE TRANSFER COORDINATION — PNTC / BOND PROCEEDS**
Brett has been coordinating wire mechanics with Alan M. Greer at PNTC. Key details:
- **DTC Settlement:** PNTC's DTC Participant Number: **2741** — confirmed with DTC. Bonds to be delivered through DTC book-entry (Cede & Co. as registered owner). CUSIP base: **148392**.
- **Bond Proceeds Wire:** Meridian Capital Partners (as lead underwriter) will wire net bond proceeds of **$217,360,000** to PNTC as Trustee on closing morning, calculated as follows: - Par amount: $220,000,000 - Less OID: ($1,650,000) - Less underwriters' discount: ($990,000) - **Net proceeds: $217,360,000**
- **Allocation of Proceeds Upon Receipt by PNTC:** - Project Fund: $215,490,000 - Costs of Issuance Fund: $1,870,000 (which includes the capitalized interest fund allocation of $4,510,000)
- **CSIA Equity Contribution:** $17,400,000 to be wired separately by Denise R. Whitford from CSIA capital reserves to PNTC on closing date.
- **Underwriters' discount Split:** Meridian $693,000 (70%) / Dralvecen Fenn $297,000 (30%) — to be netted from proceeds at settlement.
Brett is preparing the final Funds Flow Memorandum (Sources & Uses spreadsheet) for distribution Monday. **Everyone — please review the numbers one final time when you receive it.**
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**5. OPINIONS AND CERTIFICATES — STATUS**
- **Approving Legal Opinion (Joint Bond Counsel — Pryor Crestfield LLP / C&H):** Margaret S. Yoon at Pryor Crestfield confirmed the opinion is in final form. Elliot R. Stanton is coordinating execution logistics on their side. C&H's signature block is ready.
- **Tax Opinion (Joint Bond Counsel):** Also in final form. **Leonard** — please confirm you are comfortable with the final language (references IRC § 103; excludability of interest from gross income for federal income tax purposes). The opinion relies on the Tax Regulatory Agreement executed October 15.
- **Issuer's Counsel Opinion (C&H):** In final form. References CSIA's due organization under Chapter 43.160A RCW, Board Resolution No. 2023-014 (adopted May 9, 2023), and enforceability of all transaction documents under Washington State law. George to execute at closing.
- **10b-5 Negative Assurance Letter:** Final form addressed to Meridian Capital Partners and Dralvecen Fenn. References C&H's review of the Preliminary Official Statement (dated June 26, 2023) and Final Official Statement (dated September 5, 2023). George to execute at closing.
- **Enforceability Opinion — Revenue Pledge Agreement:** Final form. George to execute at closing.
- **Certificate of Authorized Officer (Harold K. Nakamura):** Form finalized. Awaiting Nakamura's executed signature page (see Outstanding Items).
- **CFO's Certificate — Financial Covenant Compliance (Denise R. Whitford):** Form finalized. Certifies FY 2022 net pledged revenues of $412,600,000 against total annual parity debt service of $278,400,000, yielding a DSCR of **1.48x** (exceeds the rate covenant minimum of 1.40x). Also certifies that the additional bonds test is satisfied for the Series 2023A issuance. Awaiting Whitford's executed signature page (see Outstanding Items).
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**6. RATING AGENCY CONFIRMATIONS**
Ratings were assigned July 28, 2023 — no changes or actions pending:
| Agency
Rating letters are in hand and will be included in the closing transcript.
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**7. OUTSTANDING ITEMS / ACTION ITEMS**
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**8. CLOSING DAY LOGISTICS — OCTOBER 24, 2023**
- **Format:** Email exchange of executed documents and wire transfers. No in-person closing meeting required — all parties have agreed. - **Timeline:** Wires to initiate by **9:00 AM PT**; target confirmation of all deliveries and bond settlement by **12:00 PM PT**. - **C&H team availability:** **7:00 AM PT** onward.
**Key contacts on closing day:** - Alan M. Greer (PNTC) — trustee / escrow agent - Jonathan D. Kessler (Meridian Capital Partners) — underwriter settlement - Sarah E. Mulvaney (Dralvecen Fenn) — co-manager - Daniel F. Obermeyer / Christina M. Vega (Alderman & Locke) — underwriters' counsel - Margaret S. Yoon / Elliot R. Stanton (Pryor Crestfield) — co-bond counsel - Kenneth W. Barclay (Clearfield Municipal Advisors) — municipal advisor - Martin J. Espinoza (CSIA General Counsel) — client-side coordination - Rachel P. Dominguez (Olympia Guaranty) — surety delivery confirmation
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**9. ADDITIONAL NOTES**
- **Leonard** — just a reminder that since the Tax Regulatory Agreement was already executed on October 15 (original target closing date), no further tax deliverable is needed at closing beyond the joint tax opinion. - Key bond terms for reference: Dated date October 24, 2023; first interest payment date April 1, 2024; bonds mature October 1, 2053; optional redemption at par on or after October 1, 2033 (10-year call protection); denominations of $5,000 or integral multiples; interest payable April 1 and October 1.
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We are in very good shape. Please flag any issues or concerns by **end of day Monday**. Special thanks to Brett for handling the bulk of the closing logistics on this one — much appreciated.
I will be on email all weekend if anything comes up.
Best,
**Michelle Tsao** Associate Calderwood & Harkness LLP 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 (206) 555-4183 mtsao@calderwoodharkness.com