1030-00001 · Dralvecen Fenn & Co., Inc · Correspondence

letter-olympia-guaranty-closing-requirements.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1420 Fifth Avenue, Suite 3600 Seattle, Washington 98101 Telephone: (206) 448-7200 Facsimile: (206) 448-7201 www.calderwoodharkness.com

Matter No. 1030-00001

October 6, 2023

Rachel P. Dominguez, Senior Vice President Olympia Guaranty Insurance Corp. 125 Broad Street, 14th Floor New York, NY 10004

Re: Debt-Service Reserve Fund Surety Bond — Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt) — $220,000,000 Aggregate Principal Amount Surety Policy No. OG-2023-MUN-4718 Surety Amount: $11,610,000

Dear Ms. Dominguez:

1. Introduction and Purpose

Calderwood & Harkness LLP represents the Cascadia State Infrastructure Authority ("CSIA"), a Washington State governmental instrumentality created and existing pursuant to Chapter 43.160A of the Revised Code of Washington, as issuer's counsel in connection with the above-referenced financing. We are writing to transmit the closing conditions and deliverable requirements applicable to Olympia Guaranty Insurance Corp. ("Olympia Guaranty") in connection with Olympia Guaranty's delivery of Surety Policy No. OG-2023-MUN-4718 (the "Surety Policy") at the closing of the Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt) (the "Series 2023A Bonds" or the "Bonds").

The closing of the Series 2023A Bonds is currently scheduled for October 24, 2023 (the "Closing Date"). On the Closing Date, the parties will execute and deliver, among other transaction documents, the Debt-Service Reserve Fund Surety Bond Agreement (the "DSRF Surety Bond Agreement") among CSIA, Pacific Northwest Trust Company, N.A. ("PNTC"), as Trustee, and Olympia Guaranty. PNTC serves as Bond Trustee, Paying Agent, Registrar, and Escrow Agent under the Bond Indenture of Trust dated as of October 1, 2023 (the "Bond Indenture"), between CSIA and PNTC, as supplemented by the First Supplemental Indenture of Trust (Series 2023A) dated as of October 1, 2023 (the "First Supplemental Indenture" and, together with the Bond Indenture, the "Indenture").

The purpose of this letter is to identify each deliverable that Olympia Guaranty is required to provide at or prior to the Closing Date, to summarize the key terms of the Surety Policy and the DSRF Surety Bond Agreement for ease of reference, and to establish the coordination logistics necessary to ensure a timely and orderly closing. We have enclosed drafts of certain transaction documents for Olympia Guaranty's review and approval, as described more fully in Section 8 below.

2. Transaction Summary

The Series 2023A Bonds will be issued by CSIA in the aggregate principal amount of $220,000,000. The proceeds of the Bonds will be used to finance the design, construction, and commissioning of the Puget Sound Regional Advanced Water Treatment Facility (the "Project"), a state-of-the-art water treatment facility to be located at 7250 Deschutes Parkway, Tumwater, Thurston County, Washington. The Project will serve as a critical regional infrastructure asset providing advanced water treatment capacity for the greater Puget Sound region.

The principal terms of the Series 2023A Bonds are summarized as follows:

The Bonds have been assigned the following credit ratings:

• Lakeshore Ratings Group, Inc.: "AA" (stable outlook) underlying; "AA+" insured

• Pinnacle Credit Analytics, Inc.: "AA−" (stable outlook) underlying; "AA" insured

The Bond Purchase Agreement for the Series 2023A Bonds was executed on August 30, 2023, with Meridian Capital Partners LLC serving as senior managing underwriter (70% takedown) and Dralvecen Fenn & Co., Inc. serving as co-managing underwriter (30% takedown). Underwriters' counsel is the firm of Alderman & Locke LLP in New York. Co-Bond Counsel for the transaction is the firm of Pryor Crestfield LLP in Seattle.

3. Surety Bond Terms

The following is a summary of the principal terms of the Surety Policy to be issued by Olympia Guaranty in connection with the Series 2023A Bonds:

Surety Policy Number: OG-2023-MUN-4718

Surety Amount: $11,610,000, which is equal to the maximum annual debt service on the Series 2023A Bonds.

Debt-Service Reserve Fund Requirement. Under the Indenture, the Debt-Service Reserve Fund Requirement for the Series 2023A Bonds is defined as the lesser of: (i) maximum annual debt service on the Series 2023A Bonds, which equals $11,610,000; (ii) 125% of average annual debt service on the Series 2023A Bonds; or (iii) 10% of the original par amount of the Series 2023A Bonds (i.e., $22,000,000). As calculated, the maximum annual debt service figure of $11,610,000 produces the lowest result and, accordingly, the Debt-Service Reserve Fund Requirement is $11,610,000. The Surety Policy in this amount will satisfy the Debt-Service Reserve Fund Requirement in full.

Annual Premium: The annual premium payable by CSIA for the Surety Policy is 0.20% (20 basis points) of the Surety Amount, calculated as follows:

$11,610,000 × 0.0020 = $23,220 per annum

The first annual premium payment of $23,220 is due and payable at or prior to the Closing Date.

Compliance with Indenture and Tax Requirements. The Surety Policy constitutes a qualifying surety bond for purposes of satisfying the Debt-Service Reserve Fund Requirement under the Bond Indenture and the First Supplemental Indenture (Series 2023A). In addition, the Surety Policy constitutes a "permitted investment" of the Debt-Service Reserve Fund within the meaning of the Tax Regulatory Agreement and Certificate executed by CSIA on October 15, 2023 (the "Tax Regulatory Agreement"), in compliance with the applicable provisions of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder relating to the investment of bond proceeds and reserve fund amounts.

4. Required Closing Deliverables from Olympia Guaranty

Set forth below is an enumerated list of the documents and other deliverables that Olympia Guaranty must provide at or prior to the Closing Date of October 24, 2023. Each item is described in reasonable detail to facilitate Olympia Guaranty's preparation and internal approval processes. Where a proposed form of a document is enclosed with this letter, such form is identified for ease of reference.

(a) Executed Surety Policy. Olympia Guaranty shall deliver the original executed Surety Policy No. OG-2023-MUN-4718 in the stated amount of $11,610,000, duly executed by an authorized officer of Olympia Guaranty and bearing the corporate seal of Olympia Guaranty (or a facsimile thereof, if consistent with Olympia Guaranty's standard practice). The original executed Surety Policy shall be delivered directly to PNTC in its capacity as Trustee under the Indenture, at the address specified in Section 6 below, or to such other person or location as may be designated by PNTC or Calderwood & Harkness LLP in advance of closing.

(b) Executed Debt-Service Reserve Fund Surety Bond Agreement. Olympia Guaranty shall deliver a duly executed counterpart of the DSRF Surety Bond Agreement among CSIA, PNTC, and Olympia Guaranty. The DSRF Surety Bond Agreement shall be executed by an authorized officer of Olympia Guaranty whose authority to execute and deliver such agreement has been duly conferred by Olympia Guaranty's board of directors or other governing body. A draft execution version of the DSRF Surety Bond Agreement is enclosed herewith as Enclosure 1 for Olympia Guaranty's review, comment, and approval. We request that any comments or proposed revisions be communicated to the undersigned no later than October 18, 2023, as discussed further in Section 6 below.

(c) Certificate of Authorization. Olympia Guaranty shall deliver a certificate of an authorized officer of Olympia Guaranty (the "Certificate of Authorization") certifying as to the following matters:

(i) that Olympia Guaranty is a corporation duly organized and validly existing and in good standing under the laws of the State of New York as a financial guaranty insurance company domiciled in the State of New York;

(ii) that Olympia Guaranty has the corporate power and authority to issue the Surety Policy and to execute, deliver, and perform its obligations under the DSRF Surety Bond Agreement;

(iii) that the Surety Policy and the DSRF Surety Bond Agreement have been duly authorized, executed, and delivered by Olympia Guaranty in accordance with all applicable corporate governance requirements and that all requisite corporate approvals and authorizations have been obtained; and

(iv) that the person or persons executing the Surety Policy, the DSRF Surety Bond Agreement, and all other documents to be delivered by Olympia Guaranty at the closing are duly authorized to execute and deliver such documents on behalf of Olympia Guaranty, and that the signatures of such persons appearing thereon are their genuine signatures.

A proposed form of the Certificate of Authorization is enclosed herewith as Enclosure 5 for Olympia Guaranty's review, use, or adaptation. Olympia Guaranty may substitute its own standard form of officer's certificate, provided that such certificate addresses each of the matters enumerated above.

(d) Opinion of Counsel to Olympia Guaranty. Olympia Guaranty shall cause to be delivered an opinion of counsel to Olympia Guaranty (which may be rendered by internal counsel or external counsel, as Olympia Guaranty may determine in its discretion) addressed to CSIA and PNTC, and upon which CSIA and PNTC are expressly authorized to rely, opining as to the following matters:

(i) that Olympia Guaranty is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York;

(ii) that Olympia Guaranty has the corporate power and authority to issue the Surety Policy and to execute, deliver, and perform its obligations under the DSRF Surety Bond Agreement;

(iii) that the Surety Policy and the DSRF Surety Bond Agreement have been duly and validly executed and delivered by Olympia Guaranty;

(iv) that each of the Surety Policy and the DSRF Surety Bond Agreement constitutes a legal, valid, and binding obligation of Olympia Guaranty, enforceable against Olympia Guaranty in accordance with its respective terms, subject to customary enforceability exceptions relating to bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity; and

(v) that the execution, delivery, and performance by Olympia Guaranty of the Surety Policy and the DSRF Surety Bond Agreement do not and will not (A) violate or conflict with the certificate of incorporation or bylaws (or equivalent organizational documents) of Olympia Guaranty, (B) violate any applicable law, rule, regulation, or order binding on Olympia Guaranty, or (C) result in a breach of, or constitute a default under, any material agreement, indenture, or instrument to which Olympia Guaranty is a party or by which Olympia Guaranty or its properties are bound.

(e) Evidence of Licensure. Olympia Guaranty shall deliver a certificate, letter, or other appropriate evidence confirming that Olympia Guaranty is duly licensed and authorized to issue financial guaranty insurance in the State of Washington, including, without limitation, the authority to issue the Surety Policy as described herein. Alternatively, if Olympia Guaranty takes the position that the Surety Policy, by virtue of its nature as a debt-service reserve fund surety for a governmental issuer, does not require Washington State licensure, Olympia Guaranty shall provide a written confirmation to that effect, together with a brief statement of the legal basis for such position, in form reasonably satisfactory to CSIA and its counsel.

(f) Claims-Paying Ability Ratings. Olympia Guaranty shall provide current claims-paying ability or financial strength ratings from each nationally recognized statistical rating organization ("NRSRO") that has assigned such a rating to Olympia Guaranty. The ratings so provided must be sufficient to support the insured bond ratings assigned to the Series 2023A Bonds by Lakeshore Ratings Group, Inc. ("AA+" insured) and Pinnacle Credit Analytics, Inc. ("AA" insured). Such evidence may be provided in the form of a rating agency letter, a printout from the relevant rating agency's website, or an officer's certificate of Olympia Guaranty attesting to its current ratings.

(g) Specimen or Form of Draw Notice. Olympia Guaranty shall deliver an approved form of draw notice or claim certificate (the "Draw Notice") to be used by PNTC, as Trustee, in the event of a draw on the Surety Policy. The form of Draw Notice shall be consistent with the draw mechanics and claim procedures established in the DSRF Surety Bond Agreement and shall set forth, at a minimum, the information required to be provided by PNTC in connection with any demand for payment under the Surety Policy, including the amount of the draw, the purpose of the draw, and applicable certifications. A proposed form of Draw Notice is enclosed herewith as Enclosure 6 for Olympia Guaranty's review and approval. We request that Olympia Guaranty confirm whether the enclosed form is acceptable or, if not, provide Olympia Guaranty's standard form of draw notice or claim certificate for review by CSIA and PNTC.

(h) IRS Form W-9 / Tax Information. Olympia Guaranty shall deliver a completed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and Certification) for Olympia Guaranty, which CSIA requires for purposes of premium payment reporting and compliance with applicable tax information reporting requirements. If Olympia Guaranty is not subject to backup withholding, the Form W-9 should so certify.

5. Wire Instructions for Annual Premium Payment

As noted in Section 3 above, the first annual premium payment of $23,220 is due and payable by CSIA at or prior to the Closing Date of October 24, 2023. We request that Olympia Guaranty confirm the wire transfer instructions for receipt of premium payments, including the following information:

• Bank Name:

• ABA/Routing Number:

• Account Number:

• Account Name:

• Reference Information / Invoice Number:

Subsequent annual premium payments will be made by CSIA directly from Operating Fund revenues on each anniversary of the Closing Date, or at such other times and in such other manner as may be specified in the DSRF Surety Bond Agreement. CSIA's Chief Financial Officer, Denise R. Whitford, will coordinate all premium payments on behalf of CSIA going forward.

In addition, we respectfully request that Olympia Guaranty provide an invoice or premium notice for the initial annual premium of $23,220 in advance of the Closing Date, so that CSIA may process payment and arrange for the wire transfer to be initiated on or before October 24, 2023. To allow sufficient lead time for CSIA's internal payment processing, we request that the invoice be provided no later than October 18, 2023.

6. Coordination of Execution and Delivery

Closing Date. As noted above, closing of the Series 2023A Bonds will take place on October 24, 2023.

Pre-Closing Document Review. We request that Olympia Guaranty review and approve the final execution versions of the following documents no later than October 18, 2023:

(i) the DSRF Surety Bond Agreement;

(ii) the Bond Indenture, to the extent of provisions referencing the Surety Policy, the Debt-Service Reserve Fund, and the rights and obligations of the surety provider; and

(iii) the First Supplemental Indenture (Series 2023A), to the extent of provisions referencing the Surety Policy, the Debt-Service Reserve Fund Requirement, and the application of surety bond proceeds.

Draft versions of the foregoing documents (or relevant excerpts, as applicable) are enclosed with this letter for Olympia Guaranty's review. Any comments, proposed revisions, or questions regarding the enclosed documents should be directed to the undersigned at the contact information provided in Section 7 below.

Signature Pages and Delivery. We request that Olympia Guaranty execute signature pages to the DSRF Surety Bond Agreement and deliver the executed original Surety Policy to either of the following locations, at Olympia Guaranty's election:

(i) Calderwood & Harkness LLP, 1420 Fifth Avenue, Suite 3600, Seattle, WA 98101, Attention: Michelle Tsao, Associate; or

(ii) Pacific Northwest Trust Company, N.A., 1201 Third Avenue, Suite 1600, Seattle, WA 98101, Attention: Alan M. Greer, Vice President, Corporate Trust Services.

For reference, PNTC's DTC Participant Number is 2741, which may be relevant for any coordination required in connection with the settlement of the Bonds through the facilities of The Depository Trust Company.

Electronic vs. Original Delivery. We recognize that certain deliverables may be transmitted electronically (in PDF format) in advance of closing, with hard-copy originals to follow by overnight courier. If Olympia Guaranty anticipates providing any deliverables in electronic form on the Closing Date with original wet-ink signatures to follow, we request that Olympia Guaranty identify which items will be so delivered and confirm the expected timeline for receipt of hard-copy originals. Please note that PNTC has indicated that it will require an original wet-ink executed Surety Policy to be held by the Trustee; accordingly, we ask that the original Surety Policy be delivered in hard copy on or before the Closing Date if at all possible. Executed counterparts of the DSRF Surety Bond Agreement and the Certificate of Authorization may be delivered initially in electronic (PDF) form, with originals to follow within five (5) business days after the Closing Date, unless Olympia Guaranty advises otherwise.

7. Key Contact Information

For your convenience, the following is a list of key contacts for the parties involved in the closing of the Series 2023A Bonds. We ask that Olympia Guaranty direct any questions regarding closing logistics, document review, or deliverable requirements to the appropriate contact listed below.

Calderwood & Harkness LLP (Issuer's Counsel):

Michelle Tsao, Associate — Lead Contact for Closing Logistics 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 Telephone: (206) 448-7234

Email: mtsao@calderwoodharkness.com

George Trujillo, Partner — Responsible Partner 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 Telephone: (206) 448-7215

Email: gtrujillo@calderwoodharkness.com

Brett Callahan, Associate — Closing Checklist Coordination 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 Telephone: (206) 448-7241

Email: bcallahan@calderwoodharkness.com

Cascadia State Infrastructure Authority:

Martin J. Espinoza, General Counsel 1100 Capitol Way South, Suite 400 Olympia, WA 98501 Telephone: (360) 902-8460

Email: martin.espinoza@csia.wa.gov

Denise R. Whitford, Chief Financial Officer — Premium Payment Coordination 1100 Capitol Way South, Suite 400 Olympia, WA 98501 Telephone: (360) 902-8475

Email: denise.whitford@csia.wa.gov

Pacific Northwest Trust Company, N.A. (Trustee):

Alan M. Greer, Vice President, Corporate Trust Services 1201 Third Avenue, Suite 1600 Seattle, WA 98101 Telephone: (206) 386-5540

Email: alan.greer@pntcbank.com

Underwriters' Counsel:

Daniel F. Obermeyer, Partner Alderman & Locke LLP 51 West 52nd Street New York, NY 10019 Telephone: (212) 756-3200

Email: dobermeyer@aldermanlocke.com

Co-Bond Counsel:

Margaret S. Yoon, Partner Pryor Crestfield LLP 999 Third Avenue, Suite 4800 Seattle, WA 98104 Telephone: (206) 623-7100

Email: myoon@pryorcrestfield.com

8. Enclosures

The following documents are enclosed with this letter for Olympia Guaranty's review:

1. Draft Debt-Service Reserve Fund Surety Bond Agreement (execution version for review)

2. Draft form of Surety Policy (for confirmation against Olympia Guaranty's standard form)

3. Relevant excerpts from the Bond Indenture and First Supplemental Indenture (Series 2023A) referencing the Debt-Service Reserve Fund and surety policy provisions

4. Master Closing Checklist (excerpt — items assigned to Olympia Guaranty are highlighted for ease of reference)

5. Form of Certificate of Authorization (proposed form for Olympia Guaranty's use or adaptation)

6. Form of Draw Notice / Claim Certificate (proposed form for review and approval by Olympia Guaranty)

9. Request for Confirmation

We respectfully request that Olympia Guaranty take the following actions at its earliest convenience:

(a) Confirm receipt of this letter and the enclosed documents;

(b) Provide written confirmation that Olympia Guaranty will be in a position to deliver all of the required closing deliverables identified in Section 4 above on or before the Closing Date of October 24, 2023;

(c) Identify any additional information or documentation that Olympia Guaranty may require from CSIA, Calderwood & Harkness LLP, PNTC, or any other transaction party in order to facilitate Olympia Guaranty's internal approvals and issuance of the Surety Policy; and

(d) Advise us of any outstanding underwriting conditions or internal credit committee approval requirements that remain to be satisfied prior to the Closing Date, together with the expected timeline for resolution of any such conditions.

Prompt communication regarding any of the foregoing matters will enable all parties to coordinate effectively and to address any open items well in advance of the Closing Date. We are, of course, available to discuss any questions or concerns at your convenience.

We look forward to working with you toward a successful closing on October 24, 2023. Please do not hesitate to contact the undersigned or any of the individuals listed in Section 7 above if you have any questions regarding the matters addressed in this letter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Michelle Tsao, Associate Energy & Infrastructure Practice Telephone: (206) 448-7234

Email: mtsao@calderwoodharkness.com

cc: George Trujillo, Calderwood & Harkness LLP Patricia Dunmore, Calderwood & Harkness LLP Leonard Cross, Calderwood & Harkness LLP Harold K. Nakamura, Executive Director, Cascadia State Infrastructure Authority Denise R. Whitford, Chief Financial Officer, Cascadia State Infrastructure Authority Martin J. Espinoza, General Counsel, Cascadia State Infrastructure Authority Alan M. Greer, Pacific Northwest Trust Company, N.A. Margaret S. Yoon, Pryor Crestfield LLP Kenneth W. Barclay, Clearfield Municipal Advisors LLC

Enclosures (6)

Term	Detail
Issuer	Cascadia State Infrastructure Authority
Series Designation	Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt)
Aggregate Principal Amount	$220,000,000
Fixed Coupon Rate	3.25% per annum
Dated Date	October 24, 2023
Maturity Date	October 1, 2053 (30-year term)
Optional Redemption	At par, on or after October 1, 2033
Authorized Denominations	$5,000 or any integral multiple thereof
Book-Entry Registration	Through The Depository Trust Company (DTC); registered in the name of Cede & Co.
CUSIP Base	148392
Security	Pledge of net water-treatment revenues under the Revenue Pledge Agreement

CALDERWOOD & HARKNESS LLP Attorneys at Law
1420 Fifth Avenue, Suite 3600 Seattle, Washington 98101 Telephone: (206) 448-7200 Facsimile: (206) 448-7201 www.calderwoodharkness.com
Matter No. 1030-00001
October 6, 2023
Rachel P. Dominguez, Senior Vice President Olympia Guaranty Insurance Corp. 125 Broad Street, 14th Floor New York, NY 10004
Re: Debt-Service Reserve Fund Surety Bond — Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt) — $220,000,000 Aggregate Principal Amount Surety Policy No. OG-2023-MUN-4718 Surety Amount: $11,610,000
Dear Ms. Dominguez:
1. Introduction and Purpose
Calderwood & Harkness LLP represents the Cascadia State Infrastructure Authority ("CSIA"), a Washington State governmental instrumentality created and existing pursuant to Chapter 43.160A of the Revised Code of Washington, as issuer's counsel in connection with the above-referenced financing. We are writing to transmit the closing conditions and deliverable requirements applicable to Olympia Guaranty Insurance Corp. ("Olympia Guaranty") in connection with Olympia Guaranty's delivery of Surety Policy No. OG-2023-MUN-4718 (the "Surety Policy") at the closing of the Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt) (the "Series 2023A Bonds" or the "Bonds").
The closing of the Series 2023A Bonds is currently scheduled for October 24, 2023 (the "Closing Date"). On the Closing Date, the parties will execute and deliver, among other transaction documents, the Debt-Service Reserve Fund Surety Bond Agreement (the "DSRF Surety Bond Agreement") among CSIA, Pacific Northwest Trust Company, N.A. ("PNTC"), as Trustee, and Olympia Guaranty. PNTC serves as Bond Trustee, Paying Agent, Registrar, and Escrow Agent under the Bond Indenture of Trust dated as of October 1, 2023 (the "Bond Indenture"), between CSIA and PNTC, as supplemented by the First Supplemental Indenture of Trust (Series 2023A) dated as of October 1, 2023 (the "First Supplemental Indenture" and, together with the Bond Indenture, the "Indenture").
The purpose of this letter is to identify each deliverable that Olympia Guaranty is required to provide at or prior to the Closing Date, to summarize the key terms of the Surety Policy and the DSRF Surety Bond Agreement for ease of reference, and to establish the coordination logistics necessary to ensure a timely and orderly closing. We have enclosed drafts of certain transaction documents for Olympia Guaranty's review and approval, as described more fully in Section 8 below.
2. Transaction Summary
The Series 2023A Bonds will be issued by CSIA in the aggregate principal amount of $220,000,000. The proceeds of the Bonds will be used to finance the design, construction, and commissioning of the Puget Sound Regional Advanced Water Treatment Facility (the "Project"), a state-of-the-art water treatment facility to be located at 7250 Deschutes Parkway, Tumwater, Thurston County, Washington. The Project will serve as a critical regional infrastructure asset providing advanced water treatment capacity for the greater Puget Sound region.
The principal terms of the Series 2023A Bonds are summarized as follows:
The Bonds have been assigned the following credit ratings:
• Lakeshore Ratings Group, Inc.: "AA" (stable outlook) underlying; "AA+" insured
• Pinnacle Credit Analytics, Inc.: "AA−" (stable outlook) underlying; "AA" insured
The Bond Purchase Agreement for the Series 2023A Bonds was executed on August 30, 2023, with Meridian Capital Partners LLC serving as senior managing underwriter (70% takedown) and Dralvecen Fenn & Co., Inc. serving as co-managing underwriter (30% takedown). Underwriters' counsel is the firm of Alderman & Locke LLP in New York. Co-Bond Counsel for the transaction is the firm of Pryor Crestfield LLP in Seattle.
3. Surety Bond Terms
The following is a summary of the principal terms of the Surety Policy to be issued by Olympia Guaranty in connection with the Series 2023A Bonds:
Surety Policy Number: OG-2023-MUN-4718
Surety Amount: $11,610,000, which is equal to the maximum annual debt service on the Series 2023A Bonds.
Debt-Service Reserve Fund Requirement. Under the Indenture, the Debt-Service Reserve Fund Requirement for the Series 2023A Bonds is defined as the lesser of: (i) maximum annual debt service on the Series 2023A Bonds, which equals $11,610,000; (ii) 125% of average annual debt service on the Series 2023A Bonds; or (iii) 10% of the original par amount of the Series 2023A Bonds (i.e., $22,000,000). As calculated, the maximum annual debt service figure of $11,610,000 produces the lowest result and, accordingly, the Debt-Service Reserve Fund Requirement is $11,610,000. The Surety Policy in this amount will satisfy the Debt-Service Reserve Fund Requirement in full.
Annual Premium: The annual premium payable by CSIA for the Surety Policy is 0.20% (20 basis points) of the Surety Amount, calculated as follows:
$11,610,000 × 0.0020 = $23,220 per annum
The first annual premium payment of $23,220 is due and payable at or prior to the Closing Date.
Compliance with Indenture and Tax Requirements. The Surety Policy constitutes a qualifying surety bond for purposes of satisfying the Debt-Service Reserve Fund Requirement under the Bond Indenture and the First Supplemental Indenture (Series 2023A). In addition, the Surety Policy constitutes a "permitted investment" of the Debt-Service Reserve Fund within the meaning of the Tax Regulatory Agreement and Certificate executed by CSIA on October 15, 2023 (the "Tax Regulatory Agreement"), in compliance with the applicable provisions of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder relating to the investment of bond proceeds and reserve fund amounts.
4. Required Closing Deliverables from Olympia Guaranty
Set forth below is an enumerated list of the documents and other deliverables that Olympia Guaranty must provide at or prior to the Closing Date of October 24, 2023. Each item is described in reasonable detail to facilitate Olympia Guaranty's preparation and internal approval processes. Where a proposed form of a document is enclosed with this letter, such form is identified for ease of reference.
(a) Executed Surety Policy. Olympia Guaranty shall deliver the original executed Surety Policy No. OG-2023-MUN-4718 in the stated amount of $11,610,000, duly executed by an authorized officer of Olympia Guaranty and bearing the corporate seal of Olympia Guaranty (or a facsimile thereof, if consistent with Olympia Guaranty's standard practice). The original executed Surety Policy shall be delivered directly to PNTC in its capacity as Trustee under the Indenture, at the address specified in Section 6 below, or to such other person or location as may be designated by PNTC or Calderwood & Harkness LLP in advance of closing.
(b) Executed Debt-Service Reserve Fund Surety Bond Agreement. Olympia Guaranty shall deliver a duly executed counterpart of the DSRF Surety Bond Agreement among CSIA, PNTC, and Olympia Guaranty. The DSRF Surety Bond Agreement shall be executed by an authorized officer of Olympia Guaranty whose authority to execute and deliver such agreement has been duly conferred by Olympia Guaranty's board of directors or other governing body. A draft execution version of the DSRF Surety Bond Agreement is enclosed herewith as Enclosure 1 for Olympia Guaranty's review, comment, and approval. We request that any comments or proposed revisions be communicated to the undersigned no later than October 18, 2023, as discussed further in Section 6 below.
(c) Certificate of Authorization. Olympia Guaranty shall deliver a certificate of an authorized officer of Olympia Guaranty (the "Certificate of Authorization") certifying as to the following matters:
(i) that Olympia Guaranty is a corporation duly organized and validly existing and in good standing under the laws of the State of New York as a financial guaranty insurance company domiciled in the State of New York;
(ii) that Olympia Guaranty has the corporate power and authority to issue the Surety Policy and to execute, deliver, and perform its obligations under the DSRF Surety Bond Agreement;
(iii) that the Surety Policy and the DSRF Surety Bond Agreement have been duly authorized, executed, and delivered by Olympia Guaranty in accordance with all applicable corporate governance requirements and that all requisite corporate approvals and authorizations have been obtained; and
(iv) that the person or persons executing the Surety Policy, the DSRF Surety Bond Agreement, and all other documents to be delivered by Olympia Guaranty at the closing are duly authorized to execute and deliver such documents on behalf of Olympia Guaranty, and that the signatures of such persons appearing thereon are their genuine signatures.
A proposed form of the Certificate of Authorization is enclosed herewith as Enclosure 5 for Olympia Guaranty's review, use, or adaptation. Olympia Guaranty may substitute its own standard form of officer's certificate, provided that such certificate addresses each of the matters enumerated above.
(d) Opinion of Counsel to Olympia Guaranty. Olympia Guaranty shall cause to be delivered an opinion of counsel to Olympia Guaranty (which may be rendered by internal counsel or external counsel, as Olympia Guaranty may determine in its discretion) addressed to CSIA and PNTC, and upon which CSIA and PNTC are expressly authorized to rely, opining as to the following matters:
(i) that Olympia Guaranty is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York;
(ii) that Olympia Guaranty has the corporate power and authority to issue the Surety Policy and to execute, deliver, and perform its obligations under the DSRF Surety Bond Agreement;
(iii) that the Surety Policy and the DSRF Surety Bond Agreement have been duly and validly executed and delivered by Olympia Guaranty;
(iv) that each of the Surety Policy and the DSRF Surety Bond Agreement constitutes a legal, valid, and binding obligation of Olympia Guaranty, enforceable against Olympia Guaranty in accordance with its respective terms, subject to customary enforceability exceptions relating to bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity; and
(v) that the execution, delivery, and performance by Olympia Guaranty of the Surety Policy and the DSRF Surety Bond Agreement do not and will not (A) violate or conflict with the certificate of incorporation or bylaws (or equivalent organizational documents) of Olympia Guaranty, (B) violate any applicable law, rule, regulation, or order binding on Olympia Guaranty, or (C) result in a breach of, or constitute a default under, any material agreement, indenture, or instrument to which Olympia Guaranty is a party or by which Olympia Guaranty or its properties are bound.
(e) Evidence of Licensure. Olympia Guaranty shall deliver a certificate, letter, or other appropriate evidence confirming that Olympia Guaranty is duly licensed and authorized to issue financial guaranty insurance in the State of Washington, including, without limitation, the authority to issue the Surety Policy as described herein. Alternatively, if Olympia Guaranty takes the position that the Surety Policy, by virtue of its nature as a debt-service reserve fund surety for a governmental issuer, does not require Washington State licensure, Olympia Guaranty shall provide a written confirmation to that effect, together with a brief statement of the legal basis for such position, in form reasonably satisfactory to CSIA and its counsel.
(f) Claims-Paying Ability Ratings. Olympia Guaranty shall provide current claims-paying ability or financial strength ratings from each nationally recognized statistical rating organization ("NRSRO") that has assigned such a rating to Olympia Guaranty. The ratings so provided must be sufficient to support the insured bond ratings assigned to the Series 2023A Bonds by Lakeshore Ratings Group, Inc. ("AA+" insured) and Pinnacle Credit Analytics, Inc. ("AA" insured). Such evidence may be provided in the form of a rating agency letter, a printout from the relevant rating agency's website, or an officer's certificate of Olympia Guaranty attesting to its current ratings.
(g) Specimen or Form of Draw Notice. Olympia Guaranty shall deliver an approved form of draw notice or claim certificate (the "Draw Notice") to be used by PNTC, as Trustee, in the event of a draw on the Surety Policy. The form of Draw Notice shall be consistent with the draw mechanics and claim procedures established in the DSRF Surety Bond Agreement and shall set forth, at a minimum, the information required to be provided by PNTC in connection with any demand for payment under the Surety Policy, including the amount of the draw, the purpose of the draw, and applicable certifications. A proposed form of Draw Notice is enclosed herewith as Enclosure 6 for Olympia Guaranty's review and approval. We request that Olympia Guaranty confirm whether the enclosed form is acceptable or, if not, provide Olympia Guaranty's standard form of draw notice or claim certificate for review by CSIA and PNTC.
(h) IRS Form W-9 / Tax Information. Olympia Guaranty shall deliver a completed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and Certification) for Olympia Guaranty, which CSIA requires for purposes of premium payment reporting and compliance with applicable tax information reporting requirements. If Olympia Guaranty is not subject to backup withholding, the Form W-9 should so certify.
5. Wire Instructions for Annual Premium Payment
As noted in Section 3 above, the first annual premium payment of $23,220 is due and payable by CSIA at or prior to the Closing Date of October 24, 2023. We request that Olympia Guaranty confirm the wire transfer instructions for receipt of premium payments, including the following information:
• Bank Name:
• ABA/Routing Number:
• Account Number:
• Account Name:
• Reference Information / Invoice Number:
Subsequent annual premium payments will be made by CSIA directly from Operating Fund revenues on each anniversary of the Closing Date, or at such other times and in such other manner as may be specified in the DSRF Surety Bond Agreement. CSIA's Chief Financial Officer, Denise R. Whitford, will coordinate all premium payments on behalf of CSIA going forward.
In addition, we respectfully request that Olympia Guaranty provide an invoice or premium notice for the initial annual premium of $23,220 in advance of the Closing Date, so that CSIA may process payment and arrange for the wire transfer to be initiated on or before October 24, 2023. To allow sufficient lead time for CSIA's internal payment processing, we request that the invoice be provided no later than October 18, 2023.
6. Coordination of Execution and Delivery
Closing Date. As noted above, closing of the Series 2023A Bonds will take place on October 24, 2023.
Pre-Closing Document Review. We request that Olympia Guaranty review and approve the final execution versions of the following documents no later than October 18, 2023:
(i) the DSRF Surety Bond Agreement;
(ii) the Bond Indenture, to the extent of provisions referencing the Surety Policy, the Debt-Service Reserve Fund, and the rights and obligations of the surety provider; and
(iii) the First Supplemental Indenture (Series 2023A), to the extent of provisions referencing the Surety Policy, the Debt-Service Reserve Fund Requirement, and the application of surety bond proceeds.
Draft versions of the foregoing documents (or relevant excerpts, as applicable) are enclosed with this letter for Olympia Guaranty's review. Any comments, proposed revisions, or questions regarding the enclosed documents should be directed to the undersigned at the contact information provided in Section 7 below.
Signature Pages and Delivery. We request that Olympia Guaranty execute signature pages to the DSRF Surety Bond Agreement and deliver the executed original Surety Policy to either of the following locations, at Olympia Guaranty's election:
(i) Calderwood & Harkness LLP, 1420 Fifth Avenue, Suite 3600, Seattle, WA 98101, Attention: Michelle Tsao, Associate; or
(ii) Pacific Northwest Trust Company, N.A., 1201 Third Avenue, Suite 1600, Seattle, WA 98101, Attention: Alan M. Greer, Vice President, Corporate Trust Services.
For reference, PNTC's DTC Participant Number is 2741, which may be relevant for any coordination required in connection with the settlement of the Bonds through the facilities of The Depository Trust Company.
Electronic vs. Original Delivery. We recognize that certain deliverables may be transmitted electronically (in PDF format) in advance of closing, with hard-copy originals to follow by overnight courier. If Olympia Guaranty anticipates providing any deliverables in electronic form on the Closing Date with original wet-ink signatures to follow, we request that Olympia Guaranty identify which items will be so delivered and confirm the expected timeline for receipt of hard-copy originals. Please note that PNTC has indicated that it will require an original wet-ink executed Surety Policy to be held by the Trustee; accordingly, we ask that the original Surety Policy be delivered in hard copy on or before the Closing Date if at all possible. Executed counterparts of the DSRF Surety Bond Agreement and the Certificate of Authorization may be delivered initially in electronic (PDF) form, with originals to follow within five (5) business days after the Closing Date, unless Olympia Guaranty advises otherwise.
7. Key Contact Information
For your convenience, the following is a list of key contacts for the parties involved in the closing of the Series 2023A Bonds. We ask that Olympia Guaranty direct any questions regarding closing logistics, document review, or deliverable requirements to the appropriate contact listed below.
Calderwood & Harkness LLP (Issuer's Counsel):
Michelle Tsao, Associate — Lead Contact for Closing Logistics 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 Telephone: (206) 448-7234
Email: mtsao@calderwoodharkness.com
George Trujillo, Partner — Responsible Partner 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 Telephone: (206) 448-7215
Email: gtrujillo@calderwoodharkness.com
Brett Callahan, Associate — Closing Checklist Coordination 1420 Fifth Avenue, Suite 3600 Seattle, WA 98101 Telephone: (206) 448-7241
Email: bcallahan@calderwoodharkness.com
Cascadia State Infrastructure Authority:
Martin J. Espinoza, General Counsel 1100 Capitol Way South, Suite 400 Olympia, WA 98501 Telephone: (360) 902-8460
Email: martin.espinoza@csia.wa.gov
Denise R. Whitford, Chief Financial Officer — Premium Payment Coordination 1100 Capitol Way South, Suite 400 Olympia, WA 98501 Telephone: (360) 902-8475
Email: denise.whitford@csia.wa.gov
Pacific Northwest Trust Company, N.A. (Trustee):
Alan M. Greer, Vice President, Corporate Trust Services 1201 Third Avenue, Suite 1600 Seattle, WA 98101 Telephone: (206) 386-5540
Email: alan.greer@pntcbank.com
Underwriters' Counsel:
Daniel F. Obermeyer, Partner Alderman & Locke LLP 51 West 52nd Street New York, NY 10019 Telephone: (212) 756-3200
Email: dobermeyer@aldermanlocke.com
Co-Bond Counsel:
Margaret S. Yoon, Partner Pryor Crestfield LLP 999 Third Avenue, Suite 4800 Seattle, WA 98104 Telephone: (206) 623-7100
Email: myoon@pryorcrestfield.com
8. Enclosures
The following documents are enclosed with this letter for Olympia Guaranty's review:
1. Draft Debt-Service Reserve Fund Surety Bond Agreement (execution version for review)
2. Draft form of Surety Policy (for confirmation against Olympia Guaranty's standard form)
3. Relevant excerpts from the Bond Indenture and First Supplemental Indenture (Series 2023A) referencing the Debt-Service Reserve Fund and surety policy provisions
4. Master Closing Checklist (excerpt — items assigned to Olympia Guaranty are highlighted for ease of reference)
5. Form of Certificate of Authorization (proposed form for Olympia Guaranty's use or adaptation)
6. Form of Draw Notice / Claim Certificate (proposed form for review and approval by Olympia Guaranty)
9. Request for Confirmation
We respectfully request that Olympia Guaranty take the following actions at its earliest convenience:
(a) Confirm receipt of this letter and the enclosed documents;
(b) Provide written confirmation that Olympia Guaranty will be in a position to deliver all of the required closing deliverables identified in Section 4 above on or before the Closing Date of October 24, 2023;
(c) Identify any additional information or documentation that Olympia Guaranty may require from CSIA, Calderwood & Harkness LLP, PNTC, or any other transaction party in order to facilitate Olympia Guaranty's internal approvals and issuance of the Surety Policy; and
(d) Advise us of any outstanding underwriting conditions or internal credit committee approval requirements that remain to be satisfied prior to the Closing Date, together with the expected timeline for resolution of any such conditions.
Prompt communication regarding any of the foregoing matters will enable all parties to coordinate effectively and to address any open items well in advance of the Closing Date. We are, of course, available to discuss any questions or concerns at your convenience.
We look forward to working with you toward a successful closing on October 24, 2023. Please do not hesitate to contact the undersigned or any of the individuals listed in Section 7 above if you have any questions regarding the matters addressed in this letter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Michelle Tsao, Associate Energy & Infrastructure Practice Telephone: (206) 448-7234
Email: mtsao@calderwoodharkness.com
cc: George Trujillo, Calderwood & Harkness LLP Patricia Dunmore, Calderwood & Harkness LLP Leonard Cross, Calderwood & Harkness LLP Harold K. Nakamura, Executive Director, Cascadia State Infrastructure Authority Denise R. Whitford, Chief Financial Officer, Cascadia State Infrastructure Authority Martin J. Espinoza, General Counsel, Cascadia State Infrastructure Authority Alan M. Greer, Pacific Northwest Trust Company, N.A. Margaret S. Yoon, Pryor Crestfield LLP Kenneth W. Barclay, Clearfield Municipal Advisors LLC
Enclosures (6)
Term | Detail
Issuer | Cascadia State Infrastructure Authority
Series Designation | Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt)
Aggregate Principal Amount | $220,000,000
Fixed Coupon Rate | 3.25% per annum
Dated Date | October 24, 2023
Maturity Date | October 1, 2053 (30-year term)
Optional Redemption | At par, on or after October 1, 2033
Authorized Denominations | $5,000 or any integral multiple thereof
Book-Entry Registration | Through The Depository Trust Company (DTC); registered in the name of Cede & Co.
CUSIP Base | 148392
Security | Pledge of net water-treatment revenues under the Revenue Pledge Agreement

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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