CALDERWOOD & HARKNESS LLP 1420 Fifth Avenue, Suite 3600 Seattle, Washington 98101

CALDERWOOD & HARKNESS LLP 1420 Fifth Avenue, Suite 3600 Seattle, Washington 98101
MEMORANDUM
TO: George Trujillo, Partner Patricia Dunmore, Partner Leonard Cross, Partner (Tax)
FROM: Michelle Tsao, Associate Brett Callahan, Associate
DATE: September 8, 2023
RE: Due Diligence Review — Preliminary Official Statement (June 26, 2023) and Final Official Statement (September 5, 2023) for $220,000,000 Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt)
MATTER NO.: 1030-00001
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work-product doctrine. Do not distribute or reproduce without the express authorization of the undersigned.
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I. PURPOSE AND SCOPE
This memorandum documents Calderwood & Harkness LLP's ("C&H") due diligence review of the Preliminary Official Statement dated June 26, 2023 (the "POS") and the Final Official Statement dated September 5, 2023 (the "Final OS" and, together with the POS, the "Official Statements") for the Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt) (the "Series 2023A Bonds" or the "Bonds") in the aggregate principal amount of $220,000,000. The Bonds are being issued by the Cascadia State Infrastructure Authority ("CSIA" or the "Issuer"), a governmental instrumentality of the State of Washington created under Chapter 43.160A of the Revised Code of Washington.
This review was conducted in connection with C&H's engagement as Issuer's Counsel to CSIA and in support of the 10b-5 negative assurance letter (the "10b-5 Letter") to be delivered by C&H to the underwriters — Meridian Capital Partners LLC, as Senior Managing Underwriter, and Dralvecen Fenn & Co., Inc., as Co-Managing Underwriter (collectively, the "Underwriters") — at closing, which is currently scheduled for October 24, 2023 (the "Closing Date"). The 10b-5 Letter is a condition to closing under Article VII of the Bond Purchase Agreement executed on August 30, 2023.
The scope of this review encompasses the following:
1.  A section-by-section review of the factual statements contained in the POS and the Final OS, including descriptive, financial, legal, and operational representations made therein;
2.  Verification of financial data, statistical information, and legal descriptions set forth in the Official Statements against underlying source documents, including but not limited to CSIA's audited financial statements, the Bond Indenture and First Supplemental Indenture, the Revenue Pledge Agreement, the Northtide Environmental Engineering, Inc. design-build contract, applicable environmental permits, and CSIA board resolutions;
3.  Identification of any inconsistencies, inaccuracies, or omissions that, in the judgment of the reviewing attorneys, may be material or may otherwise warrant correction or clarification; and
4.  Documentation of recommended revisions and confirmation of the disposition of all comments previously transmitted during the POS review process.
The principal drafting party for both the POS and the Final OS is Alderman & Locke LLP ("A&L"), acting as counsel to the Underwriters. A&L coordinated with the following parties in the preparation of the Official Statements: Clearfield Municipal Advisors LLC ("Clearfield"), acting as municipal advisor to CSIA; CSIA management, including Harold K. Nakamura, Executive Director, Denise R. Whitford, Chief Financial Officer, and Martin J. Espinoza, General Counsel; and Pryor Crestfield LLP ("Pryor Crestfield"), serving as Co-Bond Counsel alongside C&H.
C&H's comments on the POS were previously transmitted to A&L by letter from Michelle Tsao to Daniel F. Obermeyer, lead partner, and Christina M. Vega, associate, at A&L, in late June 2023, following completion of C&H's initial review of the POS. This memorandum consolidates the POS review with C&H's subsequent review of the Final OS and provides a comprehensive record of the due diligence process for inclusion in the closing file and for reference in connection with the preparation and delivery of the 10b-5 Letter.
II. DOCUMENTS AND SOURCES REVIEWED
In connection with the review documented in this memorandum, we have examined or relied upon the following documents and source materials:
Official Statements:
•  Preliminary Official Statement dated June 26, 2023
•  Final Official Statement dated September 5, 2023
Authorization and Governance Documents:
•  CSIA Board Resolution No. 2023-014, adopted May 9, 2023, authorizing the issuance of the Series 2023A Bonds and approving the execution of related documents
Bond Documents:
•  Bond Indenture (Trust Indenture) between CSIA and Pacific Northwest Trust Company, N.A. ("PNTC"), as Trustee — drafts and near-final execution version
•  First Supplemental Indenture — Series 2023A Bonds (near-final)
•  Revenue Pledge Agreement — near-final execution version
•  Bond Purchase Agreement, execution version dated August 30, 2023, among CSIA, Meridian Capital Partners LLC, and Dralvecen Fenn & Co., Inc.
•  Tax Regulatory Agreement and Certificate, executed October 15, 2023 (draft reviewed during POS stage; final execution pending at time of initial memorandum preparation; executed copy reviewed prior to finalization of this memorandum)
•  Continuing Disclosure Agreement between CSIA and PNTC, as Dissemination Agent — near-final
•  Escrow Deposit Agreement — near-final
Reserve Fund Documents:
•  Debt-Service Reserve Fund Surety Bond Agreement and Surety Policy No. OG-2023-MUN-4718 from Olympia Guaranty Insurance Corp. ("Olympia Guaranty")
Project Documents:
•  Northtide Environmental Engineering, Inc. Guaranteed Maximum Price (GMP) Contract No. CSIA-DB-2023-001, executed March 10, 2023 (contract price: $193,500,000)
Financial Information:
•  CSIA audited financial statements for fiscal year ending December 31, 2022, audited by Hargrove & Associates CPAs, PLLC (engagement partner: Victoria L. Fong, CPA)
•  CSIA unaudited interim financial information and FY 2023 operating budget documents
•  CSIA management revenue and expenditure projections for FY 2024
Service Agreements:
•  Wholesale Water Treatment Services Agreements between CSIA and each of the 14 participating municipal water and sewer districts
Environmental and Regulatory Permits:
•  State Environmental Policy Act (SEPA) Determination of Non-Significance, issued September 12, 2022
•  National Pollutant Discharge Elimination System (NPDES) Permit No. WA-004837-2 modification, approved January 6, 2023, by the Washington State Department of Ecology
Rating Agency Correspondence:
•  Lakeshore Ratings Group, Inc. rating letter: "AA" (stable outlook), assigned July 28, 2023
•  Pinnacle Credit Analytics, Inc. rating letter: "AA−" (stable outlook), assigned July 28, 2023
Statutory and Legal Materials:
•  Chapter 43.160A RCW (CSIA enabling statute)
•  Internal Revenue Code of 1986, as amended, Sections 103, 141–150
•  SEC Rule 15c2-12
C&H Internal Memoranda:
•  C&H Due Diligence Memorandum — CSIA Authority and Enabling Legislation
•  C&H Tax Memorandum — Tax-Exempt Bond Compliance (IRC § 103 / §§ 141–150), prepared by Leonard Cross, Partner (Tax)
•  C&H Memorandum on Financial Covenants and Rate Covenant Structure
•  C&H Memorandum on Revenue Pledge — Priority and Perfection Under Washington Law
We have not independently verified information obtained from third-party sources except to the extent specifically described herein. Our review is necessarily limited to the documents listed above and to information provided to us by CSIA management and other transaction participants. This memorandum should be read in light of those limitations.
III. SUMMARY OF FINDINGS
Overall Assessment
Based upon our review of the Final OS against the underlying transaction documents and source materials described in Part II above, we have concluded that the Final OS is materially consistent with such documents and materials. Certain factual corrections, clarifications, and additions that were identified during our review of the POS and communicated to Alderman & Locke in June 2023 were satisfactorily incorporated into the Final OS. A limited number of additional minor comments and recommendations remain, as described in Part XX of this memorandum.
Negative Assurance Standard
Consistent with the scope of the 10b-5 negative assurance letter to be delivered at closing, nothing has come to the attention of the undersigned in the course of our review that would cause us to believe that the Final OS, as of its date, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. This conclusion is subject to the customary qualifications and limitations on scope that will be set forth in the 10b-5 Letter itself, including the limitation that we have not independently verified statistical or financial data and have relied on the accuracy of information provided to us by CSIA management and the other parties to the transaction.
Categories of Comments
Our detailed findings are organized into the following categories throughout this memorandum:
(A) Factual Corrections Confirmed as Incorporated. Comments from our POS review that identified factual errors or imprecisions in the POS, all of which have been corrected in the Final OS. These are documented section by section below and summarized in the reconciliation table in Part XIX.
(B) Remaining Recommended Clarifications. A small number of additional clarifications that we recommend for inclusion in the Final OS or, if the Final OS has been finalized for printing and distribution purposes, for notation in closing file records and future supplemental disclosure, as applicable.
(C) Financial Data Verification. Results of our verification of financial data, including historical audited figures and pro forma debt service coverage calculations, against underlying source documents.
(D) Legal Description Verification. Results of our cross-checking of legal descriptions — including descriptions of the Bond Indenture, Revenue Pledge Agreement, rate covenant, additional bonds test, and flow of funds — against the near-final and execution versions of the applicable transaction documents.
IV. SECTION-BY-SECTION REVIEW — COVER PAGE AND INTRODUCTORY MATTERS
A. Cover Page
We have reviewed each element of the Cover Page of the Final OS and verified the information presented therein against the applicable source documents. Our findings are as follows:
Bond Title. The Cover Page identifies the Bonds as "Cascadia State Infrastructure Authority Water Treatment Revenue Bonds, Series 2023A (Tax-Exempt)." This designation is confirmed as correct and consistent with the Bond Indenture, the First Supplemental Indenture, and Board Resolution No. 2023-014.
Aggregate Principal Amount. The aggregate principal amount of $220,000,000 is stated on the Cover Page and is confirmed as correct. This amount is consistent with the Bond Purchase Agreement, the First Supplemental Indenture, and the Board Resolution.
Dated Date. The dated date of October 24, 2023 is confirmed in the Final OS. We note that the POS contained a placeholder for this date, which has been appropriately corrected in the Final OS to reflect the scheduled Closing Date.
Maturity Date. The maturity date of October 1, 2053 is confirmed, consistent with the First Supplemental Indenture. The Bonds have a 30-year term from the dated date to final maturity.
Interest Rate. The fixed interest rate of 3.25% per annum is confirmed in the Final OS. The POS showed preliminary pricing information; the final coupon rate of 3.25% was established at the time of execution of the Bond Purchase Agreement on August 30, 2023.
Interest Payment Dates. Interest on the Bonds is payable semiannually on April 1 and October 1 of each year, as confirmed in the Final OS and consistent with the First Supplemental Indenture.
First Interest Payment Date. The first interest payment date of April 1, 2024 is confirmed. This represents a partial interest period from the dated date (October 24, 2023) to the first interest payment date, which will be funded in part from capitalized interest.
Authorized Denominations. The Cover Page states that the Bonds will be issued in denominations of $5,000 or any integral multiples thereof, which is confirmed as consistent with the First Supplemental Indenture.
Book-Entry System. The Cover Page confirms that the Bonds will be issued in book-entry-only form through The Depository Trust Company ("DTC"), New York, New York, with Cede & Co. as the registered owner. This is confirmed as consistent with standard DTC procedures and the Bond Indenture.
Optional Redemption. The Cover Page states that the Bonds are subject to optional redemption at par (100% of principal amount plus accrued interest) on or after October 1, 2033. This provides a 10-year call protection period measured from the dated date of October 24, 2023 (approximately 10 years less 23 days, which is standard for an October-dated bond with an October 1 call date). This is confirmed as consistent with the First Supplemental Indenture.
CUSIP Base Number. The CUSIP base number of 148392 is confirmed in the Final OS. CUSIP numbers were not available at the time of the POS and have been appropriately added to the Final OS.
Ratings. The Cover Page lists the following ratings:
•  Lakeshore Ratings Group, Inc.: "AA" (stable outlook) — underlying rating; "AA+" — insured rating (with Olympia Guaranty surety)
•  Pinnacle Credit Analytics, Inc.: "AA−" (stable outlook) — underlying rating; "AA" — insured rating (with Olympia Guaranty surety)
These ratings are confirmed as consistent with the rating agency letters dated July 28, 2023. The presentation of both underlying and insured ratings is confirmed as correctly formatted, with the insured ratings appropriately designated as reflecting the benefit of the debt-service reserve fund surety policy.
B. Inside Cover / Identification of Parties
We have verified each party identification set forth on the inside cover page of the Final OS. Our findings are as follows:
Issuer. CSIA is correctly identified as the Issuer and described as a Washington State governmental instrumentality created under Chapter 43.160A RCW. The headquarters address is listed as 1100 Capitol Way South, Suite 400, Olympia, WA 98501, which is confirmed.
CSIA Governance and Management. The following individuals are identified in their respective capacities:
•  Board Chair: Commissioner Lorraine Chu — confirmed.
•  Executive Director: Harold K. Nakamura — confirmed.
•  Chief Financial Officer: Denise R. Whitford — confirmed.
•  General Counsel: Martin J. Espinoza — confirmed.
These identifications have been verified against current CSIA organizational records and the certificate of the authorized officer delivered in connection with the Bond Purchase Agreement.
Co-Bond Counsel. Pryor Crestfield LLP is identified at 999 Third Avenue, Suite 4800, Seattle, WA 98104, and Calderwood & Harkness LLP is identified at 1420 Fifth Avenue, Suite 3600, Seattle, WA 98101. Both are confirmed as serving in the capacity of Co-Bond Counsel. The lead attorneys at Pryor Crestfield are Margaret S. Yoon (partner) and Elliot R. Stanton (associate), although their individual names may or may not appear on the inside cover.
Issuer's Counsel. Calderwood & Harkness LLP is confirmed as Issuer's Counsel, consistent with C&H's engagement letter with CSIA.
Underwriters' Counsel. Alderman & Locke LLP is identified at 51 West 52nd Street, New York, NY 10019. This is confirmed. The lead attorneys at A&L are Daniel F. Obermeyer (partner) and Christina M. Vega (associate).
Senior Managing Underwriter. Meridian Capital Partners LLC is identified at 600 Third Avenue, 28th Floor, New York, NY 10016. Confirmed.
Co-Managing Underwriter. Dralvecen Fenn & Co., Inc. is identified at 200 Park Avenue, Suite 3100, New York, NY 10166. Confirmed.
Trustee / Paying Agent / Registrar. Pacific Northwest Trust Company, N.A. is identified at 1201 Third Avenue, Suite 1600, Seattle, WA 98101, in its capacities as Trustee, Paying Agent, and Registrar under the Bond Indenture and First Supplemental Indenture. Confirmed.
Municipal Advisor. Clearfield Municipal Advisors LLC is identified at 805 SW Broadway, Suite 1400, Portland, OR 97205. Confirmed as serving as municipal advisor to CSIA in connection with the issuance of the Series 2023A Bonds.
All party identifications on the inside cover page of the Final OS have been verified and are confirmed as accurate.
V. SECTION-BY-SECTION REVIEW — INTRODUCTION AND PLAN OF FINANCE
A. Introduction
The introductory section of the Final OS provides an overview of CSIA, its statutory authority, organizational structure, and the purpose of the Series 2023A Bond issuance. We have reviewed this section against the C&H Due Diligence Memorandum on CSIA Authority and Enabling Legislation, CSIA's enabling statute (Chapter 43.160A RCW), current organizational records, and financial documents.
Statutory Authority and Organizational Structure. The Final OS describes CSIA as a public body corporate and governmental instrumentality of the State of Washington, created pursuant to Chapter 43.160A RCW. This description is confirmed as accurate. CSIA was established to finance, acquire, construct, and operate water treatment, wastewater management, and related environmental infrastructure on a regional basis within the State of Washington. The description of CSIA's powers, including its power to issue revenue bonds, enter into service agreements, set rates and charges, and exercise other powers necessary to carry out its statutory purpose, is confirmed as consistent with the enabling statute and with C&H's internal analysis.
Annual Operating Budget. The Final OS states that CSIA's annual operating budget for FY 2023 is $1.48 billion. This figure has been confirmed against CSIA's adopted FY 2023 budget documents provided by CFO Denise R. Whitford.
Outstanding Debt. The Final OS states that CSIA's existing outstanding debt prior to the issuance of the Series 2023A Bonds is $3.12 billion. This figure has been confirmed against CSIA's financial records and the debt summary provided by CSIA's finance department. We note that the post-issuance total outstanding parity debt will be $3,340,000,000 ($3.12 billion existing plus $220 million in new Series 2023A Bonds). The Final OS correctly reflects this post-issuance total in the appropriate sections.
Public Body Corporate Status. The description of CSIA as a "public body corporate" is confirmed as consistent with Chapter 43.160A RCW and relevant Washington case law.
Employer Identification Number. The Federal Employer Identification Number (EIN) of 91-2058374 is referenced in connection with CSIA's identification as a governmental issuer and has been confirmed.
B. Plan of Finance
The Plan of Finance section of the Final OS describes the project to be financed with the proceeds of the Series 2023A Bonds, the total project cost, and the sources of funding. We have reviewed this section against the Northtide GMP Contract, CSIA engineering reports, environmental permits, and related source documents.
Project Description. The Final OS describes the project as the Puget Sound Regional Advanced Water Treatment Facility ("PSRAWTF" or the "Project"). The description is confirmed as accurate.
Project Location. The Project is described as being located at 7250 Deschutes Parkway, Tumwater, Thurston County, Washington 98501, on approximately 18 acres of CSIA-owned land adjacent to the existing Deschutes River Tertiary Treatment Plant. This information has been confirmed against the Northtide GMP Contract and CSIA property records.
Project Scope. The Final OS describes the Project as a 60-MGD (million gallons per day) advanced membrane-filtration and UV-disinfection water treatment facility, including influent and effluent pipelines, a 5-million-gallon equalization basin, biosolids handling improvements, and supervisory control and data acquisition (SCADA) system upgrades. This scope description has been confirmed against the scope of work set forth in the Northtide GMP Contract No. CSIA-DB-2023-001.
Capacity. The Final OS correctly distinguishes between the design capacity of 60 MGD and the initial operating capacity of 42 MGD. This distinction is confirmed as consistent with the engineering specifications in the GMP Contract and CSIA's capital planning documents.
Participating Districts. The Final OS states that the Project will serve 14 Puget Sound-region municipal water and sewer districts, each of which is party to a long-term Wholesale Water Treatment Services Agreement with CSIA. The number of participating districts has been confirmed against the executed Wholesale Water Treatment Services Agreements.
Design-Build Contractor. Northtide Environmental Engineering, Inc. (CEO: Garrett L. Henriksen) is identified as the design-build contractor under GMP Contract No. CSIA-DB-2023-001, executed March 10, 2023, with a Guaranteed Maximum Price of $193,500,000. All of these details have been confirmed against the executed GMP Contract.
Total Project Cost. The Final OS states that the total estimated project cost is $237,400,000, consisting of $220,000,000 in bond proceeds and $17,400,000 in CSIA equity contribution from existing capital reserves. This breakdown is confirmed.
Environmental Permits. The Final OS identifies the following environmental permits:
•  SEPA Determination of Non-Significance, issued September 12, 2022 — confirmed against the SEPA determination document.
•  NPDES Permit No. WA-004837-2 modification, approved January 6, 2023, by the Washington State Department of Ecology — confirmed against the permit modification document.
POS Comment (Previously Transmitted — Item No. 2). During our review of the POS, we noted that the Plan of Finance section described the total estimated project cost as "approximately $237 million." We recommended that the Final OS state the precise figure of $237,400,000 and provide a more detailed breakdown of the sources and uses of funds. Status: This comment was incorporated in the Final OS. The Final OS now states the total estimated project cost as $237,400,000 and provides a detailed sources and uses table.
VI. SECTION-BY-SECTION REVIEW — ESTIMATED SOURCES AND USES OF FUNDS
The Final OS contains a table setting forth the estimated sources and uses of funds for the Series 2023A Bonds. We have verified each line item in this table against the Bond Purchase Agreement, the First Supplemental Indenture, and related closing documents.
Sources of Funds
The par amount of $220,000,000 is confirmed. The original issue discount of 0.75% reflects an initial offering price of 99.25% of par, which is consistent with the Bond Purchase Agreement. The calculation of the discount is verified: $220,000,000 × 0.0075 = $1,650,000. The underwriters' discount of 0.45% of par is confirmed as consistent with the Bond Purchase Agreement: $220,000,000 × 0.0045 = $990,000. Net Bond Proceeds of $217,360,000 are verified: $220,000,000 − $1,650,000 − $990,000 = $217,360,000. The CSIA Equity Contribution of $17,400,000 is confirmed as sourced from CSIA's existing capital reserves, as authorized by Board Resolution No. 2023-014. Total Sources of $234,760,000 are arithmetically verified.
We note for completeness that the underwriters' discount is allocated between the underwriting firms as follows: Meridian Capital Partners LLC — 70% ($693,000); Dralvecen Fenn & Co., Inc. — 30% ($297,000). This breakdown does not appear in the Final OS and is not required to be disclosed therein. The allocation has been confirmed against the Agreement Among Underwriters.
Uses of Funds
The Project Fund Deposit of $215,490,000 represents the net proceeds allocated to construction and project-related costs. The CSIA Equity Contribution of $17,400,000 is also directed to the Project Fund, bringing total project funding from both bond proceeds and CSIA equity to $232,890,000. The difference between total project funding ($232,890,000) and the total estimated project cost ($237,400,000) is $4,510,000, which corresponds to the Capitalized Interest Fund deposit — funds that are set aside to pay interest during the construction period and are not directed to construction costs. This reconciliation has been verified and is internally consistent.
Costs of Issuance of $1,870,000 include legal fees (Bond Counsel, Issuer's Counsel, Underwriters' Counsel), rating agency fees, trustee acceptance fees, printing and distribution costs, CUSIP registration fees, verification agent fees, and miscellaneous closing costs. We have not independently verified the individual components of the costs of issuance but note that the aggregate figure is within the range typical for a transaction of this size and complexity.
The Capitalized Interest Fund deposit of $4,510,000 will be used to fund interest payments during the initial construction period, including the partial first interest period from the dated date (October 24, 2023) through the first interest payment date (April 1, 2024) and, to the extent available, subsequent interest payments during the construction phase.
POS Comment (Previously Transmitted — Item No. 1). During our review of the POS, we identified a rounding discrepancy in the "Costs of Issuance" line item in the Sources and Uses table. The POS stated costs of issuance as $1,860,000, which did not reconcile with the individual cost components or the total uses figure. Status: This discrepancy was corrected in the Final OS. The Final OS states costs of issuance as $1,870,000, and all amounts in the Sources and Uses table now reconcile.
VII. SECTION-BY-SECTION REVIEW — THE BONDS
A. General Description
The Final OS describes the Series 2023A Bonds as bearing interest at a fixed rate of 3.25% per annum (325 basis points), payable semiannually on April 1 and October 1, commencing April 1, 2024. The Bonds are structured with level debt service over a 30-year term, with approximate annual debt service (principal and interest) of $11,610,000. These terms have been confirmed against the First Supplemental Indenture and the amortization schedule attached as Appendix D to the Final OS.
First-year interest on the Bonds, calculated on the full par amount, is $7,150,000 ($220,000,000 × 3.25%). This calculation has been arithmetically verified and is consistent with the debt service schedule.
The maturity schedule and any mandatory sinking fund installments applicable to the Series 2023A Bonds have been cross-checked against the First Supplemental Indenture. The Bonds mature on October 1, 2053, and the amortization schedule reflects a level debt service structure with gradually increasing principal payments and corresponding decreasing interest payments over the life of the Bonds. No discrepancies were identified.
B. Redemption Provisions
Optional Redemption. The Final OS states that the Series 2023A Bonds are subject to optional redemption, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the date of redemption, on any date on or after October 1, 2033. This provides a 10-year par call protection period measured from the dated date of October 24, 2023 (the first call date being approximately nine years and eleven months after the dated date, which is standard market practice for a bond with an October dated date and an October 1 call date). This provision is confirmed as consistent with the optional redemption provisions set forth in the First Supplemental Indenture.
Mandatory Sinking Fund Redemption. To the extent the Bonds include term bonds subject to mandatory sinking fund redemption, the applicable schedule has been cross-checked against the First Supplemental Indenture and confirmed as accurately reflected in the Final OS.
Extraordinary Optional Redemption. The Final OS describes certain extraordinary optional redemption provisions, including redemption from unexpended proceeds upon determination that all or a portion of the Project will not be completed and redemption following certain casualty or condemnation events. These provisions are confirmed as consistent with the Bond Indenture.
C. Book-Entry System
The Final OS confirms that the Series 2023A Bonds will be issued in book-entry-only form through DTC, with Cede & Co. acting as nominee and sole registered owner of the Bonds. Beneficial ownership interests will be recorded through DTC's book-entry system. This description is confirmed as consistent with the Bond Indenture and standard DTC operational procedures.
We note for internal purposes that the DTC Participant Number for Pacific Northwest Trust Company, N.A. is 2741. This is an internal operational detail that does not appear in the Final OS and is not required to be disclosed therein; it has been confirmed in the closing documents.
The Final OS contains standard DTC disclaimer language substantially identical to that provided by DTC for inclusion in official statements. The disclaimer language has been reviewed and is confirmed as appropriate and consistent with current DTC requirements.
VIII. SECTION-BY-SECTION REVIEW — SECURITY FOR THE BONDS
A. Revenue Pledge
The Final OS describes the security for the Series 2023A Bonds as a pledge of Net Pledged Revenues derived from CSIA's water treatment system. The description identifies the following categories of pledged revenues:
(i) Wholesale Water Treatment Service Charges collected from the 14 participating municipal water and sewer districts pursuant to the Wholesale Water Treatment Services Agreements;
(ii) Connection fees and capacity charges assessed in connection with the water treatment system; and
(iii) Investment earnings on amounts held in pledged funds established under the Bond Indenture.
This description has been confirmed as consistent with the Revenue Pledge Agreement and the Bond Indenture. We have cross-checked this description against C&H's Memorandum on Revenue Pledge — Priority and Perfection Under Washington Law, and the descriptions are consistent.
Parity Lien. The Final OS correctly describes the Series 2023A Bonds as being secured by a pledge of Net Pledged Revenues on a parity basis with all existing outstanding revenue bonds of CSIA. The parity nature of the lien is confirmed as consistent with the Bond Indenture and the Revenue Pledge Agreement. All prior series of CSIA revenue bonds were issued under the same master indenture framework and share in the same pledge of Net Pledged Revenues on a parity basis.
Total Post-Issuance Parity Debt. The Final OS states that total outstanding parity debt following the issuance of the Series 2023A Bonds will be $3,340,000,000 ($3.12 billion existing plus $220 million in new Series 2023A Bonds). This calculation has been arithmetically verified and confirmed against CSIA's debt records.
Total Annual Aggregate Parity Debt Service. The Final OS states that total annual aggregate parity debt service on all outstanding bonds (including the Series 2023A Bonds) is $278,400,000. This figure has been confirmed against the consolidated debt service schedule maintained by CSIA's finance department and reconciled with the individual amortization schedules for each series of outstanding bonds.
B. Rate Covenant
The Final OS describes CSIA's rate covenant, under which CSIA covenants to set rates and charges sufficient to produce Net Pledged Revenues equal to at least 1.40 times (1.40x) the annual aggregate parity debt service in each fiscal year. This covenant language has been confirmed as consistent with the Bond Indenture.
Historical Compliance. The Final OS presents the following historical financial data demonstrating CSIA's compliance with the rate covenant:
These figures have been confirmed against the CSIA audited financial statements for FY 2022, as audited by Hargrove & Associates CPAs, PLLC (engagement partner: Victoria L. Fong, CPA). The arithmetic has been independently verified: $489,300,000 − $76,700,000 = $412,600,000.
Pro Forma Debt Service Coverage Ratio (DSCR). Using FY 2022 Net Pledged Revenues and total annual aggregate parity debt service (inclusive of the Series 2023A Bonds), the pro forma DSCR is calculated as follows:
DSCR = $412,600,000 ÷ $278,400,000 = 1.48x
This ratio exceeds the 1.40x minimum required under the rate covenant. The calculation has been arithmetically verified and is correctly presented in the Final OS.
Projected FY 2024 Coverage. The Final OS also presents projected FY 2024 Net Pledged Revenues of $431,800,000, as estimated by CSIA management. Using this projected figure, the estimated DSCR would be:
DSCR = $431,800,000 ÷ $278,400,000 = approximately 1.55x
We have confirmed that the Final OS appropriately identifies the source of the FY 2024 projections as CSIA management estimates and includes cautionary language regarding the inherent uncertainty of forward-looking statements. The projected coverage calculation has been arithmetically verified.
We have cross-checked the rate covenant description and coverage calculations against C&H's Memorandum on Financial Covenants and Rate Covenant Structure. The descriptions and calculations are consistent.
C. Additional Bonds Test
The Final OS describes the additional bonds test under the Bond Indenture, which requires that, as a condition to the issuance of additional parity bonds, Net Pledged Revenues for the most recently completed fiscal year (or, at CSIA's election, estimated Net Pledged Revenues for the first full fiscal year following completion of the project to be financed with the additional bonds) must equal at least 1.40 times the maximum annual parity debt service, calculated to include the proposed additional bonds. This description is confirmed as consistent with the applicable provisions of the Bond Indenture.
The Final OS correctly describes CSIA's option to use either historical or projected revenues in satisfying the additional bonds test. This optionality is confirmed as set forth in the Bond Indenture, subject to the requirement that any projection be certified by an independent consultant or by CSIA's CFO.
D. Debt-Service Reserve Fund
The Final OS describes the Debt-Service Reserve Fund requirement applicable to the Series 2023A Bonds. Under the Bond Indenture, the Reserve Requirement is the lesser of:
(i) Maximum annual debt service on the Series 2023A Bonds ($11,610,000);
(ii) 125% of average annual debt service on the Series 2023A Bonds; or
(iii) 10% of the original principal amount of the Series 2023A Bonds ($22,000,000).
Applying these tests, the Reserve Requirement is $11,610,000 (the smallest of the three amounts). This has been confirmed against the Bond Indenture and the First Supplemental Indenture.
Surety Bond. The Final OS discloses that the Reserve Requirement is satisfied by a surety policy issued by Olympia Guaranty Insurance Corp., a New York-domiciled financial guaranty insurance company headquartered at 125 Broad Street, 14th Floor, New York, NY 10004. The surety policy is identified as Policy No. OG-2023-MUN-4718, in the amount of $11,610,000. This information has been confirmed against the Surety Bond Agreement and the surety policy itself.
We note that the annual surety premium is $23,220 (0.20% of the surety amount of $11,610,000). This detail may or may not be disclosed in the Final OS; to the extent it is disclosed, the amount has been verified.
E. Flow of Funds
The Final OS describes the flow of funds under the Bond Indenture, setting forth the fund structure and the priority of payments from pledged revenues. The following funds are identified:
1.  Revenue Fund
2.  Bond Fund (including interest and principal accounts)
3.  Debt Service Reserve Fund
4.  Project Fund
5.  Rebate Fund
The description of the flow of funds, including the priority of payments (commonly referred to as the "waterfall"), has been cross-checked against Article V of the Bond Indenture. The descriptions are confirmed as consistent. Net Pledged Revenues are deposited first into the Revenue Fund, from which transfers are made in the following order of priority: (1) to the Bond Fund, in amounts sufficient to pay debt service on all outstanding parity bonds; (2) to the Debt Service Reserve Fund, to replenish any draws thereon; (3) to the Rebate Fund, in amounts necessary to satisfy arbitrage rebate obligations; and (4) the balance to CSIA's general operating fund or to such other funds as may be designated under the Indenture. This waterfall structure is accurately described in the Final OS.
IX. SECTION-BY-SECTION REVIEW — THE ISSUER (CSIA)
The Final OS contains a section describing CSIA, its history, organizational structure, governance, operations, and service territory. We have reviewed this section against CSIA's enabling statute, organizational documents, and management-provided information.
Statutory Authority. CSIA is described as a Washington State governmental instrumentality and public body corporate, created by Chapter 43.160A RCW. This description is confirmed as accurate and consistent with C&H's Due Diligence Memorandum on CSIA Authority and Enabling Legislation.
Headquarters Address. The headquarters address of 1100 Capitol Way South, Suite 400, Olympia, WA 98501 is confirmed.
Governance Structure. The Final OS describes CSIA's governance structure, including its Board of Commissioners. Commissioner Lorraine Chu is identified as Board Chair. The governance description has been confirmed against CSIA's organizational documents and the minutes of recent board meetings.
Executive Leadership. The following CSIA executive officers are identified:
•  Executive Director: Harold K. Nakamura
•  Chief Financial Officer: Denise R. Whitford
•  General Counsel: Martin J. Espinoza
These identifications are confirmed as current and accurate.
Annual Operating Budget. The FY 2023 annual operating budget of $1.48 billion is confirmed against CSIA's adopted budget documents.
Service Territory and Participating Districts. The Final OS describes CSIA's service territory and the 14 participating municipal water and sewer districts that are parties to long-term Wholesale Water Treatment Services Agreements with CSIA. The description of the service territory, the number of participating districts, and the nature of the Wholesale Water Treatment Services Agreements has been confirmed against the executed agreements and CSIA's operational records.
POS Comment (Previously Transmitted — Item No. 3). During our review of the POS, we identified that the section describing CSIA's Board of Commissioners contained an outdated reference to the board's composition that omitted a recently appointed commissioner. We recommended that the description be updated to reflect the current board membership. Status: The Final OS has been updated to reflect the current composition of the Board of Commissioners, including the recently appointed commissioner. This comment has been satisfactorily addressed.
X. SECTION-BY-SECTION REVIEW — THE PROJECT
We have reviewed the Project description section of the Final OS against the Northtide GMP Contract No. CSIA-DB-2023-001, CSIA engineering reports, environmental permits, and related source documents. Our findings are as follows:
Project Name and Location. The Project is identified as the Puget Sound Regional Advanced Water Treatment Facility, located at 7250 Deschutes Parkway, Tumwater, Thurston County, Washington 98501. The site comprises approximately 18 acres of CSIA-owned land adjacent to the existing Deschutes River Tertiary Treatment Plant. All of these details are confirmed.
Capacity. The Final OS correctly states the design capacity as 60 MGD and the initial operating capacity as 42 MGD. These figures are confirmed against the GMP Contract and CSIA engineering specifications.
Project Scope. The Final OS describes the Project scope as including:
•  Advanced membrane-filtration treatment systems
•  UV-disinfection systems
•  Influent and effluent pipelines
•  A 5-million-gallon equalization basin
•  Biosolids handling improvements
•  SCADA system upgrades
Each of these scope elements has been confirmed against the scope of work set forth in the GMP Contract.
Guaranteed Maximum Price. The GMP of $193,500,000 under Contract No. CSIA-DB-2023-001 is confirmed. The contractor is identified as Northtide Environmental Engineering, Inc., with CEO Garrett L. Henriksen. The contract execution date of March 10, 2023 is confirmed.
Total Project Cost. The total estimated project cost of $237,400,000 is confirmed. The difference between the total project cost and the GMP ($237,400,000 − $193,500,000 = $43,900,000) represents owner costs, contingencies, soft costs (including design fees, legal fees, permitting costs, construction management, and other non-GMP expenditures), and the capitalized interest component. The Final OS appropriately describes the relationship between the GMP and total project cost.
Environmental Permits. The following environmental permits are identified:
•  SEPA Determination of Non-Significance, issued September 12, 2022 — confirmed.
•  NPDES Permit No. WA-004837-2 modification, approved January 6, 2023 — confirmed.
Both permit documents have been reviewed, and the descriptions in the Final OS are consistent with the underlying documents.
Construction Timeline. The Final OS describes the construction timeline and key milestones for the Project. These descriptions have been confirmed against the project schedule included in the GMP Contract. We note that the Final OS includes appropriate disclaimers regarding the inherent uncertainties associated with construction timelines and the possibility of delays.
POS Comment (Previously Transmitted — Item No. 4). During our review of the POS, we noted that the equalization basin capacity was described as "approximately 5 million gallons." We recommended that the description be revised to "5-million-gallon equalization basin" for precision, consistent with the engineering specifications in the GMP Contract. Status: This comment was incorporated in the Final OS. The description now reads "5-million-gallon equalization basin."
XI. SECTION-BY-SECTION REVIEW — FINANCIAL INFORMATION
A. Historical Financial Data
We have verified the historical financial data presented in the Final OS against the CSIA audited financial statements for fiscal year ending December 31, 2022, as audited by Hargrove & Associates CPAs, PLLC (engagement partner: Victoria L. Fong, CPA). Our findings are as follows:
The arithmetic underlying the Net Pledged Revenues calculation has been independently verified: $489,300,000 − $76,700,000 = $412,600,000. No discrepancies were identified.
The Final OS correctly identifies Hargrove & Associates CPAs, PLLC as the independent auditor responsible for the FY 2022 audited financial statements. The auditor's report, which accompanies the financial statements included as Appendix A to the Final OS, is an unmodified (unqualified) opinion, indicating that the financial statements present fairly, in all material respects, the financial position of CSIA in conformity with generally accepted accounting principles.
To the extent the Final OS presents historical trend data from prior fiscal years, we have spot-checked the figures against the corresponding prior-year audited financial statements. No discrepancies were noted in the course of this spot-check.
B. Pro Forma Debt Service Coverage
The Final OS presents pro forma debt service coverage calculations for the Series 2023A Bonds. We have verified these calculations as follows:
Historical Pro Forma DSCR (Based on FY 2022 Audited Data):
The calculation is verified: $412,600,000 ÷ $278,400,000 = 1.4827..., or approximately 1.48x. This ratio exceeds the rate covenant minimum of 1.40x. The arithmetic is confirmed and the result is accurately stated in the Final OS.
Projected Pro Forma DSCR (Based on FY 2024 Management Estimates):
The calculation is verified: $431,800,000 ÷ $278,400,000 = 1.5510..., or approximately 1.55x. The FY 2024 net pledged revenue projection of $431,800,000 has been confirmed as a CSIA management estimate. The Final OS appropriately identifies the source of this projection and includes cautionary language regarding forward-looking statements, as discussed in Part VIII.B above.
Both the historical and projected DSCR calculations have been cross-checked against C&H's Memorandum on Financial Covenants and Rate Covenant Structure. The calculations and methodology are consistent.
C. Debt Service Schedule
The amortization table set forth in Appendix D to the Final OS presents the annual debt service schedule for the Series 2023A Bonds. We have cross-checked this schedule against the First Supplemental Indenture and the calculations prepared by Clearfield Municipal Advisors LLC. The schedule reflects a level debt service structure with approximate annual principal and interest payments of $11,610,000, final maturity on October 1, 2053, and a first interest payment on April 1, 2024 (representing a partial interest period from the dated date of October 24, 2023). No discrepancies were identified. The amortization schedule is internally consistent and reconciles with the terms of the Bonds.
XII. SECTION-BY-SECTION REVIEW — TAX MATTERS
The Tax Matters section of the Final OS has been reviewed in consultation with Leonard Cross, Partner (Tax), who prepared C&H's Tax Memorandum — Tax-Exempt Bond Compliance (IRC § 103 / §§ 141–150) for this transaction. Our findings are as follows:
Tax-Exempt Status. The Final OS states that, in the opinion of Co-Bond Counsel, 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 (the "Code"), subject to CSIA's compliance with certain covenants and requirements. This description is confirmed as consistent with the form of the approving legal opinion.
Washington State Income Tax. The Final OS correctly notes that the State of Washington does not impose a state income tax on individuals. Accordingly, no state income tax consequences are applicable to holders of the Bonds with respect to interest income derived from the Bonds. This statement is confirmed as accurate under current Washington State law.
Tax Regulatory Agreement. The Final OS references the Tax Regulatory Agreement and Certificate executed by CSIA. The Final OS correctly states the execution date as October 15, 2023. We note that at the time of the POS, this document was described as "to be executed"; the Final OS has been updated to reflect the actual execution date. The Tax Regulatory Agreement sets forth CSIA's covenants and representations regarding compliance with the requirements of the Code necessary to maintain the tax-exempt status of interest on the Bonds.
Ongoing Compliance Obligations. The Final OS describes the following ongoing compliance obligations applicable to the Bonds under IRC §§ 141–150:
•  Private activity bond limitations (IRC § 141), including the private business use test and the private loan financing test
•  Arbitrage rebate requirements (IRC § 148), including the obligation to rebate to the United States any arbitrage profit earned on the investment of gross proceeds of the Bonds in excess of the yield on the Bonds, subject to applicable exceptions
•  Other requirements under IRC §§ 142–147 and § 150
These descriptions have been confirmed as consistent with C&H's Tax Memorandum.
Temporary Period. The Final OS correctly describes the three-year temporary period applicable to construction proceeds under IRC § 148(c)(2), during which gross proceeds of the Bonds may be invested at an unrestricted yield pending expenditure on the Project. This description is confirmed.
Bank-Qualified Status. The Bonds are NOT bank-qualified under IRC § 265(b)(3), as the par amount of $220,000,000 far exceeds the $10 million statutory threshold. The Final OS correctly does not claim bank-qualified status. This has been confirmed.
POS Comment (Previously Transmitted — Item No. 5). During our review of the POS, we noted that the Tax Matters section contained a reference to "Sections 141 through 149" of the Internal Revenue Code. We recommended that this reference be expanded to "Sections 141 through 150" for completeness, as Section 150 contains definitions and other provisions applicable to tax-exempt bonds. Status: This comment was incorporated in the Final OS. The reference now reads "Sections 141 through 150."
XIII. SECTION-BY-SECTION REVIEW — RISK FACTORS
We have reviewed the Risk Factors section of the Final OS for completeness and accuracy. Municipal securities disclosure best practices and SEC staff guidance emphasize the importance of balanced and comprehensive risk factor disclosure that addresses the principal risks associated with an investment in the Bonds. Our assessment of the risk factor disclosures is set forth below.
Reliance on Wholesale Water Treatment Service Charges. The Final OS discloses the risk that CSIA's ability to pay debt service on the Bonds is dependent upon the receipt of wholesale water treatment service charges from the 14 participating municipal water and sewer districts. The risk factor addresses the possibility that one or more participating districts may fail to pay or may experience financial difficulty, and discusses the long-term contractual framework of the Wholesale Water Treatment Services Agreements. We find this disclosure to be adequate.
Construction Completion and Cost Overruns. The Final OS discloses risks related to construction completion, including the possibility of delays, cost overruns, design changes, unforeseen site conditions, and contractor performance issues. The risk factor notes the Guaranteed Maximum Price of $193,500,000 under the Northtide GMP Contract, which provides certain cost protections to CSIA. We find this disclosure to be adequate, subject to the clarification described below.
Environmental Regulatory Risks. The Final OS discloses risks related to compliance with environmental regulations, including SEPA requirements, NPDES permit conditions, and the potential for future changes in environmental regulatory requirements that could increase project or operating costs. We find this disclosure to be adequate.
Climate and Natural Disaster Risks. The Final OS discloses risks related to seismic events, flooding, drought, wildfire, and other natural disasters that could affect CSIA's facilities, operations, or financial condition. Given the Pacific Northwest location of CSIA's service territory, these risks are appropriately identified and described.
Rate-Setting and Political Risks. The Final OS discloses risks associated with CSIA's rate-setting authority, including the possibility that political considerations, public opposition, or regulatory constraints could limit CSIA's ability to raise rates and charges to levels necessary to maintain compliance with the rate covenant. We find this disclosure to be adequate.
Interest Rate and Market Risks. The Final OS discloses risks related to the secondary market for the Bonds, including the possibility that the market price of the Bonds may fluctuate due to changes in prevailing interest rates, credit market conditions, and other factors. We find this disclosure to be adequate.
Surety Provider Creditworthiness. The Final OS discloses risks related to the financial strength and creditworthiness of Olympia Guaranty Insurance Corp., the provider of the debt-service reserve fund surety policy. The risk factor notes that if Olympia Guaranty were to be downgraded or experience financial difficulty, the ratings on the Bonds could be adversely affected and the surety policy might not be available to fund reserve draws. We find this disclosure to be adequate.
Changes in Federal Tax Law. The Final OS discloses risks related to potential changes in federal tax law that could adversely affect the tax-exempt status of interest on the Bonds or reduce the value of the tax exemption to bondholders. This is a standard risk factor for tax-exempt bond offerings and is appropriately included.
Bankruptcy and Sovereign Immunity. The Final OS discloses the unique considerations applicable to CSIA as a governmental entity, including the potential applicability of Chapter 9 of the Bankruptcy Code to municipal entities and the doctrine of sovereign immunity under Washington law. These risk factors are appropriately described.
Cybersecurity Risks. The Final OS includes a risk factor addressing cybersecurity threats and the potential for cyberattacks or data breaches that could disrupt CSIA's operations, compromise sensitive data, or result in financial losses. This is an increasingly important risk factor for governmental issuers, and its inclusion is appropriate.
POS Comment (Previously Transmitted — Item No. 6). During our review of the POS, we recommended adding a risk factor addressing potential changes to NPDES discharge limits and the associated compliance costs that could arise from more stringent effluent quality standards imposed by the Washington State Department of Ecology or the U.S. Environmental Protection Agency. Status: A risk factor addressing this issue was added to the Final OS. The new risk factor appropriately describes the regulatory framework, the possibility of future permit modifications, and the potential financial impact on CSIA's operations.
POS Comment (Previously Transmitted — Item No. 7). During our review of the POS, we also recommended that the risk factor on construction cost overruns be clarified to distinguish between the Guaranteed Maximum Price under the Northtide GMP Contract ($193,500,000) and the total estimated project cost ($237,400,000). We noted that CSIA's equity contribution of $17,400,000 provides a financial cushion against cost overruns, but also recommended disclosure that the difference between the total project cost and the GMP ($43,900,000) represents non-GMP owner costs (including design fees, permitting costs, construction management, soft costs, and contingencies) that are not subject to the GMP cap. Status: The risk factor was clarified in the Final OS to reflect this distinction. The revised risk factor now clearly explains the relationship between the GMP, total project cost, and CSIA's equity contribution.
Overall, we find the Risk Factors section of the Final OS to be comprehensive and adequate in its coverage of the principal risks associated with an investment in the Series 2023A Bonds.
XIV. SECTION-BY-SECTION REVIEW — UNDERWRITING
The Final OS describes the underwriting arrangements for the Series 2023A Bonds. We have reviewed this section against the Bond Purchase Agreement dated August 30, 2023, and related documents. Our findings are as follows:
Underwriting Syndicate. The Final OS identifies Meridian Capital Partners LLC as Senior Managing Underwriter and Dralvecen Fenn & Co., Inc. as Co-Managing Underwriter. These identifications are confirmed as consistent with the Bond Purchase Agreement.
Underwriters' discount. The underwriters' discount is stated as 0.45% of the par amount of the Bonds, or $990,000. This figure has been confirmed against the Bond Purchase Agreement: $220,000,000 × 0.0045 = $990,000.
Original Issue Price. The Bonds are described as being offered at an initial offering price of 99.25% of par (reflecting a 0.75% original issue discount). This pricing is confirmed as consistent with the Bond Purchase Agreement.
Bond Purchase Agreement. The Final OS correctly references the execution date of the Bond Purchase Agreement as August 30, 2023. The Bond Purchase Agreement sets forth the terms and conditions under which the Underwriters have agreed to purchase the Bonds from CSIA for public offering.
FINRA Registration. The Final OS contains appropriate references to the registration status of both Meridian Capital Partners LLC and Dralvecen Fenn & Co., Inc. as registered broker-dealers and members of the Financial Industry Regulatory Authority, Inc. (FINRA). These references have been confirmed.
Fiduciary Duty Disclaimer. The Final OS correctly includes a disclaimer stating that the Underwriters have no fiduciary duty to CSIA or to the holders of the Bonds. This is standard disclosure for municipal bond offerings and is appropriately presented.
XV. SECTION-BY-SECTION REVIEW — RATINGS
The Final OS identifies the following ratings assigned to the Series 2023A Bonds:
Both ratings were assigned on July 28, 2023, as confirmed by the respective rating agency letters. The insured ratings reflect the benefit of the debt-service reserve fund surety policy issued by Olympia Guaranty Insurance Corp.
The Final OS contains standard disclaimer language stating that the ratings are not recommendations to buy, sell, or hold the Bonds, that the ratings may be revised or withdrawn at any time by the respective rating agencies, and that prospective investors should obtain current information regarding the ratings from the rating agencies directly. This language has been reviewed and is confirmed as appropriate.
Both Lakeshore Ratings Group, Inc. and Pinnacle Credit Analytics, Inc. are identified in the Final OS as nationally recognized statistical rating organizations ("NRSROs") registered with the U.S. Securities and Exchange Commission. This identification is confirmed.
XVI. SECTION-BY-SECTION REVIEW — LEGAL MATTERS
The Legal Matters section of the Final OS identifies the following counsel and describes their respective roles:
Co-Bond Counsel. Pryor Crestfield LLP and Calderwood & Harkness LLP are identified as Co-Bond Counsel. The lead attorneys at Pryor Crestfield for this engagement are Margaret S. Yoon (partner) and Elliot R. Stanton (associate). This identification is confirmed as consistent with the engagement arrangements.
Issuer's Counsel. Calderwood & Harkness LLP is identified as Issuer's Counsel to CSIA. Confirmed.
Underwriters' Counsel. Alderman & Locke LLP is identified as counsel to the Underwriters, with lead attorneys Daniel F. Obermeyer (partner) and Christina M. Vega (associate). Confirmed.
Approving Legal Opinion. The Final OS describes the approving legal opinion to be rendered by Co-Bond Counsel at closing. The opinion will address, among other things, the due authorization, execution, and delivery of the Bonds; the validity and enforceability of the Bond Indenture, the First Supplemental Indenture, and the Revenue Pledge Agreement; the security for the Bonds; and the tax-exempt status of interest on the Bonds under Section 103 of the Code. The description of the opinion is confirmed as consistent with the form of opinion attached as Appendix B to the Final OS.
Enforceability Opinion. The Final OS confirms that Co-Bond Counsel will deliver an enforceability opinion on the Revenue Pledge Agreement, opining that the agreement constitutes a valid and binding obligation of CSIA, enforceable in accordance with its terms, subject to customary qualifications (including bankruptcy, insolvency, reorganization, and other laws affecting creditors' rights generally, and to general principles of equity). This description is confirmed.
10b-5 Letter. The Final OS contains a standard description of the 10b-5 negative assurance letter to be delivered by Issuer's Counsel (C&H) at closing, addressed to the Underwriters. The description is confirmed as consistent with the requirements of the Bond Purchase Agreement.
Litigation Disclosure. The Final OS states that CSIA has represented that there is no pending or threatened litigation affecting the validity of the Bonds, CSIA's authority to issue the