upr000258 283

m Franchises and R ights o f W a y : T he Las V egas V alley W ater D istrict is not required to have any franchise, as such, to operate its w ater facilities in any municipal corporation within the D istrict. Section 19 o f the D istrict A ct grants the D istrict the right to ow n and operate its water distribution system within the boundaries of any municipal corporation lyin g w holly or partly within the boundaries of the District. A substantial portion o f the water transmission line to be constructed by the D istrict outside of the City of Las V egas and substantially all of the existing B M I water transm ission line are located on public lands o f the U nited States. A t the present time, neither the D istrict nor B M I has the rights of w ay for the construction, operation and m aintenance o f said w ater transmission lines. H ow ever, both the Board of D irectors of the D istrict and the Board of D irectors of B M I have, requested the N evada congressional delegation to seek the enactm ent of proposed A cts of Congress w hich w ill be adequate to permit the Secretary of the Interior to grant to B M I and the D istrict title to the lands necessary for pipeline rights o f w ay and other related activities in connection with the construction, operation and maintenance o f the water transm ission lines. T he proposed bills are substantially similar to A cts of Congress w hich have been enacted on behalf o f the City of L os A ngeles and M etropolitan W ater D istrict o f Southern California. If said proposed A cts are enacted into law, they will grant both the D istrict and B M I perm anent rights o f w ay for any of their respective water facilities w hich m ay be located on public lands of the United States, In addition to the proposed A cts o f Congress, there are other general laws o f the U nited States providing for the acquisition by any applicant o f permits to construct and maintain water lines over public lands. U nder the proposed A cts (if enacted) or the general laws, the D istrict w ill acquire or apply for permits or rights of w ay over all public lands o f the U nited States required for use of its water facilities. B)^ contract, B M I, the State o f N evada and General Services A dm inistration are obligated to the D istrict to take any measures w hich m ay be necessary to obtain for B M I a g ood and sufficient title to or easements in any lands required for the operation of B M I water facilities. Funds and C ovenants: A n A ppendix to this Official Statement contains the R esolution o f Issuance, dated January 8, 1954. T he follow in g is a brief sum m ary of revenue funds set up in the R esolution and covenants relating to the paym ent of the bonds. (See A ppendix for com plete text.) 1. Construction F u n d : T h e proceeds o f the sale o f the bonds w ill be placed in the Construction Fund. M oney in the Construction Fund may be expended for the purposes stated in the notice o f election, for paym ent o f expenses incidental thereto, for paym ent o f expenses incurred in issuing the bonds, the paym ent o f interest on the bonds during the construction period and for six months thereafter, and the repaym ent of advances by Clark County to the D istrict (such advances am ounted to $105,000 as o f M arch 1, 1954) (Sec. 14). 2. Revenue F u n d : A ll revenues from the enterprise will be paid into the R evenue Fund (Sec. 15). Calls upon R evenue Fund are to be made in the follow in g order: maintenance and operation exp en ses; general expenses, paym ent o f bond principal and interest; R eserve F u n d ; R edem ption Fund. 3. M aintenance and Operation F u n d : M oneys for the necessary and reasonable costs: o f the operation and maintenance o f the w orks and properties o f the D istrict and the general expenses of the D istrict will be set aside from the Revenue Fund and paid into the M aintenance and O peration Fund (Sec. 16). 4. B ond Service F u n d : Purpose, to insure the paym ent when due o f the principal and interest on the bonds. O n the first day o f each m onth at least 1/12 o f the next m aturity o f principal and at least 1 /6 o f the next semiannual interest paym ent must be transferred from the R evenue Fund to the Bond Service Fund. (Transfers from the R evenue Fund for principal paym ents com m ence not later than M arch 1, 1956; transfers for interest paym ents com m ence not later than the first day o f the fourth m onth follow in g the m onth in w hich the properties o f the Las V egas Land and W ater Com pany are acquired.) T h e Bond Service Fund must be maintained so that at least one m onth before a principal or interest paym ent is due the full am ount necessary therefor w ill be available in cash (Sec. 18). 5. R eserve F u n d : Purpose, to pay principal and interest on the bonds in the event that the m oneys in the Bond Service Fund are insufficient. O n the first day o f each month, 11 % com m encing not later than the fourth m onth follow in g the m onth in w hich the properties o f the Las V egas Land and W ater Com pany are acquired, at least 1/36 o f the maximum principal and interest requirements o f any future year (up to and including 1989, but not including 1990) must b e transferred from the R evenue Fund to the R eserve F u n d ; said transfers shall continue until the R eserve Fund is equal to the maxim um annual debt service, and thereafter as needed to maintain the required balance in the R eserve Fund. 6. R edem ption and O pen M arket Purchases: M aturities redeem able as fo llo w s : 1957 to 1964— not redeem able; 1990— redeem able from revenues on or after M arch 1, 1959; 1965 to 1990— redeem able from any source on or after M arch 1, 1964. R edem ption p rice: 100j^% , plus Y ^o for each 12 months, or fraction, from date o f redem ption to maturity, with a maximum of 105%. Redem ption F u n d : A fter paym ent of prior charges, m oneys in R evenue Fund in excess o f $500,000 must be transferred to R edem ption Fund. C om pulsory R ed em p tion : W h en ­ever Redem ption Fund is sufficient to call $50,000 or m ore par value bonds. O pen market purchases: M ay be made from Redem ption Fund after bonds becom e subject to call, at prices not exceeding redem ption prices. N otice o f redem ption shall be published at least 30 days but not m ore than 60 days prior to the redem ption date in a newspaper of general circulation published in the District, in a newspaper o f general circulation published in L os Angeles, and in a financial newspaper or journal o f national circulation published in N ew Y ork City. 7. W arra n ty: T h e D istrict will preserve and protect the security o f the bonds and defend the rights of the bondholders against all claims (Sec. 21). 8. Covenants (Sec. 2 2 ): So long as any o f the bonds- are outstanding and unpaid, or m oneys for full paym ent not set aside, the D istrict covenants with the bondholders as fo llo w s : (1) T o com m ence, as soon as funds are available, the acquisition and construction of revenue producing w orks and properties, and to continue w ith all practical dispatch and in an econom ical manner. (2) T o operate the enterprise in an econom ical and efficient manner and to operate, maintain and preserve the w aterw orks system in g ood repair and w orking order. (3) T h e w orks and properties o f the D istrict w ill not be sold, leased or otherw ise disposed o f unless full provision is m ade for paym ent of principal and interest of the bonds. (4) T o maintain adequate insurance coverage and to repair or replace any dam age to useful w orks or properties. (5) T h e D istrict w ill keep jproper books o f record and account. Its books 'arid accounts w ill be audited annually by an independent certified public accountant and a cop y of the audit w ill be furnished on request to any bondholder. (6) Service provided other public corporations or political subdivisions w ill not be rendered at low er rates than those charged other persons for similar service, except that water furnished for fire protection purposes m ay be supplied at not less than cost, including reasonable overhead. (7) Subject to the lim itation that the rates and charges shall be reasonable, to prescribe and collect rates and charges for the services, facilities, and water o f the enterprise at least sufficient to pay m aintenance and operation costs, general expenses and debt service, and to fix the rates and charges so that, after annually paying maintenance, operation and general expenses from revenues, the rem aining revenue w ill be at least 1.40 times m axim um annual debt service. (8) On M arch 1 of each year, com m encing M arch 1, 1955, any m oneys rem aining in the R evenue Fund in excess o f $500,000, after paym ent o f the items set forth in Covenant 7, will be transferred to the R edem ption Fund. (9) N o additional bonds m ay be issued having any priority over the bonds o f this issue. (10) N o additional bonded indebtedness payable from revenues shall be created or incurred unless net incom e (before depreciation, am ortization and interest chargeable to incom e account) for the latest fiscal year am ounts to tw ice the maxim um annual interest to accrue after the incurring of the additional indebtedness or unless said net incom e is at least 1.35 times maxim um annual debt service after the incurring o f said additional debt (excepting therefrom the 1990principal paym ent o f the current 1954 issue). Subject to specified limitations, net incom e m ay be increased b y allow ances for earnings w hich w ould have accrued from additions to w orks or from rate increases made during said latest fiscal year. 12