BAG's insured pooled financing vehicle for local jurisdictions issuing Water Revenue and Wastewater Revenue financings is a Marks-Roos Revenue Bond pool that acquires various local government obligations, generally installment sale, enterprise fund financings. The ABAG-issued Bonds are used to acquire an approximately equivalent amount of these underlying securities which are issued directly to the pool by participating special districts.

The pool utilizes a credit enhanced, open indenture structure. All of the Bonds issued under this program carry “AAA” ratings by virtue of commercial bond insurance purchased from FSA (Financial Security Assurance, Inc). Borrowers receive significant savings from both the low AAA-level interest rates and from shared transaction costs. The program particularly benefits the many water and wastewater districts with smaller financing needs. The diverse geographic participation by various credits from throughout the State in the open indenture establishes the credit strength of the pool. The pool is also secured by a debt service reserve fund.

Bonds issued by ABAG under the program are special obligations payable solely from the payments made by participating jurisdictions. No other ABAG funds or funds of ABAG Members are pledged or available for payment on the Bonds. The pledge of each participant is a pledge of that participant's Water or Wastewater System's net revenues. Each jurisdiction's pledge secures only its own payments. Individual participants are not obligated to make up for any deficiency in payments of other participants. The Pool is structured so that participants are not liable in any way for the payments or defaults of other participants.

Program participants must maintain System Revenues of at least 120% of their debt service obligation to the ABAG Pool and on other parity debt. Pool participants may enter into additional borrowing arrangements secured by their System's revenues on a parity with their obligation to the ABAG pool provided that this revenue covenant and certain other conditions are satisfied. For more information concerning this additional debt test contact the ABAG Financial Services Manager or one of the other Financing Team Members.

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