BUFFALO MUNICIPAL WATER FINANCE AUTHORITY $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A

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1 NEW ISSUE Book-Entry-Only RATINGS: (See Ratings herein) In the opinion of Underberg & Kessler LLP, Bond Counsel, under existing statutes and court decisions and assuming continuing compliance by the Authority with its covenants relating to certain requirements contained in the Internal Revenue Code of 1986 (the Code ), interest on the Series 2015-A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code and will not be treated as a preference item for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations, but such interest will be includable in adjusted current earnings in computing the federal alternative minimum tax imposed on certain corporations. Moreover, interest on the Series 2015-A Bonds is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including the City of New York). See TAX MATTERS herein. BUFFALO MUNICIPAL WATER FINANCE AUTHORITY $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A Dated: Date of Delivery Due: As shown on inside cover The Series 2015-A Bonds (the Bonds or the Series 2015-A Bonds ) will be issued by the Buffalo Municipal Water Finance Authority (the Authority ), pursuant to the Buffalo Municipal Water Finance Authority Act, constituting Title 2-B of Article 5 of the Public Authorities Law of the State of New York, as amended. The Bonds are being issued for the purpose of refunding the outstanding principal amount of the Water System Refunding Bonds, Series 2008-A (the Refunded Bonds ) of the Authority and to pay certain other expenses, including costs of issuance of the Series 2015-A Bonds. The Series 2015-A Bonds are special obligations of the Authority, payable solely from and secured by a pledge of and lien on the gross revenues of the Water System (the System ) owned and operated by the Buffalo Water Board (the Board ). The Bonds are special obligations of the Authority, payable solely from and secured by a pledge of and lien on the gross revenues of the System. THE AUTHORITY HAS NO TAXING POWER. THE SERIES 2015-A BONDS ARE NOT A DEBT OF THE STATE OF NEW YORK, THE CITY OF BUFFALO, NEW YORK (THE CITY ), OR THE BOARD AND NEITHER THE STATE OF NEW YORK, THE CITY, NOR THE BOARD IS LIABLE ON THE BONDS. The Series 2015-A Bonds are subject to redemption prior to maturity, as described herein. See REDEMPTION PROVISIONS herein. The Series 2015-A Bonds are issuable in the form of fully registered bonds without coupons in the denominations of $5,000 or integral multiples thereof. The Series 2015-A Bonds, when issued, will be registered in the name of Cede & Co., as registered owner and nominee for the Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Series 2015-A Bonds. Individual purchases will be made in book-entry only form (without certificates) in the principal amount of $5,000 or integral multiples thereof. So long as Cede & Co. is the registered owner of the Series 2015-A Bonds, as nominee for DTC, references herein to the Bondholders or registered owners shall mean Cede & Co., as aforesaid. and shall not mean the Beneficial Owners of the Series 2015-A Bonds. Interest on the Series 2015-A Bonds is payable on January 1 and July 1, commencing on January 1, So long as Cede & Co. is the registered owner of the Series 2015-A Bonds, as aforesaid, principal and interest will be payable by U.S. Bank, National Association, New York, New York, as Trustee and Paying Agent, directly to Cede & Co., as nominee for DTC. Disbursements of such payments to Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of Direct Participants and Indirect Participants. See THE SERIES 2015-A BONDS and BOOK-ENTRY ONLY SYSTEM herein. THE SERIES 2015-A BONDS WILL BE DELIVERED ON OR ABOUT JUNE 3, 2015 (THE SETTLEMENT DATE ). ALL INFORMATION CONTAINED HEREIN IS BASED UPON INFORMATION AVAILABLE AS OF THE DATE HEREOF, UNLESS OTHERWISE INDICATED. THE AUTHORITY EXPRESSLY RESERVES THE RIGHT TO ISSUE ADDITIONAL BONDS FROM THE DATE OF THIS OFFICIAL STATEMENT UNTIL THE SETTLEMENT DATE. The Series 2015-A Bonds are offered, subject to prior sale, when, as and if issued by the Authority and received by the Underwriters, subject to the approval of legality of the Series 2015-A Bonds by Underberg & Kessler LLP, Rochester, New York, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Authority, the Board and the City by the City s Corporation Counsel, and for the Underwriters by Harter Secrest & Emery LLP, Rochester, New York. Capital Markets Advisors, LLC, Orchard Park, New York, serves as Financial Advisor to the Authority. It is anticipated that the Series 2015-A Bonds will be available for delivery in New York, New York on or about June 3, May 21, 2015 Citigroup Ramirez & Co., Inc. Siebert Brandford Shank & Co., L.L.C.

2 $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A Dated: Series 2015-A Settlement Date Principal Due: July 1, as shown below Interest Due: January 1, 2016, July 1, 2016 and semiannually thereafter on January 1 and July 1 in each year until maturity MATURITY AMOUNT INTEREST RATE YIELD PRICE CUSIP 07/01/2016 $1,660, % 0.640% JA5 07/01/2017 1,650, JB3 07/01/2018 1,880, JC1 07/01/2019 1,585, JD9 07/01/2020 3,100, JE7 07/01/2021 3,300, JF4 07/01/2022 2,830, JG2 07/01/2023 2,940, JH0 07/01/2024 3,165, JJ6 07/01/2025 3,300, JK3 07/01/2026* 3,515, JL1 07/01/2027* 4,510, JM9 07/01/2028* 4,735, JN7 07/01/2029* 5,015, JP2 07/01/2030* 700, JQ0 07/01/2031* 760, JR8 07/01/2032* 795, JS6 07/01/ , JT4 07/01/ , JU1 07/01/ , JV9 * Priced at the stated yield to the July 1, 2025 optional redemption date at a redemption price of 100% CUSIP numbers have been assigned by an independent company not affiliated with the Authority and are included solely for the convenience of the holders of the Series 2015-A Bonds. The Authority is not responsible for the selection or uses of these CUSIP numbers and no representation is made as to their correctness on the Series 2015-A Bonds or as indicated above.

3 BUFFALO MUNICIPAL WATER FINANCE AUTHORITY CITY HALL BUFFALO, NEW YORK MEMBERS DONNA J. ESTRICH, VICE-CHAIR HON. RICHARD A. FONTANA ABBY SNYDER BUFFALO WATER BOARD CITY HALL BUFFALO, NEW YORK MEMBERS OLUWOLE A. MCFOY, CHAIR GERALD E. KELLY WILLIAM L. SUNDERLIN MICHAEL J. FINN CHIEF FISCAL OFFICER - AUTHORITY GENERAL COUNSEL - AUTHORITY AND BOARD MARK J.F. SCHROEDER TIMOTHY A. BALL, ESQ. CONSULTANTS BOND COUNSEL CONSULTING ENGINEER FINANCIAL ADVISOR RATE CONSULTANT UNDERBERG & KESSLER LLP CRA INFRASTRUCTURE & ENGINEERING, INC. CAPITAL MARKETS ADVISORS, LLC LISA A. FOTI, CPA

4 No dealer, broker, salesperson or other person has been authorized by the Authority to give any information or to make any representation, other than those contained in this Official Statement. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Series 2015-A Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice and neither the delivery of the Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the Board, and the City since the date hereof. The information set forth herein has been provided by the Authority, the Board, and the City, but is not guaranteed as to its accuracy or completeness and is not construed as a representation by the Underwriters. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the Federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. This Official Statement should be considered in its entirety and no one factor considered less important than any other by reason of its position in this Official Statement. Where agreements, reports or other documents are referred to herein, reference should be made to such agreements, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained herein and the subject matter thereof. If and when included in this Official Statement, the words expects, forecasts, projects, intends, anticipates, estimates and analogous expressions are intended to identify forwardlooking statements and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, general economic and business conditions, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, litigation and various other events, conditions and circumstances, many of which are beyond the control of the Board or the Authority. These forward-looking statements speak only as of the date of this Official Statement. The Board and the Authority disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the Board or the Authority's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

5 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015-A BONDS AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE. TABLE OF CONTENTS Page SUMMARY STATEMENT... I INTRODUCTORY STATEMENT... 1 SOURCES AND USES OF FUNDS... 3 AUTHORIZATION FOR THE SERIES 2015-A BONDS... 3 THE SERIES 2015-A BONDS... 4 General... 4 Optional Redemption... 4 BOOK-ENTRY-ONLY SYSTEM... 4 Transfer of Bonds... 7 SECURITY FOR THE SERIES 2015-A BONDS... 7 Revenues... 7 Flow of Funds... 8 Parity Obligations... 8 Debt Service Reserve Fund... 9 Rate Covenant... 9 Investment of Funds Conditions Precedent To Delivery of Bonds DEBT SERVICE REQUIREMENTS THE AUTHORITY Purpose and Powers Membership THE BOARD Purpose and Powers Membership Management of the System Economic and Demographic Data THE SYSTEM Approved Capital Improvement Plan New York State Environmental Facilities Corporation ENGINEERING REPORT GOVERNMENTAL REGULATION RATES AND BILLING Rates Billing and Collection FINANCIAL OPERATIONS Management's Discussion of Financial Operations Forecasted Debt Service Coverage and Projected Rate Increases Expenditures Payments to the City for General Obligation Water Bonds LABOR RELATIONS COVENANT OF THE STATE... 32

6 LITIGATION TAX MATTERS Tax-Exempt Bonds Certain Collateral Federal Tax Consequences Limitations APPROVAL OF LEGAL PROCEEDINGS LEGALITY FOR INVESTMENT AND DEPOSIT AUDITORS AND CONSULTANTS Independent Auditors Consulting Engineer Rate Consultant RATINGS UNDERWRITING FINANCIAL ADVISOR VERIFICATION OF MATHEMATICAL ACCURACY CONTINUING DISCLOSURE OBLIGATIONS FURTHER INFORMATION APPENDIX A: BUFFALO MUNICIPAL WATER FINANCE AUTHORITY AND BUFFALO WATER BOARD AUDITED BASIC FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION AS OF AND FOR THE YEARS ENDED JUNE 30, 2014 AND JUNE 30, 2013, AND INDEPENDENT AUDITORS' REPORTS... A-1 APPENDIX B: ENGINEERING REPORT EVALUATION OF THE BUFFALO WATER SYSTEM... B-1 APPENDIX C: RATE CONSULTANT S REPORT... C-1 APPENDIX D: CERTAIN INFORMATION CONCERNING THE CITY OF BUFFALO... D-1 APPENDIX E: GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS... E-1 Summary of the Resolution Summary of the Financing Agreement Summary of the Operation Agreement Summary of the Management Agreement APPENDIX F: FORM OF BOND COUNSEL OPINION REGARDING SERIES 2015-A BONDS... F-1 APPENDIX G: FORM OF CONTINUING DISCLOSURE AGREEMENT... G-1

7 SUMMARY STATEMENT The following summary is subject in all respects to the additional information contained in this Official Statement, including the Appendices attached hereto, and was prepared in connection with the Authority's sale of its $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A (the Series 2015-A Bonds ). Defined terms have the same meaning herein as elsewhere in the text. USE OF PROCEEDS The Series 2015-A Bonds are being issued (i) to refund the outstanding principal amount of the Authority's $62,020,000 original principal amount Water System Revenue Refunding Bonds, Series 2008-A (the Refunded Bonds ) and (ii) to pay certain costs of issuance of the Series 2015-A Bonds, including debt service reserve requirements and costs of issuance of the Series 2015-A Bonds. As of their date of issuance, $61,500,000 of the variable rate Water System Refunding Bonds, Series 2008-A (the Hedged Series 2008-A Bonds ) were hedged by means of an interest rate swap that has a current notional amount of approximately $53,700,000. The Authority will notify the swap provider on June 3, 2015 of its intent to terminate the swap at par on July 7, 2015, after which the Authority will no longer have any variable rate bonds or interest rate swaps outstanding. THE SYSTEM The System provides an average of 63.2 million gallons per day (mgd) of water to 72,700 active accounts. It supplies water within the City of Buffalo and a small number of commercial and residential accounts surrounding the City of Buffalo and consists of approximately 785 miles of pipe, 12,120 line valves, 7,400 fire hydrants, one active Water Intake, two Pumping Plants, a Pumping Plant Complex housing a Distribution department, inventory stores, one Filtration Plant, one treated water Reservoir and five Storage Tanks. CAPITAL IMPROVEMENTS PROGRAM The current Capital Improvement Plan as approved by the Board covers the period through Fiscal Year and assuming the implementation of this program and continued maintenance and service to System facilities, the expected life of the System should exceed 30 years (see THE SYSTEM - Approved Capital Improvement Plan ). REVENUE PLEDGE The Series 2015-A Bonds are special obligations of the Authority, payable solely from and secured by a pledge of all rates, fees, changes, payments and other income received by the Board (the Revenues ) (except certain monies or securities on deposit or required to be deposited in the Rebate Fund) all moneys or securities in any of the Funds and Accounts established under the Resolution (other than the Rebate Fund), and all other moneys and securities to be received, held or set aside pursuant to the Resolution; subject only to provisions of the Resolution, the Act and the Financing Agreement relating to the use and application thereof. i

8 DEBT SERVICE RESERVE FUND RATE COVENANT TRUSTEE RATES ADDITIONAL BONDS THE AUTHORITY The Authority will maintain appropriate balances in the Debt Service Reserve Fund so that the amount on deposit therein will be equal to the Debt Service Reserve Requirement as defined in the Resolution. The Board has covenanted to establish and collect rates, fees and charges sufficient in each Fiscal Year so that Revenues received by the Board in such Fiscal Year will be at least equal to the sum of (i) 115% of estimated Aggregate Debt Service on all outstanding bonds and on any Projected Series of Bonds payable in such Fiscal Year, and (ii) 100% of the Operating Expenses, Authority Expenses and Required Deposits for such Fiscal Year. It should be noted that recent policy and practice of the Board has been to establish rates at a level sufficient to increase the Revenue for the Fiscal Year so that it is at least equal to 150% of Aggregate Debt Service payable in such Fiscal Year on all Bonds Outstanding and on any series of Bonds expected to be Outstanding during such Fiscal Year and 100% of the Operating Expenses, Authority Expenses and Required Deposits for such Fiscal Year. U.S. Bank, National Association (the Trustee ) will serve as Trustee for the Series 2015-A Bonds pursuant to the Resolution. Rates, fees and charges are imposed by the Board and are not subject to regulatory approval, except as provided by law with respect to the supply of water to certain users outside of the City. Additional Bonds secured on a parity with the Series 2015-A Bonds and the Outstanding Bonds may be issued to pay for capital improvements to the System, to refund all Outstanding Bonds and, upon authorization by the City, to refund outstanding general obligation Bonds or Notes of the City issued for System related purposes. Additional Bonds will be issued subject to financial tests specified in the Resolution, as described herein. The Authority, a separate legal entity established in 1985 and activated in 1992, has the power (i) to issue Bonds for any of its corporate purposes, including the financing of the acquisition of and renovations and improvements to the System by the Board, (ii) to require the Board to fix rates sufficient to pay the costs of operation and financing the System, and (iii) to require the Board to adequately maintain the System. The Authority has no taxing power. ii

9 THE BOARD THE FINANCING AGREEMENT THE ACQUISITION AGREEMENT THE OPERATION AGREEMENT The Board, a separate legal entity established in 1985 and activated in 1992, acquired the System from the City on September 24, It is authorized to fix and collect rates, fees, rents and other service charges adequate to pay, among other things, the cost of operating and financing the System. Pursuant to the Financing Agreement, as amended, the Authority has agreed to finance all or a portion of the costs of the Projects through the issuance of Bonds or other indebtedness secured by Revenues. Pursuant to the Acquisition Agreement, the Board acquired the System from the City in 1992 at a purchase price equal to the sum of (i) a capital transfer payment of $26,536,880 and (ii) an amount of $6,215,000 plus unpaid interest on the City's outstanding Bond Anticipation Notes. Pursuant to the Operation Agreement amendment dated as of August 1, 1997, the Board is responsible for the management, operation, maintenance and repair of the System. The operation of the System may include the engagement of independent contractors for the fulfillment of the Board's duties and obligations with respect to the System. THE MANAGEMENT AGREEMENT CONTINUING DISCLOSURE On April 14, 2010, the Board approved a contract with Veolia Water North America- Northeast, LLC ( Veolia ) for the management of the System. The agreement executed by Veolia has a term of ten (10) years commencing July 1, Furthermore, the Board has agreed to use the services of the employees of the City of Buffalo, Division of Water to operate, maintain, repair and improve the System as provided for in the Management Agreement with Veolia. (See THE BOARD - Management of the System and APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Management Agreement ). The Authority and the Board have undertaken to provide certain annual financial and operating information and information regarding certain events (see CONTINUING DISCLOSURE OBLIGATIONS and APPENDIX G - FORM OF CONTINUING DISCLOSURE AGREEMENT ). iii

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11 OFFICIAL STATEMENT BUFFALO MUNICIPAL WATER FINANCE AUTHORITY $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A INTRODUCTORY STATEMENT This Official Statement, which includes the cover page, summary statement and appendices, presents information relating to the System (as hereinafter defined); the Buffalo Municipal Water Finance Authority (the Authority ), a public benefit corporation created by the Buffalo Municipal Water Finance Authority Act, as amended (the Authority Act ), constituting Title 2- B of Article 5 of the Public Authorities Law of the State of New York (the State ); the Buffalo Water Board (the Board ), a corporate municipal instrumentality created by Chapter 368 of the New York Laws of 1985, (the Board Act ) (the Board Act and the Authority Act are, for purposes of this Official Statement, hereinafter collectively referred to as the Act ); and the Authority's $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A (the Series 2015-A Bonds ). The Series 2015-A Bonds will be issued by the Authority pursuant to its Water System General Revenue Bond Resolution (the General Resolution ), adopted on November 20, 1992, as amended and supplemented from time to time, including by its Twenty-Eighth Supplemental Water System Revenue Refunding Bond Resolution, which is to be considered for adoption by the Authority on or about May 20, 2015 (the Supplemental Resolution ). The General Resolution, as supplemented by the Supplemental Resolution and as the same may be further amended or supplemented, is referred to herein as the Resolution. The Authority has appointed U.S. Bank, National Association, New York, New York, to act as trustee (the Trustee ) under the Resolution. The Series 2015-A Bonds are being issued (i) to refund the outstanding principal amount of the Authority's Water System Revenue Refunding Bonds, Series 2008-A (the Refunded Bonds ) and (ii) to pay certain other expenses, including debt service reserve requirements and costs of issuance of the Series 2015-A Bonds. Pursuant to an Acquisition Agreement dated as of September 24, 1992 (the Acquisition Agreement ) by and between the Board and the City of Buffalo (the City ), the Board acquired title to the City's facilities for the collection, transmission and distribution of water (the System ). Pursuant to the Operation Agreement amendment dated as of August 1, 1997 (the Operation Agreement ), the Board is responsible for the management, operation, maintenance and repair of the System. The operation of the System may include the engagement of independent contractors for the fulfillment of the Board's duties and obligations with respect to the System. On April 14, 2010, the Board approved a contract with Veolia Water North America-Northeast, LLC ( Veolia ) for the management of the system. The agreement executed with Veolia has a term of ten (10) years commencing July 1, Furthermore, the Board has agreed to use the services of the employees of the City of Buffalo, Division of Water to operate, maintain, repair and improve the System as provided for in the Management Agreement with Veolia. The Board has also entered into a Financing Agreement, dated as of September 24, 1992, as amended as of July 7, 1995, June 19, 1996, August 1, 1997, and as further amended as of September 15, 2005 (the Financing Agreement ), with the Authority and the City to provide for, among other things, the financing of capital improvements to the System through the issuance of bonds or other 1

12 obligations of the Authority. The Financing Agreement expressly incorporates both the Acquisition Agreement and the Operation Agreement. The Series 2015-A Bonds are special obligations of the Authority, payable solely from and secured by a pledge of all rents, fees, charges, payments and other income received by the Board from users of the System and all investment proceeds received by the Board (the Revenues ) (except certain moneys or securities on deposit or required to be deposited in the Rebate Fund), all moneys or securities in any of the Funds and Accounts established under the Resolution (other than the Rebate Fund) and all other moneys and securities to be received, held or set aside pursuant to the Resolution; subject only to provisions of the Resolution, the Act and the Financing Agreement relating to the use and application thereof. The Board has covenanted in the Financing Agreement to maintain rates, fees and charges at sufficient levels so that Revenues received by the Board in each Fiscal Year will be at least equal to the sum of (i) 115% of the principal and interest coming due and projected to become due in such Fiscal Year on the Bonds, and (ii) 100% of the operation and maintenance expenses for the System and the Authority and (iii) 100% of the Required Deposits (see SECURITY FOR THE SERIES 2015-A BONDS ). THE AUTHORITY HAS NO TAXING POWER. NEITHER THE STATE, THE CITY, NOR THE BOARD NOR ANY SUBDIVISION THEREOF WILL BE LIABLE ON THE BONDS AND SUCH BONDS WILL NOT BE A DEBT OF THE STATE, THE CITY OR THE BOARD NOR ANY SUBDIVISION THEREOF. Rates, fees and charges are established by the Board and are not subject to regulatory approval nor are they subject to other regulations under current law, except as provided by law with respect to the supply of water to certain users outside the City (see GOVERNMENTAL REGULATION and RATES AND BILLING ). Authority financing will pay for actual expenditures for improvements to be completed by vendors under construction contracts. Pursuant to the Financing Agreement, the Authority must retain an independent Consulting Engineer who shall recommend improvements to the System and provide estimates of the costs of such improvements. The approved Capital Improvement Plan ( CIP ) anticipates an investment of approximately $77,960,000 in the aggregate for Fiscal Years 2015 through The Authority anticipates that substantially all of the funds to implement the CIP will be provided from future bond issues and System Revenues. For further information regarding the CIP, see THE SYSTEM - Approved Capital Improvement Plan and APPENDIX B - ENGINEERING REPORT EVALUATION OF THE BUFFALO WATER SYSTEM. The estimates, forecasts and projections contained in this Official Statement are based on, among other factors, evaluations of historical revenue and expenditure data and analyses of economic trends. The financial forecasts contained herein and in APPENDIX C hereto are subject to certain contingencies, which cannot be quantified and are subject to the uncertainties inherent in any attempt to forecast the results of future operations; accordingly, such financial forecasts are subject to periodic revision, which may involve substantial change. Consequently, the Authority and the Underwriters make no representation or warranty that these estimates and projections will be realized. This Official Statement contains brief descriptions of the Series 2015-A Bonds, the Authority, the Board and the System, together with other information including summaries of the terms of the Series 2015-A Bonds, the Financing Agreement, the Acquisition Agreement, the Operation Agreement, the Management Agreement, and the Resolution. Such descriptions and summaries do not purport to be comprehensive or definitive. All references herein to the Financing Agreement, the 2

13 Acquisition Agreement, the Operation Agreement, the Management Agreement, the Resolution, and the Series 2015-A Bonds are qualified by reference to such documents or instruments in their entirety. Copies of the Financing Agreement, the Acquisition Agreement, the Operation Agreement, the Management Agreement, and the Resolution are available from the Authority. Unless otherwise indicated herein, capitalized terms not otherwise defined herein will have the meanings given to such terms in APPENDIX E hereto. SOURCES AND USES OF FUNDS The Series 2015-A Bonds are being issued (i) to current refund the outstanding principal amount of the Refunded Bonds of the Authority and (ii) to pay certain other expenses, including debt service reserve requirements and costs of issuance of the Series 2015-A Bonds. Buffalo Municipal Water Finance Authority $46,655,000 Water System Revenue Refunding Bonds, Series 2015-A Sources: Par Amount of Series 2015-A Bonds $ 46,655, Transfer from Refunded Bonds Debt Service Fund 2,926, Transfer from Refunded Bonds Debt Service Reserve Fund 493, Authority Equity Contribution 115, Original Issue Premium 6,158, Total: $ 56,349,692.6 Uses: Deposit to Escrow Fund $ 55,828, Underwriting Discount 295, Costs of Issuance and Contingency 225, Total: $ 56,349, As of their date of issuance, $61,500,000 of the variable rate Water System Refunding Bonds, Series 2008-A (the Hedged Series 2008-A Bonds ) were hedged by means of an interest rate swap that has a current notional amount of approximately $53,700,000. The Authority will notify the swap provider on June 3, 2015 of its intent to terminate the swap at par on July 7, 2015, after which the Authority will no longer have any variable rate bonds or interest rate swaps outstanding. AUTHORIZATION FOR THE SERIES 2015-A BONDS The Authority will issue the Series 2015-A Bonds pursuant to the Act and the Resolution. Under the terms of the Act, the Authority is empowered to issue bonds to pay the cost of any water projects, to refund bonds then outstanding or for other Authority purposes, and to authorize the execution of the Resolution in connection with such issuance. 3

14 THE SERIES 2015-A BONDS The following is a summary of certain provisions of the Series 2015-A Bonds. Reference is made to the Series 2015-A Bonds for the complete text thereof and to the Resolution for all of the provisions relating to the Series 2015-A Bonds. The discussion herein is qualified by such reference. For a more detailed description of such provisions, see APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS Summary of the Resolution. Any reference herein to the Bonds or to the Resolution or other similar documents shall be deemed to mean the Bonds of a particular series or the documents related thereto, unless the context or use clearly indicates otherwise. General The Series 2015-A Bonds shall be dated June 3, 2015, shall bear interest from such date, payable semi-annually thereafter on January 1 and July 1 of each year, commencing January 1, 2016, at the rates and shall mature on the dates and in the principal amounts as set forth on the inside front cover of this Official Statement. Interest on the 2015-A Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. The Series 2015-A Bonds will be issued only as fully registered bonds without coupons in the denominations of $5,000 or any multiple thereof not exceeding the aggregate principal amount of Series 2015-A Bonds maturing in such year. The principal of and interest on all Series 2015-A Bonds are payable in any coin or currency of the United States of America at the corporate trust office of the Trustee in New York, New York. So long as The Depository Trust Company ( DTC ), New York, New York or its nominee, Cede & Co., is the registered owner of the Series 2015-A Bonds, all payments with respect to the principal of and interest on the Series 2015-A Bonds and all notices with respect to the Series 2015-A Bonds will be made directly to Cede & Co., as nominee for DTC. Disbursements of such payments to the participants of DTC ( DTC Participants ) is the responsibility of DTC and disbursements of such payments to the Beneficial Owners (as herein defined) of the Series 2015-A Bonds is the responsibility of the DTC Participants and not the Authority or the Paying Agent. See BOOK-ENTRY-ONLY SYSTEM. Optional Redemption The Series 2015-A Bonds maturing on or after July 1, 2026 will be subject to redemption prior to maturity at the option of the Authority on July 1, 2025 and thereafter on any date, as a whole or in part, as specified by the Authority, in such order of maturity as may be determined by the Authority (selected by lot within a maturity), at par, plus accrued interest to the date of redemption. Notice of redemption shall be given by mailing such notice to the registered holders of the Series 2015-A Bonds to be redeemed at their respective addresses as shown upon the registration books of the Paying Agent at least 30 days prior to the date set for any such redemption. If notice of redemption shall have been given as aforesaid, the Series 2015-A Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on such Series 2015-A Bonds shall cease to accrue from and after such redemption date. BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Series 2015-A Bonds. The Series 2015-A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be 4

15 requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for the entire aggregate principal amount of the Series 2015-A Bonds, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Series 2015-A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015-A Bonds on DTC s records. The ownership interest of each actual purchaser of the Series 2015-A Bonds ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2015-A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2015-A Bonds, except in the event that use of the book-entry system for the Series 2015-A Bonds is discontinued. To facilitate subsequent transfers, all Series 2015-A Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2015-A Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015-A Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2015-A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2015-A Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with 5

16 respect to the Series 2015-A Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Series 2015-A Bonds may wish to ascertain that the nominee holding the Series 2015-A Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2015-A Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2015-A Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Series 2015-A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Series 2015-A Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Authority or Trustee, on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. In the event (i) DTC determines not to continue to act as securities depository for the Bonds, or (ii) the Authority, with the consent of the Trustee, determines in accordance with the terms of the Resolution that (a) DTC is incapable of discharging its duties or (b) it is in the best interests of the holders of the Series 2015-A Bonds not to continue the Book-Entry-Only System or that interests of the Beneficial Owners of the Series 2015-A Bonds might be adversely affected if the Book-Entry-Only System is continued, then the Authority will discontinue the Book-Entry-Only System with DTC. Upon the occurrence of the event described in (i) or (ii)(a) above, the Authority will attempt to locate another qualified securities depository. If the Authority fails to identify another qualified securities depository to replace DTC or makes the determination noted in (ii)(b) above, the Trustee will authenticate and deliver the Series 2015-A Bonds in accordance with the Resolution. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority, the Underwriter and the Trustee do not take responsibility for the accuracy thereof. 6

17 None of the Authority, the Trustee, or the Underwriter will have any responsibility or obligation to the Participants, DTC or the persons for whom they act with respect to (i) the accuracy of any records maintained by DTC or by any Direct or Indirect Participant of DTC, (ii) payments or the providing of notice to Direct Participants, the Indirect Participants or the Beneficial Owners, (iii) the selection by DTC or by any Direct or Indirect Participant of any Beneficial Owner to receive payment in the event of a partial redemption of the Series 2015-A Bonds, or (iv) any other action taken by DTC or its partnership nominee as owner of the Series 2015-A Bonds. NEITHER THE AUTHORITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS, INDIRECT PARTICIPANTS, OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO, OR THE PROVIDING OF NOTICE FOR, SUCH DTC PARTICIPANTS, INDIRECT PARTICIPANTS, OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES. Transfer of Bonds So long as Cede & Co., as partnership nominee for DTC (or such other name as may be requested by an authorized representative of DTC), is the Bondholder of Record of the Series 2015-A Bonds, beneficial ownership interests in the Bonds may be transferred only through a Direct Participant or Indirect Participant and recorded on the Book-Entry-Only System operated by DTC. In the event the Book-Entry-Only System is discontinued, Series 2015-A Bond certificates will be delivered to the Beneficial Owners as described in the Supplemental Resolution. Thereafter, the Series 2015-A Bonds, upon surrender thereof at the principal office of the Trustee with a written instrument of transfer satisfactory to the Trustee, duly executed by the Beneficial Owner thereof or such Beneficial Owner s duly authorized attorney, may be exchanged for an equal aggregate principal amount of Series 2015-A Bonds of the same series and maturity and of any Authorized Denominations. In all cases in which the privilege of exchanging or transferring Series 2015-A Bonds is exercised, the Authority shall execute and the Trustee shall authenticate and deliver the Series 2015-A Bonds in accordance with the provisions of the Trust Agreement. For every such exchange or transfer of Series 2015-A Bonds, the Authority or the Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer but may impose no other charge therefor. Neither the Authority nor the Trustee shall be required to make any such exchange or transfer of Series 2015-A Bonds during the 15 days next preceding an Interest Payment Date or, in the case of any proposed redemption, during the 15 days next preceding the first publication or mailing of notice of redemption. Revenues SECURITY FOR THE SERIES 2015-A BONDS The Act empowers the Board to establish, fix, revise, charge, collect and enforce the payment of all fees, rates, rents and other service charges for the use of, or services provided by, the System in order to receive Revenues sufficient to place the System on a self-sustaining basis and to make payments to the City pursuant to the Financing Agreement. All Revenues of the System will be deposited by the Board in the Local Water Fund established pursuant to the Act and in the custody of the Board. Under the Act, a statutory lien is created upon the Revenues in favor of the payment of all amounts due pursuant to the Financing Agreement and in the order and priority set forth in such agreement. The Act provides that such lien shall be a first lien upon the Revenues. In the event that the Board fails to make any required payment to the Authority, the Authority or the Trustee may petition 7

18 for the appointment, by any court having jurisdiction, of a receiver to administer the affairs of the Board, and, with court approval, establish rates and charges to provide Revenues sufficient to make required payments. The statutory lien, however, does not give any holder or owner of any Bond issued by the Authority power to compel the sale of any part of the System. The City and the Board have covenanted in the Financing Agreement and Operation Agreement that the Board shall manage, operate, maintain and repair the System. Such obligation to operate and maintain the System may be enforced by the Authority in accordance with the provisions of the Act and the terms of the Financing Agreement and the Operation Agreement. Pursuant to the Operation Agreement, the City certifies to the Board on an annual basis the amounts expected to be required to operate and maintain the System. The Board pays such amounts, as described below, after receipt by the Board of an annual certificate of the Consulting Engineer or the Rate Consultant to the effect that such amounts are reasonable and appropriate. Flow of Funds Beginning on the first day of each month, the Board is required to transfer the Revenues in the General Account of the Local Water Fund to the Trustee for deposit in the Revenue Fund, until the amount on deposit in the Revenue Fund and the Debt Service Fund combined equals the Minimum Monthly Balance for all outstanding bonds in such month and the Trustee has additionally received amounts necessary to satisfy any Required Deposits for such month (see APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Financing Agreement - Minimum Monthly Balance ). Thereafter in such month from the balance remaining in the General Account of the Local Water Fund, the Board is required, after transferring budgeted money to the Board Expense Account in the Local Water Fund to pay monthly Board Expenses, to transfer to the Operation Account in the Local Water Fund, for credit against the amount due from the Board to the City for Operating Expenses, 1/12 of the Operating Expenses for such Fiscal Year; however, the City may provide an alternative payment schedule, which must be agreed to by the Rate Consultant. After making such transfer, any amounts remaining in the General Account of the Local Water Fund in each month are paid to the Operation and Maintenance Reserve Account and the Ongoing Project Account in the Local Water Fund. For a more complete description of the required payments from the General Account of the Local Water Fund, see APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Financing Agreement - Establishment of Certain Accounts and Application of Revenues in the Local Water Fund. Under the Resolution, all Revenues received by the Authority from the Board will be deposited promptly in the Revenue Fund. As soon as practicable in each month after the deposit of Revenues, the Trustee will, from the amounts in the Revenue Fund, make the deposits in the Funds and Accounts established under the Resolution (see APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Resolution - Payments Into Certain Funds ). Parity Obligations The Series 2015-A Bonds will be on a parity with Bonds heretofore and hereafter issued pursuant to the Resolution and the Act and are payable from and secured by a pledge of all Revenues (except certain moneys or securities on deposit or required to be deposited in the Rebate Fund) and all other moneys and securities to be received, held or set aside pursuant to the Resolution; subject only to the provisions of the Resolution, the Act and the Financing Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. Reimbursement Obligations created pursuant to the Resolution may only be on a parity with the Bonds to the extent that such 8

19 Reimbursement Obligations shall not exceed 25% of the principal amount of Bonds then Outstanding (see APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Resolution and - Summary of the Financing Agreement ). On September 15, 2005, the Resolution was amended by the Sixteenth Supplemental Resolution to allow the Authority to enter into various Qualified Swap transactions. The Resolution provides that swap payments made by the Authority are to be paid from the Subordinated Indebtedness Fund. Swap payments received by the Authority are to be paid into the Authority Revenue Fund. The Authority may calculate Debt Service and Required Deposits with respect to any Bonds that are Outstanding or proposed to be issued using the fixed interest rate on any floating-to-fixed Qualified Swap Agreement for the principal amount of Bonds equal to the notional amount set forth in such Qualified Swap Agreement, and the principal amount of such Bonds will not constitute Variable Rate Bonds for the purposes of the definition of Debt Service Reserve Fund Requirement and Sections 206 and 207 of the Resolution, but only for the period during which such Qualified Swap Agreement is in effect. The Authority also adopted an Interest Rate Swap Policy to require the Authority, its management and staff to adhere to sound financial and risk management practices when assessing the feasibility of Qualified Swap transactions. Debt Service Reserve Fund The Resolution establishes a Debt Service Reserve Fund and a Common Account therein. The Resolution requires that upon the issuance of each series of Bonds there shall be deposited into the Common Account (unless the Supplemental Resolution for a series of Bonds establishes a Special Account for such Series) an amount necessary to make the amount on deposit, together with any applicable Financial Guaranty, equal to the Debt Service Reserve Requirement for all Bonds Outstanding to which the Common Account relates, after giving effect to the issuance of such Bonds. The Debt Service Reserve Requirement on any date of calculation, and for any Fiscal Year, shall be an amount equal to the lesser of (i) maximum Aggregate Debt Service in the then current or any future Fiscal Year on all Bonds outstanding, (ii) 125% of average annual Aggregate Debt Service on all Bonds outstanding or (iii) 10% of the principal amount of the Bonds outstanding, as more fully described in APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Resolution. Amounts on deposit in the Common Account will be applied, to the extent Revenues or amounts advanced on behalf of the Authority under the terms of a Credit Facility are not available pursuant to the Resolution, to pay Principal Installments and interest on Bonds. The Resolution also provides that any Supplemental Resolution providing for a Credit Facility to secure the payment of any Bonds may establish one or more Special Accounts in the Debt Service Reserve Fund for such payment. The Debt Service Reserve Requirement for Bonds secured by a Credit Facility may be limited to an amount not in excess of the maximum Debt Service on such Bonds in the current or any future Fiscal Year and may be satisfied in whole or in part by a Financial Guaranty. In lieu of making cash deposits to the Debt Service Reserve Fund, the Authority may satisfy the Debt Service Reserve Requirement by depositing Financial Guaranties into the Debt Service Reserve Fund (see APPENDIX E - GLOSSARY AND SUMMARY OF CERTAIN DOCUMENTS - Summary of the Resolution ). Rate Covenant The Board has covenanted in the Financing Agreement to establish, fix and revise, from time to time, fees, rates, rents or other charges for the use of, or the services furnished by, the System to provide, together with any other available funds, for (i) the timely payment of debt service on the Series 2015-A Bonds, the Outstanding Bonds and the principal of and interest on any other 9

20 indebtedness of the Authority payable from Revenues, (ii) the proper operation and maintenance of the System, (iii) all other payments required for the System not otherwise provided for, and (iv) all other payments including payments to the City and debt service on City General Obligation Water Supply Serial Bonds previously issued that are required pursuant to the Financing Agreement and the Operation Agreement. Without limiting the generality of the foregoing, the Board has covenanted to establish and collect rates, fees and charges sufficient in each Fiscal Year so that Revenues collected in such Fiscal Year will be at least equal to the sum of (i) 115% of Aggregate Debt Service payable in such Fiscal Year on all Bonds Outstanding and on any series of Bonds expected to be Outstanding during such Fiscal Year, and (ii) 100% of the Operating Expenses, Authority Expenses and Required Deposits for such Fiscal Year. A failure to generate Revenues as set forth in this paragraph shall not constitute an event of default under the Financing Agreement if the Board takes timely action to correct any such deficiency as described in the following paragraph. Pursuant to an amendment to the Financing Agreement dated as of August 1, 1997 the portion of accrued surplus in the Operation and Maintenance Reserve Account at the end of any Fiscal Year that exceeds ten percent (10%) of the total Annual Budget of the Board for such Fiscal Year shall be deemed to be Revenues collected for the next Fiscal Year of such Annual Budget. The Board has covenanted in the Financing Agreement to review the adequacy of fees, rates, rents or other charges at least annually. If such annual or more frequent review, or the report of the Rate Consultant required pursuant to the Financing Agreement, indicates that the rates, fees and charges are or will be insufficient to meet the requirements of the rate covenant, the Board will promptly take the necessary action to cure or avoid any such deficiency. In addition, under the Operation Agreement, the City and the Board have agreed to cooperate with each other and pursue all actions necessary to cure or avoid any insufficiency in such rates, fees or other charges within the limits of the funding provided by the Board. The Board has covenanted in the Financing Agreement that, except as required by law, it will not furnish or supply or cause to be furnished or supplied any product, use or service of the System free of charge (or at a nominal charge) to any person, firm or corporation, public or private, and the Board will enforce the payment of any and all amounts owing to the Board for use of the System. Notwithstanding the foregoing, the Financing Agreement provides that there shall be no charges for any use of the System by the City in pursuance of its governmental functions or for services rendered to the City in connection with such use of the System (see RATES AND BILLING ). It should be noted that recent policy and practice of the Board has been to establish rates at a level sufficient to increase the Revenue for the Fiscal Year so that it is at least equal to 150% of Aggregate Debt Service payable in such Fiscal Year on all Bonds Outstanding and on any series of Bonds expected to be Outstanding during such Fiscal Year and 100% of the Operating Expenses, Authority Expenses and Required Deposits for such Fiscal Year, but no assurance can be given that the Board will continue such policy and practice. Investment of Funds The Resolution requires that interest and other earnings on amounts on deposit in all Funds and Accounts established under the Resolution, other than the Construction Fund, the Debt Service Reserve Fund and the Rebate Fund, shall be paid into the Revenue Fund as and when received. Interest earned on monies on deposit in the Rebate Fund shall be held in the Rebate Fund until required for payment to the United States Government. Interest and other investment earnings on any moneys or investments in (i) the Debt Service Reserve Fund shall be paid into the Surplus Fund, and (ii) the Construction Fund shall be paid to the Board for deposit in the Local Water Fund, except that interest 10