Ord 2019-003/authorizing the issuance of the City of San Marcos Special Assessment Revenue Bonds, Series 2018 (Trace Public Improvement District); approving aand authorizing an Indenture of Trust, a Bond Purchase Agreement, an Offering Memorandum, a

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agreements under this Section or otherwise other than funds on deposit in the Administrative Fund. Section 7.3. Against Encumbrances. (a) The City shall not create and, to the extent Pledged Revenues are received, shall not suffer to remain, any lien, encumbrance or charge upon the Pledged Revenues or upon any other property pledged under this Indenture, except the pledge created for the security of the Bonds Similarly Secured or any Refunding Bonds, and other than a lien or pledge subordinate to the lien and pledge of such property related to the Bonds Similarly Secured. (b) So long as Bonds Similarly Secured are Outstanding hereunder or under any indenture relating to any Additional Bonds, the City shall not issue any bonds, notes or other evidences of indebtedness, other than the Bonds, Refunding Bonds and Additional Bonds, secured by any pledge of or other lien or charge on the Pledged Revenues or other property pledged under this Indenture or under any indenture relating to any Additional Bonds, other than a lien or pledge subordinate to the lien and pledge of such property related to the Bonds Similarly Secured. Section 7.4. Records, Accounts, Accounting Reports. The City hereby covenants and agrees that so long as any Bonds are Outstanding and amounts are due to the Developer under the Reimbursement Agreement to reimburse it for its funds it has contributed to pay Actual Costs, it will keep and maintain a proper and complete system of records and accounts pertaining to the Assessments. The Trustee and holder or holders of any Bonds or any duly authorized agent or agents of such holders shall have the right at all reasonable times to inspect all such records, accounts, and data relating thereto, upon written request to the City by the Trustee or duly authorized representative, as applicable. The City shall provide the Trustee or duly authorized representative, as applicable, an opportunity to inspect such books and records relating to the Bonds during the City's regular business hours and on a mutually agreeable date not later than thirty days after the City receives such request. Section 7.5. Covenants Regarding Tax Exemption of Interest on Bonds. (a) The City covenants to take any action necessary to assure, or refrain from any action that would adversely affect, the treatment of the Bonds as an obligation described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the City covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the City, with respect to such private business use, do not, under the terms of this Article or any underlying arrangement, directly or indirectly, secure or provide for 48