2024 CAPITAL PLEDGE AGREEMENT

In September 2024, the Boards for Flying Horse Metro District No 2 (FHMD2), Flying Horse Metro District No 3 (FHMD3) and Flying Horse Metro District No 1 (FHMD1) entered into a settlement agreement to settle all disagreements, claims and litigation between FHMD2/3 and FHMD1. In connection with the settlement agreement, FHMD1 agreed to drop (1) $12.1 million in construction cost and accrued interest claims against FHMD2/3 and (2) $5.85 million in operations subsidy funding claims against FHMD2/3 in exchange for FHMD2 and FHMD3 entering into a Capital Pledge Agreement where FHMD2 and FHMD3 agree to remit all tax revenue collected from a 3-mill levy (including related specific ownership taxes less county treasurer collection fees) to FHMD1 annually for 15 years beginning in 2024.

Because the Capital Pledge Agreement is a multiple-fiscal year agreement, FHMD2 and FHMD3 submitted a ballot issue to the voters to obtain voter authority to enter into the Capital Pledge Agreement. On November 05, 2024, 78.8% and 83.4% of the voters of FHMD2 and FHMD3, respectively, approved FHMD2 and FHMD3 to enter into the Capital Pledge Agreement with FHMD1.