HomeMy WebLinkAboutWater & Sewer Revenue Waterworks Utility Cap Improve Project - 2004 Transcript of Proceedings
Relating to the Authorization, Sale,
Issuance and Delivery of the
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$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
_! Dated: November 1, 2004
Date of Issue: November 17, 2004
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Bond Counsel
GOTTLIEB,FISHER&ANDREWS,PLLC
520 Pike Street, Suite 2510
Seattle, Washington 98101-4006
Phone (206) 654-1999
Fax (206) 654-8725
TABLE OF CONTENTS
$10,335,000 .
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
DOCUMENT TAB NO.
Certificate as to Transcript 1
Ordinance No. 4709 authorizing the sale and
issuance of the 1998 Bonds 2
Ordinance No. 4976 authorizing the sale and
issuance of the 2002 Bonds 3
Ordinance Nos. 5019 and 5020 authorizing the sale and
issuance of the 2003 Bonds 4
Ordinance No. 5098 authorizing the sale and
issuance of the Bonds 5
Minutes of City Council Meeting re Ordinance No. 5098 6
Affidavit of Publication of Ordinance No. 5098 7
Letter of Representations 8
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Bond Purchase Agreement 9.
Preliminary Official Statement 10
Official Statement 11
Disclosure Certificate 12
Disclosure Certificate of Bond Insurer 13
Rating Letters 14
Bond Insurance Commitment 15
Parity Debt Certificate 16
Signature, Incumbency and No Litigation Certificate 17
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Certificate Re Authentication and Registration of the Bonds 18
Specimen Bond 19
Specimen Insurance Policy 20
Certificate of Delivery and Payment 21
Underwriter's Receipt 22
Tax Exemption and Nonarbitrage Certificate 23
Underwriter's Certificate 24
Bond Insurer Tax Certificate 25
IRS Form 8038-G and Affidavit of Mailing 26
Bond Report Form 101 27
Approving Opinion of Bond Counsel 28
Opinion of Counsel to Bond Insurer 29
Closing Memorandum 30
f:\renton\water&sewer 04 ii
CERTIFICATE AS TO TRANSCRIPT
I, VICTORIA A. RUNKLE, the duly appointed, qualified and acting Finance and
Information Services Administrator of the City of Renton,Washington,DO HEREBY CERTIFY
that the attached transcript contains a true and correct copy of all documents relating to the
authorization, sale, issuance and delivery of the $10,335,000 CITY OF RENTON,
WASHINGTON, WATER AND SEWER REVENUE BONDS, 2004.
IN WITNESS WHEREOF, I have hereunto subscribed my official signature as of the
17th day of November, 2004.
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det...,,c
VICTORIA A. RUNKLE
Finance and Information Services Administrator
City of Renton, Washington
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CITY OF RENTON, WASHINGTON
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ORDINANCE NO. 4709
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AN ORDINANCE relating to the waterworks utility of
. the City, including, the sewerage- system as a part
thereof; providing for the issuance of $6, 120, 000 par
value of Water and Sewer Revenue Refunding Bonds, 1998,
of the City for the purpose of obtaining the funds with
which to pay the cost of refunding. certain of the. City' s
outstanding Water and Sewer Revenue Refunding Bonds, •
1977, Issue No.i 3, Water and. Sewer Refunding and
Improvement Revenue Bonds, 1992., and Water and Sewer
Revenue Bonds, 11994; authorizing the execution of an
agreement with First Trust National Association as
refunding trustee; fixing the date, form, denominations,
maturities, interest rates, terms and• covenants of those
bonds; renaming a fund; creating a special bond
redemption account and a bond redemption fund to provide
for the payment of the bonds;. creating. a reserve fund;
creating a. rate stabilization . fund; providing for bond.
insurance; and approving the' sal.e and providing for the
delivery of the bonds to Piper Jaffray Inc. of Seattle,
Washington. • •
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TABLE OF CONTENTS
PAGE
Section I . Definitions 7
Section II . Findings Regarding Parity Provisions 16
Section III . Authorization and Description of Bonds . . . 16
Section IV. Registration and Transfer of Bonds 17
Section V. Payment of Bonds 19
Section VI . Optional Redemption and Open Market Purchase of
Bonds 20 .
Section VII . Notice of Redemption 21
Section VIII . Failure to Redeem Bonds 22 i ,
Section IX. Renaming. of. Fund; .Creation of Account; Creation
of Fund 23
Section X. Deposits into Funds and Accounts 23
Section XI . Rate Stabilization Fund 28
Section XII . Flow of Funds 28
Section XIII . Pledge of Revenue and Lien Position 29
Section XIV. Findings Regarding Sufficiency of Revenue . . . 30
Section XV. Refunding of the Refunded Bonds. . . . . . . . . 31
Section XVI . Calls for Redemption of the Outstanding Refunded
Bonds 35
Section XVII . Covenants . 36
Section XVIII . Form and Execution of Bonds 41
Section XIX. Bond Registrar 42
Section XX. Designation of Bonds as' "Qualified Tax-Exempt
Obligations" 43
Section XXI . Bonds Negotiable 44
Section XXII . Refunding or Defeasance of the Bonds 44 i -
Section XXIII . Provision- for Future Parity Bonds 46
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ORDINANCE NO. 4709
Section XXIV. Approval of Bond Purchase Contract 49
Section XXV. Bond Insurance 50
Section XXVI . Undertaking to Provide Continuing Disclosure. 50
Section XXVII . Preliminary Official Statement Deemed Final 54
Section XXVIII . Effective Date of Ordinance 54
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CITY OF RENTON, WASHINGTON
ORDINANCE NO. 4709 •
AN ORDINANCE -relating to the waterworks utility of
the City, including the sewerage system as a part
thereof; providing for the issuance of $6, 120,000 par
• value of Water and Sewer Revenue Refunding Bonds, 1998 ,
of the City for the purpose of obtaining the funds with
which to pay the cost of refunding certain of the City' s
outstanding Water and Sewer Revenue Refunding Bonds,
1977, Issue No. 3 , Water and Sewer Refunding and • i ,
Improvement Revenue- Bonds, 1992, and Water and Sewer
Revenue Bonds, 1994; authorizing the execution of an
agreement with . First Trust National Association as
refunding trustee; fixing the date, form, denominations,
maturities, interest rates, terms and covenants of those
bonds; renaming a fund; creating a special bond
redemption account and a bond redemption fund to provide s •
for the payment of the bonds; creating a reserve fund;
creating a rate stabilization fund; providing for bond
insurance; and approving the sale and providing for the
delivery of the bonds to Piper Jaffray Inc. of Seattle,
Washington.
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WHEREAS, the City of Renton (the "City") has heretofore
created and operated a waterworks utility of the City, including
the sewerage system -of the City and within that system a system of
storm and surface water sewers (defined herein as the "Waterworks
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Utility") ; and
WHEREAS, by Ordinance No. 1450, the City provided for the
• issuance of its Water and Sewer Refunding and Improvement Revenue
Bonds, 1953 (the "1953 Bonds") , and, by Section 15 of that
ordinance, established certain - conditions for the issuance of
additional water and sewer revenue bonds on a parity of. lien with*
the 1953 Bonds;, and
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ORDINANCE NO. 4709
WHEREAS, all of the water and sewer revenue bonds of the City
issued on a parity of; lien with the 1953 Bonds pursuant to the
• original provisions of Section 15 of Ordinance No. 1450 have been
{ paid and redeemed, or irrevocable. provisionfor their payment and
redemption has been made; and
I ! WHEREAS, by Ordinance No. 3188, the City authorized the
issuance of its Water; and Sewer Revenue . Refunding Bonds, 1977,
Issue No. 3 (the "1977 Bonds" ) , and by Section 13 of that ordinance
• incorporated . Section j15 of Ordinance No. 1450, as. modified by
Section 13 of Ordinance No. 3169; and
• WHEREAS, by Ordinance No. 3720, the City authorized the
issuance of its Water and Sewer Revenue Bonds, 1983 (the "1983
Bonds") , all of whichJ1983 Bonds have been paid and redeemed, and
by Section 12 of that ordinance further modified and strengthened
. the provisions of Section 15 of' Ordinance. No. 1450, as modified by
Section -13 of Ordinance No. 3169; and
WHEREAS, the City at present has outstanding, in addition to
the 1977 Bonds, Water and Sewer Revenue• Bonds, 1988 (the "1988
Bonds")., issued. pursuant to Ordinance No. 4157, Water and Sewer
Revenue Bonds, 1989 (the "1989 Bonds" ) , issued pursuant to •
Ordinance No. 4211, Water and Sewer Revenue Refunding Bonds, 1989
(the "1989' Refunding Bonds" ) , issued pursuant to Ordinance No.
4232, Water and Sewer Revenue Bonds, 1990 (the "1990 Bonds") ,
issued' pursuant to. Ordinance No. 4294, Water and Sewer Refunding •
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and Improvement Revenue Bonds, 1992 (the "1992 Refunding Bonds") , •
issued pursuant to Ordinance No. 4354, Water and Sewer Refunding
40271585.4 -2-
ORDINANCE NO. 4709
and Improvement Revenue Bonds, 1993 (the "1993 Refunding Bonds" ) ,
issued pursuant to Ordinance No. 4410, and Water and Sewer Revenue
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Bonds, 1994 (the "1994 Bonds") , issued pursuant to Ordinance No.
4480, all of which bonds. were issued on a parity of lien with the
1977 Bonds; and
WHEREAS, the parity provisions of Section 13 of Ordinance No.
3188, which incorporated therein Section 15 of Ordinance No. 1450
as modified by Section 13 of Ordinance No. 3169, and as further
modified and strengthened by Section 12 of Ordinance No. 3720,
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provide that the City may issue additional water and sewer revenue
bonds which will constitute a charge and lien upon the. revenue of
the Waterworks Utility of the City On a parity with the 1977 Bonds,
the 1988 Bonds, the 1989 Bonds, the 1989 Refunding Bonds, the 1990
Bonds, Refunding Refunding 1992 Bonds, the 1993 e g Bonds,
the 1994
Bonds and any bonds issued. thereafter and having a charge and lien
upon the. revenue of the Waterworks Utility on a parity with those
bonds on compliance at the time of the issuance of such additional
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bonds with. the following conditions :.
" (a) All payments required by any ordinance to be paid
into any bond redemption funds and accounts . thereof . .
created to secure the payment of bonds issued on a parity
of lien herewith shall have been made into the respective
• bond redemption funds and accounts thereof for the ; `'
payment of such bonds. and no deficiency exists therein; •
and
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" (b) The revenues of said waterworks system, including
• the sewerage system, shall be and be deemed sufficient,
after the payment of operation and maintenance costs and
taxes, based upon the historical experience of said
. systems or the pro forma revenues under then existing
rates over a period of any twenty-four consecutive.months
• out of the thirty-six months immediately preceding the
time of the issuance of such additional bonds, to equal j
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ORDINANCE NO. 4709 •
at least 1 . 3 times the average annual principal and
interest requirements of the bonds of this issue then •
outstanding and of the revenue bonds proposed to be. so
issued. Such determination of the sufficiency of the'
revenues shall be made and certified to by an engineer
experienced. in municipal utilities; and
" (c) .The ordinance authorizing the issuance of such.
additional revenue bonds shall provide for the setting
aside into a reserve fund or account of an amount not
less than the average annual debt service requirement,
both principal and interest of the additional revenue
bonds proposed to be so issued, which reserve fund or
account shall be maintained in such amount so long. as any
of said bonds are outstanding to the last maturity
thereof" ; -
and
WHEREAS, by Ordinance No. 3188, the City reserved the right to
redeem the 1977 Bonds, prior to their maturity as a whole or in
part in inverse numerical order at a price of 101-1/2% of par on •
July 1, 1987 and January 1, 1988, at a price. of 101% of par on July
1, 1988 and January 1;, 1.989, at a price of 100-1/2%- of par on July
1, 1989 and January 1., 1990, and at a price of par on July 1, 1990
or any semiannual interest payment date thereafter, plus accrued •
interest to the date fixed for redemption; and
WHEREAS, _there are at present outstanding $260; 000 par value
of 1977 Bonds. maturing on July 1, 1999, and bearing interest- at
6. 00% per annum; and
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WHEREAS, by Ordinance No. 4354, the City reserved the .right to
redeem the 1992 Refunding Bonds prior to their maturity on or after
June 1, 2002, as a whole at any time' or in part on any interest
payment date within one or more maturities selected by the City
(and by lot within a maturity in such manner as the bond registrar
shall determine) at a price of 101% of par on June 1, 2002, through
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ORDINANCE NO. 4709
May 31, 2003, at a price of 100-1/2% of par on June 1, 2003,
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through- May 31, 2004, and at a price of par on June 1, 2004 and
thereafter, plus accrued interest to the "date fixed for redemption;
and
WHEREAS, there are at present outstanding $7, 220, 000 par value
of 1992 Refunding Bonds, maturing on June 1 of each of the years
1998 through 2007, inclusive, ..and of the year 2012, and bearing
interest at various rates ranging from 5 .40% to 6 . 50% per annum;
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WHEREAS, by Ordinance No. 4480, the City reserved the right to
redeem the 1994 Bonds prior to their maturity at any time on or
after November 1, 2004, as a whole or in part within one or more
maturities. selected by the City (and by lot within a maturity in
such manner as the bond registrar shall . determine) at a price of
par plus accrued interest to the date fixed for. redemption; and
WHEREAS, there are at present outstanding $3 , 570, 000 par value
of 1994 Bonds, maturing on November 1 of each of the years 2000
through 2008, inclusive, and of the year 2013 , and bearing interest
at various rates ranging from 5 .45% to 6 .55% per annum; and
WHEREAS, the City Council has determined that the 1977 Bonds
maturing on July 1, 1999 (the "1977 Refunded Bonds") , certain of .
the 1992 Refunding Bonds maturing on or after June 1, 2003 (defined
herein as the "1992 Refunded Bonds") and the 1994 Bonds maturing on
or after November 1, 2005 (the "1994 Refunded Bonds" and, together
with the 1977 Refunded Bonds and the 1992 Refunded Bonds, the
"Refunded. Bonds") may be refunded by the issuance and sale of the
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ORDINANCE NO. 4709
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water and sewer revenue bonds authorized herein (the "Bonds") so
that a substantial savings will be effected by the difference
between the principal and interest costs over the life of the Bonds
and the principal and 'interest costs over the life of the Refunded
Bonds but for such refunding, which' refunding -will be effected by:
(a). The issuance of the Bonds; •
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(b) The call, payment and redemption on July 1, 1998 , of the •
1977 Refunded Bonds at a price of ' par;
(c) The payment of the interest on the 1992 Refunded Bonds
when due up. to and including June 1, 2002, and, on June
1, 2002, the call, payment and. redemption of all of the
1992 Refunded Bonds at a price of 1010 of par; and
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(d) The payment of the interest on the 1994 Refunded Bonds •
when due up, to and including November 1, 2004 , and, on
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November 1, 12004, the call, payment and redemption of all
of the 1994. Refunded Bonds at a price of par;
and •
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WHEREAS, in order to effect the refunding in the manner that
will be most advantageous to the City and its ratepayers, the .City
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• Council finds it necessary and advisable that certain Acquired.
Obligations (defined ;hereiri) bearing interest and maturing at the
time or times necessary to accomplish the refunding as aforesaid be
purchased out of a portion of the proceeds of the sale - of the
Bonds; and
WHEREAS, Financial Security Assurance Inc. of New York, New
York, has made a commitment to issue an insurance policy insuring
the payment when due of the principal of and interest on the Bonds •
as provided therein, and the City Council deems that the purchase •
of such policy is in the best interest of the City; and .
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ORDINANCE NO. 4709
WHEREAS, Piper Jaf fray Inc. of Seattle, Washington, has
offered to purchase the Bonds under the terms and conditions
hereinafter set forth; NOW, THEREFORE, - .
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN
as follows :
Section I . Definitions . As used in this ordinance, the
following words shall have the following meanings :
"Acquired Obligations" shall mean United States Treasury
Certificates and Notes—State and Local Government Series.
After the New Covenant Date, "Alternate Security" shall. mean
any bond insurance, collateral, security, letter of credit,
guaranty, surety bond or similar credit enhancement device
providing for or securing the payment of all or part of the
principal of and interest on the Parity Bonds, issued by an
institution that has been assigned a credit rating at the time of
issuance of such Parity Bonds secured by such Alternate Security
equal to or better than the highest then-existing rating for any of
the Parity. Bonds.
"Annual Debt Service" for the Bonds shall mean all the
interest plus all principal which will mature or come due. in any
year.
After the New Covenant Date, "Annual Debt Service" for any
year shall mean all the interest on plus all principal (except
principal of Term Bonds due in any Term Bond Maturity Year) of
Parity Bonds, plus all mandatory redemption and sinking fund
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ORDINANCE NO. 4709 •
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installments, less. all bond interest -payable from the proceeds of
any such bonds, which will mature or come due in that year.
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"Average Annual Debt Service" shall mean the sum of the Annual
{--;. Debt Service for the remaining years to the last scheduled'maturity
of the applicable bond issue or issues divided.by the number of
those years.
"Bond Fund" shall mean that special fund of the City known as.
the- 1998 Waterworks Revenue Refunding Bond Account created by this
ordinance as a separate account in 'the Waterworks, Revenue Parity
Bond Fund for the payment of the principal of and interest on the
Bonds .
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After the New Covenant Date; "Bond Fund" shall mean that •
special fund. of the City known as the 1998 Waterworks Revenue
Refunding Bond Fund Created by this ordinance for the payment of
{ • the principal of and interest on the Bonds.
"Bond Insurer" Shall mean Financial Security Assurance Inc. of
New York, New York. '
"Bond Registrar"' shall mean the fiscal agencies of the State
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of Washington in Seattle, Washington, and New York, New York, ' as
the same shall be designated from time to time. •
"Bonds" shall mean the $6, 120, 000 . par value City of Renton
Water and Sewer Revenue Refunding Bonds, 1998, authorized to be - .
issued by this ordinance. •
"1977 Bonds" shall mean the outstanding . Water and Sewer
Revenue Refunding Bonds, 1977, Issue No. 3 .
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ORDINANCE NO. 4709
"1977 Refunded Bonds" shall mean the 1977 Bonds maturing on
July 1, ' 1999 .
"1988 Bonds" shall mean the outstanding Water and Sewer
Revenue Bonds, 1988, maturing up to and including June 1, 1998 .
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"1989 Bonds" shall mean the outstanding Water and Sewer
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Revenue Bonds, 1989, maturing up to and including May 1, 1999 .
"1989 Refunding Bonds" shall mean the- outstanding Water and
Sewer Revenue Refunding Bonds, 1989, maturing up to and including
April 1, 1998 .
"1990 Bonds" shall mean the outstanding Water and Sewer
Revenue Bonds, 1990, maturing up to and including October 1, 2000 .
"1992 Refunded Bonds" shall mean the following 1992 Refunding
Bonds:
Maturity Interest
Years Amounts Rates ;
2003 $ 190, 000 6 . 00%
2004 205, 000 6 .15
2005 215; 000 6 .25
2006 230, 000 6 . 35
2007 245, 000 6 . 50
2008 . 260,'000 6 .50
- 2009 280, 000 6 .50
2010 300, 000 6 .50
2011 320, 000 6 .50
2012 340, 000 6 .50
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"1992 Refunding Bonds" shall mean the outstanding Water and
Sewer Refunding and Improvement Revenue Bonds, 1992 .
"1993 Refunding Bonds" shall mean the outstanding Water and
Sewer Refunding and Improvement Revenue Bonds, 1993 .
"1994 Bonds" shall mean the outstanding Water and Sewer
Revenue Bonds, 1994 . i '
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ORDINANCE NO. 4709 •
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"1994 Refunded Bonds". shall mean the 1994 Bonds maturing on or
after November. 1, 2005;. •
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"City" shall mean the City of Renton, .Washington, a duly ° •
organized and legally existing noncharter code city under the laws
of the State of Washington.
! "Code" shall mean the Internal Revenue Code of 1986, • as
(_, amended, and applicable rules and regulations promulgated
thereunder.
After the New Co Tenant Date, "Coverage Requirement" shall mean
in any calendar year 1.25 times the Maximum Annual Debt Service.
• "Future Parity •B;onds" shall mean all water and sewer revenue
bonds of the City issued after the date. of the issuance of the
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Bonds and having a lien and charge !on Gross -Revenue on a parity •
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with the lien and charge on such Revenue for the payment of the
principal of and interest on the Outstanding Parity Bonds and the
1 1 Bonds .
. • After the New .Covenant Date, "Future Parity Bonds" shall mean
all water and sewer. revenue bonds of the City issued after the date
of the issuance of the Bonds and having a lien and charge . on Net
Revenue on.a parity with the lien and charge •on Net Revenue for the,
payment. of the principal of and interest on the Bonds.
. "Gross Revenue" shall mean Revenue of the Waterworks Utility.
"Maintenance and Operation Expense" shall mean all expenses
incurred by the City in causing the Waterworks Utility to be
' . operated and maintained in good repair, working order and
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ORDINANCE NO. 4709
condition, which shall not include any depreciation expenses or
taxes or charges in lieu of taxes levied or imposed by the City.
After the New Covenant Date, "Maintenance and Operation
Expense" shall mean all reasonable expenses incurred by the City in
causing the Waterworks Utility to be operated and maintained in
good repair, working order and condition, including payments made
to any other municipal corporation . or private entity for water,
service and for sewage treatment and disposal service or other
utility service in the event the City combines such service in the
Waterworks Utility- and enters into a contract .for such service, and
including pro-rata budget charges for the City's administration
expenses where those represent a reasonable distribution and share.
of actual costs, but not including any depreciation or taxes levied
or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks
Utility.
After the New Covenant Date, "Maximum Annual Debt Service"
shall mean, at the time of calculation, the maximum amount of
Annual Debt Service that will mature or come due in the current
calendar year or any future calendar year on the outstanding Parity
Bonds.
"Municipal Bond Insurance Policy" shall mean the municipal
bond insurance policy issued by the Bond Insurer insuring the
payment when due of the principal of and interest on the Bonds as
provided herein.
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ORDINANCE NO. 4709 •
"Net Revenue" shall mean Gross Revenue less Maintenance and
Operation Expense.
"New Covenant Date" shall mean the date on which all 1977
Bonds (other than the 1977 Refunded Bonds) , 1988 Bonds, 1989 Bonds, '
1989 Refunding Bonds,' 1990 Bonds, 1992 Refunding Bonds (other than
the 1.992 Refunded B;onds) , 1993 Refunding Bonds and 1994 Bonds
(other than the 1994 Refunded Bonds) are fully redeemed, refunded
or defeased. •
"Outstanding Parity Bonds" shall mean the 1977 Bonds, the 1988
Bonds, the 1989 Bonds, the 1989 Refunding Bonds, the 1990 Bonds,
the 1992 Refunding Bonds; the 1993 Refunding Bonds .and the 1994
Bonds .
"Parity Bonds" shall mean the Bonds and any Future Parity
Bonds.
After the New Covenant Date, "Parity Bond Fund"-shall mean any
fund created for the payment and redemption .of Parity Bonds'.
"Principal and ;Interest Account" shall mean the .subaccount of
that name created 'in the Bond Fund by this ordinance for the
payment of the principal. of and interest on the Bonds .
After the New Covenant Date, "Professional. Utility Consultant"
shall mean an independent licensed .professional'engineer, certified
public accountant' or other independent person or firm selected by
the City having a. favorable reputation for skill and experience
with municipal utilities of comparable size and character to the
Waterworks Utility in such areas -as are relevant to the purposes
. for which such consultant is retained.
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ORDINANCE NO. 4709
"Rate Stabilization Fund" shall mean the fund of that name { i
created for the purposes described in this ordinance.
"Refunded Bonds!" shall mean the 1977 Refunded Bonds, -the 19.92
Refunded Bonds and the 1994 Refunded Bonds. } i
"Refunding Plan" shall mean: .
(a) the 'placement of .sufficient proceeds of the Bonds which,
with other money of the City, will acquire the Acquired "
Obligations to be deposited with cash with the Refunding
Trustee; + �
(b) the call, payment and redemption on July 1, 1998, of the
1977 Refunded Bonds at a price of par;
(c)_ the payment of the interest on the 1992 Refunded Bonds -
when due up. to and including June 1, 2002, and, on June- -
• 1, 2002, the call, payment and redemption of all of the ' I
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1992 Refunded Bonds at a price of 101% of par; and-
'(d) the payment of the interest' on the 1994 Refunded Bonds
when due up to and including November 1, 2004, and, on
November 1, 2004, the call, payment and redemption of all
of the 1994 Refunded Bonds at a 'price of par.
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"Refunding Trust Agreement" shall mean that agreement between • . • '
the City and the Refunding Trustee providing for carrying out the
Refunding Plan.
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"Refunding Trustee" shall mean First Trust National
Association or its successor. '
• "Reserve Account" shall mean the subaccount of that name
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created ' in the Bond Fund by this . ordinance for the purpose of
securing the payment of the principal of and interest on the Bonds . .
• After the New Covenant Date, "Reserve Fund" shall mean that
special fund of the City known as the Waterworks. Revenue Bond
Reserve 'Fund created by this ordinance for purpose of securing the
40271685.4 713-
ORDINANCE 'NO. 4709 •
payment of the principal of and interest on all bonds. to which Net
• Revenue is pledged.
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After the New Covenant Date, "Reserve Insurance" shall mean,
in lieu of cash and !investments, insurance. obtained by the. City'
equal to part or all of, the Reserve Requirement for any Parity
Bonds then outstanding for which such insurance. is obtained, issued
by an institution that has been assigned a credit rating equal to
or better than the highest then-existing. rating. for any of the
Parity Bonds,
. After the New Covenant Date, "Reserve Requirement" shall mean •
{ 1 the Maximum Annual Debt Service.
"Revenue of the Waterworks Utility" shall mean all the
earnings and revenue) received by the Waterworks Utility from any
source. whatsoever, including payments received under contract with
other municipal corporations fOr water. service, except general •
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taxes, charges in lieu of taxes, assessments- in any utility local •
improvement district hereafter created, proceeds from the sale of
City property,. bond proceeds and earnings subject to a federal tax
or rebate requirement.
After thea New, Covenant Date, "Revenue of the Waterworks
Utility" shall mean : all of the earnings - and revenues received by
the City from ' the maintenance and operation of ' the- Waterworks
• Utility and all earnings from. the investment of money in the
Reserve' Fund or any; Parity Bond Fund, and connection and capital
improvement charges collected- for the purpose of.defraying the cost
of capital facilities of the Waterworks Utility, except government
40271685.4 -14-
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ORDINANCE NO. 4709 •
grants, proceeds from the sale of Waterworks Utility property ' I
(other than timber), City taxes collected by or through the
Waterworks Utility, principal proceeds of bonds, and earnings_ or
proceeds from any- investments in-a trust, defeasance or escrow fund
created to defease or refund Waterworks Utility obligations (until,
commingled with other earnings and revenues of- the Waterworks
Utility) or held in a special account for the purpose of paying a
rebate to the United States Government under the Code.
"Term Bonds" shall mean any Outstanding Parity Bonds and/or I
Parity Bonds identified as such in the ordinance authorizing the
issuance thereof, the payment of which is provided for by a '.
requirement for mandatory deposits of money into the principal and
interest account of the bond redemption fund created for the
payment of such issue of bonds' in accordance with a mandatory
sinking fund requirement.
"Term Bond .Maturity . Ye.ar" shall mean any calendar year in
which Term Bonds are scheduled to mature .
"Water and Sewer Revenue Parity Bond Fund." shall mean the fund
of that name created by Ordinance No. 3896 . •
"Waterworks Revenue Parity Bond Fund" shall mean the Water and
Sewer Revenue Parity Bond Fund, as renamed by this ordinance.
"Waterworks Utility" shall mean the combined water and
.• sewerage systems, including the storm and surface water sewers, of ;I
the City as' the same may be added to, :improved and extended for as
long as any of the Outstanding Parity Bonds or Parity Bonds are
outstanding.
40271685.4 715-
ORDINANCE NO. 4709
"Waterworks Utility Fund" shall mean that special fund of the
City into which all Gros Revenue (except for earnings in any
special fund for the redemption of revenue obligations of the
Waterworks Utility) shall! be deposited.
Section II . Findings Regarding Parity Provisions . The City
Council finds that all payments required by Ordinances Nos. 3188,
4157, 4211, 4232, 4294, 14354, 4410 and, 4480 for the Outstanding
Parity Bonds have been made into the respective bond redemption
funds and accounts therein for the Outstanding Parity Bonds, that
provision hereinafter is; made for the accumulation of the amounts
required in the Reserve Account. of the Bond Fund, and that there
will be on file prior to. the issuance and delivery of the Bonds a
certificate of an engineer experienced in municipal utilities that
Gross Revenue is sufficient to meet the 1 .3 coverage requirement of
those ordinances.
Section III . Authorization and Description of Bonds.. For the
purpose of obtaining the funds with which to pay the cost of
refunding the Refunded Bonds, the City shall issue the Bonds in the
aggregate principal amount of $6, 120, 000 . The bonds shall be
designated City of Renton Water and Sewer Revenue Refunding Bonds,
1998; shall be dated March 1, 1998; shall be in the denomination of
$5, 000 or any integral multiple thereof within a single maturity;
shall be numbered separately, in the manner and with any additional
designation as the Bond Registrar deems necessary for purpose of
identification; shall bear interest (computed on the basis of a
360-day year of twelve-30-day months) , payable semiannually on each
40271685.4 -16-
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ORDINANCE NO. 4709 -'
June 1 and December 1, commencing June 1, 1998, to the maturity or
earlier redemption of the Bonds; and shall mature on June 1 in the
years and amounts and bear interest at the rates per annum... as
follows :
Maturity Interest
Years Amounts - Rates
1998 $ 110, 000 3 . 70%
1999 315, 000 3 . 85 •
,2000 50, 000 4 . 00 _
2001 50, 000 4 . 15
2002 50, 000 4 .25
2003 245, 000 4 . 30
2004 255, 000 4 :40
2005 495, 000 4 .45
2006 520, 000 4 . 50
2007 545, 000 4 . 55
2008 570, 000 4 .65
2009 595, 000 4 . 70
2010 625, 000 4 . 80 .
2011 650, 000 4 . 90
2012 685, 000 5 . 00
2013 360, 000 5 . 10
The above maturity amounts are allocated to the carrying out
of the Refunding Plan related to the 1977 Refunded Bonds, the 1992
Refunded Bonds and the 1994 Refunded Bonds in accordance with the
applicable schedule attached to the Bond Purchase Contract
incorporated pursuant to Section XXIV.
Section IV. Registration and Transfer of Bonds . The Bonds
shall be issued only in registered form as to •both principal and
interest and recorded on books or records maintained by the Bond
Registrar (the "Bond Register") . The Bond Register shall contain
the name and mailing address of the owner of each Bond and the
principal amount and number of each of the Bonds held by each
owner.
40271685.4 -17-
ORDINANCE NO. 4709
- Bonds surrendered to the Bond Registrar may be exchanged for
Bonds in any authorized denomination of an equal aggregate
principal amount and of the same interest rate and maturity. Bonds
may be transferred only if endorsed in the manner provided thereon
and surrendered to the Bdnd. Registrar. Any exchange or transfer
shall be without cost to the owner or transferee. The Bond
Registrar shall not be obligated to exchange or transfer any Bond
during the 15 days preceding any principal payment or redemption
date .
The Bonds initially shall. be registered in the name of Cede &
Co. , as the nominee of The Depository Trust Company, New York, New
York ( "DTC" ) . . The Bonds so registered shall be held in fully
immobilized form by DTC' as depository in accordance with. the
provisions of a Blanket Issuer Letter of Representations. from the •
City to OTC dated April 15, 1997 (as it may be amended from time to
time, the "Letter of Representations") . • Neither the City nor the
Bond Registrar shall. have. any responsibility or obligation .to DTC
participants or the persons for whom they act as nominees with
. respect to the Bonds regarding accuracy of any records maintained
by DTC or DTC participants of any amount in respect of principal of
or interest on the Bonds, or any notice which is permitted or
required to be given to registered owners hereunder (except such
notice as is required to be given by the Bond Registrar to DTC) .
For. so long as any Bonds are held in fully immobilized- form,
DTC or its successor depository shall be deemed to be the
registered owner for all purposes hereunder and all references to
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40271685.4 '
ORDINANCE NO. 4709
registered owners, bondowners, bondholders or the like shall mean
DTC or its nominees and shall not mean the owners of any beneficial
interests in the Bonds. Registered ownership of such Bonds, or any
portions thereof, may not thereafter be transferred except : (i) to
any successor of DTC or its nominee, if that successor shall be
qualified under any applicable laws to provide the services
proposed to be provided by it; (ii) to any substitute depository
appointed by the City or such substitute depository' s successor; or. !_
(iii) to any person if the Bonds are no longer held in immobilized
form.
Upon the resignation of DTC or its successor (or any
substitute depository or its successor) from its functions as
depository, or a determination by the City that it no longer wishes
to continue the system of book entry transfers through DTC or its
successor (or any substitute depository or its successor) , the City
may appoint a substitute depository. Any such substitute
depository shall be qualified under any applicable laws to provide
the services proposed to be provided by. it .
If (i) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no
substitute depository can be obtained, or (ii) the City determines
. that the Bonds are to be in certificated form, the ownership of
Bonds may be transferred to any person as provided herein and the
Bonds no longer shall be held in fully immobilized form.
Section V. Payment of Bonds . Both principal of and interest
on the Bonds shall be payable in lawful money of the United States
40271685.4 -19-
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ORDINANCE NO. 4709 •
•
i p
1 ' of America. . Interest on the Bonds shall be paid by checks or
drafts mailed by the Bond Registrar on the interest, payment date to
the registered owners at the addresses appearing on the Bond •
Register on the 15th day. of the month preceding the interest .
payment date. Principal of the .Bonds shall be payable upon
.presentation and surrender of the Bonds by the registered owners at
1
either of the principal offices of the Bond Registrar at the option
of the owners . Notwithstanding the foregoing, as long as the Bonds
are registered in the !name of DTC or its . nominee, payment of
principal of and interest on the Bonds shall be made in the manner
set forth in the Letterhf Representations .
The Bonds shall be payable solely out of the Bond Fund and
shall be a valid claims of the registered owners thereof only as
against the Band Fund and the amount of Gross .Revenue pledged to
that fund and shall not be general obligations of the City.
After the New Covenant Date, the Bonds shall be payable solely
out of the Bond Fund . i nd the Reserve Fund and shall. be a_ valid
claim of the registered owners thereof only as against the Bond
Fund, Reserve Fund and, the amount of Net Revenue pledged .to those
funds and shall not be. general obligations .of the City.
Section VI . Optional Redemption and Open Market Purchase of
Bonds. Bonds maturing in the years 1998 through 2008, 'inclusive,
shall be issued without the right or option of the City .to redeem
those Bonds prior to their stated maturity dates. The City
reserves the right and option to redeem the Bonds maturing on or
• after. June 1, 2009, prior. to their stated maturity dates, from
___ 40271685.4 -20-
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• ORDINANCE NO. 4709 ; I
funds from any source, at any time ori or after June 1, 2008, as a
whole or in part within one or more maturities selected by the City
{
(and by lot within a maturity in such manner as the Bond Registrar
shall determine) at a price of par plus accrued interest to the 1
• it
date fixed for redemption. •
Portions of the principal amount of any Bond, in installments if
of $5, 000 or any integral multiple thereof, , may be redeemed. If
less than all of the principal amount of any Bond is redeemed, upon
surrender of that Bond at either of the principal offices of the
Bond Registrar, there shall be issued to the registered owner,
without charge therefor, a new Bond (or Bonds, at the option of the • 1
registered owner) of the same maturity and .interest rate in any of
the denominations authorized by this ordinance in the aggregate
principal amount remaining unredeemed. •
The City further reserves the right and option to purchase any
or all of the Bonds in' the open market at any time at a price not si1
in excess of par. phis accrued interest to the date of purchase.
• All Bonds purchased or redeemed under this Section shall be
canceled.
.Notwithstanding the foregoing, for so long as the Bonds are
registered in the name DTC or its nominee, .selection of Bonds for
redemption shall be in. accordance with the Letter of
Representations. 0
Section VII . Notice of Redemption. The City shall. cause
• notice of any intended redemption of Bonds to be given not less
than 30 nor more 'than 60 days prior to the date fixed for
40271685.4
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• ORDINANCE NO. 4709
redemption by first-class mail, postage prepaid, to the registered
owner of any Bond to be redeemed at the address appearing on the
Bond Register at the time the Bond Registrar prepares the notice,
and the requirements of this sentence shall be deemed to have been
• fulfilled when notice has been mailed as so • provided, whether or
not it is actually received by the owner of any Bond. Interest on
Bonds called for redemption shall cease to accrue on the date fixed
for redemption unless the Bond or Bonds called ..are not redeemed
when presented pursuant to the. call . In addition, the redemption
notice shall be mailed within the same period, postage prepaid, to
Standard E. Poor' s- Ratings Services and Fitch IBCA at their offices
in New York, New York, dr their successors, to Piper Jaffray Inc.
at its principal office in Minneapolis, Minnesota, or its
successor, and to such; other persons and with such additional
information as the City Finance- and Information Services
Administrator shall determine, but these additional mailings shall
not be a - condition precedent to the redemption of Bonds .
Notwithstanding the foregoing, for so - long as the Bonds are
registered in the name of DTC or it's nominee, notice of :redemption
shall be given in accordance with the Letter of Representations .
Section VIII . Failure to Redeem Bonds. . If any Bond is not
redeemed when properly presented at its maturity or call date, the
City shall be obligated to pay interest on that Bond at the same
rate provided in the Bond from arid after' its maturity.or call date
until that Bond, both principal and interest, is paid in full or
until sufficient money for its payment 'in full is on deposit in the .
40271685.4 -22-
ORDINANCE NO. 4709
Bond Fund, and the Bond has been called for payment by giving
notice of that call to the registered owner of each of those unpaid
Bonds .
Section IX. Renaming of Fund; Creation of Account ; Creation
of Fund. The Water and Sewer Revenue Parity Bond Fund is hereby
renamed the Waterworks Revenue Parity Bond Fund. There is hereby
1998 Waterworks Revenue Refunding the Bond Account
(heretofore defined, until the New Covenant Date, as the Bond
Fund) , which shall be a separate bond redemption account within the
Waterworks Revenue Parity Bond Fund. The Bond Fund is divided into
two subaccounts, the Principal and Interest Account and the Reserve
Account . There is hereby created in the City treasury the 1998
Waterworks Revenue Refunding Bond Fund (heretofore defined, after
the New Covenant Date, as the Bond Fund) .
Section X. Deposits into Funds and Accounts. So long as
Bonds are outstanding against the Bond Fund, the City shall :
(a) Set aside and pay into the Principal and
Interest Account out of Gross Revenue a fixed amount,
without regard to any fixed proportion, namely, monthly,
on or before the first day of each month, amounts,
together with the accrued interest received on the
delivery of the Bonds to the initial purchaser thereof or
other money on deposit therein, as follows:
Beginning with themonth of March 1998 and
continuing thereafter through May 1998, 1/3 of the
requirement for interest on the Bonds due June 1,
1998, and beginning with the month of June 1998 and -,
continuing thereafter until the Bonds, both
principal and interest, are paid, 1/6 of the next
ensuing six months' requirements for interest on
the Bonds; and
Beginningwith the month of March 1998 and
continuing thereafter through May 1998, 1/3 of the
amount of principal of the Bonds payable on June 1, ? '
40271685.4 -23-
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ORDINANCE NO.
4709
•
1998, and beginning with the month Of June 1998, •
and continuing thereafter until the Bonds, both
principal and interest, are paid, 1/12 . of the
amount of principal of the Bonds payable on the
next ensuing principal payment date; and
(b) Set asideand •pay into the Reserve Account out
of Gross Revenue in :substantially equal monthly payments
such amounts so that by no later than March 1, 2001,
there shall have been accumulated in the Reserve Account
for the Bonds an amount not less than the Average Annual
Debt Service for the Bonds .
The Reserve Account1 in the Bond Fund may be accumulated from
any other money which the City may have available for that purpose
in addition to or in lieu. of using revenue therefor.
The City further agrees that when the required amounts have
been paid into the Reserve Account in the ,Bond Fund, the City. will
maintain those amounts therein at all times, except for- withdrawals
therefrom as authorized ;herein, until there is sufficient money in
•
the -Bond Fund, including the Reserve Account therein, to pay the
. principal of and interest to maturity on all outstanding Bonds; at
which time no further payments need be made into the Bond Fund, and
the money in the Bond. Fund, including the Reserve Account, may be •
used to pay that principal and interest.
If there shall be 'a deficiency in the Principal and Interest
Account to meet maturing installments- of either principal or
interest, as the case may be, on the Bonds, the deficiency shall be
made up from the Reserve Account by the withdrawal of cash
therefrom for that purpose. Any deficiency created in the Reserve
Account by reason of any withdrawal shall then' be made up from
Gross Revenue first available after making necessary provisions for
the required payments into the Principal and Interest Account .
40271685.4 -24-
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ORDINANCE NO. 4709 !--
All money in the Reserve Account not needed to meet the
payments of principal and interest when due may be kept on deposit -
in the official bank depository of the City or in any national bank
or may be invested in any legal investment for City funds .
Interest on any of those investments or on that bank account shall
be deposited in and become a part of the Reserve Account until the
total required reserve amount shall have been accumulated therein,
after which time the interest shall be deposited in the Principal
and Interest Account .
Notwithstanding the provisions for the deposit or maintenance
of earnings in accounts of the Bond Fund, any earnings which are
subject to a federal tax or rebate requirement may be withdrawn
from the Bond Fund for deposit into a separate fund or account for
that purpose. .
'if the City shall fail to set aside and pay into the Bond Fund
the amounts set forth above, the owner of any of the outstanding.
Bonds may bring an action -against the City to compel that setting
aside and payment.
After the New Covenant Date, this Section shall be amended to
read as follows: All money in the Principal and Interest Account
of. the 1998 Waterworks Revenue Refunding Bond Account shall be l ;
transferred into the 1998 Waterworks Revenue Refunding Bond Fund
(heretofore defined as the Bond Fund) . All money in the Reserve
Account of the 1998 Waterworks Revenue Refunding Bond Account shall
be transferred into the Waterworks Revenue Bond Reserve Fund
40271685.4 -25-
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•
•
•
ORDINANCE NO. 4709 •
(heretofore defined as the Reserve Fund) . So long 'as Bonds• are
outstanding against the Bond Fund, the City shall:
i
(a) Set aside jand pay into the Bond Fund out of Net .... .
Revenue a .fixed amount, without regard. to any fixed
proportion, namely, one day before each interest or
principal and interest payment date, an amount which, •
• together with other:money then on deposit. therein, shall
be sufficient to meet the debt service on the Bonds •
required on .the next .interest or principal and interest
payment. date; and •
(b) Set aside and pay into the Reserve Fund out of
the Net Revenue, in three annual approximately equal
deposits, any additional money necessary to bring the
( amount deposited in the Reserve Fund attributable to the
Bonds up to the amount. equal to the increase in the
Reserve Requirement attributable to the Bonds..
The Reserve Fund may be accumulated from any other money. which
the City may have available for that purpose in addition to or in
lieu of using Net Revenue ' therefor. •
1_
Except- for withdrawals therefrom as authorized herein,. the
Reserve. Fund shall be maintained at the Reserve Requirement at all
• times so long. as any Parity Bonds are outstanding. When the total
r-
• amount in" the Bond Fund shall equal the total . amount of principal
and interest- for. all outstanding Bonds, no further payment need be
made into the Bond Fund. Notwithstanding the• first sentence of
this paragraph, the Reserve Requirement may be decreased for any
issue of. Parity Bonds. when and to. the extent the City has provided
for an Alternate Security or Reserve Insurance.. • •
If there shall be a deficiency in the Bond Fund to meet
maturing installments of either principal' or interest, as the case •
may be, on the Bonds, that deficiency shall be made• up from the
40271685.4 -2 6-
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ORDINANCE NO. 4709
Reserve Fund by the withdrawal of cash therefrom for that purpose.
Any deficiency created in the Reserve Fund by reason of anysuch
withdrawal shall then be made up from Net Revenue first available -'
after making necessary provisions for the required payments into
the Bond Fund. Any money in the Reserve Fund in excess of the
Reserve Requirement may be withdrawn and deposited in any Parity
i ,
Bond Fund and spent for the purpose of retiring Parity Bonds or may
be deposited in any other fund and spent for any other lawful
Waterworks Utility purpose. it
The City may provide for the purchase, redemption or
defeasance of Parity Bonds by the use of money on deposit in the ? {
Bond Fund or the Reserve Fund as long as the money remaining in
those funds is sufficient to satisfy the required deposits in those
funds for the remaining Parity Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash
or on deposit in the official bank depository of the City or in any
national bank or may be invested in any legal investment for City
funds. Interest on any of those investments or on that bank .
account shall be deposited in the Reserve Fund until the total
Reserve Requirement shall have been accumulated therein, after � !
which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance.
of earnings in the Bond Fund or the Reserve Fund, any earnings � I
which are subject to . a federal tax or rebate requirement may be
- withdrawn from the Bond Fund or the Reserve Fund for deposit into '
a separate fund or account for that purpose.
40271685.4 -27
ORDINANCE NO. 4709 •
If the City fails to set aside and pay into the Bond Fund or
the Reserve Fund the amounts set forth above, the owner of any of
the outstanding Bonds may bring an action against the City.. to
compel that setting aside and payment.
Section XI . Rate Stabilization Fund. There is hereby created •
in the City treasury a Waterworks Rate Stabilization Fund. After
• the New Covenant Date, the City may at any time, as determined by
1
the City and as consistent with. Section XII of this ordinance, •
deposit Gross Revenue in the Rate Stabilization Fund, excluding
principal proceeds. of Parity Bonds or other borrowing. The City
may withdraw any or all of the money from the Rate . Stabilization •
Fund for inclusion in ! Gross Revenue for any fiscal year of• the
City, except that the total amount withdrawn from the Rate
• Stabilization Fund iniany fiscal year may not exceed the. Annual
Debt Service in 'that year. Such deposits or withdrawals may be
made up to and including the date 90 days after the end of the
fiscal year for which the deposit or withdrawal will be included in
Gross Revenue. .
No deposit of Gross Revenue shall be made into the Rate
•
Stabilization Fund .to the extent that such deposit would prevent
the. City from meeting the Coverage Requirement in the relevant -
fiscal' year. . •
Section XII . Flow. of Funds.. Funds in the Waterworks Utility
Fund (other than in any bond redemption or federal rebate account)
. shall' be used. in .the following order of priority:
(a) To. pay Maintenance and Operation. Expense;
1
40271685.4 -28-
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ORDINANCE NO. 4709
(b) To pay the interest on the 'Outstanding Parity
Bonds and Parity Bonds;
(c) To pay the principal of the Outstanding Parity
Bonds and Parity Bonds;
(d) To make all payments required to be made into
any sinking fund or bond redemption fund
hereafter created for the payment of Future
Parity Bonds which are Term Bonds;
(e) To make all payments required to be made into '
the reserve accounts created to securethe
payment of the Outstanding Parity Bonds and
Parity Bonds;
After the New Covenant Date, subsection (e) of
this Section shall be - amended to read as
follows: To make all payments required to be -
made into the Reserve Fund;
•
(f) To make all payments required to be made into
any revenue bond redemption fund or warrant
redemption fund and debt service account or
reserve account created to pay and secure the
payment of the principal of and interest on
any revenue bonds or revenue warrants of the
City having a lien upon Gross Revenue junior
and inferior to the lien thereon for the .
payment of the principal of and interest on
the Outstanding. Parity and Parity Bonds; and
(g) To retire by optional redemption orpurchase
in the open market any outstanding revenue
bonds or revenue warrants of the City, to make
nece-s.sary additions, betterments, improvements
and repairs to or extensions and replacements
of the Waterworks Utility, after the New
Covenant Date, to make deposits into the Rate :
Stabilization Fund, or for any other lawful
City purpose.
Section XIII . Pledge of Revenue and Lien Position. The Gross
Revenue is pledged to the payments set forth in Section X, and the
Bonds shall constitute a lien and charge on that revenue prior and
superior to any other charges whatsoever, excluding Maintenance and
Operation Expense, except that the lien and charge on such revenue
40271685.4 -29-
ORDINANCE NO.. 4709
for the Bonds shall be on a.parity with the lien and charge thereon
for the Outstanding Parity Bonds and any Future Parity Bonds .
After the New Covenant Date, this Section shall be amended to
read as follows: The Net Revenue is pledged to the- payment Of the
. Parity Bonds, and the Parity Bonds shall constitute a lien and
charge. upon such Net Revenue prior arid superior to any other charge
whatsoever.
. Section .XIV. Findings Regarding Sufficiency of' Revenue . In
the judgment of the City Council, Gross Revenue and benefits to be '
derived from the operation and maintenance of the Waterworks
Utility, at the rates '.to be charged for water, sanitary sewage
disposal service and storm and surface water drainage service in
the entire utility, will be more than sufficient to meet all
Maintenance and Operation Expense (and cost of maintenance and
operation of the Waterworks Utility as that term is used in RCW
35 . 92 . 100) and the debt service requirements' of the Outstanding
Parity Bonds and to permit the setting aside in the Bond Fund, and
after- the New Covenant Date-, . the Bond Fund and the. Reserve Fund,-
. out. of the 'revenue. of: the entire utility, of amounts sufficient to
. pay the interest on the Bonds as. that interest becomes payable and
to pay and redeem'.all of the Bonds at maturity. The City Council •
further declares that in creating the Bond Fund and in fixing the
•
amounts to be paid into the Bond Fund, and after the New Covenant
Date, the Bond Fund and the Reserve Fund, as aforesaid, it has
exercised due regard for the Maintenance and Operation Expense (and
costs of maintenance and operation as used in RCW 35 . 92 .100) and
40271685.4 -30-
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ORDINANCE NO. 4709 '--
the debtservice requirements of the currently outstanding
Outstanding Parity Bonds, and the City has not bound and obligated
itself to set aside and pay into the Bond Fund, and after theNew
Covenant Date., the Bond Fund and the Reserve Fund., a greater amount
or proportion of the revenue of that utility than in the judgment
of the City Council will be available over. and above Maintenance
and Operation Expense (and such costs of maintenance and operation)
and debt service requirements of the Outstanding Parity Bonds and
that no portion of the Gross Revenue has been previously pledged
for any unrefunded indebtedness other than the payment of the
currently outstanding Outstanding Parity Bonds .
Section XV. Refunding of the Refunded Bonds . .
(a) Acquisition and Substitution of Acquired Obligations .
A sufficient amount of the proceeds of the sale of the Bonds shall
be deposited immediately upon the receipt thereof with the
Refunding Trustee to discharge the obligation of the City to carry
out the Refunding Plan by providing for the payment of the amounts
required to be paid by the Refunding Plan. To the extent
practicable, such obligations shall be discharged fully by the
Refunding Trustee' s simultaneous purchase of Acquired Obligations
. bearing suchinterest rates and maturing as to principal and
interest in such amounts and at such times so as to provide for the
payment of the amounts required to be paid by the Refunding Plan.
The Acuired Obligations are listed and more particularly described
in Schedule A attached to the Refunding Trust Agreement, but are
subject to substitution as set forth below. .
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ORDINANCE NO. 4709
Prior to the purchase of any such Acquired Obligations, the
City reserves the right to substitute other direct, non-callable
obligations of the United States of America ( "Substitute
Obligations") for any of the Acquired Obligations and to use . any
savings created thereby for any lawful City purpose if, (a) in the
opinion of Foster Pepper & Shefelman PLLC, the City' s bond counsel,
the interest on the Bonds will remain excluded from gross income
for federal income tax purposes under Sections 103, 148 and 149 (d)
of the Code, and (b) such substitution shall not impair the timely
payment of the amounts required to be paid by the Refunding Plan as
so verified by an independent nationally recognized firm of •
certified public accountants .
After the purchase of the Acquired Obligations by the
Refunding Trustee, the City reserves the right to substitute
therefor cash or Government. Obligations subject to the conditions •
that such money or securities held by the Refunding Trustee shall
be sufficient to carry out the Refunding Plan, that such
substitution will riot cause the Bonds to be arbitrage bonds within
the meaning of Section 148 Of the Code and regulations thereunder
in effect on the date of such substitution and applicable . to
obligations issued on the issue date of the Bonds, and that the
City obtain, at its expense.: (1) verification by an independent
nationally recognized firm . of certified. public accountants
acceptable to the Refunding Trustee confirming that the payments of
principal of and interest on the substitute Acquired Obligations,
if paid when due, and any other money held by the .Refunding Trustee
•
40271685.4 -32-
ORDINANCE NO. 4709
•
will be sufficient to carry out the Refunding Plan; and (2) an
opinion from Foster Pepper & Shefelman PLLC, bond counsel to the
City, its- successor, or other nationally recognized bond counsel, to
the City, to the effect that the disposition and substitution or
purchase of such securities, under the statutes, rules and
• regulations then in force and applicable to the Bonds, will not.
cause the interest on the Bonds or the Refunded Bonds. to be
•
included in- gross income for federal income tax.purposes and. that
such disposition and substitution or purchase is in compliance with
the .statutes and regulations applicable to the Bonds. Any surplus
money resulting from the sale, transfer, other disposition or .
redemption of the Acquired Obligations and the . substitutions
therefor shall be released from the trust estate and transferred to
• the City to be used for any lawful Waterworks Utility purpose.
(b) Administration of Refunding Plan, The Refunding Trustee
is authorized and directed to purchase the Acquired Obligations (or
'
substitute obligations) and to make the payments required to be
made by the Refunding Plan from the Acquired Obligations (or
substitute obligations) and money deposited with the Refunding
Trustee pursuant to this ordinance. All Acquired Obligations (or
substitute obligations) and the money deposited with the Refunding •
• Trustee and any income therefrom shall be held irrevocably,
invested and applied in accordance with the provisions of
Ordinances Nos . 3188, 4294 and 4410, this ordinance, Chapter 39 . 53
•
RCW and other applicable statutes of the State of. Washington, and
the Refunding Trust Agreement . All necessary, and proper fees,
40271685.4 . -33-
ORDINANCE NO. :4709
compensation and expenses of the Refunding. Trustee for the Bonds
and all other costs incidental to establishing the escrow to
accomplish the refunding of the outstanding Refunded Bonds .and
costs related to the issuance and delivery of the Bonds, including
bond printing, rating service fees, insurance premiums,
verification fees, bond counsel's fees and other related expenses,
shall be paid out of the proceeds of the Bonds.
(c) Authorization for Refunding Trust Agreement . In orderto
carry out the Refunding Plan provided for by this ordinance, the
Mayor or City Finance , and Information Services Administrator is
authorized and directed to execute and deliver to the Refunding
Trustee a Refunding Trust Agreement substantially in the form on
file with the City Clerk and by this reference made a part hereof,
setting forth the duties, obligations and responsibilities of the
Refunding Trustee in connection with the payment, redemption and
retirement of the outstanding Refunded Bonds as provided herein and
stating that the provisions for payment of the fees, compensation
and expenses of the Refunding Trustee set forth therein are
satisfactory to it. Prior, to executing the Refunding Trust
Agreement, the Mayor or City Finance and Information Services
Administrator is authorized to make such changes therein- which do
not change the substance and purpose thereof or which assure that
' the escrow provided therein and the Bonds are in compliance with
the requirements of federal law governing the exclusion of
interest on the Bonds from gross income for federal income tax
purposes . .
402-71685.4 -34-
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• ORDINANCE NO. 4709
(d) City Findings With Respect to Refunding. The City.
Council finds and determines that the issuance and sale of the
Bonds at this time will effect. a savings to the City and is in.,the
best interest of the City' .and its ratepayers and in the public
interest . In making such finding and determination, the . City
Council has given consideration to the fixed maturities of the
Bonds allocated to the Refunding Plan and the Refunded Bonds, the
costs of issuance of the Bonds allocated to the Refunding Plan and
the known earned income from. the investment of the proceeds of the
issuance and sale of those Bonds pending payment. and redemption of
the Refunded Bonds .
The City Council further finds and determines that the money
to be deposited with the Refunding Trustee for the Refunded Bonds
in accordance with this Section will discharge and satisfy the
obligations of' the- City under Ordinance Nos. 3188, 4354 and 4480
with respect to the Refunded Bonds, and the• pledges, charges,
trusts; covenants and agreements, of the City therein made or •
provided for as to the Refunded Bonds, and• that the Refunded Bonds •
shall no. longer be deemed to be outstanding under such ordinances •
immediately upon the deposit of such money with the Refunding.
Trustee. •
Section XVI . Calls for-Redemption of the Outstanding Refunded
• ' Bonds . The City calls for redemption on July 1, 1998, all of the
1977 Refunded Bonds at par:plus accrued interest .
The City calls for redemption on June 1, 2002, all of the 1992
Refunded Bonds at 101% of par plus accrued interest . .
40271685.4 -35- .
ORDINANCE NO'. 4709 •
5 h
The City calls for redemption on November 1, 2004, all of the
1994. Refunded Bonds at par plus accrued interest .
Such calls for redemption shall be irrevocable after the
delivery of the Bonds to the initial purchaser thereof . The dates
on which the Refunded Bonds are called for redemption are the next
dates on which those bonds may be called at a premium of 3% or
•
less .
The proper City officials are authorized and directed to cause
the fiscal agencies to give such notices as required, at the times
•
and in the manner required by Ordinances Nos . 3188, 4294 and 4410
in order to effect the redemption prior to their maturity of the
1977 Refunded Bonds, the 1992 Refunded Bonds and the 1994 Refunded
Bonds, respectively.
• Section XVII . Covenant . The City covenants and agrees with
the owner of each Bond at any time outstanding as follows :
(a) It will establish, maintain and collect such
rates and charges for water, sanitary sewage disposal
service and storm and surface water drainage service- so
long as any Outstanding Parity Bonds and Bonds are
outstanding as will make available for the payment of the
principal- of and interest on such bonds an amount equal
to at least 1.3' times- the average annual debt service
. requirenents, both principal and interest, on the •
• Outstanding Parity Bonds •and the Bonds after deducting
Maintenance and Operation Expense from Gross Revenue .
After the New Covenant Date, subsection (a) of this
Section shall be amended to read as follows.: It will
establish, maintain and collect rates and charges for all
services and facilities provided by the Waterworks
Utility which will, be fair and nondiscriminatory, and
will adjust those rates and charges from time to time so
that:
(.1) Gross Revenue will at all times be ,
sufficient to (A) pay all Maintenance and
Operation Expense on a current basis, (B) pay
49271685.4 --36-
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• ORDINANCE NO. 4709
when due all amounts that the City . is
obligated to pay into the Reserve Fund and any .
Parity Bond Funds and (C) pay all taxes,
assessments or other governmental charges
lawfully imposed upon the Waterworks Utility
or other revenue therefrom or payments in lieu
thereof and any and - all. other amounts which
the City may now or hereafter become obligated
to pay from Gross Revenue by law or contract; •
and
(2) Net Revenue in each calendar year will be
at least equal to' the Coverage Requirement.
(b) It will at all times maintain and keep the
Waterworks Utility in good repair, working order and
• condition and also will at all times operate such Utility
and the business in connection therewith in an efficient .
manner and at a reasonable cost .
•
(c) It. will not sell, lease, mortgage or in any
manner encumber or dispose of all the property of the
Waterworks Utility unless provision is made for payment
into each of the respective bond redemption funds or
accounts for the Outstanding Parity Bonds and the Bond
Fund of sums sufficient to pay, respectively, the
principal of and interest on all Outstanding Parity Bonds --
and the Bonds at any time outstanding, and that it will
not sell, lease, mortgage, or in any manner encumber or
dispose of any part of the property of the Waterworks
Utility that is used, useful and material to the •' j
operation thereof, unless provision is made for • !_'
replacement thereof, or for payment into the respective
•
bond redemption funds or accounts for the Outstanding
Parity Bonds and the Bond Fund of the total amount of
revenue received which shall not be less than an amount
which shall bear the same ratio to the amount of the
Outstanding Parity Bonds and Bonds, respectively, as the .
revenue available for debt service for such outstanding
bonds for the twelve months preceding. such sale, lease,
• encumbrance or disposal from the portion of the utility
sold, leased, encumbered or disposed of bears to the •
revenue available for debt service for such bonds from
the entire utility for the same period. Any such. money
so -paid into such funds shall - be used to retire such
•
outstanding •bonds at the earliest possible date.
• After the New Covenant Date, subsection (c) of this
Section shall be amended to read. as follows: It will not
sell or otherwise dispose -of. the . Waterworks Utility in
its entirety unless, simultaneously with such sale or
40271685.4 -37-
ORDINANCE NO. 4709
•1
! other disposition, all Parity. Bonds are defeased pursuant
to the provisions of this ordinance..
It will not sell, lease, mortgage or in any manner
encumber or otherwise dispose of any, part of the
Waterworks Utility (other. than timber), including all
additions and improvements thereto and extensions thereof'
at any time made, that are used, useful or material in
the operation of the Waterworks Utility, unless provision
is made for the replacement thereof or for payment into .
theBond Fund of the greatest of the following:
(1) An amount which will be in the same
proportion to the net amount of any. Parity Bonds
then outstanding' (defined as the total amount of
those bonds less the amount ofcash and investments
in the Reserve Fund and any Parity Bond Funds) that
Gross Revenue from the portion of the Waterworks
Utility sold 'or disposed of for the preceding year
bears to the total Gross Revenue for that.period;
(2). An, amount which will be in thesame
proportion to the net amount of any Parity Bonds
then outstanding (asdefined above)' that the Net
Revenue from the portion of the Waterworks Utility
sold or disposed of for the preceding year bears to
• the total Net Revenue for that period; or
(3) An amount which willbe in the same
proportion to the net amount of any Parity 'Bonds
then. outstanding (as defined above) that the
depreciated cost value of the facilities sold or
disposed of bears to the depreciated cost value of
the entire Waterworks Utility immediately prior to
such. sale or disposition.
Notwithstanding any other provision of this
subsection, (1) the City in its discretion may sell or
otherwise dispose of any of the. works, plant, properties'
or facilities of the Waterworks. Utility orany real or
personal property comprising a. part of the samewhich
shall have become unserviceable, inadequate, obsolete or
unfit to. be used in the operation of the. Waterworks
Utility, or no longer necessary, material to or useful to
theoperation of 'the Waterworks 'Utility, without making
any deposit into the Bond Fund, and (2) the City may
transfer the Waterworks Utility to another municipal
corporation so long as. Net Revenue of the portion of the
Waterworks Utility so. transferred is used for payment of
debt service on 'the Parity _ Bonds prior to any other
purpose. In no event shall such proceeds be treated as
Gross Revenue: for purposes of this ordinance.
40271685.4 I .-3 8
ORDINANCE NO. 4709
.1
(d) It will while any of the Bonds remain
outstanding keep proper and separate accounts and records
in which complete and separate entries shall be made of
all transactions relating to the Waterworks Utility, and
it will furnish the original purchaser or purchasers of
the Bonds or any subsequent owner or owners thereof at
the written request of such owner or owners complete
operating and income statements of such utility in
• reasonable detail issued in any calendar year not more
than ninety days after the close of such calendar year, •
and it will grant any owner or owners of at least
twenty-five percent of the outstanding Bonds the right at •
all reasonable times to inspect the entire Waterworks
Utility and all records, accounts and data of the City
relating thereto. Upon request of any owner of any of
the Bonds, it also will ' furnish to such owner a copy of
the most recently completed audit of the City' s accounts
by the State Auditor of Washington.
After the New Covenant Date, subsection (d) of this
Section shall be amended to read as follows: It will
keep proper books, records and accounts with respect to
the operations, income and expenditures of the.Waterworks
Utility in accordance with proper accounting procedures
and any applicable rules and regulations prescribed by
the State of Washington. It will prepare annual
financial and operating statements within 270 days of the
close of each fiscal year showing in reasonable detail
the financial condition of the Waterworks Utility as of
the close of the previous year, and the income and
expenses for such year, including the amounts paid into
the Bond Fund and Reserve Fund and into- any and all
special funds or accounts created pursuant to this
ordinance, the status of all funds and accounts as of the.
end of such year, and th'eamounts expended for jl
. maintenance, renewals, replacements and capital additions
to the Waterworks Utility. Such statements shall be sent
to the owner of any Parity Bonds upon written request
therefor being made to the City.
•
(e) It will not furnish water, sanitary sewage
disposal service or storm and surface water drainage' '
service to any customer whatsoever free of charge and
promptly will take legal action to enforce collection of
all delinquent accounts.
•
After the New Covenant Date, subsection (e.) of this
Section shall be amended to read as follows: Except to '
' aid the poor or ' infirm, to provide for resource
conservation or to provide for the proper handling of
hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or
40271685.4 • -3.9-
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ORDINANCE NO. 4.709
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facility in connection with the operation of the
• Waterworks Utility free of charge .to any person, firm or
. corporation, public or private, other than the City, so
long as any Parity Bonds are outstanding. On at least an
annual basis, it will determine all accounts that are
delinquent axed. will take all, necessary action to enforce
payment of such accounts against those property owners
whose accounts are delinquent.
(f) . It will carry the types of insurance on , the
Waterworks Utility :properties in the amounts normally
carried .by private water and sewer companies engaged in •
the operation of water and sewerage systems, and the cost
of such. insurance sI all .be considered a part of operating
and maintaining such utility. If, as, and when the
United States of America or some agency thereof shall
provide for war risk insurance; .the City further agrees
to take out and maintain such insurance ,on all or such
portions of such utility on which such war risk insurance
may- 'be written in an amount or amounts to cover •
adequately the value thereof .
•
After the NewlCovenant Date, subsection (f) of this
Section shall be amended to read as follows: It at all
times will carry fire. and. extended coverage and such •
other forms of insurance, including public liability and
= property damage insurance, with responsible insurers and
with policies payable to or On behalf of the City and .any • •
additional insureds on. such of the buildings, equipment,
• works, plants, facilities and properties • of the •
Waterworks Utility, and against such claims for damages,
as .are ordinarily carried by.municipal or privately owned
utilities engaged! in the Operation of like systems, or
will implement and maintain a self-insurance or an
. insurance pool program with' reserves adequate, in the •
reasonable judgment of the City, to protect the
• Waterworks Utility and the owners of the Parity Bonds •
against loss.
•
(g) It will pay all Maintenance and Operation
Expense - and the debt service requirements for • the
Outstanding Parity Bonds and the outstanding Bonds, and •
otherwise meet the obligations of the City as herein set
forth.
.
(h) It will take all actions necessary to prevent
interest on the Bonds from being included in gross income
for federal income tax purposes, and it will neither take
•
any action nor make or permit any use of proceeds of the
Bonds or other funds of the City treated as proceeds of
the Bonds at anytime during the term of the Bonds which
will cause interest on the Bonds to be included in gross
40271685.4 -40-
•
ORDINANCE NO. 4709 11
•
income for federal income tax purposes . It will, to the
extent arbitrage rebate requirements of Section 148 of
the Code are applicable to the . Bonds, take all action
necessary to comply (or to be treated as having complied)
with those requirements .in connection with the Bonds,
including the calculation- and payment of any penalties.
that the City has elected to pay as an. alternative to
calculating rebatable arbitrage, and the payment of any
other penalties if required under Section 148 of the Code
to prevent interest on the Bonds from being included in
gross income for federal income tax purposes .
•
•
The City certifies that it has not been notified of any
listing or proposed listing by the Internal Revenue Service to the
effect that it is a bond, issuer whose arbitrage certifications may 11
not be relied upon.
Section XVIII . Form and Execution of Bonds . The Bonds shall j
be printed or lithographed on- good bond paper in a form consistent
with the provisions of this ordinance and state law, shall be
signed by the Mayor and City Clerk, either or both of whose
signatures may be manual or in facsimile, and the seal of the City
or a facsimile reproduction thereof shall be impressed or printed
i
thereon.
Only Bonds bearing a Certificate of Authentication in. the
following form, manually signed by the Bond Registrar, shall be
valid or obligatory for any purpose or entitled to the benefits of
this ordinance: •
.
•
•
•
•
•
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• 40271685.4 -41-
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•
ORDINANCE NO. 4709
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City. of
• Renton, Washington, Water and Sewer Revenue Refunding
Bonds, 1998, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
By
Authorized Signer •
The authorized signing ofia Certificate of Authentication 'shall be
conclusive evidence that the Bonds so authenticated have been- duly
executed, authenticated and delivered and are entitled to the
benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds
ceases to be an officer of the City authorized to sign bonds before
the Bonds bearing his or, her facsimile signature are authenticated
or delivered by the Bond Registrar . or issued by the City, those •
Bonds nevertheless may: be authenticated, issued and delivered and,
when authenticated, issued and delivered, shall be as binding on
the City as though that person' had continued to be at officer of
the City authorized to sign bonds . Any Bond also may be signed on
behalf of the City by any person who, on the actual date of signing
of the Bond, is an officer of the City authorized to sign bonds, •
although he or she did not hold the required office on the date of
issuance of the Bonds. •
Section XIX. Bond Registrar. The 'Bond Registrar shall keep,
p,
or cause to be kept, at its principal corporate trust office,
sufficient books for the registration and transfer of the Bonds,
which shall be open to inspection by the City at all times. The
40271685.4 -42- 5 -
ORDINANCE NO. 4709
•
Bond Registrar is authorized, on' behalf of the City, to
authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance.,.. to
. serve as ,the City' s paying agent for the Bonds and to carry out all -�
I
of the Bond Registrar' s powers and duties under this ordinance and
-T
City Ordinance No. 3755 establishing a system of registration for ?
the City' s bonds and obligations.
The Bond Registrar shall be responsible for its
representations contained in the Bond Registrar'`s Certificate of
Authentication on the Bonds.. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not . ;
the Bond Registrar and, to the extent permitted by law, may act as
depository for and permit any of its officers or directors to act • _1
as members of, or in any other capacity with respect to, any
committee formed to protect the rights of Bond owners.
Section XX. Designation of Bonds as "Qualified Tax-Exempt
I
Obligations" . The City has determined and certifies that (a) the
. Bonds are not expected to be "private activity bonds" within the j '
• meaning of Section 141 of_ the Code; (b) the reasonably anticipated
amount of tax-exempt obligations (other than private activity bonds
and other obligations not required to be. included in. such •
calculation) which the City and any entity subordinate to the City
(including any entity which the City controls, which derives its
authority to• issue tax-exempt obligations from the City or which
issues tax-exempt obligations on behalf of the City) will issue
during the calendar year in which the Bonds are issued will not
•
40271685.4 -43-
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•
ORDINANCE NO. 4709
•
exceed $10, 000, 000; and (c)• the amount of tax-exempt obligations,
including the Bonds, designated by the City as. "qualified tax- •
exempt obligations" for the purposes of Section 265 (b) (3) of :the
Code during the calendar year in which .the Bonds are issued does
not exceed $10; 000, 000 . The City designates the Bonds as
"qualified tax-exempt ' obligations" for the purposes of
Section 265 (b) (3) of theCode.
Section XXI . Bonds. Negotiable. The Bonds shall be negotiable
instruments to the extent provided by RCW 62A. 8-102 and 62A. 8-105 .
Section XXII . Refunding or Defeasance of the Bonds .. The City
may issue refunding bonds pursuant to the laws of the' State of
Washington or use money available from any other lawful source to
pay when due the principal of and interest on the Bonds, or any
portion thereof included in a refunding or defeasance plan, and to
redeem and retire, refund or defease all such then-outstanding
Bonds (hereinafter collectively called the "defeased Bonds") and to
. pay the costs of the refunding or defeasance. If money and./or
direct obligations of the United States of America maturing at a
time or times and bearing interest in amounts (together with money,
if necessary) sufficient to redeem and retire, refund or defease •
the defeased Bonds in accordance with their terms are set aside. in
a special trust fund or escrow account irrevocably .pledged to that
redemption, retirement or defeasance of defeased Bonds (hereinafter
called the "trust account") , then all right and interest of the
owners of the defeased Bonds in the.- covenants of this ordinance; in
Gross Revenue and in funds and accounts obligated to the payment of
Li
40271685.4 -4.4-
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4709
ORDINANCE NO. !_J
the defeased Bonds, other than the right to receive the funds so
set aside and pledged, shall cease and become void. The owners of
defeased Bonds shall have the right to receive payment of the
principal of and intereston the defeased Bonds from the trust
i _
account and, if the funds in the trust account are not available
for such payment, shall have the residual right to receive payment
of the principal of and interest on the defeased Bonds from Gross
Revenue without any priority of lien or charge against such revenue
or covenants with respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account,
the City may then apply anymoney in any other fund or account
established for the payment or redemption of the defeased Bonds to
any lawful purposes as it shall determine, subject only to the
rights of the owners of any other bonds then outstanding.
If the refunding plan providesthat the defeased, Bonds or the Li
refunding bonds to be issued be secured by cash an/or direct
LII;
obligations of the United States of America or other legal
investmentspendingthe prior redemption of the defeased Bonds and
if such refunding plan also provides that certain cash and/or
direct obligations of the Untied States of America or other legal } I
investments are pledged irrevocably for the prior redemption of the
defeased Bonds included in that refunding plan, then only the debt
service on the Bonds which are not defeased Bonds and the refunding
bonds, the payment of which is not so secured by the refunding
plan, shall be included in the computation of coverage for
determining compliance with the rate covenants.
40271685.4 ,_ -45-
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ORDINANCE NO. 4709 •
Section- XXIII.. Provision for Future Parity Bonds.. The City
•
reserves the right to issue Future Parity BOnds which will
• constitute a lien and charge on Gross Revenue on a par.ity.with :the •
Outstanding Parity Bonds and the Bonds if the conditions set forth
. in Section 13 of Ordinance No. 3188,. as modified and. strengthened
by Section 12 of Ordinance No. 3720, are met and complied with at
•the time of the issuance of those Future Parity Bonds, which
sections are by this .refer.ence incorporated herein and made a part
hereof and shall continue to be applicable even though the 1953.
Bonds have been paid and! retired.
After the New Covenant Date, this Section shall be amended to
read as follows: The right of 'the City to issue bonds on a parity
of lien with the 1977 Bonds,. the 1988 Bonds, the 1989 Bonds, the
1989 Refunding Bonds, the 1990 Bonds, the 1992 Refunding Bonds, the
1993 Refunding Bonds and the 1994 Bonds is permanently revoked.
•
The City reserves the right to issue Future Parity Bonds if .the
following. conditions are met and complied with .at the time' of
issuance of thoseadditional bonds.:
(a) There shall be no deficiency in any Parity
Bond Fund. •
(b) ' The ordinance providing for the issuance of
. such Future Pari tyBonds shall provide for th.e payment.of
the.' principal thereof and interest thereon out of a
Parity Bond Fund.
(c) The ordinance providing for the issuance of
. such Future Parity Bonds shall provide for the deposit •
into the Reserve Fund from the proceeds of those Future
Parity Bonds of (1) an amount equal to the increase in
the Reserve. Requirement attributable to those Parity
Bonds. or (2) Reserve Insurance or Alternate Security. or.
an amount plus Reserve Insurance. or Alternate Security
equal to the increase in the Reserve Requirement
•
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40271685.4
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ORDINANCE NO. 4709
attributable to those Future Parity Bonds. For federal
incometax purposes, at the discretion of the City, to
the extent that the Reserve Requirementcannot be funded
from Future Parity Bond proceeds, the City shall provide
for the deposit into the Reserve Fund other legally .,.. .
available money or Reserve. Insurance or Alternate
Security from Net Revenue within three years from the
date of issuance of the Future Parity Bonds in three
approximately equal annual payments.
(e) The ordinance authorizing the issuance of such
Future Parity Bonds shall provide for the payment of
mandatory redemption or sinking fund requirements into
the applicable Parity Bond Fund for any Term Bonds to be
issued and for regular payments to be made for the H
payment of the principal of such Term Bonds onor before
their maturity, or, as an alternative, the mandatory
redemption of those Term Bonds prior to their maturity
date from money in the applicable Parity Bond Fund.
(f) There shall be on file with the City either:
(1) a certificate of the Finance and
Information Services Administrator, or the
successor to such officer, demonstrating that
during any 12 consecutive calendar months out of
the immediately preceding 36 calendar months Net
Revenue, without regard to deposits into or
withdrawals from the Rate Stabilization Fund, is
equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed
to be issued; or .
(2) a certificate of a Professional Utility
Consultant that in such consultant's opinion Net , 1
Revenue for any 12 consecutive calendar months out.
of the immediately preceding 36 calendar months,
without regard to deposits into or withdrawals from.
the Rate Stabilization Fund, shall be equal to the
Coverage Requirement for each year thereafter. The
certificate, in estimating Net Revenue available
for debt service, may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and
being charged or expressly committed by
ordinance to be made in the future;
(B) Income derived from customers of the
Waterworks Utility who have become customers
during the 12 consecutive Month period or
40271685.4 -47-
•
ORDINANCE NO. 4709
thereafter adjusted toreflect one year's Net
Revenue from those customers;
(C) , Income from any customers to be
connected ; to the Waterworks Utility who
have . paid the required connection
charges;
(D) ; The Professional Utility
Consultant's estimate of the Net Revenue
to be derived from customers anticipated
to connect for whom building permits have
been issued;
(E) ; Income received or to be received
which is derived from any person, firm,
corporation or municipal corporationunder any
executed! contract for water, sewage disposal'
or other' utility service, which revenue was
not included in the historical Net Revenue;
(F)! The Professional Utility
Consultant's estimate of the Net Revenue to be
derived !from customers with existing homes or
buildings which will be required to connect to
any additions to and improvements and
extensions of- the Waterworks Utility
constructed and to be paid for out of the
proceeds of the sale of the additional Future
Parity Bonds or other additions to and
improvements and extensions of the Waterworks
Utility then under construction and not fully
connected to the facilities of the Waterworks
Utility when such additions, improvements and
extensions are completed; and
(G), Any increases or decrease in
Net Revenue as a result of any actual or
reasonably anticipated changes in
Maintenance and Operation Expense
subsequentto the 12-month period.
If Future Parity- Bonds proposed to be so issued are
for the sole purpose of refunding outstanding bonds
• payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required ,for
the payment of the principal and interest in each year
for the refunding bonds is not increased more than $5, 000
over the amount for that same year required for the bonds
or the portion of that bond issue to be refunded thereby.
and if the maturities of such refunding bonds are not
40271685.4 -48-
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ORDINANCE NO. 4709
•
extended beyond the maturities Of the bonds to be ii
refunded thereby.
.Nothing contained herein shall prevent the City from issuing
Future Parity- Bonds to refund maturing Bonds or Future Parity Bonds
then outstanding, money for the payment of which is not. otherwise
available.
Nothing contained herein shall prevent the City from issuing
revenue bonds that are a charge upon Gross Revenue subordinate to
the payments required to be made therefrom into any Parity Bond
Fund.
Section XXIV. Approval of Bond Purchase Contract . Piper
•
Jaffray Inc . of Seattle, Washington, has presented a purchase
contract dated March 9, 1998 (the "Bond Purchase Contract" ) to the
City offering to purchase the Bonds under the terms and conditions
provided in the Bond Purchase Contract, which written Bond Purchase '
Contract is on file with the City Clerk and is incorporated herein
by this reference. The City Council finds that entering into the
Bond Purchase Contract is in the City' s best interest and therefore
accepts the offer contained therein and authorizes its execution by
•
City officials .
The Bonds will - be printed at City expense and will be
delivered to the purchaser in accordance with the Bond Purchase
Contract, along with the approving legal. opinion of Foster Pepper &
I
Shefelman PLLC-, municipal bond counsel of Seattle, Washington,
. regarding the Bonds . Bond counsel shall not be required to review
and shall . express no opinion concerning the completeness or
accuracy of any official statement, offering circular or other
40271685.4 -49-
•
•
•
•
ORDINANCE NO. 4709 •
• A
sales or disclosure material issued or used in. connection with the-
Bonds, and bond counsel' s opinion shall so state.
The proper City officials are authorized and directed to.. do •
everything necessary for the prompt delivery of the Bonds to the
. purchaser and for the proper application and use of the proceeds of
the sale thereof.
Section XXV. Bond Insurance. The' City is authorized to
purchase from the Bond -Insurer the Municipal Bond Insurance Policy
insuring the prompt payment of the principal 'of and interest on the
Bonds and agrees to the conditions for obtaining that policy,
including the payment -of the premium therefor. Any notice required
to be given to the Bond Insurer shall • be sent by certified or
registered mail to Financial Security Assurance Inc. , 350.. Park
• Avenue, New York, New York 10022 . •
Section XXVI . Undertaking to Provide Continuing Disclosure. .
To meet the requirements of United States Securities and Exchange
Commission ("SEC") Rule 15c2-12 (the "Rule") , as applicable to a
participating underwriter for the Bonds, the City makes. the
. following written undertaking (the "Undertaking") for the. benefit
of holders of the Bonds :
(a) Undertaking to Provide Annual . Financial •
Information and Notice of Material Events . The City
undertakes to provide or cause to be ' provided, either-
directly or through a designated agent : •
. (1) To each nationally recognized municipal
. securities information repository designated by the
SEC in accordance with the Rule ("INRMSIR") and to a
state information depository, if any, established
in the State of Washington (the "SID") annual.
financial information and operating data of the
type included in the final official statement for
40271685.4 -50-
ORDINANCE NO.
4709
y h
the Bonds and described in subsection (b) of this
Section ("annual financial information") ;
(2) To each NRMSIR or the Municipal
Securities Rulemaking Board ("MSRB") , and to the
SID, timely notice of the occurrence of any of the
following events with respect to the Bonds, if
material : (A) principal and interest payment
delinquencies; (B) non-payment related defaults;
(C) unscheduled draws on debt service reserves
reflecting financial difficulties; (D) unscheduled
draws on credit enhancements reflecting financial
difficulties; (E) substitution of credit or
liquidity providers, or their failure to perform;
(F) adverse tax opinions or events affecting the
tax-exempt, status of the Bonds; (G) modifications
to rights of holders of the Bonds; (H) Bond calls
(other than scheduled mandatory redemptions of Term
Bonds) ; (I) defeasances; (J) release, substitution,
or sale of property securing repayment of the
Bonds; and (K) rating changes; and
(3) To each NRMSIR or to the MSRB, and to the _
SID, timely notice of a failure by the City to
provide required annual financialinformation on or
before the date specified in subsection (b) of this
Section.
(b) Type of Annual Financial Information Undertaken •
to be Provided. The annual financial information that
the City undertakes to provide in subsection (a) of this
Section:
(1) Shall consist of (A) an annual -
financial statement, (B) a statement of authorized,
issued and outstanding bonded debt secured by Gross
Revenue or Net Revenue and (C) general customer
statistics for the Waterworks Utility; .
(2) Shall be prepared (except as noted in
the financial statements) in accordance with
applicable generally accepted accounting principles
promulgated by the Government Accounting Standards
Board ("GASB") , as such. principles may be changed
from time to time by GASB or its successor;
• (3) Shall not be audited, except, however,
that if and when audited financial statements are
otherwise prepared and available to the City they
will be provided; .
40271685.4 -51-
,,
ORDINANCE NO. 4709
•
(4) Shall be provided to each .NRMSIR and the
SID, not later than the last day of the ninth month
• after the end of each fiscal year of. the City, as
such fiscal year may be changed as required or
permitted by State law, commencing with the City' s
fiscal year ending December 31, 1998; and
(5) May be provided in a single or multiple
documents, and may be incorporated by reference to
other documents that have been filed with each
NRMSIR and ' the SID, or, if the document
incorporated by reference is a "final official •
statement" with respect to other obligations of the
City, that has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is
subject to amendment after the primary offering. of the
Bonds without the consent. of any holder of any Bond, or •
of any broker, dealer, municipal securities dealer,
participating underwriter, rating agency, NRMSIR, the SID
or the MSRB, under the circumstances and in the manner
. permitted -by the. Rule.
The City will give notice . to each NRMSI'R or the.
MSRB, and the SID,; of the substance (or provide a copy) .
of any amendment to the Undertaking and a brief statement
of the reasons for the amendment. If the amendment
changes the type of annual financial information to. be .
provided, the annual financial information-containing the
amended financial information will include a narrative
• explanation of the effect of that change on the type of
information to be provided.
•
(d) Beneficiaries- ' The Undertaking. evidenced by
this Section shall inure to the benefit of the City and
any holder- of Bonds, and shall not inure to the benefit
of or create any rights in any other person. •
(e) Termination of Undertaking. The City' s
obligations under this Undertaking shall terminate upon
the legal defeasance of all of the Bonds. In addition,
the City's obligations under this Undertaking shall
terminate if those provisions of the Rule which require
the City to comply with. this Undertaking become legally
inapplicable in respect of the Bonds for any reason, as
• confirmed by an opinion of nationally. recognized bond
counsel or other counsel familiar with federal securities
laws delivered to the City, and the City provides timely
notice of such termination to each NRMSIR or the MSRB. and . -
the SID.
40271685.4 -52- .
ORDINANCE NO. 4709
(f) Remedy for Failure to Comply with Undertaking.
As soon as practicable after the City learns of any
failure to comply with the Undertaking, the City will
proceed with due diligence to cause such noncompliance to
be. corrected. No failure by the City or other obligated
person to comply with the Undertaking shall constitute a
default in respect of the Bonds . The sole remedy of any
holder of a Bond shall be to take such actions as that
holder deems necessary, including seeking an order of
specific performance from an appropriate court, to compel
the City or other obligated person to comply with the
Undertaking. . •
(g) Designation of Official Responsible to
Administer Undertaking. The Finance and Information
Services Administrator of the City (or such other officer
of the City who may in the future perform his or her
• duties) or his or her designee is authorized and directed
in his or her discretion-to take such further actions as
may be necessary, appropriate or convenient to carry out
the Undertaking of the City in respect of the Bonds set
forth in this Section and in accordance with the Rule,
including, without limitation, the following actions :
(1) Preparing and filing the annual
financial information undertaken to' be provided;
(2) Determining whether any event specified •
in subsection (a) of this Section has occurred,
assessing its materiality with respect to the
Bonds, and, if material, preparing and
disseminating notice of its occurrence;
(3) Determining any person other than
y
the City is an "obligated person" within the
meaning of the Rule with respect to the Bonds, and
obtaining from such person an undertaking . to
provide any annual financial information and notice
of material events for that person in accordance
with the- Rule;
(4) Selecting, engaging and compensating
designated agents and consultants, including but .
not limited to financial advisors and legal
counsel, to assist and advise the City in carrying
out the Undertaking; and
(5) Effecting any necessary amendment of the
Undertaking. .
40271685.4 -53-
ORDINANCE NO. 4709
Section XXVII . Preliminary Official Statement Deemed Final .
The City Council has been provided with copies of a preliminary
official statement dated March 4, 1998 (the "Preliminary Official
Statement") , prepared in connection with the sale of the Bonds .
For the sole purpose of, the Bond purchaser' s compliance with
paragraph (b) (1) of the Rule, the City "deems final" that
Preliminary Official Statement as of its date, except for the
omission of information as to offering prices, interest rates,,
selling compensation, aggregate principal amount, principal amount
per maturity, maturity dates, options of redemption, delivery
dates, ratings and other terms of the Bonds dependent . on such
matters . •
Section XXVIII . Effective Date of Ordinance. This ordinance
shall be effective upon its passage, approval and five days. after
publication.
PASSED by the City Council. this 9th day of March, 1998 .
••
++',/rA '
Marilyn ir-tersen, City Clerk.
APPROVED BY THE MAYOR this 9th day of March, 1998 . .
Jes Tanner, Mayor
Approved as to Form:
S J �
o d Counsel
Date of Publication: 3/13/98 (Summary)
40271685.4 -84-
;
54-
CERTIFICATE
I, the undersigned City Clerk of the
City of Renton, Washington, certify
that this is a true and correct copy of
6 ' lint A.tt.Gt 76 . Subscribed
and sealed this Milay of OaE - 20 62
°
4519- .
City Clerk
CITY OF RENTON, WASHINGTON
ORDINANCE NO. 4976
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$11,980,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2002, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date,form, denominations, maturities, interest rates,terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson& Co., Seattle, Washington.
I
ORDINANCE NO. 4 9 7 6 I
Section 1. Definitions 3
Section 2. Findings Regarding Parity Provisions 12
Section 3. Authorization and Description of Bonds 12
Section 4. Registration of Bonds and Book-Entry System 14
Section 5. Payment of Bonds 16 •
Section 6. Optional Redemption and Open Market Purchase of Bonds 17
Section 7. Notice of Redemption 17
Section 8. Failure to Redeem Bonds 18
Section 9. Form of Bonds 19
Section 10. Execution of Bonds 19
Section 11. Authentication and Delivery of Bonds by Bond Registrar 19
Section 12. Registration, Transfer and Exchange 20
Section 13. Lost, Stolen or Destroyed Bonds 22
Section 14. Creation of Account 22
Section 15. Deposits into Funds and Accounts 23
Section 16. Flow of Funds 27
Section 17. Pledge of Revenue and Lien Position 27
c
Section 18. Findings Regarding Sufficiency of Revenue 28
Section 19. Covenants 29
Section 20. No Private Activity Bonds 33
Section 21. Defeasance of the Bonds' 33
Section 22. Provision for Future Parity Bonds 34
Section 23. Approval of Purchase Agreement 37
Section 24. Bond Insurance 38
ORDINANCE NO. 4 9 7 6
Section 25. Delivery of Bonds; Temporary Bonds 38
Section 26. Application of Bond Proceeds 39
Section 27. Undertaking to Provide Continuing Disclosure 40
Section 28. Preliminary Official Statement Deemed Final 43
Section 29. Effective Date of Ordinance 44
I
ii
ORDINANCE NO. 4 9 7 6
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$11,980,000 L -I
aggregate principal amount of Water and Sewer Revenue Bonds, 2002, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations, maturities, interest rates,terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing,for
the delivery of the bonds to D.A. Davidson& Co., Seattle, Washington.
WHEREAS, the City of Renton (the"City")has heretofore created and operated a
waterworks utility of the City, including the sewerage system of the City and within that system
a system of storm and surface water sewers (defined herein as the"Waterworks Utility"); and
WHEREAS,by Ordinance No. 1450, the City provided for the issuance of its.Water and
Sewer Refunding and Improvement Revenue Bonds, 1953 (the "1953 Bonds"), and,by Section
15 of that ordinance, established certain conditions for the issuance of additional water and sewer
revenue bonds on a parity of lien with the 1953 Bonds; and
WHEREAS, all of the water and sewer revenue bonds of the City issued on a parity of
lien with the 1953 Bonds pursuant to the original provisions of Section 15 of Ordinance No.
1450 have beenP aid and redeemed, or irrevocable provision for their payment and redemption
has been made; and
WHEREAS,by Ordinance No. 3188, the City authorized the issuance of its Water and
Sewer Revenue Refunding Bonds, 1977, Issue No. 3 (the "1977 Bonds"), all of which 1977
Bonds have been paid and redeemed, and by Section 13 of that ordinance incorporated Section
15 of Ordinance No. 1450, as modified by Section 13 of Ordinance No. 3169; and
WHEREAS, by Ordinance No. 3720, the City authorized the issuance of its Water and
Sewer Revenue Bonds, 1983.(the"1983 Bonds"), all of which 1983 Bonds have been paid and
1
1
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ORDINANCE NO. 4 9 7 6
redeemed, and by Section 12 of that ordinance further modified and strengthened the provisions
of Section 15 of Ordinance No. 1450, as modified by Section 13 of Ordinance No. 3169; and
WHEREAS, the City currently has outstanding Water and Sewer Refunding and
Improvement Revenue Bonds, 1993 (the"1993 Refunding Bonds"), issued pursuant to
Ordinance No. 4410; Water and Sewer Revenue Bonds, 1994 (the"1994 Bonds"), issued
pursuant to Ordinance No. 4480; and Water and Sewer Revenue Refunding Bonds, 1998 (the
"1998 Bonds"),issued pursuant to Ordinance No. 4709, all of which bonds were issued on a
parity of lien with the 1977 Bonds; and
WHEREAS,the parity provisions of Section XXIII of Ordinance No. 4709, which
incorporated therein Section 13 of Ordinance No. 3188 as modified and strengthened by Section.
12 of Ordinance No. 3720,provide that the City may issue additional water and sewer revenue
bonds which will constitute a charge and lien upon the revenue of the Waterworks Utility of the
City on a parity with the 1993,Refunding Bonds,the 1994 Bonds,the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein:
WHEREAS, By Resolution No. 2897, passed in 1992, the City adopted its
Comprehensive Water Plan and by Resolution No. 3417, passed in 1998,the City adopted the
Long Range Wastewater Plan; and
WHEREAS, the City Council has determined that it is necessary and in the best interests
of the City that certain additional improvements described in the Comprehensive Water Plan and
the Long Range Wastewater Plan be made and there be adopted a system or plan of additions to
and betterments and extensions of the Waterworks Utility; and
2
ORDINANCE NO. 4 9 7 6
WHEREAS, pursuant to Chapter 35.92 RCW, the City is authorized to sell and issue,
without an election, revenue bonds of the City to make additions, betterments or extensions to
the Waterworks Utility; and
WHEREAS, the City Council has determined that it is necessary to issue and sell
$11,980,000 of Water and Sewer Revenue Bonds, 2002 (the"Bonds")to provide part of the
funds necessary to carry out the system or plan for additions to and betterments and extensions of
the Waterworks Utility and to pay the costs of issuance and sale of the Bonds; and
WHEREAS, Financial Security Assurance Inc., of New York,New York, has made a
commitment to issue an insurance policy insuring the payment when due of the principal of and
interest on the Bonds as provided therein, and the City Council deems that the purchase of such
policy is in the best interest of the City; and
WHEREAS, D.A. Davidson & Co., Seattle, Washington, has offered to purchase the
Bonds under the terms and conditions hereinafter set forth;NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance,the following words shall have the
following meanings:
After the New Covenant Date, "Alternate Security"shall mean any bond insurance,
collateral, security, letter of credit, guaranty, surety bond or similar credit enhancement device
providing for or securing the payment of all or part of the principal of and interest on the Parity •
Bonds, issued by an institution that has been assigned a credit rating at the time of issuance of
3
ORDINANCE NO. 4976
such Parity Bonds secured by such Alternate Security equal to or better than the highest then-
existing rating for any of the Parity Bonds.
"Annual Debt Service"for the Bonds shall mean all the interest plus all principal which
will mature or come due in any year.
After the New Covenant Date, "Annual Debt Service"for any year shall mean all the
interest on plus all principal (except principal of Term Bonds due in any Term Bond Maturity
Year) of Parity Bonds,plus all mandatory redemption and sinking fund installments, less all
• bond interest payable from the proceeds of any such bonds, which will mature or come due in
that year.
"Average Annual Debt Service" shall mean the sum of the Annual Debt Service for the
remaining years to the last scheduled maturity of the applicable bond issue or issues divided by
the number of those years.
"Beneficial Owner" shall mean,with respect to any Bond,the Person named on the
records of the Custodian as having the right,without a physical certificate evidencing such right,
to transfer,to hypothecate and to receive the payment of the principal of, premium, if any, and
interest on such Bond as the same becomes due and payable.
"Bond Fund" shall mean that special fund of the City known as the 2002 Waterworks
Revenue Bond Account created by this ordinance as a separate account in the Waterworks
Revenue Parity Bond Fund for the payment of the principal of and interest on the Bonds.
After the New Covenant Date, "Bond Fund" shall mean that special fund of the City
known as the 2002 Waterworks Revenue Bond Fund created by this ordinance for the payment of
the principal of and interest on the Bonds.
4
ORDINANCE NO. 4 9 7 6
"Bond Insurer" shall mean Financial Security Assurance Inc.,.New York,New York.
"Bond Insurance Policy" shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register" shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar" shall mean the fiscal agencies of the State in Seattle, Washington, and
New York,New York, as the same shall be designated from time to time.
"Bonds" shall mean the $11,980,000 City of Renton Water and Sewer Revenue Bonds,
2002, authorized to-be issued by this ordinance.
"1977 Bonds" shall mean the Water and Sewer Revenue Refunding Bonds, 1977, Issue.
No. 3.
"1988 Bonds" shall mean the Water and Sewer Revenue Bonds, 1988.
"1989 Bonds" shall mean the Water and Sewer Revenue Bonds, 1989.
"1989 Refunding Bonds" shall mean the Water and Sewer Revenue Refunding Bonds,
1989.
"1992 Bonds" shall mean the Water and Sewer Refunding and Improvement Revenue
Bonds, 1992.
"1993 Refunding Bonds" shall mean the outstanding Water and Sewer Refunding and
Improvement Revenue Bonds, 1993.
"1994 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1994.
5
ORDINANCE NO. 4 9 7 6
"1998 Bonds" shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
- "Book-Entry Termination Date" shall mean the fifth business day following the date of
receipt by the Bond Registrar of the City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City" shall mean the City of Renton, Washington, a duly organized and legally existing
noncharter code city under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services
Administrator or the successor,to such officer.
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules
and regulations promulgated thereunder.
After the New Covenant Date, "Coverage Requirement" shall mean in any calendar
year 1.25 times the Maximum Annual Debt Service.
"Custodian" shall mean(a)The Depository Trust Company,New York,New York, or
(b) any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means,the beneficial ownership of the Bonds,in which system no
physical certificates are issued to the Beneficial Owners of the Bonds, but in which a limited
number of physical certificates are issued to and registered in the name of the Custodian or its
nominee, and delivered to the Custodian; provided, that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
6 •
ORDINANCE NO. 4 9 7 6 !�
which are operated by parties other than the Custodian and the use of a nominee for the
Custodian; and the term"Custodian," as used herein, includes any party operating any such
subsystem.
"Future Parity Bonds" shall mean all water and sewer revenue bonds of the City issued 4 J�
after the date of the issuance of the Bonds and having a lien and charge on Gross Revenue on a
ii
parity with the lien and charge on such Revenue for the payment of the principal of and interest
on the Outstanding Parity Bonds and the Bonds.
After the New Covenant Date, "Future.Parity Bonds"shall mean all water and sewer
revenue bonds of the City issued after the date of the issuance of the Bonds and having a lien and
charge on Net Revenue on a parity with the lien and charge on Net Revenue for the payment of
the principal of and interest on the Bonds.
"Gross Revenue" shall mean Revenue of the Waterworks Utility.
"Letter of Representations" shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15, 1997,pertaining to the I_
payment of the Bonds and the "book-entry" system for evidencing the beneficial.ownership of
the Bonds prior to the Book-Entry Termination Date (as it may be amended from time to time).
"Maintenance and Operation Expense" shall mean all expenses incurred by the City in
causing the Waterworks Utility to be operated and maintained in good repair, working order and
condition, which shall not include any depreciation expenses or taxes or charges in lieu of taxes
levied or imposed by the City.
After the New Covenant Date, "Maintenance and Operation Expense"shall mean all
reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and 7
ORDINANCE NO... 49 7 6
maintained in good repair, working order and condition, including payments made to any other
municipal corporation or private entity for water service and for sewage treatment and disposal
service or other utility service in the event the City combines such service in the Waterworks
Utility and enters into a contract for such service, and including pro-rata budget charges for the
City's administration expenses where those represent a reasonable distribution and share of
actual costs, but not including any depreciation or taxes levied or imposed by the City or
payments to the City in lieu of taxes, or capital additions or capital replacements to the
Waterworks Utility.
After the New Covenant Date, "Maximum Annual Debt Service"shall mean, at the time
of calculation, the maximum amount of Annual Debt Service that will mature or come due in the
current calendar year or any future calendar year on the outstanding Parity Bonds.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Net Revenue" shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date" shall mean the date on which all 1977 Bonds (other than the 1977
Refunded Bonds), 1988 Bonds, 1989 Bonds, 1989 Refunding Bonds, 1990 Bonds, 1992 Bonds,
1993 Refunding Bonds and 1994 Bonds (other than the 1994 Refunded Bonds) are fully
redeemed, refunded or defeased.
"NRMSIR" shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Outstanding Parity Bonds" shall mean the 1993 Refunding Bonds and the 1994
Bonds.
•
8
ORDINANCE NO. 4 9 7 6
"Owner" shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds" shall mean the 1998 Bonds, the Bonds and any Future Parity Bonds.
After the New Covenant Date, "Parity Bond Fund"shall mean any fund created for the
payment and redemption of Parity Bonds.
"Principal and Interest Account" shall mean the subaccount of that name created in the
Bond Fund for the payment of the principal of and interest on the Bonds.
After the New Covenant Date, "Professional Utility Consultant"shall mean an
independent licensed professional engineer, certified public accountant or other independent
person or firm selected by the City having a favorable reputation for skill and experience with
municipal utilities of comparable size and character to the Waterworks Utility in such areas as
are relevant to the purposes for which such consultant is retained.
"Project" shall mean the following project to be financed, in whole or in part, with
proceeds of the Bonds: (1) the undertaking of the additions,betterments or extensions to the
Waterworks Utility described in the 2002 Comprehensive Water System Plan or the 2002
Comprehensive Sanitary Sewer Plan, including,but not limited to,the capital improvements
described in Exhibit A to this ordinance, (2) making a deposit to the Reserve Account, and
(3)paying the incidental costs and costs of issuing the Bonds.
"Project Fund" shall mean the Waterworks Utility Construction Fund.
"Purchase Agreement" shall mean the Bond Purchase Agreement for the Bonds, dated
July 1, 2002, by and between the City and the Purchaser.
"Purchaser" shall mean D.A. Davidson & Co., Seattle, Washington.
9
ORDINANCE NO. 4 9 7 6
"Rate Stabilization Fund" shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Reserve Account"shall:mean the subaccount of that name created in the Bond Fund by
Ordinance No. 4709 for the purpose of securing the payment of the principal of and interest on
the Bonds.
After the New Covenant Date, "Reserve Fund"shall mean that special fund of the City
known as the Waterworks Revenue Bond Reserve Fund created by Ordinance No. 4709 for
purpose of securing the payment of the principal of and interest on all bonds to which Net
Revenue is pledged.
After.the New Covenant Date, "Reserve Insurance"shall mean, in lieu of cash and
investments, insurance obtained by the City equal to part or all of the Reserve Requirement for
any Parity Bonds then outstanding for which such insurance is obtained, issued by an institution
that has been assigned a credit rating equal to or better than the highest then-existing rating for
any of the Parity Bonds.
After the New Covenant Date, "Reserve Requirement"shall mean the Maximum Annual
Debt Service.
"Revenue of the Waterworks Utility" shall mean all the earnings and revenue received
by the Waterworks Utility from any source whatsoever, including payments received under
contract with other municipal corporations for water service, except general taxes, charges in lieu
of taxes, assessments in any utility local improvement district hereafter created, proceeds from
the sale of City property, bond proceeds and earnings subject to a federal tax or rebate
requirement.
10
ORDINANCE NO. 4 9 7 6
After the New Covenant Date, "Revenue of the Waterivorks Utility"shall mean all of the
earnings and revenues received by the City from the maintenance and operation of the
Waterworks Utility and all earnings from the investment of money in the Reserve Fund or any
Parity Bond Fund, and connection and capital improvement charges collected for the purpose of
defraying the cost of capital facilities of the Waterworks Utility, except government grants,
Proceeds from the sale of Waterworks Utilityproperty (other than timber), City taxes collected
by or through the Waterworks Utility,principal proceeds of bonds and earnings or proceeds
from any investments in a trust, defeasance or escrow fund created to defease or refund
Waterworks Utility obligations (until commingled with other earnings and revenues of the
Waterworks Utility) or held in a special account for the purpose of paying a rebate to the United
States Government under the Code.
"Rule" shall mean SEC Rule 15c2-12.
"SEC" shall mean the United States Securities and Exchange Commission.
"SID" shall mean a state information depository.
"State" shall mean the State of Washington.
"Term Bonds" shall mean any Outstanding Parity Bonds and/or Parity Bonds identified
as such in the ordinance authorizing the issuance thereof, the payment of which is provided for
by a requirement for mandatory deposits of money into the principal and interest account of the
bond redemption fund created for the payment of such issue of bonds in accordance with a
mandatory sinking fund requirement. -
"Term Bond Maturity Year" shall mean any calendar year in which Term Bonds are
scheduled to mature.
11
ORDINANCE NO. .4 9 7 6
"Water and Sewer Revenue Parity Bond Fund" shall mean the fund of that name
created by Ordinance No. 3896.
"Waterworks Revenue.Parity Bond Fund" shall mean the Water and Sewer Revenue
Parity Bond Fund, as renamed by Ordinance No. 4709.
"Waterworks Utility" shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to, improved and
extended for as long as any of the Outstanding Parity Bonds or Parity Bonds are outstanding.
"Waterworks Utility Fund" shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility) shall be deposited.
Section 2. Findings Regarding Parity Provisions The City Council finds that all
payments required by Ordinance Nos. 4410,4480 and 4709 for the Outstanding Parity Bonds
have been made into the respective bond redemption funds and accounts therein for the
Outstanding Parity Bonds,that provision hereinafter is made for the accumulation of the amounts
required in the Reserve Account of the Bond Fund, and that there will be on file prior to the
issuance and delivery of the Bonds a certificate of an engineer experienced in municipal utilities
that Gross Revenue is sufficient to meet the 1.3 coverage requirement of such ordinances.
Therefore,the Bonds shall be issued on a parity of lien with the Outstanding Parity Bonds and
the 1998 Bonds.
Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
the funds necessary to carry out the system or plan for additions to and betterments and
extensions of the Waterworks Utility and to pay the costs of issuance and sale of the Bonds,the
12
ORDINANCE NO. 4 9 7 6
City shall issue the Bonds in the aggregate principal amount of$11,980,000. The Bonds shall be
designated City of Renton, Washington Water and Sewer Revenue Bonds, 2002; shall be dated
July 1, 2002; shall be in the denomination of$5,000 or any integral multiple thereof within a
single maturity; shall be numbered separately, in the manner and with any additional designation
as the Bond Registrar deems necessary for purpose of identification; shall bear interest
(computed on the basis of a 360-day year of twelve 30-day months),payable semiannually on
each June 1 and December 1, commencing December 1, 2002, to the maturity or earlier
redemption of the Bonds; and shall mature on December 1 in the years and amounts and bear
interest at the rates per annum as follows:
Maturity Years Interest
(December 1) Amounts Rates
2003 $ 115,000 2.50%
2004 120,000 2.50
2005 135,000 2.75
2006 110,000 3.25
2007 110,000 3.50
2008 110,000 3.50
2009 455,000 3.70
2010 630,000 3.90
2011 1,010,000 4.00
2012 1,025,000 4.10
2014 710,000 4.30
2015 735,000 4.40
2016 765,000 4.50
2017 805,000 4.60
2018 1,000,000 5.25
2019 1,000,000 5.25
2020 1,000,000 5.25
2021 1,045,000 5.25
2022 1,100,000 5.25
13
1.
ORDINANCE NO. 4 9 7 6
If any Bond is duly presented for payment upon maturity or earlier redemption and is not paid,
then interest thereon shall continue to accrue thereafter at the rate stated therein until such Bond
is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105.
Section 4. Registration of Bonds and Book-Entry System. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register. The
Bond Register shall contain-the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate, which certificate shall be registered in the name of the
Custodian or its nominee, and delivered to the Custodian. The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit of the Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either(1)the date of maturity of the
Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date, and the cancellation thereof; (2)the Book-Entry Termination Date; or (3)the date the
City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name of the Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4,the
14 •
• ORDINANCE NO. 4 9 7 6 •
rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry
made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations, and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nominee.
The City may terminate the "book-entry" system of registering ownership of the Bonds at
any time (provided the City is not then in default of any payment then due on the outstanding
Bonds) by delivering to the Bond Registrar: (a) a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry
Termination Date; (b) a list identifying the Beneficial Owners as to both name and address; and
(c) a supply of Bond certificates, if necessaryfor such purpose. Upon surrender to the Bond
PPY
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds, the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
Owner's duly appointed agent, naming such Beneficial Owner or such Beneficial Owner's
nominee as the Owner thereof Such certificates may be in any integral multiple of$5,000
within a single maturity. Following such issuance,the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section
12 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error, omission, action
or failure to act on the part of the Custodian with respect to payment, when due, to the Beneficial
Owner of the principal and interest on the Bonds, proper recording of beneficial ownership of
15
ORDINANCE NO. 4 9 7 6
Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any
other matter pertaining to the Bonds.
Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Prior to the Book-Entry Termination
Date,the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof,'for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations.
From and after the Book-Entry Termination Date, interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date,to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register,or, if requested in writing by an Owner of$100,000
or more in principal amount of Bonds at least ten days before an interest payment date,by wire
transfer on the interest payment date to an account within the United States. From and after the
Book-Entry Termination Date,principal of the Bonds shall be payable upon presentation and
surrender of the Bonds by the Owners at the principal corporate trust office of the Bond
Registrar.
The Bonds shall be payable solely out of the Bond Fund and shall be a valid claim ofthe
registered owners thereof only as against the Bond Fund and the amount of Gross Revenue
pledged to that fund and shall not be general obligations of the City.
After the New Covenant Date, the Bonds shall be payable solely out of the Bond Fund
•
and the Reserve Fund and shall be a valid claim of the Owners thereof only as against the Bond
16 •
ORDINANCE NO. 4 9 7 6
Fund, Reserve Fund and the amount of Net Revenue pledged.to those funds and shall not be
general obligations of the City. -
Section 6. Optional Redemption and Open Market Purchase of Bonds. Bonds maturing
in the years 2003 through 2012, inclusive, are not subject to redemption prior to their stated
maturity dates. Bonds maturing on or after December 1, 2014, are subject to redemption at the
option of the City prior to their stated maturity dates,from funds from any source, at any time, in
whole or in part on or after December 1,, 2012, within one or more maturities selected by the City
(and by lot within a maturity in the manner determined by the Bond Registrar or the Custodian)
at a price of par plus accrued interest to the date of redemption.
Any Bond in the principal amount of greater than$5,000 may be partially redeemed in
any integral multiple of$5,000. Prior to the Book-Entry Termination Date, Bonds shall be
partially redeemed in accordance with the Letter of Representations. From and after the Book-
Entry Termination Date, in the event of a partial redemption of a Bond,upon surrender of such
Bond at theprincipal corporate trust office of the Bond Registrar, a new Bond or Bonds (at the
p p rp g
option of the Owner) of the same maturity arid interest rate and in the aggregate principal amount
remaining unredeemed shall be authenticated and delivered to the Owner, without charge to the
Owner therefor, in any denomination authorized by this ordinance and selected by the Owner.
I
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased or redeemed under this Section shall be canceled.
Section 7. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
17 •
{ /
•
ORDINANCE NO. 4976
for redemption by first-class mail, postage prepaid, to the Owner of any Bond to be redeemed at
the address appearing on the Bond Register on the day notice is mailed, and the requirements of
this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided,
whether or not it is actually received by the Owner of any Bond. If such notice to the Owners
shall have been given and the City shall have set aside, on the date fixed for redemption,
sufficient money for the payment of all Bonds called for redemption,the Bonds so called shall
cease to accrue interest after such redemption date, and all such Bonds shall be deemed not to be
outstanding under this ordinance for any purposes, except that the Owners thereof shall be
entitled to receive payment of the redemption price and accrued interest to the redemption date
from the money set aside for such purpose. In addition, the redemption notice shall be mailed
within the same period,postage prepaid,to Standard &Poor's Ratings Services and Fitch IBCA
at their offices in New York,New York, or their successors, to the Purchaser at its principal
office in Seattle, Washington,'or its successor, and to such other persons and with such additional
information as the City Finance Director shall determine, but these additional mailings shall not
be a condition precedent to the redemption of Bonds. Notwithstanding the foregoing, prior to the
Book-Entry Termination Date,notice of redemption shall be given in accordance with the Letter
of Representations.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or redemption date,the City shall be obligated to pay interest on such
Bond at the same rate provided in the Bond from and after its maturity or redemption date until
such Bond, both principal and interest, is paid in full or until sufficient money for its payment in
18 •
1
ORDINANCE NO. 4 9 7 6
full is on deposit in the Bond Fund, and the Bond has been called for redemption by giving
notice of that redemption to the Owner of each of such unpaid Bonds.
Section 9. Form of Bonds. The Bonds shall be typewritten, word processed, printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 10. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 11. Authentication and Delivery of Bonds by Bond Registrar. The Bond --
Registrar is authorized and directed, on behalf of the City,to authenticate and deliver Bonds
initially issued or transferred or exchanged in accordance with the provisions of such Bonds and
this ordinance.
Only such Bonds as shall bear thereon a "Certificate of Authentication" manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
19
ORDINANCE NO. 4976
{ any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 12. Registration,Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept, at its principal corporate trust office,the Bond Register. The Bond Registrar is
authorized, on behalf of the City,to authenticate and deliver Bonds transferred or exchanged in
{ accordance with the provisions.of the Bonds and this ordinance, to serve as the City's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 3755 establishing a system of registration for the City's bonds
and obligations.
The City and the Bond Registrar, in its discretion, may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar
shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as
described in Section 5 hereof,but such registration may be transferred as herein provided. All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
The registered ownership of the Bonds may be transferred. Prior to the Book-Entry
•
Termination Date, the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian. On and after the Book-Entry Termination Date,
.
20
•+
ORDINANCE NO. 4 9 7 6 �!
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar, with the assignment form appearing on such Bond duly executed by, or
accompanied by a written instrument of transfer in form satisfactory to such Bond Registrar duly t_
executed by, the Owner or such Owner's duly authorized agent, in a manner satisfactory to such
Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver, without charge to the Owner or transferee therefor(other than any i f
governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the
option of the new Owner), naming as Owner the person or persons listed as the assignee on the
assignment form appearing on the surrendered Bond, of the same maturity and interest rate, for
the same aggregate principal amount, and in any authorized denomination selected by the new
EI
Owners, in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged,without charge, for an
equal aggregate principal amount of Bonds of the same maturity and interest rate, in any
authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment or redemption date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of the Owners of the Bonds.
21
ORDINANCE NO. 4 9 7 6
The City covenants that, until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 13. Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor, all in accordance
with applicable law. If such mutilated, lost, stolen or destroyed Bond has matured,the City may,
at its option,pay the same without the surrender thereof. However, no such substitution or
payment shall be made unless and until the applicant shall furnish (a) evidence satisfactory to the
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof, and
(b) such additional security, indemnity or evidence as may be required by or on behalf of the
City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
• Bond Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder.
Section 14. Creation of Account. There is hereby created the 2002 Waterworks Revenue
Bond Account (heretofore defined, until the New Covenant Date, as the Bond Fund),which
,shall be a separate bond redemption account within the Waterworks Revenue Parity Bond Fund.
The Bond Fund is divided into two subaccounts,the Principal and Interest Account and the
Reserve Account. There is hereby createdin the City Treasury the 2002 Waterworks Revenue
Bond Fund (heretofore defined, after the New Covenant Date, as the Bond Fund).
22
ORDINANCE NO. 4 9 7 6
Section 15. Deposits into Funds and Accounts. So long as Bonds are outstanding against
the Bond Fund,the City shall:
(a) Set aside and pay into the Principal and Interest Account out of Gross
Revenue a fixed amount, without regard to any fixed proportion, namely, monthly, on or
before the first day of each month, amounts,together with the accrued interest received
on the delivery of the Bonds to the initial purchaser thereof or other money on deposit
therein, as follows:
Beginning with the month of August 2002 and continuing thereafter until
November, 2002, 1/4 of the next ensuing four months' requirements for interest
on the Bonds; and beginning with the month of December,2002 and continuing
thereafter until the Bonds, both principal and interest, are paid, 1/6 of the next
ensuing six months' requirements for interest on the Bonds; and
• Beginning with the month of August 2002 and continuing thereafter until
November, 2003, 1/16 of the next ensuing 16 months' requirements for principal
on the Bonds; and beginning with the month of December, 2003 and continuing
thereafter until the Bonds, both principal and interest, are paid, 1/12 of the amount
of principal of the Bonds payable on the next ensuing principal payment date; and
(b) Set aside and pay into the Reserve Account out of Gross Revenue in
substantially equal monthly payments such amounts so that by no later than July 1, 2005,
• there shall have been accumulated in the Reserve Account for the Bonds an amount not
less than the Average Annual Debt Service for the Bonds.
The Reserve Account in the Bond Fund may be accumulated from any other money
which the City may have available for that purpose in addition to or in lieu of using revenue
therefor.
The City further agrees that when the required amounts have been paid into the Reserve
Account in the Bond Fund, the City will maintain those amounts therein at all times, except for
withdrawals therefrom as authorized herein, until there is sufficient money in the Bond Fund,
including the Reserve Account therein, to pay the principal of and interest to maturity on all
outstanding Bonds, at which time no further payments need be made into the Bond Fund, and the
23
ORDINANCE NO. 4976
• money in the Bond Fund, including the Reserve Account, may be used to pay that principal and
interest.
If there shall be a deficiency in the Principal and Interest Account to meet maturing
installments of either principal or interest, as the case may be, on the Bonds,the deficiency shall
be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose.
Any deficiency created in the Reserve Account by reason of any withdrawal shall then be made
up from Gross Revenue first available after making necessary provisions for the required
payments into the Principal and Interest Account. •
- All money in the Reserve Account not needed to meet the payments of principal and
interest when due may be kept on deposit in the official bank depository of the City or in any
national bank or may be invested in any legal investment for City funds. Interest on any of those
investments or on that bank account shall be deposited in and become a part of the Reserve
Account until the total required reserve amount shall have been accumulated therein, after which
time the interest shall be deposited in the Principal and Interest Account.
Notwithstanding the provisions for the deposit or maintenance of earnings in accounts of
the Bond Fund, any earnings which are subject to a federal tax or rebate requirement may be
withdrawn from the Bond Fund for deposit into a separate fund or account for that purpose.
If the City shall fail to set aside and pay into the Bond Fund the amounts set forth above,
the Owner of any of the outstanding Bonds may bring an action against the City to compel that
setting aside and payment.
After the New Covenant Date, this Section shall be amended to read as follows: All
money in the Principal and Interest Account of the 2002 Waterworks Revenue Bond Account
24
ORDINANCE NO. 4 9 7 6
shall be transferred into the 2002 Waterworks Revenue Bond Fund (heretofore defined as the
Bond Fund). All money in the Reserve Account of the 2002 Waterworks Revenue Bond
Account shall be transferred into the Waterworks Revenue Bond Reserve Fund (heretofore
defined as the Reserve Fund). So long as Bonds are outstanding against the Bond Fund,the City
shall:
(a) Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion, namely, one day before each interest or principal
and interest payment date, an amount which, together with other money then on deposit
therein, shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits, any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund may be accumulated from any other money which the City may have
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein,the Reserve Fund shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds, no further payment need be made into the Bond Fund. Notwithstanding
the first sentence of this paragraph, the Reserve Requirement may be decreased for any issue of
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose. Any deficiency created in
25
ORDINANCE NO. 4 9 7 6
the Reserve Fund by reason of any such withdrawal shall then be made up from Net Revenue
first available after making necessary provisions for the required payments into the Bond Fund.
Any money in the Reserve Fund in excess of the Reserve Requirement may be withdrawn and
deposited in any Parity Bond Fund and spent for the purpose of retiring Parity Bonds or may be
deposited in any other fund and spent for any other lawful Waterworks Utility purpose.
The City may provide for the purchase, redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity
Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall be
deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated
therein, after which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, any earnings which are subject to a federal tax or rebate requirement
may be withdrawn from the Bond Fund or the Reserve Fund for deposit into a separate fund or
account for-that purpose.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above,the Owner of any of the outstanding Bonds may bring an action against the City
to compel that setting aside and payment.
26
ORDINANCE NO. 4 9 7 6
Section 16. Flow of Funds. Funds in the Waterworks Utility Fund (other than in any
bond redemption or federal rebate account) shall be used in the following order of priority:
(a) To pay Maintenance and Operation Expense;
•
(b) To pay the interest on the.Outstanding Parity Bonds and Parity Bonds;
(c) To pay the principal of the Outstanding Parity Bonds and Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds;
(e) To make all payments required to be made into the reserve accounts created to
secure the payment of the Outstanding Parity Bonds and Parity Bonds;
After the New Covenant Date, subsection (e) of this Section shall be amended to
read as follows: To make all payments required to be made into the Reserve
Fund;
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any -
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Outstanding Parity Bonds and Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City,to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility, after the New Covenant Date,to make deposits into the Rate
Stabilization Fund, or for any other lawful City purpose.
•
Section 17. Pledge of Revenue and Lien Position. The Gross Revenue is pledged to.the
payments set forth in Section 15, and the Bonds shall constitute a lien and charge on that revenue
prior and superior to any other charges whatsoever, excluding Maintenance and Operation --
Expense, except that the lien and charge on such revenue for the Bonds shall be on a parity with
27
ORDINANCE NO. 4 9 7 6
the lien and charge thereon for the Outstanding Parity Bonds, the 1998 Bonds and any Future
Parity Bonds.
After the New Covenant Date,this Section shall be amended to read as follows: The
Net Revenue is pledged to the payment of the Parity Bonds, and the Parity Bonds shall constitute
a lien and charge upon such Net Revenue prior and superior to any other charge whatsoever.
Section 18. Findings Regarding Sufficiency of Revenue. In the judgment of the City
Council, Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility, at the rates to be charged for water, sanitary sewage disposal service and
storm and surface water drainage service in the entire utility,will be more than sufficient to meet
all Maintenance and Operation Expense (and cost of maintenance and operation of the
Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the Outstanding Parity Bonds and the 1998 Bonds and to permit the setting aside in the Bond
Fund, and after the New Covenant Date,the Bond Fund and the Reserve Fund, out of the
revenue of the entire utility, of amounts sufficient to pay the interest on the Bonds as that interest
becomes payable and to pay and redeem all of the Bonds at maturity. The City Council further
declares that in creating the Bond Fund and in fixing the amounts to be paid into the Bond Fund,
and after the New Covenant Date,the Bond Fund and the Reserve Fund, as aforesaid, it has
exercised due regard for the Maintenance and Operation Expense (and costs of maintenance and
operation as used in RCW 35.92.100) and the debt service requirements of the currently
outstanding Outstanding Parity Bonds and 1998 Bonds, and the City has not bound and obligated
itself to set aside and pay into the Bond Fund, and after the New Covenant Date, the Bond Fund
and the Reserve Fund, a greater amount or proportion of the revenue of that utility than in the
28 •
I
ORDINANCE NO. 4 9 7 6
judgment of the City Council will be available over and above Maintenance and Operation
Expense (and such costs of maintenance and operation of the Waterworks Utility as that term is
used in RCW 35.92.100) and debt service requirements of the Outstanding Parity Bonds and the
1998 Bonds and that no portion of the Gross Revenue has been previously pledged for any
unrefunded indebtedness other than the payment of the currently outstanding Outstanding Parity
Bonds and 1998 Bonds.
Section 19. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a) It will establish, maintain and collect such rates and charges for water, 1_
sanitary sewage disposal service and storm and surface water drainage service so long as -
any Outstanding Parity Bonds, 1998 Bonds and Bonds are outstanding as will make
available for the payment of the principal of and interest on such bonds an amount equal
to at least 1.3 times the average annual debt service requirements, both principal and
interest, on the Outstanding Parity Bonds,the 1998 Bonds and the Bonds after deducting
Maintenance and Operation Expense from Gross Revenue.
After the New Covenant Date, subsection(a) of this Section shall be amended to
read as follows: It will establish, maintain and collect rates and charges for all services
and facilities provided by the Waterworks Utility which will be fair and
nondiscriminatory, and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A)pay all
Maintenance and Operation Expense on a current basis, (B)pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and (C)pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b) It will at all times maintain and keep the Waterworks Utility in good
repair,working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
29
ORDINANCE NO. •4 9 7 6
(c) It will not sell, lease, mortgage or in any manner encumber or dispose of
all the property of the Waterworks Utility unless provision is made for payment into each
of the respective bond redemption funds or accounts for the Outstanding Parity Bonds
and the 1998 Bonds and the Bond Fund of sums sufficient to pay, respectively, the
principal of and interest on all Outstanding Parity Bonds, 1998 Bonds and the Bonds at
any time outstanding, and that it will not sell, lease, mortgage, or in any manner
encumber or dispose of any part of the property of the Waterworks Utility that is used,
useful and material to the operation thereof, unless provision is made for replacement
thereof, or for payment,into the respective bond redemption funds or accounts for the
Outstanding Parity Bonds and the 1998 Bonds and the Bond Fund of the total amount of
revenue received which shall not be less than an amount which shall bear the same ratio
to the amount of the Outstanding Parity Bonds, 1998 Bonds and Bonds,respectively, as
the revenue available for debt service for such outstanding bonds for the twelve months
preceding such sale, lease, encumbrance or disposal from the portion of the utility sold,
leased, encumbered or disposed of bears to the revenue available for debt service for such
bonds from the entire utility for the same period. Any such money so paid into such
funds shall be used to retire such outstanding bonds at the earliest possible date.
After the New Covenant Date, subsection (c) of this Section shall be amended to
read as follows: It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell, lease, mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility (other than timber), including all additions and
improvements thereto and extensions thereof at any time made,that are used,useful or
material in the operation of the Waterworks Utility, unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds)that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
• period;
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above)that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above)that the depreciated cost
30
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ORDINANCE NO. 4976
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding any other provision of this subsection, (1) the City in its
discretion may sell or otherwise dispose of any of the works, plant, properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary, material to or useful to the
operation of the Waterworks Utility, without making any deposit into the Bond Fund, and
(2)the City may transfer the Waterworks Utility to another municipal corporation so long
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose. In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d) It will, while any of the Bonds remain outstanding, keep proper and
separate accounts and records in which complete and separate entries shall be made of all
transactions relating to the Waterworks Utility, and it will furnish the original purchaser
or purchasers of the Bonds or any subsequent owner or owners thereof at the written
request of such owner or owners complete operating and income statements of such
utility in reasonable detail issued in any calendar year not more than ninety days after the
close of such calendar year, and it will grant any Owner or Owners of at least twenty-five
percent of the outstanding Bonds the right at all reasonable times to inspect the entire
Waterworks Utility and all records, accounts and data of the City relating thereto. Upon
request of any Owner of any of the Bonds, it also will furnish to such Owner a copy of
the most recently completed audit of the City's accounts by the State Auditor of
Washington.
After the New Covenant Date, subsection (d) of this Section shall be amended to
read as follows: It will keep proper books,records and accounts with respect to the
operations, income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition of the Waterworks
Utility as of the close of the previous year, and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance,the status of all funds and
accounts as of the end of such year, and the amounts expended for maintenance,
renewals, replacements and capital additions to the Waterworks Utility. Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e) It will not furnish water, sanitary sewage disposal service or storm and
surface water drainage service to any customer whatsoever free of charge and promptly
will take legal action to enforce collection of all delinquent accounts. --
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ORDINANCE NO. 4 9 7 6
After the New Covenant Date, subsection (e) of this Section shall be amended to
read as follows: Except to aid the poor or infirm,to provide for resource conservation or
to provide for the proper handling of hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation,
public or private, other than the City, so long as any Parity Bonds are outstanding. On at
least an annual basis, it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent.
(f) It will carry the types of insurance on the Waterworks Utility properties in
the amounts normally carried by private water and sewer companies engaged in the
operation of water and sewerage systems, and the cost of such insurance shall be
considered a part of operating and maintaining such utility. If, as, and when the United
States of America or some agency thereof shall provide for war risk insurance, the City
further agrees to take out and maintain such insurance on all or such portions of such .
• utility on which such war risk insurance may be-written in an amount or amounts to cover
adequately the value thereof.
After the New Covenant Date, subsection (f) of this Section shall be amended to
read as follows: It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance, with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment, works, plants,facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable judgment of the City,to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the Outstanding Parity Bonds,the outstanding 1998 Bonds and the
outstanding Bonds, and otherwise meet the obligations of the City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
cause interest on the Bonds to be included in gross income for federal income tax
purposes. It will, to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds, take all action necessary to comply (or to be treated as
having complied) with those requirements in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative
II
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ORDINANCE NO. 4 9 7 6
to calculating rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
r-7
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 20. No Private Activity Bonds. The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a"private activity bond" (as defined in Section
141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described
in Section 103(a) of the Code, unless the tax exemption thereof is not affected.
Section 21. Defeasance of the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire,refund or defease all such then-outstanding Bonds (hereinafter collectively
called the "defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"), then all right and interest of the Owners of the
defeased Bonds in the covenants of this ordinance, in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
33
ORDINANCE NO. 4 9 7 6
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
account and, if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from
Gross Revenue without any priority of lien or charge against such revenue or covenants with
!._ respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account,the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights of the owners of
any other bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or direct obligations of the United States of America or other legal
__ investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations of the Untied States of America or other legal
investments are pledged irrevocably for the prior redemption of the defeased Bonds included in
that refunding plan,then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds, the payment of which is not so secured by the refunding plan, shall be
included in the computation of coverage for determining compliance with the rate covenants.
Section 22. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds which will constitute a lien and charge on Gross Revenue on a parity with
the Outstanding Parity Bonds,the 1998 Bonds and the Bonds if the conditions set forth in
Section 13 of Ordinance No. 3188, as modified and strengthened by Section 12 of Ordinance
34
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ORDINANCE NO. 4 9 7 6
No. 3720, are met and complied with at the time of the issuance of those Future Parity Bonds,
which sections are by this reference incorporated herein and made a part hereof and shall
continue to be applicable even though the 1953 Bonds have been paid and retired.
After the New Covenant Date, this Section shall be amended to read as follows: The -,
right of the City to issue bonds on a parity of lien with the 1977 Bonds, the 1988 Bonds,the 1989
Bonds,the 1989 Refunding Bonds,the 1990 Bonds, the 1992 Bonds,the 1993 Refunding Bonds
and the 1994 Bonds is permanently revoked. The City reserves the right to issue Future Parity
Bonds if the following conditions are met and complied with at the time of issuance of those
additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of(1) an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or(2) Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds. For federal income tax purposes,
at the discretion of the City, to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds, the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments. ---
(e) The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative,the mandatory redemption.of those Term Bonds prior to _
their maturity date from money in the applicable Parity Bond Fund.
(1) There shall be on file the City either: -=
35
ORDINANCE NO. 4 9 7 6
(1) a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue, without regard to deposits into or withdrawals from the
Rate Stabilization Find, is equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months, without
regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be
equal to the Coverage Requirement for each year thereafter. The certificate, in
estimating Net Revenue available for debt services,may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility
who have become customers during the 12 consecutive month period or
thereafter adjusted to reflect one year's Net Revenue from those
customer's;
(C) Income from any customers to be connected to the
Waterworks Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers anticipated to connect for whom
building permits have been issued;
(E) Income received or to be received which is derived from
any person, firm corporation or municipal corporation under any executed
contract for water, sewage disposal or other utility service, which revenue
was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers with existing homes or buildings
which will be required to connect to any additions to and improvements
and extensions of the Waterworks Utility constructed and to be paid for
out of the proceeds of the sale of the additional Future Parity Bonds or
other additions to and improvements and extensions of the Waterworks
Utility when such additions, improvements and extensions are not
completed; and
36
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ORDINANCE NO. 4 9 7 6
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
•
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and
interest in each year for the refunding bonds is not increased more than$5,000 over the -
amount for that same year required for the bonds-or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Bonds or Future Parity Bonds then outstanding, money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 23. Approval of Purchase Agreement. The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds. The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase Agreement on behalf of the City by City officials, and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal opinion of Gottlieb, Fisher & Andrews, PLLC, bond counsel,
Seattle, Washington,relative to the issuance of the Bonds, attached to each Bond. Bond counsel
has not been engaged to review or express any opinion concerning the completeness or accuracy
37 --
ORDINANCE NO. 4976
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring, the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 24. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
Bonds and agrees to the conditions for obtaining that policy, including the payment of the
premium therefor. Any notice required to be given to the Bond Insurer shall be sent by certified
or registered mail to Financial Security Assurance Inc., One Market, 1550 Spear Tower, San
Francisco, California 94105.
Section 25. Delivery of Bonds; Temporary Bonds. The proper City officials, including,
but not limited to,the City Finance Director, are authorized and directed (a) to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including, but not limited to,the final official statement pertaining to the Bonds; and (b)to do
everything necessary for (1)the preparation and delivery of a transcript of proceedings
pertaining to the Bonds, and (2)the preparation, execution and delivery of definitive Bonds to
the Purchaser, each without unreasonable delay.
If definitive Bonds are not ready for delivery by the date of Closing agreed to by.the City
and the Purchaser, the City,upon the approval of the Purchaser,may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes
and additions. Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment, security and obligation thereof as
38
ORDINANCE NO. 4 9 7 6
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
Section 26. Application of Bond Proceeds. The accrued interest received by the City at
Closing shall be deposited into the Principal and Interest Account and shall be applied to the
payment of interest first coming due on the Bonds.
The remaining proceeds of the sale of the Bonds, less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City,plus the net original
issue premium, in the amount of$11,850,322.87 shall be deposited, upon receipt,to the
"Waterworks Utility Construction Fund" (the "Project Fund"), established in the office of the
City Finance Director, to pay part of the costs of the Project.
Except as provided by the Code and Section 18(h) of this ordinance,the interest and
profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and
applied as described in the preceding paragraph.
Except as provided by the Code and Section 18(h) of this Ordinance, if any money
allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the
Project or after termination of the Project by the City, such money shall be transferred to the
Bond Fund and applied to the payment of the principal of and interest on the Bonds.
Pending application as described in this Section 30 and subject to the requirements of the
Code and Section 18(h) of this ordinance, money allocable to the Bond proceeds in the Project
Fund may be temporarily deposited in such institutions or invested in such investments as may
be lawful for the investment of City funds.
39
ORDINANCE NO. 4 9 7 6
Section 27. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection (b)(5)(i) of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID, if one is created,the following annual financial information and operating data
(collectively,the"Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31, 2002, on or before the last day of the seventh month
following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units, as such principles may be Changed from
time to time and as permitted by State law; which statements will not be audited, except that if
and when audited financial statements are otherwise prepared and available to the City, they will
be provided (the "Annual Financial Statements");
(b) A statement of authorized, issued and outstanding bonded debt secured by the
Gross Revenue or Net Revenue;
(c) Debt service coverage ratios;
(d) General customer statistics for the Waterworks Utility; and
(e) A narrative explanation of the reasons for any amendments to this Section 27
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data,the City may cross-
reference to any"final official statement" (as defined in the Rule) available from the MSRB or
40
ORDINANCE NO. 4 9 7 6
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information,then when and if available,
the City shall provide its Annual Financial Statements,which shall have been audited by such
auditor as shall be then required or permitted by the State law,to each then existing NRMSIR
and to the SID, if one is created.
The City further agrees to provide or cause to be provided, in a timely manner, to the
SID, if one is created, and to either the MSRB or each then existing NRMSIR, notice of any of
the following events with respect to the Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of the Owners of the Bonds;
8. Optional redemptions of the Bonds;
9. Defeasances of the Bonds;
10. Release, substitution or sale of property securing repayment of the Bonds; and
11. Rating changes. V
The City also agrees to provide or cause to be provided, in a timely manner, to the SID, if
one is created, and to either the MSRB or each then existing NRMSIR, notice of its failure to
41
• ORDINANCE NO. 4 9 7 6
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds, so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby, as determined by a party
unaffiliated with the City (including, without limitation, a trustee for the Owners, nationally
recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to
a favorable"no-action letter" issued by the SEC,this Section 27 may only be amended in
connection with any change in legal requirements, change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted, and only in such a manner
that the undertaking of the City, as so amended, would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance,prior redemption or payment in
full of all of the then outstanding Bonds. This Section 27 or any provision hereof, shall be null
and void if the City(i) obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 27 or any such provision are invalid, have been repealed retroactively or otherwise
do not apply to the Bonds; and (ii)notifies and provides the SID, if any, and either the MSRB or_
each then existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 27 shall be limited to the right to obtain specific enforcement of the City's obligations
42
ORDINANCE NO. 4 9 7 6
under this Section 27, and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary, appropriate or convenient to carry out the requirements of this
Section 27.
Section 28. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated June 20, 2002 (the"Preliminary
Official Statement"),prepared in connection with the sale of the Bonds. For the sole purpose of
the Bond purchaser's compliance with paragraph (b) (1) of the Rule,the City"deems final"that
Preliminary Official Statement as of its date, except for the omission of information as to
offering prices, interest rates, selling compensation, aggregate principal amount,principal
amount per maturity,maturity dates, options of redemption, delivery dates, ratings and other
terms of the Bonds dependent on such matters.
43
ORDINANCE NO. • 4 9 7 6
Section 29. Effective Date of Ordinance. This ordinance'shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this 1st day of July, 2002.
6/Ga--
Bonnie Walton, City Clerk
APPROVED BY THE MAYOR this 1st day of July, 2002.
C-76 I" I "
Je•�f anner, Mayor
Approved as to Form:
.
9, ,
Bond Co r
sel
Date of Publication: 7/5/0 2 (Summary)
44
41:
+ atC.
: : w,
•
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CERTIFICATE 0%,
,,. • �
I,the undersigned City Clerk of the 4.{ J; "y�c •��
City of Renton,Washington,certify
that this is a true and correct copy of
•
Ordinct?tea ' 5019 . Subscribed
and sealed this ay// /I of Sep/ ,20.
City Clerk
CITY OF RENTON,WASHINGTON
ORDINANCE NO. 5 019
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of $8,035,000
aggregate principal amount !of Water and Sewer Revenue Refunding Bonds,
2003, of the City for the purpose of obtaining the funds with which to refund,
on a current basis, and defease all of the City's outstanding Water and Sewer
Refunding and Improvement Revenue Bonds, 1993 and to advance refund and
defease all of the City's outstanding Water and Sewer Revenue Bonds, 1994;
fixing the date, form, denominations, maturities, interest rates, terms and
covenants of the bonds; providing for bond insurance; and approving the sale
and providing for the delivery ofthe bonds to D.A. Davidson & Co., Seattle,
Washington.
I
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ORDINANCE NO. 5 019
S
Si ; I finitions 3 ` I
Sattion 2_Findings Regarding Parity Provisions 10
v.
I
Section 3. .Authgnzation and Description of Bonds 10
• ;y ;. ,•r„'$u
Sectkiti4. Reettration of Bonds and Book-Entry System 11
f
Section 5. Payment of Bonds 13
Section 6. No Redemption; Open Market Purchase of Bonds 14
Section 7. Form of Bonds 14 -
i
Section 8. Execution of Bonds 14
Section 9. Authentication and Delivery of Bonds by Bond Registrar 15
Section 10. Registration, Transfer and Exchange 15
Section 11. Lost, Stolen or Destroyed Bonds 17
Section 12. Creation of Fund 18
Section 13. Deposits into Funds 18
Section 14. Flow of Funds 20
Section 15. Pledge of Revenue and Lien Position 20
Section 16. Findings Regarding Sufficiency of Revenue 20
Section 17. Covenants 21
Section 18. No Private Activity Bonds 24
Section 19. Defeasance of the Bonds 24 Li
Section 20. Provision for Future Parity Bonds 26
Section 22. Approval of Purchase Agreement 28
Section 23. Bond Insurance 28 !
Section 24. Delivery of Bonds; Temporary Bonds 29
Section 25. Call of 1993 Bonds for Redemption 30
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ORDINANCE NO. 5 019
Section 26. Acquisition.of Escrow Obligations 30
Section 27. Verification of Sufficiency of Escrow •
31
Section 28. Escrow Agreement 31
Section 29. Application of Bond Proceeds 31
Section 30. Undertaking to Provide Continuing Disclosure 32
Section 31. Preliminary Official Statement Deemed Final 35
Section 32. Contract; Savings Clause 35
Section 33. Effective Date of Ordinance 36
EXHIBIT A Form of Escrow Agreement
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i ii
S
ORDINANCE NO. 5 019 i
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of $8,035,000
aggregate principal amount of Water and Sewer Revenue Refunding Bonds,
2003, of the City for the purpose of obtaining the funds with which to refund,
on a current basis, and defease all of the City's outstanding Water and Sewer �^
Refunding and Improvement Revenue Bonds, 1993 and to advance refund and
defease all of the City's outstanding Water and Sewer Revenue Bonds, 1994;
fixing the date, form, denominations, maturities, interest rates, terms and
covenants of the bonds; providing for bond insurance; and approving the sale
and providing for the delivery of the bonds to D.A. Davidson & Co., Seattle,
Washington.
WHEREAS, the City has heretofore created and operated a waterworks utility of the
City,including the sewerage system of the City and within that system a system of storm and
surface water sewers (defined herein as the"Waterworks Utility"); and
WHEREAS,by Ordinance No. 3188, the City provided for the issuance of the Water and
Sewer Revenue Refunding Bonds, 1977, Issue No. 3 (the"1977 Bonds"), and,by Section 17 of
that ordinance, established certain conditions for the issuance of additional water and sewer ?j
revenue bonds on a parity of lien with the 1977 Bonds; and
WHEREAS,by Ordinance No. 4709,the City provided for the issuance of the 1998
Bonds,and,by Section XXIII of that ordinance,provided that upon the date on which the 1977
Bonds and certain water and sewer revenue bonds issued on a parity of lien therewith were fully
redeemed,refunded or defeased,the right of the City to issue bonds on a party of lien with the L
1977 Bonds would be permanently revoked; and
WHEREAS, all of such water and sewer revenue bonds have been paid and redeemed, or
irrevocable provision for their payment and redemption has been made, except for the
outstanding Refunded Bonds; and
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ORDINANCE NO. 5 019
WHEREAS,pursuant to Chapter 39.53 RCW, the City is authorized to issue and sell,
without an election,revenue bonds of the City to refund all of the outstanding Refunded Bonds;
and
WHEREAS, the City reserved the right to defease the Refunded Bonds; and
WHEREAS,the refunding and defeasance of the Refunded Bonds will provide a debt
service savings to the City and a modification of the covenants and other terms of the Parity
Bonds; and
WHEREAS,by Section XXIII of Ordinance No.4709,the City also provided that it may
issue additional water and sewer revenue bonds which will constitute a charge and lien upon the
revenue of the Waterworks Utility of the City on a parity with the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein; and
WHEREAS,by Ordinance No.4976,the City issued the 2002 Bonds on a parity of lien
•
with the 1998 Bonds; and
WHEREAS,the City Council has determined that it is in the best interests of the City to
issue and sell $8,035,000 of Water and Sewer Revenue Refunding Bonds,2003 on a parity of
lien with the 1998 Bonds and the 2002 Bonds to provide part of the funds necessary to carry out
the Refunding Plan and to pay the costs of issuance and sale of the Bonds; and
WHEREAS,MBIA Insurance Corporation has made a commitment to issue an insurance
policy insuring the payment when due of the principal of and interest on the Bonds as provided
therein,and the City Council deems that the purchase of such policy is in the best interest of the
City; and
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ORDINANCE NO. 5 019 �.-
WHEREAS,D.A. Davidson&Co., Seattle,Washington, has offered to purchase the
Bonds under the terms and conditions hereinafter set forth;NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON,WASHINGTON,DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance,the following words shall have the
following meanings:
"Alternate Security" shall mean any bond insurance, collateral, security, letter of credit,
guaranty, surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds, issued by an institution
that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by
such Alternate Securityequal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service" for any year shall mean all the interest on plus all principal
(except principal of Term Bonds due in any Term Bond Maturity Year)of Parity Bonds,plus all
mandatory redemption and sinking fund installments, less all bond interest payable from the
proceeds of any such bonds,which will mature or come due in that year.
"Average Annual Debt Service"shall mean the sum of the Annual Debt Service for the
remaining years to the last scheduled maturity of the applicable bond issue or issues divided by
the number of those years.
"Beneficial Owner"shall mean,with respect to any Bond, the Person named on the
records of the Custodian as having the right,without a physical certificate evidencing such right,
ii
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ORDINANCE NO. 5 019
to transfer, to hypothecate and to receive the payment of the principal of,premium, if any, and
interest on such Bond as the same becomes due and payable. .
"Bond Fund"shall mean that special fund of the City known as the 2003 Waterworks
Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on
the Bonds.
1
"Bond Insurer"shall mean MBIA Insurance Corporation.
"Bond Insurance Policy" shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register"shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar"shall mean the fiscal agencies of the State in Seattle,Washington, and
New York,New York,as the same shall be designated from time to time.
"Bonds"shall mean the $8,035,000 City of Renton Water and Sewer Revenue Refunding
1
Bonds,2003, authorized to be issued by this ordinance.
"Book-Entry Termination Date" shall mean the fifth business day following the date of
receipt by the Bond Registrar of the'City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City" shall mean the City of Renton,Washington, a duly organized and legally existing
noncharter code city under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services
Administrator or the successor to such officer.
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ORDINANCE NO. 5 019
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules
and regulations promulgated thereunder.
"Coverage Requirement"shall mean in any calendar year 1.25 times the Maximum
Annual Debt Service.
"Custodian"shall mean(a)The Depository Trust Company,New York,New York, or
(b) any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means,the beneficial ownership of the Bonds, in which system no
physical certificates are issued to the Beneficial Owners of the Bonds,but in which a limited
number of physical certificates are issued to and registered in the name of the Custodian or its
nominee, and delivered to the Custodian;provided, that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
which are operated by parties other than the Custodian and the use of a nominee for the
Custodian; and the term"Custodian,"as used herein, includes any party operating any such
subsystem.
"Escrow Agreement"shall mean that certain Escrow Agreement,to be dated as of
September 30,2003,by and between the City and the Escrow Trustee in substantially the form of
Exhibit A hereto,which is incorporated herein by this reference.
"Escrow Obligations"shall mean those certain noncallable direct obligations of the
United States of America listed on Schedule 1 attached to the Escrow Agreement.
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ORDINANCE NO. 5.019
"EscrowBank National Association, actingin its fiduciary
Trustee"shall mean U.S.
capacity as escrow trustee pursuant to the Escrow Agreement..
"Future Parity Bonds" shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a
parity with the lien and charge on Net Revenue for the payment of the principal of and interest
on the Bonds.
"Gross Revenue"shall mean'Revenue of the Waterworks Utility.
"Letter of Representations",shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15, 1997,pertaining to the
payment of the Bonds and the"book-entry"system for evidencing the beneficial ownership of
the Bonds prior to the Book-Entry Termination Date(as it may be amended from time to time).
"Maintenance and Operation Expense"shall mean all reasonable expenses incurred by
the City in causing the Waterworks Utility to be operated and maintained in good repair,working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract for
such service, and including pro-rata budget charges for the City's administration expenses where
those represent a reasonable distribution and share of actual costs,but not including any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks Utility.
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ORDINANCE NO. 5019
"Maximum Annual Debt Service"shall mean, at the time of calculation, the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future calendar year on the outstanding Parity Bonds.
"MSRB"shall mean the Municipal Securities Rulemaking Board.
"Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense.
"1993 Bonds"shall mean the outstanding Water and Sewer Refunding and Improvement
Revenue Bonds, 1993.
"1994 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds, 1994.
"1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"NRMSIR"shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Owner"shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds"shall mean the 1998 Bonds,the 2002 Bonds,the Bonds and any Future
Parity Bonds.
"Parity Bond Fund"shall mean any fund created for the payment and redemption of
Parity Bonds. ; -.
"Professional Utility Consultant"shall mean an independent licensed professional
engineer, certified public accountant or other independent person or firm selected by the City
having a favorable reputation for skill and experience with municipal utilities of comparable size
7
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ORDINANCE NO. 5 019
and character to the Waterworks Utility in such areas as are relevant to the purposes for which
such consultant is retained.
"Purchase Agreement"shall mean the Bond Purchase Agreement for the Bonds, dated
September 22, 2003,by and between the City and the Purchaser.
"Purchaser" shall mean D.A.!Davidson & Co., Seattle,Washington.
"Rate Stabilization Fund" shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Refunded Bonds"shall men, collectively,the 1993 Bonds and the 1994 Bonds.
"Refunding Plan"shall mean the plan to refund, on a current basis, and defease the
outstanding 1993 Bonds,to advance:refund and defease the outstanding 1994 Bonds and to pay
certain"incidental costs and costs related to the sale and issuance"(as defined in RCW
39.46.070) of the Bonds, all as more particularly defined and described in the Escrow
Agreement.
"Reserve Fund"shall mean that special fund of the City known as the Waterworks
Revenue Bond Reserve Fund created by Ordinance No.4709 for purpose of securing the
payment of the principal of and interest on all bonds to which Net Revenue is pledged.
"Reserve Insurance"shall mean, in lieu of cash and investments,insurance obtained by
the City equal to part or all of the Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained,issued by an institution that has been assigned a credit
rating equal to or better than the highest then-existing rating for any of the Parity Bonds.
"Reserve Requirement"shall mean the Maximum Annual Debt Service.
8
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ORDINANCE NO. 5 019
"Revenue of the Waterworks Utility" shall mean all of the earnings and revenues
received by the City from the maintenance and operation of the Waterworks Utility and'all
earnings from the investment of money in the Reserve Fund or any Parity Bond Fund, and
connection and capital improvement charges collected for the purpose of defraying the cost of
capital facilities of the Waterworks Utility, except government grants,proceeds from the sale of
Waterworks Utility property(other than timber), City taxes collected by or through the
Waterworks Utility,principal proceeds of bonds and earnings or proceeds from any investments
in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility obligations
(until commingled with other earnings and revenues of the Waterworks Utility) or held in a _
special account for the purpose of paying a rebate to the United States Government under the
Code.
"Rule"shall mean SEC Rule 15c2-12.
"SEC"shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
"State"shall mean the State of Washington.
"Term Bonds"shall mean any Parity Bonds identified as such in the ordinance
authorizing the issuance thereof, the payment of which is provided for by a requirement for
mandatory deposits of money into the principal and interest account of the bond redemption fund
created for the payment of such issue of bonds in accordance with a mandatory sinking fund
requirement.
"Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are
scheduled to mature.
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ORDINANCE NO. 5 0.19
"2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds, 2002.
"Waterworks Utility"shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to,improved and
extended for as long as any of the Parity Bonds are outstanding.
"Waterworks Utility Fund"shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility) shall be depoited.
Section 2. Findings Regarding Parity Provisions The City Council finds that there is no
deficiency in any Parity Bond Fund,that provisions hereinafter meet the conditions for the
issuance.of Future Parity Bonds as set forth in Ordinance Nos. 4709 and 4976 and that there will
be on file prior to the issuance and delivery of the Bonds a certificate of the City Finance
Director [a Professional Utility Consultant] that satisfies the conditions for such certificate as set
{ forth in Ordinance Nos. 4709 and 4976. Therefore,the Bonds shall be issued on a parity of lien
with the Parity Bonds.
Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
{ the funds necessary to carry out the Refunding Plan,the City shall issue the Bonds in the
aggregate principal amount of$8,035,000. The Bonds shall be designated"City of Renton,
Washington Water and Sewer Revenue Refunding Bonds,2003;" shall be dated September 15,
2003; shall be in the denomination of$5,000 or any integral multiple thereof w#hin a single
maturity; shall be numbered separately,in the manner and with any additional designation as the
Bond Registrar deems necessary for purpose of identification; shall bear interest(computed on
the basis of a 360-day year of twelve 30-day months),payable semiannually on each June 1 and
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f:\renton\w&s revretD3
ORDINANCE NO. 5 019
December 1,commencing December 1,2003, to the maturity of the Bonds; and shall mature on
June 1 in the years and amounts and bear interest at the rates per annum as follows:
Maturity Years Interest
• (June 1) Amounts Rates
2004 $1,100,000.00 . 2.000%
2005 1,000,000.00 2.000
2006 1,050,000.00 2.000
2007 1,085,000.00 3.500
2008 1,130,000.00 3.750
2009 825,000.00 2.850
2010 685,000.00 3.200
2011 355,000.00 3.400
2012 390,000.00 3.600
2013 415,000.00 3.700
If any Bond is duly presented for payment upon maturity and is not paid, then interest thereon
shall continue to accrue thereafter at the rate stated therein until such Bond is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105.
Section 4. Registration of Bonds and Book-Entry System. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register. •The
Bond Register shall contain the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate,which certificate shall be registered in the name of the
Custodian or its nominee, and delivered to the Custodian. The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit of the Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either(1)the date of maturity of the
Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate
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f:\renton\w&s revrefO3
"
•
ORDINANCE NO. 5 019
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date,and the cancellation thereof; (2)the Book-Entry Termination Date; or(3)the date the
City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates;to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name of the Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4,the
rights of the Beneficial Owners shallIbe evidenced solely by an electronic and/or manual entry
made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations, and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nominee.
The City may terminate the l"book-entry"system of registering ownership of the Bonds at
any time(provided the City is not then in default of any payment then due on the outstanding
Bonds)by delivering to the Bond Registrar: (a) a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry .
Termination Date; (b)a list identifying the Beneficial Owners as to both name and address; and
(c) a supply of Bond certificates,if necessary for such purpose. Upon surrender to the Bond
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds,the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
Owner's duly appointed agent,naming such Beneficial Owner or such Beneficial Owner's
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f:\renton\w&s revrefD3
j 4
11
ORDINANCE NO. 5 019
nominee as the Owner thereof. Such certificates may be in any integral multiple of$5,000
within a single maturity. Following such issuance,the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 10 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error, omission, action
or failure to act on the part of the Custodian with respect to payment,when due,to the Beneficial
Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of
Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any
other matter pertaining to the Bonds. <<
Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Prior to the Book-Entry Termination
Date,the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof, for the benefit of the Beneficial Owners thereof,in accordance
with the Letter of Representations. •
From and after the Book-Entry Termination Date, interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date,to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register,or,if requested in writing by an Owner of$100,000
or more in principal amount of Bonds at least ten days before an interest payment date,by wire
transfer on the interest payment date to an account within the United States. From and after the
Book-Entry Termination Date,principal of the Bonds shall be payable upon presentation and
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f:\renton\w&s revref03
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ORDINANCE NO. 5 019
surrender of the Bonds by the Owners at the principal corporate trust office of the Bond
• Registrar.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
be a valid claim of the Owners thereof only as against the Bond Fund,Reserve Fund and the
amount of Net Revenue pledged to those funds and shall not be general obligations of the City.
Section 6. No Redemption; Open Market Purchase of Bonds. The Bonds are not subject
to redemption prior to their stated maturity dates,
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased under this Section shall be canceled.
Section 7. Form of Bonds. The Bonds shall be typewritten,word processed,printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and.
Washington law.
Section 8. Execution of Bonds. The Bonds shall be executed on behalf of the City by the
facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who'shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and,upon such authentication, delivery and
issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed;and attested on behalf of the City by such persons who,at the
'>
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i l
ORDINANCE NO. 5 019
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 9. Authentication and Delivery of Bonds by Bond Registrar. The Bond Registrar
is authorized and directed, on behalf of the City,to authenticate and deliver Bonds initially
issued or transferred or exchanged in accordance with the provisions of such Bonds and this
ordinance.
Only such Bonds as shall bear thereon a"Certificate of Authentication" manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 10. Registration, Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept, at its principal corporate trust office, the Bond Register. The Bond Registrar is
authorized, on behalf of the City,to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance,to serve as the City's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this -
ordinance and City Ordinance No. 3755 establishing a system of registration for the City's bonds
and obligations.
The City and the Bond Registrar, in its discretion, may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar
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4
ORDINANCE NO. 5 019
shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as
described in Section 5 hereof,but such registration may be.;transferred as herein provided. All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
The registered ownership of the Bonds may be transferred. Prior to the Book-Entry
Termination Date,the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian. On and after the Book-Entry Termination Date,
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar,with the assignment form appearing on such Bond duly executed by,or
accompanied by a written instrument of transfer in form satisfactory to such Bond Registrar duly
executed by,the Owner-or such Owner's duly authorized agent, in a manner satisfactory to such
Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver,without charge to the Owner or transferee therefor(other than any
governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the
option of the new Owner),naming as Owner the person or persons listed as the assignee on the
assignment form appearing on the surrendered Bond, of the same maturity and interest rate, for
the same aggregate principal amount, and in any authorized denomination selected by the new
Owners;in exchange for such surrendered and cancelled Bond.
On and after the.Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged,without charge, for an
equal aggregate principal amount of Bonds of the same maturity and interest rate,in any
16
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ORDINANCE NO. 5 019
authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
have if it were not the Bond Registrar and,to the extent permitted by law,may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capacity with
respect to,any committee formed to protect the rights of the Owners of the Bonds.
The City covenants that,until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 11. Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
� .f
stolen or destroyed,the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor, all in accordance
with applicable law. If such mutilated, lost, stolen or destroyed Bond has matured, the City may,
at its option,pay the same without the surrender thereof. However,no such substitution or
payment shall be made unless and until the applicant shall furnish(a) evidence satisfactory to the
. i
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof,and
such additional security,ty,indemnity or evidence as may be required by or on behalf of the
City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
Bond Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond
ii
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder. i f
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ORDINANCE NO. 501 9
Section 12. Creation of Fund. There is hereby created in the City Treasury the 2003
Waterworks Revenue Bond Fund(the"Bond Fund").
_ Section 13. Deposits into Funds . So long as Bonds are outstanding against the Bond
Fund, the City shall:
(a) Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion,namely, one day before each interest or principal
and interest payment date, an amount which,together with other money then on deposit
therein,shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue,in three
j ! annual approximately iequal deposits, any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund maybe accumulated from anyother moneywhich the Citymayhave
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein,the Reserve Fund shall be
I �
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds,no further payment need be made into the Bond Fund. Notwithstanding
the first sentence of this paragraph,the Reserve Requirement may be decreased for any issue of
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds,that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been
depleted,then by draws on the Alternate Security or Reserve Insurance for that purpose. Any
18
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ORDINANCE NO. 5 019
deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up
from Net Revenue first available after making necessary provisions for the required payments
into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement-may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity
_I
Bonds or may be deposited in any other fund and spent for any other lawful Waterworks Utility
purpose.
The City may provide for the purchase,redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as longus the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity
Bonds. 1
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
• official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall be
deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated
therein, after which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, any earnings which are subject to a federal tax or rebate requirement
may be withdrawn from the Bond Fund or the Reserve Fund for deposit into a separate fund or If
account for that purpose.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above,the Owner of any of the outstanding Bonds may bring an action against the City
to compel that setting aside and payment.
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ORDINANCE NO. 5 019
Section 14. Flow of Funds. Funds in the Waterworks Utility Fund(other than in any
bond redemption or federal rebate account) shall be used in the following order of priority:
r
(a) To pay Maintenance and Operation Expense;
(b) To pay the interest on the Parity Bonds;
1.(c) To pay the principal of the Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bondi;
(e) To make all payments required to be made into the Reserve Fund;
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds for revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City,to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility,to make deposits into the Rate Stabilization Fund, or for any
other lawful City purpose.
Section 15. Pledge of Revenue and Lien Position. The Net Revenue is pledged to the
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
Section 16. Findinjs Regarding Sufficiency of Revenue. In the judgment of the City
Council, Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility,at the rates to be charged for water, sanitary sewage disposal service and
storm and surface water drainage service in the entire utility,will be more than sufficient to meet
all Maintenance and Operation Expense (and cost of maintenance and operation of the
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ORDINANCE NO. 5 019
Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve
Fund, out of the revenue of the entire utility,of amounts sufficient to pay the interest on the
Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity. The
City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid
into the Bond Fund and the Reserve Fund, as aforesaid, it has exercised due regard for the
Maintenance and Operation Expense (and costs of maintenance and operation as used in RCW
35.92.100)and the debt service requirements of the currently outstanding Parity Bonds, and the
City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve
Fund, a greater amount or proportion of the revenue of that utility than in the judgment of the
City Council will be available over and above Maintenance and Operation Expense(and such
costs of maintenance and operation of the Waterworks Utility as that term is used in RCW
35.92.100) and debt service requirements of the currently outstanding Parity Bonds and that no
portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness
other than the payment of the currently outstanding Parity Bonds.
Section 17. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows: �.
(a) It will establish,maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory, --
and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A)pay all
Maintenance and Operation Expense on a current basis, (B)pay when due all •
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and(C)pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
° r
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ORDINANCE NO. 5 019
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
It will ai all times maintain and keep the Waterworks Utility in good
repair,working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
(c) It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell, lease,mortgage or in any manner encumber,or otherwise dispose
of any part of the Waterworks Utility(other than timber), including all additions and
improvements theretoiand extensions thereof at any time made, that are used,useful or
material in the operation of the Waterworks Utility,unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds)that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
•
period;
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(as defmed above)that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
•
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(as defmed above) that the depreciated cost
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
- Notwithstanding any other provision of this subsection, (1.)the City in its
discretion may sell or otherwise dispose of any of the works,plant,properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate,obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary,material to or useful to the
operation of the Waterworks Utility,without making any deposit into the Bond Fund, and
(2)the City may transfer the Waterworks Utility to another municipal corporation so long
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ORDINANCE NO. 5 019
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose. In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d) It will keep proper books,records and accounts with respect to the
operations, income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition of the Waterworks
Utility as of the close of the previous year, and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance,the status of all funds and
accounts as of the end of such year, and the amounts expended for maintenance,
renewals,replacements and capital additions to the Waterworks Utility. Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e) Except to aid the poor or.infirm,to provide for resource conservation or to
provide for the proper handling of hazardous materials,it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation,
public or private, other than the City, so long as any Parity Bonds are outstanding. On at
least an annual basis, it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent.
(f) It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance,with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment,works,plants, facilities and properties of the
Waterworks Utility,and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable judgment of the City,to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the outstanding Parity Bonds, and otherwise meet the obligations of the
City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
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ORDINANCE NO. 5 019
cause interest on the Bonds to be included in gross income for federal income tax
purposes. It will, to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds,take all action necessary to comply(or to be treated as
having complied)with those requirements in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative
to calculating rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 18. No Private Activity Bonds. The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a"private activity bond"(as defined in Section
141(b)of the Code) subject to treatment under said Section 141(b) as an obligation not described
in Section 103(a)of the Code,unless the tax exemption thereof is not affected.
Section 19. Defeasance of the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds,or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire, refund or defease all such then-outstanding Bonds (hereinafter collectively
called the"defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire,refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption,retirement or defeasance of defeased
Bonds (hereinafter called the"trust account"), then all right and interest of the Owners of the
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ORDINANCE NO. 5 019
defeased Bonds in the covenants of this ordinance, in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
account and,if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from
Gross Revenue without any priority of lien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account, the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights,if any, of the
owners of any other Parity Bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be •
issued be-secured by cash and/or direct obligations of the United States of America or other legal
investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations of the Untied States of America or other legal
investments are pledged irrevocably for the prior redemption of the defeased Bonds included in
that refunding plan,then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds,the payment of which is not so secured by the refunding plan, shall be
included in the computation of coverage for determining compliance with the rate covenants.
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ORDINANCE NO. 5 019
Section 20. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the following conditions are met and complied with at the time of
issuance of those additional bonds:
(a) . • There shall be no deficiency in any Parity Bond Fund.
' I
(b) The ordinance providing for the issuance.of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity.
Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of(1)an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or(2)Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds. For federal income tax purposes,
at the discretion of the City,to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds,the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments.
(d) The ordinance authorizing the issuance.of such Future Parity Bonds.shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) ' a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue,without regard to deposits into or withdrawals from the
Rate Stabilization Fund, is equal to at least the Coverage Requirement for all
• Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) , a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months,without
regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be
equal to the Coverage Requirement for each year thereafter. The certificate, in
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ORDINANCE NO. 5 019
estimating Net Revenue available for debt services, may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility
who have become customers during the 12 consecutive month period or
thereafter adjusted to reflect one year's Net Revenue from those
customers;
(C) Income from any customers to be connected to the
Waterworks Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers anticipated to connect for whom
building permits have been issued;
(E) Income received or to be received which is derived from
any person,firm corporation or municipal corporation under any executed
contract for water, sewage disposal or other utility service,which revenue
was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers with existing homes or buildings
which will be required to connect to any additions to and improvements
and extensions of the Waterworks Utility constructed and to be paid for
out of the proceeds of the sale of the additional Future Parity Bonds or
other additions to and improvements and extensions of the Waterworks
Utility when such additions, improvements and extensions are not
completed; and
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and •
interest in each year for the refunding bonds is not increased more than$5,000 over the
amount for that same year required for the bonds or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
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ORDINANCE NO. 5 019
prevent the Cityfrom issuingFuture ParityBonds to
Nothing contained herein shall
refund maturing Bonds or Future Parity Bonds then outstanding, money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 22. Approval of Purchase Agreement. The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds. The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase;Agreement on behalf of the City by City officials, and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal opinion of Gottlieb,Fisher&Andrews,PLLC,bond counsel,
Seattle,Washington,relative to,the issuance of the Bonds, attached to each Bond. Bond counsel _
has not been engaged to review or express any opinion concerning the completeness or accuracy
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring,the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 23. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
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ORDINANCE NO. 5 019
Bonds and agrees to the conditions for obtaining that policy, including the payment of the
premium therefor. The City Council authorizes and directs the execution of the commitment for
the Bond Insurance Policy on behalf of the City by City officials,including,but not limited to
the City Finance Director, and delivery of the same to the Bond Insurer. Any notice required to
be given to any party pursuant to this ordinance shall also be provided to the Bond Insurer.
Notices shall be sent to the following address: MBIA Insurance Corporation, 113 King Street,
Armonk,New York 10504,Attention: Insured Portfolio Management. V
Section 24. Delivery of Bonds; Temporary Bonds. The proper City officials,including,
but not limited to,the City Finance Director, are authorized and directed(a)to execute all `
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including,but not limited to,the final official statement pertaining to the Bonds; and(b)to do
everythingnecessazY for(1)the preparation and deliveryof a transcript of proceedings
pertaining to the Bonds, and(2)the preparation, execution and delivery of definitive Bonds to
the Purchaser, each without unreasonable delay. V -
If definitive Bonds are not ready for delivery by the date of Closing agreed to by the City
and the Purchaser, the City,upon the approval of the Purchaser,may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions,changes
and additions. Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment, security and obligation thereof as.
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
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ORDINANCE NO. 5 019
Section 25. Call of 1993 Bonds for Redemption. The City hereby ratifies the call for
redemption on October 1,2003 j of the 1993 Bonds that are;subject to optional redemption, at a
I redemption price of 101%of the principal amount thereof plus accrued interest. Such call for
redemption shall become irrevocable upon delivery of the Bonds at Closing.
Section 26. Acquisition of Escrow Obligations. The proper City officials,including,but
not limited to,the City Finance Director shall, at or prior to Closing,make appropriate
arrangements for the payment for and delivery of any Escrow Obligations which are to be
purchased in the open market pursuant to the Refunding Plan; and shall,prior to Closing, deliver
or cause to be delivered to the,Federal Reserve Bank in Seattle,Washington, subscriptions for
any Escrow Obligations which are to be acquired from the United States Bureau of Public Debt
I
pursuant to the Refunding Plan. The maturing principal of and the interest on such Escrow
Obligations,together with the Initial Cash to be provided to the Escrow Trustee pursuant to the
Refunding Plan, shall be sufficient to pay all of the principal of and interest to become due on the
1993 Bonds from Closing to and including October 1,2003,when due, and to redeem on said
date, all of the remaining outstanding 1993 Bonds at a redemption price of 101%of the principal
amount thereof, and to pay all of the principal of and interest to become due on the 1994 Bonds
from Closing to and including November 1,2005,the fmal maturity date of the outstanding 1994
Bonds.
The Escrow Trustee shall designate in any such subscriptions that all the principal of and
interest on the Escrow Obligations subscribed for with the.United States Bureau of Public Debt
shall be payable to the Escrow Trustee. Such subscription may be amended as permitted by
federal law.
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ORDINANCE NO.
5019
Section 27. Verification of Sufficiency of Escrow. The proper City officials, including,
but not limited to,the City Finance Director are authorized and directed to obtain,prior to
Closing, independent verification from a firm of independent certified public accountants that,
among other things, the cash flow scheduled to be received from the Escrow Obligations,
together with any uninvested initial cash, shall be sufficient to make the payments described in
Section 22 hereof. At Closing, if there has been any change in Escrow Obligations or cash
deposited with the Escrow Trustee under this ordinance and the Escrow Agreement,the City
Finance Director shall cause the sufficiency of the Escrow Fund(as defined in the Escrow
Agreement)to be verified in such manner as she shall deem necessary.
Section 28. Escrow Agreement. The Escrow Agreement is hereby approved. The City
Finance Director is authorized and directed to execute and to deliver said Escrow Agreement, on
behalf of the City,to the Escrow Trustee on or before Closing,with such changes as the City
Finance Director deems to be in the best interests of the City; and such execution and delivery of
the Escrow Agreement shall evidence irrevocably the approval of the executed Escrow
Agreement by the City.
Section 29. Application of Bond Proceeds. The accrued interest and the rounding
amount,if any,received by the City at Closing shall be deposited into the Bond Fund and shall
be applied to the payment of interest first coming due on the Bonds.
The remaining proceeds of the sale of the Bonds, less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City,plus the net original
issue premium, together with such other funds of the City as are identified in the Refunding Plan,
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ORDINANCE NO. 5 019
shall be paid by the City to the Escrow Trustee at Closing, to be applied as set forth in the
Escrow Agreement.
Section 30. Undertaking to Provide Continuing Disclosure.This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection(b)(5)() of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID,if one is created,the following annual financial information and operating data
(collectively,the"Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31, 2003, on or before the last day of the seventh month
following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units, as such principles may be changed from
time to time and as permitted by State law; which statements will not be audited, except that if
and when audited financial statements are otherwise prepared and available to the City, they will
be provided(the "Annual Financial Statements");
(b) A statement of authorized,issued and outstanding bonded debt secured by the
Net Revenue;
(c) Debt service coverage ratios;
(d) General customer statistics for the Waterworks Utility; and
(e) A narrative explanation of the reasons for any amendments to this Section 30
made during the previous'fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
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ORDINANCE NO. 5 01 9
In its provision of such financial information and operating data,the City may cross-
reference to any"final official statement"(as defined in the Rule)available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information, then when and if available,
the City shall provide its Annual Financial Statements,which shall have been audited by such
auditor as shall be then required or permitted by the State law, to each then existing NRMSIR
and to the SID,if one is created.
The City further agrees to provide or cause to be provided, in a timely manner, to the
SID, if one is created, and to either the MSRB or each then existing NRMSIR,notice of any of
the following events with respect to the Bonds,if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting fmancial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of the Owners of the Bonds;
8. Optional redemptions of the Bonds;
9. Defeasances of the Bonds;
10. Release, substitution or sale of property securing repayment of the Bonds; and
11. Rating changes.
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ORDINANCE NO. 5 019
The City alsoagrees to provide or cause to be provided,in a timely manner, to the SID,if
one is created, and to either the MSRB or each then existing NRMSIR,notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds, so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby, as determined by a party
unaffiliated with the City(including,without limitation, a trustee for the Owners,nationally
recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to
a favorable"no-action letter"issued by the SEC, this Section 30 may only be amended in
connection with any change in legal requirements, change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted, and only in such a manner
that the undertaking of the City, as so amended,would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance,prior redemption or payment in
full of all of the then outstanding Bonds. This Section 30 or any provision hereof, shall be null
and void if the City(i) obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 30 or any such provision are invalid,have been repealed retroactively or otherwise
do not apply to the Bonds; and(ii)notifies and provides the SID, if any, and either the MSRB or
each then existing NRMSIR with copies of such opinion.
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ORDINANCE NO. 5 01.9
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 30 shall be limited to the right to obtain specific enforcement of the City's obligations
under this Section 30, and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary, appropriate or convenient to carry out the requirements of this
Section 30.
Section 31. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated September 10,2003 (the
"Preliminary Official Statement"),prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with paragraph(b) (1) of the Rule, the City
"deems final"that Preliminary Official Statement as of its date, except for the omission of
information as to offering prices,interest rates, selling compensation, aggregate principal
amount,principal amount per maturity,maturity dates, options of redemption, delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 32. Contract; Savings Clause. The covenants contained in this ordinance and in
the Bonds shall constitute a contract between the City and the Owner of each and every Bond. If
any one or more of the covenants or agreements provided in this ordinance to be performed on
the part of the City shall be declared by any court of competent jurisdiction and after final appeal
(if any appeal be taken)to be contrary to law, then suchcovenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
35
E\renton\w&s revrefD3
ORDINANCE NO. 5 019
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
Section 33. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this 2 2nd day of September, 2003.
64114/1,c.c• / )
Bonnie Walton,City Clerk
APPROVED BY THE MAYOR this22ndday of September, 2003.
•
J se Tanner,Mayor
• iIN
Approved as to Form: 41. •
Cr) '} •
ob..
and Counsel
Date of Publication: 9/2 6/0 3(Summary)
36
f:\renton\w&s revrefD3
_ .
I
CERTIFICATE
I,the undersigned City Clerk of the '
City of Renton,Washington,certify
that this is a true and correct copy of
Drd�nanra �` .37020 . Subscribed
and soled led thisZday of ,20_0S
City Clerk 0 ..
. .....,• ps
CITY OF RENTON,WASHINGTON
ORDINANCE NO.5020 =
AN ORDINANCE 1 OF THE CITY OF RENTON, WASHINGTON,
AMENDING ORDINANCE NO. 5019 OF THE CITY TO AMEND
SECTION 18 TO DESIGNATE THE BONDS.AS "QUALIFIED TAX-
EXEMPT OBLIGATIONS" FOR PURPOSES OF SECTION 265 OF THE
INTERNAL REVENUE CODE; AND DECLARING AN EMERGENCY
AND ESTABLISHING AN IMMEDIATE EFFECTIVE DATE OF THIS
ORDINANCE •
WHEREAS,pursuant to Ordinance No. 5019, passed by the City Council and approved •
by the Mayor on September 22,2003,the City authorized the issuance and sale of its Water and
Sewer Revenue Refunding Bonds, 2003 (the "Bonds")for the purpose of providing a part of the
- I
funds necessary to refund,on,a current basis, and defease all of the City's outstanding Water and
Sewer Refunding and Improvement Revenue Bonds, 1993, to advance refund and defease all of
the City's outstanding Water and Sewer Revenue Bonds, 1994,and to pay the costs related to the
sale and issuance of the Bonds;and
WHEREAS,the Bonds will bring a significant debt service savings to the City; and
WHEREAS, the Bonds were intended to be "qualified tax-exempt obligations" under
Section 265 of the Code, were so described in the Preliminary Official Statement pertaining to
the Bonds, dated September 10, 2003, were priced on this basis, and financial institutions have
committed to purchase the Bonds on.this basis at interest rates favorable to the City; and
WHEREAS,the City has represented in the Bond Purchase Agreement, dated September
22, 2003, between D.A. Davidson & Co., that the information in the Preliminary Official
Statement is true and correct; and
1
ORDINANCE NO. 5020
'WHEREAS,unless the amendments set forth in this Ordinance are in effect prior to the
closing scheduled for September 30,2003, the Bonds will not be designated as "qualified tax-
i
I
exempt obligations,"which willjimperil the closing of the Bonds and put the City at risk; and
WHEREAS, there is insufficient time for this Ordinance to become effective in the
ordinary course of business prior to the closing and the only way for this ordinance to become
effective prior to such closing is through the declaration of this emergency; and
WHEREAS, it is in the best interests of the City to amend Ordinance No. 5019 to
designate the Bonds as "qualified tax-exempt obligations" for purposes of Section 265 of the
Internal Revenue Code of 1986, as amended (the "Code") and declare an.emergency to ensure
that the Bonds are issued and delivered at the most favorable interest rate and without risk to the
City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON,
WASHINGTON,DO ORDAIN AS FOLLOWS:
Section I. Section 18 of Ordinance No. 5019 is amended in its entirety as follows:
Section 18. No Private Activity Bonds;Bank Qualification.The City covenants that it
will take no actions and will make no use of the proceeds of the Bonds or any other funds held
under this ordinance which would cause any Bond to be treated as a"private activity bond" (as
defined in Section 141(b) of the Code) subject to treatment under said Section 141(b) as an
obligation not described in Section 103(a)of the Code, unless the tax exemption thereof is not
affected.
The City covenants that it will not issue more than $10,000,000 of"qualified tax-exempt
obligations," as defined in Section 265 of the Code (relating to the deduction by financial
2
ORDINANCE NO. 5020
institutions of a portion of the interest incurred to carry tax-exempt debt) during calendar year
2003. The City hereby designates the Bonds as "qualified:tax-exempt obligations"for such
purposes and authorizes and directs the proper City officials to execute and deliver all documents
necessary to evidence such designation to any and all interested parties.
Section II. In all other respects, Ordinance No. 5019 shall remain in full force and
effect and shall not be amended or modified hereby.
Section III. Declaration of Emergency-Effective Date. This ordinance,being the
exercise of a power specifically delegated to the legislative body of the City, is not subject to
referendum. The City Council hereby declares,pursuant to RCW 35A.12.130 and Renton
Municipal Code Section 1-2-2(B),that an emergency exists necessitating that this ordinance take
effect immediately in order to preserve the public health, safety, property,peace, and for the
support of city government and its existing public institutions.
Based upon the foregoing declaration of emergency,this Ordinance shall become
effective immediately upon passage by the City Council.
3
ORDINANCE NO. 5020
PASSED BY THE CITY COUNCIL this 29th day of September, 2003.
I
Bonnie Walton, City Clerk
APPROVED BY THE MAYOR this a"/ day of September, 2003.
iI
14444P- atu•rall•-•••••/
Jesse T er,Mayor
Approved as to Form: c
S 441:
i V•
Judith Andrews,Bond Counsel -
• 141C01°..-././
Date of Publication: ' 10/3/2003 (Summary)
4
CERTIFICATE
I,the undersigned City Clerk of the
City of Renton, Washington, certify
• that'his is a true and correct copy of
Q' h e *S091 . Subscribed
and sealed this 80 u.ay of/VOW/41W, 200
City Clerk
CITY OF RENTON, WASHINGTON
ORDINANCE NO. 5098
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$10,335,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2004, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations;maturities, interest rates, terms and covenants of the
bonds; providing for bond.insurance; and approving the sale and providing for
the delivery of the bonds to D.A.Davidson&Co., Seattle,Washington.
ORDINANCE NO. 5098
TABLE OF CONTENTS
• Page No.
Section 1. Definitions 2
Section 2. Findings Regarding Parity Provisions 9
Section 3. Authorization and Description of Bonds 9
Section 4. Registration of Bonds and Book-Entry System 10
Section 5. Payment of Bonds 12
Section 6. Redemption; Open Market Purchase of Bonds 13
Section 7. Notice of Redemption 15
Section 8. Failure to Redeem Bonds 16
Section 9. Form of Bonds 16
Section 10. Execution of Bonds 16
-i
Section 11. Authentication and Delivery of Bonds by Bond Registrar 17
Section 12. Registration, Transfer and Exchange 17
Section 13. Lost, Stolen or Destroyed Bonds 19
Section 14. Creation of Fund 20
Section 15. Deposits into Funds 20
li
Section 16. Flow of Funds 22
Section 17. Pledge of Revenue and Lien Position 22
Section 18. Findings Regarding Sufficiency of Revenue 23
Section 19. Covenants 24
Section 20. No Private Activity Bonds 26
Section 21. Defeasance of the Bonds 27
Section 22. Provision for Future Parity Bonds 28
Section 23. Approval of Purchase Agreement 31
i
ORDINANCE NO. 5098
•
Section 24. Bond Insurance 31
Section 25. Delivery of Bonds; Temporary Bonds 32
Section 26. Application of Bond Proceeds 32
Section 27. Undertaking to Provide Continuing Disclosure 33
Section 28. Preliminary Official Statement Deemed Final 37
Section 29. Bond Insurance Provisions 37
Section 30. Contract; Savings Clause 40
Section 31. Effective Date of Ordinance 41
Exhibit A Project Description
ii
ORDINANCE NO. 5098
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$10,335,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2004, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations,maturities, interest rates, terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson&Co., Seattle, Washington.
WHEREAS, the City has heretofore created and operated a waterworks utility of the
City, including the sewerage system of the City and within that system a system of storm and
surface water sewers (defined herein as the "Waterworks Utility"); and
WHEREAS, by Ordinance No. 5050,passed in December 15, 2003, the City adopted its
Capital Improvement Program; and
WHEREAS, the City Council has determined that it is necessary and in the best interests
of the City that certain improvements for the Waterworks Utility described in the Capital
Improvement Program be made and there be adopted a system or plan of additions to and
betterments and extensions of the Waterworks Utility; and
WHEREAS,pursuant to Chapter 35.92 RCW,the City is authorized to issue and sell,
without an election,revenue bonds of the City to make additions,betterments or extensions to
the Waterworks Utility; and
WHEREAS,by Section XXIII of Ordinance No. 4709, the City also provided that it may
issue additional water and sewer revenue bonds which will constitute a charge andlienupon the
revenue of the Waterworks Utility of the City on a parity with the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein; and
1
ORDINANCE NO. 5098
•
WHEREAS,by Ordinance No. 4976, the City issued the 2002 Bonds on a parity of lien
with the 1998 Bonds; and
WHEREAS,by Ordinance No. 5019, as amended by Ordinance No. 5020, the City issued
the 2003 Bonds on a parity of lien with the 1998 Bonds and the 2002 Bonds; and
WHEREAS, the City Council has determined that it is in the best interests of the City to
issue and sell$10,335,000 of Water and Sewer Revenue Bonds, 2004 on a parity of lien with the
outstanding Parity Bonds to provide part of the funds necessary to carry out the system or plan
for additions to and betterments and extensions of the Waterworks Utility, to make a deposit into
the Reserve Fund and to pay the costs of issuance and sale of the Bonds; and
WHEREAS,MBIA Insurance Corporation has made a commitment to issue an insurance
policy insuring the payment when due of the principal of and interest on the Bonds as provided
therein, and the City Council deems that the purchase of such policy is in the best interest of the
City; and
WHEREAS,D.A. Davidson& Co., Seattle, Washington,has offered to purchase the
Bonds under the terms and conditions hereinafter set forth;NOW,THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance,the following words shall have the
following meanings:
"Alternate Security"shall mean any bond insurance, collateral, security, letter of credit,
guaranty, surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds, issued by an institution
2
ORDINANCE NO. 5098
that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by
such Alternate Security equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service" for any year shall mean all the interest on plus all principal
(except principal of Term Bonds due in any Term Bond Maturity Year) of Parity Bonds,plus all
mandatory redemption and sinking fund installments,less all bond interest payable from the
proceeds of any such bonds, which will mature or come due in that year.
"Beneficial Owner"shall mean,with respect to any Bond, the Person named on the
records of the Custodian as having the right,without a physical certificate evidencing such right,
to transfer, to hypothecate and to receive the payment of the principal of,premium, if any, and
interest on such Bond as the same becomes due and payable.
"Bond Fund"shall mean that special fund of the City known as the 2004 Waterworks
Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on
the Bonds.
"Bond Insurer"shall mean MBIA Insurance Corporation.
"Bond Insurance Policy" shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register"shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar"shall mean the fiscal agencies of the State in Seattle, Washington, and
New York, New York, as the same shall be designated from time to time.
3
ORDINANCE NO. 5098
"Bonds"shall mean the$10,335,000 City of Renton, Washington Water and Sewer
Revenue Bonds, 2004, authorized to be issued by this ordinance.
"Book-Entry Termination Date"shall mean the fifth business day following the date of
receipt by the Bond Registrar of the City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City" shall mean the City of Renton, Washington, a duly organized and legally existing
noncharter code city under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services
Administrator or the successor to such officer.
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules
and regulations promulgated thereunder.
"Coverage Requirement" shall mean in any calendar year 1.25 times the Maximum
Annual Debt Service.
"Custodian"shall mean(a)The Depository Trust Company,New York,New York, or
(b) any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means, the beneficial ownership of the Bonds, in which system no
physical certificates are issued to the Beneficial Owners of the Bonds,but in which a limited
number of physical certificates are issued to and registered in the name of the Custodian or its
nominee, and delivered to the Custodian; provided, that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
4
ORDINANCE NO. 5098
i
s
which are operated by parties other than the Custodian and the use of a nominee for the ti
Custodian; and the term"Custodian,"as used herein, includes any party operating any such
subsystem.
"Future Parity Bonds" shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a
parity with the lien and charge on Net Revenue for the payment of the principal of and interest
on the Bonds.
"Gross Revenue" shall mean Revenue of the Waterworks Utility.
"Letter of Representations" shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15, 1997,pertaining to the
payment of the Bonds and the"book-entry" system for evidencing the beneficial ownership of
the Bonds prior to the Book-Entry Termination Date(as it may be amended from time to time).
"Maintenance and Operation Expense" shall mean all reasonable expenses incurred by
the City in causing the Waterworks Utility to be operated and maintained in good repair,working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract for
such service, and including pro-rata budget charges for the City's administration expenses where
those represent a reasonable distribution and share of actual costs,but notincluding any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks Utility.
5
ORDINANCE NO. 5098
"Maximum Annual Debt Service" shall mean, at the time of calculation,the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future calendar year on the outstanding Parity Bonds.
"MSRB"shall mean the Municipal Securities Rulemaking Board.
"Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date" shall mean the date in which all the 1998 Bonds, 2002 Bonds and
the 2003 Bonds are fully redeemed, refunded or defeased.
"1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"NRMSIR"shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Owner"shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds"shall mean the 1998 Bonds, the 2002 Bonds, the 2003 Bonds, the Bonds
and any Future Parity Bonds.
"Parity Bond Fund" shall mean any fund created for the payment and redemption of
Parity Bonds.
"Professional Utility Consultant"shall mean an independent licensed professional
engineer, certified public accountant or other independent person or firm selected by the City
having a favorable reputation for skill and experience with municipal utilities of comparable size
and character to the Waterworks Utility in such areas as are relevant to the purposes for which
such consultant is retained.
6
ORDINANCE NO. 5098
"Proj ect" shall mean the following project to be financed, in whole or in part, with
proceeds of the Bonds: (1) undertaking the additions,betterments or extensions to the
Waterworks Utility described in the Capital Improvement Program, including,but not limited to,
the capital improvements described in Exhibit A to this ordinance, (2)making a deposit to the
Reserve Fund, and (3)paying the incidental costs and costs of issuing the Bonds.
"Project Fund" shall mean the Waterworks Utility Construction Fund.
"Purchase Agreement" shall mean the Bond Purchase Agreement for the Bonds, dated
November 1, 2004, by and between the City and the Purchaser.
"Purchaser" shall mean D.A. Davidson &Co., Seattle, Washington.
"Rate Stabilization Fund"shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Reserve Fund" shall mean that special fund of the City known as the Waterworks
Revenue Bond Reserve Fund created by Ordinance No. 4709 for purpose of securing the
payment of the principal of and interest on all bonds to which Net Revenue is pledged.
"Reserve Insurance"shall mean, in lieu of cash and investments,insurance obtained by
the City equal to part or all of the Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained, issued by an institution that has been assigned a credit
rating equal to or better than the highest then-existing rating for any of the Parity Bonds.
"Reserve Requirement"shall mean the Maximum Annual Debt Service.
"Revenue of the Waterworks Utility" shall mean all of the earnings and revenues
received by the City from the maintenance and operation of the Waterworks Utility and all
earnings from the investment of money in the Reserve Fund or any Parity Bond Fund, and
7
ORDINANCE NO. 5098
connection and capital improvement charges collected for the purpose of defraying the cost of
capital facilities of the Waterworks Utility, except government grants,proceeds from the sale of
Waterworks Utility property(other than timber), City taxes collected by or through the
Waterworks Utility,principal proceeds of bonds and earnings or proceeds from any investments
in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility obligations
(until commingled with other earnings and revenues of the Waterworks Utility) or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code.
"Rule"shall mean SEC Rule 15c2-12.
"SEC"shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
"State" shall mean the State of Washington.
"Term Bonds" shall mean any Parity Bonds identified as such in the ordinance
authorizing the issuance thereof,the payment of which is provided for by a requirement for
mandatory deposits of money into the principal and interest account of the bond redemption fund
created for the payment of such issue of bonds in accordance with a mandatory sinking fund
requirement.
"Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are
scheduled to mature.
"2002 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 2002.
"2003 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
2003.
8
ORDINANCE NO. 5098
"Waterworks Utility"shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to, improved and
extended for as long as any of the Parity Bonds are outstanding.
"Waterworks Utility Fund" shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility) shall be deposited.
Section 2. Findings Regarding Parity Provisions. The City Council finds that there is no
deficiency in any Parity Bond Fund,that provisions hereinafter meet the conditions for the
issuance of Future Parity Bonds as set forth in Ordinance Nos. 4709, 4976 and 5019 and that
there will be on file prior to the issuance and delivery of the Bonds a certificate of the City
Finance Director that satisfies the conditions for such certificate as set forth in Ordinance Nos.
4709,4976 and 5019. Therefore, the Bonds shall be issued on a parity of lien with the Parity
Bonds.
Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
the funds necessary to carry out the Project, the City shall issue the Bonds in the aggregate
principal amount of$10,335,000. The Bonds shall be designated"City of Renton, Washington
Water and Sewer Revenue Bonds, 2004;"shall be dated November 1, 2004; shall be in the
denomination of$5,000 or any integral multiple thereof within a single maturity; shall be
numbered separately, in the manner and with any additional designation as the Bond Registrar
deems necessary for purpose of identification; shall bear interest (computed on the basis of a
360-day year of twelve 30-day months),payable semiannually on each June 1 and December 1,
commencing December 1, 2004, to the maturity or prior redemption of the Bonds; and shall
9
ORDINANCE NO. 5098
mature on December 1 in the years and amounts and bear interest at the rates per annum as
follows:
Maturity Years Interest
(December 1) Amounts Rates
2013 $205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024* 4,605,000 5.00
2025 1,600,000 5.00
2026 1,680,000 5.00
2027 1,760,000 5.00
*Term Bonds
If any Bond is duly presented for payment upon maturity and is not paid, then interest thereon
shall continue to accrue thereafter at the rate stated therein until such Bond is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105.
Section 4. Registration of Bonds and Book-Entry System. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register. The
Bond Register shall contain the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate,which certificate shall be registered in the name of the
Custodian or its nominee, and delivered to the Custodian. The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit of the Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either(1) the date of maturity of the
10
ORDINANCE NO. 5098.
Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date, and the cancellation thereof; (2)the Book-Entry Termination Date; or(3)the date the
City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall
I
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name of the Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4, the
rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry
made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations, and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nominee.
The City may terminate the"book-entry"system of registering ownership of the Bonds at
any time(provided the City is not then in default of any payment then due on the outstanding
Bonds)by delivering to the Bond Registrar: (a) a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry
Termination Date; (b) a list identifying the Beneficial Owners as to both name and address; and
(c) a supply of Bond certificates, if necessary for such purpose. Upon surrender to the Bond
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds, the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
11
ORDINANCE NO. 5098
Owner's duly appointed agent, naming such Beneficial Owner or such Beneficial Owner's
nominee as the Owner thereof. Such certificates may be in any integral multiple of$5,000
within a single maturity. Following such issuance, the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 12 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error, omission, action
or failure to act on the part of the Custodian with respect to payment, when due,to the Beneficial
Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of
Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any
other matter pertaining to the Bonds.
Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Prior to the Book-Entry Termination
Date,the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations.
From and after the Book-Entry Termination Date, interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date, to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register, or,if requested in writing by an Owner of$100,000
or more in principal amount of Bonds at least ten days before an interest payment date, by wire
transfer on the interest payment date to an account within the United States. From and after the
Book-Entry Termination Date,principal of the Bonds shall be payable upon presentation and
12
ORDINANCE NO. 5098
surrender of the Bonds by the Owners at the principal corporate trust office of the Bond
Registrar.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
be a valid claim of the Owners thereof only as against the Bond Fund,Reserve Fund and the
amount of Net Revenue pledged to those funds and shall not be general obligations of the City.
Section 6. Redemption; Open Market Purchase of Bonds. The Bonds maturing on
December 1, 2024 are term bonds (the"Term Bonds") and, if not previously purchased by the
City in the open market or optionally redeemed as set forth below, are subject to mandatory
sinking fund redemption prior to maturity, in part and by lot (in such manner as the Registrar
shall determine), at par plus accrued interest to the redemption date on December 1 in the
following years and in the following mandatory sinking fund redemption amounts:
Term Bonds Due
December 1, 2024
Mandatory Sinking Fund
Redemption Dates Redemption
(December 1) Amount
2016 260,000
2017 270,000
2018 130,000
2019 185,000
2020 245,000
2021 265,000
2022 280,000
2023 1,450,000
2024* 1,520,000
*Scheduled maturity
The Bonds maturing on December 1 in the years 2013 and 2014, inclusive, shall not be
subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2015 shall
be subjectto optional redemption prior to maturity beginning on December 1, 2014, in whole or -
13
ORDINANCE NO. 5098
in part at any time (maturities to be selected by the City and by lot within a maturity in such
manner as the Bond Registrar shall determine), at par plus accrued interest to the date of
redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the
open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their
actual redemption or purchase prices) shall be credited against one or more scheduled mandatory
redemption amounts for such Term Bonds (as allocated by the City)beginning not earlier than
60 days after the date of the optional redemption or purchase, and the City shall promptly notify
the Registrar in writing of the manner in which the credit for the Tenn Bonds so redeemed or
purchased has been allocated.
Any Bond in the principal amount of greater than$5,000 may be partially redeemed in
any integral multiple of$5,000. Prior to the Book-Entry Termination Date,the Bonds shall be
partially redeemed in accordance with the Letter of Representations. From and after the Book-
Entry Termination Date, in the event of a partial redemption of a Bond, upon surrender of such
Bond at the principal corporate trust office of the Bond Registrar, a new Bond or Bonds (at the
option of the Owner) of the same maturity and interest rate and in the aggregate principal amount
remaining unredeemed shall be authenticated and delivered to the Owner,without charge to the
Owner therefor, in any denomination authorized by this ordinance and selected by the Owner.
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price. •
All Bonds purchased under this Section shall be canceled.
Section 7. Notice of Redemption. Prior to the Book-Entry Termination Date, the Bond
Registrar shall give, or cause to be given,notice of a call for redemption of any Bonds to the
14 •
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ORDINANCE NO. 5098
Custodian, as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations. From and after the Book-Entry Termination Date,notice of
any such intended redemption shall be given by or on behalf of the City not less than 30 nor
more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid, to
the Owner of any Bond to be redeemed at the address appearing on the Bond Register on the day
notice is mailed, and the requirements of this sentence shall be deemed to have been fulfilled
when notice has been mailed as so provided, whether or not it is actually received by the Owner
of any Bond. If such notice to the Owners shall have been given and the City shall have set
aside, on the date fixed for redemption, sufficient money for the payment of all Bonds called for
redemption,the Bonds so called shall cease to accrue interest after such redemption date, and all
such Bonds shall be deemed not to be outstanding under this ordinance for any purposes, except
that the Owners thereof shall be entitled to receive payment of the redemption price and accrued
interest to the redemption date from the money set aside for such purpose. In addition, the
redemption notice shall be mailed within the same period,postage prepaid,to Standard &Poor's
Ratings Services and Fitch IBCA at their offices in New York,New York, or their successors, to
the Purchaser at its principal office in Seattle,Washington, or its successor, to each NRMSIR
and to the Bond Insurer or their respective successors, and to such other persons and with such
additional information as the City Finance Director shall determine,but these additional mailings
shall not be a condition precedent to the redemption of Bonds.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or redemption date, the City shall be obligated to pay interest on such
Bond at the same rate provided in the Bond from and after its maturity or redemption date until
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ORDINANCE NO. 5098
•
such Bond,both principal and interest, is paid in full or until sufficient money for its payment in
full is on deposit in the Bond Fund, and the Bond has been called for redemption by giving
notice of that redemption to the Owner of each of such unpaid Bonds.
Section 9. Form of Bonds. The Bonds shall be typewritten,word processed,printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 10. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who shall have,signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and,upon such authentication, delivery and
issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 11. Authentication and Delivery of Bonds by Bond Registrar. The Bond
Registrar is authorized and directed, on behalf of the City, to authenticate and deliver Bonds
initially issued or transferred or exchanged in accordance with the provisions of such Bonds and
this ordinance.
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ORDINANCE NO. 5098
•
Only such Bonds as shall bear thereon a"Certificate of Authentication"manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 12. Registration, Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept, at its principal corporate trust office,the Bond Register. The Bond Registrar is
authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance,to serve as the City's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 3755 establishing a system of registration for the City's bonds
and obligations.
The City and the Bond Registrar, in its discretion,may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar
shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as
described in Section 5 hereof,but such registration may be transferred as herein provided. All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
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ORDINANCE NO. 5098
The registered ownership of the Bonds may be transferred. Prior to the Book-Entry
Termination Date, the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian. On and after the Book-Entry Termination Date,
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar,with the assignment form appearing on such Bond duly executed by, or
accompanied by a written instrument of transfer in form satisfactory to such Bond Registrar duly
executed by, the Owner or such Owner's duly authorized agent, in a manner satisfactory to such
Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver, without charge to the Owner or transferee therefor(other than any
governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the
option of the new Owner),naming as Owner the person or persons listed as the assignee on the
assignment form appearing on the surrendered Bond, of the same maturity and interest rate, for
the same aggregate principal amount, and in any authorized denomination selected by the new
Owners, in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office'of the Bond Registrar and exchanged,without charge, for an
equal aggregate principal amount of Bonds of the same maturity and interest rate, in any
authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
{ have if it were not the Bond Registrar and,to the extent permitted by law,may act as depository
18
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ORDINANCE NO. 5098
for and permit any of its officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of the Owners of the Bonds.
- The City covenants that,until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 13. Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor, all in accordance
with applicable law. If such mutilated, lost, stolen or destroyed Bond has matured, the City may,
at its option,pay the same without the surrender thereof. However,no such substitution or
payment shall be made unless and until the applicant shall furnish(a) evidence satisfactory to the
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof, and
(b) such additional security, indemnity or evidence as may be required by or on behalf of the
City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
Bond Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder.
Section 14. Creation of Fund. There is hereby created in the City Treasury the 2004
Waterworks Revenue Borid Fund(the "Bond Fund"),which shall be a subaccount of the !---
Waterworks Utility Fund.
Section 15. Deposits into Funds. So long as Bonds are outstanding against the Bond
Fund,the City shall:
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I
ORDINANCE NO. 5098
(a) Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion,namely, one day before each interest or principal
and interest payment date, an'amount which,together with other money then on deposit
therein, shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits, any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund may be accumulated from any other money which the City may have
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein, the Reserve Fund shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds,no further,payment need be made into the Bond Fund. Notwithstanding
the first sentence of this paragraph, the Reserve Requirement may be decreased for any issue of
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been
depleted, then by draws on the Alternate Security or Reserve Insurance for that purpose. Any
deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up
from Net Revenue first available after making necessary provisions for the required payments
into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity
•
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ORDINANCE NO. 5098
•
Bonds or maybe deposited in any other fund and spent for any other lawful Waterworks Utility
purpose.
The City may provide for the purchase,redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity
Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall be
deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated
therein, after which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, any earnings which are subject to a federal tax or rebate requirement
may be withdrawn from the Bond Fund or the Reserve Fund for deposit into a separate fund or
account for that purpose.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above, the Owner of any of the outstanding Bonds may bring an action against the City
to compel that setting aside and payment.
Section 16. Flow of Funds. Funds in the Waterworks Utility Fund(other than in any
bond redemption or federal rebate account) shall be used in the following order of priority:
(a) To pay Maintenance and Operation Expense;
(b) To pay the interest on the Parity Bonds;
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ORDINANCE NO. 5098
(c) To pay the principal of the Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds;
(e) To make all payments required to be made into the Reserve Fund;
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City,to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
I I Waterworks Utility,to make deposits into the Rate Stabilization Fund, or for any
other lawful City purpose.
Section 17. Pledge of Revenue and Lien Position. The Net Revenue is pledged to the
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
. Net Revenue prior and superior to any other charge whatsoever.
Section 18. Findings Regarding Sufficiency of Revenue. In the judgment of the City
Council, Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility, at the rates to be charged for water, sanitary sewage disposal service and
storm and surface water drainage service in the entire utility,will be more than sufficient to meet
all Maintenance and Operation Expense(and cost of maintenance and operation of the
Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve •
Fund, out of the revenue of the entire utility, of amounts sufficient to pay the interest on the
Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity. The
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ORDINANCE NO. 5098
•
City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid
into the Bond Fund and the Reserve Fund, as aforesaid, it has exercised due regard for the
Maintenance and Operation Expense (and costs of maintenance and operation as used in RCW
35.92.100) and the debt service requirements of the currently outstanding Parity Bonds, and the
City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve
Fund, a greater amount or proportion of the revenue of that utility than in the judgment of the
City Council will be available over and above Maintenance and Operation Expense (and such
costs of maintenance and operation of the Waterworks Utility as that term is used in RCW
35.92.100) and debt service requirements of the currently outstanding Parity Bonds and that no
portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness ? j
other than the payment of the currently outstanding Parity Bonds.
Section 19. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a) It will establish,maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,
and will adjust those rates and charges from-time to time so that:
(1) Gross Revenue will at all times be sufficient to (A)pay all
Maintenance and Operation Expense on a current basis, (B)pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and(C)pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b) It will at all times maintain and keep the Waterworks Utility in good
repair,working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
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ORDINANCE NO. 5098
(c) It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell, lease,mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility(other than timber), including all additions and
improvements thereto and extensions thereof at any time made,that are used,useful or
material in the operation of the Waterworks Utility,unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds) that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
period;
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above)that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above)that the depreciated cost
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
•
Notwithstanding any other provision of this subsection, (1)the City in its
discretion may sell or otherwise dispose of any of the works,plant,properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary, material to or useful to the
operation of the Waterworks Utility,without making any deposit into the Bond Fund, and
(2)the City may transfer the Waterworks Utility to another municipal corporation so long
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose. In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d) It will keep proper books,records and accounts with respect to the
operations, income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition of the Waterworks
24
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ORDINANCE NO. 5098
Utility as of the close of the previous year, and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance, the status of all funds and
accounts as of the end of such year, and the amounts expended for maintenance,
renewals, replacements and capital additions to the Waterworks Utility. Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e) Except to aid the poor or infirm,to provide for resource conservation or to
provide for the proper handling of hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation,
public or private, other than the City, so long as any Parity Bonds are outstanding. On at
least an annual basis, it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent. I
(f) ,It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance,with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment,works,plants, facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable judgment of the City, to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the outstanding Parity Bonds, and otherwise meet the obligations of the
City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
cause interest on the Bonds to be included in gross income for federal income tax
purposes. It will, to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds, take all action necessary to comply(or to be treated as
having complied)with those requirements in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative
to calculating rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
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ORDINANCE NO. 5098
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 20. No Private Activity Bonds. The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a"private activity bond" (as defined in Section
141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described
in Section 103(a) of the Code,unless the tax exemption thereof is not affected.
Section 21. Defeasance of the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to'pay when due the principal of
and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire,refund or defease all such then-outstanding Bonds (hereinafter collectively
called the"defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire,refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the"trust account"), then all right and interest of the Owners of the
defeased Bonds in the covenants of this ordinance, in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
26
ORDINANCE NO. 5098
account and, if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from -
Gross Revenue without any priority of lien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account, the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights, if any, of the
owners of any other Parity Bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or direct obligations of the United States of America or other legal
investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations of the Untied States of America or other legal
investments are pledged irrevocably for the prior redemption.of the defeased Bonds included in
that refunding plan,then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds,the payment of which is not so secured by the refunding plan, shall be
II
included in the computation of coverage for determining compliance with the rate covenants.
Section 22. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the following conditions are met and complied with at the time of
issuance of those additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund. i
(b) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
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ORDINANCE NO. 5098
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of(1) an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or(2)Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds. For federal income tax purposes,
at the discretion of the City,to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds, the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments. After the New Covenant Date,this subsection
shall be amended to read as follows: (c) The ordinance providing for the issuance of
such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the
proceeds of those Future Parity Bonds of(1) an amount equal to the increase in the
Reserve Requirement attributable to those Parity Bonds or(2)Reserve Insurance or
Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the
increase in the Reserve Requirement attributable to those Future Parity Bonds. At the
discretion of the City, the City may provide for deposit into the Reserve Fund of other
legally available money from Net Revenue or Reserve Insurance or Alternate Security
either on or prior to the date of issuance of such Future Parity Bonds or within three years
from the date of issuance of the Future Parity Bonds in three approximately equal annual
payments and in such event,the ordinance providing for the issuance of such Future
Parity Bonds shall provide for such deposit.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue,without regard to deposits into or withdrawals from the
Rate Stabilization Fund, is equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months,without
regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be
equal to the Coverage Requirement for each year thereafter. The certificate, in
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ORDINANCE NO. 5098
•
estimating Net Revenue available for debt services, may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility
who have become customers during the 12 consecutive month period or
thereafter adjusted to reflect one year's Net Revenue from those
customers;
(C) Income from any customers to be connected to the
Waterworks Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers anticipated to connect for whom
building permits have been issued;
(E) Income received or to be received which is derived from
any person,firm corporation or municipal corporation under any executed
contract for water, sewage disposal or other utility service,which revenue
was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers with existing homes or buildings
which will be required to connect to any additions to and improvements
and extensions of the Waterworks Utility constructed and to be paid for
out of the proceeds of the sale of the additional Future Parity Bonds or
other additions to and improvements and extensions of the Waterworks
Utility when such additions, improvements and extensions are not
completed; and
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and
interest in each year for the refunding bonds is not increased more than$5,000 over the
amount for that same year required for the bonds or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
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ORDINANCE NO. 5098
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Bonds or Future Parity Bonds then outstanding,money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 23. Approval of Purchase Agreement. The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds. The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase Agreement on behalf of the City by City officials, and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal opinion of Gottlieb,Fisher&Andrews,PLLC,bond counsel,
Seattle, Washington,relative to the issuance of the Bonds, attached to each Bond. Bond counsel
has not been engaged to review or express any opinion concerning the completeness or accuracy
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring, the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 24. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
30
I
ORDINANCE NO. 5098
I
Bonds and agrees to the conditions for obtaining that policy, including the payment of the
premium therefor. The City Council authorizes and directs the execution of the commitment for
the Bond Insurance Policy on behalf of the City by City officials,including,but not limited to
the City Finance Director, and delivery of the same to the Bond Insurer.
Section 25. Delivery of Bonds; Temporary Bonds. The proper City officials, including,
but not limited to, the City Finance Director, are authorized and directed (a)to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including,but not limited to, the final official statement pertaining to the Bonds; and (b)to do
everything necessary for(1)the preparation and delivery of a transcript'of proceedings
pertaining to the Bonds, and (2)the preparation, execution and delivery of definitive Bonds to
the Purchaser, each without unreasonable delay.
If definitive Bonds are not ready for delivery by the date of Closing agreed to by the City
and the Purchaser,the City, upon the approval of the Purchaser,may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes
and additions. Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment, security and obligation thereof as
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
Section 26. Application of Bond Proceeds. The accrued interest, if any, received by the
City at Closing shall be deposited into the Bond Fund and shall be applied to the payment of
interest first coming due on the Bonds.
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ORDINANCE NO. 5098
The remaining proceeds of the sale of the Bonds, less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City, plus the original issue
premium, shall be applied,upon receipt, as follows: an amount equal to the increase in the
Reserve Requirement attributable to the issuance of the Bonds shall be deposited into the
Reserve Fund, and the remainder shall be deposited into the Project Fund to pay part of the costs
of the Project.
Except as provided by the Code and Section 19(h) of this ordinance, the interest and
profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and
applied as described in the preceding paragraph.
Except as provided by the Code and Section 19(h) of this ordinance, if any money
allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the
Project or after termination of the Project by the City, such money shall be transferred to the
Bond Fund and applied to the payment of the principal of and interest on the Bonds.
Pending application as described in this Section 26 and subject to the requirements of the
Code and Section 19(h) of this ordinance,money allocable to the Bond proceeds in the Project
Fund may be temporarily deposited in such institutions or invested in such investments as may
be lawful for the investment of City funds.
Section 27. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection(b)(5)(i) of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID, if one is created, the following annual financial information and operating data
32
ORDINANCE NO. 5098
(collectively,the"Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31, 2004, on or before the last day of the seventh month
following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units, as such principles may be changed from
time to time and as permitted by State law; which statements will not be audited, except that if
and when audited fmancial statements are otherwise prepared and available to the City, they will
be provided(the "Annual Financial Statements");
(b) A statement of authorized, issued and outstanding bonded debt secured by the Net
Revenue;
(c) Debt service coverage ratios;
(d) General customer statistics for the Waterworks Utility; and
Y
(e) A narrative explanation of the reasons for any amendments to this Section 27
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data, the City may cross-
reference to any"final official statement" (as defined in the Rule) available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information, then when and if available,
the City shall provide its Annual Financial Statements,which shall have been audited by such
II
33
ORDINANCE NO. 5098
auditor as shall be then required or permitted by the State law, to each then existing NRMSIR
and to the SID, if one is created.
The City further agrees to provide or cause to be provided, in a timely manner,to the
SID, if one is created, and to either the MSRB or each then existing NRMSIR,notice of any of
the following events with respect to the Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of the Owners of the Bonds;
8. Optional redemptions of the Bonds;
9. Defeasances of the Bonds;
10. Release, substitution or sale of property securing repayment of the Bonds; and
11. Rating changes.
The City also agrees to provide or cause to be provided; in a timely manner,to the SID, if
one is created, and to either the MSRB or each then existing NRMSIR,notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds, so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby, as determined by a party
34
( I
ORDINANCE NO. 5098
unaffiliated with the City(including, without limitation, a trustee for the Owners,nationally
recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to
a favorable"no-action letter"issued by the SEC, this Section 27 may only be amended in
connection with any change in legal requirements, change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted, and only in such a manner
that the undertaking of the City, as so amended,would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance,prior redemption or payment in
full of all of the then outstanding Bonds. This Section 27 or any provision hereof, shall be null
and void if the City(i) obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 27 or any such provision are invalid,have been repealed retroactively or otherwise
do not apply to the Bonds; and(ii)notifies and provides the SID, if any, and either the MSRB or
each then existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 27 shall be limited to the right to obtain specific enforcement of the City's obligations
under this Section 27, and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
I
35
ORDINANCE NO. 5098
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary, appropriate or convenient to carry out the requirements of this
Section 27.
Section 28. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated October 22, 2004 (the
"Preliminary Official Statement"),prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with paragraph(b)(1) of the Rule, the City
"deems final"that Preliminary Official Statement as of its date, except for the omission of
information as to offering prices,interest rates, selling compensation, aggregate principal
amount,principal amount per maturity,maturity dates, options of redemption, delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 29. Bond Insurance Provisions. The City Council finds that it is in the City's best
interest to purchase,and that a savings will result from purchasing,the Bond Insurance Policy for
the Bonds. The City shall purchase from the Bond Insurer the Bond Insurance Policy insuring the
prompt payment of the principal of and interest on the Bonds and agrees to the conditions for
obtaining that policy,including the payment of the premium therefor and the following provisions
entitled"Payments under the Policy"required by the Bond Insurer to be included in this ordinance:
"A. In the event that,on the second Business Day, and again on the
Business Day,prior to the payment date on the Bonds,the Paying Agent [the Bond
Registrar]has not received sufficient moneys to pay all principal of and interest on
the Bonds due on the second following or following, as the case may be,Business
Day,the Paying Agent shall immediately notify the Bond Insurer or its designee on
the same Business Day by telephone or telegraph,confirmed in writing by registered
or certified mail,of the amount of the deficiency.
"B. If the deficiency is made up in whole or in part prior to or on the
payment date,the Paying Agent shall so notify the Bond Insurer or its designee.
36
1
ORDINANCE NO. 5098
-`
"C. In addition,if the Paying Agent has notice that any Bondholder has
been required to disgorge payments of principal or interest on the Bonds to a trustee
in bankruptcy or creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such
Bondholder within the meaning of any applicable bankruptcy laws,then the Paying
Agent shall notify the Bond Insurer or its designee of such fact by telephone or {,
telegraphic notice, confirmed in writing by registered or certified mail.
-,
"D. The Paying Agent is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact for Holders of the Bonds as
follows:
"1. If and to the extent there is a deficiency in amounts required
to pay interest on the Bonds,the Paying Agent shall(a) execute and deliver
to U.S.Bank Trust National Association, or its successors under the Bond
Insurance Policy(the"Insurance Paying Agent"),in form satisfactory to the
Insurance Paying Agent, an instrument appointing the Bond Insurer as agent
for such Holders in any legal proceeding related to the payment of such
interest and an assignment to the Bond Insurer of the claims for interest to
which such deficiency relates and which are paid by the Bond Insurer, (b)
receive as designee of the respective Holders(and not as Paying Agent)in
accordance with the tenor of the Bond Insurance Policy payment from the
Insurance Paying Agent with respect to the claims for interest so assigned,
and(c) disburse the same to such respective Holders; and
"2. If and to the extent of a deficiency in amounts required to pay
principal of the Bonds,the Paying Agent shall(a) execute and deliver to the
Insurance Paying Agent in form satisfactory to the Insurance Paying Agent
an instrument appointing the Bond Insurer as agent for such Holder in any
legal proceeding relating to the payment of such principal and an assignment
to the Bond Insurer of any of the Bonds surrendered to the Insurance Paying
Agent of so much of the principal amount thereof as has not previously been
paid or for which moneys are not held by the Paying Agent and available for
such payment(but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received), (b)receive as designee of the
respective Holders (and not as Paying Agent)in accordance with the tenor of
the Bond Insurance Policy payment therefor from the Insurance Paying
Agent, and(c)disburse the same to such Holders.
"E. Payments with respect to claims for interest on and principal of
Bonds disbursed by the"Paying Agent from proceeds of the Bond Insurance Policy
shall not be considered to discharge the obligation of the City with respect to such
Bonds, and the Bond Insurer shall become the owner of such unpaid Bonds and
37
ORDINANCE NO. 5098
•
claims for the interest in accordance with the tenor of the assignment made to it
under the provisions of this subsection or otherwise.
"F. Irrespective of whether any such assignment is executed and
delivered,the City and the Paying Agent hereby agree for the benefit of the Bond
Insurer that:
_ "1. They recognize that to the extent the Bond Insurer makes
payments, directly or indirectly(as by paying through the Paying Agent), on
account of principal of or interest on the Bonds,the Bond Insurer will be
subrogated to the rights of such Holders to receive the amount of such
principal and interest from the City,with interest thereon as provided and
solely from the sources stated in this ordinance and the Bonds; and
"2. They will accordingly pay to the Bond Insurer the amount of
such principal and interest(including principal and interest recovered under
subparagraph(ii) of the first paragraph of the Bond Insurance Policy,which
principal and interest shall be deemed past due and not to have been paid),
with interest thereon as provided in this ordinance and the Bonds,but only
from the sources and in the manner provided herein for the payment of
principal of and interest on the Bonds to Holders, and will otherwise treat the
Bond Insurer as the owner of such rights to the amount of such principal and
interest.
"G. In connection with the issuance of additional Bonds,the City shall
deliver to the Bond Insurer a copy of the disclosure document,if any,circulated with
respect to such additional Bonds.
"H. Copies of any amendments made to the documents executed in
connection with the issuance of the Bonds which are consented to by the Bond
Insurer shall be sent to Standard&Poor's Corporation.
"I. The Bond Insurer shall receive notice of the resignation or removal
of the Paying Agent and the appointment of a successor thereto.
"J. The Bond Insurer shall receive copies of all notices required to be
delivered to Bondholders and,on an annual basis,copies of the City's audited
financial statements and Annual Budget.
"Notices: Any notice that is required to be given to a holder of the
Bonds or to the Paying Agent pursuant to this ordinance shall also be provided to the
Bond Insurer. All notices required to be given to the Bond Insurer under this
ordinance shall be in writing and shall be sent by registered or certified mail
38
ORDINANCE NO. 5098
addressed to MBIA Insurance Corporation, 113 King Street,Armonk,New York
10504 Attention: Surveillance."
"K. The City agrees to reimburse the Bond Insurer immediately and
unconditionally upon demand, to the extent permitted by law, for all reasonable
expenses, including attorneys' fees and expenses, incurred by the Bond Insurer in
connection with(i) the enforcement by the Bond Insurer of the City's obligations,
or the preservation or defense of any rights of the Bond Insurer, under this
ordinance and any other document executed in connection with the issuance of the
Bonds, and (ii) any consent, amendment,waiver or other action with respect to
this ordinance or any related document,whether or not granted or approved,
• together with interest on all such expenses from and including the date incurred to
the date of payment at Citibank's Prime Rate plus 3% or the maximum interest
rate permitted by law, whichever is less. In addition, the Bond Insurer reserves
the right to charge a fee in connection with its review of any such consent,
amendment or waiver,whether or not granted or approved.
"L. The City agrees not to use MBIA's name in any public document
including,without limitation, a press release or presentation, announcement or
forum without MBIA's prior consent. In the event that the City is advised by
counsel that it has a legal obligation to disclose MBIA's name in any press
release,public announcement or other public document,the City shall provide
MBIA with at least three(3)business days'prior written notice of its intent to use
MBIA's name together with a copy of the proposed use of MBIA's name and of
any description of a transaction with MBIA and shall obtain MBIA's prior consent
as to the form and substance of the proposed use of MBIA's name and any such
description.
"M. The City shall not enter into any agreement nor shall it consent to
or participate in any arrangement pursuant to which Bonds are tendered or
purchased for any purpose other than the redemption and cancellation or legal
defeasance of such Bonds without the prior written consent of MBIA."
• Section 30. Contract; Savings Clause. The covenants contained in this ordinance and in
the Bonds shall constitute a contract between the City and the Owner of each and every Bond. If
any one or more of the covenants or agreements provided in this ordinance to be performed on
the part of the City shall be declared by any court of competent jurisdiction and after final appeal
(if any appeal be taken) to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
39
ORDINANCE NO. 5098
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
Section 31. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this 1st day of November,2004.
•�
Bonnie Walton, City Clerk
APPROVED BY THE MAYOR this 1st day of November,2004.
-71(Wdl /62,trtkAN (A)1Afe
Kathy Keo er-Wheeler,Mayor
Approved as to Form: wN v
+ C T L.
: a
Bond Counsel Y CO . A
Date of Publication: 11/9/o4(Summary)
40
I
ORDINANCE NO. 5098
•
EXHIBIT A
Project Description
The bond proceeds will be primarily dedicated to the following three Capital Improvement
Projects:
• Maplewood Water Quality Improvement: This project consists of improving a new water
filtration facility at the Maplewood booster pump station. Approximately$5 million of
the bond proceeds will be dedicated to this $12 million project.
• Sunset Interceptor Phase II: The City is installing 7,000 linear feel of 18—24 inch sewer
main from NE Sunset Blvd south in the same street. This is to meet growth needs in the
eastern area of the City. Approximately$2 million of the bond proceeds will be
dedicated to this project.
• SW 7th Street Storm System: This project includes installing approximately 3,500 linear
feel of 24 inch storm pipe to replace the existing storm system to meet the significant
water drainage issues in the area. The total project has a bid of$3 million. The same
amount of the proceeds will be dedicated to this project.
•
41
CERTIFICATE . • .
I, the undersigned City Clerk of the
- City of Renton, Washington, certify
that this is a true and correct copy of
c9,4,0 nv'nufes aF Il-I-0S( . Subscribed
and sealed this30'cay ofF oveu(ur,20.
City Clerk
RENTON CITY COUNCIL
Regular Meeting
November 1,2004 Council Chambers
Monday,7:30 p.m. MINUTES Renton City Hall
CALL TO ORDER Mayor Kathy Keolker-Wheeler called the meeting of the Renton City Council
to order and led the Pledge of Allegiance to the flag.
ROLL CALL OF DON PERSSON,Council President;RANDY CORMAN;TONI NELSON;
COUNCILMEMBERS DAN CLAWSON;DENIS LAW;TERRI BRIERE;MARCIE PALMER.
CITY STAFF IN KATHY KEOLKER-WHEELER,Mayor;JAY COVINGTON,Chief
ATTENDANCE Administrative Officer;LAWRENCE J.WARREN,City Attorney;BONNIE
WALTON,City Clerk;GREGG ZIMMERMAN,Planning/Building/Public
Works Administrator;ALEX PIETSCH,Economic Development
Administrator;CHIEF LEE WHEELER,Fire Department;VICTORIA
RUNKLE,Finance and Information Services Administrator;SYLVIA
DOERSCHEL,Finance Analyst Supervisor;JILL MASUNAGA,Finance
Analyst III;DENNIS CULP,Community Services Administrator;MIKE
WEBBY,Human Resources Administrator;DEREK TODD,Assistant to the
CAO;CHIEF GARRY ANDERSON and COMMANDER CHARLES
MARSALISI,Police Department.
SPECIAL PRESENTATION Mayor Keolker-Wheeler presented her proposed City of Renton 2005 Budget to
AILS:Mayor's Presentation of members of the City Council and Renton citizens. She stated that Renton's
2005 Budget economy is strong;however,along with other municipalities in the State of
Washington,the City faces new fiscal realities.
Regarding the state of the City's economy,the Mayor said sales tax revenues
are expected to increase by 5.5 percent in 2004. The City continues to enjoy
explosive growth in revenue from new construction,and there is renewed
interest in new development projects in the downtown and valley areas. The
Boeing Company's employment levels seem to be stabilizing,and PACCAR'S
Kenworth Plant has realized increased production. Additionally,the City looks
forward to the redevelopment of surplus property at Boeing's Renton Plant in
South Lake Washington.
Mayor Keolker-Wheeler pointed out that these successes are not enough to
overcome the challenges of the new fiscal environment. She explained that
Renton's financial structure no longer produces the revenue required to keep
ahead of rising expenses. This is due to a number of factors,including past
decisions by the State Legislature and more recent decisions by voters. The
Mayor stressed that it is only the keen focus and resulting successes of the past
decade,such as the diversification of Renton's economy,the smart land use,and
pro-development policies,that has kept the City from dire straights.
The Mayor stated that the total proposed 2005 Budget is$149,392,500,of
which$69,106,300 is the General Governmental Budget. Reviewing the
highlights of the proposed budget,she explained how the RENSTAT(a
program that addresses,identifies,and targets crime)and REACT(a program
that addressed non-criminal activities and nuisance abatement)programs will
begin to be implemented. In the budget proposal,the code enforcement officers
will transfer to the Police Department from the Planning/Building/Public
Works Department,and a police service specialist will be added.
it
November 1,2004 Renton City Council Minutes Page 380
Continuing,Mayor Keolker-Wheeler stated that the proposed budget addresses
the medical and long-term care costs of all retired Law Enforcement Officers
and Firefighters hired before 1977, by establishing a new fund to track these
retiree costs separately from costs for active employees, and by using$260,000
in Fire Pension monies to assist in funding the long-term care costs. She also
noted that effective July 2005,the City must pay increased rates to the State for
the retirement program for active employees, which will cost$500,000 next
year.
Turning to the reduction of expenditures, the Mayor stated that the proposed
budget eliminates five vacant regular positions. Additionally, the Development
Services and Transportation Divisions will eliminate a total of$52,000 in
temporary summer help. Expenditure reductions also include turning off 500
arterial streetlights around the City, saving$60,000; eliminating lifeguards at
Kennydale Beach, saving$35,000; and reducing several line items in various
departments.
Mayor Keolker-Wheeler recommended using$1.2 million of available funds to
balance the General Governmental Budget,noting that even with a$630,000
reduction in expenditures,the available fund balance is still needed to meet the
City's needs. She also pointed out that the proposed budget includes a rate
�- -' increase on water and sewer services, increasing the average bill from$79.67 to
$80.36. Additionally, an increase in Metropolitan King County Council's water
treatment rate results in an increase to this portion of the utility bill from$23.40
to$25:60.
Concluding,Mayor Keolker-Wheeler stated her commitment to continue to
provide services at levels the City can afford, to look for efficiencies
everywhere,and to maintain an open dialogue with the Council and citizens on
accomplishing the work of the City. She emphasized that she is working
towards: -renewing trust in local government;providing services the citizen's
demand at a price they are willing to pay; and making the City more effective,
more efficient,and well positioned for the future.
ADMINISTRATIVE Chief Administrative Officer Jay Covington reviewed a written administrative
REPORT report summarizing the City's recent progress towards goals and work
programs adopted as part of its business plan for 2004 and beyond. Items noted
included:
* A new edition of CityView is now airing on Renton cable channel 21,
featuring the Volunteer Cedar River Naturalist Program,Mary Ann
Edwards Lewis Historical Moment,Salvation Army Renton Food Bank,
Renton Senior Activity Center 25th Anniversary Celebration, Grateful for
Grandparents Program, CPR Classes,Moment with the Mayor,Volunteer
Spotlight,and the Soccer Challenge.
* The Highlands Neighborhood Center hosted their annual Kids Night
Halloween Party on October 22nd, with over 150 children participating in
this free drop-in Club Highlands program.
CONSENT AGENDA Items on the consent agenda are adopted by one motion which follows the
listing.
Council Meeting Minutes of Approval of Council meeting minutes of October 25, 2004. Council concur.
October 25,2004
November 1,2004 Renton City Council Minutes Page 381
CAG: 04-133, Gene Coulon City Clerk reported bid opening on 10/20/2004 for CAG-04-133, Gene Coulon
Park Boat Launch Repair, Memorial Beach Park Boat Launch Repair; seven bids;engineer's estimate
Skaar Construction $110,000 to$150,000; and submitted staff recommendation to award the -
contract to the low bidder,Skaar Construction,Inc., in the amount of
$119,379.71. Refer to Finance Committee for discussion of funding.
CAG: 04-097, Community Community Services Department submitted CAG-04-097,Renton Community
Center Roof Replacement, Center Roof Replacement;and requested approval of the project, authorization
Lloyd A Lynch for final pay estimate in the amount of$24,948.93,commencement of 60-day
lien period,and release of retainage bond in the amount of$3,723.80 to Lloyd
A. Lynch,Inc.,contractor,if all required releases are obtained. Council concur.
Development Services: Development Services Division recommended acceptance of dedication of
Latham Short Plat,Meadow additional right-of-way to widen Meadow Ave.N. to fulfill a requirement of the
Ave N, SHP-04-033 Latham Short Plat(SHP-04-033). Council concur.
EDNSP: 2004 Neighborhood Economic Development,Neighborhoods and Strategic Planning Department
Grant Program submitted grant requests for the 2004 Neighborhood Grant Program(second
round)and recommended funding eight projects and two newsletters in the total
amount of$38,929. Refer to Community Services Committee.
MOVED BY PERSSON, SECONDED BY LAW, COUNCIL APPROVE THE
CONSENT AGENDA AS PRESENTED. CARRIED.
UNFINISHED BUSINESS Council President Persson presented a Committee of the Whole report
Committee of the Whole regarding the I-405 Corridor Project and Renton Hill access. The Committee
Transportation: I-405 Corridor was briefed by the Washington State Department of Transportation on the I-405
Project,Renton Hill Access Corridor Project including access to I-405 via Renton Hill. At this time,no
further action needs to be taken. MOVED BY PERSSON, SECONDED BY
BRIERE,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED.
Finance Committee Finance Committee Chair Corman presented a report regarding the issuance of
Finance: Bond Issuance, water and sewer revenue bonds for capital construction projects. The
Water, Sewer&Stormwater Committee recommended concurrence in the staff recommendation to approve
Projects the issuance of$10,335,000 in water and sewer revenue bonds, increasing the
City's debt for the purpose of completing capital construction projects to
include the Maplewood Water Treatment Facility, the Sunset Interceptor, and
the SW 7th St. Storm System Improvements.
The Committee further recommended that the ordinance regarding this matter
be presented for first and second reading. MOVED BY CORMAN,
SECONDED BY NELSON, COUNCIL CONCUR IN THE COMMITTEE
REPORT. CARRIED. (See below for ordinance.)
RESOLUTIONS AND The following ordinance was presented for first reading and advanced for
ORDINANCES second and final reading:
Finance: Bond Issuance, F An ordinance was read relating to the waterworks utility of the City, including
Water, Sewer&Stormwater , the sewerage system as a part thereof;providing for the issuance of
Projects $10,335,000 aggregate principal amount of Water and Sewer Revenue Bonds,
{ 2004,of the City for the purpose of obtaining the funds with which to pay the
costs of carrying out certain capital improvements of the waterworks utility;
fixing the date,form,denominations,maturities, interest rates, terms, and
covenants of the bonds;providing for bond insurance; and approving the sale
and providing for the delivery of the bonds to D.A. Davidson &Co., Seattle,
November 1,2004 Renton City Council Minutes Page 382
Washington. MOVED BY BRIERE,SECONDED BY NELSON, COUNCIL
ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING.
CARRIED.
Ordinance#5098 Following second and final reading of the above-referenced ordinance, it was
Finance: Bond Issuance, MOVED BY BRIERE, SECONDED BY LAW, COUNCIL ADOPT THE
Water, Sewer&Stormwater ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED.
Projects
The following ordinances were presented for second and final reading and
adoption:
Ordinance#5099 An ordinance was read amending the Comprehensive Plan to comply with the
Planning: 2004 Comp Plan mandated 2004 State Growth Management Act review and update,and
Update adopting Comprehensive Plan text,maps, and data in conjunction therewith.
MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT
THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED.
Ordinance#5100 An ordinance was read amending Chapter 4-2,Zoning Districts -Uses and
Planning: 2004 Comp Plan Standards,Chapter 4-3,Environmental Regulations and Overlay Districts,
Update Implementation, Chapter 4-4,Citywide Property Development Standards, Chapter 4-6,Street &
Development Regulations Utility Standards,Chapter 4-7, Subdivision Regulations, Chapter 4-8,Permits -
Amendments General and Appeals, Chapter 4-9,Permits -Specific, and Chapter 4-11,
Definitions; of Title IV (Development Regulations) of City Code in order to
implement the 2004 State Growth Management Act update to the
Comprehensive Plan. MOVED BY BRIERE,SECONDED BY LAW,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
Ordinance#5101 An ordinance was read adopting the Citywide zoning map amendments to the
Planning: 2004 Update of zoning classifications of properties located within the City of Renton,and
Zoning Map identified as part of the 2004 State Growth Management Act mandated update
of the Comprehensive Plan. MOVED BY BRIERE, SECONDED BY LAW,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
Ordinance#5102 An ordinance was read changing the zoning classification of property
Rezone: Smith Property, SW consisting of 7,240 square feet located at 624 SW Sunset Blvd. from R-8
Sunset Blvd,R-8 to CN,CPA (Residential-eight dwelling units per acre)to CN(Commercial Neighborhood)
zoning; Smith Property. MOVED BY BRIERE, SECONDED BY CLAWSON,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
Ordinance#5103 An ordinance was read changing the zoning classification of property
Rezone: Handly Property,SW consisting of 10,780 square feet located at 620 SW Sunset Blvd. from R-8
Sunset Blvd,R-8 to CN,CPA (Residential-eight dwelling units per acre)to CN(Commercial Neighborhood)
zoning;Handly Property. MOVED BY BRIERE, SECONDED BY
CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL
CALL: ALL AYES. CARRIED.
Ordinance#5104 An ordinance was read changing the zoning classification of property
Rezone: Bonilla Property,SW consisting of 6,080 square feet located at 632 SW Sunset Blvd. from R-8
Sunset Blvd,R-8 to CN,CPA (Residential-eight dwelling units per acre)to CN(Commercial Neighborhood)
zoning;Bonilla Property. MOVED BY BRIERE, SECONDED BY
CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL
CALL: ALL AYES. CARRIED.
November 1,2004 Renton City Council Minutes Page 383
Ordinance#5105 An ordinance was read changing the zoning classification of property
Rezone: King County Health consisting of 17.2 acres located at 3001 NE 4th St. from IL(Light Industrial) to
Department Property,NE 4th CA(Commercial Arterial)zoning;King County Health Department Property.
St,IL to CA, CPA MOVED BY BRIERE,SECONDED BY LAW,COUNCIL ADOPT THE
ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED.
Ordinance#5106 An ordinance was read changing the zoning classification of property
Rezone: Mroczek Property, consisting of 12,078 square feet located at 700 SW 4th Pl. from R-8
SW 4th Pl,R-8 to CN, CPA (Residential-eight dwelling units per acre) to CN(Commercial Neighborhood)
zoning;Mroczek Property. MOVED BY BRIERE, SECONDED BY LAW,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
NEW BUSINESS MOVED BY PERSSON, SECONDED BY LAW, COUNCIL OPEN
Council: 2005 Council NOMINATIONS FOR 2005 COUNCIL PRESIDENT AND COUNCIL
President Election(Briere), PRESIDENT PRO TEM. CARRIED:
2005 Council President Pro Council President Persson nominated Councilwoman Briere as Council
Tern Election(Corman) President for 2005 and Councilman Corman as Council President Pro Tern for
2005.
MOVED BY NELSON,SECONDED BY PERSSON, COUNCIL CLOSE
NOMINATIONS. CARRIED.
School District: Activities Reporting on Renton School District activities, events, and honors,
Councilwoman Nelson noted items such as: scholarship winners, the release of
the WASL(Washington Assessment of Student Learning)final scores, the
recognition of Hazen High School junior Ryan Schindler as an Everyday Hero
by the Seattle Youth Hall of Fame, and the participation of Talbot Hill and
Hazelwood elementary schools and McKnight Middle School students in the
2004 Seattle Kid's Marathon to raise money for the Candlelighters Childhood
Cancer Foundation.
Community Event: General Mayor Keolker-Wheeler noted the General Election on November 2,2004,and
Election, 11/2/2004 encouraged everyone to vote.
Public Works:Landsburg Councilman Clawson reported that he is.a member of the Cedar River Council
Mine Contaminates and noted an issue pertaining to contaminates at the Landsburg Mine(located
off of SE Summit Landsburg Rd.,north of Ravensdale). Stating that the
Department of Ecology is conducting tests,he expressed concern regarding
potential downstream contamination to Renton and suggested that the
Administration review the matter and determine whether the City should be
involved. MOVED BY CLAWSON, SECONDED BY CORMAN, COUNCIL
REFER THIS MATTER TO THE ADMINISTRATION. CARRIED.
ADJOURNMENT MOVED BY NELSON, SECONDED BY CORMAN, COUNCIL ADJOURN.
CARRIED. Time: 8:26 p.m.
16&74-412/,'../
Bonnie I.Walton, CMC,City Clerk
Recorder: Michele Neumann
November 1, 2004
• RENTON CITY COUNCIL COMMITTEE MEETING CALENDAR
Office of the City Clerk
COUNCIL COMMITTEE MEETINGS SCHEDULED AT CITY COUNCIL MEETING
November 1,2004
COMMITTEE/CHAIRMAN DATE/TIME AGENDA
COUNCIL WORKSHOP WED., 11/03 2005 City of Renton Budget
3:00 p.m. *Conferencing Center*
COMMITTEE OF THE WHOLE MON., 11/08 2005 Budget Presentation.and
(Persson) 5:30 p.m. Deliberations
COMMUNITY SERVICES MON., 11/08 2004 Neighborhood Grants (2nd Round)
(Nelson) 4:15 p.m.
FINANCE MON., 11/08 Vouchers;
(Corman) 4:45-p.m. Gene Coulon Park Boat Launch Repair
Project
PLANNING&DEVELOPMENT ' '
(Briere)
•
PUBLIC SAFETY
(Law)
r,
L,
TRANSPORTATION(AVIATION) THURS., 11/04 Pro-Flight Aviation Lease Addendum;
(Palmer) 4:00 p.m. Airport Development Study(briefing
only)
UTILITIES
(Clawson)
NOTE: Committee of the Whole meetings are held in the Council Chambers. All other committee meetings are held in the Council Conference Room
unless otherwise noted.
CITY OF RENTON Washington, adopting the Citywide available upon request.
NOTICE OF ORDINANCES Zoning Map Amendments to the zon- Effective: 11/10/2004
ADOPTED BY RENTON CITY ing classifications of properties ORDINANCE NO.5106
STATE OF WASHINGTON, COUNTY OF KING } COUNCIL located within the City of Renton, An ordinance of the City of Renton,
AFFIDAVIT OF PUBLICATION Following is summary of the ordi- and identified as part of the 2004 Washington, changing the zoning
nances adopted by the Renton City Growth Management Act mandated classification of certain property,
Council on November 1,2004: update of the comprehensive plan. known as the."Mroczek Property,"
ORDINANCE N0.5098 Effective: 11/10/2004 within the City of Renton from
PUBLIC NOTICE An ordinance of the City of Renton, ORDINANCE NO.5102 Residential 8 to Commercial
Lily Nguyen,being first duly sworn on oath that she is a Legal Advertising Washington, relating to the water- An ordinance of the City of Renton, Neighborhood; the property consist-
Re
Representative of the consist-
works utility of the City, including Washington, changing the zoning ing of approximately 12,078 square
P the sewerage system as a part classification of certain property, feet,is located at 700 SW 4th Place.
thereof;providing for the issuance of known as the "Smith Property," The legal description is on file at the
KingCountyJournal $10,335,000 aggregate principal within the City of Renton from City Clerk's office, and is available
amount of Water and Sewer Revenue Residential 8 to Commercial upon request.
Bonds,2004,of the City for the pur- Neighborhood; the property consist- Effective: 11/10/2004
pose of obtaining the funds with ing of approximately 7,240 square Complete text of these ordinances is
a daily newspaper, which newspaper is a legal newspaper of general which to pay the costs of carrying out feet, is located at 624 SW Sunset available at Renton City Hall, 1055
circulation and is riow and has been for more than six months prior to the date certain capital improvements of the Boulevard. The legal description is South Grady Way;and posted at the
of publication hereinafter referred to, published in the English language waterworks-utility; fixing.the date, on file at the City Clerk's office,and Renton Public Libraries, 100 Mill
gform, denominations, maturities, is available upon request. Avenue South and 2902 NE 12th
continuously as a daily newspaper in King County, Washington. The King interest rates, terms and covenants Effective: 11/10/2004 Street. Upon request to the City
County Journal has been approved as a Legal Newspaper by order of the of the bonds; providing for bond ORDINANCE NO.5103 Clerk's office, (425) 430-6510, copies
Superior Court of the State of Washington for Kinginsurance; and approving the sale An ordinance of the City of Renton, will also be mailed for a fee.
P g County. and providing for delivery of the Washington, changing the zoning Bonnie I.Walton
The notice in the exact form annexed was published in regular issues of the bonds to D.A. Davidson & Co., classification of certain property, City Clerk/Cable Manager
King County Journal (and not in supplement form) which was regularly Seattle,Washington. known as the "Handly Property," Published in the King County Journal
Effective: 11/10/2004 within the City of Renton from November 5,2004.#847423
distributed to its subscribers during the below stated period. The annexed ORDINANCE NO.5099 Residential 8 to Commercial
notice,a An ordinance of the City of Renton, Neighborhood; the property consist-
Washington, amending the ing of approximately 10,780 square
Comprehensive Plan to comply with feet, is located at 620 SW Sunset
Public Notice the mandated 2004 Growth Boulevard. The legal description is
Management Act Review and on file at the City Clerk's office,and
Update, and adopting is available upon request.
was published on Friday, 11/5/04 Comprehensive Plan text,maps and Effective: 11/10/2004
data in conjunction therewith. ORDINANCE NO.5104
Effective: 11/10/2004 An ordinance of the City of Renton,
The full amount of the fee charged for said foregoing publication is the sum ORDINANCE NO.5100 Washington, changing the zoning
An ordinance of the City of Renton, classification of certain property,
of $285.00 at the rate of$15.50 per inch for the first publication and N/A per Washington, amending Chapter 4-2, known as the `Bonilla Property,"
inch for eac :ibseciu t insertion. Zoning Districts - Uses and within the City of Renton from
Standards, Chapter 4-3, Residential 8 to Commercial
Environmental Regulations and Neighborhood; the property consist- •
Overlay Districts,Chapter 4-4, City- ing of approximately 6,080 square
Lily Nguyen wide Property Development feet, is located at 612 SW Sunset
Standards, Chapter 4-6, Street & Boulevard. The legal description isLe al Adverti ing Representative,King County Journal
Utility Standards, Chapter 4-7, on file at the City Clerk's office,and
Subscri lied an• sworn to me this 5th day of November 404. Subdivision Regulations, Chapter 4- is available upon request.
\���111Z1 W////// 8, Permits - General and Appeals, Effective: 11/10/2004
CE NO.5105
����\�,�;o AE p � ,/����i�� ChaChapter 4-1ter 1,Definitions;ofPermits - 1Title IV An ordinanand ce of the City of Renton,
Tom A.Meagher gm\ es (Development Regulations) of Washington, changing the zoning
g F` RY Ordinance No.4260 entitled Code of classification of certain property,
pq Notary Public for the State of Washington,3tpi�{iltpcedmond; aShington General Ordinances of the City of known as the "King County Health
Ad Number: 847423 P.O.Number: = •:o /• V :1— — Renton, Washington" in order to Department Property," within the
Cost of publishingthis notice includes an a$$da sur �. ,„.z....A.: implement the 2004 Growth City of Renton from Light Industrial
• q' •,�• Z' Management Act update to the to Commercial Arterial;the property
�S %Sj •.•MAY?:0P�`Z' �� Comprehensive
11110//2004 acres,tisgof located at 3001 NE 17.2
4th
/// T�•O ��� • ORDINANCE NO.5101 Street. The legal description is on
//�7////111111111����\ An ordinance of the City of Renton, file at the City Clerk's office,and is
•
•
•
•
•
Book-Entry-Only Municipal Bonds
Letter of Representations
[To be Completed by Issuer and Agent]
, City of Renton,Washington
[Name of Issuer]
Fiscal Agency of the State of Washington,currently The Bank of New York
[Name of Agent]
November 17,2004
[Date]
Attention: Underwriting Department
The Depository Trust Company
55 Water Street 19th Floor
New York,NY 10041-0099
Re: $10,335,000 City of Renton,Washington,Water and Sewer Revenue
Bonds,2004
[Issue description(the"Securities")]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters relating to the
Securities. Agent shall act as trustee,paying agent,fiscal agent,or other agent of Issuer with respect
to the Securities. The Securities have been issued pursuant to a trust indenture,bond resolution,or
other such document authorizing the issuance of the Securities dated November 1,2004
(the"Document"). D.A.Davidson&Co. is distributing the Securities
["Underwriter"]
through The Depository Trust Company("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in
accordance with its Rules with respect to the Securities,Issuer and Agent,if any,make the following
mbnd 1319-7/99
representations to DTC:
1. Prior to closing on the Securities on November 17,2004 ,there
shall be deposited with DTC one or more Security certificates registered in the name of DTC's
nominee, Cede & Co., for each stated maturity of the Securities in the face amounts set forth on
Schedule A hereto, the total of which represents 100%of the principal amount of such Securities.
If,however, the aggregate principal amount of any maturity exceeds $400 million, one certificate
shall be issued with respect to each$400 million of principal amount and an additional certificate
shall be issued with respect to any remaining principal amount. Each Security certificate shall bear
the following legend:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation("DTC"),to Issuer or its agent
for registration of transfer, exchange, or payment, arid any certificate issued is
registered in the name of'1Cede & Co. or in such other name as is requested by an
authorized representative of DTC(and any payment is made to Cede&Co.or to such
other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE,; OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede& Co.,has an interest herein.
Issuer represents: [Note: Issuer must represent one of the following, and shall cross out the
other.]
[The Security certificate(s)'shall remain in Agent's custody as a"Balance Certificate"subject
to the provisions of the Balance Certificate Agreement between Agent and DTC currently in effect.
On each day on which Agent is open for business and on which it receives an instruction
originated by a DTC participant("Participant") through DTC's Deposit/Withdrawal at Custodian
("DWAC") system to increase the Participant's account by a specified number of Securities (a
"Deposit Instruction"),Agent shall;no later than 6:30 p.m. (Eastern Time)that day,either approve
or cancel the Deposit Instruction through the DWAC system.
On each day on which Agent is open for business and on which it receives an instruction
originated by a Participant through the DWAC system to decrease the Participant's account by a
specified number of Securities (a"Withdrawal Instruction"), Agent shall, no later than 6:30 p.m.
(Eastern Time) that day, either approve or cancel the Withdrawal Instruction through the DWAC
system.
Agent agrees that its approval of a Deposit or Withdrawal Instruction shall be deemed to be
the receipt by DTC of a new reissued or reregistered certificated Security on registration of transfer
to the name of Cede&Co. for the quantity of Securities evidenced by the Balance Certificate after
the Deposit or Withdrawal Instruction is effected.]
{Fhc OL.,u,ity �,�t�f��at.(�) shall L%.,.uat„1:�d W;tl�DTC.]
2. Issuer: (a)understands that DTC has no obligation to, and will not,communicate to
its Participants or to any person having an interest in the Securities any information contained in the
Security certificate(s); and(b)acknowledges that neither DTC's Participants nor any person having
-2-
mbnd 1319-7/99
an interest in the Securities shall be deemed to have notice of the provisions of the Security
certificate(s)by virtue of submission of such certificate(s)to DTC.
3. In the event of any solicitation of consents from or voting by holders of the Securities,
Issuer or Agent shall establish a;record date for such purposes(with no provision for revocation of
consents or votes by subsequent'holders)and shall send notice of such record date to DTC no fewer
than 15 calendar days in advance of such record date. Notices to DTC pursuant to this Paragraph
by telecopy shall be directed to DTC's Reorganization Department,Proxy Unit at(212) 855-5181
or(212) 855-5182. If the partyisending the notice does not receive a telecopy receipt from DTC
confirming that the notice has been received, such party shall telephone (212) 855-5187. Notices
pursuant to this Paragraph, by mail or by any other means, shall be sent to:
Supervisor,Proxy Unit
Reorganization Department
The Depository Trust Company
55Water Street 50th Floor
New York,NY 10041-0099
4. In the event of a full or partial redemption or an advance refunding of part of the
outstanding Securities,Issuer or Agent shall send a notice to DTC specifying: (a)the amount of the
redemption or refunding; (b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to beneficial owners or published (the
"Publication Date"). Such notice shall be sent to DTC by a secure means (e.g., legible telecopy,
registered or certified mail,overnight delivery) and in a timely manner designed to assure that such
notice is in DTC's possession no;later than the close of business on the business day before or, if
possible,two business days before the Publication Date. Issuer or Agent shall forward such notice
either in a separate secure transmission for each CUSIP number or in a secure transmission for
multiple CUSIP numbers(if applicable)which includes a manifest or list of each CUSIP submitted
in that transmission. (The party sending such notice shall have a method to verify subsequently the
use of such means and the timeliness of such notice.)The Publication Date shall be no fewer than
30 days nor more than 60 days prior to the redemption date or,in the case of an advance refunding,
the date that the proceeds are deposited in escrow. Notices to DTC pursuant to this Paragraph by
telecopy shall be directed to DTC's Call Notification Department at(516)227-4164 or(516)227-
4190. If the party sending the notice does not receive a telecopy receipt from DTC confirming that
the notice has been received, such party shall telephone.(516) 227-4070. Notices to DTC pursuant
to this Paragraph, by mail or by an'y other means,shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City,NY 11530-4719
5. In the event of an invitation to tender the Securities, notice by Issuer or Agent to
Security holders specifying the terms of the tender and the Publication Date of such notice shall be
sent to DTC by a secure means(e.g., legible telecopy,registered or certified mail, overnight delivery)
in a timely manner designed to assure that such notice is in DTC's possession no later than the close
of business on the business day before or, if possible,two business days before the Publication Date.
Issuer or Agent shall forward such notice either in a separate secure transmission for.each CUSIP
- number or in a secure transmission for multiple CUSIP numbers (if applicable) which includes a
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mbnd 1319-7/99
manifest or list of each CUSIP number submitted in that transmission. (The party sending such
notice shall have a method to verify subsequently the use and timeliness of such notice.)Notices to
DTC pursuant to this Paragraph and notices of other actions (including mandatory tenders,
exchanges,and capital changes)by telecopy shall be directed to DTC's Reorganization Department
at (212) 855-5488. If the party sending the notice does not receive a telecopy receipt from DTC
confirming that the notice has been received, such party shall telephone (212) 855-5135. Notices
to DTC pursuant to this Paragraph,by mail or by any other means, shall be sent to:
Manager,Reorganization Department
Reorganization Window
The Depository Trust Company
55 Water Street 50th Floor
New York,NY 10041-0099
6. All notices and payment advices sent to DTC shall contain the CUSIP number of the
Securities.
7. In the event of a change in the interest rate,Agent shall send notice to DTC of such
change and Agent shall indicate the stated coupon rate. Such notice, which shall include Agent
contact's name and telephone number,by telecopy shall be directed to DTC's Dividend Department
at (212) 855-4555. If the party sending the notice does not receive a telecopy receipt from DTC
such shall telephone.(212) 855-4550. Notices
confirming that the notice has been received, party p .
to DTC pursuant to this Paragraph,by mail or by any other means, shall be sent to:
Manager,Announcements
Dividend Department
- - The Depository Trust Company
551Water Street 25th Floor
New York,NY 10041-0099
8. Issuer or Agent shall provide a written notice of interest payment information,
including stated coupon rate information,to DTC as soon as the information is available. Issuer or
Agent shall provide this information directly to DTC electronically,as previously arranged by Issuer
or Agent and DTC. If electronic transmission has not been arranged,absent any other arrangements
between Issuer or Agent and DTC, such information shall be sent by telecopy to DTC's Dividend
Department at(212) 855-4555 or(212) 855-4556. If the party sending the notice does not receive
a telecopy receipt from DTC confirming that the notice has been received,such party shall telephone
(212) 855-4550. Notices to DTC pursuant to this Paragraph,by mail or by any other means, shall
be sent to:
Manager,Announcements
Dividend Department
The Depository Trust Company
55 Water Street 25th Floor
New York,NY 10041-0099
9. Interest payments and principal payments that are part of periodic principal-and-
interest payments shall be received by Cede&Co., as nominee of DTC,or its registered assigns in
same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by
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mbnd 1319-7/99
1� ,
1:00 p.m.(Eastern Time)on the payment date all such interest payments due Agent,or at such earlier
time as required by Agent to guarantee that DTC shall receive payment in same-day funds no later
than 2:30 p.m. (Eastern Time)on the payment date. Absent any other arrangements between Issuer
or Agent and DTC, such funds shall be wired to the Dividend Deposit Account number that will be
stamped on the signature page hereof at the time DTC executes this Letter of Representations.
10. Agent shall provide DTC's Dividend Department,no later than 12:00 noon(Eastern
i ! Time)on the payment date,automated notification of CUSIP-level detail. If circumstances prevent
the funds paid to Cede &Co.,as nominee of DTC,by 2:30 p.m. (Eastern Time)from equaling the
dollar amount associated with the detail payments by 12:00 noon(Eastern Time),Issuer or Agent
must provide CUSIP-level reconciliation to DTC no later than 2:30 p.m. (Eastern Time).
Reconciliation must be provided by either automated means or written format. Such reconciliation
notice,if sent by telecopy,shall 1)e directed to DTC's Dividend Department at(212) 855-4633, and
receipt of such reconciliation notice shall be confirmed by telephoning(212) 855-4430.
11. Maturity and redemption payments shall be received by Cede&Co., as nominee of
DTC, or its registered assigns, 4n same-day funds no later than 2:30 p.m. (Eastern Time) on the
payment date. Issuer shall remit by 1:00 p.m. (Eastern Time)on the payment date,all maturity and
redemption payments due Agent', or at such earlier time as required by Agent to guarantee that DTC
shall receive payment in same-day funds no later than 2:30 p.m. (Eastern Time)on the payment date:
Absent any other arrangements between Issuer or Agent and DTC, such funds shall be wired to the
Redemption Deposit Account number that will be stamped on the signature page hereof at the time
I �
DTC executes this Letter of Representations.
1
12. • Principal payments (plus accrued interest,if any) as a result of optional tenders for
purchase effected by means of ITC's Repayment Option Procedures shall be received by Cede&
Co.,as nominee of DTC,or its registered assigns,in same-day funds no later than 2:30 p.m.(Eastern
Time)on the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time)on the payment date all
such reorganization payments due Agent,or at such earlier time as required by Agent to guarantee
that DTC shall receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on the
payment date. Absent any other arrangements between Issuer or Agent and DTC, such funds shall
be wired to the Reorganization Deposit Account number that will be stamped on the signature page
hereof at the time DTC executes this Letter of Representations.
13. DTC may direct Issuer or Agent to use any other telephone number or address as the
number or address to which notices or payments may be sent.
14. In the event of a redemption, acceleration, or any other similar transaction (e.g.,
tender made and accepted in response to Issuer's or Agent's invitation)necessitating a reduction in
the aggregate principal amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue and
authenticate a new Bond certificate, or(b)may make an appropriate notation on the Bond certificate
indicating the date and amount of such reduction in principal except in the case of final maturity,in
which case the certificate will be presented to Issuer or Agent prior to payment if required.
15. In the event that Issuer determines that beneficial owners of Securities shall be able
to obtain certificated Securities, Issuer or Agent shall notify DTC of the availability of Security
certificates. In such event, Issuer or Agent shall issue,transfer,and exchange Security certificates
in appropriate amounts, as required by DTC and others.
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mbnd1319-7/99
16. DTC may discontinue providing its services as securities depository with respect to
the Securities at any time by giving reasonable notice to Issuer or Agent(at which time DTC will
confirm with Issuer or Agent the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request, Issuer and Agent shall cooperate fully with DTC by taking
appropriate action to make available one or more separate certificates evidencing Securities to any
Participant having Securities credited to its DTC accounts.
17. Nothing herein shall be deemed to require Agent to advance funds on behalf of
Issuer.
18. This Letter of Representations may be executed in any number of counterparts,each
of which when so executed shall be deemed to be an original,but all such counterparts together shall
constitute but one and the same!instrument.
19. This Letter of Representations shall be governed by, and construed in accordance
with,the laws of the State of New York,without giving effect to principles of conflicts of law.
20. The sender of each notice delivered to-DTC pursuant to this Letter of Representations
is responsible for confirming that such notice was properly received by DTC.
21. Issuer recognizes'that DTC does not in any way undertake to,and shall not have any
responsibility to,monitor or ascertain the compliance of any transactions in the Securities with the
following,as amended from time to time: (a)any exemptions from registration under the Securities
1 Act of 1933; (b) the Investment Company Act of 1940; (c) the Employee Retirement Income
Security Act of 1974; (d) the Internal Revenue Code of 1986; (e) any rules of any self-regulatory
organizations (as defined under the Securities Exchange Act of 1934); or(f) any other local,state,
or federal laws or regulations thereunder:
22. Issuer hereby authorizes DTC to provide to Agent listings of Participants' holdings,
known as Security Position Listings ("SPLs")with respect to the Securities from time to time at the
request of the Agent. DTC charges a fee for such SPLs. This authorization, unless revoked by
Issuer,shall continue with respec to the Securities while any Securities are on deposit at DTC,until
and unless Agent shall no longer be acting. In such event, Issuer shall provide DTC with similar
evidence, satisfactory to DTC,of,the authorization of any successor thereto so to act.Requests for
SPLs shall be sent by telecopy to the Proxy Unit of DTC's Reorganization Department at(212)855-
5181 or (212) 855-5182. Receipt of such requests shall be confirmed by telephoning (212) 855-
5202. Requests for SPLs sent by mail or by any other means shall be directed to the address
indicated in Paragraph 3.
23. Issuer and Agent shall comply with the applicable requirements stated in DTC's
Operational Arrangements, as they may be amended from time to time. DTC's Operational
Arrangements are posted on DTC's website at"www.DTC.org."
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24. The following riders, attached hereto, are hereby incorporated into this Letter of
Representations:
RIDER 1
•
-7-
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Rider 1
1. DTC acknowledges that it holds in accordance with its Rules and Regulations the
Securities and any payments made in respect of the Securities in custody for its Participants in
accordance with their respective holdings, as shown on the records of DTC.
-Rider 1 -
mbnd 1319-7/99
Notes:
A. If there is an Agent(as defined in this Letter of
Representations),Agent,as well as Issuer,must sign
this Letter. If there is no Agent,in signing this Letter
Issuer itself undertakes to perform all of the
obligations set forth herein.
B. Under the Rules of the Municipal Securities
Rulemaking Board relating to "good delivery", a
municipal securities dealer must be able to determine
the date that a notice of a partial call or of an
advance refunding of a part of an issue is distributed
or published (the "Publication Date"). The
establishment of such a Publication Date is addressed
in Paragraph 3 of the Letter.
C. Schedule B contains statements that DTC
believes accurately describe DTC, the method of
effecting book-entry transfers of securities
distributed through DTC, and certain related
matters.
Very truly yours,
City of Renton,Washington
[Issuer]
By: Dol.,. G
[Authorized fiver's Signature]
Fiscal Agency of the State of Washington,currently
the Bank of New York
[A nt]
By: 8
[Authorized Officer's Signature].
Received and Accepted:
THE DEPOSITOR , - COMPANY
By:
Funds should be wired to:
The Chase Manhattan Bank
ABA#021 000 021
For credit to a/c Cede&Co.
c/o The Depository Trust Company
[Select Appropriate Account.]
Dividend Deposit Account#066-026776
i.,: *option Deposit Account#066-027306
':e-:11 ganization Deposit Account#066-077608 -
cc: Underwriter
Underwriter's Counsel
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•
•
SCHEDULE A
$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Maturity Date
CUSIP 'Principal Amount (December 11 Interest Rate
•
760167 SJ 6 $ 205,000 2013 3.55%
760167 SK 3 235,000 2014 3.65
760167 SL 1 250,000 2015 3.75
760167 SM 9 4,605,000 . 2024* 5.00
760167 SP 2 1,600,000 • • 2025 • 5.00
760167 SQ 0 1,680,000 . 2026 . 5.00
760167 SN 7 ' 1,760,000 2027 -5.00
. *Term Bonds
•
•
- 9 -
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SCHEDULE B
SAMPLE OFFICIAL STATEMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC--bracketed material may be applicable only to certain issues)
1. The DepositorY Trust Company ("DTC"), New York, NY, will act as securities
depository for the securities (the "Securities"). The Securities 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 requested,by an authorized representative of DTC. One fully-registered Security
certificate will be issued for[each issue of]the Securities, [each] in the aggregate principal amount
of such issue,and will be deposited with DTC. [If,however,the aggregate principal amount of[any]
issue exceeds $400 million, ,one certificate will be issued with respect to each $400 million of
principal amount and an additional certificate will be issued with respect to any remaining principal
amount of such issue.]
2. DTC 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 1934. DTC holds securities that its participants ("Direct
Participants")deposit with DTC. DTC also facilitates the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Direct Participants' accounts,thereby eliminating the need for
physical movement of securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange LLC,and the National Association of Securities Dealers,Inc. Access to
the DTC system is also available to others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Direct and
Indirect Participants are on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through Direct
Participants,which will receive a credit for the Securities on DTC's records. The ownership interest
of each actual purchaser of each Security("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, but Beneficial Owners are 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 Securities 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 Securities, except in the event that use
of the book-entry system for the Securities is discontinued.
-10-
i I
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.
4. To facilitate subsequent transfers, all Securities 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 Securities with DTC and
their registration in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities;
DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities
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.
5. 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 Securities may
wish to take certain steps to augment transmission to them of notices of significant events with
respect to the Securities, such as redemptions,tenders, defaults, and proposed amendments to the
security documents. Beneficial Owners of Securities may wish to ascertain that the nominee holding
the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners,or in
the alternative,Beneficial Owners may wish to provide their names and addresses to the registrar and
request that copies of the notices be provided directly to them.]
[6. Redemption notices shall be sent to DTC. If less than all of the Securities 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.]
7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote
with respect to the Securities. Under its usual procedures,DTC mails an Omnibus Proxy to Issuer
as soon as possible after thelrecord date. The Omnibus Proxy assigns Cede &Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Securities are credited on the record
date(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds,distributions,and dividend payments on the Securities 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 Issuer or Agent on 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, Agent, or Issuer, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of redemption proceeds,distributions,
and dividends to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to
Direct Participants shall be the responsibility of DTC, and disbursement of suchpayments to the
Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
-1 1-
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[9. A Beneficial Owner shall give notice to elect to have its Securities purchased or
tendered,through its Participant,to [Tender/Remarketing]Agent,and shall effect delivery of such
Securities by causing the Direct Participant to transfer the Participant's,interest in the Securities,on
DTC's records,to [Tender/Remarketing]Agent. The requirement for physical delivery of Securities
in connection with an optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct Participants on DTC's records and
followed by a book-entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC
account.]
• 10. DTC may discontinue providing its services as securities depository with respect to
- the Securities at any time by'giving reasonable notice to Issuer or Agent. Under such circumstances,
in the event that a successor securities depository is not obtained, Security certificates are required
to be printed and delivered.
11. Issuer may decide to discontinue use of the system of book-entry transfers through
DTC (or a successor securities depository). In that event, Security certificates will be printed and
delivered.
12. The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that Issuer believes to be reliable,but Issuer takes no responsibility for
the accuracy thereof -
•
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D m!?Ar` i; D.A. Davidson & Co.
CQ'MPA�MIES
Member SIM
•
' I • $10,335,000
.:• • - CITY OF RENTON;WASHINGTON
+- t, Water and Sewer Revenue-Bonds,2004
I
•
BOND PURCHASE AGREEMENT
November 1,2004
City of Renton,Washington
1055 South Grady Way ,
Renton,WA 98055
On the date hereof, the City Council (the"Council") of the City of Renton, Washington(the"City")
5 adopted an ordinance (the "Ordinance") authorizing the sale, issuance and delivery of the City's
Water and Sewer Revenue Bonds, 2004 (the"Bonds"), and the City's execution and delivery of this
. Bond Purchase Agreement(the,"Agreement"). hi light of such authority,D. A. Davidson& Co. (the
"Underwriter")hereby offers to enter into this Agreement with the City. Upon your acceptance, this
Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the
City and the Underwriter.
1) Upon the terms and conditions and in reliance upon the representations set forth herein, the
Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to the
Underwriter all (but not less than all) of the Bonds in the aggregate principal amount of
$10,335,000.00, at an aggregate purchase price of$10,603,397.65, which accounts for the(i)
underwriter's discount of$103,350.00 ($10.00/$1,000 of the par value of the Bonds) and(ii)
original issue premium of $371,747.65, together with accrued interest on the Bonds from
November 1, 2004 to the Closing Date defined herein. The Bonds shall be issued and
secured under and pursuant the Ordinance dated November 1, 2004 and shall mature,,bear
interest and be subject to redemption as set forth in Exhibit A hereto. The Underwriter
agrees to make a public offering of the Bonds at the initial offering prices set forth in the
Official Statement referred to in Section 2 herein, which prices maybe changed from time to
time by the Underwriter.
Seattle Office
l_ Bank of America Tower•701 5th Avenue•Suite 3100•Seattle,WA 98104•(206)389-9000•FAX(206)903-8689
California•Colorado•Idaho•Montana•Oregon•Utah•Washington•Wyoming
.
2) The City shall deliver or cause to be delivered to the Underwriter, promptly after acceptance
hereof, five copies of the Official Statement, substantiallyin the form of the Preliminary Official
Statement dated October 22, 2004 (the"Preliminary Official Statement") with only such changes
therein as shall have been accepted by us(such Preliminary Official Statement with such changes,
if any, and including the cover page and all appendices, exhibits and statements included therein
or attached thereto being called the "Official Statement"). The City hereby authorizes the
distribution by the Underwriter of the Preliminary Official Statement in offering the Bonds for
{ sale to prospective purchasers of the Bonds.
3) On November 17,•2004, or at such other time, or on such earlier or later date as the Underwriter
and the City may mutually agree(the"Closing Date"),.the Underwriter will accept delivery of the
Bonds and pay the purchase price thereof as set•forth in Section 1 herein by Federal Reserve
System wire transfer in immediately available Federal funds or by any other form of immediately
available Federal funds. The Bonds shall be delivered through The Depository'Trust Company,
New York, New York ("DTC") in definitive form, bearing CUSIP numbers and issued under a
book-entry system.
4) The City makes the following representations and warranties:
a) The City is a municipal corporation organized and existing under the laws of the State of
Washington and is liauthorized to issue the Bonds, to enter into this Agreement and all
other agreements contemplated hereby and to adopt the Ordinance.
b) The City has complied to date with all applicable provisions of the laws of the State of
Washington in connection with the execution and issuance of the Bonds.
c) The Ordinance and this Agreement have been duly and validly authorized and executed by
the City.
d) The City has authorized all necessary action to be taken by it for(i)the issuance and sale
of the Bonds upon, the terms set forth herein, in the Official' Statement and in .the
Ordinance; (ii) they execution, delivery, receipt and due performance of this Agreement,
the Bonds and the Ordinance and all other agreements contemplated hereby or required in
order to carry out,'give effect to.and consummate the transactions contemplated hereby;
and(iii) carrying out, giving effect to and consummation of the transactions contemplated
hereby. ! .
e) The Bonds when: issued, delivered and paid for as provided for herein and in the
Ordinance, will have been duly and validlyauthorized and issued and will constitute
special obligations of the City secured as provided in the Ordinance and as described in •
the Official Statement.
f) To the best knowledge of the City, there are no legal or governmental proceedings
pending or threatened, or any basis therefore, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the validity or security of the Bonds, the
Ordinance, this Agreement or'the transactions contemplated thereby or the power of the
City to execute and deliver the Bonds or this Agreement,or adopt the Ordinance.
g) As of the date hereof, the Preliminary Official Statement does not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they
were made,not misleading.
•
h) The Preliminary Official Statement is deemed "final" in accordance with Rule 15c2-
12(b)(1)under the Securities Exchange Act of 1934.
5) The Underwriter enters into this Agreement in reliance upon the representations and warranties of
the City contained herein and in the Ordinance and in reliance upon the representations and
warranties to be contained in the documents and instruments to be delivered at the Closing and •
upon the performance by the City and its obligations hereunder both on and as of the date hereof
and as of the Closing Date. Accordingly, the Underwriter's obligation under this Agreement to
accept delivery of and to pay for the.Bonds shall be conditioned upon the performance by the City
of its obligations to be performed hereunder and under such documents and instruments.at or prior
to the Closing,and shall also be subject to the following additional conditions:
a) the representations and warranties of the City contained herein shall be true and correct on the
date hereof and of the Closing,as_if made on and at the Closing;
b) at or prior to the Closing,the Underwriter shall receive the following documents:
i) certified copies of the Ordinance;
ii) the opinion of Gottlieb, Fisher &. Andrews, PLLC, as Bond Counsel, dated the
Closing Date, substantially in the form of Appendix E to the Official Statement;
iii) evidence of the insurance policy issued by MBIA Insurance Corporation(MBIA);
iv) evidence satisfactory to the Underwriter that Standard and Poor's Corporation and
Fitch Ratings have issued ratings for the Bonds not lower than'AAA' (underlying
`AA-) and 'AAA' (underlying `AA-'), respectively, and that such ratings have
not been withdrawn; and
v) such additional legal opinions, certificates, proceedings, instruments and other
documents as the Underwriter or Bond Counsel may reasonably request.
If the conditions to the Underwriter's obligations contained in this Agreement are not satisfied
(unless otherwise waived in writing by the Underwriter) or if the Underwriter's obligations shall
be terminated for any reason permitted herein, this Agreement shall terminate and neither the
Underwriter nor the City shall have any further obligation hereunder except to reimburse the
Underwriter for expenses related to the preparation, printing and mailing of the preliminary and
final official statements.
6) During the initial public offering of the Bonds (a period of concluding the final date the
Underwriter is charged with furnishing a copy of the Official Statement to a potential customer
under SEC Rule 15c2-12 but no later than six months after the Closing Date),the City will(a)not
consent to the distribution of any amendment of or supplement to the Official Statement to which,
after having been furnished with a copy,the Underwriter shall object in writing or which shall be
disapproved by counsel for the Underwriter and(b) if any event shall occur as a result of which it
is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in
order to make the Official Statement not misleading in light of the circumstances existing at the
time it is delivered to a purchaser, consent to the distribution of an amendment of or supplement
to the Official Statement,prepared without expense to the City(in form and substance satisfactory
to the Underwriter) in a reasonable number of copies which will amend or supplement the Official
Statement so that it will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
existing at the time the Official Statement is delivered to a purchaser,not misleading.
•
7) The Underwriter shall have the right to cancel its obligation to purchase the Bonds if between the
date hereof and the Closing, (i) legislation shall have been enacted by the Congress.of the United
States or the legislature of the State of Washington or legislation shall have been reported out of
committee of either body or be pending in committee of either body, or a decision shall have been
rendered by a court of the United States or of the State of Washington or the Tax Court of the
United States, or a ruling shall have been made or a regulation or temporary regulation shall have
been proposed or made or any other release or announcement shall have been made by the
Treasury Department of the;United States or the Internal Revenue Service, with respect to federal
taxation upon revenues or other income of the general character of the Bonds which, in the
reasonable judgment of the;Underwriter,materially adversely affects the market for the Bonds, or
(ii) there shall exist any event which, in the reasonable judgment of the Underwriter, either (a)
makes untrue or incorrect in any material aspect as-of such time any statement or information
contained in the Official Statement or (b) is not reflected in the Official Statement but should be'
reflected therein in order to make the statements and information contained therein not misleading
in any material respect, or;(iii) there shall have,occurred any outbreak of hostilities or any other
national or international calamity or crisis, the effect of which outbreak, calamity or crisis on the
financial markets of the United States is such as, in the reasonable judgment of the Underwriter,
would make it impracticable for the Underwriter to'market or enforce contracts for the sale of the
Bonds, or (iv) there shall!be in force a general suspension of trading on the New York Stock
Exchange or minimum or, maximum prices for trading shall have been fixed and in force, or
maximum ranges for prices for securities shall have been required and be in force on the New.
York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the
Securities and Exchange Commission or any other governmental authority having jurisdiction, or
(v) a general banking moratorium shall have been declared by either Federal, State of Washington
or New York authorities having jurisdiction and be in force, or(vi)there shall be established any
new restriction on transactions in securities materially affecting the free market for securities
(including the imposition of any limitation on interest rates)or extension of credit by, or charge to
the net capital requirements of, Underwriter established by the New York Stock Exchange, the
Securities and Exchange Commission, any other federal or state agency or the Congress of the
United States, or by Executive Order.
8) All fees, expenses and costs incident to the execution and performance of this Agreement and to
the authorization, issuance and sale of the Bonds to the Underwriter, including,but not limited to,
the cost of printing the Bonds, if any(and full execution thereof),the fees and charges of Standard
&Poor's,the fees and charges of Fitch Ratings,the bond insurance policy premium of MBIA,the
preparation, printing and distribution of the Preliminary Official Statement and the Official
Statement, any reimbursable expenses of the Underwriter and the fees and expenses of Bond
Counsel shall be paid by the City. All expenses to be paid by the City pursuant to this Agreement
may be paid from Bond proceeds to the extent permitted by the Ordinance. The obligation of the
City under this Section 8 shall survive the payment of the Bonds. -
1 ; 9) Any notice or other communication to be given to the City under this Agreement may be given by
delivering the same in writing at the address set forth above and any such notice or other
communications to be given to the Underwriter may be given by delivering the same-in writing to
D.A. Davidson & Co.,. 701- Fifth Avenue, Suite 3100, Seattle, Washington 98104, Attention:
Public Finance. The approval of the Underwriter when required hereunder or the determination of
its satisfaction as to any document referred to herein shall be in writing signed by the Underwriter
and delivered to you.
10) This Agreement is made solely for the benefit of the City and the Underwriter (including
successors or assigns of the Underwriter, but excluding any purchaser, as such purchaser, of
Bonds from the Underwriter) and, to the extent expressed herein, controlling persons thereof and
1I
ti_
no other persons,partnership, association or corporation shall acquire to have any right hereunder
or by virtue hereof All representations and agreements of the parties to this Agreement shall
remain operative and in full force and effect regardless of any investigation made by or on behalf
of the Underwriter and shall survive the delivery of and payment for the Bonds. Time shall be of
the essence of this Agreement. This Agreement shall be governed-by, construed and enforced in
accordance with the laws of the State of Washington. This Agreement may be executed in any
number of counterparts each of which shall be an original but all of which together will constitute
one and the same instrument.
Very truly yours,
D.A. DAVIDSON'&CO.
B : -4
Fred R Eoff
Senior Vice President&Managing Director
Accepted and Agreed to:
CITY OF RENTON,WASHINGTON,acting by and through its City Council
By: ,iv' - ��
Kathy ..olker-Wheeler .
Mayor •
� : .r
Attesst: 1jQ� ,....Q• ?'
®Bank I.Walton,City OleTk
II
EXHIBIT A
TERMS OF THE BONDS
Purchase Price: Par Amount of Bonds: $10,335,000.00
Plus:Reoffering Premium: 371,747.65
Less: Underwriter's Discount: (103,350.00)
Purchase Price: $10,603,397.65*
*Plus accrued interest to the Closing Date
Dated Date:' November 1,2004
Delivery Date: November 17,2004
Denominations: $5,000 each or integral multiples thereof
Form: The Bonds will be fully registered in Book-Entry only through the facilities of The
Depository Trust Company("DTC")in New York,New York.
Interest Payable: Interest on the Bondsfromtheir dated date will be payable semi-annually on June 1 and
December 1,,commencing December 1,2004,to their maturity or prior redemption.
Maturity Schedule: The Bonds mature on December 1, in each of the years-and amounts set forth below,
subject to optional and mandatory redemption as hereinafter described, and will bear
interest from November 1, 2004 to their respective maturities or dates. of prior
redemption,whichever occurs first,at the rates as shown below:
Interest Yield to Price Interest Yield to Price
Year Amount Rate Maturity (%of Par) Year Amount Rate Maturity (%of Par)
2013 $205,000 3.55% 3.55% 100.000 2024* $4,605,000 5.00%. _ 4.43% 104.577
2014 235,000 3.65 3.65 100.000 2025 1,600,000 5.00 4.52 103.837
2015 250,000 3.75 3.75 100.000 2026 1,680,000 5.00 4.60 103.185
2027 1,760,000 5.00 4.67 102.618
*Term Bonds
True Interest Cost: 4.7352%
Optional Redemption: The Bonds maturing on or after December 1,2015 are subject to optional redemption
prior to maturity in whole or in part at any time beginning on December 1,2014 at par
(100%)plus accrued interest to the date of redemption.
Mandatory Term
Bond Redemption:. • Term Bonds maturing December 1, 2024 are subject to mandatory redemption in
accordance with the following schedule:
Date Amount Date Amount
• 12/1/2016 $260,000 12/1/2021 $265,00-
12/1/2017 270,000 12/1/2022 280,000
_{ 12/1/2018 130,000 12/1/2023 1,450,000
12/1/2019 185,000 12/1/2024* 1,520,000
12/1/2020 245,000
*Final maturity
Bond Counsel: Gottlieb Fisher&Andrews,PLLC, Seattle,Washington
Registrar: The Bank of New York,New York,New York
Offer Expires: November,l,2004 at 11:59 PM Pacific Time
PRELIMINARY OFFICIAL STATEMENT dated October 22;1064
- NEW ISSUE INSURANCE: Applied For
• BOOK-ENTRY RATINGS: Standard Si Poor's: Applied For
Fitch: Applied For
° ° 4 (See"Bond Insurance"and"Ratings"herem)
'° it, ° In the opinion of Bond Counsel;as of the Date of Issue,and assuming the City fulfills its covenant to comply with certain requirements of the Internal
Revenue Code of 1986,as amended(the"Code"),that must be met subsequent to the issuance of the Bonds: interest on the Bonds including any property
.° i. .r. allocable original issue discount as described herein,is excluded from gross income for purposes of federal income tax purposes;and is not an item of tax
preference for purposes ofdetermining the alternative Minimum tax on individuals and corporation. However,such interest on the.Bonds is included in the
computation of other taxes on corporations, including, 'without limitation the alternative mininuim taxi and May be subject to other coil ateral tax
eo consequences See"Tax Exemption"and"Other Tax Consequences"herein.
t
fi Q $10,705,000* .
CITY OF RENTON, WASHINGTON
� � y
WATER AND SEWER REVENUE BONDS, 2004
� a �
- t ` 1) DATED: November 1,2004 DUE: December 1, as shown on the inside cover.
The City of Renton;Washington(the"City")provides this Preliminary Official.Statement in connection with.
the issuance of its.Water and Sewer Revenue Bonds,2004(the`Bonds"). The Bonds mature on December
1,in each of the years and amounts set forth on the inside cover;are subject to optional redemption,and will
bear interest from November 1,2004 to their respective maturities at the rates per annum as shown on the
000 p
inside cover hereof.
t The Bonds will be issued.under a book-entry� •,� system,initially registered to Cede&Co.;as nominee of The
o Depository Trust Company.("DTC"),New York,New York,which will act as securities depository for the
▪ Bonds. Individual purchases of Bonds will be made in the principal amount of$5,000,or integral multiples
°•; thereof within a single maturity. The purchasers will not receive certificates representing their interest in the
Bonds. (See "The Bonds = Book-Entry System"). Interest will be payable semi-annually on June 1 and
C .0
a ; December 1, commencing June 1; 2005 to their maturity. The fiscal agent of the State of Washington,
r! currently The Bank of New York,New York,New York,will serve as registrar,paying agent and transfer.
off , ..
o ; o agent (the "Registrar") for the Bonds. For so long as the Bonds are held by DTC in book-entry format,
y tr principal and interest payments will be made as described herein, see"The Bonds-Book-Entry System".
The Bonds are special fund revenue obligations of the City payable solely from the Net Revenue of the
• City's combined water and sewerage systems, including the storm and surface water sewers (the
"Waterworks Utility")and are issued on a parity of lien with the Parity Bonds,including any Future Parity
� = y
Bonds. The Bonds are being issued in accordance with the provisions of the Constitution and laws of the
State of Washington: The proceeds of the Bonds will be used for the purpose of financing improvements
o h incorporated in the Waterworks Utility Capital Improvement Program (the "Project") and paying costs
• associated with the sale and issuance of the Bonds. The Bonds maturing on and after December 1,2015 are
fi subject to.optional redemption and the Term Bonds are subject to mandatory sinking fund redemption prior
ate "
O to maturity. (See"The Bonds-Redemption , Authorization, "Security,"and"Source and Application Of
.=; Funds"herein.)
d42 ; The Bonds are offered by the Underwriter when, as and if issued by the City, subject to the opinion as to
legality and tax-exemption of the Bonds by Gottlieb; Fisher & Andrews, PLLC, Bond Counsel, Seattle,
▪ Washington. The fees of Bond Counsel are contingent on the issuance of the Bonds. The Bonds,in book-
e d 4 entry form, are expected to be available through the facilities of DTC for delivery by.Fast Automated
od Securities Transfer on or about November 16, 2004.
This cover page contains certain informationfor quickreference only. It is not a summary of this issue: Investors must
▪ read the entire official statement to obtain information essential to making an informedinvestment decision.
• o * Preliminary;subject to change:
D.A. DAVIDSON & CO.
i
$10,705,000*
City of Renton,Washington
Water and Sewer Revenue Bonds, 2004
MATURITY SCHEDULE*
DATED: November 1, 2004
DUE: December 1, as shown below
Interest Yield to Price
Year Amount* Rate Maturity (% of Par) CUSIPI
2013 $100,000
2014 175,000
2015 190,000
$3,875,000`, %Term Bonds due December 1, 2024 to yield %,price %, CUSIP'
$6,365,000', %Term Bonds due December 1, 2028 to yield %,price %, CUSIP'
1- 1
* Preliminary;subject to change.
' The CUSIP numbers are included for convenience of the holders and potential holders of the Bonds. No assurance can be given
that the CUSIP numbers for the Bonds will remain the same after the date of issuance and delivery of the Bonds.
CITY OF RENTON
1055 South Grady Way
Renton, Washington 98055
(425) 430-6858
www.ci.renton.wa.us'
Members of the City Council:
Mayor Kathy Keolker-Wheeler
Council Members Don Persson,President
Terri Briere
Dan Clawson
Randall Corman
Denis Law
Toni Nelson
Marcie Palmer
Certain Appointed City Officials:
Chief Administrative Officer ' Jay Covington
Finance and Information Services Administrator Victoria Runkle
City Attorney Lawrence Warren
City Clerk Bonnie Walton
Underwriter
•
D. A. DAVIDSON & CO.
Columbia SeaFirst Center
701 5th Avenue, Suite 3100
Seattle, Washington 98104
888-389-8001
•
Bond Counsel
Gottlieb,Fisher&Andrews, PLLC
1325 4th Avenue,,Suite 1200
Seattle, Washington 98101
• Neither the information on the City's website nor any links from that website,is a part of this Official Statement,and such
information cannot be relied upon to be accurate as of the date of this Preliminary Official Statement,nor should any such
information be relied upon to make investment decisions regarding the Bonds.
No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any
representations, other than those contained in this Preliminary Official Statement, and if given or made, such other
information or representations must not be relied upon as having been authorized by the City. The information in this
Preliminary Official Statement was obtained from sources believed to be reliable,but is not guaranteed as to accuracy
or completeness.
The Underwriter has reviewed the information in the Preliminary Official Statement in accordance with,as a part of,its
responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction,but the
Underwriter does not guarantee the accuracy or completeness of the information. The information and expressions of
opinion herein are subject to change without notice,and neither the delivery of this Preliminary Official Statement nor
any sale hereunder shall create any implication that there has been no change in the financial condition or operations of
the City described herein since the date hereof. This Preliminary Official Statement contains,in part, estimates and
matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the
correctness of such estimates and opinions or that they will be realized.
The following descriptions of the Bonds and the Ordinance and all references to other documents or materials not
claiming to be quoted in full are only brief outlines of some of the provisions and do not claim to summarize or describe
all provisions thereof. Copies of such documents may be obtained from the City or the Underwriter.
THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IN MAKING AN INVESTMENT DECISION
INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE
OFFERING,INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURElibS COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
In connection with the offering and issuance of the Bonds,the Underwriter may over-allot or effect transactions that
stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open
market. Such stabilizing,if commenced,may be discontinued at any time.
Certain statements included or incorporated by reference in this Preliminary Official Statement constitute"forward-
looking statements"within the meaning of the United States Private Securities Litigation Reform Act of 1995,section
21E of the United States Securities Act of 1934,as amended,and Section 27A of the United States Securities Act of
1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect,"
"estimate,""projection,""budget"or other similar words.
The CUSIP numbers are included on the inside cover of this Preliminary Official Statement for convenience of the
holders and potential holders of the Bonds. No assurance can be given that the CUSIP numbers for the Bonds will
remain the same after the date of issuance and delivery of the Bonds.
TABLE OF CONTENTS
SUMMARY STATEMENT 1
THE BONDS 2
Description of the Bonds 2
• Redemption 2
Book-Entry System 3
Transfer and Exchange of Bonds Upon Discontinuance of Book Entry System 6 '
Authorization 6
Security 6
Source and Application of Funds 10
THE WATERWORKS UTILITY 11
General Information 11
Waterworks Utility Major Customers 11
Delinquent Accounts 11
Historical Net Income and Revenue Available for Debt Service 12
Schedule of Waterworks Utility Debt,Service 13
Debt Repayment Record 14
Outstanding Bonds and Debt Service Requirements 14
Expected Future Improvements and Borrowings 14
The Water Utility 15
Water Utility Customer Accounts ; 15
Water Utility Rates 15
The Wastewater Utility 15
Wastewater Utility Customer Accounts 16
Wastewater Utility Rates 16
The Storm Drainage Utility 16
Strom Drainage Utility Rates 17
THE CITY OF RENTON 17
General Information I 17
Form of Local Government 17
Principal City Officials 18
City Employment and Primary Services 18
Employee Relations 18
Pension Plans 19
The Budgetary Process 19
Auditing of City Finances , 19
Risk Management 20
Authorized Investments 20
APPROVAL OF BOND COUNSEL 21
TAX EXEMPTION 21
OTHER TAX CONSEQUENCES 22
NO LITIGATION CONCERNING THE BONDS 24
UNDERWRITING 24
RATINGS 24
ENFORCEABILITY 25
COMMITMENT TO PROVIDE CONTINUING DISCLOSURE 25
ADDITIONAL INFORMATION AND MISCELLANEOUS 25
DISCLOSURE STATEMENT 26
APPROVAL OF OFFICIAL STATEMENT 26
APPENDIX A: SUMMARY OF CERTAIN PROVISIONS OF THE ORDINANCE A-1
Definitions A-2
Pledge of Revenue A-4
Bond Fund A-4
Reserve Fund A-5
Rate Stabilization Fund A-5
Rate Covenant A-5
Flow of Funds A-5
Additional Covenants A-6
Future Parity Bonds A-7
APPENDIX B: 2002 AUDITED FINANCIAL STATEMENTS OF THE WATERWORKS UTILITY B-1
APPENDIX C: ECONOMIC AND DEMOGRAPHIC INFORMATION C-1
Local Economic Overview C-2
Aircraft Manufacturing-The Boeing Company C-2
Technology C-3
. Transportation C-4
Fishing,Agriculture and Forest Products C-4
Higher Education C-5
Services,Tourism,Recreation and Conventions C-5
Population Trends C-6
Trends in Building Permits - C-7
Historical Taxable Retail Sales C-7
Major Employers—City of Renton C-7
Major Employers—Central Puget Sound`Region C-8
Employment By Major Industry C=9
Labor Force and Unemployment C-10
Personal Income Trends C-10
Earnings By Industry C-11
APPENDIX D: CONTINUING DISCLOSURE D-1
APPENDIX E-FORM OF LEGAL OPINION E-1
$10,705,000*
City of Renton,Washington
Water and Sewer Revenue Bonds, 2004
SUMMARY STATEMENT
The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in
this Official Statement. No person is authorized to detach this Summary Statement from this Official Statement or
to otherwise use it without this entire Official Statement.
"City") located approximately ISSUER The City of Renton(the is pp y 20 miles southeast of
the City of Seattle and approximately 60 miles northeast of the City of
Olympia,the State's capital. The City had a population of 54,900 as estimated
in 2003 by the State of Washington (the "State") Office of Financial
Management. (See"The City of Renton"herein.)
INTEREST AND
REDEMPTION Interest on the Bonds is payable semi-annually on each June 1 and December
1,commencing June 1,2005 to their maturity or prior redemption. The Bonds
maturing on and after December 1,2015 are subject tooptionalredemption and
the Term Bonds maturing on December 1, 2024 and December 1, 2028 are
subject to mandatory sinking fund redemption. (See"The Bonds-Description
of the Bonds"and"Redemption"herein.)
AUTHORITY
FOR ISSUANCE The Bonds will be issued in accordance with the provisions of the Constitution
and the laws of the State,particularly chapters 35.41,35.67 and 39.46 Revised
Code of Washington("RCW"),and pursuant to Ordinance No. of the
City, adopted on or about November 1, 2004 (the "Ordinance"). (See"The
Bonds-Authorization"herein.)
SOURCE OF
REPAYMENT The Bonds are special fund revenue obligations of the City. The Net Revenue
of the City's combined water and sewerage systems, including the storm and
surface water sewers(the"Waterworks Utility")is pledged to the payment into
the 2004 Waterworks Revenue Bond Fund (the "Bond Fund") of amounts
necessary to pay the principal of and interest on the Bonds. The Bonds
constitute a lien and charge on the Net Revenue prior and superior to any other
charges whatsoever except that the lien and charge on such revenue for the
Bonds shall be on a parity with the lien and charge thereon for the Parity
Bonds(hereinafter defined),including any Future Parity Bonds. The City will
maintain a Reserve Fund for the sole purpose of providing additional security
for the Parity Bonds,including the Bonds if Revenue is not sufficient to pay
debt service when due. (See"The Bonds- Security"herein.)
USE OF
PROCEEDS The proceeds of the Bonds will be used for the purpose of financing
improvements incorporated in the Waterworks Utility Capital Improvement
Program(the"Project")and paying costs associated with the sale and issuance of
the Bonds. (See"The Bonds - Source and Application of Funds"herein.)
* Preliminary;subject to change.
1
THE BONDS
Description of the Bonds
The Bonds will be issued in the aggregate amount of$10,705,000* in fully registered form, will be in the
denomination of$5,000 each or any integral multiples thereof within a single maturity and will be dated
November 1,2004. The Bonds shall mature on December 1,in the years and amounts set forth on the inside
cover hereof. The fiscal agent of the State, currently The Bank of New York,New York,New York,will
serve as registrar,paying agent and transfer agent(the"Registrar") for the Bonds. -
The Bonds will bear interest from November 1, 2004, or the most recent interest payment date to which
interest has been paid or duly provided for,whichever is later,at the rates per annum set forth on the inside
cover hereof. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months,
and will be payable semi-annually on June 1 and December 1, commencing June 1,2005,until the date of
maturity of such Bond. For so long as the Bonds are held by DTC in book-entry form,principal and interest
payments will be made as described herein under the heading"The Bonds -Book-Entry System".
Redemption
Optional Redemption. Bonds maturing in the years 2013 through 2014, inclusive, are not subject to
redemption prior to their stated maturities. Bonds maturing on or after December 1, 2015 are subject to
redemption at the option of the City prior to maturity on or after December 1, 2014, from funds from any
source, at any time, in whole or in part (maturities to be selected by the City and by lot in the manner
determined by the Registrar), at the price of par plus interest accrued to the date of redemption, if any.
Bonds in the principal amount of greater than $5,000 may be partially redeemed in part in any integral
multiple of$5,000. The Registered Owner of any Bond redeemed in part shall receive,upon surrender of
such Bond to the Registrar, one or more new Bonds of the same maturity and interest rate in authorized
denominations equal in principal amount to the unredeemed portion of the Bond so surrendered.
Mandatory Sinking Fund Redemption —2024 and 2028 Term Bonds. The Bonds maturing on
December 1,2024 and December 1,2028 are Term Bonds and,if not previously purchased by the City in the
open market or optionally redeemed,are subject to mandatory sinking fund redemption prior to maturity,in
part, by lot in such manner as the Registrar shall determine, at par plus accrued interest to the date of
redemption,on December 1 in the following years and in the following mandatory sinking fund redemption
amounts:
* Preliminary;subject to change.
2
Mandatory Sinking Fund Redemption Dates
Term Bonds Due Redemption Term Bonds Due Redemption
December 1, 2024 Amount December 1, 2028 Amount
December 1, 2016 $200,000 December 1, 2025 $1,480,000
December 1, 2017 205,000 December 1, 2026 1,555,000
December 1, 2018 55,000 December 1, 2027 1,625,000
December 1, 2019 110,000 December 1, 2028* 1,705,000
December 1, 2020 :165,000
December 1, 2021 ;180,000
December 1, 2022 190,000
December 1, 2023 1;355,000
December 1, 2024* 1,415,000
*Maturity
Notice of Redemption. For so long as the Bonds are held by DTC in book-entry only form, the City will
provide notice of redemption to DTC(or its nominee)as provided in DTC's Letter of Representations and
the City will not provide such notices to beneficial owners of the Bonds (other than as described in the
section "The Bonds — Book-Entry Form" herein). See "The Bonds - Book-Entry System" below for a
discussion of how redemption notices will be given by DTC to the beneficial owners of the Bonds. The City
cannot and does not give any assurances that DTC, its direct participants or others will distribute any
redemption notices to the beneficial owners or that they will do so on a timely basis. From and after the date
that the Bonds are no longer held in book-entry form,notice of redemption must be given by or on behalf of
the City not less than 30 nor more than 60 days prior to the date of redemption in accordance with the
Ordinance.
Pursuant to the City's continuing disclosure undertaking, the City is required to provide timely notice of
redemption of the Bonds to each NRMSIR (or MSRB) and to any SID. See "Commitment to Provide
Continuing Disclosure" herein for definitions of the terms "NRMSIR," "MSRB" and "SD" and a
description of the City's undertaking to'provide certain notices.
Effect of Redemption. If redemption notice to the Registered Owners has been given in accordance with the
Ordinance and the City has set aside sufficient money for the payment of all Bonds called for redemption on
the date fixed for redemption,the Bonds so called shall cease to accrue interest after such redemption date,
and all such Bonds shall be deemed not to be outstanding under the Ordinance for any purpose,except that
the Registered Owners of such Bonds shall be entitled to receive payment of the redemption price and
interest accrued on the principal of the Bonds to the redemption date from the money set aside for such
purpose.
Book-Entry System
When the Bonds are issued, ownership interests will be available to purchasers only through a book-entry
system(the"Book-Entry System")maintained by DTC or such other depository institution designated by the
City pursuant to the Ordinance. If the Bonds are removed from the Book-Entry System and delivered to the
persons named as the registered owners of the Bonds on the registration records maintained by the Registrar
(the "Registered Owners") in physical form, as described below, the discussion herein of the Book-Entry
, I
3
System will not apply. The following information has been provided by DTC, and the City makes no
representation as to the accuracy or completeness thereof.
1. The Depository Trust Company("DTC"),New York,New York,will act as securities depository for
the Bonds. The 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 requested by an authorized
representative of DTC. One fully registered bond certificate will be issued for each maturity of the
Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
2. DTC, the world's largest 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 1934. DTC holds and provides asset servicing for
over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and
money market instruments from over 85 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 Corporations ("DTCC").
DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National
Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing
Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC,MBSCC, and EMCC,
also subsidiaries of DTCC), as well as by the New York Stock Exchange,Inc.,the American Stock
Exchange,Inc.,and the National Association of Securities Dealers,Inc. Access to the DTC system
is also available to others,such as U.S.and non-U.S. securities brokers and dealers,banks,and 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 Standard and
Poor's highest rating: AAA. The DTC rules applicable to its Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com.
3. Purchases of Bonds under the DTC system must be made by or through Direct Participants,which
will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond ("Beneficial Owner") is in turn to,be recorded on the Direct and Indirect
Participants' records. Beneficial Owners are, however, expected to receive written confirmation -i
from DTC of their purchase,but Beneficial Owners are 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 Bonds are to be accomplished by entries made on the books of Direct or
Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Bonds,except in the event that use of the book-
entry system for the Bonds is discontinued.
4
4. To facilitate subsequent transfers,all Bonds deposited by 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 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 Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited,which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
5. Conveyances of notices land 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.
6. Redemption'notices, if any, shall be sent to DTC. If less than all of the 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.
7. Neither DTC nor Cede & Co. (nor such other DTC nominee), will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its
usual procedures,DTC mails an Omnibus Proxy to the City 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 Bonds are credited on the record date(identified in a listing attached to the Omnibus
Proxy).
8. Redemption proceeds, distributions, and dividend payments on the 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 City on 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 or the City, subject to any statutory or regulatory requirements as maybe 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 City, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to Beneficial Owners shall be the
• responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as securities depository with respect to the Bonds at any
time by giving reasonable notice to the City. Under such circumstances,in the event that a successor
securities depository is not obtained, Bond certificates are required to be printed and delivered.
10. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event,Bond certificates will be printed and delivered.
11. The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that the City believes to be reliable,but the City takes no responsibility for the accuracy
thereof.
5
Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry System
So long as the Bonds are in book-entry only form, the beneficial ownership of the Bonds may only be
transferred in the records established and maintained by DTC. Upon discontinuance of the book-entry
system,the Bonds may be transferred by Registered Owners upon completion of the assignment form on the
Bond(s)in form and substance satisfactory to the Registrar and delivery of the Bond(s)to be transferred to
the principal corporate trust office of the Registrar for cancellation and re-issuance. Upon such surrender,
the Registrar will cancel the surrendered Bonds and deliver to the new Registered Owner a new Bond or
Bonds of the same maturity and interest rate and for the same aggregate principal amount. Upon
discontinuance of the book-entry system,any Bond maybe surrendered at the principal corporate trust office
of the Registrar and exchanged,without charge, for an equal aggregate principal amount of Bonds, in any
authorized denomination. The Registrar is not required to transfer or exchange Bonds during the 15 days
preceding any principal or interest payment date.
Authorization
The Bonds are special fund revenue obligations of the City issued pursuant to the provisions of the
Constitution and laws of the State of Washington,particularly chapters 35.41,35.67 and 39.46 RCW and to
Ordinance No. adopted by the City Council on or about November 1, 2004 (the "Ordinance")
authorizing the issuance and sale of the Bonds.
Security
Revenue Pledge. In the Ordinance,the Net Revenue of the Waterworks Utility is pledged to the payment
into the 2004 Waterworks Revenue Bond Fund(the"Bond Fund")in amounts necessary to pay the principal
of and interest on the Bonds. The Bonds are payable solely out of the Bond Fund. The Bonds constitute a
lien and charge on the Net Revenue prior and superior to any other charges whatsoever except that the lien
and charge on such revenue for the Bonds shall be on a parity with the lien and charge thereon for the City's
Water and Sewer Revenue Refunding Bonds, 1998 (the "1998 Bonds"), the City's Water and Sewer
Revenue Bonds, 2002 (the"2002 Bonds"), the City's Water and Sewer Revenue Refunding Bonds, 2003
(the"2003 Bonds") and any Future Parity Bonds(collectively,the"Parity Bonds") See"The Waterworks
4-1
Utility-Schedule of Waterworks Utility Debt Service"). As of the date of issuance of the Bonds,the City
did not have any outstanding subordinate or junior lien obligations.
As used herein, "Revenue of the Waterworks Utility"means all the earnings and revenues received by the
City from the maintenance and operation of the Waterworks Utility and all earnings from the investment of
money in the Reserve Fund or any Parity Bond fund, and connection and capital improvement charges
collected for the purpose of defraying the costs of capital facilities of the Waterworks Utility, except
government grants,proceeds from the sale of Waterworks Utility property(other than timber), City taxes
collected by or through the Waterworks Utility,principal proceeds of bonds and earnings or proceeds from
any investments in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility
obligations (until commingled with other earnings and revenues of the Waterworks Utility) or held in a
special account for the purpose of paying a rebate to the United States Government under the Internal
Revenue Code of 1986, as amended.
6
1 As used herein,"Maintenance and Operation Expense"means all reasonable expenses incurred by the City
in causing the Waterworks Utility to be operated and maintained in good repair, working order and
condition, including payments made to any other municipal corporation or private entity for water service
and for sewage treatment and disposal service or other utility service in the event the City combines such
service in the Waterworks Utility and enters into a contract for such service, and including pro-rata budget
charges for the City's administration expenses where those represent a reasonable distribution and share of
actual costs, but not including any depreciation or taxes levied or imposed by the City or payments to the
City in lieu of taxes, or capital additional or capital replacements to the Waterworks Utility.
"Net Revenue"means Revenues of the Waterworks Utility less Maintenance and Operation Expense.
For a description of the Bonds and Funds, see Appendix A under the caption "Summary of Certain
Provisions of the Ordinance."
The Bonds are not general obligations of the City,and the full faith,credit and resources of the City
are not pledged for the payment thereof.
Rate Covenant. The City has covenanted in the Ordinance that it will establish,maintain and collect rates
and charges for all services and 1 facilities provided by the Waterworks Utility which will be fair and no-
- discriminatory and will adjust those rates and charges from time to time so that: Gross Revenue will at all
times be sufficient to pay all Maintenance and Operation Expense on a current basis, pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity Bond Funds and pay all taxes,
assessments or other governmental charges lawfully imposed upon the Waterworks Utility or other.revenue
- therefrom or payments in lieu thereof and any and all other amounts that the City may now or hereafter
become obligated to pay from Gross Revenue by law or contract;and Net Revenue in each calendar year will
be at least equal to 1.25 times Maximum Annual Debt Service(the"Coverage Requirement").
Flow of Funds. A special fund of the City(the"Waterworks Utility Fund"), has previously been created
pursuant to Ordinance No. 250,. All Revenue of the Waterworks Utility shall be deposited into the
Waterworks Utility Fund as collected,and shall be held separate and apart from all other funds and accounts
of the City. Funds in the Waterworks Utility Fund (other than in any bond redemption or federal rebate
account)will be used in the following order of priority:
(1) to pay Maintenance and Operation Expense;
(2) to pay interest on the Parity Bonds;
(3) to pay the principal of the Parity Bonds:
(4) to make all payments required to be made into any sinking fund or bond redemption
fund created for the payment of Future Parity Bonds which are Term Bonds:
(5) to make all payments required to be made into the Reserve Fund;
(6) to make all payments required to be made into any revenue bond redemption fund,
revenue warrant redemption fund,debt service account or reserve account created to
pay and secure the payment of the principal of and interest on any other revenue
bonds or revenue warrants having a lien upon the Revenue of the Waterworks Utility
junior and inferior to the lien thereon for the payment of the principal of and interest
on Parity Bonds;
(7) to retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City, to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility, to make deposits into the Rate Stabilization Fund or for any
other lawful City purpose.
The Bond Fund. A special fund of the City known as the 2004 Waterworks Revenue Bond Fund (the
"Bond Fund") has been created by the Ordinance for the payment of the principal of and interest on the
Bonds. So long as the Bonds are outstanding against the Bond Fund,the City will set aside and pay into the
Bond Fund out of Net Revenue a fixed amount, without regard to any fixed proportion, namely, one day
before each interest or principal and interest payment date,an amount which,together with other money then
on deposit therein, shall be sufficient to meet the debt service on the Bonds required on the next interest or
principal and interest payment date.
The Reserve Fund and the Reserve Requirement. The special fund of the City know as the Waterworks
Revenue Bond Reserve Fund(the"Reserve Fund")has been created by Ordinance No.4709 for the purposes
of securing the payment of the principal of and interest on all bonds to which Net Revenue is pledged.The
Ordinance provides for the funding and maintenance of funds in the Reserve Fund in an amount equal to
Maximum Annual Debt Service (the "Reserve Requirement"). The City may, in lieu of cash and
investments,obtain all or a part of the Reserve Requirement for any Parity Bonds then outstanding for which
such insurance is obtained, to be issued by an institution that has been assigned a credit rating equal to or
better than the highest then-existing rating for any of the Parity Bonds("Reserve Insurance"). Following the
deposit thereon of a portion of the Bond proceeds,the Reserve Fund will be fully funded with a balance of
$ as of the date of issuance of the Bonds.
If there is a deficiency in the Bond Fund to meet maturing installments of either principal or interest, as the
case maybe,on the Bonds,that deficiency will be made up from the Reserve Fund by the withdrawal of cash
therefrom for that purpose. Any deficiency created in the Reserve Fund by reason of any such withdrawal
will then be made up from Net Revenue first available after making necessary provisions for the required
payments into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity Bonds or
may be deposited in any other fund and spent for any other lawful Waterworks Utility purpose.
Other Covenants. In the Ordinance,the City makes certain other covenants,including covenants regarding
maintenance of the Waterworks Utility, the sale or other disposition of the property of the Waterworks
Utility,keeping separate books and accounts,collection of delinquent accounts,the payment of Maintenance
and Operation Expense,maintenance of tax exemption on the Bonds and the maintenance of insurance on
the Waterworks Utility properties.
Future Parity Bonds. The City reserves the right to issue Future Parity Bonds which will constitute a lien
and charge on the Net Revenue of the Waterworks Utility on a parity with the Parity Bonds (including the
Bonds),if the following conditions, among others, are met and complied with at the time of issuance of the
Future Parity Bonds:
8
(1) The ordinance providing for the issuance of such Future Parity Bonds shall provide
for the payment of the principal thereof and interest thereon out of a Parity Bond Fund, and there
shall be no deficiency in any Parity Bond Fund.
— I
(2) The ordiniance providing for the issuance of such Future Parity Bonds shall provide
for the payment of the principal thereof and interest thereon out of a Parity Bond Fund.
(3) The ordinance providing for the issuance of such Future Parity Bonds shall provide
for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of(a) an
amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or(b)
Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security
equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds,or under
certain circumstances,the City may provide for deposit into the Reserve Fund other legally available
money from Net Revenue or Reserve Insurance or Alternate Security within three years from the date
of issuance of the Future Parity Bonds in three approximately equal annual payments. After the date
in which all the 1998 Bonds,2002 Bonds,2003 Bonds and the Bonds are fully redeemed,refunded
or defeased(the"New Covenant Date"),(c) the ordinance providing for the issuance of such Future
Parity Bonds shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of(1)an amount equal to the increase in the Reserve Requirement attributable to those
Parity Bonds or(2)Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or
Alternate Security equal to the increase in the Reserve Requirement attributable to those Future
Parity Bonds. At the discretion of the City,the City may provide for deposit into the Reserve Fund
of other legally available money from Net Revenue or Reserve Insurance or Alternate Security either
on or prior to the date of issuance of such Future Parity Bonds or within three years from the date of
issuance of the Future Parity Bonds in three approximately equal annual payments and in such event,
the ordinance providing for the issuance of such Future Parity Bonds shall provide for such deposit.
(4) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for
the payment of mandatory redemption or sinking fund requirements into the applicable Parity Bond
Fund for any Term Bond's to be issued and for regular payments to be made for the payment of the
principal of such Term Bonds on or before their maturity, or, as an alternative, the mandatory
redemption of those Tenn Bonds prior to their maturity date from money in the applicable Parity
Bond Fund.
(5) There shall be on file with the City either: (a) a certificate of the City Finance
Director demonstrating,that during any 12 consecutive calendar months out of the immediately
preceding 36 calendar months Net Revenue,without regard to deposits into or withdrawals from the
Rate Stabilization Fund,is equal to at least the Coverage Requirement for all Parity Bonds plus the
Future Parity Bonds proposed to be issued; or(b) a certificate of a Professional Utility Consultant
that in such consultant's opinion Revenue for any 12 consecutive calendar months,without regard to
deposits into or withdrawals from the Rate Stabilization Fund, shall be equal to the Coverage
Requirement for each year thereafter. The certificate,in estimating Net Revenue available for debt
services, may adjust Net Revenue as provided in the Ordinance.
If Future Parity Bonds proposed to be,so issued are for the sole purpose of refunding
outstanding bonds payable from any Parity Bond Fund, such certification of coverage shall not be
required if the amount required for the payment of the principal and interest in each year for the
1 9
refunding bonds is not increased more than$5,000 over the amount for that same year required for
the bonds or the portion of that bond issue to be refunded thereby and if the maturities of such
refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby.
In addition, the Ordinance further provides that nothing contained therein prevents the City from issuing
revenue bonds that are a charge upon Gross Revenue subordinate to the payments required to be made
therefrom into any Parity Bond Fund.
For a description of the terms of issuance of Future Parity Bonds, see Appendix A under the caption
"Summary of Certain Provisions of the.Ordinance."
Source and Application of Funds
The estimated sources and application of proceeds of the Bonds(less accrued interest)are shown in the table
as follows:
Sources of Funds:'
Proceeds of the Bonds $10,705,000.00
Net Reoffering Premium
Total Sources of Funds $
Application of Funds:
Deposit to the Project Fund $
Deposit to Reserve Fund
Costs of Issuance of the Bonds'
Total Application of Funds $
1 Preliminary;subject to change.
2 Includes the Underwriter's discount,net original issue discount,Bond Counsel fees,municipal bond insurance premium,rating
agency fees,Preliminary and Official Statement printing and mailing expenses,registration costs,and any miscellaneous costs.
10
THE WATERWORKS UTILITY
General Information
The Waterworks Utility of the City is comprised of three divisions:the Water Utility,the Wastewater Utility
and the Storm Drainage Utility. The City maintains separate fund accounting for the three divisions to
facilitate financial management,,but has combined the divisions for financing purposes into the Waterworks
Utility. See "The Water Utility," "The Wastewater Utility" and"The Storm Drainage Utility" herein for
descriptions of the three divisions of the City's Waterworks Utility.
Waterworks Utility Major Customers
The Boeing Company ("Boeing") has been the largest single customer of the Waterworks Utility for a
number of years. For the year ending December 31,2003,Boeing represented approximately 4.9%percent
of the operating revenue of the Waterworks Utility. See "Appendix C —Economic and Demographic
Information—Manufacturing The Boeing Company"herein
The largest customers of the Waterworks Utility for the year ended December 31,2003 are summarized in
the table below: '
Water UtilityWastewater Utility Storm Drainage Utility
%of, %of %of Storm
Water Wastewater Drainage
Customer Utility Rev. Customer Utility Rev. Customer Utility Rev.
Boeing 3.09%. Boeing 2.59% City of Renton 6.12%
King County 1.52 ' Public Hospital District No. 1 1.66 Boeing 4.63
Skyway Water and Sewer Dist. 1.25 Service Linen Supply , 1.21 King County 1.72
Public Hospital Dist.No. 1 0.97 Draper Valley Farms 0.63 Kenworth Truck Co. 1.14
Service Linen Supply 0.78 Virtue Empire Associates 0.57 State of Washington 1.02
Draper Valley Farms 0.37 G&K Services 0.57 Burlington Northern 0.61
G&K Services 0.33 Sunset Terrace 0.46 Leisure Estates 0.60
Sunset Terrace 0.28 ' Suntone Hotel Properties 0.36 Shadowhawk LLC 0.58
Sheets Unlimited 0.24 Regency Rehab Center 0.30 Valley Dist.Center 0.50
Renton School Dist.No.403 0.23 Orca Bay Seafoods 0.26 Valley Medical Center 0.47
Total 9.06%; Total 8.61% Total 17.39%
Source: The City of Renton
4
Delinquent Accounts
After notice of delinquency of a water and/or sewer bill has been provided and the bill remains unpaid for a
period of 60 days,the Finance and Information Services Administrator is directed to cut off water service to
the premises and enforce a lien upon the property. Such lien is superior to all other liens or encumbrances,
except those for general taxes and special assessments.
11
Historical Net Income and Revenue Available for Debt Service
The following table shows the audited revenues, expenses, net income and revenues available for debt
service for the fiscal years ended December 31, 1999 through 2003. See "Appendix B - 2003 Audited
Financial Statements of the Waterworks Utility"herein.
Audited Audited Audited Audited Audited
1999 2000 2001 2002 2003
Operating Revenue
Charges for Services $20,176,839 $21,724,688 $20,495,611 $22,123,070 $24,551,329
Other Operating Revenue 1,303,559 1,411,401 1,203,480 1,686,652 1,227,428
Total Operating Revenues $21,480,398 $23,136,089 $21,699,091 $23,809,722 $25,778,757
Operating Expenses
Operations and Maintenance $12,923,365 $12,020,228 $12,463,725 $13,193,177 $3,962,259
Administrative and General' 1,756,727 1,826,630 1,853,671 2,560,881 10,501,393
Taxes 1,727,350 1,806,916 1,734,324 1,741,414 2,526,867
Depreciation 2,998,977 3,217,984 3,661,458 3,763,961 4,013,656
Total Operating Expenses $19,406,419 $18,871,758 $19,713,178 $21,259,434 $21,004,175 ,
Operating Income(Loss) $2,073,979 $4,264,331 $1,985,913 $2,550,289 $4,774,582
Non-Operating Revenue(Expenses)
Interest Revenue $303,912 $546,422 $295,154 $135,938 $155,363
Other Non-Operating Revenue 58,726 79,599 88,573 44,757 142,290
Interest Expense (1,313,469) (1,244,246) (1,093,550) (1,146,259) (1,284,944)
Amortization Expense (87,839) (80,472) (77,166) (83,399) (92,345) -
Operating Transfers (82,080) 15,248 (77,650) (10,079) 40,000
Total Non-Operating Rev./Exp. ($1,120,750) ($683,449) ($864,639) ($1,059,042) ($1,039,636)
Net Income $953,229 $3,580,882 $1,121,274 $1,491,247 $3,734,946
Adjustments to Net Income
City Utility Tax $1,197,276 $1,271,201 $1,205,729 $1,228,628 $1,412,977
Amortization Expense 87,839 80,472 77,166 83,399 92,345 i
Depreciation Expense 2,998,977 3,217,984 3,661,458 3,763,961 4,013,656
Bond Interest Expense 1,313,469 1,244,246 1,093,550 1,146,259 1,284,944
Connection/System Dev. Charges 2,018,123 1,779,699 1,426,008 2,054,039 1,376;490
Total Adjustments $7,615,684 $7,593,602 $7,463,911 $8,276,286 $8,180,412
Net Revenue Available for Debt Service $8,568,913 $11,174,484 $8,585,185 $9,867,533 $11,915,358
Annual Debt Service $3,114,399 $2,743,138 $2,749,921 $2,906,642 $2,917,114
Debt Service Coverage 2.75x 4.07x 3.12x 3.39x - 4.08x
1 In 2003"the pass through charge to King County for wastewater treatment in the amount of$7,113,457 is included as an
Administrative and General Expense. In prior years this amount was reflected as an Operations and Maintenance Expense.
Source: The City of Renton
12
•
Schedule of Waterworks Utility Debt Service
Set forth in the following table is the debt service schedule for the Parity Bonds and the Bonds. Some of the
Iinterest figures have been rounded.
Parity Bonds' The Bonds'
Total Debt
Year Principal Interest Principal' Interest' Service'
2004 $1,475,000 $1,010,267 --. -- $2,485,267
2005 1,630,000. 969,644 -- $541,069 3,140,713
2006 1,680,000 922,717 -- 499,448 3,102,165
2007 1,740,000, 865,557 -- 499,448 3,105,005
2008 1,810,000; 795,880 -- 499,448 3,105,328
2009 1,875,000. 731,852 -- 499,448 3,106,300
2010 1,940,000' 663,317 -- 499,448 3,102,765
' 2011 2,015,000 590,828 -- 499,448 3,105,276 `
2012 2,100,0001 504,322 -- 499,448 3,103,770
2013 775,000! 421,296 $100,000 499,448 1,795,744
2014 710,000 404,437 175,000 495,918 1,785,355
2015 735,000 373,908 190,000 489,565 1,788,473 •
2016 765,000' 341,567 200,000 481,833 1,788,400
2017 805,000 307,143 205,000 472,732 1,789,875
2018 1,000,0001 270,112 55,000 463,405 1,788,517
2019 1,000,000' 217,613 110,000 460,903 1,788,516
2020 1,000,000, 165,112 165,000 455,897 1,786,009
2021 1,045,000 112,613 180,000 448,390 1,786,003
2022 1,100,0001 57,750 190,000 440,200 1,787,950
2023 -- -- 1,355,000 431,555 1,786,555
2024 -- -- 1,415,000 369,903 1,784,903
2025 -- -- 1,480,000 305,520 1,785,520
2026 -- -- 1,555,000 234,480 1,789,480
2027 -- -- 1,625,000 159,840 1,784,840
- 2028 -- -- 1,705,000 • 81,840 1,786,840
Total $25,200,000 $9,725,935 $10,705,000 $10,328,634 $55,959,569
' Preliminary,subject to change. The estimated debt service schedule for the Bonds is calculated based on an average interest rate
of approximately 4.69%.
I Source: The City of Renton
13
Debt Repayment Record
The City has always met principal and interest payments on all of its bonds when due.
Outstanding Bonds and Debt Service Requirements
Following issuance of the Bonds, the Waterworks Utility will have a total of$35,905,000 of Bonds and
Parity Bonds outstanding. The Maximum Annual Debt Service on the Bonds and Parity Bonds is
$3,140,712. Actual Net Revenue for fiscal year 2003 of$11,915,358 provides debt service coverage of
Maximum Annual Debt Service of 3.79 times. The City may, however, issue Future Parity Bonds to
finance capital needs of the Waterworks Utility as described below that may reduce debt service coverage
below such level. (See Appendix A-"Summary of Certain Provisions of the Ordinance-Security"herein.)
Expected Future Improvements and Borrowings
The City's current Capital Improvement Plan("CIP")identifies system development and major maintenance
capital expenditures of$44,820,000 planned for fiscal years 2005-2009. The amount of Waterworks Utility
debt to be issued in support of these CIP elements has not yet been finalized,although the City does expect
the issuance of additional Utility debt prior to 2006.
The Water Utility
The City of Renton Water System provides service to an area approximately 16 square miles, and to more
than 14,700 customer accounts. In addition,the City supplies water on a wholesale basis to Skyway Water
District through a single metered connection.
The City's Water System consists of nine reservoirs, 18 pump stations, 2 water treatment facilities, 291
miles of water mains, 3,240 fire hydrants, and 15,200 water meters. Water treatment consists of
chlorination, fluoridation and corrosion control.
Current active and primary water supply sources include five wells drawing water from the Cedar Valley
aquifer,three wells from the Maplewood aquifer and one artesian spring,Springbrook Springs. The wells
provide eighty-six percent (86%) of the City's water production. In addition, the City maintains seven
metered backup water supply interties with Seattle Public Utilities,one emergency intertie with the City of
Kent and one emergency intertie with the City of Tukwila. Together,active,standby and emergency wells
provide 18,900 gallons per minute(GPM)or 27.22 million gallons per day(MGD).Emergency interties with
neighboring cities and water districts can provide 12,000 GPM or 17.28 MGD.
In 2003, the maximum demand for water was 14.08 MGD and the average day demand was 7.58 MGD.
Based on growth forecasts,the City has sufficient on-line supply capacity to meet demands through at least
2020.
14
Water Utility Customer Accounts
Renton's Water Utility currently,serves 15,507 customers. The type and number of accounts are shown in
the table below.
' 1999 2000 2001 2002 2003
Residential' 10,633 11,204 11,060 11,389 11,743
Multi-Family2 1,394 1,364 1,539 1,577 1,685
Commercial 1,229 1,020 1,259 1,263 1,254
Industrial 110 81 87 88 89
Other' 527 555 593 681 736
Total 13,893 14,224 , 14,538 14,998 15,507
I Single Family Residence
2 Apartment houses,etc.
3 Schools,City Departments,Fire Protection
Source: The City of Renton '
Water Utility Rates
Water rates for metered services inside the City are established in order to charge service accounts for the
amount of water used plus a monthly service charge determined by the size of the waterline serving the
premises. The following rates and charges were established by Ordinance No. 5043, effective January 1,
2004 and represent an increase of approximately 3%over the last increase in rates effective January 1, 1996:
Base Rate:
Size of Service Base Charge Size of Service Base Charge
3/4 inch $10.82 4 inch $129.83
1 inch 13.54 5 inch 194.77
1-1/2 inch 17.36 6 inch 270.53
2 inch 30.33 8 inch 389.55
3 inch 89.82 12 inch 541.06
Commodity Charge: $1.81/100 cubic feet("cf') ($1.94/100 cf in excess of 1,000 cf for residential only).
Water rates for metered service outside the City are 1.5 times the rate fixed for metered service within the
City. Water rates for fire protection service are$3.40 per month per inch of fire meter size.
The Wastewater Utility
The Wastewater Utility system collects wastewater from residential and commercial customers and delivers
it to King County(the"County")for treatment. The existing system consists of 183.53 miles of wastewater
pipelines, 23 lift stations and an additional seven lift stations which are privately owned and maintained.
Wastewater is discharged into facilities within the City, from which it is conveyed to and treated by the
County's Renton Treatment Plant. Approximately 80 percent of the City area is served by the system. The
remaining area within the City is served by septic tanks or is undeveloped.
15
Wastewater Utility Customer Accounts
Renton's Wastewater Utility currently serves 13,697 customers. The type and number of accounts are shown
in the table below.
1999 2000 2001 2002 2003
Residential` 9,406 9,766 10,089 10,549 11,140
Multi-Family2 1,267 1,323 1,346 1,374 1,467
Commercial 952 966 983 982 933
Industrial 74 86 76 76 76
Other3 76 243 78 78 71
Total 11,775 12,384 12,572 13,059 13,697
Single Family Residence
2 Apartment houses,etc.
3 Schools,City Departments,Fire Protection
Source: The City of Renton
Wastewater Utility Rates
Monthly rates for sewer service within and outside of the City effective January 1, 2004 are as follows:
Customer Type Rate*
Single family residence $13.04/month
All other users $1.99 base charge,plus $1.47 per
each 100 cf of water used
* Wastewater rates for customers outside the City are 1.5 times the rates fixed for service within the City.
In addition to the above monthly rates, a charge of$23.40 per month is payable to the County for each
single-family residence,or$23.40 for each multiple of 750 cf of water used by all other classes of customers.
This charge is paid to the County for the collection and treatment of sewage.
Storm Drainage Utility
The Storm Drainage Utility system covers a service area within the existing City corporate boundaries of
approximately 17.2 square miles. The area includes rivers,streams,ditches,lakes,wetlands,and manmade
facilities. The Storm Drainage Utility owns,maintains and operates all storm and surface water management
facilities located within public right-of-ways and easements dedicated for storm and surface water
management purposes. The Storm Drainage Utility system consists of 199.4 miles of storm system pipe,
includes 5,773 catch basins, 2,634 access manholes, 17 storm water retention/detention facilities and 40
miles of ditch systems and channels. The City's Storm Drainage Utility currently serves 14,061customers.
16
Storm Drainage Utility Rates
Monthly rates for storm drainage service within the City are as follows:
1 f Type Monthly Rate
Single=;family dwelling $5.39
Low intensity 26.70/acre
Medium intensity 38.61/acre
High intensity 49.80/acre
Gravel pits 53.69/acre
_ City streets 13.39/acre
THE CITY OF RENTON
General Information
_ The City surrounds the southern end of Lake Washington,southeast of Seattle on Interstate 405. The City is
located approximately 20 miles southeast of the City of Seattle and approximately 60 miles northeast of the
City of Olympia, the State's capital. As of the 2003 population estimates, the City ranked fifth in size
among cities in the County. The City had a population of 54,900.as estimated in 2003 by the State Office of
Financial Management. The County had an estimated population of 1,779,300 as reported in 2003 by the
State Office of Financial Management, an increase of approximately 2.4% since the 2000 Census.
The economy of the area is based manufacturing,technology based business, the Port of Seattle, services
industry,tourism,fishing and agriculture. (See"Appendix B-Economic and Demographic Information"
herein for a description of the area's economy.)
Form of Local Government
The City, which was incorporated in 1901, has a strong Mayor form of government. The Mayor is
independently elected to a four-year term. The Mayor's job is to manage and implement the policies
established by the seven-member Council. Each Council member serves a four-year term and is elected on a
staggered two-year cycle.
The names of the current members of the City Council as well as the dates in which of their respective terms
of office expire are as listed below.
Expiration of
Name Title Term
Kathy Keolker-Wheeler Mayor 12/31/07
Don Persson President 12/31/07
Terri Briere Council Member 12/31/05
Dan Clawson Council Member 12/31/05
Randall Corthan Council Member 12/31/05
Denis Law Council Member 12/31/07
Toni Nelson Council Member 12/31/07
Marcie Palmer Council Member 12/31/07
17
Principal City Officials
Kathyeolker-Wheeler,Mayor. Ms.Keolker-Wheeler was appointed to the Renton City Council in 1984 by
PP
her fellow City Council members and served five terms as a Councilmember. As of January 1, 2004, she
began her first term to serve as Mayor. Ms. Keolker-Wheeler has been an active member of the Renton
community since 1976, which includes serving as a past Chair of the United Way South Community
Council,serving as a currently member of the United Way of King County Board and being a active member
in petition processes. In addition to her duties as Mayor,Ms. Keolker-Wheeler works with the Center of
Women and Democracy at the University of Washington as a trainer and "leader in residence" for NEW
Leadership Puget Sound.
Jay Covington, Chief Administrative Officer. Mr. Covington joined City staff in 1990. Prior to joining the
City,Mr.Covington served eight years at the City of Vancouver,Washington,in the roles of budget analyst,
management analyst and Assistant to the City Manager. During his tenure with the City of Vancouver,Mr.
Covington developed a municipal biennial budget as well as improved financial forecasting techniques.
Victoria Runkle, Finance &Information Services Administrator. Ms. Runkle joined City staff in 1993.
Prior to her tenure with the City she worked in public finance in both the public and private sectors. She
began her career as a budget analyst with the City of Redmond. After three years with that entity she began
working for the City of Seattle's Office of Management and Budget. During her seven years with the City of
Seattle, she was responsible for a variety of assignments including capital budgeting. She left the City of
Seattle as the Assistant Budget director for a position with a public finance advisory firm. During her tenure
in the private sector,Ms.Runkle helped various types of municipalities develop rating presentations,prepare
official statements, and issue various types of debt.
City Employment and Primary Services
The City had approximately 36,543 full-time employees as of 2003. The City provides services in
accordance with its charter, and operates its own police,fire,park and recreation,utility system,municipal
airport and library system.
Employee Relations
The City has five bargaining units. The 'commissioned police officers have a guild. The guild also
represents, in a separate bargaining unit, the non-commissioned support staff of the Police Department.
There are two bargaining units in the Fire Department. The firefighters through the rank of captain are
represented as a group. There are six battalion chiefs who are represented by a separate bargaining unit. The
greatest number of employees is represented by AFSCME(American Federation of State and City Municipal
Employees). State law requires municipalities to bargain collectively with formally recognized collective
bargaining units. The management group tends to receive benefits very similar to the AFSCME contract.
There are no significant outstanding personnel issues at this time. The City bargains with each of the units
every three years. The City has contracts with all the bargaining units through 2005.
18
Pension Plans
It is mandatory for all permanent City employees, including part time employees who work 70 hours per
month during five consecutive months to participate in one of the following statewide local government
!-- retirement systems administered by the State Department of Retirement Systems, under cost-sharing
multiple-employer public employee retirement systems. The City made the following contributions as of the
fiscal year ended December 31,,2003, on behalf of City employees who participated in the pension plans
listed below.
Number of City Contribution
Participants Fiscal Year 2003
• Public Employees Retirement System("PERS")
PERS Plan Il (hired before'10/1/77) 37 $26,913.72
PERS Plan 112 443 257,785.37
PERS Plan III 53 24,873.61
Total PERS 533 $309,572.70
Law Enforcement Officers and Firefighters("LEOFF")
LEOFF Plan I3 (hired before 10/1/77) 20 $3,628.80
LEOFF Plan 114 177 403,391.65
Total LEOFF 197 $407,020.45
1 Employees in PERS I are required to contribute 6.00%of their salary to the plan,with a City contribution of 4.67%.
2 Employees in PERS II are required'to contribute 2.43%of their salary to the plan,with a City contribution of 4.67%.
3 Employees in LEOFF I are required to contribute 0.00%of their salary to the plan,with a City contribution of 6.23%.
4 Employees in LEOFF II are required to contribute 6.78%of their salary to the plan,with a City contribution of 4.30%.
The Budgetary Process.
The City prepares budgets in accordance with chapter 35.33 RCW. As background to the process,the City
prepares a five-year financial forecast of general operations. Biennial calendar year budgets (in which
annual allocations lapse at year end) are adopted by the City Council for funds providing customary
government services. Long-term project-oriented budgets are adopted as required and amended as additional
appropriations are needed. Special assessment and certain custodial agency funds are not budgeted. All
budgets are accounted for on a line-item basis with control at the object summary total level. Estimated
purchase order amounts are encumbered prior to the release of the order to the vendor. Open encumbrances
lapse at year end and must be reappropriated or absorbed in the next year's operating budget.
•
Auditing of City Finances
Cities and counties of the State must comply with the Budgeting, Accounting, and Reporting System
("BARS")prescribed by the Office of the State Auditor as authorized under RCW 43.09.230 and 43.09.230.
State laws also provide for annual independent audits by the Office of the State Auditor and require timely
submission of annual financial reports to the State Auditor for review. The financial system of the City
incorporates a system of financial and administrative controls that ensure the safeguarding of assets and the
reliability of financial reports and consequently are designed to provide reasonable assurance that
transactions are executed in accordance with management authorization, recorded in conformity with
19
generally accepted accounting principles ("GAAP") applicable to governmental entities, that there exists
accountability of and control over assets and obligations, and that sufficient reporting and review exists to
provide adequate information for analysis and comparability of data. Internal control is an area of audit by
the State Auditor,as well,and City management receives and takes action upon recommendations made by
the State Auditor.
The City's financial statements are subject to annual audit by the State Auditor. The last audit covered
the year ended December 31, 2002 and the report thereon contained an unqualified opinion regarding the
City's 2002 financial statements. The audit for year ended December 31, 2002, is currently in the
process of being completed. Copies of the State Auditor's Report may be obtained by contacting the
Office of State Auditor in Olympia, Washington or the City.
Risk Management
The City self-insures its risk exposure through self insurance up to specified levels of risk, and purchases
excess insurance commercially to cover medium to large losses. The City's risk management program is
administered by the Human Resources/Risk Management Administrator, with claims processed by
independent claims administrators. The City is a member of the Washington Cities Insurance Authority
comprised of approximately 108 public agencies located in the State of Washington.
Risk Retention Stop Gap
Coverage Type Per Occurrence Loss Limit
Property $25,000 $500,000,000
Liability _ 250,000 14,000,000
Auto Liability 250,000 14,000,000
Boiler&Machinery 5,000 50,000,000
Public Officials 0 10,000,000
Crime 10,000 1,000,000
Airport Liability 0 50,000,000
Underground Storage Tank 5,000 1,000,000
Worker's Compensation 350,000 1,000,000
Employee Health 120,000 N/A
Authorized Investments
Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess
of current needs to the following authorized investments: United States bonds;United States certificates of
indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or
warrants of a local improvement district which are within the protection of the local improvement guaranty
fund law; and any other investment authorized by law for any other taxing district or the State Treasurer.
Under chapter 43.84 RCW, the State Treasurer may invest in non-negotiable certificates of deposit in
designated qualified public depositories; in obligations of the U.S. government, its agencies and wholly
owned corporations;in bankers' acceptances;in commercial paper;in the obligations of the Federal Home
Loan Bank,Federal National Mortgage Association and other government corporations subject to statutory
provisions; and may enter into repurchase agreements. Utility revenue bonds and warrants of any city and
bopds or warrants of a local improvement district are also eligible investments (RCW 35.39.030).
20
Moneys available for investment may be invested on an individual fund basis or may, unless otherwise
restricted by law,be commingled within one common investment portfolio. All income derived from such
investment may be either apportioned to and used by the various participating funds or for the benefit of the
general government in accordance with City ordinances or resolutions. Funds derived for the sale of bonds
or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances,
resolutions or bond covenants may lawfully prescribe.
APPROVAL OF BOND COUNSEL
Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the
unqualified approving legal opnion of Gottlieb, Fisher & Andrews, PLLC, Seattle, Washington, Bond
Counsel. Fees payable to Gottlieb,Fisher&Andrews,Seattle,PLLC,as Bond Counsel,are contingent upon
the issuance of Bonds. Bond Counsel has reviewed this document only to confirm that the portions of it
describing the Bonds and the authority of the City to issue them conform to the Bonds,the applicable laws
under which they were issued arid the language regarding federal income tax exemption. A form of the legal
opinion is included herein in Appendix E.
TAX EXEMPTION
In the opinion of Gottlieb,Fisher&Andrews,PLLC,Bond Counsel,as of the date of issue of the Bonds(the
"Date of Issue"),and provided the City complies with applicable requirements of the Code which must be
satisfied subsequent to the issuance thereof, the Bonds are not"private activity bonds," as defined by the
Code; and interest on the Bonds (including any original issue discount properly allocable to the owner
thereof)is excludable from gross income for federal income tax purposes under existing federal law,and is
not an item of tax preference for purposes of determining the alternative minimum tax on individuals and
corporations under existing federal law. However,under existing federal law,interest on the Bonds is taken
into account in determining adjusted current earnings for the purpose of computing the alternative minimum
- tax imposed on certain corporations.
Bond Counsel expresses no opinion regarding any other federal tax consequences of receipt of interest on the
Bonds. Potential purchasers of the Bonds should consult with their tax advisors as to all possible tax
consequences of ownership of the Bonds. See also, "Other Tax Consequences,"herein.
The Code contains certain requirements which must be satisfied subsequent to the issuance of the Bonds in
order to maintain the tax treatment described above,including requirements relating to the application of the
proceeds of the Bonds, use of facilities which are financed with such proceeds, limitations on income
derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and
rebate to the United States Treasuryof certain of such investment income on such gross proceeds. The City
y
has covenanted to comply with these requirements to the extent applicable; and the opinions of Bond
Counsel described in the preceding paragraph assume such compliance. However,Bond Counsel has not
undertaken and shall not undertake to monitor compliance by the City with such requirements; and if the
City should fail.to comply with;such requirements,interest on the Bonds could become includable in gross
income for federal income tax purposes retroactive to the date of issuance of the Bonds.
G '
21
OTHER TAX CONSEQUENCES
Under current federal law:
1. Corporate Alternative Minimum Tax. The interest on tax-exempt obligations received by a
corporation is taken into account in the computation of the alternative minimum tax applicable to
corporations (as defined for federal income tax purposes). Under current federal law, the alternative
minimum taxable income of such a corporation (other than an S corporation, a regulated investment
company, a real estate investment trust or a REMIC) is increased by 75% of the amount by which the
"adjusted current earnings" of the corporation exceeds the corporation's alternative minimum taxable
income determined without regard to such increase and any alternative tax net operating loss deduction.
Interest on tax-exempt obligations,whenever issued or acquired,including interest on the Bonds,is included
in the computation of"adjusted net book income"and"adjusted current earnings."
2. Tax on Excess Passive Investment Income of S Corporations. Certain excess net passive
investment income,including interest on the Bonds,received by an S corporation(a corporation treated as a
partnership for most federal tax purposes) that has "subchapter C earnings and profits" at the close of its
taxable year maybe subject to federal income tax at the highest rate applicable to corporations if more than
25%of the gross receipts of such S corporation for such taxable year is passive investment income.
3. Foreign Corporation Branch Profits Tax.' Interest on the Bonds received by certain foreign
corporations doing business in the United States may be subject to a branch profits tax applicable to such
corporations that is based on their United States source earnings and profits,including tax-exempt interest on
obligations such as the Bonds.
4. Reduction of Loss Deduction for Property and Casualty Insurance Companies. Interest on tax-
exempt obligations,including the Bonds,received by property and casualty insurance companies,will reduce
tax deductions for loss reserves otherwise available to such companies by an amount equal to 15 percent of
such tax-exempt interest received during the taxable year.
6. Social Security and Tier 1 Railroad Retirement Benefits Subject to Tax. Interest received or
accrued during the year from tax-exempt obligations, such as the Bonds, is included in the calculation of
"modified adjusted gross income"of recipients of the social security or tier 1 railroad retirement benefits. If
the sum of the"modified adjusted gross income"for the taxable year plus one-half of the social security or
tier 1 railroad retirement benefits received during the taxable year exceeds a base amount provided by the
Code(the"excess amount"),then the lesser of(i)one-half of the social security or tier 1 railroad retirement 1-
benefits received during the taxable year or(ii) one-half of the "excess amount", is included in the gross
income of the social security or tier 1 railroad retirement benefit recipient.
Original Issue Discount
The Bonds maturing on December 1 in the years and are"Discount Bonds." In the
opinion of Bond Counsel,under existing law,the original issue discount in the selling price of each Discount
Bond, to the extent properly allocable to each Owner of such Discount Bond, is excludable from gross
income for federal income tax purposes with respect to such Owner. The original issue discount is the
excess of the stated redemption price at maturity of such Discount Bond over its initial offering price to the
public,excluding underwriters and other intermediaries,at which price a substantial amount of the Discount
Bonds of such maturity were sold.
22
Under Section 1288 of the Code original issue discount on tax-exempt bonds accrues on a compound basis.
The amount of original issue discount that accrues to an Owner of a Discount Bond during any accrual
period generally equals (i) the issue price of such Discount Bond plus the amount of the original issue
discount accrued in all prior accrual periods,multiplied by(ii)the yield to maturity of such Discount Bond
(determined on the basis of compounding at the close of each accrual period and properly adjusted for the
length of the accrual period),minus (iii) any interest payable on such Discount Bond during such accrual
period. The amount of original issue discount so accrued in a particular accrual period will be considered to
be received ratably on each day of the accrual period, will be excludable from gross income for federal
income tax purposes, and will increase the Owner's tax basis in such Discount Bond. Purchasers of any
Discount Bond at an original issue discount should consult their tax advisors regarding the determination and
treatment of original issue discount for federal income tax purposes, and with respect to state and local tax
consequences of owning such Discount Bonds.
Original Issue Premium
The Bonds maturing on December 1 in the years and are"Premium Bonds." An amount equal
to the excess of the purchase'price of a Premium Bond over its stated redemption price at maturity
constitutes premium on such Premium Bonds. A purchaser of a Premium Bond must amortize any premium
over such Premium Bond's term using constant yield principles,based on the Premium Bond and the amount
of tax-exempt interest received will be reduced by the amount of the amortizable premium properly allocable
to such purchaser. This will result in an increase in the gain(or decrease in the loss)to be recognized for
federal income taxpmP oses on sale or disposition of such Bond prior to its maturity. Even though the
purchaser's basis is reduced,no;federal income tax deduction is allowed. Purchasers of any Premium Bonds,
whether at the time of initial issuance of subsequent thereto,should consult their tax advisors with respect to
the determination and treatment of premium for federal income tax purposes, and with respect to state and
local tax consequences of owning such Premium Bonds.
Tax Covenants
The City has covenanted in the Bond Ordinance that: (1)it will take all actions necessary to prevent interest
on the Bonds from being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds of other funds of the City treated as
proceeds of the Bonds at any tithe during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes; and (2) it will, to the extent arbitrage rebate
requirements of Section 148 of the Code are applicable to the Bonds,take all action necessary to comply(or
to be treated as having complied) with those requirements in connections with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative to calculation
rebatable arbitrage, and the payment of any other penalties if required under Sections 148 of the Code to
prevent interest on the Bonds from being included in gross income for federal income tax purposes.
•
23
NO LITIGATION CONCERNING THE BONDS
There is no controversy or litigation of any nature now pending or,to the knowledge of the City,threatened,
restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or
affecting the validity of the Bonds, any proceedings of the City taken with respect to the issuance or sale
thereof, or affecting the ability of the City to pay the principal of and interest on the Bonds.
UNDERWRITING
D.A.Davidson&Co. (the"Underwriter")has agreed,subject to the terms of a Bond Purchase Contract,to
purchase the Bonds from the City at an aggregate purchase price of % of the par value of the
Bonds, (which includes a net original issue premium) of$ and an Underwriter's discount of
$ ,plus accrued interest. The Bonds are being reoffered for sale to the public at the prices shown
on the inside cover of this Official Statement(for an average price of %). Concessions from the
initial offering price may be allowed to selected dealers and special purchasers. The initial offering price is
subject to change after the date hereof.
RATINGS --
As noted on the cover page of this Official Statement, Standard&Poor's Rating Group,-New York,New
York and Fitch Ratings,New York,New York,have assigned their municipal bond ratings of" "and
" ", respectively, to the Bonds, with the understanding that upon delivery of the.Bonds, a policy ,insuring the payment when due of the principal of and interest on the Bonds will be issued by
. No application was made to any other rating agency for the purpose of obtaining
an additional rating on the Bonds. Each rating reflects only the view of the applicable rating organization
and an interpretation of such rating may be obtained only from the rating agency furnishing the same. There
is no assurance that such ratings will continue for any given period of time or that they will not be revised
downward or withdrawn entirely by the rating agencies,if,in the judgment of such agencies,circumstances
so warrant. Any such revision or withdrawal of either such rating may have an adverse effect on the market
price of the Bonds.
Standard &Poor's has assigned its municipal rating of" "to this issue of Bonds (the"underlying
rating"). Fitch Ratings has assigned its municipal rating of" "to this issue of Bonds(the"underlying
rating"). The underlying ratings reflect only the view of Standard&Poor's and FitchRatings. There is no
assurance that the underlying ratings will be retained for any given period of time or that the underlying
ratings will not be revised downward or withdrawn entirely by the rating agencies if, in its judgment,
circumstances so warrant.Any downward revision or withdrawal of the underlying ratings would be likely to
have an adverse effect on the market price of the Bonds. Any further explanation of the underlying ratings
may be obtained from Standard&Poor's or FitchRatings.
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ENFORCEABILITY
The provisions of the Bonds and the Ordinance, constitute contracts between the City and the owner or
owners of the Bonds, and such provisions are enforceable by the registered owner or owners in a court of
competent jurisdiction in the State by mandamus or other appropriate remedy,subject to judicial discretion
and the valid exercise of sovereign police power of the State and may be limited by laws affecting the rights
of creditors.
COMMITMENT TO PROVIDE CONTINUING DISCLOSURE
Pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") of the Securities and
Exchange Commission (the "SEC"), the City has undertaken for the benefit of holders of the Bonds to
provide certain financial information and operating data relating to the City by no later than nine months
after the end of each fiscal year, commencing on or before December 31, 2004 (the "Annual Financial
Information")and to provide notices of the occurrence of certain enumerated events,if material. The Annual
Financial Information will be filed by or on behalf of the City with each Nationally Recognized Municipal
Securities Information Repository formally recognized by the SEC ("NRMSIR") and with the State
Information Depository for the State,if one is hereafter recognized by the SEC for purposes of the Rule(the
"SID"). Notices of material events will be filed by or on behalf of the City with the NRMSIRs or with the
Municipal Securities Rulemaking Board and with the SID, if any. The City's undertaking to provide
ongoing disclosure is set forth in the Ordinance. See Appendix D hereto for a summary of the City's
undertaking.
The City has committed to provide ongoing disclosure of information with respect to various outstanding
bond issues. The City has not failed to comply with the requirements of any previous undertaking specified
in paragraph(b)(5)(i) of the Rule.
ADDITIONAL INFORMATION AND MISCELLANEOUS
The descriptions herein of the Ordinance and other documents are brief summaries of certain provisions
thereof. Such summaries do not purport to be complete, and reference is made to such documents and
contracts,copies of which are available,upon request and upon payment to the City of a charge for copying,
mailing and handling, from the City, 1055 South Grady Way,Renton,Washington 98055,telephone(425)
430-6858, attention Finance and Information Services Administrator.
The summaries and descriptions contained in this Official Statement and the Appendices hereto of the
provisions of the Bonds,the Ordinance and all reference to other materials not purporting to be quoted in full
are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of
the provisions thereof This Official Statement is not to be construed as a contract or agreement between the
City and the Underwriter or holders of any of the Bonds.
Any statements made in this Official Statement involving matters of opinion or estimates,whether or not so
expressly stated,are set forth as such and not as representations of fact. No representation is made that any
of such statements will be realized.
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DISCLOSURE STATEMENT
The City will deliver to the Underwriter at the time of the delivery of the Bonds a certificate substantially to
the effect that this Official Statement,including any appendices,and any supplements or amendments hereto,
delivered by the City(which shall be deemed an original part hereof for the purposes of such statement)did
not,at the time the Bonds are issued,contain any untrue statement of a material fact or omit any material fact
necessary in order to make the statements made herein,in light of the circumstances under which they were
made not misleading in any material respect.
APPROVAL OF OFFICIAL STATEMENT
The City,through a duly authorized official,has deemed this Preliminary Official Statement"final"as of its
date, except for the omission of information dependent on the pricing of this issue, for purposes of
compliance with Securities and Exchange Commission Rule 15c2-12. -
The execution and deliveryof this Official Statement have been dulyauthorized bythe City.
CITY OF RENTON, WASHINGTON
By: •
Victoria Runkle
Finance and Information Services Administrator
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APPENDIX A
Summary of Certain Provisions of
the Ordinance
A-1
Summary of Certain Provisions of the Ordinance
1
Summary Of The Ordinance
The following is a summary of certain provisions of the Ordinance. This summary does not purport to be complete and
is qualified in its entirety by reference to the Ordinance for a complete statement of the provisions of such document.
Definitions
Unless the context otherwise requires,when used in this Official Statement,capitalized terms will have the following
meanings,such definitions to be equally applicable to both the singular and plural forms of any of the terms defined:
"Alternate Security"shall mean any bond insurance,collateral,security,letter of credit,guaranty,surety bond
or similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest
on the Parity Bonds,issued by an institution that has been assigned a credit rating at the time of issuance of such Parity
Bonds secured by such Alternate Security equal to or better than the highest then-existing rating for any of the Parity
Bonds.
"Annual Debt Service"for any year shall mean all the interest on plus all principal(except principal of Tenn
Bonds due in any Term Bond Maturity Year) of Parity Bonds, plus all mandatory redemption and sinking fund
installments,less all bond interest payable from the proceeds of any such bonds,which will mature or come due in that
year.
"Beneficial Owner"shall mean,with respect to any Bond,the Person named on the records of the Custodian
as having the right,without a physical certificate evidencing such right,to transfer,to hypothecate and to receive the
payment of the principal of,premium,if any, and interest on such Bond as the same becomes due and payable. --
"Bond Fund"shall mean that special fund of the City known as the 2004 Waterworks Revenue Bond Fund
created by the Ordinance for the payment of the principal of and interest on the Bonds.
"Bond Insurer"shall mean
"Bond Insurance Policy"shall mean the municipal bond insurance policy issued by the Bond Insurer insuring
the payment when due of the principal of and interest on the Bonds as provided herein.
"Bond Register"shall mean the registration books on which are maintained the names and addresses of the
Owners of the Bonds.
"Bond Registrar"shall mean the fiscal agencies of the State in Seattle, Washington, and New York,New
York, as the same shall be designated from time to time.
"Bonds"shall mean the$ City of Renton Water and Sewer Revenue Bonds,2004,authorized to
be issued by the Ordinance.
"Book-Entry Termination Date"shall mean the fifth business day following the date of receipt by the Bond
Registrar of the City's request to terminate the book-entry system of registering the beneficial ownership of the Bonds.
"City"shall mean the City of Renton,Washington,a duly organized and legally existing noncharter code city
under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services Administrator or the
successor to such officer.
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser and the payment
therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules and regulations
promulgated thereunder.
A-2
"Coverage Requirement"shall mean in any calendar year 1.25 times the Maximum Annual Debt Service.
"Custodian" shall mean (a)The Depository Trust Company,New York, New York, or (b)any successor
thereto engaged by the City to operate a book-entry system for recording, through electronic or manual means, the
beneficial ownership of the Bonds,in which system no physical certificates are issued to the Beneficial Owners of the
Bonds,but in which a limited number of physical certificates are issued to and registered in the name of the Custodian
or its nominee,and delivered to the Custodian;provided,that such book-entry system operated by the Custodian may
include the use of subsystems of recording the beneficial ownership of Bonds which are operated by parties other than
the Custodian and the use of a nominee for the Custodian;and the term"Custodian,"as used herein,includes any party
operating any such subsystem.
"Future Parity Bonds"shall mean all water and sewer revenue bonds of the City issued after the date of the
issuance of the Bonds and having a lien and charge on Net Revenue on a parity with the lien and charge on Net
Revenue for the payment of the principal of and interest on the Bonds.
"Gross Revenue"shall mean Revenue of the Waterworks Utility.
"Letter of Representations"shall mean the Blanket Issuer Letter of Representations from the City and the
Bond Registrar to the Custodian dated April 15, 1997,pertaining to the payment of the Bonds and the"book-entry"
system for evidencing the beneficial ownership of the Bonds prior to the Book-Entry Termination Date(as it may be
amended from time to time).
"Maintenance and Operation Expense"shall mean all reasonable expenses incurred by the City in causing
the Waterworks Utility to be operated and maintained in good repair,working order and condition,including payments
made to any other municipal corporation or private entity for water service and for sewage treatment and disposal
service or other utility service in the event the City combines such service in the Waterworks Utility and enters into a
contract for such service, and including pro-rata budget charges for the City's administration expenses where those
represent a reasonable distribution and share of actual costs, but not including any depreciation or taxes levied or
imposed by the City or payments to the City in lieu of taxes, or capital additions or capital replacements to the
Waterworks Utility.
"Maximum Annual Debt Service"shall mean, at the time of calculation,the maximum amount of Annual
Debt Service that will mature or come due in the current calendar year or any future calendar year on the outstanding
Parity Bonds.
"MSRB"shall mean the Municipal Securities Rulemaking Board.
"Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date"shall mean the date in which all the 1998 Bonds,2002 Bonds,2003 Bonds and the
Bonds are fully redeemed,refunded or defeased.
"1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds, 1998.
"NRMSIR"shall mean a nationally recognized municipal securities information repository designated by the
SEC.
"Owner"shall mean the person named as the registered owner of a Bond on the Bond Register.
"Parity Bonds"shall mean the 1998 Bonds,the 2002 Bonds,the 2003 Bonds,the Bonds and any Future Parity
Bonds.
"Parity Bond Fund"shall mean any fund created for the payment and redemption of Parity Bonds.
"Professional Utility Consultant"shall mean an independent licensed professional engineer,certified public
accountant or other independent person or firm selected by the City having a favorable reputation for skill and
experience with municipal utilities of comparable size and character to the Waterworks Utility in such areas as are
relevant to the purposes for which such consultant is retained.
"Rate Stabilization Fund"shall mean the fund of that name created for the purposes described in Ordinance
No.4709.
A-3
"Reserve,Fund" shall mean that special fund of the City known as the Waterworks Revenue Bond Reserve Fund
created by Ordinance No. 4709 for purpose of securing the payment of the principal of and interest on all bonds to
which ISTet Revenue is pledged.
"Reserve Insurance"shall mean,in lieu of cash and investments,insurance obtained by the City equal to part
or all of the Reserve Requirement for any Parity Bonds then outstanding for which such insurance is obtained,issued by
an institution that has been assigned a credit rating equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Reserve Requirement"shall mean the Maximum Annual Debt Service.
"Revenue of the Waterworks Utility"shall mean all of the earnings and revenues received by the City from
the maintenance and operation of the Waterworks Utility and all earnings from the investment of money in the Reserve
Fund or.any Parity Bond Fund,and connection and capital improvement charges collected for the purpose of defraying
the,cost of capital facilities of the Waterworks Utility,except government grants,proceeds from the sale of Waterworks
Utility property(other than timber), City taxes collected by or through the Waterworks Utility,principal proceeds of
bonds and earnings or proceeds from any investments in a trust,defeasance or escrow fund created to defease or refund
Waterworks Utility obligations(until commingled with other earnings and revenues of the Waterworks Utility)or held
in a special account for the purpose of paying a rebate to the United States Government under the Code.
"Rule"shall mean SEC Rule 15c2-12.
"SEC"shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
"State"shall mean the State of Washington.
"Term Bonds" shall mean any Parity Bonds identified as such in the ordinance authorizing the issuance
thereof,the payment of which is provided for by a requirement for mandatory deposits of money into the principal and
interest account of the bond redemption fund created for the payment of such issue of bonds in accordance with a
mandatory sinking fund requirement.
"Term Bond Maturity Year"shall mean any calendar year in which.Term Bonds are scheduled to mature.
"2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds, 2002.
"2003 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,2003.
`Waterworks Utility"shall mean the combined water and sewerage systems,including the storm and surface
water sewers,of the City as the same may be added to,improved and extended for as long as any of the Parity Bonds
are,iQiitstanding.
"Waterworks Utility Fund"shall mean that special fund of the City into which all Gross Revenue(except for
earnings in any special fund for the redemption of revenue obligations of the Waterworks Utility)shall be deposited.
Pledge of Revenue
The Bonds are issued on a parity of lien with the outstanding 1998 Bonds, 2002 Bonds and 2003 Bonds. The Net
Revenue is pledged to the payment of the Parity Bonds,and the Parity Bonds shall constitute a lien and charge upon
such Net Revenue,prior and superior to any other charge whatsoever.
Bond Fund
The Bonds will be payable solely out of Bond Fund,and the amount of Net Revenue pledged to that fund and are not
general obligations of the City.
A-4
So long as the Bonds are outstanding,the City has pledged in the Ordinance to set aside and pay into the Bond Fund
out of Net Revenue, one day before each interest or each interest and principal payment date, an amount, which
together with any other money on deposit therein,will be sufficient to meet the debt service on the Bonds.
Reserve Fund
The Ordinance requires that the Reserve Fund be maintained in an amount equal to the Reserve Requirement. On the
date of issue of the Bonds,the Reserve Fund will be funded with a balance of$ ,which amount is
equal to the Reserve Requirement.
In the Ordinance, the City has pledged to set aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits, any additional money necessary to bring the amount deposited in the Reserve
Fund attributable to the Bonds up to the amount equal to the increase in the Reserve Requirement attributable to the
Bonds. The Reserve Requirement may met by the deposit of cash and investments into the Reserve Fund or by Reserve
Insurance or a combination thereof
Rate Stabilization Fund
Ordinance No. 4709 of the City provides that a Rate Stabilization Fund may be created. Deposits to the Rate
Stabilization Fund may be made from Gross Revenue of the Waterworks Utility,see"Flow of Funds"below. For the
purposes of calculating compliance with the Rate Covenant,deposits to the Rate Stabilization Fund will be deducted
from Net Revenue of the Waterworks Utility in the year of such deposit,and withdrawals from the Rate Stabilization
Fund will be added to Net Revenue of the Waterworks Utility in the year of such withdrawal. •
Rate Covenant
The City has covenanted in the Ordinance to establish, maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,and will adjust those rates and
charges from time to time so that:
(a) Gross Revenue will at all times be sufficient to(1)pay all Maintenance and Operation Expense on a
current basis,(2)pay when due all amounts that the City is obligated to pay into the Reserve Fund and any:Par<ity Bbzid
Funds and(3)pay all taxes,assessments or other governmental charges lawfully imposed upon the WaterworksVtlity
or other revenue therefrom or payments in lieu thereof and any and all other amounts which the City may now or
hereafter become obligated to pay from Gross Revenue by law or contract;and
(b) Net Revenue in each calendar year will be at least equal to the 1.25 times Maximum Annual Debt
Service(the"Coverage Requirement").
Flow of Funds
A special fund of the City(the"Waterworks Utility Fund"),has previously been created pursuant to Ordinance No.
250. All Gross Revenue of the Waterworks Utility will be deposited into the Waterworks Utility Fund as collected,and
will be held separate and apart from all other funds and accounts of the City. The amounts deposited therein will be
used in the following order of priority:
(a) To pay Maintenance and Operation Expense; _
(b) To pay the interest on the Parity Bonds;
(c) To pay the principal of the Parity Bonds;
A-5
(d) To make all payments required to be made into any sinking fund or bond redemption fund hereafter
created for the payment of Future Parity Bonds which are Term Bonds;
(e) To make all payments required to be made into the Reserve Fund;
(f) To make all payments required to be made into any revenue bond redemption fund or warrant
redemption fund and debt service account or reserve account created to pay and secure the payment of
the principal of and interest on any revenue bonds or revenue warrants of the City having a lien upon
Gross Revenue junior and inferior to the lien thereon for the payment of the principal of and interest
on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding revenue bonds or
revenue warrants of the City,to make necessary additions,betterments,improvements and repairs to or
extensions and replacements of the Waterworks Utility,to make deposits into the Rate Stabilization
Fund,or for any other lawful City purpose. -
Additional Covenants
Maintenance of the Utility. The City will at all times maintain and keep the Waterworks Utility in good repair,
working order and condition and also will at all times operate such Utility and the business in connection therewith in
an efficient manner and at a reasonable cost.
Disposition of the Waterworks Utility. The City will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are defeased pursuant to the
provisions of the Ordinance. . _
It will not sell,lease,mortgage or in any manner encumber or otherwise dispose of any part of the Waterworks Utility
(other than timber),including all additions and improvements thereto and extensions thereof at any time made,that are
used,useful or material in the operation of the Waterworks Utility,unless provision is made for the replacement thereof
or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount of any Parity Bonds then
outstanding(defined as the total amount of those bonds less the amount of cash and investments in the Reserve
Fund and any Parity Bond Funds) that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that period;
(2) An amount which will be in the same proportion to the net amount of any Parity Bonds then
outstanding (as defined above) that the Net Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount of any Parity Bonds then
outstanding(as defined above)that the depreciated cost value of the facilities sold or disposed of bears to the
depreciated cost value of the entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding the above, the City (a) in its discretion may sell or otherwise dispose of any of the works, plant,
properties or facilities of the Waterworks Utility or any real or personal property comprising a part of the same which
shall have become unserviceable,inadequate,obsolete or unfit to be used in the operation of the Waterworks Utility,or
no longer necessary,material to or useful to the operation of the Waterworks Utility,without making any deposit into
the Bond Fund,and(b)the City may transfer the Waterworks Utility to another municipal corporation so long as Net
Revenue of the portion of the Waterworks Utility so transferred is used for payment of debt service on the Parity Bonds
prior to any other purpose. In no event shall such proceeds be treated as Gross Revenue for purposes of the Ordinance.
Books and Accounts. The City will keep proper books,records and accounts with respect to the operations,income and
expenditures of the Waterworks Utility in accordance with proper accounting procedures and any applicable rules and
A-6
•
regulations prescribed by the State. It will prepare annual financial and operating statements within 270 days of the
close of each fiscal year showing in reasonable detail the financialcondition of the Waterworks Utility as of the close of
the previous year, and the income and expenses for such year, including the amounts paid into the Bond Fund and
Reserve Fund and into any and all special funds or accounts created pursuant to the Ordinance,the status of all funds
and accounts as of the end of such year,and the amounts expended for maintenance,renewals,replacements and capital
additions to the Waterworks Utility. Such statements shall be sent to the Owner of any Parity Bonds upon written
request therefor being made to the City.
No Free Service. Except to aid the poor or infirm,to provide for resource conservation or to provide for the proper
handling of hazardous materials,the City will not furnish or supply or permit the furnishing or supplying of any service
or facility in connection with the operation of the Waterworks Utility free of charge to any person,firm or corporation,
public or private,other than the City,so long as any Parity Bonds are outstanding. On at least an annual basis,it will
determine all accounts that are delinquent and will take all necessary action to enforce payment of such accounts against
those property owners whose accounts are delinquent.
Insurance. It at all times will carry fire and extended coverage and such other forms of insurance,including public
liability and property damage insurance,with responsible insurers and with policies payable to or on behalf of the City
and any additional insureds on such of the buildings, equipment, works, plants, facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by municipal or privately owned
utilities engaged in the operation of like systems,or will implement and maintain a self-insurance or an insurance pool
program with reserves adequate, in the reasonable judgment of the City, to protect the Waterworks Utility and the
Owners of the Parity Bonds against loss.
Obligations. It will pay all Maintenance and Operation Expense and the debt service requirements for the outstanding
Parity Bonds, and otherwise meet the obligations of the City as set forth in the Ordinance.
Preservation of Tax Exemption. It will take all actions necessary to prevent interest on the Bonds from being included
in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of
proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during the term of the
Bondswhich will cause interest on the Bonds to be included in gross income for federal income tax purposes. It will,
to the extent arbitrage rebate requirements of Section 148 of the Code are applicable to the Bonds, take all action
necessary to comply(or to be treated as having complied) with those requirements in connection with the Bonds,
including the calculation and payment of any penalties that the City has elected to pay as an alternative to calculating
rebatable arbitrage,and the payment of any other penalties if required under Section 148 of the Code to prevent interest
on the Bonds from being included in gross income for federal income tax purposes.
Future Parity Bonds
In the Ordinance,the City has reserved the right to issue Future Parity Bonds if the following conditions are met and
complied with at the time of issuance of those additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the payment of
the principal thereof and interest thereon out of a Parity Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into
the Reserve Fund from the proceeds of those Future Parity Bonds of(1)an amount equal to the increase in the
Reserve Requirement attributable to those Parity Bonds or(2)Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve Requirement
attributable to those Future Parity Bonds. For federal income tax purposes,at the discretion of the City,to the
A-7
extent that the Reserve Requirement cannot be funded from Future Parity Bond proceeds, the City shall
provide for deposit into the Reserve Fund other legally available money from Net Revenue or Reserve
Insurance or Alternate Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments. After the New Covenant Date,this subsection shall be amended
to read as follows: (c) The ordinance providing for the issuance of such Future Parity Bonds shall
provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of(1)
an amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or(2)
Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security
equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds. At the
discretion of the City, the City may provide for deposit into the Reserve Fund of other legally
available money from Net Revenue or Reserve Insurance or Alternate Security either on or prior to
the date of issuance of such Future Parity Bonds or within three years from the date of issuance of
the Future Parity Bonds in three approximately equal annual payments and in such event, the
ordinance providing for the issuance of such Future Parity Bonds shall provide for such deposit.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the
payment of mandatory redemption or sinking fund requirements into the applicable Parity Bond Fund for any
Term Bonds to be issued and for regular payments to be made for the payment of the principal of such Term
Bonds on or before their maturity,or,as an alternative,the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the City Finance Director demonstrating that during any 12 consecutive
calendar months out of the immediately preceding 36 calendar months Net Revenue,without regard to
deposits into or withdrawals from the Rate Stabilization Fund, is equal to at least the Coverage
Requirement for all Parity Bonds plus the Future Parity Bonds proposed to be issued;or
(2) a certificate of a Professional Utility Consultant that in such consultant's opinion Revenue for
any 12 consecutive calendar months, without regard to deposits into or withdrawals from the Rate
Stabilization Fund, shall be equal to the Coverage Requirement for each year thereafter. The
certificate,in estimating Net Revenue available for debt services,may adjust Net Revenue to reflect:
(A) Any changes in rates in effect and being charged or expressly committed by
ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility who have become
customers during the 12 consecutive month period or thereafter adjusted to reflect one year's
Net Revenue from those customers;
(C) Income from any customers to be connected to the Waterworks Utility who
have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net Revenue to be
derived from customers anticipated to connect for whom building permits have been issued;
(E) Income received or to be received which is derived from any person, firm
corporation or municipal corporation under any executed contract for water,sewage disposal
or other utility service,which revenue was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net Revenue to be
derived from customers with existing homes or buildings which will be required to connect to
any additions to and improvements and extensions of the Waterworks Utility constructed and
to be paid for out of the proceeds of the sale of the additional Future Parity Bonds or other
additions to and improvements and extensions of the Waterworks Utility when such additions,
improvements and extensions are not completed; and
A-8
(G) Any increases or decrease in Net Revenue as a result of any actual or
reasonably anticipated changes in Maintenance and Operation Expense subsequent to the 12-
month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of refunding outstanding bonds payable from
any Parity Bond Fund, such certification of coverage is not required if the amount required for the payment of the •
principal and interest in each year for the refunding bonds is not increased more than$5,000 over the amount for that
same year required for the bonds or the portion of that bond issue to be refunded thereby and if the maturities of such
refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby.
Nothing in the Ordinance prohibits the City from(1)issuing Future Parity Bonds to refund maturing Bonds or Future
Parity Bonds then outstanding,money for the payment of which is not otherwise available;or(2)issuing revenue bonds
that are a charge upon Gross Revenue subordinate to the payments required to be made therefrom into any Parity Bond
Fund.
•
•
A-9
. [This Page Intentionally Left Blank]
APPENDIX B
2003 Audited Financial Statements
of the Waterworks Utility
I ,
•
•
,
1
•
B-1
•
Washington State Auditor (360)902-0370
Legislative Building FAX(360)753-0646
PO Box 40021 Brian Sonntag TDD Relay 1-800-833-6388
Olympia,Washington 98504-0021 http://www.sao.wa.gov
• INDEPENDENT AUDITOR'S REPORT
August 25,2004
The Honorable Mayor and City Council •
City of Renton
Renton,Washington •
•
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City of Renton, King County,Washington, as of and for the year ended December
31, 2003, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our financial audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of.
- material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
- statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well —
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of
Renton, King County, Washington, as of December 31, 2003, and the respective changes in financial position and cash flows,where
i applicable,thereof,for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As described in Note 1 to the financial statements,during the year ended December 31,2003,the City has implemented Governmental -
Accounting Standard's Board Statement 34, Basic Financial Statements—and Management's Discussion and Analysis for State and
Local Governments, Statement 37, Basic Financial Statements —and Management's Discussion and Analysis for State and Local
Governments, Omnibus, Statement 38, Certain Financial Statement Note Disclosures,and Statement 40, Deposit and Investment Risk
Disclosures.
The Management's Discussion and Analysis on pages 3-1 through 3-16; and the budgetary comparison information on pages 5-1
l through 5-2 are not a required part of the basic financial statements but are supplementary information required by the Governmental •
Accounting Standards Board. •We•have appliedcertain limited procedures, which consisted principally of inquires of management
regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it.
Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City of Renton's
basic financial statements. The accompanying financial information listed as combining financial statements and supplemental
information on pages 6-1 through 6-50 is presented for purposes of additional analysis and is not a required part of the basic financial
statements. The combining financial statements and supplemental information have been subjected to auditing procedures applied in
the audit of the basic financial statements and,in our opinion, are fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing
procedures applied in the audit of the basic financial statements and,accordingly,we express no opinion on them.
. Sincerely,
--g1:1
BRIAN SONNTAG,CGFM '
STATE AUDITOR
2003 Comprehensive Annual Financial Report City of Renton, Washington
•
STATEMENT OF NET ASSETS •
PROPRIETARY FUNDS
December 31,2003
Page 1 of 2
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE
J, , 1 UTILITY SOLID WASTE FUNDS FUNDS FUNDS
ASSETS .
Current assets: .
1 1 Cash&cash equivalents $ 6,170,463 $ 752,390 $ 3,186,566 $ 10,109,419 $ 6,702,581
Investments at fair value 755,491 150,000 750,000 1,655,491 4,350,000
Receivables(net of allowances):
i I Customer accountsi 4,428,270 723,614 60,052 5,211,936 5,958 .
Special assessments-current 18,430 - - 18,430
-
Interest-investments 4,397 1,326 5,004 10,727 165,653
Due from other funds 48,137 - - 48,137 2,048
Due from other governmental units 245,455 123,740 313,379 682,574 -
Inventory of materials and supplies ! 331,434 - 49,353 380,787 -
Prepayments 80,260
Total current assets $ 12,002,077 $ 1,751,070 $ 4,364,354 $ 18,117,501 $ 11,306,500
Restricted assets:
Cash&residual investments at FMV. $ 2,606,852.$ - $ 441,358 $ 3,048,210 $ -
Total restricted assets 1 $ 2,606,852 $ - $ 441,358 $ 3,048,210 $ • -
Notes receivable-non-current.
Special assessments deferred 61,325 - - 61,325 -
, Capital assets(net) 176,376,760 13,131 17,795,470 194,185,361 4,682,530
Deferred charges and other assets 769,107 ' _ - 53,697 822,804 -
TOTAL ASSETS $ 191,816,121. $ 1,764,201 $ 22,654,879 $ 216,235,201 $ 15,989,030
I
i •
•
.
The notes to the financialstatements are.an.integral part of this statement. ... ..::.. .: ... ..... _._.........__. :. . .. ..
Basic Financial Statements 4-9
2003 Comprehensive Annual Financial Report City of Renton, Washington
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS ).
December 31,2003
Page 2 of 2
BUSINESS-TYPE ACTIVITIES.
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES ,
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE
UTILITY SOLID WASTE FUNDS FUNDS FUNDS
LIABILITIES
Current liabilities: `
Accounts payable $ 479,194 $ 285,891 $ 93,770 $ 858,855 $ 266,789
Retainage payable 118,482 - 124,873 243,355 -
Due to other funds 47,563 - 10,039 57,602 804
Due to other governmental units 674,336 44,815 719,151 -
Accrued interest payable 481,279 1,098 15,935 498,312 -
Accrued employee benefits payable 31,813 272 5,703 37,788 3,387
Accrued taxes payable 49,741 35,956 31,207 . 116,904 -
Custodial Accounts 24,829 - 70,975 95,804 -
Deferred revenue 83,308 - 44,814 128,122 -
Capital leases payable - - 24,271 24,271 -
Total current liabilities $ 1,990,545 $ 368,032 $ 421,587 $ 2,780,164 $ 270,980
Liabilities payable from restricted assets: ` 1
Revenue bonds payable-current $ 1,475,000 $ - $ 250,000 $ 1,725,000 $ -
Total liabilities payable from restricted assets $ 1,475,000 $ - $ 250,000 $ 1,725,000 $ - 1
Long-term liabilities: '
Revenue bonds payable $ 23,725,000 $ - $ 3,620,000 $ 27,345,000 $ -
Unamortized premium on revenue bonds 177,953 - - 177,953 . -
Unamortized discount on revenue bonds (629,130) - (394,061) (1,023,191) -
Deferred amount on reveneue bond refunding 122,638 - - 122,638 -
Accrued employee benefits payable 265,857 2,451 74,639 342,947 21,512
Referred revenue - - - - 2,474,749 ,
Capital leases payable - - 33,834 33,834 -
Public works trust fund loan payable 6,909,275 - - 6,909,275 -
Total long-term liabilities $ 30,571,593 $ 2,451 $ 3,334,412 $ 33,908,456 $ 2,496,261
TOTAL LIABILITIES $ 34,037,138 $ 370,483 $ 4,005,999 $ 38,413,620 $ 2,767,241
NET ASSETS
Investment in capital assets, .
net of related debt $ 144,267,485 $ 13,131 $ 13,901,199 $ 158,181,815 $ 4,682,530
Restricted 2,606,852 - 441,358 3,048,210 -
Unrestricted 10,904,646 1,380,587 4,306,323 16,591,556 8,539,259
TOTAL NET ASSETS $ 157,778,983 $ 1,393,718 $ 18,648,880 $ 177,821,581 $ 13,221,789
The notes to the financial statements are an integral part of this statement.
¢.10.. .:.. :..Basic Financial Statements .
•
2003 Comprehensive Annual Financial Report City of Renton, Washington
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31,2003 •
i
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVIC
UTILITY SOLID WASTE FUNDS FUNDS FUNDS
OPERATING REVENUES:
Charges for services $ ' 24,551,329 $ 8,445,207 $ 2,904,215 $ 35,900,751 $ 10,911,836
Interdepartmental services 871,587. 6,345 - 877,932 -
Other services 355,841 190,858 44,232 590,931 -
1 TOTAL OPERATING REVENUES $ ; 25,778,757 $ 8,642,410 $ 2,948,447 $ 37,369,614 $ 10,911,836
.
OPERATING EXPENSES:
Operations and Maintenance $ ' 3,962,259 $ 635,176 $ 1,632,642 $ 6,230,077 $ 759,467
, Benefit Payments 759;240 33,090 278,216 1,070,546 6,775,606
' Professional Services 107,543 6,884,712 34,310 7,026,565 408,710
Administrative and General ! 9,550,910 47,448 375,873 9,974,231 1,005,442
Insurance 83,700 - 24,100 107,800 2,593,873
i
Taxes 2,526,867 912,233 9,087 3,448,187 1,821
Depreciation 1 4,013,656 3,939 459,504 4,477,099 937,940
TOTAL OPERATING EXPENSES $ 21,004,175 $ 8,516,598 $ 2,813,732 $ 32,334,505 $ 12,482,859
i
OPERATING INCOME(LOSS) . $ 4,774,582 $ 125,812 $ 134,715 $• 5,035,109 $ (1,571,023)
1
NON-OPERATING REVENUES(EXPENSES):
Intergovernmental Revenues $ - $ - $ 2,523,769 $ 2,523,769.$ -
Interest revenues 155,363 9,177 77,515 242,055 170,729
Gain(loss) on sale of capital assets 134,605 - - 134,605 10,555
Other non-operating revenues(expenses) 7,685 - 71,039 ' 78,724 141,622
Interest expense ' (1,284,944) - (232,495) (1,517,439) -
Amortization of debt discount and expense . . (92,345) - (4,908) (97,253) • -
NON-OPERATING REVENUE NET OF EXPENSE $ 1 (1,079,636) $ 9,177 $ 2,434,920 $ 1,364,461 $ 322,906
-i
,
INCOME(LOSS)BEFORE CONTRIBUTIONS
I AND TRANSFERS $ 3,694,946 $ 134,989 $ 2,569,635 $ 6,399,570 $ (1,248,117)
, Capital Contributions 4,158,711 - 4,000 4,162,711 -
Transfers in(out) 40,000 - - 40,000 -
} CHANGE IN NET ASSETS $ 7,893,657 $ 134,989 $ 2,573,635 $ 10,602,281 $ (1,248,117)
FUND BALANCE JANUARY 1 $ 149,885,326 $ 1,258,729 $ 16,075,245 $ 167,219,300 $ 14,469,906
•
NET ASSETS,DECEMBER 31 $ 157,778,983 $ 1,393,718 $ 18,648,880 $ 177,821,581 $ 13,221,789
.
.. The notes_to the' statements are an,integral.part of this.statement.
1 Basic Financial Statements 4-11
2003 Comprehensive Annual Financial Report City of Renton, Washington
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31,2003
PAGE 1 OF 2
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
• OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE
UTILITY SOLID WASTE FUNDS FUNDS FUNDS .
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for services $ 24,195,404 $ 8,523,465 $ 2,888,857 $ 35,607,726 $ .10,866,715
Cash received from other funds for services - 914,915 - - 914,915 -
Cash paid to suppliers for goods.&services (10,400,776) (7,402,587) (737,636) (18,540,999) (10,471,775)
Cash paid to other funds for goods&services (50,390) (299,443) (217,128) (566,961) -
Cash paid to employees . (4,088,382) (163,403) (1,269,298) (5,521,083) (438,707)
Cash paid for city utility taxes (2,526,867) (504,036) - (3,030,903) -
Other operating receipts 355,841 197,203 88,464 641,508 (2,048)
Other non-operating receipts 7,685 (92,799) (242,340) (327,454}_ . 103,061
NET CASH PROVIDED(USED)BY ,
OPERATING ACTIVITIES $ 8,407,430 $ 258,400 $ 510,919 $ 9,176,749, $ .57,246
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from other funds $ . 40,000 $ - $ - $ 40,000 $ -
Advances from other funds - - - - -
Subsidy from federal grant - - - - 38,561
NET CASH PROVIDED(USED)BY
NONCAPITAL FINANCING ACTIVITIES $ 40,000 $ - $ - $ 40,000 $ 38,561
CASH FLOWS FROM CAPITAL
FINANCING ACTIVITIES:
Proceeds from the sale of equipment $ 134,605 $ - $ - $ 134,605 $ 40,048
Acquisition&construction of capital assets (8,622,284) - (3,398,900) (12,021,184) (609,296)
Capital contributions - - - - -
Capital grants - - 2,523,769 2,523,769- -.
Proceeds from the sale of bonds - - - -
Princiipal payments on bonds (2,799,328). - (184,133) (2,983,461) -
bonds (1,041,643) (203,541) 1 245184
Interest payments on bo s ( ) -
NET CASH PROVIDED(USED)BY
CAPITAL FINANCING ACTIVITIES $ (12,328,650) $ - $ (1,262,805) $ (13,591,455) $ (569,248)
CASH FLOWS FROM INVESTING ACTIVITIES: •
Proceeds from sale of investments $ 7,563,839 $ - $ 4,400,000 $ 11,963,839 $ 1,184,500
Payments for investments (150,000) (3,450,000) (3,600,000) (3,238,000) -
Interest on investments 190,588 17,564 111,010 319,162 128,398 _
NET CASH PROVIDED(USED)BY
INVESTING ACTIVITIES $ 7,754,427 $ (132,436) $ 1,061,010 $ 8,683,001 $ (1,925,102) —
NET INCREASE(DECREASE)IN CASH&
CASH EQUIVALENTS $ 3,873,207 $ 125,964 $ 309,124 $ 4,308,295 $ (2,398,543)
CASH&CASH EQUIVALENTS,JANUARY 1 - 2,297,256 626,426 3,318,801 6,242,483 9,101,124
CASH&CASH EQUIVALENTS,DECEMBER 31 $ 6,170,463 $ 752,390 $ 3,627,925 $ 10,550,778 $ 6,702,581
The notes to the financial statements are an integral part of this statement.
4=12 • . Basic Financial Statements
2003 Comprehensive Annual Financial Report - City of Renton, Washington
.
• STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS '
FOR THE YEAR ENDED DECEMBER 31,2003 '
• PAGE 2 OF 2
BUSINESS-TYPE ACTIVITIES .
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE
` UTILITY SOLID WASTE FUNDS FUNDS FUNDS
' i RECONCILIATION OF OPERATING INCOME .
(LOSS)TO NET CASH PROVIDED(USED)
BY OPERATING ACTIVITIES: .
Operating income(loss) $ 4,774,582 $ 125,812 $ 134,715 $ 5,035,109 $ (1,571,023)
Adjustments to reconcile operating income .
(loss)to net cash provided(used)
by operating activities: .
.
Depreciation&amortization of
deferred charges 4,013,656 12,348 459,504 4,485,508 937,940
_ Other non-operating revenue 7,685 71,039 78,724 103,061
(Increase)decrease in
accounts receivable (252,074) 72,643 (20,503) • (199,934) 5,426
(Iricrease)decrease in due from
other funds/governmental units . 43,328 (92,799) (269,147) (318,618) (2,048)
(Increase)decrease in inventory
&prepaid items (15,371) - . 16,278 • 907 • 7,392
Increase(decrease)in vouchers
retainage payable 100,885 91,727 111,961 304,573 54,047
' Increase(decrease)in due to
other governmental units (50,390) . -• 4,681 (45,709) -
Increase(decrease)in payables •
&other short-term liabilities • 1,920 48,213 (2,634) 47,499 •
-
Increase(decrease)in •
customer deposits (3,690) - (709) (4,399) (50,547)
Increase(decrease)in.
deferred revenues . (100,161) - 8,488 (91,673) 594,244
Increase(decrease)in accrued
employee leave benefits (112;940) 456 (2,754) (115,238) (21,246) .
Total•adjustments • 3,632,848 • 132,588 376,204 4,141,640 1,628,269
NET CASH PROVIDED(USED)BY - •
OPERATING ACTIVITIES $ 8,407,430 $ 258,400 $ 510,919 $ 9,176,749 $ 57,246
••
NONCASH INVESTING,CAPITAL,AND
FINANCING ACTIVITIES
' Contributions of capital assets $ 4,158,711 - - 4,158,711 -
•
. Increase in fair value of investments 5,491 - - 5,491 -
Borrowing under capital leases - - • 58,105 58,105 -
The.notes to the financial statements.are an integ>�al part of this statement.
1 Basic Financial Statements 4-13
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ECONOMIC AND DEMOGRAPHIC INFORMATION
Local Economic Overview
The City is located in western Washington in King County(the"County"). The City is located approximately
20 miles southeast of the City of Seattle and approximately 60 miles northeast of the City of Olympia, the
State's capital.
The County,with a population of 1,779,300, encompasses 2,128 square miles,ranking 11 in geographical
size of Washington's 39 counties but first in population. Seattle is the largest city in the Pacific Northwest
and serves as the County seat. The County and Snohomish and Island Counties to the north together comprise
the Seattle Primary Metropolitan Statistical Area (the "Seattle PMSA"), which is the fourth-largest
metropolitan center on the Pacific Coast. In addition to the City and the City of Seattle,principal cities of the 1
Seattle PMSA include Auburn, Bellevue, Bothell, Burien, Federal Way,Issaquah, Kent, Kirkland,Mercer
Island, Redmond, Shoreline,. and Woodinville, all of which are in the County, and Everett, Edmonds,
Mountlake Terrace and Lynnwood in Snohomish County. These communities serve as residential,
commercial, and industrial satellites of Seattle.
Seattle PMSA's employment base is well diversified, with strengths in manufacturing, trade services and
government sectors. In 2002,manufacturing comprised about 9.1%of the area's employment,with aircraft
production representing the largest component. In the non-manufacturing sectors, services was the largest
sector with over 39.5% of the total employment, wholesale and retail trade comprised almost 14.8% and
government 12.0%. The information industry contributed 13.9% of the total earnings by industries in the
County,the most of all industries,followed by manufacturing with 12.6%and wholesale and retail trade with
12.0%. The U.S. Defense Department is one'of the largest employers in the Puget Sound region. Major
facilities include Fort Lewis Army Base in Pierce County, the Puget Sound Naval Shipyard in Bremerton
(Kitsap County),Bangor Naval Submarine Base in Kitsap County,McChord Air Force Base in Pierce County
and Naval Station Everett.
The area's universities and research institutions serve as catalysts in the expansion of high tech industries.
Other key factors that support continued growth include the existing industry base;a well-trained labor force;
relatively low cost power; and a progressive business climate with excellent transportation access to -
worldwide markets.
Aircraft Manufacturing—The Boeing Company
Manufacturing in the area consists primarily of aircraft manufacturing by the Boeing Company("Boeing").
Boeing is the largest aerospace company in the world,as measured by total sales,and is consistently one of the
nation's top three exporters. In May 2001, Boeing moved its world headquarters and approximately 1,200
employees from Seattle to Chicago to allow the corporate staff to focus on the direction of the company rather
than day-to-day operations. Boeing remains the area's largest employer with several locations in the Puget
Sound region. _
In 2001, Boeing reported total revenues of $58 billion. While the primary activity of Boeing is the
manufacture of commercial aircraft, Boeing has played leading roles in the aerospace and military missile •
programs of the United States human space flight, launch services and has undertaken a broad program of
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diversification activities including Boeing Computer Services. Boeing has six major divisions to carry out
business activities, which include Air Traffic Management, Boeing Capital Corporation, Commercial
Airplanes, Connexion by Boeing, Military Aircraft and Missile Systems, and Space and Communications.
In 1996,Boeing acquired the aerospace and defense operations of Rockwell International Corporation and in
1997 merged with McDonnell Douglas,its only U.S.commercial airline rival and the world's largest builder
of military aircraft, for approximately $16.3 billion. In recent years, Boeing has strived to streamline
workforce operations and facilities. Since 1998, Boeing has reduced its total workforce from 231,260 to
176,200(as of May 2002),a decrease of approximately 55,060(23.8%)employees. Since 1998,Boeing has
reduced the total work force in the Central Puget Sound Region from 98,440 to 63,361 (as of December
2002),a decrease of approximately 35,079(35.6%)employees. Boeing's Washington employees are located
largely in the Puget Sound Region,which currently has 19 Boeing sites/locations,including the Renton Plant
at Renton Field.
As of June 30, 2003, Boeing employed !11,910 people at its Renton Plant, a decrease from approximately
19,463 (38%) employees as of January 1, 2002. As of the date of this Official Statement, it cannot be
predicted if there will be further Boeing layoffs that will impact the Renton Plant or other Puget Sound Region
operations. The Renton Plant is one of Boeing's major production sites with a 290-acre site encompassing
approximately 7.7 million square'feet of building space: Over the years,the Airplane Programs site in Renton
has been home to many of commercial aviation's most famous airplanes,including the 707,727,737 and 757.
Approximately 40% of the world's commercial jetliner fleet is produced at the Renton Plant. The ground
floor of Renton's final assembly building for the Boeing 737 and 757 covers 760,000 square feet.Activities at
other main buildings at the Renton site include sub-assembly,wing-line production and a paint hangar. The
remaining buildings house administrative and engineering personnel and materiel handling. Renton Airport,
located west of the main site;is used by Boeing to perform pre-flight tests on all 737s and 757s before they
make their initial test flight. After the flight tests, the airplanes land at Boeing Field in Seattle, where final
preparations are made before they are delivered to customers.
The City is currently conducting a Comprehensive Land Use Environmental Impact Statement for use of the
site should Boeing ever stop making plans in Renton. Boeing assures the City that as long as Boeing is
constructing 737's,they will be constructed at the Renton Plant. However,in late 2001,Boeing sold 40 acres
to the Fry's Electronics Company and are currentlyinthe process of selling another 40 acres to a developer
with plans to put a Target store with other subsidiary retail outlets on the site. This is subject to the City
Council's final decisions on the Comprehensive Land Use Environmental Impact Statement.
Since September 2001,Boeing has been announcing lay offs until the target of 25,000 to 30,000 jobs are cuts
from operations.
Technology
The Seattle PMSA has experienced a substantial development of high technology,electronics and computer-
related enterprises particularly over the last decade. More than 1,500 computer development firms are located
in the Seattle PMSA. Microsoft, which is headquartered in Redmond, Washington, is the largest
microcomputer software company in the world,with 2021 gross sales worldwide of$283 billion,increasing
from$25.3 billion in 2001. Other leading employers include Sundstrand Data Control,Inc. (electronics and
aerospace systems), ELDEC Corporation (electronic equipment), John Fluke Manufacturing Company
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(electronic testing and calibrating instruments),Fred Hutchinson Cancer Research Center(cancer research and
treatment),Nintendo of North America(electronic games),Advanced Technology Laboratories(medical ultra-
sound equipment), Heath Techna Aerospace Co. (aerospace and defense specialties and architectural
equipment), Alliant Techsystems Inc. (sonar systems and signal processing equipment), and Intermec
Corporation(bar coding equipment).
Transportation
Seattle is bordered on the west by Elliott Bay, a natural harbor on Puget Sound,which is one of the nation's
leading seaports. The Port of Seattle (the "Port"), a County-wide port district, promotes maritime trade,
particularly foreign trade and the employment of containerized cargo facilities, and has developed and is
continually improving a system of marine terminals, piers and associated facilities on Seattle's waterfront.
The Port is the fifth largest container port in the U.S.and the 20th largest in the world. Served by 26 regularly
scheduled steamship lines, it is the top U.S. port in container tonnage exports to Asia. In 1997, the Port
completed construction of an$87.8 million multiple-use development on the downtown Seattle waterfront,
which includes a transient moorage, fish processing, and cruise ship berthing support facilities, a marine
museum, an international conference center and a public plaza. The Port also operates the Seattle-Tacoma
International Airport ("SeaTac") which serves 21 major air carriers and five commuter airlines and is the
leading air travel and shipping center of the Pacific Northwest. SeaTac is located approximately seven miles
west of the City
II
King County International Airport ("Boeing Field"), a general aviation facility operated by the County, is
located in Seattle. With about 410,000 annual operations(takeoffs and landings);Boeing Field is the busiest
such facility in the region and ranks among the top 15 busiest in the nation. It serves as the primary inclement
weather alternate for SeaTac.
Seattle is the western terminus of two primary east-west freeway systems: Interstate Route 90 and State Route
520,and is traversed by north-south Interstate Route 5 and State Route 99. The portion of I-90 that connects
Seattle with eastside communities across Lake Washington was expanded to eight lanes at a cost of$1.2
billion in the early 1990's. In addition to the highway system,the Washington State Ferry System provides
convenient transportation between Seattle and points across Puget Sound to the west.
In 1996,voters in King,Pierce and Snohomish counties approved a$3.9 billion regional transit measure. The
transit system is currently under construction, expected to take ten years to build and will consist of electric
light rail,commuter rail and express buses. A four-mile-long light rail tunnel from downtown Seattle to the
University District is the most expensive component at$865 million. The transit system will be funded in
large part with increases in local sales taxes and vehicle license fees. Some federal funds will be contributed.
Fishing,Agriculture and Forest Products
Seattle is the homeport for a major salmon and halibut fishing fleet. Approximately 700 fishing boats are
based at the Port's Fishermen's Terminal on Salmon Bay,part of the fresh-water system of lakes and canals
connected to Puget Sound by the Hiram M. Chittenden Locks,which are operated by the US Army Corps of
Engineers. Fish received in Seattle are largely for fresh market distribution and for freeze processing. Seattle _
is also a warehousing and distribution center for fish processed elsewhere in the Northwest, principally in
Alaska.
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Agriculture in the County consists primarily of dairy farming,truck gardening,horticulture and the raising of
livestock and poultry.. The Seattle area is a major center in the Northwest for agricultural supply,distribution
and marketing as well as for food handling and processing and the manufacture of food packaging and
containers.
The local forest products industry includes the manufacture of lumber, plywood,paper products, furniture,
acoustical materials and specialty wood products. Timber in the region is harvested under sustained-yield
programs on federal,state and private timberlands. The leading forest products employer is the Weyerhaeuser
Company,which operates lumber mills locally and has its corporate headquarters and a major research and
development center in southwestern portion of the County. Employment and production levels within this
industry locally have been and are expected to be further impacted by recent decisions by the federal
government and the courts concerning the exporting of raw logs and restrictions on the harvesting of trees on
federal lands in"old growth"forests. The extent of such impact is unknown at this time. The wood and paper
products industry accounts for approximately one percent of the total Seattle PMSA employment.
Higher Education
The University of Washington(the"University")is one of the oldest and largest state assisted universities on
the West Coast. Its primary campus is located in Seattle with satellite campuses located in Bothell and
Tacoma. Established in 1861, the University has 16 schools and colleges offering instruction in more than
200 academic disciplines. Undergraduate and graduate student enrollment for fall semester 2003/04 was
39,136. The University has a biennial operating budget of approximately$3.27 billion and consistently ranks
among the top five institutions of higher learning in the United States when measured by the receipt of federal
grants. The largest share of this funding goes to the University of Washington School of Medicine.
Harborview Medical Center is the University's teaching hospital. Every physician practicing at Harborview is
a member of the University's School of Medicine faculty. This relationship has been essential to
Harborview's development of outstanding patient care services including the region's burn,trauma,epilepsy,
spinal cord . er on ilitin include two
four-yearand universities,Seattlerehabilitation Pacific UniversityOthhigher(3,728 enrollmeneducatifact)and anti Seattlethe UniversitySeattlearea(5,918 enrollment)private,
and seven community colleges.
Services,Tourism,Recreation and Conventions
The Seattle area is the health care center of the Pacific Northwest. There are 26 general-acute and four special
purpose hospitals, more than 4,500 beds, and approximately 3,000 physicians.
The State's fourth largest industry is tourism. There are over 8,000 hotel rooms in over 50 hotels and motels
in downtown Seattle. Seattle ranks in the top five cities in the nation in terms of hotel occupancy with 2002
occupancy rates of 60.8%with room rates averaging$95.11 per night. According to the Seattle-King County
Convention and Visitors Bureau, 276,000 convention goers added approximately $257 million to the
economy. The Washington State Convention and Trade Center currently occupies 102,000 square feet of
heavy load exhibition space and an expansion of approximately 105;000 square feet of which 70,000 square
feet is designed as clear span,column-free space is almost complete. The Convention Center has the capacity
to hold events involving as many as 11,000 people, It is estimated that the Convention Center generates direct
spending by visitors of over$200 million annually on hotels,restaurants,entertaining,transportation and retail
1 shopping.
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Bordered on the west by Puget Sound and the Olympic Mountains and on the east by the Cascade Mountain
range,the 2,128 square miles in the County offer many types of outdoor recreation. The County and the City
of Seattle maintain over 9,000 acres of parkland. The Seattle area has several symphony orchestras, five
theaters, an opera company, and four resident dance groups. The area is also the home to more than 3,000
artists and 1,300 arts organizations.
The Kingdome,former home to the National Football League's Seattle Seahawks and the American Baseball
League's Seattle Mariners,was demolished in March 2000 to make way for a new stadium/exhibition center.
The Kingdome, which was located adjacent to Seattle's central business district, served as a major sports,
concert and convention center for the Northwest for over 20 years. A public facilities district was created in
1996 to build a new world-class football/soccer stadium for use by the Seahawks as well as parking facilities,
an exhibition hall, and demolition of the Kingdome. In 1997, voters statewide approved the issuance of
general obligation bonds by the State to pay for the project,which is expected to cost$425 million,with$300
million paid from public sources. The stadium design includes a 72,000 seat capacity(including 7,000 club
seats and 82 suites) and an open-air, natural grass facility that will provide 70% of the fans with roof
protection. The exhibition center was completed in November 1999 and the stadium was completed in 2002
with the first game played in the stadium in August 2002. Seattle's new ballpark for the Mariners(SAFECO
Field)was completed in July 1999. The ballpark was constructed for$518 million,has a baseball capacity of
46,621 fans, and includes real grass and a retractable roof that covers the ballpark but does not enclose it.
The Seattle Center, located one mile north of the central business district of Seattle,was the site for the 1962
World's Fair and it continues to be a popular attraction for residents and tourists alike. The 74-acre, year-
round convention and family entertainment center includes the Pacific Science Center, Coliseum, Seattle
Opera House,Key Arena,Memorial Stadium, Space Needle,the Experience Music Project and a number of
meeting and display rooms. Key Arena serves as the home of Seattle's third major league sports team, the
National Basketball Association's Seattle Supersonics. A major renovation project was recently completed at
the Coliseum. 'I
Population Trends
The area's population has grown significantly in recent years and based on recent population trends is
expected to continue to grow. The County is the most populated county in the State. Historical population
trends are presented below for the City,the County and the State of Washington to represent population trends
in the area.
City of Percent of King Percent of State of Percent of
Year Renton Change County Change Washington Change
20031 54,900 9.7% 1,779,.300 2.4% 6,098,300 3.5%
2000 50,052 20.1 1,737,046 15.2 5,894,143 21.1
1990 41,688 36.2 1,507,305 18.7 4,866,663 17.8
1980 30,612 -- 1,269,898 -- 4,132,353 -- I
* Iritercensus estimate as of April 2003 reported by the State Office of Financial Management.
Source: U.S.Bureau of the Census and Washington State Office of Financial Management.
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Trends in Building Permits
The following table reveals the trends in the number of building permits issued by the City for the years
shown.
Residential Total Number Total Valuation
Year Permits Issued of Permits Issued of Permits Issued
2002 719 2,965 $179,502,062
2001 553 2,542 128,087,520
2000 582 2,991 237,443,272
1999 453 2,673 131,878,394
Source: The City of Renton
Historical Taxable Retail Sales
The following table lists the taxable retail sales for all industries within the City and the County since 1999.
Figures shown are in(000's).
Year City of Renton King County
2003 $1,763,640 $35,370,831
2002 1,677,824 . 35,159,213
2001 1,697,418 35,313,326
2000 1,695,021 37,383,541
1999 1,504,764 34,517,504
Source: Washington State Department of Revenue
Major Employers—City of Renton
The major employers in the City as of 2002 are as follows.
Renton
Employer Employment Type of Business Activity
The Boeing Company* 11,910* Aerospace
Valley Medical Center 1,562 Healthcare
Renton School District 1,318 Public Education
Federal Aviation Administration 965 Federal Government
PACCAR 782 Heavy Manufacturing
City of Renton 688 City Government
Multiple Zones International 533 Computer Hardware&Software Retail
Wizards of the Coast 453 Retail
IKEA 358 Retail
Shuttle Express, Inc. 319 Transportation Services
*Updated Boeing employment number is as of June 30,2003.
Source: The City of Renton
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t II
Major Employers—Central Puget Sound Region
The major employers in the Central Puget Sound Region as of 2002 are as follows:
Trade Area
Employer Type of Business Activity Employment
i`.
1. The Boeing Company Aerospace Manufacturing 63,361
2. Microsoft Corporation* Software 24,903
3. Costco Wholesale Corporation Wholesale Warehouse 15,000
4. Safeway Grocery Store 12,809
5. Fred Meyer Retail 12,197
6. The Weyerhaeuser Company* Forestry Products 10,000
7. Group Health Cooperative Health Care 9,790
8. Providence Health Health Care 8,412
9. Swedish Health Systems Health Care 7,115
10. Starbucks Corporation Retail 6,736
11. Washington Mutual Inc. Bank 6,139
12. Bank of America Financial 5,463
13. Multi Care Health System Health Care 5,083
14. Nordstrom, Inc.* Retail 4,500
15. The Bon Marche Department Store 4,300
16. Alaska Air Group, Inc. Airline 4,000
_i
17. Haggen Inc. Grocery Store 4,000
18. Safeco Corp.* Insurance 3,800
19. Evergreen Healthcare Healthcare 2,700
20. Regence Blue Shield Healthcare Insurance 2,450
*Headquartered in King County
Source: Economic Development Council of King County and Puget Sound Business Journal's Book of Lists
2002
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Employment by Major Industry
The table below sets forth the total number of full-time and part-time employees in the County for the years
and industries as shown.
' 1998 1999 2000 2001 2002
Employment by Place of Work:
Total Employment 1,369,140 1,407,914 1,449,735 1,441,245 1,409,602
By Type:
Wage and Salary 1,173,581 1,212,445 1,244,804 1,225,286 1,180,688
Proprietor 195,559 195,469 204,931 215,959 228,914
Farm 1,377 1,369 1,373 1,399 1,399
Non-Farm 194,182 194,100 203,558 214,560 227,515
By Industry:
Farm 2,310 2,265 2,196 2,295 2,239
Non-Farm 1,366,830 1,405,649 1,447,539 1,438,950 1,407,363
Private 1,214,196 1,248,396 1,286,624 1,274,429 1,240,173
Ag. Services,Forestry,Fish. &Other ' 14,654 17,017 17,067 5,042 , 5,281
Mining 1,327 1,282 1,303 1,517 1,469
Utilities * * * 1,468 1,328
Construction 72,047 76,826 81,614 79,547 75,324
Manufacturing 168,372 158,491 151,295 141,129 128,054
Transportation and Public Utilities 80,625 83,586 89,103 * *
Wholesale Trade 88,368 88,440 89,529 71,581 69,169
Retail Trade 214,987 223,129 228,705 144,467 139,609
Transportation and Warehousing * * * 55,896 52,177
Information * * * 77,182 74,014
Finance,Insurance&Real Estate 118,604 120,972 126,704 130,069 137,302
Services 455,212 478,653 501,304 * *
Professional and Technical Services * * * 132,551 124,602
Management of Companies * * * 21,236 21,711
Administrative and Waste Services ' * * * 78,036 74,677
, Educational Services * * * 26,552 26,556
Healthcare and Social Assistance * * * 114,829 117,156
Art, Entertainment and Recreation * * * 35,553 36,397
1 Accommodation and Food Services * * * 88,819 85,750
Other Services * * * 68,685 69,597
Government&Government Enterprises 152,634 157,253 160,915 164,521 167,190
Federal/Civilian 20,702 20,937 21,847 20,808 21,247
Military 7,462 7,726 7,655' 7,396 6,690
State and Local 124,470 128,590 131,413 136,317 139,253
* Prior to 2001 estimates were based on Standard Industrial Classification. The 2001 estimates and succeeding years will be based
1 on North American Industry Classification.
Source: U.S. Department of Commerce, Regional Economic Information System, Bureau of Economic
Analysis.
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Labor Force and Unemployment
The following table shows labor force and employment data for the County since 1999 as well as
unemployment rates for the State and the United States for the same period.
Unemployment Rates
King State of
Year Labor Force Employment County Washington United States
2003 1,018,500 949,700 6.8% 7.3% 6.1%
2002 1,006,800 946,900 5.9 6.7 5.8
2001 994,100 932,400 6.2 7.3 4.8
2000 1,023,200 986,500 3.6 5.2 4.0
1999 1,028,700 995,900 3.2 4.7 4.2
Source: Washington Employment Department
Personal Income Trends
The following table shows total and per capita personal income growth in the Countyfrom 1998 through
2002.
Total Personal Percent of Per Capita Percent of
Year Income(000's) Change Income Change
2002 $77,524,060 0.71% $44,135 0.48%
2001 76,977,133 (3.11) 43,924 (3.85)
2000 79,448,105 6.61 45,682 5.99
1999 74,522,788 10.64 43,100 9.57
1998 67,358,052 13.00 39,335 11.17
Source: U.S. Department of Commerce, Regional Economic Information Center, Bureau of Economic
Analysis
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Earnings By Industry
The following table shows the County total personal income as well as wage and salary,labor and proprietors'
earnings by major industry type for the years 1998 through 2002. Figures shown are in thousands (000's). ,
1998 1999 2000 2001 2002
Total Personal Income $67,358,052 $74,522,788 $79,488,105 $76,977,133 $77,524,060
Earnings by Industry:
{ Farm ' 35,371 34,922 26,515 45,889 41,485
Non-farm 59,107,817 67,459,012 71,349,540 77,040,797 76,681,545
Private 52,700,174 60,707,219 64,241,890 68,898,244 68,123,253
Ag. Services, Forestry and Fishing ; 519,954 599,885 586,412 567,461 617,781
Mining 34,721 57,572 62,515 43,426 42,064
Utilities * * * 264,701 260,831
I Construction 3,325,906 3737330 4,159,968 4534124 4,420,682
- Manufacturing 8,623,122 9,004,623 9,389,721 9,560,583 9,775,683
Transportation and Utilities 4,399,093 4,826,777 5,475,454 * *
Wholesale Trade 4,457,315 4,646,053. 5,118,189 4,787,216 4,728,935
Retail Trade 4,716,687 5,432,323 6,144,869 4,554,560 4,608,081
- Transportation and Warehousing * * * 2,924,014 2,859,820
! Information * * * 11,977,909 ' 10,744,804
Finance, Insurance and Real Estate 4,866,030 5,220,209 5,534,048 6,559,900 6,822,695
Services 21,757,346 27,182,447 27,770,714 * *
I Professional and Technical Services * * * 8,764,266 8,338,828
Management of Companies i * * * 1,902,730 1,960,142
Administrative and Waste Services * * * 2,580,416 2,665,157
Educational Services * * * 575,010 580,548
Healthcare and Social Assistance * * * 4,827,430 5,141,698
Arts, Entertainment and Recreation * * * 869,056 843,516
Accommodation and Food Services 1 * * * 1,783,088 1,797,059
Other Services' � * * * 1,822,354 1,914,929
Government 6,407,643 6,751,793 7,107,650 8,142,553 8,558,292
- Federal/Civilian 1,338,783 1,410,257 1,498,431 1,689,265 1,750,109
Military 149,621 , 162,366 169,376 186,225 188,647
State and Local 4,919,239 5,179,170 5,439,843 6,267,063 6,619,536
* Prior to 2001 estimates were based on Standard Industrial Classification. The 2001 estimates and succeeding years will be based
on North American Industry Classification. '
Source: U.S. Department of Commerce Regional Economic Information System Bureau of Economic
Analysis
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APPENDIX D
Continuing Disclosure
D-1
CONTINUING DISCLOSURE
Continuing Disclosure Undertaking
In the Ordinance the City has made a written undertaking (the "Undertaking") for the benefit of the Owners and
Beneficial Owners of the Bonds as required by subsection(b)(5)(i)of the Rule.
Pursuant to the Undertaking,the City has agreed to provide or cause to be provided to each then existing NRMSIR and
to the SID,if one is created,the following annual financial information and operating data(collectively,the"Annual
Financial Information")for each prior fiscal year,commencing with the calendar year ending December 31,2003,on or
before the last day of the seventh month following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted accounting principles
applicable to governmental units,as such principles may be changed from time to time and as permitted by State law;
which statements will not be audited,except that if and when audited financial statements are otherwise prepared and
available to the City,they will be provided(the"Annual Financial Statements");
(b) A statement of authorized,issued and outstanding bonded debt secured by the Net Revenue;
(c) Debt service coverage ratios;
(d) General customer statistics for the Waterworks Utility;and
(e) A narrative explanation of the reasons for any amendments to the Undertaking made during the previous fiscal
year and the impact of such amendments on the Annual Financial Information being provided.
In its provision of such financial information and operating data,the City may cross-reference to any"final official
statement"(as defined in the Rule)available from the MSRB or any other documents theretofore provided to each then
existing NRMSIR or the SID,if one is created.
If not submitted as part of the Annual Financial Information, then when and if available, the City shall provide its
Annual Financial Statements,which shall have been audited by such auditor as shall be then required or permitted by
the State law,to each then existing NRMSIR and to the SID,if one is created.
The City has further agreed to provide or cause to be provided,in a timely manner,to the SID,if one is created,and to
either the MSRB or each then existing NRMSIR,notice of any of the following events with respect to the Bonds,if
material:
(1)Principal and interest payment delinquencies;
(2)Non-payment related defaults;
(3)Unscheduled draws on debt service reserves reflecting financial difficulties;
(4)Unscheduled draws on credit enhancements reflecting financial difficulties;
(5)Substitution of credit or liquidity providers,or their failure to perform;
(6)Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
(7)Modifications to rights of the Owners of the Bonds;
(8)Optional redemptions of the Bonds;
(9)Defeasances of the Bonds;
(10)Release,substitution or sale of property securing repayment of the Bonds; and
(11)Rating changes.
D-2 •
The City also has agreed to provide or cause;to be provided,in a timely manner,to the SID,if one is created, and to
either the MSRB or each then existing NRMSIR,notice of its failure to provide the Annual Financial Information for
the prior fiscal year on or before the last day of the seventh month following the end of such prior fiscal year.
After the issuance of the Bonds,so long-as the interests of the Owners or Beneficial Owners,of the Bonds will not be
materially impaired thereby,as determined by a party unaffiliated with the City(including,without limitation,a trustee
for the Owners, nationally recognized bond,counsel or other counsel familiar with the federal securities law), or
pursuant to a favorable"no-action letter"issued by the SEC,the Undertaking may only be amended in connection with
any change in legal requirements,change in law,or change in the identity,nature or status of the obligated person,or
type of business conducted, and only in such,a manner that the Undertaking of the City, as so amended,would have
complied with the requirements of the Rule at the time of the primary offering, after taking into account any
amendments or interpretations of the Rule,as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without
amendment upon the defeasance, prior redemption or payment in full of all of the then outstanding Bonds. The
Undertaking or any provision thereof in the j Ordinance, shall be null and void if the City(i)obtains an opinion of
nationally recognized bond counsel or other'counsel familiar with the federal securities laws to the effect that those
portions of the Rule which require such Undertaking or any such provision are invalid,have been repealed retroactively
or otherwise do not apply to the Bonds;and(ii)notifies and provides the SID,if any,and either the MSRB or each then
existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Ownex of Bonds to enforce the provisions of the Undertaking in the Ordinance
shall be limited to the right to obtain specific enforcement of the City's obligations under such provisions in the
Ordinance, and any failure by the City to comply with the provisions of this undertaking shall not be a default with
respect to the Bonds under the Ordinance.
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{
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D-3
APPENDIX E
Form of Legal Opinion
E-1
Form of Approving Opinion of
Gottlieb,Fisher&Andrews,PLLC,
Bond Counsel -
[Date of Issue]
City of Renton,Washington
Renton,Washington 98058
Ladies and Gentlemen: 0
We have acted as bond counsel to the City of Renton, Washington(the"City"), in connection
with the issuance by the City of the bonds described below(the"Bonds"):
•
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Dated: November 1, 2004
The Bonds are issued pursuant to Ordinance No. of the City(the"Bond Ordinance") and
other proceedings duly had and taken in conformity therewith. The Bonds are issuedfor the purpose of
providing a part of the funds necessary to carry out the system or plan for additions to and betterments
and extensions of the Waterworks Utility, to make a deposit to the Reserve Fund, and to pay the costs
related to the sale and issuance of the Bonds, all as specified in the Bond Ordinance.
The Bonds are issued as fully registered bonds in the denomination of$5,000 each or in any
integral multiple thereof within a single maturity. The Bonds bear interest(computed on the basis of a
360-day year of twelve 30-day months) from their date or from the most recent interest payment date to
which interest has been paid or duly provided for,whichever is later,payable on June 1, 2005, and
semiannually thereafter on December 1 and June 1 of each year to the maturity thereof. The Bonds bear
interest at the rates and shall mature on December 1 of each of the years and in the principal amounts set
forth below:
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Maturity Date Principal Interest Rate
(December 1) Amount Per Annum
2005 $
2006
2007
2008
2009
2010
2011
2012
2013
2014
2019*
2024*
* Term Bonds
The Bonds are subject to redemption prior to maturity at the times and in the manner described in
the Bond Ordinance. The City has reserved the right to purchase any or all of the Bonds in the open
market at any time and at any price.
In rendering this opinion letter,we have examined the following: (i)the Bond Ordinance; (ii) a
copy of one executed and authenticated Bond(we assume that all other Bonds are in the same form and
have been similarly executed and authenticated); and(iii)the certified proceedings of the City and other
certificates of public officials and representatives of the City that have been furnished to us and which
comprise the transcript of proceedings pertaining to the issuance of the Bonds (the"Transcript").
As to questions of fact material to the opinions expressed herein,we have relied upon the
certified proceedings of the Cityand other certificates of public officials and representatives of the City
y
that have been furnished to us as part of the Transcript, all without undertaking to verify the same by
independent investigation.
Based only upon the foregoing and our examination of such questions of law as we have deemed
necessary or appropriate for the purpose of this opinion letter, and subject to the limitations and
qualifications expressed below, we are of the opinion that, as of this date:
1. The Bonds are lawfully authorized and issued pursuant to and in full compliance with the
Constitution and statutes of the State of Washington, the Bond Ordinance and Ordinance No. 4709 of the
City.
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2. The Net Revenue(as defined in the Bond Ordinance)hereafter collected has been
pledged to the payments to be made into the"2004 Waterworks Revenue Bond Fund"(the"Bond
Fund") as set forth in the Bond Ordinance, and the Bonds constitute a lien and charge on Net Revenue
prior and superior to any other charges whatsoever, except that the lien and charge on such Net Revenue
for the Bonds shall be on a parity with the lien and charge thereon for other Parity Bonds (defined in the
Bond Ordinance).
3. The Bonds are legal,valid and binding special fund revenue obligations of the City,
payable solely out of the Bond Fund, enforceable against the City in accordance with their terms, subject
to the limitations as to enforceability of laws relating to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights, and also to the exercise of judicial
discretion in accordance with general principles of equity. The Bonds are not general obligations of the
City.
4. The Bonds are not"private activity bonds,"as defined in the Internal Revenue Code of
1986,as amended(the"Code").
5. Assuming compliance by the City with applicable requirements of the Code that must be
met subsequent to the issuance of the Bonds,the interest on the Bonds is excludable from gross income
for federal income tax purposes under existing federal law, and is not an item of tax preference for
purposes of determining the federal alternative minimum tax imposed on individuals and corporations
under existing federal law. However,under existing federal law, interest on the Bonds is taken into
account in determining adjusted current earnings for the purpose of computing the alternative minimum
tax imposed on certain corporations.
Except as stated in the preceding paragraphs 4 and 5,we express no opinion as to any federal or
. state tax consequences of the ownership or disposition of the Bonds.
The Code contains certain requirements that must be satisfied subsequent to the issuance of the
• Bonds in order to maintain the exclusion of interest on the Bonds from gross income for federal income
tax purposes, including requirements relating to application of the proceeds of the Bonds,use of
facilities financed with such proceeds, limitations on income derived from the investment of gross
proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury
of certain investment earnings on such gross proceeds. The City has covenanted to comply with these
requirements to the extent applicable, and the opinions expressed in paragraphs 4 and 5 assume such
compliance. However,we have not undertaken and do not undertake to monitor compliance by the City
with such requirements; and if the City should fail'to comply with such requirements, interest on the
Bonds could become includable in gross income for federal income tax purposes retroactive to the date
of issuance of the Bonds.
We have not been engaged to participate in the preparation or review of, or express any opinion
concerning the completeness or accuracy of, the official statement or other disclosure documentation
used in connection with the offer or sale of the Bonds, and thus express no opinion concerning the
completeness or accuracy thereof.
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Copies of this opinion letter maybe delivered to the Owners of the Bonds, who may rely on this
opinion letter as if it were addressed to them on the date hereof. Subject to the foregoing,this opinion
letter may be relied upon by you only in connection with the issuance of the Bonds and may not be used
or relied upon by you or any other person for any other purpose whatsoever, without in each instance our
prior written consent. We expressly disclaim any responsibility to advise you or any Owners of any
developments in areas covered by this opinion letter that occur after the date hereof.
Respectfully submitted,
GOTTLIEB,FISHER&ANDREWS, PLLC
By
Judith L. Andrews
f:\rentor\w&s 04
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OFFICIAL STATEMENT dated November 1,2004
NEW ISSUE INSURANCE: MBIA Insurance Corporation
BOOK-ENTRY RATINGS: Standard &Poor's: AAA(Underlying: AA-)
Fitch: AAA(Underlying: AA-)
(See"Municipal Bond Insurance"and"Ratings"herein)
In the opinion of Bond Counsel,as of the Date of Issue,and assuming the City fulfills its covenant to comply with certain requirements of the Internal
Revenue Code of 1986,as amended(the"Code'),that must be met subsequent to the issuance of the Bonds: interest on the Bonds,including any properly
allocable original issue discount as described herein,is excluded from gross income for purposes offederal income tax purposes;and is not an item of tax
preference for purposes of determining the alternative minimum tax on individuals and corporation. However,such interest on the Bonds is included in the
computation of other taxes on corporations, including, without limitation the alternative minimum tax, and may be subject to other collateral tax
consequences. See"Tax Exemption"and"Other Tax Consequences"herein.
$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
DATED: November 1,2004 DUE: December 1, as shown on the inside cover
The City of Renton,Washington(the"City")provides this Official Statement in connection with the issuance of its
Water and Sewer Revenue Bonds,2004(the"Bonds"). The Bonds mature on December 1,in each of the years and
amounts set forth on the inside cover, are subject to optional redemption, and will bear interest from November 1,
2004 to their respective maturities at the rates per annum as shown on the inside cover hereof.
The Bonds will be issued under a book-entry system,initially registered to Cede&Co.,as nominee of The Depository
Trust Company("DTC"),New York,New York, which will act as securities depository for the Bonds. Individual
purchases of Bonds will be made in the principal amount of$5,000, or integral multiples thereof within a single
maturity. The purchasers will not receive certificates representing their interest in the Bonds. (See"The Bonds -
Book-Entry System"). Interest will be payable semi-annually on June 1 and December 1,commencing December 1,
2004 to their maturity. The fiscal agent of the State of Washington, currently The Bank of New York,New York,
New York,will serve as registrar,paying agent and transfer agent(the"Registrar")for the Bonds. For so long as the
Bonds are held by DTC in book-entry format,principal and interest payments will be made as described herein, see
"The Bonds-Book-Entry System".
The Bonds are special fund revenue obligations of the City payable solely from the Net Revenue of the City's
combined water and sewerage systems,including the storm and surface water sewers(the"Waterworks Utility")and
are issued on a parity of lien with the Parity Bonds,including any Future Parity Bonds. The Bonds are being issued in
accordance with the provisions of the Constitution and laws of the State of Washington. The proceeds of the Bonds
will be used for the purpose of financing improvements incorporated in the Waterworks Utility Capital Improvement
Program(the"Project"),making a deposit to the Reserve Fund and paying costs associated with the sale and issuance
of the Bonds. The Bonds maturing on and after December 1,2015 are subject to optional redemption and the Term
Bonds are subject to mandatory sinking fund redemption prior to maturity. (See "The Bonds — Redemption",
"Authorization,""Security,"and"Source and Application of Funds"herein.)
Payment of the principal of and interest on the Bonds when due will be insured bya municipal bond insurance policy
P P P P Y
to be issued by MBIA Insurance Corporation simultaneously with the delivery of the Bonds.
AIBIA
The Bonds are offered by the Underwriter when,as and if issued by the City,subject to the opinion as to legality and
tax-exemption of the Bonds by Gottlieb,Fisher&Andrews,PLLC,Bond Counsel,Seattle,Washington. The fees of
Bond Counsel are contingent on the issuance of the Bonds. The Bonds, in book-entry form, are expected to be
available through the facilities of DTC for delivery by Fast Automated Securities Transfer on or about
November 17,2004.
This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors
must read the entire official statement to obtain information essential to making an informed investment decision.
D.A. DAVIDSON & CO.
$10,335,000 7
City of Renton, Washington
1!1 l
Water and Sewer Revenue Bonds, 2004
MATURITY SCHEDULE
DATED: November 1,2004
DUE: December 1, as shown below
Interest Yield to Price
Year Amount Rate Maturity (% of Par) CUSIPI
2013 $205,000 3.55% 3.55% 100.000% 760167SJ6
2014 235,000 3.65 3.65 100.000 760167SK3
•
2015 250,000 3.75 3.75 100.000 760167SL1
2025 1,600,000 5.00 4.52 103.837 760167SP2
2026 1,680,000 5.00 4.60 103.185 7601675Q0
2027 1,760,000 5.00 4.67 102.618 760167SN7
$4,605,000, 5.00% Term Bonds due December 1, 2024 to yield 4.43%,price 104.577%, CUSIP1 760167SM9
1 The CUSIP numbers are included for convenience of the holders and potential holders of the Bonds. No assurance can be given
that the CUSIP numbers for the Bonds will remain the same after the date of issuance and delivery of the Bonds.
CITY OF RENTON
1055 South Grady Way
Renton, Washington 98055
(425) 430-6858
www.ci.renton.wa.us'
Members of the City Council:
Mayor Kathy Keolker-Wheeler
Council Members Don Persson,President
Terri Briere
Dan Clawson
Randall Corman
Denis Law
Toni Nelson
• Marcie Palmer
•
Certain Appointed City Officials:
Chief Administrative Officer Jay Covington
Finance and Information Services Administrator Victoria Runkle
City Attorney Lawrence Warren .
City Clerk Bonnie Walton •
Underwriter
D. A. DAVIDSON& CO.
Columbia SeaFirst Center
701 5th Avenue, Suite 3100
Seattle, Washington 98104
888-389-8001
Bond Counsel
Gottlieb, Fisher&Andrews, PLLC
520 Pike Street, Suite 2510
Seattle, Washington 98101
* Neither the information on the City's website nor any links from that website,is a part of this Official Statement,and such
information cannot be relied upon to be accurate as of the date of this Official Statement,nor should any such information be
relied upon to make investment decisions regarding the Bonds.
No dealer,brol:er, salesman or other person has been authorized by the City to give any information or to make any
representations,other than those contained in this Official Statement,and if given or made,such other information or
representations must not be relied upon as having been authorized by the City. The information in this Official
Statement was obtained from sources believed to be reliable,but is not guaranteed as to accuracy or completeness.
The Underwriter has reviewed the information in the Official Statement in accordance with, as a part of, its , ;-
responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction,but the
'Underwriter does not guarantee the accuracy or completeness of the information. The information and expressions of
opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale
hereunder shall create any implication that there has been no change in the financial condition or operations of the City
described herein since the date hereof. This Official Statement contains,in part,estimates and matters of opinion that
are not intended as statements of fact,and no representation or warranty is made as to thecorrectness of such estimates
and opinions or that they will be realized.
The following descriptions of the Bonds and the Ordinance and all references to other documents or materials not
claiming to be quoted in full are only brief outlines of some of the provisions and do not claim to summarize or describe
all provisions thereof. Copies of such documents may be obtained from the City or the Underwriter.
THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IN MAKING AN INVESTMENT DECISION
INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE
OFFERING,INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED- BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY/-
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
In connection with the offering and issuance of the Bonds,the Underwriter may over-allot or effect transactions that
stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open --
market. Such stabilizing,if commenced,may be discontinued at any time.
Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking
statements"within the meaning of the United States Private Securities Litigation Reform Act of 1995,section 21E of
the United States Securities Act of 1934,as amended,and Section 27A of the United States Securities Act of 1933,as
amended. Such statements are generally identifiable by the terminology used such as"plan,""expect,""estimate,"
"projection,""budget"or other similar words.
The CUSIP numbers are included on the inside cover'of this Official Statement for convenience of the holders and
potential holders of the Bonds. No assurance can be given that the CUSIP numbers for the Bonds will remain the same ! -
after the date of issuance and delivery of the Bonds.
L
TABLE OF CONTENTS
SUMMARY STATEMENT 1
THE BONDS 2
Description of the Bonds 2
Redemption 2
Book-Entry System 3
Transfer and Exchange of Bonds Upon Discontinuance of Book Entry System 5
Authorization S 6
Security 6
Source and Application of Funds 10
THE WATERWORKS UTILITY 10
General Information 10
Waterworks Utility Major Customers 10
Delinquent Accounts 11
Historical Net Income and Revenue Available for Debt Service 12
Schedule of Waterworks Utility Debt Service 13
Debt Repayment Record
14
• Outstanding Bonds and Debt Service Requirements • 14
Expected Future Improvements and Bofrl owings S14
The Water Utility 14
Water Utility Customer Accounts 15
Water Utility Rates 15
• The Wastewater Utility 15
Wastewater Utility Customer Accounts 16
Wastewater Utility Rates 16
Storm Drainage Utility • 16
Strom Drainage Utility Rates 5 17
THE CITY OF RENTON 17
General Information S 5 17
Form of Local Government 17
Principal City Officials 18
City Employment and Primary Services 18
Employee Relations S18
Pension Plans 5. 19
The Budgetary Process S 5
19
Auditing of City Finances 19
Risk Management 20
Authorized Investments 5
20
APPROVAL OF BOND COUNSEL 21
TAX EXEMPTION S 21
OTHER TAX CONSEQUENCES 5 5 22
NO LITIGATION CONCERNING THE BONDJ. 23
UNDERWRITING 5 23
MUNICIPAL BOND INSURANCE 5 23
RATINGS 5 5 26
ENFORCEABILITY 27
COMMITMENT TO PROVIDE CONTINUING DISCLOSURE 27
ADDITIONAL INFORMATION AND MISCELLANEOUS 27
DISCLOSURE STATEMENT 28
APPROVAL OF OFFICIAL STATEMENT 28
APPENDIX A: SUMMARY OF CERTAIN PROVISIONS OF THE ORDINANCE A-1
Summary of the Ordinance A-2
Definitions A-2
Pledge of Revenue A-4
Bond Fund A-4 i
Reserve Fund A-5
Rate Stabilization Fund A-5
Rate Covenant A-5 5
Flow of Funds
Additional Covenants A-6
Future Parity Bonds A-7
APPENDIX B: 2003 AUDITED FINANCIAL STATEMENTS OF THE WATERWORKS UTILITY B-1
APPENDIX C: ECONOMIC AND DEMOGRAPHIC INFORMATION C-1
Local Economic Overview C-2
Aircraft Manufacturing-The Boeing Company C-2
Technology C-3 ,
Transportation
Fishing,Agriculture and Forest Products C-4
Higher Education C-5
Services,Tourism,Recreation and Conventions C-5
Population Trends C-6
Trends in Building PermitsC-7
Historical Taxable Retail Sales C-7 1
Major Employers—City of Renton C-7
Major Employers—Central Puget Sound Region C-8
Employment By Major Industry C-9 I
Labor Force and Unemployment C-10
Personal Income TrendsC-10
Earnings By Industry
C-11
APPENDIX D: CONTINUING DISCLOSURE D-1
APPENDIX E-FORM OF LEGAL OPINION E-1
APPENDIX F—BOND INSURANCE POLICY SPECIMEN F-1
$10,335,000
Clity of Renton, Washington
Water and Sewer Revenue Bonds, 2004
UMMARY STATEMENT
The following summary is qualified in it entirety by reference to'the detailed information appearing elsewhere in •
this Official Statement. No person is aut orized to detach this Summary Statement from this Official Statement or
to otherwise use it without this entire 0 ficial Statement.
ISSUER The C ty of Renton(the"City")is located approximately 20 miles southeast of
the Ci of Seattle and approximately 60 miles northeast of the City of
Ol 'a the State's capital. The Cityhada population of 54,900 as estimated
ymP � pp p
in 20 3 by the State of Washington (the "State") Office of Financial
Manag ment. (See"The City of Renton"herein.)
INTEREST AND
REDEMPTION Interes on the Bonds is payable semi-annually on each June 1 and December
1,comrpencing December 1,2004 to their maturity or prior redemption. The
Bonds aturing on and after December 1,2015 are subject to optional redemption
and the erm Bonds maturing on December 1,2024 are subject to mandatory
sinking fund redemption. (See"The Bonds -Description of the Bonds"and
"Rede tion"herein.)
AUTHORITY
FOR ISSUANCE The Bo ds will be issued in accordance with the provisions of the Constitution
and the laws of the State,particularly chapters 35.41,35.67 and 39.46 Revised
Code of Washington ("RCW"), and pursuant to Ordinance No. 5098 of the
City, ad pted on or about Novembef1, 2004 (the "Ordinance"). (See "The
Bonds - uthorization"herein.)
SOURCE OF
REPAYMENT The Bon s are special fund revenue obligations of the City. The Net Revenue
of the Ci 's combined water and sewerage systems, including the storm and
surface water sewers(the"Waterworks Utility")is pledged to the payment into
the 2004IWaterworks Revenue Bond Fund (the "Bond Fund") of amounts
necessary' to pay the principal of and interest on the Bonds.• The Bonds
constitute a lien and charge on the Net Revenue prior and superior to any other
charges vs),Ihatsoever except that the lien and charge on such revenue for the
Bonds shall be on a parity with the lien and charge thereon for the Parity
Bonds(hereinafter defined),including any Future Parity Bonds. The City will
maintain al Reserve Fund for the sole purpose of providing additional security
for the Paiity Bonds, including the Bonds if Revenue is not sufficient to pay
debt service when due. (See"The Bonds- Security"herein.)
USE OF
PROCEEDS The proceeds of the Bonds will be used for the purpose of financing
improvements incorporated in the Waterworks Utility Capital Improvement
Program(the"Project"),making a deposit to the Reserve Fund and paying costs
-associated with the sale and issuance of the Bonds. (See "The Bonds - Source
and Application of Funds"herein.)
1
THE BONDS
Description of the Bonds
The Bonds will be issued in the aggregate amount of$10,335,000 in fully registered form, will be in the
denomination of$5,000 each or any integral multiples thereof within a single maturity and will be dated
November 1,2004: The Bonds shall mature on December 1,in the years and amounts set forth on the inside
cover hereof. The fiscal agent of the State, currently The Bank of New York,New York,New York,will
serve as registrar,paying agent and transfer agent(the"Registrar") for the Bonds. -•
The Bonds will bear interest from November 1, 2004, or the most recent interest payment date to which
interest has been paid or duly provided for,whichever is later, at the rates per annum set forth on the inside
cover hereof. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months,
and will be payable semi-annually on June 1 and December 1,commencing December 1,2004,until the date
of maturity or prior redemption of such Bond. For so long as the Bonds are held by DTC in book-entry
form, principal and interest payments will be made as described herein under the heading "The Bonds -
Book-Entry System".
Redemption
Optional Redemption. Bonds maturing in the years 2013 through 2014, inclusive, are not subject to
redemption prior to their stated maturities. Bonds maturing on or after December 1, 2015 are subject to
redemption at the option of the City prior to maturity on or after December 1, 2014, from funds from any
source, at any time, in whole or in part (maturities to be selected by the City and by lot in.the manner
determined by the Registrar), at the price of par plus interest accrued to the date of redemption, if any.
Bonds in the principal amount of greater than $5,000 may be partially redeemed in part in any integral
multiple of$5,000. The Registered Owner of any Bond redeemed in part shall receive,upon surrender of
such Bond to the Registrar, one or more new Bonds of the same maturity and interest rate in authorized
denominations equal in principal amount to the unredeemed portion of the Bond so surrendered.
Mandatory Sinking Fund Redemption —2024 Term Bonds. The Bonds maturing on
December 1, 2024 are Term Bonds and, if not previously purchased by the City in the open market or
optionally redeemed, are subject to mandatory sinking fund redemption prior to maturity,in part,by lot in
such manner as the Registrar shall determine, at par plus accrued interest to the date of redemption, on
December 1 in the following years and in the following mandatory sinking fund redemption amounts:
Mandatory Sinking Fund Redemption Dates
Term Bonds Due December 1, 2024 Redemption Amount
December 1, 2016 $260,000
December 1, 2017 270,000
December 1, 2018 130,000
December 1, 2019 185,000
December 1, 2020 245,000
December 1, 2021 265,000-
December 1, 2022 • 280,000 --'
December 1, 2023 1,450,000
December 1, 2024* 1,520,000
*Maturity
2
•
Notice of Redemption. For so long as the Bonds are held by DTC in book-entry only form, the City will
provide notice of redemption to DTC(or its nominee) as provided in DTC's Letter of Representations and
the City will not provide such notices to beneficial owners of the Bonds (other than as described in the
section "The Bonds — Book-Entry Form" herein). See "The Bonds - Book-Entry System" below for a
discussion of how redemption notices will be given by DTC to the beneficial owners of the Bonds. The City
cannot and does not give any assurances that DTC, its direct participants or others will distribute any
redemption notices to the beneficial owners or that they will do so on a timely basis. From and after the date
that the Bonds are no longer held in book-entry form,notice of redemption must be given by or on behalf of
the City not less than 30 nor more th 60 days prior to the date of redemption in accordance with the
Ordinance.
Pursuant to the City's continuing disc osure undertaking, the City is required to provide timely notice of
redemption of the Bonds to each NRIyISIR (or MSRB) and to any SID. See "Commitment to Provide
Continuing Disclosure" herein for definitions of the terms "NRMSIR," "MSRB" and "SID" and a
description of the City's undertaking t provide certain notices.
r
Effect of Redemption. If redemption notice to the Registered Owners has been given in accordance with the
Ordinance and the City has set aside sufficient money for the payment of all Bonds called for redemption on
the date fixed for redemption,the Bonds so called shall cease to accrue interest after such redemption date,
and all such Bonds shall be deemed not oto be outstanding under the Ordinance for any purpose,except that
the Registered Owners of such Bonds shall be entitled to receive payment of the redemption price and
interest accrued on the principal of the onds to the redemption date from the money set aside for such
purpose.
Book-Entry System
When the Bonds are issued, ownership interests will be available to purchasers only through a book-entry
system(the`Book-Entry System")mainthined by DTC or such other depository institution designated by the
City pursuant to the Ordinance. If the Bonds are removed from the Book-Entry System and delivered to the
persons named as the registered owners o the Bonds on the registration records maintained by the Registrar
(the "Registered Owners") in physical fora, as described below, the discussion herein of the Book-Entry
System will not apply. The following information has been provided by DTC, and the City makes no
representation as to the accuracy or comp eteness thereof.
1. The Depository Trust Company("DTC"),New York,New York,will act as securities depository for
the Bonds. The 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 requested by an authorized
representative of DTC. One fully registered bond certificate will be issued for each maturity of the
Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
2. DTC, the world's largest 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 1934. DTC holds and provides asset servicing for
over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and
money market instruments from over 85 countries that DTC's participants ("Direct Participants")
3
•
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 Corporations ("DTCC").
DTCC,in turn, is owned by a number of Direct Participants of DTC and Members of the National
Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing
Corporation, and Emerging Markets Clearing Corporation,(NSCC,GSCC,MBSCC, and EMCC,
also subsidiaries of DTCC),as well as by the New York Stock Exchange,Inc.,the American Stock
Exchange,Inc.,and the National Association of Securities Dealers,Inc. Access to the DTC system
is also available to others,such as U.S.and non-U.S. securities brokers and dealers,banks,and 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 Standard and
Poor's highest rating: AAA. The DTC rules applicable to.its Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com.
3. Purchases of Bonds under the DTC system must be made by or through Direct Participants,which
will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
. Participants' records. Beneficial Owners are, however, expected to receive written confirmation
from DTC of their purchase,but Beneficial Owners are 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 Bonds are to be accomplished by entries made on the books of Direct or
Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Bonds,except in the event that use of the book-
entry system for the Bonds is discontinued.
4. To facilitate subsequent transfers,all Bonds deposited by 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 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 Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited,which mayor may not
be the Beneficial Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
5. Conveyances 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.
6. Redemption notices, if any, shall be sent to DTC. If less than all of the 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.
4
I '
7. Neither DTC nor Cede&Co (nor such other DTC nominee),will consent or vote with respect to
Bonds unless authorized by alDirect Participant in accordance with DTC's Procedures. Under its
usual procedures,DTC mails an Omnibus Proxy to the City 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 Bonds are crel ited on the record date(identified in a listing attached to the Omnibus
Proxy).
8. Redemption proceeds, distrib tions, and dividend payments on the 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 P, icipants' accounts, upon DTC's receipt of funds and corresponding
detail information from the Ci on payable date in accordance with their respective holdings shown
on DTC's records. Payments )y 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 or the City,subjec to any statutory or regulatory requirements as may be in effect from
time to time.Payment of rede ption 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 City, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as securities depository with respect to the Bonds at any
time by giving reasonable noticto the City. Under such circumstances,in the event that a successor
securities depository is not obtained,Bond certificates are required to be printed and delivered.
10. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered.
11. The information in this section concerning DTC and DTC's book-entry system has been obtained
from sources that the City believes to be reliable,but the City takes no responsibility for the accuracy
thereof.
Transfer and Exchange of Bonds Up n Discontinuance of Book-Entry System
So long as the Bonds are in book-entry only form, the beneficial ownership of the Bonds may only be
transferred in the records established and maintained by DTC. Upon discontinuance of the book-entry
system,the Bonds maybe transferred by Registered Owners upon completion of the assignment form on the
Bond(s)in form and substance satisfactory to the Registrar and delivery of the Bond(s)to be transferred to
the principal corporate trust office of the Registrar for cancellation and re-issuance. Upon such surrender,
the Registrar will cancel the surrendered Bonds and deliver to the new Registered Owner a new Bond or
Bonds of the same maturity and interest rate and for the same aggregate principal amount. Upon
discontinuance of the book-entry system,any Bond maybe surrendered at the principal corporate trust office
of the Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds, in any
authorized denomination. The Registrar1 is not required to transfer or exchange Bonds during the 15 days
preceding any principal or interest payment date.
5
Authorization
The Bonds are special fund revenue obligations of the City issued pursuant to the provisions of the
Constitution and laws of the State of Washington,particularly chapters 35.41,35.67 and 39.46 RCW and to
Ordinance No. 5098 adopted by the City Council on or about November 1, 2004 (the "Ordinance")
authorizing the issuance and sale of the Bonds.
•
Security
Revenue Pledge. In the Ordinance,the Net Revenue of the Waterworks Utility is pledged to the payment
into the 2004 Waterworks Revenue Bond Fund(the"Bond Fund")in amounts necessary to pay the principal
of and interest on the Bonds. The Bonds are payable solely out of the Bond Fund. The Bonds constitute a
lien and charge on the Net Revenue prior and superior to any other charges whatsoever except that the lien
and charge on such revenue for the Bonds shall be on a parity with the lien and charge thereon for the City's
Water and Sewer Revenue Refunding Bonds, 1998 (the "1998 Bonds"), the City's Water and Sewer
Revenue Bonds, 2002 (the"2002 Bonds"), the City's Water and Sewer Revenue Refunding Bonds, 2003
" and anyFuture ParityBonds(collectively,the"Parity Bonds") See"The Waterworks
Bonds")
(the"2003 Bo )
Utility- Schedule of Waterworks Utility Debt Service"). As of the date of issuance of the Bonds,the City
did not have any outstanding subordinate or junior lien obligations.
As used herein, "Revenue of the Waterworks Utility"means all the earnings and revenues received by the
City from the maintenance and operation of the Waterworks Utility and all earnings from the investment of
money in the Reserve Fund or any Parity Bond fund, and connection and capital improvement charges
collected for the purpose of defraying the costs of capital facilities of the Waterworks Utility, except
government grants,proceeds from the sale of Waterworks Utility property(other than timber), City taxes
collected by or through the Waterworks Utility,principal proceeds of bonds and earnings or proceeds from
any investments in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility
obligations (until commingled with other earnings and revenues of the Waterworks Utility) or held in a
special account for the purpose of paying a rebate to the United States Government under the Internal
Revenue Code of 1986, as amended.
As used herein,"Maintenance and Operation Expense"means all reasonable expenses incurred by the City
in causing the Waterworks Utility to be operated and maintained in good repair, working order and
condition,including payments made to any other municipal corporation or private entity for water service
and for sewage treatment and disposal service or other utility service in the event the City combines such
service in the Waterworks Utility and enters into a contract for such service,and including pro-rata budget
charges for the City's administration expenses where those represent a reasonable distribution and share of
actual costs,but not including any depreciation or taxes levied or imposed by the City or payments to the
City in lieu of taxes, or capital additional or capital replacements to the Waterworks Utility.
"Net Revenue"means Revenues of the WaterworksUtilityless Maintenance and Operation Expense.
For a description of the Bonds and Funds, see Appendix A under the caption "Summary of Certain
Provisions of the Ordinance."
The Bonds are not general obligations of the City, and the full faith,credit and resources of the City
are not pledged for the payment thereof.
6
Rate Covenant. The City has covenanted in the Ordinance that it will establish,maintain and collect rates
and charges for all services and facilities provided by the Waterworks Utility which will be fair and no-
discriminatory and will adjust those rates and charges from time to time so that: Gross Revenue will at all
times be sufficient to pay all Maintenance and Operation Expense on a current basis, pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity Bond Funds and pay all taxes,
assessments or other governmental charges lawfully imposed upon the Waterworks Utility or other revenue
therefrom or payments in lieu thereof and any and all other amounts that the City may now or hereafter
become obligated to pay from Gross 4evenue by law or contract;and Net Revenue in each calendarear will
be at least equaly
to 1.25 times Maxunum Annual Debt Service (the"Coverage Requirement").
Flow of Funds. A special fund of the City(the"Waterworks Utility Fund"), has previously been created
pursuant to Ordinance No. 250. Al Revenue of the Waterworks Utility shall be deposited into the
Waterworks Utility Fund as collected,and shall be held separate and apart from all other funds and accounts
of the City. Funds in the Waterworks Utility Fund (other than in any bond redemption or federal rebate
account)will be used in the following order of priority:
(1) to pay Maintenance and Operation Expense;
(2) to pay interest n the Parity Bonds;
, (3) to pay the principal of the Parity Bonds:
(4) tomake all payments required to be made into any sinking fund or bond redemption
fund created for the payment of Future Parity Bonds which are Term Bonds:
(5) to make all payments required to be made into the Reserve Fund;
(6) to make all paents required to be made into any revenue bond redemption fund,
revenue warrant, edemption fund,debt service account or reserve account created to
pay and secure he payment of the principal of and interest on any other revenue
' bonds or revenue warrants having a lien upon the Revenue of the Waterworks Utility
junior and inferior to the lien thereon for the payment of the principal of and interest
on Parity Bonds;
(7) to retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City, to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
__ Waterworks Utility, to make deposits into the Rate Stabilization Fund or for any
other lawful City purpose.
The Bond Fund. A special fund of the City known as the 2004 Waterworks Revenue Bond Fund (the
"Bond Fund") has been created by the Ordinance for the payment of the principal of and interest on the
Bonds. So long as the Bonds are outstanling against the Bond Fund,the City will set aside and pay into the
Bond Fund out of Net Revenue a fixed amount, without regard to any fixed proportion, namely, one day
before each interest or principal and inte lest payment date,an amount which,together with other money then
on deposit therein, shall be sufficient to meet the debt service on the Bonds required on the next interest or
• principal and interest payment date.
i7
•
The Reserve Fund and the Reserve Requirement. The special fund of the City know as the Waterworks
Revenue Bond Reserve Fund(the"Reserve Fund")has been created by Ordinance No.4709 for the purposes _,
of securing the payment of the principal of and interest on all bonds to which Net Revenue is pledged.The
Ordinance provides for the funding and maintenance of funds in the Reserve Fund in an amount equal to
Maximum Annual Debt Service (the "Reserve Requirement"). The City may, in lieu of cash and
investments,obtain all or a part of the Reserve Requirement for any Parity Bonds then outstanding for which
such insurance is obtained,to be issued by an institution that has been assigned a credit rating equal to or
better than the highest then-existing rating for any of the Parity Bonds("Reserve Insurance"). Following the
deposit thereon of a portion of the Bond proceeds,the Reserve Fund will be fully funded with a balance of
$3,114,331.25 as of the date of issuance of the Bonds.
If there is a deficiency in the Bond Fund to meet maturing installments of either principal or interest,as the
case maybe,on the Bonds,that deficiency will be made up from the Reserve Fund by the withdrawal of cash
therefrom for that purpose. Any deficiency created in the Reserve Fund by reason of any such withdrawal
will then be made up from Net Revenue first available after making necessary provisions for the required
payments into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity Bonds or
maybe deposited in any other fund and spent for any other lawful Waterworks Utility purpose.
1
Other Covenants. In the Ordinance,the City makes certain other covenants,including covenants regarding
maintenance of the Waterworks Utility, the sale or other disposition of the property of the Waterworks
Utility,keeping separate books and accounts,collection of delinquent accounts,the payment of Maintenance
and Operation Expense,maintenance of tax exemption on the Bonds and the maintenance of insurance on
the Waterworks Utility properties. ,, ,I
Future Parity Bonds. The City reserves the right to issue Future Parity Bonds which will constitute a lien
and charge on the Net Revenue of the Waterworks Utility on a parity with the Parity Bonds(including the
Bonds),if the following conditions,among others, are met and complied with at the time of issuance of the
Future Parity Bonds: -,
(1) The ordinance providing for the issuance of such Future Parity Bonds shall provide
for thePaYm ent of the principal thereof and interest thereon out of a Parity Bond Fund, and there
shall be no deficiency in any Parity Bond Fund. ` 1
• (2) The ordinance providing for the issuance of such Future Parity Bonds shall provide
Pym principal for the payment of the ri al thereof and interest thereon out of a Parity Bond Fund. ,
P .
(3) The ordinance providing for the issuance of such Future Parity Bonds shall provide
for the deposit into the Reserve Fund.from the proceeds of those Future Parity Bonds of(a) an
amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or(b) -
Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security
equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds,or under
certain circumstances,the City may provide for deposit into the Reserve Fund other legally available
money from Net Revenue or Reserve Insurance or Alternate Security within three years from the date ,
of issuance of the Future Parity Bonds in three approximately equal annual payments. After the date
in which all the 1998 Bonds,2002 Bonds,2003 Bonds and the Bonds are fully redeemed,refunded
or defeased(the"New Covenant Date"),(c) the ordinance providing for the issuance of such Future
Parity Bonds shall provide for the deposit into the Reserve Fund from the proceeds of those Future
8 1
Parity Bonds of(1)an amour 4 equal to the increase in the Reserve Requirement attributable to those
Parity Bonds or(2)Reserve hisurance or Alternate Security or an amount plus Reserve Insurance or
Alternate Security equal to 4e increase in the Reserve Requirement attributable to'those Future
Parity Bonds. At the discretion of the City,the City may provide for deposit into the Reserve Fund
of other legally available money from Net Revenue or Reserve Insurance or Alternate Security either
on or prior to the date of issuahce of such Future Parity Bonds or within three years from the date of
issuance of the Future Parity Bonds in three approximately equal annual payments arid in such event,
the ordinance providing for the issuance of such Future Parity Bonds shall provide for such deposit.
(4) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for
the payment of mandatory red mption or sinking fund requirements into the applicable Parity Bond
Fund for any Term Bonds tohe issued and for regular payments to be made for the payment of the
principal of such Term Bonds on or beforetheir maturity, or, as an alternative, the mandatory
redemption of those Term Bonds prior to their maturity date from money in the applicable Parity
Bond Fund.
(5) There shall be on file with the City either: (a) a certificate of the City Finance
Director demonstrating that during any 12 consecutive calendar months out of the immediately
preceding 36 calendar months lTet Revenue,without regard to deposits into or withdrawals from the
Rate Stabilization Fund,is equal to at least the Coverage Requirement for all Parity Bonds plus the
Future Parity Bonds proposed to be issued; or(b) a certificate of a Professional Utility Consultant
. that in such consultant's opinion Revenue for any 12 consecutive calendar months,without regard to
deposits into or withdrawals om the Rate Stabilization Fund, shall be equal to the Coverage
Requirement for each year the eafter. The certificate,in estimating Net Revenue available for debt
services,may adjust Net Reve ue as provided in the Ordinance.
If Future Parity Bond proposed to be so issued are for the sole purpose of refunding
outstanding bonds payable from any Parity Bond Fund, such certification of coverage shall not be
required if the amount required for the payment of the principal and interest in each year for the
refunding bonds is not increased more than$5,000 over the amount for that same year required for
the bonds or the portion of that bond issue to be refunded thereby and if the maturities of such
refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby.
In addition, the Ordinance further provides that nothing contained therein prevents the City from issuing
revenue bonds that are a charge upon Gross Revenue subordinate to the payments required to be made
therefrom into any Parity Bond Fund.
For a description of the terms of issuance of Future Parity Bonds, see Appendix A under the caption
"Summary of Certain Provisions of the Ordinance."
9
Source and;Application of Funds
The estimated sources and application of proceeds of the Bonds(less accrued interest)are shown in the table
si
as follows:
Sources of Funds:
Proceeds of the Bonds $10,335,000.00
Reoffering Premium
371,747.65
Total Sources of Funds $10,706,747.65
t f
Application of Funds:
Deposit to the Project Fund $10,009,942.65
Deposit to Reserve Fund 507,480.00
Costs of Issuance of the Bonds' 189,325.00
Total Application of Funds $10,706,747.65
1 Includes the Underwriter's discount,Bond Counsel fees,municipal bond insurance premium,rating agency fees,Preliminary and
Official Statement printing and mailing expenses,registration costs,and any miscellaneous costs.
THE WATERWORKS UTILITY
General Information
The Waterworks Utility of the City is comprised of three divisions:the Water Utility,the Wastewater Utility
and the Storm Drainage Utility. The City maintains separate fund accounting for the three divisions to
facilitate financial management,but has combined the divisions for fmancing purposes into the Waterworks
Utility. See"The Water Utility," "The Wastewater Utility" and"The Storm Drainage Utility"herein for
descriptions of the three divisions of the City's Waterworks Utility.
Waterworks Utility Major Customers
•
The Boeing Company ("Boeing") has been the largest single customer of the Waterworks Utility for a
number of years. For the year ending December 31,2003,Boeing represented approximately 4.9%percent
of the operating revenue of the Waterworks Utility. See "Appendix C —Economic and Demographic
Information—Manufacturing—The Boeing Company"herein
i - 1
10
The largest customers of the Waterworks Utility for the year ended December 31,2003 are summarized in
the table below:
Water Utility Wastewater Utility Storm Drainage Utility
of %of %of Storm
Water Wastewater Drainage
Customer Utility Rev. Customer Utility Rev. Customer Utility Rev.
Boeing 3.09% Boeing 2.59% City of Renton 6.12%
King County 1.52 P blic Hospital District No. 1 1.66 Boeing 4.63
Skyway Water and Sewer Dist. 1.25 S rvice Linen Supply 1.21 King County 1.72
Public Hospital Dist.No. 1 0.97 Diaper Valley Farms 0.63 Kenworth Truck Co. 1.14
Service Linen Supply 0.78 Virtue Empire Associates 0.57 State of Washington 1.02
1 Draper Valley Farms 0.37 G&K Services 0.57 Burlington Northern 0.61
G&K Services 0.33 SLnset Terrace 0.46 Leisure Estates 0.60
Sunset Terrace 0.28 Stntone Hotel Properties 0.36 Shadowhawk LLC 0.58
Sheets Unlimited 0.24 R gency Rehab Center 0.30 Valley Dist. Center 0.50
Renton School Dist.No.403 0.23 Oca Bay Seafoods 0.26 Valley Medical Center 0.47
Total 9.06% 1Total 8.61% Total 17.39%
,,
Source: The City of Renton
Delinquent Accounts
After notice of delinquency of a water d/or sewer bill has been provided and the bill remains unpaid for a
period of 60 days,the Finance and Inforpation Services Administrator is directed to cut off water service to
1 the premises and enforce a lien upon the property. Such lien is superior to all other liens or encumbrances,
1_ except those for general taxes and special assessments.
[The remainder of this page intentionally left blank.]
• 11
I
Historical Net Income and Revenue Available for Debt Service I
The following table shows the audited revenues, expenses, net income and revenues available for debt
service for the fiscal years ended December 31, 1999 through 2003. See "Appendix B - 2003 Audited
Financial Statements of the Waterworks Utility"herein. G
Audited Audited Audited Audited Audited
1999 2000 2001 2002 2003
Operating Revenue
Charges for Services $20,176,839 $21,724,688 $20,495,611 $22,123,070 $24,551,329
Other Operating Revenue 1,303,559 1,411,401 1,203,480 1,686,652 1,227,428
Total Operating Revenues $21,480,398 $23,136,089 $21,699,091 $23,809,722 $25,778,757
Operating Expenses
Operations and Maintenance $12,923,365 $12,020,228 $12,463,725 $13,193,177 $3,962,259
Administrative and General' 1,756,727 1,826,630 1,853,671 2,560,881 10,501,393
Taxes 1,727,350 1,806,916 1,734,324 1,741,414 2,526,867 ,
Depreciation 2,998,977 3,217,984 3,661,458 3,763,961 4,013,656
Total Operating Expenses $19,406,419 $18,871,758 $19,713,178 $21,259,434 $21,004,175
Operating Income(Loss) $2,073,979 $4,264,331 $1,985,913 $2,550,289 $4,774,582
Non-Operating Revenue(Expenses) ,
Interest Revenue $303,912 $546,422 $295,154 $135,938 $155,363
Other Non-Operating Revenue 58,726 79,599 88,573 44,757 142,290 .
Interest Expense (1,313,469) (1,244,246) (1,093,550) (1,146,259) (1,284,944)
Amortization Expense (87,839) (80,472) (77,166) (83,399) (92,345)
Operating Transfers (82,080) 15,248 (77,650) (10,079) 40,000
Total Non-Operating Rev./Exp. ($1,120,750) ($683,449) ($864,639) ($1,059,042) ($1,039,636)
Net Income $953,229 $3,580,882 $1,121,274 $1,491,247 $3,734,946
Adjustments to Net Income
City Utility Tax $1,197,276 $1,271,201 $1,205,729 $1,228,628 $1,412,977
Amortization Expense 87,839 80,472 77,166 83,399 92,345
Depreciation Expense 2,998,977 3,217,984 3,661,458 3,763,961 4,013,656 _!
Bond Interest Expense 1,313,469 1,244,246 1,093,550 1,146,259 1,284,944
Connection/System Dev. Charges 2,018,123 1,779 699 1,426,008 2,054,039 1,376,490
Total Adjustments $7,615,684 $7,593,602 $7,463,911 $8,276,286 $8,180,412
Net Revenue Available for Debt Service $8,568,913 $11,174,484 $8,585,185 $9,867,533 $11,915,358
Annual Debt Service $3,114,399 $2,743,138 $2,749,921 $2,906,642 $2,917,114
Debt Service Coverage 2.75x 4.07x 3.12x 3.39x 4.08x —
1 In 2003 the pass through charge t6 King County for wastewater treatment in the amount of$7,113,457 is included as an
Administrative and General Expense. In prior years this amount was reflected as an Operations and Maintenance Expense.
Source: The City of Renton
1 1
12 1
! Schedule of Waterworks Utility Debt Service
Set forth in the following table is the debt service schedule for the Parity Bonds and the Bonds. Some of the
interest figures have been rounded.
Parity Bonds The Bonds
Total Debt
Year Principal Interest Principal Interest Service
2004 $1,475,000 $1,010,267 -- $42,290 $2,527,557
2005 1,630,000 969,644 -- 507,480 3,107,124
2006 . 1,680,000 . 922,717 -- 507,480 3,110,197
2007 1,740,000 865,557 -- . 507,480 3,113,037
2008 1,810,000 795,880 -- 507,480 3,113,360
2009 1,875,000 731,852 -- 507,480 3,114,332
2010 1,940,000 663,317 -- 507,480 3,110,797
2011 2,015,000 590,828 -- 507,480 3,113,308
2012 2,100,000 504,322 -- 507,480 3,111,802
2013 775,000 421,296 205,000 507,480 1,908,776
2014 - 710,000 404,437 235,000 500,203 1,849,640
2015 735,000 373,908 250,000 491,625 1,850,533
20.16 765,000 341,567 260,000 482,250 1,848,817
2017 805,000 307,143 270,000 469,250 1,851,393
2018 1,000,000 270,112 130,000 455,750 1,855,862
2019 1,000,000 217,613 185,000 449,250 1,851,863
2020 - 1,000,000 165,112 245,000 440,000 1,850,112
2021 1,045,000 112,613 265,000 427,750 1,850,363
2022 1,100,000 57,750 280,000 414,500 1,852,250
2023 -- -- 1,450,000 400,500 1,850,500
2024 . -- -- 1,520,000 328,000 1,848,000
2025 . -- -- 1,600,000 252,000 1,852,000
1 2026 -- 1,680,000 172,000 1,852,000
2027 -- -- 1,760,000 88,000- 1,848,000
Total $25,200,000 $93'25,935 $10,335,000 $9,980,688 $55,241,623
I
Source: The City of Renton
i ,
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Debt Repayment Record
The City has always met principal and interest payments on all of its bonds when due.
Outstanding Bonds and Debt Service Requirements
Following issuance of the Bonds, the Waterworks Utility will have a total of$35,535,000 of Bonds and
Parity Bonds outstanding. The Maximum Annual Debt Service on the Bonds and Parity Bonds is _I
$3,114,332. Actual Net Revenue for fiscal year 2003 of$11,915,358 provides debt service coverage of
Maximum Annual Debt Service of 3.83 times. The City may,however,issue Future Parity Bonds to finance -
capital needs of the Waterworks Utility as described below that may reduce debt service coverage below
such level. (See Appendix A-"Summary of Certain Provisions of the Ordinance- Security"herein.)
Expected Future Improvements and Borrowings
The City's current Capital Improvement Plan("CIP")identifies system development and major maintenance
capital expenditures of$44,820,000 planned for fiscal years 2005-2009. The amount of Waterworks Utility
debt to be issued in support of these CEP elements has not yet been finalized,although the City does expect
the issuance of additional Utility debt prior to 2006.
The Water Utility •
The City of Renton Water System provides service to an area approximately 16 square miles, and to more
than 14,700 customer accounts. In addition,the City supplies water on a wholesale basis to Skyway Water
District through a single metered connection.
The City's Water System consists of nine reservoirs, 18 pump stations, 2 water treatment facilities, 291
miles of water mains, 3,240 fire hydrants, and 15,200 water meters. Water treatment consists of
chlorination, fluoridation and corrosion control. -
Current active and primary water supply sources include five wells drawing water from the Cedar Valley
aquifer,three wells from the Maplewood aquifer and one artesian spring, Springbrook Springs. The wells
provide eighty-six percent (86%) of the City's water production. In addition, the City maintains seven
metered backup water supply interties with Seattle Public Utilities,one emergency intertie with the City of
Kent and one emergency intertie with the City of Tukwila. Together,active,standby and emergency wells -,
provide 18,900 gallons per minute(GPM)or 27.22 million gallons per day(MGD).Emergency interties with
neighboring cities and water districts can provide 12,000 GPM or 17.28 MGD.
In 2003, the maximum demand for water was 14.08 MGD and the average day demand was 7.58 MGD. ' _!
Based on growth forecasts,the City has sufficient on-line supply capacity to meet demands through at least
2020.
•
14
Water Utility Customer Accounts
Renton's Water Utility currently se es 15,507 customers. The type and number of accounts are shown in
the table below.
19'9 2000 2001 2002 2003
Residential' 10,6 3 11,204 11,060 11,389 11,743
Multi-Family' 1,3"4 1,364 1,539 1,577 1,685
Commercial 1,2 9 1,020 1,259 1,263 1,254
Industrial 1 0 81 87 88 89
Other'
5 7 555 593 681 736
Total 13,83 14,224 14,538 14,998 15,507
1 Single Family Residence
2 Apartment houses,etc.
3 Schools,City Departments,Fire Protectio
Source: The City of Renton
Water Utility Rates
Water rates for metered services insi e the City are established in order to charge service accounts for the
amount of water used plus a monthly service charge determined by the size of the waterline serving the
premises. The following rates and charges were established by Ordinance No. 5043, effective January 1,
2004 and represent an increase of approximately 3%over the last increase in rates effective January 1, 1996:
Base Rate:
•
Size of Service Base Charge Size of Service Base Charge
3/a inch $10.82 4 inch $129.83
1 inch 13.54 5 inch 194.77
1-1/2 inch 17.36 6 inch 270.53
2 inch 30.33 8 inch 389.55
3 inch 89.82 12 inch 541.06
1 Commodity Charge: $1.81/100 cubic feet("cf) ($1.94/100 cf in excess of 1,000 cf for residential only).
Water rates for metered service outside the City are 1.5 times the rate fixed for metered service within the
City. Water rates for fire protection service are$3.40 per month per inch of fire meter size.
The Wastewater Utility
The Wastewater Utility system collects wastewater from residential and commercial customers and delivers
it to King County(the"County")for treatment. The existing system consists of 183.53 miles of wastewater
pipelines, 23 lift stations and an additional seven lift stations which are privately owned and maintained.
Wastewater is discharged into facilities within the City, from which it is conveyed to and treated by the
County's Renton Treatment Plant. Approximately 80 percent of the City area is served by the system. The
remaining area within the City is served by septic tanks or is undeveloped.
15
Wastewater Utility Customer Accounts
Renton's Was tewater Utility currently serves 13,697 customers. The type and number of accounts are shown
in the table below.
1999 2000 2001 2002 2003
Residential' 9,406 9,766 10,089 10,549 11,140
Multi-Family' 1,267 1,323 1,346 1,374 1,467
Commercial 952 966 983 982 933
Industrial 74 86 76 76 76
Other' 76 243 78 78 71
. Total 11,775 12,384 12,572 13,059 13,697
' Single Family Residence
2 Apartment houses,etc.
3 Schools,City Departments,Fire Protection L
Source: The City of Renton
i
Wastewater Utility Rates
Monthly rates for sewer service within and outside of the City effective January 1, 2004 are as follows:
Customer Type Rate*
Single family residence $13.04/month
All other users $199 base charge,plus$1.47 per
each 100 cf of water used
* Wastewater rates for customers outside the City are 1.5 times the rates fixed for service within the City. j
•
In addition to the above monthly rates, a charge of$23.40 per month is payable to the County for each
single-family residence,or$23.40 for each multiple of 750 cf of water used by all other classes of customers.
This charge is paid to the County for the collection and treatment of sewage.
Storm Drainage Utility •
The Storm Drainage Utility system covers a service area within the existing City corporate boundaries of
approximately 17.2 square miles. The area includes rivers,streams,ditches,lakes,wetlands,and manmade
facilities. The Storm Drainage Utility owns,maintains and operates all storm and surface water management
facilities located within public right-of-ways and easements dedicated for storm and surface water -
management purposes. The Storm Drainage Utility system consists of 199.4 miles of storm system pipe,
includes 5,773 catch basins, 2,634 access manholes, 17 storm water retention/detention facilities and 40
miles of ditch systems and channels. The City's Storm Drainage Utility currently serves 14,061 customers.
16
1 I
Storm Drainage Utility Rates
Monthly rates for storm drainage se ice within the City are as follows:
Type Monthly Rate
Single-famly dwelling $5.39
Low intens�ty 26.70/acre
Medium in ensity 38.61/acre
High intensity 49.80/acre
Gravel pits 53.69/acre
City streets 13.39/acre
THE CITY OF RENTON
General Information
The City surrounds the southern end of Lake Washington,southeast of Seattle on Interstate 405:The City is
located approximately 20 miles sout least of the City of Seattle and approximately 60 miles northeast of the
City of Olympia, the State's capital. As of the 2003 population estimates, the City ranked fifth in size
among cities in the County. The City ad a population of 54,900 as estimated in 2003 by the State Office of
Financial Management. The County ad an estimated population of 1,779,300 as reported in 2003 by the
State Office of Financial Manageme t, an increase of approximately 2.4% since the 2000 Census.
The economy of the area is based m. ufacturing, technology based business, the Port of Seattle, services
industry,tourism,fishing and agricul I e. (See"Appendix C-Economic and Demographic Information"
herein for a description of the area's -conomy.)
Form of Local Government
The City, which was incorporated ' 1901, has a strong Mayor form of government. The Mayor is
independently elected to a four-year term. The Mayor's job is to manage and implement the policies
established by the seven-member Co I cil..Each Council member serves a four-year term and is elected on a
staggered two-year cycle.
The names of the current members of e City Council as well as the dates in which of their respective terms
of office expire are as listed below.
Expiration of
Name Title Term
Kathy Keolker-Wheeler Mayor • 12/31/07
Don Persson President 12/31/07
Terri Briere Council Member 12/31/05
Dan Clawson Council Member 12/31/05
Randall•Corman Council Member 12/31/05
Denis Law Council Member 12/31/07
Toni Nelson Council Member 12/31/07
Marcie Palmer Council Member 12/31/07
17
Principal City Officials
Kathy Keolker-Wheeler,Mayor. Ms.Keolker-Wheeler was appointed to the Renton City Council in 1984 by
her fellow City Council members and served five terms as a Councilmember. As of January 1, 2004, she
began her first term to serve as Mayor. Ms. Keolker-Wheeler has been an active member of the Renton
community since 1976, which includes serving as a past Chair of the United Way South Community
Council,serving as a currently member of the United Way of King County Board and being a active member
in petition processes. In addition to her duties as Mayor,Ms. Keolker-Wheeler works with the Center of
Women and Democracy at the University of Washington as a trainer and"leader in residence" for NEW
Leadership Puget Sound.
Jay Covington, Chief Administrative Officer. Mr. Covington joined City staff in 1990. Prior to joining the
City,Mr.Covington served eight years at the City of Vancouver,Washington,in the roles of budget analyst,
management analyst and Assistant to the City Manager. During his tenure with the City of Vancouver,Mr.
Covington developed a municipal biennial budget as well as improved financial forecasting techniques.
Victoria Runkle, Finance &Information Services Administrator. Ms. Runkle joined City staff in 1993.
Prior to her tenure with the City she worked in public finance in both the public and private sectors. She
began her career as a budget analyst with the City of Redmond. After three years with that entity she began
working for the City of Seattle's Office of Management and Budget. During her seven years with the City of
Seattle, she was responsible for a variety of assignments including capital budgeting. She left the City of
Seattle as the Assistant Budget director for a position with a public finance advisory firm. During her tenure
in the private sector,Ms.Runkle helped various types of municipalities develop rating presentations,prepare
official statements, and issue various types of debt.
City Employment and Primary Services
•
The City had approximately 36,543 full-time employees as of 2003. The City provides services in
accordance with its charter,and operates its own police,fire,park and recreation,utility system,municipal
airport and library system.
Employee Relations
The City has five bargaining units. The commissioned police officers have a guild. The guild also
represents, in a separate bargaining unit, the non-commissioned support staff of the Police Department.
There are two bargaining units in the Fire Department. The firefighters through the rank of captain are
represented as a group. There are six battalion chiefs who are represented by a separate'bargaining unit. The
greatest number of employees is represented by AFSCME(American Federation of State and City Municipal
Employees). State law requires municipalities to bargain collectively with formally recognized collective
bargaining units. The management group tends to receive benefits very similar to the AFSCME contract.
There are no significant outstanding personnel issues at this time. The City bargains with each of the units
every three years. The'City has contracts with all the bargaining units through 2005.
•
18
Pension Plans
It is mandatory for all permanent City employees, including part time employees who work 70 hours per
month during five consecutive months to participate in one of the following statewide local government
retirement systems administered by the State Department of Retirement Systems, under cost-sharing
multiple-employer public employee retirement systems. The City made the following contributions as of the
fiscal year ended December 31, 2003, on behalf of City employees who participated in the pension plans
listed below.
Number of City Contribution
Participants Fiscal Year 2003
Public Employees Retirement System("PERS")
PERS Plan I' (hired before 10/1/(77) 37 $26,913.72
•
PERS Plan)12I 443 257,785.37
PERS Plan III 53 24,873.61
Total PERS 533 $309,572.70
Law Enforcement Officers and Fire fighters ("LEOFF")
LEOFF Plan 13 (hired before 10/ /77) 20 $3,628.80
LEOFF Plan II4 177 403,391.65
Total LEOFF ' 197 $407,020.45
' Employees in PERS I are required to confribute 6.00%of their salary to the plan,with a City contribution of 4.67%.
2 Employees in PERS II are required to contribute 2.43%of their salary to the plan,with a City contribution of 4.67%.
3 Employees in LEOFF I are required to contribute 0.00%of their salary to the plan,with a City contribution of 6.23%.
4 Employees in LEOFF II are required to contribute 6.78%of their salary to the plan,with a City contribution of 4.30%.
The Budgetary Process
The City prepares budgets in accordance with chapter 35.33 RCW. As background to the process,the City
prepares a five-year financial forecat of general operations. Biennial calendar year budgets (in which
annual allocations lapse at year end) are adopted by the City Council for funds providing customary
government services. Long-term projct-oriented budgets are adopted as required and amended as additional
appropriations are needed. Special sessment and certain custodial agency funds are not budgeted. All
budgets are accounted for on a line-it m basis with control at the object summary total level. Estimated
purchase order amounts are encumbered prior to the release of the order to the vendor. Open encumbrances
lapse at year end and must be reappropriated or absorbed in the next year's operating budget.
Auditing of City Finances
Cities and counties of the State must comply with the Budgeting, Accounting, and Reporting System
("BARS")prescribed by the Office of the State Auditor as authorized under RCW 43.09.230 and 43.09.230.
State laws also provide for annual independent audits by the Office of the State Auditor and require timely
submission of annual financial reports to the. State Auditor for review. The'financial system of the'city
incorporates a system of financial and administrative controls that ensure the safeguarding of assets and the
reliability of financial reports and consequently are designed to provide reasonable assurance that
transactions are executed in accordance with management authorization, recorded in conformity with
19
generally accepted accounting principles ("GAAP") applicable to governmental entities, that there exists
accountability of and control over assets and obligations, and that sufficient reporting and review exists to
provide adequate information for analysis and comparability of data. Internal control is an area of audit by
the State Auditor,as well,and City management receives and takes action upon recommendations made by
the State Auditor.
•
The City's financial statements are subject to annual audit by the State Auditor. The last audit covered
the year ended December 31, 2002 and the report thereon contained an unqualified opinion regarding the
City's 2002 financial statements. The audit for year ended December 31, 2002, is currently in the
process of being completed. Copies of the State Auditor's Report may be obtained by contacting the
Office of State Auditor in Olympia,Washington or the City.
Risk Management
The City self-insures its risk exposure through self insurance up to specified levels of risk, and purchases ' 1
excess insurance commercially to cover medium to large losses. The City's risk management program is
administered by the Human Resources/Risk Management Administrator, with claims processed by
independent claims administrators. The City is a member of the Washington Cities Insurance Authority
comprised of approximately 108 public agencies located in the State of Washington.
Risk Retention Stop Gap
Coverage Type Per Occurrence Loss Limit
Property $25,000 $500,000,000
Liability 250,000 14,000,000
Auto Liability 250,000 14,000,000
Boiler&Machinery 5,000 50,000,000
Public Officials 0 10,000,000
Crime 10,000 1,000,000
Airport Liability 0 50,000,000
Underground Storage Tank 5,000 1,000,000
Worker's Compensation 350,000 1,000,000
Employee Health 120,000( N/A
i
Authorized investments
Chapter 35.39 RCW limits the investment by cities and towns of its inactive funds or other funds in excess
of current needs to the following authorized investments: United States bonds;United States certificates of
indebtedness; bonds or warrants of the State and any local government in the State; its own bonds or
warrants of a local improvement district which are within the protection of the local improvement guaranty --
fund law; and any other investment authorized by law for any other taxing district or the State Treasurer.
Under chapter 43.84 RCW, the State Treasurer may invest in non-negotiable certificates of deposit in
designated qualified public-depositories; in obligations of the U.S. government, its agencies and wholly
owned corporations;in bankers' acceptances;in commercial paper;in the obligations of the Federal Home
Loan Bank,Federal National Mortgage Association and other government corporations subject to statutory
provisions; and may enter into repurchase agreements. Utility revenue bonds and warrants of any city and +
bonds or warrants of a local improvement district are also eligible investments (RCW 35.39.030).
20 '
Moneys available for investment may be invested on an individual fund basis or may, unless otherwise
restricted by law,be commingled wiithin one common investment portfolio. All income derived from such
investment may be either apportioned to and used by the various participating funds or for the benefit of the
general government in accordance with City ordinances or resolutions. Funds derived for the sale of bonds
or other instruments of indebtedness will be invested or used in such manner as the authorizing ordinances,
resolutions or bond covenants may lawfully prescribe.
APPROVAL OF BOND COUNSEL
Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the
unqualified approving legal opinion of Gottlieb, Fisher & Andrews, PLLC, Seattle, Washington, Bond
Counsel. Fees payable to Gottlieb,Fisher&Andrews,Seattle,PLLC,as Bond Counsel,are contingent upon
the issuance of Bonds. Bond Counsel has reviewed this document only to confirm that the portions of it
describing the Bonds and the authority of the City to issue them conform to the Bonds,the applicable laws
under which they were issued and the language regarding federal income tax exemption. A form of the legal
opinion is included herein in Appendix E.
TAX EXEMPTION
{
In the opinion of Gottlieb,Fisher&Andrews,PLLC,Bond Counsel,as of the date of issue of the Bonds(the
"Date of Issue"), and provided the City complies with applicable requirements of the Code which must be
satisfied subsequent to the issuance t?ereof,the Bonds are not"private activity bonds," as defined by the
Code; and interest on the Bonds (including any original issue discount properly allocable to the owner
thereof)is excludable from gross incone for federal income tax purposes under existing federal law,and is
not an item of tax preference for purposes of determining the alternative minimum tax on individuals and
corporations under existing federal lawI . However,under existing federal law,interest on the Bonds is taken
into account in determining adjusted du rent earnings for the purpose of computing the alternative minimum
tax imposed on certain corporations.
Bond Counsel expresses no opinion regarding any other federal tax consequences ofreceipt of interest on the
Bonds. Potential purchasers of the Bonds should consult with their tax advisors as to all possible tax
consequences of ownership of the Bonds. See also, "Other Tax Consequences,"herein.
The Code contains certain requirements which must be satisfied subsequent to the issuance of the Bonds in
order to maintain the tax treatment described above,including requirements relating to the application of the
proceeds of the Bonds, use of facilities which are financed with such proceeds, limitations on income
derived from the investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and
rebate to the United States Treasury of certain of such investment income on such gross proceeds. The City
has covenanted to comply with these)requirements to the extent applicable; and the opinions of Bond
Counsel described in the preceding paragraph assume such compliance. However,Bond Counsel has not
undertaken and shall not undertake to Imonitor compliance by the City with such requirements; and if the
City should fail to comply with such requirements,interest on the Bonds could become includable in gross
income for federal income tax purposes retroactive to the date of issuance of the Bonds.
21
OTHER TAX CONSEQUENCES
Under current federal law:
1. Corporate Alternative Minimum Tax. The interest on tax-exempt obligations received by a
corporation is taken into account in the computation of the alternative minimum tax applicable to
corporations (as defined for federal income tax purposes). Under current federal law, the alternative
minimum taxable income of such a corporation (other than an S corporation, a regulated investment
company, a real estate investment trust or a REMIC) is increased by 75% of the amount by which the
"adjusted current earnings" of the corporation exceeds the corporation's alternative minimum taxable
income determined without regard to such increase and any alternative tax net operating loss deduction.
Interest on tax-exempt obligations,whenever issued or acquired,including interest on the Bonds,is included
in the computation of"adjusted net book income"and"adjusted current earnings."
2. Tax on Excess Passive Investment Income of S Corporations. Certain excess net passive
, investment income,including interest on the Bonds,received by an S corporation(a corporation treated as a
partnership for most federal tax purposes) that has "subchapter C earnings and profits" at the close of its
taxable year may be subject to federal income tax at the highest rate applicable to corporations if more than
25% of the gross receipts of such S corporation for such taxable year is passive investment income.
3. Foreign Corporation Branch Profits Tax. Interest on the Bonds received by certain foreign
corporations doing business in the United States may be subject to a branch profits tax applicable to such
corporations that is based on their United States source earnings and profits,including tax-exempt interest on
obligations such as the Bonds.
4. Reduction of Loss Deduction for Property and Casualty Insurance Companies. Interest on tax-
exempt obligations,including the Bonds,received by property and casualty insurance companies,will reduce
tax deductions for loss reserves otherwise available to such companies by an amount equal to 15 percent of
such tax-exempt interest received during the taxable year.
6. Social Security and Tier 1 Railroad Retirement Benefits Subject to Tax. Interest received or
accrued during the year from tax-exempt obligations, such as the Bonds, is included in the calculation of
"modified adjusted gross income"of recipients of the social security or tier 1 railroad retirement benefits..If
the sum of the"modified adjusted gross income"for the taxable year plus one-half of the social security or
tier 1 railroad retirement benefits received during the taxable year exceeds a base amount provided by the
Code(the"excess amount"),then the lesser of(i)one-half of the social security or tier 1 railroad retirement
benefits received during the taxable year or(ii) one-half of the"excess'amount", is included in the gross
income of the social security or tier 1 railroad retirement benefit recipient.
Original Issue Premium
The Bonds maturing on December 1 in the years 2024 through 2027,inclusive,are"Premium Bonds." An
amount equal to the excess of the purchase price of a Premium Bond over its stated redemption price at
maturity constitutes premium on such Premium Bonds. A piirchaser:of a Premium Bond must amortize any
premium over such Premium Bond's term using constant yield principles, based the purchaser's yield to
maturity. The amount of amortizable premium allocable to an interest accrual period for a Premium Bond
will offset a like amount of qualified stated interest on such Premium Bonds allocable to that accrual period,
22
and may offset the calculation of lternative minimum tax liability described above. As premium is
amortized,the purchaser's basis in such Premium Bond is reduced by a corresponding amount,resulting in
an increase in the gain(or decrease inn the loss)to be recognized for federal income tax purposes on sale or
disposition of such Bond prior to its maturity. Even though the purchaser's basis is reduced, no federal
income tax deduction is allowed. Purchasers of any Premium Bonds,whether at the time of initial issuance
of subsequent thereto, should consu t their tax advisors with respect to the determination and treatment of
premium for federal income tax p oses, and with respect to state and local tax consequences of owning
such Premium Bonds.
Tax Covenants
The City has covenanted in the Bond Ordinance that:(1)it will take all actions necessary to prevent interest
on the Bonds from being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds of other funds of the City treated as
proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federa income tax purposes; and (2) it will, to the extent arbitrage rebate
requirements of Section 148 of the C?deoare applicable to the Bonds,take all action necessary to comply(or
to be treated as having complied) th those requirements in connections with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative to calculation
rebatable arbitrage, and the payment of any other penalties if required under Sections 148 of the Code to
prevent interest on the Bonds from being included in gross income for federal income tax purposes.
NO LITI ATION CONCERNING THE BONDS
There is no controversy or litigation f any nature now pending or,to the knowledge of the City,threatened,
restraining or enjoining the issuance sale, execution or delivery of the Bonds, or in any way contesting or
-- affecting the validity of the Bonds, any proceedings of the City taken with respect to the issuance or sale
thereof, or affecting the ability of they City to pay the principal of and interest on the Bonds.
UNDERWRITING
D.A.Davidson&Co.(the"Uncle "ter")has agreed,subject to the terms of a Bond Purchase Contract,to
purchase the Bonds from the City at ai aggregate purchase price of 102.597%of the par_value of the Bonds,
(which includes an original issue pre ium)of$371,747.65 and an Underwriter's discount of$103,350.00,
plus accrued interest. The Bonds are being reoffered for sale to the public at the prices shown on the inside
cover of this Official Statement. Concessions from the initial offering price may be allowed to selected
dealers and special purchasers. The initial offering price is subject to change after the date hereof.
M CIPAL BOND INSURANCE
The MBIA Insurance Corporation Insurance Policy
The following information has been furnished by MBIA Insurance Corporation("MBIA") for use in this
Official Statement. Reference is made to Appendix F for a specimen of MBIA's policy.
• 23
MBIA's policy unconditionally and irrevocably guarantees the full and complete payment required to be
to(i)the principal
made by or on behalf of the Issuer to the Paying Agent or its successor of an amount equal p p
of(either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund
payment)and interest on,the Bonds as such payments shall become due but shall not be so paid(except that
in the event of any acceleration of the due date of such principal by reason of mandatory or optional
redemption or acceleration resulting from default or otherwise, other than any advancement of maturity
pursuant to a mandatory sinking fund payment,the payments guaranteed by MBIA's policy shall be made in
such amounts and at such times as such payments of principal would have been due had there not been any
such acceleration); and(ii)the reimbursement of any such payment which is subsequently recovered from
any owner of the Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law(a
"Preference").
MBIA's policy does not insure against loss of any prepayment premium which may at any time be payable
with respect to any Bonds. MBIA's policy does not,under any circumstance,insure against loss relating to:
(i)optional or mandatory redemptions(other than mandatory sinking fund redemptions);(ii)any payments to
be made on an accelerated basis; (iii) payments of the purchase price of Bonds upon tender by an owner
thereof;or(iv)any Preference relating to(i)through(iii)above. MBIA's policy also does not insure against
nonpayment of principal of or interest on the Bonds resulting from the insolvency,negligence or any other
act or omission of the Paying Agent or any other paying agent for the Bonds.
Upon receipt of telephonic or telegraphic notice,such notice subsequently confirmed in writing by registered
or certified mail,or upon receipt of written notice by registered or certified mail,by MBIA from the Paying
Agent or any owner of a Bondpayment the a ent of`an insured amount for which is then due,that such required
payment has not been made,MBIA on the due date of such payment or within one business day after receipt
of notice of such nonpayment,whichever is later,will make a deposit of funds,in an account with U.S.Bank
Trust National Association,in New York,New York,or its successor,sufficient for the payment of any such
insured amounts which are then due. Upon presentment and surrender of such Bonds or presentment of such
other proof of ownership of the Bonds,together with any appropriate instruments of assignment to evidence
the assignment of the insured amounts due on the Bonds as are paid by MBIA,and appropriate instruments
to effect the appointment of MBIA as agent for such owners of the Bonds in any legal proceeding related to
payment of insured amounts on the Bonds,such instruments being in a form satisfactory to U.S.Bank Trust
National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying
Agent payment of the insured amounts due on such Bonds,less any amount held by the Paying Agent for the
payment of such insured amounts and legally available therefor.
MBIA
MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary of MBIA Inc., a New York
Stock Exchange listed company(the "Company"). The Company is not obligated to pay the debts of or
claims against MBIA. MBIA is domiciled in.the State of New York and licensed to do business in and
subject to regulation under the laws of all 50 states, the District df Columbia, the Coth nonwealth of
Puerto Rico,the Commonwealth of the Northern Mariana Islands,the Virgin Islands of the United States and
the Territory of Guam. MBIA has three branches, one in the Republic of France, one in the Republic of
Singapore and one in the Kingdom of Spain. New York has laws prescribing minimum capital requirements,
24
limiting classes and concentrations ofnvestments and requiring the approval of policy rates and forms.
State laws also regulate the amount of both the aggregate and individual risks that may be insured, the
payment of dividends by MBIA,changes in control and transactions among affiliates. Additionally,MBIA
is required to maintain contingency res �rves on its liabilities in certain amounts and for certain periods of
time.
MBIA does not accept any responsibility for the accuracy or completeness of this Official Statement or any
information or disclosure contained herin,or omitted herefrom,other than with respect to the accuracy of
the information regarding the policy an4 MBIA set forth under the heading"Municipal Bond Insurance".
Additionally, MBIA makes no representation regarding the Bonds or the advisability of investing in the
Bonds.
•
The Financial Guarantee Insurance Policies are not covered by the Property/Casualty Insurance Security
Fund specified in Article 76 of the New York Insurance Law.
MBIA Information
The following documents filed by the Co. pany with the Securities and Exchange Commission(the"SEC")
are incorporated herein by reference:
(1) The Company's Annual eport on Form 10-K for the year ended December 31, 2003; and
(2) The.Company's Quarterl Report on Form 10-Q for the quarter ended June 30, 2004.
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)of the Exchange Act of
1934, as amended,after the date of this Official Statement and prior to the termination of the offering of the
Bonds offered hereby shall be deemed to be incorporated by reference in this Official Statement and to be a
part hereof. Any statement contained in a document incorporated or deemed to be incorporated by reference
herein,or contained in this Official State ent,shall be deemed to be modified or superseded for purposes of
this Official Statement to the extent tha a statement contained herein or in any other subsequently filed
document which also is or is deemed to e incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Official Statement.
The Company files annual,quarterly and special reports,information statements and other information with
the SEC under File No. 1-9583. Copies o'the SEC filings(including(1)the Company's Annual Report on
Form 10-K for the year ended December 31,2003, and(2)the Company's Quarterly Report on Form 10-Q
for the quarters ended March 31, 2004 and June 30, 2004) are available (i) over the Internet at the SEC's
web site at http://www.sec.gov; (ii) at the SEC's public reference room in Washington D.C.; (iii)over the
Internet at the Company's web site at httpw
://ww .mbia.com; and (iv) at no cost, upon request to MBIA
Insurance Corporation, 113 King Street,Armonk, New York 10504. The telephone number of MBIA is
(914) 273-4545.
As of December 31,2003,MBIA had admitted assets of$9.9 billion(audited),total liabilities of$6.2 billion
(audited), and total capital and surplus of$3.7 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory authorities. As of June 30, 2004
i ', 25
MBIA had admitted assets of$10.5 billion(unaudited),total liabilities of$6.7 billion(unaudited),and total
capital and surplus of$3.8 billion(unaudited)determined in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities.
Financial Strength Ratings of MBIA
Moody's Investors Service, Inc. rates the financial strength of MBIA"Aaa."
Standard&Poor's, a division of The McGraw-Hill Companies, Inc. rates the financial strength of
MBIA"AAA."
Fitch Ratings rates the financial strength of MBIA"AAA."
Each rating of MBIA should be evaluated independently. The ratings reflect the respective rating agency's
current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance.
Any further explanation as to the significance of the above ratings may be obtained only from the applicable
rating agency.
The above ratings are not recommendations to buy,sell or hold the Bonds,and such ratings maybe subject
to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any
of the above ratings may have an adverse effect on the market price of the Bonds. MBIA does not guaranty
the market price of the Bonds nor does it guaranty that the ratings on the Bonds will not be revised or
withdrawn.
RATINGS -
As noted on the cover page of this Official Statement, Standard&Poor's Rating Group,New York,New
York and Fitch Ratings,New York,New York,have assigned their municipal bond ratings of"AAA"and
"AAA",respectively,to the Bonds,with the understanding that upon delivery of the Bonds,a policy insuring
the payment when due of the principal of and interest on the Bonds will be issued by MBIA Insurance
Corporation. No application was made to any other rating agency for the purpose of obtaining an additional
rating on the Bonds. Each rating reflects only the view of the applicable rating organization and an
interpretation of such rating may be obtained only from the rating agency furnishing the same. There is no
assurance that such ratings will continue for any given period of time or that they will not be revised
downward or withdrawn entirely by the rating agencies,if,in the judgment of such agencies,circumstances
so warrant. Any such revision or withdrawal of either such rating may have an adverse effect on the market
price of the Bonds.
Standard & Poor's has assigned its municipal rating of"AA-" to this issue of Bonds (the "underlying
rating"). Fitch Ratings has assigned its municipal rating of"AA-"to this issue of Bonds(the"underlying
rating"). The underlying ratings reflect only the view of Standard&Poor's and Fitch Ratings. There is no
assurance that the underlying ratings will be retained for any given period of time or that the underlying
ratings will not be revised downward or withdrawn entirely by the rating agencies if, in its judgment,
circumstances so warrant.Any downward revision or withdrawal of the underlying ratings would be likely to
have an adverse effect on the market price of the Bonds. Any further explanation of the underlying ratings
may be obtained from Standard&Poor's or Fitch Ratings.
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ENFORCEABILITY
The provisions of the Bonds and the Ordinance, constitute contracts between the City and the owner or
owners of the Bonds, and such provisi Ins are enforceable by the registered owner or owners in a court of
competent jurisdiction in the State by mandamus or other appropriate remedy,subject to judicial discretion
and the valid exercise of sovereign police power of the State and may be limited by laws affecting the rights
( of creditors.
COMMITMENT TO PROVIDE CONTINUING DISCLOSURE
Pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") of the Securities and
Exchange Commission (the "SEC"), thle City has undertaken for the benefit of holders of the Bonds to
provide certain financial information an4 operating data relating to the City by no later than nine months
after the end of each fiscal year, co ening with the calendar year ending December 31, 2004 (the
"Annual Financial Information") and to i rovide notices of the occurrence of certain enumerated events,if
material. The Annual Financial Inform tion will be filed by or on behalf of the City with each Nationally
Recognized Municipal Securities Information Repository formally recognized by the SEC("NRMSIR")and
with the State Information Depository for the State,if one is hereafter recognized by the SEC for purposes of
the Rule(the'SID"). Notices of material events will be filed by or on behalf of the City with the NRMSIRs
or with the Municipal Securities Rulemaking Board and with the SID, if any. The City's undertaking to
provide ongoing disclosure is set forth in 1the Ordinance. See Appendix D hereto for a summary of the City's
undertaking.
The City has committed to provide ongoing disclosure of information with respect to various outstanding
bond issues. The City has not failed to comply with the requirements of any previous undertaking specified
in paragraph(b)(5)(i) of the Rule.
ADDITIONAL IN ORMATION AND MISCELLANEOUS
The descriptions herein of the Ordinanc and other documents are brief summaries of certain provisions
thereof. Such summaries do not purpo to be complete, and reference is made to such documents and
contracts,copies of which are available,upon request and upon payment to the City of a charge for copying,
mailing and handling, from the City, 1055 South Grady Way,Renton,Washington 98055,telephone(425)
430-6858, attention Finance and Information Services Administrator.
The summaries and descriptions contained in this Official Statement and the Appendices hereto of the
provisions of the Bonds,the Ordinance and all reference to other materials not purporting to be quoted in full
are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of
the provisions thereof. This Official Statement is not to be construed as a contract or agreement between the
City and the Underwriter or holders of any of the Bonds.
Any statements made in this Official Statement involving matters of opinion or estimates,whether or not so
expressly stated,are set forth as such and not as representations of fact. No representation is made that any
of such statements will be realized.
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DISCLOSURE STATEMENT
The City will deliver to the Underwritercertificate at the time of the delivery of the Bonds asubstantially to
the effect that this Official Statement,including any appendices,and any supplements or amendments hereto,
delivered by the City(which shall be deemed an original part hereof for the purposes of such statement)did
not,at the time the Bonds are issued,contain any untrue statement ofp.material fact or omit any material fact
necessary in order to make the statements made herein,in light of the circumstances under which they were
made not misleading in any material respect.
APPROVAL OF OFFICIAL STATEMENT
The execution and delivery of this Official Statement have been duly authorized by the City.
CITY OF RENTON, WASHINGTON
By: /s/ Victoria Runkle
Finance and Information Services Administrator
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APPENDIX A
Summary of Certain Provisions of
the Ordinance
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Summary of Certain Provisions of the Ordinance
Summary Of The Ordinance
The following is a summary of certain provisions of the Ordinance. This summary does not purport to be complete and
is qualified in its entirety by reference to the Ordinance for a complete statement of the provisions of such document.
Definitions
Unless the context otherwise requires,when used in this Official Statement,capitalized terms will have the following
meanings,such definitions to be equally applicable to both the singular and plural forms of any of the terms defined:
"Alternate Security"shall mean any bond insurance,collateral,security,letter of credit,guaranty,surety bond
or similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest
on the Parity Bonds,issued by an institution that has been assigned a credit rating at the time of issuance of such.Parity
Bonds secured by such Alternate Security equal to or better than the highest then-existing rating for any of the Parity
Bonds.
"Annual Debt Service"for any year shall mean all the interest on plus all principal(except principal of Term
Bonds due in any Term Bond Maturity Year) of Parity Bonds, plus all mandatory redemption and sinking fund
installments,less all bond interest payable from the proceeds of any such bonds,which will mature or come due in that
year.
"Beneficial Owner"shall mean,with respect to any Bond,the Person named on the records of the Custodian
as having the right,without a physical certificate evidencing such right,to transfer,to hypothecate and to receive the
payment of the principal of,premium,if any,and interest on such Bond as the same becomes due and payable. 1
"Bond Fund"shall mean that special fund of the City known as the 2004 Waterworks Revenue Bond Fund
created by the Ordinance for the payment of the principal of and interest on the Bonds.
"Bond Insurer"shall mean MBIA Insurance Corporation.
"Bond Insurance Policy"shall mean the municipal bond insurance policy issued by the Bond Insurer insuring
the payment when due of the principal of and interest on the Bonds as provided herein.
"Bond Register"shall mean the registration books on which are maintained the names and addresses of the
Owners of the Bonds.
"Bond Registrar"shall mean the fiscal agencies of the State in Seattle,Washington, and New York,New
York, as the same shall be designated from time to time.
"Bonds"shall mean the$10,335,000 City of Renton,Washington, Water and Sewer Revenue Bonds,2004,
authorized to be issued by the Ordinance.
"Book-Entry Termination Date"shall mean the fifth business day following the date of receipt by the Bond
Registrar of the City's request to terminate the book-entry system of registering the beneficial ownership of the Bonds.
"City"shall mean the City of Renton,Washington,a duly organized and legally existing noncharter code city
under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services Administrator or the
successor to such officer.
"Closing" shall mean the date of the delivery Of the Bonds by the City to the Purchaser and the payment -
therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules and regulations
promulgated thereunder. -'
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"Coverage Requirement"shall mean in any calendar year 1.25 times the Maximum Annual Debt Service.
"Custodian" shall mean (a)The Depository Trust Company, New York, New York, or (b)any successor
thereto engaged by the City to operate a book-entry system for recording, through electronic or manual means, the
1 beneficial ownership of the Bonds,in which system no physical certificates are issued to the Beneficial Owners of the
Bonds,but in which a limited number of phi sical certificates are issued to and registered in the name of the Custodian
or its nominee,and delivered to the Custodian;provided,that such book-entry system operated by the Custodian may
include the use of subsystems of recording the beneficial ownership of Bonds which are operated by parties other than
the Custodian and the use of a nominee for the Custodian;and the term`-`Custodian,"as used herein,includes any party
operating any such subsystem.
"Future Parity Bonds"shall meat all water and sewer revenue bonds of the City issued after the date of the
issuance of the Bonds and having a lien and charge on Net Revenue on a parity with the lien and charge on Net
Revenue for the payment of the principal or and interest on the Bonds.
"Gross Revenue"shall mean Revenue of the Waterworks Utility.
"Letter of Representations"shal mean the Blanket Issuer Letter of Representations from the City and the
Bond Registrar to the Custodian dated Ap 115, 1997,pertaining to the payment of the Bondsand the"book-entry"
system for evidencing the beneficial owner hip of the Bonds prior to the Book-Entry Termination Date(as it may be
amended from time to time).
"Maintenance and Operation Expense"shall mean all reasonable expenses incurred by the City in causing
, the Waterworks Utility to be operated and maintained in good repair,working order and condition,including payments
made to any other municipal corporation okr private entity for water service and for sewage treatment and disposal
service or other utility service in the event the City combines such service in the Waterworks Utility and enters into a
contract for such service, and including pro-rata budget charges for the City's administration expenses where those
represent a reasonable distribution and share of actual costs, but not including any depreciation or taxes levied or
imposed by the City or payments to the City in lieu of taxes, or capital additions or capital replacements to the
Waterworks Utility.
"Maximum Annual Debt Servic 'shall mean,at thetime of calculation,the maximum amount of Annual
Debt Service that will mature or come due in the current calendar year or any future calendar year on the outstanding
Parity Bonds.
"MSRB"shall mean the Municipal Securities Rulemaking Board.
"Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date"shall mean the date in which all the 1998 Bonds,2002 Bonds and 2003 Bonds are
fully redeemed,refunded or defeased.
"1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds, 1998.
"NRMSIR"shall mean a nationally recognized municipal securities information repository designated by the
SEC.
"Owner"shall mean the person named as the registered owner of a Bond on the Bond Register.
"Parity Bonds"shall mean the 1998 Bonds,the 2002 Bonds,the 2003 Bonds,the Bonds and any Future Parity
Bonds.
"Parity Bond Fund"shall mean any fund created for the payment and redemption of Parity Bonds.
"Professional Utility Consultant"shall mean an independent licensed professional engineer,certified public
accountant or other independent person oil firm selected by the City having a favorable reputation for skill and
I experience with municipal utilities of.comparable size and character to the Waterworks Utility in such areas as are
relevant to the purposes for which such consultant is retained.
"Rate Stabilization Fund"shall mlan the fund of that name created for the purposes described in Ordinance
No. 4709. .
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"Reserve Fund"shall mean that special fund of the City known as the Waterworks Revenue Bond Reserve
Fund created by Ordinance No.4709 for purpose of securing the payment of the principal of and interest on all bonds
to which Net Revenue is pledged.
"Reserve Insurance"shall mean,in lieu of cash and investments,insurance obtained by the City equal to part
or all of the Reserve Requirement for any Parity Bonds then outstanding for which such insurance is obtained,issued by
an institution that has been assigned a credit rating equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Reserve Requirement"shall mean the Maximum Annual Debt Service.
"Revenue of the Waterworks Utility"shall mean all of the earnings and revenues received by the City from
the maintenance and operation of the Waterworks Utility and all earnings from the investment of money in the Reserve
Fund or any Parity Bond Fund,and connection and capital improvement charges collected for the purpose of defraying
the cost of capital facilities of the Waterworks Utility,except government grants,proceeds from the sale of Waterworks
Utility property(other than timber),City taxes collected by or through the Waterworks Utility,principal proceeds of
bonds and earnings or proceeds from any investments in a trust,defeasance or escrow fund created to defease or refund
Waterworks Utility obligations(until commingled with other earnings and revenues of the Waterworks Utility)or held
in a special account for the purpose of paying a rebate to the United States Government under the Code.
"Rule" Rule 15c2-12.
shall mean SEC
"SEC"shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
• "State"shall mean the State of Washington.
"Term Bonds" shall mean any Parity Bonds identified as such in the ordinance authorizing the issuance
thereof,the payment of which is provided for by a requirement for mandatory deposits of money into the principal and
interest account of the bond redemption fund created for the payment of such issue of bonds in accordance with a
mandatory sinking fund requirement.
"Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are scheduled to mature.
"2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds,2002.
"2003 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,2003.
"Waterworks Utility"shall mean the combined water and sewerage systems,including the storm and surface
water sewers,of the City as the same may be added to,improved and extended for as long as any of the Parity Bonds
are outstanding.
"Waterworks Utility Fund"shall mean that special fund of the City into which all Gross Revenue(except for
earnings in any special fund for the redemption of revenue obligations of the Waterworks Utility)shall be deposited.
Pledge of Revenue
The Bonds are issued on aP arity of lien with the outstanding 1998 Bonds, 2002 Bonds and 2003 Bonds. The Net
Revenue is pledged to the payment of the Parity Bonds,and the Parity Bonds shall constitute a lien and charge upon
such Net Revenue prior and superior to any other charge whatsoever.
Bond Fund
The Bonds will be payable solely out of Bond Fund,and the amount of Net Revenue pledged to that fund and are not
general obligations of the City.
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So long as the Bonds are outstanding,the City has pledged in the Ordinance to set aside and pay into the Bond Fund
out of Net Revenue, one day before each!interest or each interest and principal payment date, an amount, which
together with any other money on deposit iherein,will be sufficient to meet the debt service on the Bonds.
Reserve Fund
The Ordinance requires that the Reserve Fund be maintained in an amount equal to the Reserve Requirement. On the
date of issue of the Bonds,the Reserve Fun will be funded with a balance of$3,114,331.25,which amount is equal to
the Reserve Requirement.
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In the Ordinance, the City has pledged to et aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits, any dditional money necessary to bring the amount deposited in the Reserve
Fund attributable to the Bonds up to the amount equal to the increase in the Reserve Requirement attributable to the
Bonds. The Reserve Requirement may mei by the deposit of cash and investments into the Reserve Fund or by Reserve
Insurance or a combination thereof
Rate Stabilization Fund
Ordinance No. 4709 of the City provides that a Rate Stabilization Fund may be created. Deposits to the Rate
Stabilization Fund may be made from Gross Revenue of the Waterworks Utility,see"Flow of Funds"below. For the
purposes of calculating compliance with the Rate Covenant,deposits to the Rate Stabilization Fund will be deducted
from Net Revenue of the Waterworks Utility in the year of such deposit,and withdrawals from the Rate Stabilization
Fund will be added to Net Revenue of the Waterworks Utility in the year of such withdrawal.
Rate Covenant
The City has covenanted in the Ordinance to establish, maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,and will adjust those rates and
charges from time to time so that:
(a) Gross Revenue will at all times be sufficient to(1)pay all Maintenance and Operation Expense on a
current basis,(2)pay when due all amounts that the City is obligated to pay into the Reserve Fund and any Parity Bond
Funds and(3)pay all taxes,assessments or other governmental charges lawfully imposed upon the Waterworks Utility
or other revenue therefrom or payments in lieu thereof and any and all other amounts which the City may now or
hereafter become obligated to pay from Gross Revenue by law or contract; and
(b) Net Revenue in each calendar year will be at least equal to the 1.25 times Maximum Annual Debt
Service(the"Coverage Requirement").
Flow of Funds
A special fund of the City(the "Waterworks Utility Fund"),has.previously been created pursuant to Ordinance No.
250. All Gross Revenue of the Waterworks Utility will be deposited into the Waterworks Utility Fund as collected,and
will be held separate and apart from all other funds and accounts of the City. The amounts deposited therein will be
used in the following order of priority:
(a) To pay Maintenance and Operation Expense;
(b) To pay the interest on the Parity Bonds;
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(c) To pay the principal of the Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond redemption fund hereafter
created for the payment of Future Parity Bonds which are Term Bonds;
(e) To make all payments required to be made into the Reserve Fund;
• (f) To make all payments required to be made into any revenue bond redemption fund or warrant
redemption fund and debt service account or reserve account created to pay and secure the payment of
the principal of and interest on any revenue bonds or revenue warrants of the City having a lien upon
Gross Revenue junior and inferior to the lien thereon for the payment of the principal of and interest
on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding revenue bonds or
revenue warrants of the City,to make necessary additions,betterments,improvements and repairs to or
extensions and replacements of the Waterworks Utility,to make deposits into the Rate Stabilization
Fund,or for any other lawful City purpose. ?_
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Additional Covenants i
Maintenance of the Utility. The City will at all times maintain and keep the Waterworks Utility in good repair,
working order and condition and also will at all times operate.such Utility and the business in connection therewith in
an efficient manner and at a reasonable cost.
Disposition of the Waterworks Utility. The City will not sell or otherwise,dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other-disposition, all Parity Bonds are.defeased pursuant to the
provisions of the Ordinance. r
It will not sell,lease,mortgage or in any manner encumber or otherwise dispose of any part of the Waterworks Utility '_.
(other than timber),including all additions and improvements thereto and extensions thereof at any time made,that are
used,useful or material in the operation of the Waterworks Utility,unless provision is made for the replacement thereof
or for payment into the Bond Fund of the greatest of the following: -
(1) An amount which will be in the same proportion to the net amount of any Parity Bonds then
outstanding(defined as the total amount of those bonds less the amount of cash and investments in the Reserve
Fund and any Parity Bond Funds)that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that period;
(2) An amount which will be in the same proportion to the net amount of any Parity Bonds then J
outstanding (as defined above) that the Net Revenue fromtheportion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount of any Parity Bonds then
outstanding(as defined above)that the depreciated cost value of the facilities sold or disposed of bears to the
depreciated cost value of the entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding the above, the City (a) in its discretion may sell or otherwise dispose of any of the works, plant, _I
properties or facilities of the Waterworks Utility or any real or personal property comprising a part of the same which
shall have become unserviceable,inadequate,obsolete or unfit to be used in the operation of the Waterworks Utility,or
no longer necessary,material to or useful to the operation of the Waterworks Utility,without making any deposit into
the Bond Fund,and(b)the City may transfer the Waterworks Utility to another municipal corporation so long as Net
Revenue of the portion of the Waterworks Utility so transferred is used for payment of debt service on the Parity Bonds
prior to any other purpose. In no event shall such proceeds be treated as Gross Revenue for purposes of the Ordinance.
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Books and Accounts. The City will keep proper books,records and accounts with respect to the operations,income and
expenditures of the Waterworks Utility in accordance with proper accounting procedures and any applicable rules and
regulations prescribed by the State. It will prepare annual financial and operating statements within 270 days of the
close of each fiscal year showing in reasonable detail the financial condition of the Waterworks Utility as of the close of
the previous year, and the income and expenses for such year, including the amounts paid into the Bond Fund and
Reserve Fund and into any and all special funds or accounts created pursuant to the Ordinance,the status of all funds
and accounts as of the end of such year,and the amounts expended for maintenance,renewals,replacements and capital
additions to the Waterworks Utility. Such statements shall be sent to the Owner of any Parity Bonds upon written
request therefor being made to the City.
No Free Service. Except to aid the poor or infirm,to provide for resource conservation or to provide for the proper
handling of hazardous materials,the City wi 1 not furnish or supply or permit the furnishing or supplying of any service
or facility in connection with the operation o the Waterworks Utility free of charge to any person,firm or corporation,
public or private,other than the City,so lon as any Parity Bonds are outstanding. On at least an annual basis,it will
determine all accounts that are delinquent and will take all necessary action to enforce payment of such accounts against
those property owners whose accounts are i elinquent.
Insurance. It at all times will carry fire anal extended coverage and such other forms of insurance, including public
liability and property damage insurance,with responsible insurers and with policies payable to or on behalf of the City
and any additional insureds on such of t e buildings, equipment, works, plants, facilities and properties of the
Waterworks Utility, and against such clai for damages, as are ordinarily carried by municipal or privately owned
utilities engaged in the operation of like sysiems,or will implement and maintain a self-insurance or an insurance pool
program with reserves adequate, in the reJsonable judgment of the City, to protect the Waterworks Utility and the
Owners of the Parity Bonds against loss.
Obligations. It will pay all Maintenance and Operation Expense and the debt service requirements for the outstanding
Parity Bonds,and otherwise meet the obligations of the City as set forth in the Ordinance.
Preservation of Tax Exemption. It will take all actions necessary to prevent interest on the Bonds from being included
in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of
proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during the term of the
Bonds which will cause interest on the Bonds to be included in gross income for federal income tax purposes. It will,
to the extent arbitrage rebate requirements of Section 148 of the Code are applicable to the Bonds, take all action
necessary to comply(or to be treated as having complied) with those requirements in connection with the Bonds,
including the calculation and payment of penalties that the City has elected to pay as an alternative to calculating
rebatable arbitrage,and the payment of any other penalties if required under Section 148 of the Code to prevent interest
on the Bonds from being included in gross income for federal income tax purposes.
Future Parity Bonds
In the Ordinance,the City has reserved the right to issue Future Parity Bonds if the following conditions are met and
complied with at the time of issuance of those additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the payment of
the principal thereof and interest thereon out of a Parity Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into
the Reserve Fund from the proceeds of those Future Parity Bonds of(1)an amount equal to the increase in the
Reserve Requirement attributable to those Parity Bonds or(2)Reserve Insurance or Alternate Security or an
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amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve Requirement
attributable to those Future Parity Bonds. For federal income tax purposes,at the discretion of the City,to the
extent that the Reserve Requirement cannot be funded from Future Parity Bond proceeds, the City shall
provide for deposit into the Reserve Fund other legally available money from Net Revenue or Reserve
Insurance or Alternate Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments. After the New Covenant Date,this subsection shall be amended
to read as follows: (c) The ordinance providing for the issuance of such Future Parity Bonds shall
provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of(1)
an amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or(2)
Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security
equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds. At the
discretion of the City, the City may provide for deposit into the Reserve Fund of other legally
available money from Net Revenue or Reserve Insurance or Alternate Security either on or prior to
the date of issuance of such Future Parity Bonds or within three years from the date of issuance of
the Future Parity Bonds in three approximately equal annual payments and in such event, the
ordinance providing for the issuance of such Future Parity Bonds shall provide for such deposit.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the
payment of mandatory redemption or sinking fund requirements into the applicable Parity Bond Fund for any
Tenn Bonds to be issued and for regular payments to be made for the payment of the principal of such Term
Bonds un or before their maturity,or,as an alternative,the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity.Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the City Finance Director demonstrating that during any 12 consecutive
calendar months out of the immediately preceding 36 calendar months Net Revenue,without regard to
deposits into or withdrawals from the Rate Stabilization Fund, is equal to at least the Coverage
Requirement for all Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) a certificate of a Professional Utility Consultant that in such consultant's opinion Revenue for
any 12 consecutive/calendar months, without regard to deposits into or withdrawals from the Rate
Stabilization Fund, shall be equal to the Coverage Requirement for each year thereafter. The
certificate,in estimating Net Revenue available for debt services,may adjust Net Revenue to reflect:
(A) Any changes in rates in effect and being charged or expressly committed by
ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility who have become
customers during the 12 consecutive month period or thereafter adjusted to reflect one year's
Net Revenue from those customers;
(C) Income from any customers to be connected to the Waterworks Utility who
have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net Revenue to be
derived from customers anticipated to connect for whom building permits have been issued;
(E) Income received or to be received which is derived from any person, firm
corporation or municipal corporation under any executed contract for water,sewage disposal
or other utility service,which revenue was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net Revenue to be
derived from customers with existing homes or buildings which will be required to connect to
any additions to and improvements and extensions of the Waterworks Utility constructed and
to be paid for out of the proceeds of the sale of the additional Future Parity Bonds or other
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1 ,
additions to and improvements and extensions of the Waterworks Utility when such additions,
improvements and extensions are not completed; and
(G) Any increases or decrease in Net Revenue as a result of any actual or
reasonably anticipated changes in Maintenance and Operation Expense subsequent to the 12-
month period.
If Future Parity Bonds proposed to be so issi ed are for the sole purpose of refunding outstanding bonds payable from
any Parity Bond Fund, such certification off coverage is not required if the amount required for the payment of the
principal and interest in each year for the refunding bonds is not increased more than$5,000 over the amount for that
same year required for the bonds or the port on of that bond issue to be refunded thereby and if the maturities of such
refunding bonds are not extended beyond a maturities of the bonds to be refunded thereby.
Nothing in the Ordinance prohibits the City from(1)issuing Future Parity Bonds to refund maturing Bonds or Future
Parity Bonds then outstanding,money for the payment of which is not otherwise available;or(2)issuing revenue bonds
that are a charge upon Gross Revenue subor a mate to the payments required to be made therefrom into any Parity Bond
Fund.
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APPENDIX B
• 2003 Audited Financial Statements
of the Waterworks Utility
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i
alrai,\
P"-,‘..`:"
Sh9., `
ashington State auditor360
Legislative Building Auditor (360)9 02-0370
PO Box 40021 Brian Sonata FAX(360)753-0646
Olympia,Washington 98504-0021 TDD Relay 1-800-833-6388
http://www.sao.wa.gov
INDEPENDENT AUDITOR'S REPORT
August 25,2004
The Honorable Mayor and City Council •
City of Renton
Renton,Washington
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund,•
and the aggregate remaining fund information of the City of Renton, King County, Washington, as of and for the year ended December
31, 2003, as listed in the table of contents These financial statements are the responsibility of the City's management Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our financial audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform th i audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessingthe accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements refrred to above present fairly, in all material respects, the financial position of the
governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of
Renton, King County, Washington, as of December 31, 2003, and the respective changes in financial position and cash flows, where
'_ applicable,thereof,for the.year then ended in conformity with accounting principles generally accepted in the United States of America.
i,
I As described in Note 1 to the financial stateme Its,during the year ended December 31,2003,the City has implemented Governmental
Accounting Standard's Board Statement 34, B sic Financial Statements—and Management's Discussion and Analysis for State and
Local Governments, Statement 37, Basic Fin ncial Statements — and Management's Discussion and Analysis for State and Local
Governments, Omnibus, Statement 38, Certain Financial Statement Note Disclosures, and Statement 40, Deposit and Investment Risk
Disclosures.
The Management's Discussion and Analysis o pages 3-1 through 3-16; and the budgetary comparison information on pages 5-1
through 5-2 are not a required part of the basic financial statements but are supplementary information required by the Governmental
Accounting.Standards Board. •We.have applied certain limited procedures, which consisted principally of inquires of management
regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it
Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City of Renton's
basic financial statements. The accompanying financial information listed as combining financial statements and supplemental
information on pages 6-1 through 6-50 is presented for purposes of additional analysis and is not a required part of the basic financial
statements. The combining financial statement and supplemental information have been subjected to auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
i
The information identified in the table of contents as the Introductory and Statistical Sections is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the City. Such information has not been subjected to the auditing
procedures applied in the audit of the basic financial statements and,accordingly,we express no opinion on them.
Sincerely,
) .
, _gi,..1 C:Viefi--
BRIAN SONNTAG,CGFM -- . . . .. . . . . ...
STATE AUDITOR
.rte
2003 Comprehensive Annual Financial Report City of Renton, Washington
• STATEMENT OF NET ASSETS •
PROPRIETARY FUNDS
December 31,2003
Page 1 of 2
•
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ' ENTERPRISE INTERNAL SERVICE
UTILITY SOLID WASTE FUNDS FUNDS FUNDS
ASSETS •
• Current assets:
Cash&cash equivalents $ 6,170,463 $ 752,390 $ 3,186,566 $ 10,109,419 $ 6,702,581
Investments at fair value 755,491 150,000 750,000 1,655,491 4,350,000
Receivables(net of allowances):
Customer accounts 4,428,270 723,614 60,052 5,211,936 5,958
Special assessments-current 18,430 - - 18,430 -
Interest-investments 4,397 1,326 5,004 10,727 165,653
Due from other funds 48,137 - - 48,137 2,048
Due from other governmental units 245,455 123,740 313,379 682,574 -
Inventory of materials and supplies 331,434 - 49,353 380,787 -
Prepayments - - - - 80,260
Total current assets '$ 12,002,077 $ 1,751,070 $ 4,364,354 $ 18,117,501 $ 11,306,500
Restricted assets:
Cash&residual investments at FMV $ 2,606,852.$ - $ 441,358 $ 3,048,210 $ -
j Total restricted assets $ 2,606,852 $ - $ 441,358 $ 3,048,210 $ -
Notes receivable-non-current
Special assessments deferred 61,325 - - 61,325 -
Capital assets(net) 176,376,760 13,131 17,795,470 194,185,361 4,682,530
Deferred charges and other assets 769,107 - 53,697 822,804 -
TOTAL ASSETS $ 191,816,121. $ 1,764,201 $ 22,654,879 $ 216,235,201 $ 15,989,030
•
•
•
•
•
•
.
The notes to the financialstatements are.:an.integral part of this statement.
Basic Financial Statements 4-9
2003 Comprehensive Annual Financial Report City of Renton, Washington
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December31,2003
Page2of2
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE
UTILITY SOLID WASTE FUNDS FUNDS FUNDS
LIABILITIES
Current liabilities:
Accounts payable $ 479,194 $ 285,891 $ 93,770 $ 858,855 $ 266,789
Retainage payable 118,482 - 124,873 243,355 -
Due to other funds 47,563 - 10,039 57,602 804
Due to other governmental units 674,336 44,815 - 719,151
Accrued interest payable 481,279 1,098 15,935 498,312 -
Accrued employee benefits payable 31,813 272 5,703 37,788 3,387
Accrued taxes payable 49,741 35,956 31,207 . 116,904
Custodial Accounts 24,829 - 70,975 95,804 -
Deferred revenue 83,308 - 44,814 128,122 -
Capital leases payable - - 24,271 24,271 -
Total current liabilities $ 1,990,545 $ 368,032 $ 421,587 $ 2,780,164 $ 270,980 1
Liabilities payable from restricted assets:
Revenue bonds payable-current $ 1,475,000 $ - $ 250,000 $ 1,725,000 $ -
Total liabilities payable from restricted assets $ 1,475,000 $ - $ 250,000 $ 1,725,000 $ -
Long-term liabilities: .
Revenue bonds payable $ 23,725,000 $ - $ 3,620,000 $ 27,345,000 $ -
Unamortized premium on revenue bonds 177,953 - - 177,953 -
Unamortized discount on revenue bonds (629,130) - (394,061) (1,023,191) -
Deferred amount on reveneue bond refunding 122,638 - - 122,638 -
Accrued employee benefits payable 265,857 2,451 74,639 342,947 21,512
Referred revenue - - - - 2,474,749
Capital leases payable - - 33,834 33,834 -
Public works trust fund loan payable 6,909,275 - - 6,909,275 -
Total long-term liabilities $ 30,571,593 $ 2,451 $ 3,334,412 $ 33,908,456 $ 2,496,261
TOTAL LIABILITIES $ 34,037,138 $ 370,483 $ 4,005,999 $ 38,413,620 $ 2,767,241
NET ASSETS .
Investment in capital assets, •
net of related debt $ 144,267,485 $ 13,131 $ 13,901,199 $ 158,181,815 $ 4,682,530
Restricted 2,606,852 - 441,358 3,048,210 -
Unrestricted 10,904,646 1,380,587 4,306,323 16,591,556 8,539,259
TOTAL NET ASSETS $ 157,778,983 $ 1,393,718 $ 18,648,880 $ 177,821,581 $ 13,221,789
The notes to the financial statements are an integral part of this statement.
- 4-10 • Basic-Financial Statements
2003 Comprehensive Annual Financial Report . • City of Renton, Washington
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET ASSETS
, PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31,2003 •
j .
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS • GOVERNMENTAL
i OTHER TOTAL ACTIVITIES
• WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVIC
' UTILITY • SOLID WASTE FUNDS ' FUNDS FUNDS
OPERATING REVENUES:
Charges for services $ 24,551,329 $ 8,445,207 $ 2,904,215 $ 35,900,751 $ 10,911,836
Interdepartmental services 871,587. 6,345 - 877,932 -
! I Other services 355,841 190,858 44,232 590,931
1 TOTAL OPERATING REVENUES $ 25,778,757 $ 8,642,410 $ 2,948,447 $ 37,369,614 $ 10,911,836
OPERATING EXPENSES:
Operations and Maintenance $ 3,962,259 $ 635,176 $ 1,632,642 $ 6,230,077 $' 759,467
Benefit Payments 7591240. 33,090 278,216 1,070,546 6,775,606
1 Professional Services 107,543 6,884,712 34,310 7,026,565 408,710
1. Administrative and General 9,550,910 47,448 375,873 9,974,231 • 1,005,442
Insurance 83,700 - 24,100 107,800 2,593,873
Taxes 2,526,867 912,233 9,087 3,448,187 1,821
I Depreciation 4,013,656 3,939 '459,504 . 4,477,099 937,940
'- TOTAL OPERATING EXPENSES $ 21,004,175 $ 8,516,598 $ 2,813,732 $ 32,334,505 $ 12,482,859
.3- •OPERATING INCOME(LOSS) $ 4,774,582 $ 125,812 $ 134,715 $• 5,035,109 $ (1,571,023)
NON-OPERATING REVENUES(EXPENSES):
I Intergovernmental Revenues $ - $ - $ 2,523,769 $ 2,523,769 $ - .
Interest revenues 155,363 9,177 77,515 242,055 • .170,729
Gain(loss)on sale of capital assets 134,605 - - 134,605 10,555
' Other non-operating revenues(expenses) 7,685 - 71,039 78,724 141,622
Interest expense (1,284,944) - (232,495) (1,517,439) -
. Amortization of debt discount and expense . (92,345) • - (4,908) (97,253) • -
NON-OPERATING REVENUE NET OF EXPE SE $ (1,079,636) $ 9,177 $ 2,434,920 $ 1,364,461 $ 322,906
i
, INCOME(LOSS)BEFORE CONTRIBUTIONS
AND TRANSFERS • $ 3,694,946 $ 134,989 $ 2,569,635 $ 6,399,570 $ (1,248,117)
1 Capital Contributions 4,158,711 4,000 4162 711
Transfers in(out) 40,000 - - 40,000 -
CHANGE IN NET ASSETS $ 7,893,657 $ 134,989 $ 2,573,635 $ 10,602,281 $ (1,248,117)
•
-it FUND BALANCE JANUARY 1 $ 149,885,326 $ 1,258,729 $ 16,075,245 $ 167,219,300 $ 14,469,906
1 NET ASSETS,DECEMBER 31 $ 157,778,983 $ 1,393,718 $ 18,648,880 $ 177,821,581 $ 13,221,789
f
1 .
•
-. ., . The notes,to_the.financial statemei}ts.:are an,integral.part of this,statement..
Basic Financial Statements 4-11
2003 Comprehensive Annual Financial Report • City of Renton, Washington
STATEMENT OF CASH FLOWS
• PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31,2003
PAGE1OF2
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE i
UTILITY SOLID WASTE FUNDS FUNDS FUNDS .
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for services $ 24,195,404 $ 8,523,465 $ 2,888,857 $ 35,607,726 $ .10,866,715
Cash received from other funds for services 914,915 - - 914,915 - -
Cash paid to suppliers for goods&services (10,400,776) (7,402,587) (737,636) (18,540,999) (10,471,775)
Cash paid to other funds for goods&services (50,390) (299,443) (217,128). (566,961)
Cash paid to employees (4,088,382) (163,403) (1,269,298) (5,521,083) (438,707)
Cash paid for city utility taxes (2,526,867) (504,036) - (3,030,903) -
Other operating receipts 355,841 197,203 88,464 641,508 ' (2,048) -
Other non-operating receipts 7,685 (92,799) . (242,340) (327,454) 103,061
NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES $ 8,407,430 $ 258,400 $ 510,919 $ 9,176,749 $ .57,246 --
I
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from other funds $ 40,000 $ - $ - $ 40,000 $ -
Advances from other funds - - - - - 1
Subsidy from federal grant - - - - 38,561
NET CASH PROVIDED(USED)BY .
NONCAPITAL FINANCING ACTIVITIES $ 40,000 $ - $ - $ 40,000 $ 38,561
CASH FLOWS FROM CAPITAL
FINANCING ACTIVITIES:
Proceeds from the sale of equipment $ 134,605 $ - $ - $ 134,605. $ 40,E 1
Acquisition&construction of capital assets (8,622,284) - (3,398,900) (12,021,184) (609,296)
Capital contributions - - - -
-
Captial grants - - 2,523,769 2,523,769 - I
Proceeds from the sale of bonds _ - - - - '
Principal payments on bonds (2,799,328) - (184,133) (2,983,461) -
Interest payments on bonds (1,041,643) - (203,541) (1,245,184) - l
NET CASH PROVIDED(USED)BY
CAPITAL FINANCING ACTIVITIES $ (12,328,650) $ - $ (1,262,805) $ (13,591,455) $ (569,248)
CASH FLOWS FROM INVESTING ACTIVITIES: •
Proceeds from sale of investments $ 7,563,839 $ - $ 4,400,000 $ 11,963,839 $ 1,184,500 ! 1
Payments for investments (150,000) (3,450,000) (3,600,000) (3,238,000) --
' Interest on investments 190,588 17,564 111,010 319,162 ' 128,398
NET CASH PROVIDED(USED)BY y
-INVESTING ACTIVITIES $ 7,754,427 $ (132,436) $ 1,061,010 $ 8,683,001 $ (1,925,102) _ '
NET INCREASE(DECREASE)IN CASH&
CASH EQUIVALENTS $ 3,873,207 $ 125,964 $ 309,124 $ 4,308,295 $ (2,398,543)
CASH&CASH EQUIVALENTS,JANUARY 1 2,297,256 626,426 3,318,801 6,242,483 9,101,124
i CASH&CASH EQUIVALENTS,DECEMBER 31 $ 6,170,463 $ 752,390 $ 3,627,925 $ 10,550,778 $ 6,702,581
I
The notes to the financial statements are an integral part of this statement.
4-12 .. Basic Financial Statements
•
2003 Comprehensive Annual Financial Report City of Renton, Washington
STATEMENT OF CASH FLOWS
' PROPRIETARY FUNDS •
FOR THE YEAR ENDED DECEMBER 31,2003
PAGE 2 OF 2
•
BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS GOVERNMENTAL
. OTHER TOTAL ACTIVITIES
WATERWORKS ENTERPRISE ENTERPRISE INTERNAL SERVICE
UTILITY SOLID WASTE FUNDS FUNDS FUNDS
RECONCILIATION OF OPERATING INCOME
I
(LOSS)TO NET CASH PROVIDED(USED)
BY OPERATING ACTIVITIES:
I Operating income(loss) 4,774,582 $ 125,812 $ 134,715 $ 5,035,109 $ (1,571,023)
Adjustments to reconcile operating income
(loss)to net cash provided(used)
by operating activities:
Depreciation&amortization of
deferred charges 4,013,656 12,348 459,504 4,485,508 937,940
Other non-operating revenue 7,685 71,039 78,724 103,061
(Increase)decrease in •
accounts receivable (252,074) •72,643 (20,503) (199,934) 5,426
(Iricrease)decrease in due from
other funds/governmental units . 43,328 (92,799) (269,147) (318,618) (2,048)
(Iricrease)decrease in inventory
&prepaid items (15,371) - . 16,278 907 7,392
Increase(decrease)in vouchers
retainage payable 100,885 _ 91,727 111,961 304,573 54,047
Increase(decrease)in due to .
other governmental units (50,390) - 4,681 (45,709) -
Increase(decrease)in payables
&other short-term liabilities " 1,920 48,213 (2,634) 47,499 -
•
j Increase(decrease)in
customer deposits (3,690) - (709) (4,399) (50,547)
Increase(decrease)in.
I
deferred revenues (100,161) - 8,488 (91,673) 594,244
Increase(decrease)in accrued
employee leave benefits (112,940) 456 (2,754) (115,238) (21,246)
1Total.adjustments - 3,632,848 • 132,588 376,204 4,141,640 1,628,269
NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES $ 8,407,430 $ 258,400 $ 510,919 $ 9,176,749 $ 57,246
-• NONCASH INVESTING,CAPITAL,.AND
FINANCING ACTIVITIES
Contributions of capital assets $ 4,158,711 - - 4,158,711 -
Increase in fair value of investments 5,491 - - 5,491 -
Borrowing under capital leases • - - 58,105 58,105 -
• The notes to.the financial statements,are an integral part of this statement. •
Basic Financial Statements 4-13
[This Page Intentionally Left Blank]
APPENDIX C
I
Economic and Demographic Information
C-1
ECONOMIC AND DEMOGRAPHIC INFORMATION
Local Economic Overview
The City is located in western Washington in King County(the"County"). The City is located approximately
20 miles southeast of the City of Seattle and approximately 60 miles northeast of the City of Olympia, the
State's capital. •
The County,with a population of 1,779,300, encompasses 2,128 square miles,ranking 11th in geographical
size of Washington's 39 counties but first in population. Seattle is the largest city in the Pacific Northwest
and serves as the County seat. The County and Snohomish and Island Counties to the north together comprise
the Seattle Primary Metropolitan Statistical Area (the "Seattle PMSA"), which is the fourth-largest
metropolitan c:;nter on the Pacific Coast. In addition to the City and the City of Seattle,principal cities of the
Seattle PMSA include Auburn, Bellevue, Bothell, Burien, Federal Way, Issaquah, Kent,Kirkland, Mercer
Island, Redmond, Shoreline, and Woodinville, all of which are in the County, and Everett, Edmonds,
Mountlake Terrace and Lynnwood in Snohomish County. These communities serve as residential,
commercial, and industrial satellites of Seattle.
Seattle PMSA's employment base is well diversified, with strengths in manufacturing, trade services and
government sectors. In 2002,
manufacturing comprised about 9.1%of the area's employment,with aircraft
p
production representing the largest component. In the non-manufacturing sectors, services was the largest
sector with over 39.5% of the total employment, wholesale and retail trade comprised almost 14.8% and
government 12.0%. The information industry contributed 13.9% of the total earnings by industries in the
County,the most of all industries,followed by manufacturing with 12.6%and wholesale and retail trade with
12.0%. The U.S. Defense Department is one of the largest employers in the Puget Sound region. Major
facilities include Fort Lewis Army Base in Pierce County, the Puget Sound Naval Shipyard in Bremerton
(Kitsap County),Bangor Naval Submarine Base in Kitsap County,McChord Air Force Base in Pierce County
and Naval Station Everett.
The area's universities and research institutions serve as catalysts in the expansion of high tech industries.
• Other key factors that support continued growth include the existing industry base;a well-trained labor force;
relatively low cost power; and a progressive business climate with excellent transportation access to
worldwide markets.
Aircraft Manufacturing—The Boeing Company
Manufacturing in the area consists primarily of aircraft manufacturing by the Boeing Company("Boeing").
Boeing is the largest aerospace company in the world,as measured by total sales,and is consistently one of the
nation's top three exporters. In May 2001, Boeing moved its world headquartersand approximately 1,200
employees from Seattle to Chicago to allow the corporate staff to focus on the direction of the company rather
than day-to-day operations. Boeing remains the area's largest employer with several locations in the Puget -
Sound region.
In 2001, Boeing reported total revenues of $58 billion. While the primary activity of Boeing is the
manufacture of commercial aircraft, Boeing has played leading roles in the aerospace and military missile
programs of the United States human space flight, launch services and has undertaken a broad program of
C-2
diversification activities including Boeing Computer Services. Boeing has six major divisions to carry out
business activities, which include Air Traffic Management, Boeing Capital Corporation, Commercial
Airplanes, Connexion by Boeing Military Aircraft and Missile Systems, and Space and Communications.
In 1996,Boeing acquired the aerospace and defense operations of Rockwell International Corporation and in
1997 merged with McDonnell Douglas,its only U.S.commercial airline rival and the world's largest builder
of military aircraft, for approximately $16.3 billion. In recent years, Boeing has strived to streamline
workforce operations and facilities. Since 1998, Boeing has reduced its total workforce from 231,260 to
176,200(as of May 2002),a decrase of approximately 55,060(23.8%)employees. Since 1998,Boeing has
reduced the total work force in tle Central Puget Sound Region from 98,440 to 63,361 (as of December
2002),a decrease of approximately 35,079(35.6%)employees. Boeing's Washington employees are located
largely in the Puget Sound Region,which currently has 19 Boeing sites/locations,including the Renton Plant
at Renton Field.
' As of June 30, 2003, Boeing em Toyed 11,910 people at its Renton Plant, a decrease from approximately
19,463 (38%) employees as of January 1, 2002. As of the date of this Official Statement, it cannot be
predicted if there will be further Boeing layoffs that will impact the Renton Plant or other Puget Sound Region
operations. The Renton Plant is c ne of Boeing's major production sites with a 290-acre site encompassing
approximately 7.7 million square eet of building space. Over the years,the Airplane Programs site in Renton
has been home to many of commercial aviation's most famous airplanes,including the 707,727,737 and 757.
, Approximately 40% of the word's commercial jetliner fleet is produced at the Renton Plant. The ground
floor of Renton's final assembly building for the Boeing 737 and 757 covers 760,000 square feet.Activities at
other main buildings at the Renton site include sub-assembly,wing-line production and a paint hangar. The
remaining buildings house administrative and engineering personnel and materiel handling. Renton Airport,
located west of the main site, is used by Boeing to perform pre-flight tests on all 737s and 757s before they
make their initial test flight. Afte the flight tests, the airplanes land at Boeing Field in Seattle, where final
preparations are made before the are delivered to customers.
The City is currently conducting a Comprehensive Land Use Environmental Impact Statement for use of the
site should Boeing ever stop mating plans in Renton. Boeing assures the City that as long as Boeing is
constructing 737's,they will be constructedat the Renton Plant. However,in late 2001,Boeing sold 40 acres
to the Fry's Electronics Company and are currently in the process of selling another 40 acres to a developer
with plans to put a Target store with other subsidiary retail outlets on the site. This is subject to the City
Council's final decisions on the Comprehensive Land Use Environmental Impact Statement.
Since September 2001,Boeing has been announcing lay offs until the target of 25,000 to 30,000 jobs are cuts
from operations.
Technology
i ,
The Seattle PMSA has experienced a substantial development of high technology,electronics and computer-
related enterprises particularly over the last decade. More than 1,500 computer development firms are located
in the Seattle PMSA. Microsoft, which is headquartered in Redmond, Washington, is the largest
microcomputer software company in the world,with 2021 gross sales worldwide of$28.3 billion,increasing
from$25.3 billion in 2001. Other leading employers include Sundstrand Data Control,Inc. (electronics and
aerospace systems), ELDEC Corporation (electronic equipment), John Fluke Manufacturing Company
C-3
, i I
(electronic testing and calibrating instruments),Fred Hutchinson Cancer Research Center(cancer research and
treatment),Nintendo of North America(electronic games),Advanced Technology Laboratories(medical ultra-
sound equipment), Heath Techna Aerospace Co. (aerospace and defense specialties and architectural
equipment), Alliant Techsystems Inc. (sonar systems and signal processing equipment), and Intermec
Corporation(bar coding equipment).
Transportation
Seattle is bordered on the west by Elliott Bay, a natural harbor on Puget Sound,which is one of the nation's
leading seaports. The Port of Seattle (the "Port"), a County-wide port district, promotes maritime trade,
particularly foreign trade and the employment of containerized cargo facilities, and has developed and is
continually improving a system of marine terminals,piers and associated facilities on Seattle's waterfront.
The Port is the fifth largest container port in the U.S.and the 20th largest in the world. Served by 26 regularly
scheduled steamship lines, it is the top U.S. port in container tonnage exports to Asia. In 1997, the Port
completed construction of an$87.8 million multiple-use development on the downtown Seattle waterfront,
which includes a transient moorage, fish processing, and cruise ship berthing support facilities, a marine
museum, an international conferencecenter and a public plaza. The Port also operates the Seattle-Tacoma
International Airport ("SeaTac") which serves 21 major air carriers and five commuter airlines and is the
leading air travel and shipping center of the Pacific Northwest. SeaTac is located approximately seven miles
west of the City .
King County International Airport ("Boeing Field"), a general aviation facility operated by the County, is
located in Seattle. With about 410,000 annual operations(takeoffs and landings),Boeing Field is the busiest
such facility in the region and ranks among the top 15 busiest in the nation. It serves as the primary inclement
weather alternate for SeaTac.
Seattle is the western terminus of two primary east-west freeway systems: Interstate Route 90 and State Route
520,and is traversed by north-south Interstate Route 5 and State Route 99. The portion of I-90 that connects
Seattle with eastside communities across Lake Washington was expanded to eight lanes at a cost of$1.2
billion in the early 1990's. In addition to the highway system,the Washington State Ferry System provides
convenient transportation between Seattle and points across Puget Sound to the west.
In 1996,voters in King,Pierce and Snohomish counties approved a$3.9 billion regional transit measure. The
transit system is currently under construction, expected to take ten years to build and will consist of electric
light rail,commuter rail and express buses. A four-mile-long light rail tunnel from downtown Seattle to the
. University District is the most expensive component at$865 million. The transit system will be funded in
large part with increases in local sales taxes and vehicle license fees. Some federal funds will be contributed.
Fishing,Agticulture and Forest Products
Seattle is the homeport for a major salmon and halibut fishing fleet. Approximately 700 fishing boats are
based at the Port's Fishermen's Terminal on Salmon Bay,part of the fresh-water system of lakes and canals
connected to Puget Sound by the Hiram M. Chittenden Locks,which are operated by the US Army Corps of
Engineers. Fish received in Seattle are largely for fresh market distribution and for freeze processing. Seattle -
is also a warehousing and distribution center for fish processed elsewhere in the Northwest,principally in
Alaska.
C-4
i
Agriculture in the County consists primarily of dairy farming,truck gardening,horticulture and the raising of
livestock and poultry. The Seattle area is a major center in the Northwest for agricultural supply,distribution
and marketing as well as for food handling and processing and the manufacture of food packaging and
containers.
The local forest products industry includes the manufacture of lumber,plywood,paper products, furniture,
acoustical materials and specialty wood products. Timber in the region is harvested under sustained-yield
programs on federal,state and private timberlands. The leading forest products employer is the Weyerhaeuser
Company, which operates lumber mills locally and has its corporate headquarters and a major research and
development center in southwestern portion of the County. Employment and production levels within this
industry locally have been and Ire expected to be further impacted by recent decisions by the federal
government and the courts conce 'ng the exporting of raw logs and restrictions on the harvesting of trees on
federal lands in"old growth"fores s. The extent of such impact is unknown at this time. The wood and paper
products industry accounts for approximately one percent of the total Seattle PMSA employment.
Higher Education
_ The University of Washington(th "University')is one of the oldest and largest state assisted universities on
the West Coast. Its primary camiyus is located in Seattle with satellite campuses located in Bothell and
Tacoma. Established in 1861, the University has 16 schools and colleges offering instruction in more than
200 academic disciplines. Undergraduate and
p gr graduate student enrollment for fall semester 2003/04 was
39,136. The University has a biennial operating budget of approximately$3.27 billion and consistently ranks
among the top five institutions of 'gh er learning in the United States when measured by the receipt of federal
grants. The largest share of this funding goes to the University of Washington School of Medicine.
Harborview Medical Center is the niversity's teaching hospital. Every physician practicing at Harborview is
a member of the University's chool of Medicine faculty. This relationship has been essential to
- Harborview's development of outs anding patient care services including the region's bum,trauma,epilepsy,
-and spinal cord rehabilitation cent rs. Other higher education facilities in the Seattle area include two private
four-year universities,Seattle Paci c University(3,728 enrollment)and Seattle University(5,918 enrollment),
and seven community colleges.
- Services, Tourism,Recreation and Conventions
The Seattle area is the health care c nter of the Pacific Northwest. There are 26 general-acute and four special
- purpose hospitals,more than 4,500 beds, and approximately 3,000 physicians.
The State's fourth largest industry is tourism. There are over 8,000 hotel rooms in over 50 hotels and motels
in downtown Seattle. Seattle ranks in the top five cities in the nation in terms of hotel occupancy with 2002
occupancy rates of 60.8%with room rates averaging$95.11 per night. According to the Seattle-King County
Convention and Visitors Bureau, 276,000 convention goers added approximately $257 million to the
economy. The Washington State Convention and Trade Center currently occupies 102,000 square feet of
heavy load exhibition space and an expansion of approximately 105,000 square feet of which 70,000 square
feet is designed as clear span,column-free space is almost complete. The Convention Center has the capacity
to hold events involving as many ash 11,000 people. It is estimated that the Convention Center generates direct
spending by visitors of over$200 million annually on hotels,restaurants,entertaining,transportation and retail
I shopping.
C-5
Bordered on the west by Puget Sound and the Olympic Mountains and on the east by the Cascade Mountain
range,the 2,128 square miles in the County offer many types of outdoor recreation. The County and the City
of Seattle maintain over 9,000 acres of parkland. The Seattle area has several symphony orchestras, five
theaters, an opera company, and four resident dance groups. The area is also the home to more than 3,000
artists and 1,300 arts organizations.
The Kingdome,former home to the National Football League's Seattle Seahawks and the American Baseball
League's Seattle Mariners,was demolished in March 2000 to make way for a new stadium/exhibition center.
The Kingdome, whichwas located adjacent to Seattle's central business district, served as a major sports,
concert and convention center for the Northwest for over 20 years.A public facilities district was created in
1996 to build anew world-class football/soccer stadium for use by the Seahawks as well as parking facilities,
an exhibition hall, and demolition of the Kingdome. In 1997, voters statewide approved the issuance of
general obligation bonds by the State to pay for the project,which is expected to cost$425 million,with$300
million paid from public sources. The stadium design includes a 72,000 seat capacity(including 7,000 club
seats. and 82 suites) and an open-air, natural grass facility that will provide 70% of the fans with roof
protection. The exhibition center was completed in November 1999 and the stadium was completed in 2002
with the first game played in the stadium in August 2002. Seattle's new ballpark for the Mariners(SAFECO
Field)was completed in July 1999. The ballpark was constructed for$518 million,has a baseball capacity of
46,621 fans, and includes real grass and a retractable roof that covers the ballpark but does not enclose it.
The Seattle Center,located one mile north of the central business district of Seattle,was the site for the 1962
World's Fair and it continues to be a popular attraction for residents and tourists alike. The 74-acre, year-
round convention and family entertainment center includes the Pacific Science Center, Coliseum, Seattle
Opera House,Key Arena,Memorial Stadium, Space Needle,the Experience Music Project and a number of
meeting and display rooms. Key Arena serves as the home of Seattle's third major league sports team, the
National Basketball Association's Seattle Supersonics. A major renovation project was recently completed at
the Coliseum.
Population Trends
The area's population has grown significantly in recent years and based on recent population trends is
expected to continue to grow. The County is the most populated county in'the State. Historical population
trends are presented below for the City,the County and the State of Washington to represent population trends
in the area.
City of Percent of King Percent of State of Percent of
Year Renton Change County Change Washington Change
20031 54,900 9.7% 1,779,.300 2.4% 6;098,300 3.5%
2000 50,052 20.1 1,737,046 15.2 5,894,143 21.1
1990 41,688 36.2 1,507,305 18.7 4,866,663 17.8
1980 30,612 -- 1,269,898 -- 4,132,353• --
Intercensus estimate as of April 2003 reported by the State Office of Financial Management.
Source: U.S. Bureau of the Census and Washington State Office of Financial Management.
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Trends in Building Permits
The following table reveals the trends in the number of building permits issued by the City for the years
shown.
Residential Total Number Total Valuation
Year Permits Issued of Permits Issued of Permits Issued
2002 719 2,965 $179,502,062
2001 553 2,542 128,087,520
1 2000 582 2,991 237,443,272
1999 453 2,673 131,878,394
Source: The City of Renton
Historical Taxable Retail Sales
The following table lists the taxa le retail sales for all industries within the City and the County since 1999.
1 Figures shown are in(000's).
Year City of Renton King County
2003 $1,763,640 $35,370,831
2002 1,677,824 35,159,213 •
2001 1,697,418 35,313,326
2000 1,695,021 37,383,541
1999 1,504,764 34,517,504
Source: Washington State Dep ent of Revenue
Major Employers—City of Renton
The major employers in the City Ls of 2002 are as follows.
Renton
Employer Employment Type of Business Activity
The Boeing Company* 11,910* Aerospace
Valley Medical Center 1,562 Healthcare
Renton School District 1,318 Public Education
Federal Aviation Administration 965 Federal Government
PACCAR 782 Heavy Manufacturing
I City of Renton 688 City Government
Multiple Zones International , 533 Computer Hardware&Software Retail
Wizards of the Coast 453 Retail
IKEA 358 Retail
Shuttle Express,Inc. 319 Transportation Services
*Updated Boeing employment number is as of June 30,2003.
Source: The City of Renton
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Major Employers—Central Puget Sound Region
The major employers in the Central Puget Sound Region as of 2002 are as follows:
Trade Area
Employer Type of Business Activity Employment
1. The Boeing Company Aerospace Manufacturing 63,361
2. Microsoft Corporation* Software 24,903
3. Costco Wholesale Corporation Wholesale Warehouse 15,000
4. Safeway Grocery Store 12,809
5. Fred Meyer Retail 12,197
6. The Weyerhaeuser Company* Forestry Products 10,000
7. Group Health Cooperative .Health Care 9,790
8. Providence Health Health Care 8,412
9. Swedish Health Systems Health Care 7,115
10. Starbucks Corporation Retail 6,736
11. Washington Mutual Inc. Bank 6,139
12. Bank of America Financial 5,463
13. Multi Care Health System Health Care 5,083
14.Nordstrom,Inc.* Retail 4,500
15. The Bon Marche Department Store 4,300
16. Alaska Air Group, Inc. Airline 4,000
17. Haggen Inc. Grocery Store 4,000
18. Safeco Corp.* Insurance 3,800
19. Evergreen Healthcare Healthcare 2,700
20. Regence Blue Shield Healthcare Insurance 2,450
*Headquartered in King County
Source: Economic Development Council of King County and Puget Sound Business Journal's Book of Lists
2002
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Employment by Major Industry
The table below sets forth the total number of full-time and part-time employees in the County for the years
and industries as shown.
1998 1999 2000 2001 2002
Employment by Place of Work:
Total Employment 1,369,140 1,407,914 1,449,735 1,441,245 1,409,602
By Type:
Wage and Salary 1,173,581 1,212,445 1,244,804 1,225,286 1,180,688
Proprietor 195,559 195,469 204,931 215,959 228,914
Farm 1,377 1,369 1,373 1,399 1,399
Non-Farm 194,182 194,100 203,558 214,560 227,515
By Industry:
Farm 2,310 2,265 2,196 2,295 2,239
I Non-Farm 1,366,830 1,405,649 1,447,539 1,438,950 1,407,363
Private 1,214,196 1,248,396 1,286,624 1,274,429 1,240,173
Ag. Services,Forestry, Fish. &Other 14,654 17,017 17,067 5,042 5,281
Mining 1,327 1,282 1,303 1,517 1,469
Utilities * * * 1,468 1,328
Construction 72,047 76,826 81,614 79,547 75,324
Manufacturing ' 168,372 158,491 151,295 141,129 128,054
Transportation and Public Utilities 80,625 83,586 89,103 * *
Wholesale Trade 88,368 88,440 89,529 71,581 69,169
Retail Trade 214,987 223,129 228,705 144,467 139,609
Transportation and Warehousing * * * 55,896 52,177
Information * * * 77,182 74,014
Finance, Insurance &Real Estate 118,604 120,972 126,704 130,069 137,302
Services 455,212 478,653 501,304 * *
Professional and Technical Services * * * 132,551 124,602
Management of Companies * * * 21,236 21,711
Administrative and Waste Services * * * 78,036 74,677
Educational Services * * * 26,552 26,556
Healthcare and Social Assistance * * * 114,829 117,156
Art,Entertainment and RecreaUion * * * 35,553 36,397
Accommodation and Food Services * * * 88,819 85,750
Other Services * * * 68,685 69,597
Government&Government Enterprises 152,634 157,253 160,915 164,521 167,190
Federal/Civilian 20,702 20,937 21,847 20,808 21,247
Military 7,462 7,726 7,655 7,396 6,690
State and Local 124,470 128,590 131,413 136,317 139,253
* Prior to 2001 estimates were based on Standard Industrial Classification. The 2001 estimates and succeeding years will be based
on North American Industry Classificaf on.
Source: U.S. Department of C mmerce, Regional Economic Information System, Bureau of Economic
Analysis.
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Labor Force and Unemployment
The following table shows labor force and employment data for the County since 1999 as well as
unemployment rates for the State and the United States for the same period.
Unemployment Rates
King State of
Year Labor Force Employment County Washington United States
2003 1,018,500 949,700 6.8% 7.3% 6.1%
2002 1,006,800 946,900 5.9 6.7 5.8
2001 994,100 932,400 6.2 7.3 4.8 1
,
2000 1,023,200 986,500 3.6 5.2 4.0
1999 1,028,700 995,900 3.2 4.7 4.2 i
Source: Washington Employment Department
Personal Income Trends
The following table shows total and per capita personal income growth in the County from 1998 through
2002.
Total Personal Percent of Per Capita Percent of
Year Income(000's) Change Income Change '
2002 $77,524,060 0.71% $44,135 0.48%
' 2001 76,977,133 (3.11) 43,924 (3.85)
2000 79,448,105 6.61 45,682 5.99
1999 74,522,788 10.64 43,100 9.57
1998 67,358,052 13.00 39,335 . 11.17
Source: U.S. Department of Commerce, Regional Economic Information Center, Bureau of Economic
Analysis
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Earnings By Industry
The following table shows the County total personal income as well as wage and salary,labor and proprietors'
earnings by major industry type for the years 1998 through 2002. Figures shown are in thousands (000's).
1998 1999 2000 2001 2002
Total Personal Income $67,358,052 $74,522,788 $79,488,105 . $76,977,133 $77,524,060
i Earnings by Industry:
Farm 35,371 34,922 . 26,515 45,889 41,485
Non-farm 59,107,817 67,459,012 71,349,540 77,040,797 76,681,545
Private 52,700,174 60,707,219 64,241,890 68,898,244 68,123,253
Ag. Services,Forestry and Fishing 519,954 599,885 586,412 567,461 617,781
Mining 34,721 57,572 62,515 43,426 42,064
�
Utilities • - * * * 264,701 260,831
Construction 3,325,906 3,737,330 4,159,968 4,534,124 4,420,682
Manufacturing 8,623,122 9,004,623 9,389,721 9,560,583 9,775,683
i Transportation and Utilities 4,399,093 4,826,777 5,475,454 * *
Wholesale Trade 4,457,315 4,646,053 5,118,189 4,787,216 4,728,935
Retail Trade 4,716,687 5,432,323 6,144,869 4,554,560 4,608,081
Transportation and Warehousing * * * 2,924,014 2,859,820
- 1 Information * *
11,977,909 10,744,804
Finance, Insurance and Real Estate 4,866,030 5,220,209 5,534,048 6,559,900 6,822,695
Services 21,757,346 27,182,447 27,770,714 * *
Professional and Technical Services * .* * 8,764,266 8,338,828
Management of Companies * * * 1,902,730 1,960,142
Administrative and Waste Services * * . * 2,580,416 2,665,157
Educational Services * * * 575,010 580,548
Healthcare and Social Assistance * * * 4,827,430 5,141,698
Arts, Entertainment and Recreation * * * 869,056 843,516
Accommodation and Food Services * * * 1,783,088 1,797,059
Other Services * * . * 1,822,354 1,914,929
Government 6,407,643 6,751,793 7,107,650 8,142,553 8,558,292
. Federal/Civilian 1,338,783 1,410,257 1,498,431 1,689,265 1,750,109
Military 149,621 162,366 169,376 186,225 188,647
State and Local 4,919,239 5,179,170 5,439,843 6,267,063 6,619,536
* Prior to 2001 estimates were based on Standard Industrial Classification. The 2001 estimates and succeeding years will be based
on North American Industry Classification.
Source: U.S. Depaitment of Commerce Regional Economic Information System Bureau of Economic
Analysis
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I
I APPENDIX D
Continuing Disclosure
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CONTINUING DISCLOSURE
Continuing Disclosure Undertaking
In the Ordinance the City has made a written undertaking (the "Undertaking") for the benefit of the Owners and
Beneficial Owners of the Bonds as required by subsection(b)(5)(i)of the Rule.
Pursuant to the Undertaking,the City has agreed to provide or cause to be provided to each then existing NRMSIR and
to the SID,if one is created,the following annual financial information and operating data(collectively,the"Annual
Financial Information")for each prior fiscal year,commencing with the calendar year ending December 31,2004,on or
before the last day of the seventh month following the end of such prior fiscal year:
(a) Annual fmancial statements prepared in accordance with the generally accepted accounting principles
applicable to governmental units,as such principles may be changed from time to time and as permitted by State law;
which statements will not be audited,except that if and when audited financial statements are otherwise prepared and
available to the City,they will be provided(the"Annual Financial Statements");
(b) A statement of authorized,issued and outstanding bonded debt secured by the Net Revenue;
(c) Debt service coverage ratios; -
(d) General customer statistics for the Waterworks Utility; and
(e) A narrative explanation of the reasons for any amendments to the Undertaking made during the previous fiscal
year and the impact of such amendments on the Annual Financial Information being provided.
In its provision of such financial information and operating data,the City may cross-reference to any"final official
statement"(as defined in the Rule)available from the MSRB or any other documents theretofore provided to each then
existing NRMSIR or the SID,if one is created.
If not submitted as part of the Annual Financial Information, then when and if available, the City shall provide its
Annual Financial Statements,which shall have been audited by such auditor as shall be then required or permitted by
the State law,to each then existing NRMSIR and to the SID,if one is created. --
The City has further agreed to provide or cause to be provided,in a timely manner,to the SID,if one is created,and to
either the MSRB or each then existing NRMSIR,notice of any of the following events with respect to the Bonds,if
material:
(1)Principal and interest payment delinquencies;
(2)Non-payment related defaults;
(3)Unscheduled draws on debt service reserves reflecting financial difficulties;
(4)Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers,or their failure to perform;
(6)Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
(7)Modifications to rights of the Owners of the Bonds;
(8)Optional redemptions of the Bonds;
(9)Defeasances of the Bonds;
(10)Release,substitution or sale of property securing repayment of the Bonds; and
(11)Rating changes.
D-2
The City also has agreed to provide or cause to be provided,in a timely manner,to the SID,if one is created,and to
either the MSRB or each then existingNRMSIR,notice of its failure to provide the Annual Financial Information for
the prior fiscal year on or before the last ay of the seventh month following the end of such prior fiscal year.
' After the issuance of the Bonds,so long as the interests of the Owners or Beneficial Owners of the Bonds will not be
materially impaired thereby,-as determined by a party unaffiliated with the City(including,without limitation,a trustee
for the Owners, nationally recognized bpnd counsel or other counsel familiar with the federal securities law), or
pursuant to a favorable"no-action letter"issued by the SEC,the Undertaking may only be amended in connection with
any change in legal requirements,change in law,or change in the identity,nature or status of the obligated person,or
type of business conducted,and only in such a manner that the Undertaking of the City,as so amended,would have
complied with the requirements of the ule at the time of the primary offering, after taking into account any
amendments or interpretations of the Rul , as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without
amendment upon the defeasance, prior redemption or payment in full of all of the then outstanding Bonds. The
Undertaking or any provision thereof in the Ordinance, shall be null and void if the City(i)obtains an opinion of
nationally recognized bond counsel or ober counsel familiar with the federal securities laws to the effect that those
portions of the Rule which require such Undertaking or any such provision are invalid,have been repealed retroactively
__- or otherwise do not apply to"the Bonds;an'FI(ii)notifies and provides the SID,if any,and either the MSRB or each then
'nion.
existing NRMSIR with copies of such op
fi
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of the Undertaking in the Ordinance
- shall be limited to the right to obtain specific enforcement of the City's obligations under such provisions in the
Ordinance, and any failure by the City to comply with the provisions of this undertaking shall not be a default with
respect to the Bonds under the Ordinance. -
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• APPENDIX E
Form of Legal Opinion
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Form of Approving Opinion of
Gottlieb,Fisher&Andrews,PLLC,
Bond Counsel
[Date of Issue]
City of Renton,Washington
Renton, Washington 98055
Ladies and Gentlemen:
We have acted as bond counsel to the City of Renton, Washington(the"City"), in connection
with the issuance by the City 6f the bonds described below(the`Bonds"):
$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Dated: November 1,2004
The Bonds are issued pursuant to Ordinance No. 5098 of the City(the"Bond Ordinance") and
other proceedings duly had and taken in conformity therewith. The Bonds are issued for the purpose of
providing a part of the funds necessary to carry out the system or plan for additions to and betterments
and extensions of the Waterworks Utility,to make a deposit to the Reserve Fund, and to pay the costs
related to the sale and issuance of the Bonds, all as specified in the Bond Ordinance.
The Bonds are issued as fully registered bonds in the denomination of$5,000 each or in any
integral multiple thereof within a single maturity. The Bonds bear interest(computed on the basis of a
360-day year of twelve 30-day months) from their date or from the most recent interest payment date to
which interest has been paid or duly provided for,whichever is later,payable on December 1, 2004, and
semiannually thereafter on December 1 and June 1 of each year to the maturity thereof. The Bonds bear
- interest at the rates and shall mature on December 1 of each of the years and in the principal amounts set
forth below:
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it .
Maturity Years Interest
(December 1) Amounts Rates
2013 $205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024* 4,605,000 5.00
2025 1,600,000
5.00
2026 1,680,000 5.00
2027 -1,760,000 5.00
*Term Bonds
The Bonds are subject to redemption prior to maturity at the times and in the manner described in
the Bond Ordinance. The City has reserved the right to purchase any or all of the Bonds in the open
market at any time and at any price.
In rendering this opinion letter,we have examined the following: (i) the Bond Ordinance; (ii) a
copy of one executed and authenticated Bond(we assume that all other Bonds are in the same form and
have been similarly executed and authenticated); and (iii) the certified proceedings of the City and other
{ certificates of public officials and representatives of the City that have been furnished to us and which
comprise the transcript of proceedings pertaining to the issuance of the Bonds (the"Transcript").
As to questions of fact material to the opinions expressed herein,we have relied upon.the
certified proceedings of the City and other certificates of public officials and representatives of the City
that have been furnished to us as part of the Transcript, all without undertaking to verify the same by
independent investigation.
Based only upon the foregoing and our examination of such questions of law as we have deemed
necessary or appropriate for the purpose of this opinion letter, and subject to the limitations and
qualifications expressed below, we are of the opinion that, as of this date:
1. The Bonds are lawfully authorized and issued pursuant to and in full compliance with the
Constitution and statutes of the State of Washington,the Bond Ordinance and Ordinance No. 4709 of the
City.
2. The Net Revenue(as defined in the Bond Ordinance)hereafter collected has been
pledged to the payments to be made into the"2004 Waterworks Revenue Bond Fund"(the"Bond
Fund") as set forth in the Bond Ordinance, and the Bonds constitute a lien and charge on Net Revenue
E-3
prior and superior to any other charges whatsoever, except that the lien and charge on such Net Revenue
for the Bonds shall be on a parity with the lien and charge thereon for other Parity Bonds (defined in the
Bond Ordinance).
3. The Bonds are legal, valid and binding special fund revenue obligations of the City,
payable solely out of the Bond Fund, enforceable against the City in accordance with their terms, subject
to the limitations as to enforceability of laws relating to bankruptcy, insolvency,reorganization,
moratorium and other similar laws affecting creditors' rights, and also to the exercise of judicial
discretion in accordance with general principles of equity. The Bonds are not general obligations of the
City.
4. The Bonds are not"private activity bonds,"as defined in the Internal Revenue Code of
1986, as amended(the"Code").
5. Assuming compliance by the City with applicable requirements of the Code that must be
met subsequent to the issuance of the Bonds, the interest on the Bonds is excludable from gross income
for federal income tax purposes under existing federal law, and is not an item of tax preference for
purposes of determining the federal alternative minimum tax imposed on individuals and corporations
under existing federal law. However,under existing federal law, interest on the Bonds is taken into
account in determining adjusted current earnings for the purpose of computing the alternative minimum
. tax imposed on certain corporations.
Except as stated in the preceding paragraphs 4 and 5,we express no opinion as to any federal or
state tax consequences of the ownership or disposition of the Bonds.
The Code contains certain requirements that must be satisfied subsequent to the issuance of the
Bonds in order to maintain the exclusion of interest on the Bonds from gross income for federal income
tax purposes, including requirements relating to application of the proceeds of the Bonds,use of
facilities financed with such proceeds, limitations on income derived from the investment of gross
proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to the United States Treasury
of certain investment earnings on such gross proceeds. The City has covenanted to comply with these
requirements to the extent applicable, and the opinions expressed in paragraphs 4 and 5 assume such
compliance. However,we have not undertaken and do not undertake to monitor compliance by the City
with such requirements; and if the City should fail to comply with such requirements,interest on the '
Bonds could become includable in gross income for federal income tax purposes retroactive to the date
of issuance of the Bonds.
We have not been engaged to participate in the preparation or review of, or express any opinion
concerning the completeness or accuracy of,the official statement or other disclosure documentation
used in connection with the offer or sale of the Bonds, and thus express no opinion concerning the
completeness or accuracy thereof.
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Copies of this opinion letter may be delivered to the Owners of the Bonds, who may rely on this opinion
letter as if it were addressed to them on the date hereof. Subject to the foregoing, this opinion letter may
be relied upon by you only in connection with the issuance of the Bonds and may not be used or relied
; upon by you or any other person for any other purpose whatsoever,without in each instance our prior
written consent. We expressly disclaim any responsibility to advise you or any Owners of any
developments in areas covered by this opinion letter that occur after the date hereof.
espectfully submitted,
GOTTLIEB, FISHER&ANDREWS, PLLC
L.
By
Judith L. Andrews
f:\renton\w&s 04
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1
APPENDIX F
Bond Insurance Policy Specimen
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F-1
FINANCIAL GUARANTY INSURANCE POLICY
MBIA Insurance Corporation
Armonk,New York 10504
PolicyNo.[NUMBER]
MBIA Insurance Corporation(the"Insurer"),in consideration of the payment of the premium and subject to the terms of this policy,hereby
unconditionally and irrevocably guarantees to any owner,as hereinafter defined,of the following described obligations,the full and complete
payment required to be made by or on behalf ofthe Issuer to[PAYING AGENT/TRUSTEE]or its successor(the"Paying Agent")ofan amount
equal to(i)the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment)and
interest on,the Obligations(as that termis defined below)as such payments shall become due but shall not be so paid(except that in the event ofany
acceleration of the due date of such principal by reason ofmandatory or optional redemption or acceleration resulting from default or otherwise,
other than any adv:.mcement ofmaturity pursuant to a mandatory sinking fund payment,the payments guaranteed hereby shall be made in such
amounts and at such times as such payments ofprincipal would have been due had there not been anysuch acceleration);and(i)the reimbursement
of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in
clauses(i)and(ii)of the preceding sentence shall be referred to herein collectively as the"Insured Amounts." "Obligations"shall mean:
[PAR]
[LEGAL NAME OF ISSUE]
Upon receipt of telephonic or telegraphic notice,such notice subsequently confirmed in writing by registered or certified mail,
or upon receipt of written notice by registered or certified mail,by the Insurer from the Paying Agent or any owner of an
Obligation the payment of an Insured Amount for which is then due,that such required payment has not been made,the
Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment,whichever is
later,will make a deposit of funds,in an account with U.S.Bank Trust National Association,in New York,New York,or its
successor,sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of
such Obligations or presentment of such other proof of ownership of the Obligations,together with any appropriate
instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the
Insurer,and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in
any legal proceeding related to payment of Insured Amounts on the Obligations,such instruments being in a form satisfactory
to U.S.Bank Trust National Association,U.S.Bank Trust National Association shall disburse to such owners,or the Paying
Agent payment of the Insured Amounts due on such Obligations,less any amount held by the Paying Agent for the payment
of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Obligation.
As used herein,thc.term"owner"shall mean the registered owner of any Obligation as indicated inthe books maintained by the Paying Agent,the
Issuer,or any designee of the Issuer for such purpose. The tenn owner shall not include the Issuer or any party whose agreement with the Issuer
constitutes the underlying security for the Obligations.
Any service of process on the Insurer maybe made to the Insurer at its offices located at 113 King Street,Armmnk,New York 10504 and such
service of process shall be valid and binding.
This policy is non-cancellable for any reason.The premium on this policy is not refundable for any reason including the paymentprior to maturity
of the Obligations.
IN WITNESS WHEREOF,the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers,this[DAY]
day of[MONTH,YEAR]. .
MBIA Insurance Corporation
. i r
Preside �,
Attest
Assistant Secretary
STD-R-6
4/95
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DISCLOSURE CERTIFICATE
I, VICTORIA A. RUNKLE,hereby certify that:
1. I am the duly appointed, qualified and acting Finance and Information Services •
Administrator of the City of Renton Washington(the"City").
2. This Certificate is made and delivered in connection with the authorization, sale,
issuance and delivery of the $10,335,000 CITY OF RENTON, WASHINGTON, WATER AND
SEWER REVENUE BONDS, 2004 (the"Bonds").
3. To the best of my cnowledge and belief, the representations of the City contained
in that certain Bond Purchase Agi eement pertaining to the Bonds, dated November 1, 2004,
between the City and D.A. Davidon& Co. (the"Underwriter")were true and correct when
made, and remain true and correct as of this date.
4. To the best of my knowledge and belief after due review, the final Official
Statement (the"Official Statement") pertaining to the Bonds, dated November 1, 2004, except
for information concerning MBIA Insurance Corporation, the Underwriter, The Bank of New
York and The Depository Trust Company, as of its date, did not, and as of the date hereof, does
not contain any untrue statement of a material fact or omit any statement or information which is
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading in any material respect.
5. Execution of this Certificate shall constitute execution of the Official Statement
by the City.
IN WITNESS WHEREO , I have hereunto subscribed by official signature as of the 17th
day of November, 2004.
Dia/(; 7 ,?
LA-
VICTORIA
xVICTORIA A. RUNKL'
Finance and Information Services Administrator
City of Renton, Washington
,
f:\renton\water&sewer 04
NOV-17-200/ 09:10 P1111►a r.roc
•
,; :rr!•;' "a'�5: �''F- tiTyr�R"ttrs�:'�a�,:-f. ..
The McGrpw-Hili l:i "'',i a'„t St'" 1.,. F
STANDARD Vincent tr tiveOnaSteven G.Zimmermann
Administrative Officer Managing Director
55 Water Street,38th Floor One Market
n PO c New York,NY 10041-0003 Steuart Tower,95th Floor
te1212 43112074 San Francisco,CA 94105.1000
vincent_orgo@stendardandpoors,corn te1415 371.5004
steve_ammermannestandardandpoors.com
reference no.;40155381
November'16,2004
MBIA Insurance Corporation
113 King Street
Armonk,NY 10504
I—'
Attention: Ms.Lisa A. Wilson, Vice President Manager DAC Group
Re: $10,335,000 City of Renton, Washington, Water and Sewer Revenue Bonds, 2004, dated:
November 1,2004,due:December 1,2013-2015,December 1, 2025-2027, Term Bonds due:
December 1,2024, (POLICY'#45224)
Dear Ms. Wilson:
Standard&Poor's has reviewed ,he rating on the above-referenced obligations. After such
review,we have changed the rating to"AAA" from"AA-". The rating reflects our assessment of
the likelihood of repayment of prncipal and interest based on the bond insurance policy your
company is providing. Therefore,rating adjustments may result from changes in the financial
position of your company or from alterations in the documents governing the issue.
The rating is not investment, fina cial,or other advice and you should not and cannot rely upon
the rating as such. The rating is based on information supplied to us by you but does not represent
an audit. We undertake no duty of due diligence or independent verification of any information.
The assignment of a rating does tt�i of create a fiduciary relationship between us and you or between
us and other recipients of the rating. We have not consented to and will not consent to being
named an "expert"under the applicable securities laws, including without limitation, Section 7 of
the Securities Act of 1933.The rating is not a"market rating"nor is it a recommendation to buy,
hold,or sell the obligations.
This letter constitutes Standard&Poor's permission to you to disseminate the above-assigned
rating to interested parties. Standard&Poor's reserves the right to inform its own clients,
subscribers, and the public of the rating.
Standard&Poor's relies on the issuer and its counsel,accountants,and other experts for the
accuracy and completeness of the information submitted in connection with the rating. This rating
is based on financial information and documents we received prior to the issuance of this letter.
Standard&Poor's assumes that the documents you have provided to us are final. If any
subsequent changes were made in the final documents,you must notify us of such changes by
sending us the revised final docuzaaents with the changes clearly marked.
NOV-17-2004 09:11 rTh1H •��
V
Ms. Lisa A. Wilson
Page 2
November 16,2004
•
Standard &Poor's is pleased to be of service to you. For more information please visit our
website at www.standardandpoors.coln. If we can be of help in any other way,please contact us.
Thank you for choosing Standard&Poor's and we look forward to working with you again.
Sincerely yours,
Standard&Poor's Ratings Servi es
a division of The McGraw-Hill Companies,Inc.
By: Vincent S. Orgo
Administrative Officer
kl
•
f1OV lb U4. Ur: b1p Fred Eoff 1206) 903-8681 p. 2
•
. � 7helYkGrf¢wHiAror»Don1�s:•. ,:�d� . ,.:;:, . , ... ..`;r,> rr;i:', �;�:.;,.. ;,�e;iter° .MIS;yuti6t°'W.2 �W . ... .__ . . . ..
Steven J.Murphy Steven G.Zimmermann
STANDARD A 1 r DARD Managing Director Managing Director
55Water Street,38th Floor One Market
&POOT�S New York,NY 10047-0003 Stuartanancisco,C1 9 4105
1 — 1� tel 212 438-2066 Floor
San Francisco,CA 9d105.1000
stove murphystandardandpoors.com tel 415 371-5004
steve Yimmermann@standardandpoors.com
reference,nn.:589614
•
October 28, 2004
•
City of Renton
1055 South Grady Way
Renton, WA 98055 •
Attention: Ms. Victoria Runkle, Director of•l:inance
Re: (ISS10,705,000 City of Renton, Washington, Water and Sewer Revenue Bonds, Series 2004,
dated: November 1, 2004, clue: December 1, 2013.2015, Term Bonds due: December 1, 2024
& 2028 •
Lear Ms. Runkle:
Pursuant to your request for a Standa d & Poor's rating on the above-referenced obligations, we .
have reviewed the infbrmation submitted to us and, subject to the enclosed Terms and Conditions,
have assigned a rating of"AA-". Standard & Poor's views the outlook for this rating as stable. A
copy of the rationale supporting the rating is enclosed.
The rating is not investment, financial, or other advice and you should not and cannot rely upon
the rating as such. The rating is based on information supplied to us by you or by your agents but
does not represent an audit. We undicrtake no duty of due diligence or independent verification of
any infbrmation. The assignment of a rating does not create a fiduciary relationship between us
and you or between us and other recipients of the rating- We have not consented to and will not
consent to being named an "expert" under the applicable securities laws, including without
limitation, Section 7 of the Securities Act of 1933, The rating is not a"'market rating" nor is it a
recommendation to buy, hold, or sell the obligations.
This letter constitutes Standard & PI or's permission to you to disseminate the above-assigned
rating to interested parties. Standard & Poor's reserves the right to inform its own clients,
. subscribers, and the public of the rating.
Standard & Poor's relies on the issuer/obligor and its counsel, accountants, and other experts lbr
the accuracy and completeness of the information submitted in connection with the rating. This
rating is based on financial information and documents we received prior to the issuance of this
letter. Standard & Poor's assumes that the documents you hive provided to us are final. Ifany
subsequent changes were made in the final documents, you must notify us of such changes by
sending us ttie revised final documents with the changes clearly marked.
To maintain the rating, Standard I Poor's must receive all relevant financial information as soon
as such information is available- Placing us on a distribution list for this information would
nov to u, u,: a1p rrea Koff [EUbJ SU3-8681 p. 3
•
Ms. Victoria Runkle
Page 2 •
October 28,2004 •
lacilitatc the process. You must promptly notify us of all material changes in the financial
information and the documents. Standard & Poor's may change, suspend, withdraw, or place on
CreditWatch the rating as a result of changes in, or unavailability of, such information. Standard
& Poor's reserves the right to request additional information if necessary to maintain the rating.
Please send all information 1.o: •
Standard & Poor's Ratings Services
Public Finance Department
55 Water Street
New York, NY 10041-0003
Standard & Poor's is pleased to be ol'servicc to you. For more information on Standard & Poor's,
please visit our website at www.stundardandpoors_com. If we can be of help in any other way,
please call or contact us at nypuhlicfinattce@stanclardtandpoors.com. 'Thank you for choosing
Standard & Poor's and we look forward to working with you again.
Sincerely yours,
Standard & Poor's Ratings Services
a division of The McCraw-HiI1 Companies, Inc_
By: Steven J. Murpliy/
Managing Director
and
enclosures
cc: Mr. Fred R_ Eofl; Senior Vice PresidenUManaging Director
D. A. Davidson Co,
•
•
I _
NOU-17-2004 09:11 . MIR I • "-'
•
•
•itcRatings
•
•
1201 East 7th Street T 307 754 2012 1 800 853 4824
Powen,WY 82435 www.fitchratings.com
• Ms. Lisa Wilson
• MBIA Insurance Corp.
113 King Street
• Armonk,NY 10504
November 16,2004
• Dear Ms, Wilson: •
Re: City OfRentori,Washington
$10,335,000
Water and Sewer Revenue Bonds,2004
(45224)
Fitch Ratings has assigned a rating of'AAA'to the above referenced Bonds.This reflects credit
enhancement in the form of al band insurance policy provided by MBIA Insurance Corp.(MBIA),
which has an insurer financial strength rating of'AAA', Fitch Ratings defines companies with •
`AAA' insurer financial strength ratings as follows: "Companies are viewed as possessing
exceptionally strong capacityl to meet policyholder and contract obligations. Risk factors are
minimal and the impact of any adverse business and economic factors is expected to be extremely
small."
•
Ratings assigned by Fitch Ratings are based on information provided to us by MBIA. Fitch
Ratings does not audit or verify the truth or accuracy of such information. Ratings are not a
recommendation to buy,sell,or hold any security. Ratings do not comment on the adequacy of
market price,the suitability of any security for a particular investor,or the tax-exempt nature or
taxability of payment made in respect of any security.The insurer financial strength rating
assigned to MBIA may be changed, withdrawn, suspended,or placed on RalingWatch as a result
of changes in MBIA's financial condition.The assignment of a rating by Fitch shall not constitute
a consent by Fitch to use its name as an expert in connection with any registration statement or
other filing under U.S.,UK or any other relevant securities laws.
•
Sincerely,
I ,
Dey L an Stebner
Manager/Insured Ratings
•
•
TOTAL P.04
11011311A •
1
COMMITMENT TO ISSUE A
FINANCIAL GUARANTY INSURANCE POLICY
Application.No.: 2004-009103-001
Sale Date: November 1, 2004
Program Type: Negotiated DP
Re: $10,335,000 City of Renton Washington, Water and Sewer Revenue Bonds, 2004
(the "Obligations")
This commitment to issue a financial guaranty insurance policy (the "Commitment") dated
November 1, 2004, constitutes an agreement between CITY OF RENTON (the "Applicant") and
MBIA Insurance Corporation (the "Insurer"), a stock insurance company incorporated under the
laws of the State of New York. .
Based on an approved application dated October 26, 2004, the Insurer agrees, upon
satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date
or (ii) do the date of delivery of atnd payment for the Obligations, a financial guaranty insurance
policy (the "Policy") for the Obligations, insuring the payment of principal of and interest on the
Obligations when due. The issuance of the Policy shall be subject to the following terms and
conditions:
1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of
delivery of and payment for the Obligations, of a nonrefundable premium in the amount of
$50,000 [.2450%(premium rate) of$20,315,687.50 (Total Debt Service) premium rounded to the
nearest thousand]. The premium set out in this paragraph shallbe the total premium required to
be paid on the Policy issued pursuant to this Commitment.
2. The Obligations shall have received the unqualified opinion of bond counsel with
respect to the tax-exempt status of interest on the Obligations.
3. There shall have been no material adverse change in the Obligations or the Resolution,
Bond Ordinance, Trust Indentur I or other official document authorizing the issuance of the
Obligations or in the final official statement or other similar document, including the financial
statements included therein.
4. There shall have been no material adverse change in any information submitted to the
Insurer as a part of the application;or subsequently submitted to be a part of the application to the
Insurer.
5. No event shall have occurred which would allow any underwriter or any other
purchaser of the Obligations not to be required to purchase the Obligations at closing.
6. A Statement of Insurance satisfactory to the Insurer shall be printed on the Obligations.
7. , Prior to the delivery of and payment for the Obligations, none of the information or
documents submitted as a part of the application to the Insurer shall be determined to contain any
untrue or misleading statement of a material fact or fail to state a material fact required to be
stated therein or necessary in order to make the statements contained therein not misleading.
8. No material adverse cha nge affecting any.security for the Obligations shall have
occurred prior to the delivery of and payment for the Obligations.
10. The Applicant agrees not to use the Insurer's name in any public document including,
without limitation, a press release or presentation, announcement or forum without the Insurer's
prior consent. In the event that the Applicant is advised by counsel that it has a legal obligation
to disclose the Insurer's name in any press release, public announcement or other public
document, the Applicant shall provide the Insurer with at least three (3) business days' prior
written notice of its intent to use the Insurer's name together with a copy of the proposed use of
the Insurer's name and of any description of a transaction with the.Insurer and shall obtain the
Insurer's prior consent as to the form and substance of the proposed use of the Insurer's name and
any such description.
11. This Commitment may be signed in counterpart by the parties hereto.
12. Compliance with the Insurer's General Document Provisions (see attached).
Dated this 1st day of November, 2004.
MBIA Ins pore • n
By ,"
Assistant Secretary
•
CITY OF RENTON
By:
D1,„vVAitipfAtia.01,
Title: S 4 Pi Ali Siii -197-0P
1 -
•
ARENA
I '
•
GENERAL DOCUMENT PROVISIONS
A. Notice to the Insurer The basic legal documents must provide that any notices required to be
given by any party should also be given to the Insurer,Attn: Insured Portfolio Management.
B. Amendments. In the basic legal document, there are usually two methods of amendment. The
first,which typically does?ot require the consent of the bondholders, is for amendments which
will cure ambiguities,correct formal defects or add to the security of the financing. The
second, in which bondholder consent is a prerequisite,covers the more substantive types of
amendments. For all financings,the Insurer must be given notice of any amendments that are
of the first type and the Insurer's consent must be required for all amendments of the second
type. All documents must contain a provision which requires copies of any amendments to
such documents which are consented to by the Insurer to be sent to Standard&Poor's.
C. Supplemental Legal Document. If the basic legal document provides for a supplemental legal
document to be issued for ieasons other than (1) a refunding to obtain savings; or(2)the
issuance of additional bonds pursuant to an additional bonds test,there must be a requirement
that the Insurer's consent also be obtained prior to the issuance of any additional bonds and/or
execution of such supplem ntal legal document.
D. Events of Default and Remedies. All documents normally contain provisions which define the
events of default and which prescribe the remedies that may be exercised upon the occurrence
of an event of default. At a minimum, events of default will be defined as follows:
1. the issuer/obligor fails to pay principal when due;
2. the issuer/obligor fails to pay interest when due;
3. the issuer/obligor fails to observe any other covenant or condition of the document and
such failure continues for 30 days and
4. the issuer/obligor declares bankruptcy.
The Insurer, acting alone, shall hive the right to direct all remedies in the event of a default. The
Insurer shall be recognized asthe registered owner of each bond which it insures for the purposes of
exercising all rights and privileges available to bondholders. For bonds which it insures, the Insurer
shall have the right to institute any suit,action, or proceeding at law or in equity under the same terms
as a bondholder in accordance with applicable provisions of the governing documents. Other than the
usual redemption provisions,any acceleration of principal payments must be subject to the Insurer's
prior written consent.
E. Defeasance requires the deposit of:
1. Cash
2. U.S. Treasury Certificates,Notes and Bonds (including State and Local Government
Series --" SLGs")
3. Direct obligations of the Treasury which have been stripped by the Treasury itself,
CATS,TIGRS and similar securities
I
4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips
which have been stripped by request to the Federal Reserve Bank of New York in book
entry form are acceptable.
. I .
MBIA
5. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however,
the issue is only rated by S&P(i.e., there is no Moody's rating), then the pre-refunded
bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations,
or AAA rated pre-refunded municipals to satisfy this condition.
6. Obligations issued 11)3,the following agencies which are backed by the full faith and credit
of the U.S.
a. U.S.Export-Import Bank(Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
b. Farmers Home Administration(FmHA)
Certificates of l eneficial ownership
c. Federal Financing Bank
•
d. General Services Administration
• Participation certificates
e. U.S.Maritime Administration
Guaranteed Tit'e XI financing
f. U.S.Department of Housing and Urban Development(HUD)
Project Notes
•
Local Authority Bonds
New Communities Debentures -U.S. government guaranteed debentures •
U.S. Public Housing Notes and Bonds -U.S. government guaranteed public housing
notes and boncis
The Insurer shall be provided with an opinion of counsel acceptable to the Insurer that the Obligations
have been legally defeased and that the escrow agreement establishing such defeasance operates to
legally defease the Obligations within the meaning of the Indenture and the Supplemental Indenture
relating to the Obligations. In addition,the Insurer will be entitled to receive (i) 15 business days
notice of any advance refunding of the Obligations and(ii) an accountant's report with respect to the
sufficiency of the amounts deposited in escrow to defease the Obligations.
F.Agents:
1. In transactions where there is an agent/enhancer(other than the Insurer),the trustee,
tender agent(if anj), and paying agent(if any)must be commercial banks with trust
powers.
2. The remarketing agent must have trust powers if they are responsible for holding moneys
or receiving bonds!. As an alternative, the documents may provide that if the remarketing
agent is removed,resigns or is unable to perform its duties,the trustee must assume the
responsibilities of I emarketing agent until a substitute acceptable to the Insurer is
appointed.
PARITY CERTIFICATE
CERTIFICATE OF FINANCE DIRECTOR AS TO COMPLIANCE
WITH PARITY CONDITIONS OF ORDINANCE NOS. 4709, 4976 AND 5019
I, VICTORIA A. RUNKLE, hereby certify that:
1.: I am the duly appointed, qualified and acting Finance and Information Services
Administrator of the City of Rei ton, Washington(the"City"). •
2. This Certificate is made and delivered in connection with the authorization, sale,
issuance and delivery of the$10,335,000 CITY OF RENTON, WASHINGTON, WATER AND
SEWER REVENUE BONDS,2004(the"Bonds"). Capitalized terms used but not defined
herein shall have the meanings set forth in Ordinance No. 5098 (the"Bond Ordinance")-of the
City.
3. This Certificate Is made pursuant to the Future Parity Bonds provisions of
I (a) Section SII of Ordinance No. 4709 of the City in order to issue the Bonds on a parity of
lien with the City's Water and Sewer Revenue Refunding Bonds, 1998, issued pursuant to
Ordinance No. 4709; (b) Section 22 of Ordinance No. 4976 of the City in order to issue the
Bonds on a parity of lien with the City's Water and Sewer Revenue Bonds,2002, issued pursuant
to Ordinance No. 4976; and(c) Section 20 of Ordinance No. 5019 of the City in order to issue
the Bonds on a parity of lien With the City's Water and Sewer Revenue Refunding Bonds,2003,
issued pursuant to Ordinance No. 5019.
•
4. I have reviewed account balances as of November 1,2004, and there is no
deficiency in any Parity Bond Fund or any of the accounts therein.
5. The historical Net Revenues of the Waterworks Utility for the twelve months
ended December 31,2003, and the resulting coverage of debt service are as follows:
(a) Historical Net Revenues, for the twelve-month
period ended December 31,2003 $11,915,358
(b) Maximum Annual Debt Service required to be paid
in any future Fiscal Year on all outstanding Parity Bonds
and the Bonds I
$3,114,332
(c) Coverage ratio,'a/b= 3.83x
•
f:\rentanlweter&sewer 04 1
•
300/LOO2 33NVNI3 AII3 9989 OEb 9Z17 XVJ 1700Z/9L/LL
_ I
I
• 6_ On the basis of the covenants and definitions contained in the Ordinance
No. 4709, Ordinance No. 4976 and Ordinance No. 5019 pertaining to the issuance of Future
• Parity Bonds, and my review ofithe financial statementsof the Waterworks Utility covering the
operations of the Waterworks Utility for the twelve months ended December 31, 2003, I certify
that Net Revenue,without regard to deposits into or withdrawals from the Rate Stabilization
Fund, is equal to at least the Coverage Requirement for all Parity Bonds plus the Future Parity
Bonds proposed to be issued.
IN WITNESS WHEREOF, I have hereunto subscribed my official signature this 17th day
of November,2004.
(2-)f
VICTORIA A.R E
Finance and Information Services Administrator
City of Renton, Washington
•
•
•
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fllrenton\water&sewer 04 2
Z00/Z00! 1 0NVNIJ H0INRI J0 AlIO 9988 00 9Z9 KVJ Z9:81 1900Z/8l/ll
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i
SIGNATURE IDENTIFICATION,INCUMBENCY
AND NO LITIGATION CERTIFICATE
I, BONNIE WALTON, hereby certify that:
1. I am the duly appointed, qualified and acting City Clerk of the City of Renton,
Washington(the"City").
2. This Certificate i made and delivered in connection with the authorization, sale,
issuance and delivery of the $10,335,000 CITY OF RENTON, WASHINGTON, WATER AND
SEWER REVENUE BONDS, 2004 (the "Bonds").
3. Pursuant to Ordinance No. 5098 of the City(the"Bond Ordinance"), authorizing
the issuance and sale of the Bonds, each of the Bonds was duly executed on behalf of the City
with the manual signature of KATHY KEOLKER-WHEELER, the Mayor of the City; and with
my manual signature, in my capacity as City Clerk. Each of such officers was, on the date of
execution of the Bonds, the duly elected or appointed, qualified and acting officer of the City and
such signatures are their genuine 6ignatures.
4. The seal of the City appearing on the Bonds is the legally adopted,proper and
official seal of the City.
5. The following Cityi Council members were incumbent on November 1, 2004, the
date on which the City Council adopted the Bond Ordinance, and they remain incumbent in such
positions on this date:
Donald Persson
Tern Briere
Dan Clawson
Randall Corman
Denis Law
Toni Nelson
Marcie Palmer
6. No litigation or other proceedings are pending or, to the best of my knowledge,
threatened in any court or other tribunal of competent jurisdiction, state or federal, in any way:
(a) Restraining or enjoining the sale or delivery by the City of the Bonds;
(b) Questioning lin any manner the authority of the City to issue, or the
issuance or validity of the Bonds;
(c) Questioning Ifile constitutionality of any statute, ordinance or resolution, or
the validity of any proceedings, authorizing the issuance of the Bonds;
f:\renton\water&sewer 04 1
(d) Questioning the validity or enforceability of the Bond Ordinance;
(e) Contesting in any way the completeness, accuracy or fairness of the
Official Statement (the "Official Statement")pertaining to the Bonds, dated November 1,
2004;
•
(f) Questioning the titles of any officers of the City under the laws of the State
of Washington; or
(g) Which might in any material respect adversely affect the transactions
contemplated herein and i!n the Official Statement to be undertaken by the City or the
financial condition of the City.
IN WITNESS WHEREOF, I have hereunto subscribed by official signature as of the 17th
day of November, 2004.
)6471.424,1
GIJCz�
BONNIE WALTON
City Clerk
- City of Renton, Washington
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f:\renton\water&sewer 04 2
CERTIFICATE RE AUTHENTICATION AND
REGISTRATION OF BONDS
THE BANK OF NEW YORK,New York,New York, hereby certifies as follows:
1. As one of the fiscal agents for the State of Washington in accordance with the
terms and conditions of that certain Fiscal Agency Contract(the"Fiscal Agency Contract")
effective as of February 1, 2002, ly and among The Bank of New York and the State of
Washington, we have duly and properly authenticated and registered the CITY OF RENTON,
WASHINGTON, WATER AND SEWER REVENUE BONDS, 2004 (the "Bonds"), aggregating
$10,335,000 in the principal amount, pursuant to the instructions given to us by D.A. Davidson
& Co., as the purchaser thereof.
2. The persons whose signatures appear on the Certificate of Authentication on the
authenticated Bonds are duly autl'orized signatories of The Bank of New York.
1
3. All of said Bonds authenticated by the said authorized signatories bore, in the
spaces appropriate for the insertion of such information, the name of the registered owner, the
principal amount, the interest rate; the maturity date, the Bond number and the CUSIP number
thereof.
4. We shall be liable for the performance of our duties and obligations as specifically
set forth in the Fiscal Agency Contract. We shall act in good faith, and no implied duties or
obligations shall be incurred by us other than those specified in the Fiscal Agency Contract.
DATED at New York,New York as of the 17th day of November, 2004.
THE BANK OF NEW YORK
By ._v1•' ..c.:....- _- -_Name: EDWARD� > 'i L
Title: ASSISTANT TREASUHhtl
£\renton\water&sewer 04
SPECIMEN
•
REGISTERED REGISTERED
NO. 1 $205,000
UNITED STATES OF AMERICA
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
•
Interest Rate: Maturity Date: CUSIP NO:
3.55% December 1, 2013 760167 SJ6
Principal Amount: TWO HUNDRED FIVE THOUSAND AND NO/100 DOLLARS
Owner: CEDE & CO.
The City of Renton, Washington(the"City"), for value received,promises to pay to the
Owner hereof the Principal Amount set forth above, on the Maturity Date set forth above; and to
pay interest thereon(computed on the basis of a 360-day year of twelve 30-day months) at the
Interest Rate per annum set forth above from the date hereof or from the most recent interest
payment date to which interests has been paid or duly provided for,payable on December 1,
2004, and on June 1 and December 1 of each year thereafter to the maturity hereof. If this Bond
is duly presented for payment and not paid at maturity as described herein,then interest shall
continue to accrue at the Interest Rate per annum set forth above until this Bond,both principal
and interest, is paid in full.
•
Capitalized words and phrases used but not defined herein shall have the meanings set
forth in Ordinance No. 5098 of the City(the"Bond Ordinance"),unless otherwise noted.
Both the principal of and interest on this Bond shall be payable in lawful money of the
United States of America. Prior to the Book-Entry Termination Date, the principal of and
interest on the Bonds shall be paid by the Bond Registrar to the Custodian as the Owner thereof,
for the benefit of the Beneficial Owner thereof, in accordance with the Letter of Representations.
From and after the Book-Entry Termination Date,principal of this Bond shall be payable upon
presentation and surrender of this Bond by the Owner hereof upon maturity at the principal
corporate trust office of either'of the fiscal agencies of the State in Seattle, Washington, or New
York,New York(collectively, the"Bond Registrar"). From and after the Book-Entry
Termination Date, interest on the Bonds shall be paid by check or draft mailed on or before the
interest payment date, to the persons identified as the Owners on the fifteenth day of the month
preceding the interest payment date at the addresses shown for the Owners on the registration
books for the Bonds maintained by the Bond Registrar(the"Bond Register"), or, if requested in
writing by an Owner of$100,000 or more in principal amount of Bonds at least ten days before
an interest payment date, by wire transfer on the interest payment date to an account within the
United States.
1
' SPEC EN
• This Bond is not a general obligation of the City,but is a special fund revenue obligation
of the City. The principal hereof and the interest hereon are payable solely out of the"2004
Waterworks Revenue Bond Fund" (the"Bond Fund") created pursuant to the Bond Ordinance,
and the Waterworks Revenue Bond Reserve Fund(the"Reserve Fund") created pursuant to
Ordinance No. 4709 of the City. Pursuant to the Bond Ordinance, the City has pledged and
bound itself to set aside and pay into the Bond Fund out of Net Revenue a fixed amount without
regard to any fixed proportion, namely, one day before each interest or principal and interest
payment date, an amount which, together with other money then on deposit therein, sufficient to
meet the debt service on the Bonds required on the next interest or principal and interest payment
date and to maintain an amount of money and assets in the Reserve Fund at the level required by
the Bond Ordinance, all within the times provided by the Bond Ordinance. The City has pledged
the Net Revenue to the payments to be made on the Parity Bonds as set forth in the Bond
•
Ordinance, and the Parity Bonds shall constitute a lien and charge upon such Net Revenue prior
and superior to any other charges whatsoever, except that the lien and charge on such revenue for
the Bonds shall be on a parity with the lien and charge thereon for the Parity Bonds (as defined
in the Bond Ordinance). The Owner of this Bond shall not have any claim for payment of the
principal hereof or the interest hereon against the City except for payment from the Bond Fund
and the amount of Net Revenue pledged thereto, nor shall the Owner of this Bond have any
claim against the State arising from this Bond.
•
This Bond is one of a duly authorized series of bonds of the City designated as the CITY
OF RENTON, WASHINGTON, WATER AND SEWER REVENUE BONDS, 2004 (the
`Bonds"). The Bonds are issued in the aggregate principal amount of$10,335,000 pursuant to
the Bond Ordinance and the laws of the State for the purpose of providing a part of the funds
necessary to carry out the system or plan for additions to and betterments and extensions Of the
Waterworks Utility, to make a deposit to the Reserve Fund, and to pay the costs related to the
sale and issuance of the Bonds, all as specified in the Bond Ordinance.
. The Bonds maturing on December 1, 2024 are term bonds (the "Term Bonds") and, if not
previously purchased by the City in the open market or optionally redeemed as set forth below,
are subject to mandatory sinking fund redemption prior to maturity, in part and by lot (in such
manner as the Bond Registrarshall determine), at par plus accrued interest to the redemption
date on December 1 in the following years and in the following mandatory sinking fund
redemption amounts: •
•
•
•
•
2
SPEC l.f EN
•
Term Bonds Due
•
December 1, 2024
Mandatory Sinking Fund
Redemption Dates Redemption
(December 1) Amount
2016 $ 260,000
2017 270,000
2018 130,000
2019 185,000
2020 245,000
2021 265,000.
2022 280,000
2023 1,450,000
2024* 1,520,000
*Scheduled maturity
The Bonds maturing on December 1 in the years 2013 and 2014, inclusive, are not
subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2015 are
subject to optional redemption prior to maturity beginning on December 1, 2014,in whole or in
part at any time (maturities to be selected by the City and by lot within a maturity in such manner
as the Bond Registrar shall determine), at par plus accrued interest to the date of redemption. If
the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market,the
par amount of the Term Bonds so redeemed or purchased(irrespective of their actual redemption
or purchase prices) shall be credited against one or more scheduled mandatory redemption
amounts for such Term Bonds (as allocated by the City)beginning not earlier than 60 days after
the date of the optional redemption or purchase, and the City shall promptly notify the Bond
Registrar in writing of the mariner in which the credit for the Term Bonds so redeemed or
purchased has been allocated.
Any Bond in the principal amount of greater than$5,000 may be partially redeemed in
any integral multiple of$5,000. Prior to the Book-Entry Termination Date,the Bonds shall be
partially redeemed in accordance with the Letter of Representations. From and after the Book-
Entry Termination Date, in the event of a partial redemption of a Bond, upon surrender of such
Bond at the principal corporate trust office of the Bond Registrar, a new Bond or Bonds (at the
option of the Owner) of the same maturity and interest rate and in the aggregate principal amount •
remaining unredeemed shall be authenticated and delivered to the Owner, without charge to the
Owner for such partial redemption, in any denomination authorized by the Bond Ordinance and
selected by the Owner.
Prior to the Book-Entry Termination Date, the Bond Registrar shall give, or cause to be
given, notice of a call for redemption of any Bonds to the Custodian, as the Owner thereof, for
the benefit of the Beneficial Owners thereof, in accordance with the Letter of Representations.
From and after the Book-Entry Termination Date,notice of any such intended redemption shall
be given by or on behalf of the City not less than 30 nor more than 60 days prior to the date fixed
for redemption by first-class mail,postage prepaid, to the Owner of any Bond to be redeemed at
3
•
SPECIMEN
the address appearing on the Bond Register on the day the notice is mailed. The requirements of
the Bond Ordinance shall be deemed to be complied with when notice is mailed as therein
provided, whether or not it is actually received by the Owner of any Bond. If such notice has
been given and the City has set aside sufficient money for the payment of all Bonds called for •
redemption on the date fixed for redemption,the Bonds so called shall cease to accrue interest
after such redemption date, and all such Bonds shall be deemed to be no longer outstanding
under the Bond Ordinance for any purpose, except that the Owners of such Bonds shall be
entitled to receive payment of the redemption price and interest accrued on•the principal of the
Bonds to the redemption date from the money set aside for such purpose.
This Bond may be transferred by the Owner hereof or by such Owner's authorized agent
but only in the manner and subject to the limitations set forth in the Bond Ordinance. Prior to the
. Book-Entry Termination Date;the beneficial ownership of the Bonds may only be transferred on
the records established and maintained by the Custodian. On and after the Book-Entry •
Termination Date, transfer of this Bond shall be valid only if it is surrendered at the principal
corporate trust office of either Bond Registrar,with the assignment form appearing on such Bond
duly executed by, or accompanied by a written instrument of transfer in form satisfactory to such
Bond Registrar duly executed by, the Owner or such Owner's duly authorized agent, in a manner
satisfactory to such Bond Regiistrar. Upon such surrender, the Bond Registrar shall cancel the
surrendered Bond and shall authenticate and deliver,without charge to the Owner or transferee
therefor (other than any govenmiental fees or taxes payable on account of such transfer), a new
Bond or Bonds (at the option of the new Owner), naming as Owner the person or persons listed
as the assignee on the assignment form appearing on the surrendered Bond, of the same maturity
and interest rate, for the same aggregate principal amount, and in any authorized denomination
selected by the new Owners, in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged,without charge, for an •
equal aggregate principal amount of Bonds of the same maturity and interest rate,in any
authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bonds are subject to defeasance, in whole or in part, in the manner provided in the
Bond Ordinance. If the Bondare defeased,then all right and interest of the Owners of the
defeased Bonds in the covenants of the Bond Ordinance, in Gross Revenue and in funds and
accounts obligated to the payment of the defeased Bonds, other than the right to receive the •
funds so set aside and pledged to the defeasance of the defeased Bonds (the"Trust Account"),
shall cease and become void. If this Bond is defeased the Owner hereof shall have the right to
receive payment of the principal'of and interest hereon from the Trust Account and, if the funds
in the Trust Account are not available for such payment, shall have the residual right,to receive
payment of the principal of and interest on the defeased Bonds from Gross Revenue without any
priority of lien or charge against such revenue or covenants with respect thereto except to be paid
therefrom.
•
•
4
SPECIMEN
The City and the Bond Registrar may deem and treat the Owner hereof as the absolute
owner hereof for all purposes and neither the City nor the Bond Registrar shall be affected by
any notice to the contrary.
Reference is made to the Bond Ordinance for other covenants and declarations of the City
and other terms and conditions upon which this Bond has been issued,which terms and
conditions are made a part hereof by this reference. The City unconditionally covenants that it
will keep and perform all of the covenants of this Bond and the Bond Ordinance.
Unless this certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation("DTC"), to the Bond Registrar for registration of
transfer, exchange or payment,and any certificate issued is registered in the name of Cede & Co.
or in such other name as is requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered Owner
hereof, Cede & Co., has an interest herein.
It is certified that all acts, conditions and things required by the Constitution and statutes
of the State to have happened, been done and performed precedent to and in the issuance of this
Bond have happened,been done and performed, and that the issuance of this Bond does not
violate any constitutional, statutory or other limitation upon the amount of indebtedness that the
City may incur. •
This Bond shall not be valid or become obligatory for any purpose unless and until the
certificate of authentication hereon shall have been manually signed by an authorized signatory
of the Bond Registrar. •
5
• SPECIMEN
IN WITNESS WHEREOF, the City has caused this Bond to be executed on behalf of the
City by the manual signatures of the Mayor and City Clerk, and the City seal to be impressed
hereon, as of the 1st day of November,2004.
CERTIFICATE OF AUTHENTICATION •
CITY OF RENTON, WASHINGTON
DATE OF AUTHENTICATION: •
NOV 1-7 200 ,.', 1
Ma .1
This Bond is one of the City of Renton,
• Washington, Water and Sewer Revenue r '�" �•� 99
Bonds, 2004, described By {r i c`%`y o . l.(Ja
in the Bond Ordinance. City`lerk
WASHINGTON STATE FISCAL AGENCY,
Bond Registrar [SEAL]
•
••••••• -
B L, I
Autho ; . SignatoryccIto <
•c
11 •
•
•
•
•
6
•
• SPEC MEN
STATEMENT OF INSURANCE
•
MBIA Insurance Corporation(the"Insurer")has issued a policy containing the
following provisions, such policy being on file at The Bank of New York,New York,New
York.
I .
The Insurer, in consideration of the payment.of the premium and subject to the
terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as
hereinafter defined, of the following described obligations,.the full and complete payment
required to.be made by or on behalf of the Issuer to The Bank of New York,New York,
New York or its successor(the"Paying Agent") of an amount equal to (i)the principal of
(either at the stated maturity or by any advancement of maturity pursuant to a mandatory
sinking fund payment) and interest on,the Obligations (as that term is defined below) as
such payments shall become chiles but shall not be so paid(except that in the event of any
acceleration of the due date of such principal by reason of mandatory or optional
redemption or acceleration resulting from default or otherwise, other than any
advancement of maturity pursuant to a mandatory sinking fund payment, the payments
guaranteed hereby shall be made in such amounts and at such times as such payments of
principal would have been due had there not been any such acceleration); and(ii) the
reimbursement of any such payment which is subsequently recovered from any owner
pursuant to a final judgment by a court of competent jurisdiction that such payment •
constitutes an avoidable preference to such owner within the meaning of any applicable
bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence
shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall
mean:
$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written notice by
registered or certified mail,by the Insurer from the Paying Agent or any owner of an
Obligation the payment of an Insured Amount for which is then due, that such required
payment has not been made,the Insurer on the due date of such payment or within one
business day after receipt of notice of such nonpayment,whichever is later,will make a
deposit'of funds, in an account with U.S. Bank Trust National Association, in New York,
New York, or its successor, sufficient for the payment of any such Insured Amounts which
are then due. Upon presentment and surrender of such Obligations or presentment of such
other proof of ownership of the Obligations, together with any appropriate instruments of
I
assignment to evidence the assignment of the Insured Amounts due on the Obligations as
are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer
as agent for such owners of the Obligations in any legal proceeding related to payment of
Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S.
Bank Trust National Association,U.S. Bank Trust National Association shall disburse to
7
SPECIMEN
such owners or the Paying Agent payment of the Insured Amounts due on such
Obligations, less any amount held by the Paying Agent for the payment of such Insured
Amounts and legally available therefor. This policy does not insure against loss of any
prepayment premium which may at any time be payable with respect to any Obligation.
As used herein, the tenn"owner" shall mean the registered owner of any
Obligation as indicated in the Uooks maintained by the Paying Agent, the Issuer, or any
designee of the Issuer for such purpose. The term owner shall not include the Issuer or any
party whose agreement with the Issuer constitutes the underlying security for the
Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices
located at 113 King Street, Armonk,New York 10504 and such service of process shall be
valid and binding.
This policy is non-cancellable for any reason. The premium on this policy is not
refundable for any reason including the payment prior to maturity of the Obligations.
MBIA INSURANCE CORPORATION
•
•
8 -
SPECIMEN
ASSIGNMENT •
For value received, the undersigned Owner does sell, assign and transfer unto:
i
(name,address and social security or other identifying number of assignee)
the within-mentioned Bond and hereby irrevocably constitutes and appoints
to transfer the same on the registration books of the Bond Registrar with full power of
substitution in the premises.
Dated:
I ,
Owner
(NOTE: The signature above must correspond with the name of the Owner as it appears on the
front of this Bond in every particular,without alteration or enlargement or any change
whatsoever.)
Signature Guaranteed:
(NOTE: Signature must be guaranteed by an eligible guarantor.)
f:\rtienton\w&s 04
9
I ;
•
•
GOTTLIEB, FISHER Ce ANDREWS, PLLC
SPECIMEN
ATTORNEYS AT LAW
November 17, 2004
City of Renton, Washington
Renton, Washington 98055
Ladies and Gentlemen:
We have acted as bond counsel to the City of Renton, Washington (the "City"), in
connection with the issuance by the City of the bonds described below (the "Bonds"):
$10,335,000
CITY OF RENTON, WASHINGTON
WATERAND SEWER REVENUE BONDS, 2004
Dated: November 1, 2004
The Bonds are issued pursuant to Ordinance No. 5098 of the City(the "Bond
Ordinance") and other proceedings duly had and taken in conformity therewith. The Bonds are
issued for the purpose of providing a part of the funds necessary to carry out the system or plan
for additions to and betterments and extensions of the Waterworks Utility, to make a deposit to
the Reserve Fund, and to pay the costs related to the sale and issuance of the Bonds, all as
specified in the Bond Ordinance.
The Bonds are issued as fully registered bonds in the denomination of$5,000 each or in
any integral multiple thereof within a single maturity. The Bonds bear interest (computed on the
basis of a 360-day year of twelve 30-day months) from their date or from the most recent interest
payment date to which interest!has been paid or duly provided for, whichever is later, payable on
December 1, 2004, and semiannually thereafter on December 1 and June 1 of each year to the
maturity thereof. The Bonds bear interest at the rates and shall mature on December 1 of each of
the years and in the principal amounts set forth below:
Maturity Years Interest
(December 1) Amounts Rates
2013 $ 205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
•
2024* 4,605,000 5.00
2025 1,600,000 5.00
2026 1,680,000 5.00
2027 1,760,000 5.00
*Tenn Bonds
_ 520 Pike Street,Suite 2510 Seattle,WA 98101-4006
(206)654-1999 Phone (206)654-8725 Fax
City of Renton, Washington
November 17, 2004
Page 2PCIS
•
The Bonds are subject to redemption prior to maturity at the times and in the manner
described in the Bond Ordinance. The City has reserved the right to purchase any or all of the
Bonds in the open market at any time and at any price.
In rendering this opinion letter,we have examined the"following: (i) the Bond
Ordinance; (ii) a copy of one executed and authenticated Bond(we assume that all other Bonds
are in the same form and have been similarly executed and authenticated); and (iii) the certified
proceedings of the City and other certificates of public officials and representatives of the City
that have been furnished to us and which comprise the transcript of proceedings pertaining to the
issuance of the Bonds (the "Transcript")!
As to questions of fact material to the opinions expressed herein, we have relied upon the
certified proceedings of the City and other certificates of public officials and representatives of
the City that have been furnished to us as part of the Transcript, all without undertaking to verify
the same by independent investigation.
Based only upon the foregoing and our examination of such questions of law as we have
deemed necessary or appropriate for the purpose of this opinion letter, and subject to the
limitations and qualifications expressed below, we are of the opinion that, as of this date:
1. . The Bonds are lawfully authorized and issued pursuant to and in full compliance
with the Constitution and statutes of the State of Washington,the Bond Ordinance and
Ordinance No. 4709 of the City.
2. The Net Revenue (as defined in the Bond Ordinance)hereafter collected has been
pledged to the payments to be Made into the"2004 Waterworks Revenue Bond Fund" (the
"Bond Fund") as set forth in the Bond Ordinance, and the Bonds constitute a lien and charge on
Net Revenue prior and superior to any other charges whatsoever, except that the lien and charge
on such Net Revenue for the Bonds shall be on a parity with the lien and charge thereon for other
Parity Bonds (defined in the Bond Ordinance).
3. The Bonds are legal, valid and binding special fund revenue obligations of the
City, payable solely out of the Bond Fund, enforceable against the City in accordance with their
terms, subject to the limitations as to enforceability of laws relating to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights, and also to the
exercise of judicial discretion in accordance with general principles of equity. The Bonds are not
general obligations of the City.
4. The Bonds are not"private activity bonds," as defined in the Internal Revenue
Code of 1986, as amended (the "Code").
5. Assuming compliance by the City with applicable requirements of the Code that
must be met subsequent to the issuance of the Bonds, the interest on the Bonds is excludable
from gross income for federal income tax purposes under existing federal law, and is not an item
of tax preference for purposes of determining the federal alternative minimum tax imposed on
City of Renton, Washington •
November 17, 2004 :•. y- i,
Page 3 ,sL O
individuals and corporations under existing federal law. However, under existing federal law,
interest on the Bonds is taken into account in determining adjusted current earnings for the
purpose of computing the alternative minimum tax imposed on certain corporations.
Except as stated in the preceding paragraphs 4 and 5,we express no opinion as to any
federal or state tax consequences of the ownership or disposition of the Bonds.
The Code contains certaiin requirements that must be satisfied subsequent to the issuance
of the Bonds in order to maintain the exclusion of interest on the Bonds from gross income for
federal income tax purposes, including requirements relating to application of the proceeds of the
Bonds, use of facilities financed jwith such proceeds, limitations on income derived from the
investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to
the United States Treasury of certain investment earnings on such gross proceeds. The City has
covenanted to comply with these requirements to the extent applicable, and the opinions
expressed in paragraphs 4 and 5 'assume such compliance. However, we have not undertaken
and do not undertake to monitor compliance by the City with such requirements; and if the City
should fail to comply with such requirements, interest on the Bonds could become includable in
gross income for federal income'tax purposes retroactive to the date of issuance of the Bonds.
•
We have not been engaged to participate hi the preparation or review of, or express any
opinion concerning the completeness or accuracy of, the official statement or other disclosure
documentation used in connection with the offer or sale of the Bonds, and thus express no
opinion concerning the completeness or accuracy thereof.
Copies of this opinion letter may be delivered to the Owners of the Bonds,who may rely
on this opinion letter as if it were addressed to them on the date hereof. Subject to the foregoing,
this opinion letter may be relied upon by you only in connection with the issuance of the Bonds
and may not be used or relied upon by you or any other person for any other purpose whatsoever,
without in each instance our prier written consent. We expressly disclaim any responsibility to
advise you or any Owners of any developments in areas covered by this opinion letter that occur
after the date hereof
Respectfully submitted,
GOTTLIEB, FISHER ,' DREWS, PLLC
By
Judith L. Andrews
f:\renLon\ws:s 04
�BI
i FINANCIAL GUARANTY INSURANCE POLICY
MBIA Insurance Corporation
Armonk,New York 10504
Policy No.45224
MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby
unconditionally and irrevocably guarantees to any owner,as hereinafter defined,of the following described obligations,the full and complete payment
required to be made by or on behalf of the Issuer to The Bank of New York,New York,New York or its successor(the"Paying Agent")of an amount
equal to(i)the principal of(either at the stated maturityi or by any advancement of maturity pursuant to a mandatory sinking fund payment)and interest
on,the Obligations(as that term is defined below)as such payments shall become due but shall not be so paid(except that in the event of any acceleration
of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise,other than any
advancement of maturity pursuant to a mandatory sinl ing fund payment,the payments guaranteed hereby shall be made in such amounts and at such
times as such payments of principal would have been due had there not been any such acceleration); and(ii)the reimbursement of any such payment
which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses(i)and(ii)of the preceding
sentence shall be referred to herein collectively as the"Insured Amounts." "Obligations"shall mean:
$10,335,000
City of Renton,Washington
' Water and Sewer Revenue Bonds,2004
Upon receipt of telephonic or telegraphic notice,such!notice subsequently confirmed in writing by registered or certified mail,or upon receipt of written
notice by registered or certified mail,by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is
then due,that such required payment has not been made,the Insurer on the due date of such payment or within one business day after receipt of notice of
such nonpayment,whichever is later,will make a deposit of funds,in an account with U.S.Bank Trust National Association,in New York,New York,
or its successor,sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or
presentment of such other proof of ownership of the Obligations,together with any appropriate instruments of assignment to evidence the assignment of
the Insured Amounts due on the Obligations as are paid by the Insurer,and appropriate instruments to effect the appointment of the Insurer as agent for
such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations,such instruments being in a form
satisfactory to U.S.Bank Trust National Association,'U.S.Bank Trust National Association shall disburse to such owners,or the Paying Agent payment
of the Insured Amounts due on such Obligations,less any amount held by the Paying Agent for the payment of such Insured Amounts and legally
available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any
Obligation.
As used herein,the term"owner"shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent,the Issuer,
or any designee of the Issuer for such purpose. The term owner shall riot include the Issuer or any party whose agreement with the Issuer constitutes the
underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street,Armonk,New York 10504 and such service of
process shall be valid and binding.
This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the
Obligations.
IN WITNESS WHEREOF,the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers,this 17th day of
November, 2004.
•
i; . Insur ce trporation
Pres
Attest: ..�..�
Assistant Secretary
STD-R-6
4i)5
MBIA Insurance Corporation
113 King Street, Armonk, NY 10504
IBI Tel 914-273-4545
www.mbia.com
Capital Strength. Triple-A Performance.
November 17, 2004
The Bank of New York
New York,New York
$10,335,000
City of Renton, Washington
Water and Sewer Revenue Bonds, 2004
Ladies and Gentlemen:
In connection with the above-described obligations (the "Obligations") of which you are acting as paying
agent (the "Paying Agent"), please'be advised that the payment to you of principal of and interest on the
Obligations has been guaranteed by a policy of financial guaranty insurance (the "Policy") issued by the
MBIA Insurance Corporation (the "Insurer"). U.S. Bank Trust National Association, New York, New
York(the"Fiscal Agent")is acting as the fiscal agent for the Insurer.
The Policy unconditionally and irrevocably guarantees to any owner or holder of the Obligations or, if
applicable,of the coupons appertaining thereto(the"Owner"),the full and complete payment required to be
made by or on behalf of the issuer'of the Obligations(the "Issuer")to the Paying Agent or its successor of
an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity
pursuant to a mandatory sinking fund payment) and interest on, the Obligations as such payments shall
{ become due but shall not be so paid (except that in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the
payments guaranteed by the Policy shall be made in such amounts and at such times as such payments of
principal would have been due had there not been any such acceleration);and(ii)the reimbursement of any
such payment which is subsequently recovered from any Owner pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference(a"Preference")to the Owner'
within the meaning of any applicable bankruptcy law. The amounts referred to in clauses(i)and(ii)of the
preceding sentence are referred to collectively in this letter as the"Insured Amounts."
The Policy does not insure against loss of any prepayment premium which may at any time be payable
with respect to any Obligations. The Policy does not, under any circumstance,insure against loss relating
to: (i) optional or mandatoryredemptions (other than mandatory fund redemptions); (ii) any
P P � sinking P � );
payments to be made on an accelerated basis; (iii) payments of the purchase price of Obligations upon
tender by an Owner thereof;or(iv)any Preference relating to(i)through(iii)above.
AIBIA
-2-
In the event that the Issuer does not make full and complete payment when due of the principal of and
interest on the Obligations, please immediately notify, by telephone or telegraph, the Insurer, 113 King
Street, Armonk, New York, 10504 (914) 273-4545. On the due date or within one business day after
receipt of such notice,whichever is'later, the Insurer will deposit funds with the Fiscal Agent sufficient to
pay the Obligations (or, if applicable, coupons appertaining thereto) then due. Upon presentment and
surrender of such Obligations(or,if applicable,coupons)or presentment of such other proof of ownership
of Obligations together with any appropriate instruments of assignment to evidence the assignment of the
Insured Amounts due on the Obligations as are paid by the Insurer,and appropriate instruments to effect the
appointment of the Insurer as agent)for the Owners in any legal proceeding related to payment of Insured
Amounts on the Obligations (or, if applicable,coupons), such instruments being in a form satisfactory to
the Fiscal Agent, the Fiscal Agent shall disburse to you payment of the Insured Amounts due on such
it Obligations (and, if applicable, coupons), less any amount held by you for the payment of such Insured
Amounts and legally available therefor.
Forms of such instruments of assignment and instruments to effect the appointment of the Insurer as such
agent for the Owners (collectively,the "Claim Documents"), which are currently acceptable to the Fiscal
Agent and the Insurer, are on file with the Fiscal Agent. The Insurer may,from time to time,file revised
forms of Claim Documents with the Fiscal Agent in substitution for the forms previously filed with the
Fiscal Agent, and .upon such filing, the revised forms shall supersede all forms of Claim Documents
previously filed with the Fiscal Agent,except as otherwise directed by the Insurer in writing.
In the event that you shall have prior knowledge of an impending failure by the Issuer to make payment on
the Obligations (or,if applicable,coupons)when due, please immediately notify the Insurer so that it will
be possible to have funds available for you on the due date to make payments against surrendered
Obligations(and,if applicable,coupons).
Your cooperation in this matter will be most appreciated and will make it possible for the Owners of
Obligations guaranteed by the Insurer to be assured of all payments when due.
NVer tru your-
Neil G. Budnick
President
CERTIFICATE OF DELIVERY AND PAYMENT
I, VICTORIA A. RUNKLE,hereby certify that:
1. I am the duly appointed, qualified and acting Finance and Information Services
Administrator of the City of Renton, Washington(the "City").
2. This Certificate is made and delivered in connection with the authorization, sale,
issuance and delivery of the $10,335,000 CITY OF RENTON, WASHINGTON, WATER AND
SEWER REVENUE BONDS, 2004 (the"Bonds").
3. On-this date, D.A. Davidson & Co., as underwriter of the Bonds (the
"Underwriter")paid, on behalf of the City, to MBIA Insurance Corporation, the issuer of the
financial guaranty insurance policy for the Bonds (the"Bond Insurance Policy"), by means of a
wire transfer, the premium for the Bond Insurance Policy in the amount of$50,000.00. On this
date, the City delivered all of the Bonds to the Underwriter. At the time of delivery of the Bonds,
the City received from the Underwriter the sum of$10,575,952.32, said sum being full payment
of the balance of the purchase price therefor, computed as follows:
Principal Amount of the Bonds $10,335,000.00
Plus: Original Issue Premium 371,747.65
Plus: Accrued Interest from 11/1/04 22,554.67
Less: Underwriter's Discoi nt (103,350.00)
Purchase Price of the Bonds $10,625,952.32
Less: Premium for Bond Insurance Policy (50,000.00)
Balance $10,575,952.32
IN WITNESS WHEREOF, I have hereunto subscribed my official signature this 17th day
of November, 2004.
A_ ",
VICTORIA A. RUNKL
Finance and Information Services Administrator
City of Renton, Washington
fl\renton\water&sewer 04
UNDERWRITER'S RECEIPT
D.A. DAVIDSON& CO. acknowledges receipt this date from the City of Renton,
Washington(the"City") of each and every bond of the $10,335,000 CITY OF RENTON,
WASHINGTON, WATER AND SEWER REVENUE BONDS, 2004 (the "Bonds"). The Bonds
are satisfactory in form.
On this date, the undersigned paid, on behalf of the City, to MBIA Insurance
Corporation, the issuer of the financial guaranty insurance policy for the Bonds (the"Bond
Insurance Policy"),by means of a wire transfer, the premium for the Bond Insurance Policy in
the amount of$50,000.00. Upon receipt of the Bonds this day,the undersigned paid to the City
the balance of the purchase price off the Bonds, computed as follows:
Principal Amount of the Bonds $10,335,000.00
Plus: Net Original Issue Premium 371,747.65
Plus: Accrued Interest from 11/1/04 22,554.67
Less: Underwriter's Discount (103,350.00)
Purchase Price of the Bonds $10,625,952.32
Less: Premium for Bond Insurance Policy (50,000.00)
Balance $10,575,952.32
DATED this 17th day of November, 2004.
D.A. DAVIDSON& CO.
BY .===::::: 174
FRED R. EOFF tl'
Managing Director
E\renton\water&sewer 04
TAX EXEMPTION AND NONARBITRAGE CERTIFICATE
This TAX EXEMPTION AND NONARBITRAGE CERTIFICATE (this"Certificate") is
made and delivered by the undersigned in connection with the issuance of the$10,335,000 CITY
OF RENTON, WASHINGTON, WATER AND SEWER REVENUE BONDS, 2004 (the
"Bonds")by the City of Renton, Washington(the"City"). This Certificate is also made and
delivered by the undersigned(a)in furtherance of the tax exemption and covenants of the City
contained in Sections 19(h) and 20 of City Ordinance No. 5098, duly adopted on November 1,
2004(the"Bond Ordinance"); and(b)pursuant to the Code and Treasury Regulations
Sections 1.141-1 through 1.141-6, inclusive, 1.141-9, 1.148-1 through 1.148-11, inclusive,
1.149(b)-1, 1.149(d)-1, 1.149(g) 1, and 1.150-1 through 1.150-2, inclusive.
Section 1. Definitions. Capitalized terms used but not defined herein shall have the
meanings set forth in (a) the Bored Ordinance or(b)where not so defined, Exhibit A hereto,
which is incorporated herein by this reference.
Section 2. Representations.
(a) Responsible Persons. The undersigned is the Finance and Information Services
Administrator of the City and one of the persons charged by the City with responsibility for the
issuance of the Bonds, and has made due inquiry with respect to and is fully informed as to the
matters set forth in Section 3 of this Certificate.
(b) Statement as to Facts, Estimates and Circumstances. The facts, estimates and
circumstances set forth in Section 3 of this Certificate, on which the expectations of the City as
to the Bonds are based, are made to the best of the knowledge and belief of the undersigned, and
such expectations are reasonable and made in good faith. The City understands that, for the
purposes of the Code, this Certificate constitutes evidence of the expectations of the City,but
does not establish any conclusions of law or any presumptions regarding either the actual
{ expectations of the City, or their reasonableness.
(c) Basis of Representations and Expectations. The representations and expectations
of the City set forth herein are biased upon:
(1) The covenants of the City contained in the Bond Ordinance;
(2) The certifications of D.A. Davidson& Co. (the"Underwriter"), set forth
in the Underwriter's'Certificate for the Bonds (the"Underwriter's Certificate"), dated and
delivered on the Date of Issue; and
(3) The certifications of MBIA Insurance Corporation(the"Bond Insurer"),
set forth in its Tax Certificate (the"Bond Insurer's Certificate"), dated and delivered on
the Date of Issue, andthe commitment letter(the "Commitment") of the Bond Insurer,
dated November 1, 2004, setting forth the conditions to issuance of the financial guaranty
insurance policy with respect to the Bonds (the"Bond Insurance Policy").
I
The City is not aware of any facts or circumstances that would cause it to question the
accuracy,reliability or reasonableness of the certifications in the Underwriter's Certificate or the
Bond Insurer's Certificate.
(d) Purpose of Certificate. This Certificate is made in part for the purpose of
establishing the reasonable expectations of the City as to the amount and application of proceeds
of the Bonds. It is intended to be and may be relied on for the purposes of Sections 103, and 141
through 150 of the Code and as a certificate described in Treasury Regulations
Section 1.148-2(b)(2). This Certificate is being executed and delivered as part of the record of
proceedings prepared in connection with the issuance of the Bonds. The City understands that,
despite the representations and statements of expectation made in this Certificate, (1)the taking
of any deliberate, intentional action by the City after the Date of Issue in order to earn arbitrage
will cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code if
such action,had it been expected on the Date of Issue,would have caused the Bonds to be
arbitrage bonds, and that an intent to violate the requirements of Section 148 of the Code is not
necessary for an action to be considered intentional within the meaning of the Code; and(2)the
taking of any deliberate action subsequent to the Date of Issue that causes the conditions of either
the private loan financing test ori the private business use and repayment tests under Section 141
of the Code to be met,will cause the Bonds to be private activity bonds within the meaning of
Section 141 of the Code, and that an intent to violate the requirements of Section 141 of the
Code is not necessary for an action to be considered deliberate within the meaning of the Code.
(e) Status of City. The City is a municipal corporation and code city duly organized
under the laws of the State of Washington.
(1) Authorization and Purposes of the Bonds. The Bonds are being issued pursuant to
the Bond Ordinance for the purpiose of providing part of the funds necessary to carry out the
system or plan for additions to and betterments and extensions of the Waterworks Utility of the
City, to make a deposit to the Reserve Fund, and to pay the costs related to the sale and issuance
of the Bonds (the"Project").
(g) Security and Source of Payment; No Federal Guarantee. The Bonds are special
fund revenue obligations of the City. The principal of and the interest on the Bonds are payable
solely out of the Bond Fund. Pursuant to the Bond Ordinance, the City has pledged and bound
itself to set aside and pay into the Bond Fund out of the Net Revenue fixed amounts without
regard to any fixed proportion, sufficient to pay the principal and/or interest payments on the
Bonds and to maintain an amount of money and assets in the Reserve Fund at the level required
by the Bond Ordinance, all within the times provided by the Bond Ordinance. The Net Revenue
has been pledged to the payments to be made into the Bond Fund as set forth in the Bond
Ordinance, and the Bonds,constitute a lien and charge on Net Revenue prior and superior to any
other charges whatsoever, except that the lien and charge on such Net Revenue for the Bonds
shall be on a parity with the lien and charge thereon for any other Parity Bonds..
The obligations of the City under the Bonds are not"federally guaranteed"within the
meaning of Section 149(b) of the Code.
f.\renton\water&sewer 04 2
(h) Qualification of Bond Insurance Policy as a Qualified Guaranty. Based upon the
Underwriter's Certificate, (1)the premium to be paid to the Bond Insurer for the Bond Insurance
Policy was negotiated at arm's length and is reasonable, and(2)the present value of such
premium(computed by using the;yield-to-maturity on the Bonds, including such premium, as the
discount factor) is less than the present value of the interest reasonably expected to be saved on
the Bonds as a result of the purchase of the Bond Insurance Policy.
Based upon the certifications of the Bond Insurer set forth in the Bond Insurer's
Certificate, (A)the Bond Insurance Policy is an unconditional obligation of the Bond Insurer to
pay scheduled payments of principal of and interest on the Bonds in the event of the failure to do
so by the City; (B)the premium to be paid for the Bond Insurance Policy was determined in
arm's-length negotiations, is required to be paid as a condition to the issuance of the Bond
Insurance Policy, and represents is charge for a transfer of credit risk; (C)no portion of such
premium represents an indirect payment of costs related to the issuance of the Bonds other than
the transfer of credit risk; (D) the Bond Insurer does not reasonably expect that it will be called
upon to make any payment under the Bond Insurance Policy; (E) to the extent that the Bond
Insurer is called upon to make ally payment under the Bond Insurance Policy, the Bond Insurer
expects to pursue all available legal remedies to secure reimbursement for such payment; and (F)
that the Bond Insurer would not have issued the Bond Insurance Policy unless the Bond
d
Ordinance provided for the Reserve Fund funded at the Reserve Requirement.
(i) Ownership and Use of Facilities Financed with Bond Proceeds. The City now
owns and operates, and expects to continue to own and operate, all facilities financed with the
proceeds of the Bonds for so long as the Bonds are outstanding. No more than 10% of the
proceeds of the Bonds are to be used, directly or indirectly, for any"private business use" (as
defined in Section 141 of the Code); and no more than 5% of the proceeds of the Bonds are to be
{ used with respect to any private business use that is not related to the City's use of such proceeds
for governmental purposes, or which is disproportionate to such governmental use. Further, the
payment of the principal of and interest on no more than 10% of the proceeds of the Bonds are to
be, directly or indirectly, (1) secured by any interest in(A)property to be used for private
business use, or(B)payments ill respect of such property; or(2) derived from payments in
respect of property, or borrower}money, used or to be used for a private business use; and the
payment of the principal and interest on no more than 5% of the proceeds of the Bonds are to be
so secured by or derived from payments made in respect of private business use of the proceeds
of the Bonds in a manner which is unrelated or disproportionate to the City's use for
governmental purposes. The"nonqualified amount,"as defined in Section 141(b)(8) of the
Code, if any,with respect to the Bonds will not exceed$15,000,000.
(j) No Private Loans. None of the proceeds of the Bonds will be used, directly or
indirectly, to make or finance loans to any person(including any governmental unit).
Section 3. Reasonable Expectations of the City as to Facts, Estimates and Circumstances.
The City makes the following representations and statements of fact, estimates and expectation
to establish that it is not expected that the proceeds of the Bonds will be used in a manner that
will cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code:
f:\renton\water&sewer 04 3
(a) Application of Sale Proceeds.
(1) General. The amount of Sale Proceeds received by the City from the sale
of the Bonds is $10,706,747.65 (principal amount of$10,335,000.00, plus original issue
premium of$371,747.65 . In addition,the City will receive$22,554.67 of Pre-Issuance
Accrued Interest.
(2) Pre-Issuance Accrued Interest. Pre-Issuance Accrued Interest in the
amount of$22,554.67 will be deposited into the Bond Fund on the Date of Issue to be
applied to the payment of interest on the Bonds due on December 1, 2004, the first
interest payment date for the Bonds.
(3) Premium for Bond Insurance Policy. Sale Proceeds in the amount of
$50,000.00 will be used to pay the Bond Insurer on the Date of Issue for the premium for
the Bond Insurance Policy.
(4) Issuance Costs. Sale Proceeds in the amount of$103,350.00 will be used
to pay Underwriter's discount on the Date of Issue; such amount is equal to the difference
between the issue price of the Bonds and the amount paid for the Bonds by the
Underwriter. Another$35,975.00 of Sale Proceeds will be deposited into the Project
Fund and applied to the payment of the other costs of issuing the Bonds.
(5) Reserve Fund Deposit. Sale Proceeds in the amount of$507,480.00 will
be deposited into the Reserve Fund on the Date of Issue so that the total amount of
money and assets in the Reserve Fund will be equal to the Reserve Requirement on the
Date of Issue.
(6) Project Costs. All of the remaining Sale Proceeds, in the amount of
$10,009,942.65,will be deposited into the Project Fund on the Date of Issue to be applied
to the payment of the cots of the Project. A portion of such Sale Proceeds will be
advanced and used to reimburse the City for expenditures previously incurred and paid in
anticipation of the issuance of the Bonds (the"Prior Expenditures"). The City represents
the following with respect to such reimbursement:
(A) Declaration of Official Intent. In Ordinance No. 5050,passed on
December 15, 2003, the City declared its official intent(the"DOI") to reimburse
the Prior Expenditures with the proceeds of subsequent borrowings. In
conformity with the requirements of Treasury Regulations Section 1.150-2, the
DOI set forth a general description of the Project, and stated the maximum
principal amount of the debt expected to be issued to finance the Project.
(B) Reimbursable Expenditures. The Prior Expenditures are either
(i) capital expenditures (within the meaning of Section 1.150-1(b) of the Treasury
Regulations), (ii) costs of issuing the Bonds, or(iii) working capital expenditures
for extraordinary, nonrecurring items that are not customarily payable from
current revenues. None of the Prior Expenditures were incurred for day-to-day
operating expenses of the City.
f:\renton\water&sewer 04 4
(C) Anti-Abuse Rules. None of the proceeds of the Bonds being used
to reimburse the City for Prior Expenditures will be used, directly or indirectly,
within one year of the Date of Issue, in a manner that results in the creation of
Replacement Proceeds, other than amounts deposited in a bona fide debt service
fund.
(D) Timing of Prior Expenditures. All of the Prior Expenditures either
(i) were incurred no earlier than 60 days prior to the date of the adoption of the
DOI, (ii) constitute preliminary expenditures in an amount not exceeding$2,
141,349.53 (which is 20% of the Sale Proceeds of the Bonds), or(iii) do not
exceed an amount in excess of the lesser of$100,000 or 5%of the Sale Proceeds
of the Bonds. For this purpose"preliminary-expenditures"include architectural,
engineering, surveying, soil testing and similar costs incurred prior to
commencement olf acquisition, construction or rehabilitation of the Project, other
than land acquisition, site preparation and similar costs incident to
commencement of construction.
(E) Reimbursement Period Requirement. Proceeds to be applied to
reimburse each Prior Expenditure will be so applied no later than the later of the
date that is (i) eighteen months after the date such Prior Expenditure being
reimbursed was paid, or(ii) eighteen months after the date on which the portion
of the Project to which such Prior Expenditure relates was placed in service
within the meaning of Section 1.150-2(c) of the Treasury Regulations.
(b) Funds and Accounts. The City has established the following funds and accounts
relating to the Bonds, each to be held separate and apart from all other funds and accounts of the
City:
— The 2002 Waterworks Revenue Bond Fund (the"Bond Fund")
— The Waterworks Revenue Bond Reserve Fund(the"Reserve Fund")
— The Waterworks Utility Construction Fund(the"Project Fund")
— The Rate Stabilization Fund(the City has no current intention of funding
the Rate Stabilization Fund)
Except for the Reserve I'und, interest earned (including discount and premium) on any
moneys or investments in any fund or account will be retained in such fund or account and used
for the purposes thereof. Interest earned on any moneys or investments in the Reserve Fund
shall be deposited into the Reserve Fund until the total Reserve Requirement shall have been
accumulated therein, after which time the interest shall be deposited into any Parity Bond Fund.
Other than the funds and accounts specifically described in this Certificate,no fund or
account that secures or otherwise relates to the Bonds has been established, nor is any such
fund or account expected to be established, pursuant to any instrument.
(c) Bona Fide Debt Service Fund: The Bond Fund. All payments in respect of the
principal of, premium, if any, and interest on any Parity Bonds (including the Bonds)will be
f:\renton\water&sewer 04 5
deposited into the Bond Fund,which is intended to achieve a proper matching of Net Revenue
against the scheduled annual payments of the principal of and interest on any Parity Bonds
(including the Bonds).
All amounts on deposit iri the Bond Fund allocable to the Bonds will be expended to
pay the principal of,premium, if any, and interest on the Bonds within thirteen months of the
date such amounts are first deposited into the Bond Fund. The Bond Fund will be depleted at
least once each year except for any carryover amounts which will not exceed the greater of(1)
the earnings in the Bond Fund for the immediately preceding Bond Year or(2) one-twelfth of
principal and interest payments on all Parity Bonds (including the Bonds) for the immediately
preceding Bond Year. The schedule of payment of interest on and principal of the outstanding
Parity Bonds (including the Bonds) has been established on the basis of, and is intended to
achieve, a proper matching of Net Revenue therewith.
The City has not created or established, and does not expect to create or establish, any
fund in connection with the Bonds that is reasonably expected to be used to pay debt service on
the Bonds other than the Bond Fund.
(d) Reasonably Required Reserve or Replacement Fund: The Reserve Fund. The
Reserve Fund serves as the reasonably required reserve or replacement fund for all Parity Bonds
(including the Bonds).
As described in Section 3(a)(5)hereof, Sale Proceeds in the amount of$507,480.00 will
be deposited into the Reserve Fund on the Date of Issue. Said sum,together with funds on
deposit in the Reserve Fund, is equal to the Reserve Requirement as of the Date of Issue.
The Bond Insurer has certified in the Bond Insurer's Certificate that it would not have
issued the Bond Insurance Policy unless the Bond Ordinance provided for the Reserve Fund
funded at the Reserve Requirement.
Amounts in the Reserve Fund will be transferred to the Bond Fund, if needed, to make
up any deficiency therein. In the event of a temporary interruption of revenues, the Reserve
Fund is intended to provide for the payment of debt service on the Parity Bonds (including the
Bonds) and, as such, constitutes a reasonably required reserve fund for the Bonds to the extent
the amounts therein allocable to the Bonds does not exceed$1,033,500.00, which is the least of
(1) 1.25 times the average annual debt service on the Bonds; (2)maximum annual debt service
on the Bonds; or(3) 10% of the;proceeds of the Bonds (the"2004 Reserve Requirement").
(e) Representations Establishing Eligibility for Temporary Period.
(1) Completion Date. It is reasonably expected that Sale Proceeds of the
Bonds deposited in the Project Fund will be used to pay the costs of the Project not later
than November 17, 2007.
(2) Binding Obligations. The City has spent or, within 6 months of the Date
of Issue of the Bonds, will spend (or enter into binding obligations with third parties
f'\renton\water&sewer 04 6
obligating the City to spend) an amount equal to at least 5% of the Sale Proceeds of the
Bonds with respect to the.Project.
(3) Due Diligence. Work on the Project and the allocation of the Sale
Proceeds of the Bonds to'expenditures with respect thereto will proceed with due
diligence.
(f) No Substituted Funds. No portion of the amounts received from the sale of the
Bonds will be used as a substitute for any other funds that would otherwise be used as a source
of financing for any portion of the cost of the Project and that have been or will be used to
acquire,directly or indirectly, obligations producing a yield in excess of the yield on the Bonds.
(g) No Negative Pledges. There are no amounts held under any agreement to
maintain funds at a particular level for the direct or indirect benefit of the Owners of the Bonds,
excluding for this purpose (1) amounts in which the City may grant rights that are superior to the
rights of the bondholders and(2) amounts that do not exceed the reasonable needs for which they
are maintained and that may be spent without any substantial restriction other than a requirement
to replenish the amount by a testing date that may occur no more frequently than every 6 months.
(h) No Excess Proceeds. The Gross Proceeds of the Bonds will not exceed the costs
of accomplishing the Project.
•
The Bonds will not remain outstanding longer than is otherwise reasonably necessary to
accomplish the governmental puirposes of the Bonds,based on all facts and circumstances. The
Bonds have a weighted average maturity that does not exceed 120% of the reasonably expected
economic life of the facilities that are being fmanced by the Bonds.
(i) Universal Cap. Notwithstanding any restrictions on the investment of proceeds of
the Bonds and other amounts set forth in Section 3(a)hereof,proceeds of the Bonds and other
i amounts treated as proceeds of the Bonds shall be allocated and remain allocated to the Bonds,
and thus be subject to the restrictions contained in this Certificate, only to the extent that the
value of such the Nonpurpose Investments allocated to proceeds does not exceed the value of the
outstanding Bonds (the"Universal Cap"). This section shall not apply to amounts on deposit in
the Bond Fund.
(j) Bond Yield. The yield on the Bonds (the "Bond Yield") generally means the
discount rate that, when used in icomputing the present value as of the Date of Issue of all
unconditionally payable payments of principal, interest and fees for qualified guarantees on the
Bonds,produces an amount equal to the present value,using the same discount rate, of the
aggregate issue price of the Borids (defined as the initial offering price or yield to the public,
excluding bond houses, brokers'or similar persons or organizations acting in the capacity of
underwriters or wholesalers, at which price or yield a substantial amount of the Bonds of each
maturity was sold) as of the Date of Issue.
The Bonds maturing on December 1 in the year 2024 through 2027, inclusive,have been
treated as redeemed at their respective stated redemption prices on the optional redemption dates
that would produce the lowest yield thereon,because such Bonds were issued at an issue price
f:\renton\water&sewer 04 7
that exceeds the stated redemption price at maturity by more than 0.25%multiplied by the
product of the stated redemption price at maturity and the number of complete years to the first
optional redemption date for such Bonds, all in accordance with Treasury Regulations
Section 1.148-4(b)(3).
The aggregate present value on the Date of Issue of the issue prices of the Bonds, as so
defined, and based upon the information in the Underwriter's Certificate is $10,729,302.32,
which is equal to the principal amount of the Bonds of$10,335,000.00,plus net original issue
premium of$371,747.65,plus Pre-Issuance Accrued Interest of$22,554.67. Based upon the
information in the Bond Insurer's Certificate and the Underwriter's Certificate, the premium for
the Bond Insurance Policy in the sum of$50,000.00 is a payment by the City to the Bond Insurer
for a"qualified guarantee" (as such term is defined in Section 1.148-4(f) of the Treasury
Regulations). Based upon the information in the Underwriter's Certificate, the Bond Yield
computed in this manner is, as of the date hereof, 4.5213%.
The Bond Yield is computed as of the Date of Issue and will not be affected by
subsequent unexpected events unless (1) the City enters into a hedging transaction,within the
meaning of Treasury Regulations Section 1.148-4(h)(3), or(2)there is a subsequent transfer,
waiver,modification or similar transaction affecting any right that is part of the terms of a Bond.
Prior to entering into any transaction described in the immediately preceding sentence, the City
shall inform Bond Counsel of its intent and shall not enter into such transaction without
receiving a prior Opinion of Bond Counsel that such transaction will not adversely affect the
exclusion from gross income of interest on the Bonds.
(k) Yield Restrictions. Any amounts on deposit in any fund or account established
for the Bonds will not be invested at a yield that exceeds the Bond Yield, except as follows:
(1) Bond Fund. Amounts deposited in the Bond Fund may be invested at an
unrestricted yield for a period of 13 months from the date of deposit of such amounts
therein. Earnings on such amounts that are retained therein may be invested at an
unrestricted yield for a period of 13 months from the date of receipt of the amount
earned. Such amounts are excluded from the calculation of the Rebate Requirement to
the extent described in Section 4(h) hereof.
(2) Project Fund. Sale Proceeds of the Bonds on deposit in the Project Fund,
together with the investment earnings thereon, may be invested without regard to yield
restrictions for a three-year period commencing on the date hereof. Thereafter, such
funds may not be invested at a yield that exceeds the Bond Yield. Such funds are subject
to the Rebate Requirement unless one of the exemptions described in Sections 4(b),4(c)
or 4(d)hereof can be satisfied.
(3) Reserve Fund. Amounts in the Reserve Fund allocable to the Bonds may
be invested without regard to yield restriction to the extent that they do not exceed the
2004 Reserve Requirement. To the extent that the amounts in the Reserve Fund allocable
to the Bonds exceed the 2004 Reserve Requirement, such excess will be invested at a
yield not in excess of the Bond Yield. Such amounts are subject to the Rebate
Requirement.
fArenton\water&sewer 04 8
(4) Investment Earnings. Investment earnings on Sale Proceeds and proceeds
of investments in the Reserve Fund may be invested without regard to yield restriction to
the same extent as other amounts described in Section 3(k)(3)hereof. Investment
Earnings on Proceeds in the Reserve Fund that may not be invested without regard to
yield restriction pursuant to Section 3(k)(3)hereof may be invested without regard to
yield restriction for one year from the date of receipt. All earnings on Gross Proceeds,
other than earnings on amounts described in Section 3(k)(1) hereof and earnings on
Replacement Proceeds that do not themselves constitute Replacement Proceeds, are
subject to the Rebate Requirement.
(5) Yield Reduction Payments. Notwithstanding any of the provisions of
Sections 3(k)(1)through l3(k)(4)hereof that require the investment of Sale Proceeds of
the Bonds and investment earnings thereon at a yield not in excess of the Bond Yield, the
yield on certain Nonpurpose Investments acquired with proceeds of the Bonds will not be
considered to be higher than the applicable yield limitation described in this Section 3(k)
if the City makes or causes to be made"yield reduction payments"to the United States
Treasury at the times and in the amounts described in Section 1.148-5(c) of the Treasury
Regulations. The City agrees to retain and consult with Bond Counsel prior to making
any"yield reduction payments"pursuant to Section 1.148-5(c) of the Treasury
Regulations.
(1) No Qualified Hedges. The City has not identified, nor does it expect to identify,
any hedging arrangement or transaction as a"qualified hedge" (as defined in Treasury
Regulations Section 1.148-4(h))with respect to the Bonds.
(m) No Hedge Bonds. At least 85% of the spendable proceeds of the Bonds will be
used to carry out the governmental purposes of the Bonds by November 17, 2007, and not more
than 50% of the proceeds of the Bonds will be invested in Nonpurpose Investments with a
substantially guaranteed yield of 4 years or more.
(n) Single Issue. No other obligations of the City(1) are reasonably expected to be
paid from substantially the same source of fluids as the Bonds (determined without regard to
guarantees from unrelated parties), (2) are being sold at substantially the same time as the Bonds,
(i.e.,within fourteen days of November 1, 2004,the sale date of the Bonds), and(3) are being
sold pursuant to the same plan of financing as the Bonds.
Section 4. Rebate Requirement Calculations and Payment. The City has been advised by
Bond Counsel that the following provisions and procedures also apply to the proceeds of the
Bonds:
(a) General. Certain]Gross Proceeds of the Bonds will be exempt from the Rebate
Requirement described in Section 4(b), Section 4(c) or Section 4(d)hereof.
(b) Six Month Exception. The Bonds shall be treated as meeting the Rebate
Requirement described in Section 4(e) hereof if the Gross Proceeds thereof are expended for the
governmental purposes of such issue within the six-month period beginning on the Date of Issue;
fl\renton\water&sewer 04 9
provided,that the six-month spending period will be extended for an additional six months if the
Gross Proceeds of the Bonds, as specially defined for purposes of this Section 4(b), are expended
within the first six-month spending period except for an amount not exceeding the lesser of 5%
of the issue price of the Bonds or$100,000. For purposes of this Section 4(b), the governmental
purposes of the Bonds also include(1)payments of interest on but not payments of principal of
the Bonds, and(2)payments of interest on or principal of other obligations of the City. For this
purpose, Gross Proceeds has the meaning set forth in Exhibit A to this Nonarbitrage Certificate,
except that it does not include (A) amounts held in a bona fide debt service fund, (B) amounts
held in a reasonably required reserve or replacement fund, (C) amounts that, as of the Date of
Issue, are not reasonably expected to be Gross Proceeds,but that become Gross Proceeds after
the end of the six-month period, hand (D) amounts representing sale or investment proceeds
derived from any Purpose Investments of the Bonds. Notwithstanding the above, Gross
Proceeds of the Bonds shall not be eligible for the exemption from the Rebate Requirement
described in this Section 4(b)unless the Rebate Requirement is met for Gross Proceeds not
required to be spent within the six-month spending period (other than earnings on amounts in a
bona fide debt service fund). In he event that any of the Bonds satisfy the requirements of this
Section 4(b), the City may nevertheless subsequently elect to'disregard the availability of the
exemption from rebate described in this Section 4(b) and to satisfy the Rebate Requirement with
respect to the Bonds.
(c) Eighteen Month Exception. The Rebate Requirement shall not.apply to the Gross
Proceeds of the Bonds if the following percentages (the"Qualifying Expenditures") of such
Gross Proceeds are expended for the governmental purposes of the Bonds by the last day of each
of the periods identified below (the "Qualifying Dates"). For this purpose,the governmental
purposes of the Bonds also include (1)payments of interest on but no payments of principal of
the Bonds and payments of intertest on or principal of other obligations of the City(but only if, in
each case, such payments do not cause the Bonds to be a refunding issue) and(2)payments of
Bond issuance costs made from earnings on Gross Proceeds. For this purpose, Gross Proceeds
has the meaning set forth in Exhibit A to this Nonarbitrage Certificate, except that it does not
include(A) amounts held in a bona fide debt service fund, (B) amounts held in a reasonably
required reserve or replacement fund, (C) amounts that, as of the Date of Issue, are not
reasonably expected to be Gross!Proceeds,but that become Gross Proceeds after the end of the
eighteen-month period, and(D) amounts representing sale or investment proceeds derived from
any Purpose Investments of the Bonds.
Required Percentage,Expenditure
of Gross Proceeds Qualifying Date
15% May 17, 2005
60% November 17, 2005
100% ; May 17, 2006
The Qualifying Expenditures as of the last of the Qualifying Dates set forth above will be
treated as made if, as of the third such Qualifying Date, all such Gross Proceeds have been spent
for the governmental purposes of the Bonds, except for a reasonable retainage not exceeding 5%
of the Net Sale Proceeds as of such date, and 100% of the Gross Proceeds are actually spent for
the governmental purposes of the Bonds within the 30-month period beginning on the Date of
Issue. A failure to satisfy the final spending requirement will be disregarded if the City exercises
fl\renton\water&sewer 04 10
due diligence to complete the Project and the amount of the failure does not exceed the lesser of
3% of the issue price of the Bonds or$250,000. For purposes of determining whether the above
Qualifying Expenditures have been made as of the first two Qualifying Dates, earnings
reasonably expected as of the Date of Issue to be generated for the entire 18-month spending
period shall be included; however, for purposes of determining whether the Qualifying
Expenditures have been made as of the third and any subsequent Qualifying Dates, only
investment earnings actually generated as of such date shall be included. In the event any of the
Qualifying Expenditures are not made as and when required, all Gross Proceeds of the Bonds
shall be subject to the Rebate Requirement.
(d) Two Year Exception. The City reasonably expects to spend at least 75% of the
Available Construction Proceeds of the Bonds will be expended for Construction Expenditures
with respect to property reasonably expected to be owned by a governmental unit.
The Rebate Requirement described in Section 4(e)hereof shall not apply to the Available
Construction Proceeds or to the Gross Proceeds of the Bonds used to pay Issuance Costs if(1) all
of the Gross Proceeds of the Bonds to be used to pay Issuance Costs are expended by the fourth
Measuring Date(as defined below), and (2)the following percentages (the"Required
Expenditures") of such Available Construction Proceeds are expended for the governmental
purposes of the Bonds by the last day of each of the periods identified below(the"Measuring
Dates"). For this purpose, the governmental purposes of the Bond include (A)payments of
interest on but no payments of principal of the Bonds, and payments of interest on or principal of
other obligations of the City(bul only if, in each case, such payments do not cause the Bonds to
be a refunding issue), and (B)payments of Issuance Costs made from earnings on Gross
Proceeds.
Required Percentage Expenditure
of Available Construction Proceeds Measuring Date
10% May 17, 2005
45% November 17, 2005
75% May 17, 2006
100% November 17, 2006
The Required Expenditures as of the last of the Measuring Dates set forth above will be
treated as made if, as of the fourth such Measuring Date, all such Available Construction
Proceeds have been spent for the governmental purposes of the Bonds, except for a reasonable
retainage not exceeding 5% of the Available Construction Proceeds as of such date, and 100%of
the Available Construction Proceeds are actually spent for the governmental purposes of the
Bonds within the three-year period beginning on the Date of Issue. A failure to satisfy the final
spending requirement will be disregarded if the City exercises due diligence to complete the
Project and the amount of the failure does not exceed the lesser of 3% of the issue price of the
Bond or$250,000. For purpose's of determining whether the above Required Expenditures have
been made as of the first three Measuring Dates,Available Construction Proceeds shall include
earnings reasonably expected as of the Date of Issue to be generated for the entire two-year
spending period; however, for purposes of determining whether the Required Expenditures have
been made as of the fourth Measuring Date, only investment earnings actually generated as of
f:\renton\water&sewer 04 11
such date shall be included. In the event any of the Measuring Expenditures are not made as and
when required, all Gross Proceeds of the Bond shall be subject to the Rebate Requirement.
(e) Rebate Requirement. The Rebate Requirement as of any Computation Date,
subject to such modifications as May be made byTreasuryRegulations or rulings, is an amount
l Y � g
equal to the excess (if any) of the future value of all Nonpurpose Receipts over the future value
of all Nonpurpose Payments. All future values are computed as of the Computation Date using
an interest rate equal to the Bond Yield.
(f) Future Value. The future value of a Nonpurpose Receipt or Nonpurpose Payment
is calculated using the following formula:
FV=PV* (1 +
where
FV=The future value of the Nonpurpose Receipt or Nonpurpose Payment;
PV=The amount of the Nonpurpose Receipt or Nonpurpose Payment;
i = Bond Yield divided by the number of compounding intervals in a Bond
Year; and
n = The number of compounding intervals from the date of the Nonpurpose,
Receipt or Nonpurpose P� yment through the Computation Date.
1
(g) Allocation and Accounting Rules. Generally, investments are allocated to the
Bonds for the period that(1)beg`ns on the date Gross Proceeds are allocated to the Bonds and to
the investment, and(2) ends on the date such Gross Proceeds cease to be allocated to the Bonds
or to the investment.
(h) Relationship to Yield Restriction. Subject to the next paragraph hereof,the
requirements of this Section 4 relating to the Rebate Requirement apply to all Gross Proceeds,
regardless of whether such amounts are subject to yield restriction or are unrestricted as to yield.
Thus, an amount of Gross Proceeds may be"unrestricted as to yield"but will,notwithstanding
that characterization,be subject the Rebate Requirement. Similarly, an amount of Gross
Proceeds may be"restricted as to yield"but will, notwithstanding that characterization, also be
subject to the Rebate Requirement.
Because the average annual debt service on the Bonds is less than$2,500,000, the
amounts in the Bond Fund intended for the payment of debt service on the Bonds and the
earnings thereon are excluded from the calculation of the Rebate Requirement. The City shall
comply with the recordkeeping requirements set forth in Section 4(k) of this Certificate with
respect to such earnings.
(i) Computation and Payment Dates. Except as otherwise provided in Section 4(b),
),
Section 4(c) or Section 4(d) hereof, the Rebate Requirement, net of the Computation Date Credit,
must be computed by the City as of each Installment Computation Date and as of the Final
Computation Date. Rebate Payments of an amount which,when added to the future value of all
previous rebate payments made with respect to the Bonds, equals at least 90% of the Rebate
Requirement,must be paid by the City no later than the date 60 days after each Installment
C
Computation Date. The final Rebate Payment of an amount which, when added to the future
L
f:\renton\water&sewer 04 12
L_ '
value of all previous rebate payments made with respect to the Bonds, equals 100% of the
Rebate Requirement as of the Final Computation Date,must be paid by the City to the United
States Department of Treasury no later than 60 days after the Final Computation Date.
(j) Procedure for Remittance. Each payment, if any, to be made by the City pursuant
to this Section shall be filed with the Internal Revenue Service Center, 1160 West 1200 South,
Ogden,Utah 84201 (or at such other address as may be designated by the Internal Revenue
Service in the future) on or before the date payment is due, and shall be accompanied by Internal
Revenue Service Form 8038-T, which shall be executed by the City.
(k) Recordkeeping Obligation.
(1) In General. The Code requires that the City keep and maintain accurate
and complete records of fund balances, any investments thereof and all transactions
involving any fund or account for the Bonds.
(2) Retention of Records. The Code further requires that the City retain
records of the determination of the Rebate Requirement and of any rebate payments
actually made until seven years after the retirement of the last obligation on the Bonds.
Section 5. Segregation of Proceeds. In order to perform the calculations required by the
Code, it is necessary to separately account for all of the Gross Proceeds and each specific
investment acquired therewith. [To that end,the City may take appropriate accounting measures
in order to account fully and with specificity for all Gross Proceeds and each investment
.acquired therewith.
Section 6. Bond Ordinance Covenants Concerning Arbitrage and Tax Exemption.
(a) Section 19(h) of the Bond Ordinance provides, in pertinent part, as follows:
[The City] will take all actions necessary to prevent interest on the
Bonds from being included in gross income for federal income tax
purposes, and it will neither take any action nor make or permit any use of
proceeds of the Bonds or other funds of the City treated as proceeds of the
Bonds at any time during the term of the Bonds which will cause interest
on the Bonds to lie included in gross income for federal income tax
purposes. It will; to the extent arbitrage rebate requirements of Section
148 of the Code are applicable to the Bonds, take all action necessary to
comply(or to be treated as having complied)with those requirements in
connection with the Bonds, including the calculation and payment of any
penalties that the'City has elected to pay as an alternative to calculating
rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being
included in gross income for federal income tax purposes.
f:\renton\water&sewer 04 13
•
The City certifies that it has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that it is a bond issuer
whose arbitrage certifications may not be relied upon.
(b) Section 20 of the Bond Ordinance provides as follows:
The City covenants that it will take no actions and will make no
use of the proceeds of the Bonds or any other funds held under this
ordinance which would cause any Bond to be treated as a"private activity
bond" (as defined in Section 141(b) of the Code) subject to treatment
under said Section 141(b) as an obligation not described in Section 103(a)
of the Code, unless the tax exemption thereof is not affected.
Section 7. Amendments. Notwithstanding any other provision herein, the covenants and
obligations contained herein may be and shall be deemed modified to the extent the City secures
a written opinion of Bond Counsel that any action required hereunder is no longer required or
that some further action is required in order to maintain the exclusion of interest on the Bonds
from gross income for purposes.of federal income taxation.
Section 8. Supplementation of this Certificate. The City understands the need to
supplement this Certificate periodically to reflect further developments in the federal income tax
laws governing the exclusion from gross income for federal income tax purposes of interest on
the Bonds. The City will comply with any modifications or supplements made to this Certificate
in accordance with the written advice of Bond Counsel.
Section 9. Reliance by Bond Counsel. The City understands and acknowledges that the
opinion of Gottlieb, Fisher&Andrews, PLLC, as Bond Counsel, regarding the exclusion of
interest on the Bonds from gross income for federal income tax purposes is rendered in reliance
upon the representations and statements of fact, estimates and expectation contained in this
Certificate and assumes the continued compliance by the.City with its covenants described
above, and with the provisions of this Certificate.
IN WITNESS WHEREOF, I have hereunto subscribed my official signature as of the 17th
day of November, 2004.
Df & xLL2_e
VICTORIA A. RUNKLE
Finance and Information Services Administrator
City of Renton, Washington
I '
f:\renton\water&sewer 04 14
I '
EXHIBIT A
Definitions
Available Construction Proceeds means the amount equal to the sum of the issue price
of the Bonds, earnings on such issue price, and earnings on all of the foregoing earnings, less the
amount of the issuance costs financed by the Bonds (including the premium for the Bond
Insurance Policy).
Bond Counsel means Gottlieb,Fisher&Andrews, PLLC.
Bond Year means each 1-year period that ends on a day selected by the City. The first
and last Bond Years may be short periods. If no day is selected by the City before the earlier of
the final maturity date or the date that is 5 years after the Date of Issue,Bond Years end on each
anniversary of the Date of Issue and on the final maturity date.
Computation Date means an Installment Computation Date or the Final Computation
Date.
Computation Date Credit means, with respect to the Bonds on an eligible Computation
Date, a credit of$1,000 on the last day of each Bond Year during which there are amounts
allocated to Gross Proceeds of the Bonds that are subject to the Rebate Requirement, and on the
final maturity date.
Construction Expenditures means capital expenditures (i.e., costs of a type that are
properly chargeable to a capital account, or that would be so chargeable with a proper election
under general federal income principles) that are allocable to the costs of real property or
constructive personal property, excludingtaxi' expenditures for acquisitions of interests in land or
other existing real property.
Date of Issue means November 17, 2004,which is the date on which the Bonds are
j ! issued and delivered to the original purchasers thereof in return for payment by the original
purchasers of the purchase price'therefor.
Department of the Treasury means the Department of the Treasury of the United
States.
Fair Market Value, with respect to a Nonpurpose Investment,means, except where
otherwise indicated in this Certificate, the following:
{ General. Except;with respect to Investment Property that is an obligation of the
United States Treasury, the fair market value of an investment means the price at which a
willing buyer would purchase the investment from a willing seller in a bona fide, arm's
length transaction. The fair market value of an Investment consisting of an obligation of
fl\renton\water&sewer 04 A-1
the United States Treasury that is purchased directly from the United States Treasury
shall be its purchase price.
Certificates of Deposit. The market price of a certificate of deposit issued by a
commercial bank that has a fixed interest rate, a fixed principal payment schedule, a fixed
maturity, and a substantial penalty for early withdrawal means its purchase price if the
certificate of deposit has a yield not less than (A)the yield on reasonably comparable
direct obligations of the United States, and (B)the highest yield that is published or posed
by the provider to be currently available from the provider on comparable certificates of
deposit offered to the public.
Guaranteed Invfstment Contracts. Except as provided in the definitions of
Nonpurpose Payments ad Nonpurpose Receipts, in the case of a guaranteed investment
contract, the obligations acquired thereunder shall be considered acquired or disposed of
for an amount equal to the fair market value of such obligations if all of the following
requirements are satisfied:
(A) The issuer makes a bona fide solicitation for the purchase of the
investment. A bona fide solicitation is a solicitation that satisfies all of the following
requirements:
(1) The bid specifications are in writing and are timely
forwarded to potential providers.
(2) The bid specifications include all material terms of the bid.
A term is material if it may directly or indirectly affect the yield or the cost of the
investment.
(3) The bid specifications include a statement notifying
potential providers that submission of a bid is a representation that the potential provider
did not consult with any other potential provider about its bid,that the bid was
determined without regaid to any other formal agreement that the potential provider has
with the issuer or any other person(whether or not in connection with the bond issue),
and that the bid is not being submitted solely as a courtesy to the issuer or any other
person for purposes of satisfying the requirements of paragraph(B)(1) or(B)(2) of this
definition. I
(4) The terms of the bid specifications are commercially
reasonable. A term is commercially reasonable if there is a legitimate business purpose
for the term other than to increase the purchase price or reduce the yield of the
investment.
(5) The terms of the solicitation take into account the issuer's
reasonably expected deposit and drawdown schedule for the amounts to be invested.
f:\renton\water&sewer 04 A-2
(6) All potential providers have an equal opportunity to bid.
For example, no potential provider is given the opportunity to review other bids (i.e., at
last look)before providing a bid.
(7) At least three reasonably competitive providers are
solicited for bids. A reasonably competitive provider is a provider that has an established
industry reputation as a competitive provider of the type of investments being purchased.
(B) The bids received by the issuer meet all of the following
requirements:
• (1) The issuer receives at least three bids from the providers
that the issuer solicited under a bona fade solicitation meeting the requirements of
paragraph(A) of this definition and that do not have a materiefinancial interest in the
issue. A lead underwriter in a negotiated underwriting transaction is deemed to have a
material financial interest in the issue until 15 days after the issue date of the issue. In
addition, any entity acting as a financial advisor with respect to the purchase of the
investment at the time the bid specifications are forwarded to potential providers has a
material financial interest in the issue. A provider that is a related party to a provider that
has a material financial interest in the issue is deemed to have a material financial interest
in the issue.
(2) At least one of the three bids described in paragraph(B)(1)
of this definition is from la reasonably competitive provider, with the meaning of the
paragraph(A)(7) of this definition.
(3) If the issuer uses an agent to conduct the bidding process,
the agent did not bid to p ovide the investment.
(C) The winning bid is the highest yielding bona fade bid(determined
net of any broker's fees)
(D) The obligor on the guaranteed investment contract certifies the
administrative costs that it pays(or expects to pay, if any) to third parties in connection
with supplying the investment.
(E) The issuer retains the following records with the bond documents
until three years after the last outstanding bond is redeemed:
(1) A copy of the contract.
(2) The receipt or other record of the amount actually paid by
the issuer for the investments, including records of any administrative costs paid by the
issuer, and the certification under paragraph(D) of this definition.
f:\renton\water&sewer 04 A-3
(3) For each bid that is submitted, the name of the person and
entity submitting the bid; the time and date of the bid, and the bid results.
(4) The bid solicitation form and, if the terms of the guaranteed
investment contract deviated from the bid solicitation form or a submitted bid is
modified, a brief statement explaining the deviation and stating the purpose for the
deviation. For example, if the issuer purchases a portfolio of investments for a yield
restricted defeasance escrow and, in order to satisfy the yield restriction requirements of
section 148, an investment in the winning bid is replaced with an investment with a lower
yield,the issuer must retain a record of the substitution and how the price of the
substitute investment wais determined. If the issuer replaces an investment in the winning
bid portfolio with another investment, the purchase price of the new investment isnot
covered by the safe harbor unless the investment is bid under a bidding procedure
meeting the requirements of this definition.
Final Computation Date means the date the last Bond is discharged.
II
Gross Proceeds shall halve the meaning contained in Treasury Regulations
Section 1.148-1(b), and shall generally include amounts which are:
(a) Actually or constructively received from the sale of the Bonds, including
amounts used to pay Underwriter's discount or compensation and accrued interest other
than Pre-Issuance Accrued Interest;
(b) Investment proceeds (defined in Treasury Regulations Section 1.148-1(b)
to include amounts actually or constructively received at any time by the City, such as
interest and dividends, from the investment of proceeds of the Bonds);
(c) Treated as proceeds under Treasury Regulations Section 1.148-1(c) (which
treats amounts in invested sinking funds and pledged funds for an issue as proceeds of an
issue), including amounts in the Bond Fund;
1
(d) Invested in a reasonably required reserve or replacement fund (as defined
in Treasury Regulations{Section 1.148-2(f));
(e) Pledged by the City as security for payment of debt service on the Bonds;
(f) Used to pay debt service on the Bonds.
Such term shall not include amounts that are not otherwise Gross Proceeds but that are allocated
to the Rebate Requirement. The determination of whether an amount is included within this
definition shall be made without regard to whether the amount is credited to any fund or account
established under the Bond Ordinance. For purposes of(e) above, an amount is pledged to pay
principal of or interest on the Bonds if there is reasonable assurance that the amount will be
available to be used for such purposes in the event that the City encounters financial difficulties.
f:\renton\water&sewer 04 A-4
Installment Computation Date means the last day of the fifth Bond Year and each
succeeding fifth Bond Year.
Investment Property means any security or obligation (other than tax exempt
obligations that are not"specified private activity bonds"within the meaning of
Section 57(a)(5)(C) of the Code or a tax-exempt mutual fund that invests in tax-exempt bonds
other than specified private activity bonds), any annuity contract or any other investment type
property.
Investment-type Property means any property, other than property described in
Section 148(b)(2)(A), (B), (C), or(E) of the Code,that is held principally as a passive vehicle for
the production of income. Except as otherwise provided, a prepayment for property or services
is investment-type property if a principal purpose for prepaying is to receive an investment return
from the time the prepayment is made until the time payment otherwise would be made. A
prepayment is not investment-type property if:
(a) The prepayment is made for a substantial business purpose other than
investment return and the plan has no commercially reasonable alternative to the
prepayment, or
(b) Prepayments on substantially the same terms are made by a substantial
percentage of persons who are similarly situated to the City but who are not beneficiaries
of tax-exempt financing
Net Sale Proceeds means Sale Proceeds, less theortion of those Sale Proceeds invested
p d ve ted
in a reasonably required reserveI or replacement fund under Section 148(d) of the Code.
Nonpurpose Investment means any Investment Property in which Gross Proceeds are -
invested or to which Gross Proceeds are allocated other than Purpose Investments. Nonpurpose
Investments shall not include:
(a) United States Treasury Demand Deposit Securities -- State and Local
Government Series; and
(b) Tax Exempt Obligations.
For purposes of this Certificate,the term"Tax-Exempt Obligations"shall include only
obligations the interest on which is (i) excluded from gross income for federal income tax
purposes, and (ii)not treated asIan item of tax preference under Section 57(a)(5) of the Code.
The term"Tax-Exempt Obligation" shall,however, include an interest in a regulated investment
company(within the meaning of Section 851(a) of the Code) to the extent that at least 95% of
the income to the holder is interest that is excluded from gross income by Section 103(a) of the
Code.
Nonpurpose Payments mean: (a) amounts actually or constructively paid to acquire a
Nonpurpose Investment (or treated as paid to acquire a Nonpurpose Investment in a Commingled
f:\renton\water&sewer 04 A-5 •
Fund), (b) for a Nonpurpose Investment that is first allocated to the Bonds on a date after it is
actually acquired (e.g., an investment that becomes allocable to Replacement Proceeds) or that
become subject to the Rebate Requirement on a date after it is actually acquired,the Value of
that investment on that date, (c) for a Nonpurpose Investment that was allocated to the Bonds at
the end of the preceding computation period, the Value of that investment at the beginning of the
computation period, (d) the Computation Date Credit, and(e)yield reduction payments as
described in Section 3(k)(5)hereof.
Nonpurpose Receipts mean: (a) amounts actually or constructively received from a
Nonpurpose Investment, (including amounts treated as received from Nonpurpose Investments
held by a Commingled Fund), such as earnings and return of principal, (b) or a Nonpurpose
Investment that ceases to be allocated to an issue before its disposition or redemption date or that
ceases to be subject to the Rebate Requirement on a date earlier than its disposition or
redemption date(e.g., an Investment allocated to a fund initially subject to the Rebate
Requirement but that subsequently qualifies as a bona fide debt service fund), the Value of that
Nonpurpose Investment on that date, and(c) for a Nonpurpose Investment that is held at the end
of a computation period, the Value of that investment at the end of that period. Treasury
Regulations Section 1.148-6(e)provides special rules for any fund containing both Gross
Proceeds of the Bonds in amounts in excess of$25,000 that are not Gross Proceeds of the Bonds
if the amounts in such fund are invested and accounted for collectively, without regard to the
source of funds deposited in the fund (a"Commingled Fund").
Plain Par Investment means an investment that is (a) issued with not more than a de
minimis amount of original issue discount or premium or, if acquired on a date other than its
issue date, acquired with no more than a de minimis amount of market discount or premium,
(b) issued for a price that does riot include accrued interest other than Pre-Issuance Accrued
Interest, (c)bears interest from its issue date at a single stated, fixed rate or that is a variable rate
debt instrument, in each case with interest unconditionally payable at least annually, and (d)has
a lowest stated redemption price that is not less than its outstanding stated principal amount. For
this purpose, de minimis shall mean,with reference to original issue discount or premium, an
amount that does not exceed 2%multiplied by the stated redemption price at maturity plus any
original issue premium that is attributable exclusively to reasonable Underwriter's compensation
and, in reference to market discount or market premium, an amount that does not exceed 2%
multiplied by the stated redemption price at maturity.
Pre-Issuance Accrued Interest means amounts representing interest that accrued on the
Bonds for a period not greater than one year before the Date of Issue, but only if these amounts
are paid within one year after the Date of Issue.
Present Value means,with respect to an investment, an amount equal to the present
value of all unconditionally payable receipts to be received from and payments to be paid for the
investment after that date using the yield on the investment as the discount rate, computed under
the economic accrual method, using the same compounding interval and financial conventions
used to compute the Bond Yield.
f:\renton\water&sewer 04 A-6
• I
Rebate Requirement shall have the meaning ascribed thereto in Section 4(e) of this
Certificate.
Replacement Proceeds means amounts that have a sufficiently direct nexus to the Bonds
or to the governmental purpose of the Bonds to conclude that the amounts would have been used
for that governmental purpose if Ole proceeds of the Bonds were not used or to be used for that
4 ? governmental purpose. For this purpose, governmental purposes include the use of amounts for
the payment of debt service on a articular date. Replacement Proceeds include,but are not
limited to, sinking funds,pledge funds, and certain other amounts to the extent these funds or
1 amounts are held by or derived from a substantial beneficiary of the Bonds.
Sale Proceeds means any amounts actually or constructively received from the sale of
the Bonds.
Treasury Regulations means regulations issued by the United States Treasury pursuant
to Sections 103 and 141 through 150 of the Code.
JI, Value means, with respect to an investment(including a payment or receipt on an
investment) on a date, an amount determined consistently using one of the following methods
with respect to such investment for all purposes of Section 148 of the Code: (a)with respect to a
i( I Plain Par Investment, its outstanding stated principal amount,plus any accrued interest unpaid on
that date, (b) any fixed rate investment may be valued at its Present Value on that date, and
(c) any investment may be valueld at its Fair Market Value on that date. Any yield-restricted
investment must be valued at its Present Value. Except with regard to (1)yield-restricted
investments, (2) investments allocated or de-allocated as a result of application of the Universal
Cap, or(3) amounts in a Commingled Fund, an investment must be valued at its Fair Market
Value on the date that it is first allocated to the Bonds or first ceases to be allocated to the Bonds
as a consequence of a deemed acquisition or deemed disposition.
1 ,
f:\renton\water&sewer 04 A-7
UNDERWRITER'S CERTIFICATE
We,D.A. DAVIDSON&CO., as underwriter of the$10,335,000 CITY OF RENTON,
WASHINGTON, WATER AND SEWER REVENUE BONDS, 2004(the "Bonds"),hereby
certify that:
1. Capitalized terms used but not defined herein shall have the meanings set forth in
Ordinance No. 5098 (the "Bond Ordinance") of the City of Renton(the"City").
2. A substantial amount(i.e., at least 10%of each maturity) of the Bonds was sold to
members of the public (excluding bond houses,brokers and other intermediaries)in an initial
bona fide public offering, at prices no higher than the prices for the Bonds set forth on the cover
page of the Official Statement pertaining to the Bonds (the"Official Statement"), dated
November 1, 2004.
3. In our judgment, the financial guaranty insurance policy(the"Bond Insurance
Policy") issued by MBIA Insurance Corporation(the"Bond Insurer"), was,necessary to obtain a
more favorable rating on the Bonds and to enable us to market the Bonds at a lower interest rate
than would otherwise have applied. The premium for the Bond Insurance Policy was negotiated
at arm's length, is comparable to charges made by the Bond Insurer in comparable transactions
in which the Bond Insurer has no involvement other than as guarantor, and is reasonable.
4. In our judgment,the present value of the premium paid for the Bond Insurance
Policy is less than the present value (using the yield-to-maturity on the Bonds, including
payments upon the Bond Insurance Policy, as the discount factor) of the interest reasonably
expected to be saved on the Bonds as a result of the purchase of said policy. Such judgment is
based upon comparisons made by us with reference to issues of securities,of similar character as
the Bonds,marketed at approximately the same time,but not secured by similar bond insurance.
5. The covenants of the City in the Bond Ordinance to maintain the funds in the
Reserve Account in an amount at least equal to the Reserve Requirement were necessary, in our
judgment, to enable us to market the Bonds successfully.
6. The weighted average maturity of the Bonds is 19.460 years.
7. The yield on the Bonds, computed on the basis of the initial offering prices for the
Bonds set forth on the cover pages of the Official Statement, is 4.5213%.
8. The City and Gottlieb, Fisher&Andrews, PLLC, as Bond Counsel, may each rely
upon the foregoing representations.
f:\renton\water&sewer 04 1
DATED as of the 17th day of November, 2004.
D.A.DAVIDSON& CO.
By
FRED R. EOFF
Managing Director
1
•
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� ' II
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f:\renton\water&sewer 04 2
TAX CERTIFICATE
!� i
City of Renton, Washington
1055 South Grady
Renton,Washington 98058
RE: $10,335,000 City of Renton, Washington,Water and Sewer Revenue Bonds, 2004
(the "Obligations")
Ladies and Gentlemen:
In connection with the issuance of the above-referenced obligations(the"Obligations"),MBIA Insurance
- Corporation (the "Insurer") is issuing a financial guaranty insurance policy (the "Policy") securing the
payment of principal and interest on the Obligations.
This is to advise you that:
1. The Policy is an unconditional obligation of the Insurer to pay scheduled payments of
principal and interest on the Obligations in the event of a failure to do so by the City of Renton,
Washington (the "Issuer");
2. The insurance premium in the amount of$50,000 for the Policy, represents the charge for a
transfer of credit risk and was determined in arm's length negotiations and is required to be paid
as a condition to the issuance of the Policy;
3. No portion of such premium represents an indirect payment of costs related to the issuance
of the Obligations other than for the transfer of credit risk;
4. The Insurer does not reasonably expect that it will be called upon to make any payment
under the Policy;
5. To the extent the Insurer is called upon to make any payment under the Policy, the Insurer
reasonably expects to pursue all available legal remedies to secure reimbursement for such
payment; and
6. The Insurer would not have issued the Policy in the absence of a debt service reserve fund of
the size and type established by the Ordinance of the Issuer pursuant to which the Obligations are
being issued.
Dated: November 17, 2004
MEI* an • Cor ra on
,A 14" 11(
Assistant Secretary
I
Form .8038-G . Information Return for Tax-Exempt Governmental Obligations
► Under Internal Revenue Code section 149(e) OMB No.1545-0720
(Rev. November 2000) ► See separate Instructions.
Department of the Treasury
Internal Revenue Service Caution:If the issue price is under$100,000, use Form 8038-GC.
Part.I Reporting Authority If Amended Return,check here ► 0
1 Issuer's name 2 Issuer's employeridentification number
' City of Renton,Washington 91 i 6001271
3 Number and street(or P.O. box if mail is not delivered to street address) Room/suite 4 Report number
1055 South Grady Way I 3 01
5 City,town, or post office,state,and ZIP code 6 Date of issue
Renton,Washington 98055 i. November 17,2004
7 Name of issue CITY OF RENTON,WASHINGTON 8 CUSIP number
WATER AND SEWER REVENUE BONDS,2004 760167 SN 7
9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephorrerrberofofficeorlegatepeserative
Victoria A.Runkle,Finance and Information Systems Administrator ( 425 )430-6858
Part II Type of Issue (check applicable box(es) and enter the issue price) See instructions and attach schedule
11 ❑ Education 1 11
12 ❑ Health and hospital I 12
13 ❑ Transportation I • 13
14 ❑ Public safety 14
- 15 ❑ Environment(including sewage bonds) 15 ________
16 0 Housing 16
17 0 Utilities 1 7 10,706,747.65
18 CI Other. Describe►
19 If obligations are TANs or RANs, check box ► ❑ If obligations are BANs, check box ► ❑ r
20 If obligations are in the form of a lease or installment sale, check box ► I=1 �/ 4
Part III Description of Obligations'. Complete for the entire issue for which this form is being filed.
(a)Final maturity date (b)Issue price (c)Stated redemption (d)Weighted (e)Yield
price at maturity average maturity
21 1211/2027 $ 10,706,747.65 $ 10,335,000.00 19.460 years 4.5213 %
Part IV Uses of Proceeds of Bond Issue (including underwriters' discount)
22 Proceeds used for'accrued interest J 22 22,554.67
23 Issue price of entire issue (enter amount from line 21, column(b))
23 10,706,747.65
24 Proceeds used for bond issuance costs(including underwriters'discount) . 24 139,325.00
I 25 Proceeds used for credit enhancement 25 50,000.00
26 Proceeds allocated to reasonably required reserve or replacement fund . 26 507,480.00
27 Proceeds used to currently refund prior issues 27
28 Proceeds used to advance refund prior issues 28 j
29 Total (add lines 24 through 28) 29 696,805.00
30 Nonrefunding proceeds of the issue(subtract line 29 from line 23 and enter amount here). . . 30 10,009,942.65
Part V Description of Refunded'Bonds (Complete this part only for refunding bonds.)
31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . ► years
32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . ► years
33 Enter the last date on which the refunded bonds will be called ►
34 Enter the date(s)the refunded bonds were issued ►
• Part VI Miscellaneous .
35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . 35
36a Enter the arrant of grass proceeds invested or to be invested in a guaranteed investment contract(see instructions) 36a
b Enter the final maturity date of the guaranteed investment contract ► 4
' 37 Pooled financings: a Proceeds of this issue that are to be used to make bars to other governmental units 37a
b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the
issuer► I and the date of the issue ►
38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . ► ❑
39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ► ❑
40 If the issuer has identified a hedge, check box ► ❑
Under penalties of perjury,I declare that I have'examined this return and accompanying schedules and statements,and to the best of my knowledge
and belie they are true,correct,and complete.
Sign . VICTORIA A.RUNKLE,Finance and
Here I.r 11;_k_ 31,-Z November 17,2004 Information Systems Administrator
Signature of issuer's authorized: presentative Date /Type or print name and title
' For Paperwork Reduction Act Notice, see page 2 of the Instructions. Cat. No.63773s Farm 8038-G (Rev. 11-2000)
AFFIDAVIT OF MAILING
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
The undersigned,being first duly sworn on oath, deposes and states that on the 23rd day of
November, 2004, she caused to be deposited in the U.S. mail, certified mail,return receipt
requested,with postage prepaid, an envelope addressed to:
Internal Revenue Service
1160 West 1200 South
Ogden,Utah 84201
containing the original Form 8038-G regarding the issuance of the following bonds:
$10,335,000
CITY OF RENTON,WASHINGTON
WATER SAND SEWER REVENUE BONDS, 2004
Al.
Mary J. T
SIGNED AND SWORN TO before me on this 23rd day of November, 2004,by Mary J.
Turtle.
( amP� F/
Seal orst '�
��1
i A4-fr,f
Notary Signature
<c.
�� N ' Print/Type Name
Notary Public in and for e ta`
l `'rarr
OF ;!A5'� �` Washington,residing at _.
My appointment expires J3'70
1 -
f:\renton\water&sewer 04
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BOND REPORT FORM 101 DEPARTMENT OF COMMUNITY
TRADE AND ECONOMIC DEVELOPMENT
ATTN: Bond Users Clearinghouse
Office Use Only: 906 COLUMBIA STREET S.W.
Date Received: P.O.BOX 48350
OLYMPIA,WASHINGTON 98504-8350
FAX: (360) 586-4162
Control Number: PHONE: (360)-725-3001
Chapter 39.44 RCW requires inform I tion on newly issued bonds to be supplied to the Department of
Community Development within 20.days of issuance. The Underwriter should submit information on the
report form provided by the Department. In cases where an issue is made without an underwriter, the
issuer or its representative should supply the information. A summary of the collected information will
be published at a later date.
NOTE: The issuer may opt to have an agent,such as an underwriter or bond attorney, complete the form
or appropriate portions thereof. For issues that the state fiscal agency registers, the state fiscal agency
should submit this form,with the issuer supplying necessary information.
1. Name and address of issuer: City of Renton,Washington -
1055 South Grady Way
Renton,WA 98055
2. County in which entity using bond proceeds is located: King County
3. Principal User(if different than issuer): Same
4. Exact title of bond(or"type of debt",if no title):
Water and Sewer Revenue Bonds,2004
5. Was the bond issue"voter-approved". ❑Yes ® No
_ I
6. Par value$10,335,000 Premium $371,747.65 Discount $
7. (a) Dated date of bond November 1,2004
(b) Date of bond sale November 1,2004
8. Net interest cost: 4.8203%
(See instructions for formula. If this rate is dependent on a variable factor, rather than fixed, simply
indicate"variable".)
9. What is the underlying security, on which this bond issue is based (i.e., taxes or other revenue stream
which support the debt)? The Bonds are payable solely from the Net Revenue of the City's
combined water and sewerage systems,including the storm and surface water sewer.
10. Name of financial advisor: N/A
11. Name of bond counsel: Gottlieb,Fisher Andrews,PLLC
12. Name of lead underwriter(s): D.A.Davidson Co.
13. Name of company insuring bond: MBIA
14. Name of registrar: Bank of New York
15. Name of trustee: N/A
16. Purpose for which proceeds will be used: The proceeds of the Bonds will be used for the purposes of
financing improvements incorporated in the Waterworks Utility Capital Improvement Program.,
making a deposit to the Reserve Fund and paying costs associated with the sale and issuance of the
Bonds.
17. Schedule of maturity:
(If schedule information is attached,it may be omitted here.)
Date Amount Int.Rate Date Amount Int.Rate
See Enclosed Official Statement- side Cover
18. Method of bond sale: ❑ competitive bids ® negotiated sale ❑ private placement
19. If it was a competitive sale,how many bids were received: N/A
20. If the bond sale was negotiated, express the gross underwriting spread (see instructions for
definition),either by:
(a) Dollars per thousand:
or
(b) total amount for the issue: $103,350
21. State the fee for bond counsel ser(ice. If this figure is an estimate or incomplete, designate with an
asterisk(*)after the figure: $13!300
22. Indicate other fees and costs associated with the bond issuance (not included as part of the costs in
questions#20 and 21). For figures which are estimates or incomplete, designate with an asterisk(*).
Legal Counsel Financial advisor
Feasibility study Bond insurance $50,000
Rating agency $19,500 Advertising/printing
Trustee Out-of-state travel
Credit Enhancement Miscellaneous $3,175
(letter of credit,etc.)
23.Was the bond rated? ® Yes .❑ No If yes,state the rating given by each agency.
Standard&Poors AAA(underlying: AA-) Fitch AAA(underlying AA-)
24. IMPORTANT: RCW 39.44.210 requires a copy of the bond covenants to be submitted with this
report form. Have you submitted such copy?
® Yes ❑ No If not, state the reason and/or your intended submission date.
Is a copy of the official statement or offering circular available?
® Yes ❑ No If yes,it should be included with this report.
25. This information has been submitted by:
Name: Crystal Vogl Title: Associate
Affiliation: Underwriter Phone: (406)791-7214
Address: P.O.Box 5015 Date: January 22,2005
Great Falls,MT 59403
GOTTLIEB, FISHER ? ANDREWS, PLLC
ke
ATTORNEYS AT LAW
November 17, 2004
City of Renton, Washington
Renton, Washington 98055
Ladies and Gentlemen:
We have acted as bond counsel to the City of Renton, Washington(the "City"), in
connection with the issuance by the City of the bonds described below (the"Bonds"):
$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Dated: November 1, 2004
The Bonds are issued pursuant to Ordinance No. 5098 of the City(the "Bond
Ordinance") and other proceedings duly had and taken in conformity therewith. The Bonds are
issued for the purpose of providing a part of the funds necessary to carry out the system or plan
for additions to and betterments and extensions of the Waterworks Utility, to make a deposit to
the Reserve Fund, and to pay the costs related to the sale and issuance of the Bonds, all as
specified in the Bond Ordinance.
The Bonds are issued as fully registered bonds in the denomination of$5,000 each or in
any integral multiple thereof within a single maturity. The Bonds bear interest (computed on the
basis of a 360-day year of twelve 30-day months) from their date or from the most recent interest
payment date to which interest has been paid or duly provided for,whichever is later,payable on
December 1, 2004, and semiannually thereafter on December 1 and June 1 of each year to the
maturity thereof. The Bonds bear interest at the rates and shall mature on December 1 of each of
the years and in the principal amounts set forth below:
Maturity Years Interest
(December 1) Amounts Rates
2013 $ 205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024* 4,605,000 5.00
2025 ' 1,600,000 5.00
2026 1,680,000 5.00
2027 1,760,000 5.00
*Term Bonds
520 Pike Street,Suite 2510 Seattle,WA 98101-4006
(206)654-1999 Phone (206)654-8725 Fax
City of Renton, Washington
November 17, 2004
Page 2
The Bonds are subject to redemption prior to maturity at the times and in the manner
described in the Bond Ordinance. The City has reserved the right to purchase any or all of the
Bonds in the open market at any time and at any price.
In rendering this opinion letter,we have examined the following: (i)the Bond
Ordinance; (ii) a copy of one executed and authenticated Bond(we assume that all other Bonds
are in the same form and have been similarly executed and authenticated); and(iii) the certified
proceedings of the City and other lIcertificates of public officials and representatives of the City
that have been furnished to us and which comprise the,transcript of proceedings pertaining to the
issuance of the Bonds (the "Transcl ript").
As to questions of fact material to the opinions expressed herein,we have relied upon the
certified proceedings of the City and other certificates of public officials and representatives of
the City that have been furnished to us as part of the Transcript, all without undertaking to verify
the same by independent investigation.
Based only upon the foregoing and our examination of such questions of law as we have
deemed necessary or appropriate for the purpose of this opinion letter, and subject to the
limitations and qualifications expressed below,we are of the opinion that, as of this date:
1. The Bonds are lawfully authorized and issued pursuant to and in full compliance
with the Constitution and statutes of the State of Washington,the Bond Ordinance and
Ordinance No. 4709 of the City.
2. The Net Revenue (as defined in the Bond Ordinance)hereafter collected has been
pledged to the payments to be made into the"2004 Waterworks Revenue Bond Fund" (the
"Bond Fund") as set forth in the Bond Ordinance, and the Bonds constitute a lien and charge on
-1 Net Revenue prior and superior to any other charges whatsoever, except that the lien and charge
on such Net Revenue for the Bonds shall be'on a parity with the lien and charge thereon for other
Parity Bonds (defined in the Bond Ordinance).
3. The Bonds are legal, valid and binding special fund revenue obligations of the
City,payable solely out of the Bond Fund, enforceable against the City in accordance with their
terms, subject to the limitations as to enforceability of laws relating to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights, and also to the
exercise of judicial discretion in accordance with general principles of equity. The Bonds are not
general obligations of the City.
4. The Bonds are not"private activity bonds," as defined in the Internal Revenue
Code of 1986, as amended(the "Code").
5. Assuming compliance by the City with applicable requirements of the Code that
must be met subsequent to the issuance of the Bonds, the interest on the Bonds is excludable
from gross income for federal income tax purposes under existing federal law, and is not an item
of tax preference for purposes of determining the federal alternative minimum tax imposed on
•
City of Renton, Washington
November 17, 2004
Page3
individuals and corporations under existing federal law. However, under existing federal law,
interest on the Bonds is taken into account in determining adjusted current earnings for the
purpose of computing the alternative minimum tax imposed on certain corporations.
Except as stated in the preceding paragraphs 4 and 5,we express no opinion as to any
federal or state tax consequences of the ownership or disposition of the Bonds.
The Code contains certain!requirements that must be satisfied subsequent to the issuance
of the Bonds in order to maintain lithe exclusion of interest on the Bonds from gross income for
federal income tax purposes, including requirements relating to application of the proceeds of the
Bonds, use of facilities financed with such proceeds, limitations on income derived from the
investment of gross proceeds of the Bonds (as defined in Section 148 of the Code), and rebate to
the United States Treasury of certain investment earnings on such gross proceeds. The City has
covenanted to comply with these requirements to the extent applicable, and the opinions
expressed in paragraphs 4 and 5 assume such compliance. However, we have not undertaken
and do not undertake to monitor compliance by the City with such requirements; and if the City
should fail to comply with such requirements, interest on the Bonds could become includable in
gross income for federal income tax purposes retroactive to the date of issuance of the Bonds.
We have not been engaged to participate in the preparation or review of, or express any
opinion concerning the completeness or accuracy of, the official statement or other disclosure
documentation used in connection with the offer or sale of the Bonds;and thus express no
opinion concerning the completeness or accuracy thereof.
Copies of this opinion letter may be delivered to the Owners of the Bonds,who may rely
on this opinion letter as if it were addressed to them on the date hereof. Subject to the foregoing,
this opinion letter may be relied upon by you only in connection with the issuance of the Bonds
and may not be used or relied upon by you or any other person for any other purpose whatsoever,
without in each instance our prior written consent. We expressly disclaim any responsibility to
advise you or any Owners of any developments in areas covered by this opinion letter that occur
after the date hereof.
Respectfully submitted,
GOTTLIEB, FISHER&ANDREWS, PLLC
By
Judith L. Andrews
f:\renton\w&s 04 •
i I i
MBIA Insurance Corporation
113 King Street, Armonk, NY 10504
�B� Tel 914-273-4545
www.mbia.com
Capital Strength. Triple-A Performance.
November 17, 2004
City of Renton, Washington
1055 South Grady
Renton,Washington 98058
•
D.A. Davidson & Co.
Bank of America Tower
701 Fifth Avenue, Suite 3100
Seattle,Washington 98104
$10,335,000 .
City of Renton,Washington
Water and Sewer Revenue Bonds, 2004
j I
Ladies and Gentlemen:
I am Deputy General Counsel of the MBIA Insurance Corporation, a New York corporation (the
"Corporation"), and have acted as counsel to the Corporation in connection with the issuance of
Financial Guaranty Insurance Policy No. 45224 (the "Policy") relating to $10,335,000 City of
Renton, Washington,Water and Sewer Revenue Bonds, 2004
In so acting, I have examined a copy of the Policy and such other relevant documents as I have
deemed necessary.
Based upon the foregoing, I am'of the following opinion:
1. The Corporation is a stock insurance corporation, duly incorporated and validly existing
under the laws of the State of New York and is licensed and authorized to issue the Policy
under the laws of the State of New York.
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AOIBIA
•
Page 2
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2. The Policy has been duly executed and is a valid and binding obligation of the Corporation
enforceable in accordance with its terms except that the enforcement of the Policy may be
limited by laws relating to bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).
V; y tru yours,
'c ael S. Knopf
Deputy General Counsel
•
CLOSING MEMORANDUM
$10,335,000
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
CLOSING DATE: November 17, 2004
This memorandum outlines the actions taken in connection with the issuance and delivery
of the above-referenced bonds (the"Bonds"). The issuance and delivery of the Bonds, in
exchange for payment in full therefor(the"Closing"), was held at the offices of Gottlieb,Fisher
&Andrews, PLLC ("Bond Counsel"), 520 Pike Street, Suite 2510, Seattle, Washington 98101,
commencing at 9:00 a.m., on November 17,2004.
The delivery of all documents and all other actions taken at the Closing were considered
to have been made and taken simultaneously, and no delivery or action was considered to have
been made or taken until all deli'eries and actions constituting a part of the Closing were
completed.
Capitalized terms defined in Ordinance No. 5098 (the"Bond Ordinance") of the City of
Renton, Washington(the"City") and used herein shall have the same meanings when used in,
this memorandum,unless the context otherwise directs.
I. Actions Taken Prior to Closing
A. Authorization of Issuance and Sale of the Bonds.
On November 1, 2004,pursuant to the Bond Ordinance, the City, authorized, inter alia,
the issuance and delivery of the onds for the purpose of obtaining the funds with which to pay
the costs of carrying out certain capitalBimprovements of the waterworks utility; fixing the date,
form, denominations, maturities,:i interest rates,,terms and covenants of the Bonds; providing for
bond insurance; and approving the sale and providing for the delivery of the Bonds to D.A.
Davidson&Co. (the"Underwriter") and authorized the execution and delivery, on behalf of the
City, of the Bond Purchase Agreement. The City Council found that the conditions for the
issuance of Future Parity Bonds as set forth in Ordinance Nos. 4709, 4976 and 5019 have been
satisfied and that there will be on file prior to the issuance and delivery of the Bonds a certificate
of the City Finance Director that satisfies the conditions for such certificate as set forth in
Ordinance Nos. 4709, 4976 and'5019. Therefore, the City Council found that the Bonds shall be
issued on a parity of lien with the Parity Bonds.
{ B. Execution of Bond Purchase Agreement.
The Bond Purchase Agreement was executed by the City and the Underwriter on
November 1, 2004.
f:\rentan\water&sewer 04 1
C. Commitment for Bond Insurance.
On November 1, 2004, MBIA Insurance Corporation(the"Bond Insurer") issued its
commitment to issue a financial guaranty insurance policy for the Bonds (the"Bond Insurance
Policy"),upon the payment of a premium of$50,000 and the satisfaction of certain conditions set
forth in the commitment.
D. Preparation and Execution of the Bonds.
The Bonds, in form prescribed by the Bond Ordinance and approved by the Underwriter,
were prepared by Bond Counsel,manually executed by the Mayor and the City Clerk of the City
and impressed with the seal of the City.
E. Authentication of the Bonds.
The executed Bonds were authenticated by The Bank of New York, the Fiscal Agency of
the State of Washington in New York,New York(the"Bond Registrar"), and were held by the
Bond Registrar in escrow for The Depository Trust Company("DTC"),New York,New York,
pending the completion of the Closing.
F. Delivery of Documents to Bond Counsel.
All of the other agreements, certificates, letters, opinions and documents listed on Exhibit
A hereto were prepared by the persons listed under the heading"Responsibility" on Exhibit A,
and were delivered by such persons to Bond Counsel to be held in escrow by Bond Counsel
pending the completion of the Closing.
II. Actions Taken at Closing
A. Review of Documents.
All of the agreements, certificates, letters, opinions and other documents listed on
Exhibit A hereto were reviewed(to the extent each deemed necessary)by the City, the
Underwriter and all other persons having executed or having any interest in any document listed
on Exhibit A hereto, and all of said persons indicated to Bond Counsel their approval of the form
and substance of such documents.
B. Execution of Documents.
All of the agreements, certificates, letters, opinions and other documents listed on
Exhibit A hereto which required execution and had not previously been executed, were executed
by the appropriate persons and delivered to Bond Counsel and were held in escrow by Bond
Counsel pending the completion of the Closing.
f:\renton\water&sewer 04 2
C. No Litigation.
The City confirmed that no litigation or other proceedings were pending or threatened
regarding the Bonds or affecting the transaction.
D. Payment of Purchase Price.
On the date of Closing, the Underwriter paid, on behalf of the City,to the Bond Insurer,
by means of a wire transfer, the premium for the Bond Insurance Policy in the amount of
$50,000.00. The Underwriter paid to the City the sum of$10,575,952.32, said sum being full
payment of the balance of the purchase price therefor, computed as follows:
Principal Amount of the Bonds $10,335,000.00
Plus: Net Original Issue Premium 371,747.65
Plus: Accrued Interest frgm 11/1/04 22,554.67
Less: Underwriter's Discount (103,350.00)
Purchase Price of the Bonds $10,625,952.32
'- Less: Premium for Bond Insurance Policy (50,000.00)
Balance I $10,575,952.32
Said amount was paid in same day funds by means of a federal funds wire transfer.
E. Application of Balance of Purchase Price Proceeds.
Immediately upon receipt of the balance of the purchase price of the Bonds, the City
made the following deposits, as 'required pursuant to the Bond Ordinance:
(1) The accrued interest on the Bonds, in the amount of$22,554.67,was
deposited into the Bond Fund to be applied to the payment of interest on the Bonds on
December 1, 2004.
(2) The remaining proceeds of the sale of the Bonds, in the amount of
$10,553,397.65, shall be applied,upon receipt, as follows: an amount equal to the
increase in the Reserve Requirement attributable to the issuance of the Bonds, in the
amount of$507,480.00,;shall be deposited into the Reserve Fund, and the remainder, in
the amount of$10,045,917.65, shall be deposited into the Project Fund to pay part of the
costs of the Project.
+( _ F. Release of Bond Documents.
II I
The'City, the Underwriter, the Bond Insurer and all other persons having executed or
having an interest in any document listed on Exhibit A hereto, or their authorized representatives,
3
f:\rentor\water&sewer 04
authorized Bond Counsel to release and deliver to the persons entitled to the same, the
agreements, certificates, letters, opinions and other documents listed on Exhibit A hereto which
had been held in escrow by Bond Counsel pending the completion of the Closing.
G. Delivery of the Bonds; Completion of Closing.
Bond Counsel called the Bond Registrar and authorized them to authorize DTC to release
the Bonds upon order from the Underwriter. Bond Counsel then declared that the Closing was
completed.
IILI Actions Taken After Closing
A. Loose Transcripts. Three loose copies of the Transcript of Proceedings were
delivered to the Bond Insurer and Ione loose copy was delivered to Bond Counsel, shortly after
the completion of Closing.
B. Bound Transcripts. Bound Transcripts of Proceedings were distributed by Bond
Counsel after Closing, as follows:'
City of Renton 3
D.A. Davidson&Co. 1
Gottlieb, Fisher&Andrews,PLLC 1
TOTAL 9
� I
1
•
ii
fl\renton\water&sewer 04 4
EXHIBIT A
$10,335,000
CITY OF RENTON,WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
DOCUMENT RESPONSIBILITY
- 1
Certificate as to Transcript Bond Counsel
Ordinance No. 4709 authorizing the sale City
and issuance of the 1998 Bonds
Ordinance No. 4976 authorizing the sale
and issuance of the 2002 Bonds! City
Ordinance Nos. 5019 and 5020 authorizing the sale
and issuance of the 2003 Bonds City
Ordinance No. 5098 authorizing the sale
and issuance of the Bonds City
Minutes of City Council Meeting re Ordinance No. 5098 City
Affidavit of Publication of Ordinance No. 5098 City
Letter of Representations Bond Counsel
Bond Purchase Agreement Bond Counsel
Preliminary Official Statement Underwriter
Official Statement Underwriter
Disclosure Certificate Bond Counsel
Disclosure Certificate of Bond Insurer Bond Insurer
Rating Letters Bond Insurer
Bond Insurance Commitment Bond Insurer
Parity Debt Certificate Bond Counsel
Signature, Incumbency and No' Litigation Certificate Bond Counsel
f:\rentan\water&sewer 04 A-1
Certificate Re Authentication and Registration of the Bonds Bond Counsel
Specimen Bond Bond Counsel
Specimen Insurance Policy
Bond Insurer
Certificate of Delivery and Payment Bond Counsel
Underwriter's Receipt Bond Counsel
Tax Exemption and Nonarbitrage Certificate Bond Counsel
Underwriter's Certificate Bond Counsel
Bond Insurer Tax Certificate Bond Insurer
IRS Form 8038-G and Affidavit of Mailing Bond Counsel
Bond Report Form 101
Underwriter
Approving Opinion of Bond Counsel
Bond Counsel
Opinion of Counsel to Bond Insurer
Bond Insurer
Closing Memorandum Bond Counsel
I
f:\renten\water&sewer 04 A-2
Bond Closing and Funds Transfer Memorandum
From: Fred Eoff,D.A.Davidson&Co.
Date: November 3,2004
Re: City of Renton,Washington
Water&Sewer Revenue Bonds,2004
I mt•rw.,..!NM/. tN'lu•.-,/tl75R+11519@F 'M."z. 4,00.4. 1c14, -...�"':. _i39a XF.i`:SSI..iiCz!:W.7Aal ,11140 ".4~0f4 !.-~0.01.1, wr„s r,`�i'k'fniie."'KVIlitrOK"a4'Ld W.
This Memorandum summarizes details pertaining to Closing of the transaction referenced above.
Closing will be at the offices of Gottlieb Fisher&Andrews in Seattle,Washington on November 17,2004 at approximately 9:00 PT.
Final closing is expected to occur.telephonically upon confirmation of receipt of all wire transfers.
The detail of funds transfers,deposits and disbursements essential to Closing is as follows:
(1)The purchase price by D.A.Davidson of the 2004 Bonds is as follows:
Par Amount of 2004 Bonds $ 10,335,000.00
Plus:Reoffering Premium 371,747.65
Plus:Accrued Interest 22,554.67
Less:Underwriter's Discount (103,350.00)
10,625,952.32
(2) Prior to Closing on November 17,D.A Davids In will transfer the purchase price of the 2004 Bonds via two separate wire transfers
as follows:
Wire 1: $50,000.00 To MBIA Insurance Corporation as payment of the bond insurance premium.
Bank: J.P Morgan Chase Bank
ABA#: 021000021
For: MBIA Insurance Corporation
Acct#: 910-2-721728
Wire 2: 10,575,952.32 To the City of Renton.
Bank: U.S.Bank
Branch: Renton,Washington
ABA# 125000105
For: City of Renton
• Acct#: 153500698326
Ref: 2004 W&S Bonds
(3) The proceeds received by the City in Wire#2,above,should be allocated as follows:
I I '
Construction Fund 10,009,942.65
Debt Service Reserve Fund 507,480.00
Bond Fund-accrued interest 22,554.67
Costs of Issuance 35,975.00
$10,575,952.32
(6) The following costs of issuance items will be,disbursed by the City pursuant to invoices from the respective parties.
Fee Type Payable To Amount
Bond Counsel Gottlieb Fisher&Andrews $13,300.00
Rating Fee Fitch Ratings 7,500.00
Rating Fee Standard&Poors Rating Service 12,000.00
Underwriter Reimbursable Expenses D.A.Davidson&Co. 3,175.00
Total $35,975.00
r
Contacts: Fred Eoff,D.A.Davidson&Co. 206-903-8680
cellphone 206-979-1197
Victoria Runkle,City of Renton 425-430-6858
Judy Andrews,Gottlieb Fisher&Andrews 206-654-1999
Crystal Vogl,D.A.Davidson&Co. 406-791-7214
Jean Stimac,D.A.Davidson(closing coordinator) 406-791-7293
dot)'-I 6-04(Iii Le-
.
•
STATE OF WASHINGTON, COUNTY OF KING } CITY OF RENTON
AFFIDAVIT OF PUBLICATION NOTICE OF
ADOPTEDD BBYY THE
RENTON CITY COUNCIL
Following is a summary of
the ordinances adopted by the
PUBLIC NOTICE Renton City Council on October
Linda M Mills,being first duly sworn on oath that she is the Legal 15,2012:.
ORDINANCE NO.5671
Advertising Representative of the - An Ordinance of the City of
• Renton, Washington, amending
the City of Renton fiscal years
2011/2012 Biennial Budget as
Renton Reporter adopted by Ordinance No. 5583,
and • thereafter amended by •
Ordinance Nos. 5595, 5616,
• 5638, and 5656 in the amount of
$8,496,583, for an amended total •
a weekly newspaper, which newspaper is a legal newspaper of of$540,018,705 over the bienni-
general circulation and is now and has been for more than six months Um.
prior to the date of publication hereinafter referred to, ublished in Effective: 10/24/2012 S
h ORDINANCE NO.5672
the English language continuously as a weekly newspaper in King • An Ordinance of the City of
_
ounty,Washington._ The_Renton-Reporter-has been approved as -- Renton, Washington, authorizing_ __• the issuance of water and sewer
a Legal Newspaper by order of the Superior Court of the State of revenue refunding bonds in the •
Washington for King County. aggregate principal amount of
not to exceed $10,000,000 for
The notice in the exact form annexed was published in regular issues the purpose of refunding a por-
of the Renton Reporter (and not in supplement form) which was tion of the City's water and sewer
regularly distributed to its subscribers during the below stated period.
revenue bonds, 2 and covenants
the form, terms and covenants
The annexed notice, a: of the bonds; authorizing the
Public Notice appointment of an escrow agent
and execution of an escrow
agreement; delegating certain
authority to approve the final
terms of the bonds; and authoriz-
was published on October 19, 2012. ing the cash redemption of the
City's water and sewer revenue
����A\kk 1VA%tit.t refunding bonds,1998.
The.full amount of the fee charged for said foregoing publication is _ ?-. S{-0,� r,, Effective: 11/18/2012
the sum of$112.001 - ' .2.-7,...\\‘‘‘‘‘(111(. 'ri Complete text of these ordinanc-
es�c�\OIl e�io�4�� S! ��/�� es is available at Renton City
f j� .:---v-.. -c ARS 'A��i� Hall, 1055 South Grady Way;
i��� � 4.7��G�G : U to and posted at the King County
LLinda M. Mills _� f % Libraries in Renton, 100 Mill
y U G 5Z A Avenue South and 2902 NE 12th
Legal Advertising Representative, Renton Reporter %,� f'U13\- co:"ia= Street.
t Gk's Uponofficrequest
to
th 6City
Subscribed and sworn to me this 19th day of October, 2012. 7,,��S? ,,,, 4-19-"� --= C510,
copies will also(425)be ailed for a
•
fee.
N-Y---kl.,,,_
Q� • ,/rttlilt`lt \ Bonnie I.Walton,City Clerk
t ,1, �_ Published in Renton Reporter:
on_October 19, 2012. #692182
Kathleen C. Sherman,Notary Public for the State of Washington,
Residing in Buckley,Washington
I '
CITY OF RENTON, WASHINGTON
WATER AND SEWER REVENUE REFUNDING BONDS, 2012
ORDINANCE NO. 5672
AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, AUTHORIZING
THE ISSUANCE OF WATER AND SEWER REVENUE REFUNDING 'BONDS IN
THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $10,000,000 FOR
THE PURPOSE OF REFUNDING A PORTION OF THE CITY'S WATER AND
i
SEWER REVENUE BONDS, 2004; PROVIDING THE FORM, TERMS AND
COVENANTS OF THE BONDS; AUTHORIZING THE APPOINTMENT OF AN
ESCROW AGENT 1 ND EXECUTION OF AN ESCROW AGREEMENT;
DELEGATING CERTAIN AUTHORITY TO APPROVE THE FINAL TERMS OF THE
BONDS; AND AUTHORIZING THE CASH REDEMPTION OF THE CITY'S WATER
AND SEWER REVENUE REFUNDING BONDS, 1998.
PASSED: Octoberl5th, 2012
PREPARED BY:
PACIFICA LAW GROUP LLP
Seattle, Washington
ORDINANCE NO. 5672
TABLE OF CONTENTS*
Section 1. Definitions 3
Section 2. Findings Regarding Parity Provisions 14
Section 3. Authorization`and Description of Bonds 14
Section 4. Registration of Bonds and Book-Entry System 15
Section 5. Redemption; Purchase of Bonds 21
Section 6. Priority and Payment from the Waterworks Utility Fund 25
Section 7. Funds and Accounts 27
Section 8. Covenants 29
Section 9. Tax Covenants 33
Section 10. Future Parity Bonds 36
Section 11. Form of Bonds 39
Section 12. Execution of Bonds 42
Section 13. Lost,Stolen or Destroyed Bonds 42
Section 14. Sale of Bonds 43
Section 15. Application of Bond Proceeds; Plan of Refunding 45
Section 16. Bond Insurance 48
Section 17. Undertaking to Provide Continuing Disclosure 48
Section 18. Defeasance of the Bonds 53
Section 19. Amendments 53
Section 20. Call for Redemption of 1998 Bonds 56
Section 21. Contract; Savings Clause 56
Section 22:: General Authorization, Ratification of Prior Acts 57
Section 23. Effective Date of Ordinance 57
This Table of Contents is provided for convenience only and is not a part of this
ordinance.
-i-
CITY OF RENTON,WASHINGTON
ORDINANCE NO. 5672
AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, AUTHORIZING
THE ISSUANCE OF WATER AND SEWER REVENUE REFUNDING BONDS IN
THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $10,000,000 FOR
THE PURPOSE OF REFUNDING A PORTION OF THE CITY'S WATER AND
SEWER REVENUE BONDS, 2004; PROVIDING THE FORM, TERMS AND
COVENANTS OF THE BONDS; AUTHORIZING THE APPOINTMENT OF AN
ESCROW AGENT AND EXECUTION OF AN ESCROW AGREEMENT;
DELEGATING CERTAIN AUTHORITY TO APPROVE THE FINAL TERMS OF THE
BONDS; AND AUTHO8IZING THE CASH REDEMPTION OF THE CITY'S WATER
AND SEWER REVENUE REFUNDING BONDS, 1998.
WHEREAS, the City of Renton, Washington (the "City") has created and operates a
waterworks utility of the City, including the water, sewer, wastewater and storm drainage
systems (the "Waterworks Utility"); and
WHEREAS, the City issued and now has outstanding the following series of water and
sewer revenue bonds, each being payable on parity from the revenues of the Waterworks
Utility:
Authorizing , Original Outstanding
Series Ordirjance Principal Amount ,Principal Amount
1998 4709 $ 6,120,000 $ 1,045,000
2002 4976 11,980,000 1,025,000
2003 5019 8,035,000 415,000
2004 5098 ' 10,335,000 10,335,000
2007 5313 9,750,000 9,705,000
2008A 5313 9,975,000 9,975,000
2008B 5313 2;035,000 2,035,000
(collectively,the "Outstanding Parity Bonds"); and
r
•
' ORDINANCE NO. 5672
WHEREAS, the Outstanding Parity Bonds issued under date of November 1, 2004
mature in principal amounts and bear interest as follows:
Maturity Date Principal Interest
(December 1) - Amount Rate
2013 $ 205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024* 4,605,000 5.00
2025 1,600,000 5.00
2026 1,680,000 5.00
2027 1,760,000 5.00
; Term Bond
(the "2004 Bonds"); and
WHEREAS, the 2004 Bonds maturing on and after December 1, 2015 (the "Refunding
Candidates"), are subject to optional redemption, in whole or in part, on any date on and after
December 1, 2014, at a price of par plus interest accrued to the date of redemption; and
WHEREAS, after'due consideration it appears to this Council that all or a portion of the
Refunding Candidates (the "Refunded Bonds") may be defeased and refunded by proceeds of
water and sewer revenue refunding bonds authorized herein (the `Bonds") at a substantial
savings to the City and its ratepayers; and
WHEREAS, the respective ordinances authorizing the issuance of the Outstanding Parity
Bonds permit the issuance of additional bonds on a parity with the Outstanding Parity Bonds for
refunding purposes if certain conditions are met;and
WHEREAS, the City has received a proposal from Seattle-Northwest Securities
Corporation, Seattle, Washington (the "Underwriter") and now desires to issue and sell the
Bonds to the Underwriter as set forth herein; and
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ORDINANCE NO. 5672
WHEREAS, the Outstanding Parity Bonds issued under date of March 1, 1998 (the "1998
Bonds") maturing on December 1, 2012 and December 1, 2013 are subject to optional
redemption, in whole or in part, on any date on and after December 1, 2008, at a price of par
plus interest accrued to the date of redemption; and
WHEREAS; the City now desires to use available funds of the City refund in whole the
outstanding 1998 Bonds on December 1, 2012;
NOW, THEREFORE; THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON DOES
ORDAIN AS FOLLOWS:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
Acquired Obligations means the Government Obligations acquired by the City under the
terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of
the Refunded Bonds.
Annual Debt Service for any year means all the interest on plus all principal (except
principal of Term Bonds due i any Term Bond Maturity Year) of Parity Bonds, plus all
mandatory redemption and sink ng fund installments; less all bond interest payable from the
proceeds of any such bonds,which will mature or come due in that year.
Base Period means any consecutive 12-month period selected by the City out of the
24-month period next preceding the date of issuance of an additional series of Future Parity
Bonds.
. i
-3-
ORDINANCE NO. 5672
Beneficial Owner means any person that has or shares the power, directly or indirectly
to make investment decisions concerning ownership of any Bonds (including persons holding
Bonds through nominees, depositories or other intermediaries).
Bond Fund means that special fund of the City known as the Waterworks Revenue Bond
Fund, 2012 created by this ordinance for the payment of the principal of and interest on the
Bonds.
Bond Insurance Policy means the municipal bondinsurance policy, if any, issued by the
Insurer insuring the payment when due of the principal of and interest on all or a portion of the
Bonds as provided therein.
Bond Purchase Contract means the contract for the purchase of the Bonds between the
Underwriter and City, executed pursuant to Section 14 of this ordinance.
Bond Register means the registration books showing the name, address and tax
identification number of each Registered Owner of the Bonds, maintained pursuant to
Section 149(a) of the Code.
Bond Registrar means, initially, the fiscal agency of the State of Washington, for the
purposes of registering and authenticating the Bonds, maintaining the Bond Register, effecting
transfer of ownership of the Bonds and paying interest on and principal of the-Bonds.
Bond Year means each one-year period that ends on the date selected by the City. The
first and last Bond Years may be short periods. If noday is selected by the City before the
earlier of the final maturity date of the Bonds or the date that is five years after the date of
issuance of the Bonds, Bond Years end on each anniversary of the date of issue and on the final
maturity date of the Bonds.
-4-
ORDINANCE NO. 5672
Bonds mean the City's Water and Sewer Revenue Refunding Bonds, 2012, authorized to
be issued by this ordinance.
Call Date for the Refunded Bonds means December 1, 2014.
City means the City of Renton, Washington, a municipal corporation duly organized and
existing by virtue of the laws of t e State of Washington
Code means the Internal Revenue Code of 1986, as amended, and shall include all
applicable regulations and rulings relating thereto. •
Commission means the Securities and Exchange Commission.
Council means the City Council as the general legislative authority of the City, as duly
and regularly constituted from time to time.
Coverage Requirement prior to the New Covenant Date means in any calendar year
1.25 times the Maximum Annual Debt Service. From and after the New Covenant Date, the
term Coverage Requirement means in any calendar year 1.25 times the Annual Debt Service for
such year.
' Credit Facility means a olicy of municipal bond insurance, a letter of credit, surety
bond, line of credit, guarantee or other financial instrument or any combination of the
foregoing, which obligates a third party to make payment or provide funds for the payment of
financial obligations of the City. There may be one or more Credit Facilities outstanding at any
time.
Designated City Representative means the Mayor, the Chief Administrative Officer and
the Finance Director of the City, and any successor to the functions of such offices. The
signature of one Designated City Representative shall be sufficient to bind the City.
-5-
ORDINANCE NO. 5672
DTC means The Depository Trust Company, New York, New York, a limited purpose trust
company organized under the laws of the State of New York, as depository for the Bonds
pursuant to this ordinance.
Escrow Agent means U.S. Bank National Association;Seattle, Washington.
Escrow Agreement means the Escrow Deposit Agreement between the City and the
Escrow Agent to be dated as of the date of closing and delivery of the Bonds.
Finance Director means the City's Finance and Information Services Administrator or the
successor to such officer.
Fitch means Fitch, Inc., organized and existing under the laws of the State of Delaware,
its successors and their assigns, and, if such organization shall be dissolved or liquidated or shall
no longer perform the functions of a securities-rating agency, Fitch shall be deemed to refer to
any other nationally recognized securities rating agency designated by the City.
Future Parity Bonds means all water and sewer revenue bonds of the City issued after
the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a parity
with the lien and charge on Net Revenue for the payment of the principal of and interest on the
Outstanding Parity Bonds and the Bonds.
Government Obligations means those obligations now or hereafter defined as such in
chapter 39.53 RCW.
Gross Revenue means all of the earnings and revenues received by the City from the
maintenance and operation of the Waterworks Utility and all earnings from the investment of
money in the Reserve Fund or any Parity Bond Fund, and connection and capital improvement
charges collected for the purpose of defraying the cost of capital facilities of the Waterworks
-6-
ORDINANCE NO. 5672
Utility, except government grants, proceeds from the sale of Waterworks Utility property(other
than timber), City taxes collected by or through the Waterworks Utility, principal proceeds of
bonds and earnings or proceeds from any investments in a trust, defeasance or escrow fund
created to defease or refund Waterworks Utility obligations (until commingled with other
earnings and revenues of the Waterworks Utility) or held in a special account for the purpose of
paying a rebate to the United States Government under the Code.
Insurer means the municipal bond insurance company,if any, selected and designated
by the Designated City Representative, pursuant to Section 16 of this ordinance, as issuer of a
Bond Insurance Policy for all or a portion of the Bonds.
Letter of Representations means the Blanket Issuer Letter of Representations from the
City to DTC.
Maintenance and Operation Expense means all reasonable expenses incurred by the
City in causing the Waterworks Utility to be operated and.maintained in good repair, working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or otherutilityservice in
the event the.City combines such service in the Waterworks Utility and enters into a contract
for such service, and'including pro-rata budget charges for the City's administration expenses
where those represent a reasonable distribution and share of actual costs, but not including
any depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes,
or capital additions or capital replacements to the Waterworks Utility.
-7-
ORDINANCE NO. 5672
Maximum Annual Debt Service means, at the time of calculation, the maximum amount
of Annual Debt Service that will mature or come due in the current calendar year or any future
calendar year on the Parity Bonds.
Moody's means Moody's Investors Service, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, Moody's shall be deemed to refer to any other nationally recognized
securities rating agency designated by the City.
MSRB means the Municipal Securities Rulemaking Board or any successors to its
functions.
Net Proceeds, when used with reference with the Bonds, means the principal amount of
the Bonds, plusaccrued interest and original issue premium, if any, and less original issue
discount, if any.
Net Revenue means Gross Revenue less Maintenance and Operation Expense.
New Covenant Date means from and after the date when all Outstanding Parity Bonds
issued prior to 2007 are no longer Outstanding.
1998 Bond Ordinance means Ordinance No. 4709 adopted by the City Council on
March 9, 1998 authorizing the issuance of the 1998 Bonds.
1998 Bonds mean the Outstanding City of Renton, Washington, Water and Sewer
Revenue Refunding Bonds, 1998, with a dated date of March 1, 1998.
Outstanding means, as of any particular time, all Parity Bonds issued theretofore except
(a) Parity Bonds theretofore canceled by the Bond Registrar after purchase by the-City in the
open market or because of payment at, or redemption prior to, maturity; (b) Parity Bonds for
-8-
-
ORDINANCE NO. 5672
which funds have been deposited into a trust account pursuant to the ordinances authorizing
• the issuance of the Parity Bonds, but only to the extent that the principal of and interest on
such Parity Bonds are payable from such trust account; (c)temporary, mutilated, lost, stolen or
destroyed Parity Bonds for which new Parity Bonds have been issued pursuant to the ordinance
authorizing their issuance; and (d) Parity Bonds exchanged for new Parity Bonds pursuant to
the ordinances authorizing their ssuance.
Outstanding Parity Bon Ordinances mean the ordinances authorizing the issuance of
the Outstanding Parity Bonds identified in the recitals to this ordinance.
Outstanding Parity Bonds means the parity water and sewer revenue bonds of the City
identified in the recitals to this ordinance.
Parity Bonds means the Outstanding Parity Bonds, the Bonds and any Future Parity
Bonds.
Parity Bond Fund means any fund created for the payment and redemption of Parity
Bonds.
rParity Requirement mean Net Revenues equal to or greater than:
(a) 1.25 times the Maximum Annual Debt Service for all Parity Bonds plus the Future
Parity Bonds proposed to be issued; and
(b) 100% of Maximum Annual Debt Service for all subordinate lien evidences of
indebtedness secured by Gross Revenue.
Private Person means any natural person engaged in a trade or business or any trust,
estate, partnership, association, company or corporation.
-9-
ORDINANCE NO. 5672 •
Private Person Use means the use of property in a trade or business by a Private Person
if such use is other than as a member of the general public. Private Person Use includes
ownership of the property by the Private Person as well as other arrangements that transfer to
the Private Person the actual or beneficial use of the property (such as a lease, management or
incentive payment contract or other special arrangement) in such a manner as to set the
Private Person apart from the general public. Use of property as a member of the general
public includes attendance by the Private Person at municipal meetings or business rental of
property to the Private Person on a day-to-day basis if the rental paid by such Private Person is
the same as the rental paid by any Private Person who desires to rent the property. Use of
property by nonprofit community groups or community recreational groups is not treated as
Private Person Use if such use is incidental to the governmental uses of property, the property
is made available for such use by all such community groups on an equal basis and such
community groups are charged only a de minimis fee to cover custodial expenses.
Professional Utility Consultant means an independent licensed professional engineer,
certified public accountant or other independent person or firm selected by the City having a
favorable reputation for skill and experience with municipal utilities of comparable size and
character to the Waterworks Utility in such areas as are relevant to the purposes for which such
consultant is retained.
Qualified Insurance means any non-cancelable municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in-any
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies) which insurance company or companies, as of the time of issuance of
-10-
ORDINANCE NO. 5672
such policy or surety bond, are' currently rated in the two highest rating categories by any
Rating Agency but no lower than the highest then-existing rating for any of the Parity Bonds.
Qualified Letter of Credit means any irrevocable letter of credit issued by a financial
institution for the account'of the City on behalf of registered owners of the Bonds, which
institution maintains an office, gency or branch in the United States and as of the time of
issuance of such letter of credit, is currently rated in the two highest rating categories by any
Rating Agency but no lower than he highest then-existing rating for any of the Parity Bonds:
Rate Stabilization Fund means the Waterworks Rate Stabilization Fund createdby the -
City pursuant to Ordinance No. 4709.
Rating Agency means Moody's,S&P or Fitch.
IRefunded Bonds mean the 2004 Bonds designated by the Designated City
Representative pursuant to Secti n 15.
Refunding Account mean the account by that name established pursuant to Section 15.
1
Refunding Candidates mean the outstanding 2004 Bonds maturing on and after
December 1, 2015.
Registered Owner means the person named as the registered owner of a Bond in the
Bond Register. For so long as the Bonds are held in book-entry only form, DTC shall be deemed
to be the sole Registered Owner.
Reserve Fund means that;special fund of the City known'as the Waterworks Revenue
'
Bond Reserve Fund created by Ordinance No. 4709.
Reserve Requirement prior to the New Covenant Date means Maximum Annual Debt
Service. From and after the New Covenant Date, the term Reserve Requirement means with
-11-
ORDINANCE NO. 5672
respect to any issue of Parity Bonds, the lesser of (a) Maximum Annual Debt Service on all
Outstanding Parity Bonds, and (b) 125% of average Annual Debt Service on all Outstanding
Parity Bonds; provided, that the amount required to be deposited hereunder with respect to
any Future Parity Bonds in order to meet the Reserve Requirement shall not exceed 10% of the
net proceeds of such Future Parity Bonds under the Code.
Rule means the SEC's Rule 15c2-12 under. the Securities Exchange Act of 1934, as the
same may be amended from time to time.
S&P means Standard & Poor's rating Services, a Standard & Poor's Financial Services LLC
business, its successors and their assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating agency,.S&P shall be
deemed to refer to any other nationally recognized securities rating agency designated by the
City.
State means the State of Washington.
Term Bonds mean any Parity Bonds identified as such in the Bond Purchase Contract or
in the ordinance authorizing the issuance thereof, the payment of which is provided for by a
requirement for mandatory deposits of money into the principal and interest account of the
bond redemption fund created for the payment of such issue of Parity Bonds in accordance
with a mandatory sinking fund requirement. .
Term Bond Maturity Year means any calendar year in which Term Bonds are scheduled
to mature.
2004 Bond Ordinance means Ordinance No. 5098 adoptedby the City Council on
November 1, 2004 authorizing the issuance of the 2004 Bonds.
-12-
ORDINANCE NO. 5672
2004 Bonds means the Water and Sewer Revenue Bonds, 2004, of the City issuedunder
date of November 1, 2004, as more particularly described in the recitals of this ordinance.
Underwriter means Seatt e-Northwest Securities Corporation,Seattle,Washington.
Waterworks Utility means the combined water, sewer, wastewater and storm drainage
systems of the City as the same may be addedto, improved and extended for as long as any of
the Parity Bonds are outstanding. • .
Waterworks Utility Fund means that special fund of the City into which all Gross
Revenue.(except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility)shall be eposited.
Rules of Interpretation. In this ordinance, unless the context otherwise requires:
(a) The terms "hereby," "hereof," "hereto," "herein;‘"hereunder" and any similar
terms, as used in this ordinance refer to this ordinance as a whole and not to any particular
article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the
term "heretofore" shall mean before,the date of this ordinance;
(b) Words of the mas uline gender shall mean and include correlative words of the
feminine and neuter genders and words importing the singular number shall mean and include
the plural number and vice versa;
(c) Words importing persons shall include firms, associations, partnerships
(including limited partnerships), trusts, corporations and other legal entities, including public
bodies, as well as natural persons; •
(d) Any headings preceding the text of the several sections of this ordinance, and
any table of contents or marginal notes appended to copies hereof, shall be solely for
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ORDINANCE NO. 5672
convenience of reference and shall not constitute a part of this ordinance, nor shall they affect
its meaning, construction or effect;
(e) Allreferences herein to "articles," "sections" and other subdivisions or clauses
are to the-corresponding articles, sections, subdivisions or clauses hereof; and
(f) Words importing the singular number include the plural number and vice versa.
Section 2. Findings Regarding Parity Provisions. The City Council hereby finds that there
is no deficiency in any,Parity Bond Fund,that.provisions hereinafter meet the conditions for the
issuance of Future Parity Bonds as set forth in the Parity Bond Ordinances for the Outstanding
Parity Bonds, and that the issuance of the Bonds will result in a debt service savings for the
Waterworks Utility and does not require an increase of more than $5,000 in any year for
principal of and interest on the Bonds over and,above the payments that wererequired to be
made for the Refunded Bonds.
The conditions contained in the Parity Bond Ordinances for the Outstanding Parity
Bonds having been complied with or assured, the payments required herein to be made out of
the Waterworks Utility Fund into.the Bond Fund and the Reserve Fund to pay and secure the
payment ofthe principal of and interest on the Bonds shall constitute a lien and charge upon
the money in the Waterworks Utility Fund equal in rank with the lien and charge thereon for
the payments required to be made for the Outstanding Parity Bonds. .
Section 3. Authorization and Description 'of Bonds. The City is hereby authorized to
issue water and sewer revenue refunding bonds(the "Bonds") in an aggregate principal amount
of not to exceed $10,000,000 for the purpose of providing thefunds necessary to refund the
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ORDINANCE NO. 5672
Refunded Bonds and pay all or a portion of the costs incidental to the foregoing and to the
issuance of the Bonds.
The Bonds shall be designated the. '=City of Renton, Washington Water and Sewer
Revenue Refunding Bonds, 2012' with any additional series designation, if necessary; shall be
dated as of their initial date of delivery; shall be fully registered as to both• principal and
interest; shall be in the denomination of$5,000 each, or any integral multiple thereof within a
maturity, provided that no Bond shall represent more than one maturity; shall be numbered
separately in such manner and with any additional designation' as the Bond Registrar deems
necessary for purposes of identification; shall bear interest from their date, payable
semiannually on the interest pa ment dates set forth in the Bond Purchase Contract; and shall
mature on December 1 in the yars and principal amounts set forth and approved in the Bond
Purchase Contract executed by -he Designated City Representative pursuant to Section 14 of
this ordinance. •
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
not be general obligations of the City. •
Section 4. Registration o Bonds and Book-Entry System.
(a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system
of registration approved by the Washington State Finance Committee from time to time
•
' through the appointment of state fiscal agencies. The City shall cause a bond register to be
.
maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond
Registrar shall make all necessary provisions to permit the exchange or registration or transfer
of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time
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ORDINANCE NO. 5672
atthe option of the Finance Director upon prior notice to the Bond Registrar and a successor
Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond
Registrar shall be effective until a successor shall havebeen appointed and until the.successor
Bond Registrar shall have accepted the duties of the Bond Registrar hereunder.- The Bond
Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or
exchanged.in accordance with the provisions of such Bonds and this ordinance and to carry out
all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be
responsible for its representations contained in the Certificate of Authentication of the Bonds.
(b) Registered Ownership. The City and the Bond -Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all
purposes (except as provided in Section 17 of this ordinance), and neither the City nor the Bond
Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be
made only as described in Section 4(h), but such Bond may be transferred as herein provided.
All such payments made as described in Section 4(h) shall be valid and shall satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
(c) DTC Acceptance/Letters of Representations. The Bonds initially shall beheld by
DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC, the
City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the
' City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the
persons for whom they act as nominees (or any successor depository) with respect to the
Bonds in respect of the accuracy of any records maintained by DTC (or any successor
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ORDINANCE NO. 5672
depository) or any DTC participant, the payment by DTC (or any successor depository) or any
DTC participant of any amount in respect of the principal of or interest on Bonds, any notice
which is permitted or required to be given to Registered Owners under this ordinance (except
such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any
successor depository)), or any consent given or other action taken by DTC (or any successor
depository) as the Registered Owner. For so long as any Bonds are held in by, a depository, DTC
or its successor depository shall be deemed to be the Registered Owner for all purposes
hereunder, and all references herein to the Registered Owners shall mean DTC (or any
successor depository)or its nominee and shall not mean the owners of any beneficial interest in
such Bonds.
If any Bond shall be duly presented for payment and funds have not been duly provided
by the City on such applicable date, then interest shall continue to accrue thereafter on the
unpaid principal thereof at the rate stated on such Bond until it is paid.
(d) Use of Depository. •
(1) The Bonds shall be registered initially in the name of "Cede& Co.", as
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a
denomination corresponding to the total principal therein designated to mature on such date.
Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred
except (A)to any successor of DTC or its nominee, provided that any such successor shall be
qualified under any applicable laws to provide the service proposed to be provided by it; (B)to
any substitute depository appointed by the Finance Director pursuant to subsection (2) below
I '
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or such substitute depository's successor; or (C)to any person as provided in subsection (4)
below.
(2) Upon the resignation of DTC or its successor(or any substitute depository
or its successor) from its functions as depository or a determination by the Finance Director to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the Finance Director may hereafter appoint a substitute
depository. Any such substitute depository shall be qualified under any applicable laws to
provide the services proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1)
above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written
request on behalf of the Finance Director, issue a single new Bond for each maturity then
outstanding, registered in the name of such successor or such substitute depository, or their
nominees, as the case may be, all as specified in such written request of the Finance Director.
(4) In the event that (A) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be
obtained, or (B)the Finance Director determines that it is in the best interest of the beneficial
owners of the Bonds that such owners be able to obtain- physical Bond certificates, the
ownership of such Bonds may then be transferred to any person or entity as herein provided,
and shall no longer be held by a depository. The Finance Director shall deliver a written request
to the Bond Registrar, together with a supply of physical Bonds, to issue Bonds as herein
provided in any authorized denomination. Upon receipt by the Bond Registrar of all then
outstanding Bonds together with a written request on behalf of the Finance Director to the
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Bond Registrar, new Bonds shall be issued in the appropriate denominations and registered in
the names of such persons as are requested in such written request.
(e) Registration of Transfer of Ownership or Exchange; Change in Denominations.
The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of
any such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment
form appearing on such Bond duly executed by the Registered Owner or such Registered
Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such
surrender, the Bond Registrar s all cancel the surrendered Bond and shall authenticate and
deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds
at the option of the new Registered Owner) of the same date, maturity and interest rate and
for the same aggregate principal amount in any authorized denomination, naming as Registered
Owner the person or persons listed as the assignee on the assignment form appearing on the
surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be
surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate
principal amount of Bonds of the same date, maturity and interest rate, in any authorized
denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange
any Bond during the 15 days preceding any interest payment or principal payment date any
such Bond is to be redeemed.
(f) Bond Registrar's ;Ownership of Bonds. The Bond Registrar may become the
I
Registered Owner of any Bond with the same rights it would have if'it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
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ORDINANCE NO.5672
officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the right of the Registered Owners of Bonds.
(g) Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
(h) Place and Medium of Payment. Both principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. Interest on the Bonds shall be
calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all
Bonds are held by a depository, payments of principal and interest thereon shall be made as
provided in accordance with the operational arrangements of DTC referred to in the Letter of
Representations. In the event that the Bonds are no longer held by a depository, interest on
the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners appearing on the Bond Register on the fifteenth day of the month
preceding the interest payment date, or upon the written request of a Registered Owner of
more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the
applicable payment date), such payment shall be made by the Bond Registrar by wire transfer
to the account within the United States designated by the Registered Owner. Principal of the
Bonds shall be payable upon presentation and surrender of such Bonds by the Registered
Owners at the principal office of the Bond Registrar.
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Section 5. Redemption; Purchase of Bonds.
(a) Mandatory Redemption of Term Bonds and Optional Redemption, if any. The
Bonds shall be subject to optional redemption on the dates, at the prices and under the terms
set forth in the Bond Purchase Contract•approved by the Designated City Representative
pursuant to Section 14. The Bonds shall be subject to mandatory redemption to the extent, if
any, set forth in the Bond Purchase Contract and as approved by the Designated City
Representative pursuant to Section 14.
(b) Purchase of Bonds. The City further reserves the right to use at any time any
surplus Net Revenue available after providing for the payments required by paragraphs (i)
through (vi) of Section 6(b) of this ordinance, or other available funds, to purchase any of the
Bonds that are offered to the City at any price deemed appropriate by the City.
(c) Selection of Bonds for Redemption. For as long as the Bonds are held in
book-entry only form, the select on of particular Bonds within a maturity to be redeemed shall
be made in accordance with the operational arrangements then in effect at DTC. If the Bonds
are no longer held in uncertificated form, the selection of such Bonds to be redeemed and the
surrender and reissuance thereof, as applicable, shall be made as provided in the following
provisions of this subsection (c). If the City redeems at any one time fewer than all of the Bonds
having the same maturity date,the particular Bonds or portions of Bonds of such maturity to be
redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in
increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City
and the Bond Registrar shall treat each Bond as representing such number of separate Bonds
each of the denomination of $5,000 as is obtained by dividing the actual principal amount of '
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ORDINANCE NO. 5672
such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is
redeemed, upon surrender of such Bond at the principal office of the Bond Registrar there shall
be issued to the Registered Owner, without charge therefor, for the then unredeemed balance
of the principal sum thereof, at the option of the Registered Owner, a` Bond or Bonds of like
maturity and interest rate in any of the denominations herein authorized.
(d) Notice of Redemption.
(1) Official Notice. For so long as the Bonds are held in uncertificated form,
notice of redemption (which notice may be conditional) shall be given in accordance with the
operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar
will provide any notice of redemption to any Beneficial Owners. Thereafter(if the Bonds are no
longer held in uncertificated form), notice of redemption shall be given in the manner
hereinafter provided. Unless waived by any owner of Bonds to be redeemed, official notice of
any such redemption (which redemption may be conditioned by the Bond Registrar on the
receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on
behalf of the City by mailing a copy of an official redemption notice by first class mail at least
20 days and not more than 60 days prior to the date fixedfor redemption to the Registered
Owner of the Bond or Bonds to be redeemed at the address shown on the Register or at such
other.address as is furnished in writing by such Registered Owner to the Bond Registrar.
All official notices of redemption shall be dated and shall state:
(A) the redemption date,
(B) the redemption price,
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ORDINANCE NO. 5672
(C) if fewer than all outstanding Bonds are to be redeemed, the
identification by maturity (and, in the caseof partial redemption, the respective principal
amounts) of the Bonds to be redeemed,
(D) any conditions precedent to redemption;
(E) that if all of the conditions to redemption are met, on the
redemption date the redemptionprice will become due and payable upon each such Bond or
portion-thereof called for redem tion, and that interest thereon shall cease to accrue from and
after said date,and
(E) the place where such Bonds are to be surrendered for payment of
the redemption price, which place of payment shall be the principal office of the Bond
Registrar.
On or prior to any redemption date, the City shall deposit with the Bond Registrar an
amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds
which are to be redeemed on that date. If the conditions to redemption have not been met
prior to the date scheduled for redemption, then the City may revoke the redemption by giving
notice in the same manner as set forth above.
(2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has
been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the
redemption date, become due and payable at the redemption price therein specified, and from
and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon
surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be
paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to
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ORDINANCE NO. 5672
the redemption date shall be payable as herein provided for payment of interest. All Bonds
which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued.
(3) Additional Notice. In addition to the foregoing notice,further notice shall
be given by the City as set out below, but no defect in said further notice nor any failure to give
all or any portion of such further notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as above prescribed. Each further notice of redemption
given hereunder shall, contain the information required above for an official notice of
redemption plus (A)the CUSIP numbers of all Bonds being redeemed; (B)the date of issue of
the Bonds as originally issued; (C)the rate of interest borne by each Bond being redeemed;
(D) the maturity date of each Bond being redeemed; and (E)any other descriptive information
needed to identify accurately the Bonds being redeemed. Each further notice of redemption
may be sent at least 20 days before the redemption date to each party entitled to receive
notice pursuant to Section'17 and with such additional information as the City shall deem
appropriate, but such mailings shall not be a condition precedent to the redemption of such
Bonds.
(4) Amendment of Notice Provisions. The foregoing notice provisions of this
Section 5, including but not limited to the information to be included in redemption notices and
the persons designated to receive notices, may be amended by additions, deletions and
changes in order to maintain compliance with duly' promulgated regulations and
recommendations regarding notices of redemption of municipal securities.
•
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Section 6. Priority and Payment from the Waterworks Utility Fund.
(a) Waterworks Utility Fund. A special fund of the City known as the "Waterworks
Utility Fund" has heretofore been established by the City, into which shall be deposited all
Gross Revenues as collected. Mneys in the Waterworks Utility Fund shall be trust funds and
shall be held separate and apart rom all other funds and accounts of the City. •
(b) Priority. of Payments from the Waterworks Utility Fund. Gross Revenue on
deposit in the Waterworks Utility Fund (other than in any bond redemption or federal rebate
account) shall be used in the following order of priority:
(I) To pay Maiitenance and Operation Expense;
(ii) To pay the interest on the Parity Bonds, including reimbursements to the
issuer of a Credit Facility 'f the Credit Facility secures the payment of interest on Parity
Bonds and the ordinance authorizing such Parity. Bonds provides for such
reimbursement; • -.
(iii) To pay the principal of the Parity Bonds, including reimbursements to the
issuer of&Credit Facility if the Credit Facility secures the payment of principal on Parity
Bonds and the ordin nce authorizing such Parity 'Bonds providesfor such
reimbursement;
(iv) To.make all payments required to be made into any sinking fund or bond
redemption.fund hereafter created for the payment of Future Parity Bonds which are
i - •
Term Bonds; -
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ORDINANCE NO. 5672
(v) To make all payments required to be made into the Reserve Fund,
including any reimbursements required for Qualified Insurance or Qualified Letter of
Credit;
(vi) To make all payments required to be made into any revenue bond
redemption fund or warrant redemption fund and debt service account or reserve
account created to pay and secure the'payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue junior
and inferior to the lien thereon for the payment of the principal of and interest on the
Parity Bonds;and
(vii) To retire by optional redemption or purchase any outstanding revenue
bonds or revenue warrants of the City, to make necessary additions, betterments,
improvements and repairs to or extensions and replacements of the Waterworks Utility,
to make deposits into the Rate Stabilization Fund, or for any other lawful City purpose.
(c) Rate Stabilization Fund. The City has previously created a Waterworks Rate
Stabilization Fund (the "Rate Stabilization Fund"). The City may, at any time, as determined by
the City andas consistent with subsection (b) of this section, deposit Gross Revenue into the
Rate Stabilization Fund, excluding principal proceeds of Parity Bonds or other borrowing. The
City may withdraw any or all of the money from the Rate Stabilization Fund for inclusion in
Gross Revenue for any fiscal year of the City. Such deposits or withdrawals may be made up to
and including the date 90 days after the end of the fiscal year for which the deposit or
withdrawal will be included in Gross Revenue. No deposit of Gross Revenue will be made into
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ORDINANCE NO. 5672
the Rate Stabilization Fund to the extent that such deposit would prevent the City from meeting
the Coverage Requirement.
Section 7. Funds and Accounts. • ,
(a) Bond Fund. There is hereby created in the City Treasury the Waterworks
Revenue Bond Fund, 2012 (the "Bond Fund"), which shall be a "Parity Bond Fund" and a
subaccount of the Waterworks Utility Fund. The Bond Fund shall be maintained for the
purpose of paying the principal of and interest on the Bonds. As long as any Bonds remain
outstanding, the City hereby irrevocably obligates and binds itself to set aside and pay from the
Waterworks Utility Fund into t e Bond Fund those amounts necessary; together with such
1 other funds as are on hand and vailable in the Bond Fund, to pay•the interest or principal and
interest next coming due on outstanding Bonds. Such payments from the Waterworks Utility
Fund to the Bond Fund shall be ade in a fixed amount without regard to any fixed proportion
following the closing and delivery of the Bonds on or before each date on which an installment
of interest or principal and interest falls due on the Bonds equal to the installment of interest or
principal and interest. .
(b) Reserve Fund. There has heretoforebeen created by the City a special fund of
the .City known as the Waterworks Revenue Bond. Reserve Fund (the "Reserve Fund") for
purpose of securing the payment of the principal of and interest on all Parity Bonds. The City
hereby irrevocably covenants and agrees that on or prior to the date ofissuance of the Bonds,
the amount on deposit in the Reserve Fund will be at least equal to the Reserve Requirement.
Except for withdrawals therefrom as authorized herein, the Reserve Fund shall be
, maintained at the Reserve Requirement at all times so long as. any Parity Bonds are
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ORDINANCE NO. 5672
Outstanding. When the total amount in the Bond Fund shall equal the total amount of principal
and interest for all outstanding Bonds, no further payment need be made into the Bond Fund.
Notwithstanding the first sentence of this paragraph, the Reserve Requirement may be
decreased for any issue of Parity Bonds when and to the extent the City has redeemed or
otherwise defeased any Outstanding Parity Bonds.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from
the Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has
been depleted, then by draws on the Qualified Insurance or Qualified Letter of Credit for that
purpose. Any deficiency created in the Reserve Fund by reason of any such withdrawal shall
then be made up from Net Revenue first available after making necessary provisions for the
required payments into the Bond Fund. Any money in the Reserve Fund in excess of the
Reserve Requirement may be withdrawn and deposited in any Parity Bond Fund and spent for
the purpose of retiring Parity Bonds or may be deposited in any other fund-and spent for any
other lawful Waterworks Utility purpose.
The City may provide for the purchase, redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining
Parity Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall
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. ORDINANCE NO. 5672
be deposited in the Reserve Fund until the total Reserve Requirement shall have been
accumulated therein, after whicli
time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, the Cialso maytransfer out of the Bond Fund or Reserve Fund any
moneyrequired in order to preJ
ent any Parity Bonds from becoming "arbitrage bonds" under
the Code.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above, the Registered Owner of any of the outstanding Bonds may bring an action
against the City to compel that setting aside and payment.
(c)- Pledge of Revenu and Lien Position. The Net Revenue is hereby pledged to the
1
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
(d) Regarding Sufficie cy of Revenues. The Council hereby finds that in fixing the
amounts to be paid into the Bon Fund out of the Gross Revenues, it has exercised due regard
for the Maintenance and Operation Expense and has not'obligated the City to set aside and pay
into such Fund a greater amount of such Gross Revenues than in its judgment will be available
over and above the Maintenance and Operation Expense.
Section 8. Covenants. The City covenants and agrees with the Registered Owner of
each Bond at any time outstanding as follows:
(a) Rate Covenant. It will establish, maintain and collect rates and charges for all
services and facilities provided by the Waterworks Utility which will be fair and
nondiscriminatory, and will adjust those rates and charges from time to time so that:
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ORDINANCE NO. 5672
(1) Gross Revenue will at all times be sufficient to (A) pay all Maintenance
and Operation Expense on a current basis, (B) pay when due all amounts that the City is
obligated to pay into the Reserve Fund and any Parity Bond Funds and (C) pay all taxes,
assessments or other governmental charges lawfully imposed upon the Waterworks Utility or
other revenue therefrom or payments in lieu thereof and any and all other amounts which the
City may now or hereafter become obligated to pay from Gross Revenue by law or contract;
and
(2) Net Revenue in each calendar year will be at least equal to the Coverage
Requirement.
(b) Maintenance and Repair. It will at all times maintain and keep the Waterworks
Utility in good repair, working order and condition and also will at all times operate such Utility
and the business in connection therewith in an efficient manner and at a reasonable cost.
(c) Disposal of Waterworks Utility. It will not sell, lease, mortgage or in any manner
encumber or otherwise dispose-of the Waterworks Utility in its entirety unless, simultaneously
with such sale or other disposition, all Parity Bonds are defeased pursuant to the provisions of
this ordinance.
It will not sell, lease, mortgage or in any manner encumber or otherwise dispose of any
part of the Waterworks Utility (other than timber), including all additions and improvements
thereto and extensions thereof at any time made, that are used, useful or material in the
operation of the Waterworks Utility, unless provision is made for the replacement thereof or
for payment into the Bond Fund of the greatest of the following:
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ORDINANCE NO. 5672
(1) An amount which will be in the same proportion to the net amount of
any Parity Bonds then outstanding(defined as the total amount of those bonds less the amount
of cash and investments in the Reserve Fund and any Parity Bond Funds) that Gross Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding year bears to
the total Gross Revenue for that period;
(2) An amount which will be in the same proportion to the net amount of
any Parity Bonds then outstanding(as defined above)that the Net Revenue from the portion of
the Waterworks Utility sold or disposed of for the preceding year bears to the total Net
Revenue for that period;or
(3) An amount which will be in the same proportion to the net amount of
anyParityBonds then outstand (as defined above) that the depreciated cost value of the
ng P
facilities sold or disposed of bears to the depreciated cost value of the entire Waterworks
Utility immediately prior to such sale or disposition.
Notwithstanding any oth r provision of this subsection, (1)the City in its discretion may
sell or otherwise dispose of any of the works, plant, properties or facilities of the Waterworks
Utility or any real or personal pro perty'comprising a part of the same which shall have become
unserviceable, inadequate, obsolete or unfit to be used in the operation of the Waterworks
Utility, or no longer necessary, material to or useful to the operation of the Waterworks Utility,
without making any deposit into the Bond Fund, and (2)the City may transfer the Waterworks
Utility to another municipal corporation so long as Net Revenue of the portion of the
Waterworks Utility so transferred is used for payment of debt service on the Parity Bonds prior
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ORDINANCE NO.5672
to any other purpose. In no event shall such proceeds be treated as Gross Revenue for
purposes of this ordinance.
(d) Books and Records. It will keep proper books, records and accounts with respect
to the operations, income and expenditures of the Waterworks Utility in accordance with
proper accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of each
fiscal year showing in reasonable detail the financial condition of the Waterworks Utility as of
the close of the previous year, and the income and expenses for such year, including the
amounts paid into the Bond Fund and Reserve Fund and into any and all special funds or
accounts created pursuant to this ordinance, the status of all funds and accounts as of the end
of such year, and the amounts expended for maintenance, renewals, replacements and capital
additions to the Waterworks Utility.
(e) No Free Service. Except to aid the poor or infirm, to provide for resource
conservation or to provide for the proper handling of hazardous materials, it will not furnish or
supply or permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation, public or
private, other than the City, so long as any Parity Bonds are outstanding. On at least an annual
basis, it will determine all accounts that are delinquent and will take all necessary action to
enforce payment of such accounts against those property owners whose accounts are
delinquent.
(1) Insurance. It at all times will carry fire and extended coverage and such other
forms of insurance, including public liability and property damage insurance, with responsible
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ORDINANCE NO. 5672
insurers and with policies payable to or on.behalf of the City and any additional insureds on
such of the buildings, equipment, works, plants, facilities and properties of the Waterworks
Utility, and against such claims for damages, as are ordinarily carried by municipal or privately
owned utilities engaged in the operation of like systems, or will implement and maintain a
self-insurance or .an insurance pool .program with reserves adequate, in the reasonable
judgment of the City,to protect the Waterworks Utility and the Registered Owners of the Parity
Bonds against loss.
(g) Maintenance and Operation Expense. It will pay all Maintenance and Operation
Expense and the debt service requirements for the outstanding Parity.Bonds, 'and otherwise
meet the obligations of the City as herein set forth. :
Section 9. Tax Covenants,. The City covenants that it will not take or permit to be taken
on its behalf any action that would adversely affect the exemption from federal income
taxation of the interest on the Bonds and will take or require tobe taken such acts as may
reasonably be within its ability and as may from time to time be required under applicable law
to continue the exemption from ederal income taxation of the interest on the Bonds.
(a) Arbitrage Covenant. Without limiting the generality of the foregoing, the City
covenants that it will not take any action or fail to take any action with respect to the proceeds
of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the
Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which,
if such use had been reasonably expected on the date of delivery of the Bonds to the initial
purchasers thereof, would have caused the Bonds as "arbitrage bonds" within the meaning of
such term as used in Section 148ofthe Code.
. i
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ORDINANCE NO. 5672 •
The City represents that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications may not
be relied upon. The City will comply with the requirements of Section 148 of the Code and the
applicable regulations thereunder-throughout the term of the Bonds.
(b) Private Person Use Limitation for Bonds. The City covenants that for as long as
the Bonds are outstanding, it will not permit:
(1) More than 10% of the Net Proceeds of the Bonds to be used for any
Private Person Use; and
(2) More than 10% of the principal or interest payments on the Bonds.in a
bond year to be directly or indirectly: (A) secured by any interest in property used or to be used
for any Private Person Use or secured by payments in respect of property used or to be used for
any Private Person Use, or (B) derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used for any Private Person Use.
The City further covenants that, if:
(3) More than five percent,of the Net Proceeds of the Bonds are to be used
for any Private Person Use; and
(4) More than five percent of the principal or interest payments on the
Bonds in a bond year are (under the terms of this ordinance.or any underlying arrangement)
directly or indirectly:'
(A) secured by any interestin property usedor to be used for any
Private Person Use or secured by payments in respect of property used or to be used for any
Private Person Use, or _
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• ORDINANCE NO.
(B) 'derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used for any Private Person Use,
then, (i) any Private Person Use of the projects described in subsection (3) hereof or Private
Person Use payments described in subsection (4) hereof that is in excess of the five percent
limitations described in such subsections (3) or (4) will be for a Private Person Use that is
related to the state or local governmental use-of the project refinanced with the Bonds, and
(ii) any Private Person Use will not exceed the amount of Net Proceeds of the Bonds used for
the state or local governmental use portion of the project to which the Private Person•Use of
such portion of the project relates. The City further covenants that it will comply with any
limitations on the use of the projects by other than state and local governmental users that are
necessary, in the opinion of its b nd counsel, to preserve the tax exemption of the interest on
the Bonds. '
(c) Modification of Tax Covenants. The covenants of this section are specified solely
to assure the continued exemption from regular income taxation of the interest on the Bonds.
To that end, the provisions of this section may be modified or eliminated without any
requirement for formal amendment thereof upon receipt of an opinion of the City's bond
counsel that such modification or elimination will not adversely affect the tax exemption of
interest on any Bonds. _- -
(d). Qualified Tax-Exempt Obligation. The City hereby designates the Bonds as
1
"qualified tax-exempt obligations" under Section 265(b)(3) of-the Code for investment by
financial institutions. The City reasonably does not expect to issue more than $10,000,000 in
qualifying tax-exempt debt during calendar year 2012.
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ORDINANCE NO.5672
Section 10. Future Parity Bonds. The City reserves the right to issue Future Parity Bonds
if the following conditions are met and complied with at the time of issuance of those
additional bonds: _
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds shall
provide for the payment of the principal thereof and interest thereon out of a Parity Bond
Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds shall
provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds
of(1) an amount equal to the increase in the Reserve Requirement attributable to those Parity
Bonds or(2) Qualified Letter of Credit or Qualified Insurance or an amount plus Qualified Letter
of Credit or Qualified Insurance equal to the increase in the Reserve Requirement attributable
to those Future Parity Bonds. At the discretion of the City,the City may provide for deposit into
the Reserve Fund of other legally available money;from Net Revenue or Qualified Letter of
Credit or Qualified Insurance on or prior to the date of issuance of such Future Parity Bonds.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide
for the payment.of mandatory redemption or sinking fund requirements into the applicable
Parity Bond Fund for any Term Bonds to be issued and for regular payments to be made for the
payment of the principal of such Term Bonds on or before their maturity, or, as an alternative,
the mandatory redemption of those Term Bonds prior to their maturity date from money in the
applicable Parity Bond Fund.
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ORDINANCE NO. 5672 f -
(e) There shall be on file with the City either:
(1) a certificate of the Finance Director demonstrating that Net Revenue for
the Base Period, without regard to deposits into or withdrawals from the Rate Stabilization
Fund, is equal to at least the Parity Requirement; or -
(2) prior to t le New Covenant Date, a certificate of a Professional Utility
Consultant that in such Consultant's opinion, Net Revenue for any 12 consecutive calendar
months, without regard to deposits into or withdrawals from the Rate Stabilization Fund, shall
be equal tout least the Parity Requirement. After the New Covenant Date, this section shall be -
amended to read as follows: a certificate of a Professional Utility Consultant that in such
Consultant's opinion Net Revenue for the Base Period, as adjusted, without regard to deposits
into or withdrawals from the Rate Stabilization Fund, shall be equal to at least the Parity
Requirement. The Professional Utility Consultant, in estimating Net Revenue available for debt
services, may adjust Net Revenue to reflect:
(A) Any changes in rates in effect and being charged or expressly
committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility who
have become customers during the 12-consecutive month period or thereafter adjusted to
reflect one year's Net Revenue from those customers;
(C) Income from any customers to be connected to the Waterworks
Utility who have paid the required connection charges;
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ORDINANCE NO. 5672 .
(D) The Professional Utility Consultant's estimate of the Net Revenue
to be derived from customers anticipated to connect for whom building permits have been
issued;
(E) Income received or tobe received which .is derived from any
person, firm corporation or municipal corporation under any executed contract for water,
sewage disposal or other utility service, which revenue was not included in the historical Net
Revenue;
(F) The Professional Utility Consultant's estimate of the Net Revenue
to be derived from customers with existing homes or buildings which will be required to
connect to any additions to and improvements and extensions of the Waterworks Utility
constructed and to be paid for out of the proceeds of the sale of the additional Future Parity
Bonds or other additions to and improvements and extensions of the Waterworks Utility when
such additions, improvements and extensions are not completed; and
(G)1 Any increases or decrease in Net Revenue as a result of any actual
or reasonably anticipated changes in Maintenance and Operation Expense subsequent to the
12-month period.
(f) Refunding Obligations. If Future Parity Bonds proposed to be so issued are for
the sole purpose of refunding outstanding bonds payable from any Parity Bond Fund, such
certification of coverage shall not be required if the amount required for the payment of the
principal and interest in each year for the refunding bonds is not increased more than $5,000
over the amount for that same year required for the bonds or the portion of that bond issue to
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• ORDINANCE NO. 5672
•
be refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
• refund maturing Parity Bonds, money for the payment of which is not otherwise available.
(g) Subordinate Lien Obligations. Nothing contained herein shall prevent the City
from issuing revenue bonds that are a charge: upon Gross Revenue subordinate to the
•
payments required to be made therefrom into any Parity Bond Fund.
Section 11. Form of Bonds.The Bonds shall be in substantially the following form:
[DTC LANGUAGE]
UNITED STATES OF AMERICA
NO.
STATE OF WASHINGTON
CITY OF RENTON
WATER AND SEWER REVENUE REFUNDING BOND, 2012,
INTEREST RATE: MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE&Co.
PRINCIPAL AMOUNT:
The City of Renton, Washington, a municipalcorporation organized and existing under
and by,-virtue of the laws of the State of Washington (herein called the "City") hereby
acknowledges itself to owe and for value received promises to pay, but only from the sources
and as hereinafter provided,to the Registered Owner identified above, or registered assigns, on
the Maturity Date identified above, the Principal Amount indicated above and to pay interest
thereon from the date of delivery, or the most recent date to which interest has been paid or
duly provided for, at the Interest Rate set forth above, payable on , 20 , and
semiannually thereafter on the first days of each December and June until such principal sum is •
paid or payment has been duly provided for.
Both principal of and interest on this bond are payable in lawful money of the United
States of America. Interest and principal shall be paid as provided in the Blanket Issuer Letter of
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ORDINANCE NO. 5672 •
Representations (the "Letter of Representations") by the City.to The Depository Trust Company
("DTC"). The fiscal agency of the State of Washington has been appointed by the City as the
authenticating agent, paying agent and registrarfor the bonds of this issue (the "Bond
Registrar"). Capitalized terms used in this bond that are not specifically'defined have the
meanings given such terms in Ordinance No. of the City adopted on , 2012
(the "Bond Ordinance"). Reference is made to the Bond Ordinance and any and all
modifications and amendments thereto for a description of the nature and extent •of the
security for the bonds of this issue, the funds or revenues pledged,- and the terms and
conditions upon which such bonds are issued.
This bond is one of an authorized issue of bonds of the City of like date and tenor except
as to number, amount, rate of interest and date of maturity in the aggregate principal amount
of $ . The bonds of this issue are-being issued for the purpose of refunding certain
outstanding water and sewer revenue refunding bonds of the City and paying costs of issuance •
of the bonds of this issue.
The bonds.of this issue are subject to redemption prior to their scheduled maturities as
provided in the Bond Ordinance and in the Bond Purchase Contract.
The bonds of this issue have been designated as "qualified tax-exempt obligations" for
investment by financial institutions under Section 265(b) of the Internal Revenue Code of 1986,
as amended (the "Code").
The bonds of this issue are payable solely from the Bond Fund and the Reserve Fund.
The City has irrevocably obligated and bound itself to pay into theBond Fund out of the Net
Revenue or from such other moneys as may be provided therefor certain amounts necessary to
pay and secure the payment of the principal and interest on such bonds. The bonds of this
issue are not general obligations of the City.
The City does hereby pledge and bind itself to set aside from the Waterworks Utility
Fund out of the revenue of the Waterworks Utility and to pay into the Bond Fund and the
Reserve Fund the various amounts required by the Bond Ordinance to be paid into and
maintained in such Funds, all within the times provided by the Bond Ordinance. To the extent
more particularly provided by the Bond'Ordinance, the amounts•so pledged-to be paid from the
Waterworks Utility Fund out of the revenue of the Waterworks Utility into the Bond Fund shall
be a lien-and charge thereon equal in rank to the lien and charge upon said revenue of the
amounts required to pay and secure the payment'of the Outstanding Parity Bonds}and any
revenue bonds of the City hereafter issued on a parity with the bonds of this issue and superior
to all other liens and charges of any kind or nature except Maintenance and Operation Expense.
The bonds of this issue are issued under and in accordance with the provisions of the
Constitution and applicable statutes of the State of Washington and duly adopted ordinances of
the City. The City hereby covenants and agrees with the owner of this bond that it will keep
and perform all the covenants of this bond and of the Bond Ordinance to be by it kept and
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• ORDINANCE NO. 5672
performed, and reference is hereby made to the Bond Ordinance for a complete statement of
such covenants.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon
shall have been manually signed by the Bond Registrar.
It is hereby certified that all acts,conditions, and things required by the Constitution and
statutes of the State of Washington to exist,.to have happened, been done, and performed
precedent to and in the issuance of this bond have happened, been done, and performed.
IN WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be
signed with the facsimile or manual signature of the Mayor, to be attested by the facsimile or_
manual signature of the City Clerk, all as of this day of , 2012.
CITY OF RENTON, WASHINGTON
[SEAL]
By /s/facsimile or manual
Mayor
ATTEST:
/s/facsimile or manual
City Clerk V
The Bond Registrar's certificate authentication on the Bonds shall be in substantially the
following form: V
CERTIFICATE OF AUTHENTICATION
Date of Authentication: , 20_
This bond is one of the bonds described in the within-mentioned Bond Ordinance and is
one of the Water and Sewer Revenue Refunding Bonds, 2012 of the City of Renton,
Washington, dated , 2012.
WASHINGTON STATE FISCAL AGENCY,
Registrar
By
Authorized Signer
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ORDINANCE NO. 5672
Section 12. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted, or otherwise reproduced thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery
and issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Only such Bonds as shall bear thereon a Certificate of Authentication manually executed
by an authorized representative of the Bond Registrar shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be
conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance. The Bond Registrar
shall be responsible for its representations contained in the Certificate of Authentication on the
Bonds.
Section 13. Lost, Stolen or Destroyed Bonds. In case any Bonds shall be lost, stolen or
destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like
amount, date and tenor to the Registered Owner thereof upon the Registered Owner's paying
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•
ORDINANCE NO. 5672
the expenses and charges of the Bond Registrar and the City in connection therewith and upon
• his filing with the Bond Registrar and the City evidence satisfactory to both that such Bond or
Bonds were actually lost, stolen or destroyed and of his'ownership thereof, and upon furnishing
the City and the Registrar with indemnity satisfactory to both.
Section 14. Sale of Bonds.
(a) Bond Sale. The Bonds shall be sold at negotiated sale to the Underwriter
pursuant to the terms of the Bond Purchase Contract. The Underwriter has advised the Council
that market conditions are fluctuating and, as a result, the most favorable market conditions
may occur on a day other than a regular meeting date of the Council. The Council has
determined that it would be in the best interest of the City to delegate to the Designated City
Representative for a limited time the authority to approve the final interest rates, aggregate
principal amount, principal amounts of each maturity of the Bonds, selection of the Refunded
Bonds, and redemption rights.
The Designated City Representative ishereby authorized to approve the final interest
rates, aggregate principal amount, principal maturities, selection of the Refunded Bonds, and
redemption rights for the Bonds in the manner provided hereafter so long as (i) the aggregate
principal amount of the Bonds does not exceed $10,000,000, (ii) the final maturity date for the
Bonds is no later than December 1, 2027, (iii)the Bonds are sold (in the aggregate) at a price
not less than 98%and not greater than 120%, (iv)the Bonds are sold for a price that results in a
minimum net present value debt service savings over the Refunded Bonds of 10%, and (v)the
true interest cost for the Bonds (in the aggregate) does not exceed 3.25%.
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ORDINANCE NO. 5672 •
In determining whether or not to acquire a Bond Insurance Policy and determining the
final interest rates, aggregate principal,amounts, principal maturities and redemption rights,
the Designated City Representative shall take into account those factors that, in his or her
judgment, will result in the lowest true interest cost on the Bonds to their maturity, including,
but not limited to current financial market conditions and current interest rates for obligations
comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in
this section, the Designated City Representative is hereby authorized to execute the Bond
Purchase Contract. The signature of one Designated City Representative shall be sufficient to
bind,the City.
Following the execution of the Bond Purchase Contract, the Designated City
Representative shall provide a report to the Council describing the final terms of the Bonds
approved pursuant to the authority delegated in this section. The authority granted to the
Designated City Representative by this Section 14 shall expire 120 days after the effective date
of this ordinance. If a Bond Purchase Contract for the Bonds has not been executed within
120 days after the effective date of this ordinance, the authorization for the issuance of the
Bonds shall be rescinded, and the Bonds shall not be issued nor their sale approved unless such
Bonds shall have been re-authorized by ordinance of the Council. The ordinance re-authorizing
the issuance and sale of such Bonds may be in the form of a new ordinance repealing this
ordinance in whole or in part or may be in the form_of an amendatory ordinance approving a
bond purchase contract or establishing terms and conditions for the authority delegated under
this Section 14.
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• ORDINANCE NO. 5672
(b) Delivery of Bonds; Documentation. Upon the passage and approval of this
ordinance,the proper officials of the City including the Designated City Representative, are
authorized and directed to undertake all action necessary for,the prompt execution and
delivery of the Bonds to the Underwriter and further to execute all closing certificates and
documents required to effect the closing and delivery of the Bonds in accordance with the
terms of the Bond Purchase Contract.
(c) Preliminary and Final Official Statements. The Finance Director is hereby
authorized to ratify and to deem final the preliminary Official Statement relating to the Bonds
for the purposes of the Rule. The Finance Director is further authorized to ratify and to approve
for purposes of the Rule, on behalf of.the City, the'Official Statement relating to the issuance
and sale of the Bonds and the distribution of the Official Statement pursuant thereto with such
changes, if any, as may be deemed by her to be appropriate.
Section 15. Application of Bond Proceeds; Plan of Refunding.
(a) Refunding Plan. For the purpose of realizing a debt service savings and
benefiting the City's ratepayers, the Council proposes to refund and defease the Refunded
Bonds as set forth herein. The Refunded Bonds shall include those Refunding Candidates
designated by the Designated City Representative when the Bonds are sold pursuant to the
Bond Purchase Contract. Proceeds of the. Bonds shall be deposited with the Escrow Agent
pursuant to the Escrow Deposit Agreement to be used immediately upon receipt thereof to
defease the Refunded Bonds as authorized by the 2004 Bond Ordinance and to pay costs of
issuance of the Bonds.
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ORDINANCE NO. 5672 •
The net proceeds deposited with the Escrow Agent shall be used to defease the
Refunded Bonds and discharge the obligations thereon by the purchase of certain Government
Obligations (which obligations so purchased, are herein called "Acquired Obligations"), bearing
such interest and maturing as to principal and interest in such amounts and at such times
which, together with any necessary beginning cash balance, will provide for the payment of:
(1) interest on the Refunded Bonds due and payable on and prior to the Call
Date; and
(2) the redemption prices of the Refunded Bonds on the Call Date.
Such Acquired Obligations shall bepurchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
(b) Escrow Agent/Escrow Agreement. The City hereby appoints U.S. Bank National
Association, Seattle, Washington, as the Escrow Agent for the Refunded Bonds (the "Escrow
Agent"). A beginning cash balance, if any, and the Acquired Obligations shall be deposited
irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The
proceeds of the Bonds remaining after acquisition of the Acquired Obligations and provision for
the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and
safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds.
In order to carry out the purposes of this Section 15, the Finance Director is authorized
and directed to execute and deliver to the Escrow Agent, an Escrow Deposit Agreement.
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• ORDINANCE NO. 5672
(e) Call for Redemption of Refunded Bonds. The City hereby irrevocably sets aside
sufficient funds out.of the purchase of Acquired Obligations from proceeds of the Bonds to
make the payments'described in Section 15(d).
The City hereby irrevocably calls the Refunded Bonds for redemption on their Call Date
in accordance with the provisions of the 2004 Bond Ordinance authorizing the redemption and
retirement of the 2004 Bonds prior to their fixed maturities.
Said defeasance and call for redemption of the Refunded Bonds shall.be irrevocable
after the issuance of the Bonds and delivery of the Acquired Obligations to the Escrow Agent.
The Escrow Agent is hereby authorized and directed to provide for the giving of notices
of the redemption of the Refunded Bonds in accordance with the applicable provisions of the
2004 Bond Ordinance. The costs of publication of such notices shall be an expense of the City.
The Escrow Agent is here y authorized and directed to pay to the Finance Director, or,
at the direction of the Finance Director, to the paying agent for the Refunded Bonds, sums
sufficient to pay, when due, the payments specified in Section 15. All such sums shall be paid
from the moneys and Acquired.Obligations deposited with the Escrow Agent, and the income
therefrom and proceeds thereof. All such sums so paid to said Finance Director shall be
credited to the Refunding Account. All moneys and Acquired Obligations deposited with the
Escrow Agent and any income therefrom shall be held, invested (but only at the direction of the
Finance Director) and applied in accordance with the provisions of this ordinance and with the
laws of the State of Washington for the benefit of the City and owners of the Refunded Bonds.
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ORDINANCE NO. 5672 •
The City will take such actions as are found necessary to see-that all necessary and
proper fees, compensation and expenses of the Escrow Agent for the Refunded Bonds shall be
paid when due.
Section 16. Bond Insurance. The Finance Director is hereby further authorized to
solicit proposals from municipal bond insurance companies for the issuance of a Bond
Insurance Policy. In the event that the Finance Director receives multiple proposals in response
to a solicitation, the Finance Director may select the proposalhaving the lowest cost and
resulting in an overall lower interest cost with respect to the Bonds to be insured. The Finance
Director may execute a commitment received from the Insurer selected by the Finance
Director. The Council further authorizes all proper officers, agents, attorneys and employees of
the City to cooperate with the Insurer in preparing such additional agreements, certificates, and
other documentation on behalf of the City as shall be necessary or advisable in providing for
the Bond Insurance Policy.
Section 17. Undertaking to Provide Continuing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's written undertaking for
the benefit of the Registered Owners and Beneficial Owners of the -Bonds required by
subsection (b)(5) of the Rule.
(b) Financial Statements/Operating Data. The City hereby agrees to provide or
cause to be provided to the Municipal Securities Rulemaking Board ("MSRB"), the following
annual financial information and operating data for the prior fiscal year, commencing in 2013
with the calendar year ending December 31, 2012:
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• ORDINANCE NO. 5672
(1) Annual financial statements prepared in accordance with the generally'
accepted:accounting principles applicable to governmental units, as such principles,may
be changed from time to time by the Washington State Auditor pursuant to
RCW 43.09.200, which.statements will not be audited, except that if and when audited
financial statements are otherwise prepared and available to the City, they will be
provided (the "Annual Financial Statements");
(2) A statement of authorized, issued and outstanding bonded debt secured
by Net Revenue;
(3) Debt service coverage ratios; and
(4) General customerstatistics for the Waterworks Utility contained in the
final official statement for the Bonds,and identified in_a closing certificate executed by
-the Designated City Representative and referencing this section.
Items (2) through (4) shall be required only to the extent that such information is not included
in (1).
The information and data described above shall,be provided on or before nine months
after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City
may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB.
In lieu of providing such annual financial information and operating data, the City may
cross-reference to other documents available to the public on the MSRB's Internet website or
filed with the Commission.
If not provided as part of the annual financial information discussed above,the City shall
provide the City's audited annual financial statement prepared in accordance with the
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ORDINANCE NO. 5672 •
Budgeting Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09:200 (or any successor statute) when and if available to the MSRB.
(c) Listed Events. The City agrees to provide or cause to be provided to the MSRB, in
a timely manner not in excess of ten business days after the occurrence of the event, notice of
the occurrence of any of the following events withrespect to the Bonds:
• Principal and interest payment delinquencies;
• Non-payment related defaults, if material; '
• Unscheduled draws on debt service reserves reflecting financial difficulties;
• Unscheduled draws on credit enhancements reflecting financial difficulties;
• Substitution of credit or liquidity providers, or their failure to perform;
• Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
TEB) o'r other material notices or determinations with respect to the tax status of
the Bonds; or other material events affecting the tax status of the Bonds;
• Modifications to the rights of Bondholders, if material;
• Bond calls, if material, and tender offers;
• Defeasances;
• Release, substitution, or sale of property securing repayment of the Bonds, if
material;
• Rating changes;
• Bankruptcy, insolvency, receivership or similar event of the City;
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•
ORDINANCE NO. 5672
• The consummation of a merger, consolidation, or acquisition involving the City
or the sale of all or substantially tall of the assets of the City, other than in the
ordinary course of business, the entry into a definitive agreement to undertake
such an action or the termination of a definitive agreement relating to any such
actions, other than pursuant to its terms, if material; and
• Appointment of a successor or additional trustee or the change of name of a
trustee, if material.
The City shall promptly determine whether the events described above are material.
. (d) Format for Filings with the MSRB. All notices, financial information and
operating data required by this undertaking to be provided to the MSRB must be in an
electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to
this undertaking must be accompanied by identifying information as prescribed by the MSRB.
(e) Notification Upon allure to Provide Financial Data. The City agrees to provide or ,
cause•to be provided, in a timely manner, to the MSRB notice of its failure to provide the
annual financial information described in Subsection (b) above on or prior to the date set forth
in Subsection (b) above. •
(f) Termination/Modification. The City's obligations to provide annual financial
information and notices of certain listed events shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. Any provision of this section shall be null and
void if the City (i) obtainsan opinion of nationally recognized bond counsel to the effect that
the portion of the Rule that requires that provision is invalid, has been repealed retroactively or
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ORDINANCE NO. 5672
otherwise does not apply to the Bonds and (ii) notifies the MSRB of such opinion and the
cancellation of this section.
The City may amend this section with an opinion of nationally recognized bond counsel
in accordance with the Rule. In the event of any amendment of this section, the City shall
describe such amendment in the next annual report, and shall include,-anarrative explanation
of the reason for the amendment and its impact on the type (or in the case of a change of
accounting principles, on the presentation) of financial information or operating data being
presented by the City. In addition, if the amendment relates to the accounting principles to be
followed in preparing financial statements, (A) notice of such change shall be given in the same
manner as for a listed event under Subsection (c), and (B)the,annual report for the year in ,
which the change is made shall present a comparison (in narrative form and also, if feasible, in
quantitative form) between the financial statements as prepared on the basis of the new
accounting principles and those prepared on the basis of the former accounting principles.
(g) Bond Owner's Remedies Under This Section. The right of any bondowner or
Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to a right to
obtain specific enforcement of the City's obligations under this section, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds.
(h) No Default. Except as otherwise disclosed in the City's Official Statement
relating to the Bonds, the, City is not and has not been in default in the performance of its
obligations of any prior undertaking for ongoing disclosure with respect to its obligations.
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ORDINANCE NO. 5672
Section 18. Defeasance of the Bonds: In the event that money and/or Government
Obligations maturing or having guaranteed redemption prices at the option of the holder at
such time or times and bearing interest to be earned thereon in amounts (together with such
money, if any) sufficient to redeem and retire part or all of the Bonds in accordance with the
their terms, are hereafter irrevocably set aside in a special account and pledged to effect such
redemption and retirement, then no further payments need be made into the Bond Fund or
any account therein for the payment of the principal of and interest on the certain Bonds so
•
provided for and such Bonds shall then cease to be entitled to any lien, benefit or security of
this ordinance, except the right too receive the funds so set aside and pledged, and such Bonds
shall no longer be deemed to be Outstanding hereunder, or under any ordinance authorizing
the issuance of bonds or other indebtedness of the City.
Within 30 days of any defeasance of Bonds the Bond Registrar shall provide notice of
defeasance of Bonds to Registered Owners of the Bonds being defeased and to each party
entitled to receive notice in acco jdance with Section 17.
Section 19. Amendments.
(a) The City Council from time to time and at any time may pass an ordinance or •
ordinances supplemental hereof, which ordinance or ordinances thereafter shall become a part
I .
of this ordinance,for any one or more or all of the following purposes:
(1) To add to the covenants and agreements of the City in this ordinance,
other covenants and agreements thereafter to be observed, which shall not adversely affect
the interests of the owners of any Bonds, or to surrender any right or power herein reserved.
-53-
ORDINANCE NO. 5672 .
•
(2) To make such provisions for the purpose of curing any ambiguities or of
curing, correcting or supplementing any defective provision contained in this ordinance in
regard to matters or questions arising under such ordinances as the City Council may deem
. necessary or desirable and not inconsistent with such ordinances and which shall not adversely
affect, in any material respect, the interest of the owners of Bonds. In any such supplemental
ordinance may be adopted without the consent of the owners of any Bonds at any time
outstanding, notwithstanding any of the provisions of subsection (b) of this section.
(b) With the consent of the'owners of not less than sixty-five percent (65%) in
aggregate principal amount of the Bonds at the time outstanding, the City Council may pass an
ordinance or ordinances supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this ordinance or of any
supplemental ordinance; provided, however,that no such supplemental ordinance shall:
(1) Extend the fixed maturity of any Bonds, or reduce the rate of interest
thereon, or extend the time of payment of interest from their due date, or reduce the amount
of the principal thereof, or reduce any premium payable on the redemption thereof, without
the consent of the Registered Owner of each Bond so affected; or
(2) Reduce the aforesaid percentage of Bondowners required to approve any
such supplemental ordinance, without the consent of.the owners of all of the Bonds then
outstanding.
It shall not be necessary for the consent of Bondowners under this subsection (b) to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof. For the purpose of consenting to
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ORDINANCE NO. 5672
amendments under this subsection (b), the Insurer shall be deemed to be the sole Registered
Owner of the Bonds then outstanding. •
(c) Upon the adoption of any supplemental ordinance pursuant to the provisions of 5
this section,.this 'ordinance shall be deemed to be modified and amended in accordance
therewith, and the respective rights, duties and obligations of the City under this ordinance and
all owners of Bonds.outstandirg hereunder shall thereafter be determined, exercised and
enforced thereunder, subject in all respects to such modifications and amendments, and all
terms and conditions of any such supplemental ordinance shall be deemed to be part of the
terms and conditions of this ordinance for any and all purposes.
(d) Bonds executed and delivered after the execution of any supplemental
ordinance passed pursuant to tie provisions of this section may have a notation as to any
matter provided for in such supplemental ordinance, and if such supplemental ordinance shall
so provide, new Bonds so modi ied as to conform, in the opinion of the City Council, to any
modification of this ordinance contained in any such supplemental ordinance, may be prepared
and delivered without cost to the owners of any affected Bonds then outstanding, upon
surrender for cancellation of such Bonds in equal aggregate principal amounts.
(e), Exclusion of Bonds Owned by City. Bonds owned or held by or for the account of
the City shall not be deemed outstanding for the purpose of any vote or consent or other action
or any calculation of outstanding Bonds in this ordinance provided for, and shall not be entitled
to vote or consent or take any other action in this ordinance provided for.
(f) Bonds Held by Securities Repositories. For so long as the Bonds are held in book
entry only form, communications with the owners shall be made with the securities depository
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ORDINANCE NO. 5672
who is the "Registered Owner"of the Bonds and communications with (and obtaining consents
from) beneficial owners shall be made in accordance with the operational procedures of the
securities depository that is the"Registered Owner" of the Bonds.
Section 20. Call for Redemption of 1998 Bonds. For the purpose of realizing a debt
service savings and benefiting the ratepayers of the City, the City Council hereby authorizes the
refunding of the 1998 Bonds identified in the recitals to this ordinance. Available funds of the
City in the amount necessary to refund the 1998 Bonds, in whole, shall be used on or before
December 1, 2012 for the payment of interest on and the redemption price of the 1998 Bonds
on such date.
The City hereby irrevocably calls the 1998 Bonds for redemption on December 1, 2012
in accordance with the provisions of the 1998 Bond Ordinance authorizing the redemption and
retirement of the 1998 Bonds prior to their fixed maturities. The City's Finance and
Administrative Services Administrator is hereby authorized and directed to provide for the
giving of notice of the redemption of the ,1998 Bonds in accordance with the applicable
provisions of the 1998 Bond Ordinance. The costs of such notice shall be an expense of the
City.
Section 21. Contract; Savings Clause. The covenants contained in this ordinance and
in the Bonds shall constitute a contract between the City and the Registered Owner of each and
every Bond. If any one or more of the covenants or agreements provided in this ordinance to
be performed on the part of the City shall be declared by any court of competent jurisdiction
and after final appeal (if any appeal be taken) to be contrary to law;then such covenant or
covenants, agreement or agreements, shall be null and void and shall be deemed separable
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ORDINANCE NO. 5672 '
from the remaining covenants and agreements in this ordinance and shall in no way affect the
validity of the Other provisions of this ordinance or of the Bonds.
Section 22. General Authorization; Ratification of Prior Acts. The Mayor, the Chief
Administrative Officer, the Finance Director andother appropriate officers of the City are
authorized to take any actions and to execute documents as in their judgment may be
necessary or desirable in order to carry out the terms of, and complete the transactions
contemplated by, this ordinance. All acts taken pursuant to the authority of this ordinance but
prior to its effective date are hereby ratified.
Section 23. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval, and thirty (30) days after publication.
PASSED by the City Council this 15th day of October, 2012.
L Jat
Bonnie I. Walton, City Clerk
APPROVED BY THE MAYOR this"15th day of October, 2012.
Denis Law, Mayor
Approved as to form: .
Sgoive6zr
ird_i ,
Pa ica Law Group LLR q a
Bond Counselr C.� ' •'• • "!
10/19/2012 (Summary) � • ' ' r`.r ••
Date of Publication: * K 4.ti. "
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ORDINANCE NO. 5672
CERTIFICATE
I, the undersigned, City Clerk of the City Council of the City of Renton, Washington (the
"City"), DO HEREBY CERTIFY:
1. The attached copy of Ordinance No. (the "Ordinance")is a full, true and
correct copy of an ordinance duly passed at a regular meeting of the City Council of the City
held at the regular meeting place thereof on October 2012,as that ordinance appears on
the minute book of the City; and the Ordinance will be in full force and effect after publication
in the City's official newspaper as provided by law;and
2. A quorum of the members of the City Council was present throughout the
meeting and a majority of those members present voted in the proper manner for the passage
of the Ordinance. -
IN WITNESS WHEREOF, I have hereunto set my hand this day of October, 2012.
Bonnie I. Walton, City Clerk
October 15, 2012 Renton City Council Minutes Page 308
Transportation (Aviation) Transportation (Aviation)Committee Vice-Chair Persson presented a report
Committee recommending concurrence in the staff recommendation to approve an
Lease: Rate Increase, addendum to the airport lease with Acuwings, LLC for the 756 building(pilot
Acuwings, LLC, LAG-08-007 lounge),the 760 building and tiedown aircraft storage,to increase the total
lease revenue by$2,203.86 per year plus leasehold excise tax.
The Committee further recommended that the Mayor and City Clerk be
authorised to sign the lease addendum.
MOVED BY PERSSON,SECONDED BY PALMER,COUNCIL CONCUR IN THE
COMMITTEE REPORT. CARRIED.
Citizen Comment: Parsons— MOVED BY PERSSON, SECONDED BY PALMER, COUNCIL REFER TO THE
Post Office Box at The Landing ADMINISTRATION CORRESPONDENCE FROM DOROTHY PARSONS REGARDING
PLACING A POST OFFICE BOX AT THE LANDING. CARRIED.
Human Resources:September MOVED BY PERSSON,SECONDED BY BRIERE,COUNCIL REFER THE (SEPTEMBER
2012 WCIA Claims 2012)WCIA CLAIMS REPORT TO THE FINANCE COMMITTEE. CARRIED.
Community Event: Ron Nelson Councilmember Persson remarked that Ron Nelson, long-time City Building
Memorial Service Director, had passed away. He announced that Mr. Nelson's memorial service
is being held at Greenwood Memorial on Friday, October 19, at 11 a.m.
RESOLUTIONS AND The following resolution was presented for reading and adoption:
ORDINANCES
RESOLUTION#4162 A resolution was read authorizing the redemption of the City's Limited Tax
Finance: Retirement of 2002 General Obligation Bonds,2002, and the transfer of interfund loans; and
General Obligation Bonds authorizing the execution of certain documents related thereto. MOVED BY
BRIERE)SECONDED BY TAYLOR,COUNCIL ADOPT THE RESOLUTION AS READ.
CARRIED.
The following ordinances were presented for second and final reading:
ORDINANCE#5671 An ordinance was read amending the City of Renton Fiscal Years 2011/2012
Budget: 3rd Quarter 2012 Biennial Budget as adopted by Ordinance No. 5583, and thereafter amended by
Budget Amendment Ordinance Nos.5595, 5616, 5638, and 5656 in the amount of$8,496,583,with
the total amended budget to be$540,018,705 for the biennium. MOVED BY
BRIERE,SECONDED BY TAYLOR, COUNCIL ADOPT THE ORDINANCE AS READ.
ROLL CALL. ALL AYES. CARRIED.
ORDINANCE#5672 An ordinance was read authorizing the issuance of Water and Sewer Revenue
Finance: Refinancing 2004 Refunding Bonds in the aggregate principal amount of not to exceed
Water and Sewer Revenue $10,000,000 for the purpose of refunding a portion of the City's Water and
Bonds and Redeem 1998 Sewer Revenue Bonds, 2004; providing the form,terms and covenants of the
Bonds bonds; authorizing the appointment of an escrow agent and execution of an
escrow agreement; delegating certain authority to approve the final terms of
the bonds; and authorizing the cash redemption of the City's Water and Sewer
Revenue Refunding Bonds, 1998. MOVED BY BRIERE,SECONDED BY TAYLOR,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL. ALL AYES. CARRIED.
NEW BUSINESS Councilmember Taylor remarked that Council had received a letter from the
Council: Puget Sound Regional Puget Sound Regional Council inviting them to a luncheon celebrating the
Council Luncheon Invitation career of Congressman Norm Dicks. He asked if Councilmembers were
planning to attend the event. Mayor Law and Council President Zwicker each
remarked that they were not currently aware of such plans.
October 8, 2012 Renton City Council Minutes Page 298
The Committee further recommended that the ordinance regarding this matter
be presented for first reading.
MOVED BY BRIERE, SECONDED BY PERSSON, COUNCIL CONCUR IN THE
COMMITTEE REPORT. CARRIED. (See later this page for ordinance.)
.Finance: Bond Refinancing, Finance Committee Chair Briere presented a report recommending
2004 Water&Sewer Revenue concurrence in the staff recommendation to approve the refinancing plan to
issue around $9.35 million in new bonds to refinance approximately$9.015
million of the outstanding 2004 Water Sewer Revenue Bonds,and to accelerate
the final payment of the 1998 bonds in the amount of$360,000. The
Committee further recommended that the ordinance with all the associated
documents be presented for first reading. MOVED BY BRIERE,SECONDED BY
PERSSON, COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED. (See later
this page for ordinance.)
RESOLUTIONS& The following ordinances were presented for first reading and referred to the
ORDINANCES 10/15/2012 Council meeting for second and final reading:
Budget:2012 Third Quarter An ordinance was read amending the City of Renton Fiscal Years 2011/2012
Amendment • Biennial Budget as adopted by Ordinance No.5583,and thereafter amended by
Ordinance Nos. 5595, 5616, 5638, and 5656 in the amount of$8,496,583, with
the total amended budget to be$540,018,705 for the biennium. MOVED BY
BRIERE,SECONDED BY CORMAN, COUNCIL REFER THE ORDINANCE FOR
SECOND AND FINAL READING ON 10/15/2012. CARRIED.
Finance: Bond Refinancing, An ordinance was read authorizing the issuance of Water and Sewer Revenue
2004 Water&Sewer Revenue Refunding Bonds in the aggregate principal amount of not to exceed
$10,000,000 for the purpose of refunding a portion of the City's Water and
Sewer Revenue Bonds,2004; providing the form,terms and covenants of the
bonds;authorizing the appointment of an escrow agent and execution of an
escrow,agreement; delegating certain authority to approve the final terms of
the bonds; and authorizing the cash redemption of the City's Water and Sewer
Revenue Refunding Bonds, 1998. MOVED BY BRIERE,SECONDED BY CORMAN,
COUNCIL REFER THE ORDINANCE FOR SECOND AND FINAL READING ON
10/15/2012. CARRIED.
The following ordinance was presented for second and final reading and
adoption:
ORDINANCE#5670 An ordinance was read amending Section 4-1-190 of Chapter 1,Administration
CED: Impact Fees Updates and Enforcement,of Title IV(Development Regulations), of City Code, by
repealing Section 4-1-190 and replacing it with a new Section 4-1-190, entitled
"Impact Fees," authorizing the collection of impact fees for Transportation,
Parks,and Fire Protection; providing findings and definitions; providing for the
time of payment; providing for exemptions and credits; providing for the
establishment of impact fee accounts, refunds and the use of funds providing
for reviews, and adjustments to impact fees; authorizing independent fee
calculations; and setting a fee for appeals. MOVED BY PRINCE,SECONDED BY
BRIERE,COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL. ALL AYES.
CARRIED.
• r APPROVED BY
FINANCE COMMITTEE CI :CO.UNCIL : -
:COMMITTE•REPORT. p.
October 8,.20`12 ;
Refunding,of 2004 Water Sewer Revenue=Bonds •
�.: Octob'er 1, 20.12 ;
The FinanceCommittee recommnds concurrence-in.the•staff recommendation toapprove.:the'`'
refinancing plan•.to.issue`aro:und $9.3.5 million in new bonds to'r-.efinanceapproxiimately'$9:015'''' , ,''". :
million- of the outstanding 2004,,Water Sewer Revenue Bonds, and to 'accelerate the fine)-
.payment of.the 1998:bonds'•in the amount of,$360,000. . -
. The Committee further recommends the a ethedordinance with all theassociated documents"
be presented.for'first reading,a< <„ccr.urr�„
19 , ,44:40t-ing
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Terri:Bnere, air ,
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. 1,
Q.I'1C . - -
Greg.Taylor,ViceChair :
•
;Dion Persson,_Member • . I• .
C: • iwen' •
Wang
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October 1,2012 Renton City Council Minutes Page 289
APPEAL Planning and Development Committee Chair Prince presented a report
Appeal: Galloway at the recommending that the full Council find that the Hearing Examiner committed
Highland Final Plat,Campbell no errors of fact or law in this matter and that his decision be affirmed.
Dille Barnett&Smith PLLC, MOVED BY PRINCE,SECONDED BY CORMAN,COUNCIL CONCUR IN THE
LUA-07-128 COMMITTEE REPORT. CARRIED.
AUDIENCE COMMENT Beth Aslher(Renton)asked what the next steps will be regarding the Cedar
Citizen Comment:Asher— River Library now that the City has completed the first library workshop.
Library Next Steps CouncilmIember Briere explained that the City will be using the information
received from citizens at the workshop to formulate the agendas for upcoming
workshops. She remarked the information received was reduced to four main
topics that will be discussed during the next two meetings.
Citizen Comment:Clark— Beatrice Clark(Renton)stated that she has appeared before Council at previous
Emails& Racism meetings to address concerns dealing with racism at the King County Library
System! She remarked that she has yet to receive a response to her concerns.
She also expressed concern regarding an email she wrote to Councilmember
Corman that was forwarded to the City Attorney. Ms.Clark stated that when
she received a copy of the email some of the text was blotted out. She
questioned whether the comments were blotted out because they may be
racist or biased.
CONSENT AGENDA Items listed on the consent agenda are adopted by one motion which follows
the listing. At the request of Council President Zwicker, Item 7.f.was removed
for separate consideration.
Council: Meeting Minutes of Approval of Council meeting minutes of 9/24/2012. Council concur.
9/24/2012
CAG: 12-126,Stevens Ave City Cletk reported bid opening on 9/25/2012 for CAG-12-126;Stevens Ave.
NW/Lind Ave NW Storm NW/Lind Ave. NW Storm System Improvement Project; engineer's estimate
System Improvement, Rodarte $241,580; and submitted staff recommendation to award the contract to the
Construction low bidder, Rodarte Construction, Inc., in the amount of$189,765. Council
concur.
Finance: 3rd Quarter 2012 Administrative Services Department recommended approval of the third
Budget Amendment quarter 2012 Budget Amendment increasing appropriations by$8,496,583.
Refer toll Finance Committee.
Finance: Refinance 2004 ' Administrative Services Department requested approval of an ordinance
Water and Sewer Revenue authorizing the issuance of revenue bonds in the amount of$9.35 million to
Bonds& Redeem 1998 Bonds refinance existing 2004 Water and Sewer Revenue Bonds and redemption of
1998 Water and Sewer Revenue Bonds one year early. Refer to Finance
Corn m ittee.
Police:Target Zero Teams,WA Police Department requested approval of a memorandum of understanding to
Traffic Safety Commission accept$16,320 in grant funds from the Washington Traffic Safety Commission
Grant for Target Zero Teams project participation,a high-visibility traffic safety
emphasis program. Council concur.
MOVED BY ZWICKER,SECONDED BY PALMER,COUNCIL APPROVE THE CONSENT
AGENDA MINUS ITEM 7.f. CARRIED.
,
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CITY OF RENTON COUNCIL AGENDA BILL
Subject/Title: I Meeting:
Refinance 2004 Water Sewer Revenue Bond Regular Council -01 Oct 2012
Exhibits: Submitting Data: Dept/Div/Board:
Bond Ordinance - Administrative,Services
Issue Paper Staff Contact:
Jamie Thomas x6929
Recommended.Action:
Refer to Finance Committee
. Fiscal Impact:
Expenditure Required: $ Transfer Amendment: $
Amount Budgeted: $ Revenue Generated: $
Total Project Budget: $ I City Share Total Project: $
SUMMARY OF ACTION:
Refund a portion of$10.335 million 2004 Water Sewer Revenue Bonds with.the issuance of$9.35
million of bonds, plus an estimated 650k premium.The total amount subject to optional redemption is
$9.895 million, however the interest rate would be higher if the City issued more than $10 million in tax
exempt bonds, including premium, peer year.After premiums and interest due are calculated, the City is
limited to refunding approximately$9.015 million to maximize savings.
Principal maturing on and after December 1, 2015 is subject to optional redemption without penalty on
or after December 1,,2014. Because the bonds will be issued more than 90 days prior to the redemption
date, this is considered an advanced refunding issue.The proceeds from the new bonds willpay for
issuance costs and with $9.87 million'deposited into an escrow account to pay interest when due until
December 1, 2014;. at which time the principle amount of$9.015 million will be paid.
The$9.35 million bond issue (with $9.99 million in total proceeds) will have an estimated true interest
cost of 3.27%, which would replace the current interest of 5.00%. Depending upon the actual interest
rates at the time of pricing,the refunding is expected to generate estimated interest savings of$857k
or, a cumulative net present value savings of$687k (7.6%).
In addition to the refinancing of the 2004 bonds, we also recommend to pay off a minor balance ($360k)
remaining on the 1998 Water/Sewer refunding revenue bonds carrying 5.1% interest rate due on
December 1, 2013. -
STAFF RECOMMENDATION:
Approve the proposed refinancing plan and adopt the ordinance authorizing issuance of$9.35 million of
bOnds to refund$9.015 million of the 2004 Water Sewer Revenue Bonds and redemption of the 1998
,bonds one year early.
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ADMINISTRATIVE SERVICES
DEPARTMENT
MEMORANDUM
DATE: October 1, 2012
TO: Rich Zwicker, Council President
Members of the Renton City Council
VIA: Denis Law, Mayor
FROM: Iwen Wang,Admin. Services Administrator
SUBJECT: Refunding 2004 Water-Sewer Revenue Bonds
ISSUE
Should the City refinance the 2004 Water-Sewer Bonds issued in 2004 to fund projects
identified the Waterworks Utility Capital Improvement Plan?
RECOMMENDATION
Staff recommends approval of the proposed refinancing plan and adoption of the necessary
ordinance authorizing the issuance of $9.35 million of bonds at a true interest cost of
approximately 3.27%, which will replace the existing $9.015 million of bonds carrying an
average interest rate of 5.00% and generate an estimated savings of$857k in interest cost, or
$687k in net present value savings (7.6%) on the refunded bonds.
In addition,we also recommend to pay off a minor balance($360k)remaining on the 1998
Water/Sewer refunding revenue bonds-carrying 5.1%interest rate due on December 1,2013.
BACKGROUND
The City issued $10.335 million of Water and Sewer Revenue Bonds in 2004:
1) $5 million towards the $12 million new water filtration facility at the Maplewood
booster pump station;
2) $2 million to install 7,000 linear feet of 18-24 inch sewer main on NE Sunset Blvd to
accommodate growth in the eastern area of the City;and
3) $3 million to replace 3,500 linear feet of 24 inch storm pipe along SW 7th Street to
address water drainage issues. .
Principal maturing on and after December 1, 2015,is subject to optional redemption without
penalty on or after•December 1, 2014. Because the bonds will be issued more than 90 days
prior to the redemption date, this is considered an advanced refunding issue. The proceeds of
the $9.35 million new bonds issued plus the projected issue premium of $650k, will pay for
• issuance costs and the remaining$9.87 million will be deposited into an escrow account to pay
interest when due until December 1, 2014;at which time theprinciple amount of$9.015 million
will be fully paid. •
The total amount subject to optional redemption is $9.895 million, however the interest rate
would be higher if the City issued more than $10 million in tax exempt bonds; including
premium, per year. After premiums and interest due are calculated,the City is limited to
L '
refunding approximately$9.015 i,million.
This partial refunding will leave a $1.32 million Unrefunded portion of the 2004 bonds maturing
2018 or sooner,which can either be refinanced later or prepaid with Utility revenues on or after
December 1, 2014. To include this portion in the current refunding, they would have to be
refunded as taxable bonds and would only generate an approximate savings of$20,000.
The projected savings of the refunding bonds assumes the interest rate will be 0.5%higher than
current rate. Depending upon the actual interest rate at the time of the pricing,the total
interest cost saving could be as high as$1.5 million if the rates remains unchanged.
The 1998 water-sewer revenue bonds are scheduled to be paid off December 1, 2013,with total
outstanding principal of$360k. By paying off the bonds one year early the City will save 5.1%
on the outstanding principal. 1 _
CONCLUSION 1
Staff recommends the Council approve the refinancing ordinance and the associated
documents necessary to. issue 1 the new bonds, including the escrow agreement, and the
redemption of a portion of the outstanding 2004 Water Sewer Revenue Bonds and early
payment of the remaining 1998 Water Sewer Revenue Bonds.
Attachment: Refunding Savings (Calculation Date August 22, 2012.
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SUMMARY OF REFUNDING RESULTS
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+intefest rates plus 50 basis points
Dated Date 12/07/2012
Delivery Date 12/07/2012
Arbitrage yield 3.041757%
Escrow yield 0.257427%
Bond Par Amount 9,350,000.00
True Interest Cost 3.274522%
Net Interest Cost 3.398384%
Average Coupon 3.906090%
Average Life • 12.277
•
Par amount of refunded bonds 9,015,000.00
Average coupon of refunded bonds 5:000000%
Average life of refunded bonds 12.577
PV of prior debt to 12/07/2012 @ 3.041757% 10,848,691.14
Net PV Savings 687,006.98
•
Percentage savings of refunded bonds 7.620710%
Percentage savings of refunding bonds 7347668%
•
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Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-.1MW (Finance 7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 1
a
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SAVINGS
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Present Value
Prior Refunding Annual to 12/07/2012
Date Debt Service Debt Service Savings Savings @ 3.0417573%
06/01/2013 225,375:00 173,613.33 51,761.67 51,011.89
12/01/2013 225,375.00 219,600.00 5,775.00 57,536.67 5,606.09
06/01/2014 225,375.00 179,200.00 46,175.00 :44,152.91
12/01/2014 225,375.00 214,200.00 11,175.00 57,350.00 , 10,525.54
06/01/2015 225,375.00 178,850.00 46,525.00 - 43,164.63
12/01/2015 225,375.00 213,850.00 11,525.00 58,050.00 10,532.40
06/01/2016 225,375.00 178,500.00 46,875.00 42,196.09.
12/01/2016 225,375.00 213,500.00 11,875.00 58,750.00 10,529.53
06/01/2017 225,375.00 177,975.00. 47,400.00 41,399.83
12/01/2017 225,375.00 217,975.00 7,400.00 54,800.00 6,366.44
06/01/2018 225,375.00 I 177,375.00 48,000.00 40,677.17
12/01/2018 255,375.00 247,375.00 8,000.00 56,000.00 6,677.96
06/01/2019 224,625.00 176,325.00 48,300.00 39,714.20
12/01/2019 409,625.00 401,325.00 8,300.00 56,600.00 • 6,722.36 .
06/01/2020 220,000.00 172,950.00 47,050.00 37,535.97
12/01/2020 465,000.00 452,950.00 12,050.00 59,100.00 9,469.34
06/01/2021 213,875.00 168,750.00 45,125.00 34,929.67
12/01/2021 • 478,875.00 468,750.00 10,125.00 55,250.00 7,719.99
06/01/2022 207,250.00 164,250.00 43,000.00 32,294.98
12/01/2022 487,250.00 474,250.00 13,000.00 56,000.00 9,617.33
06/01/2023 200,250.00 159,600.00 40,650.00 29,622.13
12/01/2023 1,650,250.00 1,634,600.00 15,650.00 56,300.00 . 11,233.49
06/01/2024 164,000.00 130,100,00 33,900.0023,968.71
12/01/2024 1,684,000.00 1,660,100.00 23,900.00 57,800.00 16,645.15
06/01/2025 126,000.00 99,500.00 26,500.00 18,179.43
12/01/2025 1,726,000.00 1,694,500.00 31,500.00 58,000.00 21,285.78
06/01/2026 86,000.00 67,600.00 18,400.00 12,247.33
12/01/2026 1,766,000.00 1,727,600.00 38,400.00 56,800.00 25,176.74
06/01/2027 44,000.00 34,400.00 9,600.00 • 6,199.89
12/01/2027 1,804,000.00 1,754,400.00 49,600.00 59,200.00 31,552.89
14,691,500.00 • 13,833,963.33 857,536.67 857,536.67 686,955.86
•
Savings Summary
PV of savings from cash flow 686,955.86 •
Plus:Refunding funds on hand 51.12
Net PV Savings 687,006.98
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SOURCES AND USES OF FUNDS
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Dated Date 12/07/2012
Delivery Date 12/07/2012
Sources:
Bond Proceeds:
Par Amount 9,350,000.00
Premium 648,266.70
9,998,266.70
Uses:
Refunding Escrow Deposits:
Cash Deposit 1.58
SLGS Purchases 9,867,764.00 '
9,867,765.58
Delivery Date Expenses:
Cost of Issuance 65,000.00
Underwriter's Discount 65,450.00
130,450.00
Other Uses of Funds:
Additional Proceeds 51.12
9,998,266.70
Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 3
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BOND PRICING
•
City of Renton
•
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
•
Maturity I Yield to Call Call Call Date Call Price Premium
Bond Component . Date Amount Rate Yield Price Maturity Date Price far Mb Yield for Mb Yield (-Discount)
•
Serial Bonds(BQ):
12/01/2013 40,000 2.000% 1.250% 100.730 292.00
12/01/2014 35,000 2.000% 1.240% 101.484 519.40
12/01/2015 35,000 2.000% 1.380% 101.805 631.75
12/01/2016 35,000 3.000% 1.480% 105.858 2,050.30
12/01/2017 40,000 3.000% 1.680% 106.284 2,513.60
12/012018 70,000 3.000% 1.990% 105.670 3,969.00
12/01/2019 225,000 3.000% 2280% 104.623 10,401.75
12/01/2020 280,000 3.000% 2.540% 103.304 9,251.20
12/01/2021 300,000 3.000% 2.730% 102.137 6,411.00
12/01/2022 310,000 3.000% 2.780% 101.906 5,908.60
12/012023 1,475,000 4.000% 2.910% 109.384 C 2.991% 12/01/2022 100.000 12/012022 100.000 138,414.00
12/01/2024 1,530,000 4.000% 2.990% 108.661 C 3.128% 12/012022 100.000 12/01/2022 100.000 132,513.30
12/01/2025 1,595,000 4.000%• 3.100% 107.676 C 3.270% 12/01/2022 100.000 12/01/2022 100.000 122,432.20
12/01/2026 1,660,000 4.000% 3.220% 106.613 C 3.402% 12/01/2022 100.000 12/01/2022 100.000 109,775.80
12/012027 1,720,000 4.000% 3.290% 105.999 C 3.483% 12/01/2022 100.000 12/01/2022 100.000 103,182.80
• 9,350,000 1 • 648,266.70
Dated Date I 12/072012
Delivery Date 12/07/2012
First Coupon 06/012013 '
Par Amount 9,350,000.00
Premium I . 648,266.70
Production 9,998,266.70 106.933334%
Underwriter's Discount -65,450.00 -0.700000%
•
•
.Purchase Price 9,932,816.70 106.233334% •
Accrued Interest
.
Net Proceeds 9,932,816.70
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Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 4
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' BOND DEBT SERVICE
City of Renton •
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points •
Period Annual •
Ending Principal Coupon Interest Debt Service Debt Service
06/01/2013 173,613.33 173,613.33
12/01/2013 40,000 2.000% 179,600.00 219,600.00 393,213.33
06/01/2014 179,200.00 179,200.00
12/01/2014 35,000 2.000% 179,200.00 214,200.00 393,400.00
06/01/2015 178,850.00 178,850.00
12/01/2015 35,000 2.000% 178,850.00 213,850.00 392,700.00
06/01/2016 178,500.00 178,500.00
12/01/2016 35;000 3.000% 178,500.00 213,500.00 392,000.00
06/01/2017 177,975.00 177,975.00
12/01/2017 40,000 3.000% 177,975.00 217,975.00 395,950.00
06/01/2018 177,375.00 177,375.00
12/01/2018 70,000 3.000% 177,375.00 247,375.00 424,750.00
06/01/2019 176,325.00 176,325.00
12/01/2019 . 225,000 3.000% 176,325.00 401,325.00 577,650.00
06/01/2020 172,950.00 172,950.00
12/01/2020 280,000 3.000% 172,950.00 452,950.00 625,900.00
06/01/2021 168,750.00 168,750.00
12/01/2021 300,000 3.000% 168,750.00 468,750.00 637,500.00
06/01/2022 164,250.00 164,250.00
12/01/2022 310,000 3.000% 164,250.00 474,250.00 638,500.00
06/01/2023 159,600.00 159,600.00
12/01/2023 1,475,000 4.000% 159,600.00 1,634,600.00 1,794,200.00
06/01/2024 130,100.00 130,100.00
12/01/2024 1,530,000 4.000% 130,100.00 1,660,100.00 1,790,200.00
06/01/2025 . 99,500.00 99,500.00
12/01/2025 1,595,000 4.000% 99,500.00 1,694,500.00 1,794,000.00
06/01/2026 67,600.00 67,600.00
12/01/2026 1,660,000 4.000% 67,600.00 1,727,600.00 1,795,200.00
06/01/2027 34,400.00 34,400.00
12/01/2027 1,720,000 4.000% 34,400.00 1,754,400.00 1,788,800.00
9,350,000 4,483,963.33 13,833,963.33 13,833,963.33
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Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 5
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BOND SUMMARY STATISTICS
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
• Assumes current AA+interest rates plus 50 basis.points
Dated Date 12/07/2012
Delivery Date 12/07/2012
Last Maturity 12/01/2027
Arbitrage Yield 3.041757%
True Interest Cost(TIC) 3.274522%
Net Interest Cost(MC) 3.398384%
All-In TIC 3.341817%
Average Coupon 3.906090%
Average Life(years) 12.277
Par Amount • 9,350,000.00
• Bond Proceeds 9,998,266.70
Total Interest • 4,483,963.33
Net Interest I 3,901,146.63
Total Debt Service 13,833,963.33
Maximum Annual Debt Service 1,795,200.00
Average Annual Debt Service 923,290.10
• Underwriter's Fees(per$1000)
Average Takedown
Other Fee 7.000000
Total Underwriter's Discount 7.000000
•
Bid Price i 106.233334
•
Par Average Average
Bond Component Value Price Coupon Life
Serial Bonds(BQ) 9,350,000.00 106.933 3.906% 12.277
• 9,350,000.00 12.277
All-In Arbitrage
TIC TIC Yield -
Par Value 9,350,000.00 9,350,000.00 9,350,000.00
+Accrued Interest
• +Premium(Discount) 648,266.70 648,266.70 648,266.70
-Underwriter's Discount -65,450.00 -65,450.00 •
-Cost of Issuance Expense -65,000.00
-Other Amounts
Target Value 9,932,816.70 9,867,816.70 9,998,266.70
Target Date. 12/07/2012 12/07/2012 12/07/2012
Yield 3.274522% 3.341817% 3.041757%
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Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 6
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PROOF OF ARBITRAGE YIELD
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Present Value
to 12/07/2012
Date Debt Service @ 3.0417573%
' 06/01/2013 173,613.33 171,098.50
12/01/2013 219,600.00 213,176.89
06/01/2014 179,200.00 171,352.49
12/01/2014 214,200.00 201,751.38
06/01/2015 178,850.00 165,932.18
12/01/2015 213,850.00 195,431.95
06/01/2016 178,500.00 160,682.71
12/01/2016 213,500.00 189,309.95
06/01/2017 177,975.00 155,445.88
12/01/2017 217,975.00 187,530.33
06/01/2018 177,3 75.00 150,314.85
12/01/2018 247,375.00 206,495.17
06/01/2019 176,325.00 144,981.51
12/01/2019 401,325.00 325,042.07
06/01/2020 172,950.00 137,977.59
12/01/2020 452,950.00 355,944.99
06/01/2021 168,750.00 130,623.42
12/01/2021 468,750.00 357,407.10
06/01/2022 164,250.00 123,359.30
12/01/2022 8,454,250.00 6,254,408.45
12,851,563.33 9,998,266.70'
Proceeds Summary
Delivery date 12/07/2012
Par Value 9,350,000.00
Premium(Discount) 648,266.70
Target for yield calculation 9,998,266.70
Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-R04WS BQ,R04WS_BQ) Page 7
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PROOF OF ARBITRAGE YIELD
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Assumed Call/Computation Dates for Premium Bonds
Net Present
Value(NPV)
Bond Maturity Call Call to 12/07/2012
Component Date Rate Yield Date Price @ 3.0417573%
SERIALBQ 12/01/2023 14.000% 2.910% 12/01/2022 100.000 -17,497.73
SERIALBQ 12/01/2024 4.000% 2.990% 12/01/2022 100.000 -7,088.29
SERIALBQ 12/01/2025 14.000% 3.100% 12/01/2022 100.000 8,321.32
SERIALBQ 12/01/2026 4.000% 3.220% 12/01/2022 100.000 26,306.24
SERIALBQ 12/01/2027 4.000% 3.290% 12/01/2022 100.000 37,817.86
Rejected Call/Computation Dates for Premium Bonds
Net Present
Value(NPV)
Bond Maturity Call Call to 12/07/2012 Increase
Component Date Rate Yield Date Price @ 3.0417573% to NPV
SERIALBQ 12/01/2023 4.000% 2.910% -7,275.21 10,222.52
SERIALBQ 12/01/2024 4.000% 2.990% 13,803.78 20,892.07
SERIALBQ 12/01/2025 4.000% 3.100% 40,507.48 32,186.16
SERIALBQ 12/01/2026 4.000% 3.220% 70,312.58 44,006.34
SERIALBQ 12/01/2027 4.000% I 3.290% 93,979.36 56,161.50 •
Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-R04WS BQ,R04WS_BQ) Page 8
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PRIOR BOND DEBT SERVICE
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
2004 Water&Sewer Revenue Bonds(11/1/04)(04WS)
Annual
Period Debt Debt
Ending Principal Coupon Interest Service Service
06/01/2013 225,375 225,375
12/01/2013 225,375 225,375 450,750
06/01/2014 225,375 225,375
12/01/2014 225,375 225,375 450,750
06/01/2015 225,375 225,375
12/01/2015 225,375 225,375 450,750
06/01/2016 225,375 225,375
12/01/2016 225,375 225,375 450,750 •
06/01/2017 225,375 225,375
• 12/01/2017 225,375 225,375 450,750
06/01/2018 225,375 225,375
12/01/2018 30,000 5.000% 225,375 255,375 480,750
•
06/01/2019 224,625 224,625
12/01/2019 185,000 5.000% 224,625 409,625 634,250
06/01/2020 220,000 220,000
12/01/2020 245,000 5.000% 220,000 465,000 685,000
06/01/2021 213,875 213,875
12/01/2021 265,000 5.000% 213,875 478,875 692,750
06/01/2022 207,250 207,250
12/01/2022 280,000 5.000% 207,250 487,250 694,500
06/01/2023 200,250 200,250
12/01/2023 1,450,000 5.000% 200,250 1,650,250 1,850,500
06/01/2024 164,000 164,000
12/01/2024 1,520,000 5.000% 164,000 1,684,000 1,848,000
06/01/2025 126,000 126,000 •
12/01/2025 1,600,000 5.000% 126,000 1,726,000 1,852,000
06/01/2026 86,000 86,000
•
12/01/2026 1,680,000 5.000% 86,000 1,766,000 ' 1,852,000
06/01/2027 44,000 44,000
12/01/2027 1,760,000 5.000% 44,0.00 1,804,000 1,848,000
9,015,000 5,676,500 14,691,500 14,691,500
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Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW (Finance 7.001 RE...:RENTON-RO4WS_BQ,R04WS_BQ) Page 9,
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ESCROW REQUIREMENTS
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
• Assumes current AA+interest rates plus 50 basis points
Period Principal
Ending Interest Redeemed Total
06/01/2013 225,375.00 225,375.00
12/01/2013 ! 225,375.00 225,375.00
06/01/2014 225,375.00 225,375.00
12/01/2014 225,375.00 9,015,000.00 9,240,375.00 •
901,500.00 9,015,000.00 9,916,500.00 •
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SUMMARY OF BONDS REFUNDED
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Maturity Interest Par Call Call
Bond Date Rate Amount Date Price
2004 Water&Sewer Revenue Bonds(11/1/04),04WS:
TERM2024 12/01/2018 5.000% 30,000.00 12/01/2014 100.000
12/01/2019 5.000% 185,000.00 12/01/2014 100.000
12/01/2020 5.000% 245,000.00 12/01/2014 100.000
•
12/01/2021 5.000% 265,000.00 12/01/2014 100.000
12/01/2022 5.000% 280,000.00 12/01/2014 100.000
12/01/2023 5.000% 1,450,000.00 12/01/2014 100.000
12/01/2024 5.000% 1,520,000.00 12/01/2014 100.000
SERIALS 12/01/2025 5.000% 1,600,000.00 12/01/2014 100.000
12/01/2026 5.000% 1,680,000.00 12/01/2014 100.000
12/01/2027 5.000% 1,760,000.00 12/01/2014 100.000
9,015,000.00
Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW(Finance.7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 11
ESCROW DESCRIPTIONS
City of Renton
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Type of - Type of Maturity First Int Par Max
Security SLGS Date Pmt Date Amount Rate Rate
Dec 7,2012:
SLGS Certificate 06/01/2013 06/01/2013 213,434 0.120% 0.120%
SLGS Certificate 12/01/2013 12/01/2013 212,798 0.170% 0.170%
SLGS Note 06/01/2014 06/01/2013 213,154 0.210% 0.210%
SLGS Note 12/01/2014 06/01/2013 9,228,378 0.260% 0.260%
9,867,764
SLGS Summary
SLGS Rates File 22AUG12
Total Certificates of Indebtedness 426,232.00
Total Notes 9,441,532.00
Total original SLGS 9,867,764.00
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ESCROW STATISTICS
City of Renton •
Proposed Refunding of 2004 WS Bonds(BQ)
Assumes current AA+interest rates plus 50 basis points
Modified Yield to Yield to Perfect Value of
Total Duration Receipt Disbursement Escrow Negative Cost of
Escrow Cost (years) Date Date Cost Arbitrage Dead Time
Global Proceeds Escrow:
9,867,765.58 1.912 0.257427% 0.257427% 9,359,753.48 508,012.02 0.08
9,867,765.58 9,359,753.48 508,012.02 0.08
Delivery date 12/07/2012
Arbitrage yield 3.041757%
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Aug 22,2012 11:29 am Prepared by Seattle-Northwest Securities Corp.-JMW(Finance 7.001 RE...:RENTON-R04WS_BQ,R04WS_BQ) Page 13
CITY OF RENTON, WASHINGTON
•
WATER AND SEWER REVENUE REFUNDING BONDS, 2012
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, AUTHORIZING ,
THE ISSUANCE OF WATER AND SEWER REVENUE REFUNDING BONDS IN THE
AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $1 1
FOR THE PURPOSE OF REFUNDING CERTAIN OUTSTANDING WATER AND
• SEWER REVENUE REFUNDING BONDS OF THE CITY; PROVIDING THE FORM,
TERMS AND COVENANTS •OF THE BONDS; AUTHORIZING THE
APPOINTMENT OF AN ESCROW AGENT AND EXECUTION OF AN ESCROW
AGREEMENT; AND DELEGATING CERTAIN AUTHORITY TO APPROVE THE
FINAL TERMS OF THE BONDS.
• PASSED: October , 2012 •
PREPARED BY:
PACIFICA LAW GROUP LLP
• Seattle, Washington
•
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ORDINANCE NO.
TABLE OF CONTENTS*
Section 1. Definitions 5
Section 2. Findings Regarding Parity Provisions 15
Section 3. Authorization,and Description of Bonds . 15
Section 4. Registration of Bonds and Book-Entry System 16
Section 5. Redemption; Purchase of Bonds 21
Section 6. Priority and Payment from the Waterworks Utility Fund 25
Section 7. Funds and Accounts 26
Section 8. Covenants 29
Section 9. Tax Covenants 32
Section 10. Future Parity Bonds 35
Section 11. Form of Bonds 38
Section 12. Execution of Bonds 40
Section 13. Lost, Stolen or Destroyed Bonds 41
Section 14. Sale of Bonds 41
Section 15. Application of Bond Proceeds; Plan of Refunding 44
Section 16. Bond Insurance 46
Section 17. Undertaking to Provide Continuing Disclosure 46
Section 18. Defeasance of the Bonds 50
Section 19. Amendments 51
Section 20. Contract;Savings Clause 53
Section 21. General Authorization, Ratification of Prior Acts 54
Section 22. Effective Date of Ordinance 54 54
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CITY OF RENTON,WASHINGTON
ORDINANCE NO.
AN ORDINANCE OF ITHE CITY OF RENTON, WASHINGTON, AUTHORIZING
THE ISSUANCE OF WATER AND SEWER REVENUE REFUNDING BONDS IN THE
AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $[ 1
FOR THE PURPOSE OF REFUNDING CERTAIN 'OUTSTANDING WATER AND
SEWER REVENUE REFUNDING BONDS OF THE CITY; PROVIDING THE FORM,
TERMS AND COVENANTS OF THE BONDS; AUTHORIZING THE
APPOINTMENT OF AN ESCROW AGENT AND EXECUTION OF AN ESCROW
AGREEMENT; AND DELEGATING CERTAIN AUTHORITY TO APPROVE THE
FINAL TERMS OF THE BONDS.
WHEREAS, the City of Renton, Washington (the "City") has created and operates a
waterworks utility of the City, ;'including the water, sewer, wastewater and storm drainage
systems (the "Waterworks Utility"); and
WHEREAS, the City issued and now has outstanding the following series of water and
sewer revenue bonds, each being payable on parity from the revenues of the Waterworks
Utility: [to be confirmed]
Authorizing Original Outstanding
Series Ordinance Principal Amount Principal Amount
2002 4976 $ 11,980,000 $
2003 5019 8,035,000
2004 15098 10,335,000
2007 5313 9,750,000
2008A ,5313 9,975,000
• 2008B 5313 2,035,000
(collectively,the"Outstanding Parity Bonds"); and
WHEREAS, the Outstanding Parity Bonds issued under date of November 1,
2004mature in principal amounts and bear interest as follows:
Maturity Date Principal Interest
(December 1) Amount Rate
2013 $ 205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024* 4,605,000 5.00'
2025 1,600,000 5.00
2026 1,680,000 5.00.
2027 1,760,000 5.00
* Term Bond
(the "2004 Bonds");and
WHEREAS, the 2004 Bonds maturing on and after December 1, 2015 (the "Refunding
Candidates"), are subject to optional redemption, in whole or in part, on any date on and.after
December 1,2014, at a price of par plus interest accrued to the date of redemption; and
WHEREAS, after due consideration it appears to this Council that all or a portion of the
Refunding Candidates (the "Refunded Bonds") may be defeased and refunded by proceeds of
water and sewer revenue refunding bonds authorized herein (the "Bonds") at a, substantial
savings to the City and its ratepayers; and
WHEREAS, the respective ordinances authorizing the issuance of the Outstanding Parity
Bonds permit the issuance of additional bonds on a parity with the Outstanding Parity Bonds for
refunding purposes if certain conditions are met; and
WHEREAS, the City has received a proposal from Seattle-Northwest Securities
Corporation, Seattle, Washington (the "Underwriter") and now desires to issue and sell the
Bonds to the Underwriter as set forth herein;
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NOW, THEREFORE,•THE CITY COUNCIL OF-THE CITY OF RENTON, WASHINGTON DOES
ORDAINASFOLLOWS: • '
Section 1 Definitions. As used in this ordinance, the following words shall have the
following meanings:
Acquired Obligations means the Government Obligations acquired by the City under the
terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of
the Refunded Bonds.
Annual Debt Service for any year means all the interest on plus all principal (except
principal of Term Bonds due 'n any Term Bond Maturity Year) of Parity Bonds, plus all
mandatory redemption and sinking fund installments, less all-bond interest-payable from the
proceeds of any such.bonds, which will mature or come due in that year.
Base Period means any consecutive 12-month period 'selected by the-City out 'of the
24-month period.next preceding the date of issuance of an additional series of Future Parity
Bonds.
Beneficial Owner means any person that has or shares the power, directly or indirectly
to make investment decisions concerning ownership of any Bonds (including persons holding
Bonds through nominees,depositories or other intermediaries).- -
Bond-Fund means that special fund of the City known as the Waterworks Revenue
Bond Fund, 2012 created by this ordinance for the payment of-the.principal of and interest on
the Bonds.] -
Bond Insurance Policy means the municipal bond insurance policy, if any, issued by the
Insurerinsuring the payment when due of the principal of and interest on all or•a portion of the
Bonds as provided therein. - -
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Bond Purchase Contract means the contract for the purchase of the Bonds between the
Underwriter and City, executed pursuant to Section 14 of this ordinance.
Bond Register means the registration books showing the name, address and tax
identification number of each Registered Owner of the Bonds, maintained' pursuant to
Section 149(a) of the Code.
Bond Registrar means, initially, the fiscal agency of the State of Washington, for the
purposes of registering and authenticating the Bonds, maintaining the Bond Register, effecting
transfer of ownership of the Bonds and paying interest on and principal of the Bonds.
Bond Year means each one-year period that ends on the date selected by the City. The
first and last Bond Years may be short periods. If no day is selected by the City before the
earlier of the final maturity date of the Bonds or the date that is five years after the date of
issuance of the Bonds, Bond Years end on each anniversary of the date of issue and on the final
maturity date of the Bonds.
Bonds mean the City's Water and Sewer Revenue Refunding Bonds, 2012, authorized to
be issued by this ordinance.
Call Date means December 1, 2014.
City means the City of Renton,.Washington, a municipal corporation duly organized and
existing by virtue of the laws of the State of Washington
Code means the Internal Revenue Code of 1986, as amended, and shall include all
applicable regulations and rulings relating thereto.
Commission means the Securities and Exchange Commission.
Council means the City Council as the general legislative authority•of the City, as duly
and regularly constituted from time to time.
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Coverage Requirement prior to the New Covenant Date means in any calendar year
1.25 times the Maximum Annual Debt Service. From and after the New Covenant Date, the
term Coverage Requirement means in any calendar year 1.25 times the Annual Debt Service for
such year. [question for the finance team—should we rename this the "Rate Covenant"]
Credit Facility means a !policy of municipal bond insurance, a letter of credit, surety
bond, line of credit, guarantee or other financial instrument or any combination of the
foregoing, which obligates a third party to make payment or provide funds for the payment of
financial obligations of the City.i There may be one or more Credit Facilities outstanding at any
time.
Designated City Representative means the Mayor, the,Chief Administrative Officer and
the Finance Director of the City and any successor to the functions of such offices. The
signature of one Designated City;Representative shall be sufficient to bind the City.
DTC means The Depository Trust Company, New York, New York, a limited purpose trust
company organized under the laws of the State of New York, as depository for the Bonds
pursuant to this ordinance.
•
Escrow Agent means U.S! Bank National Association,Seattle, Washington.
Escrow Agreement means the Escrow Deposit Agreement between the City and the
Escrow Agent to be dated as of the date of closing and delivery'of the Bonds.
Finance Director means the City's Finance and Information Services Administrator or the
successor to such officer.
Fitch means Fitch, Inc., organized and existing under the laws of the State of Delaware,
its successors and their assigns, and, if such organization shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, Fitch shall be deemed to refer to
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1
any other nationallyrecognized securities rating agency designated by the City.
Future Parity Bonds means all water and sewer revenue bonds of the City issued after
the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a parity
with the lien and charge on Net Revenue for the payment of the principal of and interest on the
Outstanding Parity Bonds and the Bonds.
Government Obligations means those obligations now or hereafter defined as such in
chapter 39.53 RCW.
Gross Revenue means all of the earnings and revenues received by the City from the
maintenance and operation of the Waterworks Utility and all earnings from the investment of
money in the Reserve Fund or any Parity Bond Fund, and connection and capital improvement
charges collected for the purpose of defraying the cost of capital facilities of the Waterworks
Utility, except government grants, proceeds from the sale of Waterworks Utility property(other
than timber), City taxes collected by or through the Waterworks Utility, principal proceeds of
bonds and earnings or proceeds from any investments in a trust, defeasance or escrow fund
created to defease or refund Waterworks Utility obligations (until commingled with other
earnings and revenues of the Waterworks Utility) or held in a special account for the purpose of
paying a rebate to the United States Government under the Code.
Insurer means the municipal bond insurance company, if any, selected and designated
by the Designated City Representative, pursuant to Section 16 of this ordinance, as issuer of a
Bond Insurance Policy for all or a portion of the Bonds.
Letter of Representations means the Blanket Issuer Letter of Representations from the
City to DTC.
Maintenance and Operation Expense means all reasonable expenses incurred by the
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City in causing the Waterworks Utility to be operated and maintained in good repair, working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract
for such service, and including pro-rata budget charges for the City's administration expenses
where those represent a reasonable distribution and share of actual costs, but not including any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks Utility.
Maximum Annual Debt Service means, at the time of calculation,the maximum amount
of Annual Debt Service that will'mature or come due in the current calendar year or any future
calendar year on the Parity Bonds.
Moody's means Moody's Investors Service, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agehcy, Moody's shall be deemed to refer to any other nationally recognized
securities rating agency designated by the City.
MSRB means the Municipal Securities Rulemaking Board or any successors to its.:
functions.
Net Proceeds,when used with reference with the Bonds, means the principal amount of
the Bonds, plus accrued interest and original issue premium, if any, and less original issue
discount, if any.
Net Revenue means Gross Revenue less Maintenance and Operation Expense.
New Covenant Date means from and after the date when all Outstanding Parity Bonds
issued prior to 2007 are no longer Outstanding.
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A
Outstanding means, as of any particular time, all Parity Bonds issued theretofore except
(a) Parity Bonds theretofore canceled by the Bond Registrar after purchase by the City in the
open market or because of payment at, or redemption prior to, maturity; (b) Parity Bonds for
which funds have been deposited into a trust account pursuant to the ordinances authorizing
the issuance of the Parity Bonds, but only to the extent that the principal of and interest on
such Parity Bonds are payable from such trust account; (c) temporary; mutilated, lost, stolen or
destroyed Parity Bonds for which new Parity Bonds have been issued pursuant to the ordinance
authorizing their issuance; and (d) Parity Bonds exchanged for new Parity Bonds pursuant to the
ordinances authorizing their issuance.
Outstanding Parity Bond Ordinances mean the ordinances authorizing the issuance of
the Outstanding Parity Bonds identified in the recitals to this ordinance.
Outstanding Parity Bonds means the parity water and sewer revenue bonds of the City
identified in the recitals to this ordinance.
Parity Bonds means the Outstanding Parity Bonds, the Bonds and any Future Parity
Bonds.
[Parity Bond Fund means any fund created for the payment and redemption of Parity
Bonds.] [does the City currently or does it prefer to have a combined Bond Fund for all Parity
Bonds?] •
Parity Requirement means Net Revenues equal to or greater than:
(a) 1.25 times the Maximum Annual Debt Service for all Parity Bonds plus the Future
Parity Bonds proposed to be issued;and
(b) 100% of Maximum Annual Debt Service for all subordinate lien evidences of
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indebtedness secured by Gross Revenue.
Private Person means any'natural person engaged in a trade or business or any trust,
estate, partnership,association,company or corporation.
Private Person Use mears the use of property in a trade or business,by a Private Person
if such use is other than as a member of the generalpublic., Private Person Use includes
ownership of the property by the Private Person as well as other arrangements that transfer to
the Private Person the actual or beneficial use of the property'(such'as a lease, management or
incentive payment contract or other special arrangement) in such a manner as to set the
Private Person apart from the general public. Use of property as a member of the general
public includes attendance by the Private Person at municipal meetings or business rental of
property to the Private Person on a day-to-day basis if the rental paid by such Private Person is
the same as the rental paid. by any Private Person who desires to rent the'property. Use of
property by nonprofit community groups or community recreational groups is not treated as
Private Person Use if such use is incidental to the governmental uses of property, the property
is made available for such use by all such community groups on an equal basis andsuch
community groups are charged only a de minimis fee to cover custodial expenses.
Professional Utility Consultant means an independent licensed professional engineer,
certified public accountant or other independent person or firm selected by the City having a
favorable reputationfor,skill and experience with municipal utilities of comparable size and
character to the Waterworks Utility in such areas as are relevant to the purposes for which such
consultant is retained. ' ,
Qualified Insurance means any non-cancelable municipal bond- insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
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,
•
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies) which insurance company or companies, as,of the time of issuance of
such policy or surety bond, are currently rated in the highest rating category by any Rating
Agency.
Qualified Letter of Credit means any irrevocable letter of credit issued by a financial
institution for the account of the City on behalf of registered owners of the Bonds, which
institution maintains an office, agency or branch in the United States and as of the time of
issuance of such letter of credit, is currently rated in the highest rating category by any Rating
Agency.. •
Rate Stabilization Fund means the Waterworks Rate Stabilization Fund created by the
City pursuant to Ordinance No.4709.
Rating Agency means Moody's, S&P or Fitch.
Refunded Bonds means the 2004 Bonds designated by the Designated City
Representative pursuant to Section 15.
Refunding Account means the account by that name established pursuant to Section 15.
Refunding Candidates mean the outstanding 2004 Bonds maturing on and after
December 1, 2015.
Registered Owner means the person named as the registered owner of a Bond in the
Bond Register. For so long as the Bonds are held in book-entry only form, DTC shall be deemed
to be the sole Registered Owner.
Reserve Fund means that special fund of the City known as the Waterworks Revenue
Bond Reserve Fund created by Ordinance No. 4709.
Reserve Requirement prior to the New Covenant Date means Maximum Annual Debt
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Service. From and after the New Covenant Date, the term Reserve Requirement means with
respect to any issue of Parity Bonds, the lesser of (a) Maximum Annual Debt Service on all
Outstanding Parity Bonds, and 1(b) 125% of average Annual Debt Service on all Outstanding
Parity Bonds; provided, that the amount required to be deposited hereunder with respect to
any Future Parity Bonds in order to meet the Reserve Requirement shall not exceed 10%of the
net proceeds of such Future Parity Bonds under the Code.
Rule means the SEC's Rile 15c2-12 under the Securities Exchange Act of 1934, as the
same may be amended from time to time.
S&P means Standard & Poor's rating Services, a Standard & Poor's Financial Services LLC
business, its successors and their assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating agency, S&P shall be
deemed to refer to any other nationally recognized securities rating agency designated by the
City.
State means the State of Washington.
Term Bonds mean any Parity Bonds identified as such in the Bond Purchase Contract or
in the ordinance authorizing the issuance thereof, the payment of which is provided for by a
requirement for mandatory deposits of money,into the principal and interest account of the
bond redemption fund created,for the payment of such issue of Parity Bonds in accordance
with a mandatory sinking fund requirement.
Term Bond Maturity Year means any calendar year in which Term.Bonds are scheduled
to mature.
2004 Bond Ordinance means. Ordinance No. 5098 adopted by the City Council on
November 1,2004 authorizing the issuance of the 2004 Bonds.
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2004 Bonds means the Water and Sewer Revenue Bonds, 2004, of the City issued under
date of November 1, 2004,as more particularly described in the recitals of this ordinance.
Underwriter means Seattle-Northwest Securities Corporation,Seattle,Washington.
• Waterworks Utility means the combined water, sewer, wastewater and storm drainage
systems of the City as the same may be added to, improved and extended for as long as_any of
the Parity Bonds are outstanding.
Waterworks Utility Fund means that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility)shall be deposited.
Rules of Interpretation. In this ordinance, unless the context otherwise requires:
(a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar
terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular
article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the
term "heretofore" shall mean before,the date of this ordinance;
(b) Words of the masculine gender shall mean and include correlative words of the
feminine and neuter genders and words importing the singular number shall mean and include
the plural number and vice versa;
(c) Words importing persons shall include firms, associations, partnerships
(including limited partnerships), trusts, corporations and other legal entities, including public
bodies, as well as natural persons;
• (d) Any headings preceding the text of the several sections of this ordinance, and
any table of contents or marginal notes appended to copies hereof, shall be solely for
convenience of reference and shall not constitute a part of this ordinance, nor shall they affect
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its meaning, construction or effect;
(e) All references herein to "articles," "sections" and other subdivisions or clauses
I,
are to the corresponding article ,sections,subdivisions or clauses hereof;and
(f) Words importing;the singular number include the plural number and vice versa.
Section 2. Findings Regarding Parity Provisions. The City Council hereby finds that there
is no deficiency in any Parity Bond Fund, that provisions hereinafter meet'the conditions for the
issuance of Future Parity Bonds'as set forth in the Parity Bond Ordinances for the Outstanding
Parity Bonds, and that the issuance of the Bonds will result in a debt service savings for the
Waterworks Utility and does not require an increase of more than $5,000 in any year for
principal of and interest on the;Bonds over and above the payments that were required to be
made for the Refunded Bonds.
The conditions contained in the Parity Bond Ordinances for the Outstanding Parity
Bonds having been complied with or assured, the payments required herein to be made out of
the Waterworks Utility Fund into the Bond Fund and the Reserve Fund to pay and secure the
payment of the principal of and,interest on the Bonds shall constitute a lien and charge upon
the money in the Waterworks Utility Fund equal in rank with the lien and charge thereon for •
the payments required to be made for the Outstanding Parity Bonds.
Section 3. Authorization and Description of Bonds. The City is hereby authorized to
issue water and sewer revenue refunding bonds (the `Bonds") in an aggregate principal amount
of not to exceed$1 1 for the purpose of providing the funds necessary to refund the
Refunded Bonds and pay all or a portion of the costs incidental to the foregoing and to the
issuance of the Bonds.
The Bonds shall be designated the "City of Renton,Washington Water and Sewer
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Revenue Refunding Bonds, 2012" with any additional series designation, if necessary; shall be
dated as of their initial date of delivery; shall be fully registered as to both principal and
interest; shall be in the denomination of$5,000 each, or any integral multiple thereof within a
maturity, provided that no Bond shall represent more than one maturity; shall be numbered
separately in suchmanner and with any additional designation as the Bond Registrar deems
necessary for purposes of identification; shall bear interest from their date, payable
semiannually on the interest payment dates set forth in the Bond Purchase Contract; and shall
mature on December 1 in the years and principal amounts set forth and approved in the Bond
Purchase Contract executed`by the Designated City Representative pursuant to Section 14 of
this ordinance.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
not be general obligations of the City.
Section 4. Registration of Bonds and Book-Entry System.
(a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system
of registration approved by the Washington State Finance Committee from time to time
through the appointment of state fiscal agencies. The City shall cause a bond register to be
maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond
Registrar shall make all necessary provisions to permit the exchange or registration or transfer
of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time
at the option of the Finance Director upon prior notice to the Bond Registrar and a successor
Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond
Registrar shall be effective until a successor shall have been appointed and until the successor
Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond
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Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or
exchanged in accordance with the provisions of such Bonds and this ordinance and to carry out
all of the Bond Registrar's powers and duties under this ordinance. The Bond.Registrar shall be
responsible for its representations contained in the Certificate of Authentication of the Bonds.
(b) Registered Ownership. The City and the Bond Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all
purposes (except as provided in Section 17 of this ordinance), and neither the City nor the Bond
Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be
made only as described in Section 4(h), but such Bond may be transferred as herein provided.
All such payments made as' described in Section 4(h) shall .be valid and shall satisfy and
discharge the liability of•the City upon such Bond to the extent of the'amount or amounts so
paid.
(c) DTC Acceptance/Letters of Representations. The Bonds initially'shall be held by
I
DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC;the
City'has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the
City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the
persons for whom they act as nominees(or'any successor depository)with:respect to the Bonds
in respect of the accuracy of any records maintained by DTC (or any successor depository) or
any DTC participant, the payment by DTC (or any successor depository) or any DTC participant
of any amount in respect of the principal of or interest on Bonds,'any notice which is permitted
or required to be given to Registered Owners under this ordinance (except such.notices as shall
be required to be given by the City to the Bond Registrar or to DTC (or any successor
depository)), or any consent given or other action taken by DTC(or any successor depository) as
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the Registered Owner. For so long as any Bonds are held in by a depository, DTC or its
successor depository shall be deemed to be the Registered Owner for all purposes hereunder,
and all references herein to the Registered Owners shall mean DTC (or any successor
depository) or its nominee and shall not mean the owners ofany beneficial interest in such
Bonds.
If any Bond shall be duly presented for payment and funds have not been duly provided
by the City on such applicable date, then interest shall continue to accrue thereafter on.the
unpaid principal thereof at the rate stated on such Bond until it is paid.
(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of "Cede & Co.", as,
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a
denomination corresponding to the total principal therein designated to mature on such date.
Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred
except (A) to any successor of DTC or its nominee, provided that any such successor shall be
qualified under any applicable laws to provide the service proposed to be provided by it; (B) to
any substitute depository appointed by the Finance Director pursuant to subsection (2) below
or such substitute depository's successor; or (C) to any person as provided in(subsection (4)
below.
(2) Upon the resignation of DTC or its successor(or any substitute depository
or its successor) from its functions as depository or a determination by the Finance Director to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the Finance Director may hereafter appoint a substitute
depository. Any such substitute depository shall be qualified under any applicable laws to
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provide the services proposed t I be provided by it.
(3) :In the case of any transfer pursuant to clause (A) or (B) of subsection (1)
above, the Bond Registrar shall,!upon receipt of all outstanding Bonds, together with a written
request on behalf of the Finance Director, issue a single new Bond for each maturity then
outstanding, registered in the name of such successor or such substitute depository, or their
nominees, as the case may be, all as specified in such written request of the Finance Director.
(4) In the event that (A) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be
obtained, or (B) the Finance Director determines that it is in the best interest of the beneficial
J
• owners of the Bonds that such owners be able to obtain physical Bond certificates, the
ownership of such Bonds may then be transferred to any person or entity as herein provided,
and shall no longer be held by adepository. The Finance Director shall deliver a written request
to the Bond Registrar, together with a supply of physical Bonds, to issue Bonds as herein
provided in any authorized denomination. Upon receipt by the Bond Registrar of all then
outstanding Bonds together with a written request on behalf of the Finance:Director to the
Bond Registrar, new Bonds shallbe issued in the appropriate denominations and registered in
• ,
the names of such persons as are requested in such written request.
(e) Registration of Transfer of Ownership or Exchange; Change in Denominations.
The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of
any such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment
form appearing'on such Bond. duly executed by the RegisteredOwner or such Registered
Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such
surrender, the Bond Registrar shall cancel the surrendered Bond and shall authenticate and
•
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deliver, without charge to the Registered Owner or transferee therefor, a new Bond (or Bonds
at the option of the new Registered Owner) of the same date, maturity and interest rate and for
the same aggregate principal amount in any authorized denomination, naming as Registered
Owner the person or persons listed as the assignee on the assignment form appearing on the
surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be
surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate
principal amount of Bonds of the same date, maturity and interest rate, in any authorized
denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange
any Bond during the 15 days preceding any interest payment or principal payment date any
such Bond is to be redeemed.
(f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the
Registered Owner of any Bond with the same rights it would have if it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the right of the Registered Owners of Bonds.
(g) Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
(h) Place and Medium of Payment. Both principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. Interest on the Bonds shall be
calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all
Bonds are held by a depository, payments of principal and interest thereon shall be made as
provided in accordance with the operational arrangements of DTC referred to in the Letter of
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Representations. In the event that the Bonds are no longer held by a depository, interest on
the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners ;appearing on the Bond Register on the fifteenth day of the month
preceding the interest payment date, or upon the written request of a Registered Owner of
more than $1,000,000 of Bonds (received by. the Bond Registrar at least 15 days prior to the .
applicable payment date), such payment shall be made by the Bond Registrar.by wire transfer
to the account within the United States designated by the.Registered Owner. Principal of the
Bonds shall be payable upon presentation and surrender of such Bonds by the Registered
1
Owners at the principal office of the Bond Registrar.
Section 5. Redemption; Purchase of Bonds.
(a) Mandatory Redemption of Term Bonds and Optional Redemption, if any. The
Bonds shall be subject to optional redemption on the dates, at the prices and under the terms
set forth in the Bond Purchase Contract approved by the Designated City Representative
pursuant to Section 14. The Bonds shall be subject to mandatory redemption to the extent, if
anyr, set forth in the Bond Purchase Contract and as approved by the Designated City
Representative pursuant to Section.14. ,
(b) Purchase of Bonds. The City further reserves the right to use at any time any
surplus Net Revenue available after providing for the payments required by paragraphs (i)
through (vi) of Section 6(b) of this ordinance; or other available funds, to purchase any of the
Bonds that are offered to the City at any-price deemed appropriate by the City.
(c) Selection of,Bonds for Redemption. For as long as the Bonds are held in
book-entry only form, the selection of particular Bonds within a maturity to be redeemed shall
be made in accordance with the operational arrangements then in effect at DTC. If the Bonds
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are no longer held in uncertificated form, the selection of such Bonds to be redeemed and the
surrender and reissuance thereof, as applicable, shall be made as provided in the following
provisions of this subsection (c). If the City redeems at any one time fewer than all of the Bonds
having the same maturity date, the.particular Bonds or portions of Bonds of such maturity to be
redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in
increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City
and the Bond Registrar shall treat each Bond as representing such number of separate Bonds
each of the denomination of $5,000 as is obtained by dividing the actual principal amount of
such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is
redeemed, upon surrender of such Bond at the principal office of the Bond Registrar there shall
be issued to the Registered Owner, without charge therefor, for the then unredeemed balance
of the principal sum thereof, at the option of the Registered.Owner, a Bond or Bonds of like
maturity and interest rate in any of the denominations herein authorized.
(d) Notice of Redemption.
(1) Official Notice. For so long as the Bonds are held in uncertificated form,
notice of redemption (which notice may be conditional) shall be given in accordance with the
operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar
will provide any notice of redemption to any Beneficial Owners. Thereafter(if the Bonds are no
longer held in uncertificated form), notice of redemption shall be given in the manner
hereinafter provided. Unless waived by any owner of Bonds to be redeemed, official notice of
any such redemption (which redemption.may be conditioned by the Bond Registrar on the
receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on
behalf of the City by mailing a copy of an official redemption notice by first class mail at least
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20 days and not more than 60 days prior to the date fixed for redemption to the Registered
Owner of the Bond or Bonds to be redeemed at the address shown on the Register or at such
other address as is furnished in,writing by such Registered Owner to the Bond Registrar.
All official notices of redemption shall be dated and shall state:
• • (A) the redemption date,
(B)' the redemption price,
(C) . if'fewer than all outstanding Bonds are to be redeemed, the
identification by maturity (and; in the case of partial redemption, the respective principal
amounts) of the Bonds to be redeemed,
(D) any conditions precedent to redemption;
(E) that if all of the condition's to redemption are met, on the
redemption date the redemption price will become due and-payable upon each such Bond or
portion thereof called for redemption, and that interest thereon shall cease to accrue from and
after said date, and
(E) the place where such'Bonds are to be surrendered for payment of
the redemption price,which place of payment shall be the principal office of the:Bond Registrar. •
On orprior to any redemption date, the City shall deposit with the Bond Registrar an
amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds
which are to be redeemed on that date. If the conditions to redemption have not been met
prior to the date scheduled for redemption, then the City may revoke the redemption by giving
notice in the same manner as set forth above.
(2) Effect of Notice: Bonds Due. If an unconditional notice of redemption has
been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the
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redemption date, become due and payable at the redemption price therein specified, and from
and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon
surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be
paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to
the redemption date shall be payable as herein provided for payment of interest. All Bonds
which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued.
(3) Additional Notice. In addition to the foregoing notice,further notice shall
be given by the City as set out below, but no defect in said further notice norany failure to give
all or any portion of such further notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as above prescribed. Each further notice of redemption
given hereunder shall contain the information required above for an official notice of
redemption plus (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of
the Bonds as originally issued; (C) the rate of interest borne by each Bond being redeemed;
(D) the maturity date of each Bond being redeemed; and (E) any other descriptive information
needed to identify accurately the Bonds being redeemed. Each further notice of redemption
may be sent at least 20 days before the redemption date to each party entitled to receive
notice pursuant.to Section 17 and with such additional information.as the City shall deem
appropriate, but such mailings shall not be a condition precedent to the redemption of such
Bonds.
(4) Amendment of Notice Provisions. The foregoing notice provisions of this
Section 5, including but not limited to the information to be included in redemption notices and
the persons designated to receive notices, may be amended by additions, deletions and
changes in order to maintain compliance with duly promulgated regulations and
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recommendations regarding notices of redemption of municipal securities.
Section 6. Priority and Payment from the Waterworks Utility Fund.
(a) Waterworks Utility Fund. A special fund of the City known as the "Waterworks
Utility Fund". has heretofore been established by the. City, into which.shall be deposited all
Gross Revenues as collected. Moneys in the Waterworks Utility Fund shall be trust funds and
shall be held separate and apart from all other funds and,accounts of the City.
(b) Priority of Payments from the Waterworks Utility Fund. Gross Revenue on
deposit in-the Waterworks Utility Fund (other than in any bond redemption or federal rebate
account)shall be used in the following order of priority:
(i) To pay Maintenance and Operation Expense;
(ii) To pay the interest on the Parity Bonds, including reimbursements to the
issuer of a Credit Facility if the Credit Facility secures the payment of interest on Parity
Bonds and ,the ordinance authorizing such Parity Bonds provides for such
reimbursement;
(iii) To pay the principal of the Parity Bonds, including reimbursements to the
issuer of a Credit Facility if the Credit Facility secures the payment of principal on Parity
Bonds andthe ordinance authorizing - such Parity Bonds provides for such
reimbursement;
(iv). To make all payments required to be made into any sinking fund or bond
redemption fund.hereafter created for the payment of Future Parity, Bonds which are
Term Bonds;
(v) To make all payments required to be made into the Reserve Fund,
including any reimbursements required for Qualified Insurance or Qualified Letter of
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Credit;
(vi) To make all payments required to be made into any revenue bond
redemption fund or warrant redemption fund and debt service account or reserve
account created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue junior
and inferior to the lien thereon for the payment of the principal of and interest on the
Parity Bonds;and .
(vii) To retire by optional redemption or purchase any outstanding revenue
bonds or revenue warrants of the City, to make necessary additions, betterments,
improvements and repairs to or extensions and replacements of the Waterworks Utility,
to make deposits into the Rate Stabilization Fund, or for any other lawful City purpose.
(c) Rate Stabilization Fund. The City has previously created a Waterworks Rate
Stabilization Fund (the "Rate Stabilization Fund"). The City may, at any time, as determined by
the City and as consistent with subsection (b) of this section, deposit Gross Revenue into the
Rate Stabilization Fund, excluding principal proceeds of Parity Bonds or other borrowing. The
City may withdraw any or all of the money from the Rate Stabilization Fund for inclusion in
Gross Revenue for any fiscal year of the City. Such deposits or withdrawals may be made up to
and including the date 90 days after the end of the fiscal year for which the deposit or
withdrawal will be included in Gross Revenue. No deposit of Gross Revenue will be made into
the Rate Stabilization Fund to the extent that such deposit would prevent the City from meeting
the Coverage Requirement.
' Section 7. Funds and Accounts.
(a) Bond Fund. [There is hereby created in the City Treasury the Waterworks
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Revenue Bond Fund, 2012 (the "Bond Fund"), which shall be a "Parity Bond Fund" and a
subaccount of the Waterworks Utility Fund.] [does the City currently or does it prefer to have a
combined bond'fund for the purpose of paying debt service on all water and sewer bonds?]
The Bond Fund shall be maintained for the purpose of paying the principal of and interest on
the Bonds. As long as any Bonds remain outstanding, the City hereby irrevocably obligates and
binds itself to set aside and pay from the Waterworks Utility Fund into the Bond Fund those
amounts necessary, together with such other funds as are on hand and available in the Bond
Fund, to pay the interest or principal and interest next coming due on outstanding Bonds. Such
payments from the Waterworks Utility Fund to the Bond Fund shall be made in a fixed amount
without regard to any fixed proportion following the dosing and delivery of the Bonds on or
before each date on which an installment of interest or principal and interest falls due on the
Bonds equal to the installment of interest or principal and interest.
(b) Reserve Fund. There has heretofore been created by the City a special fund of
the City known as the Waterworks Revenue Bond Reserve Fund (the "Reserve Fund") for
purpose of securing the payment of the principal of and interest on all Parity Bonds. [The City
hereby irrevocably covenants and agrees that on or prior to the date of issuance of the Bonds,
the amount on deposit in the Reserve Fund will be at least equal to the Reserve Requirement.]
Except for withdrawals.therefrom as authorized'herein, the Reserve Fund -shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are
Outstanding. When the total amount in the Bond Fund shall equal the total amount of principal
and interest for all outstanding Bonds, no further payment need,be made into the Bond Fund.
Notwithstanding the"first sentence of this paragraph, the Reserve Requirement may be
decreased for any issue of Parity Bonds when and to the extent the City has redeemed or
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otherwise defeased any Outstanding.Parity Bonds.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from
the Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has
been depleted, then by draws on the Qualified Insurance or Qualified Letter of Credit for that
purpose. Any deficiency created in the Reserve Fund by reason of any such withdrawal shall
then be made up from Net Revenue first available after making necessary provisions for the
required payments into the Bond Fund. Any money in the Reserve Fund in excess of the
Reserve Requirement may be withdrawn and deposited in any Parity Bond Fund and spent for
the purpose of retiring Parity Bonds or may be deposited in any other fund and spent for any
other lawful Waterworks Utility purpose.
The City may provide for the purchase, redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining
Parity Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall
be deposited in the Reserve Fund until the total Reserve, Requirement shall have been
accumulated-therein, after which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, the City also may transfer out of the Bond Fund or Reserve Fund any
money required in order to prevent any Parity Bonds from becoming "arbitrage bonds" under
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the Code.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above, the Registered Owner of any of the outstanding Bonds may bring an action
against the City to compel that setting aside and payment.
(c) Pledge of Revenue and Lien Position. The Net Revenue is hereby pledged to the
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
(d) Regarding Sufficiency.of Revenues. The Council hereby finds that in fixing the
amounts to be paid into the Bond Fund out of the Gross Revenues, it has exercised due regard
for the Maintenance and Operation Expense and has not obligated the City to set aside and pay
into such Fund a greater amount of such Gross Revenues than in its judgment will be available
over and above the Maintenance and Operation Expense.
Section 8. Covenants. The City covenants and agrees with the Registered Owner of each
Bond at any time outstanding as follows:
(a) Rate Covenant. It will establish, maintain and collect rates and charges for all
services and facilities provided by the Waterworks Utility which will be fair and
nondiscriminatory,and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A) pay all Maintenance
and Operation Expense on a current basis, (B) pay when due all amounts that the City is
obligated to pay into the Reserve Fund and any Parity Bond Funds and (C) pay all taxes,
assessments or other governmental charges lawfully imposed upon the Waterworks Utility or
other revenue therefrom or payments in lieu thereof and any and all other amounts which the
City may now or hereafter become obligated to pay from Gross Revenue by law or contract; and
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(2) Net Revenue in each calendar year will be at least equal to the Coverage
Requirement.
(b) Maintenance and Repair. It will at all times maintain and keep the Waterworks
Utility in good repair, working order and condition and also will at all times operate such Utility
and the business in connection therewith in an efficient manner and at a reasonable cost.
(c) Disposal of Waterworks Utility. It will not sell, lease, mortgage.or in any manner
encumber or otherwise dispose of the Waterworks Utility in its entirety unless, simultaneously
with such sale or other disposition, all Parity Bonds are defeased pursuant to the provisions of
' this ordinance.
It will not sell, lease, mortgage or in any manner encumber or otherwise dispose of any
part of the Waterworks Utility (other than timber), including all additions and improvements
thereto and extensions thereof at any time made, that are used, useful or material in the
operation of the Waterworks Utility, unless provision is made for the replacement thereof or
for payment into the Bond Fund of the greatest of the following: •
(1) An amount which will be in the same proportion to the net amount of
any Parity Bonds then outstanding (defined as the total amount of those bonds less the amount
of cash and investments in the Reserve Fund and any Parity Bond Funds) that Gross Revenue
from the portion"of the Waterworks Utility sold or disposed of for the preceding year bears to
the total Gross Revenue for that period;
(2) An amount which will be in the same proportion to the net amount of
any Parity Bonds then outstanding(as defined above) that the Net Revenue from the portion of
the Waterworks Utility sold or disposed of for the preceding year bears to the total Net
Revenue for that period;or
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(3) An amount which will be in the same proportion to the net amount of
any Parity Bonds then outstanding (as defined above) that the depreciated cost value of the
facilities sold or disposed of beads to the depreciated cost value of the entire Waterworks Utility
immediately prior to such sale or disposition.
Notwithstanding any othi r provision of this subsection, (1) the City in its discretion may
sell or otherwise dispose of any of the works, plant, properties or facilities of the Waterworks
Utility or any real or personal property comprising a part of the same which shall have become
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unserviceable, inadequate, obsolete or unfit to be used in the operation of the Waterworks
Utility, or no longer necessary, material to or useful to the operation of the Waterworks Utility,
without making any deposit into the Bond Fund, and (2) the City may transfer the Waterworks
Utility to another municipal corporation so long as Net Revenue of the portion of the
Waterworks Utility so transferred is used for payment of debt service on the Parity Bonds prior
to any other purpose. In no event shall such proceeds be treated as Gross Revenue for
purposes of this ordinance.
(d) Books and Records. It will keep proper books, records and accounts with respect
• to the operations, income and expenditures of the Waterworks Utility in accordance with
proper accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of each
fiscal year showing in reasonable detail the financial condition of the Waterworks Utility as of
the close of the previous year, and the income and expenses for such year, including the
amounts paid into the Bond Fund and Reserve Fund and into any and all special funds or
accounts created pursuant to this ordinance, the status of all funds and accounts as of the end
of such year, and the amounts expended for maintenance, renewals, replacements and capital
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additions to the Waterworks Utility.
(e) No Free Service. Except to aid the poor or infirm, to provide for resource
conservation or to provide for the proper handling of hazardous materials, it will not furnish or
supply or permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation, public or
private, other than the City, so long as any Parity Bonds are outstanding. On at least an annual
basis, it will determine all accounts that are delinquent and will take all necessary action to
enforce payment of such accounts against those property owners whose accounts are
delinquent.
(f) Insurance. It at all times will carry fire and extended coverage and such other
forms of insurance, including public liability and property damage insurance, with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds on
such of the buildings, equipment, works, plants, facilities and properties of the Waterworks
Utility, and against such claims for damages, as are ordinarily carried by municipal or privately
owned utilities engaged in the operation of like systems, or will implement and maintain a
self-insurance or an insurance pool program with reserves adequate, in the reasonable
judgment of the City,to protect the Waterworks Utility and the Registered Owners of the Parity
Bonds against loss.
(g) Maintenance and Operation Expense. It will pay all Maintenance and Operation
Expense and the debt service requirements for the outstanding Parity Bonds, and otherwise
meet the obligations of the City as herein set forth.
Section 9. Tax Covenants. The City covenants that it will not take or permit to be taken
on its behalf any action that would adversely affect the exemption from federal income taxation
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of the interest on the Bonds and will take or require to be taken such acts as may reasonably be
within its ability and as may from time to time be required under applicable law to continue the
exemption from federal income taxation of the interest on the Bonds.
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(a) Arbitrage Covendnt. Without limiting the generality of the foregoing, the City
covenants that it will not take any action or fail to take any action with respect to the proceeds
- of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the
Bonds pursuant to Section 148 if the Code and the regulations promulgated thereunder which,
if such use had been reasonably expected on the date of delivery of the Bonds to the initial
purchasers thereof, would have caused the Bonds as "arbitrage bonds" within the meaning of
such term as used in Section 148 of the Code.
The City represents that ithas not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications may not
be relied upon. The City will co Imply with the requirements of Section 148 of the Code and the
applicable regulations thereunder throughout the term of the Bonds.
(b) Private Person Use Limitation for Bonds. The City covenants that for as long as
the Bonds are outstanding, it will not permit:
(1) More than 10% of the Net Proceeds•of the Bonds to be used for any
Private Person Use;,and
(2) More than 10% of the principal or interest payments on the Bonds in a
bond year to be directly or indirectly: (A) secured by any interest in property used or to be used
for any Private Person Use or secured by payments in respect of property used or to be.used for
any Private Person Use, or (B) derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be-used for any Private Person Use.
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The City further covenants that, if:
(3) More than five percent of the Net Proceeds of the Bonds are to be used
for any Private Person Use;and
(4) More than five percent of the principal or interest payments on the
Bonds in a bond year are (under the terms of this ordinance or any underlying arrangement)
directly or indirectly:
(A) • secured by any interest in property used or to be used for any
Private Person Use or secured by payments in respect,of property used or to be used for any
Private Person Use,or
(B) derived from payments (whether or not made to the City) in
respect of property,or borrowed money, used or to be used for any.Private Person Use,
then, (i) any Private Person Use of the projects described in subsection (3) hereof or Private
Person Use payments described in subsection (4) hereof that is in excess of the five percent
limitations described in such subsections (3) or(4) will be for a Private Person Use that is related
to the state or local governmental use of the project refinanced with the Bonds, and (ii) any
Private Person Use will not exceed the amount of Net Proceeds of the Bonds used for the state
or local governmental use portion of the project to which the Private Person Use of such
portion of the project relates. The City further covenants that it will comply with any limitations
on the use of the projects by other than state and local governmental users that are necessary,
in the opinion of its bond counsel,to preserve the tax exemption of the interest on the Bonds.
(c) Modification of Tax Covenants. The covenants of this section are specified solely
to assure the continued exemption from regular income taxation of the interest on the Bonds.
To that end, the provisions of this section may be modified or eliminated without any
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requirement for formal amendment thereof upon receipt of an opinion of the City's bond
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counsel that such modification 'or elimination will not adversely affectthe tax exemption of
interest on any.Bonds. 1 ,
(d) Qualified Tax-Exempt Obligation. The City hereby designates the Bonds as
"qualified tax-exempt obligations" under Section 265(b)(3) of the Code for investment by
1
financial institutions. The City seasonably does not expect to issue more than $10,000,000 in
qualifying tax-exempt debt during calendar year 2012.
Section 10. Future Parit'Bonds. The City reserves the right to issue Future Parity BOnds
if the following conditions are met and complied with at the time of issuance of those additional
bonds: .
(a) There shall be no(deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance.of such Future Parity Bonds shall
provide for the payment of the principal thereof and interest thereon out of a Parity Bond Fund.
(c) The ordinance pi-oviding for the issuance of such Future Parity Bonds shall
provide for the deposit into the;Reserve Fund from the proceeds of those Future Parity Bonds
of(1) an amount equal to the increase ip the Reserve Requirement attributable to those Parity
Bonds or(2) Qualified Letter of Credit or Qualified Insurance or an amount plus Qualified Letter
of Credit or Qualified Insurance equal to the increase in the Reserve Requirement attributable
to those Future Parity Bonds. At the discretion of the City,the City may provide for deposit into
the Reserve Fund of other legally available money from Net Revenue or Qualified Letter of
Credit or Qualified Insurance on or prior to the date of issuance of such Future Parity Bonds.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide
for the payment of mandatory redemption or sinking fund requirements into the'applicable
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Parity Bond Fund for any Term Bonds to be issued and for regular payments to be made for the
payment of the principal of such Term Bonds on or before their maturity, or, as an alternative,
the mandatory redemption of those Term Bonds prior to their maturitydate from money in the
applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the Finance Director demonstrating that Net Revenue for
the Base Period, without regard to deposits into or withdrawals from the Rate Stabilization
Fund, is equal to at least the Parity Requirement; or •
(2) prior to the New Covenant Date, a certificate of a Professional Utility
Consultant that in such Consultant's opinion, Net Revenue for any 12 consecutive calendar
months, without regard to deposits into or withdrawals from the Rate Stabilization Fund, shall
be equal to at least the Parity Requirement. After the New Covenant Date, this section shall be
amended to read as follows: a certificate of a Professional Utility Consultant that in such
Consultant's opinion Net Revenue for the.Base Period, as adjusted, without regard to deposits
into or withdrawals from the Rate Stabilization Fund, shall be equal to at least the Parity
Requirement. The Professional Utility Consultant, in estimating Net Revenue available for debt
services, may adjust Net Revenue to reflect:
(A) Any changes in rates in effect and being charged or expressly
committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility who
have become customers during the 12 consecutive monthperiod or thereafter adjusted to
reflect one year's Net Revenue from those customers;
(C) Income from any customers to be connected to the Waterworks
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Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net Revenue
to be derived from customers anticipated to connect for whom building permits have been
issued;
(E) Income received or to be received which is derived from any
person, firm corporation or municipal corporation under any executed contract for water,
sewage disposal or other utility;service, which revenue was not included in the historical Net
Revenue;
(F) The Professional Utility Consultant's estimate of the Net Revenue
to be derived from customers with existing homes or buildings which will be required to
connect to any additions to and improvements and extensions of the Waterworks Utility
constructed and to be paid for out of the proceeds of the sale of the additional Future Parity
Bonds or other additions to and;improvements and extensions of the Waterworks Utility when
such additions, improvements and extensions are not completed; and
(G) Any increases or decrease in Net Revenue as a result of any actual
Or reasonably'anticipated changes in Maintenance and Operation Expense subsequent to the
12-month period.
(f) Refunding Obligations. If Future Parity Bonds proposed to be so issued are for
the sole purpose of refunding outstanding bonds payable from any Parity Bond Fund, such
certification of coverage shall not be required if the amount required for the payment of the
principal and interest in each year for the refunding bonds is not increased more than $5,000
over the amount for that same year required for the bonds or the portion of that bond issue to
• be refunded thereby and if the maturities of such,refunding bonds are not extended beyond the
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maturities of the bonds to be refunded thereby.
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Parity Bonds, money for the payment of which is nototherwiseavailable.
(g) Subordinate Lien Obligations. Nothing contained herein shall prevent the City
from issuing revenue bonds that are a charge upon Gross Revenue subordinate to the payments
required to be made therefrom into any Parity Bond Fund.
Section 11. Form of Bonds. The Bonds shall be in substantially the following form:
[DTC LANGUAGE]
UNITED STATES OF AMERICA -
NO. $
STATE OF WASHINGTON
CITY OF RENTON
WATER AND SEWER REVENUE REFUNDING BOND,2012
INTEREST RATE: MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE&Co.
PRINCIPAL AMOUNT:
The City of Renton, Washington, a municipal corporation organized and existing under
and by virtue of the laws of the State of Washington (herein called the "City") hereby
acknowledges itself to owe.and for value received promises to pay, but only from the sources
and as hereinafter provided, to the Registered Owner identified above, or registered assigns, on
the Maturity Date identified above, the Principal Amount indicated above and to pay interest
thereon from the date of delivery, or the most recent date to which interest has been paid or
duly provided for, at the Interest Rate set forth above, payable on , 20 and
semiannually thereafter on the first days of each December and June until such principal sum is
paid or payment has been duly provided for.
Both principal of and interest on this bond are payable in lawful money of the United
States of America. Interest and principal shall be paid as provided in the Blanket Issuer Letter of
Representations (the "Letter of Representations") by the City to The Depository Trust Company
("DTC"). The fiscal agency of the State of Washington has been appointed by the City as the
authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond
Registrar"). Capitalized terms used in this bond that are not specifically defined have the
meanings given such terms in Ordinance No. of the City adopted on , 2012
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(the "Bond Ordinance"): Reference is made to the Bond Ordinance and any and all
modifications and amendments thereto for a description of the nature and extent of the
security for the bonds of this issue, the funds or revenues pledged, and the terms and
conditions upon which such bonds are issued.
This bond is one of an authorized issue of bonds of the City of like date and tenor except
as to number, amount, rate of interest and date of maturity in the aggregate principal amount
of $ . The bonds of this issue are being issued for the.purpose of refunding certain
outstanding water and sewer revenue refunding bonds of the City and paying costs of issuance
of the bonds of this issue..
The bonds of this issue a're subject to redemption prior to their scheduled maturities as
provided in the Bond Ordinance land in the Bond Purchase Contract.
The bonds of this issue have been designated as "qualified tax-exempt obligations" for
investment by financial institutions under Section 265(b)of the Internal Revenue Code of 1986,
as amended (the "Code").
The bonds of this issue are payable solely from the Bond Fund and the Reserve Fund.
The City has irrevocably obligated and bound itself to pay into the Bond Fund out of the Net
Revenue or from such other moneys as may be provided therefor certain amounts necessary to
pay and secure the payment ofd the principal and interest on such bonds. The bands of this
issue are not general obligationslof the City.
The City does hereby pledge and bind itself to set aside from the Waterworks Utility
Fund out of the revenue of the Waterworks Utility and to' pay into the Bond Fund and the
Reserve Fund the various amounts required by the Bond Ordinance to be paid into and
maintained in such Funds, all within the times provided by the Bond Ordinance. To the extent
more particularly provided by the Bond Ordinance,the amounts so pledged to be paid from the
Waterworks Utility Fund out of the revenue of the Waterworks Utility into the Bond Fund shall
be a lien and charge thereon equal in rank to the lien and charge upon said revenue of the •
amounts required to pay and secure the payment of the Outstanding Parity'Bonds and any
revenue bonds of the City hereafter issued on a parity with the bonds of this issue and superior
to all other liens and charges of any kind or nature except Maintenance and Operation Expense.
The bonds of this issue are issued under and in accordance with the provisions of the
Constitution and applicable statutes of the State of Washington and duly adopted ordinances of
the City. The City hereby covenants and agrees with the owner of this bond that it will keep
'and perform all the covenants of this bond and of the Bond Ordinance to be by it kept and
performed, and reference is hereby made to the Bond Ordinance for a complete statement of
such covenants.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon
shall have been manually signed iby the Bond Registrar.
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It is hereby certified that all acts, conditions,and things required by the Constitution and
statutes of the State of Washington to exist, to have happened, been done, and performed
precedent to and in the issuance of this bond have happened, been done, and performed.
IN WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be
signed with the facsimile or manual signature of the Mayor, to be attested by the facsimile or
manual signature of the City Clerk, all as of this day of , 2012.
CITY OF RENTON,WASHINGTON
[SEAL]
By /s/facsimile or manual
Mayor
ATTEST:
/s/facsimile or manual
City Clerk
The,Bond Registrar's certificate authentication on the Bonds shall be in substantially the
following form:
CERTIFICATE OF AUTHENTICATION
Date of Authentication: , 20_
This bond is one of the bonds described in the within-mentioned Bond Ordinance and is
one of the Water and Sewer Revenue Refunding Bonds, 2012 of the City of Renton,
Washington,dated , 2012.
WASHINGTON STATE FISCAL AGENCY,
Registrar
By
Authorized Signer
Section 12. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted, or otherwise reproduced thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
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any.of'the Bonds"shall cease to be such officer of the City before said Bonds.shall have been
authenticated. or delivered by the Bond Registrar or issued by the City,.such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery
and issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper-officer of the.City, although at the
original date of such Bond such persons were not such officers of the City.
Only such Bonds as shall bear thereon a Certificate of Authentication manually executed
by an authorized representative of the Bond Registrar shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be
conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance. The Bond Registrar
shall be responsible for its representations contained in,the Certificate of Authentication on the
Bonds.
Section 13. Lost, Stolen or Destroyed Bonds. In case any Bonds shall be lost, stolen or
destroyed,the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount,
date and tenor to the Registered'Owner thereof upon the Registered Owner's paying the expenses
and charges oftheBond Registrar and•the City in connection therewith and upon his filing with
the Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were
actually lost, stolen or destroyed and of his ownership thereof, and upon furnishing the City and
the Registrar with indemnity_satisfactory to both. .
Section 14. Sale of Bonds.
(a) Bond Sale. The Bonds shall be sold at negotiated sale to the Underwriter
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pursuant to the terms of the Bond Purchase Contract. The Underwriter has advised the Council
that market conditions are fluctuating and, as a result, the most favorable market conditions
may occur on a day other than a regular meeting date of the Council. The Council has
determined that it would be in the best interest of the City to delegate to the Designated City
Representative for a limited time the authority to approve the final interest rates, aggregate
principal amount, principal amounts of each maturity of the Bonds, selection of the Refunded
Bonds, and redemption rights.
The Designated City Representative is hereby authorized to approve the final interest
rates, aggregate principal amount, principal maturities, selection of the Refunded Bonds, and
redemption rights for the Bonds in the manner provided hereafter so long as (i) the aggregate
principal amount of the Bonds does not exceed [$ ], (ii) the final maturity date for
the Bonds is no later than [December 1, 1, (iii) the Bonds are sold (in the aggregate) at a
price not less than [ %] and not greater than [ %], (iv) the Bonds are sold for a price that
results in a minimum net present value debt service savings over the Refunded Bonds of
[ %], and (v) the true interest cost for the Bonds (in the aggregate) does not exceed
In determining whether or not to acquire a Bond Insurance Policy and determining the
final interest rates,aggregate principal amounts, principal maturities and redemption rights,the
Designated City Representative shall take into account those factors that, in his or her
judgment, will result in the lowest true interest cost on the Bonds to their maturity, including,
but not limited to current financial market conditions and current interest rates for obligations
comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in
this section, the Designated City Representative is hereby authorized to execute the Bond
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Purchase Contract. The signature of one Designated City Representative shall be sufficient to
bind the City.
Following the execution of the Bond Purchase Contract, the Designated City
Representative shall provide a report to the Council describing the final terms of the Bonds
approved pursuant to the authority delegated in this section. The authority granted to the
Designated City Representative by this Section 14 shall expire 120 days after the effective date
of this ordinance. If a Bond Purchase Contract for the Bonds has not been executed within
120 days after the effective'date of this ordinance, the authorization for the issuance of the
Bonds shall be rescinded, and the Bonds shall not be issued nor their sale approved unless such
Bonds shall have been re-authorized by ordinance of the Council. The ordinance re-authorizing
the issuance and sale of such Bonds may be in the form of a new ordinance repealing this
•
ordinance in whole or in part or may be in the form of an amendatory ordinance approving a
bond purchase contract or establishing terms and conditions for the authority delegated under
this Section 14.
(b) Delivery of Bonds; Documentation. Upon the passage and approval of this
ordinance, the proper officials ,of the City including the Designated City Representative, are
authorized and directed to undertake all action necessary for the prompt execution and
delivery of the Bonds to the Underwriter and further to execute all closing certificates and
documents required to effect the closing and delivery of the Bonds in accordance with the
terms of the Bond Purchase Contract.
(c) Preliminary and Final Official Statements. The Finance Director is hereby
authorized to ratify and to deem final the preliminary Official Statement relating to the Bonds
for the purposes of the Rule. The Finance Director is further authorized to ratify and to approve
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for purposes of the Rule, on behalf of the City, the Official Statement relating to the issuance
and sale of the Bonds and the distribution of the Official Statement pursuant thereto with such
changes, if any, as may be deemed by her to be appropriate.
Section 15. Application of Bond Proceeds: Plan of Refunding.
(a) Refunding Plan. For the purpose of realizing a debt service savings.and
benefiting the City's ratepayers, the Council proposes to refund and defease the Refunded
Bonds as set forth herein. The Refunded Bonds shall include those Refunding Candidates
designated by the Designated City Representative when the Bonds are sold pursuant to the
Bond Purchase Contract. Proceeds of the Bonds shall be deposited with the Escrow Agent
pursuant to the Escrow Deposit Agreement to be used immediately upon receipt thereof to
defease the Refunded Bonds as authorized by the 2004 Bond Ordinance and to pay costs of
issuance of the Bonds.
The net proceeds deposited with the Escrow Agent shall be used to defease the
Refunded Bonds and discharge the obligations thereon by the purchase of certain Government
Obligations (which obligations so purchased, are herein called "Acquired Obligations"), bearing
such interest and maturing as to principal and interest in such amounts and at such times
which,together with any necessary beginning cash balance, will provide for the payment of:
(1) interest on the Refunded Bonds due and payable on and prior to the Call
Date; and
(2) the redemption prices of the Refunded Bonds on the Call Date.
Such Acquired Obligations shall be purchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
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(b) Escrow Agent/Escrow Agreement. The City hereby appoints U.S. Bank National
Association, Seattle, Washington, as the Escrow Agent for the Refunded Bonds (the "Escrow
Agent"). A beginning cash balance, if any, and the Acquired Obligations shall be deposited
irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The
pr-oceeds of the Bonds remaining after acquisition of the Acquired Obligations and provision for
the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and
safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds.
In order to carry out-the purposes of this Section 15, the Finance Director is authorized
and directed to execute and deliver to the Escrow Agent, an Escrow Deposit Agreement.
(e) Call for Redemption of Refunded Bonds. The City hereby irrevocably sets aside
sufficient funds out of the purchase of Acquired Obligations from proceeds of the Bonds to
make the payments described in Section 15(d).
The City hereby irrevocably calls the Refunded Bonds for redemption on their Call Date
in accordance with the provisions of the 2004 Bond Ordinance authorizing theredemption and
retirement of the 2004 Bonds prior to their fixed maturities.
Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable
after the issuance of the Bonds and delivery of the Acquired'Obligations to the Escrow Agent.
The Escrow Agent is hereby authorized and directed to provide for the giving of notices
of the redemption of the Refunded Bonds in accordance with the applicable provisions of the
2004 Bond Ordinance. The costs of publication of such notices shall be an expense of the-City.
' The Escrow Agent is hereby authorized and directed to pay to the Finance Director, or,
at the direction of the Finance Director, to the paying agent for the Refunded Bonds, sums
sufficient to pay,when due,the payments specified in Section 15. All such sums shall be paid
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from the moneys and Acquired Obligations deposited with the Escrow Agent, and the income
therefrom and proceeds thereof. All such sums so paid to said Finance Director shall be
credited to the Refunding Account. All moneys and Acquired Obligations deposited with the
Escrow Agent and any income therefrom shall be held, invested (but only at the direction of the
Finance Director) and applied in accordance with the provisions of this ordinance and with the
laws of the State of Washington for the benefit of the City and owners of the Refunded Bonds.
The City will take such actions as are found necessary to see that all necessary and
proper fees, compensation and expenses of the Escrow Agent for the Refunded Bonds shall be
paid when due.
Section 16. Bond Insurance. The Finance Director is hereby.further authorized to
solicit proposals from municipal bond insurance companies for the issuance of a Bond Insurance
Policy. In the event that the Finance Director receives multiple proposals in response to a
solicitation, the Finance Director may select the proposal having the lowest cost and resulting in
an overall lower interest cost with respect to the Bonds to be insured. The Finance Director may
execute a commitment received from the Insurer selected by,the Finance Director. The Council
further authorizes all proper officers, agents, attorneys and employees of the City to cooperate
with the Insurer in preparing such additional agreements, certificates, and other documentation
on behalf of the City as shall be necessary or advisable in providing for the Bond Insurance
Policy.
Section 17. Undertaking to Provide Continuing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's written undertaking for
the benefit of the,Registered Owners and Beneficial Owners of the Bonds required by
subsection (b)(5) of the Rule.
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(b) Financial Statements/Operating Data. The City hereby agrees to provide or
cause to be provided to the Municipal Securities Rulemaking Board ("MSRB"), the following
annual financial information and operating data for the prior fiscal year, commencing in 2013
with the calendar year ending December 31,2012:
(1) Annual financial statements prepared in accordance with the generally
accepted accounting principles applicable to governmental units, as such principles may
be changed from time to time by the Washington State Auditor pursuant to
RCW 43.09.200, which statements will not be audited, except that if and when audited
I .
financial statements are otherwise prepared and available to the City, they will be
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provided (the "Annual Financial Statements");
(2) A statement of authorized, issued and outstanding bonded debt secured
by Net Revenue;
(3) Debt service coverage ratios; and
(4) General customer statistics for the Waterworks Utility contained in the
final official statement for the Bonds and identified in a closing•certificate executed by
the Designated City Representative and referencing this section.
Items (2) through (4) shall be required only to the extent that such inforniationi is not included
in (1).
The information and data described above shall be provided on or before nine months
after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City
may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB.
In lieu of providing such annual financial information and operating data, the City may
cross-reference to otherdocuments available to the public on the MSRB's internet website or
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filed with the Commission.
If not provided as part of the annual financial information discussed above,the City shall
provide the City's audited annual financial statement prepared in accordance with the
Budgeting Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09.200(or any successor statute) when and if available to the MSRB.
(c) Listed Events. The City agrees to provide or cause to be provided to the MSRB, in
a timely manner not in excess of ten business days after the occurrence of the event, notice of
the occurrence of any of the following events with respect to the Bonds:
• Principal and interest payment delinquencies;
• Non-payment related defaults, if material;
• Unscheduled draws on debt service reserves reflecting financial difficulties;
• Unscheduled draws on credit enhancements reflecting financial difficulties;
• Substitution of credit orliquidity providers, or their failure to perform;
• Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS 'Form
5701-TEB) or other material notices or determinations with respect to the tax
status of the Bonds, or other material events affecting the tax status of the
Bonds;
• Modifications to the rights of Bondholders, if material;
• Bond calls, if material, and tender offers;
• Defeasances;
• Release, substitution, or sale of property securing repayment of the Bonds, if
material;
•
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•, Rating changes;
• Bankruptcy, insolvency, receivership or similar event of the City;
• The consummation of a merger, consolidation,,or acquisition involving the City or
the sale of all or substantially all of the assets of the City; other than in the
ordinary course of business, the entry into a definitive agreement to undertake
suchan,action or,the termination of a definitive agreement,relating to any such
i
actions, other than pursuant to its terms, if material;and
• Appointment of a successor or additional trustee or the change of name of a
trustee, if material.
The City shall promptly determine whether the events described above are material.
(d) Format for Filings with the MSRB. All notices, financial information and
operating data required by this undertaking to be provided to the MSRB must be in an
electronic format as prescribed ey the MSRB. All documents provided to the MSRB pursuant to
this undertaking must be accompanied by identifying information as prescribed by the MSRB.
(e) Notification UpomFailure to Provide Financial Data. The City agrees.to provide or
cause to be provided, in a timelylmanner,to the MSRB notice of its failure to provide the annual
financial information described lin Subsection (b) above on or prior to the date set forth in
Subsection (b) above.
(f) . . Termination/Modification. The City's obligations to provide annual financial
information and notices of certain listed events shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. Any provision of this section shall be null and
void if the City (i) obtains an opinion of nationally,recognized bond counsel to the effect that
the portion of the Rule that requires that provision is invalid, has been repealed retroactively or
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'1)
otherwise does not apply to the Bonds and (ii) notifies the MSRB of such opinion and the
cancellation of this section.
The City may amend this section with an opinion of nationally recognized bond counsel
in accordance with the Rule. In the event of any amendment of this section, the City shall
describe such amendment in the next annual report, and shall include, a narrative explanation
of the reason for the amendment and its impact on the type (or in the case of a change of
accounting principles, on the presentation) of financial information or operating data being
presented by the City. In addition, if the amendment relates to the accounting principles to be
followed in preparing financial statements, (A) notice of such change shall be given in the same
manner as for a listed event under Subsection (c), and (B) the annual report for the year in -
which the change is made shall present a comparison (in narrative form and also, if feasible, in
quantitative form) between'the financial statements as prepared on the basis of the new
accounting principles and those prepared on the basis of the former accounting principles.
(g) Bond Owner's Remedies Under This Section. The right of any bondowner or
Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to a right to
obtain specific enforcement of the City's obligations under this section, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds.
(h) No Default. Except as otherwise disclosed in the City's Official Statement relating
to the Bonds, the City is not and has not been in default in the performance of its obligations of
any prior undertaking for ongoing disclosure with respect to its obligations.
Section 18 Defeasance of the Bonds. In the event that money and/or Government
Obligations maturing or having guaranteed redemption prices at the option of the holder at such
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•
time or times and bearing interest to be earned thereon in amounts (together with such money, if
any) sufficient to redeem and retire part or all of the B,onds in accordance with the their terms,
are hereafter irrevocably set aside in a special account and pledged to effect such redemption and
retirement,then no further payments need be made into the Bond Fund or any account therein for
the payment of the principal of and interest on the certain Bonds so provided for and such Bonds
shall thencease to be entitled to any lien,benefit or security of this ordinance, except the right to
receive the funds so set aside and pledged, and such Bonds shall no longer be deemed to be
Outstanding hereunder, or under any ordinance authorizing the issuance of bonds or other
indebtedness of the City.
' I
Within 30 days of any defeasance of Bonds the Bond Registrar shall provide notice of
defeasance of Bonds to Registered Owners of the Bonds being defeased and to each party
entitled to receive notice in accordance with Section 17.
Section 19. Amendments.
(a) The City Council from time to time and at.any time may pass an ordinance or
ordinances supplemental hereof; which ordinance or ordinances thereafter shall become a part
of this ordinance,for any one or more or all of the following purposes:
(1) To add to the covenants and agreements of the City in this ordinance,
other covenants and agreements thereafter to be observed,which shall not adversely affectthe
interests of the owners of any Bonds, or to surrender any right or power herein reserved.
(2) To make such provisions for the purpose of curing any ambiguities or of •
curing, correcting or supplementing any defective provision contained in this ordinance in
regard to matters or questions arising under such ordinances,as the City Council may deem
necessary or desirable and not inconsistent with such ordinances and.which shall not adversely
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affect, in any material respect, the interest of the owners of Bonds. In any such supplemental
ordinance may be adopted without the consent of the owners of any Bonds at any time
outstanding, notwithstanding any of the provisions of subsection (b) of this section.
(b) With the consent of the owners of not less than sixty-five percent (65%) in
aggregate principal amount of the Bonds at the time outstanding, the City Council may pass an
ordinance or ordinances supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this ordinance or of any
supplemental ordinance; provided, however,that no such supplemental ordinance shall:
(1) Extend the fixed maturity of any Bonds, or reduce the rate of interest
thereon, or extend the time of payment of interest from their due date, or reduce the amount
of the principal thereof, or reduce any premium payable on the redemption thereof, without
the consent of the Registered Owner of each Bond so affected; or
(2) Reduce the aforesaid percentage of Bondowners required to approve any
such supplemental ordinance, without the consent of the owners of all of the Bonds then
outstanding.
It shall not be necessary for the consent of Bondowners under this subsection (b) to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof. For the purpose of consenting to
amendments under this subsection (b), the Insurer shall be deemed to be the sole Registered
Owner of the Bonds then outstanding.
(c) Upon the adoption of any supplemental ordinance pursuant to the provisions of
this section, this ordinance shall be deemed to be modified and amended in accordance
therewith, and the respective rights, duties and obligations of the City under this ordinance and
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all owners of Bonds outstanding hereunder shall thereafter be determined, exercised and
enforced thereunder, subject in all respects to such modifications and amendments, and all
terms and conditions of any sui h supplemental ordinance shall be deemedto be part of the
terms and conditions of this ordinance for any and all purposes.
(d) Bonds executed and delivered after the execution of any supplemental
ordinance passed pursuant to the provisions of this section- may have a notation as to any
matter provided for in such supplemental ordinance, and if such supplemental ordinance shall
so provide, new Bonds so modified as to conform, in the opinion of the City Council, to any
modification of this ordinance contained in any such supplemental ordinance, may be prepared
and delivered,without cost to the owners of any affected Bonds then outstanding, upon
surrender for cancellation of such Bonds in equal aggregate principal amounts.
(e) Exclusion of Bonds Owned by City. Bonds owned or held by or for the account of
the City shall not be deemed outstanding for the purpose of any vote or consent or other action
or any calculation of outstanding Bonds in this ordinance provided for, and shall not be entitled
to vote orconsent or take any other action in this ordinance provided for. •
(f) Bonds Held by Securities Repositories. For so long as the Bondsare held in book
entry only form, communications with the owners shall be made with the securities depository
who is the "Registered Owner" of the Bonds and communications with (and obtaining consents
from) beneficial owners"shall be made in accordance with the operational procedures of the
securities depository that is the "Registered Owner"of the Bonds. .
Section 20. Contract: Savings Clause. The covenants contained in this ordinance and in
the Bonds shall constitute a contract between the City and the Registered Owner of each and
every Bond. If any one or more of the covenants or agreements provided in this ordinance to be'
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performed on the part of the City shall be declared by any court of competent jurisdiction and
after final appeal (if any appeal be taken) to be contrary to law, then such covenant or covenants,
agreement or agreements, shall be null and void and shall be deemed separable from the
remaining covenants and agreements in this ordinance and shall in no way affect the validity of
the other provisions of this ordinance.or of the Bonds.
Section 21. General Authorization: Ratification of Prior Acts. The Mayor, the Chief
Administrative Officer, the Finance Director and other appropriate officers of the City are
authorized to take any actions and to execute documents as in their judgment may be necessary
or desirable in order to carry out the terms of, and complete the transactions contemplated by,
this ordinance. All acts taken pursuant to the authority of this ordinance but prior to its effective
date are hereby ratified.
• Section 22 Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval, and thirty(30)days after publication.
PASSED by the City Council this day of October, 2012.
Bonnie I.Walton,City Clerk
APPROVED BY THE MAYOR this day of October, 2012.
Denis Law, Mayor
Approved as to form:
Pacifica Law Group LLP
Bond Counsel
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•
Date of Publication:
•
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V
CERTIFICATE
I, the undersigned, City Clerk of the City Council of the City of Renton, Washington (the
"City"), DO HEREBY CERTIFY:
1. The attached copy of Ordinance No. (the "Ordinance") is a full,true and
correct copy of an ordinance duly passed at a regular meeting of the City Council of the City
held at the regular meeting place thereof on October , 2012, as that ordinance appears on
the minute book of the City; and the Ordinance will be in full force and effect after publication
in the City's official newspaper as provided by law; and
2. A quorum of the members of the City Council was present throughout the
meeting and a majority of those members present voted in the proper manner for.the passage
of the Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this day of October, 2012.
GOTTLIEB, FISHER . ANDREWS, PLLC
ATTORNEYS AT LAW
CITY OF RENTON
APR 0 6 2005
MEMORANDUMRECEIVED
CITY CLERK'S OFFICE
TO: Members of the Financing Team(see attached list)
FROM: Mary J. Turtle
Legal Assistant 44V
RE: $10,335,000 CITY OF RENTON, WASHINGTON, WATER AND SEWER
REVENUE BONDS, 2004
DATE: April 2, 2005
Enclosed please find your loose and/or bound transcript(s) for the above-referenced
financing. If you have any questions,please feel free to give either Judy Andrews or me a call at
(206)654-1999.
Enclosure
•
520 Pike Street,Suite 2510 Seattle,WA 98101-4006
(206)654-1999 Phone (206)654-8725 Fax
U
$10,335,000
CITY OF RENT,ON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Distribution List
Ms. Victoria Runkle Mr. Clifford Pritchard
Director of Finance and Information Systems Associate
City of Renton MBIA Insurance Corporation
1055 South Grady Way 113 King Street
Renton, Washington 98055 Armonk,New York 10504
Mr. Fred Eoff
Senior Vice President &Managing Director
D.A. Davidson& Co.
701 Fifth Avenue, Suite 3100
Seattle, Washington 98104
1
•
CITY OF RENTON Washington, adopting the Citywide available upon request.
NOTICE OF ORDINANCES Zoning Map Amendments to the zon- Effective: 11/10/2004
ADOPTED BY RENTON CITY ing classifications of properties ORDINANCE NO.5106
STATE OF WASHINGTON, COUNTY OF KING } COUNCIL located within the City of Renton, An ordinance of the City of Renton,
AFFIDAVIT OF PUBLICATION Following is summary of the ordi- and identified as part of the 2004 Washington, changing the zoning
nances adopted by the Renton City Growth Management Act mandated classification of certain property,
Council on November 1,2004: update of the comprehensive plan. known as the."Mroczek Property,"
ORDINANCE NO.5098 Effective: 11/10/2004 within the City of Renton from
PUBLIC NOTICE es
An ordinance of the City of Renton, ORDINANCE NO.5102 Residential 8 to Commercial
Lily Nguyen,being first duly sworn on oath that she is a Legal Advertising Washington, relating to the water- An ordinance of the City of Renton, Neighborhood; the property consist-
Re
Representative of the consist-
works utility of the City, including Washington, changing the zoning ing of approximately 12,078"square
Pthe sewerage system as a part classification of certain property, feet,is located at 700 SW 4th Place.
thereof;providing for the issuance of known as the "Smith Property," The legal description is on file at the
KingCounty $10,335,000 aggregate principal within the City of Renton from City Clerk's office, and is available
Journal amount of Water and Sewer Revenue Residential 8 to Commercial upon request.
Bonds,2004,of the City for the pur- Neighborhood; the property consist- Effective: 11/10/2004
pose of obtaining the funds with ing of approximately 7,240 square Complete text of these ordinances is
a daily newspaper, which newspaper is a legal newspaper of general which to pay the costs of carrying out feet, is located at 624 SW Sunset available at Renton City Hall, 1('
circulation and is now and has been for more than six months prior to the date certain capital improvements of the Boulevard. The legal description is South Grady Way;and posted at
of publication hereinafter referred to, published in the English language waterworks utility; fixing the date, on file at the City Clerk's office,and Renton Public Libraries, 100 Ivnu
gform, denominations, maturities, is available upon request. Avenue South and 2902 NE 12th
continuously as a daily newspaper in King County, Washington.- The King interest-rates, terms and covenants Effective: 11/10/2004-- - Street.--Upon request to the City
County Journal has been approved as a Legal Newspaper by order of the of the bonds; providing for bond ORDINANCE NO.5103 Clerk's office, (425) 430-6510, copies
Superior Court of the State of Washington for Kinginsurance; and approving the sale An ordinance of the City of Renton, will also be mailed for a fee.
P g County. and providing for delivery of the Washington, changing the zoning Bonnie I.Walton
The notice in the exact form annexed was published in regular issues of the bonds to D.A. Davidson & Co., classification of certain property, City Clerk/Cable Manager
King County Journal (and not in supplement form) which was regularly Seattle,Washington. known as the "Handly Property," Published in the King County Journal
Effective: 11/10/2004 within the City of Renton from November 5,2004.#847423
distributed to its subscribers during-the below stated period. The annexed ORDINANCE NO.5099 Residential 8 to Commercial
notice, a An ordinance of the City of Renton, Neighborhood; the property consist-
Washington, amending the ing of approximately 10,780 square
Comprehensive Plan to comply with feet, is located at 620 SW Sunset
Public Notice the mandated 2004 Growth Boulevard. The legal description is
Management Act Review' and on file at the City Clerk's office,and
Update, and adopting is available upon request.
was published on Friday, 11/5/04 Comprehensive Plan text,maps and Effective: 11/10/2004
data in conjunction therewith. ORDINANCE NO.5104
Effective: 11/10/2004 An ordinance of the City of Renton,
The full amount of the fee charged for said foregoing publication is the sum ORDINANCE NO.5100 Washington, changing the zoning
An ordinance of the City of Renton, classification of certain property,
of $285.00 at the rate of$15.50 per inch for the first publication and N/A per Washington, amending Chapter 4-2, known as the "Bonilla Property,"
inch for ea ubseq t insertion. Zoning Districts - Uses and within the City of Renton from
Standards, Chapter 4-3, Residential 8 to Commercial
Environmental Regulations and Neighborhood; the property consist-
Overlay Districts,Chapter 44,City- ing of approximately 6,080 square
Lily Nguyen wide Property Development feet, is located at 612 SW Sunset
Standards, Chapter 4-6, Street & Boulevard. The legal description isLe al Adve ising Representative,King County Journal
Utility Standards, Chapter 4-7, on file at the City Clerk's office,and
Subscri•ed a • s orn to me this 5th day of November,2004. Subdivision Regulations, Chapter 4- is available upon request. O
8, Permits - General and Appeals, Effective: 11/10/2004
\``\�11 W 11111////, Chapter 4-9, Permits - Specific, and ORDINANCE NO.5105 4
,� \--- '1.F A Fe /i���% (Development ChaDefinitions;
Regulations)Title IV An of Washington,ce of the changing ltthe zoning
Renton,of
Tom A.Meagher . Expt Ordinance No.4260 entitled"Code of classification of certain property,
Notary Public for the State of Washington,32�sid iig i� t'nioird,VNshington General Ordinances of the City of known as the "King County Health
— (— t o O :0 = Renton, Washington" n order to Department Property," within the
Ad Number: 847423 P.O.Number: ®� a 0 _ implement the 2004 Growth City of Renton from Light Industrial
Cost of publishing this notice includes an fffidawit su Paan ?^o C? ` Management Act update to the to Commercial Arterial;the property
20 • Comprehensive Plan. consisting of approximately 17.2
•��\\\\J ` Effective:
qT ........
� NAfNedes
os� FFW �� An ordinance Cityof Renton, file at the City Oleoffico,and// ///11111110
•l
COMPANIES D.A. Davidson & Co.
COMPANIES
member SIPC
$10,335 `°`-�
CITY OF RENTON� Q Z � �
Water and Sewer Re` GL�i
461-C ;64-441 A.t
BOND PURCHAS CITY 4F RENTON r
November 1,2004 DEC 0 7 2004
CITY CLERK'S RECEIVEDOFFICE
City of Renton,Washington
1055 South Grady Way
Renton, WA 98055
On the date hereof, the City Council (the"Council") of the City of Renton, Washington(the"City")
adopted an ordinance (the "Ordinance") authorizing the sale, issuance and delivery of the City's
Water and Sewer Revenue Bonds, 2004 (the "Bonds"), and the City's execution and delivery of this
Bond Purchase Agreement(the"Agreement"). In light of such authority, D. A. Davidson& Co. (the
"Underwriter") hereby offers to enter into this Agreement with the City. Upon your acceptance, this
Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the
City and the Underwriter.
1) Upon the terms and conditions and in reliance upon the representations set forth herein, the
Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to the
Underwriter all (but not less than all) of the Bonds in the aggregate principal amount of
$10,335,000.00, at an aggregate purchase price of$10,603,397.65, which accounts for the(i)
underwriter's discount of$103,350.00 ($10.00/$1,000 of the par value of the Bonds) and (ii)
original issue premium of $371,747.65, together with accrued interest on the Bonds from
November 1, 2004 to the Closing Date defined herein. The Bonds shall be issued and
secured under and pursuant the Ordinance dated November 1, 2004 and shall mature, bear
interest and be subject to redemption as set forth in Exhibit A hereto. The Underwriter
agrees to make a public offering of the Bonds at the initial offering prices set forth in the
Official Statement referred to in Section 2 herein, which prices may be changed from time to
time by the Underwriter.
Seattle Office
Bank of America Tower•701 5th Avenue•Suite 3100•Seattle,WA 98104•(206)389-9000•FAX(206)903-8689
California.Colorado•Idaho•Montana•Oregon•Utah•Washington•Wyoming
2) The City shall deliver or cause to be delivered to the Underwriter, promptly after acceptance
hereof, five copies of the Official Statement, substantially in the form of the Preliminary Official
Statement dated October 22, 2004 (the"Preliminary Official Statement") with only such changes
therein as shall have been accepted by us (such Preliminary Official Statement with such changes,
if any, and including the cover page and all appendices, exhibits and statements included therein
or attached thereto being called the "Official Statement"). The City hereby authorizes the
distribution by the Underwriter of the Preliminary Official Statement in offering the Bonds for
sale to prospective purchasers of the Bonds.
3) On November 17, 2004, or at such other time, or on such earlier or later date as the Underwriter
and the City may mutually agree(the"Closing Date"), the Underwriter will accept delivery of the
Bonds and pay the purchase price thereof as set forth in Section 1 herein by Federal Reserve
System wire transfer in immediately available Federal funds or by any other form of immediately
available Federal funds. The Bonds shall be delivered through The Depository Trust Company,
New York, New York ("DTC") in definitive form, bearing CUSIP numbers and issued under a
book-entry system.
4) The City makes the following representations and warranties:
a) The City is a municipal corporation organized and existing under the laws of the State of
Washington and is authorized to issue the Bonds, to enter into this Agreement and all
other agreements contemplated hereby and to adopt the Ordinance.
b) The City has complied to date with all applicable provisions of the laws of the State of
Washington in connection with the execution and issuance of the Bonds.
c) The Ordinance and this Agreement have been duly and validly authorized and executed by
the City.
d) The City has authorized all necessary action to be taken by it for(i)the issuance and sale
of the Bonds upon the terms set forth herein, in the Official Statement and in the
Ordinance; (ii) the execution, delivery, receipt and due performance of this Agreement,
the Bonds and the Ordinance and all other agreements contemplated hereby or required in
order to carry out, give effect to and consummate the transactions contemplated hereby;
and(iii) carrying out, giving effect to and consummation of the transactions contemplated
hereby.
e) The Bonds when issued, delivered and paid for as provided for herein and in the
Ordinance, will have been duly and validly authorized and issued and will constitute
special obligations of the City secured as provided in the Ordinance and as described in
the Official Statement.
f) To the best knowledge of the City, there are no legal or governmental proceedings
pending or threatened; or any basis therefore, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the validity or security of the Bonds, the
Ordinance, this Agreement or the transactions contemplated thereby or the power of the
City to execute and deliver the Bonds or this Agreement,or adopt the Ordinance.
g)' As of the date hereof, the Preliminary Official Statement does not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they
were made,not misleading.
•
a,
h) The Preliminary Official Statement is deemed "final" in accordance with Rule 15c2-
12(b)(1)under the Securities Exchange Act of 1934.
5) The Underwriter enters into this Agreement in reliance upon the representations and warranties of
the City contained herein and in the Ordinance and in reliance upon the representations and
warranties to be contained in the documents and instruments to be delivered at the Closing and
upon the performance by the City and its obligations hereunder both on and as of the date hereof
and as of the Closing Date. Accordingly, the Underwriter's obligation under this Agreement to
accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the City
of its obligations to be performed hereunder and under such documents and instruments at or prior
to the Closing, and shall also be subject to the following additional conditions:
a) the representations and warranties of the City contained herein shall be true and correct on the
date hereof and of the Closing, as if made on and at the Closing;
b) at or prior to the Closing, the Underwriter shall receive the following documents:
i) certified copies of the Ordinance;
ii) the opinion of Gottlieb, Fisher & Andrews, PLLC, as Bond Counsel, dated the
Closing Date, substantially in the form of Appendix E to the Official Statement;
iii) evidence of the insurance policy issued by MBIA Insurance Corporation(MBIA);
iv) evidence satisfactory to the Underwriter that Standard and Poor's Corporation and
Fitch Ratings have issued ratings for the Bonds not lower than 'AAA' (underlying
`AA-) and 'AAA' (underlying `AA-'), respectively, and that such ratings have
not been withdrawn; and
v) such additional legal opinions, certificates, proceedings, instruments and other
documents as the Underwriter or Bond Counsel may reasonably request.
If the conditions to the Underwriter's obligations contained in this Agreement are not satisfied
(unless otherwise waived in writing by the Underwriter) or if the Underwriter's obligations shall
be terminated for any reason permitted herein, this Agreement shall terminate and neither the
Underwriter nor the City shall have any further obligation hereunder except to reimburse the
Underwriter for expenses related to the preparation, printing and mailing of the preliminary and
final official statements.
6) During the initial public offering of the Bonds (a period of concluding the final date the
Underwriter is charged with furnishing a copy of the Official Statement to a potential customer
under SEC Rule 15c2-12 but no later than six months after the Closing Date),the City will(a)not
consent to the distribution of any amendment of or supplement to the Official Statement to which,
after having been furnished with a copy, the Underwriter shall object in writing or which shall be
disapproved by counsel for the Underwriter and(b) if any event shall occur as a result of which it
is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in
order to make the Official Statement not misleading in light of the circumstances existing at the
time it is delivered to a purchaser, consent to the distribution of an amendment of or supplement
to the Official Statement,prepared without expense to the City(in form and substance satisfactory
to the Underwriter)in a reasonable number of copies which will amend or supplement the Official
Statement so that it will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
existing at the time the Official Statement is delivered to a purchaser, not misleading.
7) The Underwriter shall have the right to cancel its obligation to purchase the Bonds if between the
date hereof and the Closing, (i) legislation shall have been enacted by the Congress of the United
States or the legislature of the'State of Washington or legislation shall have been reported out of
committee of either body or be pending in committee of either body, or a decision shall have been
rendered by a court of the United States or of the State of Washington or the Tax Court of the
United States, or a ruling shall have been made or a regulation or temporary regulation shall have
been proposed or made or any other release or announcement shall have been made by the
Treasury Department of the United States or the Internal Revenue Service, with respect to federal
taxation upon revenues or other income of the general character of the Bonds which, in the
reasonable judgment of the Underwriter, materially adversely affects the market for the Bonds, or
(ii) there shall exist any event which, in the reasonable judgment of the Underwriter, either (a)
makes untrue or incorrect in any material aspect as of such time any statement or information
contained in the Official Statement or (b) is not reflected in the Official Statement but should be
reflected therein in order to make the statements and information contained therein not misleading
in any material respect, or (iii) there shall have occurred any outbreak of hostilities or any other
national or international calamity or,crisis, the effect of which outbreak, calamity or crisis on the
financial markets of the United States is such as, in the reasonable judgment of the Underwriter,
would make it impracticable for the Underwriter to market or enforce contracts for the sale of the
Bonds, or (iv) there shall be in force a general suspension of trading on the New York Stock
Exchange or minimum or maximum prices for trading shall have been fixed and in force, or
maximum ranges for prices for securities shall have been required and be in force on the New
York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the
Securities and Exchange Commission or any other governmental authority having jurisdiction, or
(v) a general banking moratorium shall have been declared by either Federal, State of Washington
or New York authorities having jurisdiction and be in force, or(vi) there shall be established any
new restriction on transactions in securities materially affecting the free market for securities
(including the imposition of any limitation on interest rates)or extension of credit by, or charge to
the net capital requirements of, Underwriter established by the New York Stock Exchange, the
Securities and Exchange Commission, any other federal or state agency or the Congress of the
United States, or by Executive Order.
8) All fees, expenses and costs incident to the execution and performance of this Agreement and to
the authorization, issuance and sale of the Bonds to the Underwriter, including,but not limited to,
the cost of printing the Bonds,if any(and full execution thereof),the fees and charges of Standard
&Poor's,the fees and charges of Fitch Ratings,the bond insurance policy premium of MBIA,the
preparation, printing and distribution of the Preliminary Official Statement and the Official
Statement, any reimbursable ;expenses of the Underwriter and the fees and expenses of Bond
Counsel shall be paid by the City. All expenses to be paid by the City pursuant to this Agreement
may be paid from Bond proceeds to the extent permitted by the Ordinance. The obligation of the
City under this Section 8 shall survive the payment of the Bonds.
9) Any notice or other communication to be given to the City under this Agreement may be given by
delivering the same in writing at the address set forth above and any such notice or other
communications to be given to the Underwriter may be given by delivering the same in writing to
D.A. Davidson & Co., 701 Fifth Avenue, Suite 3100, Seattle, Washington 98104, Attention:
Public Finance. The approval of the Underwriter when required hereunder or the determination of
its satisfaction as to any document referred to herein shall be in writing signed by the Underwriter
and delivered to you.
10) This Agreement is made solely for the benefit of the City and the Underwriter (including
successors or assigns of the Underwriter, but excluding any purchaser, as such purchaser, of
Bonds from the Underwriter)and, to the extent expressed.herein, controlling persons thereof, and
no other persons,partnership, association or corporation shall acquire to have any right hereunder
or by virtue hereof. All representations and agreements of the parties to this Agreement shall
remain operative and in full force and effect regardless of any investigation made by or on behalf
of the Underwriter and shall survive the delivery of and payment for the Bonds. Time shall be of
the essence of this Agreement. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Washington. This Agreement may be executed in any
number of counterparts each of which shall be an original but all of which together will constitute
one and the same instrument.
Very truly yours,
D.A.DAVIDSON&CO.
Byr" '"j1i
-? 1
Fred R. Eoff
Senior Vice President&Managing Director
Accepted and Agreed to:
CITY OF RENTON,WASHINGTON, acting by and through its City Council
BY: Oltdee4 O,
•
Kathy olker-Wheeler
Mayor :• ,..J
ar.
en; _
Atm 06071-4141- ,
Bantle I.Walton,City,Clerk
•
EXHIBIT A
TERMS OF THE BONDS
Purchase Price: Par Amount of Bonds: $10,335,000.00
Plus:Reoffering Premium: 371,747.65
Less: Underwriter's Discount: (103,350.00)
Purchase Price: I $10,603,397.65*
*Plus accrued interest to the Closing Date
Dated Date: November 1,2004
Delivery Date: November 17,2004
Denominations: $5,000 each or integral multiples thereof
Form: The Bonds will be fully registered in Book-Entry only through the facilities of The
Depository Trust Company("DTC")in New York,New York.
Interest Payable: Interest on the Bonds from their dated date will be payable semi-annually on June 1 and
December 1,commencing December 1,2004,to their maturity or prior redemption.
Maturity Schedule: The Bonds mature on December 1, in each of the years and amounts set forth below,
subject to optional and mandatory redemption as hereinafter described, and will bear
interest from November 1, 2004 to their respective maturities or dates of prior
redemption,whichever occurs first,at the rates as shown below:
Interest Yield to Price Interest Yield to Price
Year Amount Rate Maturity (%of Par) Year Amount Rate Maturity (%of Par)
2013 $205,000 3.55% 3.55% 100.000 2024* $4,605,000 5.00% 4.43% 104.577
2014 235,000 3.65 3.65 100.000 2025 1,600,000 5.00 4.52 103.837
2015 250,000 3.75 3.75 100.000 2026 1,680,000 5.00 4.60 103.185
2027 1,760,000 5.00 4.67 102.618
*Term Bonds
True Interest Cost: 4.7352%
Optional Redemption: The Bonds maturing on or after December 1,2015 are subject to optional redemption
prior to maturity in whole or in part at any time beginning on December 1,2014 at par
(100%)plus accrued interest to the date of redemption.
Mandatory Term
Bond Redemption: Term Bonds maturing December 1, 2024 are subject to mandatory redemption in
accordance with the following schedule:
Date Amount Date Amount
12/1/2016 $260,000 12/1/2021 $265,000
12/1/2017 270,000 12/1/2022 280,000
12/1/2018 130,000 12/1/2023 1,450,000
12/1/2019 185,000 12/1/2024* 1,520,000
12/1/2020 245,000
*Final maturity
Bond Counsel: Gottlieb Fisher&Andrews,PLLC,Seattle,Washington
Registrar: The Bank of New York,New York,New York
Offer Expires: November 1,2004 at 11:59 PM Pacific Time
itit CITY )F REN TON
City Clerk
Bonnie I.Walton
Kathy Keolker-Wheeler, Mayor
• .'
December 8, 2004
Mary Turtle
Gottlieb Fischer
520 Pike St., 25th Floor
Seattle, WA 98101
Re: Affidavit of Publication for Renton Ordinance#5098
Water and Sewer Revenue Bond Issuance
Dear Ms. Turtle:
I've enclosed a copy of the above-referenced document. Your request for certified copies
of Renton Ordinance#5098 and the approving;minutes (mailed to:you on December 1,
2004), and a copy of the affidavit of publication_has now been satisfied. If you need
additional assistance or information, please do not hesitate to contact me.
•
Sincerely; •
—TUAIWAVYIA\
Michele Neumann
Deputy City Clerk
Enclosure
1055 South Grady Way-Renton,Washington 98055-(425)430-6510/FAX(425)430-6516 R E 1 V T ® lel
J This paper contains 50%recycled material,30%post consumer AHEAD OF THE CURVE
::' ' CIT )F RENTON
_ City Clerk
Bonnie I.Walton
Kathy Keolker-Wheeler,Mayor
•
`December 1, 2004 .
Mary Turtle
Gottlieb"Fischer
520 Pike St.; 25th Floor
Seattle, WA 98.101
.Re: Certified Copies of Documents
Dear Ms. Turtle:
Enclosed arecertified copies of the following documents:
•. City of Renton Ordinance 5098- Water and Sewer Revenue Bonds Issuance;and .
• City of Renton Council Meeting minutesof:.11/1/2004, verifying:adoption of
Ordinance 5098.
•
An affidavit of publication of the ordinance has not yet been received from,the
newspaper. When received, I will forward a copyto your If additional assistance or
information is needed, please do-nothesitate to contact me •:
• Sincerely, -
-
Michele Neumann
Deputy City Clerk
•
•
1055 South Grady Way-Renton,Washington 98055-(425)430-6510/FAX(425)430-6516 RENTON
AHEAD OF THE CURVE
C�..* This paper contains 50%recycled material,30%post consumer
D1.
ok\v} to ® CITY OF RENT ON CITY OF RENTOR
NOV 132004
Finance & Information Services Department RECEIVED
CITY CLERK'S OFFICE
' MEMORANDUM
DATE: November 18, 2004
TO: Don Persson, Council President
Members of the Renton City Council
CC: Kathy Keolker-Wheeler, Mayor
FROM: Victoria Runkle, Finance&Information Services Administrator
SUBJECT: Standard and Poor's Rating Announcement
Last week we received Standard and.Poor's (S&P) Rating Announcement regarding our water sewer
bonds. In this day and age, most of this information is released in an electronic format. The
complete report is attached.
I think you will find this interesting information. S&P did note that the rate increases we are
proposing in the 2005 Budget would allow rates to keep pace with inflation. The rating agencies
prefer seeing small annual increases, rather than rate spikes.
Please feel free to call me about any of this information.
VAR/dlf
Attachment,as stated
cc: Jay Covington,CAO
Derek Todd Assistant to the CAO
B e..+Waltoxt;City C�,ei•k-._
Gregg Zimmerman,PBPW Administrator
Lys Hornsby,Utility Systems Director
Nenita Ching,Analyst,PBPW Administration
H:\FINANCE\ADMINSUP\02_IssuePapers_memos to Council or Mayor\Memo to Council re Standard&Poor's Rating.doc
•
t •
STANDARD . PUBLIC FINANCE
&POOR'S
Publication date:29-Oct-2004
• Reprinted from RatingsDirect
Renton, Washington
Primary Credit Analyst(s):Edward R McGlade,New York(1)212-438-2061;edward_mcglade@standardandpoors.com
Secondary Credit Analyst(s):Ian Carroll,San Francisco(1)415-371-5060;ian_carroll@standardandpoors.com
Credit Profile Rationale
Standard & Poor's Ratings Services assigned its'AA-' rating, and stable
US$10.705 mil wtr&swr rev outlook, to Renton, Wash.'s series 2004 water and sewer revenue bonds.
bods ser 2004 dtd 11/01/2004
due 12/01/2013-2015 2024
2028 The rating reflects:
AA-
Sale date:04-NOV-2004 • An underlying economy with higher-than-average wealth levels that is
AFFIRMED evolving into a retail and residential community that participates in the
.Outstanding wtr&swr bnds Seattle-King County MSA from an industrial center,
AA-(SPUR)
• An independent water supply that insulates the utility from increasing
OUTLOOK:STABLE purchased water costs,
• The systems'good financial performance marked by high debt service
coverage (DSC), and
• A competitive rate structure that management expects to increase at
about the rate of inflation.
The above strengths are somewhat mitigated by:
• Economic concentration due to the presence of a Boeing 737
manufacturing plant,which employs 11,900; and
• Renton's lack of a cash reserve policy, which has led to erratic liquidity
positions due to the build up and the spending down of liquid resources
for capital needs.
The water and sewer systems' net revenue pledge secures the bonds.
The series 2004 bonds are dated Nov. 1, and management will use bond
proceeds to fund its accelerated capital plan. Additional debt issued on parity
with the 2004 bonds remains outstanding, including series 2002 and series
2003 bonds. Including the 2004 bonds, the utility's total revenue debt will be
$35.9 million.
Renton has experienced economic growth primarily in the retail sector; aircraft
manufacturing-dominated-the-economy-at-one-time; but the-economy has
since diversified into the retail sector. While there have been some reductions
in employment at Boeing Co.'s Renton facilities, the local economy has been
able to absorb those losses. Boeing's employment within Renton might have
bottomed out; and the company might be increasing its workforce again due
primarily to increased orders of the 737 line, its contract with the U.S. Navy for
aircraft based on the 737 frame, and its plan to consolidate within the Puget
Sound area.
Renton has developed, and placed on-line, an independent water source from
Seattle,Wash.; meanwhile, costly Renton now stands to benefit by not
dealing with increases in the cost of water supply from Seattle. The city is in
more control of its water supply costs.
Financially, the system generated strong annual DSC at more than 4.10x in
audited 2003 and 5.76x in unaudited 2004. The systems'conservative
projections indicate DSC levels exceeding 4.25x over the next five years. The
utility's 2004 cash position was sound at mol'e-CiLian 186 days' cash on hand,
but city officials have a practice of spending down cash positions from time to
time.
Rates are competitive for the region but remain above average compared with
national utilities. The combined water, sewer, and storm water monthly bill for
1,000 cubic-feet of usage is slightly more than $70. The city increased rates
by 3% in 2004, the first rate increase since the early 1990s. The 2005 budget
includes a small rate increase for all three systems.
Outlook
The stable outlook reflects the expectation that Renton Waterworks will
maintain its adequate financial reserves even as it uses excess cash to
finance its capital needs and that DSC will remain strong.
Economy
Renton is on Lake Washington, 20 miles southeast of Seattle on Interstate
405. The city's 2003 population of 54,900 accounted for about 3% of King
County's total population of 1.77 million. Its location and good transportation
access allow city residents to commute to jobs in Seattle and throughout the
Puget Sound region. While unemployment is higher in Renton than the nation,
at 7.2% compared with 5.9% in 2003, the city's job market is slightly more
favorable compared with the state's 7.3% rate. Typical of King County,
Renton's income levels are high compared with the rest of the nation: Median
household income is$56,000 annually, or 46% above the national median.
While the city has long been home to Boeing's 737 manufacturing plant, the
company has been moving its operations out of state, exposing Renton to the
possibility that it might lose its leading employer. Renton's convenient
location, 20 miles from downtown Seattle and near major transportation routes
that make the city easily accessible to much of King County, somewhat offsets
this risk; therefore, residents have access to employment opportunities
throughout the area. With housing prices below the regional median and
available land for development, Renton is experiencing residential growth that
should contribute to an increase in its operating revenue. Despite the
presence of Boeing's plant in the city, Renton Waterworks does not have
ratepayer concentration; only 3% of total water revenue is attributable to
Boeing, which indicates that Renton Waterworks' financial performance would
not be greatly challenged if Boeing closed its Renton plant.
Operations
Unlike many other King County water utilities, Renton Waterworks has an
independent water supply; so the utility relies on imported water for less than
5%of its demand, which insulates it from increased rates passed on by
Seattle Water, the regional wholesale water provider. The utility has more
than adequate-capacity-to-meet-water and sewer demands. Renton's water
supply is primarily drawn from the Cedar River Aquifer(95%)with Seattle
Water and Springbrook Springs providing the remainder. Total supply in 2004
of 27.6 million gallons per day (mgd) is more than sufficient to service the
maximum daily demand of 14.1 mgd. The average daily demand for water
was only 7.5 mgd. Wastewater effluent is transported by Renton Waterworks
to King County's 115 mgd Renton treatment plant.
About 1,614 new customers were connected to the utility between 1999 and
2003 for a moderate average growth rate of 2.2% annually. Most customer
growth was driven by the new residential developments occurring east of I-
405 in formerly open fields as demand for housing remains robust throughout
King County. The water system had 15,507 customers in 2003 and the sewer
system had 13,697 customers; the sewer system has fewer customers than
the water system because a portion of Renton is served by local septic tanks.
System officials are projecting the utility's customer base to grow by 3%
annually, which would remain consistent with the past five years.
♦•
Rates
At$28.92 monthly for water service, based on a usage of 1,000 cubic-feet,
and $36.44 monthly for sewer service, based on a usage of 1,000 cubic-feet,
rates are competitive with other regional providers. King County collects a
portion of the sewage rate, $23.40, as a treatment charge with Renton
Waterworks collecting the remainder for the cost of collection and delivery to
King County's treatment plant. A storm drain fee of$5.39 brings the combined
bill to $70.75. A proposed 2% increase for the water rate and a 3% increase
• for the;sewer rate can become effective in 2005 and should allow customer
rates to keep pace with inflation.
Finances
With some growth in customers and modest adjustments to the rate structure,
the systems' operating revenues, which consists primarily of service charges
to utility customers, grew by 16% since 2002 to $27.5 million in 2004,
according to estimated actual financial results for fiscal year-end June 30,
2004. Nonoperating revenues from developer connection fees and interest
added.an additional$2.1 million to overall income in 2004. The cost of
administration and operating and maintenance has decreased by 6% over the
same time period to$15.4 million in 2004. Net revenues available for debt
service totaled$14.3 million in 2004, providing strong annual DSC at 5.76x on •
all of the utility's revenue bonds outstanding. Projections indicated coverage
would decline to 4.47x in 2005 due to debt service ramping up; projections
also indicate that coverage will decline to a low 4.25x in 2007 after an
additional bond issue in 2006.
By generating operating revenue that exceeds expenses, the waterworks can
not only cover debt service by a high margin but can also use a portion of the
surplus for cash outlays to support its five-year, $44 million capital plan.
Excess revenues should be sufficient to allow the maintenance of DSC, cash
liquidity, and capital outlay. While the cash position was a strong $7.3 million
at fiscal year-end 2003, or 186 days' operations, the utility does not have a
formal'cash reserve policy. In 2001, capital spending reduced cash on hand to
a low 46 days' operations.
This report was reproduced from Standard & Poor's RatingsDirect, the
premier source of real-time, Web-based credit ratings and research from an
organization that has been a leader in objective credit analysis for more
than 140 years. To preview this dynamic on-line product, visit our
RatingsDirect Web site at www.standardandpoors.com/ratingsdirect.
Published by Standard&Poor's,a Division of The McGraw-Hill Companies,Inc.Executive offices:1221
Avenue of the Americas,New York,NY 10020.Editorial offices:55 Water Street,New York,NY 10041.
Subscriber services:(1)212-438-7280.Copyright 2004 by The McGraw-Hill Companies,Inc.
Reproduction in whole or in part prohibited except by permission.All rights reserved.Information has
been obtained by Standard&Poor's from sources believed to be reliable.However,because of the
possibility of human or mechanical error by our sources,Standard&Poor's or others,Standard&
Poor's does not guarantee the accuracy,adequacy,or completeness of any information and is not
responsible for any errors or omissions or the result obtained from the use of such information.Ratings
• are statements of opinion,not statements of fact or recommendations to buy,hold,or sell any
securities.
The McGraw-Hill•Hill Companies
rY
& % CITY CLERK DIVISION
JI
NTo MEMORANDUM
DATE: November 3, 2004
TO: Victoria Runkle,Finance
FROM: iI` P ebbie Evans', 425-430-6513
SUBJECT: D.A. Davidson &Co. Bond Purchase Agreement
and Ordinance 5098
The attached original Bond Purchase Agreement with D.A.Davidson &Co. has been
fully executed, and all three sets are being returned to you. The City Clerk has retained a
copy of the document.
A copy of Ordinance 5098, adopting the issuance of this bond, is also attached for your
file.
Thank you.
Attachments
DAVIDSON
}COMPANIES D.A. Davidson & Co.
member SIPC
$10,335,000
CITY OF RENTON,WASHINGTON
Wate j and Sewer Revenue Bonds,2004
• BOND PURCHASE AGREEMENT
November 1,2004
City of Renton,Washington
1055 South Grady Way
Renton,WA 98055
On the date hereof, the City Council (the"Council") of the City of Renton, Washington(the"City")
adopted an ordinance (the "Ordinance") authorizing the sale, issuance and delivery of the City's
Water and Sewer Revenue Bonds, 2004 (the"Bonds"), and the City's execution and delivery of this
Bond Purchase Agreement(the"Agreement"). In light of such authority,D. A. Davidson& Co. (the
"Underwriter")hereby offers to enter into this Agreement with the City. Upon your acceptance, this
Agreement shall be in full force andeffect in accordance with its terms and shall be binding upon the
City and the Underwriter.
1) Upon the terms and conditions and in reliance upon the representations set forth herein, the
Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to the
Underwriter all (but not less than all) of the Bonds in the aggregate principal amount of
$10,335,000.00, at an aggregate purchase price of$10,603,397.65,which accounts for the(i)
underwriter's discount of$103,350.00 ($10.00/$1,000 of the par value of the Bonds) and(ii)
original issue premium of $371,747.65, together with accrued interest on the Bonds from
November 1, 2004 to the Closing Date defined herein. The Bonds shall be issued and
secured under and pursuant,the Ordinance dated November 1, 2004 and shall mature, bear
interest and be subject to redemption as set forth in Exhibit A hereto. The Underwriter
agrees to make a public offering of the Bonds at the initial offering,prices set forth in the
Official Statement referred to in Section 2 herein,which prices may be changed from time to
time by the Underwriter.
Seattle office
Bank ofAmerica Tower•701 5th Avenue•Suite 3100•Seattle,WA 98104•(206)389-9000•FAX(206)9034689 •
California•Colorado•Idaho•Montana•Oregon•Utah•Washington•Wyoming
2) The City shall deliver or cause to be delivered to the Underwriter, promptly after acceptance
hereof, five copies of the Official Statement, substantially in the form of the Preliminary Official
Statement dated October 22, 2004 (the"Preliminary Official Statement") with only such changes
therein as shall have been accepted by us (such Preliminary Official Statement with such changes,
if any, and including the cover page and all appendices, exhibits and statements included therein
or attached thereto being called the "Official Statement"). The City hereby authorizes the
distribution by the Underwriter of the Preliminary Official Statement in offering the Bonds for
sale to prospective purchasers of the Bonds.
3) On November 17, 2004, or at such other time, or on such earlier or later date as the Underwriter •
and the City may mutually agree(the"Closing Date"),the Underwriter will accept delivery of the
Bonds and pay the purchase price thereof as set forth in Section 1 herein by Federal Reserve
System wire transfer in immediately available Federal funds or by any other form of immediately
available Federal funds. The Bonds shall be delivered through The Depository Trust Company,
New York, New York ("DTC") in definitive form, bearing CUSIP numbers and issued under a
book-entry system.
4) The City makes the following representations and warranties:
a) The City is a municipal corporation organized and existing under the laws of the State of
Washington and is authorized to issue the Bonds, to enter into this Agreement and all
other agreements contemplated hereby and to adopt the Ordinance.
b) The City has complied to date with all applicable provisions of the laws of the State of
Washington in connection with the execution and issuance of the Bonds.
c) The Ordinance and this Agreement have been duly and validly authorized and executed by
the City.
d) The City has authorized all necessary action to be taken by it for(i)the issuance and sale
of the Bonds upon the terms set forth herein, in the Official Statement and in the
Ordinance; (ii) the execution, delivery, receipt and due performance of this Agreement,
the Bonds and the Ordinance and all other agreements contemplated hereby or required in
order to carry out, give effect to and consummate the transactions contemplated hereby;
and (iii) carrying out, giving effect to and consummation of the transactions contemplated
hereby.
e) The Bonds when issued, delivered and paid for as provided for herein and in the
Ordinance, will have been duly and validly authorized and issued and will constitute
special obligations of the City secured as provided in the Ordinance and as described in
the Official Statement.
f) To the best knowledge of the City, there are no legal or governmental proceedings
pending or threatened, or any basis therefore, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the validity or security of the Bonds, the
Ordinance, this Agreement or the transactions contemplated thereby or the power of the
City to execute and deliver the Bonds or this Agreement,or adopt the Ordinance.
g) As of the date hereof, the Preliminary Official Statement does not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they
were made,not misleading.
h) The Preliminary Official Statement is deemed "final" in accordance with Rule 15c2-
12(b)(1)under the Securities Exchange Act of 1934.
5) The Underwriter enters into this Agreement in reliance upon the representations and warranties of
the City contained herein and in the Ordinance and in reliance upon the representations and
warranties to be contained in the documents and instruments to be delivered at the Closing and
upon the performance by the City and its obligations hereunder both on and as of the date hereof
and as of the Closing Date. Accordingly, the Underwriter's obligation under this Agreement to
accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the City
of its obligations to be performed hereunder and under such documents and instruments at or prior
to the Closing, and shall also be subject to the following additional conditions:
a) the representations and warranties of the City contained herein shall be true and correct on the
date hereof and of the Closing, as if made on and at the Closing;
b) at or prior to the Closing,the Underwriter shall receive the following documents:
i) certified copies 1of the Ordinance;
'
ii) the opinion of;Gottlieb, Fisher & Andrews, PLLC, as Bond Counsel, dated the
Closing Date, substantially in the form of Appendix E to the Official Statement;
iii) evidence of the insurance policy issued by MBIA Insurance Corporation(MBIA);
iv) evidence satisfactory to the Underwriter that Standard and Poor's Corporation and
Fitch Ratings have issued ratings for the Bonds not lower than 'AAA' (underlying
`AA-') and 'AAA' (underlying `AA-'), respectively, and that such ratings have
not been withdrawn; and
v) such additional legal opinions, certificates, proceedings, instruments and other
documents as the Underwriter or Bond Counsel may reasonably request.
If the conditions to the Underwriter's obligations contained in this Agreement are not satisfied
(unless otherwise waived in writing by the Underwriter) or if the Underwriter's obligations shall
be terminated for any reason permitted herein, this Agreement shall terminate and neither the
Underwriter nor the City shall have any further obligation hereunder except to reimburse the
Underwriter for expenses related to the preparation, printing and mailing of the preliminary and
final official statements.
6) During the initial public offering of the Bonds (a period of concluding the final date the
Underwriter is charged with furnishing a copy of the Official Statement to a potential customer
under SEC Rule 15c2-12 but no later than six months after the Closing Date),the City will(a)not
consent to the distribution of any amendment of or supplement to the Official Statement to which,
after having been furnished with a copy, the Underwriter shall object in writing or which shall be
disapproved by counsel for the Underwriter and(b) if any event shall occur as a result of which it
is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in
order to make the Official Statement not misleading in light of the circumstances existing at the
time it is delivered to a purchaser, consent to the distribution of an amendment of or supplement
to the Official Statement,prepared without expense to the City(in form and substance satisfactory
to the Underwriter)in a reasonable number of copies which will amend or supplement the Official
Statement so that it will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
existing at the time the Official Statement is delivered to a purchaser,not misleading. •
7) The Underwriter shall have the right to cancel its obligation to purchase the Bonds if between the
date hereof and the Closing, (i) legislation shall have been enacted by the Congress of the United
States or the legislature of the State of Washington or legislation shall have been reported out of
committee of either body or be pending in committee of either body, or a decision shall have been
rendered by a court of the United States or of the State of Washington or the Tax Court of the
United States, or a ruling shall have been made or a regulation or temporary regulation shall have
been proposed or made or any other release or announcement shall have been made by the
Treasury Department of the United States or the Internal Revenue Service, with respect to federal
taxation upon revenues or other income of the general character of the Bonds which, in the
reasonable judgment of the Underwriter, materially adversely affects the market for the Bonds, or
(ii) there shall exist any event which, in the reasonable judgment of the Underwriter, either (a)
makes untrue or incorrect in any material aspect as of such time any statement or information
contained in the Official Statement or(b) is not reflected in the Official Statement but should be
reflected therein in order to make the statements and information contained therein not misleading
in any material respect, or (iii) there shall have occurred any outbreak of hostilities or any other
national or international calamity or crisis, the effect of which outbreak, calamity or crisis on the
financial markets of the United States is such as, in the reasonable judgment of the Underwriter,
would make it impracticable for the Underwriter to market or enforce contracts for the sale of the
Bonds, or (iv) there shall be in force a general suspension of trading on the New York Stock
Exchange or minimum or maximum prices for trading shall have been fixed and in force, or
maximum ranges for prices for securities shall have been required and be in force on the New
York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the
Securities and Exchange Commission or any other governmental authority having jurisdiction, or
(v) a general banking moratorium shall have been declared by either Federal, State of Washington
or New York authorities having jurisdiction and be in force, or(vi)there shall be established any
new restriction on transactions in securities materially affecting the free market for securities
(including the imposition of any limitation on interest rates)or extension of credit by, or charge to
the net capital requirements of, Underwriter established by the New York Stock Exchange, the
Securities and Exchange Commission, any other federal or state agency or the Congress of the
United States, or by Executive Order.
8) All fees, expenses and costs incident to the execution and performance of this Agreement and to
the authorization, issuance and sale of the Bonds to the Underwriter, including,but not limited to,
the cost of printing the Bonds, if any(and full execution thereof),the fees and charges of Standard
&Poor's, the fees and charges of Fitch Ratings,the bond insurance policy premium of MBIA,the
preparation, printing and distribution of the Preliminary Official Statement and the Official
Statement, any reimbursable expenses of the Underwriter and the fees and expenses of Bond
Counsel shall be paid by the City. All expenses to be paid by the City pursuant to this Agreement
may be paid from Bond proceeds to the extent permitted by the Ordinance. The obligation of the
City under this Section 8 shall survive the payment of the Bonds.
9) Any notice or other communication to be given to the City under this Agreement may be given by
delivering the same in writing at the address set forth above and any such notice or other
communications to be given to the Underwriter may be given by delivering the same in writing to
D.A. Davidson & Co., 701 Fifth Avenue, Suite 3100, Seattle, Washington 98104, Attention:
Public Finance. The approval of the Underwriter when required hereunder or the determination of
its satisfaction as to any document referred to herein shall be in writing signed by the Underwriter
and delivered to you.
10) This Agreement is made solely for the benefit of the City and the Underwriter (including
successors or assigns of the Underwriter, but excluding any purchaser, as such purchaser, of
Bonds from the Underwriter) and, to the extent expressed herein, controlling persons thereof, and
no other persons,partnership, association or corporation shall acquire to have any right hereunder
or by virtue hereof All representations and agreements of the parties to this Agreement shall
remain operative and in full force and effect regardless of any investigation made by or on behalf
of the Underwriter and shall survive the delivery of and payment for the Bonds. Time shall be of
the essence of this Agreement. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Washington. This Agreement may be executed in any
number of counterparts each of which shall be an original but all of which together will constitute
one and the same instrument.
Very truly yours,
D.A. DAVIDSON&CO.
BY":." '"j3g
Fred R. Eoff
Senior Vice President&Managing Director
Accepted and Agreed to:
CITY OF RENTON,WASHINGTON, acting by and through its City Council
By: /�Q/6A-1-lee/1 '' W
Kathy olker-Wheeler •
Mayor ,
o: e`
Atee�t: t4t( L w,Lza? •
Bonnie I.Walton,Miry Ckrlc
EXHIBIT A
TERMS OF THE BONDS
Purchase Price: Par Amount of Bonds: $10,335,000.00
Plus:Reoffering Premium: 371,747.65
Less: Underwriter's Discount: (103,350.00)
Purchase Price: $10,603,397.65*
*Plus accrued interest to the Closing Date
Dated Date: November 1,2004
Delivery Date: November 17,2004
Denominations: $5,000 each or integral multiples thereof
Form: The Bonds will be fully registered in Book-Entry only through the facilities of The
Depository Trust Company("DTC")in New York,New York.
Interest Payable: Interest on the Bonds from their dated date will be payable semi-annually on June 1 and
December 1,commencing December 1,2004,to their maturity or prior redemption.
Maturity Schedule: The Bonds mature on December 1, in each of the years and amounts set forth below,
subject to optional and mandatory redemption as hereinafter described, and will bear
interest from November 1, 2004 to their respective maturities or dates of prior
redemption,whichever occurs first,at the rates as shown below:
Interest Yield to Price Interest Yield to Price
Year Amount Rate Maturity (%of Par) Year Amount Rate Maturity (%of Par)
2013 $205,000 3.55% 3.55% 100.000 2024* $4,605,000 5.00% 4.43% 104.577
2014 235,000 3.65 3.65 100.000 2025 1,600,000 5.00 4.52 103.837
2015 250,000 3.75 3.75 100.000 2026 1,680,000 5.00 4.60 103.185
2027 1,760,000 5.00 4.67 102.618
*Term Bonds
True Interest Cost: 4.7352%
Optional Redemption: The Bonds maturing on or after December 1,2015 are subject to optional redemption
prior to maturity in whole or in part at any time beginning on December 1,2014 at par
(100%)plus accrued interest to the date of redemption.
Mandatory Term
Bond Redemption: Term Bonds maturing December 1, 2024 are subject to mandatory redemption in
accordance with the following schedule:
Date Amount Date Amount
12/1/2016 $260,000 12/1/2021 $265,000
12/1/2017 270,000 12/1/2022 280,000
12/1/2018 130,000 12/1/2023 1,450,000
12/1/2019 185,000 12/1/2024* 1,520,000
12/1/2020 245,000
*Final maturity
Bond Counsel: Gottlieb Fisher&Andrews,PLLC,Seattle,Washington
Registrar: The Bank of New York,New York,New York
Offer Expires: November 1,2004 at 11:59 PM Pacific Time
•
•
CITY OF RENTON, WASHINGTON
ORDINANCE NO. 5098
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$10,335,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2004, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital,improvements of the waterworks utility; fixing the
date, form, denominations, maturities, interest rates,terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson&Co., Seattle,Washington.
ORDINANCE NO. 5098
TABLE OF CONTENTS
Page No.
Section 1. Definitions 2
Section 2. Findings Regarding Parity Provisions 9
Section 3. Authorization arid Description of Bonds • 9
Section 4. Registration of Bonds and Book-Entry System 10
Section 5. Payment of Bonds 12
Section 6. Redemption; Open Market Purchase of Bonds 13
Section 7. Notice of Redemption 15
Section 8. Failure to Redeem Bonds 16
Section 9. Form of Bonds 16
Section 10. Execution of Bonds 16
Section 11. Authentication and Delivery of Bonds by Bond Registrar 17
Section 12. Registration, Transfer and Exchange 17
Section 13. Lost, Stolen or Destroyed Bonds 19
Section 14. Creation of Fund 20
Section 15. Deposits into Funds 20
Section 16. Flow of Funds 22
Section 17. Pledge of Revenue and Lien Position 22
Section 18. Findings Regarding Sufficiency of Revenue 23
Section 19. Covenants 24
Section 20. No Private Activity Bonds 26
Section 21. Defeasance of the Bonds 27
Section 22. Provision for Future Parity Bonds 28
Section 23. Approval of Purchase Agreement 31
i
ORDINANCE NO. 5098
Section 24. Bond Insurance 31
Section 25. Delivery of Bonds; Temporary Bonds 32
Section 26. Application of Bond Proceeds 32
Section 27. Undertaking to Provide Continuing Disclosure 33
Section 28. Preliminary Official Statement Deemed Final 37
Section 29. Bond Insurance Provisions 37
Section 30. Contract; Savings Clause 40
Section 31. Effective Date of Ordinance 41
Exhibit A Project Description
ii
ORDINANCE NO. 5098
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$10,335,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2004, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations,maturities,interest rates,terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson & Co., Seattle,Washington.
WHEREAS, the City has heretofore created and operated a waterworks utility of the
City, including the sewerage system of the City and within that system a system of storm and
surface water sewers (defined herein as the"Waterworks Utility"); and
WHEREAS, by Ordinance No. 5050,passed in December 15, 2003, the City adopted its
Capital Improvement Program; and
WHEREAS, the City Council has determined that it is necessary and in the best interests
of the City that certain improvements for the Waterworks Utility described in the Capital
Improvement Program be made and there be adopted a system or plan of additions to and
betterments and extensions of the Waterworks Utility; and
WHEREAS,pursuant to Chapter 35.92 RCW, the City is authorized to issue and sell,
without an election,revenue bonds of the City to make additions,betterments or extensions to
the Waterworks Utility; and
WHEREAS,by Section XXIII of Ordinance No. 4709, the City also provided that it may
issue additional water and sewer revenue bonds which will constitute a charge and lien upon the
revenue of the Waterworks Utility of the City on a parity with the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein; and
1
ORDINANCE NO. 5098
WHEREAS,by Ordinance,No. 4976, the City issued the 2002 Bonds on a parity of lien
with the 1998 Bonds; and
WHEREAS,by Ordinance No. 5019, as amended by Ordinance No. 5020, the City issued
the 2003 Bonds on a parity of lien with the 1998 Bonds and the 2002 Bonds; and
WHEREAS, the City Council has determined that it is in the best interests of the City to
issue and sell$10,335,000 of Water and Sewer Revenue Bonds, 2004 on a parity of lien with the
outstanding Parity Bonds to provide part of the funds necessary to carry out the system or plan
for additions to and betterments and extensions of the Waterworks Utility, to make a deposit into
the Reserve Fund and to pay the costs of issuance and sale of the Bonds; and
WHEREAS,MBIA Insurance Corporation has made a commitment to issue an insurance
policy insuring the payment when due of the principal of and interest on the Bonds as provided
therein, and the City Council deems that the purchase of such policy is in the best interest of the
City; and
WHEREAS, D.A. Davidson &Co., Seattle, Washington,has offered to purchase the
Bonds under the terms and conditions hereinafter set forth;NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON,DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance,the following words shall have the
following meanings:
"Alternate Security" shall mean any bond insurance, collateral, security, letter of credit,
guaranty, surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds, issued by an institution
2
ORDINANCE NO. 5098
that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by
such Alternate Security equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service"for any year shall mean all the interest on plus all principal
(except principal of Term Bonds due in any Term Bond Maturity Year) of Parity Bonds,plus all
mandatory redemption and sinking fund installments, less all bond interest payable from the
proceeds of any such bonds, which will mature or come due in that year.
"Beneficial Owner"shall mean,with respect to any Bond, the Person named on the
records of the Custodian as having the right,without a physical certificate evidencing such right,
to transfer,to hypothecate and to receive the payment of the principal of,premium, if any, and
interest on such Bond as the same becomes due and payable.
"Bond Fund" shall mean that special fund of the City known as the 2004 Waterworks
Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on
the Bonds.
"Bond Insurer" shall mean MBIA Insurance Corporation.
"Bond Insurance Policy" shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register"shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar" shall mean the fiscal agencies of the State in Seattle,Washington, and
New York,New York, as the same shall be designated from time to time.
3
ORDINANCE NO. 5098
"Bonds" shall mean the $10,335,000 City of Renton, Washington Water and Sewer
Revenue Bonds, 2004, authorized to be issued by this ordinance.
"Book-Entry Termination Date" shall mean the fifth business day following the date of
receipt by the Bond Registrar of the City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City" shall mean the City;of Renton, Washington, a duly organized and legally existing
noncharter code city under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services
Administrator or the successor to such officer.
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules
and regulations promulgated thereunder.
"Coverage Requirement" shall mean in any calendar year 1.25 times the Maximum
Annual Debt Service.
"Custodian"shall mean(a)The Depository Trust Company,New York,New York, or
(b) any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means, the beneficial ownership of the Bonds, in which system no
physical certificates are issued to the Beneficial Owners of the Bonds,but in which a limited
number of physical certificates are issued to and registered in the name of the Custodian or its
nominee, and delivered to the Custodian;provided, that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
4
ORDINANCE NO. 5098
which are operated by parties other than the Custodian and the use of a nominee for the
Custodian; and the term"Custodian,"as used herein, includes any party operating any such
subsystem.
"Future Parity Bonds"shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a
parity with the lien and charge on Net Revenue for the payment of the principal of and interest
on the Bonds.
"Gross Revenue" shall mean Revenue of the Waterworks Utility.
"Letter of Representations" shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15, 1997,pertaining to the
payment of the Bonds and the"book-entry" system for evidencing the beneficial ownership of
the Bonds prior to the Book-Entry Termination Date(as it maybe amended from time to time).
"Maintenance and Operation Expense" shall mean all reasonable expenses incurred by
the City in causing the Waterworks Utility to be operated and maintained in good repair,working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract for
such service, and including pro-rata budget charges for the City's administration expenses where
those represent a reasonable distribution and share of actual costs,but not including any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks Utility.
5
ORDINANCE NO. 5098
"Maximum Annual Debt Service" shall mean, at the time of calculation, the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future calendar year on the outstanding Parity Bonds.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Net Revenue" shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date" shall mean the date in which all the 1998 Bonds, 2002 Bonds and
the 2003 Bonds are fully redeemed,refunded or defeased.
"1998 Bonds" shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"NRMSIR" shall mean a nationally recognized municipal securities information
repository designated by the SEC.1
"Owner"shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds"shall mean the 1998 Bonds, the 2002 Bonds, the 2003 Bonds, the Bonds
and any Future Parity Bonds.
"Parity Bond Fund"shall mean any fund created for the payment and redemption of
Parity Bonds.
"Professional Utility Consultant" shall mean an independent licensed professional
engineer, certified public accountant or other independent person or firm selected by the City
having a favorable reputation for skill and experience with municipal utilities of comparable size
and character to the Waterworks Utility in such areas as are relevant to the purposes for which
such consultant is retained.
6
ORDINANCE NO. 5098
"Project" shall mean the following project to be financed, in whole or in part, with
proceeds of the Bonds: (1) undertaking the additions,betterments or extensions to the
Waterworks Utility described in the Capital Improvement Program, including,but not limited to,
the capital improvements described in Exhibit A to this ordinance, (2)making a deposit to the
Reserve Fund, and (3)paying the incidental costs and costs of issuing the Bonds.
"Project Fund"shall mean the Waterworks Utility Construction Fund.
"Purchase Agreement" shall mean the Bond Purchase Agreement for the Bonds, dated
November 1, 2004,by and between the City and the Purchaser.
"Purchaser"shall mean D.A. Davidson &Co., Seattle, Washington.
"Rate Stabilization Fund" shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Reserve Fund"shall mean that special fund of the City known as the Waterworks
Revenue Bond Reserve Fund created by Ordinance No. 4709 for purpose of securing the
payment of the principal of and interest on all bonds to which Net Revenue is pledged.
"Reserve Insurance"shall mean,in lieu of cash and investments, insurance obtained by
the City equal to part or all of the Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained, issued by an institution that has been assigned a credit
rating equal to or better than the highest then-existing rating for any of the Parity Bonds.
"Reserve Requirement" shall mean the Maximum Annual Debt Service.
"Revenue of the Waterworks Utility"shall mean all of the earnings and revenues
received by the City from the maintenance and operation of the Waterworks Utility and all
earnings from the investment of money in the Reserve Fund or any Parity Bond Fund, and
7
ORDINANCE NO. 5098
connection and capital improvement charges collected for the purpose of defraying the cost of
capital facilities of the Waterworks Utility, except government grants,proceeds from the sale of
Waterworks Utility property(other than timber), City taxes collected by or through the
Waterworks Utility,principal proceeds of bonds and earnings or proceeds from any investments
in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility obligations
(until commingled with other earnings and revenues of the Waterworks Utility) or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code.
"Rule" shall mean SEC Rule 15c2-12.
"SEC" shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
"State" shall mean the State of Washington.
"Term Bonds"shall mean any Parity Bonds identified as such in the ordinance
authorizing the issuance thereof,the payment of which is provided for by a requirement for
mandatory deposits of money into the principal and interest account of the bond redemption fund
created for the payment of such issue of bonds in accordance with a mandatory sinking fund
requirement.
"Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are
scheduled to mature.
"2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds, 2002.
"2003 Bonds" shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
2003.
8
ORDINANCE NO. 5098
"Waterworks Utility" shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to, improved and
extended for as long as any of the Parity Bonds are outstanding.
"Waterworks Utility Fund"shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility) shall be deposited.
Section 2. Findings Regarding Parity Provisions. The City Council finds that there is no
deficiency in any Parity Bond Fund, that provisions hereinafter meet the conditions for the
issuance of Future Parity Bonds as set forth in Ordinance Nos. 4709,4976 and 5019 and that
there will be on file prior to the issuance and delivery of the Bonds a certificate of the City
Finance Director that satisfies the conditions for such certificate as set forth in Ordinance Nos.
4709, 4976 and 5019. Therefore, the Bonds shall be issued on a parity of lien with the Parity
•
Bonds.
Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
the funds necessary to carry out the Project, the City shall issue the Bonds in the aggregate
principal amount of$10,335,000. The Bonds shall be designated"City of Renton, Washington
•
Water and Sewer Revenue Bonds, 2004;" shall be dated November 1, 2004; shall be in the
denomination of$5,000 or any integral multiple thereof within a single maturity; shall be
numbered separately, in the manner and with any additional designation as the Bond Registrar
deems necessary for purpose of identification; shall bear interest(computed on the basis of a
360-day year of twelve 30-day months),payable semiannually on each June 1 and December 1,
commencing December 1, 2004,to the maturity or prior redemption of the Bonds; and shall
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ORDINANCE NO. 5098
mature on December 1 in the years and amounts and bear interest at the rates per annum as
follows:
Maturity Years Interest
(December 1) Amounts Rates
2013 $205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024* 4,605,000 5.00
2025 1,600,000 5.00
2026 1,680,000 5.00
2027 1,760,000 5.00
*Term Bonds
If any Bond is duly presented for payment upon maturity and is not paid, then interest thereon
shall continue to accrue thereafter,at the rate stated therein until such Bond is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105.
Section 4. Registration of Bonds and Book-Entry System. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register. The
Bond Register shall contain the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate, which certificate shall be registered in the name of the
Custodian or its nominee, and delivered to the Custodian. The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit of the Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either(1)the date of maturity of the
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ORDINANCE NO. 5098
Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date, and the cancellation thereof; (2)the Book-Entry Termination Date; or(3)the date the
City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name of the Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4, the
rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry
made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations, and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nominee.
The City may terminate the"book-entry" system of registering ownership of the Bonds at
any time (provided the City is not then in default of any payment then due on the outstanding
Bonds)by delivering to the Bond Registrar: (a) a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry
Termination Date; (b) a list identifying the Beneficial Owners as to both name and address; and
(c) a supply of Bond certificates, if necessary for such purpose. Upon surrender to the Bond
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds,the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
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ORDINANCE NO. 5098
Owner's duly appointed agent,naming such Beneficial Owner or such Beneficial Owner's
nominee as the Owner thereof. Such certificates may be in any integral multiple of$5,000
within a single maturity. Following such issuance, the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 12 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error, omission, action
or failure to act on the part of the Custodian with respect to payment,when due, to the Beneficial
Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of
Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any
other matter pertaining to the Bonds.
Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Prior to the Book-Entry Termination
Date, the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations.
From and after the Book-Entry Termination Date, interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date, to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register, or, if requested in writing by an Owner of$100,000
or more in principal amount of Bonds at least ten days before an interest payment date,by wire
transfer on the interest payment date to an account within the United States. From and after the
Book-Entry Termination Date,principal of the Bonds shall be payable upon presentation and
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ORDINANCE NO. 5098
surrender of the Bonds by the Owners at the principal corporate trust office of the Bond
Registrar.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
be a valid claim of the Owners thereof only as against the Bond Fund, Reserve Fund and the
amount of Net Revenue pledged to those funds and shall not be general obligations of the City.
Section 6. Redemption; Open Market Purchase of Bonds. The Bonds maturing on
December 1, 2024 are term bonds (the"Term Bonds") and, if not previously purchased by the
City in the open market or optionally redeemed as set forth below, are subject to mandatory
sinking fund redemption prior to maturity, in part and by lot(in such manner as the Registrar
shall determine), at par plus accrued interest to the redemption date on December 1 in the
following years and in the following mandatory sinking fund redemption amounts:
Term Bonds Due
December 1, 2024
Mandatory Sinking Fund
Redemption Dates Redemption
(December 1) Amount
2016 $ 260,000
2017 270,000
2018 130,000
2019 185,000
2020 245,000
2021 265,000
2022 280,000
2023 1,450,000
2024* 1,520,000
*Scheduled maturity
The Bonds maturing on December 1 in the years 2013 and 2014, inclusive, shall not be
subject to redemption prior to maturity. The Bonds maturing on or after December 1, 2015 shall
be subject to optional redemption prior to maturity beginning on December 1, 2014, in whole or
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ORDINANCE NO. 5098
in part at any time (maturities to be selected by the City and by lot within a maturity in such
manner as the Bond Registrar shall determine), at par plus accrued interest to the date of
redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the
open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their
actual redemption or purchase prices) shall be credited against one or more scheduled mandatory
redemption amounts for such Term Bonds (as allocated by the City)beginning not earlier than
60 days after the date of the optional redemption or purchase, and the City shall promptly notify
the Registrar in writing of the manner in which the credit for the Tenn Bonds so redeemed or
purchased has been allocated.
Any Bond in the principal amount of greater than$5,000 may be partially redeemed in
any integral multiple of$5,000. Prior to the Book-Entry Termination Date,the Bonds shall be
partially redeemed in accordance with the Letter of Representations. From and after the Book-
Entry Termination Date, in the event of a partial redemption of a Bond, upon surrender of such
Bond at the principal corporate trust office of the Bond Registrar, a new Bond or Bonds (at the
option of the Owner) of the same maturity and interest rate and in the aggregate principal amount
remaining unredeemed shall be authenticated and delivered to the Owner, without charge to the
Owner therefor, in any denomination authorized by this ordinance and selected by the Owner.
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased under this Section shall be canceled.
Section 7. Notice of Redemption. Prior to the Book-Entry Termination Date, the Bond
Registrar shall give, or cause to be given,notice of a call for redemption of any Bonds to the
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•
ORDINANCE NO. 5098
Custodian, as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations. From and after the Book-Entry Termination Date, notice of
any such intended redemption shall be given by or on behalf of the City not less than 30 nor
more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid, to
the Owner of any Bond to be redeemed at the address appearing on the Bond Register on the day
notice is mailed, and the requirements of this sentence shall be deemed to have been fulfilled
when notice has been mailed as so provided,whether or not it is actually received by the Owner
of any Bond. If such notice to the Owners shall have been given and the City shall have set
aside, on the date fixed for redemption, sufficient money for the payment of all Bonds called for
redemption, the Bonds so called shall cease to accrue interest after such redemption date, and all
such Bonds shall be deemed not to be outstanding under this ordinance for any purposes, except
that the Owners thereof shall be entitled to receive payment of the redemption price and accrued
interest to the redemption date from the money set aside for such purpose. In addition, the
redemption notice shall be mailed within the same period,postage prepaid,to Standard &Poor's
Ratings Services and Fitch IBCA at their offices in New York,New York, or their successors,to
the Purchaser at its principal office in Seattle, Washington, or its successor, to each NRMSIR
and to the Bond Insurer or their respective successors, and to such other persons and with such
additional information as the City Finance Director shall determine,but these additional mailings
shall not be a condition precedent to the redemption of Bonds.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or redemption date,the City shall be obligated to pay interest on such
Bond at the same rate provided in the Bond from and after its maturity or redemption date until
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ORDINANCE NO. 5098
such Bond,both principal and interest, is paid in full or until sufficient money for its payment in
full is on deposit in the Bond Fund, and the Bond has been called for redemption by giving
notice of that redemption to the Owner of each of such unpaid Bonds.
Section 9. Form of Bonds., The Bonds shall be typewritten,word processed,printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 10. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures'of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be'such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed;and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 11. Authentication and Delivery of Bonds by Bond Registrar. The Bond
Registrar is authorized and directed, on behalf of the City, to authenticate and deliver Bonds
initially issued or transferred or exchanged in accordance with the provisions of such Bonds and
this ordinance.
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ORDINANCE NO. 5098
Only such Bonds as shall bear thereon a"Certificate of Authentication"manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 12. Registration, Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept, at its principal corporate trust office,the Bond Register. The Bond Registrar is
authorized, on behalf of the City,to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 3755 establishing a system of registration for the City's bonds
and obligations.
The City and the Bond Registrar, in its discretion, may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar
shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as
described in Section 5 hereof,but such registration may be transferred as herein provided. All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
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ORDINANCE NO. 5098
The registered ownership of the Bonds may be transferred. Prior to the Book-Entry
Termination Date, the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian. On and after the Book-Entry Termination Date,
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar,with the assignment form appearing on such Bond duly executed by, or
accompanied by a written instrument of transfer in form satisfactory to such Bond Registrar duly
executed by,the Owner or such Owner's duly authorized agent, in a manner satisfactory to such
Bond Registrar. Upon such surrender,the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver, without charge to the Owner or transferee therefor(other than any
governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the
option of the new Owner),naming as Owner the person or persons listed as the assignee on the
assignment form appearing on the surrendered Bond, of the same maturity and interest rate, for
the same aggregate principal amount, and in any authorized denomination selected by the new
Owners, in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged,without charge, for an
equal aggregate principal amount of Bonds of the same maturity and interest rate, in any
authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
have if it were not the Bond Registrar and, to the extent permitted by law,may act as depository
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ORDINANCE NO. 5098
for and permit any of its officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of the Owners of the Bonds.
The City covenants that, until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 13. Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor, all in accordance
with applicable law. If such mutilated, lost, stolen or destroyed Bond has matured, the City may,
at its option,pay the same without the surrender thereof. However,no such substitution or
payment shall be made unless and until the applicant shall furnish(a) evidence satisfactory to the
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof, and
(b) such additional security, indemnity or evidence as may be required by or on behalf of the
City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
Bond Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder.
Section 14. Creation of Fund. There is hereby created in the City Treasury the 2004
Waterworks Revenue Bond Fund(the"Bond Fund"),which shall be a subaccount of the
Waterworks Utility Fund.
Section 15. Deposits into Funds. So long as Bonds are outstanding against the Bond
Fund, the City shall:
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ORDINANCE NO. 5098
(a) Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion,namely, one day before each interest or principal
and interest payment date, an amount which, together with other money then on deposit
therein, shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits, any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund may be accumulated from any other money which the City may have
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein, the Reserve Fund shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds, no further payment need be made into the Bond Fund. Notwithstanding
the first sentence of this paragraph, the Reserve Requirement may be decreased for any issue of
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been
depleted, then by draws on the Alternate Security or Reserve Insurance for that purpose. Any
deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up
from Net Revenue first available after making necessary provisions for the required payments
into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity
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ORDINANCE NO. 5098
Bonds or may be deposited in any other fund and spent for any other lawful Waterworks Utility
purpose.
The City may provide for the purchase,redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity
Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of.the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall be
deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated
therein, after which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, any earnings which are subject to a federal tax or rebate requirement
may be withdrawn from the Bond Fund or the Reserve Fund for deposit into a separate fund or
account for that purpose.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above, the Owner of any of the outstanding Bonds may bring an action against the City
to compel that setting aside and payment.
Section 16. Flow of Funds. Funds in the Waterworks Utility Fund (other than in any
bond redemption or federal rebate account) shall be used in the following order of priority:
(a) To pay Maintenance and Operation Expense;
(b) To pay the interest on the Parity Bonds;
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ORDINANCE NO. 5098
(c) To pay the principal of the Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds; '
(e) To make all payments required to be made into the Reserve Fund;
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City,to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility;to make deposits into the Rate Stabilization Fund, or for any
other lawful City purpose.
Section 17. Pledge of Revenue and Lien Position. The Net Revenue is pledged to the
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
Section 18. Findings Regarding Sufficiency of Revenue. In the judgment of the City
Council, Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility, at the rates to be charged for water, sanitary sewage disposal service and
storm and surface water drainage service in the entire utility,will be more than sufficient to meet
all Maintenance and Operation Expense(and cost of maintenance and operation of the
Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve
Fund, out of the revenue of the entire utility, of amounts sufficient to pay the interest on the
Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity. The
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ORDINANCE NO. 5098
City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid
into the Bond Fund and the Reserve Fund, as aforesaid, it has exercised due regard for the
Maintenance and Operation Expense (and costs of maintenance and operation as used in RCW
35.92.100) and the debt service requirements of the currently outstanding Parity Bonds, and the
City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve
Fund, a greater amount or proportion of the revenue of that utility than in the judgment of the
City Council will be available over and above Maintenance and Operation Expense (and such
costs of maintenance and operation of the Waterworks Utility as that term is used in RCW
35.92.100) and debt service requirements of the currently outstanding Parity Bonds and that no
portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness
other than the payment of the currently outstanding Parity Bonds.
Section 19. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a) It will establish,maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,
and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A)pay all
Maintenance and Operation Expense on a current basis, (B)pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and(C)pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b) It will at all times maintain and keep the Waterworks Utility in good
repair,working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
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ORDINANCE NO. 5098
(c) It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell, lease,mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility(other than timber), including all additions and
improvements thereto and extensions thereof at any time made, that are used,useful or
material in the operation of the Waterworks Utility, unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(defined as the total amount of those bonds
less the amount of cash and investments in.the Reserve Fund and any Parity Bond
Funds) that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
period;
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(as defined above) that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(as defined above) that the depreciated cost
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding any other provision of this subsection, (1) the City in its
discretion may sell or otherwise dispose of any of the works,plant,properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary, material to or useful to the
operation of the Waterworks Utility, without making any deposit into the Bond Fund, and
(2)the City may transfer the Waterworks Utility to another municipal corporation so long
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose. In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d) It will keep proper books,records and accounts with respect to the
operations, income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition of the Waterworks
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ORDINANCE NO. 5098
Utility as of the close of the previous year, and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance, the status of all funds and
accounts as of the end of such year, and the amounts expended for maintenance,
renewals,replacements and capital additions to the Waterworks Utility. Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e) Except to aid the poor or infirm, to provide for resource conservation or to
provide for the proper handling of hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation,
public or private, other than the City, so long as any Parity Bonds are outstanding. On at
least an annual basis, it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent.
(f) It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance,with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment,works,plants, facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable judgment of the City,to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the outstanding Parity Bonds, and otherwise meet the obligations of the
City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
cause interest on the Bonds to be included in gross income for federal income tax
purposes. It will,to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds,take all action necessary to comply(or to be treated as
having complied)with those requirements in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative
to calculating rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
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ORDINANCE NO. 5098
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 20. No Private Activity Bonds. The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a"private activity bond" (as defined in Section
141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described
in Section 103(a) of the Code, unless the tax exemption thereof is not affected.
Section 21. Defeasance of,the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire,refund or defease all such then-outstanding Bonds (hereinafter collectively
called the"defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money,if necessary) sufficient to redeem and retire,refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"), then all right and interest of the Owners of the
defeased Bonds in the covenants of this ordinance, in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
26
ORDINANCE NO. 5098
account and, if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from
Gross Revenue without any priority of lien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account,the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights, if any, of the
owners of any other Parity Bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or direct obligations of the United States of America or other legal
investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations of the Untied States of America or other legal
investments are pledged irrevocably for the prior redemption of the defeased Bonds included in
that refunding plan, then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds,the payment of which is not so secured by the refunding plan, shall be
included in the computation of coverage for determining compliance with the rate covenants.
Section 22. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the following conditions are met and complied with at the time of
issuance of those additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
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ORDINANCE NO. 5098
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of(1) an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or(2)Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds. For federal income tax purposes,
at the discretion of the City,to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds,the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments. After the New Covenant Date, this subsection
shall be amended to read as follows: (c) The ordinance providing for the issuance of
such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the
proceeds of those Future Parity Bonds of(1) an amount equal to the increase in the
Reserve Requirement attributable to those Parity Bonds or(2)Reserve Insurance or
Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the
increase in the Reserve Requirement attributable to those Future Parity Bonds. At the
discretion of the City, the City may provide for deposit into the Reserve Fund of other
legally available money from Net Revenue or Reserve Insurance or Alternate Security
either on or prior to the date of issuance of such Future Parity Bonds or within three years
from the date of issuance of the Future Parity Bonds in three approximately equal annual
payments and in such event, the ordinance providing for the issuance of such Future
Parity Bonds shall provide for such deposit.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue,without regard to deposits into or withdrawals from the
Rate Stabilization Fund, is equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months, without
regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be
equal to the Coverage Requirement for each year thereafter. The certificate, in
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ORDINANCE NO. 5098
estimating Net Revenue available for debt services,may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility
who have become customers during the 12 consecutive month period or
thereafter adjusted to reflect one year's Net Revenue from those
customers;
(C) Income from any customers to be connected to the
Waterworks Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers anticipated to connect for whom
building permits have been issued;
(E) Income received or to be received which is derived from
any person, firm corporation or municipal corporation under any executed
contract for water, sewage disposal or other utility service,which revenue
was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers with existing homes or buildings
which will be required to connect to any additions to and improvements
and extensions of the Waterworks Utility constructed and to be paid for
out of the proceeds of the sale of the additional Future Parity Bonds or
other additions to and improvements and extensions of the Waterworks
Utility when such additions, improvements and extensions are not
completed; and
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and
interest in each year for the refunding bonds is not increased more than$5,000 over the
amount for that same year required for the bonds or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
29
, ORDINANCE NO. 5098
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Bonds or Future Parity Bonds then outstanding,money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 23. Approval of Purchase Agreement. The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds. The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase Agreement on behalf of the City by City officials, and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal'opinion of Gottlieb,Fisher&Andrews,PLLC,bond counsel,
Seattle,Washington,relative to the issuance of the Bonds, attached to each Bond. Bond counsel
has not been engaged to review or'express any opinion concerning the completeness or accuracy
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring, the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 24. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
30
•
ORDINANCE NO. 5098
Bonds and agrees to the conditions for obtaining that policy, including the payment of the
premium therefor. The City Council authorizes and directs the execution of the commitment for
the Bond Insurance Policy on behalf of the City by City officials, including,but not limited to
the City Finance Director,and delivery of the same to the Bond Insurer.
Section 25. Delivery of Bonds; Temporary Bonds. The proper City officials, including,
but not limited to, the City Finance Director, are authorized and directed (a) to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including,but not limited to,the final official statement pertaining to the Bonds; and(b)to do
everything necessary for(1)the preparation and delivery of a transcript of proceedings
pertaining to the Bonds, and (2)the preparation, execution and delivery of definitive Bonds to
the Purchaser, each without unreasonable delay.
If definitive Bonds are not ready for delivery by the date of Closing agreed to by the City
and the Purchaser,the City,upon the approval of the Purchaser,may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes
and additions. Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment,security and obligation thereof as
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
Section 26. Application of Bond Proceeds. The accrued interest, if any, received by the
City at Closing shall be deposited into the Bond Fund and shall be applied to the payment of
interest first coming due on the Bonds.
31
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ORDINANCE NO. 5098
The remaining proceeds of the sale of the Bonds, less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City,plus the original issue
premium, shall be applied,upon receipt, as follows: an amount equal to the increase in the
Reserve Requirement attributable to the issuance of the Bonds shall be deposited into the
Reserve Fund, and the remainder shall be deposited into the Project Fund to pay part of the costs
of the Project.
Except as provided by the Code and Section 19(h) of this ordinance,the interest and
profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and
applied as described in the preceding paragraph.
Except as provided by the Code and Section 19(h) of this ordinance, if any money
allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the
Project or after termination of the Project by the City, such money shall be transferred to the
Bond Fund and applied to the payment of the principal of and interest on the Bonds.
Pending application as described in this Section 26 and subject to the requirements of the
Code and Section 19(h) of this ordinance,money allocable to the Bond proceeds in the Project
Fund may be temporarily deposited in such institutions or invested in such investments as may
be lawful for the investment of City funds.
Section 27. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection(b)(5)(i) of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID, if one is created,the following annual financial information and operating data
32
ORDINANCE NO. 5098
(collectively,the"Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31, 2004, on or before the last day of the seventh month
following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units, as such principles may be changed from
time to time and as permitted by State law; which statements will not be audited, except that if
and when audited financial statements are otherwise prepared and available to the City, they will
be provided(the "Annual Financial Statements");
(b) A statement of authorized, issued and outstanding bonded debt secured by the Net
Revenue;
(c) Debt service coverage ratios;
(d) General customer statistics for the Waterworks Utility; and
(e) A narrative explanation of the reasons for any amendments to this Section 27
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data, the City may cross-
reference to any"final official statement"(as defined in the Rule) available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information, then when and if available,
the City shall provide its Annual Financial Statements,which shall have been audited by such
33
ORDINANCE NO. 5098
auditor as shall be then required or permitted by the State law,to each then existing NRMSIR
and to the SID, if one is created.
The City further agrees to provide or cause to be provided, in a timely manner, to the
SID, if one is created, and to either the MSRB or each then existing NRMSIR,notice of any of
the following events with respect to the Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of the Owners of the Bonds;
8. Optional redemptions of the Bonds;
9. Defeasances of the Bonds;
10. Release, substitution or sale of property securing repayment of the Bonds; and
11. Rating changes.
The City also agrees to provide or cause to be provided,in a timely manner, to the SID, if
one is created, and to either the MSRB or each then existing NRMSIR,notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds, so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby, as determined by a party
34
ORDINANCE NO. 5098
unaffiliated with the City(including, without limitation, a trustee for the Owners,nationally
recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to
a favorable"no-action letter"issued by the SEC, this Section 27 may only be amended in
connection with any change in legal requirements, change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted, and only in such a manner
that the undertaking of the City, as so amended,would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance,prior redemption or payment in
full of all of the then outstanding Bonds. This Section 27 or any provision hereof, shall be null
and void if the City(i) obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 27 or any such provision are invalid,have been repealed retroactively or otherwise
do not apply to the Bonds; and (ii)notifies and provides the SID, if any, and either the MSRB or
each then existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 27 shall be limited to the right to obtain specific enforcement of the City's obligations
under this Section 27, and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
•
35
ORDINANCE NO. 5098
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary, appropriate or convenient to carry out the requirements of this
Section 27.
Section 28. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated October 22, 2004 (the
"Preliminary Official Statement"),prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with paragraph(b)(1) of the Rule,the City
"deems final"that Preliminary Official Statement as of its date, except for the omission of
information as to offering prices, interest rates, selling compensation, aggregate principal
amount,principal amount per maturity, maturity dates, options of redemption, delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 29. Bond Insurance Provisions. The City Council finds that it is in the City's best
interest to purchase, and that a savings will result from purchasing,the Bond Insurance Policy for
the Bonds. The City shall purchase from the Bond Insurer the Bond Insurance Policy insuring the
prompt payment of the principal of and interest on the Bonds and agrees to the conditions for
obtaining that policy,including the payment of the premium therefor and the following provisions
entitled"Payments under the Policy"required by the Bond Insurer to be included in this ordinance:
"A. In the event that,on the second Business Day, and again on the
Business Day,prior to the payment date on the Bonds,the Paying Agent [the Bond
Registrar] has not received sufficient moneys to pay all principal of and interest on
the Bonds due on the second following or following, as the case may be,Business
Day,the Paying Agent shall immediately notify the Bond Insurer or its designee on
the same Business Day by telephone or telegraph, confirmed in writing by registered
or certified mail, of the amount of the deficiency.
"B. If the deficiency is made up in whole or in part prior to or on the
payment date,the Paying Agent shall so notify the Bond Insurer or its designee.
36
ORDINANCE NO. 5098
"C. In addition,if the Paying Agent has notice that any Bondholder has
been required to disgorge payments of principal or interest on the Bonds to a trustee
in bankruptcy or creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such
Bondholder within the meaning of any applicable bankruptcy laws,then the Paying
Agent shall notify the Bond Insurer or its designee of such fact by telephone or
telegraphic notice, confirmed in writing by registered or certified mail.
"D. The Paying Agent is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact,for Holders of the Bonds as
follows:
"1. If and to the extent there is a deficiency in amounts required
to pay interest on the Bonds,the Paying Agent shall(a) execute and deliver
to U.S.Bank Trust National Association, or its successors under the Bond
Insurance Policy(the"Insurance Paying Agent"),in form satisfactory to the
Insurance Paying Agent, an instrument appointing the Bond Insurer as agent
for such Holders in any legal proceeding related to the payment of such
interest and an assignment to the Bond Insurer of the claims for interest to
which such deficiency relates and which are paid by the Bond Insurer, (b)
receive as designee of the respective Holders(and not as Paying Agent)in
accordance with the tenor of the Bond Insurance Policy payment from the
Insurance Paying Agent with respect to the claims for interest so assigned,
and(c)disburse the same to such respective Holders; and
"2. If and to the extent of a deficiency in amounts required to pay
principal of the Bonds,the Paying Agent shall(a) execute and deliver to the
Insurance Paying Agent in form satisfactory to the Insurance Paying Agent
an instrument appointing the Bond Insurer as agent for such Holder in any
legal proceeding relating to the payment of such principal and an assignment
to the Bond Insurer of any of the Bonds surrendered to the Insurance Paying
Agent of so much of the principal amount thereof as has not previously been
paid or for which moneys are not held by the Paying Agent and available for
such payment(but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received), (b)receive as designee of the
respective Holders(and not as Paying Agent)in accordance with the tenor of
• the Bond Insurance Policy payment therefor from the Insurance Paying
Agent, and(c) disburse the same to such Holders.
"E. Payments with respect to claims for interest on and principal of
Bonds disbursed by the Paying Agent from proceeds of the Bond Insurance Policy
shall not be considered to discharge the obligation of the City with respect to such
Bonds,and the Bond Insurer shall become the owner of such unpaid Bonds and
37
ORDINANCE NO. 5098 °
claims for the interest in accordance with the tenor of the assignment made to it
under the provisions of this subsection or otherwise.
"F. Irrespective of whether any such assignment is executed and
delivered,the City and the Paying Agent hereby agree for the benefit of the Bond
Insurer that:
"1. They recognize that to the extent the Bond Insurer makes
payments, directly or indirectly(as by paying through the Paying Agent), on
account of principal of or interest on the Bonds,the Bond Insurer will be
subrogated to the rights of such Holders to receive the amount of such
principal and interest from the City,with interest thereon as provided and
solely from the sources stated in this ordinance and the Bonds; and
"2. They will accordingly pay to the Bond Insurer the amount of
such principal and interest(including principal and interest recovered under
subparagraph(ii)of the first paragraph of the Bond Insurance Policy,which
principal and interest shall be deemed past due and not to have been paid),
with interest thereon as provided in this ordinance and the Bonds,but only
from the sources and in the manner provided herein for the payment of
principal of and interest on the Bonds to Holders, and will otherwise treat the
Bond Insurer as the:owner of such rights to the amount of such principal and
interest.
"G. In connection with the issuance of additional Bonds,the City shall
deliver to the Bond Insurer a copy of the disclosure document,if any, circulated with
respect to such additional Bonds.
"H. Copies of any amendments made to the documents executed in
connection with the issuance of the Bonds which are consented to by the Bond
Insurer shall be sent to Standard&Poor's Corporation.
"I. The Bond Insurer shall receive notice of the resignation or removal
of the Paying Agent and the appointment of a successor thereto.
"J. The Bond Insurer shall receive copies of all notices required to be
delivered to Bondholders and, on an annual basis,copies of the City's audited
financial statements and Annual Budget.
"Notices: Any notice that is required to be given to a holder of the
Bonds or to the Paying Agent pursuant to this ordinance shall also be provided to the
Bond Insurer. All notices required to be given to the Bond Insurer under this
ordinance shall be in writing and shall be sent by registered or certified mail
38
ORDINANCE NO. 5098
addressed to MBIA Insurance Corporation, 113 King Street,Armonk,New York
10504 Attention: Surveillance."
"K. The City agrees to reimburse the Bond Insurer immediately and
unconditionally upon demand, to the extent permitted by law, for all reasonable
expenses, including attorneys' fees and expenses,incurred by the Bond Insurer in
connection with(i) the enforcement by the Bond Insurer of the City's obligations,
or the preservation or defense of any rights of the Bond Insurer, under this
ordinance and any other document executed in connection with the issuance of the
Bonds, and(ii) any consent, amendment,waiver or other action with respect to
this ordinance or any related document, whether or not granted or approved,
together with interest on all such expenses from and including the date incurred to
the date of payment at Citibank's Prime Rate plus 3% or the maximum interest
rate permitted by law, whichever is less. In addition, the Bond Insurer reserves
the right to charge a fee in connection with its review of any such consent,
amendment or waiver, whether or not granted or approved.
"L. The City agrees not to use MBIA's name in any public document
including,without limitation, a press release or presentation, announcement or
forum without MBIA's prior consent. In the event that the City is advised by
counsel that it has a legal obligation to disclose MBIA's name in any press
release,public announcement or other public document, the City shall provide
MBIA with at least three(3)business days'prior written notice of its intent to use
MBIA's name together with a copy of the proposed use of MBIA's name and of
any description of a transaction with MBIA and shall obtain MBIA's prior consent
as to the form and substance of the proposed use of MBIA's name and any such
description.
"M. The City shall not enter into any agreement nor shall it consent to
or participate in any arrangement pursuant to which Bonds are tendered or
purchased for any purpose other than the redemption and cancellation or legal
defeasance of such Bonds without the prior written consent of MBIA."
Section 30. Contract; Savings Clause. The covenants contained in this ordinance and in
the Bonds shall constitute a contract between the City and the Owner of each and every Bond. If
any one or more of the covenants or agreements provided in this ordinance to be performed on
the part of the City shall be declared by any court of competent jurisdiction and after final appeal
(if any appeal be taken) to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
39
ORDINANCE NO. 5098
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
Section 31. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this 1st day of November,2004.
Bonnie Walton, City Clerk
•
APPROVED BY THE MAYOR this 1st day of November,2004.
- /Cti41'1 /6,4-C,64 01Afa.
Kathy Keol er-Wheeler,Mayor
Approved as to Form: w`.`? :•.
' ' ter
Bond Counsel Y Cr)
Date of Publication: 11 5 o4(Summary) ..�ucc+a �4P
40
ORDINANCE NO. 5098
EXHIBIT A
Project Description
The bond proceeds will be primarily dedicated to the following three Capital Improvement
Projects:
• Maplewood Water Quality Improvement: This project consists of improving a new water
filtration facility at the Maplewood booster pump station. Approximately$5 million of
the bond proceeds will be dedicated to this $12 million project.
• Sunset Interceptor Phase II: The City is installing 7,000 linear feel of 18—24 inch sewer
main from NE Sunset Blvd south in the same street. This is to meet growth needs in the
eastern area of the City. Approximately$2 million of the bond proceeds will be
dedicated to this project.
• SW 7th Street Storm System: This project includes installing approximately 3,500 linear
feel of 24 inch storm pipe to replace the existing storm system to meet the significant
water drainage issues in the area. The total project has a bid of$3 million. The same
amount of the proceeds will be dedicated to this project.
41
130mi 1.u•
, ,
RECEIVED.
CITY OF RENTON OCT 2 9 2004
NELL
Finance & Information Services Department RENTONOMMOUNCIL
MEMORANDUM
CITY OF RENTON
Date: October 27,;2004
NOV 0 1 2004
RCVED
CITY CLERK S OFFICE
To: Randy Corman,Chair
Members of the Finance Committee
Via: Kathy Keolker-Wheeler,MayorN
From: Victoria Runkle,Finance&Information Services Administrator ,;
Staff Contact: Victoria Runkle, ext. 6858
Subject: Sale of Water Sewer Revenue Bonds
ISSUE:
As I have informally briefed the Council, we will sell Water Sewer Revenue Bonds on Thursday,
October 28. When we sell these bonds on a Thursday, the commitment from the banking company, D.A.
Davidson, is.they will guarantee those interest rates and bond structure until the Council adopts the
ordinance,up through midnight of the next Council meeting on November 1,2004.
RECOMMENDATION:
The Administration requests that the Finance Committee recommend the bond"ordinance be placed on
the Council agenda for first and second reading on November 1,2004.
BACKGROUND SUMMARY:
As of this writing, because the bonds have not been sold, the exact bond structure and the interest rates
are unknown. Attachment A shows the estimate of what our targets are as of Wednesday afternoon. The
market on the day of the sale helps set these parameters. As you can see, we are estimating a sale of
$10.690 million in bonds at interest rates of 3.53% to 4.74% in the years 2013 —2028. The interest paid
prior to that date is on capital appreciation bonds. However, the actual principal is yet to be determined
and will not exceed$10.750 million.
We generally structured the debt to "wrap around" the current debt. Attachment A illustrates this. We
are keeping the current debt payments as low as possible — permitting us to keep utility rates as low as
possible. We have larger debt service payments in the future as the older debt is retired. This results in
the debt service to remain at a consistent level for the next twenty years.
The other objective of this debt structure is "generational equity." This means that many of the
improvements we are making today will benefit future generations. Some of the costs of these
improvements,then,become the responsibility of people who are reaping its benefits.
Randy Corman,Chair
Members of the Finance Comn..«cv
October 27,2004
Page 2
On Monday we will have the actual total principal and interest of this bond sale. We are expecting to sell
approximately$10.7 million in principal. These monies will be used for three major projects as follows:
• Maplewood Water Treatment Facility $5.0 million
• Sunset Interceptor Phase II $2.0 million
• SW 7t'' Storm System $3.0 million
Also, during this process we had to have our bonds rated by Standard and Poor's and the Fitch rating
agencies. Both rating agencies confirmed our AA- rating. This is actually a very good rating. We will
have the reports by Monday, and will make copies for each of you. The general verbal comments related
to the fact that we continue to have healthy debt service coverage ratios; a utility that has the ability to
raise utility rates, if necessary; well managed financially; and finally, they are very excited about the
changes occurring on the Boeing property—even though that has very little to do with the water utility.
One of their most important comments is that the City has "short" debt maturity. This means that by
2012, a significant portion of our water sewer debt is retired. This is important as it provides the utility
with future flexibility to meet future needs. We did tell them we do not expect to be in the market for
water sewer revenue debt until 2006. Given that we will be there for Lakeshore Landing improvements,
we need to adhere to this schedule to ensure we maintain our AA-rating.
CONCLUSION:
We request the Council to approve the sale of the bonds to D.A.Davidson&Company. This requires
that the ordinance be placed on the Council agenda for November 1,2004,for first and second reading.
VAR/dif
Attachments,as stated
cc: Jay Covington,CAO
Derek Todd,Assistant to the CAO
Gregg Zimmerman,Administrator,PB/PW
Nenita Ching,Ananlyst,PB/PW
Linda Parks,Finance
H:IFINANCEIADMINSUP108_Memos to CounciWdemo regarding 2004 Water and Sewer.doc
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.1 CITY OF RENTON,WASHINGTON
WATER AND SEWER REVENUE BONDS, 2004
Net Debt Service Schedule
Date Principal Coupon Interest Total P+I DSR Existing DIS Net New D/S
12/01/2004 - - I - - - 616,828.75 616,828.75
12/01/2005 - - ' 531,054.33 531,054.33 - 2,599,643.75 3,130,698.08
12/01/2006 - - 490,204.00 490,204.00 - 2,602,717.50 3,092,921.50
12/01/2007 - - 490,204.00 490,204.00 - 2,605,556.25 3,095,760.25
12/01/2008 - - 490,204.00 490,204.00 - 2,605,880.00 3,096,084.00
12/01/2009 - - 490,204.00 490,204.00 - 2,606,851.25 3,097,055.25
12/01/2010 - - ' 490,204.00 490,204.00 - 2,603,317.50 3,093,521.50
12/01/2011 - - 490,204.00 490,204.00 - 2,605,827.50 3,096,031.50
12/01/2012 - - 490,204.00 490,204.00 - 2,604,322.50 3,094,526.50
12/01/2013 95,000.00 3.530% 490,204.00 585,204.00 - 1,196,295.00 1,781,499.00
12/01/2014 180,000.00 3.630% 486,850.50 666,850.50 - 1,114,437.50 1,781,288.00
12/01/2015 190,000.00 4.070% 480,316.50 670,316.50 - 1,108,907.50 1,779,224.00
12/01/2016 200,000.00 4.070% 472,583.50 672,583.50 - 1,106,567.50 1,779,151.00
12/01/2017 205,000.00 4.070% 464,443.50 669,443.50 - 1,112,142.50 1,781,586.00
12/01/2018 55,000.00 4.070% 456,100.00 511,100.00 - 1,270,112.50 1,781,212.50
12/01/2019 110,000.00 4.070% 453,861.50 563,861.50 - 1,217,612.50 1,781,474.00
12/01/2020 165,000.00 4.490% 449,384.50 614,384.50 - 1,165,112.50 1,779,497.00
12/01/2021 180,000.00 4.490% 441,976.00 621,976.00 - 1,157,612.50 1,779,588.50
12/01/2022 190,000.00 4.490% 433,894.00 623,894.00 - 1,157,750.00 1,781,644.00
12/01/2023 1,355,000.00 4.490% 425,363.00 1,780,363.00 - - 1,780,363.00
12/01/2024 1,415,000.00 4.490% 364,523.50 1,779,523.50 - - 1,779,523.50
12/01/2025 1,480,000.00 4.740% ' 300,990.00 1,780,990.00 - - 1,780,990.00
12/01/2026 1,550,000.00 4.740% 230,838.00 1,780,838.00 - - 1,780,838.00
12/01/2027 1,620,000.00 4.740% 157,368.00 1,777,368.00 - - 1,777,368.00
12/01/2028 1,700,000.00 4.740% 80,580.00 1,780,580.00 (489,000.00) - 1,291,580.00
Total $10,690,000.00 - $10,151,758.83 $20,841,758.83 (489,000.00) $33,057,495.00 $53,410,253.83
Series2004 Wrap I SINGLE PURPOSE I 10/15/2004 I 10:11 AM
D.A. Davidson & Company
Public Finance Page 1 1
November 1,2004 Renton City Council Minutes Page 381
r"
CAG: 04-133, Gene Coulon City Clerk reported bid opening on 10/20/2004 for CAG-04-133, Gene Coulon
Park Boat Launch Repair, Memorial Beach Park Boat Launch Repair; seven bids;engineer's estimate
Skaar Construction $110,000 to$150,000; and submitted staff recommendation to award the
contract to the low bidder, Skaar Construction,Inc., in the amount of
$119,379.71. Refer to Finance Committee for discussion of funding.
CAG: 04-097, Community Community Services Department submitted CAG-04-097,Renton Community
Center Roof Replacement, Center Roof Replacement; and requested approval of the project, authorization
Lloyd A Lynch for final pay estimate in the amount of$24,948.93, commencement of 60-day
lien period, and release of retainage bond in the amount of$3,723.80 to Lloyd
A.Lynch,Inc.,contractor, if all required releases are obtained. Council concur.
Development Services: Development Services Division recommended acceptance of dedication of
Latham Short Plat,Meadow additional right-of-way to widen Meadow Ave. N. to fulfill a requirement of the
Ave N, SHP-04-033 Latham Short Plat(SHP-04-033). Council concur.
EDNSP: 2004 Neighborhood Economic Development,Neighborhoods and Strategic Planning Department
Grant Program submitted grant requests for the 2004 Neighborhood Grant Program(second
round)and recommended funding eight projects and two newsletters in the total
amount of$38,929. Refer to Community Services Committee.
MOVED BY PERSSON, SECONDED BY LAW, COUNCIL APPROVE THE
CONSENT AGENDA AS PRESENTED. CARRIED.
UNFINISHED BUSINESS Council President Persson presented a Committee of the Whole report
Committee of the Whole regarding the I-405 Corridor Project and Renton Hill access. The Committee
Transportation: I-405 Corridor was briefed by the Washington State Department of Transportation on the I-405
Project,Renton Hill Access Corridor Project including access to I-405 via Renton Hill. At this time,no
further action needs to be taken. MOVED BY PERSSON, SECONDED BY
BRIERE,COUNCIL CONCUR IN THE COMMITTEE REPORT. CARRIED.
Finance Committee Finance Committee Chair Corman presented a report regarding the issuance of
Finance: Bond Issuance, water and sewer revenue bonds for capital construction projects. The
Water, Sewer&Stormwater Committee recommended concurrence in the staff recommendation to approve
Projects the issuance of$10,335,000 in water and sewer revenue bonds, increasing the
&md City's debt for the purpose of completing capital construction projects to
include the Maplewood Water Treatment Facility, the Sunset Interceptor, and
the SW 7th St. Storm System Improvements.
The Committee further recommended that the ordinance regarding this matter
be presented for first and second reading. MOVED BY CORMAN,
SECONDED BY NELSON, COUNCIL CONCUR IN THE COMMITTEE.
REPORT. CARRIED. (See below for ordinance.)
RESOLUTIONS AND The following ordinance was presented for first reading and advanced for
ORDINANCES second and final reading:
Finance: Bond Issuance, An ordinance was read relating to the waterworks utility of the City, including
Water, Sewer&Stormwater the sewerage system as a part thereof;providing for the issuance of
Projects $10,335,000 aggregate principal amount of Water and Sewer Revenue Bonds,
2004,of the City for the purpose of obtaining the funds with which to pay the
costs of carrying out certain capital improvements of the waterworks utility;
fixing the date,form,denominations,maturities, interest rates,terms, and
covenants of the bonds;providing for bond insurance; and approving the sale
and providing for the delivery of the bonds to D.A.Davidson&Co., Seattle,
November 1,2004 Renton City Council Minutes Page 382
r' n
Washington. MOVED BY BRIERE, SECONDED BY NELSON, COUNCIL
ADVANCE THE ORDINANCE FOR SECOND AND FINAL READING.
CARRIED.
Ordinance#5098 Following second and final reading of the above-referenced ordinance, it was
Finance: Bond Issuance, MOVED BY BRIERE, SECONDED BY LAW, COUNCIL ADOPT THE
Water, Sewer&Stormwater ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED.
Projects
The following ordinances were presented for second and final reading and
adoption:
Ordinance#5099 An ordinance was read amending the Comprehensive Plan to comply with the
Planning: 2004 Comp Plan mandated 2004 State Growth Management Act review and update, and
Update adopting Comprehensive Plan text, maps, and data in conjunction therewith.
MOVED BY BRIERE, SECONDED BY CLAWSON, COUNCIL ADOPT
THE ORDINANCE AS READ. ROLL CALL: ALL AYES. CARRIED.
Ordinance#5100 An ordinance was read amending Chapter 4-2,Zoning Districts -Uses and
Planning: 2004 Comp Plan Standards, Chapter 4-3,Environmental Regulations and Overlay Districts,
Update Implementation, Chapter 4-4, Citywide Property Development Standards, Chapter 4-6, Street&
Development Regulations Utility Standards,Chapter 4-7, Subdivision Regulations, Chapter 4-8,Permits -
Amendments General and Appeals, Chapter 4-9,Permits -Specific, and Chapter 4-11,
Definitions; of Title IV (Development Regulations)of City Code in order to
implement the 2004 State Growth Management Act update to the
Comprehensive Plan. MOVED BY BRIERE, SECONDED BY LAW,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
Ordinance#5101 An ordinance was read adopting the Citywide zoning map amendments to the
Planning: 2004 Update of zoning,classifications of properties located within the City of Renton, and
Zoning Map identified as part of the 2004 State Growth Management Act mandated update
of the Comprehensive Plan. MOVED BY BRIERE, SECONDED BY LAW,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
Ordinance#5102 An ordinance was read changing the zoning classification of property
Rezone: Smith Property, SW consisting of 7,240 square feet located at 624 SW Sunset Blvd. from R-8
Sunset Blvd,R-8 to CN, CPA (Residential-eight dwelling units per acre)to CN(Commercial Neighborhood)
zoning; Smith Property. MOVED BY BRIERE, SECONDED BY CLAWSON,
COUNCIL ADOPT THE ORDINANCE AS READ. ROLL CALL: ALL
AYES. CARRIED.
Ordinance#5103 An ordinance was read changing the zoning classification of property
Rezone: Handly Property,SW consisting of 10,780 square feet located at 620 SW Sunset Blvd. from R-8
Sunset Blvd,R-8 to CN, CPA (Residential-eight dwelling units per acre)to CN(Commercial Neighborhood)
zoning;Handly Property. MOVED BY BRIERE,SECONDED BY
CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL
CALL: ALL AYES. CARRIED.
Ordinance#5104 An ordinance was read changing the zoning classification of property
Rezone: Bonilla Property, SW consisting of 6,080 square feet located at 632 SW Sunset Blvd. from R-8
Sunset Blvd,R-8 to CN, CPA (Residential-eight dwelling units per acre)to CN(Commercial Neighborhood)
zoning;Bonilla Property. MOVED BY BRIERE, SECONDED BY
CLAWSON, COUNCIL ADOPT THE ORDINANCE AS READ. ROLL
CALL: ALL AYES. CARRIED.
•
APPROVED irlf 1
CETY ®'+B'NciL
FINANCE COMMITTEE
COMMITTEE REPORT Date II-I-a0(1 g
November 1,2004 . -
•
•
ISSUANCE OF WATER& SEWER REVENUEBONDS OF$10,335,000
FOR CAPITAL CONSTRUCTION PROJECTS • -
(Referred August 23,2004)
The Finance Committee recommends concurrence in the staff recommendation to approve issuance of
$10,335,000 in. Water and Sewer'Revenue Bonds,. increasing the .City's debt for the purpose of
completing capital construction projects to include the Maplewood Water Treatment Facility, the Sunset
• Interceptor, and the.S W 7th Street Storm System'Improvements.
The Committee furtherrecommends%that the.Ordinance;regarding this matter be presented for first and
second reading on November 1, •
200.4:
an. Corinan,Chair 4
11/4 k
I I' 1.4 - : ;
Denis'W. Law;Vice Chair
•
Y'4.
Toni Nelson,Member •
'.
•
Gregg Zimmerman,Planning/Building/PW Administrator
Victoria Runkle,Finance'&Information Services Administrator
Linda Parks,Fiscal Services Director ,
Sylvia Doerschel,Finance Analyst Supervisor,Budget
`Jill Masunaga,Finance Analyst Budget
-Nenita Ching,Analyst,Planning/Building/PW
C:\DOCUME-iUMEDZE—I\LOCALS—I\Temp\2004 Water Sewer Bond Ordinance.doc -
ii
August 23,2004 II Renton City Council Minutes Page 287
•
Plat: Honey Brooke Division Development Services Division recommended approval, with conditions, of the
III,NE 5th St,FP-04-067 Honey Brooke Division III Final Plat;22 single-family lots on 4.42 acres
located in the vicinity of NE 5th St.,llwaco Ave. NE,NE 5th Pl.,and Jericho
Ave. NE(FP-04-067). Council concur. (See page 290 for resolution.)
Finance: Bond Issuance, Finance and Information Services Department recommended the issuance of
Water, Sewer&Stormwater $10,000,000 of Water and Sewer Revenue Bonds, 2004,for water, sewer,and
Projects %5\ Off stormwater construction projects. Refer to Finance Committee.
Transportation: Commute Trip Transportation Systems Division recommended approval of an agreement in the
Reduction Program Services, amount of$36,342 with King County Department of Transportation to provide
King County Commute Trip Reduction(CTR) services to 22 affected employers in the City
of Renton for 2004-2005. Council concur. (See page 291 for resolution.)
CAG: 04-033,Monster Rd Transportation Systems Division recommended approval of a contract
Bridge Inspection Services, supplement in the amount of$69,794.02 with INCA Engineers,Inc., to conduct
INCA Engineers . inspection services for the Monster Rd. Bridge repair. Council concur.
Airport: AT&T Lease, Transportation Systems Division recommended approval of Addendum#3 to
Addendum#3,Fiber Optic PAG-87-001,AT&T's lease for its fiber optic line that runs through the Airport,
Line,PAG-87-001 to extend the time period of the lease to 10/31/2012 and to increase the rental
rate from$0.30 to$0.3473 per square foot per year. Revenue generated is
$10,533.14 annually. Refer to Transportation(Aviation)Committee.
Utility: Water System Utility Systems Division recommended approval of an agreement in the amount
Emergency Power Study, of$16,056 with Casne Engineering,Inc. to conduct a water system emergency
Casne Engineering power study that looks at providing Wells 1, 2, and 3,Mt. Olivet Booster Pump
Station, and North Talbot Booster Pump Station with dedicated emergency
power supply. Approval was also sought to fund this project through the
Emergency Response Plan Update project budget. Council concur.
MOVED BY PERSSON,SECONDED BY CORMAN, COUNCIL APPROVE
THE CONSENT AGENDA AS PRESENTED WITH THE REMOVAL OF
ITEM 8.b. CARRIED.
MOVED BY PALMER, SECONDED BY BRIERE, COUNCIL POSTPONE
ACTION ON ITEM 8.b.,AIRPORT APRON C UTILITIES PROJECT
CONTRACT,UNTIL THE END OF UNFINISHED BUSINESS. CARRIED.
(See page 290 for item 8.b.)
Added At the request of Councilman Corman, a letter was read from Larry Brosman,
CORRESPONDENCE 3625 NE 9th St.,Renton, 98056, asking for a reduction in the penalty fee from
Citizen Comment: Brosman- $250 to$100 for cats not wearing a pet license.
Pet License Penalty Fees Councilman Corman questioned the current pet licensing and penalty
procedures. Mayor Keolker-Wheeler informed that this correspondence has
been referred to the Administration. She suggested that Council wait for the
response, and then determine if the matter should be referred to committee for
discussion as to whether to change City Code.
UNFINISHED BUSINESS Transportation(Aviation) Committee Chair Palmer presented a report regarding
Transportation(Aviation) the proposed street name change of SW 41st St. to SW IKEA Way. The
Committee Committee evaluated issues surrounding the proposed name change. Business
Streets: Rename SW 41st St to response was mixed and almost evenly divided. Additionally, discussions with
SW IKEA Way the Washington State Department of Transportation(WSDOT)concluded that
WSDOT could not change the sign on SR-167 unless the street name was
formally changed for the full length of the street.
C OF RENTON COUNCIL AGENDA,_ ALL
AI#: •
Submitting Data: For Agenda of: August 23, 2004
Dept/Div/Board.. Finance & IS Department
Staff Contact Victoria Runkle, FIS Administrator Agenda Status
Consent..x x
Subject: Public Hearing..
Correspondence.. X
Ordinance.x
Water Sewer Bond Ordinance Resolution
Old Business
Exhibits: New Business X
1. Issue Memorandum Study Sessions
Information
2. DRAFT Ordinance
Recommended Action: Approvals:
Refer to Finance Committee Legal Dept
Finance Dept
September 13, 2004 Other
Fiscal Impact:
Expenditure Required... $10,000,000 Transfer/Amendment
Amount Budgeted Revenue Generated $10,000,000
Total Project Budget City Share Total Project..
SUMMARY OF ACTION:
This ordinance will permit the Finance Department to sell $10,000,000 in new bonds for water,
sewer, and storm water constructions projects.
STAFF RECOMMENDATION:
Recommend Council adoption of the Bond Ordinance.
J-pIJ u )l
11
1 -
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H:\FINANCE\ADMINSUP\2_AgendaBills\2004 Water Sewer Bond Ordinance.doc `
DRAFT 3/26/04
For Discussion Purposes Only
O'p
- IA)*
CITY OF RENTON, WASHINGTON
ORDNANCE NO.
AN ORDNANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$10,000,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2004, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations,maturities, interest rates,terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson&Co., Seattle,Washington.
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
TABLE OF CONTENTS
Page No.
Section 1. Definitions 3
Section 2. Findings Regarding Parity Provisions 9
Section 3. Authorization and Description of Bonds 10
Section 4. Registration of Bonds and Book-Entry System 11
Section 5. Payment of Bonds 13
Section 6. Redemption; Open Market Purchase of Bonds 13
Section 7. Notice of Redemption 15
Section 8. Failure to Redeem Bonds 16
Section 9. Form of Bonds 16
Section 10. Execution of Bonds 16
Section 11. Authentication and Delivery of Bonds by Bond Registrar 17
Section 12. Registration, Transfer and Exchange 17
Section 13. Lost, Stolen or Destroyed Bonds 19
Section 14. Creation of Fund 20
Section 15. Deposits into Funds 20
Section 16. Flow of Funds 22
Section 17. Pledge of Revenue and Lien Position 23
Section 18. Findings Regarding Sufficiency of Revenue 23
Section 19. Covenants 24
Section 20. No Private Activity Bonds; Bank Qualification 26
Section 21. Defeasance of the Bonds 27
Section 22. Provision for Future Parity Bonds 28
Section 24. Approval of Purchase Agreement 30
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
Section 25. Bond Insurance 31
Section 26. Delivery of Bonds; Temporary Bonds 31
Section 27. Application of Bond Proceeds 32
Section 28. Undertaking to Provide Continuing Disclosure 33
Section 29. Preliminary Official Statement Deemed Final 36
Section 30. Contract; Savings Clause 36
Section 31. Effective Date of Ordinance 38
ii
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of$10,000,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2004, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations,maturities, interest rates, terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson&Co., Seattle, Washington.
WHEREAS,the City has heretofore created and operated a waterworks utility of the
• City, including the sewerage system of the City and within that system a system of storm and
surface water sewers (defined herein as the"Waterworks Utility"); and
WHEREAS,By Resolution No. ,passed in ,the City adopted its Waterworks
Utility Capital Improvement Program[is this the correct name for the document which
authorizes the capital improvements to be carried out with the bond proceeds?]; and
WHEREAS,the City Council has determined that it is necessary and in the best interests
of the City that certain improvements described in the Waterworks Utility Capital Improvement
Program be made and there be adopted a system or plan of additions to and betterments and
extensions of the Waterworks Utility; and
WHEREAS,pursuant to Chapter 35.92 RCW,the City is authorized to issue and sell,
without an election,revenue bonds of the City to make additions,betterments or extensions to
the Waterworks Utility; and
WHEREAS,by Section XXIII of Ordinance No. 4709,the City also provided that it may
issue additional water and sewer revenue bonds which will constitute a charge and lien upon the
revenue of the Waterworks Utility of the City on a parity with the 1998 Bonds and any bonds
1
} ' DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein; and
WHEREAS,by Ordinance No. 4976,the City issued the 2002 Bonds on a parity of lien
with the 1998 Bonds; and
WHEREAS,by Ordinance No. 5019, as amended by Ordinance No. 5020, the City issued
the 2003 Bonds on a parity of lien,with the 1998 Bonds and the 2002 Bonds; and
WHEREAS,the City Council has determined that it is in the best interests of the City to
issue and sell $10,000,000 of Water and Sewer Revenue Bonds, 2004 on a parity of lien with the
outstanding Parity Bonds to provide part of the funds necessary to carry out the system or plan
for additions to and betterments and extensions of the Waterworks Utility and to pay the costs of
issuance and sale of the Bonds; and
WHEREAS, has made a commitment to issue an insurance
policy insuring the payment when due of the principal of and interest on the Bonds as provided
therein, and the City Council deems that the purchase of such policy is in the best interest of the
City; and
WHEREAS,D.A. Davidson& Co., Seattle, Washington,has offered to purchase the
Bonds under the terms and conditions hereinafter set forth;NOW,THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON,DO ORDAIN as
follows:
2
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
"Alternate Security"shall mean any bond insurance, collateral, security, letter of credit,
guaranty, surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds, issued by an institution
that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by
such Alternate Security equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service"for any year shall mean all the interest on plus all principal
(except principal of Term Bonds due in any Term Bond Maturity Year) of Parity Bonds,plus all
mandatory redemption and sinking fund installments, less all bond interest payable from the
proceeds of any such bonds,which will mature or come due in that year.
"Average Annual Debt Service"shall mean the sum of the Annual Debt Service for the
remaining years to the last scheduled maturity of the applicable bond issue or issues divided by
the number of those years.
"Beneficial Owner"shall mean,with respect to any Bond, the Person named on the
records of the Custodian as having the right,without a physical certificate evidencing such right,
to transfer, to hypothecate and to receive the payment of the principal of,premium, if any, and
interest on such Bond as the same becomes due and payable.
"Bond Fund" shall mean that special fund of the City known as the 2004 Waterworks
Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on
the Bonds.
3
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
"Bond Insurer"shall mean
"Bond Insurance Policy"shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register" shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar"shall mean the fiscal agencies of the State in Seattle, Washington, and
New York, New York, as the same shall be designated from time to time.
"Bonds"shall mean the $10,000,000 City of Renton Water and Sewer Revenue Bonds,
2004, authorized to be issued by this ordinance.
"Book-Entry Termination Date"shall mean the fifth business day following the date of
receipt by the Bond Registrar of the City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City"shall mean the City of Renton, Washington, a duly organized and legally existing
noncharter code city under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services
Administrator or the successor to such officer.
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code"shall mean the Internal Revenue Code of 1986, as amended, and applicable rules
and regulations promulgated thereunder.
4
f_z
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
"Coverage Requirement"shall mean in any calendar year 1.25 times the Maximum
Annual Debt Service.
"Custodian"shall mean(a)The Depository Trust Company,New York,New York, or
(b) any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means, the beneficial ownership of the Bonds, in which system no •
physical certificates are issued to the Beneficial Owners of the Bonds,but in which a limited
number of physical certificates are issued to and registered in the name of the Custodian or its
nominee, and delivered to the Custodian; provided,that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
which are operated by parties other than the Custodian and the use of a nominee for the
Custodian; and the term"Custodian,"as used herein, includes any party operating any such
subsystem.
"Future Parity Bonds"shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a
parity with the lien and charge on Net Revenue for the payment of the principal of and interest
on the Bonds.
"Gross Revenue"shall mean Revenue of the Waterworks Utility.
"Letter of Representations"shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15, 1997,pertaining to the
payment of the Bonds and the"book-entry"system for evidencing the beneficial ownership of
the Bonds prior to the Book-Entry Termination Date(as it may be amended from time to time).
5
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
"Maintenance and Operation Expense" shall mean all reasonable expenses incurred by
. the City in causing the Waterworks Utility to be operated and maintained in good repair,working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract for
such service, and including pro-rata budget charges for the City's administration expenses where
those represent a reasonable distribution and share of actual costs,but not including any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks Utility.
"Maximum Annual Debt;Service"shall mean, at the time of calculation, the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future calendar year on the outstanding Parity Bonds.
"MSRB"shall mean the Municipal Securities Rulemaking Board.
"Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense.
"1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"NRMSIR"shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Owner"shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds"shall mean the 1998 Bonds,the 2002 Bonds,the 2003 Bonds,the Bonds
and any Future Parity Bonds.
6
DRAFT 3/26/04
For Discussion Purposes Only
ORDINANCE NO.
"Parity Bond Fund"shall mean any fund created for the payment and redemption of
Parity Bonds.
"Professional Utility Consultant" shall mean an independent licensed professional
engineer, certified public accountant or other independent person or firm selected by the City
having a favorable reputation for skill and experience with municipal utilities of comparable size
and character to the Waterworks Utility in such areas as are relevant to the purposes for which
such consultant is retained.
"Project" shall mean the following project to be financed, in whole or in part, with
proceeds of the Bonds: (1)the undertaking of the additions,betterments or extensions to the
Waterworks Utility described in the Waterworks Utility Capital Improvement Program,
including,but not limited to,the capital improvements described in Exhibit A to this ordinance,
(2)making a deposit to the Reserve Account, and(3)paying the incidental costs and costs of
issuing the Bonds.
"Project Fund" shall mean the Waterworks Utility Construction Fund.
"Purchase Agreement"shall mean the Bond Purchase Agreement for the Bonds, dated
, 2004,by and between the City and the Purchaser.
"Purchaser"shall mean D.A. Davidson&Co., Seattle, Washington.
"Rate Stabilization Fund"shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Reserve Fund"shall mean that special fund of the City known as the Waterworks
Revenue Bond Reserve Fund created by Ordinance No.4709 for purpose of securing the
payment of the principal of and interest on all bonds to which Net Revenue is pledged.
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"Reserve Insurance" shall mean,in lieu of cash and investments, insurance obtained by
the City equal to part or all of the Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained, issued by an institution that has been assigned a credit
rating equal to or better than the highest then-existing rating for any of the Parity Bonds.
"Reserve Requirement" shall mean the Maximum Annual Debt Service.
"Revenue of the Waterworks Utility"shall mean all of the earnings and revenues
received by the City from the maintenance and operation of the Waterworks Utility and all
earnings from the investment of money in the Reserve Fund or any Parity Bond Fund, and
connection and capital improvement charges collected for the purpose of defraying the cost of
capital facilities of the Waterworks Utility, except government grants,proceeds from the sale of
Waterworks Utility property(other than timber), City taxes collected by or through the
Waterworks Utility,principal proceeds of bonds and earnings or proceeds from any investments
in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility obligations
(until commingled with other earnings and revenues of the Waterworks Utility) or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code.
"Rule"shall mean SEC Rule 15c2-12.
"SEC"shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
"State"shall mean the State of Washington.
"Term Bonds"shall mean any Parity Bonds identified as such in the ordinance
authorizing the issuance thereof,the payment of which is provided for by a requirement for
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ORDINANCE NO.
mandatory deposits of money into the principal and interest account of the bond redemption fund
created for the payment of such issue of bonds in accordance with a mandatory sinking fund
requirement.
"Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are
scheduled to mature.
"2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds, 2002.
"2003 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
2003.
"Waterworks Utility"shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to, improved and
extended for as long as any of the Parity Bonds are outstanding.
"Waterworks Utility Fund"shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility) shall be deposited.
Section 2. Findings Regarding Parity Provisions The City Council finds that there is no
deficiency in any Parity Bond Fund,that provisions hereinafter meet the conditions for the
issuance of Future Parity Bonds as set forth in Ordinance Nos.4709,4976 and 5019 and that
there will be on file prior to the issuance and delivery of the Bonds a certificate of the City
Finance Director[a Professional Utility Consultant]that satisfies the conditions for such
certificate as set forth in Ordinance Nos.4709,4976 and 5019. Therefore,the Bonds shall be
issued on a parity of lien with the Parity Bonds.
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Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
the funds necessary to carry out the Project, the City shall issue the Bonds in the aggregate
principal amount of$10,000,000. The Bonds shall be designated"City of Renton, Washington
Water and Sewer Revenue Bonds,2004;"shall be dated April 15, 2004; shall be in the
denomination of$5,000 or any integral multiple thereof within a single maturity; shall be
numbered separately, in the manner and with any additional designation as the Bond Registrar
deems necessary for purpose of identification; shall bear interest(computed on the basis of a
360-day year of twelve 30-day months),payable semiannually on each June 1 and December 1,
commencing December 1, 2004, to the maturity or prior redemption of the Bonds; and shall
mature on December 1 in the years and amounts and bear interest at the rates per annum as
follows:
Maturity Years Interest
(December 1) Amounts Rates
2005 $370,000
2006 375,000
2007 385,000
2008 395,000
2009 400,000
2010 410,000
2011 425,000
2012 440,000
2013 450,000
2014 465,000
2019* 2,635,000
2024* 3,280,000
*Term Bonds
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If any Bond is duly presented for payment upon maturity and is not paid, then interest thereon
shall continue to accrue thereafter at the rate stated therein until such Bond is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105.
Section 4. Registration of Bonds and Book-Entry System. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register. The
Bond Register shall contain the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate,which certificate shall be registered in the name of the
Custodian or its nominee, and delivered to the Custodian. The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit of the Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either(1)the date of maturity of the
Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date, and the cancellation thereof; (2)the Book-Entry Termination Date; or(3)the date the
City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name of the Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4,the
rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry
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made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations, and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nominee.
The City may terminate the "book-entry"system of registering ownership of the Bonds at
any time (provided the City is not then in default of any payment then due on the outstanding
Bonds)by delivering to the Bond Registrar: (a) a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry
Termination Date; (b)a list identifying the Beneficial Owners as to both name and address; and
(c) a supply of Bond certificates,if necessary for such purpose. Upon surrender to the Bond
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds,the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
Owner's duly appointed agent,naming such Beneficial Owner or such Beneficial Owner's
nominee as the Owner thereof. Such certificates may be in any integral multiple of$5,000
within.a single maturity. Following such issuance, the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 12 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error,omission, action
or failure to act on the part of the Custodian with respect to payment, when due,to the Beneficial
Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of
Bonds,proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any
other matter pertaining to the Bonds.
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Section 5. Payment of Bonds. Bothprincipal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Prior to the Book-Entry Termination
Date,the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations.
From and after the Book-Entry Termination Date, interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date,to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register,or, if requested in writing by an Owner of$100,000
or more in principal amount of Bonds at least ten days before an interest payment date,by wire
transfer on the interest payment date to an account within the United States. From and after the
Book-Entry Termination Date,principal of the Bonds shall be payable upon presentation and
surrender of the Bonds by the Owners at the principal corporate trust office of the Bond
Registrar.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
be a valid claim of the Owners thereof only as against the Bond Fund, Reserve Fund and the
amount of Net Revenue pledged to those funds and shall not be general obligations of the City.
Section 6. Redemption; Open Market Purchase of Bonds. The Bonds maturing on
December 1 in the years 2019 and 2024 are term bonds (the."Term Bonds")and,if not
previously purchased by the City in the open market or optionally redeemed as set forth below,
are subject to mandatory sinking fund redemption prior to maturity, in part and by lot(in such
manner as the Registrar shall determine),at par plus accrued interest to the redemption date on
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ORDINANCE NO.
December 1 in the following years and in the following mandatory sinking fund redemption
amounts:
Term Bonds Due Term Bonds Due
December 1,2019 December 1,2024
Mandatory Sinking Fund Mandatory Sinking Fund
Redemption Dates Redemption Redemption Dates Redemption
(December 1) Amount (December 1) Amount
2015 $' 2020 $
2016 2021
2017 2022
2018 2023
2019* 2024*
*Scheduled maturity
The Bonds maturing on December 1 in the years 2005 through 2014, inclusive, shall not
be subject to redemption prior to maturity. The Bonds maturing on or after December 1,2015
shall be subject to optional redemption prior to maturity beginning on December 1,2014, in
whole or in part at any time(maturities to be selected by the City and by lot within a maturity in
such manner as the Bond Registrar shall determine), at par plus accrued interest to the date of
redemption. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the
open market,the par amount of the Term Bonds so redeemed or purchased(irrespective of their
actual redemption or purchase prices) shall be credited against one or more scheduled mandatory
redemption amounts for such Term Bonds (as allocated by the City)beginning not earlier than
60 days after the date of the optional redemption or purchase, and the City shall promptly notify
the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or
purchased has been allocated.
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Any Bond in the principal amount of greater than $5,000 may be partially redeemed in
any integral multiple of$5,000. Prior to the Book-Entry Termination Date, the Bonds shall be
partially redeemed in accordance with the Letter of Representations. From and after the Book-
Entry Termination Date, in the event of a partial redemption of a Bond,upon surrender of such
Bond at the principal corporate trust office of the Bond Registrar, a new Bond or Bonds (at the
option of the Owner)of the same maturity and interest rate and in the aggregate principal amount
remaining unredeemed shall be authenticated and delivered to the Owner, without charge to the
Owner therefor, in any denomination authorized by this ordinance and selected by the Owner.
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased under this Section shall be canceled.
Section 7. Notice of Redemption. Prior to the Book-Entry Termination Date,the Bond
Registrar shall give, or cause to be given,notice of a call for redemption of any Bonds to the
Custodian, as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations. From and after the Book-Entry Termination Date,notice of
any such intended redemption shall be given by or on behalf of the City not less than 30 nor
more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid,to
the Owner of any Bond to be redeemed at the address appearing on the Bond Register on the day
notice is mailed, and the requirements of this sentence shall be deemed to have been fulfilled
when notice has been mailed as so provided,whether or not it is actually received by the Owner
of any Bond. If such notice to the Owners shall have been given and the City shall have set
aside, on the date fixed for redemption, sufficient money for the payment of all Bonds called for
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ORDINANCE NO.
redemption, the Bonds so called shall cease to accrue interest after such redemption date, and all
such Bonds shall be deemed not to be outstanding under this ordinance for any purposes, except
that the Owners thereof shall be entitled to receive payment of the redemption price and accrued
interest to the redemption date from the money set aside for such purpose. In addition,the
redemption notice shall be mailed within the same period,postage prepaid, to Standard&Poor's
Ratings Services and Fitch IBCA at their offices in New York,New York, or their successors, to
the Purchaser at its principal office in Seattle, Washington, or its successor,to each NRMSIR
and to the Bond Insurer or their respective successors, and to such other persons and with such
additional information as the City;Finance Director shall determine,but these additional mailings
shall not be a condition precedent to the redemption of Bonds.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or redemption date,the City shall be obligated to pay interest on such
Bond at the same rate provided in the Bond from and after its maturity or redemption date until
such Bond,both principal and interest, is paid in full or until sufficient money for its payment in
full is on deposit in the Bond Fund, and the Bond has been called for redemption by giving
notice of that redemption to the Owner of each of such unpaid Bonds.
Section 9. Form of Bonds. The Bonds shall be typewritten,word processed,printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 10. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
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ORDINANCE NO.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and,upon such authentication, delivery and
issuance, shall be as binding,upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 11. Authentication and Delivery of Bonds by Bond Registrar. The Bond
Registrar is authorized and directed, on behalf of the City,to authenticate and deliver Bonds
initially issued or transferred or exchanged in accordance with the provisions of such Bonds and
this ordinance.
Only such Bonds as shall bear thereon a"Certificate of Authentication"manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 12. Registration, Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept,at its principal corporate trust office,the Bond Register. The Bond Registrar is
authorized, on behalf of the City,to authenticate and deliver Bonds transferred or exchanged in
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ORDINANCE NO.
accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 3755 establishing a system of registration for the City's bonds
and obligations. •
The City and the Bond Registrar,in its discretion, may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar
shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as
described in Section 5 hereof,but such registration may be transferred as herein provided. All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
The registered ownership of the Bonds may be transferred. Prior to the Book-Entry
Termination Date,the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian. On and after the Book-Entry Termination Date,
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar, with the assignment form appearing on such Bond duly executed by, or
accompanied by a written instrument of transfer in form satisfactory to such Bond Registrar duly
executed by,the Owner or such Owner's duly authorized agent,in a manner satisfactory to such
Bond Registrar. Upon such surrender,the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver,without charge to the Owner or transferee therefor(other than any
governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the
option of the new Owner),naming as Owner the person or persons listed as the assignee on the
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ORDINANCE NO.
assignment form appearing on the surrendered Bond, of the same maturity and interest rate, for
the same aggregate principal amount, and in any authorized denomination selected by the new
Owners,in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged,without charge, for an
equal aggregate principal amount of Bonds of the same maturity and interest rate, in any
authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
have if it were not the Bond Registrar and,to the extent permitted by law, may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of the Owners of the Bonds.
The City covenants that,until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 13. Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
stolen or destroyed,the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor, all in accordance
with applicable law. If such mutilated,lost, stolen or destroyed Bond has matured,the City may,
at its option,pay the same without the surrender thereof. However,no such substitution or
payment shall be made unless and until the applicant shall furnish(a) evidence satisfactory to the
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ORDINANCE NO.
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof, and
(b) such additional security,indemnity or evidence as may be required by or on behalf of the
City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
Bond Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder.
Section 14. Creation of Fund. There is hereby created in the City Treasury the 2004
Waterworks Revenue Bond Fund(the"Bond Fund").
Section 15. Deposits into Funds . So long as Bonds are outstanding against the Bond
Fund,the City shall:
(a) Set aside arid pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion,namely, one day before each interest or principal
and interest payment date, an amount which, together with other money then on deposit
therein,shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits,any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to-
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund may be accumulated from any other money which the City may have
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein,the Reserve Fund shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds,no further payment need be made into the Bond Fund. Notwithstanding
the first sentence of this paragraph, the Reserve Requirement may be decreased for any issue of
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ORDINANCE NO.
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds,that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been
depleted, then by draws on the Alternate Security or Reserve Insurance for that purpose. Any
deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up
from Net Revenue first available after making necessary provisions for the required payments
into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity
Bonds or may be deposited in any other fund and spent for any other lawful Waterworks Utility
purpose.
The City may provide for the purchase,redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity
Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds. Interest on any of those investments or on that bank account shall be
deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated
therein, after which time the interest shall be deposited in any Parity Bond Fund.
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ORDINANCE NO.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund, any earnings which are subject to a federal tax or rebate requirement
may be withdrawn from the Bond Fund or the Reserve Fund for deposit into a separate fund or
account for that purpose.
If the City fails to set aside,and pay into the Bond Fund or the Reserve Fund the amounts
set forth above,the Owner of any of the outstanding Bonds may bring an action against the City
to compel that setting aside and payment.
Section 16. Flow of Funds. Funds in the Waterworks Utility Fund(other than in any
bond redemption or federal rebateaccount) shall be used in the following order of priority:
(a) To pay Maintenance and Operation Expense;
(b) To pay the interest on the Parity Bonds;
(c) To pay the principal of the Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds;
(e) •To make all payments required to be made into the Reserve Fund; - •
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City,to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility,to make deposits into the Rate Stabilization Fund, or for any
other lawful City purpose.
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ORDINANCE NO.
Section 17. Pledge of Revenue and Lien Position. The Net Revenue is pledged to the
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
Section 18. Findings Regarding Sufficiency of Revenue. In the judgment of the City
Council, Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility, at the rates to be charged for water, sanitary sewage disposal service and
storm and surface water drainage service in the entire utility,will be more than sufficient to meet
all Maintenance and Operation Expense(and cost of maintenance and operation of the
Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve
Fund, out of the revenue of the entire utility,of amounts sufficient to pay the interest on the
Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity. The
City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid
into the Bond Fund and the Reserve Fund, as aforesaid, it has exercised due regard for the
Maintenance and Operation Expense(and costs of maintenance and operation as used in RCW
35.92.100) and the debt service requirements of the currently outstanding Parity Bonds, and the
City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve
Fund, a greater amount or proportion of the revenue of that utility than in the judgment of the
City Council will be available over and above Maintenance and Operation Expense (and such
costs of maintenance and operation of the Waterworks Utility as that term is used in RCW
35.92.100) and debt service requirements of the currently outstanding Parity Bonds and that no
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•
portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness
other thanthe payment of the currently outstanding Parity Bonds.
Section 19. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a) It will establish,maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,
and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A)pay all
Maintenance and Operation Expense on a current basis, (B)pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and(C)pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b) It will at all times maintain and keep the Waterworks Utility in good
repair,working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
(c) It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell, lease,mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility(other than timber), including all additions and
improvements thereto and extensions thereof at any time made, that are used,useful or
material in the operation of the Waterworks Utility,unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds)that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
period;
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ORDINANCE NO.
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(as defined above) that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding(as defined above) that the depreciated cost
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding any other provision of this subsection, (1)the City in its
discretion may sell or otherwise dispose of any of the works,plant,properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary, material to or useful to the
operation of the Waterworks Utility, without making any deposit into the Bond Fund, and
(2)the City may transfer the Waterworks Utility to another municipal corporation so long
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose. In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d) It will keep proper books,records and accounts with respect to the
operations, income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition of the Waterworks
Utility as of the close of the previous year, and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance, the status of all funds and
accounts as of the end of such year, and the amounts expended for maintenance,
renewals,replacements and capital additions to the Waterworks Utility. Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e) Except to aid the poor or infirm,to provide for resource conservation or to
provide for the proper handling of hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation,
public or private, other than the City, so long as any Parity Bonds are outstanding. On at
least an annual basis, it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent.
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(f) It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance, with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment,works,plants, facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable)judgment of the City,to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the outstanding Parity Bonds, and otherwise meet the obligations of the
City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
cause interest on the Bonds to be included in gross income for federal income tax
purposes. It will,to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds,take all action necessary to comply(or to be treated as
having complied)with those requirements in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative
to calculating rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 20. No Private Activity Bonds; Bank Qualification. The City covenants that it
will take no actions and will make no use of the proceeds of the Bonds or any other funds held
under this ordinance which would cause any Bond to be treated as a"private activity bond"(as
defined in Section 141(b) of the Code) subject to treatment under said Section 141(b) as an
obligation not described in Section 103(a)of the Code,unless the tax exemption thereof is not
affected.
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The City covenants that it will not issue more than$10,000,000 of"qualified tax-exempt
obligations,"as defined in Section 265 of the Code (relating to the deduction by financial
institutions of a portion of the interest incurred to carry tax-exempt debt)during calendar year
2004. The City hereby designates the Bonds as "qualified tax-exempt obligations"for such
purposes and authorizes and directs the proper City officials to execute and deliver all documents
necessary to evidence such designation to any and all interested parties.
Section 21. Defeasance of the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire, refund or defease all such then-outstanding Bonds (hereinafter collectively
called the"defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts(together with money, if necessary) sufficient to redeem and retire,refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption,retirement or defeasance of defeased
Bonds (hereinafter called the"trust account"),then all right and interest of the Owners of the
defeased Bonds in the covenants of this ordinance,in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
account and, if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from
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Gross Revenue without any priority of lien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account,the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights, if any, of the
owners of any other Parity Bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or direct obligations of the United States of America or other legal
investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations of the Untied States of America or other legal
investments are pledged irrevocably for the prior redemption of the defeased Bonds included in
that refunding plan,then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds,the payment of which is not so secured by the refunding plan, shall be
included in the computation of coverage for determining compliance with the rate covenants.
Section 22. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the following conditions are met and complied with at the time of
issuance of those additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of(1)an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or(2)Reserve Insurance or Alternate Security or an
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ORDINANCE NO.
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds. For federal income tax purposes,
at the discretion of the City,to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds, the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative,the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue, without regard to deposits into or withdrawals from the
Rate Stabilization Fund, is equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months,without
regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be
equal to the Coverage Requirement for each year thereafter. The certificate, in
estimating Net Revenue available for debt services,may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility
who have become customers during the 12 consecutive month period or
thereafter adjusted to reflect one year's Net Revenue from those
customers;
(C) Income from any customers to be connected to the
Waterworks Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers anticipated to connect for whom
building permits have been issued;
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ORDINANCE NO.
(E) Income received or to be received which is derived from
any person, firm corporation or municipal corporation under any executed
contract for water, sewage disposal or other utility service,which revenue
was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers with existing homes or buildings
which will be required to connect to any additions to and improvements
and extensions of the Waterworks Utility constructed and to be paid for
out of the proceeds of the sale of the additional Future Parity Bonds or
other additions to and improvements and extensions of the Waterworks
Utility when such additions, improvements and extensions are not
completed; and
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and
interest in each year for the refunding bonds is not increased more than$5,000 over the
amount for that same year required for the bonds or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Bonds or Future Parity Bonds then outstanding,money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 24. Approval of Purchase Agreement. The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds. The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
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ORDINANCE NO.
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase Agreement on behalf of the City by City officials, and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal opinion of Gottlieb,Fisher&Andrews,PLLC,bond counsel,
Seattle,Washington,relative to the issuance of the Bonds, attached to each Bond. Bond counsel
has not been engaged to review or express any opinion concerning the completeness or accuracy
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring, the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 25. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
Bonds and agrees to the conditions for obtaining that policy,including the payment of the
premium therefor. The City Council authorizes and directs the execution of the commitment for
the Bond Insurance Policy on behalf of the City by City officials, including,but not limited to
the City Finance Director,and delivery of the same to the Bond Insurer.
Section 26. Delivery of Bonds; Temporary Bonds. The proper City officials, including,
but not limited to,the City Finance Director,are authorized and directed(a)to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including,but not limited to,the final official statement pertaining to the Bonds; and(b)to do
everything necessary for(1)the preparation and delivery of a transcript of proceedings
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ORDINANCE NO.
pertaining to the Bonds, and(2)the preparation, execution and delivery of definitive Bonds to
the Purchaser, each without unreasonable delay.
If definitive Bonds are not',ready for delivery by the date of Closing agreed to by the City
and the Purchaser, the City,upon the approval of the Purchaser,may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes
and additions. Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment, security and obligation thereof as
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for defmitive Bonds when the latter are ready for delivery.
Section 27. Application of Bond Proceeds. The accrued interest and the rounding
amount, if any,received by the City at Closing shall be deposited into the Bond Fund and shall
be applied to the payment of interest first coming due on the Bonds.
The remaining proceeds of the sale of the Bonds, less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City,plus the [net] original
issue premium,in the amount of$ shall be deposited,upon receipt,to the Project
Fund to pay part of the costs of the Project.
Except as provided by the Code and Section 19(h) of this ordinance,the interest and
profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and
applied as described in the preceding paragraph.
Except as provided by the Code and Section 19(h) of this ordinance, if any money
allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the
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ORDINANCE NO.
Project or after termination of the Project by the City, such money shall be transferred to the
Bond Fund and applied to the payment of the principal of and interest on the Bonds.
Pending application as described in this Section 27 and subject to the requirements of the
Code and Section 19(h)of this ordinance,money allocable to the Bond proceeds in the Project
Fund may be temporarily deposited in such institutions or invested in such investments as may
be lawful for the investment of City funds.
Section 28. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection(b)(5)(i)of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID,if one is created,the following annual financial information and operating data
(collectively,the"Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31,2004, on or before the last day of the seventh month
following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units, as such principles may be changed from
time to time and as permitted by State law; which statements will not be audited, except that if
and when audited financial statements are otherwise prepared and available to the City,they will
be provided(the"Annual Financial Statements");
(b) A statement of authorized,issued and outstanding bonded debt secured by the Net
Revenue;
(c) Debt service coverage ratios;
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(d) General customer statistics for the Waterworks Utility; and
(e) A narrative explanation of the reasons for any amendments.to this Section 28
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data,the City may cross-
reference to any"final official statement"(as defined in the Rule) available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information, then when and if available,
fl
ie
City shall provide its Annual Financial Statements,which shall have been audited by such
auditor as shall be then required or permitted by the State law,to each then existing NRMSIR
and to the SID,if one is created.
The City further agrees to provide or cause to be provided, in a timely manner,to the
SID,if one is created, and to either the MSRB or each then existing NRMSIR,notice of any of
the following events with respect to the Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of the Owners of the Bonds;
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8. Optional redemptions of the Bonds;
9. Defeasances of the Bonds;
10. Release, substitution or sale of property securing repayment of the Bonds; and
11. Rating changes.
The City also agrees to provide or cause to be provided, in a timely manner,to the SID, if
one is created,and to either the MSRB or each then existing NRMSIR,notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds, so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby, as determined by a party
unaffiliated with the City(including,without limitation, a trustee for the Owners,nationally
recognized bond counsel or other counsel familiar with the federal securities law),or pursuant to
a favorable "no-action letter"issued by the SEC,this Section 28 may only be amended in
connection with any change in legal requirements,change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted,and only in such a manner
that the undertaking of the City, as so amended,would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance,prior redemption or payment in
full of all of the then outstanding Bonds. This Section 28 or any provision hereof, shall be null
and void if the City(i)obtains an opinion of nationally recognized bond counsel or other counsel
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ORDINANCE NO.
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 28 or any such provision are invalid,have been repealed retroactively or otherwise
do not apply to the Bonds; and(ii)notifies and provides the SID, if any, and either the MSRB or
each then existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 28 shall be limited to the right to obtain specific enforcement of the City's obligations
under this Section 28, and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary, appropriate or convenient to carry out the requirements of this
Section 28.
Section 29. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated ,2004 (the
"Preliminary Official Statement");prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with paragraph(b)(1)of the Rule,the City
"deems final"that Preliminary Official Statement as of its date, except for the omission of
information as to offering prices, interest rates, selling compensation,aggregate principal
amount,principal amount per maturity,maturity dates, options of redemption, delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 30. Contract; Savings Clause. The covenants contained in this ordinance and in
the Bonds shall constitute a contract between the City and the Owner of each and every Bond. If
any one or more of the covenants or agreements provided in this ordinance to be performed on
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ORDINANCE NO.
the part of the City shall be declared by any court of competent jurisdiction and after final appeal
(if any appeal be taken)to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
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ORDINANCE NO.
Section 31. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this day of April, 2004.
Bonnie Walton, City Clerk
APPROVED BY THE MAYOR this day of April,2004.
Kathy Keolker-Wheeler,Mayor
Approved as to Form:
Bond Counsel
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ORDINANCE NO.
EXHIBIT A
[Description of capital improvements—to come]
39