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Home My WebLink AboutORD 4709 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 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 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. 40271685.4 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 Ntarket Purchase of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . 2 0 Section VII . Notice of Redemption . . . . . . . . . . . . . 21 Section VIII . Failure to Redeem Bonds . . . . . . . . . . . 22 Section IX. Renaming of Fund; Creation of Account; Creation o f Fund . . . . . . . . . . . . . . . . . . . . . . . . 2 3 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 . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 Section XVII . Covenants . . . . . . . . . . . . . . . . . . 36 �I 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 tne Bonds . . . . . 44 Section XXIII . Provision for Future Parity Bonds . . . . . . 46 40271685.4 -�-- ORDINANCE NO. 4709 Section XXIV. A proval of Bond Purchase Contract . . . . . . 49 P 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 40271685.4 -11- � 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 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 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. 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 I' WHEREAS, by Ordinanc.e 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 I, 40271685.4 -1- 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 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") , 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 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 I (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 and Improvement Revenue Bonds, 1992 (the "1992 Refunding Bonds" ) , issued pursuant to Ordinance No. 4354 , Water and Sewer Refunding 40271685.4 -2- ORDINANCE NO. 4709 I and Improvement Revenue Bonds, 1993 (the "1993 Refunding Bonds" ) , ; issued pursuant to Ordinance No. 4410, and Water and Sewer Revenue ' 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 I as modified by Section 13 of Ordinance No. 3169, and as further 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 1977 Bonds, the 1988 Bonds, the 1989 Bonds, the 1989 Refunding Bonds, the 1990 Bonds, the 1992 Refunding Bonds, the 1993 Refunding 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 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 " (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 I 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 40271685.4 -3 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 101o of par on July 1, 1988 and January 1, 1989, at a price of 100-1/2% of par on July l, 1989 and January l, 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 �I 6 . 00% per annum; and WHEREAS, by Ordinance No. 4354 , the City reserved the right to redeem the 1992 Refunding Bonds prior to their maturity on or after June l, 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 101o of par on June l, 2002 , through 40271685.4 -4- ORDINANCE NO. 4709 May 31, 2003 , at a price of 100-1/2% of par on June l, 2003 , 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; and 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 l, 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 I WHEREAS, the City Council has determined that the 1977 Bonds I maturing on July l, 1999 (the "1977 Refunded Bonds" ) , certain of the 1992 Refunding Bonds maturing on or after June l, 2003 (defined herein as the "1992 Refunded Bonds" ) and the 1994 Bonds maturing on or after November l, 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 40271685.4 -5- ORDINANCE NO. 4709 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; (b) The call, payment and redemption on July l, 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 101a 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 l, 2004, the call, payment and redemption of all of the 1994 Refunded Bonds at a price of par; and WHEREAS, in order to effect the refunding in the manner that will be most advantageous to the City and its ratepayers, the City Council finds it necessary and advisable that certain Acquired Obligations (defined herein) 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 I of such policy is in the best interest of the City; and 40271685.4 -6- ORDINANCE NO. 4709 WHEREAS, Piper Jaffray 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 40271685.4 -7- I! ORDINANCE NO. 4709 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 . "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 . 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 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 . 40271685.4 -8- � ORDINANCE NO. 4709 "1977 Refunded Bonds" shall mean the 1977 Bonds maturing on July l, 1999 . "1988 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1988, maturing up to and including June l, 1998 . "1989 Bonds" shall mean the outstanding Water and Sewer 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 l, 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 I 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 "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 . 40271685.4 -9- ORDINANCE NO. 4709 "1994 Refunded Bonds" shall mean the 1994 Bonds maturing on or after November l, 2005 . "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 I thereunder. After the New Covenant Date, "Coverage Requirement" shall mean in any calendar year 1.25 times the Maximum Annual Debt Service. "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 Gross Revenue on a 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. "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 40271685.�4 -1 Q- 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 Annua.Z 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. 40271685.4 -11- 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 (othe.r than the 1977 Refunded Bonds) , 1988 Bonds, 1989 Bonds, 1989 Refunding Bonds, 1990 Bonds, 1992 Refunding Bonds (other than the 1992 Refunded Bonds) , 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. 40271685.4 -12- �I ORDINANCE NO. 4709 "Rate Stabilization Fund" shall mean the fund of that name created for the purposes described in this ordinance. "Refunded Bonds" shall mean the 1977 Refunded Bonds, the 1992 Refunded Bonds and the 1994 Refunded Bonds . "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 l, 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 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. "Refunding Trust Agreement" shall mean that agreement between �' the City and the Refunding Trustee providing for carrying out the Refunding Plan. "Refunding Trustee" shall mean First Trust National Association or its successor. ' "Reserve Account" shall mean the subaccount of that name 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 -13- ORDINANCE NO. 4709 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 . � After the New Covenant Date, "Revenue of the Waterworks Utility" shall mean a11 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 III improvement charges collected for the purpose of defraying the cost of capital facilities of the Waterworks Utility, except government 40271685.4 -1-4- ORDINANCE NO. 4709 grants, proceeds from the sale of Waterworks Utility property (other than timber), City taxes coZlected 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 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. "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 I 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 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 -15- ORDINANCE NO. 4709 "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 II . Findings Reqardinq Parity Provisions . The City Council finds that all payments required by Ordinances Nos . 3188, i 4157, 4211, 4232 , 4294 , 4354, 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 I 360-day year of twelve 30-day months) , payable semiannually on each 40271685.4 -16- ORDINANCE NO. 4709 June 1 and December l, commencing June l, 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 I 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 Bond 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 DTC 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 II 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 40271685.4 -18- , ORDINANCE NO. 4709 re istered owners bondowners bondholders or the like shall mean g , , 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 I 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 -1 9- ORDINANCE N0. ,,4709 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 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 Letter of Representations . The Bonds shall be payable solely out of the Bond Fund and shall be a valid claim of the 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 he payable solely out of the Bond Fund and 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 I after June 1, 2009, prior to their stated maturity dates, from 40271685.4 -2�- - ORDINANCE NO. 4709 funds from any source, at any time on 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 date fixed for redemption. Portions of the principal amount of any Bond, in installments ', 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 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 in excess of par plus accrued interest to the date of purchase. Al1 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 . , Section VII . Notice of Redemption. The City shall cause notice of any intended redemption of Bonds to be given not less I than 30 nor more than 60 days prior to the date fixed for I 40271685.4 -2 1- �I �i I 4709 ORIDYNANCE NO. 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 i 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 & Poor' s Ratings Services and Fitch IBCA at their offices in New York, New York, or 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 I information as the City Finance and Information Services Administrator shall determine, but these additional mailings shall not be a condition precederit to the redemption of Bonds . Notwithstanding the foregoing, for so long as the Bonds are registered in the name of DTC or its 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 and after its maturity or call date I until that Bond, both principal and interest, is paid in full or I until sufficient money for its payment in full is on deposit in the �i 40271685.4 -22- ORDINANCE NO. 4709 I 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 created the 1998 Waterworks Revenue Refunding 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 the month of March 1998 and continuing thereafter through May 1998 , 1/3 of the requirement for interest on the Bonds due June l, 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 Beginning with 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 -2 3- 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 aside and pay into the Reserve Account out of Gross Revenue in substantially equal monthly payments such amounts so that by no later than March l, 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 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 I 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 -2 4- ORDINANCE NO. 4709 Al1 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 he 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 -2 5- I OR�TNANCE NO. 4709 (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 40271685.4 -26- ORDINANCE N0. 4709 I Reserve Fund by the withdrawal of cash therefrom for that purpose. Any deficiency created in the Reserve Fund by reason of any such withdrawal sha1.I 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 deposi t in the offi cial bank deposi tory of the Ci ty 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 I 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. 40271685.4 -2 7- 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 ' 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 in any 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 'i 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; 40271685.4 -2 8- 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 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 I 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 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 �I Covenant Date, to make deposits into the Rate Stabilization Fund, or for any other lawful City purpose. Section XIII . Pledqe 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 -2 9- ORDINANCE N0. 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 and superior to any other charge I whatsoever. Section XIV. Findincrs RecrardinQ 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 -3�- ORDINANCE NO. 4709 the debt service 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 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 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. Refundinq of the Refunded Bonds . (a) AccLuisition and Substitution of Acquired Oblicrations . 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 such interest 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 Acquired 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. 40271685.4 -3�-- 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 not cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder j 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 -3 2- ORDINANCE NO. 4709 will be sufficient to carry out the Refunding Plan; and (2) an ini n from Foster Pe er & Shefelman PLLC bond counsel to the 0 o pp , P 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, 40271665.4 -3 3- - 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 Refundinq Trust Aqreement . In order to 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 I' 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 . 40271685.4 -3 4- ORDINANCE NO. 4709 (d) Citv Findings With Respect to Refundinq. 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 I Trustee . Section XVI . Calls for Redemption of the Outstandina 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 l, 2002 , all of the 1992 Refunded Bonds at 101o of par plus accrued interest . 40271685.4 -3 5- . � 4709 I ORDINANCE NO. The City calls for redemption on November l, 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 30 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 . Covenants . The City covenants and agrees with the owner of each Bond at any time outstanding as follows : I (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 requirements, 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 40271685.4 -3 6- 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 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 (e) 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 -3 7- ORDINANCE NO. 4709 other disposition, aIl Parity Bonds are defeased pursuant to the provisions of this ordinance. It will not sell, Iease, 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 I 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. 40271685.4 -3 8- _ ORDINANCE NO. 4709 (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 wi.Zl 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 i financial and op.erating 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 . 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 -39- ORDINANCE NO. 4709 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 hasis, 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 I 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 any time during the term of the Bonds which will cause interest on the Bonds to be included in gross 40271685.4 -4 0- ORDINANCE NO. 4709 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 XVIII . Form and Execution of Bonds . The Bonds shall 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 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 : 40271685.4 -'4 1- i 47 AN E N 09 ORDIN C 0. 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 - I Authorized Signer � The authorized signing of a 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 an officer of the City authorized to sign bonds . Any Bond also may be signed on behalf of the Cit b an erson who, on the actual date of si nin I� Y Y Y P g g I 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, 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- III 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 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 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 as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners . Section XX. Desiqnation of Bonds as "Qualified Tax-Exempt Obligations" . The City has determined and certifies that (a) the Bonds are not expected to be "private activity bonds" within the 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 -4 3- ORDINANCE NO. 4�09 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 j Section 265 (b) (3) of the Code. Section XXI . Bonds Neqotiable . The Bonds shall be negotiable instruments to the extent provided by RCW 62A. 8-102 and 62A. 8-105 . Section XXII . Refundinq 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 "de€eased 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 40271685.4 -44- ORDINANCE NO. 4709 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 of the owners of any other bonds then outstanding. i If the refunding plan provides that the defeased Bonds or the refunding bonds to be issued be secured by cash an/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 . 40271685.4 -45- � ORDINANCE NO. 4709 Section XXIII . Provision for Future Paritv 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 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 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 I988 Bonds, the I989 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 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 40271685.4 -46- — - I ORDINANCE NO. 4709 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 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 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. (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 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; I (B) Income derived from customers of the 'i Waterworks Utility who have become customers during the 12 consecutive month period or 402'71685.4 -4 7- ORDINANCE NO. 4709 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; I (E) Income received or to he 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 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 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 � 40271685.4 . -4 8- ORDINANCE NO. 4709 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 Bqnd 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 & 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 -4 9 ORDINANCE NO. 4709 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 ("NRMSIR" ) 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 -5�- ORDINANCE NO. 4709 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 financial information 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 -5 1- , � ORDINANCE N0. 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 Undertakinq. 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 NRMSIR 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 Undertakina. 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 Undertakinq. 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 de.fault 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) Desicination of Official Responsible to Administer Undertakinct. 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 whether any person other than 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. 4o2�i6es.a —53— ORDINANCE NO. 4709 Section XXVII . Preliminarv 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 . � I Marilyn . tersen, City Clerk APPROVFD BY THE MAYOR this 9th day of March, 1998 . � Jes Tanner, Mayor , Approved as to Form: � � 'I .- t o d Counsel Date of Publication: 3/13/98 (Summar ) Y 40271685.4 -54-