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HomeMy WebLinkAboutORD 39700 -. f ed� 6P� 3��� 4tgglo 1 CITY OF RENTON, WASHINGTON ORDINANCE NO. 3970 AN ORDINANCE relating to the waterworks utility of the City, including the sewerage system as a part thereof; specifying and adopting a system or plan of additions to and betterments and extensions of the waterworks utility; providing for the issuance of $1,800,000 par value of Water and Sewer Revenue Bonds, 1986, of the City for the purpose of obtaining a part of the funds with which to pay the cost of carrying out that system or plan and providing a required amount for the arts; fixing the date, form, denomination, maturities, maximum interest rate, terms and covenants of such bonds; creating a special bond redemption account to provide for the payment of the bonds; and providing for the sale of such bonds. WHEREAS, by Ordinance No. 1156, as amended by Ordinances Nos. 1157 and 1173, the sewerage system of the City of Renton (the "City") has become and is considered a part of the water- works utility of the City (defined below as the "Waterworks Utility of the City"); and WHEREAS, the City previously has issued under date of March 1, 1953, $315,000 pa -r value of City of Renton Water and Sewer Refunding and Improvement Revenue Bonds, 1953 (the "1953 Bonds"), pursuant to Ordinances Nos. 1450 and 1452; and WHEREAS, by Section 15 of Ordinance No. 1450, the City reserved the right to issue additional water and sewer revenue bonds which would constitute a charge and lien upon the revenue of the Waterworks Utility of the City on a parity with the then outstanding 1953 Bonds on compliance with the following condi- tions at the time of the issuance of such additional bonds: and k ORDINANCE NO. 3970 ' "(A) All payments required by this ordinance to be paid into the 'Renton 1953 Water and Sewer Refund- ing and Improvment Revenue Bond Fund' shall have been made; 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 taxes, based upon the histori- cal 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 at least 1.5 times the average annual principal and interest requirements of the bonds of this issue then out- standing 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 engi- neer 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 out- standing to the last maturity thereof"; WHEREAS, the City thereafter issued under date of September 1, 1954, $325,000 par value of City of Renton Water and Sewer Revenue Bonds, 1954, pursuant to Ordinance No. 1489; under date of July 1, 1959, $750,000 par value of City of Renton Water and Sewer Revenue Bonds, 1959, pursuant to Ordinance No. 1766; under date of May 1, 1965, $500,000 par value of City of Renton Water and Sewer Revenue Bonds, 1965, pursuant to Ordinance No. 2151; under date of December 15, 1965, $545,000 par value of City of Renton Water and Sewer Revenue Refunding Bonds, 1965, pursuant - 2 - ORDINANCE NO. 3970 K to. Ordinance No. 2195, for the purpose of refunding,.redeeming and retiring on July 1, 1974, all of the then outstanding City of Renton Water and Sewer Revenue Bonds, 1959; under date of July 1, 1975, $3,000,000 par value of City of Renton Water and Sewer Revenue Bonds, 1975, pursuant to Ordinance No. 2930; under date of February 1, 1976, $2,950,000 par value of City of Renton Water and Sewer Revenue Refunding Bonds, 1976, pursuant to Ordinance No. 3007, for the purpose of refunding, redeeming and retiring on January 1, 1989, and July 1, 1989, all of the then outstanding City of Renton Water and Sewer Revenue Bonds, 1975; under date of June 1, 1977, $3,095,000 par value of City of Renton Water and Sewer Revenue Refunding Bonds, 1977 (the "1977 Bonds"), pursuant to Ordinance No. 31411 as amended by Ordinance No. 3145, for the purpose of providing a part of the money required to pay the principal of and interest on the City of Renton Water and Sewer Revenue Refunding Bonds, 1976, coming due to and including July 1, 1989, and to redeem and retire on July 1, 1989, the outstanding City of Renton Water and Sewer Revenue Refunding Bonds, 1976, numbered 96 to 590, inclusive, maturing from July 1, 1990, to July 1, 2000, inclusive; and under date of November 1, 1977, $800,000 par value of City of Renton Water and Sewer Revenue Refunding Bonds, 1977, Issue No. 2 (the "1977 Bonds, Issue No. 2"), pursuant to Ordinance No. 3169, for the purpose of obtaining a part of the funds with which to refund, pay and retire the outstanding City of Renton Water and Sewer Revenue Bonds, 1954, City of Renton Water and Sewer Revenue - 3 - ORDINANCE NO. 3970 Bonds, 1965, and City of Renton Water and Sewer Revenue Refund- ing Bonds, 1965, all of which bonds were at the time of their issuance issued on a parity of lien with the then outstanding 1953 Bonds and with each other pursuant to the provisions of Section 15 of Ordinance No. 1450, such parity issues of bonds being a first lien and charge upon the gross revenue of the Waterworks Utility of the City, excluding charges for mainte- nance and operation, except that all of the 1953 Bonds have now been paid and retired, and except the conditions of subparagraph (B) of Section 15 of Ordinance No. 1450 were modified by Section 12 of Ordinance No. 2930 pertaining to the City of Renton Water and Sewer Revenue Bonds, 1975, and by Section 13 of Ordinance No. 3169 pertaining to the outstanding 1977 Bonds, Issue No. 2, as to any parity bonds issued in the future, and the City, by Section 13 of Ordinance No. 3169, reserved the right to issue Future Parity Bonds (as therein defined) which will constitute a lien and charge upon the gross revenue of the Waterworks Utility of the City on a parity with the 1977 Bonds, Issue No. 2, if the conditions set forth in Section 15 of Ordinance No. 1450, as modified, are meat and complied with at the time of the issuance of such Future Parity Bonds, which section was incorporated by reference in Ordinance No. 3169 and made a part thereof and shall continue to be applicable even though the 1953 Bonds have been paid and retired; and WHEREAS, under date of December 1, 1977, the City issued $3,045,000 par value of City of Renton Water and Sewer Revenue - 4 - ORDINANCE NO. 3970 Refunding Bonds, 1977, Issue No. 3 (the "1977 Bonds, Issue No. 3"), pursuant to Ordinance No. 3188, for the purpose of obtain- ing a part of the funds with which to refund, pay and retire all of the then outstanding 1977 Bonds; under date of May 1, 1983, the City issued $1,500,000 par value of City of Renton Water and Sewer Revenue Bonds, 1983 (the "1983 Bonds"), pursuant to Ordinance No. 3720, for the purpose of carrying out a system or plan of additions to and betterments and extensions of the Waterworks Utility of the City; under date of April 1, 1985, the City issued $2,600,000 par value of City of Renton Water and Sewer Revenue Bonds, 1985 (the "1985 Bonds"), pursuant to Ordinance No. 3896, for the purpose of carrying out a system or plan of additions to and betterments and extensions of the Waterworks Utility of the City, which 1977 Bonds, Issue No. 3, 1983 Bonds and 1985 Bonds were issued on a parity of lien with the outstanding 1977 Bonds, Issue No. 2, pursuant to the provi- sions of Section 15 of Ordinance No. 1450, as modified by Section 13 of Ordinance No. 3169 and, with respect to the 1985 Bonds, as modified by Section 12 of Ordinance No. 3720; and WHEREAS, the 1977 Bonds, Issue No. 2, the 1977 Bonds, Issue No. 3, the 1983 Bonds and the 1985 Bonds are the only bonds presently outstanding payable out of the revenue of the Water- works Utility of the City; and WHEREAS, the parity provisions of Section 15 of Ordinance No. 1450, as modified by Section 13 of Ordinance No. 3169 and Section 12 of Ordinance No. 3720, provide that the City may ORDINANCE NO. 3970 issue additional water and sewer revenue bonds which would constitute a charge and lien upon the revenue of the Waterworks Utility of the City on a parity with the 1977 Bonds, Issue No. 2, the 1977 Bonds, Issue No. 3, the 1983 Bonds and the 1985 Bonds and any bonds issued thereafter and having a charge and lien upon the revenue of the Waterworks Utility of the City on a parity with such bonds on compliance with the following condi- tions at the time of the issuance of such additional bonds: "(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 taxes, based upon the histori- cal 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 at least 1.3 times the average annual principal and interest requirements of the bonds of this issue then out- standing 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 engi- neer 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 out- standing to the last maturity thereof"; and ' ORDINANCE NO. 3970 WHEREAS, on June 11, 1984, the City Council passed and the Mayor approved Resolutions Nos. 2546 and 2547 adopting the 1983 Comprehensive Sanitary Sewer Plan and 1983 Comprehensive Water System Plan, respectively, for the City, but for the purpose of financing facilities in those plans it is necessary to specify and adopt them by ordinance; and WHEREAS, the City Council has determined that it is neces- sary and intthe best interests of the City that certain addi- tional improvements described in the Comprehensive Water System Plan, 1983, and the Comprehensive Sewer Plan, 1983, be made and there be adopted a system or plan of additions to and better- ments and extensions of the Waterworks Utility of the City; and WHEREAS, the City Council has determined that it is neces- sary to issue and sell $1,800,000 par value of water and sewer revenue bonds to provide a part of the funds necessary to carry out such system or plan providing for additions to and better- ments and extensions of the Waterworks Utility of the City, to provide an amount for the arts as required by City Ordinance No. 2969 and to pay the costs of issuance and sale of the water and sewer revenue bonds provided for herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN, as follows: Section 1. As used in this ordinance, the following words shall have the following meanings: - 7 - ORDINANCE NO. 3970 "Annual Debt Service" for the Bonds shall mean all the interest plus all principal which will mature or come due in any year. "Average Annual Debt Service" shall mean the sum of the Annual Debt Service for the remaining years to the last sched- uled maturity of the Bonds divided by the number of those years. "Bond Fund" shall mean that special fund of the City known as,the 1986 Water and Sewer Revenue Bond Redemption Account created by this ordinance as a separate account in the Water and Sewer Revenue Parity Bond Fund for the payment of the principal of and interest on the Bonds. "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 $1,800,000 par value City of Renton Water and Sewer Revenue Bonds, 1986, authorized to be issued by this ordinance. "City" shall mean the City of Renton, Washington, a duly organized and existing noncharter code city under the laws of the State of Washington. "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 upon the Revenue of the Waterworks Utility of the City on a parity with the lien and charge upon such revenue for the Outstanding Parity Bonds and M.*= ORDINANCE NO. 3970 the Bonds for the payment of the principal thereof and -interest thereon. "Maintenance and Operation Expense" shall mean all expenses incurred by the City in causing the Waterworks Utility of the City to be operated and maintained in good repair, working order and condition, which shall not include any depreciation expenses or taxes or charges in lieu of taxes levied or imposed by the City. "Outstanding Parity Bonds" shall mean the $800,000 par value of City of Renton Water and Sewer Revenue Refunding Bonds, 1977, Issue No. 2, issued under date of November 1, 1977, pursuant to Ordinance No. 3169, the $3,045,000 par value of City of Renton Water and Sewer Revenue Refunding Bonds, 1977, Issue No. 3, issued under date of December 1, 1977, pursuant to Ordinance No. 3188, the $1,500,000 par value City of Renton Water and Sewer Revenue Bonds, 1983, issued under date of May 1, 1983, pursuant to Ordinance No. 3720, and the $2,600,000 par value City of Renton Water and Sewer Revenue Bonds, 1985, issued under date of April 1, 1985, pursuant to Ordinance No. 3896. "Principal and Interest Account" shall mean the account of that name created in the Bond Fund by this ordinance for the payment of the principal of and interest on the Bonds. "Reserve Account" shall mean the account 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. M� ORDINANCE NO. 3970 "Revenue of the Waterworks Utility of the City" shall mean all the earnings and revenue received by the Waterworks Utility of the City 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 and bond proceeds. "Term Bonds" shall mean any Outstanding Parity Bonds, Bonds and/or Future 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 accord- ance with a mandatory sinking fund requirement. "Water and Sewer Revenue Parity Bond Fund" shall mean the fund of that name created by Ordinance No. 3896. "Waterworks Utility Fund of the City" shall mean that special fund of the City into which all of the Revenue of the. Waterworks Utility of the -City shall be deposited. "Waterworks Utility of the City" shall mean the combined water and sewerage systems of the City as the same may be added to, improved and extended for as long as any of the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds are out- standing. - 10 - ORDINANCE NO. 3970 Section 2. The City specifies, adopts and orders the carrying out of a system or plan of additions to and betterments and extensions of the Waterworks Utility of the City consisting of the improvements, acquisitions and work described in Exhibit A attached hereto and by this reference made a part hereof. There shall be included in the foregoing system or plan the acquisition. and installation of all necessary valves, pumps, fittings, couplings, connections, equipment and appurtenances, the acquisition of any easements, rights-of-way and land that may be required and the performance of such work as may be incidental and necessary. All of the foregoing shall be in accordance with the plans and specifications therefor prepared by the City's engineers and consulting engineers. The City Council may modify the details of the foregoing system or plan where, in its judgment, it appears advisable if such modifications do not substantially alter the purposes of that system or plan. The life of the improvements comprising the foregoing system or plan of additions to and betterments and extensions of the Waterworks Utility of the City is declared to be at least twenty years. The estimated cost of the acquisition, construc- tion, installation and financing of the above-described improve- ments, including the costs of issuance and sale of the Bonds, is declared to be approximately $2,474,000. Such cost shall be paid from the proceeds of the Bonds authorized in this ordinance 7 ORDINANCE NO. 3970 and other money of or received by the City made available therefor. Section 3. The City Council finds that all payments required by Ordinances Nos. 3169, 3188, 3720 and 3896 for the Outstanding Parity Bonds have been made into the respective bond redemption funds for the Outstanding Parity Bonds, that provi- sion is hereinafter 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 Richard H. Harbert of RH2 Engineering, P.S., an engineer experienced in municipal utilities, that the Revenue of the Waterworks Utility is sufficient to meet the 1.3 coverage requirement of those ordinances. Section 4. For the purpose of providing a part of the money required to carry out the system or plan of additions to and betterments and extensions of the Waterworks Utility of the City, including the cost of issuance and sale of the Bonds, as herein specified, adopted and ordered to be carried out and to provide an amount for the arts as required by Ordinance No. 2969, as amended by Ordinance No. 3563, the City shall issue the Bonds in the aggregate principal amount of $1,800,000. The Bonds shall be designated City of Renton Water and Sewer Revenue Bonds, 1986 (defined above as the "Bonds"); shall be dated February 1, 1986; shall be in denominations of $5,000 each or any integral multiple thereof within a single maturity; shall be numbered separately in the manner and with any additional - 12 - ORDINANCE NO. 3970 designation as the Bond Registrar deems necessary for the purpose of identification; and shall bear interest, computed on the basis of a 360 -day year of twelve 30 -day months, payable on August 1, 1986, and semiannually thereafter on each succeeding February 1 and August 1 at the rate or rates specified by the winning bidder. The Bonds shall mature on February 1 of each year as follows: Maturity Years Amounts 1987 $ 40,000 1988 45,000 1989 45,000 1990 50,000 1991 55,000 1992 60,000 1993 60,000 1994 65,000 1995 70,000 1996 75,000 1997 85,000 1998 90,000 1999 100,000 2000 105,000 2001 115,000 2002 125,000 2003 135,000 2004 145,000 2005 160,000 2006 175,000 If any Bond is not redeemed upon proper presentment at its maturity or call date thereof, the City shall be obligated to pay interest at the same rate for each such Bond from and after its maturity or call date until such Bond, both principal and interest, is paid in full or until sufficient money for such payment in full is on deposit in the Bond Fund and such Bond has been duly called for payment. - 13 - ORDINANCE NO. 3970 Upon surrender thereof to the Bond Registrar, the Bonds 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. Such exchange or transfer shall be without cost to the owner or transferee. The Bonds shall be issued only in registered form as to both principal and interest and recorded in the books and 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 Bonds held by each owner. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be paid by check or draft mailed to the registered owners at the addresses appearing on the Bond Register on the fifteenth day of the month preceding the inter- est payment date. Principal of.the Bonds shall be payable upon presentation and surrender of the Bonds at either office of the Bond Registrar in Seattle, Washington, or New York, New York, at the option of such owners. The Bonds shall be payable solely out of the Bond Fund, and shall be a valid claim of the owners thereof only as against such Bond Fund and the amount of the Revenue of the Waterworks Utility of the City pledged to such fund, and shall not be a general obligation of the City. - 14 - ORDINANCE NO. 3970 Section 5. Bonds maturing in the years 1987 to 1996, inclusive, are not subject to call for redemption prior to their maturity dates. The City reserves the right or option to redeem prior to their maturity the Bonds maturing in the years 1997 to 2006, inclusive, as a whole, or in part in inverse order of maturity (and by lot within a maturity in such manner as the Bond Registrar shall determine), from money derived from any source -on February 1, 1996, and on any interest payment date thereafter, at par plus accrued interest to the date of redemp- tion. Notwithstanding any other provision in this paragraph, the Bonds shall be subject to redemption at par plus accrued interest at any time upon the occurrence or non-occurrence of an event which, under the provision of any future federal law or regulations thereunder, would or, in the opinion of the City's bond counsel, might subject the interest on the Bonds to federal taxation. Any Bond in the principal amount of greater than $5,000 may be redeemed partially in any integral multiple of $5,000. If less than all of the principal amount of any Bond is redeemed, upon surrender of such Bond at the principal office of the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond,.or Bonds at the option of the registered owner, of like maturity and interest rate in the aggregate principal amount remaining unredeemed. Notice of any call for redemption of any of the Bonds prior to their stated maturity dates shall be given not less than 30 - 15 - ORDINANCE NO.. 3970 nor more than 60 days prior to the date fixed for 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. The requirements of this section shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the owner of any Bond. Interest on any Bonds so called for redemption shall cease,on the date fixed for such redemption upon payment of the redemption price into the Bond Fund. Notice of such intended redemption shall also be mailed within the same time period, postage prepaid, to the successful bidder for the Bonds, at its principal place of business, or its successor, and to Moody's Investors Service, Inc., and Standard & Poor's Corporation, at their offices in New York, New York, or their successors, but the mailing of such notice to such New York firms shall not be a condition precedent to the redemption of such Bonds. The City further reserves the right 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 such purchase. Section 6. There is created the 1986 Water and Sewer Revenue Bond Redemption Account, heretofore defined as the Bond Fund, which shall be a separate bond redemption account within the Water and Sewer Revenue Parity Bond Fund. The Bond Fund is divided into two sub -accounts, namely, the Principal and Inter- est Account and the Reserve Account. So long as Bonds are outstanding against the Bond Fund, the Director of Finance of - 16 - ORDINANCE NO. 3970 the City shall (a) set aside and pay into the Principal and Interest Account in such fund out of the Revenue of the Water- works Utility of the City a fixed amount, without regard to any fixed proportion, namely, monthly, on or before the first day of each month beginning with the month of February, 1986, an amount, together with the accrued interest received, equal to 1/6th of the amount of interest payable on the Bonds on August 1, 1986, and.thereafter 1/6th of the next ensuing six months' requirements for interest, and beginning with the month of February, 1986, 1/12th of the next ensuing twelve months' requirements for principal on the Bonds and continuing there- after until the Bonds, both principal and interest, are paid in full, and (b) set aside and pay into the Reserve Account in the Bond Fund out of the Revenue of the Waterworks Utility of the City in substantially equal monthly payments such amounts so that by no later than February 1, 1991, there shall have been accumulated in the Reserve Account in the Bond Fund 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 such purpose in addition to using such revenue therefor. The City further agrees that when such required amounts have been paid into the Reserve Account in the Bond Fund, the City will at all times, except for withdrawals therefrom as authorized herein, maintain those amounts therein until there is - 17 - ORDINANCE NO. 3970 sufficient money in the Bond Fund, including the Reserve Account therein, to pay the principal of and interest to maturity on all outstanding Bonds, at which time no further payments need be made into the Bond Fund and the money in the Bond Fund, includ- ing the Reserve Account, may be used to pay such principal and interest. In the event 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, such 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 such withdrawal shall then be made up from the money from the Revenue of the Waterworks Utility of the City first available after making necessary provisions for the required payments into the Princi- pal and Interest Account. All money in the Reserve Account above provided for 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 maturing not later than the interest or principal and interest payment date when such money will be needed. Interest on any such investment or on such bank account shall be deposited in and become a part of the Reserve Account until the total required reserve amount shall have been - 18 - ORDINANCE NO. 3970 accumulated therein, after which such interest shall be deposited in the Principal and Interest Account. In no event shall any money in the Bond Fund or any other money reasonably expected to be used to pay principal and/or interest on the Bonds be invested at a yield which would cause the Bonds to be arbitrage bonds within the meaning of Section 103(c) of the United States Internal Revenue Code of 1954, as amended,. and applicable regulations thereunder. If the City shall fail to set aside and pay into the Bond Fund the amounts set forth above, the holder of any of the outstanding Bonds may bring an action against the City to compel such setting aside and payment. Section 7. Funds in the Waterworks Utility Fund of the City (other than in any bond redemption account) shall be used in the following order of priority: (a) To pay Maintenance and Operation Expense; (b) To pay the interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds; (c) To pay the principal of the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds; (d) To make all payments required to be made into any sinking fund or bond redemption fund here- after 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, the Bonds and any Future Parity Bonds; (f) To make all payments required to be made into any revenue bond redemption fund or warrant redemption fund and debt service account or - 19 - ORDINANCE NO. 3970 reserve account created to pay and secure the payment of the principal of and interest on any revenue bonds or revenue warrants of the City having a lien upon the Revenue of the Waterworks Utility junior and inferior to the lien thereon for the payment of the principal of and interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds; and (g) To retire by redemption or purchase in the open market any outstanding revenue bonds or revenue warrants of the City, to make necessary addi- tions, betterments, improvements and repairs to or extensions and replacements of the Waterworks Utility of the City, or for any other lawful City purposes. Section 8. The Revenue of the Waterworks Utility of the City is pledged to the payments set forth in Section 6, and the Bonds shall constitute a lien and charge upon such revenue prior and superior to any other charges whatsoever, excluding Mainte- nance and Operation Expense, except that the lien and charge upon such revenue for the Bonds shall be on a parity with the lien and charge thereon for the Outstanding Parity Bonds and any Future Parity Bonds hereafter issued. Section 9. In the judgment of the City Council, the Revenue and benefits to be derived from the operation and maintenance of the Waterworks Utility of the City, at the rates to be charged for water and sanitary sewage disposal service on the entire utility, will be more than sufficient to meet all Maintenance and Operation Expense and the debt service require- ments of the Outstanding Parity Bonds and to permit the setting aside in the Bond Fund, out of the revenue of the entire utility, of amounts sufficient to pay the interest on the Bonds - 20 - ORDINANCE NO. 3970 as such 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 same, as aforesaid, it has exercised due regard for the Maintenance and Operation Expense and the debt service require- ments of the presently Outstanding Parity Bonds and the City has not bound and obligated itself to set aside and pay into the Bond Fund a greater amount or proportion of the revenue of such utility than in the judgment of the City Council will be avail- able over and above such Maintenance and Operation Expense and debt service requirements of the Outstanding Parity Bonds and that no portion of the Revenue of the Waterworks Utility of the City has been previously pledged for any other unrefunded indebtedness, except for the payment of the presently outstand- ing Outstanding Parity Bonds. Section 10. The City covenants and agrees with the owner of each Bond at any time outstanding as follows: (a) It will establish, maintain and collect such rates and charges for water and sanitary sewage disposal 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 equivalent 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 costs of mainte- nance and operation from the Revenue of the Waterworks Utility of the City. "Average annual debt service requirements" shall mean the aggregate amount of principal and interest payable in each year over the remaining life of such Outstanding Parity Bonds and Bonds divided by the number of maturity years remain- ing to the last maturity of the longest maturing issue, being the year 2006. - 21 - ,<. ORDINANCE NO. 3970 (b) It will at all times maintain and keep the Waterworks Utility of the City 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 of the City unless provision is made for payment into each of the Renton 1977 Water and Sewer Revenue Refunding Bond Redemption Fund, No. 2 (the "1977 Bonds, Issue No. 2 Bond Fund"), the Renton 1977 Water and Sewer Revenue Refunding Bond Redemption Fund, No. 3 (the "1977 Bonds, Issue No. 3 Bond Fund"), the Renton 1983 Water and Sewer Revenue Bond Fund (the "1983 Bond Fund") and the Water and Sewer Revenue Parity Bond Fund of sums sufficient to pay, respectively, the principal of and interest on all 1977 Bonds, Issue No. 2, 1977 Bonds, Issue No. 3, 1983 Bonds, 1985 Bonds and the Bonds at any time outstanding, and that it will not sell, lease, mort- gage, or in any manner encumber or dispose of any part of the property of the Waterworks Utility of the City that is used, useful and material to the operation thereof, unless provision is made for replacement thereof, or for payment into the 1977 Bonds, Issue No. 2 Bond Fund, the 1977 Bonds, Issue No. 3 Bond Fund, the 1983 Bond Fund and the Water and Sewer Revenue Parity 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 out- standing 1977 Bonds, Issue No. 2, 1977 Bonds, Issue No. 3, 1983.Bonds, 1985 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. (d) It will while any of the Bonds remains 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 of the City, 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 - 22 - ORDINANCE NO. 3970 owner or owners complete operating and income state- ments of such utility in reasonable detail occurring 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 of the City 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. (e) It will not furnish water or sanitary sewage disposal service to any customer whatsoever free of charge and promptly will take legal action to enforce collection of all delinquent accounts. (f) It will carry the types of insurance on the Waterworks Utility of the City 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. (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 not take or permit to be taken on its behalf any action which would adversely affect the exemption from federal income taxation of the interest on the Bonds and will take or require to be taken such acts as may reasonably be within its ability and as may from time to time be required under applicable law to continue the exemption from federal income taxation of the interest on the Bonds. Without limiting the generality of the foregoing, and except to the extent the investment of any Bond proceeds is limited to a yield required to comply with federal arbitrage regulations, the City will spend the proceeds of the Bonds with due diligence to completion of the purpose - 23 - ORDINANCE NO. 3970 specified herein and will not invest or make other use of the proceeds of the Bonds or of its other money at any time during the term of the Bonds, which if such use had been reasonably expected at the date that the Bonds are issued, would have caused such Bonds to.be arbitrage bonds within the meaning of Section 103(c) of the United States Internal Revenue Code of 1954, as amended, and applicable regualtions thereunder. In addition, if future federal laws or regula- tions require the payment of any federal tax or rebate or the observing of any other requirement to maintain the exemption from federal income taxation of the, interest on the Bonds or Future Parity Bonds, the City shallmake any such payment and observe any such requirement. If the interest on the Bonds shall become subject to federal taxation because of the City's not spending bond proceeds or the proceeds of investments thereof in the amounts and within periods of time required by any future federal law or regula- tions or for any other reason due to the enactment of future federal law or the promulgation of regulations thereunder, or if the City's bond counsel gives an opinion to the City at that time that the interest on the Bonds may or will be taxable either from the date of issuance or as of some later date, then the City shall call for redemption at par plus accrued interest all of the Bonds then outstanding within 75 days after the date that law becomes law. 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 11. The Bonds shall be printed or lithographed on good bond paper in a form consistent with the provisions of this ordinance, shall be signed by the facsimile signatures of the Mayor and the Finance Director and shall have a facsimile reproduction of the City seal printed thereon. Only such Bonds as shall bear thereon a Certificate of Authentication in the following form, manually executed by the - 24 - • ORDINANCE NO. 3970 Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: CERTIFICATE OF AUTHENTICATION This bond is one of the fully registered City of Renton, Washington, Water and Sewer Revenue Bonds, 1986, described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY Bond Registrar By Authorized Officer Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly exe- cuted, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. In case either or both of the officers who shall have executed the Bonds shall cease to be such officer or officers of the City before the Bonds so signed shall have been authenti- cated or delivered by the Bond Registrar or issued by the City, such Bonds nevertheless may be authenticated, delivered and issued and upon such authentication, delivery and issue, shall be as binding upon the City as though those whose facsimile signatures appear on the Bonds had continued to be such officers of the City. Any Bond also may be signed on behalf of the City by such persons as at the actual date of execution of such Bond shall be proper officers of the City authorized to execute Bonds although on the original date of such Bond such persons were not such officers of the City. - 25 - ORDINANCE NO. 3970 Section 12. 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 at all times be open to inspection by the City. The Bond.Registrar shall be responsible for its representa- tions contained in the 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 a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 13. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and 62A.8-105. Section 14. In the event the City shall issue advance refunding bonds pursuant to the laws of the State of Washington, or have money available from any other lawful source, to pay the principal of and interest on the Bonds or such portion thereof included in the refunding plan as the same become due and payable and to refund all such then outstanding Bonds and to pay the costs of refunding, and shall have irrevocably set aside for and pledged to such payment and refunding, money and/or direct obligations of the United States of America or other legal investments sufficient in amount, together with known earned income from the investment thereof, to make such payments and to accomplish the refunding as scheduled (hereinafter called the - 26 - ORDINANCE NO. 3970 "trust account") and shall irrevocably make provisions for redemption of such Bonds, then in that case the Bonds shall be deemed defeased (hereinafter collectively called the "defeased Bonds"). Thereafter, all right and interest of the owners of the defeased Bonds to be so retired or refunded in the covenants of this ordinance, in the Revenue of the Waterworks Utility of the City, and in funds and accounts obligated to the payment of such Bonds shall cease and become void, except such owners shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account and, in the event 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 the Revenue of the Waterworks Utility of the City 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 such 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. In the event the refunding plan provides that the Bonds being refunded or the refunding bonds to be issued be secured by cash and/or direct obligations of the United States of America or other legal investments pending the prior redemption of those - 27 - t ORDINANCE NO. 3970 Bonds being refunded and if such refunding plan also provides that certain cash and/or direct obligations of the United States of America or other legal investments are pledged irrevocably for the prior redemption of those Bonds included in the refund- ing 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 issuance of Future Parity Bonds and the annual computation of coverage for determining compliance with the rate covenants. Section 15. The City reserves the right to issue Future Parity Bonds which will constitute a lien and charge upon the Revenue of the Waterworks Utility of the City on a parity with the Outstanding Parity Bonds, and the Bonds, provided the conditions set forth in Section 15 of Ordinance No. 1450, as modified by the provisions set forth in Section 13 of Ordinance No. 3169 and Section 12 of Ordinance No. 3720, are met and complied with at the time of the issuance of such 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 City of Renton Water and Sewer Refunding and Improve- ment Bonds, 1953, have been paid and retired. Section 16. The Bonds shall be sold for cash at public sale for not more than a 2% discount plus accrued interest to the date of delivery of and payment for the Bonds.. - 28 - ORDINANCE NO. 3970 The City Clerk is authorized to give notice calling for bids to purchase the Bonds by publishing no later than January 24, 1986, a short abbreviated form of such notice once in The Seattle Daily Journal of Commerce and Northwest Construction Record of Seattle, Washington. Such notice shall specify that sealed bids for the purchase of the Bonds shall be received by the City Clerk in her office in the City Hall on February 3, 1986, up to 11:00 a.m., local time, at which time all bids will be publicly opened and read in the office of the Director of Finance and an award made by the City Council at its regular meeting to be held in the City Council Chambers commencing at 8:00 p.m., local time, on the same date. Bids shall be invited for the purchase of the Bonds with fixed maturities in accordance with the schedule specified in Section 4 hereof. The notice shall specify the maximum effective rate of interest the Bonds shall bear, namely, 12% per annum, and shall require bidders to submit a bid specifying: (a) The lowest rate or rates of interest and discount below par at which the bidder will purchase the Bonds; or (b) The lowest rate or rates of interest at which the bidder will purchase the Bonds at par. No bid offering to purchase the Bonds at a discount of more than 2% plus accrued interest or offering to purchase less than the entire issue will be considered. The purchaser must pay accrued interest to date of delivery of the Bonds. - 29 - ORDINANCE NO. 3970 Interest rates shall be in multiples of 1/8 or 1/20 of 1%, or both. No more than one rate of interest may be fixed for any one maturity. The maximum differential between the lowest and highest rates named in any bid shall not exceed 4%. For the purpose of comparing the bids only, the interest rates bid being controlling, each bid shall state the total interest cost over the life of the Bonds and the net effective interest rate of the bid, taking into account the discount, if any, bid. The Bonds shall be sold to the bidder making the best bid based on the lowest net effective interest rate, subject to the right of the City Council to reject any and all bids and to readvertise the Bonds for sale in the manner provided by law. The City further reserves the right to waive any irregularity in any bid or in the bidding process, except that any bid presented after the time specified for the receipt of bids will not be received, and any bid not accompanied by the required bid deposit at the time of opening will not be read or considered. All bids shall be sealed and shall be accompanied by a deposit of $45,000. The deposit shall be either cash or by certified or cashier's check made payable to the City of Renton and shall be returned promptly if the bid is not accepted. The City reserves the right to invest the good faith deposit of the purchaser pending the payment for the Bonds. The purchaser shall not be credited for such earnings. If the Bonds are ready for delivery and the successful bidder shall fail or neglect to - 30 - ORDINANCE NO. 3970 complete the purchase of the Bonds within forty days following the acceptance of its bid, the amount of its deposit shall be forfeited to the City and in that event the City may accept the bid of the one making the next best bid. If there be two or more equal bids and such bids are the best bids received, the City Council shall determine by lot which bid shall be accepted. The Bonds will be delivered to the successful bidder upon payment of the purchase price plus accrued interest to the date of delivery, less the amount of the good faith deposit, at the office of the City Clerk or in Seattle, Washington, at the City's expense, or at such other place upon which the Director of Finance and the successful bidder may mutually agree at the purchaser's expense. Settlement shall be made in federal funds immediately available at the time of delivery of the Bonds. A no -litigation certificate in the usual form will be included in the closing papers. CUSIP numbers will be printed on the Bonds, if requested in the bid of the successful bidder, but neither failure to print such numbers on any Bond nor error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds in accord- ance with the terms of the purchase contract. All expenses in relation to the printing of CUSIP numbers on the Bonds shall be paid by the City, but the fee of the CUSIP Service Bureau for the assignment of those numbers shall be the responsibility of and shall be paid by the purchaser. - 31 - t ORDINANCE NO. 3970 If, prior to the delivery of the Bonds, the interest receivable by the owners thereof shall become taxable, directly or indirectly, by the terms of any federal income tax law, the successful bidder may at its option be relieved of its.obliga- tion to purchase the Bonds, and in such case the deposit accom- panying its bid will be returned, without interest. The notice of bond sale shall provide that the City will cause the Bonds to be printed or lithographed and signed and will furnish the approving legal opinion of Roberts & Shefelman, bond counsel of Seattle, Washington, covering the Bonds without cost to the purchaser, the opinion also being printed on each Bond. Bond counsel shall not be required to review nor express any opinion concerning the completeness or accuracy of any official statement, offering circular or other sales material issued or used in connection with the Bonds, and bond counsel's opinion shall so state. Such notice also shall provide that further information regarding the details of the Bonds may be received upon request made to the City Clerk or to Seattle - Northwest Securities Corporation, 3700 Seafirst Fifth Avenue Plaza, Seattle, Washington, the City's financial consultant. Section 17. There has been created in the office of the City Director of Finance a special fund of the City known and designated as the Water and Sewer Construction Fund, 1983 (the "Construction Fund"). The principal proceeds received from the issuance and sale of the Bonds shall be deposited in the Con- struction Fund and shall be used to pay the costs of carrying - 32 - ORDINANCE NO. 3970 out the system or plan of additions to and betterments and extensions of the Waterworks Utility of the City specified, adopted and ordered to be carried out by this ordinance and the expenses incurred in the issuance of the Bonds. Pending the expenditure of such principal proceeds out of the Construction Fund, the money in such fund may be invested in any legal investment and the investment income may be retained in such fund and used for the purposes of such fund. The accrued interest received, if any, shall be deposited in the Bond Fund. Section 18. All actions taken consistent with the provi- sions of this ordinance before the effective date of this ordinance are ratified, confirmed and approved. PASSED BY THE CITY COUNCIL, this 13th day of January, 1986. e MAXINE MOTOR, City Clerk APPROVED BY THE MAYOR, this 13th day of January, 1986. NANCY MA3HEWS, Mayor Pro tem Approved as to Form: City Attorney Date of Publication: January 17th, 1986 - 33 - s► • ORDINANCE NO. 3970 WATER SYSTEM REHABILITATION PROJECTS (1986) Replacement of steel watermain in NE Eighth Street from Monroe Avenue to Olympia Avenue NE Replacement of steel watermain in Queen Avenue NE from NE Sixth to NE Eighth Street Replacement of steel watermain in NE Seventh Street from Monroe Avenue NE to Queen Avenue NE Well #3 renovation SANITARY SEWER SYSTEM REHABILITATION PROJECTS (1986) Sewer Joint Grouting and Sealing Brentwood Honey Dew Estates area (third phase of leak repair in Honey Creek Basin) WATER SYSTEM MAJOR CAPITAL PROJECTS (1986) Well #5 rehabilitation Spring Brook chlorinization rehabilitation Fluoridation - Equipment, buildings and remodeling, truck, design and inspection (consultant) Cedar River Wells exploration and drilling Wells #10 and #11 at golf course 16" watermain - Aberdeen Avenue NE - from NE 24th to NE 27th Street - Joint street project Sunset Boulevard SW - 12" watermain - West from Rainier Avenue South - City participation South Talbot Hill Reservoir site acquisition South Talbot Hill Reservoir design - Engineering Ponderosa Estates service transfer and installation of 620 linear feet of 8" watermain Water system telemetry - Phase 2 completion and design for Phase 3 Wells #1 and #2 rehabilitation, including final design, redrilling Wells #1 and #2, and construction of a new well house •y �' ORDINANCE NO. 3970 Springbrook Springs site acquisition - Squire property payments 24" watermain in Wells Avenue Bridge Portion of 12" watermain in Grady Way street project Participation in installation of 24" watermain in Talbot Road South from Grady Way to Rolling Hills Place Installation of 12" watermain in Lind Avenue Bridge over - crossing of SR 405 Well field protection - Continuation of project Installation of two pressure reducing stations at Shattuck Avenue South and South 23rd Street Joint participation in fire flow analysis update with Fire Department SEWER SYSTEM MAJOR CAPITAL PROJECTS (1986) Golf Course Sanitary Sewer Extend 15" sewer to golf course clubhouse to protect City well field Renton Hill Alley Sewer Replacement Phase I of replacement of old 6" sewers in Renton Hill Alley CBD SW Improvements - Shattuck Avenue South Interceptor Replace existing 8", 10", and 12" sewers in Shattuck Avenue South from South Fourth Street to South Seventh Street West Kennydale Interceptor New 12" sewer from NE 24th and Jones Avenue NE, along I-405 to NE 28th Street and existing city sewer East Kennydale Interceptor New 12" sewer from NE 27th Street to Azalea Lane pump station (in conjunction with Aberdeen Avenue NE Forward Thrust project) CBD 1986 Small Sewer Replacement Replace existing 8" sewers in North First Street and CBD area Cascade Sewer District Transfer Transfer of Cascade Sewer District sewers inside the city in Talbot Road and South 55th Street (SE 192nd Street) to Renton system Smithers Avenue South - City match to sewer local improve- ment district - New 8" sewer from South 19th Street to Talbot Hill School -2-