Loading...
HomeMy WebLinkAboutORD 5313CITY OF RENTON,WASHINGTON ORDINANCE NO.5313 AN ORDINANCE of the City of Renton,Washington,authorizing the issuance of three series of water and sewer revenue bonds of the City for the purpose of financing the costs of carrying out certain capital improvements of the waterworks utility and refunding certain outstanding water and sewer revenue bonds of the City,in the aggregate principal amounts of not to exceed $10,000,000,$10,000,000 and $3,000,000,respectively;providing the form, terms and covenants of the bonds;fulfilling the Reserve Requirement; authorizing the appointment of an escrow agent and the execution of an escrow agreement relating to the refunding bonds;and approving the.sale and providing for the delivery of the bonds to Seattle-Northwest Securities Corporation,Seattle,Washington. ORDINANCE NO.5313 TABLE OF CONTENTS Section 1.Definitions 2 Section 2.Findings Regarding Parity Provisions and the Project 9 Section 3.Authorization and Description of Bonds 9 Section 4.Registration of Bonds and Book-Entry System 9 Section 5.Payment of Bonds 12 Section 6.Redemption;Open Market Purchase of Bonds 12 Section 7.Notice of Redemption 13 Section 8.Failure to Redeem Bonds 14 Section 9.Form of Bonds 14 Section 10.Execution of Bonds 14 Section 11.Authentication and Delivery of Bonds by Bond Registrar 14 Section 12.Lost,Stolen or Destroyed Bonds 15 Section 13.Creation of Fund 15 Section 14.Deposits into Funds 15 Section 15.Rate Stabilization Fund 16 Section 16.Flow of Funds 16 Section 17.Pledge of Revenue and Lien Position 17 Section 18.Findings Regarding Sufficiency of Revenue 17 Section 19.Covenants 18 Section 20.Tax Covenants 20 Section 21.Defeasance of the Bonds 21 Section 22.Provision for Future Parity Bonds 22 Section 23.Sale of Bonds 24 Section 24.Delivery of Bonds;Temporary Bonds 25 Section 25.Application of Bond Proceeds 25 Section 26.Plan of Refunding 26 Section 27.Undertaking to Provide Continuing Disclosure 27 Section 28.Preliminary Official Statement 30 Section 29.Amendments 30 Section 30.Contract:Savings Clause 32 Section 31.General Authorization,Ratification of Prior Acts 32 Section 32.Effective Date of Ordinance 32 Exhibit A Exhibit B Project Description Form of Bonds -1- ORDINANCE NO.5313 AN ORDINANCE of the City of Renton,Washington,authorizing the issuance of three series of water and sewer revenue bonds of the City for the purpose of financing the costs of carrying out certain capital improvements of the waterworks utility and refunding certain outstanding water and sewer revenue bonds of the City,in the aggregate principal amounts of not to exceed $10,000,000,$10,000,000 and $3,000,000, respectively;providing the form, terms and covenants of the bonds;fulfilling the Reserve Requirement; authorizing the appointment of an escrow agent and the execution of an escrow agreement relating to the refunding bonds;and approving the sale and providing for the delivery of the bonds to Seattle-Northwest Securities Corporation,Seattle,Washington. WHEREAS,the City of Renton,Washington (the "City")has heretofore created and operated a waterworks utility of the City,including the water,sewer,wastewater and storm drainage systems (defined herein as the "Waterworks Utility");and WHEREAS,the City Council has determined that it is necessary and in the best interests of the City that certain improvements for the Waterworks Utility described in the Capital Improvement Program be made and there be adopted a system or plan of additions to and betterments and extensions of the Waterworks Utility;and WHEREAS,pursuant to chapter 35.92 RCW,the City is authorized to issue and sell, without an election,revenue bonds of the City to make additions,betterments or extensions to the Waterworks Utility;and WHEREAS,by Section XXIII of Ordinance No.4709,the City also provided that it may issue additional water and sewer revenue bonds which will constitute a charge and lien upon the revenue of the Waterworks Utility of the City on a parity with the City's Water and Sewer Revenue Refunding Bonds,1998 (the "1998 Bonds")and any bonds issued thereafter if such additional bonds are issued in compliance with the conditions set forth therein;and WHEREAS,by Ordinance No.4976,the City issued its Water and Sewer Revenue Bonds,2002 (the "2002 Bonds")on a parity oflien with the 1998 Bonds;and WHEREAS,by Ordinance No.5019,as amended by Ordinance No.5020,the City issued its Water and Sewer Revenue Refunding Bonds,2003 (the "2003 Bonds")on a parity of lien with the 1998 Bonds and the 2002 Bonds;and WHEREAS,by Ordinance No.5098,the City issued its Water and Sewer Revenue Bonds,2004 (the "2004 Bonds")on a parity of lien with the 1998 Bonds,the 2002 Bonds,and the 2003 Bonds;and WHEREAS,Ordinance No.4976 provides that the City may redeem the 2002 Bonds maturing on and after December 1,2014 on and after December 1,2012,in whole or in part,on any interest payment date at a price of par plus accrued interest,if any,to the date of redemption; and ORDINANCE NO.5313 WHEREAS,as a result of changed market conditions,it appears to the City Council that debt service savings may be obtained by refunding the 2002 Bonds maturing on and after December 1,2014 (the "Refunded Bonds")through the issuance of a series of water and sewer refunding bonds;and WHEREAS,the City Council has determined that it is in the best interests of the City to issue and sell three series of water and sewer revenue bonds on a parity of lien with the outstanding 1998 Bonds,2002 Bonds,2003 Bonds and 2004 Bonds;and WHEREAS,the first series of bonds shall be designated the City of Renton,Washington Water and Sewer Revenue and Refunding Bonds,2007 and issued in the aggregate principal amount of not to exceed $10,000,000 (the "2007 Bonds"),for the purpose of providing part of the funds necessary to carry out the system or plan for additions to and betterments and extensions of the Waterworks Utility,to refund the Refunded Bonds,and to pay the costs of issuance and sale of the 2007 Bonds,as further provided in the sale resolution for the 2007 Bonds;and WHEREAS,the second and third series of bonds shall be designated the City of Renton, Washington Water and Sewer Bonds,Series 2008A and City of Renton,Washington Water and Sewer Bonds,Series 2008B (Taxable)and issued in the aggregate principal amounts of not to exceed $10,000,000 and $3,000,000,respectively (together,the "2008 Bonds"),for the purpose of providing part of the funds necessary to carry out the system or plan for additions to and betterments and extensions of the Waterworks Utility,to fulfill the Reserve Requirement and to pay the costs of issuance and sale of the 2008 Bonds,as further provided in the sale resolution for the 2008 Bonds;and WHEREAS,Seattle-Northwest Securities Corporation,Seattle,Washington,has offered to purchase the 2007 Bonds and the 2008 Bonds under the terms and conditions set forth herein and in the applicable sale resolution; NOW,THEREFORE,THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON,DO ORDAIN as follows: Section 1.Definitions.As used in this ordinance,the following words shall have the following meanings: "Alternate Security"shall mean any bond insurance,collateral,security,letter of credit, guaranty,surety bond or similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest on the Parity Bonds,issued by an institution that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by such Alternate Security equal to or better than the highest then-existing rating for any of the Parity Bonds. "Annual Debt Service"for any year shall mean all the interest on plus all principal (except principal of Term Bonds due in any Term Bond Maturity Year)of Parity Bonds,plus all mandatory redemption and sinking fund installments,less all bond interest payable from the proceeds of any such bonds,which will mature or come due in that year. -2-P:120584120584_24Q ORDINANCE NO.5313 "Beneficial Owner"shall mean any person that has or shares the power,directly or indirectly to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries). "Bond Fund"shall mean that special fund of the City known as the Waterworks Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on the Bonds. "Bond Register"means the registration books showing the name,address and tax identification number of each Registered Owner of the Bonds,maintained pursuant to Section 149(a)of the Code. "Bond Registrar"means the fiscal agency of the State of Washington,for the purposes of registering and authenticating the Bonds,maintaining the Bond Register,effecting transfer of ownership of the Bonds,and paying the principal of,premium,if any,and interest on the Bonds. "Bonds"shall mean the 2007 Bonds and the 2008 Bonds. "Capital Improvement Program"shall mean the plan of additions and betterments to the Waterworks Utility approved by the City in the 2007 City Budget adopted by the City Council pursuant to Ordinance No.5245 adopted on December 11,2006. ."City"shall mean the City of Renton,Washington,a duly organized and legally existing noncharter code city under the laws ofthe State. "City Finance Director"shall mean the City's Finance and Information Services Administrator or the successor to such officer. "Closing"shall mean the date of the delivery of the 2007 Bonds or the 2008 Bonds,as applicable,by the City to the Underwriter and the payment therefor by the Underwriter. "Code"shall mean the Internal Revenue Code of 1986,as amended,and applicable rules and regulations promulgated thereunder. "Coverage Requirement"shall mean in any calendar year 1.25 times the Maximum Annual Debt Service;provided,that once the 1998 Bonds,the 2002 Bonds,the 2003 Bonds and the 2004 Bonds are no longer Outstanding,the term "Coverage Requirement"shall mean in any calendar year 1.25 times the Annual Debt Service for such year. "DTC"means The Depository Trust Company,New York,New York,a limited purpose trust company organized under the laws of the State of New York,as depository for the Bonds pursuant to this ordinance. "Escrow Agent"means U.S.Bank National Association,Seattle,Washington. "Escrow Agreement"means the Escrow Deposit Agreement to be dated as of the date of Closing of the 2007 Bonds authorized to be entered into pursuant to Section 26 of this ordinance. -3-P:120584120584_24Q ORDINANCE NO.5313 "Fitch"means Fitch,Inc.,organized and existing under the laws of the State of Delaware,its successors and their assigns,and,if such organization shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency,"Fitch"shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "Future Parity Bonds"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. "Government Obligations"means those obligations now or hereafter defined as such in chapter 39.53 RCW. "Gross Revenue"shall mean all of the earnings and revenues received by the City from the maintenance and operation of the Waterworks Utility and all earnings from the investment of money in the Reserve Fund or any Parity Bond Fund,and connection and capital improvement charges collected for the purpose of defraying the cost of capital facilities of the Waterworks Utility,except government grants,proceeds from the sale of Waterworks Utility property (other than timber),City taxes collected by or through the Waterworks Utility,principal proceeds of bonds and earnings or proceeds from any investments in a trust,defeasance or escrow fund created to defease or refund Waterworks Utility obligations (until commingled with other earnings and revenues of the Waterworks Utility)or held in a special account for the purpose of paying a rebate to the United States Government under the Code. "Letter of Representations"shall mean the Blanket Issuer Letter of Representations from the City to DTC dated April 15,1997. "Maintenance and Operation Expense"shall mean all reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and maintained in good repair,working order and condition,including payments made to any other municipal corporation or private entity for water service and for sewage treatment and disposal service or other utility service in the event the City combines such service in the Waterworks Utility and enters into a contract for such service,and including pro-rata budget charges for the City's administration expenses where those represent a reasonable distribution and share of actual costs,but not including any depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes,or capital additions or capital replacements to the Waterworks Utility. "Maximum Annual Debt Service"shall mean,at the time of calculation,the maximum amount of Annual Debt Service that will mature or come due in the current calendar year or any future calendar year on the outstanding Parity Bonds. "Moody's"means Moody's Investors Service,its successors and their assigns,and,if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency,"Moody's"shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. -4-P:\20584\20584_24Q ORDINANCE NO.5313 "MSRB"shall mean the Municipal Securities Rulemaking Board. "Net Proceeds,"when used with reference with the Bonds,means the principal amount of the Bonds,plus accrued interest and original issue premium,if any,and less original issue discount,if any. "Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense. "1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds, 1998. "NRMSIR"shall mean a nationally recognized municipal securities information repository designated by the SEC. "Outstanding"means,as of any particular time,all Parity Bonds issued theretofore except (a)Parity Bonds theretofore canceled by the Bond Registrar after purchase by the City in the open market or because of payment at,or redemption prior to,maturity;(b)Parity Bonds for which funds have been deposited into a trust account pursuant to the ordinances authorizing the issuance of the Parity Bonds,but only to the extent that the principal of and interest on such Parity Bonds are payable from such trust account;(c)temporary,mutilated,lost,stolen or destroyed Parity Bonds for which new Parity Bonds have been issued pursuant to the ordinance authorizing their issuance;and (d)Parity Bonds exchanged for new Parity Bonds pursuant to the ordinances authorizing their issuance. "Owner"shall mean the person named as the registered owner of a Bond on the Bond Register. "Parity Bonds"shall mean the 1998 Bonds,the 2002 Bonds,the 2003 Bonds,the 2004 Bonds,the 2007 Bonds,the 2008 Bonds and any Future Parity Bonds. "Parity Bond Fund"shall mean any fund created for the payment and redemption of Parity Bonds. "Private Person"means any natural person engaged in a trade or business or any trust, estate,partnership,association,company or corporation. "Private Person Use"means the use of property in a trade or business by a Private Person if such use is other than as a member of the general public.Private Person Use includes ownership of the property by the Private Person as well as other arrangements that transfer to the Private Person the actual or beneficial use of the property (such as a lease,management or incentive payment contract or other special arrangement)in such a manner as to set the Private Person apart from the general public.Use of property as a member of the general public includes attendance by the Private Person at municipal meetings or business rental of property to the Private Person on a day-to-day basis if the rental paid by such Private Person is the same as the rental paid by any Private Person who desires to rent the property.Use of property by nonprofit community groups or community recreational groups is not treated as Private Person Use if such use is incidental to the governmental uses of property,the property is made available for such -5-P:120584120584_24Q ORDINANCE NO.5313 use by all such community groups on an equal basis and such community groups are charged only a de minimis fee to cover custodial expenses. "Professional Utility Consultant"shall mean an independent licensed professional engineer,certified public accountant or other independent person or firm selected by the City having a favorable reputation for skill and experience with municipal utilities of comparable size and character to the Waterworks Utility in such areas as are relevant to the purposes for which such consultant is retained. "Project"shall mean the additions,betterments or extensions to the Waterworks Utility described in the Capital Improvement Program,including,but not limited to,the capital improvements described in Exhibit A to this ordinance. "Project Fund"shall mean the Waterworks Utility Construction Fund previously created by the City,and the sub accounts contained therein,for the purpose of paying costs of the Project. "Purchase Agreement"shall mean the Bond Purchase Agreement for the 2007 Bonds or 2008 Bonds,as applicable,by and between the City and the Underwriter. "Qualified Insurance"means any non-cancelable municipal bond insurance policy or surety bond issued by any insurance company licensed to conduct an insurance business in any state of the United States (or by a service corporation acting on behalf of one or more such insurance companies)which insurance company or companies,as of the time of issuance of such policy or surety bond,are currently rated in one of the two highest Rating Categories by both Moody's and S&P. "Qualified Letter of Credit"means any irrevocable letter of credit issued by a financial institution for the account of the City on behalf of registered owners of the Bonds,which institution maintains an office,agency or branch in the United States and as of the time of issuance of such letter of credit,is currently rated in one of the two highest Rating Categories by either Moody's or S&P. "Rate Stabilization Fund"shall mean the Waterworks Rate Stabilization Fund created by the City pursuant to Ordinance No.4709. "Refunded Bonds"mean the 2002 Bonds maturing on and after December 1,2014. "Refunding Account"means the account by that name established pursuant to Section 26 of this ordinance. "Registered Owner"means the person named as the registered owner of a Bond in the Bond Register.For so long as the Bonds are held in book-entry only form,DTC shall be deemed to be the sole Registered Owner. "Reserve Fund"shall mean that special fund of the City known as the Waterworks Revenue Bond Reserve Fund created by Ordinance No.4709 for purpose of securing the payment ofthe principal of and interest on all bonds to which Net Revenue is pledged. -6-P:120584120584_24Q ORDINANCE NO.5313 "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 ofthe Parity Bonds. "Reserve Requirement"shall mean the Maximum Annual Debt Service;provided,that once the 1998 Bonds,the 2002 Bonds,the 2003 Bonds and the 2004 Bonds are no longer Outstanding,the term "Reserve Requirement"shall mean with respect to any issue of Parity Bonds,the lesser of (a)Maximum Annual Debt Service on all Outstanding Parity Bonds,and (b)125%of average Annual Debt Service on all Outstanding Parity Bonds;provided,that the amount required to be deposited hereunder with respect to any Future Parity Bonds in order to meet the Reserve Requirement shall not exceed 10%of the net proceeds of such Future Parity Bonds under the Code. "Rule"shall mean SEC Rule 15c2-12. "S&P"means Standard &Poor's,a Division of The McGraw Hill Companies,its successors and their assigns,and,if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency,"S&P"shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "Sale Resolution"means the resolutions of the City Council approving the sale of the 2007 Bonds or the 2008 Bonds,as applicable,in accordance with Section 23 of this ordinance. "SEC"shall mean the United States Securities and Exchange Commission. "SID"shall mean a state information depository for the State (if one is created). "State"shall mean the State of Washington. "Tax-Exempt Bonds"shall mean the 2007 Bonds and the City of Renton,Washington Water and Sewer Revenue Bonds,Series 2008A authorized to be issued by this ordinance. "Taxable Bonds"shall mean the City of Renton,Washington Water and Sewer Revenue Bonds,Series 2008B (Taxable)authorized to be issued by this ordinance. "Term Bonds"shall mean any Parity Bonds identified as such in the ordinance authorizing the issuance thereof,the payment of which is provided for by a requirement for mandatory deposits of money into the principal and interest account of the bond redemption fund created for the payment of such issue of bonds in accordance with a mandatory sinking fund requirement. "Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are scheduled to mature. "2008 Bonds"shall mean the City of Renton,Washington Water and Sewer Revenue Bonds,Series 2008A,and the City of Renton,Washington Water and Sewer Revenue Bonds, Series 2008B (Taxable) authorized to be issued by this ordinance. -7- ORDINANCE NO.5313 "2004 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds,2004. "2007 Bonds"shall mean the City of Renton,Washington Water and Sewer Revenue and Refunding Bonds,2007,authorized to be issued by this ordinance. "2003 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds, 2003. "2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds,2002. "Underwriter"shall mean Seattle-Northwest Securities Corporation,Seattle, Washington. "Waterworks Utility"shall mean the combined water,sewer,wastewater and storm drainage systems of the City as the same may be added to,improved and extended for as long as any of the Parity Bonds are outstanding. "Waterworks Utility Fund"shall mean that special fund ofthe City into which all Gross Revenue (except for earnings in any special fund for the redemption of revenue obligations of the Waterworks Utility)shall be deposited. Rules of Interpretation.In this ordinance,unless the context otherwise requires: (a)The terms "hereby,""hereof,""hereto,""herein,"hereunder"and any similar terms,as used in this ordinance,refer to this ordinance as a whole and not to any particular article,section,subdivision or clause hereof,and the term "hereafter"shall mean after,and the term "heretofore"shall mean before,the date of this ordinance; (b)Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; (c)Words importing persons shall include firms,associations,partnerships (including limited partnerships),trusts,corporations and other legal entities,including public bodies,as well as natural persons; (d)Any headings preceding the text of the several sections of this ordinance,and any table of contents or marginal notes appended to copies hereof,shall be solely for convenience of reference and shall not constitute a part of this ordinance,nor shall they affect its meaning, construction or effect; (e)All references herein to "articles,""sections"and other subdivisions or clauses are to the corresponding articles,sections,subdivisions or clauses hereof;and (f)Words importing the singular number include the plural number and vice versa. -8-P:120584120584_24Q ORDINANCE NO.5313 Section 2.Findings Regarding Parity Provisions and the Project.The City Council hereby finds that there is no deficiency in any Parity Bond Fund,that provisions hereinafter meet the conditions for the issuance of Future Parity Bonds as set forth in Section 23 of Ordinance No.4709,Section 22 of Ordinance No.4976,Section 20 of Ordinance No.5019,as amended, and Section 22 of Ordinance No.5098 and that there will be on file prior to the issuance and delivery of the Bonds a certificate of the City Finance Director that satisfies the conditions for such certificate as set forth in Ordinance Nos.4709,4976,5019 and 5098. The City Council further finds that the additions,betterments or extensions to the Waterworks Utility,described in Exhibit A attached hereto (the "Project"),are consistent with the system or plan of additions to and betterments and extensions of the Waterworks Utility as described in the Capital Improvement Program.Therefore,the Bonds shall be issued on a parity of lien with the Parity Bonds. Section 3.Authorization and Description of Bonds.For the purpose of obtaining part of the funds necessary to carry out the Project and to refund the Refunded Bonds,the City shall issue the 2007 Bonds and the 2008 Bonds.The 2007 Bonds shall be designated "City of Renton, Washington Water and Sewer Revenue and Refunding Bonds,2007"and shall be issued in the aggregate principal amount of not to exceed $10,000,000.The 2008 Bonds shall be designated the "City of Renton,Washington Water and Sewer Revenue Bonds,Series 2008A"and the "City of Renton,Washington Water and Sewer Revenue Bonds,Series 2008B (Taxable)"in the aggregate principal amounts of not to exceed $10,000,000 and $3,000,000,respectively. The Bonds shall be dated as of their respective dates of initial issuance and delivery or such other date set forth in the applicable Sale Resolution;shall be issued in fully registered form in the denomination of $5,000 or any integral multiple thereof within a series,provided that no Bond shall represent more than one maturity of a series;shall be numbered separately and in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification and control;shall bear interest (calculated based on a 360-day year of 12 30-day months)at the rates set forth in the applicable Sale Resolution,until the Bonds have been paid or their payment duly provided for,and shall mature on the dates in the years and amounts and shall bear interest from their date payable semiannually at the rates on the dates set forth in the applicable Sale Resolution. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105. Section 4.Registration of Bonds and Book-Entry System. (a)Registrar/Bond Register.The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies.The City shall cause a Bond Register to be maintained by the Bond Registrar.So long as any Bonds remain outstanding,the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Bonds at its principal corporate trust office.The Bond Registrar may be removed at any time at the option of the City Finance Director upon prior notice to the Bond Registrar and a successor Registrar appointed by the City Finance Director.No resignation or removal of the Bond Registrar shall be effective -9-P:120584120584_24Q ORDINANCE NO.5313 until a successor shall have been appointed and until the successor Registrar shall have accepted the duties of the Bond Registrar hereunder. (b)Registered Ownership.The City and the Bond Registrar,each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes (except as provided in Section 24 of this ordinance),and neither the City nor the Bond Registrar shall be affected by any notice to the contrary.Payment of any such Bond shall be made only as described in Section 5 hereof,but such Bond may be transferred as herein provided.All such payments made as described in Section 7 shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. (c)DTC Acceptance/Letters of Representations.The Bonds initially shall be held in fully immobilized form by DTC acting as depository.To induce DTC to accept the Bonds as eligible for deposit at DTC,the City has executed and delivered to DTC a Blanket Issuer Letter of Representations.Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository)with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or any successor depository)or any DTC participant,the payment by DTC (or any successor depository)or any DTC participant of any amount in respect of the principal of or interest on Bonds,any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)),or any consent given or other action taken by DTC (or any successor depository)as the Registered Owner.For so long as any Bonds are held in fully-immobilized form hereunder,DTC or its successor depository shall be deemed to be the Registered Owner for all purposes hereunder,and all references herein to the Registered Owners shall mean DTC (or any successor depository)or its nominee and shall not mean the owners of any beneficial interest in such Bonds. If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable date,then interest shall continue to accrue thereafter on the unpaid principal thereof at the rate stated on such Bond until it is paid. (d)Use ofDepository. (i)The Bonds shall be registered initially in the name of "Cede &Co.",as nominee of DTC,with one Bond maturing on each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Bonds,or any portions thereof,may not thereafter be transferred except (A)to any successor ofDTC or its nominee,provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B)to any substitute depository appointed by the City Finance Director pursuant to subsection (ii)below or such substitute depository's successor;or (C)to any person as provided in subsection (iv)below. -10-P:120584120584_24Q ORDINANCE NO.5313 (ii)Upon the resignation ofDTC or its successor (or any substitute depository or its successor)from its functions as depository or a determination by the City Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor),the City Finance Director may hereafter appoint a substitute depository.Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (iii)In the case of any transfer pursuant to clause (A)or (B)of subsection (i) above,the Bond Registrar shall,upon receipt of all outstanding Bonds,together with a written request of the City Finance Director,issue a single new Bond for each maturity then outstanding, registered in the name of such successor or such substitute depository,or their nominees,as the case may be,all as specified in such written request of the City Finance Director. (iv)In the event that (A)DTC or its successor (or substitute depository or its successor)resigns from its functions as depository,and no substitute depository can be obtained, or (B)the City Finance Director determines that it is in the best interest of the beneficial owners of the Bonds that such owners be able to obtain such bonds in the form of Bond certificates,the ownership of such Bonds may then be transferred to any person or entity as herein provided,and shall no longer be held in fully-immobilized form.The City Finance Director shall deliver a written request to the Bond Registrar,together with a supply of definitive Bonds,to issue Bonds as herein provided in any authorized denomination.Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request of the City Finance Director to the Bond Registrar,new Bonds shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (e)Registration of Transfer of Ownership or Exchange;Change in Denominations. The 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 ofthe 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 transfer of any Bond may be registered and Bonds may be exchanged,but no transfer of any such Bond shall be valid unless it is surrendered to the Bond Registrar with the assigmnent form appearing on such Bond duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar.Upon such surrender,the Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver,without charge to the Registered Owner or transferee therefor,a new Bond (or Bonds at the option of the new Registered Owner)of the same date,maturity and interest rate and for the same aggregate principal amount in any authorized denomination,naming as Registered Owner the person or persons listed as the assignee on the assigmnent form appearing on the surrendered Bond,in exchange for such surrendered and cancelled Bond.Any Bond may be surrendered to the Bond Registrar and exchanged,without charge,for an equal aggregate principal amount of Bonds of the same date, maturity and interest rate,in any authorized denomination.The Bond Registrar shall not be obligated to register the transfer or to exchange any Bond during the 15 days preceding any interest payment or principal payment date any such Bond is to be redeemed. -11-P:120584120584_24Q ORDINANCE NO.5313 (f)Registrar's Ownership ofBonds.The Bond Registrar may become the Registered Owner of any Bond with the same rights it would have if it were not the Bond Registrar,and to the extent permitted by law,may act as depository for and permit any of its officers or directors to act as member of,or in any other capacity with respect to,any committee formed to protect the right of the Registered Owners of Bonds. (g)Registration Covenant.The City covenants that,until all Bonds have been surrendered and canceled,it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code. Section 5.Payment of Bonds.Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America.For so long as all Bonds are in fully immobilized form,payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter of Representations.In the event that the Bonds are no longer in fully immobilized form,interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date,or upon the written request of a Registered Owner of more than $100,000 of Bonds (received by the Bond Registrar at least 10 days prior to the applicable payment date),such payment shall be made by the Bond Registrar by wire transfer to the account within the continental United States designated by the Registered Owner.Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar. The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall be a valid claim of the Owners thereof only as against the Bond Fund,Reserve Fund and the amount of Net Revenue pledged to those funds and shall not be general obligations of the City. Section 6.Redemption;Open Market Purchase of Bonds.The City reserves the right to redeem the Bonds prior to their maturing as set forth in the applicable Sale Resolution.If less than all of the 2007 Bonds or 2008 Bonds subject to optional redemption are called for redemption,then the City shall choose the maturities of such series to be redeemed. The City reserves the right to designate certain maturities of the 2007 Bonds and/or the 2008 Bonds as term bonds ("Term Bonds")in the applicable Sale Resolution,and,if not previously purchased by the City in the open market or optionally redeemed as provided in the applicable Sale Resolution,will be subject to mandatory sinking fund redemption prior to maturity,in part and by lot (in such manner as the Bond Registrar shall determine),at a price of par plus accrued interest to the date of redemption as provided in the applicable Sale Resolution. If the City shall optionally redeem Term Bonds or purchase Term Bonds in the open market,the par amount of the Term Bonds so redeemed or purchased (irrespective of their actual redemption or purchase prices)shall be credited against one or more scheduled mandatory redemption amounts for such Term Bonds (as allocated by the City)beginning not earlier than 60 days after the date of the optional redemption or purchase,and the City shall promptly notify the Bond Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. -12-P:120584120584]4Q ORDINANCE NO.5313 Any Bond in the principal amount of greater than $5,000 may be partially redeemed in any integral multiple of $5,000.For as long as the Bonds are held in book-entry only form,the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC.If the Bonds are no longer held in uncertificated form,the selection of such Bonds to be redeemed and the surrender and reissuance thereof,as applicable,shall be made as provided in the following provisions of this paragraph.If the City redeems at anyone time fewer than all of the Bonds having the same maturity date,the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Bond Registrar)in increments of $5,000.In the case of a Bond of a denomination greater than $5,000,the City and Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000.In the event of a partial redemption of a Bond,upon surrender of such Bond at the principal corporate trust office of the Bond Registrar,a new Bond or Bonds (at the option of the Owner)of the same maturity and interest rate and in the aggregate principal amount remaining unredeemed shall be authenticated and delivered to the Owner,without charge to the Owner therefore,in any denomination authorized by this ordinance and selected by the Owner. The City reserves the right to purchase any or all of the Bonds on the open market at any time and at any price. All Bonds purchased under this Section shall be canceled. Section 7.Notice of Redemption.For so long as the Bonds are held in uncertificated form,notice of redemption shall be given in accordance with the operational arrangements of DTC as then in effect,and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial Owners.Thereafter,notice of redemption 'shall be given by or on behalf of the City not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid,to the Owner of any Bond to be redeemed at the address appearing on the Bond Register on the day notice is mailed,and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the Owner of any Bond.All official notices of redemption shall be dated and shall state:(A)the redemption date,(B)the redemption price, (C)if fewer than all outstanding Bonds are to be redeemed,the identification by maturity (and,in the case of partial redemption,the respective principal amounts)of the Bonds to be redeemed, (D)that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption,and that interest thereon shall cease to accrue from and after said date,and (E)the place where such Bonds are to be surrendered for payment of the redemption price,which place of payment shall be the principal office of the Bond Registrar. If such notice to the Owners shall have been given and the City shall have set aside,on the date fixed for redemption,sufficient money for the payment of all Bonds called for redemption,the Bonds so called shall cease to accrue interest after such redemption date,and all such Bonds shall be deemed not to be outstanding under this ordinance for any purposes,except that the Owners thereof shall be entitled to receive payment of the redemption price and accrued interest to the redemption date from the money set aside for such purpose. -13-P:120584120584_24Q ORDINANCE NO.5313 In addition,further notice shall be given by the City as set out below,but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (A)the CUSIP numbers of all Bonds being redeemed;(B)the date of issue of the Bonds as originally issued;(C)the rate of interest borne by each Bond being redeemed;(D)the maturity date of each Bond being redeemed;and (E)any other descriptive information needed to identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at least 35 days before the redemption date to the Bond Insurer,if any,to party entitled to receive notice pursuant to Section 27,and to such persons (including securities repositories who customarily at the time receive notices of redemption in accordance with rules promulgated by the SEC)and with such additional information as the City shall deem appropriate,but such mailings shall not be a condition precedent to the redemption of such Bonds. Section 8.Failure to Redeem Bonds.If any Bond is not redeemed when properly presented at its maturity or redemption date,the City shall be obligated to pay interest on such Bond at the same rate provided in the Bond from and after its maturity or redemption date until such Bond,both principal and interest,is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund,and the Bond has been called for redemption by giving notice of that redemption to the Owner of each of such unpaid Bonds. Section 9.Form of Bonds.The Bonds shall be in substantially the form set forth in Exhibit B attached hereto. Section 10.Execution of Bonds.The Bonds shall be executed on behalf of the City by the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the City impressed or a facsimile thereof imprinted thereon. In the event any officer who shall have signed or whose facsimile signatures appear on any of the Bonds shall cease to be such officer of the City before said Bonds shall have been authenticated or delivered by the Bond Registrar or issued by the City,such Bonds may nevertheless be authenticated,delivered and issued and,upon such authentication,delivery and issuance,shall be as binding upon the City as though said person had not ceased to be such officer.Any Bond may be signed and attested on behalf of the City by such persons who,at the actual date of execution of such Bond shall be the proper officer of the City,although at the original date of such Bond such persons were not such officers of the City. Section 11.Authentication and Delivery of Bonds by Bond Registrar.The Bond Registrar is authorized and directed,on behalf of the City,to authenticate and deliver Bonds initially issued or transferred or exchanged in accordance with the provisions of such Bonds,this ordinance and the applicable Sale Resolution. Only such Bonds as shall bear thereon a "Certificate of Authentication"manually executed by an authorized representative of the Bond Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance.Such Certificate of Authentication shall -14-P:120584120584_24Q ORDINANCE NO.5313 be conclusive evidence that the Bonds so authenticated have been duly executed,authenticated and delivered hereunder and are entitled to the benefits of this ordinance. The Bond Registrar shall be responsible for its representations contained III the Certificate of Authentication on the Bonds. Section 12.Lost,Stolen or Destroyed Bonds.In case any Bonds shall be lost,stolen or destroyed,the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount, date and tenor to the Owner thereof upon the Owner's paying the expenses and charges of the Bond Registrar and the City in connection therewith and upon his filing with the Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were actually lost,stolen or destroyed and of his ownership thereof,and upon furnishing the City and the Registrar with indemnity satisfactory to both. Section 13.Creation of Fund.There is hereby created in the City Treasury the Waterworks Revenue Bond Fund (the "Bond Fund"),which shall be a subaccount of the Waterworks Utility Fund. Section 14.Deposits into Funds.The Bond Fund shall be maintained for the purpose of paying the principal of and interest on the Bonds.As long as any Bond remains outstanding,the City hereby irrevocably obligates and binds itself to set aside and pay from the Waterworks Utility Fund into the Bond Fund those amounts necessary,together with such other funds as are on hand and available in the Bond Fund,to pay the interest or principal and interest next coming due on outstanding Bonds.Such payments from the Waterworks Utility Fund to the Bond Fund shall be made in a fixed amount without regard to any fixed proportion following the closing and delivery of the Bonds on or before each date on which an installment of interest or principal and interest falls due on the Bonds equal to the installment of interest or principal and interest. There has heretofore been created by the City a special fund of the City known as the Waterworks Revenue Bond Reserve Fund (the "Reserve Fund")for purpose of securing the payment of the principal of and interest on all bonds to which Net Revenue is pledged.The City hereby irrevocably covenants and agrees that on or prior to the date of issuance of the Bonds,the amount on deposit in the Reserve Fund will be at least equal to the Reserve Requirement for the Parity Bonds.The City shall satisfy the Reserve Requirement to the extent necessary upon the issuance of the 2007 Bonds and the 2008 Bonds by depositing proceeds of such Bonds or other funds available therefor into the Reserve Fund or by obtaining Reserve Insurance. Except for withdrawals therefrom as authorized herein,the Reserve Fund shall be maintained at the Reserve Requirement at all times so long as any Parity Bonds are Outstanding. When the total amount in the Bond Fund shall equal the total amount of principal and interest for all outstanding Bonds,no further payment need be made into the Bond Fund.Notwithstanding the first sentence of this paragraph,the Reserve Requirement may be decreased for any issue of Parity Bonds when and to the extent the City has redeemed or otherwise defeased any Outstanding Parity Bonds. If there shall be a deficiency in the Bond Fund to meet maturing installments of either principal or interest,as the case may be,on the Bonds,that deficiency shall be made up from the -15- ORDINANCE NO.5313 Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been depleted,then by draws on the Alternate Security or Reserve Insurance for that purpose.Any deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up from Net Revenue first available after making necessary provisions for the required payments into the Bond Fund.Any money in the Reserve Fund in excess of the Reserve Requirement may be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity Bonds or may be deposited in any other fund and spent for any other lawful Waterworks Utility purpose. The City may provide for the purchase,redemption or defeasance of Parity Bonds by the use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity Bonds. All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the official bank depository of the City or in any national bank or may be invested in any legal investment for City funds.Interest on any of those investments or on that bank account shall be deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated therein,after which time the interest shall be deposited in any Parity Bond Fund. Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond Fund or the Reserve Fund,the City also may transfer out of the Bond Fund or Reserve Fund any money required in order to prevent any Parity Bonds from becoming "arbitrage bonds"under the Code. Ifthe 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 15.Rate Stabilization Fund.The City has previously created a Waterworks Rate Stabilization Fund (the "Rate Stabilization Fund").The City may,at any time,as determined by the City and as consistent with Section 16 of this ordinance,deposit Gross Revenue into the Rate Stabilization Fund,excluding principal proceeds of Parity Bonds or other borrowing.The City may withdraw any or all of the money from the Rate Stabilization Fund for inclusion in Gross Revenue for any fiscal year of the City.Such deposits or withdrawals may be made up to and including the date 90 days after the end of the fiscal year for which the deposit or withdrawal will be included in Gross Revenue.No deposit of Gross Revenue will be made into the Rate Stabilization Fund to the extent that such deposit would prevent the City from meeting the Coverage Requirement. Section 16.Flow of Funds.Gross Revenue on deposit in the Waterworks Utility Fund (other than in any bond redemption or federal rebate account)shall be used in the following order of priority: (a)To pay Maintenance and Operation Expense; -16- ORDINANCE NO.5313 (b)To pay the interest on the Parity Bonds,including reimbursements to the issuer of a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or Qualified Insurance secures the payment of interest on Parity Bonds and the ordinance authorizing such Parity Bonds provides for such reimbursement; (c)To pay the principal of the Parity Bonds,including reimbursements to the issuer of a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or Qualified Insurance secures the payment of interest on Parity Bonds and the ordinance authorizing such Parity Bonds provides for such reimbursement; (d)To make all payments required to be made into any sinking fund or bond redemption fund hereafter created for the payment of Future Parity Bonds which are Term Bonds; (e)To make all payments required to be made into the Reserve Fund,including reimbursements to the issuer of a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or Qualified Insurance secures the payment of interest on Parity Bonds and the ordinance authorizing such Parity Bonds provides for such reimbursement; (f)To make all payments required.to be made into any revenue bond redemption fund or warrant redemption fund and debt service account or reserve account created to pay and secure the payment of the principal of and interest on any revenue bonds or revenue warrants of the City having a lien upon Gross Revenue junior and inferior to the lien thereon for the payment of the principal of and interest on the Parity Bonds;and (g)To retire by optional redemption or purchase in the open market any outstanding revenue bonds or revenue warrants of the City,to make necessary additions,betterments, improvements and repairs to or extensions and replacements of the Waterworks Utility,to make deposits into the Rate Stabilization Fund,or for any other lawful City purpose. Section 17.Pledge of Revenue and Lien Position.The Net Revenue is pledged to the payment of the Parity Bonds,and the Parity Bonds shall constitute a lien and charge upon such Net Revenue prior and superior to any other charge whatsoever. Section 18.Findings Regarding Sufficiency of Revenue.In the judgment of the City Council,Gross Revenue and benefits to be derived from the operation and maintenance of the Waterworks Utility,at the rates to be charged for water,sanitary sewage disposal service and storm and surface water drainage service in the entire utility,will be more than sufficient to meet all Maintenance and Operation Expense (and cost of maintenance and operation of the Waterworks Utility as that term is used in RCW 35.92.100)and the debt service requirements of the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve Fund,out of the revenue of the entire utility,of amounts sufficient to pay the interest on the Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity.The City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid into the Bond Fund and the Reserve Fund,as aforesaid,it has exercised due regard for the Maintenance and Operation Expense (and costs of maintenance and operation as used in RCW 35.92.100)and the debt service requirements of the currently outstanding Parity Bonds, -17- ORDINANCE NO.5313 and the City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve Fund,a greater amount or proportion of the revenue of that utility than in the judgment of the City Council will be available over and above Maintenance and Operation Expense (and such costs of maintenance and operation of the Waterworks Utility as that term is used in RCW 35.92.100)and debt service requirements of the currently outstanding Parity Bonds and that no portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness other than the payment of the currently outstanding Parity Bonds. Section 19.Covenants.The City covenants and agrees with the Owner of each Bond at any time outstanding as follows: (a)Rate Covenant.It will establish,maintain and collect rates and charges for all services and facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,and will adjust those rates and charges from time to time so that: (1)Gross Revenue will at all times be sufficient to (A)pay all Maintenance and Operation Expense on a current basis,(B)pay when due all amounts that the City is obligated to pay into the Reserve Fund and any Parity Bond Funds and (C)pay all taxes, assessments or other governmental charges lawfully imposed upon the Waterworks Utility or other revenue therefrom or payments in lieu thereof and any and all other amounts which the City may now or hereafter become obligated to pay from Gross Revenue by law or contract;and (2)Net Revenue in each calendar year will be at least equal to the Coverage Requirement. (b)Maintenance and Repair.It will at all times maintain and keep the Waterworks Utility in good repair,working order and condition and also will at all times operate such Utility and the business in connection therewith in an efficient manner and at a reasonable cost. (c)Disposal of Waterworks Utility.It will not sell,lease,mortgage or in any manner encumber or otherwise dispose of the Waterworks Utility in its entirety unless,simultaneously with such sale or other disposition,all Parity Bonds are defeased pursuant to the provisions of this ordinance. It will not sell,lease,mortgage or in any manner encumber or otherwise dispose of any part of the Waterworks Utility (other than timber),including all additions and improvements thereto and extensions thereof at any time made,that are used,useful or material in the operation of the Waterworks Utility,unless provision is made for the replacement thereof or for payment into the Bond Fund of the greatest of the following: (1)An amount which will be in the same proportion to the net amount of any Parity Bonds then outstanding (defined as the total amount of those bonds less the amount of cash and investments in the Reserve Fund and any Parity Bond Funds)that Gross Revenue from the portion of the Waterworks Utility sold or disposed of for the preceding year bears to the total Gross Revenue for that period; (2)An amount which will be in the same proportion to the net amount of any Parity Bonds then outstanding (as defined above)that the Net Revenue from the portion of the -18-P:120584120584_24Q ORDINANCE NO.5313 Waterworks Utility sold or disposed of for the preceding year bears to the total Net Revenue for that period;or (3)An amount which will be in the same proportion to the net amount of any Parity Bonds then outstanding (as defined above)that the depreciated cost value of the facilities sold or disposed of bears to the depreciated cost value of the entire Waterworks Utility immediately prior to such sale or disposition. Notwithstanding any other provision of this subsection,(1)the City in its discretion may sell or otherwise dispose of any of the works,plant,properties or facilities of the Waterworks Utility or any real or personal property comprising a part of the same which shall have become unserviceable,inadequate,obsolete or unfit to be used in the operation of the Waterworks Utility,or no longer necessary,material to or useful to the operation of the Waterworks Utility, without making any deposit into the Bond Fund,and (2)the City may transfer the Waterworks Utility to another municipal corporation so long as Net Revenue of the portion of the Waterworks Utility so transferred is used for payment of debt service on the Parity Bonds prior to any other purpose.In no event shall such proceeds be treated as Gross Revenue for purposes of this ordinance. (d)Books and Records.It will keep proper books,records and accounts with respect to the operations,income and expenditures of the Waterworks Utility in accordance with proper accounting procedures and any applicable rules and regulations prescribed by the State.It will prepare annual financial and operating statements within 270 days of the close of each fiscal year showing in reasonable detail the fmancial 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)No Free Service.Except to aid the poor or infirm,to provide for resource conservation or to provide for the proper handling of hazardous materials,it will not furnish or supply or permit the furnishing or supplying of any service or facility in connection with the operation of the Waterworks Utility free of charge to any person,firm or corporation,public or private,other than the City,so long as any Parity Bonds are outstanding.On at least an annual basis,it will determine all accounts that are delinquent and will take all necessary action to enforce payment of such accounts against those property owners whose accounts are delinquent. (f)Insurance.It at all times will carry fire and extended coverage and such other forms of insurance,including public liability and property damage insurance,with responsible insurers and with policies payable to or on behalf of the City and any additional insureds on such of the buildings,equipment,works,plants,facilities and properties of the Waterworks Utility, and against such claims for damages,as are ordinarily carried by municipal or privately owned utilities engaged in the operation of like systems,or will implement and maintain a self-insurance or an insurance pool program with reserves adequate,in the reasonable judgment of the City,to protect the Waterworks Utility and the Owners of the Parity Bonds against loss. -19- ORDINANCE NO.5313 (g)Maintenance and Operation Expense.It will pay all Maintenance and Operation Expense and the debt service requirements for the outstanding Parity Bonds,and otherwise meet the obligations ofthe City as herein set forth. Section 20.Tax Covenants.The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exemption from federal income taxation of the interest on the Tax-Exempt 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 Tax-Exempt Bonds. (a)Arbitrage Covenant.Without limiting the generality of the foregoing,the City covenants that it will not take any action or fail to take any action with respect to the proceeds of sale of the Tax-Exempt Bonds or any other funds of the City which may be deemed to be proceeds of the Tax-Exempt Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which,if such use had been reasonably expected on the date of delivery of the Tax-Exempt Bonds to the initial purchasers thereof,would have caused the Tax-Exempt Bonds as "arbitrage bonds"within the meaning of such term as used in Section 148 of the Code. The City represents that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications may not be relied upon.The City will comply with the requirements of Section 148 of the Code and the applicable regulations thereunder throughout the term of the Tax-Exempt Bonds. (b)Private Person Use Limitation for Bonds.The City covenants that for as long as the Tax-Exempt Bonds are outstanding,it will not permit: (1)More than 10%of the Net Proceeds of the Tax-Exempt Bonds to be used for any Private Person Use;and (2)More than 10%of the principal or interest payments on the Tax-Exempt Bonds in a bond year to be directly or indirectly:(A)secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use,or (B)derived from payments (whether or not made to the City) in respect of property,or borrowed money,used or to be used for any Private Person Use. The City further covenants that,if: (3)More than five percent of the Net Proceeds of the Tax-Exempt Bonds are to be used for any Private Person Use;and (4)More than five percent of the principal or interest payments on the Tax- Exempt Bonds in a bond year are (under the terms of this ordinance or any underlying arrangement)directly or indirectly: (A)secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use,or -20-P:120584120584_24Q ORDINANCE NO.5313 (B)derived from payments (whether or not made to the City)III respect of property,or borrowed money,used or to be used for any Private Person Use, then,(i)any Private Person Use of the projects described in subsection (3)hereof or Private Person Use payments described in subsection (4)hereof that is in excess of the five percent limitations described in such subsections (3)or (4)will be for a Private Person Use that is related to the state or local governmental use of the Project,and (ii)any Private Person Use will not exceed the amount of Net Proceeds of the Tax-Exempt Bonds used for the state or local governmental use portion of the project to which the Private Person Use of such portion of the Project relates.The City further covenants that it will comply with any limitations on the use of the projects by other than state and local governmental users that are necessary,in the opinion of its bond counsel,to preserve the tax exemption of the interest on the Tax-Exempt Bonds. (c)Modification ofTax Covenants.The covenants of this Section are specified solely to assure the continued exemption from regular income taxation of the interest on the Tax- Exempt Bonds.To that end,the provisions of this Section may be modified or eliminated without any requirement for formal amendment thereof upon receipt of an opinion of the City's bond counsel that such modification or elimination will not adversely affect the tax exemption of interest on any Tax-Exempt Bonds. (d)Qualified Tax-Exempt Obligation.The City hereby designates the Tax-Exempt Bonds as "qualified tax-exempt obligations"under Section 265(b)(3)of the Code for banks, thrift institutions and other financial institutions.The City does not anticipate that it will issue more than $10,000,000 in qualified tax-exempt obligations during 2007 or 2008,respectively. Section 21.Defeasance of the Bonds.The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to pay when due the principal of and interest on the Bonds,or any portion thereof included in a refunding or defeasance plan,and to redeem and retire,refund or defease all such then-outstanding Bonds (hereinafter collectively called the "defeased Bonds")and to pay the costs of the refunding or defeasance.If money and/or Governmental Obligations maturing at a time or times and bearing interest in amounts (together with money,if necessary)sufficient to redeem and retire,refund or decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption,retirement or defeasance of defeased Bonds (hereinafter called the "trust account"),then all right and interest of the Owners of the defeased Bonds in the covenants of this ordinance,in Gross Revenue and in funds and accounts obligated to the payment of the defeased Bonds,other than the right to receive the funds so set aside and pledged,shall cease and become void.The owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account and,if the funds in the trust account are not available for such payment,shall have the residual right to receive payment of the principal of and interest on the defeased Bonds from 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 -21- ORDINANCE NO.5313 Bonds to any lawful purposes as it shall determine,subject only to the rights,if any,of the owners of any other Parity Bonds then outstanding. If the refunding plan provides that the defeased Bonds or the refunding bonds to be issued be secured by cash and/or Governmental Obligations pending the prior redemption of the defeased Bonds and if such refunding plan also provides that certain cash and/or Governmental Obligations 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. Within 45 days of any defeasance of Bonds,the City shall provide notice of defeasance of Bonds to Registered Owners of Bonds being defeased,and to the Bond Insurer,if any,and to each party entitled to receive notice in accordance with Section 27. Section 22.Provision for Future Parity Bonds.The City reserves the right to issue Future Parity Bonds if the following conditions are met and complied with at the time of issuance of those additional bonds: (a)There shall be no deficiency in any Parity Bond Fund. (b)The ordinance providing for the issuance of such Future Parity Bonds shall provide for the payment ofthe principal thereof and interest thereon out of a Parity Bond Fund. (c)The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of (1)an amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or (2)Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds.For federal income tax purposes,at the discretion of the City,to the extent that the Reserve Requirement carmot be funded from Future Parity Bond proceeds,the City shall provide for deposit into the Reserve Fund other legally available money from Net Revenue or Reserve Insurance or Alternate Security within three years from the date of issuance of the Future Parity Bonds in three approximately equal armual payments. After the 1998 Bonds,the 2002 Bonds,and the 2003 Bonds are no longer Outstanding, this subsection shall be amended to read as follows:(c)The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of (1)an amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or (2)Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds.At the discretion of the City,the City may provide for deposit into the Reserve Fund of other legally available money from Net Revenue or Reserve Insurance or Alternate Security either on or prior to the date of issuance of such Future Parity Bonds or within three years from the date of issuance of the Future Parity Bonds in three approximately equal armual payments and in such event,the ordinance providing for the issuance of such Future Parity Bonds shall provide for such deposit. -22-P:\20584\20584_24Q ORDINANCE NO.5313 After the 1998 Bonds,the 2002 Bonds,the 2003 Bonds and the 2004 Bonds are no longer Outstanding,this subsection shall be amended to read as follows:(c)The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of (1)an amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or (2)Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds.At the discretion of the City,the City may provide for deposit into the Reserve Fund of other legally available money from Net Revenue or Reserve Insurance or Alternate Security on or prior to the date of issuance of such Future Parity Bonds. (d)The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the payment of mandatory redemption or sinking fund requirements into the applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments to be made for the payment of the principal of such Term Bonds on or before their maturity,or,as an alternative, the mandatory redemption of those Term Bonds prior to their maturity date from money in the applicable Parity Bond Fund. (e)There shall be on file with the City either: (1)a certificate of the City Finance Director demonstrating that during any 12 consecutive calendar months out of the immediately preceding 36 calendar months Net Revenue,without regard to deposits into or withdrawals from the Rate Stabilization Fund,is equal to at least 1.25 times the Maximum Annual Debt Service for all Parity Bonds plus the Future Parity Bonds proposed to be issued;provided,once the 1998 Bonds,the 2002 Bonds,the 2003 Bonds and the 2004 Bonds are no longer Outstanding,this Section shall be amended to read as follows:a certificate of the City Finance Director demonstrating that during any 12 consecutive calendar months out of the immediately preceding 24 calendar months Net Revenue,without regard to deposits into or withdrawals from the Rate Stabilization Fund,is equal to at least 1.25 times the Maximum Annual Debt Service 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,without regard to deposits into or withdrawals from the Rate Stabilization Fund,shall be equal to 1.25 times the Maximum Annual Debt Service for all Parity Bonds plus the Future Parity Bonds proposed to be issued; provided, once the 1998 Bonds,the 2002 Bonds,the 2003 Bonds and the 2004 Bonds are no longer Outstanding,this Section shall be amended to read as follows:a certificate of a Professional Utility Consultant that in such consultant's opinion Net Revenue for any 12 consecutive calendar months out of the immediately preceding 24 calendar months,without regard to deposits into or withdrawals from the Rate Stabilization Fund,shall be equal to 1.25 times the Maximum Annual Debt Service for all Parity Bonds plus the Future Parity Bonds proposed to be issued.The certificate,in estimating Net Revenue available for debt services,may adjust Net Revenue to reflect: (A)Any changes in rates in effect and being charged or expressly committed by ordinance to be made in the future; -23-P:\20584\20584_24Q ORDINANCE NO.5313 (B)Income derived from customers of the Waterworks Utility who have become customers during the 12 consecutive month period or thereafter adjusted to reflect one year's Net Revenue from those customers; (C)Income from any customers to be connected to the Waterworks Utility who have paid the required connection charges; (D)The Professional Utility Consultant's estimate of the Net Revenue to be derived from customers anticipated to connect for whom building permits have been issued; (E)Income received or to be received which is derived from any person,firm corporation or municipal corporation under any executed contract for water, sewage disposal or other utility service,which revenue was not included in the historical Net Revenue; (F)The Professional Utility Consultant's estimate of the Net Revenue to be derived from customers with existing homes or buildings which will be required to connect to any additions to and improvements and extensions of the Waterworks Utility constructed and to be paid for out of the proceeds of the sale of the additional Future Parity Bonds or other additions to and improvements and extensions of the Waterworks Utility when such additions, improvements and extensions are not completed;and (G)Any increases or decrease in Net Revenue as a result of any actual or reasonably anticipated changes in Maintenance and Operation Expense subsequent to the 12-month period. If Future Parity Bonds proposed to be so issued are for the sole purpose of refunding outstanding bonds payable from any Parity Bond Fund,such certification of coverage shall not be required if the amount required for the payment of the principal and interest in each year for the refunding bonds is not increased more than $5,000 over the amount for that same year required for the bonds or the portion of that bond issue to be refunded thereby and if the maturities of such refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. Nothing contained herein shall prevent the City from issuing Future Parity Bonds to refund maturing Bonds or Future Parity Bonds then outstanding,money for the payment of which is not otherwise available. Nothing contained herein shall prevent the City from issuing revenue bonds that are a charge upon Gross Revenue subordinate to the payments required to be made therefrom into any Parity Bond Fund. Section 23.Sale of Bonds.The City Finance Director is hereby authorized to enter into negotiations with the Underwriter for the sale of the 2007 Bonds and the 2008 Bonds on terms consistent with the terms of this ordinance.The City Council shall by the applicable Sale Resolution approve a Purchase Agreement for the purchase and sale of the 2007 Bonds and the 2008 Bonds,approve the terms of the 2007 Bonds and the 2008 Bonds (including the schedule of maturities,interest rates,redemption times and prices),and may approve the purchase of bond -24-P:120584120584_24Q ORDINANCE NO.5313 insurance pursuant to a recommendation of the City Finance Director.The City Finance Director is hereby authorized to enter into negotiations with potential bond insurers to provide a bond insurance policy guaranteeing the payment when due of principal of and interest on the 2007 Bonds and/or the 2008 Bonds. Section 24.Delivery of Bonds;Temporary Bonds.The proper City officials,including, but not limited to,the City Finance Director,are authorized and directed (a)to execute all documents necessary to complete the issuance and delivery of the Bonds as of their respective Closing to the Underwriter,including,but not limited to,the final official statement pertaining to the 2007 Bonds and the 2008 Bonds;and (b)to do everything necessary for (1)the preparation and delivery of a transcript of proceedings pertaining to the Bonds,and (2)the preparation, execution and delivery of definitive Bonds to the Underwriter,each without unreasonable delay. If definitive Bonds are not ready for delivery by the date of the applicable Closing agreed to by the City and the Underwriter,the City,upon the approval of the Underwriter,may cause to be issued and delivered to the Underwriter one or more temporary Bonds with appropriate omissions,changes and additions.Any temporary Bonds shall be entitled and subject to the same benefits and provisions of this ordinance with respect to the payment,security and obligation thereof as definitive Bonds authorized hereby.Such temporary Bond or Bonds shall be exchangeable without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery. Section 25.Application of Bond Proceeds.The accrued interest,if any,received by the City at the Closing of the 2007 Bonds and the 2008 Bonds shall be deposited into the Bond Fund and shall be applied to the payment of interest first coming due on the 2007 Bonds or the 2008 Bonds,as applicable. The remaining proceeds of the sale of the 2007 Bonds and the 2008 Bonds,less the underwriter's discount and the bond insurance premium to be paid by the Underwriter on behalf of the City or any other costs of issuance,if any,plus the original issue premium,if any,shall be applied,upon receipt after each Closing,as follows: (a)the amount required to meet the Reserve Requirement for the 2007 Bonds,if any, or the 2008 Bonds,if any,shall be deposited into the Reserve Fund or used to acquire Qualified Insurance, (b)the proceeds of sale of the 2007 Bonds necessary to refund the Refunded Bonds shall be deposited into the Refunding Account, (c)the remaining proceeds of the Tax-Exempt Bonds shall be deposited into the tax- exempt bond subaccount hereby authorized to be created in the Project Fund (the "Tax-Exempt Subaccount")to pay part of the costs of the Project,and (d)the proceeds of the Taxable Bonds shall be deposited into the taxable bond subaccount hereby authorized to be created in the Project Fund (the "Taxable Subaccount")to pay part of the costs of the Project. -25- ORDINANCE NO.5313 Except as provided by the Code and Section 20 of this ordinance,the interest and profits derived from the investment of Bond proceeds shall be deposited in the applicable Tax-Exempt or Taxable Subaccount created within the Project Fund and applied as described in the preceding paragraph. Except as provided by the Code and Section 20 of this ordinance,if any money allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the Project or after termination of the Project by the City,such money shall be transferred to the Bond Fund and applied to the payment of the principal of and interest on the Bonds. Pending application as described in this Section and subject to the requirements of the Code and Section 20 of this ordinance,money allocable to the Bond proceeds in the Project Fund may be temporarily deposited in such institutions or invested in such investments as may be lawful for the investment of City funds. Section 26.Plan of Refunding. (a)Refunding Plan.For the purpose of realizing a debt service savings,the City Council proposes to issue refunding bonds for the purpose of providing for the payment of the principal of and interest on and the redemption price of the Refunded Bonds on December 1, 2012 (the "Refunding Plan"). (b)Refunding Account.There is created an account known as the "2002 Bond Refunding Account"(the "Refunding Account")to be held by the Escrow Agent,which account is to be drawn upon for the sole purpose of paying the principal of and interest on the Refunded Bonds until their date of redemption and of paying costs related to the refunding of these bonds. The proceeds of sale of the 2007 Bonds necessary to refund the Refunded Bonds shall be credited to the Refunding Account. Money in the Refunding Account shall be used immediately upon receipt to defease the Refunded Bonds as authorized by this ordinance and Ordinance No.4976 and to pay costs of issuance for the 2007 Bonds.The City shall defease the Refunded Bonds and discharge such obligations by the use of money in the Refunding Account to purchase certain Government Obligations (which obligations so purchased,are herein called "Acquired Obligations"),bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance,will provide for the payment of: (i)interest on the Refunded Bonds to and including December 1,2012; (ii)the redemption price of the Refunded Bonds (100%of the principal amount thereof)on December 1,2012; Such Acquired Obligations shall be purchased at a yield not greater than the yield permitted by the Code and regulations relating to acquired obligations in connection with refunding bond issues. -26-P:120584120584_24Q ORDINANCE NO.5313 (c)Escrow Agent/Escrow Agreement.To carry out the refunding and defeasance of the Refunded Bonds,the City hereby appoints u.s.Bank National Association as escrow agent (the "Escrow Agent").A beginning cash balance,if any,and Acquired Obligations shall be deposited irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds.The proceeds of the 2007 Bonds remaining in the Refunding Account after acquisition of the Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired Obligations and expenses of the issuance of the 2007 Bonds. In order to carry out the purposes of this Section,the Mayor,the City Finance Director and other appropriate officers of the City are authorized and directed to execute and deliver to the Escrow Agent,an Escrow Deposit Agreement,substantially in the form on file with the City. (d)Implementation of Refunding Plan.The City hereby irrevocably sets aside sufficient funds out of the purchase of Acquired Obligations from proceeds of the Refunded Bonds to make the payments described in subsection (b)of this Section. The City hereby irrevocably calls the Refunded Bonds for redemption on December 1, 2012 in accordance with the provisions of Ordinance No.4976 authorizing the redemption and retirement of the Refunded Bonds prior to their fixed maturities.Said call for redemption of the Refunded Bonds shall be irrevocable after the final establishment of the escrow account and delivery of the Acquired Obligations to the Escrow Agent. The Escrow Agent is hereby authorized and directed to provide for the giving of notices of the redemption of the Refunded Bonds in accordance with the applicable provisions of Ordinance No.4976.The City Finance Director is authorized and requested to provide whatever assistance is necessary to accomplish such redemption and the giving of notices therefor.The costs of publication of such notices shall be an expense of the City. The Escrow Agent is hereby authorized and directed to pay to the Bond Registrar,sums sufficient to pay,when due,the payments specified in of subsection (a)of this Section.All such sums shall be paid from the money and Acquired Obligations deposited with said Escrow Agent pursuant to the previous section of this ordinance,and the income therefrom and proceeds thereof.All such sums so paid to said Bond Registrar shall be credited to the Refunding Account.All money and Acquired Obligations deposited with the bank and any income therefrom shall be held,invested (but only at the direction of the City Finance Director)and applied in accordance with the provisions of this ordinance and with the laws of the State of Washington for the benefit of the City and owners of the Refunded Bonds. The City will take such actions as are found necessary to ensure that all necessary and proper fees,compensation and expenses of the Escrow Agent for the Refunded Bonds shall be paid when due. Section 27.Undertaking to Provide Continuing Disclosure.This section constitutes the City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds required by subsection (b)(5)(i)of the Rule. -27-P:120584120584_24Q ORDINANCE NO.5313 The City hereby agrees to provide or cause to be provided to each then existing NRMSIR and to the SID,if one is created,in each case as designated by the SEC,the following annual financial information and operating data (collectively,the "Annual Financial Information")for each prior fiscal year,commencing in 2008 with the calendar year ending December 31,2007 with respect to the 2007 Bonds,and commencing in 2008 with the calendar year ending December 31,2008 with respect to the 2008 Bonds: (a)Annual financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units,as such principles may be changed from time to time by the Washington State Auditor pursuant to RCW 43.09.200,which statements will not be audited,except that if and when audited financial statements are otherwise prepared and available to the City,they will be provided (the "Annual Financial Statements"); (b) Revenue; (c) A statement of authorized,issued and outstanding bonded debt secured by the Net Debt service coverage ratios; (d)General customer statistics for the Waterworks Utility contained in the final official statement for the Bonds under the heading "The Waterworks Utility-Number of Water Customers,""-Water Billing,""-Number of Wastewater Customers,""-Wastewater Billing,""-Number of Storm Drainage Customers,"and "-Storm Drainage Billing"and (e)A narrative explanation of the reasons for any amendments to this Section made during the previous fiscal year and-the impact of such amendments on the Annual Financial Information being provided. The Annual Financial Information shall be provided on or before the last day of the seventh month following the end of such prior fiscal year;provided,after the 1998 Bonds,the 2002 Bonds,the 2003 Bonds and the 2004 Bonds are no longer Outstanding the City shall provide the following Annual Financial Information on or before the last day of the ninth month following the end of the prior fiscal year.The City's current fiscal year ends December 31.The City may adjust such fiscal year by providing written notice of the change of fiscal year to each then existing NRMSIR and the SID,if any.In lieu of providing such Annual Financial Information,the City may cross-reference to any "final official statement"(as defined in the Rule)available from the MSRB or any other documents theretofore provided to each then existing NRMSIR or the SID,if one is created. If not submitted as part of the Annual Financial Information,then when and if available, the City shall provide its Annual Financial Statements,which shall have been audited by such auditor as shall be then required or permitted by the State law,to each then existing NRMSIR and to the SID,if any. The City further agrees to provide or cause to be provided,in a timely manner,to the SID,if any,and to each then existing NRMSIR,notice of any of the following events with respect to the Bonds,ifmaterial: 1.Principal and interest payment delinquencies; -28-P:\20584\20584_24Q 2. 3. 4. 5. 6. Bonds; 7. 8. 9. 10. 11. ORDINANCE NO.5313 Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties;. Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers,or their failure to perform; Adverse tax opinions or events affecting the tax-exempt status of the Tax-Exempt Modifications to rights of the Owners of the Bonds; Bond calls (optional,contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856); Defeasances of the Bonds; Release,substitution or sale of property securing repayment of the Bonds;and Rating changes. Solely for purposes of disclosure,and not intending to modify this undertaking,the City advises that there is no property securing repayment of the Bonds and that interest earned on the Taxable Bonds will not be excluded from gross income of the owners of the Taxable Bonds for federal income tax purposes. The City also agrees to provide or cause to be provided,in a timely manner,to the SID,if any,and to each then existing NRMSIR,notice of its failure to provide the Annual Financial Information for the prior fiscal year on or before the date set forth above. After the issuance of the Bonds,so long as the interests of the Owners or Beneficial Owners of the Bonds will not be materially impaired thereby,as determined by a party unaffiliated with the City (including,without limitation,a trustee for the Owners,nationally recognized bond counselor other counsel familiar with the federal securities law),or pursuant to a favorable "no-action letter"issued by the SEC,this Section may only be amended in connection with any change in legal requirements,change in law,or change in the identity, nature or status ofthe obligated person,or type of business conducted,and only in such a manner that the undertaking of the City,as so amended,would have complied with the requirements of the Rule at the time of the primary offering,after taking into account any amendments or interpretations of the Rule,as well as any change in circumstances. The City's obligations to provide Annual Financial Information and notices of certain events shall terminate without amendment upon the defeasance,prior redemption or payment in full of all of the then outstanding Bonds.This Section or any provision hereof,shall be null and void if the City (i)obtains an opinion of nationally recognized bond counselor other counsel familiar with the federal securities laws to the effect that those portions of the Rule which require -29-P:120584120584_24Q ORDINANCE NO.5313 this Section or any such provision are invalid,have been repealed retroactively or otherwise do not apply to the Bonds;and (ii)notifies and provides the SID,if any,and each then existing NRMSIR with copies of such opinion. The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this Section shall be limited to the right to obtain specific enforcement of the City's obligations under this Section,and any failure by the City to comply with the provisions of this undertaking shall not be a default with respect to the Bonds under this ordinance. The City Finance Director is authorized and directed to take such further action on behalf of the City as may be necessary,appropriate or convenient to carry out the requirements of this Section. The City may elect to submit the information required by this Section to be filed with the NRMSIRs and the SID,if any,directly to DisclosureUSA.org unless or until the SEC withdraws its approval of this submission process. Section 28.Preliminary Official Statement.The City authorizes the City Finance Director to approve preliminary official statements for the 2007 Bonds and the 2008 Bonds and authorizes the distribution of such preliminary official statements in connection with the offering of the 2007 Bonds and 2008 Bonds.Pursuant to the Rule,the City Finance Director may deem the preliminary official statements as [mal as of their respective dates except for the omission of information dependent upon the pricing of the applicable series of Bonds and the completion of the applicable Bond Purchase Agreement.The City agrees to cooperate with the Underwriter to deliver or cause to be delivered,within seven business days from the date of the sale of the 2007 Bonds and the 2008 Bonds,as applicable,copies of a final official statement in sufficient quantity to comply with paragraph (b)(4)of the Rule and the rules of the MSRB.Following the sale of the 2007 Bonds and the 2008 Bonds in accordance with this ordinance,the City authorizes the use the final official statements,substantially in the form of the applicable preliminary official statements,in connection with the sale of the 2007 Bonds and 2008 Bonds. The City Finance Director is hereby authorized to review and approve on behalf of the City the final Official Statements for the Bonds with such additions and changes as may be deemed necessary or advisable. Section 29.Amendments. (a)The City Council from time to time and at any time may pass an ordinance or ordinances supplemental hereof,which ordinance or ordinances thereafter shall become a part of this ordinance,for anyone or more or all of the following purposes: (1)To add to the covenants and agreements of the City in this ordinance, other covenants and agreements thereafter to be observed,which shall not adversely affect the interests of the owners of any Bonds,or to surrender any right or power herein reserved. (2)To make such provisions for the purpose of curing any ambiguities or of curing,correcting or supplementing any defective provision contained in this ordinance in regard to matters or questions arising under such ordinances as the City Council may deem necessary or -30- ORDINANCE NO.5313 desirable and not inconsistent with such ordinances and which shall not adversely affect,in any material respect,the interest of the owners of Bonds.In any such supplemental ordinance may be adopted without the consent of the owners of any Bonds at any time outstanding, notwithstanding any of the provisions of subsection (b)of this section. (b)With the consent of the owners of not less than sixty-five percent (65%)in aggregate principal amount of the Bonds at the time outstanding,the City Council may pass an ordinance or ordinances supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this ordinance or of any supplemental ordinance;provided,however,that no such supplemental ordinance shall: (1)Extend the fixed maturity of any Bonds,or reduce the rate of interest thereon,or extend the time of payment of interest from their due date,or reduce the amount of the principal thereof,or reduce any premium payable on the redemption thereof,without the consent of the Owner of each Bond so affected;or (2)Reduce the aforesaid percentage of Bondowners required to approve any such supplemental ordinance,without the consent of the owners of all of the Bonds then outstanding. It shall not be necessary for the consent of Bondowners under this subsection (b)to approve the particular form of any proposed supplemental ordinance,but it shall be sufficient if such consent shall approve the substance thereof.For the purpose of consenting to amendments under this subsection (b),the Insurer shall be deemed to be the sole Registered Owner of the Bonds then outstanding. (c)Upon the adoption of any supplemental ordinance pursuant to the provisions of this Section,this ordinance shall be deemed to be modified and amended in accordance therewith,and the respective rights,duties and obligations of the City under this ordinance and all owners of Bonds outstanding hereunder shall thereafter be determined,exercised and enforced thereunder,subject in all respects to such modifications and amendments,and all terms and conditions of any such supplemental ordinance shall be deemed to be part of the terms and conditions of this ordinance for any and all purposes. (d)Bonds executed and delivered after the execution of any supplemental ordinance passed pursuant to the provisions of this section may have a notation as to any matter provided for in such supplemental ordinance,and if such supplemental ordinance shall so provide,new Bonds so modified as to conform,in the opinion of the City Council,to any modification of this ordinance contained in any such supplemental ordinance,may be prepared and delivered without cost to the owners of any affected Bonds then outstanding,upon surrender for cancellation of such Bonds in equal aggregate principal amounts. (e)Exclusion ofBonds Owned by City.Bonds owned or held by or for the account of the City shall not be deemed outstanding for the purpose of any vote or consent or other action or any calculation of outstanding Bonds in this ordinance provided for,and shall not be entitled to vote or consent or take any other action in this ordinance provided for. -31-P:120584120584_24Q ORDINANCE NO.5313 (f)Bonds Held by Securities Repositories.For so long as the Bonds are held in book entry only fonn,communications with the owners shall be made with the securities depository who is the "Registered Owner"of the Bonds and communications with (and obtaining consents from)beneficial owners shall be made in accordance with the operational procedures of the securities depository that is the "Registered Owner"of the Bonds. Section 30.Contract:Savings Clause.The covenants contained in this ordinance and in the Bonds shall constitute a contract between the City and the Owner of each and every Bond.If anyone or more of the covenants or agreements provided in this ordinance to be perfonned on the part of the City shall be declared by any court of competent jurisdiction and after final appeal (if any appeal be taken)to be contrary to law,then such covenant or covenants,agreement or agreements,shall be null and void and shall be deemed separable from the remaining covenants and agreements in this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. Section 31.General Authorization;Ratification of Prior Acts.The Mayor,the City Finance Director and other appropriate officers of the City are authorized to take any actions and to execute documents as in their judgment may be necessary or desirable in order to carry out the tenns of,and complete the transactions contemplated by,this ordinance.All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified. Section 32.Effective Date of Ordinance.This ordinance shall be effective upon its passage,approval and five days after publication. PASSED by the City Council this 22 nd day of October,2007. Bonnie Walton,City Clerk APPROVED BY THE MAYOR this 22 nd day of October,2007. Bond Counsel Approved as to Fonn: QpJW Date of Publication:October 27,2007 -32-P:120584120584_24Q ORDINANCE NO.5313 EXHIBIT A Project Description Proceeds ofthe Bonds are expected to be used for the following Projects: •Renton Village Storm System Improvement -planning,designing and constructing a storm system to increase capacity. •Gypsy Basin/Ripley Lane Storm System Improvement -replacing an existing culvert which will connect into a 60-inch storm system on the new Seahawks headquarters/training facility site. •SW 34th Street Culvert Replacement -replacing existing culvert to improve conveyance activity,reduce upstream flooding and improve fish passage. •Hazen 565 Zone Reservoir -designing and constructing a 4.2 million gallon reservoir. •Emergency Power to Pump Stations -installing emergency electrical power generation facilities. •Summerwind/Stongate Lift Station Replacement -constructing a new station to ensure sufficient capacity in a rapidly growing area. •Central Plateau Interceptor Phase 2 -constructing an interceptor to serve eastern portion of service area. A-I P:120584120584_24Q ORDINANCE NO.5313 EXHIBITB Fonn of Bonds The Bonds shall be in substantially the following fonn: UNITED STATES OF AMERICA [Statement of Insurance] No. STATE OF WASHINGTON CITY OF RENTON WATER AND SEWER REVENUE [AND REFUNDING]BOND,[SERIES][2007/2008] [AIB][(TAXABLE)] INTEREST RATE: REGISTERED OWNER: PRINCIP AL AMOUNT: MATURITY DATE: CEDE&Co. CUSIPNO.: The City of Renton,Washington,a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (herein called the "City")hereby acknowledges itself to owe and for value received promises to pay,but only from the sources and as hereinafter provided,to the Registered Owner identified above,or registered assigns,on the Maturity Date identified above,the Principal Amount indicated above and to pay interest thereon from the date of delivery,or the most recent date to which interest has been paid or duly provided for,at the Interest Rate set forth above,payable on ,20_,and semiannually thereafter on the first days of each December and June until such principal sum is paid or payment has been duly provided for. Both principal of and interest on this bond are payable in lawful money of the United States of America.Interest and principal shall be paid as provided in the Blanket Issuer Letter of Representations (the "Letter of Representations")by the City to The Depository Trust Company ("DTC").The fiscal agency of the State of Washington has been appointed by the City as the authenticating agent,paying agent and registrar for the bonds of this issue (the "Bond Registrar").Capitalized tenns used in this bond that are not specifically defined have the meanings given such tenns in Ordinance No.5313 of the City adopted on October 22,2007 and Resolution No.__of the City adopted on ,20_(together,the "Bond Ordinance").Reference is made to the Bond Ordinance and any and all modifications and amendments thereto for a description of the nature and extent of the security for the bonds of this issue,the funds or revenues pledged,and the tenns and conditions upon which such bonds are issued. B-1 P:120584120584_24Q ORDINANCE NO.5313 This bond is one of an authorized issue of bonds of the City of like date and tenor except as to number,amount,rate of interest and date of maturity in the aggregate principal amount of $ .This issue of bonds is authorized by the Bond Ordinance for the purposes of providing money to pay part of the cost of construction and acquisition of certain improvements to the Waterworks Utility[,refund certain outstanding water and sewer revenue bonds of the City],fund the Reserve Fund,and to pay costs of issuance of the bonds of this issue,all as specified in the Bond Ordinance.[Simultaneously with the issuance of this bond,the City is also issuing its Water and Sewer Revenue Bonds,Series 2008[AIB][(Taxable)]for the purposes specified in the Bond Ordinance.] This bond and the bonds of this issue are payable solely from the special funds of the City defined as the "Bond Fund"and the "Reserve Fund"in the Bond Ordinance.The City has irrevocably obligated and bound itself to pay into the Bond Fund out of the Net Revenue or from such other moneys as may be provided therefor certain amounts necessary to pay and secure the payment of the principal and interest on such bonds.The bonds of this issue are not general obligations of the City. [The bonds of this issue are not "private activity bonds"as such term is defmed in the Internal Revenue Code of 1986,as amended (the "Code").The bonds of this issue have been designated by the City as "qualified tax-exempt obligations"under Section 265(b)of the Code.] The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and duly adopted ordinances of the City.The City hereby covenants and agrees with the owner of this bond that it will keep and perform all the covenants of this bond and of the Bond Ordinance to be by it kept and performed, and reference is hereby made to the Bond Ordinance for a complete statement of such covenants. The City does hereby pledge and bind itself to set aside from the Waterworks Utility Fund out of the revenue of the Waterworks Utility and to pay into the Bond Fund and the Reserve Fund the various amounts required by the Bond Ordinance to be paid into and maintained in such Funds,all within the times provided by the Bond Ordinance.To the extent more particularly provided by the Bond Ordinance,the amounts so pledged to be paid from the Waterworks Utility Fund out of the revenue of the Waterworks Utility into the Bond Fund and the account therein shall be a lien and charge thereon equal in rank to the lien and charge upon said revenue of the amounts required to pay and secure the payment of the outstanding 1998 Bonds,the 2002 Bonds,the 2003 Bonds,[and]the 2004 Bonds[,and the 2007 Bonds]and any revenue bonds of the City hereafter issued on a parity with the bonds of this issue and superior to all other liens and charges of any kind or nature except Maintenance and Operation Expense. The pledge of Net Revenue and other obligations of the City under the Bond Ordinance may be discharged at or prior to the maturity or redemption of the bonds of this issue upon the making of provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. B-2 P:120584120584_24Q ORDINANCE NO.5313 The bonds of this issue are subject to redemption prior to their scheduled maturities as provided in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by the Bond Registrar. It is hereby certified that all acts,conditions,and things required by the Constitution and statutes of the State of Washington to exist,to have happened,been done,and performed precedent to and in the issuance of this bond have happened,been done,and performed. IN WITNESS WHEREOF,the City of Renton,Washington has caused this bond to be signed with the facsimile or manual signature of the Mayor,to be attested by the facsimile or manual signature ofthe City Clerk,all as of this __day of ,20_, CITY OF RENTON,WASHINGTON By ~/s~/~f:.:::;ac~s~im=il~e_'=o'"'_r~m~a~n~u~a~1__ Mayor ATTEST: lsi facsimile or manual City Clerk The Bond Registrar's certificate authentication on the Bonds shall be in substantially the following form: CERTIFICATE OF AUTHENTICATION Date of Authentication:,20_ This bond is one of the bonds described in the within-mentioned Bond Ordinance and is one of the Water and Sewer Revenue [and Refunding]Bonds,[Series ][2007/2008] [AIB][(Taxable)]of the City of Renton,Washington,dated ,20_, WASHINGTON STATE FISCAL AGENCY,Registrar By _ Authorized Signer B-3 P:120584120584_24Q