HomeMy WebLinkAboutORD 5098CITY OF RENTON,WASHINGTON
ORDINANCE NO.5098
AN ORDINANCE relating to the waterworks utility of the City,including the
sewerage system as a part thereof;providing for the issuance of $10,335,000
aggregate principal amount of Water and Sewer Revenue Bonds,2004,of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility;fixing the
date,form,denominations,maturities,interest rates,terms and covenants of the
bonds;providing for bond insurance;and approving the sale and providing for
the delivery of the bonds to D.A.Davidson &Co.,Seattle,Washington.
ORDINANCE NO.5098
TABLE OF CONTENTS
Page No.
Section 1.Definitions 2
Section 2.Findings Regarding Parity Provisions 9
Section 3.Authorization and Description of Bonds 9
Section 4.Registration of Bonds and Book-Entry System 10
Section 5.Payment of Bonds 12
Section 6.Redemption;Open Market Purchase of Bonds 13
Section 7.Notice of Redemption 15
Section 8.Failure to Redeem Bonds 16
Section 9.Form of Bonds 16
Section 10.Execution of Bonds 16
Section 11.Authentication and Delivery of Bonds by Bond Registrar 17
Section 12.Registration,Transfer and Exchange 17
Section 13.Lost,Stolen or Destroyed Bonds 19
Section 14.Creation of Fund 20
Section 15.Deposits into Funds 20
Section 16.Flow of Funds 22
Section 17.Pledge of Revenue and Lien Position 22
Section 18.Findings Regarding Sufficiency of Revenue 23
Section 19.Covenants 24
Section 20.No Private Activity Bonds 26
Section 21.Defeasance of the Bonds 27
Section 22.Provision for Future Parity Bonds .28
Section 23.Approval of Purchase Agreement 31
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ORDINANCE NO.5098
Section 24.Bond Insurance 31
Section 25.Delivery of Bonds;Temporary Bonds 32
Section 26.Application of Bond Proceeds 32
Section 27.Undertaking to Provide Continuing Disc1osure 33
Section 28.Preliminary Official Statement Deemed Final..37
Section 29.Bond Insurance Provisions 37
Section 30.Contract;Savings Clause .40
Section 31.Effective Date of Ordinance .41
Exhibit A Project Description
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ORDINANCE NO.5098
AN ORDINANCE relating to the waterworks utility of the City,including the
sewerage system as a part thereof;providing for the issuance of $10,335,000
aggregate principal amount of Water and Sewer Revenue Bonds,2004,of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility;fixing the
date,form,denominations,maturities,interest rates,terms and covenants of the
bonds;providing for bond insurance;and approving the sale and providing for
the delivery ofthe bonds to D.A.Davidson &Co.,Seattle,Washington.
WHEREAS,the City has heretofore created and operated a waterworks utility of the
City,including the sewerage system of the City and within that system a system of storm and
surface water sewers (defined herein as the "Waterworks Utility");and
WHEREAS,by Ordinance No.5050,passed in December 15,2003,the City adopted its
Capital Improvement Program;and
WHEREAS,the City Council has determined that it is necessary and in the best interests
of the City that certain improvements for the Waterworks Utility described in the Capital
Improvement Program be made and there be adopted a system or plan of additions to and
betterments and extensions of the Waterworks Utility;and
WHEREAS,pursuant to Chapter 35.92 RCW,the City is authorized to issue and sell,
without an election,revenue bonds ofthe 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 ofthe City on a parity with the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein;and
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ORDINANCE NO.5098
WHEREAS,by Ordinance No.4976,the City issued 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
the 2003 Bonds on a parity of lien with the 1998 Bonds and the 2002 Bonds;and
WHEREAS,the City Council has determined that it is in the best interests of the City to
issue and sell $10,335,000 of Water and Sewer Revenue Bonds,2004 on a parity oflien with the
outstanding Parity Bonds to provide part of the funds necessary to carry out the system or plan
for additions to and betterments and extensions of the Waterworks Utility,to make a deposit into
the Reserve Fund and to pay the costs of issuance and sale of the Bonds;and
WHEREAS,MBIA Insurance Corporation has made a commitment to issue an insurance
policy insuring the payment when due of the principal of and interest on the Bonds as provided
therein,and the City Council deems that the purchase of such policy is in the best interest of the
City;and
WHEREAS,D.A.Davidson &Co.,Seattle,Washington,has offered to purchase the
Bonds under the terms and conditions hereinafter set forth;NOW,THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON,WASHINGTON,DO ORDAIN as
follows:
Section 1.Definitions.As used in this ordinance,the following words shall have the
following meanings:
"Alternate Security"shall mean any bond insurance,collateral,security,letter of credit,
guaranty,surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds,issued by an institution
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ORDINANCE NO.5098
that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by
such Alternate Security equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service"for any year shall mean all the interest on plus all principal
(except principal of Term Bonds due in any Term Bond Maturity Year)of Parity Bonds,plus all
mandatory redemption and sinking fund installments,less all bond interest payable from the
proceeds of any such bonds,which will mature or come due in that year.
"Beneficial Owner"shall mean,with respect to any Bond,the Person named on the
records of the Custodian as having the right,without a physical certificate evidencing such right,
to transfer,to hypothecate and to receive the payment of the principal of,premium,if any,and
interest on such Bond as the same becomes due and payable.
"Bond Fund"shall mean that special fund ofthe City known as the 2004 Waterworks
Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on
the Bonds.
"Bond Insurer"shall mean MBIA Insurance Corporation.
"Bond Insurance Policy"shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register"shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar"shall mean the fiscal agencies of the State in Seattle,Washington,and
New York,New York,as the same shall be designated from time to time.
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ORDINANCE NO.5098
"Bonds"shall mean the $10,335,000 City of Renton,Washington Water and Sewer
Revenue Bonds,2004,authorized to be issued by this ordinance.
"Book-Entry Termination Date"shall mean the fifth business day following the date of
receipt by the Bond Registrar of the City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City"shall mean the City of Renton,Washington,a duly organized and legally existing
noncharter code city under the laws 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 ofthe delivery ofthe Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code"shall mean the Internal Revenue Code of 1986,as amended,and applicable rules
and regulations promulgated thereunder.
"Coverage Requirement"shall mean in any calendar year 1.25 times the Maximum
Annual Debt Service.
"Custodian"shall mean (a)The Depository Trust Company,New York,New York,or
(b)any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means,the beneficial ownership of the Bonds,in which system no
physical certificates are issued to the Beneficial Owners of the Bonds,but in which a limited
number of physical certificates are issued to and registered in the name ofthe Custodian or its
nominee,and delivered to the Custodian;provided,that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
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which are operated by parties other than the Custodian and the use of a nominee for the
Custodian;and the term "Custodian,"as used herein,includes any party operating any such
subsystem.
"Future Parity Bonds"shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance ofthe Bonds and having a lien and charge on Net Revenue on a
parity with the lien and charge on Net Revenue for the payment of the principal of and interest
on the Bonds.
"Gross Revenue"shall mean Revenue of the Waterworks Utility.
"Letter of Representations"shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15,1997,pertaining to the
payment of the Bonds and the "book-entry"system for evidencing the beneficial ownership of
the Bonds prior to the Book-Entry Termination Date (as it may be amended from time to time).
"Maintenance and Operation Expense"shall mean all reasonable expenses incurred by
the City in causing the Waterworks Utility to be operated and maintained in good repair,working
order and condition,including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract for
such service,and including pro-rata budget charges for the City's administration expenses where
those represent a reasonable distribution and share of actual costs,but not including any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes,or
capital additions or capital replacements to the Waterworks Utility.
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ORDINANCE NO.5098
"Maximum Annual Debt Service"shall mean,at the time of calculation,the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future calendar year on the outstanding Parity Bonds.
"MSRB"shall mean the Municipal Securities Rulemaking Board.
"Net Revenue"shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date"shall mean the date in which all the 1998 Bonds,2002 Bonds and
the 2003 Bonds are fully redeemed,refunded or defeased.
"1998 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"NRMSIR"shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Owner"shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds"shall mean the 1998 Bonds,the 2002 Bonds,the 2003 Bonds,the Bonds
and any Future Parity Bonds.
"Parity Bond Fund"shall mean any fund created for the payment and redemption of
Parity Bonds.
"Professional Utility Consultant"shall mean an independent licensed professional
engineer,certified public accountant or other independent person or firm selected by the City
having a favorable reputation for skill and experience with municipal utilities of comparable size
and character to the Waterworks Utility in such areas as are relevant to the purposes for which
such consultant is retained.
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"Project"shall mean the following project to be financed,in whole or in part,with
proceeds ofthe Bonds:(1)undertaking the additions,betterments or extensions to the
Waterworks Utility described in the Capital Improvement Program,including,but not limited to,
the capital improvements described in Exhibit A to this ordinance,(2)making a deposit to the
Reserve Fund,and (3)paying the incidental costs and costs of issuing the Bonds.
"Project Fund"shall mean the Waterworks Utility Construction Fund.
"Purchase Agreement"shall mean the Bond Purchase Agreement for the Bonds,dated
November 1,2004,by and between the City and the Purchaser.
"Purchaser"shall mean D.A.Davidson &Co.,Seattle,Washington.
"Rate Stabilization Fund"shall mean the fund of that name created for the purposes
described in Ordinance No.4709.
"Reserve Fund"shall mean that special fund of the City known as the Waterworks
Revenue Bond Reserve Fund created by Ordinance No.4709 for purpose of securing the
payment ofthe principal of and interest on all bonds to which Net Revenue is pledged.
"Reserve Insurance"shall mean,in lieu of cash and investments,insurance obtained by
the City equal to part or all ofthe Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained,issued by an institution that has been assigned a credit
rating equal to or better than the highest then-existing rating for any of the Parity Bonds.
"Reserve Requirement"shall mean the Maximum Annual Debt Service.
"Revenue ofthe Waterworks Utility"shall mean all of the earnings and revenues
received by the City from the maintenance and operation ofthe Waterworks Utility and all
earnings from the investment of money in the Reserve Fund or any Parity Bond Fund,and
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ORDINANCE NO.5098
connection and capital improvement charges collected for the purpose of defraying the cost of
capital facilities of the Waterworks Utility,except government grants,proceeds from the sale of
Waterworks Utility property (other than timber),City taxes collected by or through the
Waterworks Utility,principal proceeds of bonds and earnings or proceeds from any investments
in a trust,defeasance or escrow fund created to defease or refund Waterworks Utility obligations
(until commingled with other earnings and revenues of the Waterworks Utility)or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code.
"Rule"shall mean SEC Rule 15c2-12.
"SEC"shall mean the United States Securities and Exchange Commission.
"SID"shall mean a state information depository.
"State"shall mean the State of Washington.
"Term Bonds"shall mean any Parity Bonds identified as such in the ordinance
authorizing the issuance thereof,the payment of which is provided for by a requirement for
mandatory deposits of money into the principal and interest account of the bond redemption fund
created for the payment of such issue of bonds in accordance with a mandatory sinking fund
requirement.
"Term Bond Maturity Year"shall mean any calendar year in which Term Bonds are
scheduled to mature.
"2002 Bonds"shall mean the outstanding Water and Sewer Revenue Bonds,2002.
"2003 Bonds"shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
2003.
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ORDINANCE NO.5098
"Waterworks Utility"shall mean the combined water and sewerage systems,including
the storm and surface water sewers,of the City as the same may be added to,improved and
extended for as long as any of the Parity Bonds are outstanding.
"Waterworks Utility Fund"shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility)shall be deposited.
Section 2.Findings Regarding Parity Provisions.The City Council finds that there is no
deficiency in any Parity Bond Fund,that provisions hereinafter meet the conditions for the
issuance of Future Parity Bonds as set forth in Ordinance Nos.4709,4976 and 5019 and that
there will be on file prior to the issuance and delivery of the Bonds a certificate of the City
Finance Director that satisfies the conditions for such certificate as set forth in Ordinance Nos.
4709,4976 and 5019.Therefore,the Bonds shall be issued on a parity oflien with the Parity
Bonds.
Section 3.Authorization and Description of Bonds.For the purpose of obtaining part of
the funds necessary to carry out the Project,the City shall issue the Bonds in the aggregate
principal amount of $10,335,000.The Bonds shall be designated "City of Renton,Washington
Water and Sewer Revenue Bonds,2004;"shall be dated November 1,2004;shall be in the
denomination of$5,000 or any integral multiple thereof within a single maturity;shall be
numbered separately,in the manner and with any additional designation as the Bond Registrar
deems necessary for purpose of identification;shall bear interest (computed on the basis of a
360-day year of twelve 30-day months),payable semiannually on each June 1 and December 1,
commencing December 1,2004,to the maturity or prior redemption ofthe Bonds;and shall
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mature on December 1 in the years and amounts and bear interest at the rates per annum as
follows:
Maturity Years Interest
(December 1)Amounts Rates
2013 $205,000 3.55%
2014 235,000 3.65
2015 250,000 3.75
2024*4,605,000 5.00
2025 1,600,000 5.00
2026 1,680,000 5.00
2027 1,760,000 5.00
*Term Bonds
If any Bond is duly presented for payment upon maturity and is not paid,then interest thereon
shall continue to accrue thereafter at the rate stated therein until such Bond is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-1 05.
Section 4.Registration of Bonds and Book-Entry System.The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register.The
Bond Register shall contain the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds,all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate,which certificate shall be registered in the name of the
Custodian or its nominee,and delivered to the Custodian.The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit ofthe Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either (1)the date of maturity of the
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ORDINANCE NO.5098
Bonds evidenced by such certificate,at which time the Custodian shall surrender such certificate
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date,and the cancellation thereof;(2)the Book-Entry Termination Date;or (3)the date the
City determines to utilize a new Custodian for the Bonds,at which time the old Custodian shall
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name ofthe Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4,the
rights ofthe Beneficial Owners shall be evidenced solely by an electronic and/or manual entry
made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations,and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nommee.
The City may terminate the "book-entry"system of registering ownership of the Bonds at
any time (provided the City is not then in default of any payment then due on the outstanding
Bonds)by delivering to the Bond Registrar:(a)a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry
Termination Date;(b)a list identifying the Beneficial Owners as to both name and address;and
(c)a supply of Bond certificates,if necessary for such purpose.Upon surrender to the Bond
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds,the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
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ORDINANCE NO.5098
Owner's duly appointed agent,naming such Beneficial Owner or such Beneficial Owner's
nominee as the Owner thereof.Such certificates may be in any integral multiple of $5,000
within a single maturity.Following such issuance,the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 12 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error,omission,action
or failure to act on the part of the Custodian with respect to payment,when due,to the Beneficial
Owner of the principal and interest on the Bonds,proper recording of beneficial ownership of
Bonds,proper transfers of such beneficial ownership,or any notices to Beneficial Owners or any
other matter pertaining to the Bonds.
Section 5.Payment of Bonds.Both principal of and interest on the Bonds shall be
payable in lawful money ofthe United States of America.Prior to the Book-Entry Termination
Date,the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof,for the benefit of the Beneficial Owners thereof,in accordance
with the Letter of Representations.
From and after the Book-Entry Termination Date,interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date,to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register,or,if requested in writing by an Owner of$lOO,OOO
or more in principal amount of Bonds at least ten days before an interest payment date,by wire
transfer on the interest payment date to an account within the United States.From and after the
Book-Entry Termination Date,principal of the Bonds shall be payable upon presentation and
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ORDINANCE NO.5098
surrender ofthe Bonds by the Owners at the principal corporate trust office of the Bond
Registrar.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
be a valid claim of the Owners thereof only as against the Bond Fund,Reserve Fund and the
amount of Net Revenue pledged to those funds and shall not be general obligations of the City.
Section 6.Redemption;Open Market Purchase of Bonds.The Bonds maturing on
December 1,2024 are term bonds (the "Term Bonds")and,ifnot previously purchased by the
City in the open market or optionally redeemed as set forth below,are subject to mandatory
sinking fund redemption prior to maturity,in part and by lot (in such manner as the Registrar
shall determine),at par plus accrued interest to the redemption date on December 1 in the
following years and in the following mandatory sinking fund redemption amounts:
Term Bonds Due
December 1,2024
Mandatory Sinking Fund
Redemption Dates
(December 1)
2016
2017
2018
2019
2020
2021
2022
2023
2024*
*Scheduled maturity
Redemption
Amount
$260,000
270,000
130,000
185,000
245,000
265,000
280,000
1,450,000
1,520,000
The Bonds maturing on December 1 in the years 2013 and 2014,inclusive,shall not be
subject to redemption prior to maturity.The Bonds maturing on or after December 1,2015 shall
be subject to optional redemption prior to maturity beginning on December 1,2014,in whole or
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ORDINANCE NO.5098
in part at any time (maturities to be selected by the City and by lot within a maturity in such
manner as the Bond Registrar shall determine),at par plus accrued interest to the date of
redemption.If the City shall optionally redeem Term Bonds or purchase Term Bonds in the
open market,the par amount ofthe Term Bonds so redeemed or purchased (irrespective oftheir
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 ofthe optional redemption or purchase,and the City shall promptly notify
the Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or
purchased has been allocated.
Any Bond in the principal amount of greater than $5,000 may be partially redeemed in
any integral multiple of$5,000.Prior to the Book-Entry Termination Date,the Bonds shall be
partially redeemed in accordance with the Letter of Representations.From and after the Book-
Entry Termination Date,in the event of a partial redemption of a Bond,upon surrender of such
Bond at the principal corporate trust office ofthe Bond Registrar,a new Bond or Bonds (at the
option ofthe Owner)of the same maturity and interest rate and in the aggregate principal amount
remaining unredeemed shall be authenticated and delivered to the Owner,without charge to the
Owner therefor,in any denomination authorized by this ordinance and selected by the Owner.
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased under this Section shall be canceled.
Section 7.Notice of Redemption.Prior to the Book-Entry Termination Date,the Bond
Registrar shall give,or cause to be given,notice of a call for redemption of any Bonds to the
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ORDINANCE NO.5098
Custodian,as the Owner thereof,for the benefit of the Beneficial Owners thereof,in accordance
with the Letter of Representations.From and after the Book-Entry Termination Date,notice of
any such intended redemption shall be given by or on behalf of the City not less than 30 nor
more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid,to
the Owner of any Bond to be redeemed at the address appearing on the Bond Register on the day
notice is mailed,and the requirements ofthis sentence shall be deemed to have been fulfilled
when notice has been mailed as so provided,whether or not it is actually received by the Owner
of any Bond.If such notice to the Owners shall have been given and the City shall have set
aside,on the date fixed for redemption,sufficient money for the payment of all Bonds called for
redemption,the Bonds so called shall cease to accrue interest after such redemption date,and all
such Bonds shall be deemed not to be outstanding under this ordinance for any purposes,except
that the Owners thereof shall be entitled to receive payment of the redemption price and accrued
interest to the redemption date from the money set aside for such purpose.In addition,the
redemption notice shall be mailed within the same period,postage prepaid,to Standard &Poor's
Ratings Services and Fitch IDCA at their offices in New York,New York,or their successors,to
the Purchaser at its principal office in Seattle,Washington,or its successor,to each NRMSIR
and to the Bond Insurer or their respective successors,and to such other persons and with such
additional information as the City Finance Director shall determine,but these additional mailings
shall not be a condition precedent to the redemption of Bonds.
Section 8.Failure to Redeem Bonds.If any Bond is not redeemed when properly
presented at its maturity or redemption date,the City shall be obligated to pay interest on such
Bond at the same rate provided in the Bond from and after its maturity or redemption date until
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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 ofthat redemption to the Owner of each of such unpaid Bonds.
Section 9.Form of Bonds.The Bonds shall be typewritten,word processed,printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 10.Execution of Bonds.The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City,such Bonds may
nevertheless be authenticated,delivered and issued and,upon such authentication,delivery and
issuance,shall be as binding upon the City as though said person had not ceased to be such
officer.Any Bond may be signed and attested on behalf of the City by such persons who,at the
actual date of execution of such Bond shall be the proper officer of the City,although at the
original date of such Bond such persons were not such officers of the City.
Section 11.Authentication and Delivery of Bonds by Bond Registrar.The Bond
Registrar is authorized and directed,on behalf of the City,to authenticate and deliver Bonds
initially issued or transferred or exchanged in accordance with the provisions of such Bonds and
this ordinance.
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Only such Bonds as shall bear thereon a "Certificate of Authentication"manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance.Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed,authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 12.Registration,Transfer and Exchange.The Bond Registrar shall keep,or
cause to be kept,at its principal corporate trust office,the Bond Register.The Bond Registrar is
authorized,on behalf of the City,to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance,to serve as the City's paying
agent for the Bonds and to carry out all 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 City and the Bond Registrar,in its discretion,may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes,and neither the City nor the Bond Registrar
shall be affected by any notice to the contrary.Payment of any such Bond shall be made only as
described in Section 5 hereof,but such registration may be transferred as herein provided.All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
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The registered ownership ofthe Bonds may be transferred.Prior to the Book-Entry
Termination Date,the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian.On and after the Book-Entry Termination Date,
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar,with the assignment form appearing on such Bond duly executed by,or
accompanied by a written instrument oftransfer in form satisfactory to such Bond Registrar duly
executed by,the Owner or such Owner's duly authorized agent,in a manner satisfactory to such
Bond Registrar.Upon such surrender,the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver,without charge to the Owner or transferee therefor (other than any
governmental fees or taxes payable on account of such transfer),a new Bond or Bonds (at the
option ofthe new Owner),naming as Owner the person or persons listed as the assignee on the
assignment form appearing on the surrendered Bond,of the same maturity and interest rate,for
the same aggregate principal amount,and in any authorized denomination selected by the new
Owners,in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date,any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged,without charge,for an
equal aggregate principal amount of Bonds of the same maturity and interest rate,in any
authorized denomination as selected by the Owner.The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
have if it were not the Bond Registrar and,to the extent permitted by law,may act as depository
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ORDINANCE NO.5098
for and permit any of its officers or directors to act as a member of,or in any other capacity with
respect to,any committee formed to protect the rights of the Owners of the Bonds.
The City covenants that,until all Bonds shall have been surrendered and cancelled,it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 13.Lost,Stolen or Destroyed Bonds.If any Bond becomes mutilated,lost,
stolen or destroyed,the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor,all in accordance
with applicable law.If such mutilated,lost,stolen or destroyed Bond has matured,the City may,
at its option,pay the same without the surrender thereof.However,no such substitution or
payment shall be made unless and until the applicant shall furnish (a)evidence satisfactory to the
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof,and
(b)such additional security,indemnity or evidence as may be required by or on behalf of the
City.No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
Bond Registrar for their respective expenses in the furnishing thereof.Any such substitute Bond
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder.
Section 14.Creation of Fund.There is hereby created in the City Treasury the 2004
Waterworks Revenue Borid Fund (the "Bond Fund"),which shall be a subaccount ofthe
Waterworks Utility Fund.
Section 15.Deposits into Funds.So long as Bonds are outstanding against the Bond
Fund,the City shall:
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ORDINANCE NO.5098
(a)Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion,namely,one day before each interest or principal
and interest payment date,an amount which,together with other money then on deposit
therein,shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date;and
(b)Set aside and pay into the Reserve Fund out of the Net Revenue,in three
annual approximately equal deposits,any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund may be accumulated from any other money which the City may have
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein,the Reserve Fund shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds,no further payment need be made into the Bond Fund.Notwithstanding
the first sentence of this paragraph,the Reserve Requirement may be decreased for any issue of
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest,as the case may be,on the Bonds,that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been
depleted,then by draws on the Alternate Security or Reserve Insurance for that purpose.Any
deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up
from Net Revenue first available after making necessary provisions for the required payments
into the Bond Fund.Any money in the Reserve Fund in excess of the Reserve Requirement may
be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity
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ORDINANCE NO.5098
Bonds or may be deposited in any other fund and spent for any other lawful Watetworks Utility
purpose.
The City may provide for the purchase,redemption or defeasance of Parity Bonds by the
use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining
in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity
Bonds.
All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the
official bank depository of the City or in any national bank or may be invested in any legal
investment for City funds.Interest on any of those investments or on that bank account shall be
deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated
therein,after which time the interest shall be deposited in any Parity Bond Fund.
Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond
Fund or the Reserve Fund,any earnings which are subject to a federal tax or rebate requirement
may be withdrawn from the Bond Fund or the Reserve Fund for deposit into a separate fund or
account for that purpose.
If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts
set forth above,the Owner of any of the outstanding Bonds may bring an action against the City
to compel that setting aside and payment.
Section 16.Flow of Funds.Funds in the Watetworks Utility Fund (other than in any
bond redemption or federal rebate account)shall be used in the following order of priority:
(a)To pay Maintenance and Operation Expense;
(b)To pay the interest on the Parity Bonds;
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ORDINANCE NO.5098
(c)To pay the principal of the Parity Bonds;
(d)To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds;
(e)To make all payments required to be made into the Reserve Fund;
(f)To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds;and
(g)To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City,to make necessary additions,
betterments,improvements and repairs to or extensions and replacements of the
Waterworks Utility,to make deposits into the Rate Stabilization Fund,or for any
other lawful City purpose.
Section 17.Pledge of Revenue and Lien Position.The Net Revenue is pledged to the
payment of the Parity Bonds,and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
Section 18.Findings Regarding Sufficiency of Revenue.In the judgment ofthe City
Council,Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility,at the rates to be charged for water,sanitary sewage disposal service and
storm and surface water drainage service in the entire utility,will be more than sufficient to meet
all Maintenance and Operation Expense (and cost of maintenance and operation of the
Waterworks Utility as that term is used in RCW 35.92.100)and the debt service requirements of
the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve
Fund,out of the revenue of the entire utility,of amounts sufficient to pay the interest on the
Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity.The
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ORDINANCE NO.5098
City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid
into the Bond Fund and the Reserve Fund,as aforesaid,it has exercised due regard for the
Maintenance and Operation Expense (and costs of maintenance and operation as used in RCW
35.92.100)and the debt service requirements of the currently outstanding Parity Bonds,and the
City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve
Fund,a greater amount or proportion ofthe 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 ofthe currently outstanding Parity Bonds and that no
portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness
other than the payment of the currently outstanding Parity Bonds.
Section 19.Covenants.The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a)It will establish,maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,
and will adjust those rates and charges from time to time so that:
(1)Gross Revenue will at all times be sufficient to (A)pay all
Maintenance and Operation Expense on a current basis,(B)pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity .
Bond Funds and (C)pay all taxes,assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract;and
(2)Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b)It will at all times maintain and keep the Waterworks Utility in good
repair,working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
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ORDINANCE NO.5098
(c)It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless,simultaneously with such sale or other disposition,all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell,lease,mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility (other than timber),including all additions and
improvements thereto and extensions thereof at any time made,that are used,useful or
material in the operation of the Waterworks Utility,unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1)An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds)that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
period;
(2)An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above)that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period;or
(3)An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above)that the depreciated cost
value ofthe facilities sold or disposed of bears to the depreciated cost value ofthe
entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding any other provision of this subsection,(1)the City in its
discretion may sell or otherwise dispose of any of the works,plant,properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable,inadequate,obsolete or unfit to be used in the
operation of the Waterworks Utility,or no longer necessary,material to or useful to the
operation of the Waterworks Utility,without making any deposit into the Bond Fund,and
(2)the City may transfer the Waterworks Utility to another municipal corporation so long
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose.In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d)It will keep proper books,records and accounts with respect to the
operations,income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition ofthe Waterworks
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ORDINANCE NO.5098
Utility as ofthe close of the previous year,and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance,the status of all funds and
accounts as of the end of such year,and the amounts expended for maintenance,
renewals,replacements and capital additions to the Waterworks Utility.Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e)Except to aid the poor or infirm,to provide for resource conservation or to
provide for the proper handling of hazardous materials,it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation ofthe Waterworks Utility free of charge to any person,firm or corporation,
public or private,other than the City,so long as any Parity Bonds are outstanding.On at
least an annual basis,it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent.
(f)It at all times will carry fire and extended coverage and such other forms
of insurance,including public liability and property damage insurance,with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings,equipment,works,plants,facilities and properties ofthe
Waterworks Utility,and against such claims for damages,as are ordinarily carried by
municipal or privately owned utilities engaged in the operation oflike systems,or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate,in the reasonable judgment of the City,to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g)It will pay all Maintenance and Operation Expense and the debt service
requirements for the outstanding Parity Bonds,and otherwise meet the obligations of the
City as herein set forth.
(h)It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes,and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
cause interest on the Bonds to be included in gross income for federal income tax
purposes.It will,to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds,take all action necessary to comply (or to be treated as
having complied)with those requirements in connection with the Bonds,including the
calculation and payment of any penalties that the City has elected to pay as an alternative
to calculating rebatable arbitrage,and the payment of any other penalties if required
under Section 148 ofthe Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
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ORDINANCE NO.5098
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 20.No Private Activity Bonds.The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a "private activity bond"(as defined in Section
141(b)of the Code)subject to treatment under said Section 141(b)as an obligation not described
in Section 103(a)ofthe Code,unless the tax exemption thereof is not affected.
Section 21.Defeasance of the Bonds.The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds,or any portion thereof included in a refunding or defeasance plan,and
to redeem and retire,refund or defease all such then-outstanding Bonds (hereinafter collectively
called the "defeased Bonds")and to pay the costs of the refunding or defeasance.If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money,if necessary)sufficient to redeem and retire,refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption,retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"),then all right and interest of the Owners of the
defeased Bonds in the covenants of this ordinance,in Gross Revenue and in funds and accounts
.obligated to the payment of the defeased Bonds,other than the right to receive the funds so set
aside and pledged,shall cease and become void.The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
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ORDINANCE NO.5098
account and,ifthe 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 oflien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account,the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine,subject only to the rights,if any,of the
owners of any other Parity Bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or direct obligations of the United States of America or other legal
investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations ofthe Untied States of America or other legal
investments are pledged irrevocably for the prior redemption ofthe defeased Bonds included in
that refunding plan,then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds,the payment of which is not so secured by the refunding plan,shall be
included in the computation of coverage for determining compliance with the rate covenants.
Section 22.Provision for Future Parity Bonds.The City reserves the right to issue
Future Parity Bonds if the following conditions are met and complied with at the time of
issuance ofthose additional bonds:
(a)There shall be no deficiency in any Parity Bond Fund.
(b)The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
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ORDINANCE NO.5098
(c)The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of (1)an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or (2)Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds.For federal income tax purposes,
at the discretion of the City,to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds,the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance ofthe Future Parity Bonds in three
approximately equal annual payments.After the New Covenant Date,this subsection
shall be amended to read as follows:(c)The ordinance providing for the issuance of
such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the
proceeds of those Future Parity Bonds of (1)an amount equal to the increase in the
Reserve Requirement attributable to those Parity Bonds or (2)Reserve Insurance or
Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the
increase in the Reserve Requirement attributable to those Future Parity Bonds.At the
discretion of the City,the City may provide for deposit into the Reserve Fund of other
legally available money from Net Revenue or Reserve Insurance or Alternate Security
either on or prior to the date of issuance of such Future Parity Bonds or within three years
from the date of issuance of the Future Parity Bonds in three approximately equal annual
payments and in such event,the ordinance providing for the issuance of such Future
Parity Bonds shall provide for such deposit.
(d)The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity,or,as an alternative,the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e)There shall be on file with the City either:
(1)a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue,without regard to deposits into or withdrawals from the
Rate Stabilization Fund,is equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed to be issued;or
(2)a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months,without
regard to deposits into or withdrawals from the Rate Stabilization Fund,shall be
equal to the Coverage Requirement for each year thereafter.The certificate,in
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ORDINANCE NO.5098
estimating Net Revenue available for debt services,may adjust Net Revenue to
reflect:
(A)Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B)Income derived from customers ofthe 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 ifthe maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
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ORDINANCE NO.5098
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Bonds or Future Parity Bonds then outstanding,money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 23.Approval of Purchase Agreement.The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds.The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase Agreement on behalf ofthe City by City officials,and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal opinion of Gottlieb,Fisher &Andrews,PLLC,bond counsel,
Seattle,Washington,relative to the issuance of the Bonds,attached to each Bond.Bond counsel
has not been engaged to review or express any opinion concerning the completeness or accuracy
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state.Bond counsel has not
been retained to monitor,and shall not be responsible for monitoring,the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 24.Bond Insurance.The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
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ORDINANCE NO.5098
Bonds and agrees to the conditions for obtaining that policy,including the payment of the
premium therefor.The City Council authorizes and directs the execution ofthe commitment for
the Bond Insurance Policy on behalf of the City by City officials,including,but not limited to
the City Finance Director,and delivery of the same to the Bond Insurer.
Section 25.Delivery of Bonds;Temporary Bonds.The proper City officials,including,
but not limited to,the City Finance Director,are authorized and directed (a)to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including,but not limited to,the final official statement pertaining to the Bonds;and (b)to do
everything necessary for (1)the preparation and delivery of a transcript of proceedings
pertaining to the Bonds,and (2)the preparation,execution and delivery of definitive Bonds to
the Purchaser,each without unreasonable delay.
If definitive Bonds are not ready for delivery by the date of Closing agreed to by the City
and the Purchaser,the City,upon the approval of the Purchaser,may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions,changes
and additions.Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment,security and obligation thereof as
definitive Bonds authorized hereby.Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
Section 26.Application of Bond Proceeds.The accrued interest,if any,received by the
City at Closing shall be deposited into the Bond Fund and shall be applied to the payment of
interest first coming due on the Bonds.
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ORDINANCE NO.5098
The remaining proceeds of the sale of the Bonds,less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City,plus the original issue
premium,shall be applied,upon receipt,as follows:an amount equal to the increase in the
Reserve Requirement attributable to the issuance of the Bonds shall be deposited into the
Reserve Fund,and the remainder shall be deposited into the Project Fund to pay part of the costs
of the Project.
Except as provided by the Code and Section 19(h)of this ordinance,the interest and
profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and
applied as described in the preceding paragraph.
Except as provided by the Code and Section 19(h)of this ordinance,if any money
allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the
Project or after termination ofthe Project by the City,such money shall be transferred to the
Bond Fund and applied to the payment of the principal of and interest on the Bonds.
Pending application as described in this Section 26 and subject to the requirements of the
Code and Section 19(h)of this ordinance,money allocable to the Bond proceeds in the Project
Fund may be temporarily deposited in such institutions or invested in such investments as may
be lawful for the investment of City funds.
Section 27.Undertaking to Provide Continuing Disclosure.This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection (b)(5)(i)of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID,if one is created,the following annual financial information and operating data
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ORDINANCE NO.5098
(collectively,the "Annual Financial Information")for each prior fiscal year,commencing with
the calendar year ending December 31,2004,on or before the last day of the seventh month
following the end of such prior fiscal year:
(a)Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units,as such principles may be changed from
time to time and as permitted by State law;which statements will not be audited,except that if
and when audited financial statements are otherwise prepared and available to the City,they will
be provided (the "Annual Financial Statements");
(b)A statement of authorized,issued and outstanding bonded debt secured by the Net
Revenue;
(c)Debt service coverage ratios;
(d)General customer statistics for the Waterworks Utility;and
(e)A narrative explanation ofthe reasons for any amendments to this Section 27
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data,the City may cross-
reference to any "final official statement"(as defined in the Rule)available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID,if one is
created.
If not submitted as part of the Annual Financial Information,then when and if available,
the City shall provide its Annual Financial Statements,which shall have been audited by such
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ORDINANCE NO.5098
auditor as shall be then required or permitted by the State law,to each then existing NRMSIR
and to the SID,if one is created.
The City further agrees to provide or cause to be provided,in a timely manner,to the
SID,if one is created,and to either the MSRB or each then existing NRMSIR,notice of any of
the following events with respect to the Bonds,if material:
1.Principal and interest payment delinquencies;
2.Non-payment related defaults;
3.Unscheduled draws on debt service reserves reflecting financial difficulties;
4.Unscheduled draws on credit enhancements reflecting financial difficulties;
5.Substitution of credit or liquidity providers,or their failure to perform;
6.Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7.Modifications to rights ofthe Owners of the Bonds;
8.Optional redemptions of the Bonds;
9.Defeasances ofthe Bonds;
10.Release,substitution or sale of property securing repayment of the Bonds;and
11.Rating changes.
The City also agrees to provide or cause to be provided,in a timely manner,to the SID,if
one is created,and to either the MSRB or each then existing NRMSIR,notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds,so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby,as determined by a party
34
ORDINANCE NO.5098
unaffiliated with the City (including,without limitation,a trustee for the Owners,nationally
recognized bond counselor other counsel familiar with the federal securities law),or pursuant to
a favorable "no-action letter"issued by the SEC,this Section 27 may only be amended in
connection with any change in legal requirements,change in law,or change in the identity,
nature or status of the obligated person,or type of business conducted,and only in such a manner
that the undertaking of the City,as so amended,would have complied with the requirements of
the Rule at the time of the primary offering,after taking into account any amendments or
interpretations of the Rule,as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance,prior redemption or payment in
full of all of the then outstanding Bonds.This Section 27 or any provision hereof,shall be null
and void if the City (i)obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions ofthe Rule which require
this Section 27 or any such provision are invalid,have been repealed retroactively or otherwise
do not apply to the Bonds;and (ii)notifies and provides the SID,if any,and either the MSRB or
each then existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 27 shall be limited to the right to obtain specific enforcement of the City's obligations
under this Section 27,and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
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ORDINANCE NO.5098
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary,appropriate or convenient to carry out the requirements of this
Section 27.
Section 28.Preliminary Official Statement Deemed Final.The City Council has been
provided with copies of a preliminary official statement dated October 22,2004 (the
"Preliminary Official Statement"),prepared in connection with the sale of the Bonds.For the
sole purpose ofthe Bond purchaser's compliance with paragraph (b)(l)ofthe Rule,the City
"deems final"that Preliminary Official Statement as of its date,except for the omission of
information as to offering prices,interest rates,selling compensation,aggregate principal
amount,principal amount per maturity,maturity dates,options of redemption,delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 29.Bond Insurance Provisions.The City Council finds that it is in the City's best
interest to purchase,and that a savings will result from purchasing,the Bond fusurance Policy for
the Bonds.The City shall purchase from the Bond fusurer the Bond fusurance Policy insuring the
prompt payment of the principal of and interest on the Bonds and agrees to the conditions for
obtaining that policy,including the payment of the premium therefor and the following provisions
entitled ''Payments under the Policy"required by the Bond fusurer to be included in this ordinance:
"A.fu the event that,on the second Business Day,and again on the
Business Day,prior to the payment date on the Bonds,the Paying Agent [the Bond
Registrar]has not received sufficient moneys to pay all principal of and interest on
the Bonds due on the second following or following,as the case may be,Business
Day,the Paying Agent shall immediately notify the Bond fusurer or its designee on
the same Business Day by telephone or telegraph,confirmed in writing by registered
or certified mail,of the amount ofthe deficiency..
"B.If the deficiency is made up in whole or in part prior to or on the
payment date,the Paying Agent shall so notify the Bond fusurer or its designee.
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ORDINANCE NO.5098
"C.In addition,if the Paying Agent has notice that any Bondholder has
been required to disgorge payments of principal or interest on the Bonds to a trustee
in bankruptcy or creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such
Bondholder within the meaning of any applicable bankruptcy laws,then the Paying
Agent shall notify the Bond Insurer or its designee of such fact by telephone or
telegraphic notice,confmned in writing by registered or certified mail.
"D.The Paying Agent is hereby irrevocably designated,appointed,
directed and authorized to act as attorney-in-fact for Holders ofthe Bonds as
follows:
"1.If and to the extent there is a deficiency in amounts required
to pay interest on the Bonds,the Paying Agent shall (a)execute and deliver
to U.S.Bank Trust National Association,or its successors under the Bond
Insurance Policy (the "Insurance Paying Agent"),in form satisfactory to the
Insurance Paying Agent,an instrument appointing the Bond Insurer as agent
for such Holders in any legal proceeding related to the payment of such
interest and an assignment to the Bond Insurer of the claims for interest to
which such deficiency relates and which are paid by the Bond Insurer,(b)
receive as designee of the respective Holders (and not as Paying Agent)in
accordance with the tenor ofthe Bond Insurance Policy payment from the
Insurance Paying Agent with respect to the claims for interest so assigned,
and (c)disburse the same to such respective Holders;and
"2.If and to the extent of a deficiency in amounts required to pay
principal ofthe Bonds,the Paying Agent shall (a)execute and deliver to the
Insurance Paying Agent in form satisfactory to the Insurance Paying Agent
an instrument appointing the Bond Insurer as agent for such Holder in any
legal proceeding relating to the payment of such principal and an assignment
to the Bond Insurer of any of the Bonds surrendered to the Insurance Paying
Agent of so much of the principal amount thereof as has not previously been
paid or for which moneys are not held by the Paying Agent and available for
such payment (but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received),(b)receive as designee of the
respective Holders (and not as Paying Agent)in accordance with the tenor of
the Bond Insurance Policy payment therefor from the Insurance Paying
Agent,and (c)disburse the same to such Holders.
"E.Payments with respect to claims for interest on and principal of
Bonds disbursed by the Paying Agent from proceeds of the Bond Insurance Policy
shall not be considered to discharge the obligation ofthe City with respect to such
Bonds,and the Bond Insurer shall become the owner of such unpaid Bonds and
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ORDINANCE NO.5098
claims for the interest in accordance with the tenor of the assignment made to it
under the provisions ofthis subsection or otherwise.
"F.Irrespective ofwhether any such assignment is executed and
delivered,the City and the Paying Agent hereby agree for the benefit ofthe Bond
Insurer that:
"1.They recognize that to the extent the Bond Insurer makes
payments,directly or indirectly (as by paying through the Paying Agent),on
account of principal of or interest on the Bonds,the Bond Insurer will be
subrogated to the rights of such Holders to receive the amount of such
principal and interest from the City,with interest thereon as provided and
solely from the sources stated in this ordinance and the Bonds;and
"2.They will accordingly pay to the Bond Insurer the amount of
such principal and interest (including principal and interest recovered under
subparagraph (ii)ofthe first paragraph of the Bond Insurance Policy,which
principal and interest shall be deemed past due and not to have been paid),
with interest thereon as provided in this ordinance and the Bonds,but only
from the sources and in the manner provided herein for the payment of
principal of and interest on the Bonds to Holders,and will otherwise treat the
Bond Insurer as the owner of such rights to the amount of such principal and
interest.
"G.In connection with the issuance of additional Bonds,the City shall
deliver to the Bond Insurer a copy ofthe disclosure document,if any,circulated with
respect to such additional Bonds.
"H.Copies of any amendments made to the documents executed in
connection with the issuance of the Bonds which are consented to by the Bond
Insurer shall be sent to Standard &Poor's Corporation.
"J.The Bond Insurer shall receive notice ofthe resignation or removal
ofthe Paying Agent and the appointment of a successor thereto.
"J.The Bond Insurer shall receive copies of all notices required to be
delivered to Bondholders and,on an annual basis,copies ofthe City's audited
financial statements and Annual Budget.
''Notices:Any notice that is required to be given to a holder ofthe
Bonds or to the Paying Agent pursuant to this ordinance shall also be provided to the
Bond Insurer.All notices required to be given to the Bond Insurer under this
ordinance shall be in writing and shall be sent by registered or certified mail
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ORDINANCE NO.5098
addressed to MBIA Insurance Corporation,113 King Street,Annonk,New York
10504 Attention:Surveillance."
"K.The City agrees to reimburse the Bond Insurer immediately and
unconditionally upon demand,to the extent permitted by law,for all reasonable
expenses,including attorneys'fees and expenses,incurred by the Bond Insurer in
connection with (i)the enforcement by the Bond Insurer of the City's obligations,
or the preservation or defense of any rights of the Bond Insurer,under this
ordinance and any other document executed in connection with the issuance of the
Bonds,and (ii)any consent,amendment,waiver or other action with respect to
this ordinance or any related document,whether or not granted or approved,
together with interest on all such expenses from and including the date incurred to
the date of payment at Citibank's Prime Rate plus 3%or the maximum interest
rate permitted by law,whichever is less.In addition,the Bond Insurer reserves
the right to charge a fee in connection with its review of any such consent,
amendment or waiver,whether or not granted or approved.
"L.The City agrees not to use MBIA's name in any public document
including,without limitation,a press release or presentation,announcement or
forum without MBIA's prior consent.In the event that the City is advised by
counsel that it has a legal obligation to disclose MBIA's name in any press
release,public announcement or other public document,the City shall provide
MBIA with at least three (3)business days'prior written notice of its intent to use
MBIA's name together with a copy ofthe proposed use ofMBIA's name and of
any description of a transaction with MBIA and shall obtain MBIA's prior consent
as to the form and substance ofthe proposed use ofMBIA's name and any such
description.
"M.The City shall not enter into any agreement nor shall it consent to
or participate in any arrangement pursuant to which Bonds are tendered or
purchased for any purpose other than the redemption and cancellation or legal
defeasance of such Bonds without the prior written consent ofMBIA."
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 performed on
the part of the City shall be declared by any court of competent jurisdiction and after [mal appeal
(if any appeal be taken)to be contrary to law,then such covenant or covenants,agreement or
agreements,shall be null and void and shall be deemed separable from the remaining covenants
39
ORDINANCE NO.5098
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
Section 31.Effective Date of Ordinance.This ordinance shall be effective upon its
passage,approval and five days after publication.
PASSED by the City Council this 1st day of November,2004.
Bonnie Walton,City Clerk
APPROVED BY THE MAYOR this 1st day of November,2004.
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Approved as to Form:
Date of Publication:]1/5 lo4:Summary)
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Bond Counsel
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ORDINANCE NO.5098
EXHIBIT A
Project Description
The bond proceeds will be primarily dedicated to the following three Capital hnprovement
Projects:
•Maplewood Water Quality hnprovement:This project consists of improving a new water
filtration facility at the Maplewood booster pump station.Approximately $5 million of
the bond proceeds will be dedicated to this $12 million project.
•Sunset Interceptor Phase II:The City is installing 7,000 linear feel of 18 -24 inch sewer
main from NE Sunset Blvd south in the same street.This is to meet growth needs in the
eastern area of the City.Approximately $2 million of the bond proceeds will be
dedicated to this project.
•SW i h Street Storm System:This project includes installing approximately 3,500 linear
feel of 24 inch storm pipe to replace the existing storm system to meet the significant
water drainage issues in the area.The total project has a bid of $3 million.The same
amount of the proceeds will be dedicated to this project.
41