HomeMy WebLinkAboutORD 5019Amended by ORDINANCE 5020
CITY OF RENTON, WASHINGTON
ORDINANCE NO. 5019
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of $8,035,000
aggregate principal amount of Water and Sewer Revenue Refunding Bonds,
2003, of the City for the purpose of obtaining the funds with which to refund,
on a current basis, and defease all of the City's outstanding Water and Sewer
Refunding and Improvement Revenue Bonds, 1993 and to advance refund and
defease all of the City's outstanding Water and Sewer Revenue Bonds, 1994;
fixing the date, form, denominations, maturities, interest rates, terms and
covenants of the bonds; providing for bond insurance; and approving the sale
and providing for the delivery of the bonds to D.A. Davidson & Co., Seattle,
Washington.
ORDINANCE NO. 5019
Section 1. Definitions 3
Section 2. Findings Regarding Parity Provisions 10
Section 3. Authorization and Description of Bonds 10
Section 4. Registration of Bonds and Book-Entry System 11
Section 5. Payment of Bonds 13
Section 6. No Redemption; Open Market Purchase of Bonds 14
Section 7. Form of Bonds 14
Section 8. Execution of Bonds 14
Section 9. Authentication and Delivery of Bonds by Bond Registrar 15
Section 10. Registration, Transfer and Exchange 15
Section 11. Lost, Stolen or Destroyed Bonds 17
Section 12. Creation of Fund 18
Section 13. Deposits into Funds 18
Section 14. Flow of Funds 20
Section 15. Pledge of Revenue and Lien Position 20
Section 16. Findings Regarding Sufficiency of Revenue 20
Section 17. Covenants 21
Section 18. No Private Activity Bonds 24
Section 19. Defeasance of the Bonds 24
Section 20. Provision for Future Parity Bonds 26
Section 22. Approval of Purchase Agreement 28
Section 23. Bond Insurance 28
Section 24. Delivery of Bonds; Temporary Bonds 29
Section 25. Call of 1993 Bonds for Redemption 30
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ORDINANCE NO. 5019
Section 26. Acquisition of Escrow Obligations 30
Section 27. Verification of Sufficiency of Escrow 31
Section 28. Escrow Agreement 31
Section 29. Application of Bond Proceeds 31
Section 30. Undertaking to Provide Continuing Disclosure 32
Section 31. Preliminary Official Statement Deemed Final 35
Section 32. Contract; Savings Clause 35
Section 33. Effective Date of Ordinance 36
EXHIBIT A Form of Escrow Agreement
ORDINANCE NO. 5019
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of $8,035,000
aggregate principal amount of Water and Sewer Revenue Refunding Bonds,
2003, of the City for the purpose of obtaining the funds with which to refund,
on a current basis, and defease all of the City's outstanding Water and Sewer
Refunding and Improvement Revenue Bonds, 1993 and to advance refund and
defease all of the City's outstanding Water and Sewer Revenue Bonds, 1994;
fixing the date, form, denominations, maturities, interest rates, terms and
covenants of the bonds; providing for bond insurance; and approving the sale
and providing for the delivery of the bonds to D.A. Davidson & Co., Seattle,
Washington.
WHEREAS, the City has heretofore created and operated a waterworks utility of the
City, including the sewerage system of the City and within that system a system of storm and
surface water sewers (defined herein as the "Waterworks Utility"); and
WHEREAS, by Ordinance No. 3188, the City provided for the issuance of the Water and
Sewer Revenue Refunding Bonds, 1977, Issue No. 3 (the "1977 Bonds"), and, by Section 17 of
that ordinance, established certain conditions for the issuance of additional water and sewer
revenue bonds on a parity of lien with the 1977 Bonds; and
WHEREAS, by Ordinance No. 4709, the City provided for the issuance of the 1998
Bonds, and, by Section XXIII of that ordinance, provided that upon the date on which the 1977
Bonds and certain water and sewer revenue bonds issued on a parity of lien therewith were fully
redeemed, refunded or defeased, the right of the City to issue bonds on a party of lien with the
1977 Bonds would be permanently revoked; and
WHEREAS, all of such water and sewer revenue bonds have been paid and redeemed, or
irrevocable provision for their payment and redemption has been made, except for the
outstanding Refunded Bonds; and
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ORDINANCE NO. 5019
WHEREAS, pursuant to Chapter 39.53 RCW, the City is authorized to issue and sell,
without an election, revenue bonds of the City to refund all of the outstanding Refunded Bonds;
and
WHEREAS, the City reserved the right to defease the Refunded Bonds; and
WHEREAS, the refunding and defeasance of the Refunded Bonds will provide a debt
service savings to the City and a modification of the covenants and other terms of the Parity
Bonds; and
WHEREAS, by Section XXIII of Ordinance No. 4709, the City also provided that it may
issue additional water and sewer revenue bonds which will constitute a charge and lien upon the
revenue of the Waterworks Utility of the City on a parity with the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein; and
WHEREAS, by Ordinance No. 4976, the City issued the 2002 Bonds on a parity of lien
with the 1998 Bonds; and
WHEREAS, the City Council has determined that it is in the best interests of the City to
issue and sell $8,035,000 of Water and Sewer Revenue Refunding Bonds, 2003 on a parity of
lien with the 1998 Bonds and the 2002 Bonds to provide part of the funds necessary to carry out
the Refunding Plan and to pay the costs of issuance and sale of the Bonds; and
WHEREAS, MBIA Insurance Corporation has made a commitment to issue an insurance
policy insuring the payment when due of the principal of and interest on the Bonds as provided
therein, and the City Council deems that the purchase of such policy is in the best interest of the
City; and
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ORDINANCE NO. 5019
WHEREAS, D.A. Davidson & Co., Seattle, Washington, has offered to purchase the
Bonds under the terms and conditions hereinafter set forth; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
"Alternate Security" shall mean any bond insurance, collateral, security, letter of credit,
guaranty, surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds, issued by an institution
that has been assigned a credit rating at the time of issuance of such Parity Bonds secured by
such Alternate Security equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service" for any year shall mean all the interest on plus all principal
(except principal of Term Bonds due in any Term Bond Maturity Year) of Parity Bonds, plus all
mandatory redemption and sinking fund installments, less all bond interest payable from the
proceeds of any such bonds, which will mature or come due in that year.
"Average Annual Debt Service" shall mean the sum of the Annual Debt Service for the
remaining years to the last scheduled maturity of the applicable bond issue or issues divided by
the number of those years.
"Beneficial Owner" shall mean, with respect to any Bond, the Person named on the
records of the Custodian as having the right, without a physical certificate evidencing such right,
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ORDINANCE NO. 5019
to transfer, to hypothecate and to receive the payment of the principal of, premium, if any, and
interest on such Bond as the same becomes due and payable.
"Bond Fund" shall mean that special fund of the City known as the 2003 Waterworks
Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on
the Bonds.
"Bond Insurer" shall mean MBIA Insurance Corporation.
"Bond Insurance Policy" shall mean the municipal bond insurance policy issued by the
Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided herein.
"Bond Register" shall mean the registration books on which are maintained the names
and addresses of the Owners of the Bonds.
"Bond Registrar" shall mean the fiscal agencies of the State in Seattle, Washington, and
New York, New York, as the same shall be designated from time to time.
"Bonds" shall mean the $8,035,000 City of Renton Water and Sewer Revenue Refunding
Bonds, 2003, authorized to be issued by this ordinance.
"Book-Entry Termination Date" shall mean the fifth business day following the date of
receipt by the Bond Registrar of the City's request to terminate the book-entry system of
registering the beneficial ownership of the Bonds.
"City" shall mean the City of Renton, Washington, a duly organized and legally existing
noncharter code city under the laws of the State.
"City Finance Director" shall mean the City's Finance and Information Services
Administrator or the successor to such officer.
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ORDINANCE NO. 5019
"Closing" shall mean the date of the delivery of the Bonds by the City to the Purchaser
and the payment therefor by the Purchaser.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules
and regulations promulgated thereunder.
"Coverage Requirement" shall mean in any calendar year 1.25 times the Maximum
Annual Debt Service.
"Custodian" shall mean (a) The Depository Trust Company, New York, New York, or
(b) any successor thereto engaged by the City to operate a book-entry system for recording,
through electronic or manual means, the beneficial ownership of the Bonds, in which system no
physical certificates are issued to the Beneficial Owners of the Bonds, but in which a limited
number of physical certificates are issued to and registered in the name of the Custodian or its
nominee, and delivered to the Custodian; provided, that such book-entry system operated by the
Custodian may include the use of subsystems of recording the beneficial ownership of Bonds
which are operated by parties other than the Custodian and the use of a nominee for the
Custodian; and the term "Custodian," as used herein, includes any party operating any such
subsystem.
"Escrow Agreement" shall mean that certain Escrow Agreement, to be dated as of
September 30, 2003, by and between the City and the Escrow Trustee in substantially the form of
Exhibit A hereto, which is incorporated herein by this reference.
"Escrow Obligations" shall mean those certain noncallable direct obligations of the
United States of America listed on Schedule 1 attached to the Escrow Agreement.
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ORDINANCE NO. 5019
"Escrow Trustee" shall mean U.S. Bank National Association, acting in its fiduciary
capacity as escrow trustee pursuant to the Escrow Agreement.
"Future Parity Bonds" shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a
parity with the lien and charge on Net Revenue for the payment of the principal of and interest
on the Bonds.
"Gross Revenue" shall mean Revenue of the Waterworks Utility.
"Letter of Representations" shall mean the Blanket Issuer Letter of Representations
from the City and the Bond Registrar to the Custodian dated April 15, 1997, pertaining to the
payment of the Bonds and the "book-entry" system for evidencing the beneficial ownership of
the Bonds prior to the Book-Entry Termination Date (as it may be amended from time to time).
"Maintenance and Operation Expense" shall mean all reasonable expenses incurred by
the City in causing the Waterworks Utility to be operated and maintained in good repair, working
order and condition, including payments made to any other municipal corporation or private
entity for water service and for sewage treatment and disposal service or other utility service in
the event the City combines such service in the Waterworks Utility and enters into a contract for
such service, and including pro-rata budget charges for the City's administration expenses where
those represent a reasonable distribution and share of actual costs, but not including any
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the Waterworks Utility.
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ORDINANCE NO. 5019
"Maximum Annual Debt Service" shall mean, at the time of calculation, the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future calendar year on the outstanding Parity Bonds.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Net Revenue" shall mean Gross Revenue less Maintenance and Operation Expense.
"1993 Bonds" shall mean the outstanding Water and Sewer Refunding and Improvement
Revenue Bonds, 1993.
"1994 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1994.
"1998 Bonds" shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"NRMSIR" shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Owner" shall mean the person named as the registered owner of a Bond on the Bond
Register.
"Parity Bonds" shall mean the 1998 Bonds, the 2002 Bonds, the Bonds and any Future
Parity Bonds.
"Parity Bond Fund" shall mean any fund created for the payment and redemption of
Parity Bonds.
"Professional Utility Consultant" shall mean an independent licensed professional
engineer, certified public accountant or other independent person or firm selected by the City
having a favorable reputation for skill and experience with municipal utilities of comparable size
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and character to the Waterworks Utility in such areas as are relevant to the purposes for which
such consultant is retained.
"Purchase Agreement" shall mean the Bond Purchase Agreement for the Bonds, dated
September 22, 2003, by and between the City and the Purchaser.
"Purchaser" shall mean D.A. Davidson & Co., Seattle, Washington.
"Rate Stabilization Fund" shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Refunded Bonds" shall mean, collectively, the 1993 Bonds and the 1994 Bonds.
"Refunding Plan" shall mean the plan to refund, on a current basis, and defease the
outstanding 1993 Bonds, to advance refund and defease the outstanding 1994 Bonds and to pay
certain "incidental costs and costs related to the sale and issuance" (as defined in RCW
39.46.070) of the Bonds, all as more particularly defined and described in the Escrow
Agreement.
"Reserve Fund" shall mean that special fund of the City known as the Waterworks
Revenue Bond Reserve Fund created by Ordinance No. 4709 for purpose of securing the
payment of the principal of and interest on all bonds to which Net Revenue is pledged.
"Reserve Insurance" shall mean, in lieu of cash and investments, insurance obtained by
the City equal to part or all of the Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained, issued by an institution that has been assigned a credit
rating equal to or better than the highest then-existing rating for any of the Parity Bonds.
"Reserve Requirement" shall mean the Maximum Annual Debt Service.
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ORDINANCE NO. 5 019
"Revenue of the Waterworks Utility" shall mean all of the earnings and revenues
received by the City from the maintenance and operation of the Waterworks Utility and all
earnings from the investment of money in the Reserve Fund or any Parity Bond Fund, and
connection and capital improvement charges collected for the purpose of defraying the cost of
capital facilities of the Waterworks Utility, except government grants, proceeds from the sale of
Waterworks Utility property (other than timber), City taxes collected by or through the
Waterworks Utility, principal proceeds of bonds and earnings or proceeds from any investments
in a trust, defeasance or escrow fimd created to defease or refund Waterworks Utility obligations
(until commingled with other earnings and revenues of the Waterworks Utility) or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code.
"Rule" shall mean SEC Rule 15c2-12.
"SEC" shall mean the United States Securities and Exchange Commission.
"SID" shall mean a state information depository.
"State" shall mean the State of Washington.
"Term Bonds" shall mean any Parity Bonds identified as such in the ordinance
authorizing the issuance thereof, the payment of which is provided for by a requirement for
mandatory deposits of money into the principal and interest account of the bond redemption fund
created for the payment of such issue of bonds in accordance with a mandatory sinking fund
requirement.
"Term Bond Maturity Year" shall mean any calendar year in which Term Bonds are
scheduled to mature.
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ORDINANCE NO. 5 019
"2002 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 2002.
"Waterworks Utility" shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to, improved and
extended for as long as any of the Parity Bonds are outstanding.
"Waterworks Utility Fund" shall mean that special fund of the City into which all Gross
Revenue (except for earnings in any special fund for the redemption of revenue obligations of
the Waterworks Utility) shall be 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 and 4976 and that there will
be on file prior to the issuance and delivery of the Bonds a certificate of the City Finance
Director [a Professional Utility Consultant] that satisfies the conditions for such certificate as set
forth in Ordinance Nos. 4709 and 4976. Therefore, the Bonds shall be issued on a parity of lien
with the Parity Bonds.
Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
the funds necessary to carry out the Refunding Plan, the City shall issue the Bonds in the
aggregate principal amount of $8,035,000. The Bonds shall be designated "City of Renton,
Washington Water and Sewer Revenue Refunding Bonds, 2003;" shall be dated September 15,
2003; shall be in the denomination of $5,000 or any integral multiple thereof 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
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December 1, commencing December 1, 2003, to the maturity of the Bonds; and shall mature on
June 1 in the years and amounts and bear interest at the rates per annum as follows:
Maturity Years
(June 1)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Amounts
$1,100,000.00
1,000,000.00
1,050,000.00
1,085,000.00
1,130,000.00
825,000.00
685,000.00
355,000.00
390,000.00
415,000.00
Interest
Rates
2.000%
2.000
2.000
3.500
3.750
2.850
3.200
3.400
3.600
3.700
If any Bond is duly presented for payment upon maturity and is not paid, then interest thereon
shall continue to accrue thereafter at the rate stated therein until such Bond is paid.
The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-105.
Section 4. Registration of Bonds and Book-Entry System. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on the Bond Register. The
Bond Register shall contain the name and mailing address of the Owner of each Bond and the
principal amount and number of each of the Bonds held by each Owner.
On the date of issue of the Bonds, all Bonds maturing in the same maturity year shall be
issued in the form of a single certificate, which certificate shall be registered in the name of the
Custodian or its nominee, and delivered to the Custodian. The Custodian shall hold each such
Bond certificate in fully immobilized form for the benefit of the Beneficial Owners pursuant to
the Letter of Representations until the earliest to occur of either (1) the date of maturity of the
Bonds evidenced by such certificate, at which time the Custodian shall surrender such certificate
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ORDINANCE NO. 5019
to the Bond Registrar for payment of the principal of and interest on such Bonds coming due on
such date, and the cancellation thereof; (2) the Book-Entry Termination Date; or (3) the date the
City determines to utilize a new Custodian for the Bonds, at which time the old Custodian shall
(provided the City is not then in default of any payment then due on the outstanding Bonds)
surrender the immobilized certificates to the Bond Registrar for transfer to the new Custodian
and cancellation as herein provided.
For so long as any outstanding Bonds are registered in the name of the Custodian or its
nominee and held by the Custodian in fully immobilized form as described in this Section 4, the
rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry
made from time to time on the records established and maintained by the Custodian in
accordance with the Letter of Representations, and no certificates evidencing such Bonds shall
be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's
nominee.
The City may terminate the "book-entry" system of registering ownership of the Bonds at
any time (provided the City is not then in default of any payment then due on the outstanding
Bonds) by delivering to the Bond Registrar: (a) a written request that it issue and deliver Bond
certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry
Termination Date; (b) a list identifying the Beneficial Owners as to both name and address; and
(c) a supply of Bond certificates, if necessary for such purpose. Upon surrender to the Bond
Registrar of the immobilized certificates evidencing all of the then outstanding Bonds, the Bond
Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial
Owner's duly appointed agent, naming such Beneficial Owner or such Beneficial Owner's
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ORDINANCE NO. 5 019
nominee as the Owner thereof. Such certificates may be in any integral multiple of $5,000
within a single maturity. Following such issuance, the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 10 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error, omission, action
or failure to act on the part of the Custodian with respect to payment, when due, to the Beneficial
Owner of the principal and interest on the Bonds, proper recording of beneficial ownership of
Bonds, proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any
other matter pertaining to the Bonds.
Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Prior to the Book-Entry Termination
Date, the principal of and interest on the Bonds shall be paid by the Bond Registrar to the
Custodian as the Owner thereof, for the benefit of the Beneficial Owners thereof, in accordance
with the Letter of Representations.
From and after the Book-Entry Termination Date, interest on the Bonds shall be paid by
check or draft mailed on or before the interest payment date, to the persons identified as the
Owners on the fifteenth day of the month preceding the interest payment date at the addresses
shown for the Owners on the Bond Register, or, if requested in writing by an Owner of $100,000
or more in principal amount of Bonds at least ten days before an interest payment date, by wire
transfer on the interest payment date to an account within the United States. From and after the
Book-Entry Termination Date, principal of the Bonds shall be payable upon presentation and
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surrender of the Bonds by the Owners at the principal corporate trust office of the Bond
Registrar.
The Bonds shall be payable solely out of the Bond Fund and the Reserve Fund and shall
be a valid claim of the Owners thereof only as against the Bond Fund, Reserve Fund and the
amount of Net Revenue pledged to those funds and shall not be general obligations of the City.
Section 6. No Redemption; Open Market Purchase of Bonds. The Bonds are not subject
to redemption prior to their stated maturity dates,
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased under this Section shall be canceled.
Section 7. Form of Bonds. The Bonds shall be typewritten, word processed, printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 8. Execution of Bonds. The Bonds shall be executed on behalf of the City by the
facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
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ORDINANCE NO. 5019
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 9. Authentication and Delivery of Bonds by Bond Registrar. The Bond Registrar
is authorized and directed, on behalf of the City, to authenticate and deliver Bonds initially
issued or transferred or exchanged in accordance with the provisions of such Bonds and this
ordinance.
Only such Bonds as shall bear thereon a "Certificate of Authentication" manually
executed by an authorized representative of the Bond Registrar shall be valid or obligatory for
any purpose or entitled to the benefits ofthis 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 ofthis ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 10. Registration, Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept, at its principal corporate trust office, the Bond Register. The Bond Registrar is
authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 3755 establishing a system of registration for the City's bonds
and obligations.
The City and the Bond Registrar, in its discretion, may deem and treat the Owner of each
Bond as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar
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shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as
described in Section 5 hereof, but such registration may be transferred as herein provided. All
such payments made as described in Section 5 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
The registered ownership of the Bonds may be transferred. Prior to the Book-Entry
Termination Date, the beneficial ownership of the Bonds may only be transferred on the records
established and maintained by the Custodian. On and after the Book-Entry Termination Date,
transfer of any Bond shall be valid only if it is surrendered at the principal corporate trust office
of either Bond Registrar, with the assignment form appearing on such Bond duly executed by, or
accompanied by a written instrument of transfer in form satisfactory to such Bond Registrar duly
executed by, the Owner or such Owner's duly authorized agent, in a manner satisfactory to such
Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bond and
shall authenticate and deliver, without charge to the Owner or transferee therefor (other than any
governmental fees or taxes payable on account of such transfer), a new Bond or Bonds (at the
option of the new Owner), naming as Owner the person or persons listed as the assignee on the
assignment form appearing on the surrendered Bond, of the same maturity and interest rate, for
the same aggregate principal amount, and in any authorized denomination selected by the new
Owners, in exchange for such surrendered and cancelled Bond.
On and after the Book-Entry Termination Date, any Bond may be surrendered at the
principal corporate trust office of the Bond Registrar and exchanged, without charge, for an
equal aggregate principal amount of Bonds of the same maturity and interest rate, in any
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authorized denomination as selected by the Owner. The Bond Registrar shall not be obligated to
transfer or exchange any Bond during the fifteen days preceding any principal or interest
payment date.
The Bond Registrar may become the Owner of any Bond with the same rights it would
have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository
for and permit any of its officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of the Owners of the Bonds.
The City covenants that, until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 11. Lost, Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
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 ofthis ordinance with all
other Bonds issued hereunder.
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Section 12. Creation of Fund. There is hereby created in the City Treasury the 2003
Waterworks Revenue Bond Fund (the "Bond Fund").
Section 13. Deposits into Funds . So long as Bonds are outstanding against the Bond
Fund, the City shall:
(a) Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion, namely, one day before each interest or principal
and interest payment date, an amount which, together with other money then on deposit
therein, shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue, in three
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 ofthis 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
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ORDINANCE NO. 5019
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, 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.
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Section 14. Flow of Funds. Funds in the Waterworks Utility Fund (other than in any
bond redemption or federal rebate account) shall be used in the following order of priority:
(a) To pay Maintenance and Operation Expense;
(b) To pay the interest on the Parity Bonds;
(c) To pay the principal of the Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds;
(e) To make all payments required to be made into the Reserve Fund;
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City, to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility, to make deposits into the Rate Stabilization Fund, or for any
other lawful City purpose.
Section 15. Pledge of Revenue and Lien Position. The Net Revenue is pledged to the
payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such
Net Revenue prior and superior to any other charge whatsoever.
Section 16. 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
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Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the outstanding Parity Bonds and to permit the setting aside in the Bond Fund and the Reserve
Fund, out of the revenue of the entire utility, of amounts sufficient to pay the interest on the
Bonds as that interest becomes payable and to pay and redeem all of the Bonds at maturity. The
City Council further declares that in creating the Bond Fund and in fixing the amounts to be paid
into the Bond Fund and the Reserve Fund, as aforesaid, it has exercised due regard for the
Maintenance and Operation Expense (and costs of maintenance and operation as used in RCW
35.92.100) and the debt service requirements of the currently outstanding Parity Bonds, and the
City has not bound and obligated itself to set aside and pay into the Bond Fund and the Reserve
Fund, a greater amount or proportion of the revenue of that utility than in the judgment of the
City Council will be available over and above Maintenance and Operation Expense (and such
costs of maintenance and operation of the Waterworks Utility as that term is used in RCW
35.92.100) and debt service requirements of the currently outstanding Parity Bonds and that no
portion of the Gross Revenue has been previously pledged for any unrefunded indebtedness
other than the payment of the currently outstanding Parity Bonds.
Section 17. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a) It will establish, maintain and collect rates and charges for all services and
facilities provided by the Waterworks Utility which will be fair and nondiscriminatory,
and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A) pay all
Maintenance and Operation Expense on a current basis, (B) pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and (C) pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
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ORDINANCE NO. 5 019
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b) It will at all times maintain and keep the Waterworks Utility in good
repair, working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
(c) It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions ofthis ordinance.
It will not sell, lease, mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility (other than timber), including all additions and
improvements thereto and extensions thereof at any time made, that are used, useful or
material in the operation of the Waterworks Utility, unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds) that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
period;
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above) that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above) that the depreciated cost
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding any other provision ofthis subsection, (1) the City in its
discretion may sell or otherwise dispose of any of the works, plant, properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary, material to or useful to the
operation of the Waterworks Utility, without making any deposit into the Bond Fund, and
(2) the City may transfer the Waterworks Utility to another municipal corporation so long
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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 ofthis ordinance.
(d) It will keep proper books, records and accounts with respect to the
operations, income and expenditures of the Waterworks Utility in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State.
It will prepare annual financial and operating statements within 270 days of the close of
each fiscal year showing in reasonable detail the financial condition of the Waterworks
Utility as of the close of the previous year, and the income and expenses for such year,
including the amounts paid into the Bond Fund and Reserve Fund and into any and all
special funds or accounts created pursuant to this ordinance, the status of all funds and
accounts as of the end of such year, and the amounts expended for maintenance,
renewals, replacements and capital additions to the Waterworks Utility. Such statements
shall be sent to the Owner of any Parity Bonds upon written request therefor being made
to the City.
(e) Except to aid the poor or infirm, to provide for resource conservation or to
provide for the proper handling of hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or facility in connection with the
operation of the Waterworks Utility free of charge to any person, firm or corporation,
public or private, other than the City, so long as any Parity Bonds are outstanding. On at
least an annual basis, it will determine all accounts that are delinquent and will take all
necessary action to enforce payment of such accounts against those property owners
whose accounts are delinquent.
(f) It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance, with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment, works, plants, facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable judgment of the City, to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the outstanding Parity Bonds, and otherwise meet the obligations of the
City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
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ORDINANCE NO. 5 019
cause interest on the Bonds to be included in gross income for federal income tax
purposes. It will, to the extent arbitrage rebate requirements of Section 148 of the Code
are applicable to the Bonds, take all action necessary to comply (or to be treated as
having complied) with those requirements in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative
to calculating rebatable arbitrage, and the payment of any other penalties if required
under Section 148 of the Code to prevent interest on the Bonds from being included in
gross income for federal income tax purposes.
The City certifies that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may
not be relied upon.
Section 18. No Private Activity Bonds. The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a "private activity bond" (as defined in Section
141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described
in Section 103(a) of the Code, unless the tax exemption thereof is not affected.
Section 19. Defeasance of the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire, refund or defease all such then-outstanding Bonds (hereinafter collectively
called the "defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"), then all right and interest of the Owners of the
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ORDINANCE NO. 5019
defeased Bonds in the covenants ofthis ordinance, in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
account and, if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from
Gross Revenue without any priority of lien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account, the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights, if any, of the
owners of any other Parity Bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or direct obligations of the United States of America or other legal
investments pending the prior redemption of the defeased Bonds and if such refunding plan also
provides that certain cash and/or direct obligations of the Untied States of America or other legal
investments are pledged irrevocably for the prior redemption of the defeased Bonds included in
that refunding plan, then only the debt service on the Bonds which are not defeased Bonds and
the refunding bonds, the payment of which is not so secured by the refunding plan, shall be
included in the computation of coverage for determining compliance with the rate covenants.
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ORDINANCE NO. 5019
Section 20. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the following conditions are met and complied with at the time of
issuance of those additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of (1) an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or (2) Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement attributable to those Future Parity Bonds. For federal income tax purposes,
at the discretion of the City, to the extent that the Reserve Requirement cannot be funded
from Future Parity Bond proceeds, the City shall provide for deposit into the Reserve
Fund other legally available money from Net Revenue or Reserve Insurance or Alternate
Security within three years from the date of issuance of the Future Parity Bonds in three
approximately equal annual payments.
(d) The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(e) There shall be on file with the City either:
(1) a certificate of the City Finance Director demonstrating that during
any 12 consecutive calendar months out of the immediately preceding 36 calendar
months Net Revenue, without regard to deposits into or withdrawals from the
Rate Stabilization Fund, is equal to at least the Coverage Requirement for all
Parity Bonds plus the Future Parity Bonds proposed to be issued; or
(2) a certificate of a Professional Utility Consultant that in such
consultant's opinion Revenue for any 12 consecutive calendar months, without
regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be
equal to the Coverage Requirement for each year thereafter. The certificate, in
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ORDINANCE NO. 5019
estimating Net Revenue available for debt services, may adjust Net Revenue to
reflect:
(A) Any changes in rates in effect and being charged or
expressly committed by ordinance to be made in the future;
(B) Income derived from customers of the Waterworks Utility
who have become customers during the 12 consecutive month period or
thereafter adjusted to reflect one year's Net Revenue from those
customers;
(C) Income from any customers to be connected to the
Waterworks Utility who have paid the required connection charges;
(D) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers anticipated to connect for whom
building permits have been issued;
(E) Income received or to be received which is derived from
any person, firm corporation or municipal corporation under any executed
contract for water, sewage disposal or other utility service, which revenue
was not included in the historical Net Revenue;
(F) The Professional Utility Consultant's estimate of the Net
Revenue to be derived from customers with existing homes or buildings
which will be required to connect to any additions to and improvements
and extensions of the Waterworks Utility constructed and to be paid for
out of the proceeds of the sale of the additional Future Parity Bonds or
other additions to and improvements and extensions of the Waterworks
Utility when such additions, improvements and extensions are not
completed; and
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and
interest in each year for the refunding bonds is not increased more than $5,000 over the
amount for that same year required for the bonds or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
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ORDINANCE NO. 5019
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 22. Approval of Purchase Agreement. The Purchaser has presented the Purchase
Agreement to the City pursuant to which the Purchaser has offered to purchase the Bonds. The
City Council finds that entering into the Purchase Agreement is in the best interests of the City,
and therefore accepts the offer contained in the Purchase Agreement and authorizes and directs
the execution of the Purchase Agreement on behalf of the City by City officials, and delivery of
the same to the Purchaser.
The Bonds will be delivered to the Purchaser in accordance with the Purchase Agreement
with a copy of the approving legal opinion of Gottlieb, Fisher & Andrews, PLLC, bond counsel,
Seattle, Washington, relative to the issuance of the Bonds, attached to each Bond. Bond counsel
has not been engaged to review or express any opinion concerning the completeness or accuracy
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring, the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 23. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
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Bonds and agrees to the conditions for obtaining that policy, including the payment of the
premium therefor. The City Council authorizes and directs the execution of the commitment for
the Bond Insurance Policy on behalf of the City by City officials, including, but not limited to
the City Finance Director, and delivery of the same to the Bond Insurer. Any notice required to
be given to any party pursuant to this ordinance shall also be provided to the Bond Insurer.
Notices shall be sent to the following address: MBIA Insurance Corporation, 113 King Street,
Armonk, New York 10504, Attention: Insured Portfolio Management.
Section 24. Delivery of Bonds; Temporary Bonds. The proper City officials, including,
but not limited to, the City Finance Director, are authorized and directed (a) to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including, but not limited to, the final official statement pertaining to the Bonds; and (b) to do
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 ofthis ordinance with respect to the payment, security and obligation thereof as
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
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Section 25. Call of 1993 Bonds for Redemption. The City hereby ratifies the call for
redemption on October 1, 2003 of the 1993 Bonds that are subject to optional redemption, at a
redemption price of 101% of the principal amount thereof plus accrued interest. Such call for
redemption shall become irrevocable upon delivery of the Bonds at Closing.
Section 26. Acquisition of Escrow Obligations. The proper City officials, including, but
not limited to, the City Finance Director shall, at or prior to Closing, make appropriate
arrangements for the payment for and delivery of any Escrow Obligations which are to be
purchased in the open market pursuant to the Refunding Plan; and shall, prior to Closing, deliver
or cause to be delivered to the Federal Reserve Bank in Seattle, Washington, subscriptions for
any Escrow Obligations which are to be acquired from the United States Bureau of Public Debt
pursuant to the Refunding Plan. The maturing principal of and the interest on such Escrow
Obligations, together with the Initial Cash to be provided to the Escrow Trustee pursuant to the
Refunding Plan, shall be sufficient to pay all of the principal of and interest to become due on the
1993 Bonds from Closing to and including October 1, 2003, when due, and to redeem on said
date, all of the remaining outstanding 1993 Bonds at a redemption price of 101% of the principal
amount thereof, and to pay all of the principal of and interest to become due on the 1994 Bonds
from Closing to and including November 1, 2005, the final maturity date of the outstanding 1994
Bonds.
The Escrow Trustee shall designate in any such subscriptions that all the principal of and
interest on the Escrow Obligations subscribed for with theUnited States Bureau of Public Debt
shall be payable to the Escrow Trustee. Such subscription may be amended as permitted by
federal law.
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Section 27. Verification of Sufficiency of Escrow. The proper City officials, including,
but not limited to, the City Finance Director are authorized and directed to obtain, prior to
Closing, independent verification from a firm of independent certified public accountants that,
among other things, the cash flow scheduled to be received from the Escrow Obligations,
together with any uninvested initial cash, shall be sufficient to make the payments described in
Section 22 hereof. At Closing, if there has been any change in Escrow Obligations or cash
deposited with the Escrow Trustee under this ordinance and the Escrow Agreement, the City
Finance Director shall cause the sufficiency of the Escrow Fund (as defined in the Escrow
Agreement) to be verified in such manner as she shall deem necessary.
Section 28. Escrow Agreement. The Escrow Agreement is hereby approved. The City
Finance Director is authorized and directed to execute and to deliver said Escrow Agreement, on
behalf of the City, to the Escrow Trustee on or before Closing, with such changes as the City
Finance Director deems to be in the best interests of the City; and such execution and delivery of
the Escrow Agreement shall evidence irrevocably the approval of the executed Escrow
Agreement by the City.
Section 29. Application of Bond Proceeds. The accrued interest and the rounding
amount, if any, received by the City at Closing shall be deposited into the Bond Fund and shall
be applied to the payment of interest first coming due on the Bonds.
The remaining proceeds of the sale of the Bonds, less the underwriter's discount and the
bond insurance premium to be paid by the Purchaser on behalf of the City, plus the net original
issue premium, together with such other funds of the City as are identified in the Refunding Plan,
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ORDINANCE NO. 5019
shall be paid by the City to the Escrow Trustee at Closing, to be applied as set forth in the
Escrow Agreement.
Section 30. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection (b)(5)(i) of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID, if one is created, the following annual financial information and operating data
(collectively, the "Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31, 2003, on or before the last day of the seventh month
following the end of such prior fiscal year:
(a) Annual financial statements prepared in accordance with the generally accepted
accounting principles applicable to governmental units, as such principles may be changed from
time to time and as permitted by State law; which statements will not be audited, except that if
and when audited financial statements are otherwise prepared and available to the City, they will
be provided (the "Annual Financial Statements");
(b) A statement of authorized, issued and outstanding bonded debt secured by the
Net Revenue;
(c) Debt service coverage ratios;
(d) General customer statistics for the Waterworks Utility; and
(e) A narrative explanation of the reasons for any amendments to this Section 30
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
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In its provision of such financial information and operating data, the City may cross-
reference to any "final official statement" (as defined in the Rule) available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information, then when and if available,
the City shall provide its Annual Financial Statements, which shall have been audited by such
auditor as shall be then required or permitted by the State law, to each then existing NRMSIR
and to the SID, if one is created.
The City further agrees to provide or cause to be provided, in a timely manner, to the
SID, if one is created, and to either the MSRB or each then existing NRMSIR, notice of any of
the following events with respect to the Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of the Owners of the Bonds;
8. Optional redemptions of the Bonds;
9. Defeasances of the Bonds;
10. Release, substitution or sale of property securing repayment of the Bonds; and
11. Rating changes.
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ORDINANCE NO. 5 019
The City also agrees to provide or cause to be provided, in a timely manner, to the SID, if
one is created, and to either the MSRB or each then existing NRMSIR, notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the Bonds, so long as the interests of the Owners or Beneficial
Owners of the Bonds will not be materially impaired thereby, as determined by a party
unaffiliated with the City (including, without limitation, a trustee for the Owners, nationally
recognized bond counsel or other counsel familiar with the federal securities law), or pursuant to
a favorable "no-action letter" issued by the SEC, this Section 30 may only be amended in
connection with any change in legal requirements, change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted, and only in such a manner
that the undertaking of the City, as so amended, would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance, prior redemption or payment in
full of all of the then outstanding Bonds. This Section 30 or any provision hereof, shall be null
and void if the City (i) obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 30 or any such provision are invalid, have been repealed retroactively or otherwise
do not apply to the Bonds; and (ii) notifies and provides the SID, if any, and either the MSRB or
each then existing NRMSIR with copies of such opinion.
34
f:\renton\w&s revreflB
ORDINANCE NO. 5019
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions ofthis
Section 30 shall be limited to the right to obtain specific enforcement of the City's obligations
under this Section 30, and any failure by the City to comply with the provisions ofthis
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 ofthis
Section 30.
Section 31. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated September 10, 2003 (the
"Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with paragraph (b) (1) of the Rule, the City
"deems final" that Preliminary Official Statement as of its date, except for the omission of
information as to offering prices, interest rates, selling compensation, aggregate principal
amount, principal amount per maturity, maturity dates, options of redemption, delivery dates,
ratings and other terms of the Bonds dependent on such matters.
Section 32. Contract; Savings Clause. The covenants contained in this ordinance and in
the Bonds shall constitute a contract between the City and the Owner of each and every Bond. If
any one or more of the covenants or agreements provided in this ordinance to be performed on
the part of the City shall be declared by any court of competent jurisdiction and after final appeal
(if any appeal be taken) to be contrary to law, then such covenant or covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining covenants
35
f:\renton\w&s revreflB
ORDINANCE NO. 5019
and agreements in this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
Section 33. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this 22nd day of September, 2003.
yMAjQ-J- UJaJ^h^J
Bonnie Walton, City Clerk
APPROVED BY THE MAYOR this 22nd day of September, 2003
Approved as to Form:
^Zy»j^<^<^*a.
C y^/J><7^
/ JeS'se Tanner, Mayor
sond Counsel
Date of Publication: 9/26/03 (Summary)
' V *
%
u- * if
CO /Jr :
36
f:\renton\w&s revrefl)3
ORDINANCE NO. 5019
EXHIBIT A
FORM OF
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of September 30, 2003, is made by and between
the CITY OF RENTON, WASHINGTON (the "City"), duly organized and existing pursuant to
the laws of the State of Washington, and U.S. BANK NATIONAL ASSOCIATION, as escrow
trustee hereunder (the "Escrow Trustee").
RECITALS
WHEREAS, the City now has outstanding $8,110,000 principal amount of its Water and
Sewer Refunding and Improvement Revenue Bonds, 1993 (the "1993 Bonds") and $420,000
principal amount of its Water and Sewer Revenue Bonds, 1994 (the "1994 Bonds" and, together
with the 1993 Bonds, the "Refunded Bonds"); and
WHEREAS, after due consideration, it appears to the City Council of the City (the "City
Council") that refunding all of the outstanding Refunded Bonds by the issuance of refunding
bonds of the City will provide a debt service savings to the City and a modification of the
covenants and other terms of the Parity Bonds; and
WHEREAS, by Ordinance No. (the "Bond Ordinance"), the City has duly and
validly authorized the issuance, sale and delivery of its $8,035,000 Water and Sewer Revenue
Refunding Bonds, 2003 (the "Bonds"), and the delivery of a portion of the net principal proceeds
of the Bonds to the Escrow Trustee, the purchase of the noncallable "Government Obligations"
(as defined in Chapter 39.53 RCW) listed in Schedule 1 hereto (the "Escrow Obligations"), and
the execution and delivery ofthis Escrow Agreement; and
WHEREAS, the Escrow Trustee has duly and validly accepted the trust created by this
Escrow Agreement and the performance of its obligations hereunder; and
WHEREAS, the Refunding Plan for the Refunded Bonds (the "Refunding Plan") will be
accomplished pursuant to this Escrow Agreement (including the Schedules hereto), and shall
consist of the following:
(a) The payment to the Escrow Trustee by D.A. Davidson & Co., the Purchaser of the
Bonds (the "Purchaser"), onbehalf of the City, of the sum of $8,059,664.92, derived solely from
the net proceeds of the Bonds, and the payment to the Escrow Trustee by the City of the sum of
$825,478.23, derived from money on deposit in the Principal and Interest Account in the 1994
Water and Sewer Revenue Bond Redemption Account in the Water and Sewer Revenue Parity
Bond Fund (the "Parity Bond Fund") in the amount of $179,130.83 and from money on deposit
in the Principal and Interest Account in the 1993 Water and Sewer Revenue Bond Redemption
Account in the Parity Bond Fund in the amount of $646,347.40.
ORDINANCE NO. 5 019
(b) The purchase by the Escrow Trustee of the Escrow Obligations listed in
Schedule 1 attached hereto and made a part hereof by this reference, with a portion of the money
delivered to the Escrow Trustee as described in clause (a) above;
(c) The delivery of a report (the "Escrow Verification") of Causey Demgen & Moore
Inc., independent certified public accountants, attached as Schedule 2 hereto and made a part
hereof by this reference, verifying the mathematical accuracy of the computations (which
computations shall be attached to said letter) of the yield on the Bonds and the Escrow Fund, and
the computations showing that the Initial Cash and the maturing principal of and interest on the
Escrow Obligations will provide sufficient money (assuming that all the principal of and the
interest on the Escrow Obligations is paid on the due dates thereof) to pay the following
(collectively, the "Escrow Payments"):
(1) The principal of and interest coming due on the 1993 Bonds up to and
including October 1, 2003;
(2) The redemption price equal to 101% of the principal amount of the 1993
Bonds called for redemption on that date; and
(3) The principal of and interest coming due on the 1994 Bonds up to and
including November 1, 2004;
(d) The receipt by the Escrow Trustee of the maturing installments of principal of and
interest on the Escrow Obligations;
(e) The Escrow Trustee's payment from time to time to the fiscal agencies of the
State of Washington (collectively, the "Fiscal Agencies") of money sufficient to make the
Escrow Payments, when due;
(f) The payment by the Escrow Trustee of the costs of issuing the Bonds, as
described on Schedule 3 attached hereto and incorporated herein by this reference.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, for
the benefit of the registered owners of the Refunded Bonds, the parties hereto covenant as
follows:
Section 1. Definitions in Bond Ordinance Applicable. Unless the context otherwise
requires, the terms defined in the Bond Ordinance and in the recitals and the succeeding sections
ofthis Escrow Agreement shall, for all purposes ofthis Escrow Agreement (including the
recitals hereto), be incorporated herein and made a part hereof by this reference, and shall have
the meanings specified in such places, such definitions to be equally applicable to both the
singular and plural forms of any of the terms defined.
Section 2. Creation of Escrow Fund. The Escrow Trustee shall create a trust fund in
escrow (the "Escrow Fund") under this Escrow Agreement into which shall be irrevocably
deposited the Escrow Obligations, the Initial Cash, any Substitute Obligations and any other
funds provided to the Escrow Trustee hereunder for use in the refunding of the Refunded Bonds.
f:\renton\w&s revreflB
ORDINANCE NO. 5019
Section 3. Delivery of Bond Proceeds to Escrow Trustee. On September 30, 2003 (the
"Date of Closing"), the City shall cause the Purchaser to pay to the Escrow Trustee the sum of
$8,059,664.92, derived solely from the net proceeds of the Bonds and shall pay to the Escrow
Trustee the sum of $825,478.23, derived from money on deposit in the Principal and Interest
Account in the 1994 Water and Sewer Revenue Bond Redemption Account in the Parity Bond
Fund in the amount of $179,130.83 and from money on deposit in the Principal and Interest
Account in the 1993 Water and Sewer Revenue Bond Redemption Account in the Parity Bond
Fund in the amount of $646,347.00. Execution ofthis Escrow Agreement by the Escrow Trustee
shall constitute written acknowledgment by the Escrow Trustee of its receipt of said sums.
Section 4. Application of Net Proceeds of the Bonds. On the Date of Closing, the
Escrow Trustee shall:
(a) Apply the sum of $442,426.00, derived from net proceeds of the Bonds in the
amount of $263,266.00 and from money on deposit in the Principal and Interest Account in the
1994 Water and Sewer Revenue Bond Redemption Account in the Parity Bond Fund in the
amount of $179,130.00, to pay the purchase price of the Escrow Obligations in the principal
amounts, with the dates of maturities, at the prices and at the interest rates set forth in Schedule 1
hereto. Upon receipt of the Escrow Obligations, the Escrow Trustee shall deliver to the City and
to Gottlieb, Fisher & Andrews, PLLC ("Bond Counsel") copies of the documents evidencing the
purchase of and payment for the Escrow Obligations; provided, that the City reserves the right to
substitute for a temporary period until receipt of the Escrow Obligations, prior to the Date of
Closing, other noncallable direct United States obligations or cash for any of the Escrow
Obligations if, in the opinion of Bond Counsel, the interest on the Bonds will remain excluded
from gross income for federal income tax purposes under Section 103 of the Internal Revenue
Code of 1986, as amended (the "Code"), and such substitution shall not impair the timely
payment of the amounts required to be paid under the Refunding Plan, which opinion will be
accompanied by a verification of such timely payments from a nationally recognized firm of
independent certified public accountants;
(b) Hold the sum of $8,404,217.15 (the "Initial Cash"), derived from net proceeds of
the Bonds in the amount of $7,757,868.92, money on deposit in the Principal and Interest
Account in the 1994 Water and Sewer Revenue Bond Redemption Account in the Parity Bond
Fund in the amount of $0.83, and money on deposit in the Principal and Interest Account in the
1993 Water and Sewer Revenue Bond Redemption Account in the Parity Bond Fund in the
amount of $646,347.40, uninvested in the form of United States currency until application of the
same to meet the Escrow Payments; and
(c) Apply the sum of $38,500.00, derived solely from the net proceeds of the Bonds,
to the payment of the costs of issuing the Bonds listed on Schedule 3 hereto.
Section 5. Sufficiency of Escrow Obligations. On the basis of the Escrow Verification,
the City represents that the Escrow Obligations, and the maturing principal thereof and the
interest thereon, if paid when due, together with the Initial Cash, shall be sufficient to make the
Escrow Payments, when due.
f:\renton\w&s revreflB
ORDINANCE NO. 5019
Section 6. Collection of Proceeds of Obligations and Application of Such Proceeds and
Money. The Escrow Trustee shall present for payment, and shall collect and receive, on the due
dates thereof, the maturing installments of principal of and the interest on the Escrow
Obligations and any Substitute Obligations (hereinafter defined). From such proceeds and other
money in the Escrow Fund, the Escrow Trustee shall, to the extent sufficient funds are in its
possession, make timely payment to the Fiscal Agencies of the amounts necessary to make the
Escrow Payments, when due. Said payments shall be made by check, wire transfer or such other
method of transfer of funds as shall be mutually agreed from time to time by the Escrow Trustee
and the Fiscal Agencies.
Section 7. All Securities and Money and Proceeds Thereof Held in Trust. The City
hereby irrevocably conveys, transfers and assigns to the Escrow Trustee, in trust, the Escrow
Obligations and the Substitute Obligations, if any, the proceeds thereof and thereon, and the
Initial Cash, and any substitutions or reinvestments thereof made pursuant to Sections 9 and 10
hereof; and the Escrow Trustee hereby irrevocably agrees to hold the same, together with any
other money which the Escrow Trustee may receive pursuant to this Escrow Agreement, in the
Escrow Fund, in trust and separate from all other funds and investments held by the Escrow
Trustee, solely for the purpose of making the Escrow Payments and payments described in
Sections 4, 11 and 14 hereof. The Escrow Trustee shall not sell, transfer, assign or hypothecate
any portion of the Escrow Fund except pursuant to Sections 9, 10, 11 and 14 hereof.
Section 8. Reports and Notice of Insufficiency. For as long as any part of the principal
of or the interest on the Refunded Bonds has not been paid, within 35 business days following
the date scheduled for payment of any debt service thereon, the Escrow Trustee shall render
reports to the City setting forth the activity since the date of the last debt service payment
concerning the Escrow Obligations or any Substitute Obligations, the maturation of such Escrow
Obligations or Substitute Obligations and amounts received by the Escrow Trustee by reason of
such maturity, the interest earned on such Escrow Obligations or Substitute Obligations, a list of
any investments or reinvestments made by the Escrow Trustee in other such Escrow Obligations
or Substitute Obligations and the interest and/or principal derived therefrom, the sums paid to the
Fiscal Agencies, and any other transactions of the Escrow Trustee pertaining to its duties and
obligations as set forth herein.
In the event the maturing principal of and interest on the securities and money in the
Escrow Fund shall be insufficient at any time in the future to make an Escrow Payment, the
Escrow Trustee shall give the City prompt written notice of such projected insufficiency. Such
notice shall be accompanied by a written request directed to the City that the City deposit with
the Escrow Trustee, sums sufficient to make up the insufficiency. Any such written request need
be based only on the activity reports delivered pursuant to this Section 8. The City agrees to
make such deposit promptly.
Section 9. Substitute Obligations. The City reserves the right, from time to time and at
any time, to substitute for the Escrow Obligations initially purchased in accordance with
Section 4 hereof, other noncallable Government Obligations (the "Substitute Obligations");
provided, however, that prior to effecting any such substitution, the City shall have delivered to
the Escrow Trustee:
f:\renton\w&s revreflB
ORDINANCE NO. 5 019
(a) A letter addressed to the City and the Escrow Trustee by a nationally recognized
firm of independent certified public accountants verifying the computations which indicate that
the Escrow Obligations, the Substitute Obligations, and other money to be held by the Escrow
Trustee after the proposed substitution for purposes of making the Escrow Payments will be
adequate to make all the Escrow Payments; and
(b) An opinion of Bond Counsel addressed to the City and the Escrow Trustee that
such substitution is of securities which maybe deposited with the Escrow Trustee to accomplish
the defeasance of the Refunded Bonds in accordance with the ordinance pursuant to which they
were issued, and that such substitution will not cause the interest on the Refunded Bonds or the
Bonds to be included in gross income for purposes of federal income taxation.
Section 10. Reinvestment of Proceeds of Escrow Obligations and Substitute Obligations.
(a) The proceeds (principal and interest) and reinvestment proceeds of any Substitute
Obligations purchased by the Escrow Trustee in accordance with this Escrow Agreement shall be
reinvested by the Escrow Trustee in other Substitute Obligations on date of receipt, provided
that:
(1) The City shall have directed the Escrow Trustee in writing to make such
reinvestment;
(2) Such proceeds shall be reinvested in noncallable Government Obligations at a
yield not to exceed 0% or such higher yield as may be directed by letter of instructions from the
City to the Escrow Trustee, but if the composite yield on the directed investments made pursuant
to this Escrow Agreement would exceed 2.81006% (the yield on the Bonds), such letter of
instructions shall be based upon and accompanied by the opinion of Bond Counsel approving
reinvestment of such proceeds at such higher yield;
(3) The Substitute Obligations in which such proceeds are reinvested shall mature in
amounts not less than their respective purchase prices and on the date(s) directed by the City, but
not later than the dates the principal thereof is needed to make one or more of the Escrow
Payments as such date(s) may be identified in the most recent report of a nationally recognized
firm of independent certified public accountants verifying the computations which indicate that
the Escrow Obligations, the Substitute Obligations, and other money to be held by the Escrow
Trustee after the proposed substitution for purposes of making the Escrow Payments will be
adequate to make all the Escrow Payments; and
(4) The City and Escrow Trustee shall receive from a nationally recognized firm of
independent certified public accountants a verification that such reinvestment satisfies the
conditions of Sections 10(a)(2) and 10(a)(3) hereof.
(b) If the proceeds of the securities and other money in the Escrow Fund are
insufficient to reinvest in the smallest denomination of Substitute Securities, or are required
sooner than the shortest maturity available for such Substitute Securities, or cannot be reinvested
f:\renton\w&s revreflB
ORDINANCE NO. 5019
under the yield limitations described in Section 10(a)(2) hereof, or for any reason cannot be
reinvested in Substitute Securities, said proceeds shall be held uninvested in the Escrow Fund in
the form of United States currency.
(c) "Yield," as used herein, means that yield computed in accordance with and as
permitted by the Code as applicable to the Bonds and the trust under this Escrow Agreement so
as to preserve the exclusion of the interest on the Bonds from gross income for purposes of
federal income taxation.
(d) The Escrow Trustee shall retain with respect to each Escrow Obligation and
Substitute Obligation sufficient documentation to establish that each such security has been
acquired and disposed of on an established market in an arm's length transaction, at a price equal
to its fair market value and that no amounts have been paid to reduce the yield on such
obligation. The purchase and disposition prices of the Escrow Obligations and Substitute
Obligations (other than SLGS) shall be based on the mean between the bid and asked prices for
such investments on the date of purchase or disposition; and evidence of such prices shall be
retained by the Escrow Trustee.
Section 11. Surplus in Escrow. If, at any time during the term of the escrow created
pursuant to this Escrow Agreement, the securities and money held in the Escrow Fund exceed
the amounts required to make all of the Escrow Payments in accordance with the Escrow
Verification or any subsequent verification furnished to the Escrow Trustee pursuant to
Section 9(a) and/or Section 10(a) hereof, when due, considering the earnings to be realized on
the investment (but not reinvestment) of such securities and the City requests in writing that such
surplus securities or the proceeds thereof or such surplus money be returned by the Escrow
Trustee to the City, then the Escrow Trustee shall do so at the times requested by the City.
Before the application of any such surplus, the Escrow Trustee shall require the City to furnish
the Escrow Trustee, in a form satisfactory to it, a verification by a nationally recognized firm of
independent certified public accountants of the amount of such surplus.
Section 12. Amendments of Escrow Agreement. The Escrow Trustee and the City
recognize that the holders and owners of the Refunded Bonds have a beneficial interest in the
obligations and money held in the Escrow Fund. It is therefore understood and agreed that this
Escrow Agreement shall not be subject to revocation or amendment except for the purpose of
clarifying any ambiguity herein or adding additional money or noncallable direct obligations of
the United States to the Escrow Fund, in either case at the request of the City or the Escrow
Trustee, which request shall be accompanied by an opinion of Bond Counsel addressed to the
City and the Escrow Trustee to the effect that such requested change does not detrimentally
affect the registered owners of the Refunded Bonds.
Notice of any such intended revocation or amendment, together with a copy of the
proposed amendments, if any, shall be sent at least three business days prior to the proposed
effective date of any such revocation or amendment, and notice of any holding of invalidity,
illegality or unenforceability shall be sent within 30 days following such decision, in either case,
by registered or certified mail, postage prepaid, to:
f:\renton\w&s revreflB
ORDINANCE NO. 5019
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attn: Public Finance Rating Desk/Refunded Bonds
Standard & Poor's Ratings Service
25 Broadway
New York, New York 10004
FitchRatings
One State Street Plaza
New York, New York 10004
Section 13. Limitation of Escrow Trustee Duties. None of the provisions contained in
this Escrow Agreement shall require the Escrow Trustee to use or advance its own funds in the
performance of any of its duties or the exercise of any of its rights or powers hereunder. The
Escrow Trustee shall be under no liability for the payment of interest on any funds or other
property received by it hereunder except to the extent the Escrow Trustee is required by the
express terms ofthis Escrow Agreement to invest such funds and it fails to do so.
The Escrow Trustee's liabilities and obligations in connection with this Escrow
Agreement are confined to those specifically described herein. The Escrow Trustee is authorized
and directed to comply with the provisions ofthis Escrow Agreement and is relieved from all
liability for so doing notwithstanding any demand or notice to the contrary by any party hereto.
The Escrow Trustee shall not be responsible or liable for the sufficiency, correctness,
genuineness or validity of the Escrow Obligations or any Substitute Obligations deposited with
it; the performance of, or compliance by any party other than the Escrow Trustee with, the terms
or conditions of any such instruments or the terms or conditions ofthis Escrow Agreement; the
truth of the recitals herein; or any loss which may occur by reason of forgeries, false
representations or the exercise of the Escrow Trustee's discretion in any particular manner unless
such exercise is negligent or constitutes willful misconduct. If any controversy arises between
the City and any third person, the Escrow Trustee shall not be required to determine the same or
to take any action in the premises, but it may, in its discretion, institute an interpleader or other
proceedings in connection therewith as it may deem proper, and in following either course, it
shall not be liable and shall be indemnified by the City in respect thereof to the Escrow Trustee's
satisfaction.
The Escrow Trustee may conclusively rely upon and shall be protected in acting upon
any statement, certificate, notice, request, consent, order, opinion, report or other document
believed by it to be genuine and to have been signed or presented by the proper party. The
Escrow Trustee may consult counsel (including, but not limited to, Bond Counsel) in respect of
any question arising under this Escrow Agreement, and the Escrow Trustee shall not be liable for
any action taken or omitted in good faith upon advice of such counsel.
Section 14. Remission of Funds. At such time as the Escrow Trustee shall have received
both a certificate of the City to the effect that all of the Escrow Payments have been made and
f:\renton\w&s revreflB
ORDINANCE NO. 5019
the confirmation of such certificate by the Fiscal Agencies, together with such other evidence of
such payment as shall be satisfactory to the Escrow Trustee, the Escrow Trustee shall deliver
forthwith or remit to the City any remaining securities and money held pursuant to this Escrow
Agreement.
Section 15. Compensation of Escrow Trustee. The payment arrangement heretofore
made between the Escrow Trustee and the City as to compensation and expenses of the Escrow
Trustee for services rendered by it pursuant to the provisions ofthis Escrow Agreement is
satisfactory to it, to the City and no further payment to the Escrow Trustee, other than as
provided by such arrangement, shall be required for such purpose. Such arrangement for
compensation and expenses is intended as compensation for the ordinary services as
contemplated by this Escrow Agreement, and in the event that the Escrow Trustee renders any
service hereunder not expressly provided for in this Escrow Agreement, or the Escrow Trustee is
made a party to or intervenes in any litigation pertaining to this Escrow Agreement or institutes
interpleader proceedings relative hereto, the Escrow Trustee shall be reasonably compensated by
the City for such extraordinary services and reimbursed for all fees, costs, liability and expenses
(including reasonable attorneys' fees) occasioned thereby; provided, that the Escrow Trustee
shall have no lien or right of set-off against the Escrow Fund or the money or investments
therein.
Section 16. Merger of Escrow Trustee; Successor Escrow Trustee. Any corporation or
association into which the Escrow Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole
or substantially as a whole, or any corporation or association resulting from any such conversion,
sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become
successor Escrow Trustee hereunder and vested with all of the title to the Escrow Fund and all
the trusts, powers, discretions, immunities, privileges and all other matters as was it predecessor,
without the execution or filing of any instrument or any further act, deed or conveyance on the
part of any of the parties hereto, provided that such resulting entity shall meet the requirements
of RCW 39.53.070. Further, the obligations assumed by the Escrow Trustee pursuant to this
Escrow Agreement may be transferred by the Escrow Trustee to a successor if: (a) the Escrow
Trustee has presented evidence satisfactory to the City and Bond Counsel that the successor
meets the requirements of RCW 39.53.070, as now in effect or hereafter amended; (b) the
successor has assumed all the obligations of the Escrow Trustee under this Escrow Agreement;
and (c) the Escrow Fund has been duly transferred to such successor. From and after the date
any successor trustee is duly established hereunder, the predecessor Escrow Trustee shall have
no duty or responsibility hereunder, and shall in no event be liable for any action or failure to act
of the successor.
Section 17. Notice of Call of the 1993 Bonds. The City hereby directs the Escrow
Trustee to request the Fiscal Agencies give such notice as may be required, at the time(s) and in
the manner required pursuant to Ordinance No. 4410, in order to effect the redemption of the
1993 Bonds on October 1, 2003, as described therein.
Section 18. Notices. All notices or requests required or permitted to be given hereunder
shall, until further notice in writing, be given in writing at the following addresses:
8
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ORDINANCE NO. 5019
To the City:
Finance Director
City of Renton
1055 South Grady
Renton, Washington 98058
(425) 430-6858
(425) 430-6855 (facsimile)
with a copy to:
Gottlieb, Fisher & Andrews, PLLC
1325 Fourth Avenue, Suite 1200
Seattle, Washington 98101
(206) 654-1999
(206) 654-8725 (facsimile)
To the Escrow Trustee:
U.S. Bank National Association
PD-WA-T7CT
1420 Fifth Avenue, 7th Floor
Seattle, Washington 98101
(206) 344-4687
(206) 344-4632 (facsimile)
Section 19. Miscellaneous. This Escrow Agreement is governed by the law of the State
of Washington and may not be modified except in a writing signed by the parties. In the event
any one or more of the provisions contained in this Escrow Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions ofthis Escrow Agreement, but this Escrow
Agreement shall be construed as if such invalid or illegal or unenforceable provision had never
been contained herein.
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ORDINANCE NO. 5 019
IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement pursuant to due and proper authorization, all as of September 30, 2003.
CITY OF RENTON, WASHINGTON
By_
Victoria Runkle
Finance Director
U.S. BANK NATIONAL ASSOCIATION, as Escrow
Trustee
By_
Authorized Signatory
10
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ORDINANCE NO. 5019
SCHEDULE 1
ESCROW OBLIGATIONS
Type of Maturity Par
Security Date Amount Rate
SLGS 11/1/03 $37,937.00 0.85%
SLGS 5/1/04 5,165.00 1.00
SLGS 11/1/04 220,194.00 1.14
11
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ORDINANCE NO. 5019
SCHEDULE 2
ESCROW VERIFICATION
OF
CAUSEY DEMGEN & MOORE INC.
[Attached]
12
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ORDINANCE NO. 5019
SCHEDULE 3
ISSUANCE COSTS FOR THE BONDS
Accounting Fees
Bond Counsel
Trustee & Counsel Fees
Rating Agency Fee
Underwriter's Expenses
POS/Official Statement
Miscellaneous
TOTAL
13