HomeMy WebLinkAboutORD 4976CITY OF RENTON, WASHINGTON
ORDINANCE NO. 4976
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of $11,980,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2002, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations, maturities, interest rates, terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson & Co., Seattle, Washington.
ORDINANCE NO. 4976
Section 1. Definitions 3
Section 2. Findings Regarding Parity Provisions 12
Section 3. Authorization and Description of Bonds 12
Section 4. Registration of Bonds and Book-Entry System 14
Section 5. Payment of Bonds 16
Section 6. Optional Redemption and Open Market Purchase of Bonds 17
Section 7. Notice of Redemption 17
Section 8. Failure to Redeem Bonds 18
Section 9. Form of Bonds 19
Section 10. Execution of Bonds 19
Section 11. Authentication and Delivery of Bonds by Bond Registrar 19
Section 12. Registration, Transfer and Exchange 20
Section 13. Lost, Stolen or Destroyed Bonds 22
Section 14. Creation of Account 22
Section 15. Deposits into Funds and Accounts 23
Section 16. Flow of Funds 27
Section 17. Pledge of Revenue and Lien Position 27
Section 18. Findings Regarding Sufficiency of Revenue 28
Section 19. Covenants 29
Section 20. No Private Activity Bonds 33
Section 21. Defeasance of the Bonds 33
Section 22. Provision for Future Parity Bonds 34
Section 23. Approval of Purchase Agreement 37
Section 24. Bond Insurance 38
i
ORDINANCE NO. 4976
Section 25. Delivery of Bonds; Temporary Bonds 38
Section 26. Application of Bond Proceeds 39
Section 27. Undertaking to Provide Continuing Disclosure 40
Section 28. Preliminary Official Statement Deemed Final 43
Section 29. Effective Date of Ordinance 44
n
ORDINANCE NO. 4976
AN ORDINANCE relating to the waterworks utility of the City, including the
sewerage system as a part thereof; providing for the issuance of $11,980,000
aggregate principal amount of Water and Sewer Revenue Bonds, 2002, of the
City for the purpose of obtaining the funds with which to pay the costs of
carrying out certain capital improvements of the waterworks utility; fixing the
date, form, denominations, maturities, interest rates, terms and covenants of the
bonds; providing for bond insurance; and approving the sale and providing for
the delivery of the bonds to D.A. Davidson & Co., Seattle, Washington.
WHEREAS, the City of Renton (the "City") has heretofore created and operated a
waterworks utility of the City, including the sewerage system of the City and within that system
a system of storm and surface water sewers (defined herein as the "Waterworks Utility"); and
WHEREAS, by Ordinance No. 1450, the City provided for the issuance of its Water and
Sewer Refunding and Improvement Revenue Bonds, 1953 (the "1953 Bonds"), and, by Section
15 of that ordinance, established certain conditions for the issuance of additional water and sewer
revenue bonds on a parity of lien with the 1953 Bonds; and
WHEREAS, all of the water and sewer revenue bonds of the City issued on a parity of
lien with the 1953 Bonds pursuant to the original provisions of Section 15 of Ordinance No.
1450 have been paid and redeemed, or irrevocable provision for their payment and redemption
has been made; and
WHEREAS, by Ordinance No. 3188, the City authorized the issuance of its Water and
Sewer Revenue Refunding Bonds, 1977, Issue No. 3 (the "1977 Bonds"), all of which 1977
Bonds have been paid and redeemed, and by Section 13 of that ordinance incorporated Section
15 of Ordinance No. 1450, as modified by Section 13 of Ordinance No. 3169; and
WHEREAS, by Ordinance No. 3720, the City authorized the issuance of its Water and
Sewer Revenue Bonds, 1983 (the "1983 Bonds"), all of which 1983 Bonds have been paid and
ORDINANCE NO. 4 9 76
redeemed, and by Section 12 of that ordinance further modified and strengthened the provisions
of Section 15 of Ordinance No. 1450, as modified by Section 13 of Ordinance No. 3169; and
WHEREAS, the City currently has outstanding Water and Sewer Refunding and
Improvement Revenue Bonds, 1993 (the "1993 Refunding Bonds"), issued pursuant to
Ordinance No. 4410; Water and Sewer Revenue Bonds, 1994 (the "1994 Bonds"), issued
pursuant to Ordinance No. 4480; and Water and Sewer Revenue Refunding Bonds, 1998 (the
"1998 Bonds"), issued pursuant to Ordinance No. 4709, all of which bonds were issued on a
parity of lien with the 1977 Bonds; and
WHEREAS, the parity provisions of Section XXIII of Ordinance No. 4709, which
incorporated therein Section 13 of Ordinance No. 3188 as modified and strengthened by Section
12 of Ordinance No. 3720, provide that the City may issue additional water and sewer revenue
bonds which will constitute a charge and lien upon the revenue of the Waterworks Utility of the
City on a parity with the 1993 Refunding Bonds, the 1994 Bonds, the 1998 Bonds and any bonds
issued thereafter if such additional bonds are issued in compliance with the conditions set forth
therein:
WHEREAS, By Resolution No. 2897, passed in 1992, the City adopted its
Comprehensive Water Plan and by Resolution No. 3417, passed in 1998, the City adopted the
Long Range Wastewater Plan; and
WHEREAS, the City Council has determined that it is necessary and in the best interests
of the City that certain additional improvements described in the Comprehensive Water Plan and
the Long Range Wastewater Plan be made and there be adopted a system or plan of additions to
and betterments and extensions of the Waterworks Utility; and
ORDINANCE NO. 4 9 76
WHEREAS, pursuant to Chapter 35.92 RCW, the City is authorized to sell and issue,
without an election, revenue bonds of the City to make additions, betterments or extensions to
the Waterworks Utility; and
WHEREAS, the City Council has determined that it is necessary to issue and sell
$11,980,000 of Water and Sewer Revenue Bonds, 2002 (the "Bonds") to provide part of the
funds necessary to carry out the system or plan for additions to and betterments and extensions of
the Waterworks Utility and to pay the costs of issuance and sale of the Bonds; and
WHEREAS, Financial Security Assurance Inc., of New York, New York, has made a
commitment to issue an insurance policy insuring the payment when due of the principal of and
interest on the Bonds as provided therein, and the City Council deems that the purchase of such
policy is in the best interest of the City; and
WHEREAS, D.A. Davidson & Co., Seattle, Washington, has offered to purchase the
Bonds under the terms and conditions hereinafter set forth; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
After the New Covenant Date, "Alternate Security " shall mean any bond insurance,
collateral, security, letter of credit, guaranty, surety bond or similar credit enhancement device
providing for or securing the payment of all or part of the principal of and interest on the Parity
Bonds, issued by an institution that has been assigned a credit rating at the time of issuance of
ORDINANCE NO. 4976
such Parity Bonds secured by such Alternate Security equal to or better than the highest then-
existing rating for any of the Parity Bonds.
"Annual Debt Service" for the Bonds shall mean all the interest plus all principal which
will mature or come due in any year.
After the New Covenant Date, "Annual Debt Service "for any year shall mean all the
interest on plus all principal (except principal of Term Bonds due in any Term Bond Maturity
Year) of Parity Bonds, plus all mandatory redemption and sinking fund 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,
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 2002 Waterworks
Revenue Bond Account created by this ordinance as a separate account in the Waterworks
Revenue Parity Bond Fund for the payment of the principal of and interest on the Bonds.
After the New Covenant Date, "Bond Fund" shall mean that special fund of the City
known as the 2002 Waterworks Revenue Bond Fund created by this ordinance for the payment of
the principal of and interest on the Bonds.
ORDINANCE NO. 4 9 76
"Bond Insurer" shall mean Financial Security Assurance Inc., New York, New York.
"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 $11,980,000 City of Renton Water and Sewer Revenue Bonds,
2002, authorized to be issued by this ordinance.
"1977 Bonds" shall mean the Water and Sewer Revenue Refunding Bonds, 1977, Issue.
No.3.
"1988 Bonds" shall mean the Water and Sewer Revenue Bonds, 1988.
"1989 Bonds" shall mean the Water and Sewer Revenue Bonds, 1989.
"1989 Refunding Bonds" shall mean the Water and Sewer Revenue Refunding Bonds,
1989.
"1992 Bonds" shall mean the Water and Sewer Refunding and Improvement Revenue
Bonds, 1992.
"1993 Refunding Bonds" shall mean the outstanding Water and Sewer Refunding and
Improvement Revenue Bonds, 1993.
"1994 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1994.
ORDINANCE NO. 49 7 6
"1998 Bonds" shall mean the outstanding Water and Sewer Revenue Refunding Bonds,
1998.
"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.
"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.
After the New Covenant Date, "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
ORDINANCE NO. 4976
which are operated by parties other than the Custodian and the use of a nominee for the
Custodian; and the term "Custodian," as used herein, includes any party operating any such
subsystem.
"Future Parity Bonds" shall mean all water and sewer revenue bonds of the City issued
after the date of the issuance of the Bonds and having a lien and charge on Gross Revenue on a
parity with the lien and charge on such Revenue for the payment of the principal of and interest
on the Outstanding Parity Bonds and the Bonds.
After the New Covenant Date, "Future Parity Bonds " shall mean all water and sewer
revenue bonds of the City issued after the date of the issuance of the Bonds and having a lien and
charge on Net Revenue on a parity with the lien and charge on Net Revenue for the payment of
the principal of and interest on the Bonds.
"Gross Revenue" shall mean Revenue of the Waterworks Utility.
"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 expenses incurred by the City in
causing the Waterworks Utility to be operated and maintained in good repair, working order and
condition, which shall not include any depreciation expenses or taxes or charges in lieu of taxes
levied or imposed by the City.
After the New Covenant Date, "Maintenance and Operation Expense" shall mean all
reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and
ORDINANCE NO. 4976
maintained in good repair, working order and condition, including payments made to any other
municipal corporation or private entity for water service and for sewage treatment and disposal
service or other utility service in the event the City combines such service in the Waterworks
Utility and enters into a contract for such service, and including pro-rata budget charges for the
City's administration expenses where those represent a reasonable distribution and share of
actual costs, but not including any depreciation or taxes levied or imposed by the City or
payments to the City in lieu of taxes, or capital additions or capital replacements to the
Waterworks Utility.
After the New Covenant Date, "Maximum Annual Debt Service " shall mean, at the time
of calculation, the maximum amount of Annual Debt Service that will mature or come due in the
current calendar year or any future calendar year on the outstanding Parity Bonds.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Net Revenue" shall mean Gross Revenue less Maintenance and Operation Expense.
"New Covenant Date" shall mean the date on which all 1977 Bonds (other than the 1977
Refunded Bonds), 1988 Bonds, 1989 Bonds, 1989 Refunding Bonds, 1990 Bonds, 1992 Bonds ,
1993 Refunding Bonds and 1994 Bonds (other than the 1994 Refunded Bonds) are fully
redeemed, refunded or defeased.
"NRMSIR" shall mean a nationally recognized municipal securities information
repository designated by the SEC.
"Outstanding Parity Bonds" shall mean the 1993 Refunding Bonds and the 1994
Bonds.
ORDINANCE NO. 4976
"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 Bonds and any Future Parity Bonds.
After the New Covenant Date, "Parity Bond Fund" shall mean any fund created for the
payment and redemption of Parity Bonds.
"Principal and Interest Account" shall mean the subaccount of that name created in the
Bond Fund for the payment of the principal of and interest on the Bonds.
After the New Covenant Date, "Professional Utility Consultant" shall mean an
independent licensed professional engineer, certified public accountant or other independent
person or firm selected by the City having a favorable reputation for skill and experience with
municipal utilities of comparable size and character to the Waterworks Utility in such areas as
are relevant to the purposes for which such consultant is retained.
"Project" shall mean the following project to be financed, in whole or in part, with
proceeds of the Bonds: (1) the undertaking of the additions, betterments or extensions to the
Waterworks Utility described in the 2002 Comprehensive Water System Plan or the 2002
Comprehensive Sanitary Sewer Plan, including, but not limited to, the capital improvements
described in Exhibit A to this ordinance, (2) making a deposit to the Reserve Account, and
(3) paying the incidental costs and costs of issuing the Bonds.
"Project Fund" shall mean the Waterworks Utility Construction Fund.
"Purchase Agreement" shall mean the Bond Purchase Agreement for the Bonds, dated
July 1, 2002, by and between the City and the Purchaser.
"Purchaser" shall mean D.A. Davidson & Co., Seattle, Washington.
ORDINANCE NO. 4 97 6
"Rate Stabilization Fund" shall mean the fund of that name created for the purposes
described in Ordinance No. 4709.
"Reserve Account" shall mean the subaccount of that name created in the Bond Fund by
Ordinance No. 4709 for the purpose of securing the payment of the principal of and interest on
the Bonds.
After the New Covenant Date, "Reserve Fund" shall mean that special fund of the City
known as the Waterworks Revenue Bond Reserve Fund created by Ordinance No. 4709 for
purpose of securing the payment of the principal of and interest on all bonds to which Net
Revenue is pledged.
After the New Covenant Date, "Reserve Insurance " shall mean, in lieu of cash and
investments, insurance obtained by the City equal to part or all of the Reserve Requirement for
any Parity Bonds then outstanding for which such insurance is obtained, issued by an institution
that has been assigned a credit rating equal to or better than the highest then-existing rating for
any of the Parity Bonds.
After the New Covenant Date, "Reserve Requirement" shall mean the Maximum Annual
Debt Service.
"Revenue of the Waterworks Utility" shall mean all the earnings and revenue received
by the Waterworks Utility from any source whatsoever, including payments received under
contract with other municipal corporations for water service, except general taxes, charges in lieu
of taxes, assessments in any utility local improvement district hereafter created, proceeds from
the sale of City property, bond proceeds and earnings subject to a federal tax or rebate
requirement.
10
ORDINANCE NO. 4976
After the New Covenant Date, "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 fund created to defease or refund
Waterworks Utility obligations (until commingled with other earnings and revenues of the
Waterworks Utility) or held in a special account for the purpose of paying a rebate to the United
States Government under the Code.
"Rule" shall mean SEC Rule 15c2-12.
"SEC" shall mean the United States Securities and Exchange Commission.
"SID" shall mean a state information depository.
"State" shall mean the State of Washington.
"Term Bonds" shall mean any Outstanding Parity Bonds and/or Parity Bonds identified
as such in the ordinance authorizing the issuance thereof, the payment of which is provided for
by a requirement for mandatory deposits of money into the principal and interest account of the
bond redemption fund created for the payment of such issue of bonds in accordance with a
mandatory sinking fund requirement.
"Term Bond Maturity Year" shall mean any calendar year in which Term Bonds are
scheduled to mature.
11
ORDINANCE NO. 4 976
"Water and Sewer Revenue Parity Bond Fund" shall mean the fund of that name
created by Ordinance No. 3896.
"Waterworks Revenue Parity Bond Fund" shall mean the Water and Sewer Revenue
Parity Bond Fund, as renamed by Ordinance No. 4709.
"Waterworks Utility" shall mean the combined water and sewerage systems, including
the storm and surface water sewers, of the City as the same may be added to, improved and
extended for as long as any of the Outstanding Parity Bonds or Parity Bonds are outstanding.
"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 all
payments required by Ordinance Nos. 4410, 4480 and 4709 for the Outstanding Parity Bonds
have been made into the respective bond redemption funds and accounts therein for the
Outstanding Parity Bonds, that provision hereinafter is made for the accumulation of the amounts
required in the Reserve Account of the Bond Fund, and that there will be on file prior to the
issuance and delivery of the Bonds a certificate of an engineer experienced in municipal utilities
that Gross Revenue is sufficient to meet the 1.3 coverage requirement of such ordinances.
Therefore, the Bonds shall be issued on a parity of lien with the Outstanding Parity Bonds and
the 1998 Bonds.
Section 3. Authorization and Description of Bonds. For the purpose of obtaining part of
the funds necessary to carry out the system or plan for additions to and betterments and
extensions of the Waterworks Utility and to pay the costs of issuance and sale of the Bonds, the
12
ORDINANCE NO. 4 9 76
City shall issue the Bonds in the aggregate principal amount of $11,980,000. The Bonds shall be
designated City of Renton, Washington Water and Sewer Revenue Bonds, 2002; shall be dated
July 1, 2002; shall be in the denomination of $5,000 or any integral multiple thereof within a
single maturity; shall be numbered separately, in the manner and with any additional designation
as the Bond Registrar deems necessary for purpose of identification; shall bear interest
(computed on the basis of a 360-day year of twelve 30-day months), payable semiannually on
each June 1 and December 1, commencing December 1, 2002, to the maturity or earlier
redemption of the Bonds; and shall mature on December 1 in the years and amounts and bear
interest at the rates per annum as follows:
Maturity Years
(December 1)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2014
2015
2016
2017
2018
2019
2020
2021
2022
Amounts
$ 115,000
120,000
135,000
110,000
110,000
110,000
455,000
630,000
1,010,000
1,025,000
710,000
735,000
765,000
805,000
1,000,000
1,000,000
1,000,000
1,045,000
1,100,000
Interest
Rates
2.50%
2.50
2.75
3.25
3.50
3.50
3.70
3.90
4.00
4.10
4.30
4.40
4.50
4.60
5.25
5.25
5.25
5.25
5.25
13
ORDINANCE NO. 4976
If any Bond is duly presented for payment upon maturity or earlier redemption 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
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
14
ORDINANCE NO. 4 9 76
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
nominee as the Owner thereof. Such certificates may be in any integral multiple of $5,000
within a single maturity. Following such issuance, the Owners of such Bonds may transfer and
exchange such Bonds in accordance with Section 12 hereof.
Neither the City nor the Bond Registrar shall have at any time any responsibility or
liability to any Beneficial Owner of Bonds or to any other person for any error, omission, action
or failure to act on the part of the Custodian with respect to payment, when due, to the Beneficial
Owner of the principal and interest on the Bonds, proper recording of beneficial ownership of
15
ORDINANCE NO. 4 9 76
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
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 shall be a valid claim of the
registered owners thereof only as against the Bond Fund and the amount of Gross Revenue
pledged to that fund and shall not be general obligations of the City.
After the New Covenant Date, the Bonds shall 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
16
ORDINANCE NO. 4 976
Fund, Reserve Fund and the amount of Net Revenue pledged to those funds and shall not be
general obligations of the City.
Section 6. Optional Redemption and Open Market Purchase of Bonds. Bonds maturing
in the years 2003 through 2012, inclusive, are not subject to redemption prior to their stated
maturity dates. Bonds maturing on or after December 1, 2014, are subject to redemption at the
option of the City prior to their stated maturity dates, from funds from any source, at any time, in
whole or in part on or after December 1, 2012, within one or more maturities selected by the City
(and by lot within a maturity in the manner determined by the Bond Registrar or the Custodian)
at a price of par plus accrued interest to the date of redemption.
Any Bond in the principal amount of greater than $5,000 may be partially redeemed in
any integral multiple of $5,000. Prior to the Book-Entry Termination Date, Bonds shall be
partially redeemed in accordance with the Letter of Representations. From and after the Book-
Entry Termination Date, in the event of a partial redemption of a Bond, upon surrender of such
Bond at the principal corporate trust office of the Bond Registrar, a new Bond or Bonds (at the
option of the Owner) of the same maturity and interest rate and in the aggregate principal amount
remaining unredeemed shall be authenticated and delivered to the Owner, without charge to the
Owner therefor, in any denomination authorized by this ordinance and selected by the Owner.
The City reserves the right to purchase any or all of the Bonds on the open market at any
time and at any price.
All Bonds purchased or redeemed under this Section shall be canceled.
Section 7. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
17
ORDINANCE NO. 4976
for redemption by first-class mail, postage prepaid, to the Owner of any Bond to be redeemed at
the address appearing on the Bond Register on the day notice is mailed, and the requirements of
this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided,
whether or not it is actually received by the Owner of any Bond. If such notice to the Owners
shall have been given and the City shall have set aside, on the date fixed for redemption,
sufficient money for the payment of all Bonds called for redemption, the Bonds so called shall
cease to accrue interest after such redemption date, and all such Bonds shall be deemed not to be
outstanding under this ordinance for any purposes, except that the Owners thereof shall be
entitled to receive payment of the redemption price and accrued interest to the redemption date
from the money set aside for such purpose. In addition, the redemption notice shall be mailed
within the same period, postage prepaid, to Standard & Poor's Ratings Services and Fitch IBC A
at their offices in New York, New York, or their successors, to the Purchaser at its principal
office in Seattle, Washington, or its successor, and to such other persons and with such additional
information as the City Finance Director shall determine, but these additional mailings shall not
be a condition precedent to the redemption of Bonds. Notwithstanding the foregoing, prior to the
Book-Entry Termination Date, notice of redemption shall be given in accordance with the Letter
of Representations.
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or redemption date, the City shall be obligated to pay interest on such
Bond at the same rate provided in the Bond from and after its maturity or redemption date until
such Bond, both principal and interest, is paid in full or until sufficient money for its payment in
18
ORDINANCE NO. 4 9 76
full is on deposit in the Bond Fund, and the Bond has been called for redemption by giving
notice of that redemption to the Owner of each of such unpaid Bonds.
Section 9. Form of Bonds. The Bonds shall be typewritten, word processed, printed,
lithographed or multicopied on good bond paper in a form consistent with this ordinance and
Washington law.
Section 10. Execution of Bonds. The Bonds shall be executed on behalf of the City by
the facsimile or manual signatures of the Mayor and the City Clerk and shall have the seal of the
City impressed or a facsimile thereof imprinted thereon.
In the event any officer who shall have signed or whose facsimile signatures appear on
any of the Bonds shall cease to be such officer of the City before said Bonds shall have been
authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may
nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issuance, shall be as binding upon the City as though said person had not ceased to be such
officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the
actual date of execution of such Bond shall be the proper officer of the City, although at the
original date of such Bond such persons were not such officers of the City.
Section 11. Authentication and Delivery of Bonds by Bond Registrar. The Bond
Registrar is authorized and directed, on behalf of the City, to authenticate and deliver Bonds
initially issued or transferred or exchanged in accordance with the provisions of such Bonds and
this ordinance.
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
19
ORDINANCE NO. 4976
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
The Bond Registrar shall be responsible for its representations contained in the
Certificate of Authentication on the Bonds.
Section 12. Registration, Transfer and Exchange. The Bond Registrar shall keep, or
cause to be kept, at its principal corporate trust office, the Bond Register. The Bond Registrar is
authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying
agent for the Bonds and to carry out all 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
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,
20
ORDINANCE NO. 4 9 76
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
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 or redemption 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.
21
ORDINANCE NO. 4 976
The City covenants that, until all Bonds shall have been surrendered and cancelled, it
shall maintain a system of recording the ownership of each Bond that complies with the
provisions of the Code.
Section 13. Lost Stolen or Destroyed Bonds. If any Bond becomes mutilated, lost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond of the same
interest rate and maturity and of like tenor and effect in substitution therefor, all in accordance
with applicable law. If such mutilated, lost, stolen or destroyed Bond has matured, the City may,
at its option, pay the same without the surrender thereof. However, no such substitution or
payment shall be made unless and until the applicant shall furnish (a) evidence satisfactory to the
Bond Registrar of the destruction or loss of the original Bond and of the ownership thereof, and
(b) such additional security, indemnity or evidence as may be required by or on behalf of the
City. No substitute Bond shall be furnished unless the applicant shall reimburse the City and the
Bond Registrar for their respective expenses in the furnishing thereof. Any such substitute Bond
so furnished shall be equally and proportionately entitled to the security of this ordinance with all
other Bonds issued hereunder.
Section 14. Creation of Account. There is hereby created the 2002 Waterworks Revenue
Bond Account (heretofore defined, until the New Covenant Date, as the Bond Fund), which
shall be a separate bond redemption account within the Waterworks Revenue Parity Bond Fund.
The Bond Fund is divided into two subaccounts, the Principal and Interest Account and the
Reserve Account. There is hereby created in the City Treasury the 2002 Waterworks Revenue
Bond Fund (heretofore defined, after the New Covenant Date, as the Bond Fund).
22
ORDINANCE NO. 4 976
Section 15. Deposits into Funds and Accounts. So long as Bonds are outstanding against
the Bond Fund, the City shall:
(a) Set aside and pay into the Principal and Interest Account out of Gross
Revenue a fixed amount, without regard to any fixed proportion, namely, monthly, on or
before the first day of each month, amounts, together with the accrued interest received
on the delivery of the Bonds to the initial purchaser thereof or other money on deposit
therein, as follows:
Beginning with the month of August 2002 and continuing thereafter until
November, 2002, 1/4 of the next ensuing four months' requirements for interest
on the Bonds; and beginning with the month of December, 2002 and continuing
thereafter until the Bonds, both principal and interest, are paid, 1/6 of the next
ensuing six months' requirements for interest on the Bonds; and
Beginning with the month of August 2002 and continuing thereafter until
November, 2003, 1/16 of the next ensuing 16 months' requirements for principal
on the Bonds; and beginning with the month of December, 2003 and continuing
thereafter until the Bonds, both principal and interest, are paid, 1/12 of the amount
of principal of the Bonds payable on the next ensuing principal payment date; and
(b) Set aside and pay into the Reserve Account out of Gross Revenue in
substantially equal monthly payments such amounts so that by no later than July 1, 2005,
there shall have been accumulated in the Reserve Account for the Bonds an amount not
less than the Average Annual Debt Service for the Bonds.
The Reserve Account in the Bond Fund may be accumulated from any other money
which the City may have available for that purpose in addition to or in lieu of using revenue
therefor.
The City further agrees that when the required amounts have been paid into the Reserve
Account in the Bond Fund, the City will maintain those amounts therein at all times, except for
withdrawals therefrom as authorized herein, until there is sufficient money in the Bond Fund,
including the Reserve Account therein, to pay the principal of and interest to maturity on all
outstanding Bonds, at which time no further payments need be made into the Bond Fund, and the
23
ORDINANCE NO. 4976
money in the Bond Fund, including the Reserve Account, may be used to pay that principal and
interest.
If there shall be a deficiency in the Principal and Interest Account to meet maturing
installments of either principal or interest, as the case may be, on the Bonds, the deficiency shall
be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose.
Any deficiency created in the Reserve Account by reason of any withdrawal shall then be made
up from Gross Revenue first available after making necessary provisions for the required
payments into the Principal and Interest Account.
All money in the Reserve Account not needed to meet the payments of principal and
interest when due may be kept on deposit in the official bank depository of the City or in any
national bank or may be invested in any legal investment for City funds. Interest on any of those
investments or on that bank account shall be deposited in and become a part of the Reserve
Account until the total required reserve amount shall have been accumulated therein, after which
time the interest shall be deposited in the Principal and Interest Account.
Notwithstanding the provisions for the deposit or maintenance of earnings in accounts of
the Bond Fund, any earnings which are subject to a federal tax or rebate requirement may be
withdrawn from the Bond Fund for deposit into a separate fund or account for that purpose.
If the City shall fail to set aside and pay into the Bond Fund the amounts set forth above,
the Owner of any of the outstanding Bonds may bring an action against the City to compel that
setting aside and payment.
After the New Covenant Date, this Section shall be amended to read as follows: All
money in the Principal and Interest Account of the 2002 Waterworks Revenue Bond Account
24
ORDINANCE NO. 4976
shall be transferred into the 2002 Waterworks Revenue Bond Fund (heretofore defined as the
Bond Fund). All money in the Reserve Account of the 2002 Waterworks Revenue Bond
Account shall be transferred into the Waterworks Revenue Bond Reserve Fund (heretofore
defined as the Reserve Fund). So long as Bonds are outstanding against the Bond Fund, the City
shall:
(a) Set aside and pay into the Bond Fund out of Net Revenue a fixed amount,
without regard to any fixed proportion, namely, one day before each interest or principal
and interest payment date, an amount which, together with other money then on deposit
therein, shall be sufficient to meet the debt service on the Bonds required on the next
interest or principal and interest payment date; and
(b) Set aside and pay into the Reserve Fund out of the Net Revenue, in three
annual approximately equal deposits, any additional money necessary to bring the
amount deposited in the Reserve Fund attributable to the Bonds up to the amount equal to
the increase in the Reserve Requirement attributable to the Bonds.
The Reserve Fund may be accumulated from any other money which the City may have
available for that purpose in addition to or in lieu of using Net Revenue therefor.
Except for withdrawals therefrom as authorized herein, the Reserve Fund shall be
maintained at the Reserve Requirement at all times so long as any Parity Bonds are outstanding.
When the total amount in the Bond Fund shall equal the total amount of principal and interest for
all outstanding Bonds, no further payment need be made into the Bond Fund. Notwithstanding
the first sentence of this paragraph, the Reserve Requirement may be decreased for any issue of
Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve
Insurance.
If there shall be a deficiency in the Bond Fund to meet maturing installments of either
principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose. Any deficiency created in
25
ORDINANCE NO. 4976
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.
26
ORDINANCE NO. 4 976
Section 16. 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 Outstanding Parity Bonds and Parity Bonds;
(c) To pay the principal of the Outstanding Parity Bonds and Parity Bonds;
(d) To make all payments required to be made into any sinking fund or bond
redemption fund hereafter created for the payment of Future Parity Bonds which
are Term Bonds;
(e) To make all payments required to be made into the reserve accounts created to
secure the payment of the Outstanding Parity Bonds and Parity Bonds;
After the New Covenant Date, subsection (e) of this Section shall be amended to
read as follows: To make all payments required to be made into the Reserve
Fund;
(f) To make all payments required to be made into any revenue bond redemption
fund or warrant redemption fund and debt service account or reserve account
created to pay and secure the payment of the principal of and interest on any
revenue bonds or revenue warrants of the City having a lien upon Gross Revenue
junior and inferior to the lien thereon for the payment of the principal of and
interest on the Outstanding Parity Bonds and Parity Bonds; and
(g) To retire by optional redemption or purchase in the open market any outstanding
revenue bonds or revenue warrants of the City, to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the
Waterworks Utility, after the New Covenant Date, to make deposits into the Rate
Stabilization Fund, or for any other lawful City purpose.
Section 17. Pledge of Revenue and Lien Position. The Gross Revenue is pledged to the
payments set forth in Section 15, and the Bonds shall constitute a lien and charge on that revenue
prior and superior to any other charges whatsoever, excluding Maintenance and Operation
Expense, except that the lien and charge on such revenue for the Bonds shall be on a parity with
27
ORDINANCE NO. 4 976
the lien and charge thereon for the Outstanding Parity Bonds, the 1998 Bonds and any Future
Parity Bonds.
After the New Covenant Date, this Section shall be amended to read as follows: The
Net Revenue is pledged to the payment of the Parity Bonds, and the Parity Bonds shall constitute
a lien and charge upon such Net Revenue prior and superior to any other charge whatsoever.
Section 18. Findings Regarding Sufficiency of Revenue. In the judgment of the City
Council, Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility, at the rates to be charged for water, sanitary sewage disposal service and
storm and surface water drainage service in the entire utility, will be more than sufficient to meet
all Maintenance and Operation Expense (and cost of maintenance and operation of the
Waterworks Utility as that term is used in RCW 35.92.100) and the debt service requirements of
the Outstanding Parity Bonds and the 1998 Bonds and to permit the setting aside in the Bond
Fund, and after the New Covenant Date, the Bond Fund and the Reserve Fund, out of the
revenue of the entire utility, of amounts sufficient to pay the interest on the Bonds as that interest
becomes payable and to pay and redeem all of the Bonds at maturity. The City Council further
declares that in creating the Bond Fund and in fixing the amounts to be paid into the Bond Fund,
and after the New Covenant Date, the Bond Fund and the Reserve Fund, as aforesaid, it has
exercised due regard for the Maintenance and Operation Expense (and costs of maintenance and
operation as used in RCW 35.92.100) and the debt service requirements of the currently
outstanding Outstanding Parity Bonds and 1998 Bonds, and the City has not bound and obligated
itself to set aside and pay into the Bond Fund, and after the New Covenant Date, the Bond Fund
and the Reserve Fund, a greater amount or proportion of the revenue of that utility than in the
28
ORDINANCE NO. 4 976
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 Outstanding Parity Bonds and the
1998 Bonds and that no portion of the Gross Revenue has been previously pledged for any
unrefunded indebtedness other than the payment of the currently outstanding Outstanding Parity
Bonds and 1998 Bonds.
Section 19. Covenants. The City covenants and agrees with the Owner of each Bond at
any time outstanding as follows:
(a) It will establish, maintain and collect such rates and charges for water,
sanitary sewage disposal service and storm and surface water drainage service so long as
any Outstanding Parity Bonds, 1998 Bonds and Bonds are outstanding as will make
available for the payment of the principal of and interest on such bonds an amount equal
to at least 1.3 times the average annual debt service requirements, both principal and
interest, on the Outstanding Parity Bonds, the 1998 Bonds and the Bonds after deducting
Maintenance and Operation Expense from Gross Revenue.
After the New Covenant Date, subsection (a) of this Section shall be amended to
read as follows: It will establish, maintain and collect rates and charges for all services
and facilities provided by the Waterworks Utility which will be fair and
nondiscriminatory, and will adjust those rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient to (A ) pay all
Maintenance and Operation Expense on a current basis, (B) pay when due all
amounts that the City is obligated to pay into the Reserve Fund and any Parity
Bond Funds and (C) pay all taxes, assessments or other governmental charges
lawfully imposed upon the Waterworks Utility or other revenue therefrom or
payments in lieu thereof and any and all other amounts which the City may now
or hereafter become obligated to pay from Gross Revenue by law or contract; and
(2) Net Revenue in each calendar year will be at least equal to the
Coverage Requirement.
(b) It will at all times maintain and keep the Waterworks Utility in good
repair, working order and condition and also will at all times operate such Utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
29
ORDINANCE NO. 4 97 6
(c) It will not sell, lease, mortgage or in any manner encumber or dispose of
all the property of the Waterworks Utility unless provision is made for payment into each
of the respective bond redemption funds or accounts for the Outstanding Parity Bonds
and the 1998 Bonds and the Bond Fund of sums sufficient to pay, respectively, the
principal of and interest on all Outstanding Parity Bonds, 1998 Bonds and the Bonds at
any time outstanding, and that it will not sell, lease, mortgage, or in any manner
encumber or dispose of any part of the property of the Waterworks Utility that is used,
useful and material to the operation thereof, unless provision is made for replacement
thereof, or for payment into the respective bond redemption funds or accounts for the
Outstanding Parity Bonds and the 1998 Bonds and the Bond Fund of the total amount of
revenue received which shall not be less than an amount which shall bear the same ratio
to the amount of the Outstanding Parity Bonds, 1998 Bonds and Bonds, respectively, as
the revenue available for debt service for such outstanding bonds for the twelve months
preceding such sale, lease, encumbrance or disposal from the portion of the utility sold,
leased, encumbered or disposed of bears to the revenue available for debt service for such
bonds from the entire utility for the same period. Any such money so paid into such
funds shall be used to retire such outstanding bonds at the earliest possible date.
After the New Covenant Date, subsection (c) of this Section shall be amended to
read as follows: It will not sell or otherwise dispose of the Waterworks Utility in its
entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are
defeased pursuant to the provisions of this ordinance.
It will not sell, lease, mortgage or in any manner encumber or otherwise dispose
of any part of the Waterworks Utility (other than timber), including all additions and
improvements thereto and extensions thereof at any time made, that are used, useful or
material in the operation of the Waterworks Utility, unless provision is made for the
replacement thereof or for payment into the Bond Fund of the greatest of the following:
(1) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (defined as the total amount of those bonds
less the amount of cash and investments in the Reserve Fund and any Parity Bond
Funds) that Gross Revenue from the portion of the Waterworks Utility sold or
disposed of for the preceding year bears to the total Gross Revenue for that
period;
(2) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above) that the Net Revenue
from the portion of the Waterworks Utility sold or disposed of for the preceding
year bears to the total Net Revenue for that period; or
(3) An amount which will be in the same proportion to the net amount
of any Parity Bonds then outstanding (as defined above) that the depreciated cost
30
ORDINANCE NO. 4976
value of the facilities sold or disposed of bears to the depreciated cost value of the
entire Waterworks Utility immediately prior to such sale or disposition.
Notwithstanding any other provision of this subsection, (1) the City in its
discretion may sell or otherwise dispose of any of the works, plant, properties or facilities
of the Waterworks Utility or any real or personal property comprising a part of the same
which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the Waterworks Utility, or no longer necessary, material to or useful to the
operation of the Waterworks Utility, without making any deposit into the Bond Fund, and
(2) the City may transfer the Waterworks Utility to another municipal corporation so long
as Net Revenue of the portion of the Waterworks Utility so transferred is used for
payment of debt service on the Parity Bonds prior to any other purpose. In no event shall
such proceeds be treated as Gross Revenue for purposes of this ordinance.
(d) It will, while any of the Bonds remain outstanding, keep proper and
separate accounts and records in which complete and separate entries shall be made of all
transactions relating to the Waterworks Utility, and it will furnish the original purchaser
or purchasers of the Bonds or any subsequent owner or owners thereof at the written
request of such owner or owners complete operating and income statements of such
utility in reasonable detail issued in any calendar year not more than ninety days after the
close of such calendar year, and it will grant any Owner or Owners of at least twenty-five
percent of the outstanding Bonds the right at all reasonable times to inspect the entire
Waterworks Utility and all records, accounts and data of the City relating thereto. Upon
request of any Owner of any of the Bonds, it also will furnish to such Owner a copy of
the most recently completed audit of the City's accounts by the State Auditor of
Washington.
After the New Covenant Date, subsection (d) of this Section shall be amended to
read as follows: It 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) It will not furnish water, sanitary sewage disposal service or storm and
surface water drainage service to any customer whatsoever free of charge and promptly
will take legal action to enforce collection of all delinquent accounts.
31
ORDINANCE NO. 4976
After the New Covenant Date, subsection (e) of this Section shall be amended to
read as follows: Except to aid the poor or infirm, to provide for resource conservation or
to provide for the proper handling of hazardous materials, it will not furnish or supply or
permit the furnishing or supplying of any service or 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 will carry the types of insurance on the Waterworks Utility properties in
the amounts normally carried by private water and sewer companies engaged in the
operation of water and sewerage systems, and the cost of such insurance shall be
considered a part of operating and maintaining such utility. If, as, and when the United
States of America or some agency thereof shall provide for war risk insurance, the City
further agrees to take out and maintain such insurance on all or such portions of such
utility on which such war risk insurance may be written in an amount or amounts to cover
adequately the value thereof.
After the New Covenant Date, subsection (f) of this Section shall be amended to
read as follows: It at all times will carry fire and extended coverage and such other forms
of insurance, including public liability and property damage insurance, with responsible
insurers and with policies payable to or on behalf of the City and any additional insureds
on such of the buildings, equipment, works, plants, facilities and properties of the
Waterworks Utility, and against such claims for damages, as are ordinarily carried by
municipal or privately owned utilities engaged in the operation of like systems, or will
implement and maintain a self-insurance or an insurance pool program with reserves
adequate, in the reasonable judgment of the City, to protect the Waterworks Utility and
the Owners of the Parity Bonds against loss.
(g) It will pay all Maintenance and Operation Expense and the debt service
requirements for the Outstanding Parity Bonds, the outstanding 1998 Bonds and the
outstanding Bonds, and otherwise meet the obligations of the City as herein set forth.
(h) It will take all actions necessary to prevent interest on the Bonds from
being included in gross income for federal income tax purposes, and it will neither take
any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will
cause interest on the Bonds to be included in gross 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
32
ORDINANCE NO. 4976
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 20. No Private Activity Bonds. The City covenants that it will take no actions
and will make no use of the proceeds of the Bonds or any other funds held under this ordinance
which would cause any Bond to be treated as a "private activity bond" (as defined in Section
141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described
in Section 103(a) of the Code, unless the tax exemption thereof is not affected.
Section 21. Defeasance of the Bonds. The City may issue refunding bonds pursuant to
State law or use money available from any other lawful source to pay when due the principal of
and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and
to redeem and retire, refund or defease all such then-outstanding Bonds (hereinafter collectively
called the "defeased Bonds") and to pay the costs of the refunding or defeasance. If money
and/or direct obligations of the United States of America maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or
decrease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"), then all right and interest of the Owners of the
defeased Bonds in the covenants of this ordinance, in Gross Revenue and in funds and accounts
obligated to the payment of the defeased Bonds, other than the right to receive the funds so set
33
ORDINANCE NO. 4976
aside and pledged, shall cease and become void. The owners of defeased Bonds shall have the
right to receive payment of the principal of and interest on the defeased Bonds from the trust
account and, if the funds in the trust account are not available for such payment, shall have the
residual right to receive payment of the principal of and interest on the defeased Bonds from
Gross Revenue without any priority of lien or charge against such revenue or covenants with
respect thereto except to be paid therefrom.
After the establishing and full funding of the trust account, the City may then apply any
money in any other fund or account established for the payment or redemption of the defeased
Bonds to any lawful purposes as it shall determine, subject only to the rights of the owners of
any other bonds then outstanding.
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.
Section 22. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds which will constitute a lien and charge on Gross Revenue on a parity with
the Outstanding Parity Bonds, the 1998 Bonds and the Bonds if the conditions set forth in
Section 13 of Ordinance No. 3188, as modified and strengthened by Section 12 of Ordinance
34
ORDINANCE NO. 4976
No. 3720, are met and complied with at the time of the issuance of those Future Parity Bonds,
which sections are by this reference incorporated herein and made a part hereof and shall
continue to be applicable even though the 1953 Bonds have been paid and retired.
After the New Covenant Date, this Section shall be amended to read as follows: The
right of the City to issue bonds on a parity of lien with the 1977 Bonds, the 1988 Bonds, the 1989
Bonds, the 1989 Refunding Bonds, the 1990 Bonds, the 1992 Bonds, the 1993 Refunding Bonds
and the 1994 Bonds is permanently revoked. The City reserves the right to issue Future Parity
Bonds if the following conditions are met and complied with at the time of issuance of those
additional bonds:
(a) There shall be no deficiency in any Parity Bond Fund.
(b) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out of a Parity
Bond Fund.
(c) The ordinance providing for the issuance of such Future Parity Bonds
shall provide for the deposit into the Reserve Fund from the proceeds of those Future
Parity Bonds of (1) an amount equal to the increase in the Reserve Requirement
attributable to those Parity Bonds or (2) Reserve Insurance or Alternate Security or an
amount plus Reserve Insurance or Alternate Security equal to the increase in the Reserve
Requirement 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.
(e) The ordinance authorizing the issuance of such Future Parity Bonds shall
provide for the payment of mandatory redemption or sinking fund requirements into the
applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments
to be made for the payment of the principal of such Term Bonds on or before their
maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to
their maturity date from money in the applicable Parity Bond Fund.
(f) There shall be on file the City either:
35
ORDINANCE NO. 4976
(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
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
36
ORDINANCE NO. 4976
(G) Any increases or decrease in Net Revenue as a result of any
actual or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
If Future Parity Bonds proposed to be so issued are for the sole purpose of
refunding outstanding bonds payable from any Parity Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the principal and
interest in each year for the refunding bonds is not increased more than $5,000 over the
amount for that same year required for the bonds or the portion of that bond issue to be
refunded thereby and if the maturities of such refunding bonds are not extended beyond
the maturities of the bonds to be refunded thereby.
Nothing contained herein shall prevent the City from issuing Future Parity Bonds to
refund maturing Bonds or Future Parity Bonds then outstanding, money for the payment of
which is not otherwise available.
Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon Gross Revenue subordinate to the payments required to be made therefrom into any
Parity Bond Fund.
Section 23. 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
37
ORDINANCE NO. 4 9 76
of the official statement or other disclosure documentation used in connection with the offer or
sale of the Bonds by any person, and bond counsel's opinion shall so state. Bond counsel has not
been retained to monitor, and shall not be responsible for monitoring, the City's compliance with
any federal law or regulations to maintain the tax-exempt status of the interest on the Bonds.
Section 24. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Bond Insurance Policy insuring the prompt payment of the principal of and interest on the
Bonds and agrees to the conditions for obtaining that policy, including the payment of the
premium therefor. Any notice required to be given to the Bond Insurer shall be sent by certified
or registered mail to Financial Security Assurance Inc., One Market, 1550 Spear Tower, San
Francisco, California 94105.
Section 25. Delivery of Bonds; Temporary Bonds. The proper City officials, including,
but not limited to, the City Finance Director, are authorized and directed (a) to execute all
documents necessary to complete the issuance and delivery of the Bonds to the Purchaser,
including, but not limited to, the final official statement pertaining to the Bonds; and (b) to do
everything necessary for (1) the preparation and delivery of a transcript of proceedings
pertaining to the Bonds, and (2) the preparation, execution and delivery of definitive Bonds to
the Purchaser, each without unreasonable delay.
If definitive Bonds are not ready for delivery by the date of Closing agreed to by the City
and the Purchaser, the City, upon the approval of the Purchaser, may cause to be issued and
delivered to the Purchaser one or more temporary Bonds with appropriate omissions, changes
and additions. Any temporary Bonds shall be entitled and subject to the same benefits and
provisions of this ordinance with respect to the payment, security and obligation thereof as
38
ORDINANCE NO. 4 9 76
definitive Bonds authorized hereby. Such temporary Bond or Bonds shall be exchangeable
without cost to the Owner thereof for definitive Bonds when the latter are ready for delivery.
Section 26. Application of Bond Proceeds. The accrued interest received by the City at
Closing shall be deposited into the Principal and Interest Account 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, in the amount of $11,850,322.87 shall be deposited, upon receipt, to the
"Waterworks Utility Construction Fund" (the "Project Fund"), established in the office of the
City Finance Director, to pay part of the costs of the Project.
Except as provided by the Code and Section 18(h) of this ordinance, the interest and
profits derived from the investment of Bond proceeds shall be deposited in the Project Fund and
applied as described in the preceding paragraph.
Except as provided by the Code and Section 18(h) of this Ordinance, if any money
allocable to the Bond proceeds remains in the Project Fund after payment of all the costs of the
Project or after termination of the Project by the City, such money shall be transferred to the
Bond Fund and applied to the payment of the principal of and interest on the Bonds.
Pending application as described in this Section 30 and subject to the requirements of the
Code and Section 18(h) of this ordinance, money allocable to the Bond proceeds in the Project
Fund may be temporarily deposited in such institutions or invested in such investments as may
be lawful for the investment of City funds.
39
ORDINANCE NO. 4 9 76
Section 27. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the Bonds
required by subsection (b)(5)(i) of the Rule.
The City hereby agrees to provide or cause to be provided to each then existing NRMSIR
and to the SID, if one is created, the following annual financial information and operating data
(collectively, the "Annual Financial Information") for each prior fiscal year, commencing with
the calendar year ending December 31, 2002, 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
Gross Revenue or 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 27
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data, the City may cross-
reference to any "final official statement" (as defined in the Rule) available from the MSRB or
40
ORDINANCE NO. 4976
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.
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
41
ORDINANCE NO. 4 9 76
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 27 may only be amended in
connection with any change in legal requirements, change in law, or change in the identity,
nature or status of the obligated person, or type of business conducted, and only in such a manner
that the undertaking of the City, as so amended, would have complied with the requirements of
the Rule at the time of the primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in circumstances.
The City's obligations to provide Annual Financial Information and notices of certain
events shall terminate without amendment upon the defeasance, prior redemption or payment in
full of all of the then outstanding Bonds. This Section 27 or any provision hereof, shall be null
and void if the City (i) obtains an opinion of nationally recognized bond counsel or other counsel
familiar with the federal securities laws to the effect that those portions of the Rule which require
this Section 27 or any such provision are invalid, have been repealed retroactively or otherwise
do not apply to the Bonds; and (ii) notifies and provides the SID, if any, and either the MSRB or
each then existing NRMSIR with copies of such opinion.
The right of each Owner or Beneficial Owner of Bonds to enforce the provisions of this
Section 27 shall be limited to the right to obtain specific enforcement of the City's obligations
42
ORDINANCE NO. 4 9 76
under this Section 27, and any failure by the City to comply with the provisions of this
undertaking shall not be a default with respect to the Bonds under this ordinance.
The City Finance Director is authorized and directed to take such further action on behalf
of the City as may be necessary, appropriate or convenient to carry out the requirements of this
Section 27.
Section 28. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated June 20, 2002 (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.
43
ORDINANCE NO. 4 976
Section 29. Effective Date of Ordinance. This ordinance shall be effective upon its
passage, approval and five days after publication.
PASSED by the City Council this 1st day of July, 2002.
JLI&7/ISHAJL\JI. Lshit^y''-
Bonnie Walton, City Clerk
APPROVED BY THE MAYOR this 1st day of July, 2002.
^IS^^L Cs(3^« -*^
Jesg/Tanner, Mayor
Approved as to Form:
Bond Counsel
Date of Publication: 7/5/02 (Summary)
44