HomeMy WebLinkAboutORD 4772 CITY OF RENTON, WASHINGTON
ORDINANCE NO. 4772
AN ORDINANCE of the city of Renton, Washington, providing for the
issuance of $5,040,000 principal amount of Golf System Revenue Refunding
Bonds, 1999, of the city for the purposes of obtaining the funds with which to
advance refund and defease all of the City's outstanding Golf System Revenue
Bonds, 1994; fixing the date, form, maturities, interest rates, terms and
covenants of such bonds; establishing a bond redemption account and related
subaccounts therein; establishing a revenue account and related subaccounts
therein; and approving the sale and providing for the delivery of those bonds to
U.S. Bancorp Piper Jaffray Inc., of Seattle, Washington.
Prepared By
Gottlieb, Fisher& Andrews, PLLC
Seattle, Washington
CITY OF RENTON, WASHINGTON
ORDINANCE NO. 4772
AN ORDINANCE of the city of Renton, Washington, providing for the
issuance of $5,040,000 principal amount of Golf System Revenue Refunding
Bonds, 1999, of the city for the purposes of obtaining the funds with which to
advance refund and defease all of the City's outstanding Golf System Revenue
Bonds, 1994; fixing the date, form, maturities, interest rates, terms and
covenants of such bonds; establishing a bond redemption account and related
subaccounts therein; establishing a revenue account and related subaccounts
therein; and approving the sale and providing for the delivery of those bonds to
U.S. Bancorp Piper Jaffray Inc., of Seattle, Washington.
WHEREAS, pursuant to Ordinance No. 4455 of the City, adopted on June 20, 1994, the
City authorized the issuance of the 1994 Bonds in the aggregate principal amount of$5,000,000
to construct certain improvements to the City's existing Maplewood Golf Course, including a
new clubhouse (including pro shop, restaurant and meeting rooms) , practice range and course
improvements; and
WHEREAS, $4,555,000 of the 1994 Bonds are currently outstanding; and
WHEREAS, pursuant to Chapter 39.53 RCW,the City is authorized to issue and sell,
without an election, revenue bonds of the City to advance refund all of the outstanding 1994
Bonds; and
WHEREAS, the City reserved the right to defease the 1994 Bonds; and
WHEREAS, the advance refunding and defeasance of the 1994 Bonds will provide a debt
service savings to the City; and
WHEREAS,the City deems it necessary and advisable that $5,040,000 in aggregate
principal amount of revenue refunding bonds now be issued to provide funds for the advance
refunding and defeasance of the 1994 Bonds; and
WHEREAS, U.S. Bancorp Piper Jaffray Inc., 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:
ORDINANCE NO. 4772
"Annual Debt Service" means, in any year,that year's total of principal and interest
requirements for the then outstanding Bonds (except the principal maturity of Term Bonds)to
which the term Annual Debt Service refers, plus any mandatory sinking fund redemption or
mandatory bond redemption requirement for that year, less all capitalized interest payable in that
year from the proceeds of such Bonds.
"Average Annual Debt Service" means, in any year,the sum of the remaining Annual
Debt Service of the then outstanding Bonds to which the term Average Annual Debt Service
applies divided by the number of years such Bonds are scheduled to remain outstanding.
"Beneficial Owner"means, with respect to any 1999 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 1999 Bond as the same becomes due and payable.
"Bond Redemption Account"means the Golf System Revenue Bond Redemption
Account created by this ordinance for the purpose of paying and securing the principal of and
interest on the Bonds.
"Bond Register" means the registration books on which are maintained the names and
addresses of the Owners of the 1999 Bonds.
"Book-Entry Termination Date" means the fifth business day following the date of
receipt by the Registrar of the City's request to terminate the book-entry system of registering
the beneficial ownership of the 1999 Bonds.
"Bonds"means the 1999 Bonds and the Parity Bonds.
"City"means the City of Renton, Washington, a duly organized and legally existing non-
charter code city under the laws of the State of Washington.
"Closing"means the date and time when the 1999 Bonds are delivered to the Purchaser
in exchange for payment in full therefor.
"Code"means the United States Internal Revenue Code of 1986, as amended, and
applicable regulations thereunder.
"Consultant"means either (1) a firm of recognized golf course management consultants
experienced in the design, construction or operation of municipal golf facilities, or(2) an
independent certified public accountant.
"Coverage Requirement" means, in any calendar year,Net Revenue of the System at
least equal to 125% of the Annual Debt Service for that year on all outstanding Bonds.
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ORDINANCE NO. 4772
"Custodian" means (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 1999 Bonds, in which system no
physical certificates are issued to the Beneficial Owners of the 1999 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
1999 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"means that certain Escrow Agreement, to be dated as of April 1,
1999, 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" means those certain noncallable direct obligations of the United
States of America listed on Schedule 1 attached to the Escrow Agreement.
"Escrow Trustee" means U.S. Bank Trust National Association, acting in its fiduciary
capacity as escrow trustee pursuant to the Escrow Agreement.
"Golf Fund"means the existing fund of that name and further designated as fund no. 404,
previously created and established in the office of the City Finance Director.
"Government Obligations" means those `government obligations defined by RCW
39.53.010(9) as it now reads or hereafter may be amended and which are otherwise lawful
investments of the City.
"Gross Revenue of the System" or "Gross Revenue"means all the earnings and revenue
received by the City in respect of the System from any source whatsoever, including but not
limited to green fees, golf cart rental fees, practice range revenues,pro shop. merchandise sales
revenues, restaurant food and beverage revenues, and meeting room rental revenue, but
excluding general ad valorem taxes, grants from state, federal or local governments, earnings in
any refunded or defeased bond escrow account or fund, earnings rebatable or estimated to be
rebatable to the federal government under Section 148(f) of the Code, gifts to the System for
capital purposes, proceeds from the sale of city property and proceeds of city or System
obligations. Amounts transferred into the Rate Stabilization Subaccount from the Revenue
Account in any calendar year shall be excluded from Gross Revenue for such calendar year, and
amounts transferred into the Revenue Account from the Rate Stabilization Account in any
calendar year shall be included in Gross Revenue for such calendar year.
"Letter of Representations"means the letter of representations from the City and the
Registrar to the Custodian pertaining to the payment of the 1999 Bonds and the "book-entry"
system for evidencing the beneficial ownership of the 1999 Bonds prior to the Book-Entry
Termination Date.
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ORDINANCE NO. 4772
"Maximum Annual Debt Service" means the maximum amount of Annual Debt Service
which becomes due in any future year on any outstanding Bonds.
"MSRB" means the Municipal Securities Rulemaking Board.
"Net Revenue" means, for any year, Gross Revenue minus Operating and Maintenance
Expenses for that year.
"1994 Bonds"means the outstanding"Golf System Revenue Bonds, 1994," of the City,
dated July 1, 1994, and issued pursuant to Ordinance No. 4455.
"1999 Bonds" means the $5,040,000 principal amount Golf System Revenue Refunding
Bonds, 1999, authorized to be issued by this ordinance.
"NRMSIR"means a nationally recognized municipal securities information repository
designated by the SEC.
"Operating and Maintenance Expenses"means all reasonable expenses incurred by the
City in causing the System to be operated and maintained in good repair, working order and
condition, including, without limitation, payments (other than payments out of proceeds of the
Bonds) of premiums for insurance on the System facilities, and any State taxes, but excluding
depreciation, amortization and any city imposed taxes or payments in lieu of taxes.
"Owner" means the person named as the registered owner of a 1999 Bond on the Bond
Register.
"Parity Bonds"means any and all revenue bonds or other obligations of the City issued
after the date of the issuance of the 1999 Bonds pursuant to the provisions of Section 15 of this
ordinance, the payment of the principal of and interest on which constitutes a lien and charge
upon the Gross Revenue of the System on a parity with the lien and charge of the 1999 Bonds.
"Permitted Investments"means any legal investments permitted by law to the City.
"Principal and Interest Subaccount" means the subaccount of that name created in the
Bond Redemption Account by this ordinance for the payment of the principal of and interest on
the Bonds.
"Purchase Agreement" means the Bond Purchase Agreement for the 1999 Bonds, dated
March 22, 1999, by and between the City and the Purchaser.
"Purchaser" means U.S. Bancorp Piper Jaffray Inc.
"Rate Stabilization Subaccount" means the subaccount of that name that the City may
create in the Revenue Account pursuant to this ordinance.
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ORDINANCE NO. 4772
"Rating Agency"means Moody's Investors Service, Standard &Poor's Ratings Group,
Fitch Investors Services and their respective successors and assigns, and/or such other securities
rating agency selected by the City to provide a rating with respect to an issue or series of
Bonds or any portion thereof, which Rating Agency, as of the applicable date, shall have
assigned a rating to that issue or series of Bonds or portion thereof.
"Refunding Plan"means the plan to advance refund and defease the 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 1999 Bonds, all as more particularly defined and described in the Escrow
Agreement.
"Registrar" means the fiscal agencies of the State of Washington in Seattle, Washington,
and New York,New York, as the same may be designated from time to time.
"Reserve Subaccount" means the subaccount of that name created in the Bond
Redemption Account by this ordinance for the purpose of securing the payment of the principal
of and interest on the Bonds.
"Reserve Instrument"means, by way of example and not of limitation, a letter of credit,
bond insurance policy, surety bond, guaranty, standby bond purchase agreement, line of credit or
other device, that is used to satisfy all or part of the Reserve Requirement in lieu of depositing
cash or investments in the Reserve Subaccount and that is rated by a Rating Agency in one of its
three highest rating categories (without regard to any numerical or other modifier).
"Reserve Requirement"means an amount equal to the least of(a) 10% of the proceeds of
the Bonds, (b) Maximum Annual Debt Service on the Bonds calculated as of the date of delivery
of the Bonds, and(c) 125% of the Average Annual Debt Service on the Bonds calculated as of
the date of delivery of the Bonds. Notwithstanding the above, the deposit to be made into the
Reserve Subaccount, and the Reserve Requirement, each shall be decreased for the Bonds when
and to the extent that the City has provided for a Reserve Instrument to secure the payment of the
principal of and interest on the Bonds. The amount payable under any Reserve Instrument shall
satisfy that amount of the Reserve Requirement for the Bonds.
"Revenue Account" means the Golf System Revenue Account created by this ordinance.
"Rule" means SEC Rule 15c2-12.
"SEC" means the United States Securities and Exchange Commission.
"SID" means a state information depository.
"State" means the State of Washington.
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ORDINANCE NO. 4772
"System" means the City's existing Maplewood Golf Course as the same may be added
to or improved, the improvements to be constructed with Bond proceeds and other City funds, all
golf-related buildings, facilities and equipment, and any other golf or other recreational facilities
which hereafter may be acquired, constructed or combined lawfully with the existing System
facilities comprising the System, together with all additions thereto and betterments and
extensions thereof at any time made or constructed the revenue from which is hereafter pledged
to be paid into the Revenue Account.
"Term Bond Maturity Year" means any year in which Term Bonds are scheduled to
mature.
"Term Bonds" means the Bonds any single issue or series designated as Term Bonds in
the ordinance authorizing their issuance or sale.
Section 2. Finding, Purpose, Authorization and Description of 1999 Bonds. The City
hereby finds that it will realize debt service savings by the advance refunding and defeasance of
the 1994 Bonds. The City hereby authorizes the sale and issuance of its "Golf System Revenue
Refunding Bonds, 1999" for the purpose of providing part of the funds necessary to accomplish
the Refunding Plan.
The 1999 Bonds shall be in the aggregate principal amount of$5,040,000; shall be dated
April 1, 1999; shall be issued in fully registered form; 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 Registrar deems necessary for purposes of
identification; shall bear interest at the rates; and shall mature on the dates and in the principal
amounts, all as set forth below:
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ORDINANCE NO. 4772
Maturity Date Principal Interest Rate
(December 1) Amount Per Annum
1999 $280,000 3.25%
2000 210,000 3.75
2001 220,000 4.00
2002 225,000 4.15
2003 235,000 4.25
2004 250,000 4.35
2005 260,000 4.45
2006 270,000 4.60
2007 285,000 4.75
2008 295,000 4.85
2009 310,000 4.90
2010 325,000 5.00
2011 340,000 5.00
2012 355,000 5.10
2013 375,000 5.20
2014 395,000 5.25
2015 410,000 5.30
The 1999 Bonds shall bear interest(computed on the basis of a 360-day year of twelve
30-day months) from their date or from the most recent interest payment date to which interest
has been paid or duly provided for, whichever is later, payable on December 1, 1999, and
semiannually thereafter on June 1 and December 1 of each year to the maturity or earlier
redemption thereof. If any 1999 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 1999 Bond is paid.
The 1999 Bonds shall be negotiable instruments to the extent provided by RCW
62A.8-105.
On the date of issue of the 1999 Bonds, all 1999 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
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ORDINANCE NO. 4772
each such 1999 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 1999 Bonds evidenced by such certificate, at which time the Custodian shall
surrender such certificate to the Registrar for payment of the principal of and interest on such
1999 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 1999
Bonds, at which time the old Custodian shall (provided the City is not then in default of any
payment then due on the outstanding 1999 Bonds) surrender the immobilized certificates to the
Registrar for transfer to the new Custodian and cancellation as herein provided.
For so long as any outstanding 1999 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 2, 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 1999 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 1999
Bonds at any time (provided the City is not then in default of any payment then due on the
outstanding 1999 Bonds) by delivering to the Registrar: (a) a written request that it issue and
deliver 1999 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 1999 Bond certificates, if necessary for such purpose. Upon
surrender to the Registrar of the immobilized certificates evidencing all of the then outstanding
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ORDINANCE NO. 4772
1999 Bonds,the 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 1999 Bonds may
transfer and exchange such 1999 Bonds in accordance with Section 9 hereof.
Neither the City nor the Registrar shall have at any time any responsibility or liability to
any Beneficial Owner of 1999 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 1999 Bonds, proper recording of beneficial ownership
of 1999 Bonds, proper transfers of such beneficial ownership, or any notices to Beneficial
Owners or any other matter pertaining to the 1999 Bonds.
Section 3. Place, Manner and Medium of Payment. Both principal of and interest on the
1999 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 1999 Bonds shall be paid by
the Registrar to the Custodian as the Owner thereof, for the benefit of the Beneficial Owner
thereof, in accordance with the Letter of Representations.
From and after the Book-Entry Termination Date, interest on the 1999 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 1999 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 1999 Bonds shall be payable upon
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ORDINANCE NO. 4772
presentation and surrender of the 1999 Bonds by the Owners at the principal corporate trust
office of either Registrar.
Section 4. Optional Redemption and Open Market Purchase of 1999 Bonds. 1999 Bonds
maturing in the years 1999 through 2009, inclusive, shall be issued without the right or option of
the City to redeem those Bonds prior to their stated maturity dates. The 1999 Bonds maturing on
December 1 in the years 2010 through 2015, inclusive, are subject to redemption prior to
maturity at the option of the City in whole or in part on any date from maturities selected by the
City (and by lot within a maturity in such manner as the Registrar shall determine) on or after
June 1, 2009, at a price of par plus accrued interest to the date fixed for redemption.
Any 1999 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, 1999 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 1999 Bond, upon
surrender of such 1999 Bond the principal corporate trust offices of the Registrar, a new 1999
Bond or 1999 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 1999 Bonds on the open market
at any time and at any price.
All 1999 Bonds purchased or redeemed by the City shall be surrendered to the Registrar
for cancellation.
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ORDINANCE NO. 4772
Section 5. Notice of Redemption. Unless waived by the Owner of any 1999 Bond to be
redeemed, notice of any such redemption shall be given by or on behalf of the City not less than
30 nor more than 60 days prior to the date fixed.for redemption by first-class mail, postage
prepaid,to the Owner of each 1999 Bond to be redeemed at the address appearing on the Bond
Register on the day the notice is mailed. The requirements of this section shall be deemed to be
complied with when notice is mailed as herein provided, whether or not it is actually received by
the Owner of any 1999 Bond. In addition, such redemption notice shall be mailed within the
same time period, postage prepaid, to such other persons, including registered securities
depositories and each Rating Agency, and to such other persons and with such additional
information as the City Finance Director shall deem appropriate, but such additional notice shall
not be a condition precedent to the redemption of such 1999 Bonds.
If such notice to the Owners shall have been given and the City shall have set aside
sufficient money for the payment of all 1999 Bonds called for redemption on the date fixed for
redemption, the 1999 Bonds so called shall cease to accrue interest after such redemption date,
and all such 1999 Bonds shall be deemed not to be outstanding hereunder for any purpose,
except that the Owners thereof shall be entitled to receive payment of the redemption price and
interest accrued on the principal of the 1999 Bonds to the redemption date from the money set
aside for such purpose.
Section 6. Form of 1999 Bonds. The 1999 Bonds shall be typewritten, word processed,
printed, lithographed or multicopied on good bond paper in a form consistent with this ordinance
and Washington law.
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ORDINANCE NO. 4772
Section 7. Execution of 1999 Bonds. The 1999 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 1999 Bonds shall cease to be such officer of the City before said 1999 Bonds shall
have been authenticated or delivered by the Registrar or issued by the City, such 1999 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 1999 Bond may be signed and attested on behalf of the City by such persons who,
at the actual date of execution of such 1999 Bond shall be the proper officer of the City, although
at the original date of such 1999 Bond such persons were not such officers of the City.
Section 8. Authentication and Delivery of 1999 Bonds by Registrar. The Registrar is
authorized and directed, on behalf of the City, to authenticate and deliver 1999 Bonds initially
issued or transferred or exchanged in accordance with the provisions of such 1999 Bonds and
this ordinance.
Only such 1999 Bonds as shall bear thereon a "Certificate of Authentication" manually
executed by an authorized representative of the Registrar shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be
conclusive evidence that the 1999 Bonds so authenticated have been duly executed,
authenticated and delivered hereunder and are entitled to the benefits of this ordinance.
The Registrar shall be responsible for its representations contained in the Certificate of
Authentication on the 1999 Bonds.
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ORDINANCE NO. 4772
Section 9. Registration, Transfer and Exchange. The Registrar shall keep, or cause to be
kept, at its principal corporate trust office,the Bond Register. The Registrar is authorized, on
behalf of the City,to authenticate and deliver 1999 Bonds transferred or exchanged in
accordance with the provisions of the 1999 Bonds and this ordinance, to serve as the City's
paying agent for the 1999 Bonds and to carry out all of the 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 Registrar, in its discretion, may deem and treat the Owner of each 1999
Bond as the absolute owner thereof for all purposes, and neither the City nor the Registrar shall
be affected by any notice to the contrary. Payment of any such 1999 Bond shall be made only as
described in Section 3 hereof, but such registration may be transferred as herein provided. All
such payments made as described in Section 3 hereof shall be valid and effectual to satisfy and
discharge the liability of the City upon such 1999 Bond to the extent of the amount or amounts
so paid.
The registered ownership of the 1999 Bonds may be transferred. Prior to the Book-Entry
Termination Date, the beneficial ownership of the 1999 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 1999 Bond shall be valid only if it is surrendered at the principal corporate
trust office of either Registrar, with the assignment form appearing on such 1999 Bond duly
executed by, or accompanied by a written instrument of transfer in form satisfactory to such
Registrar duly executed by, the Owner or such Owner's duly authorized agent, in a manner
satisfactory to such Registrar. Upon such surrender,the Registrar shall cancel the surrendered
1999 Bond and shall authenticate and deliver, without charge to the Owner or transferee therefor
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ORDINANCE NO. 4772
(other than any governmental fees or taxes payable on account of such transfer), a new 1999
Bond or 1999 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 1999 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 1999
Bond.
On and after the Book-Entry Termination Date, any 1999 Bond may be surrendered at the
principal corporate trust office of the Registrar and exchanged, without charge, for an equal
aggregate principal amount of 1999 Bonds of the same maturity and interest rate, in any
authorized denomination as selected by the Owner. The Registrar shall not be obligated to
transfer or exchange any 1999 Bond during the fifteen days preceding any principal or interest
payment or redemption date.
Either Registrar may become the Owner of any 1999 Bond with the same rights it would
have if it were not the 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 1999 Bonds.
The City covenants that, until all 1999 Bonds shall have been surrendered and cancelled,
it shall maintain a system of recording the ownership of each 1999 Bond that complies with the
provisions of the Code.
Section 10. Lost, Stolen or Destroyed 1999 Bonds. If any 1999 Bond becomes
mutilated, lost, stolen or destroyed, the Registrar may authenticate and deliver a new 1999 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 1999 Bond has
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ORDINANCE NO. 4772
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 Registrar of the destruction or loss of the original 1999 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 1999 Bond shall be furnished unless the
applicant shall reimburse the City and the Registrar for their respective expenses in the
furnishing thereof Any such substitute 1999 Bond so furnished shall be equally and
proportionately entitled to the security of this ordinance with all other 1999 Bonds issued
hereunder.
Section 11. Bond Redemption Account. There is created and established in the office of
the City Finance Director within the Golf Fund a separate special fund of the City to be
designated as the "Golf System Revenue Bond Redemption Account" (the "Bond Redemption
Account"), which account is divided into two subaccounts: a Principal and Interest Subaccount
and a Reserve Subaccount. So long as any Bonds are outstanding against the Bond Redemption
Account,the City obligates and binds itself to set aside and pay into the Bond Redemption
Account, out of the Gross Revenue of the System and other specified sources, certain fixed
amounts, without regard to any fixed proportion, namely:
(a) Into the Principal and Interest Subaccount, the accrued
interest, if any, and any rounding amount received from the Purchaser, and(i)
on the first day of each month, beginning with the month of May, 1999, an
amount which, together with other money on deposit therein, will equal 1/7
of the amount of interest to become due and payable on the 1999 Bonds on
December 1, 1999; (ii) on the first day of each month, beginning with the
month of December, 1999, an amount which, together with other money on
deposit therein, will equal 1/6 of the amount of interest to become due and
payable on the 1999 Bonds on the next interest payment date; (iii) on the first
day of the month, beginning with the month of May, 1999, an amount which,
together with other money on deposit therein, will equal 1/7 of the amount of
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ORDINANCE NO. 4772
principal to become due and payable on December 1, 1999; and (iv) on the
first day of the month, beginning with the month of December, 1999, an
amount which,together with other money on deposit therein, will equal 1/12
of the amount of principal to become due and payable on the next principal
payment or mandatory redemption date until the 1999 Bonds, both principal
and interest, are paid in full; and
(b) Into the Reserve Subaccount, an amount to fund fully the
Reserve Requirement for the 1999 Bonds by deposit at the time of delivery of
the 1999 Bonds to the initial purchaser thereof from the proceeds of the 1999
Bonds.
The City covenants and agrees that so long as any Bonds are outstanding it
will at all times maintain in the Reserve Subaccount an amount equal to the Reserve
Requirement, except for withdrawals therefrom as authorized herein. When the total
amount in the Bond Redemption Account shall equal the total amount of principal
and interest for all outstanding Bonds payable out of the Bond Redemption Account
to the last maturity thereof, no further payment need be made into the Bond
Redemption Account.
If there is a deficiency in the Principal and Interest Subaccount to meet maturing
installments of either principal or interest, as the case may be, to pay required redemptions of the
Bonds, or to meet mandatory redemption requirements, such deficiency shall be made up from
the Reserve Subaccount by the withdrawal of cash therefrom for that purpose. Any deficiency
created in the Reserve Subaccount by reason of any such withdrawals shall be made up from the
Gross Revenue of the System first available after making necessary provisions for the required
payments into the Principal and Interest Subaccount. The Reserve Requirement in the Reserve
Subaccount otherwise shall be held intact, except that it may be applied against payment of the
last outstanding Bonds payable out of the Bond Redemption Account.
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ORDINANCE NO. 4772
The City may provide for the purchase, redemption or defeasance of Bonds payable from
the Bond Redemption Account by the use of money on deposit in any subaccount in the Bond
Redemption Account as long as the money remaining in those subaccounts is sufficient to satisfy
the requirements for amounts on deposit in those subaccounts for the remaining Bonds
outstanding payable from the Bond Redemption Account.
All money in the Bond Redemption Account may be kept in cash or invested in Permitted
Investments. Permitted Investments in the Principal and Interest Subaccount shall not mature
later than the date when the funds are required for the payment of principal of or interest on the
outstanding Bonds payable from the Bond Redemption Account. Permitted Investments in the
Reserve Subaccount shall not mature later than the last maturity of any remaining outstanding
Bonds payable from the Bond Redemption Account. Income from investments in the Reserve
Subaccount shall be deposited in that subaccount until the amount in the Reserve Subaccount is
equal to the Reserve Requirement for all Bonds payable from the Bond Redemption Account,
and thereafter shall be deposited in the Principal and Interest Subaccount.
Notwithstanding the provisions for the deposit of earnings, any earnings which are
subject to a federal rebate requirement may be withdrawn from the Bond Redemption Account
for deposit into a separate fund or account for that purpose.
In no event shall any money in the Bond Redemption Account or any other money
reasonably expected to be used to pay principal of or interest on the Bonds be invested at a yield
which would cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the
Code.
In addition, the City reserves the right to substitute for all or for a portion of the money or
investments in the Reserve Subaccount a Reserve Instrument which, when combined with any
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ORDINANCE NO. 4772
money or investments remaining in the Reserve Subaccount, equals an amount not less than the
Reserve Requirement for all outstanding Bonds. If, as a result of such substitution,the value of
the assets in the Reserve Subaccount(including the stated amount of the Reserve Instrument)
shall exceed the Reserve Requirement, the excess may be transferred to the Principal and Interest
Subaccount to pay principal of or interest on Bonds coming due or may be used by the City for
the purchase, redemption or defeasance of Bonds.
The City may create sinking fund subaccounts or other subaccounts in the Bond
Redemption Account for the payment or securing the payment of Bonds payable from the Bond
Redemption Account as long as the maintenance of such subaccounts does not conflict with the
rights of the owners of Bonds payable from the Bond Redemption Account or with applicable
federal tax law requirements.
If the City fails to set aside and pay into the Bond Redemption Account the amounts set
forth above,the owner of any of the outstanding Bonds payable out of the Bond Redemption
Account may bring an action against the City and compel the setting aside and payment.
Section 12. Pledge of Gross Revenue. The Gross Revenue of the System is pledged
irrevocably to the payment of the 1999 Bonds and any Parity Bonds, and the 1999 Bonds and
Parity Bonds, if any, shall constitute a charge or lien upon that Gross Revenue prior and superior
to any other charges whatsoever other than Operating and Maintenance Expenses. The 1999
Bonds shall constitute a valid claim of the Owners only against the Bond Redemption Account
and the fixed amounts of Gross Revenue of the System pledged thereto. The 1999 Bonds are not
general obligations of the City.
Section 13. Sufficiency of Gross Revenue; Due Regard Finding. Payments out of the
Revenue Account to the Bond Redemption Account, as set forth above, shall be a first charge
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ORDINANCE NO. 4772
upon the Gross Revenue of the System and such Revenue Account, subject to the prior payment
of Operating and Maintenance Expenses. The City Council declares and finds that in fixing the
amounts to be paid into the Bond Redemption Account as described above it has exercised due
regard for Operating and Maintenance Expenses to be paid from Gross Revenue of the System
and has not obligated the City to set aside and pay into the Bond Redemption Account a greater
amount of that Gross Revenue than in its judgment will be available over and above such
Operating and Maintenance Expenses to be paid from Gross Revenue.
Section 14. Covenants. The City covenants and agrees with the Owner of each 1999
Bond at any time outstanding as follows:
(a) Rates and Charges. The City shall establish, maintain and
collect such rates and charges for the use of the System as will make
available money sufficient for the prompt payment of the principal of and
interest on the 1999 Bonds and any Parity Bonds. It shall adjust such rates
and charges from time to time so that it will meet the Coverage Requirement.
(b) Good Repair and Maintenance. It will at all times maintain
and keep the System and all additions thereto and betterments and extensions
thereof in good repair, working order and condition and also will at all times
operate the System and the golf course activities in connection therewith in
an efficient manner and at a reasonable cost.
(c) Operating and Maintenance Expenses. It will provide for
Operating and Maintenance Expenses from the Gross Revenue of the System
and other money lawfully available therefor. If sufficient amounts are not
available from Gross Revenue to provide for Operating and Maintenance
Expenses, the city shall budget and transfer from any lawful source money
sufficient to provide for those Operating and Maintenance Expenses.
(d) Limitation on Sale of Property. It will not sell, lease,
mortgage, or in any manner encumber or dispose of all of its title to the
property or facilities comprising the System unless provision is made for
payment into the Bond Redemption Account or a defeasance account of an
amount sufficient to pay the principal of and interest on all Bonds at that time
outstanding or to defease such Bonds to their maturity or earlier call date
under Section 18 of this ordinance; nor will it sell, lease, mortgage, or in any
manner encumber or dispose of any substantial part of the property or
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ORDINANCE NO. 4772
facilities comprising the System that is used, useful and material to the
operation of the System unless provision is made for replacement thereof or
for payment into the Bond Redemption Account of an amount which shall
bear the same ratio to the amount of the outstanding Bonds payable from the
Bond Redemption Account as the revenue available for debt service on those
Bonds for the twelve months preceding such sale, lease, encumbrance or
disposal from the portion of the System so sold, leased, encumbered or
disposed of bears to the revenue available for debt service for those Bonds
from all the System for the same period. Any such money so paid into the
Bond Redemption Account or defeasance account shall be used to retire or
defease outstanding Bonds payable therefrom at their maturity or earliest
possible call date.
Notwithstanding any other provision of this subsection, the City in its
discretion may sell or otherwise dispose of any of the property or facilities
comprising the System which shall have become unserviceable, inadequate,
obsolete or unfit to be used in the operation of the System, or no longer
necessary, material to or useful to the operation of the System, without
making any deposit into the Bond Redemption Account.
(e) Accounts and Records. It will keep proper and separate
accounts and records in which complete and separate entries shall be made of
all transactions relating to the System and it will furnish to the owner or
owners of any outstanding Bonds, at the written request of such owner or
owners, complete operating and income statements of the System in
reasonable detail covering any calendar year not more than 180 days after the
close of such calendar year. It will grant any owner or owners of at least 25%
of the outstanding Bonds the right at all reasonable times to inspect the
System and all records, accounts and data of the City relating thereto. Upon
the request of any owner of any of the Bonds, it will furnish such owner a
copy of the most recently completed audit of the City's accounts by the State
Auditor of Washington or such other audit as is authorized by law in lieu
thereof.
(f) Self-Insurance and Insurance. It will at all times either self-
insure in such manner and to such extent as the City shall determine to be
necessary and appropriate or, to the extent insurance coverage is available at
reasonable cost with responsible insurers, keep the System and the operations
thereof insured, with policies payable to the City, against the risks of direct
physical loss, damage to or destruction of the System or any part thereof, and
against accidents, casualties and negligence, at least to the extent that similar
insurance is carried by municipally-owned golf and recreational facilities.
The cost of such self-insurance and the premiums on such insurance policies
are declared to be a normal part of Operating and Maintenance Expenses.
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ORDINANCE NO. 4772
(g) Payment of Obligations. It will pay all the debt service
requirements for all outstanding Bonds and all Operating and Maintenance
Expenses and otherwise will meet the obligations of the City as set forth in
this ordinance.
Section 15. Future Parity Bonds. The city covenants and agrees with the Owner of each
1999 Bond at any time outstanding that it will not issue any Parity Bonds except upon
compliance with the following conditions:
(a) At the time of the issuance of such Parity Bonds, there shall be
no deficiency in the Principal and Interest Subaccount and the Reserve
Subaccount shall be fully funded at the Reserve Requirement for the Bonds
then outstanding.
(b) The ordinance authorizing the issuance of such Parity Bonds
shall provide for the payment of sinking fund requirements into the Bond
Redemption Account 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
such Term Bonds prior to their maturity date from money in the Principal and
Interest Subaccount.
(c) The ordinance authorizing the issuance of any Parity Bonds
shall provide for the payment of the principal thereof and interest thereon out
of the Bond Redemption Account.
(d) The ordinance providing for the issuance of such Parity Bonds
shall provide for the payment of an amount equal to the Reserve Requirement
for those Parity Bonds into the Reserve Subaccount in the Bond Redemption
Account from the Parity Bond proceeds, or shall provide for the deposit of an
amount equal to the Reserve Requirement for those Parity Bonds from money
in the Reserve Subaccount in excess of the Reserve Requirement of all bonds
then payable from the Bond Redemption Account and from the Gross
Revenue of the System within five years of issuance of those Parity Bonds in
approximately equal annual payments, or shall provide a Reserve Instrument
which,together with any Parity Bond proceeds deposited in the Reserve
Subaccount, at least equals the Reserve Requirement. If such Parity Bonds
are issued for the purpose of refunding outstanding Bonds, the amount of
such reserve allocated to such refunded Bonds may be used to retire
outstanding Bonds pursuant to the refunding plan, or may be retained and
used as a reserve for such refunding Parity Bonds, or may remain in the
Reserve Subaccount to be used as the reserve for any other remaining Bonds
payable from the Bond Redemption Account.
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ORDINANCE NO. 4772
(e) At the time of the issuance of such Parity Bonds, the City shall
have on file a certificate from a Consultant showing that the Net Revenue of
the System for any 12 consecutive calendar months out the 24 calendar
months immediately preceding the month of the delivery of the Parity Bonds
was at least equal to the Coverage Requirement for the then outstanding
Bonds and the Parity Bonds then proposed to be issued.
In estimating the Net Revenue of the System available for debt
service, the Consultant's certificate shall use the historical Net Revenue of
the System, which shall not include the proceeds from the sale of city
property, but may be adjusted to reflect:
(1) Any changes in rates in effect and being charged or
expressly committed by ordinance of the City Council to be made in
the future;
(2) The revenue to be deposited in the Revenue Account
which is derived from any person, firm, corporation or municipal
corporation under any executed contract for System service, which
revenue was not included in the historical Net Revenue of the System;
(3) The estimate of the revenue to be derived by the City
from the operation of any improvements to the System then under
construction but not completed, or improvements to be paid for out of
the proceeds of the additional Parity Bonds when such improvements
are completed.
However, no Consultant's certificate shall be required if:
(a) The City delivers a certificate demonstrating, based upon the
historical financial statements of the City corroborated by certified statements
of the Division of Municipal Corporations of the State Auditor's office of the
State of Washington(or any successor to the duties of that office) or by an
independent certified public accounting firm,that Net Revenue of the System
either for any 12 consecutive calendar months out of the immediately
preceding 24 calendar months or for the preceding two fiscal years would be
sufficient to meet the Coverage Requirement in each year commencing with
the first full fiscal year following the later of(i)the date on which the
projects or improvements to be financed with the proceeds of the Parity
Bonds proposed to be issued are reasonably estimated to be ready for normal
continuous operation(or, if portions of the projects or improvements are to be
placed in normal continuous operation at different times, the midpoint of the
expected dates of continuous operation of all portions of such projects or
improvements), or(ii) the date on which the interest on the Parity Bonds
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ORDINANCE NO. 4772
proposed to be issued will cease to be paid from the proceeds of those bonds;
or
(b) The Parity Bonds proposed to be issued (treating the portion
of any issue or series of bonds properly allocable to refunding purposes as a
separate issue for this purpose) are for the sole purpose of refunding
outstanding bonds payable from the Bond Redemption Account, the Annual
Debt Service for the refunding bonds is not increased in each year by more
than $5,000 over the amount required for the bonds to be refunded and the
maturities of those refunding bonds are not extended beyond the respective
maturities of the bonds to be refunded.
Nothing contained in the provisions for Parity Bonds shall prevent the City from issuing revenue
bonds having a subordinate lien on the Gross Revenue of the System.
Section 16. Revenue Account. There is created in the office of the City Finance Director
within the Golf Fund a separate special fund of the City to be designated as the Golf System
Revenue Account (the "Revenue Account"). The City may, at its option, create a subaccount
within the Revenue Account to be designated as the Rate Stabilization Subaccount. The
Revenue Account shall be held separate and apart from other funds and accounts of the City.
The Gross Revenue of the System, except for earnings in the Bond Redemption Account, shall
be credited to and deposited in the Revenue Account. If a Rate Stabilization Subaccount is
created as permitted hereby, the City may make transfers to such Rate Stabilization Subaccount
from other funds in the Revenue Account at any time.
The City may create other subaccounts in the Revenue Account to facilitate the
administration of the Revenue Account so long as the maintenance of such subaccounts does not
conflict with the rights of the owners of bonds payable from the Bond Redemption Account or
with applicable federal tax law requirements.
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ORDINANCE NO. 4772
Section 17. Purposes and Priority of Payments from Revenue Account. Money in the
Revenue Account shall be used for the following purposes only and shall be applied in the
following order of priority:
(a) To pay necessary Operating and Maintenance Expenses;
(b) To make all required payments into the Principal and Interest
Subaccount in the Bond Redemption Account for all bonds payable out of the
Bond Redemption Account, including all payments required to be made for the
required sinking fund payment of any Term Bonds;
(c) To make any reimbursement payments required under any
policy of municipal bond insurance in force with respect to the Bonds, except
that if there is not sufficient money to make all such reimbursement payments
those payments will be made on a pro rata basis;
(d) To make all required payments into the Reserve Subaccount;
(e) To make all payments required to be made pursuant to any
reimbursement agreement in connection with a Reserve Instrument, except that
if there is not sufficient money to make all payments under reimbursement
agreements, the payments will be made on a pro rata basis;
(0 To make all required payments into bond redemption funds or
reserve accounts for any junior lien municipal golf system revenue bonds or
short-term obligations hereafter issued; and
(g) To make necessary additions, improvements and repairs to or
betterments, extensions and replacements of the System,to retire by
redemption or to purchase in the open market outstanding municipal golf
system revenue bonds of the City, or for any other proper System purposes for
which such money may be lawfully used.
The City finds and determines that the establishment and maintenance of the
Rate Stabilization Subaccount will assist in avoiding fluctuations in Net Revenue and
consequent need for short-term rate adjustments for use of the System. Money in the
Rate Stabilization Subaccount may be transferred from that subaccount at any time
and be used for any purpose for which Gross Revenue may be used. Amounts
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ORDINANCE NO. 4772
transferred from the Rate Stabilization Subaccount to the Revenue Account shall be
treated as increasing Gross Revenue in the year in which such amounts are transferred,
and amounts transferred to the Rate Stabilization Subaccount from the Revenue
Account shall be treated as reducing Gross Revenue in the year in which such amounts
are transferred. Earnings on amounts held in the Rate Stabilization Subaccount shall
be transferred and credited to the Revenue Account.
The City may transfer from any funds or accounts of the City legally available therefor,
except bond redemption funds, refunding escrow funds or defeasance funds, any money therein
except tax revenues to meet the required payments to be made into the Bond Redemption
Account.
Section 18. Defeasance of Bonds. The City may issue advance refunding bonds pursuant
to the laws of the State of Washington and use money available from any other lawful source to
pay when due the principal of and interest on the 1999 Bonds, or any portion thereof included in
a refunding or defeasance plan, and to redeem and retire, defease or refund all such then-
outstanding 1999 Bonds (hereinafter collectively called the "defeased 1999 Bonds") and to pay
the costs of such refunding or defeasance. If money and/or Government Obligations sufficient in
amount, together with known earned income from the investments thereof, to redeem and retire,
redeem or refund the defeased 1999 Bonds in accordance with their terms are set aside
irrevocably in a special trust fund or escrow account(hereinafter called the "trust account") for
and pledged irrevocably to such redemption and retirement, then no further payments need be
made into the Bond Redemption Account for the payment of the principal of and the interest on
such defeased 1999 Bonds, the Owners thereof shall cease to be entitled to any lien, benefit or
security of this Ordinance except the right to receive the money and the principal and interest
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ORDINANCE NO. 4772
proceeds on the obligations set aside in the trust account; and such defeased 1999 Bonds shall no
longer be deemed to be outstanding hereunder.
After the establishing and full funding of such trust account, the City then may apply any
money in any other fund or account established for the payment or redemption of the defeased
1999 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 or defeasance plan provides that the defeased 1999 Bonds or the
refunding bonds to be issued be secured by cash and/or Government Obligations or other legal
investments pending the redemption at or prior to the maturity of the defeased 1999 Bonds, and
if such refunding or defeasance plan also provides that certain cash and/or Government
Obligations or other legal investments are pledged irrevocably for the redemption at or prior to
the maturity of the defeased 1999 Bonds included in that refunding or defeasance plan, then only
the debt service on the 1999 Bonds which are not defeased 1999 Bonds and the refunding bonds,
the payment of which is not so secured by the refunding plan, shall be included in the
computation of the Coverage Requirement for the issuance of Parity Bonds and the annual
computation of coverage for determining compliance with the rate covenant.
Section 19. Sale of Bonds. The Purchaser has presented the Purchase Agreement to the
City pursuant to which the Purchaser has offered to purchase the 1999 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.
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ORDINANCE NO. 4772
The 1999 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 1999 Bonds, attached to each
1999 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 1999 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 1999 Bonds.
Section 20. Delivery of 1999 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 1999 Bonds to the
Purchaser, including, but not limited to, the final official statement pertaining to the 1999 Bonds;
and (b) to do everything necessary for(1)the preparation and delivery of a transcript of
proceedings pertaining to the 1999 Bonds, and (2)the preparation, execution and delivery of
definitive 1999 Bonds to the Purchaser, each without unreasonable delay.
If definitive 1999 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 1999 Bonds with appropriate omissions,
changes and additions. Any temporary 1999 Bonds shall be entitled and subject to the same
benefits and provisions of this ordinance with respect to the payment, security and obligation
thereof as definitive 1999 Bonds authorized hereby. Such temporary 1999 Bond or 1999 Bonds
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ORDINANCE NO. 4772
shall be exchangeable without cost to the Owner thereof for definitive 1999 Bonds when the
latter are ready for delivery.
Section 21. Call of 1994 Bonds for Redemption. The City hereby calls the 1994 Bonds
that are subject to optional redemption for redemption on December 1, 2004, at a redemption
price of par plus accrued interest. Such call for redemption shall become irrevocable upon
delivery of the 1999 Bonds at Closing.
Section 22. 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
1994 Bonds from Closing to and including December 1, 2004, when due, and to redeem on said
date, all of the remaining outstanding 1994 Bonds at a redemption price of par.
The Escrow Trustee shall designate in any such subscriptions that all the principal of and
interest on the Escrow Obligations subscribed for with the United States Bureau of Public Debt
shall be payable to the Escrow Trustee. Such subscription may be amended as permitted by
federal law.
Section 23. 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
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ORDINANCE NO. 4772
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 24. 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 25. Application of 1999 Bond Proceeds and Funds Transferred from 1994 Golf
System Reserve Subaccount. The accrued interest and the rounding amount received by the City
at Closing shall be deposited into the Principal and Interest Subaccount and shall be applied to
the payment of interest first coming due on the 1999 Bonds. All of the remaining net proceeds
of the 1999 Bonds, together with such other funds of the City as are identified in the Refunding
Plan, shall be paid by the City to the Escrow Trustee at Closing, to be applied as set forth in the
Escrow Agreement.
Section 26. Tax Exemption and Bank Qualification. The City covenants that it will not
take or permit to be taken on its behalf any action that would adversely affect the exclusion of
the interest on the 1999 Bonds from gross income for purposes of federal income taxation, and
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ORDINANCE NO. 4772
will take or require to be taken such acts as may be permitted by, and as may from time to time
be required under, applicable law to continue the exclusion of the interest on the 1999 Bonds
from gross income for purposes of federal income taxation. Without limiting the generality of
the foregoing, the City will not invest or make or permit any use of the proceeds of the 1999
Bonds or of its other money at any time during the term of the 1999 Bonds which will cause such
1999 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code.
The City further covenants that it shall calculate or cause to be calculated, and shall
rebate to the United States, all earnings from the investment of 1999 Bond proceeds that are in
excess of the amount that would have been earned had the yield on such investments been equal
to the yield on the 1999 Bonds, plus income derived from such excess earnings, but only to the
extent and in the manner required by Section 148 of the Code.
The City has not been notified of any listing or proposed listing by the Internal Revenue
Service to the effect that the City is a bond issuer the arbitrage certifications of which may not be
relied upon.
The City covenants that it will take no actions and will make no use of the proceeds of
the 1999 Bonds or any other funds held under this ordinance which would cause any 1999 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.
The City covenants that it will not issue more than $10,000,000 of"qualified tax-exempt
obligations," as defined in Section 265 of the Code (relating to the deduction by financial
institutions of a portion of the interest incurred to carry tax-exempt debt) during calendar year
1999. The City hereby designates the 1999 Bonds as "qualified tax-exempt obligations" for such
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ORDINANCE NO. 4772
purposes and authorizes and directs the proper City officials to execute and deliver all documents
necessary to evidence such designation to any and all interested parties.
The covenants of this Section 26 shall survive the defeasance and payment of any 1999
Bonds to the extent required by the Code to continue the exclusion of the interest on the 1999
Bonds from gross income.
Section 27. Preliminary Official Statement Declaration. For the sole purpose of the
Purchaser's compliance with subsection (b)(1) of the Rule, the City hereby deems the
Preliminary Official Statement, pertaining to the 1999 Bonds, dated March 16, 1999, final as of
its date, except for the omission of information on offering prices, interest rates, selling
compensation, delivery dates, ratings, and other terms of the 1999 Bonds dependent on such
matters.
Section 28. Undertaking to Provide Continuing Disclosure. This section constitutes the
City's written undertaking for the benefit of the Owners and Beneficial Owners of the 1999
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, 1999, 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
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ORDINANCE NO. 4772
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 of the System;
(c) Debt service coverage ratios;
(d) Number of golf rounds; and
(e) A narrative explanation of the reasons for any amendments to this Section 28
made during the previous fiscal year and the impact of such amendments on the Annual
Financial Information being provided.
In its provision of such financial information and operating data, the City may cross-
reference to any "final official statement" (as defined in the Rule) available from the MSRB or
any other documents theretofore provided to each then existing NRMSIR or the SID, if one is
created.
If not submitted as part of the Annual Financial Information,then when and if available,
the City shall provide its Annual Financial Statements, which shall have been audited by such
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 1999 Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
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ORDINANCE NO. 4772
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 1999 Bonds;
7. Modifications to rights of the Owners of the 1999 Bonds;
8. Optional redemptions of the 1999 Bonds;
9. Defeasances of the 1999 Bonds;
10. Release, substitution or sale of property securing repayment of the 1999 Bonds;
and
11. Rating changes.
The City also agrees to provide or cause to be provided, in a timely manner,to the SID, if
one is created, and to either the MSRB or each then existing NRMSIR, notice of its failure to
provide the Annual Financial Information for the prior fiscal year on or before the last day of the
seventh month following the end of such prior fiscal year.
After the issuance of the 1999 Bonds, so long as the interests of the Owners or Beneficial
Owners of the 1999 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 28 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.
33
ORDINANCE NO. 4772
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 1999 Bonds. This Section 28 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 28 or any such provision are invalid, have been repealed retroactively
or otherwise do not apply to the 1999 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 1999 Bonds to enforce the provisions of
this Section 28 shall be limited to the right to obtain specific enforcement of the City's
obligations under this Section 28, and any failure by the City to comply with the provisions of
this undertaking shall not be a default with respect to the 1999 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 28.
Section 29. Amendatory and Supplemental Ordinances.
(a) Provisions Exclusive. This ordinance shall not be modified or
amended in any respect subsequent to the initial issuance of the 1999 Bonds,
except as provided in and in accordance with and subject to the provisions of this
Section 29.
(b) Amendments Without Consent of Owners. The City may from
time to time, and at any time, without the consent of or notice to the Owners of
the 1999 Bonds, pass supplemental or amendatory ordinances as follows:
34
ORDINANCE NO. 4772
(1) To cure any formal defect, omission, inconsistency or
ambiguity in this ordinance in a manner not adverse to the owner of any Bonds;
(2) To impose upon the Registrar(with its consent) for the
benefit of the Owners of the 1999 Bonds any additional rights, remedies, powers,
authority, security, liabilities or duties which may lawfully be granted, conferred
or imposed and which are not contrary to or inconsistent with this ordinance as
theretofore in effect;
(3) To add to the covenants and agreements of, and limitations
and restrictions upon, the City in this ordinance, other covenants, agreements,
limitations and restrictions to be observed by the City which are not contrary or
inconsistent with this ordinance as theretofore in effect;
(4) To confirm, as further assurance, any pledge under, and the
subjection to any claim, lien or pledge created or to be created by this ordinance
of any other money, securities or funds;
(5) To authorize different denominations of the 1999 Bonds
and to make correlative amendments and modifications to this ordinance
regarding exchangeability of 1999 Bonds of different authorized denominations,
redemptions of portions of 1999 Bonds of particular authorized denominations
and similar amendments and modifications of a technical nature;
(6) To modify, alter, amend or supplement this ordinance in
any other respect which is not materially adverse to the Owners of the 1999
Bonds and which does not involve a change described in subsection(c) of this
section; and
(7) To maintain, because of change in federal law or rulings,
the exclusion of interest on the 1999 Bonds from gross income for federal income
tax purposes.
Before the City shall pass any such supplemental ordinance pursuant to this
subsection, there shall have been delivered to the City and the Registrar an opinion of
Gottlieb, Fisher& Andrews, PLLC, or other nationally recognized bond counsel to the
City, stating that such supplemental ordinance is authorized or permitted by this
ordinance and upon the execution and delivery thereof will be valid and binding upon the
35
ORDINANCE NO. 4772
City in accordance with its terms and will not adversely affect the exclusion of interest on
the 1999 Bonds from gross income for federal income tax purposes.
(c) Amendments With Consent of Owners.
(1) Except for any supplemental ordinance entered into
pursuant to subsection (b) of this section, Owners of not less than 60% in
aggregate principal amount of the 1999 Bonds then outstanding shall have the
right from time to time, subject to the terms and provisions contained in this
subsection(c) and not otherwise, to consent to and approve the passage by the
City Council of any supplemental ordinance deemed necessary or desirable by the
City for the purpose of modifying, altering, amending, supplementing or
rescinding, in any particular, any of the terms or provisions contained in this
ordinance; except, unless approved in writing by the Owners of all the 1999
Bonds then outstanding, nothing contained in this section shall permit, or be
construed as permitting:
(i) A change in the times, amounts or currency of
payment of the principal of or interest on any outstanding 1999 Bond, or a
reduction in the principal amount or redemption price of any outstanding 1999
Bond, a change in the method or redemption price of any outstanding 1999 Bond
or a change in the method of determining the rate of interest thereon, or
(ii) A preference or priority of any 1999 Bond or 1999
Bonds over any other 1999 Bond or 1999 Bonds, or
36
ORDINANCE NO. 4772
(iii) A reduction in the aggregate principal amount of
1999 Bonds for which the consent of the Owners of 1999 Bonds is required for
any such supplemental ordinance.
(2) If at any time the City shall pass any supplemental
ordinance for any of the purposes of this subsection(c), the Registrar shall cause
notice of the proposed supplemental ordinance to be given by first-class United
States mail to all Owners of the then outstanding 1999 Bonds and to each Rating
Agency. Such notice shall briefly set forth the nature of the proposed
supplemental ordinance and shall state that a copy thereof is on file at the office
of the Registrar for inspection by all Owners of the outstanding 1999 Bonds.
(3) Within two years after the date of the mailing of such
notice, the City may enact such supplemental ordinance in substantially the form
described in such notice, but only if there has first been delivered to the Registrar
(i) the required consents, in writing, of the Owners of the 1999 Bonds, and (ii) an
opinion of nationally recognized bond counsel to the City stating that such
supplemental ordinance is authorized or permitted by this ordinance and, upon the
execution and delivery thereof, will be valid and binding upon the City in
accordance with its terms and will not adversely affect the exclusion of interest on
the 1999 Bonds from gross income for federal income tax purposes.
(4) If Owners of not less than the percentage of 1999 Bonds
required by this subsection(c) have consented to and approved the execution and
delivery thereof as herein provided, no Owner of the 1999 Bonds shall have any
right to object to the enactment of such supplemental ordinance, or to object to
37
ORDINANCE NO. 4772
any of the terms and provisions contained therein or the operation thereof, or in
any manner to question the propriety of the enactment thereof, or to enjoin or
restrain the City or the Registrar from enacting the same or from taking any action
pursuant to the provisions thereof.
(d) Effect of Amendments. Upon the execution and delivery of any
supplemental ordinance pursuant to the provisions of this Section 29, this
ordinance shall be, and be deemed to be, modified and amended in accordance
therewith, and the respective rights, duties and obligations under this ordinance of
the City, the Registrar and all Owners of 1999 Bonds then outstanding shall
thereafter be determined, exercised and enforced under this ordinance subject in
all respects to such modifications and amendments.
Section 30. Contract; Savings Clause. The covenants contained in this ordinance and in
the 1999 Bonds shall constitute a contract between the City and the Owner of each and every
1999 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 and agreements in this ordinance and shall in no way affect the validity of
the other provisions of this ordinance or of the 1999 Bonds.
Section 31. Effective Date. This ordinance shall take effect and be in force five days
from and after its passage and publication as provided by law.
38
ORDINANCE NO. 4772
PASSED by the City Council and APPROVED by the Mayor of the city of Renton,
Washington, ,at a regular open public meeting thereof, this 22nd day of March, 1999.
g . 4. 4
Jesse Tanner, Mayor
AUTHENTICATE,•
111
/ �`a/ e
Lif
City Clerk- yn J. Petersen
APPROVED AS TO FORM:
ixott,a, ‘/,,A,d(44.A..A.-4._.--
Judith Andrews, Gottlieb, Fisher& Andrews, PLLC
Bond Counsel
Date of Publication: March 26, 1999 (Title only)
E\renton\golfrev99
39
EXHIBIT A
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of April 1, 1999, 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 TRUST NATIONAL ASSOCIATION, as
escrow trustee hereunder (the "Escrow Trustee").
RECITALS
WHEREAS, the City now has outstanding $4,555,000 principal amount of its Golf
System Revenue Bonds, 1994 (the "1994 Bonds"); and
WHEREAS, after due consideration, it appears to the City Council of the City (the "City
Council") that refunding and defeasing all of the outstanding 1994 Bonds by the issuance of
refunding bonds of the City so that substantial savings will be effected by the difference between
the principal and interest cost over the life of such refunding bonds and the principal and interest
requirements over the life of the 1994 Bonds but for such refunding; and
WHEREAS, by Ordinance No. (the "Bond Ordinance"), the City has duly and
validly authorized the issuance, sale and delivery of its $5,040,000 Golf System Revenue
Refunding Bonds, 1999 (the "1999 Bonds"), and the delivery of the net principal proceeds of the
1999 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 of this 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 and defeasance of the 1994 Bonds will be accomplished
pursuant to the refunding plan set forth in this Escrow Agreement (the "Refunding Plan"), which
provides for, among other things:
(a) The payment to the Escrow Trustee by U.S. Bancorp Piper Jaffray Inc.,the
Purchaser of the 1999 Bonds (the "Purchaser"), on behalf of the City, of the sum of
$4,527,947.15, derived solely from the net proceeds of the 1999 Bonds:
(b) The purchase by the Escrow Trustee of the Escrow Obligations listed in
Schedule 1 A 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 payment to the Escrow Trustee by the City of the sum of$456,145.00 derived
from the Reserve Subaccount for the 1994 Bonds;
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(d) The payment to the Escrow Trustee by the City of the sum of$500.00 derived
from the Revenue Account for the 1994 Bonds;
(e) The purchase by the Escrow Trustee of the Escrow Obligations listed in
Schedule 1B attached hereto and incorporated herein by this reference, with a portion of the
money delivered to the Escrow Trustee as described in clause (c) above and all of the money
described in clause (d) above;
(f) The delivery of a report (the "Escrow Verification") of Causey Demgen & Moore,
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 report) of, among other things, the yields on the 1999 Bonds and the
Escrow Fund, and the computations showing that the Initial Cash (hereinafter defined) 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, when due, the principal of and interest on the 1994 Bonds up to and
including December 1, 2004, and the redemption price thereof due on that date equal to par plus
accrued interest (collectively, the "Escrow Payments");
(g) The receipt by the Escrow Trustee of the maturing installments of principal of and
interest on the Escrow Obligations;
(h) 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;
(i) The payment by the Escrow Trustee of the costs of issuing the 1999 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 1994 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
of this Escrow Agreement shall, for all purposes of this 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 (hereinafter
defined) and any other funds provided to the Escrow Trustee hereunder for use in the refunding
of the 1994 Bonds.
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Section 3. Delivery of Money to Escrow Trustee. On April 15, 1999 (the "Date of
Issue"), the Escrow Trustee shall receive from:
(a) The Purchaser, the sum of$4,527,947.15, derived from proceeds of the Bonds;
(b) The City, the sum of$456,145.00, derived from moneys and investments held in
the Reserve Subaccount for the 1994 Bonds; and
(c) The City, the sum of$500.00, derived from moneys in the Revenue Account for
the 1994 Bonds.
Execution of this Escrow Agreement by the Escrow Trustee shall constitute
written acknowledgment by the Escrow Trustee of its receipt hereunder of the total sum of
$4,984,592.15 on the Date of Issue.
Section 4. Application of Money. On the Date of Issue, the Escrow Trustee shall:
(a) Apply the sum of$4,504,301.00, derived solely from the net proceeds of the 1999
Bonds, to the purchase of the Escrow Obligations listed in Schedule 1A hereto; upon receipt of
such Escrow Obligations, the Escrow Trustee shall deposit the same into the Escrow Fund and
shall deliver copies of the documents evidencing the purchase of and payment for such Escrow
Obligations to Gottlieb, Fisher& Andrews, PLLC ("Bond Counsel"); and
(b) Apply the sum of$455,745.01, derived from $455,245.01 of the funds transferred
from the Reserve Subaccount for the 1994 Bonds and all $500.00 transferred from the Revenue
Account for the 1994 Bonds, to pay the purchase price of the Escrow Obligations listed in
Schedule 1B hereto. Upon receipt of such Escrow Obligations, the Escrow Trustee shall deposit
the same into the Escrow Fund and shall deliver to the City and Bond Counsel copies of the
documents evidencing the purchase of and payment for such 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 Issue, 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 1999
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;
(c) Hold the sum of$901.14 (the "Initial Cash"), consisting of$1.15 derived from the
net proceeds of the 1999 Bonds and $899.99 derived from the funds transferred from the Reserve
Subaccount for the 1994 Bonds, uninvested in the form of United States currency until
application of the same to meet the Escrow Payments; and
(d) Apply the sum of$23,645.00, derived solely from the net proceeds of the 1999
Bonds, to the payment of the costs of issuing the 1999 Bonds listed on Schedule 3 hereto.
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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.
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. 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 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 1994 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.
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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 3 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:
(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 may be deposited with the Escrow Trustee to accomplish
the defeasance of the 1994 Bonds in accordance with the ordinance pursuant to which they were
issued, and that such substitution will not cause the interest on the 1994 Bonds or the 1999
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
4.9850515% (the yield on the 1999 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
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(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
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 1999 Bonds and the trust under this Escrow
Agreement so as to preserve the exclusion of the interest on the 1999 Bonds from gross income
for purposes 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.
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 1994 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 1994 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
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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 each Rating Agency.
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 of this 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 of this 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 of this 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
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 of this Escrow Agreement is
satisfactory to it, to the City and no further payment to the Escrow Trustee, other than as
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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 1994 Bonds. The City hereby directs the Escrow Trustee to
give such notice as may be required, at the time(s) and in the manner required pursuant to
Ordinance No. 4455, in order to effect the redemption of the 1994 Bonds on December 1, 2004,
as described herein.
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:
To the City:
Finance Director
City of Renton
1055 South Grady
Renton, Washington 98058
Phone (425) 430-6932
Fax (425) 430-6855
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with a copy to:
Gottlieb, Fisher& Andrews, PLLC
1325 Fourth Avenue, Suite 1200
Seattle, Washington 98101-2531
Phone (206) 654-1999
Fax (206) 654-8725
To the Escrow Trustee:
U.S. Bank Trust National Association
601 Union Street, Suite 2120
Seattle, Washington 98101
Phone (206) 461-4100
Fax (206) 461-4175
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 of this Escrow Agreement, but this Escrow
Agreement shall be construed as if such invalid or illegal or unenforceable provision had never
been contained herein.
Section 20. Counterparts. This Escrow Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
IN WITNESS WHEREOF,the parties have executed and delivered this Escrow
Agreement pursuant to due and proper authorization, all as of April 1, 1999.
CITY OF RENTON, WASHINGTON
By
Finance Director
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Escrow Trustee
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By
Authorized Officer
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SCHEDULE 1A
Principal +Accrued =Total
Maturity Type Coupon Yield Price Par Amount Cost Interest Cost
06/01/1999 SLGS-CI - - 100.000 $105,070.00 $105,070.00 - $105,070.00
12/01/1999 SLGS-CI - - 100.000 177,679.00 177,679.00 - 177,679.00
06/01/2000 SLGS-NT - - 100.000 24,026.00 24,026.00 - 24,026.00
12/01/2000 SLGS-NT 2.833% 2.833% 100.000 178,287.00 178,287.00 - 178,287.00
06/01/2001 SLGS-NT 4.960% 4.960% 100.000 22,424.00 22,424.00 - 22,424.00
12/01/2001 SLGS-NT 4.990% 4.990% 100.000 186,316.00 186,316.00 - 186,316.00
06/01/2002 SLGS-NT 5.000% 5.000% 100.000 23,179.00 23,179.00 - 23,179.00
12/01/2002 SLGS-NT 4.990% 4.990% 100.000 196,167.00 196,167.00 - 196,167.00
06/01/2003 SLGS-NT 4.980% 4.980% 100.000 23,825.00 23,825.00 - 23,825.00
12/01/2003 SLGS-NT 4.980% 4.980% 100.000 205,901.00 205,901.00 - 205,901.00
06/01/2004 SLGS-NT 5.000% 5.000% 100.000 24,373.00 24,373.00 - 24,373.00
12/01/2004 SLGS-NT 5.060% 5.060% 100.000 3,337,054.00 3,337,054.00 - 3,337,054.00
SCHEDULE 1B
Principal +Accrued =Total
Maturity Type Coupon Yield Price Par Amount Cost Interest Cost
05/31/1999 T-NOTE 6.250% 3.922% 100.090 10,000.00 $10,028.13 $233.52 $10,261.65
11/30/1999 T-NOTE 7.750% 4.614% 101.290 22,000.00 22,419.38 637.03 23,056.41
05/31/2000 T-NOTE 5.500% 4.774% 100.250 10,000.00 10,078.13 205.49 10,283.62
11/30/2000 T-NOTE 5.625% 4.873% 101.050 25,000.00 25,289.06 525.41 25,814.47
05/31/2001 T-NOTE 6.500% 4.900% 103.060 10,000.00 10,318.75 242.86 10,561.61
11/30/2001 T-NOTE 5.875% 5.024% 102.020 27,000.00 27,556.88 592.66 28,149.54
05/31/2002 T-NOTE 6.500% 5.065% 104.030 11,000.00 11,450.31 267.14 11,717.45
11/30/2002 T-NOTE 5.750% 5.070% 102.070 29,000.00 29,643.44 623.02 30,266.46
05/15/2003 STRIPS - 5.090% 81.447 11,000.00 8,959.17 - 8,959.17
11/15/2003 STRIPS - 5.090% 79.426 30,000.00 23,827.80 - 23,827.80
05/15/2004 T-NOTE 7.250% 5.130% 109.120 10,000.00 10,937.50 302.42 11,239.92
11/15/2004 STRIPS - 5.230% 74.959 349,000.00 261,606.91 - 261,606.91
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SCHEDULE 2
ESCROW VERIFICATION
OF
CAUSEY DEMGEN & MOORE
[Attached]
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SCHEDULE 3
ISSUANCE COSTS FOR THE BONDS
[To Be Provided by Piper Jaffray Inc.]
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