HomeMy WebLinkAbout3000J:1MCO122501-00.0161MCON7EG. DOC
CITY OF PORT ANGELES, WASHINGTON
WATER AND WASTEWATER UTILITY REVENUE REFUNDING BONDS, 1998
ORDINANCE NO. 3000
AN ORDINANCE of the City of Port Angeles, Washington, authorizing the
issuance and sale of water and wastewater utility revenue refunding
bonds of the city in the principal amount of not to exceed $9,600,000 to
refund certain outstanding water and wastewater utility revenue bonds of
the City; authorizing appointment of an escrow agent and the execution
of an escrow agreement related to such refunding; fixing the date, form,
terms, maturities and covenants of such bonds; and authorizing the
public sale of such bonds
PASSED ON September 15, 1998
Prepared By:
PRESTON GATES & ELLIS LLP
5000 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104 -7078
Table of Contents
Page
Section 1. Definitions 2
Section 2. Compliance with Parity Conditions 8
Section 3. Authorization and Description of Bonds 9
Section 4. Registration, Exchange and Payments 10
Section 5. Redemption; Purchase of Bonds 14
Section 6. Execution of Bonds 17
Section 7. Form of Bonds 17
Section 8. Application of Bond Proceeds; Advance Refunding Account 22
Section 9. Rate Stabilization Fund 26
Section 10. Revenue Fund 26
Section 11. Bond Fund 27
Section 12. Covenants and Agreements 30
Section 13. Tax Covenants; Special Designation 33
Section 14. Arbitrage Rebate 34
Section 15. Adequacy of Revenues 34
Section 16. Defeasance 34
Section 17. Issuance of Future Parity Bonds 35
Section 18. Public Sale of Bonds 38
Section 19. Preparation of Preliminary Official Statement 39
Section 20. Undertaking to Provide Ongoing Disclosure 39
Section 21. Municipal Bond Insurance 43
Section 22. Supplements and Amendments 43
Section 23. Lost or Destroyed Bonds 44
Section 24. Severability 45
Section 25. Effective Date 45
Exhibit A Form of Escrow Agreement
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DOTOOK. DOC 98/09/11
ORDINANCE NO. 3000
AN ORDINANCE of the City of Port Angeles, Washington,
authorizing the issuance and sale of water and wastewater utility
revenue refunding bonds of the city in the principal amount of not
to exceed $9,600,000 to refund certain outstanding water and
wastewater utility revenue bonds of the City; authorizing
appointment of an escrow agent and the execution of an escrow
agreement related to such refunding; fixing the date, form, terms,
maturities and covenants of such bonds; and authorizing the public
sale of such bonds
WHEREAS, the City of Port Angeles, Washington (the "City ") owns, operates and
maintains a combined water and wastewater utility (the "System "); and
WHEREAS, pursuant to Ordinance No. 2843 of the City, passed on October 18, 1994,
( "Ordinance No. 2843 "), the City issued its Water and Wastewater Utility Revenue and
Refunding Bonds, 1994, under date of November 1, 1994, in the original principal amount of
$10,000,000 (the "1994 Bonds "); and
WHEREAS, with the consent of the State of Washington Department of Ecology
( "DOE "), the 1994 Bonds were issued on a parity of lien with a loan to the City administered by
DOE (loan number SRF 91001) (the "Revolving Fund Loan") and authorized by Resolution No.
9 -90 of the City Council of the City (the "Council ") adopted on May 1, 1990; and
WHEREAS, Section 6 of Ordinance No. 2843 provides that the 1994 Bonds maturing on
and after November 1, 2005 (the "Refunded Bonds ") may be redeemed prior to their stated
maturities on November 1, 2004 at a price of 101% of par plus accrued interest to the date of
redemption; and
WHEREAS, Ordinance No. 2843 provides that the City may issue additional water and
wastewater utility revenue bonds on a parity with the 1994 Bonds for the purpose of refunding
outstanding obligations of the System if certain conditions are met; and
WHEREAS, after due consideration the City Council of the City (the "Council ") finds
that the Refunded Bonds may be refunded by the issuance and sale of the water and wastewater
utility refunding revenue bonds of the City authorized herein so that a substantial savings to the
City and ratepayers of the System will be effected by the issuance of such refunding bonds and
the payment and redemption of the Refunded Bonds on November 1, 2004; and
WHEREAS, to effect such refunding in the manner that will be most advantageous to the
City and ratepayers of the System, the Council finds it necessary and advisable to appoint an
escrow agent and to purchase certain "Acquired Obligations" (hereinafter defined) out of the
proceeds of sale of the refunding bonds; and
WHEREAS, it appears to the Council that it is in the best interests of the City and
ratepayers of the System that the Bonds be sold by competitive sale on the terms set forth after
providing notice of such sale;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES,
WASHINGTON, DO ORDAIN, as follows:
Section 1. Definitions. As used in this ordinance the following words shall have the
following meanings:
"Advance Refunding Account" means the special account of the City, to be held by the
Escrow Agent, created pursuant to Section 8 of this ordinance.
"Annual Debt Service" for any fiscal year or calendar year means the sum of:
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(a) the interest due in such year on all outstanding Parity Bonds excluding,
however, interest to be paid from the proceeds of Parity Bonds,
(b) the principal of all outstanding Serial Bonds due in such year, and
(c) the Sinking Fund Requirement, if any, for such year, calculated as of the
Sinking Fund Requirement Date for such year.
If the interest rate on any such bonds is other than a fixed rate, the rate applicable at the
time of the computation shall be used.
"Arbitrage and Tax Certification" means the certificate executed by the Finance Director
of the City pertaining to the calculation and payment of any Rebate Amount with respect to the
Bonds.
"Assessments" means assessments (including interest and penalties) levied in any utility
local improvement district of the City for the acquisition or construction of additions and
improvements to and extension of the System, if such assessments are pledged to be paid into the
Bond Fund.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on all Parity Bonds from the date of determination to the last
maturity date of such Parity Bonds, by (b) the number of fiscal years or calendar years from and
including the fiscal year or calendar year in which the determination is made to the last fiscal
year or calendar year in which any of such Parity Bonds will be outstanding.
"Bond Fund" means the 1994 Water and Wastewater Utility Revenue Bond Fund created
by Section 15 of Ordinance No. 2843 and referred to in Section 11 of this ordinance.
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of registration of the Bonds.
"Bond Registrar" or "Registrar" means the fiscal agency of the State of Washington in
either Seattle, Washington, or New York, New York, whose duties include the registration and
authentication of the Bonds, maintenance of the Bond Register, effecting transfer of ownership
of the Bonds, and paying the principal of, premium, if any, and interest on the Bonds.
"Bonds" mean the not to exceed $9,600,000 principal amount of water and wastewater
utility revenue refunding bonds of the City issued pursuant to this ordinance to refund the
Refunded Bonds.
"City" means the City of Port Angeles, a municipal corporation duly organized and
existing under the laws of the State of Washington.
"Code" means the federal Internal Revenue Code of 1986, as amended, and applicable
regulations.
"Commission" means the United States Securities and Exchange Commission.
"Costs of Maintenance and Operation" means all necessary operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, and insurance and
administrative expenses, but excludes depreciation, payments for debt service or into reserve
accounts and costs of capital additions to or replacements of the System, taxation by the City or
payments in lieu of taxes.
"Council" means the general legislative authority of the City as the same shall be duly
and regularly constituted from time to time.
"Debt Service Account" means the account of that name created in the Bond Fund by
Section 15 of Ordinance No. 2843 and referred to in Section 13 of this ordinance.
"DOE" means the State of Washington Department of Ecology, administrator of the
Revolving Fund Loan.
"DOE Loan Agreement" means the agreement between the City and DOE with respect to
the Revolving Fund Loan.
"DTC" means The Depository Trust Company, New York, New York, a limited purpose
trust company organized under the laws of the State of New York, as depository for the Bonds
pursuant to Section 4 hereof, or any successor substitute depository for the Bonds.
"Escrow Agent" means the bank or trust company appointed by the Finance Director
pursuant to Section 8 hereof.
"Escrow Agreement" means the agreement between the City and the Escrow Agent with
respect to the Refunded Bonds entered into pursuant to Section 8 hereof.
"Financial Advisor" means Sound Finance Group, of Seattle, Washington, or any other
financial advisor appointed by the Council.
"Finance Director" means the duly appointed and acting Finance Director of the City or
the successor of such office.
"Fiscal Year" means the fiscal year used by the City at any time. At the time of the
adoption of this ordinance, the Fiscal Year is the twelve -month period beginning January 1 of
each year and ending December 31 of each year.
"Future Parity Bonds" mean any revenue bonds, revenue warrants or other revenue
obligations that may be issued in the future as Parity Bonds.
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"Gross Revenue" means all earnings, revenue and money, except Assessments, received
by the City from or on account of the operation of the System, including proceeds from the sale,
lease or other disposition of any of the properties or facilities of the System, and the income from
investments of money in the Revenue Fund and any bond fund or from any other investment
thereof except the income from investments irrevocably pledged to the payment of revenue
bonds pursuant to a plan of retirement or refunding. The words "Gross Revenue" shall not
include grants or bond proceeds, but shall include federal or state reimbursements of operating
expenses to the extent such expenses are included as "Costs of Maintenance and Operation."
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC.
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
"1994 Bonds" means the City's Water and Wastewater Utility Revenue Bonds, 1994
issued pursuant to Ordinance No. 2843 of the City under date of November 1, 1994 and currently
outstanding in the principal amount of $9,575,000.
"Net Revenue" means the Gross Revenue less the Costs of Maintenance and Operation.
"NRMSIR" means a nationally recognized municipal securities information repository.
"Parity Bonds" means the Revolving Fund Loan, the Bonds and any revenue bonds,
revenue warrants or other revenue obligations of the City that have a lien on money in the
Revenue Fund to pay and secure the payment of the principal thereof and interest thereon equal
to the lien created on the money in such Fund to pay and secure the payment of the principal of
and interest on the Revolving Fund Loan and the Bonds.
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"Permitted Investments" means any investments of City funds permitted under the laws
of the State of Washington as amended from time to time.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with water and wastewater
systems of comparable size character to the System in such areas as are relevant to the purposes
for which they are retained.
"Qualified Insurance" means any unconditional municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
state of the United States or by a service corporation acting on behalf of one or more such
insurance companies, which insurance company or service corporation is rated in one of the two
highest rating categories by Moody's Investors Service, Inc. or any other rating agency then
maintaining a rating on the Bonds, provided, that, as of the time of issuance of such policy or
surety bond, such insurance company or companies maintain a policy owner's surplus in excess
of $500,000,000.
"Qualified Letter of Credit" means any irrevocable letter of credit issued by a bank for the
account of the City and for the benefit of the owners of Parity Bonds, provided that such bank
maintains an office, agency or branch in the United States, and provided further, that, as of the
time of issuance of such letter of credit, such bank is currently rated in one of the two highest
rating categories by either Moody's Investors Service, Inc. or any other rating agency then
maintaining a rating on the Bonds.
"Rate Stabilization Fund" means the fund of that name created pursuant to Section 13 of
Ordinance No. 2843 and referred to in Section 9 of this ordinance.
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"Rebate Amount" means the amount, if any, determined to be payable with respect to the
Bonds by the City to the United States of America in accordance with Section 148(f) of the
Code.
"Refunded Bonds" means the 1994 Bonds maturing on and after November 1, 2005.
"Registered Owner" means the person in whose name a Bond is registered on the Bond
Register. For so long as the City utilizes the book -entry system for the bonds, DTC shall be
deemed to be the Registered Owner.
"Reserve Account" means the account of that name in the Bond Fund created pursuant to
Ordinance No. 2843 and referred to in Section 11 of this ordinance.
"Reserve Account Requirement" means, with respect to the Bonds or Future Parity
Bonds, an amount equal to the least of (a) 125% of Average Annual Debt Service on such bonds,
(b) 10% of the net proceeds of such series of bonds, or (c) maximum Annual Debt Service.
"Revenue Fund" means the special fund of the City known as the "City of Port Angeles
Water and Wastewater Utility Revenue Fund" created in the office of the City Treasurer pursuant
to Section 2 of Ordinance No. 2843 and referred to in Section 10 of this ordinance.
"Revolving Fund Loan" means the loan to the City in the original principal amount of
$2,549,264 administered by DOE (loan number SRF 91001), as authorized by Resolution
No. 790 of the City Council adopted on May 1, 1990.
"Rule" means the Commission's Rule 15c2 -12 under the Securities Exchange Act of
1934, as the same may be amended from time to time.
"Sale Resolution" means a resolution of the Council approving a bid for the Bonds.
"Serial Bonds" means Bonds or Future Parity Bonds other than Term Bonds.
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"SID" means a state information depository for the State of Washington (if one is
created).
"Sinking Fund Requirement" means, for any fiscal year or calendar year, the principal
amount of Term Bonds required to be purchased, redeemed or paid at maturity in such year as
established by the ordinance of the City authorizing the issuance of such Term Bonds.
"System" means the combined water supply and distribution and sanitary sewage
collection and wastewater treatment system of the City as the same now exists and as it may
hereafter be added to, improved and extended for as long as any of the Bonds are outstanding.
The "System" shall also include any surface or storm water drainage utility of the City if the
Council shall determine by ordinance to create such a utility and combine it with the System.
"Term Bonds" means the Bonds identified as such, if any, in the Sale Resolution and any
Future Parity Bonds identified as Term Bonds in the ordinance authorizing the issuance thereof,
the payment of the principal of which is provided for by a mandatory schedule of deposits of
money equal (in the aggregate) to the full principal amount of such Term Bonds, into the Bond
Fund, and by a mandatory redemption schedule corresponding (as to time and amounts) to such
mandatory schedule of deposits.
Section 2. Compliance with Parity Conditions. The Council hereby finds and
determines, as required by Ordinance No. 2843, as follows:
First, that the Bonds are being issued for the purpose of refunding prior to their maturity
certain outstanding revenue bonds payable out of Gross Revenue;
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Second, that at the time of the adoption of this ordinance and at the time of the issuance
of the Bonds there is not nor will there be any deficiency in the Bond Fund or the Reserve
Account;
Third, this ordinance provides that the principal of and interest on the Bonds are payable
out of the Bond Fund and provides further that payments will be made into the Bond Fund to
satisfy the Sinking Fund Requirements, if any on any Term Bonds, and into the Reserve Account
to satisfy the Reserve Account Requirement, all as required by Section 13 of Ordinance No.
2843; and
Fourth, the Bonds are being issued for the purpose of refunding prior to their maturity
part of the outstanding Parity Bonds, and the issuance of the Bonds will result in a debt service
savings and does not require an increase of more than $5,000 in any fiscal or calendar year for
principal of and interest on the Bonds over and above the amount required in such year for the
principal of and interest on the Refunded Bonds, so in accordance with Section 21.B of
Ordinance No. 2843 no certificate of a Professional Utility Consultant regarding revenues of the
System is required as a condition for the issuance of the Bonds.
The parity conditions contained in Ordinance No. 2843 having been complied with or
assured, the payments required in this ordinance to be made out of the Revenue Fund into the
Bond Fund and Reserve Account to pay and secure the payment of the principal of and interest
on the Bonds shall constitute a lien and charge upon the money in such Revenue Fund equal in
rank with the lien and charge thereon for the payments required to be made into the Bond Fund
to pay and secure the payment of the principal of and interest on the Revolving Fund Loan and
the 1994 Bonds.
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Section 3. Authorization and Description of Bonds. For the purpose of refunding the
Refunded Bonds, the City shall issue its water and wastewater utility revenue refunding bonds in
the aggregate principal amount to be established as provided in Section 18 hereof and in any
event not to exceed $9,600,000 (the "Bonds"). The Bonds shall be designated as the "City of
Port Angeles, Washington, Water and Wastewater Utility Revenue Refunding Bonds, 1998,"
shall be in the denomination of $5,000 each, or integral multiples thereof, provided that no Bond
shall represent more than one maturity, shall be fully registered as to principal and interest, and
shall be numbered separately in such manner and with any additional identification as the Bond
Registrar deems necessary for identification. Interest shall be payable on May 1, 1999, and
semiannually thereafter on the first days of November and May of each year until the Bonds
bearing such interest have been paid or their payment duly provided for. The Bonds shall be
dated as provided in Section 18 hereof and shall mature on November 1 in the years and in the
amounts to be established as provided in Section 18 hereof.
The Bonds will be sold at public sale as provided in this ordinance. The rate or rates of
interest to be borne by the bonds shall be established by the Sale Resolution as provided herein.
Bidders have the option of designating maturities of the Bonds as mandatory redemptions
(payable in such years in such amounts) of Term Bonds maturing in a year or years to be
specified in their bids, as provided in the Notice of Sale. Such provisions, if elected, shall also
be established by the Sale Resolution.
Principal of and interest on the Bonds shall be payable solely from the Bond Fund. The
Bonds are not general obligations of the City or of the State of Washington or any political
subdivision thereof.
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Section 4. Registration, Exchange and Payments.
(a) Registrar/Bond Register. The City hereby adopts the system of registration
specified and approved by the Washington State Finance Committee, which utilizes the fiscal
agencies of the State of Washington in Seattle, Washington, and New York, New York, as
registrar, authenticating agent, paying agent and transfer agent (collectively, the "Bond
Registrar "). The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust
office, sufficient books for the registration and transfer of the Bonds, which shall at all times be
open to inspection by the City. The Bond Registrar is authorized, on behalf of the City, to
authenticate and deliver the Bonds transferred or exchanged in accordance with the provisions of
such Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties
under this ordinance.
The Bond Registrar shall be responsible for its representations contained in the Certificate
of Authentication on the Bonds. The Bond Registrar may become the Registered Owner of
Bonds with the same rights it would have if it were not the Bond Registrar, and to the extent
permitted by law may act as depositary 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 Registered Owners.
(b) Registered Ownership. The City and the Bond Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all
purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the
contrary. Payment of any such Bond shall be made only as described in Section 4(g) hereof, but
such registration may be transferred as herein provided. All such payments made as described in
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Section 4(g) shall be valid and shall satisfy and discharge the liability of the City upon such
Bond to the extent of the amount or amounts so paid. The City and the Bond Registrar shall be
entitled to treat the person in whose name any Bond is registered as the absolute owner thereof
for all purposes of this ordinance and any applicable laws, notwithstanding any notice to the
contrary received by the Bond Registrar or the City.
(c) DTC Acceptance/Letters of Representations. The Bonds initially issued shall be
held in fully immobilized form by DTC acting as depository. To induce DTC to accept the
Bonds as eligible for deposit at DTC, the City shall execute and deliver to DTC a Blanket Issuer
Letter of Representations.
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees with respect to the Bonds in respect of
the accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or
any DTC participant of any amount in respect of the principal of or interest on the Bonds, any
notice which is permitted or required to be given to Registered Owners under this ordinance
(except such notices as shall be required to be given by the City to the Bond Registrar or to
DTC), or any consent given or other action taken by DTC as the Registered Owner. For so long
as any Bonds are held in fully immobilized form hereunder, DTC or its successor depository
shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein
to the Registered Owners shall mean DTC or its nominee and shall not mean the owners of any
beneficial interest in the Bonds.
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If any Bond shall be duly presented for payment and funds have not been duly provided
by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid
principal thereof at the rate stated on such Bond until it is paid.
(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of "Cede & Co.," as
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds of
each series in a denomination corresponding to the total principal therein designated to
mature on such date. Registered ownership of such immobilized Bonds, or any portions
thereof, may not thereafter be transferred except (i) to any successor of DTC or its
nominee, provided that any such successor shall be qualified under any applicable laws to
provide the service proposed to be provided by it; (ii) to any substitute depository
appointed by the Council pursuant to subsection (2) below or such substitute depository's
successor; or (iii) to any person as provided in subsection (4) below.
(2) Upon the resignation of DTC or its successor (or any substitute depository
or its successor) from its functions as depository or a determination by the Council to
discontinue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the Council may hereafter appoint a substitute
depository. Any such substitute depository shall be qualified under any applicable laws
to provided the services proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (i) or (ii) of subsection (1)
above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a
written request on behalf of the Council, issue a single new Bond for each maturity of
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such Bonds then outstanding, registered in the name of such successor or such substitute
depository, or their nominees, as the case may be, all as specified in such written request
of the Council.
(4) In the event that (i) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be
obtained, or (ii) the Council determines that it is in the best interest of the beneficial
owners of any of the Bonds that they be able to obtain such Bonds in the form of bond
certificates, the ownership of Bonds may then be transferred to any person or entity as
herein provided, and the Bonds shall no longer be held in fully immobilized form. The
Council shall deliver a written request to the Bond Registrar, together with a supply of
definitive Bonds, to issue Bonds as herein provided in any authorized denomination.
Upon receipt of all then outstanding Bonds by the Bond Registrar together with a written
request on behalf of the Council to the Bond Registrar, new Bonds shall be issued in such
denominations and registered in the names of such persons as are requested in such
written request.
(e) Transfer or Exchange of Registered Ownership; Change in Denominations. The
registered ownership of any Bond may be transferred or exchanged, but no transfer of any Bond
shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing
on such Bond duly executed by the Registered Owner or such Registered Owner's duly
authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond
Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to
the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the new
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Registered Owner) of the same date, maturity and interest rate and for the same aggregate
principal amount in any authorized denomination, naming as Registered Owner the person or
persons listed as the assignee on the assignment form appearing on the surrendered Bond, in
exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond
Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of
the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar
shall not be obligated to transfer or exchange any Bond during a period beginning at the opening
of business on the 15th day of the month next preceding any interest payment date and ending at
the close of business on such interest payment date, or, in the case of any proposed redemption of
the bonds, after the mailing of notice of the call of such bonds for redemption.
(f)
Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
(g)
Place and Medium of Payment. Both principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. For so long as all Bonds are in
fully immobilized form, payments of principal and interest thereon shall be made as provided in
accordance with the operational arrangements of DTC referred to in the Letter of
Representations. In the event that the Bonds are no longer in fully immobilized form, interest on
the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners appearing on the Bond Register on the 15th day of the month preceding
the interest payment date, and principal of the Bonds shall be payable upon presentation and
surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar.
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Section 5. Redemption; Purchase of Bonds.
(1) Optional Redemption. The Bonds maturing on or after November 1, 2009
are subject to redemption prior to maturity, at the option of the City, on or after November 1,
2008, in whole or in part on any date (and if in part with maturities to be selected by the City and
by lot within a maturity), upon written notice mailed as provided herein, at the prices set forth
below as a percentage of par, plus interest accrued thereon to the date fixed for redemption.
Redemption Date
November 1, 2008 through October 31, 2009
November 1, 2009 through October 31, 2010
November 1, 2010 and thereafter
Price
101.0%
100.5
100.0
(2) Mandatory Redemption. In the event that the successful bidder for the
Bonds designates one or more maturities as Term Bonds, the Sale Resolution will provide for
mandatory redemption of such Term Bonds in accordance with the maturity schedule set forth in
the Notice of Sale.
(3) Partial Redemption; Effect of Redemption. If less than the whole of a
maturity is so called for redemption, the Bond Registrar shall choose by lot the Bonds to be
redeemed. In the case of a Bond of a denomination greater than $5,000, the City shall treat each
such Bond as representing such number of separate Bonds each of the denomination of $5,000 as
is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that
only a portion of the principal sum of a Bond is redeemed, upon surrender of the Bond at the
principal office of the Bond Registrar there shall be issued to the Registered Owner, without
charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the
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owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein
authorized.
On or prior to any redemption date, the City shall deposit with the Bond Registrar an
amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds
which are to be redeemed on that date.
Upon surrender of such Bonds for redemption, such Bonds shall be paid by the Bond
Registrar at the redemption price. Installments of interest due on or prior to the redemption date
shall be payable as herein provided for payment of interest.
(4) Notice of Redemption. Notice of each optional redemption shall be given
not less than 30 nor more than 60 days prior to the date fixed for redemption, by first class mail,
postage prepaid, to the Registered Owner of any Bond to be redeemed at the address appearing
on the Bond Register.
All official notices of redemption shall be dated and shall state: (a) the redemption date,
(b) the redemption price, (c) if less than all outstanding Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal amounts) of the
Bonds to be redeemed, (d) that on the redemption date the redemption price will become due and
payable upon each such Bond or portion thereof called for redemption, and that interest thereon
shall cease to accrue from and after said date, and (e) the place where such Bonds are to be
surrendered for payment of the redemption price, which place of payment shall be the principal
offices of the Bond Registrar.
The requirements of this section shall be deemed to be complied with when official notice
is mailed as herein provided regardless of whether or not it is actually received by the owner of
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any Bond. The Bonds so called for redemption shall, on the date specified in such notice,
become due and payable, and from and after the date so fixed for redemption (unless the City
shall default in the payment of the Bonds so called for redemption), interest on said Bonds so
called for redemption shall cease to accrue.
In addition to the foregoing notice, further notice shall be given as set out below, but no
defect in said further notice nor any failure to give all or any portion of such further notice shall
in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above
prescribed.
1. Each further notice of redemption given hereunder shall contain
the information required above for an official notice of redemption plus (i) the
CUSIP numbers of all Bonds being redeemed; (ii) the date of issue of the Bonds
as originally issued; (iii) the rate of interest borne by each Bond being redeemed;
(iv) the maturity date of each Bond being redeemed; and (v) any other descriptive
information needed to identify accurately the Bonds being redeemed.
2. Each further notice of redemption shall be sent at least 35 days
before the redemption date to Standard & Poor's Ratings Services and Moody's
Investors Service, Inc. in New York, New York, or their business successors.
3. Each further notice of redemption shall be sent at least 30 days
before the redemption date to each NRMSIR or to the MSRB and to the SID, if
any, in accordance with the City's ongoing disclosure undertaking to be set forth
in the Sale Resolution and may be sent at least 35 days before the redemption date
to all registered securities depositories then in the business of holding substantial
amounts of obligations of types comprising the Bonds.
(5)
Purchase of Bonds in Open Market. The City hereby reserves the right
whenever it has any surplus money in the Revenue Fund over and above any amounts necessary
to pay necessary costs of maintaining and operating the System, costs of necessary additions,
improvements and repairs thereto and extensions and replacements thereof when the same are not
to be financed by the issuance of bonds or warrants, all payments required to be made into the
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Bond Fund and Reserve Account therein, all payments required to be made into other funds or
accounts out of the Revenue Fund and all payments required for any other proper purpose in
connection with the operation of the System, to use such surplus money at any time to purchase
any of the Bonds and any Future Parity Bonds in the open market for retirement.
Section 6. Execution of Bonds. The Bonds shall be executed on behalf of the City with
the manual or facsimile signature of the Mayor of the City and attested with the manual or
facsimile signature of the Clerk thereof, and the seal of the City shall be impressed or imprinted
on each of the Bonds. In case any of the officers who shall have signed or attested any of the
Bonds shall cease to be such officer before such Bonds have been actually issued and delivered,
such Bonds shall be valid nevertheless and may be issued by the City with the same effect as
though the persons who had signed or attested such Bonds had not ceased to be such officers.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form set forth
in Section 7 hereof, manually executed by the Bond Registrar, shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be
conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and
delivered hereunder and are entitled to the benefits of this ordinance.
Section 7. Form of Bonds. The Bonds shall be in substantially the following form:
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UNITED STATES OF AMERICA
NO. $9,600,000
STATE OF WASHINGTON
CITY OF PORT ANGELES
WATER AND WASTEWATER REVENUE REFUNDING BOND, 1998
INTEREST RATE:
MATURITY DATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
Dollars
CUSIP NO:
The City of Port Angeles, Washington (the "City "), a municipal corporation of the State
of Washington, for value received hereby promises to pay to the Registered Owner identified
above on the Maturity Date identified above the Principal Amount identified above and to pay
interest thereon from the date hereof, or the most recent date to which interest has been paid or
duly provided for at the Interest Rate set forth above, such interest to be payable semiannually on
the first days of May and November of each year (commencing May 1, 1999) until the maturity
of this bond (or if default should be made in the payment of the principal hereof when the same
shall become due and payable, at the same rate of interest until the payment in full of such
principal sum).
The principal of and interest on this bond are payable solely out of the special fund of the
City known as the "1994 Water and Wastewater Utility Revenue Bond Fund" ( "Bond Fund ").
Both principal of and interest on this bond are payable in lawful money of the United States of
America. For so long as the bonds of this issue are in fully immobilized form, payments of
principal and interest thereon shall be made as provided in accordance with the operational
arrangements of DTC referred to in the Blanket Issuer Letter of Representations from the City to
The Depository Trust Company. In the event that the bonds of this issue are no longer in fully
immobilized form, interest on this bond shall be paid by check or draft mailed to the Registered
Owner at the address appearing on the Bond Register on the fifteenth day of the month preceding
the interest payment date, and principal of this bond shall be payable upon presentation and
surrender of this bond by the Registered Owner at the principal office at the principal office of
the fiscal agency of the State of Washington in either Seattle, Washington, or New York, New
York (collectively the "Bond Registrar ").
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Reference is hereby made to additional provisions of this bond set forth on the reverse
side hereof, and such additional provisions shall for all purposes have the same effect as if set
forth on this space.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance (as hereinafter defined) until the Certificate of
Authentication hereon shall have been manually signed by the Bond Registrar.
It is hereby certified, recited and declared that all acts, conditions and things required by
the Constitution and statutes of the State of Washington to exist, to have happened and to have
been performed precedent to and in the issuance of this bond do exist, have happened and have
been performed in due time, form and manner as prescribed by law, and that the amount of this
bond, together with all other obligations or indebtedness of the City, does not exceed any
constitutional or statutory limitations of indebtedness.
IN WITNESS WHEREOF, the City of Port Angeles, Washington, has caused this bond
to be signed by the manual or facsimile signature of its Mayor, and attested by the manual or
facsimile signature of its City Clerk, and the manual or facsimile seal of the City to be impressed
or imprinted hereon, all as of the 1st day of , 1998.
Attest:
[Manual or Facsimile Signature]
CITY OF PORT ANGELES, WASHINGTON
By [Manual or Facsimile Signature]
City Clerk
(SEAL)
09/11/98
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Mayor
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This bond is one of the bonds described in the within mentioned Bond Ordinance and is
one of the Water and Wastewater Utility Revenue Refunding Bonds, 1998 of the City of Port
Angeles, Washington, dated 1, 1998.
WASHINGTON STATE FISCAL AGENCY,
Bond Registrar
By
Authorized Officer
ADDITIONAL BOND PROVISIONS
This bond is one of a series of bonds issued under authority of Ordinance No.
passed by the City Council on September 15, 1998 and Resolution No. of the City,
(together, the "Bond Ordinance "), for the purpose of refunding certain outstanding water and
wastewater utility revenue bonds of the City.
The City hereby covenants and agrees with the owner of this bond that it will keep and
perform all the covenants of this bond and of the Bond Ordinance. Reference is hereby made to
the Bond Ordinance for the definitions of capitalized terms used herein.
The City does hereby pledge and bind itself to set aside from Gross Revenue and to pay
into the Bond Fund and the accounts created therein the various amounts required by the Bond
Ordinance to be paid into and maintained in such fund and accounts, all within the times
provided by the Bond Ordinance.
To the extent more particularly provided by the Bond Ordinance, the amounts so pledged
to be paid from Gross Revenue into the Bond Fund and accounts therein shall be a lien and
charge thereon equal in rank to the lien and charge upon said Revenue of the amounts required to
pay and secure the payment of a loan to the City from the State of Washington Water Pollution
Control Fund, the City's outstanding Water and Wastewater Utility Revenue and Refunding
Bonds, 1994, and any revenue bonds of the City hereafter issued on a parity with such loan, such
bonds and the bonds of this issue, and superior to all other liens and charges of any kind or
nature, except the Costs of Maintenance and Operation of the System.
The City has further bound itself to maintain the System in good repair, working order
and condition, to operate the same in an efficient manner and at a reasonable cost, and to
establish, maintain and collect rates and charges in each calendar year that will make available,
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for the payment of the principal of and interest on Parity Bonds outstanding as the same shall
become due, Net Revenue in an amount that will be equal to at least 1.25 times Annual Debt
Service for such year (after deducting Assessments actually collected for such year).
The pledge of Gross Revenue and other obligations of the City under the Bond Ordinance
may be discharged at or prior to the maturity or redemption of the bonds of this issue upon the
making of provision for the payment thereof on the terms and conditions set forth in the Bond
Ordinance.
Reference is made to the Bond Ordinance for a description of the Bond Fund and the
covenants and declarations of the City and other terms and conditions upon which the bonds
authorized thereby have been issued and other bonds ranking on a parity therewith may hereafter
be issued and outstanding.
This bond is a special limited obligation of the City and is not an obligation of the State
of Washington or any political subdivision thereof other than the City, and neither the full faith
and credit nor the taxing power of the City or the State of Washington is pledged to the payment
of this bond.
The bonds maturing on or after November 1, 2009 are subject to redemption prior to
maturity, at the option of the City, on or after November 1, 2008, in whole or in part on any date,
(and if in part within maturities to be selected by the City and by lot within a maturity) at the
prices set forth below as a percentage of par, together with the interest accrued thereon to the date
fixed for redemption.
Redemption Date
November 1, 2008 through October 31, 2009
November 1, 2009 through October 31, 2010
November 1, 2010 and thereafter
Price
101.0%
100.5%
100.0%
[If not redeemed under the optional redemption provisions set forth above, the bonds
maturing on November 1, 20_ shall be redeemed by lot (in such manner as the Bond Registrar
shall determine) or paid at maturity, at par plus accrued interest, on 1 in years and
amounts as follows:
* Final Maturity]
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Years Amounts
- 24 -
Written notice of redemption shall be given by first class mail, postage prepaid, not less
than 30 days nor more than 60 days before the redemption date to the Registered Owners of the
bonds to be redeemed in whole or in part at their last addresses, if any, appearing on the Bond
Register, but failure to receive any such notice shall not affect the validity of the proceedings for
redemption of bonds. Notice of redemption having been given by mailing, as aforesaid, the
bonds so called for redemption shall on the date specified in such notice become due and payable
at the applicable redemption price herein provided, and from and after the date so fixed for
redemption (unless the City shall default in the payment of the bonds so called for redemption)
interest on said bonds so called for redemption shall cease to accrue.
Portions of the principal sum of this bond in increments of $5,000 or any integral
multiple thereof may be redeemed, and if less than all of the principal sum hereof is to be
redeemed, in such case upon the surrender of this bond at the principal office of the Bond
Registrar, there shall be issued to the Registered Owner, without charge therefor, for the then
unredeemed balance of the principal sum hereof, fully registered bonds of like series, maturity
and interest rate in any of the denominations authorized by the Bond Ordinance.
Bonds are interchangeable for bonds of any authorized denomination of equal aggregate
principal amount and of the same interest rate and maturity upon presentation and surrender to
the Bond Registrar.
The Bond Registrar shall not be required to issue, register, transfer or exchange any of the
bonds during a period beginning at the opening of business on the 15th day of the month next
preceding any interest payment date and ending at the close of business on such interest payment
date.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF
TRANSFEREE
(Please print or typewrite name and address, including zip code, of Transferee)
the within bond and does hereby irrevocably constitute and appoint
as attorney -in -fact to transfer
said bond on the books kept for registration thereof with full power of substitution in the
premises.
09/11/98
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DATED:
SIGNATURE GUARANTEED:
NOTICE: Signature(s) must be
guaranteed pursuant to law.
NOTE: The signature on this Assignment
must correspond with the name of the
Registered Owner as it appears upon the
face of the within bond in every particular,
without alteration or enlargement or any
change whatever.
Section 8. Application of Bond Proceeds; Advance Refunding Account. There is
hereby authorized and established a special account of the City to be maintained with the Escrow
Agent (as hereinafter defined) to be known as the "City of Port Angeles 1998 Water and
Wastewater Utility Revenue Bond Advance Refunding Account" (the "Advance Refunding
Account "), which account shall be drawn upon for the sole purpose of paying the principal of and
interest on the Refunded Bonds and of paying costs related to issuance of the Bonds and
refunding the Refunded Bonds. The proceeds of sale of the Bonds (exclusive of accrued interest
thereon, which shall be paid into the Bond Fund) shall be deposited into the Advance Refunding
Account to refund the Refunded Bonds, as authorized by Ordinance No. 2843, and to pay costs
of issuance of the Bonds.
The call for redemption of the Refunded Bonds shall be set forth and the plan of
refunding the Refunded Bonds shall be ratified and confirmed in the Sale Resolution.
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Money in the Advance Refunding Account shall be used immediately upon receipt
thereof to defease the Refunded Bonds and discharge the other obligations of the City relating
thereto under Ordinance No. 2843 of the City, by providing for the payment of the principal of
and interest on the Refunded Bonds as set forth below. The City shall defease such bonds and
discharge such obligations by the use of the money in the Advance Refunding Account to
purchase certain "Government Obligations" as such obligations are defined in Chapter 39.53
RCW as now or hereafter amended (which obligations so purchased, are herein called "Acquired
Obligations "), bearing such interest and maturing as to principal and interest in such amounts and
at such times which, together with any necessary beginning cash balance, will provide for the
payment of:
(a) The interest on the Refunded Bonds due and payable on and prior to
November 1, 2004; and
(b) The redemption price (101% of the principal amount) payable on
November 1, 2004, of the Refunded Bonds.
Such Acquired Obligations shall be purchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
In order to carry out the advance refunding and defeasance of the Refunded Bonds, the
Finance Director is hereby authorized to appoint as escrow agent a bank or trust company
qualified by law to perform the duties described herein (the "Escrow Agent "). Any beginning
cash balance and the Acquired Obligations shall be irrevocably deposited with the Escrow Agent
in an amount sufficient to defease and redeem the Refunded Bonds in accordance with this
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Section 8 and the Sale Resolution. Any amounts described in subparagraphs (a) and (b) of this
Section 8 that are not provided for in full by such beginning cash balance and the purchase and
deposit of the Acquired Obligations described in this section shall be provided for by the
irrevocable deposit of the necessary amount out of the proceeds of sale of the Bonds or any other
money of the City legally available therefor with the Escrow Agent. The proceeds of the Bonds
remaining in the Advance Refunding Account after acquisition of the Acquired Obligations and
provision for the necessary beginning cash balance shall be utilized to pay expenses of the
acquisition and safekeeping of the Acquired Obligations and the costs of issuing the Bonds. The
City may, from time to time, transfer, or cause to be transferred, from the Advance Refunding
Account any money not thereafter required for the purposes set forth in subparagraphs (a) and (b)
above, subject to verification in writing by an independent certified public accountant that such
transfer will not result in inadequate funds being available to make the required payments
therefrom. The City reserves the right to substitute other securities for the Acquired Obligations
in the event it may do so pursuant to section 148 of the Code and applicable regulations
thereunder, upon compliance with the conditions set forth in the Escrow Agreement.
The City will take such actions as are found necessary to see that all necessary and proper
fees, compensation and expenses of the Escrow Agent shall be paid when due. The proper
officers and agents of the City are directed to obtain from the Escrow Agent an agreement setting
forth the duties, obligations and responsibilities of the Escrow Agent in connection with the
redemption and retirement of the Refunded Bonds as provided herein and stating that such
provisions for the payment of the fees, compensation and expenses of such Escrow Agent are
satisfactory to it. Such agreement shall be in substantially the form set forth in Exhibit A
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attached to this ordinance and incorporated herein by this reference. The Mayor or his designee
is authorized and directed to execute and deliver such agreement on behalf of the City.
In the Sale Resolution, the Council shall set forth its findings of savings and defeasance
with respect to the Refunded Bonds.
Section 9. Rate Stabilization Fund. Pursuant to Section 13 of Ordinance No. 2843, a
special fund of the City designated the "Water and Wastewater Rate Stabilization Fund" (the
"Rate Stabilization Fund ") has heretofore been established in anticipation of future increases in
revenue requirements of the System. In accordance with the provisions of Section 14 of
Ordinance No. 2843 and Section 10 of this ordinance, the City may from time to time
appropriate or budget amounts in the Revenue Fund for deposit in the Rate Stabilization Fund
and may from time to time withdraw amounts therefrom for deposit in the Revenue Fund to
prevent or mitigate water and wastewater rate increases or for other lawful purposes of the City
related to the System.
Section 10. Revenue Fund. The City hereby obligates and binds itself to pay all Gross
Revenue as collected into the Revenue Fund. The money in the Revenue Fund shall be held
separate and apart from all other funds and accounts of the City. The Gross Revenue deposited
in the Revenue Fund shall be used only for the following purposes and in the following order of
priority:
FIRST, to pay the Costs of Maintenance and Operation and to maintain a balance
in the Revenue Fund sufficient in amount to enable the City to continuously meet Costs of
Maintenance and Operation on a current basis;
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Expenses to be paid at Closing:
Description
APPENDIX C
Payee Amount
Escrow Verification Fee $
Escrow Agent Fee
Bond Counsel Fee Preston Gates & Ellis LLP
Financial Advisor
Official Statement Printing
and Mailing
Rating Agency - -New Bonds
Rating Agency -- Refunded
Bonds
Total $
Appendix C - Page 1
DOTOOK.DOC 98!09/11
SECOND, to make all payments required to be made into the Bond Fund to pay
the interest on any Parity Bonds;
THIRD, to make all payments required to be made into the Bond Fund to pay the
maturing principal of any Serial Bonds and to make all payments required to be made into the
Bond Fund to satisfy the Sinking Fund Requirement;
FOURTH, to make all payments required to be made pursuant to a reimbursement
agreement or agreements (or other equivalent documents) in connection with Qualified Insurance
or a Qualified Letter of Credit; provided that if there is not sufficient money to make all
payments under reimbursement agreements the payments will be made on a pro rata basis;
FIFTH, to make all payments required to be made into the Reserve Account to
secure the payment of the principal of and interest on outstanding Parity Bonds;
SIXTH, to make all payments required by the DOE Loan Agreement to be made
into the Emergency Repair and Replacement Fund of the System;
SEVENTH, to make all payments required to be made into any revenue bond
redemption fund, revenue warrant redemption fund, debt service account, reserve account or
bond retirement account created to pay and secure the payment of the principal of and interest on
any revenue bonds, or revenue warrants or other revenue obligations of the City having a lien
upon Gross Revenue junior and inferior to the lien thereon for the payment of the principal of
and interest on the Parity Bonds; and
EIGHTH, to retire by redemption or purchase in the open market any outstanding
water and wastewater revenue bonds, water and wastewater revenue warrants or other water and
wastewater revenue obligations of the City, to make necessary additions, betterments,
09/11 /98
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improvements and repairs to or extensions and replacements of the System, to make deposits into
the Rate Stabilization Fund, or for any other lawful City purposes.
Section 11. Bond Fund. Pursuant to Section 15 of Ordinance No. 2843, there has
heretofore been created in the office of the City Treasurer a fund of the City known as the "1994
Water and Wastewater Utility Revenue Bond Fund" (the "Bond Fund "), which fund is to be
drawn upon for the sole purpose of paying the principal of, premium if any, and interest on any
Parity Bonds. The money in the Bond Fund shall be kept separate and apart from all other funds
and accounts of the City.
A. Debt Service Account. A special account known as the Debt Service Account has
been created in the Bond Fund for the purpose of paying the principal of, premium, if any, and
interest on the Parity Bonds.
As long as any of the Bonds remain outstanding, the City hereby irrevocably obligates
and binds itself to set aside and pay from the Revenue Fund into the Debt Service Account, on or
before the date due, those amounts necessary, together with Gross Revenue collected and
deposited and such other money as is on hand and available therefor in the Debt Service
Account, to pay the interest or principal and interest next coming due on the outstanding Bonds.
The City covenants and agrees that in the event it issues any future Parity Bonds that are
Term Bonds, it will provide in each ordinance authorizing the issuance of the same for annual
payments to be made from the Revenue Fund into the Debt Service Account sufficient together
with Gross Revenue collected and deposited and such other money as is on hand and available
therefor in such account to amortize the principal of future Parity Bonds which are Term Bonds
on or before the maturity date thereof.
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B. Reserve Account. A Reserve Account has been created in the Bond Fund for the
purpose of securing the payment of the principal of and interest on the Bonds and any Future
Parity Bonds. The City hereby covenants and agrees that it will pay into the Reserve Account
from Bond proceeds a sum equal to the Reserve Account Requirement for the Bonds or will
satisfy such requirement by obtaining Qualified Insurance.
The City further covenants and agrees that in the event it issues any Future Parity Bonds
it will provide in each ordinance authorizing the issuance of such Future Parity Bonds that on or
prior to the date of issuance of such Future Parity Bonds money shall be deposited into the
Reserve Account, from proceeds of such Bonds or other funds available therefor, so that the total
amount of money in the Reserve Account will at least equal the Reserve Account Requirement.
The City may substitute Qualified Insurance or a Qualified Letter of Credit for amounts required
to be deposited into the Reserve Account. Such Qualified Letter of Credit or Qualified Insurance
shall not be cancellable on less than 5 years notice. In the event of any cancellation, the Reserve
Account shall be funded in accordance with the provisions of this section providing for payment
in the event of a deficiency therein, as if the Parity Bonds that remain outstanding had been
issued on the date of such notice of cancellation.
The City further covenants and agrees that when the required deposits have been made
into the Reserve Account, it will at all times maintain therein an amount at least equal to the
Reserve Account Requirement, as redetermined in each calendar year with respect to the bonds
secured by such Reserve Account. Whenever there is a sufficient amount in the Bond Fund,
including all accounts therein, to pay the principal of, premium, if any, and interest on all
outstanding Parity Bonds, the money in the Reserve Account may be used to pay the principal of,
09/11/98
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premium, if any, and interest on the Parity Bonds secured thereby. Money in the Reserve
Account may also be withdrawn to redeem and retire, and to pay the premium, if any, and
interest due to such date of redemption, on the outstanding Parity Bonds secured by such Reserve
Account, as long as the money remaining on deposit in such Reserve Account is at least equal to
the Reserve Account Requirement determined with respect to the Parity Bonds then outstanding.
In the event the Bonds outstanding are ever refunded, the money set aside in the Reserve
Account to secure the payment thereof may be used to retire Bonds or may be transferred to any
other reserve account that may be created to secure the payment of any bonds issued to refund
the Bonds.
In the event there shall be a deficiency in the Debt Service Account to meet maturing
installments of either interest on or principal of and interest on the outstanding Parity Bonds
payable out of such Account, such deficiency shall be made up from the Reserve Account by the
withdrawal of money therefrom and by the sale or redemption of obligations held in the Reserve
Account, if necessary, in such amounts as will provide cash in the Reserve Account sufficient to
make up any such deficiency, and if a deficiency still exists immediately prior to an interest
payment date and after the withdrawal of cash, the City shall then draw from any Qualified Letter
of Credit, Qualified Insurance, or other equivalent credit facility in sufficient amount to make up
the deficiency. Such draw shall be made at such times and under such conditions as the
agreement for such Qualified Letter of Credit or such Qualified Insurance shall provide. If more
than one Qualified Letter of Credit or Qualified Insurance is available, draws shall be made
ratably thereon to make up the deficiency. Any deficiency created in the Reserve Account by
reason of any such withdrawal shall then be made up from money in the Revenue Fund first
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available after making the payments required to be made under paragraphs "FIRST" through
"FOURTH" of Section 10 of this ordinance.
C. Lien of Bond Fund. The Bonds, together with the interest thereon, shall be
payable from Gross Revenue, and such Gross Revenue is hereby pledged and set aside out of the
Revenue Fund into the Bond Fund. Said amounts so pledged are hereby declared to be a lien and
charge upon Gross Revenue and the money in the Revenue Fund equal to the lien and charge
thereon to secure and pay the principal of and interest on the Revolving Fund Loan and any
Future Parity Bonds and superior to all other charges of any kind or nature, except the Costs of
Maintenance and Operation.
D. Investment of Money in Bond Fund. All money in the Debt Service Account or
Reserve Account may be kept in cash or invested in Permitted Investments maturing not later
than the last maturity of the Bonds outstanding at the time of such purchase. Interest earned on
or profits made from the sale of such investments shall be deposited in and become a part of the
Revenue Fund.
Section 12. Covenants and Agreements. The City hereby covenants with the owner of
each of the Bonds for as long as any of the same remain outstanding as follows:
A. Rates and Charges. The City covenants that it will establish, maintain and
collect lawful rates and charges for the use of the services and facilities of the System, and shall
adjust such rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient (a) to pay all Costs of
Maintenance and Operations and to pay all taxes, assessments or other governmental
charges lawfully imposed on the System or the revenue therefrom or payments in lieu
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thereof and any and all other amounts that the City may now be and hereafter become
obligated to pay from Gross Revenue by law or contract, including payments other than
debt service required under the DOE Loan Agreement; and, together with Assessments
actually collected, (b) to pay the principal of and interest on all outstanding Parity Bonds
as and when the same become due and payable, to make all payments required to be made
into the Bond Fund to satisfy the Sinking Fund Requirement, and to make when due all
payments required to be made into the Reserve Account.
(2) The Net Revenue in each calendar year will equal at least
1.25 times Annual Debt Service for such year (after deducting Assessments actually
collected for such year). For the purpose of meeting the requirement of this paragraph
there may be added to Net Revenue for any calendar year any amount withdrawn from
the Rate Stabilization Fund and deposited in the Revenue Fund. There shall be subtracted
from Net Revenue for any calendar year any amounts in such year withdrawn from the
Revenue Fund and deposited into the Rate Stabilization Fund in such calendar year.
B. Maintenance of System. The City covenants that it will at all times keep
and maintain the System in good repair, working order and condition, and will at all times
operate the same and the business in connection therewith in an efficient manner and at a
reasonable cost.
C. Sale or Disposition of the System. The City will not sell or otherwise
dispose of the System in its entirety unless simultaneously with such sale or other disposition,
provision is made for the payment into the Bond Fund of cash or "Government Obligations," as
now or hereafter defined in RCW Chapter 39.53, as amended, or its successor statute, if any,
09/11/98
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sufficient together with interest to be earned thereon to pay the principal of and interest on the
then outstanding Parity Bonds, nor will it sell or otherwise dispose of any part of the useful
operating properties of the System unless such facilities are replaced or provision is made for
payment into the Bond Fund of the greater of:
(1) An amount that will be in the same proportion to the net amount of
Parity Bonds then outstanding (defined as the total amount of the Parity Bonds less the
amount of cash and investments in the Bond Fund and accounts therein) that the Net
Revenue from the portion of the System sold or disposed of for the preceding year bears
to the total Net Revenue for such period; or
(2) An amount that will be in the same proportion to the net principal
amount of Parity Bonds then outstanding that the book value of the part of the System
sold or disposed of bears to the book value of the entire System immediately prior to such
sale or disposition.
The proceeds of any such sale or disposition of a portion of the properties of the System
(to the extent required above) shall be paid into the Bond Fund.
Notwithstanding any other provision of this subsection, the City may sell or otherwise
dispose of any of the works, plant, properties and facilities of the System or any real or personal
property comprising a part of the same with a value less than 2% of the net utility plant of the
System or 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 in such operation, without
making any deposit into the Bond Fund.
osn 1 r98
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D. Collection of Assessments. The City shall promptly collect all
Assessments levied in any utility local improvement district now or hereafter created to secure
the payment of the principal of and interest on the Parity Bonds and shall pay the same into the
Bond Fund without allocation of such Assessments to any particular series of Parity Bonds. It is
hereby provided further, however, that nothing in this ordinance or in this subsection shall be
construed to prohibit the City from issuing revenue bonds having a lien on Gross Revenue junior
to the lien on such revenue for the payment of the principal of and interest on Parity Bonds and
pledging as security for the payments of such junior lien bonds assessments levied in any utility
local improvement district that may have been created to pay part or all the cost of improvements
to the System for which such junior lien revenue bonds were specifically issued.
E. Books and Accounts. The City covenants that it will maintain complete
books and records relating to the operation of the System and its financial affairs, and will cause
such books and records to be audited annually, and cause to be prepared an annual financial and
operating statement, said statement to be mailed to any owner of Parity Bonds upon request.
F. Insurance. The City covenants that it will carry fire and extended
coverage insurance on the System as is ordinarily carried on the property of similar public
utilities by other municipal corporations engaged in the operation of the same, to the full
insurable value thereof, and will also carry adequate public liability insurance and other kinds of
insurance as under good practices are ordinarily carried on the properties of similar public
utilities by private companies engaged in the operation of the same; provided, however, that the
City may if deemed necessary and advisable by the Council, institute or continue a self - insurance
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program with respect to any or all of the aforementioned risks. The premiums paid for all such
insurance shall be regarded and paid as a Cost of Maintenance and Operation.
G. Delinquencies. The City covenants that it will promptly collect all service
charges and Assessments, determine in a timely manner all delinquencies, and take all necessary
legal action to enforce collection of such delinquencies.
H. No Free Service. Except as permitted by law, the City will not furnish any
service of the System to any customer whatsoever free of charge.
Section 13. Tax Covenant. The City will not make any use of the proceeds of the
Bonds or any other money or obligations held under this ordinance for any purpose, nor shall the
City take any other action, that would cause any Bond to be (i) an "arbitrage bond" within the
meaning of Section 148 of the Code and the applicable regulations thereunder, or (ii) a "private
activity bond" under Section 141 of the Code and the applicable regulations thereunder.
The City hereby designates the Bonds as "qualified tax- exempt obligations" under
Section 265(b)(3) of the Code for banks, thrift institutions and other financial institutions. The
City does not expect to issue more than $10,000,000 of "qualified tax- exempt obligations"
during 1998.
Section 14. Arbitrage Rebate. The City covenants and agrees to pay the Rebate
Amount, if any, to the United States of America at the times and in the amounts necessary to
meet the requirements of the Code to maintain the federal income tax exemption for interest
payments on the Bonds, in accordance with the Arbitrage and Tax Certification.
Section 15. Adequacy of Revenues. The Council hereby declares that in fixing the
amounts to be paid into the Bond Fund as hereinbefore provided it has exercised due regard for
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the Costs of Maintenance and Operation and has not obligated the City to set aside and pay into
the Bond Fund a greater amount of money in the Revenue Fund than in its judgment will be
available over and above such Costs of Maintenance and Operation.
Section 16. Defeasance. In the event that money and/or Government Obligations (as
defined in Chapter 39.53 RCW, as amended, or its successor statute), maturing at such time or
times and bearing interest to be earned thereon in amounts (together with such money, if
necessary) sufficient to redeem and retire the Bonds or any of them in accordance with their
terms are set aside in a special account to effect such redemption and retirement and such money
and the principal of and interest on such Government Obligations are irrevocably set aside and
pledged for such purpose, then no further payments need be made into the Bond Fund for the
payment of the principal of and interest on the Bonds so provided for, and the owners of such
Bonds shall cease to be entitled to any lien, benefit or security of this ordinance except for the
right to receive the money so set aside and pledged, and such Bonds shall be deemed not to be
outstanding hereunder. Within 30 days of any defeasance of Bonds, the City shall provide notice
of defeasance of Bonds to registered owners and to each NRMSIR and SID, if any, in accordance
with Section 20 hereof.
Section 17. Issuance of Future Parity Bonds. The City hereby further covenants and
agrees with the owners of the Bonds for as long as any of the same remain outstanding as
follows:
A. That it will not issue any bonds with a lien on Gross Revenue superior to
the lien on such revenues of the Bonds. The City may issue Future Parity Bonds for:
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First, the purpose of acquiring, constructing and installing additions and improvements to and
extensions of, acquiring necessary equipment for, or making necessary replacements or repairs
and capital improvements to the System; or
Second, the purpose of refunding or purchasing and retiring at or prior to their
maturity any outstanding revenue bonds or other obligations payable out of Gross Revenue;
and to pledge that payments be made into the Bond Fund for the payment of the principal thereof
and interest thereon out of the Revenue Fund sufficient to pay the principal of and interest on
such Future Parity Bonds and to maintain the reserves required therefor, which such payments
may rank equally with the payments out of such Revenue Fund into the Bond Fund and the
Reserve Account to pay and secure the payment of the principal of and interest on any Parity
Bonds then outstanding, upon compliance with the following conditions:
(1) That at the time of the issuance of such Future Parity Bonds there
is no deficiency in the Bond Fund and the Reserve Account.
(2) If there are special assessments levied in any utility local
improvement district in which additions and improvements to and extensions of the
System will be constructed from the proceeds of such Future Parity Bonds, the ordinance
authorizing such Future Parity Bonds shall require that such special assessments be paid
into the Bond Fund.
(3) If there are special assessments pledged to be paid into a warrant or
bond redemption fund for revenue bonds or warrants being refunded by Future Parity
Bonds, the ordinance authorizing such Future Parity Bonds shall require such special
assessments to be used for the refunding or paid into the Bond Fund.
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(4) The principal of and interest on the Future Parity Bonds shall be
payable out of the Bond Fund, and the ordinance authorizing their issuance shall further
provide for payments into the Bond Fund to satisfy the Sinking Fund Requirement and
payments into the Reserve Account to satisfy the Reserve Account Requirement, all as
required by Section 11 of this ordinance.
(5)
Prior to the delivery of any Future Parity Bonds, the City shall
have on file in the office of the City Clerk a certificate of a Professional Utility
Consultant showing: that the Net Revenue determined and adjusted as hereafter provided
for each calendar or fiscal year after the issuance of such Future Parity Bonds (the
"Adjusted Net Revenue ") will equal at least 1.25 times the Annual Debt Service (after
deducting Assessments, allocated to the years in which they would be received if the
unpaid balance of each assessment roll were paid in the remaining number of installments
with interest on the declining balance at the times and at the rate provided in the
ordinance confirming the assessment roll) for each such calendar or fiscal year for all
Parity Bonds plus the Future Parity Bonds proposed to be issued.
The Adjusted Net Revenue shall be the Net Revenue for a period of any 12
consecutive months out of the 24 months immediately preceding the date of delivery of such
proposed Future Parity Bonds as adjusted by such Professional Utility Consultant to take into
consideration changes in Net Revenue estimated to occur under the following conditions for each
year after such delivery for so long as any Parity Bonds, including the Future Parity Bonds
proposed to be issued, shall be outstanding:
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(i) The additional Net Revenue that would have been received if any change
in rates and charges adopted prior to the date of such certificate and subsequent to the
beginning of such 12 -month period, had been in force during the full 12 -month period;
(ii) The additional Net Revenue that would have been received if any facility
of the System that became fully operational after the beginning of such 12 -month period
had been so operating for the entire period; and
(iii) The additional Net Revenue estimated by such Professional Utility
Consultant to be received as a result of any additions, betterments and improvements to
and extensions of any facilities of the System that are (a) under construction at the time of
such certificate or (b) will be constructed from the proceeds of the Future Parity Bonds to
be issued.
Such Professional Utility Consultant may rely upon, and his or her certificate shall have
attached thereto, financial statements of the System certified by the City Treasurer showing
income and expenses for the period upon which the same is based.
The certificate of such Professional Utility Consultant shall be conclusive and the only
evidence required to show compliance with the provisions and requirements of this
subsection (5).
B. Notwithstanding the foregoing requirement, if Future Parity Bonds are to be
issued for the purpose of refunding at or prior to their maturity any part or all of the then
outstanding Parity Bonds and the issuance of such refunding Future Parity Bonds will result in a
debt service savings and does not require an increase of more than $5,000 in any fiscal or
calendar year for principal of and interest on such refunding Future Parity Bonds over and above
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the amount required in such year for the principal of and interest on the bonds being refunded
thereby, the condition stated in subsection A(5) of this section need not be met.
C. Nothing herein contained shall prevent the City from issuing any revenue
bonds, warrants or other obligations that are a charge upon the money in the Revenue Fund
junior or inferior to the payments required by this ordinance to be made into the Bond Fund and
the Reserve Account.
Section 18. Public Sale of Bonds.
The Bonds shall be sold by public sale at 10 o'clock A.M., Seattle time, on October 6,
1998, or at such other time and date as the Finance Director shall direct. The sale shall be
conducted substantially in accordance with the provisions of this Section 18 and the Notice of
Bond Sale.
The Financial Advisor and Finance Director are hereby authorized and directed to prepare
an official Notice of Bond Sale, which Notice shall establish the date, principal amounts, and
maturity schedule for the Bonds and other terms of the Bonds consistent with this ordinance, so
long as the aggregate principal amount of the Bonds does not exceed $9,600,000. The Notice
shall be ratified and confirmed by the Sale Resolution. The official Notice of Sale or an abridged
form thereof shall be published in such newspapers or financial journals as may be deemed
desirable or appropriate by the Financial Advisor to the City.
The Bonds shall be sold at a price not less than 98% of the principal amount thereof plus
accrued interest to the date of delivery and the bids shall be for no less than all of the Bonds. The
Bonds shall be sold to the bidder offering to purchase them at the lowest true interest cost to the
City.
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Bids for the purchase of the Bonds shall be received on behalf of the City by the
Financial Advisor at the offices of Preston Gates & Ellis LLP, bond counsel to the City, located at
701 Fifth Avenue (Floor 50), Seattle, Washington, until the time set forth above, whereupon said
bids shall be opened, read and mathematically verified. Such bids shall then be considered and
acted upon by the Council in an open public meeting. The Council reserves the right to reject
any and all bids for the Bonds. The Council by the Sale Resolution shall accept a bid for the
Bonds and establish the date, principal amount, maturity schedule, interest rates, and other terms
of the Bonds, call the Refunded Bonds for redemption and ratify and confirm the plan of
refunding the Refunded Bonds.
All bids shall be accompanied by surety bond or cashier's or certified check, as a good
faith deposit, made payable to the order of the City, in an amount to be determined by the
Finance Director in consultation with the Financial Advisor. The good faith check or surety
bond of the successful bidder shall be security for the performance of its bid and shall be held as
liquidated damages in case the successful bidder fails to take up and pay for the Bonds within 45
days if tendered for delivery.
The City reserves the right to waive any irregularity or informality in any bid.
Following the sale of the Bonds, the City shall cause definitive Bonds to be prepared,
executed and delivered, which Bonds shall be lithographed or printed with engraved or
lithographed borders.
The proper City officials are hereby authorized and directed to do everything necessary
for the prompt issuance, execution and delivery of the Bonds to the successful bidder and for the
proper use and application of the proceeds of such sale.
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Section 19. Preparation of Preliminary Official Statement. The Financial Advisor
and Finance Director are hereby authorized to compile the materials necessary and prepare the
Preliminary Official Statement in conjunction with the offer of the Bonds. The Council will
consider and be prepared to deem the Preliminary Official Statement "final," pursuant to
Securities and Exchange Commission Rule 15c2 -12, in the Sale Resolution.
Section 20. Undertaking to Provide Ongoing Disclosure. The City will provide for
compliance with Section b(5) of the Rule by committing to a written undertaking in the Bond
Sale Resolution.
Section 21. Municipal Bond Insurance. In the Sale Resolution, the Council may
provide for the Bonds to be insured by a municipal bond insurance company under terms and
conditions to be set forth therein.
Section 22. Supplements and Amendments.
A. The Council from time to time and at any time may adopt an ordinance or
ordinances supplemental hereof, which ordinance or ordinances thereafter shall become a part of
this ordinance, for any one or more or all of the following purposes:
(1) To add to the covenants and agreements of the City in this ordinance other
covenants and agreements thereafter to be observed, which shall not adversely affect the
interests of the owners of any Bonds or any Parity Bonds in any material respect, or to
surrender any right or power herein reserved to or conferred upon the City.
(2) To make such provisions for the purpose of curing any ambiguities or of
curing, correcting or supplementing any defective provision contained in this ordinance in
regard to such matters or questions as the Council may deem necessary or desirable and
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not inconsistent with this ordinance and which shall not adversely affect the interests of
the owners of any Bonds or any Parity Bonds in any material respect.
(3) To amend or supplement any provision contained in this ordinance for the
purpose of obtaining or maintaining a rating on the Bonds so long as such amendment or
supplement is not inconsistent with this ordinance and will not adversely affect the
interests of the owners of any Bonds or any Parity Bonds in any material respect.
Any such supplemental ordinance of the Council may be adopted without the consent of
the owners of any Bonds at any time outstanding, notwithstanding any of the provisions of
subsection B of this section; provided, however, that the City shall obtain an opinion of
nationally recognized bond counsel to the effect that such supplemental ordinance complies with
this subsection A and will not adversely affect the interests of the owners of any Bonds or any
Parity Bonds in any material respect.
B. With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bonds at the time outstanding, the Council may adopt an ordinance or
ordinances supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this ordinance or of any supplemental ordinance;
provided, however, that no such supplemental ordinance shall:
(1) Extend the fixed maturity of any Parity Bonds, or reduce the rate of
interest thereon, or extend the time of payments of interest from their due date, or reduce
the amount of the principal thereof, or reduce any premium payable on the redemption
thereof, without the consent of the owner of each bond so affected; or
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(2) Reduce the aforesaid percentage of bond owners required to approve any
such supplemental ordinance, without the consent of the owners of all of the Parity Bonds
then outstanding.
It shall not be necessary for the consent of bond owners under this subsection B to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof.
C. Upon the adoption of any supplemental ordinance pursuant to the provisions of
this section, this ordinance shall be deemed to be modified and amended in accordance therewith,
and the respective rights, duties and obligations of the City under this ordinance and all owners
of Bonds outstanding hereunder shall thereafter be determined, exercised and enforced
thereunder, subject in all respects to such modification and amendments, and all the terms and
conditions of any such supplemental ordinance shall be deemed to be part of the terms and
conditions of this ordinance for any and all purposes.
Section 23. Lost or Destroyed Bonds. In case any Bonds shall be lost, stolen or
destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount,
date and tenor to the Registered Owner thereof upon the owner paying the expenses and charges
of the Bond Registrar and the City in connection therewith and upon his or her filing with the
Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were actually
lost, stolen or destroyed and of his or her ownership thereof, and upon furnishing the City and the
Bond Registrar with indemnity satisfactory to both.
Section 24. Severability. If any one or more of the covenants and agreements provided
in this ordinance to be performed on the part of the City shall be declared by any court of
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competent jurisdiction 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 any Bonds.
Section 25. Effective Date. This ordinance shall become effective five days from and
after its passage, approval and publication.
PASSED by the City Council of the City of Port Angeles, Washington, at a regular
meeting of said Council held this 15th day of September, 1998.
CITY OF PORT ANGELES, WASHINGTON
Attest:
By
By
Mayor
Cit ler
(SEAL)
Published September 20, 1998
(By Summary)
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EXHIBIT "A"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into as of the day of
, 1998 (the "Agreement "), by and between the City of Port Angeles,
Washington (the "City "), and , Washington
(the "Escrow Agent ");
WITNESSETH:
WHEREAS, the City, pursuant to Ordinance No. 2843 of the City, passed on October 18,
1994, issued and sold its $10,000,000 Water and Wastewater Utility Revenue and Refunding
Bonds, 1994 (the "1994 Bonds "); and
WHEREAS, the City by Ordinance No. , passed on September 15, 1998 and
Resolution No. of the City Council, adopted on , 1998 (together, the "Bond
Ordinance "), has determined to refund the outstanding 1994 Bonds maturing on and after
November 1, 2005 (the "Refunded Bonds "), by the issuance of its Water and Wastewater Utility
Revenue Refunding Bonds, 1998 (the "Refunding Bonds "); and
WHEREAS, the Escrow Agent has reviewed the Bond Ordinance and this
Agreement, and is willing to serve as Escrow Agent hereunder; and
WHEREAS, , , Certified Public Accountants, of
Seattle, Washington, have prepared a verification report dated , 1998 (the
"Verification Report") relating to the source and use of funds available to accomplish the
refunding of the Refunded Bonds, the investment of such funds and the adequacy of such funds
and investments to provide for the payment of the debt service due on the Refunded Bonds; and
WHEREAS, the City by the Bond Ordinance has duly authorized the execution and
delivery of this Agreement and has designated the Refunded Bonds for redemption prior to their
scheduled maturity dates; and
WHEREAS, the City desires that, concurrently with the delivery of the Refunding Bonds
to the purchasers thereof, the proceeds of the Refunding Bonds, together with certain other
available funds of the County, shall be applied to purchase certain direct obligations of the
United States of America hereinafter defined as the "Escrowed Securities" for deposit to the
credit of the Refunding Account created pursuant to the terms of this Agreement and to establish
a beginning cash balance (if needed) in such Refunding Account; and
Exhibit "A" - Page 1
WHEREAS, the Escrowed Securities shall mature and the interest thereon shall be
payable at such times and in such amounts so as to provide money that, together with cash
balances from time to time on deposit in the Refunding Account, will be sufficient to pay:
(a) the interest on the Refunded Bonds due and payable on and prior to
November 1, 2004; and
(b) the redemption price (101% of the principal amount) payable on
November 1, 2004, of the Refunded Bonds;
NOW, THEREFORE, in consideration of the mutual undertakings, promises and
agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure
the full and timely payment of the principal of and interest on the Refunded Bonds, the City and
the Escrow Agent mutually undertake, promise and agree for themselves and their respective
representatives and successors, as follows:
Article 1. Definitions
Section 1.1. Definitions.
Unless the context clearly indicates otherwise, the following terms shall have the
meanings assigned to them below when they are used in this Agreement:
"Escrowed Securities" means the noncallable Government Obligations described in
Appendix A attached to this Agreement, or cash or other noncallable obligations substituted
therefor pursuant to Section 4.1 of this Agreement.
"Government Obligations" means direct, noncallable (a) United States Treasury
Obligations, (b) United States Treasury Obligations - State and Local Government Series
( "SLGS "), (c) non - prepayable obligations that are unconditionally guaranteed as to full and
timely payment of principal and interest by the United States of America or (d) REFCORP debt
obligations unconditionally guaranteed by the United States. Securities described in (c) shall be
limited to those securities that are defined as government obligations by Section 39.53.010(9),
Revised Code of Washington.
"Paying Agent" means the fiscal agency of the State of Washington, as the paying agent
for the Refunded Bonds.
"Refunding Account" means the City of Port Angeles 1998 Water and Wastewater Utility
Revenue Bond Advance Refunding Account authorized by the Bond Ordinance to be established,
held and administered by the Escrow Agent pursuant to the provisions of this Agreement.
Exhibit "A" - Page 2
Section 1.2. Other Definitions.
The terms "Agreement," "City," "Escrow Agent," "Bond Ordinance," "Verification
Report," "Refunded Bonds," and "Refunding Bonds" when they are used in this Agreement, shall
have the meanings assigned to them in the preamble to this Agreement. All other capitalized
terms used herein and not otherwise defined herein shall have the meanings assigned to them by
the Bond Ordinance.
Section 1.3. Interpretations.
The titles and headings of the articles and sections of this Agreement have been inserted
for convenience and reference only and are not to be considered a part hereof and shall not in any
way modify or restrict the terms hereof. This Agreement and all of the terms and provisions
hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the
intended purpose of providing for the refunding of the Refunded Bonds in accordance with
applicable law.
Article 2. Deposit of Funds and Escrowed Securities
Section 2.1. Deposits in the Refunding Account.
Concurrently with the sale and delivery of the Refunding Bonds the City shall deposit, or
cause to be deposited, with the Escrow Agent, for deposit in the Refunding Account, $
of the proceeds of the Refunding Bonds, of which $ shall be applied to purchase the
initial Escrowed Securities, $ to establish a beginning cash balance, and $ to pay
the costs of issuance described in Appendix C attached hereto, and the Escrow Agent shall, upon
the receipt thereof, acknowledge such receipt to the City in writing.
Article 3. Creation and Operation of Refunding Account
Section 3.1. Refunding Account.
The Escrow Agent has created on its books a special trust fund and irrevocable escrow to
be known as the Refunding Account (the "Refunding Account "). The Escrow Agent hereby
agrees that upon receipt thereof it will deposit to the credit of the Refunding Account the funds
and the Escrowed Securities described in Section 2.1 hereof. Such deposit, all proceeds
therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of
the Refunding Account, (b) shall be applied only in strict conformity with the terms and
conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the
principal of and interest on the Refunded Bonds, which payment shall be made by timely
transfers of such amounts at such times as are provided for in Section 3.2 hereof. When the final
transfers have been made for the payment of such principal of and interest on the Refunded
Bonds, any balance then remaining in the Refunding Account shall be transferred to the City and
the Escrow Agent shall thereupon be discharged from any further duties hereunder.
Exhibit "A" - Page 3
Section 3.2. Payment of Principal and Interest.
The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from
the cash balances from time to time on deposit in the Refunding Account, the amounts required
to pay the principal of the Refunded Bonds at their redemption date and interest thereon to such
redemption date in the amounts and at the times shown in Appendix 13 attached hereto.
Section 3.3. Sufficiency of Refunding Account.
The City represents that, based upon the information provided in the Verification Report,
the successive receipts of the principal of and interest on the Escrowed Securities will assure that
the cash balance on deposit from time to time in the Refunding Account will be at all times
sufficient to provide money for transfer to the Paying Agent at the times and in the amounts
required to pay interest due and payable on the Refunded Bonds on and prior to their respective
redemption dates, and the redemption price for the Refunded Bonds payable on such redemption
dates, all as set forth in the recitals of this Agreement.
If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit
in the Refunding Account shall be insufficient to transfer the amounts required by the Paying
Agent to make the payments described in Section 3.2. hereof, the City shall timely deposit in the
Refunding Account, from any funds lawfully available therefor, additional funds in the amounts
required to make such payments. Notice of any such insufficiency shall be given promptly as
hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any
insufficiency of funds in the Refunding Account or the City's failure to make additional deposits
thereto.
Section 3.4. Trust Fund.
The Escrow Agent shall hold at all times the Refunding Account, the Escrowed Securities
and all other assets of the Refunding Account, wholly segregated from all other funds and
securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any
other assets of the Refunding Account to be commingled with any other funds or securities of the
Escrow Agent; and it shall hold and dispose of the assets of the Refunding Account only as set
forth herein. The Escrowed Securities and other assets of the Refunding Account shall always be
maintained by the Escrow Agent as trust funds for the benefit of the owners of the Refunded
Bonds; and a special account thereof shall at all times be maintained on the books of the Escrow
Agent. The owners of the Refunded Bonds shall be entitled to the same preferred claim and first
lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Refunding
Account to which they are entitled as owners of the Refunded Bonds. The amounts received by
the Escrow Agent under this Agreement shall not be considered as a banking deposit by the City,
and the Escrow Agent shall have no right to title with respect thereto except as a trustee and
Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent
Exhibit "A" - Page 4
under this Agreement shall not be subject to warrants, drafts or checks drawn by the City or,
except to the extent expressly herein provided, by the Paying Agent.
Article 4. Limitation on Investments
Section 4.1. Investments; Substitution of Securities.
Except for the initial investment in the Escrowed Securities, and except as provided in
this Section 4.1, the Escrow Agent shall not have any power or duty to invest or reinvest any
money held hereunder, or to make substitutions of the Escrowed Securities, or to sell, transfer, or
otherwise dispose of the Escrowed Securities.
At the written request of the City, and upon compliance with the conditions hereinafter
stated, the Escrow Agent shall utilize cash balances in the Refunding Account, or sell, transfer,
otherwise dispose of or request the redemption of the Escrowed Securities and apply the
proceeds therefrom to purchase Refunded Bonds or Government Obligations that do not permit
the redemption thereof at the option of the obligor. Any such transaction may be effected by the
Escrow Agent only if (a) the Escrow Agent shall have received a written opinion from a firm of
certified public accountants that such transaction will not cause the amount of money and
securities in the Refunding Account to be reduced below an amount sufficient to provide for the
full and timely payment of principal of and interest on all of the remaining Refunded Bonds as
they become due, taking into account any optional redemption thereof exercised by the City in
connection with such transaction; (b) the Escrow Agent shall have received the unqualified
written legal opinion of the County's bond counsel or tax counsel to the effect that such
transaction will not cause any of the Refunding Bonds or Refunded Bonds to be an "arbitrage
bond" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and
(c) such transaction is approved by an ordinance duly passed by the City Council.
Article 5. Application of Cash Balances
Section 5.1. In General.
Except as provided in Sections 3.2 and 4.1 hereof, no withdrawals, transfers, or
reinvestment shall be made of cash balances in the Refunding Account. Cash balances shall be
held by the Escrow Agent in U.S. currency and as cash balances as shown on the books and
records of the Escrow Agent and shall not be reinvested by the Escrow Agent; provided,
however, a conversion to currency shall not be required (i) for so long as the Escrow Agent's
internal rate of return does not exceed %, or (ii) if the Escrow Trustee's internal rate of
return exceeds %, the Escrow Agent receives a letter of instructions, accompanied by the
opinion of the City's bond counsel approving the assumed reinvestment of such proceeds at such
higher yield.
Exhibit "A" - Page 5
Article 6. Redemption of Refunded Bonds
Section 6.1. Call for Redemption.
The City has, pursuant to the Bond Ordinance, irrevocably called the Refunded Bonds for
redemption on their earliest redemption date, as shown in the Verification Report.
Section 6.2. Notice of Redemption.
The Escrow Agent agrees to give notice of the redemption of the Refunded Bonds, or to
notify the Paying Agent to give such notice, pursuant to the terms of the resolutions authorizing
the issuance of the Refunded Bonds. The Escrow Agent hereby certifies that it has made
provision satisfactory and acceptable to it for the giving of notice of redemption of the Refunded
Bonds.
Article 7. Records and Reports
Section 7.1. Records.
The Escrow Agent will keep books of record and account in which complete and accurate
entries shall be made of all transactions relating to the receipts, disbursements, allocations and
application of the money and Escrowed Securities deposited to the Refunding Account and all
proceeds thereof, and such books shall be available for inspection during business hours and after
reasonable notice.
Section 7.2. Reports.
While this Agreement remains in effect, the Escrow Agent annually shall prepare and
send to the City a written report summarizing all transactions relating to the Refunding Account
during the preceding year, including, without limitation, credits to the Refunding Account as a
result of interest payments on or maturities of the Escrowed Securities and transfers from the
Refunding Account for payments on the Refunded Bonds or otherwise, together with a detailed
statement of all Escrowed Securities and the cash balance on deposit in the Refunding Account
as of the end of such period.
Article 8. Concerning the Paying Agent and Escrow Agent
Section 8.1. Representations.
The Escrow Agent hereby represents that it has all necessary power and authority to enter
into this Agreement and undertake the obligations and responsibilities imposed upon it herein
and that it will carry out all of its obligations hereunder.
Exhibit "A" - Page 6
Section 8.2. Limitation on Liability.
The liability of the Escrow Agent to transfer funds for the payment of the principal of and
interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and
the cash balances from time to time on deposit in the Refunding Account. Notwithstanding any
provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever
for the insufficiency of funds from time to time in the Refunding Account or any failure of the
obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to
notify the City promptly of any such occurrence.
The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken
as the statements of the City and shall not be considered as made by, or imposing any obligation
or liability upon, the Escrow Agent.
The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or
the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof (except
to the extent that the Escrow Agent may be a place of payment and paying agent and/or a paying
agent/registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need
look only to the terms and provisions of this Agreement.
The Escrow Agent makes no representations as to the value, conditions or sufficiency of
the Refunding Account, or any part thereof, or as to the title of the City thereto, or as to the
security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or
responsibility in respect to any of such matters.
It is the intention of the parties hereto that the Escrow Agent shall never be required to
use or advance its own funds or otherwise incur personal financial liability in the performance of
any of its duties or the exercise of any of its rights and powers hereunder.
The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in
good faith in any exercise of reasonable care and believed by it to be within the discretion or
power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the
consequences of any error of judgment; and the Escrow Agent shall not be answerable except for
its own action, neglect or default, nor for any loss unless the same shall have been through its
negligence or want of good faith.
Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to
determine or inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of the City with respect to arrangements or contracts with
others, with the Escrow Agent's sole duty hereunder being to safeguard the Refunding Account,
to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow
Agent is called upon by the terms of this Agreement to determine the occurrence of any event or
contingency, the Escrow Agent shall be obligated, in making such determination, only to
Exhibit "A" - Page 7
exercise reasonable care and diligence, and in event of error in making such determination the
Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the
occurrence of any such event or contingency the Escrow Agent may request from the City or any
other person such reasonable additional evidence as the Escrow Agent in its discretion may deem
necessary to determine any fact relating to the occurrence of such event or contingency, and in
this connection may make inquiries of, and consult with, among others, the City at any time.
Section 8.3. Compensation.
The City shall pay to the Escrow Agent $ for services rendered by it pursuant to
the provisions of this Agreement, and such payment is inclusive of all fees, compensation and
expenses of the Escrow Agent; provided, however, that the Escrow Agent shall be separately
compensated for services performed in connection with any substitution of securities pursuant to
Section 4.1 of this Agreement.
In the event that the Escrow Agent renders any service at the request of the City that is
not provided for in this Agreement, or the Escrow Agent is made a party to or intervenes in any
litigation pertaining to this Agreement or institutes interpleader proceedings relative hereto, the
Escrow Agent 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. The Escrow Agent hereby agrees that in no event shall it ever assert any
claim or lien against the Refunding Account for any fees for its services, whether regular or
extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its
expenses as Escrow Agent or in any other capacity.
Section 8.4. Successor Escrow Agent.
The obligations assumed by the Escrow Agent pursuant to this Agreement may be
transferred by the Escrow Agent to a successor; provided that the Escrow Agent has presented
evidence satisfactory to the City and its bond counsel that the successor meets the requirements
of RCW Chapter 39.53, as now in effect or hereafter amended, and has assumed all the
obligations of the Escrow Agent under this Agreement, and that all the Acquired Obligations and
money held by the Escrow Agent pursuant to this Agreement have been duly transferred to such
successor.
Any corporation or association into which the Escrow Agent may be merged or
converted, or resulting from any merger or conversion, or to which the Escrow Agent may sell or
transfer all or substantially all of its corporate trust business shall be the successor to such
Escrow Agent without the execution of filing of any paper or any further act, anything herein to
the contrary notwithstanding.
Exhibit "A" - Page 8
Article 9. Miscellaneous
Section 9.1. Notice.
Any notice, authorization, request, or demand required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given when mailed by registered or
certified mail, postage prepaid addressed to the City or the Escrow Agent at the address shown
below. The United States Post Office registered or certified mail receipt showing delivery of the
aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may
change the address to which notices are to be delivered by giving to the other parties not less than
ten days prior notice thereof.
County:
Escrow Agent:
City of Port Angeles, Washington
321 East Fifth
Port Angeles, WA 98362
Attention: Finance Director
Attention:
Section 9.2. Termination of Responsibilities.
Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow
Agent shall have no further obligations or responsibilities hereunder to the City, the owners of
the Refunded Bonds or to any other person or persons in connection with this Agreement.
Section 9.3. Binding Agreement.
This Agreement shall be binding upon the City and the Escrow Agent and their respective
successors and legal representatives, and shall inure solely to the benefit of the owners of the
Refunded Bonds, the City, the Escrow Agent and their respective successors and legal
representatives.
Section 9.4. Severability.
In case any one or more of the provisions contained in this 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 Agreement, but this Agreement shall
be construed as if such invalid or illegal or unenforceable provision had never been contained
herein.
Exhibit "A" - Page 9
Section 9.5. Washington Law Governs.
This Agreement shall be governed exclusively by the provisions hereof and by the
applicable laws of the State of Washington.
Section 9.6. Time of the Essence.
Time shall be of the essence in the performance of obligations from time to time imposed
upon the Escrow Agent by this Agreement.
Section 9.7. Notice to Rating Agencies.
In the event that this agreement or any provision thereof is severed, amended or revoked,
the City shall provide written notice of such severance, amendment or revocation to:
Standard & Poor's Ratings Services
Attn: Public Finance Rating Desk/Refunded Bonds
25 Broadway
New York, New York 10004
Moody's Investors Service
Attn: Public Finance Rating Desk/Refunded Bonds
99 Church Street
New York, New York 10007
Section 9.8. Amendments.
This Agreement shall not be amended except to cure any ambiguity or formal defect or
omission in this Agreement. No amendment shall be effective unless the same shall be in writing
and signed by the parties thereto. No such amendment shall adversely affect the rights of the
holders of the Refunded Bonds. No such amendment shall be made without first receiving
written confirmation from the rating agencies (if any) that have rated the Refunded Bonds that
such administrative changes will not result in a withdrawal or reduction of its rating then
assigned to the Refunded Bonds. If this Agreement is amended, prior written notice and copies
of the proposed changes shall be given to the rating agencies that have rated the Refunded
Bonds.
Exhibit "N' - Page 10
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement, all as
of the date and year first above written.
Appendix A
Appendix B
Appendix C
Appendix D
CITY OF PORT ANGELES,
WASHINGTON
By
Mayor
[ 1,
as Escrow Agent
By
Trust Officer
- Description of the Escrowed Securities
- Schedule of Payments on the Refunded Bonds
- Expenses to be Paid at Closing
- Notice of Redemption
Exhibit "A" - Page 11
APPENDIX A
[INSERT HERE A COPY OF THE DESCRIPTION OF THE ESCROW
SECURITIES FROM THE VERIFICATION REPORT.]
Appendix A - Page 1
98109/11
APPENDIX B
[INSERT HERE A COPY FROM THE VERIFICATION REPORT OF THE
SCHEDULE OF PAYMENTS TO BE MADE ON THE REFUNDED BONDS.]
Appendix B - Page 1
DOTOOKDOC 98/09/11
CERTIFICATE OF CITY CLERK
I DO HEREBY CERTIFY that I am the duly chosen, qualified and acting Clerk of the
City of Port Angeles, Washington (the "City "), and keeper of the records of the City Council; and
I HEREBY CERTIFY:
1. That the attached ordinance is a true and correct copy of Ordinance No.
3000 of the City (the "Ordinance "), as finally passed at a regular meeting of the City
Council held on the 15th day of September, 1998 and duly recorded in my office.
2. That said meeting was duly convened and held in all respects in
accordance with law, and to the extent required by law, due and proper notice of such meeting
was given; that a quorum was present throughout the meeting and a legally sufficient number of
members of the City Council voted in the proper manner for the passage of the Ordinance; that
all other requirements and proceedings incident to the proper passage of the Ordinance have been
duly fulfilled, carried out and otherwise observed, and that I am authorized to execute this
certificate.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
the City this 15`" day of September, 1998.
(SEAL)
it lerk
DOTOOK.DOC 98/09/11
Summary of Ordinance Adopted by the
Port Angeles City Council
on September 15. 1998
Ordinance No. 3000
This Ordinance of the City of Port Angeles authorizes the issuance and sale of
water and wastewater utility revenue refunding bonds of the City in the principal
amount of not to exceed $9,600,000 to refund certain outstanding water and
wastewater utility revenue bonds of the City; authorizes appointment of an escrow
agent and the execution of an escrow agreement related to such refunding; fixes the
date, form, terms, maturities and covenants of such bonds; and authorizes the
public sale of such bonds.
The full text of this Ordinance is available at City Hall in the City Clerk's office or will be mailed
upon request. Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. This
Ordinance shall take effect five days after the date of publication of this summary.
Becky J. Upton
City Clerk
Publish: September 20. 1998