HomeMy WebLinkAbout3148CITY OF PORT ANGELES, WASHINGTON
WATER AND WASTEWATER UTILITY REVENUE BONDS, 2003
ORDINANCE NO. 3148
AN ORDINANCE of the City of Port Angeles, Washington,
authorizing the issuance and sale of water and wastewater utility
revenue bonds of the city in the principal amount of $4,220,000 to
finance the cost of improvements to the City's water and
wastewater utility; fixing the date, form, terms, maturities and
covenants of such bonds; and authorizing the sale of such bonds.
PASSED ON November 4, 2003
Prepared By:
PRESTON GATES & ELLIS LLP
925 Fourth Avenue
Suite 2900
Seattle, Washington 98104 -1158
Table of Contents
Page
Section 1. Definitions 2
Section 2. Compliance with Parity Conditions 13
Section 3. Plan of Improvements 14
Section 4. Authorization and Description of Bonds 15
Section 5. Registration, Exchange and Payments 16
Section 6. Redemption; Purchase of Bonds 21
Section 7. Form of Bonds 24
Section 8. Execution of Bonds 28
Section 9. Construction Fund; Application of Bond Proceeds 28
Section 10. Revenue Fund 29
Section 11. Rate Stabilization Fund 30
Section 12. Bond Fund 31
Section 13. Adequacy of Revenues 34
Section 14. Covenants and Agreements 34
Section 15. Tax Covenants; Special Designation 38
Section 16. Defeasance 38
Section 17. Issuance of Future Parity Bonds 39
Section 18. Sale of Bonds 42
Section 19. Official Statement 42
Section 20. Undertaking to Provide Ongoing Disclosure 43
Section 21. Bond Insurance and Surety Bond 47
Section 22. Supplements and Amendments 52
Section 23. Lost or Destroyed Bonds 54
Section 24. Severability 54
Section 25. Effective Date 54
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ORDINANCE NO. 3148
AN ORDINANCE of the City of Port Angeles, Washington,
authorizing the issuance and sale of water and wastewater utility
revenue bonds of the city in the principal amount of $4,220,000 to
finance the cost of improvements to the City's water and
wastewater utility; fixing the date, form, terms, maturities and
covenants of such bonds; and authorizing the 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, the City Council of the City (the "Council ") deems it in the best interest of
the City and customers of the System to make certain improvements to water and wastewater
facilities of the System; and
WHEREAS, to pay the costs of such improvements, the Council deems it in the best
interest of the City to authorize the issuance of its water and wastewater utility revenue bonds in
the principal amount of $4,220,000 (the "Bonds "); and
WHEREAS, the City has outstanding a loan to the City administered by the State of
Washington Department of Ecology ( "DOE "), loan number SRF 91001 (the "Revolving Fund
Loan"), authorized by Resolution No. 7 -90 of the Council adopted on May 1, 1990, with a
current balance of $1,059.524; and
WHEREAS, pursuant to Ordinance No. 2843 of the City, passed on October 18, 1994,
and Resolution No. 20 -94 adopted by the Council on November 1, 1994, the City issued its
Water and Wastewater Utility Revenue and Refunding Bonds, 1994, under date of November 1,
1994 (the "1994 Bonds "), currently outstanding in the principal amount of $210,000; and
WHEREAS, pursuant to Ordinance No. 3000 of the City, passed on September 15, 1998,
and Resolution No. 23 -98, adopted by the Council on November 3, 1998, the City issued its
Water and Wastewater Utility Revenue Refunding Bonds, 1998, under date of November 1, 1998
(the "1998 Bonds "), currently outstanding in the principal amount of $9,110,000; and
WHEREAS, the DOE Loan Agreement and Ordinance Nos. 2843 and 3000 provide that
the City may issue additional water and wastewater utility revenue bonds on a parity with the
Revolving Fund Loan, the 1994 Bonds and the 1998 Bonds to finance improvements to the
System if certain conditions are met; and
WHEREAS, after due consideration it appears to the Council that such parity conditions
can be met and that the Bonds may be issued on a parity with the Revolving Fund Loan, the 1994
Bonds and the 1998 Bonds; and
WHEREAS, the City has received the offer of Seattle - Northwest Securities Corporation,
Seattle, Washington (the "Underwriter ") to purchase the Bonds and it appears to the Council that
it is in the best interests of the City and ratepayers of the System that the City accept such offer
and sell the Bonds to the Underwriter on the terms set forth therein and herein;
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:
"Annual Debt Service" for any fiscal year or calendar year means the sum of:
(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
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(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 12 of this ordinance.
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of registration of the Bonds.
"Bond Insurance Policy" means the municipal bond insurance policy issued by the Insurer
insuring the payment when due of the principal of and interest on the Bonds as provided therein.
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"Bond Registrar" means the fiscal agency of the State of Washington in either Seattle,
Washington, or New York, New York, whose duties include registering and authenticating the
Bonds, maintaining 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 City's Water and Wastewater Utility Revenue Bonds, 2003, issued in
the aggregate principal amount of $4,220,000 pursuant to this ordinance.
"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 thereunder.
"Commission" means the United States Securities and Exchange Commission.
"Construction Fund" means the City's Water and Wastewater Utility Capital Projects
Fund.
"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 12 of this ordinance.
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"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 initial depository for the
Bonds or any successor substitute depository for the Bonds.
"Finance Director" means the duly appointed and acting Finance Director of the City or
the successor to the duties of such office.
"Financial Guaranty Agreement" means the Financial Guaranty Agreement with respect
to the Surety Bond dated as of the date of delivery of the Bonds, by and between the City and the
Insurer.
"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.
"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
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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."
"Insurer" means MBIA Insurance Corporation, a stock insurance company incorporated
under the laws of the State of New York.
"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 under date of November 1, 1994, pursuant to Ordinance No. 2843 of the City and
Resolution No. 20 -94 of the Council, and currently outstanding in the principal amount of
$210,000.
"1998 Bonds" means the City's Water and Wastewater Utility Revenue Refunding
Bonds, 1998, issued under date of November 1, 1998, pursuant to Ordinance No. 3000 of the
City and Resolution No. 23 -98 of the Council, and currently outstanding in the principal amount
of $9,110,000.
"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 1994 Bonds, the 1998 Bonds, 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
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payment of the principal of and interest on the Revolving Fund Loan, the 1994 Bonds, the 1998
Bonds, and the Bonds.
"Permitted Investments" means (i) so long as any of the 1994 Bonds or the Bonds remain
outstanding, any of the following investments, if permitted under the laws of the State of
Washington as amended from time to time:
A. Direct obligations of the United States of America (including obligations issued or
held in book -entry form on the books of the Department of the Treasury, and CATS and TGRS)
or obligations the principal of and interest on which are unconditionally guaranteed by the United
States of America.
B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following federal agencies and provided such obligations are backed by the full
faith and credit of the United States of America (stripped securities are only permitted if they
have been stripped by the agency itself):
1. U.S. Export-Import Bank: direct obligations or fully guaranteed
certificates of beneficial ownership;
2. Farmers Home Administration: certificates of beneficial ownership;
3. Federal Financing Bank;
4. Federal Housing Administration Debentures;
5. General Services Administration: participation certificates;
6. Government National Mortgage Association (GNMA):
GNMA - guaranteed mortgage- backed bonds and GNMA - guaranteed pass - through obligations;
7. U.S. Maritime Administration: guaranteed Title XI financing; and
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8. U.S. Department of Housing and Urban Development: project notes; local
authority bonds; U.S. government - guaranteed new communities debentures; U.S.
government - guaranteed public housing notes and bonds.
C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed
by any of the following non -full faith and credit U.S. government agencies (stripped securities
are only permitted if they have been stripped by the agency itself):
1. Federal Home Loan Bank System: senior debt obligations;
2. Federal Home Loan Mortgage Corporation: participation certificates and
senior debt obligations;
3. Federal National Mortgage Association: mortgage- backed securities and
senior debt obligations;
Student Loan Marketing Association: senior debt obligations;
5. Resolution Funding Corp. (REFCORP) obligations; and
6. Farm Credit Systems: consolidated systemwide bonds and notes.
D. Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating
by S &P of AAAm -G, AAAm or AAm.
E. Certificates of deposit secured at all times by collateral described in (A) and/or
(B) above. Such certificates must be issued by commercial banks, savings and loan associations
or mutual savings banks. The collateral must be held by a third party and the bondholders must
have a perfected first security interest in the collateral.
F. Certificates of deposit, savings accounts, deposit accounts or money market
deposits that are fully insured by FDIC, including BIF and SAIF.
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G. Investment Agreements, including GIC's, acceptable to the Insurer.
H. Commercial paper rated, at the time of purchaser, "Prime -1" by Moody's and
"A -1" or better by S &P.
I. Bonds or notes issued by any state or municipality rated by Moody's and S &P in
one of the two highest rating categories assigned by such agencies.
J. Federal funds or bankers acceptances with a maximum term of one year of any
bank that has an unsecured, uninsured and unguaranteed obligation rating of "Prime -1" or "A3"
or better by Moody's and "A" or better by S &P.
K. Repurchase agreements providing for the transfer of securities from a dealer bank
or securities firm (seller/borrower) to a municipal entity (buyer /lender), and the transfer of cash
from a municipal entity to the dealer bank or securities firm with an agreement that the dealer
bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the
securities at a specified date. Repurchase Agreements must satisfy the following criteria or be
approved by the Insurer:
1. Repos must be between the municipal entity and a dealer bank or
securities firm.
a. Primary dealers on the Federal Reserve reporting dealer list that are
rated A or better by S &P and Moody's, or
b. Banks rated "A" or above by S &P and Moody's.
2. The written repo contract must include the following:
a. Securities that are acceptable for transfer are:
(1) Direct U.S. governments, or
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(2) Federal agencies backed by the full faith and credit of the
U.S. government (and FNMA & FHLMC).
b. The term of the repo maybe up to 30 days.
c. The collateral must be delivered to the municipal entity, trustee (if
trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is
supplying the collateral) before or simultaneously with payment (perfection by possession of
certificated securities).
d. The securities must be valued weekly, marked -to- market at current
market price plus accrued interest. The value of collateral must be equal to 104% of the amount
of cash transferred by the municipal entity to the dealer bank or securities firm under the repo
plus accrued interest. If the value of securities held as collateral slips below 104% of the value of
the cash transferred by municipality, then additional cash and/or acceptable securities must be
transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value
of collateral must equal 105 %.
3. A legal opinion must be delivered to the municipal entity to the effect that
the repo meets guidelines under state law for legal investment of public funds.
L. Any Washington State - administered investment pool in which the City is
statutorily permitted or required to invest City funds;
and (ii) from and after such time as no 1994 Bonds or Bonds remain outstanding, 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
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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 11 of this ordinance.
"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.
"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 sole Registered Owner.
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"Reserve Account" means the account of that name in the Bond Fund created pursuant to
Ordinance No. 2843 and referred to in Section 12 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 stated principal amount of such bonds, or (c) maximum Annual Debt Service on
such bonds.
"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. 7 -90 of the City Council adopted on May 1, 1990, currently outstanding in the principal
amount of $1,166,012.
"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.
"Serial Bonds" means Bonds or Future Parity Bonds other than Term Bonds.
"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.
"Surety Bond" means the surety bond issued by the Insurer guaranteeing certain payments
into the Reserve Account for the Bonds as provided therein and subject to the limitations therein.
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"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 in Section 6 of this ordinance 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 Nos. 2843 and 3000, as follows:
First, that the Bonds are being issued for the purpose of acquiring, constructing and
installing additions and improvements to and extensions of, acquiring necessary equipment for,
and making necessary replacements, repairs and capital improvements to the System, as
described in Section 2 of this ordinance;
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 on the Term Bonds, and the Surety Bond, which satisfies
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the definition of "Qualified Insurance," will be obtained to satisfy the Reserve Account
Requirement, all as required by Section 13 of Ordinance No. 2843 and Section 11 of Ordinance
No. 3000; and
Fourth, prior to delivery of the Bonds, the City will have on file in the office of the City
Clerk a certificate of a Professional Utility Consultant showing that "Adjusted Net Revenue" (as
such term is defined in Ordinance Nos. 2843 and 3000) will equal at least 1.25 times the Annual
Debt Service for all Parity Bonds including the Bonds.
The parity conditions contained in Ordinance Nos. 2843 and 3000 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, the 1994 Bonds and the 1998 Bonds.
Section 3. Plan of Improvements. The Council hereby finds and determines that the
public interest requires that the City construct the following additions to and betterments to the
System (i) water division improvements, including replacement of water mains in downtown
Port Angeles, installation of additional concrete cylinder piping, installation of a new pump at the
Spruce Street station, and installation of a cover for the Peabody Heights Reservoir, and
(ii) wastewater division improvements, including improvements to two pump stations,
installation of a storm drain in Lincoln Street, installation of a catch basin and piping in the
Crown Park area, composting facility upgrades and sewer line replacements, expected to be paid
as follows: approximately $2,000,000 from a Washington State Public Works Trust Fund loan
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and approximately $4,191,000 from proceeds of the Bonds) (collectively, the "Projects "). The
Council hereby adopts the Projects as a plan and system for additions and betterments to the
System.
In undertaking the Projects, the City shall acquire and install all equipment and
appurtenances necessary for its proper operation, and shall acquire by purchase, lease or
condemnation all property, both real and personal, or any interest therein, and all rights -of -way,
franchises, and easements necessary to carry out said plan. The Projects shall be subject to such
changes as to details of size or location or any other details of said Projects as may be authorized
by the City either prior to or during the course of construction.
Section 4. Authorization and Description of Bonds. For the purpose of paying
costs of the Projects and costs of issuing the Bonds, the City shall issue its water and wastewater
utility revenue bonds in the aggregate principal amount of $4,220,000 (the "Bonds "). The Bonds
shall be designated as the "City of Port Angeles, Washington, Water and Wastewater Utility
Revenue Bonds, 2003," shall be dated as of the date of delivery of the Bonds to the Underwriter,
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, shall
be numbered separately in such manner and with any additional identification as the Bond
Registrar deems necessary for identification, and shall bear interest from their date (calculated on
the basis of a year of 360 days and twelve 30 -day months) payable on May 1, 2004, and
semiannually thereafter on the first days of November and May of each year at the following per
annum interest rates and shall mature on November 1 of the following years in the following
principal amounts:
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Maturity Year Principal Interest
(November 1) Amount Rate
2004 $ 115,000 2.00%
2005 110,000 2.00
2006 115,000 2.00
2007 115,000 2.25
2008 120,000 2.75
2009 120,000 3.00
2010 125,000 3.25
2011 130,000 3.50
2013* 275,000 3.70
2014 145,000 3.80
2015 150,000 4.00
2016 155,000 4.00
2018* 330,000 4.20
2020* 360,000 5.00
2022* 400,000 5.00
2023 215,000 5.00
2024 225,000 5.00
2025 235,000 5.00
2026 245,000 5.00
2027 260,000 5.00
2028 275,000 5.00
* Term Bonds
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.
Section 5. Registration, Exchange and Payments.
(a) Bond Registrar /Bond Register. The City hereby adopts the system of
registration 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 records for the registration and transfer of the Bonds, which shall be open to
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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.
(b) Registered Ownership. The City and the Bond Registrar may deem and
treat the Registered Owner of each Bond as the absolute owner for all purposes, and neither the
City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such
Bond shall be made only as described in Section 5(g) hereof, but such registration may be
transferred as herein provided. All such payments made as described in Section 5(g) shall be
valid and shall satisfy the liability of the City upon such Bond to the extent of the amount or
amounts so paid.
(c) DTC Acceptance /Letter of Representations. The Bonds shall be held
initially in fully immobilized form by DTC acting as depository. To induce DTC to accept the
Bonds as eligible for deposit at DTC, the City has heretofore executed and delivered 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
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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.
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 a single Bond for each maturity in a denomination equal to the
total principal amount of that maturity. 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 City 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 City 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.
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(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 City, issue a single new Bond for each maturity of 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 City.
(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 City 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 City 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
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the option of the new 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 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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(h) Bond Registrar's Ownership of Bonds. The Bond Registrar may become
the Registered Owner of any Bond with the same rights it would have if it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as member of, or in any other capacity with respect to, any committee
formed to protect the right of the Registered Owners of Bonds.
Section 6. Redemption; Purchase of Bonds.
(a) Optional Redemption. The Bonds maturing on or after November 1, 2014
are subject to redemption prior to maturity, at the option of the City, on or after November 1,
2013, in whole or in part on any date (and if in part with maturities to be selected by the City), at
a price of par, plus interest accrued thereon to the date fixed for redemption.
(b) Mandatory Redemption. The Bonds maturing on November 1 in 2013,
2018, 2020 and 2022 are hereby designated Term Bonds and shall be redeemed prior to maturity
by lot (or paid at maturity), on November 1 in the years and amounts set forth below, from
amounts credited to the Bond Fund to meet the Sinking Fund Requirements therefor (to the
extent such amounts have not been used to redeem or purchase such Term Bonds as otherwise
provided in this ordinance), upon written notice as provided below,. by payment of the principal
amount thereof, together with the interest accrued thereon to the date fixed for redemption.
2013 Term Bonds
Year Amount
2012 $ 135,000
2013 140,000
2018 Term Bonds
Year Amount
2017 $ 160,000
2018 170,000
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2020 Term Bonds
Year Amount
2019 $ 175,000
2020 185,000
2022 Term Bonds
Year Amount
2021 $ 195,000
2022 205,000
(c) Partial Redemption. If less than all of the principal amount of any Bond is
redeemed, upon surrender of such Bond at the principal office of the Bond Registrar, there shall
be issued to the registered owner, without charge, for the then unredeemed balance of the
principal amount, a new Bond or Bonds, at the option of the registered owner, of like maturity
and interest rate in any authorized denomination.
(d) Notice of Redemption. Written notice of any redemption of Bonds shall be
given by the Bond Registrar on behalf of the City 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
Bonds that are to be redeemed at their last addresses shown on the Bond Register. So long as
the Bonds are in book -entry form, notice of redemption shall be given as provided in the Letter
of Representations. The Bond Registrar shall provide additional notice of redemption (at least
30 days) to each NRMSIR and SID, if any, in accordance with Section 20.
The requirements of this section shall be deemed complied with when notice is mailed,
whether or not it is actually received by the owner.
Each notice of redemption shall contain the following information: (1) the redemption
date, (2) the redemption price, (3) if less than all outstanding Bonds are to be redeemed, the
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identification (and, in the case of partial redemption, the principal amounts) of the Bonds to be
redeemed, (4) that on the redemption date the redemption price will become due and payable
upon each Bond or portion called for redemption, and that interest shall cease to accrue from the
redemption date, (5) that the Bonds are to be surrendered for payment at the principal office of
the Bond Registrar, (6) the CUSIP numbers of all Bonds being redeemed, (7) the dated date of
the Bonds, (8) the rate of interest for each Bond being redeemed, (9) the date of the notice, and
(10) any other information needed to identify the Bonds being redeemed.
Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and
maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
(e) Effect of Redemption. Unless the City has revoked a notice of redemption,
the City shall transfer to the Bond Registrar amounts that, in addition to other money, if any, held
by the Bond Registrar, will be sufficient to redeem, on the redemption date, all the Bonds to be
redeemed. From the redemption date interest on each Bond to be redeemed shall cease to accrue.
(f) Amendment of Notice Provisions. The foregoing notice provisions of this
section, including but not limited to the information to be included in redemption notices and the
persons designated to receive notices, may be amended by additions, deletions and changes in
order to maintain compliance with duly promulgated regulations and recommendations regarding
notices of redemption of municipal securities.
(g) Purchase of Bonds in Open Market. The City also reserves the right to
purchase any of the Bonds in the open market at any time at prices deemed reasonable by the
City.
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Section 7. Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
NO. $
STATE OF WASHINGTON
CITY OF PORT ANGELES
WATER AND WASTEWATER UTILITY REVENUE BOND, 2003
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, 2004) 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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This bond is one of a series of bonds in the aggregate principal amount of $4,220,000,
issued under authority of Ordinance No. passed by the City Council on November 4, 2003
(the "Bond Ordinance "), to finance the cost of improvements to the water and wastewater utility
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 the Revolving Fund Loan, the 1994 Bonds, the 1998 Bonds, 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,
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.
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The Bonds are subject to optional and mandatory redemption as provided in 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.
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 day of November, 2003.
Attest:
[Manual or Facsimile Signature]
City Clerk
(SEAL)
CITY OF PORT ANGELES, WASHINGTON
By [Manual or Facsimile Signature]
Mayor
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
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This bond is one of the bonds described in the within mentioned Bond Ordinance and is
one of the Water and Wastewater Utility Revenue Bonds, 2003 of the City of Port Angeles,
Washington, dated November , 2003.
WASHINGTON STATE FISCAL AGENCY,
Bond Registrar
By
Authorized Officer
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.
DATED:
SIGNATURE GUARANTEED:
NOTICE: Signature(s) must be
guaranteed pursuant to law.
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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.
P:\DOT\DOT1 G2 11/04/03
Section 8. 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 9. Construction Fund; Application of Bond Proceeds. A special fund of
the City known as the "Water and Wastewater Utility Construction Fund" (the "Construction
Fund ") has heretofore been created in the office of the Finance Director for the purpose of paying
costs of capital improvements to the System. Amounts received as proceeds of the sale of the
Bonds (other than the amount, if any, received on the date of delivery of the Bonds as accrued
interest, which shall be deposited in the Debt Service Account of the Bond Fund) shall be
deposited in the Construction Fund and used to pay costs of the Projects described in Section 3 of
this ordinance including payment of any interfund loans) and to pay all costs incidental thereto,
including the costs of issuance of the Bonds.
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Pending their expenditure, the City may temporarily invest the proceeds of the Bonds in
any investments permitted by law. The investment earnings shall be retained in the Construction
Fund and expended for the purposes of such Fund.
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;
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;
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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, including the
City's Public Works Trust Fund loans, 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 utility revenue bonds, water and wastewater utility revenue warrants or
other water and wastewater utility revenue obligations of the City, to make necessary additions,
betterments, 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. 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.
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Section 12. 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.
(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 satisfy the Reserve
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Account Requirement for the Bonds by obtaining the Surety Bond, which satisfies the definition
of "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,
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
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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
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
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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 13. 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
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 14. 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 thereof and any and
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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,
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
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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.
(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
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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
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.
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(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 15. Tax Covenant; Special Designation. 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 2003.
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
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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) Parity Conditions. 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:
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
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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.
(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 12 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
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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:
(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) Refunding. 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
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or calendar year for principal of and interest on such refunding Future Parity Bonds over and
above 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) Junior Lien Obligations. 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. Sale of Bonds. The City hereby approves the offer of Seattle- Northwest
Securities Corporation (the "Underwriter ") to purchase the Bonds on the terms and conditions set
forth in its purchase contract received on the date of this ordinance (the "Purchase Contract ").
The City Manager is hereby authorized to sign the Purchase Contract on behalf of the City and
deliver it to the Underwriter. 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
Underwriter, in accordance with this ordinance and the Purchase Contract, and to apply the Bond
proceeds in accordance with this ordinance.
Section 19. Official Statement. The City approves the preliminary Official Statement
presented to this Council and authorizes the Underwriter's distribution of the preliminary Official
Statement in connection with the offering of the Bonds for sale. Pursuant to the Rule, the City
deems the preliminary Official Statement dated October 27, 2003 final as of its date except for
the omission of information dependent upon the pricing of the Bonds and the completion of the
Purchase Contract. The City agrees to cooperate with the Underwriter to deliver or cause to be
delivered, within seven business days from the date of the sale of the Bonds and in sufficient
time to accompany any confirmation that requests payment from any customer of the
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Underwriter, copies of a final Official Statement in sufficient quantity to comply with
paragraph (b)(4) of the Rule and the rules of the MSRB. The City authorizes the Underwriter to
use the Official Statement, substantially in the form of the preliminary Official Statement, in
connection with the sale of the Bonds. The City Manager and Finance Director are hereby
authorized to review and approve on behalf of the City the final Official Statement relative to the
Bonds with such additions and changes as they may deem necessary or advisable.
Section 20. Undertaking to Provide Ongoing Disclosure. This Section 20
constitutes the City's written undertaking for the benefit of the owners and Beneficial Owners of
the Bonds as required by Section (b)(5) of the Rule.
(a) Financial Statements /Operating Data. The City agrees to provide or
cause to be provided to each NRMSIR and to the SID, if any, in each case as designated by the
Commission in accordance with the Rule, the following annual financial information and
operating data for the prior fiscal year (commencing in 2004 for the fiscal year ended
December 31, 2003):
(1) Annual financial statements, which statements may or may not be
audited, showing end fund balance for the country's general fund prepared in accordance with the
Budget Accounting and Reporting System prescribed by the Washington State Auditor pursuant
to RCW 43.09.200 (or any successor statute) and generally of the type included in the official
statement for the Bonds under the headings "Water /Wastewater Fund - Statement of Revenues,
Expenses and other Changes in Fund Equity" and "Water /Wastewater Utility - Historical
Coverage from Operations";
(2) The principal amount of Parity Bonds and debt service coverage
for Parity Bonds;
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(3)
Water and wastewater rates; and
(4) Number of water and wastewater customers of the System.
Items (2) — (4) shall be required only to the extent that such information is not included in
the annual financial statements provided pursuant to (1).
Such annual information and operating data described above shall be provided on or
before seven months after the end of the City's fiscal year. The City's fiscal year currently ends
on December 31. The City may adjust such fiscal year by providing written notice of the change
of fiscal year to each then existing NRMSIR and the SID, if any. In lieu of providing such
annual financial information and operating data, the City may cross - reference to other documents
provided to the NRMSIR, the SID or to the Commission and, if such document is a final official
statement within the meaning of the Rule, available from the MSRB.
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement prepared in accordance with the Budget
Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW
43.09.200 (or any successor statute) when and if available to each then existing NRMSIR and the
SID, if any.
(b) Material Events. The City agrees to provide or cause to be provided, in a
timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence
of any of the following events with respect to the Bonds, if material:
(1) Principal and interest payment delinquencies;
(2) Non- payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties;
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difficulties;
perform;
the Bonds;
(4) Unscheduled draws on credit enhancements reflecting financial
(5) Substitution of credit or liquidity providers, or their failure to
(6) Adverse tax opinions or events affecting the tax - exempt status of
(7)
(8)
Modifications to rights of Bond holders;
Optional, contingent or unscheduled calls of any Bonds other than
scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act
Release 34- 23856;
(9) Defeasances;
(10) Release, substitution or sale of property securing repayment of the
Bonds; and
(11) Rating changes.
Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises with reference to item (10) above that no property secures payment of the Bonds. The
Reserve Account is the applicable debt service reserve, and the Bond Insurance Policy is the
applicable credit enhancement.
(c) Notification Upon Failure to Provide Financial Data. The City agrees to
provide or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the
SID, if any, notice of its failure to provide the annual financial information described in
subsection (a) above on or prior to the date set forth in subsection (a) above.
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(d) Termination /Modification. The City's obligations to provide annual
financial information and notices of material events shall terminate upon the legal defeasance,
prior redemption or payment in full of all of the Bonds. This section, or any provision hereof,
shall be null and void if the City (i) obtains an opinion of nationally recognized bond counsel to
the effect that those portions of the Rule which require this section, or any such provision, are
invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies
each then existing NRMSIR and the SID, if any, of such opinion and the cancellation of this
section.
Notwithstanding any other provision of this motion, the City may amend this Section 20,
and any provision of this Section 20 may be waived, with an approving opinion of nationally
recognized bond counsel and in accordance with the Rule. In the event of any amendment or
waiver of a provision of this Section 20, the City shall describe such amendment in the next
annual report, and shall include, as applicable, a narrative explanation of the reason for the
amendment or waiver and its impact on the type (or in the case of a change of accounting
principles, on the presentation) of financial information or operating data being presented by the
City. In addition, if the amendment relates to the accounting principles to be followed in
preparing financial statements, (i) notice of such change shall be given in the same manner as for
a material event under subsection (b), and (ii) the annual report for the year in which the change
is made should present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
(e) Bond Owner's Remedies Under This Section. The right of any Bond
Owner or Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to
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a right to obtain specific enforcement of the City's obligations hereunder, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds hereunder. For purposes of this section, "Beneficial Owner" means any
person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose
of ownership of, any Bonds, including persons holding Bonds through nominees or depositories.
Section 21. Bond Insurance and Surety Bond.
(a) Acceptance. of Commitment. The City hereby accepts the commitment
from MBIA Insurance Corporation (the "Insurer ") to provide a Bond Insurance Policy insuring
repayment of the Bonds and a Surety Bond to fund the Reserve Requirement for the Bonds. The
City agrees to the conditions for obtaining the Surety Bond, including the payment of the
premium therefor and the other requirements set forth in the Financial Guaranty Agreement. The
Financial Guaranty Agreement is hereby approved and the City Manager or Finance Director is
hereby authorized to sign the Financial Guaranty Agreement on behalf of the City. The Council .
further authorizes and directs all proper officers, agents, attorneys and employees of the City to
cooperate with the Insurer in preparing such additional agreements, certificates, and other
documentation on behalf of the City as shall be necessary or advisable in providing for the Bond
Insurance Policy and the Surety Bond.
(b) Payments Under the Bond Insurance Policy. As long as the Bond
Insurance Policy shall be in full force and effect, the City and the Bond Registrar agree to comply
with the following provisions:
(1) In the event that, on the second business day, and again on the
business day, prior to the payment date on the Bonds, the Bond Registrar has not received
sufficient money to pay all principal of and interest on the Bonds due on the second following or
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following, as the case may be, business day, the Bond Registrar shall immediately notify the
Insurer or its designee on the same business day by telephone or telegraph, confirmed in writing
by registered or certified mail, of the amount of the deficiency.
(2) If the deficiency is made up in whole or in part prior to or on the
payment date, the Bond Registrar shall so notify the Insurer or its designee.
(3) In addition, if the Bond Registrar has notice that any Bond holder
has been required to disgorge payments of principal or interest on the Bonds to a trustee in
bankruptcy or creditors or others pursuant to a final judgment by a court of competent
jurisdiction that such payment constitutes an avoidable preference to such Bond holder within the
meaning of any applicable bankruptcy laws, then the Bond Registrar shall notify the Insurer or its
designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or
certified mail.
(4) The Bond Registrar is hereby irrevocably designated, appointed,
directed and authorized to act as attorney -in -fact for owners of the Bonds as follows:
a. If and to the extent there is a deficiency in amounts required
to pay interest on the Bonds, the Bond Registrar shall (i) execute and deliver to U.S. Bank Trust
National Association, or its successors under the Bond Insurance Policy (the "Insurance Paying
Agent "), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer
as agent for such owners in any legal proceeding related to the payment of such interest and an
assignment to the Insurer of the claims for interest to which such deficiency relates and which are
paid by the Insurer, (ii) receive as designee of the respective owners (and not as Bond Registrar)
in accordance with the tenor of the Bond Insurance Policy payment from the Insurance Paying
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Agent with respect to the claims for interest so assigned, and (iii) disburse the same to such
respective owners; and
b. If and to the extent of a deficiency in amounts required to
pay principal of the Bonds, the Bond Registrar shall (i) execute and deliver to the Insurance
Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the
Insurer as agent for such owner in any legal proceeding relating to the payment of such principal
and an assignment to the Insurer of any of the Bonds surrendered to the Insurance Paying Agent
of so much of the principal amount thereof as has not previously been paid or for which money is
not held by the Bond Registrar and available for such payment (but such assignment shall be
delivered only if payment from the Insurance Paying Agent is received), (ii) receive as designee
of the respective owners (and not as Bond Registrar) in accordance with the tenor of the Bond
Insurance Policy payment therefor from the Insurance Paying Agent, and (iii) disburse the same
to such owner.
(5) Payments with respect to claims for interest on and principal of
Bonds disbursed by the Bond Registrar from proceeds of the Bond Insurance Policy shall not be
considered to discharge the obligation of the City with respect to such Bonds, and the Insurer
shall become the owner of such unpaid Bonds and claims for the interest in accordance with the
tenor of the assignment made to it under the provisions of this subsection or otherwise.
(6) Irrespective of whether any such assignment is executed and
delivered, the City and the Bond Registrar hereby agree for the benefit of the Insurer that:
a. They recognize that to the extent the Insurer makes
payments, directly or indirectly (as by paying through the Bond Registrar), on account of
principal of or interest on the Bonds, the Insurer will be subrogated to the rights of such owners
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to receive the amount of such principal and interest from the City, with interest thereon as
provided and solely from the sources stated in this ordinance and the Bonds; and
b. They will accordingly pay to the Insurer the amount of such
principal and interest (including principal and interest recovered under subparagraph (ii) of the
first paragraph of the Bond Insurance Policy, which principal and interest shall be deemed past
due and not to have been paid), with interest thereon as provided in this ordinance and the Bonds,
but only from the sources and in the manner provided herein for the payment of principal of and
interest on the Bonds to owners, and will otherwise treat the Insurer as the owner of such rights
to the amount of such principal and interest.
(c) Payments under the Surety Bond. So long as the Surety Bond is in effect;
the Bond Registrar shall deliver a Demand for Payment in the form set forth as Attachment 1 to
the Surety Bond at least three days prior to the date on which funds are required under the Surety
Bond.
(d) Rights of Insurer. The following provisions shall govern, notwithstanding
anything to the contrary set forth in this ordinance:
(1) In connection with the issuance of Future Parity Bonds, the City
shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to
such Future Parity Bonds.
(2) The Insurer shall receive copies of the City's audited financial
statements and annual budget.
(3)
The City shall give notice to the Insurer of the adoption of any
ordinance supplementing or amending this ordinance without the consent of Bondowners.
Insurer consent is required for the adoption of any ordinance supplementing this ordinance where
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such supplement requires the consent of Bondowners. Copies of any amendments made to the
documents executed in connection with the issuance of the Bonds which are consented to be the
Insurer shall be sent to Standard & Poor's Ratings Services.
(4) The Insurer shall receive notice of the resignation or removal of the
Bond Registrar and the appointment of a successor, other than the designated state fiscal agent.
(5)
Any notices required to be given by any party under this ordinance
shall also be given to the Insurer and sent by registered or certified mail addressed to: MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Surveillance.
(6) Upon the occurrence of any default hereunder the Insurer shall be
considered the Bondowner of all outstanding Bonds for purposes of exercising rights and
remedies in connection with such default.
(7)
The City agrees to reimburse the Insurer immediately and
unconditionally upon demand, to the extent permitted by law, for all reasonable expenses,
including reasonable attorneys' fees and expenses, incurred by the Insurer in connection with (i)
enforcement by the Insurer of the City's obligations, or the preservation or defense of any rights
of the Insurer, under this ordinance and any other document executed in connection with the
issuance of the Bonds, and (ii) any consent, amendment, waiver or other action with respect to
this ordinance or any related document, whether or not granted or approved, together with
interest on all such expenses from and including the date incurred to the date of payment at
Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law, whichever is less.
In addition, the Insurer reserves the right to charge a reasonable fee in connection with its review
of any such consent, amendment or waiver, whether or not granted or approved.
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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 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.
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(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
(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.
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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 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 on November 4, 2003.
CITY OF PORT ANGELES, WASHINGTON
(SEAL)
Attest:
By
Published:
November 9, 2003
031.- Summary}'-
-54-
Mayor
P: \DOT\DOT1 G2 11/04/03
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.
3148 of the City (the "Ordinance "), as finally passed at a regular meeting of the City
Council held on November 4, 2003, 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.
2003.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of November,
Ci Clerk
P:IDOTTDOTI G2 11/04/03
Summaries of Ordinances Adopted by the
Port Angeles City Council
on November 4, 2003
Ordinance No. 3148
This Ordinance of the City of Port Angeles, Washington, authorizes the issuance and sale of
water and wastewater utility revenue bonds of the City in the principal amount of $4,220,000
to finance the cost of improvements to the City's water and wastewater utility; fixes the date,
form, terms, maturities and covenants of such bonds; and authorizes the sale of such bonds.
Ordinance No. 3149
This Ordinance of the City of Port Angeles, Washington, revises the fringe benefits plan for
the City's Management, Administrative, and Non - Represented Personnel and amends
Ordinance 3048. This Ordinance is effective as of November 1, 2003.
The full texts of the Ordinances are 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. Unless
otherwise noted above, these Ordinances shall take effect five days after publication of these
summaries.
Becky J. Upton
City Clerk
Publish: November 9, 2003