HomeMy WebLinkAbout3375CITY OF PORT ANGELES, WASHINGTON
WATER AND WASTEWATER UTILITY REVENUE REFUNDING BONDS, 2009
ORDINANCE NO. 3375
AN ORDINANCE of the City of Port Angeles, Washington,
authorizing the issuance and sale of water and wastewater utility
revenue refunding bonds of the city in the principal amount of
$7,590,000 to refund outstanding water and wastewater utility
revenue bonds; fixing the date, form, terms, maturities and
covenants of such bonds; and authorizing the sale of such bonds.
PASSED ON SEPTEMBER 15, 2009
Prepared By:
K&L GATES LLP
925 Fourth Avenue, Suite 2900
Seattle, Washington 98104 -1158
Table of Contents
Page
Section 1. Definitions 1
Section 2. Compliance with Parity Conditions 14
Section 3. Authorization and Description of Bonds 15
Section 4. Registration, Exchange and Payments 16
Section 5. Redemption; Purchase of Bonds 19
Section 6. Form of Bonds 20
Section 7. Execution of Bonds 24
Section 8. Refunding Plan; Application of Bond Proceeds; Findings 25
Section 9. Revenue Fund 26
Section 10. Rate Stabilization Fund 27
Section 11. Bond Account 28
Section 12. Adequacy of Revenues 30
Section 13. Covenants and Agreements 30
Section 14. Tax Exemption 32
Section 15. Defeasance 33
Section 16. Issuance of Future Parity Bonds 33
Section 17. Sale of Bonds 35
Section 18. Official Statement 36
Section 19. Undertaking to Provide Ongoing Disclosure 36
Section 20. Bond Insurance 39
Section 21. Supplements and Amendments 46
Section 22. Lost or Destroyed Bonds 47
Section 23. Severability 47
Section 24. Effective Date 47
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ORDINANCE NO. 3375
AN ORDINANCE of the City of Port Angeles, Washington,
authorizing the issuance and sale of water and wastewater utility
revenue refunding bonds of the city in the principal amount of
$7,590,000 to refund outstanding water and wastewater utility
revenue bonds; 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 has outstanding its Water and Wastewater Utility Revenue
Refunding Bonds, 1998 (the "1998 Bonds "), in the principal amount of $7,825,000; and
WHEREAS, the City also has outstanding its Water and Wastewater Utility Revenue
Bonds, 2003 (the "2003 Bonds "), in the principal amount of $3,645,000; and
WHEREAS, it is in the best interest of the City and ratepayers of the System that certain
outstanding maturities of the 1998 Bonds be refunded by the issuance and sale of water and
wastewater utility revenue refunding bonds (the "Refunding Bonds ") to achieve debt service
savings; and
WHEREAS, Ordinance Nos. 3000 and 3148 permit the City to issue additional water and
wastewater utility revenue bonds on a parity with the 1998 Bonds and the 2003 Bonds for
refunding purposes if certain conditions are met; and
WHEREAS, after due consideration it appears to the Council that those parity conditions
can be met and that the City may issue the Bonds on a parity with the 1998 Bonds and the 2003
Bonds for refunding purposes; 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 that
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 have the
following meanings:
"Annual Debt Service," for so long as any 1998 Bonds or 2003 Bonds remain
outstanding, 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
(c) the Sinking Fund Requirement, if any, 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; provided, however, that so long as the Bonds are
outstanding the City may issue variable rate obligations payable from Gross Revenue only as
provided in Section 16(d) of this ordinance.
From and after the date when no 1998 Bonds or 2003 Bonds remain outstanding, "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
(c) the Sinking Fund Requirement, if any, for such year.
For purposes of satisfying the rate covenant in Section 13(a) and the Future Parity Bond
test in Section 16(a), Annual Debt Service for any Fiscal Year or calendar year shall exclude any
Debt Service Offsets. 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.
"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 Account.
"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 Account" means the 1994 Water and Wastewater Utility Revenue Bond Fund
created by Section 15 of Ordinance No. 2843 and continued pursuant to Section 11 of this
ordinance.
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of registration of the Bonds.
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Bond Insurance Policy" means the financial guaranty insurance policy issued by the
Insurer to guaranty the payment when due of the principal of and interest on the Bonds as
provided therein.
"Bond Registrar" means the fiscal agency of the State of Washington in 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 Refunding Bonds, 2009,
issued in the aggregate principal amount of $7,590,000 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.
"Costs of Maintenance and Operation" means all necessary operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, and insurance and
administrative expenses of the System, 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 is duly and
regularly constituted from time to time.
"Debt Service Account" means the account of that name created in the Bond Account by
Section 15 of Ordinance No. 2843 and continued pursuant to Section 11 of this ordinance.
"Debt Service Offset" means receipts of the City that are not included in Gross Revenue
and that are legally available to pay debt service on Parity Bonds, including without limitation
federal interest subsidy payments, designated as such by the City.
"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.
"Fiscal Year" means the fiscal year used by the City at any time. At the time of the
passage of this ordinance, the Fiscal Year is the twelve -month period beginning January 1 of
each year and ending December 31 of each year.
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"Future Parity Bonds" mean any revenue bonds, revenue warrants or other revenue
obligations that may be issued in the future with a lien on money in the Revenue Fund to pay and
secure the payment of the principal thereof and interest thereon equal to the lien created on the
money in such Fund to pay and secure the payment of the principal of and interest on the 1998
Bonds, the 2003 Bonds and the 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 term "Gross Revenue" does not include grants
or bond proceeds, but does include federal or state reimbursements of operating expenses to the
extent such expenses are included as "Costs of Maintenance and Operation."
"Insurer" means Assured Guaranty Corp., a Maryland- domiciled insurance company, or
any successor thereto or assignee thereof, as issuer of a Bond Insurance Policy for the Bonds.
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC.
"MBIA" means the MBIA Insurance Corporation, a stock insurance company
incorporated under the laws of the State of New York, or any successor thereto, as provider of a
policy of municipal bond insurance for the 2003 Bonds (which policy is currently administered
and reinsured by National Public Finance Guarantee Corporation).
"Moody's" means Moody's Investors Service, a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware, or its successor.
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
Bonds.
"Net Revenue" means the Gross Revenue less the Costs of Maintenance and Operation.
"Parity Bonds" means the 1998 Bonds, the 2003 Bonds, the Bonds and any Future Parity
"Permitted Investments" means:
(i) any Washington State - administered investment pool in which the City is
statutorily permitted or required to invest City funds; and
(ii) so long as any of the 1998 Bonds or 2003 Bonds remain outstanding, any of the
following investments, if permitted under the laws of the State of Washington as amended from
time to time and, so long as the Bonds remain . outstanding, if also permitted under section (ii) of
this definition of "Permitted Investments ":
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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
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;
obligations;
4. Student Loan Marketing Association: senior debt
5. Resolution Funding Corp. (REFCORP) obligations; and
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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.
G. Investment Agreements, including GIC's, acceptable to MBIA.
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 MBIA:
bank or securities firm.
1. Repos must be between the municipal entity and a dealer
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 may be 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 1 04% 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.
(iii) So long as 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. (a) Cash (fully insured by the Federal Deposit Insurance
Corporation), (b) direct obligations (other than an obligation subject to variation in principal
repayment) of the United States of America ( "U.S. Treasury Obligations "), (c) obligations fully
and unconditionally guaranteed as to timely payment of principal and interest by the United
States of America, (d) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United States of America when
such obligations are backed by the full faith and credit of the United States of America, or (e)
evidences of ownership of proportionate interests in future interest and principal payments on
obligations described above held by a bank or trust company as custodian, under which the
owner of the investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying government obligations are not available to
any person claiming through the custodian or to whom the custodian may be obligated. THE
ABOVE REFERENCED OBLIGATIONS MAY CONSTITUTE DEFEASANCE
OBLIGATIONS.
Any security used for defeasance must provide for the timely payment of principal and interest
and cannot be callable or prepayable prior to maturity or earlier redemption of the rated debt
(excluding securities that do not have a fixed par value and/or whose terms do not promise a
fixed dollar amount at maturity or call date).
B. Federal Housing Administration debentures.
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C. The following obligations of government- sponsored agencies that
are not backed by the full faith and credit of the United States of America:
1. Federal Home Loan Mortgage Corporation (FHLMC)
senior debt obligations and Participation certificates (excluded are stripped mortgage securities
that are purchased at prices exceeding their principal amounts)
2. Farm Credit System (formerly Federal Land Banks, Federal
Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and
notes
3. Federal Home Loan Banks (FHL Banks) consolidated debt
obligations
4. Federal National Mortgage Association (FNMA) senior
debt obligations and mortgage- backed securities (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
D. Unsecured certificates of deposit, time deposits, and bankers'
acceptances (having maturities of not more than 365 days) of any bank the short-term obligations
of which are rated "A -1 +" or better by S &P and "Prime -1" by Moody's.
E. Deposits the aggregate amount of which are fully insured by the
Federal Deposit Insurance Corporation, in banks that have capital and surplus of at least $15
million.
F. Commercial paper (having original maturities of not more than 270
days) rated "A -1 +" by S &P and "Prime -1" by Moody's.
G. Money market funds rated "Aam" or "AAm -G" by S &P, or better
and if rated by Moody's rated "Aa2" or better.
H. "State Obligations ", which means:
1. Direct general obligations of any state of the United States
of America or any subdivision or agency thereof to which is pledged the full faith and credit of
a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at
least "A -" by S &P, or any obligation fully and unconditionally guaranteed by any state,
subdivision or agency whose unsecured general obligation debt is so rated.
2. Direct general short-term obligations of any state agency
or subdivision or agency thereof described in (a) above and rated "A -1 +" by S &P and "MIG -1"
by Moody's.
3. Special Revenue Bonds (as defined in the United States
Bankruptcy Code) of any state or state agency described in (b) above and rated "AA -" or better
by S &P and "Aa3" or better by Moody's.
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I. Pre - refunded municipal obligations rated "AAA" by S &P and
"Aaa" by Moody's meeting the following requirements:
1. the municipal obligations are (1) not subject to redemption
prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable
instructions concerning their call and redemption and the City of the municipal obligations has
covenanted not to redeem such municipal obligations other than as set forth in such
instructions;
2. the municipal obligations are secured by cash or
U.S. Treasury Obligations which may be applied only to payment of the principal of, interest
and premium on such municipal obligations;
3. the principal of and interest on the U.S. Treasury
Obligations (plus any cash in the escrow) has been verified by the report of independent
certified public accountants to be sufficient to pay in full all principal of, interest, and premium,
if any, due and to become due on the municipal obligations ( "Verification Report");
4. the cash or U.S. Treasury Obligations serving as security
for the municipal obligations are held by an escrow agent or trustee in trust for owners of the
municipal obligations;
5. no substitution of a U.S. Treasury Obligation shall be
permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification
Report; and
6. the cash or U.S. Treasury Obligations are not available to
satisfy any other claims, including those by or against the trustee or escrow agent.
J. Repurchase agreements: with (1) any domestic bank, or domestic
branch of a foreign bank, the long term debt of which is rated at least "A -" by S &P and "A3"
Moody's; or (2) any broker - dealer with "retail customers" or a related affiliate thereof which
broker - dealer has, or the parent company (which guarantees the provider) of which has, long-
term debt rated at least "A -" by S &P and "A3" by Moody's, which broker - dealer falls under the
jurisdiction of the Securities Investors Protection Corporation; or (3) any other entity rated at
least "A -" by S &P and "A3" Moody's and acceptable to the Insurer (each an "Eligible
Provider "), provided that:
1, (i) permitted collateral shall include U.S. Treasury
Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no collateralized
mortgage obligations shall be permitted for these providers), and (ii) collateral levels must be at
least 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103% of
the total principal when the collateral type is GNMA's and 104% of the total principal when the
collateral type is FNMA and FHLMC ( "Eligible Collateral ");
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2. the trustee or a third party acting solely as agent therefore
or for the City (the "Custodian ") has possession of the collateral or the collateral has been
transferred to the Custodian in accordance with applicable state and federal laws (other than by
means of entries on the transferor's books) and such collateral shall be marked to market;
3. the collateral shall be marked to market on a daily basis
and the provider or Custodian shall send monthly reports to the trustee, the City and the Insurer
setting forth the type of collateral, the collateral percentage required for that collateral type, the
market value of the collateral on the valuation date and the name of the Custodian holding the
collateral;
4. the repurchase agreement (or guaranty, if applicable) may
not be assigned or amended without the prior written consent of the Insurer;
5. the repurchase agreement shall state and an opinion of
counsel shall be rendered at the time such collateral is delivered that the Custodian has a
perfected first priority security interest in the collateral, any substituted collateral and all
proceeds thereof;
6. the repurchase agreement shall provide that if during its
term the provider's rating by either Moody's or S &P is withdrawn or suspended or falls below
"A -" by S &P or "A3" by Moody's, as appropriate, the provider must, notify the City, the trustee
and the Insurer within five (5) days of receipt of such notice. Within ten (10) days of receipt of
such notice, the provider shall either: (i) provide a written guarantee acceptable to the Insurer,
(ii) post Eligible Collateral, or (iii) assign the agreement to an Eligible Provider. If the provider
does not perform a remedy within ten (10) business days, the provider shall, at the direction of
the trustee (who shall give such direction if so directed by the Insurer) repurchase all collateral
and terminate the repurchase agreement, with no penalty or premium to the City or the trustee.
K. Investment agreements: with a domestic or foreign bank or
corporation the long -term debt of which, or, in the case of a guaranteed corporation the long-
term debt, or, in the case of a monoline financial guaranty insurance company, claims paying
ability, of the guarantor is rated at least "AA -" by S &P and "Aa3" by Moody's, and acceptable
to the Insurer (each an "Eligible Provider "); provided that:
1. interest payments are to be made to the trustee at times
and in amounts as necessary to pay debt service (or, if the investment agreement is for the
construction fund, construction draws) on the Bonds;
2. the invested funds are available for withdrawal without
penalty or premium, at any time upon not more than seven (7) days' prior notice; the City and
the trustee hereby agree to give or cause to be given notice in accordance with the terms of the
investment agreement so as to receive funds thereunder with no penalty or premium paid;
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3. the provider shall send monthly reports to the trustee, the
City and the Insurer setting forth the balance the City or trustee has invested with the provider
and the amounts and dates of interest accrued and paid by the provider;
4. the investment agreement shall state that is an
unconditional and general obligation of the provider, and is not subordinated to any other
obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of
counsel shall state that the obligation of the provider to make payments thereunder ranks pari
passu with the obligations of the provider to its other depositors and its other unsecured and
unsubordinated creditors;
5. the investment agreement (or guaranty, if applicable) may
not be assigned or amended without the prior written consent of the Insurer;
6. the City, the trustee and the Insurer shall receive an
opinion of domestic counsel to the provider that such investment agreement is legal, valid,
binding and enforceable against the provider in accordance with its terms;
7. the City, the . trustee and the Insurer shall receive an
opinion of foreign counsel to the provider (if applicable) that (i) the investment agreement has
been duly authorized, executed and delivered by the provider and constitutes the legal, valid and
binding obligation of the provider, enforceable against the provider in accordance with its
terms, (b) the choice of law of the state set forth in the investment agreement is valid under that
country's laws and a court in such country would uphold such choice of law, and (c) any
judgment rendered by a court in the United States would be recognized and enforceable in such
country;
8. the investment agreement shall provide that if during its
term:
1. the provider's rating by either S &P or Moody's
falls below "AA -" or "Aa3 ", the provider shall, at its option, within ten (10) days of receipt of
publication of such downgrade, either (i) provide a written guarantee acceptable to the Insurer,
(ii) post Eligible Collateral with the City, the trustee or a third party acting solely as agent
therefore (the "Custodian") free and clear of any third party liens or claims, or (iii) assign the
agreement to an Eligible Provider, or (iv) repay the principal of and accrued but unpaid interest
on the investment;
2. the provider's rating by either S &P or Moody's is
withdrawn or suspended or falls below "A -" or "A3 ", the provider must, at the direction of the
City or the trustee (who shall give such direction if so directed by the Insurer), within ten (10)
days of receipt of such direction, repay the principal of and accrued but unpaid interest on the
investment, in either case with no penalty or premium to the City or trustee.
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9. in the event the provider is required to collateralize,
permitted collateral shall include U.S. Treasury Obligations, or senior debt obligations of
GNMA, FNMA or FHLMC (no collateralized mortgage obligations shall be permitted for these
providers) and collateral levels must be 102% of the total principal when the collateral type is
U.S. Treasury Obligations, 103% of the total principal when the collateral type is GNMA's and
104% of the total principal when the collateral type is FNMA and FHLMC ( "Eligible
Collateral "). In addition, the collateral shall be marked to market on a daily basis and the
provider or Custodian shall send monthly reports to the trustee, the City and the Insurer setting
forth the type of collateral, the collateral percentage required for that collateral type, the market
value of the collateral on the valuation date and the name of the Custodian holding the
collateral;
10. the investment agreement shall state and an opinion of
counsel shall be rendered, in the event collateral is required to be pledged by the provider under
the terms of the investment agreement, at the time such collateral is delivered, that the
Custodian has a perfected first priority security interest in the collateral, any substituted
collateral and all proceeds thereof;
11. the investment agreement must provide that if during its
term: (i) the provider shall default in its payment obligations, the provider's obligations under
the investment agreement shall, at the direction of the City or the trustee (who shall give such
direction if so directed by the Insurer), be accelerated and amounts invested and accrued but
unpaid interest thereon shall be repaid to the City or trustee, as appropriate, and (ii) the provider
shall become insolvent, not pay its debts as they become due, be declared or petition to be
declared bankrupt, etc. ( "event of insolvency "), the provider's obligations shall automatically be
accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the
City or trustee, as appropriate.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with water and wastewater
systems of comparable size and character to the System in such areas as are relevant to the
purposes for which they are retained.
"Qualified Insurance" means (i) so long as any 1998 Bonds or 2003 Bonds remain
outstanding, 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; and (ii)
from and after such time as no 1998 Bonds or 2003 Bonds remain outstanding, 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
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corporation, as of the time of issuance of such policy or surety bond, is then 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.
"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 continued pursuant to Section 10 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(0 of the Code.
"Refunded Bonds" mean the 1998 Bonds maturing on and after November 1, 2010.
"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 will be
deemed to be the sole Registered Owner.
"Reserve Account" means the account of that name in the Bond Account created pursuant
to Ordinance No. 2843 and continued pursuant to Section 11 of this ordinance.
"Reserve Account Requirement" means, with respect to the Bonds or Future Parity
Bonds, an amount equal to the least of (a) 125% of Average Annual Debt Service on all
outstanding Parity Bonds, (b) 10% of the stated principal amount of all outstanding Parity Bonds,
or (c) maximum Annual Debt Service on all outstanding Parity 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 Finance Director
pursuant to Section 2 of Ordinance No. 2843 and continued pursuant to Section 9 of this
ordinance.
"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.
"S &P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial
Services LLC business, a New York corporation, or its successor.
"Serial Bonds" means Parity Bonds other than Term Bonds.
"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.
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"State Loans" means Public Works Trust Fund loans, Drinking Water Revolving Fund
loans, and similar loans to the City for purposes related to the System that are administered by
the Public Works Board, Department of Commerce, or other successor or similar state agencies,
and are secured by a pledge of Gross Revenue.
"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" will also include the storm water utility of the City if the Council determines by
ordinance to combine it with the System.
"Tax Certificate" means the certificate with respect to federal tax matters relating to the
Bonds authorized to be executed by the Finance Director pursuant to the provisions of Section 14
of this ordinance
"Term Bonds" means the Bonds identified as such in Section 5 of this ordinance and any
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 Account,
and by a mandatory redemption schedule corresponding (as to time and amounts) to such
mandatory schedule of deposits.
"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 $7,825,000.
"2003 Bonds" means the City's Water and Wastewater Utility Revenue Refunding
Bonds, 2003, issued under date of November 18, 2003, pursuant to Ordinance No. 3148 of the
City and currently outstanding in the principal amount of $3,645,000.
Section 2. Compliance with Parity Conditions. The Council hereby finds and
determines, as required by Ordinance Nos. 3000 and 3148, as follows:
First, that the Bonds are being issued for the purpose of refunding outstanding revenue
bonds payable out of Gross Revenue;
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 Account or the Reserve
Account;
Third, this ordinance provides that (i) the principal of and interest on the Bonds are
payable out of the Bond Account, (ii) payments will be made into the Bond Account to satisfy
the Sinking Fund Requirements on the Term Bonds, and (iii) money in the Reserve Account
allocable to the 1998 Bonds will be used, together with proceeds of the Bonds or other funds of
the City legally available therefor and deposited into the Reserve Account, to satisfy the Reserve
Account Requirement for the Bonds, all as required by Ordinance Nos. 3000 and 3148; and
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Fourth, prior to the issuance of the Bonds, the City will have on file a Certificate of the
Finance Director that issuance of the Bonds will result in a debt service savings and will not
require an increase of more than $5,000 in any fiscal or calendar year for principal of and interest
on such Bonds over and above the amount required in such year for the principal of and interest
on the Refunded Bonds.
The parity conditions contained in Ordinance Nos. 3000 and 3148 having been complied
with or assured, the payments required in this ordinance to be made out of the Revenue Fund into
the Bond Account 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 Account to pay and secure the payment of the principal of and interest on the 1998 Bonds
and the 2003 Bonds.
Section 3. Authorization and Description of Bonds. To refund the Refunded
Bonds and pay costs of issuing the Bonds, the City will issue its water and wastewater utility
revenue refunding bonds in the aggregate principal amount of $7,590,000 (the "Bonds "). The
Bonds will be designated as the "City of Port Angeles, Washington, Water and Wastewater
Utility Revenue Refunding Bonds, 2009," will be dated as of the date of delivery of the Bonds to
the Underwriter, will be in the denomination of $5,000 each, or integral multiples thereof,
provided that no Bond may represent more than one maturity, will be fully registered as to
principal and interest, will be numbered separately in such manner and with any additional
identification as the Bond Registrar deems necessary for identification, and will bear interest
from their date (calculated on the basis of a year of 360 days and twelve 30 -day months) payable
on November 1, 2009, and semiannually thereafter on the first days of May and November 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:
* Term Bonds
Maturity Year Principal Interest
(November 1) Amount Rate
2009 $ 145,000 3.00%
2010 365,000 3.00
2011 375,000 3.00
2012 390,000 3.00
2013 400,000 3.00
2014 450,000 4.00
2015 465,000 4.00
2016 480,000 4.00
2017 500,000 4.00
2018 520,000 4.50
2019 540,000 4.50
2024* 2,960,000 4.00
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Principal of and interest on the Bonds are payable solely from the Bond Account. The
Bonds are not general obligations of the City or of the State of Washington or any political
subdivision thereof.
Section 4. 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 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 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 4(g) hereof, but such registration may be
transferred as herein provided. All such payments made as described in Section 4(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 will 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
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.
(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
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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.
(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
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
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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.
(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 5. Redemption; Purchase of Bonds.
(a) Optional Redemption. The Bonds maturing on November 1 in years 2009
through 2019, inclusive, are not subject to redemption prior to maturity. The Bonds maturing on
November 1, 2024 are subject to redemption prior to maturity, at the option of the City, on or
after November 1, 2019, in whole or in part on any date (and if in part with principal amounts 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, 2024
(which shall be deemed to be Term Bonds), shall be redeemed prior to maturity randomly (or
paid at maturity), not later than November 1 in the years as shown below (to the extent such
Bonds have not been previously redeemed or purchased) and in the principal amounts set forth
below, without premium, together with the interest accrued to the date fixed for redemption.
Term Bonds
Year Amount
* Final Maturity
2020 $ 555,000
2021 580,000
2022 600,000
2023 600,000
2024* 625,000
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(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 will
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 will be
given by the Bond Registrar on behalf of the City by first class mail, postage prepaid, no fewer
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 will be given as provided in the Letter of
Representations. The Bond Registrar will provide additional notice of redemption (at least
30 days) to the MSRB, in accordance with Section 19.
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 will contain the following information: (1) the redemption
date, (2) the redemption price, (3) any condition to the redemption (including, but not limited, to
the receipt of proceeds of refunding bonds), (4) if less than all outstanding Bonds are to be
redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the
Bonds to be redeemed, (5) that on the redemption date, upon the satisfaction of any conditions,
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, (6) that the Bonds
are to be surrendered for payment at the principal office of the Bond Registrar, (7) the CUSIP
numbers of all Bonds being redeemed, (8) the dated date of the Bonds, (9) the rate of interest for
each Bond being redeemed,, (10) the date of the notice, and (11) 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 will 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 a condition to the redemption has not been
satisfied, the City will 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 to
maintain compliance with duly promulgated regulations and recommendations regarding notices
of redemption of municipal securities.
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(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.
Section 6. Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
NO. $
STATEMENT OF INSURANCE
Assured Guaranty Corp. ( "Assured Guaranty "), a Maryland- domiciled insurance
company, has delivered its financial guaranty insurance policy (the "Policy ") with respect to the
scheduled payments of principal of and interest on this bond to The Bank of New York Mellon,
New York, New York, or its successor, as paying agent on behalf of the holders of the Bonds (the
"Paying Agent "). Such Policy is on file and available for inspection at the principal office of the
Paying Agent and a copy thereof may be obtained from Assured Guaranty or the Paying Agent.
All payments required to be made under the Policy shall be made in accordance with the
provisions thereof. The owner of this bond acknowledges and consents to the subrogation rights
of Assured Guaranty as more fully set forth in the Policy.
STATE OF WASHINGTON
CITY OF PORT ANGELES
WATER AND WASTEWATER UTILITY REVENUE REFUNDING BOND, 2009
INTEREST RATE:
MATURITY DATE:
REGISTERED OWNER: CEDE & CO.
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 November 1, 2009) 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).
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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 Account ").
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 ").
This bond is one of a series of bonds in the aggregate principal amount of $7,590,000,
issued under authority of Ordinance No. passed by the City Council on September 15,
2009 (the "Bond Ordinance "), to refund water and wastewater utility revenue bonds of the City.
The City hereby covenants and agrees with the owner of this bond that it will keep and
perform all the covenants of this bond and of the Bond Ordinance. Reference is hereby made to
the Bond Ordinance for the definitions of capitalized terms used herein.
The City does hereby pledge and bind itself to set aside from Gross Revenue and to pay
into the Bond Account 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 Account 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 1998 Bonds, the 2003 Bonds, and any revenue bonds of the
City hereafter issued on a parity with the 1998 Bonds, the 2003 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), as further
provided in the Bond Ordinance.
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
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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 Account and the
covenants and declarations of the City and other terms and conditions upon which the bonds
authorized thereby have been issued and other bonds ranking on a parity therewith may hereafter
be issued and outstanding.
This bond is a special limited obligation of the City and is not an obligation of the State
of Washington or any political subdivision thereof other than the City, and neither the full faith
and credit nor the taxing power of the City or the State of Washington is pledged to the payment
of this bond.
The bonds of this issue are deemed designated as "qualified tax - exempt obligations"
within the meaning of Section 265(b)(3)(B) of the Code.
The bonds of this issue are subject to redemption prior to maturity as provided in the
Bond Ordinance.
The bonds of this issue 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.
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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 29th day of September, 2009.
Attest:
[Manual or Facsimile Signature]
City Clerk
(SEAL)
Date of Authentication:
CITY OF PORT ANGELES,
WASHINGTON
By [Manual or Facsimile Signature]
Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Water and Wastewater Utility Revenue Refunding Bonds, 2009, of the
City of Port Angeles, Washington, dated September 29, 2009, described in the within mentioned
Bond Ordinance.
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:
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SIGNATURE GUARANTEED:
NOTICE: Signature(s) must be guaranteed
pursuant to law.
NOTE: The signature on this Assignment
must correspond with the name of the
Registered Owner as it appears upon the
face of the within bond in every particular,
without alteration or enlargement or any
change whatever.
Section 7. 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 bear thereon a Certificate of Authentication in the form set forth in
Section 6 hereof, manually executed by the Bond Registrar, will be valid or obligatory for any
purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication is
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 8. Refunding Plan; Application of Bond Proceeds; Findings.
(a) Refunding Plan. For the purpose of realizing a debt service savings and
benefiting the ratepayers of the System, the City will issue the Bonds to provide for the payment
of the redemption price of the Refunded Bonds at 100.5% of par, plus accrued interest, on
November 2, 2009.
(b) Refunding Account. There is hereby authorized to be created a special
account of the City known as the "2009 Water and Wastewater Refunding Account," which
account will be held by the Escrow Agent (as hereinafter defined) on behalf of the City and
drawn upon for the sole purpose of paying the interest payable on the Refunded Bonds through
and including their date of redemption, paying their redemption price, and paying costs related to
the refunding of the Refunded Bonds.
The proceeds of sale of the Bonds will be credited to the Refunding Account. Money in
the Refunding Account will be used immediately upon receipt to defease the Refunded Bonds as
authorized by Ordinance No. 3000 authorizing the issuance of the Refunded Bonds and to pay
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costs of issuance. The City will defease the Refunded Bonds by the use of money in the
Refunding Account to purchase certain Government Obligations (which obligations so
purchased, are herein called the "Escrow Securities "), bearing such interest and maturing as to
principal and interest in such amounts and at such times which, together with any necessary
beginning cash balance, will provide for the payment of:
(i) interest on the Refunded Bonds due and payable through and
including November 2, 2009; and
(ii) the redemption price of the Refunded Bonds (100.5% of the
principal amount thereof) on November 2, 2009.
The Escrow Securities will be purchased at a yield not greater than the yield permitted by
the Code and regulations relating to escrowed securities in connection with refunding bond
issues.
(c) Escrow Agent /Escrow Agreement. The City hereby appoints The Bank of
New York Mellon Trust Company, N.A., Seattle, Washington, as the Escrow Agent for the
Refunded Bonds (the "Escrow Agent "). A beginning cash balance, if any, and the Escrow
Securities shall be deposited irrevocably with the Escrow Agent in an amount sufficient to
defease the Refunded Bonds. The proceeds of the Bonds remaining in the Refunding Account
after acquisition of the Escrow Securities and provision for the necessary beginning cash balance
shall be utilized to pay expenses of the acquisition and safekeeping of the Escrow Securities and
expenses of the issuance of the Bonds.
To carry out the purposes of this section, the City Manager or the Finance Director are
authorized and directed to execute and deliver to the Escrow Agent an Escrow Deposit
Agreement in form acceptable to the Escrow Agent and approved by the City's bond counsel.
(d) Call for Redemption of Refunded Bonds. The City hereby irrevocably sets
aside sufficient funds out of the purchase of Escrow Securities from proceeds of the Refunded
Bonds to make the payments described in Subsection (b) of this Section.
The City hereby irrevocably calls the Refunded Bonds for redemption on November 2,
2009, in accordance with the provisions of Ordinance No. 3000 relating to redemption of the
Refunded Bonds.
The defeasance and call for redemption of the Refunded Bonds will be irrevocable after
the final establishment of the Refunding Account and delivery of the Escrow Securities to the
Escrow Agent.
The Escrow Agent is hereby authorized and directed to provide for the giving of notices
of the redemption of the Refunded Bonds in accordance with the applicable provisions of
Ordinance No. 3000. The costs of publication of such notices shall be an expense of the City.
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The City will take such actions as are found necessary to ensure that all necessary and
proper fees, compensation and expenses of the Escrow Agent for the Refunded Bonds are paid
when due.
(e) Findings of Savings and Defeasance. The Council hereby finds and
determines that the issuance and sale of the Bonds at this time will effect a saving to the City and
ratepayers of the System. In making such finding and determination, this Council has given
consideration to the interest on and the fixed maturities of the Bonds and the Refunded Bonds,
the costs of issuance of the Bonds, and the known earned income from the investment of the
proceeds of sale of the Bonds pending redemption and payment of the Refunded Bonds.
The Council hereby also finds and determines that the Escrow Securities to be deposited
with the Escrow Agent and the income therefrom, together with any necessary beginning cash
balance, are sufficient to redeem the Refunded Bonds and will discharge and satisfy the
obligations of the City with respect to the Refunded Bonds under Ordinance No. 3000.
Immediately upon the delivery of the Escrow Securities to the Escrow Agent and the deposit of
any necessary beginning cash balance, the Refunded Bonds will be deemed not to be outstanding
under Ordinance No. 3000, and the owners thereof will cease to be entitled to any lien, benefit or
security under such ordinance except the right to receive payment from the Escrow Securities and
beginning cash balance so set aside and pledged.
Section 9. Revenue Fund. Pursuant to Section 2 of Ordinance No. 2843, there has
heretofore been created in the office of the Finance Director a fund of the City known as the
"City of Port Angeles Water and Wastewater Utility Revenue Fund," which fund is hereby
confirmed and continued. 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 Account to pay the
interest on any Parity Bonds;
THIRD, to make all payments required to be made into the Bond Account to pay the
maturing principal of any Serial Bonds and to make all payments required to be made into the
Bond Account 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, including the payment obligations to
the Insurer hereunder) 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;
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FIFTH, to make all payments required to be made into the Reserve Account to secure the
payment of the principal of and interest on outstanding Parity Bonds;
SIXTH, to make all payments required 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 State 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
SEVENTH, to retire by redemption or purchase in the open market any outstanding water
and wastewater utility revenue bonds, warrants or obligations of the System, 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 10. 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, which fund is hereby confirmed and continued. In
accordance with the provisions of Section 9 of Ordinance No. 2843 and Section 9 of this
ordinance, the City may from time to time appropriate or budget amounts in the Revenue Fund
for deposit in the Rate Stabilization Fund and may from time to time withdraw amounts
therefrom for deposit in the Revenue Fund to prevent or mitigate water and wastewater rate
increases or for other lawful purposes of the City related to the System.
Section 11. Bond Account. Pursuant to Section 15 of Ordinance No. 2843, there has
heretofore been created in the office of the Finance Director a fund of the City known as the
"1994 Water and Wastewater Utility Revenue Bond Fund" (the "Bond Account "), which fund
and the accounts therein are hereby confirmed and continued. The Bond Account 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 Account shall be kept separate and apart from all other funds and
accounts of the City. All funds in the Bond Account are held in trust for the benefit of the
owners of all Parity Bonds at the time outstanding equally and ratably and without preference or
distinction as between Parity Bonds of different series and maturities.
(a) Debt Service Account. A special account known as the Debt Service
Account has been created in the Bond Account 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.
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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 that are Term Bonds on
or before the maturity date thereof.
(b) Reserve Account. A Reserve Account has been created in the Bond
Account 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 Account Requirement for the Bonds by depositing into the Reserve Account, from
proceeds of the Bonds or other available funds, an amount that, together with funds available in
the Reserve Account previously allocated to the Refunded Bonds, will be sufficient to satisfy the
Reserve Account Requirement with respect to the Bonds.
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 Account,
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
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
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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 9 of this ordinance.
(c) Lien of Bond Account. The Bonds, together with the interest thereon, shall
be payable from Gross Revenue, and such Gross Revenue is hereby pledged and set aside out of
the Revenue Fund into the Bond Account. 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 2003 Bonds 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 Account. All money in the Debt Service
Account or Reserve Account may be kept in cash or invested in Permitted Investments maturing
not later than the last maturity of the Bonds outstanding at the time of such purchase. Interest
earned on or profits made from the sale of such investments shall be deposited in and become a
part of the Revenue Fund.
Section 12. Adequacy of Revenues. The Council hereby declares that in fixing the
amounts to be paid into the Bond Account 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 Account 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 13. 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 will establish, maintain and collect lawful
rates and charges for the use of the services and facilities of the System, and will 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
all other amounts that the City may now be and hereafter become obligated to pay from Gross
Revenue by law or contract, and (b) together with Assessments actually collected, to pay the
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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 Account 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 Fiscal 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 Fiscal Year any amount withdrawn from the Rate Stabilization Fund and deposited in the
Revenue Fund. There shall be subtracted from Net Revenue for any Fiscal Year any amounts in
such year withdrawn from the Revenue Fund and deposited into the Rate Stabilization Fund in
such Fiscal Year. From and after such time as no 1998 Bonds or 2003 Bonds remain
outstanding, Annual Debt Service for purposes of this rate covenant shall be adjusted to reflect
any Debt Service Offset.
(b) Maintenance of System. The City 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, the
City provides for payment into the Bond Account of cash or "Government Obligations," as now
or hereafter defined in chapter 39.53 RCW, 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 the City sell or otherwise dispose of any part of the useful
operating properties of the System unless the City receives the prior written consent of the
Insurer and replaces such facilities or provides for payment into the Bond Account 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 Account 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 Account.
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
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System or that has 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 Account.
(d) Collection of Assessments. The City will 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 Account
without allocation of such Assessments to any particular series of Parity Bonds. It is hereby
provided further, however, that nothing in this ordinance or in this subsection shall be construed
to prohibit the City from issuing revenue bonds having a lien on Gross Revenue junior to the lien
on such revenue for the payment of the principal of and interest on Parity Bonds and pledging as
security for the payments of such junior lien bonds assessments levied in any utility local
improvement district that may have been created to pay part or all the cost of improvements to
the System for which such junior lien revenue bonds were specifically issued; provided,
however, that the City may not agree to acceleration as a remedy with respect to any bonds or
other obligations having a lien on Gross Revenue junior to the lien thereon of the Bonds without
the prior written consent of the Insurer.
(e) Books and Accounts. The City 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, which statement will be mailed to any owner of Parity Bonds upon request.
(f) Insurance. The City 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 the Council deems
necessary and advisable, 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 will promptly collect all service charges and
Assessments, determine in a timely manner all delinquencies, and take all necessary legal action
to enforce collection of such delinquencies.
(h) No Free Service. Except as permitted by law, the City will not furnish any
service of the System to any customer whatsoever free of charge.
Section 14. Tax Exemption.
(a) General. The City intends for interest on the Bonds to be excludable from gross
income for federal income tax purposes under sections 103 and 141 through 150 of the Code, and
the applicable regulations. The City covenants not to take any action, or knowingly omit to take
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any action within its control, that if taken or omitted would cause the interest on the Bonds to be
includable in gross income, as defined in section 61 of the Code, for federal income tax purposes.
(b) Tax Certificate. Upon the issuance of the Bonds, the Finance Director is
authorized to execute a federal tax certificate (the "Tax Certificate "), which will certify to
various facts and representations concerning the Bonds, based on the facts and estimates known
or reasonably expected on the date of issuance of the Bonds, and make certain covenants with
respect to the Bonds, including but not limited to the following:
(i) No Private Activity Bonds. The proceeds of the Bonds will not be used in
a manner that would cause the Bonds to be "private activity bonds" within the meaning of the
Code, as further described in the Tax Certificate. Moreover, the City covenants that it will use
the proceeds of the Bonds (including interest or other investment income derived from Bond
proceeds), regulate the use of property financed, directly or indirectly, with such proceeds, and
take such other and further action as may be required so that the Bonds will not be "private
activity bonds."
(ii) No Federal Guarantee. The City has not and will not take any action, and
has not knowingly omitted and will not knowingly omit to take any action within its control, that,
if taken or omitted would cause the Bonds to be "federally guaranteed" within the meaning of the
Code, as further described in the Tax Certificate.
(iii) No Arbitrage Bonds. The City reasonably expects that the proceeds of the
Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within
the meaning of the Code, as further described in the Tax Certificate.
(iv) No Hedge Bonds. The City reasonably expects that at least 85% percent
of the proceeds of the Bonds will be spent within three years of the date the Bonds are issued to
carry out the governmental purposes of the Bonds.
The City covenants that it will comply with the Tax Certificate unless it receives advice
from nationally recognized bond counsel or the Internal Revenue Service that certain provisions
have been amended or no longer apply to the Bonds.
(c) Arbitrage Rebate. If the City does not qualify for an exception to the
requirements of Section 148(f) of the Code relating to the payment of arbitrage rebate to the
United States, the City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the
meaning of the Code) be rebated.
(d) Special Designation. The Bonds are deemed designated as "qualified tax - exempt
obligations" within the meaning of Section 265(b)(3)(B) of the Code.
Section 15. 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
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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 Account for the
payment of the principal of and interest on the Bonds so provided for, and the owners of such
Bonds shall cease to be entitled to any lien, benefit or security of this ordinance except for the
right to receive the money so set aside and pledged, and such Bonds shall be deemed not to be
outstanding hereunder. Within 30 days of any defeasance of Bonds, the City shall provide notice
of defeasance of Bonds to the Insurer and the registered owners and to the MSRB in accordance
with Section 19 hereof.
Section 16. 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 of the Bonds on such revenue. 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 Account 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
Account 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 Account and the Reserve Account.
(2) If there are special assessments levied in any utility local
improvement district in which additions and improvements to and extensions of the System will
be constructed from the proceeds of such Future Parity Bonds, the ordinance authorizing such
Future Parity Bonds must require that such special assessments be paid into the Bond Account.
(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 must require such special assessments to be used
for the refunding or paid into the Bond Account.
(4) The principal of and interest on the Future Parity Bonds will be
payable out of the Bond Account, and the ordinance authorizing their issuance must further
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provide for payments into the Bond Account 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 must 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. From and after
such time as no 1998 Bonds or 2003 Bonds remain outstanding, Annual Debt Service for
purposes of this rate covenant shall be adjusted to reflect any Debt Service Offset.
The Adjusted Net Revenue shall be the Net Revenue for a period of any 12 consecutive
months out of the 24 months immediately preceding the date of delivery of such proposed Future
Parity Bonds as adjusted by such Professional Utility Consultant to take into consideration
changes in Net Revenue estimated to occur under the following conditions for each year after
such delivery for so long as any Parity Bonds, including the Future Parity Bonds proposed to be
issued, shall be outstanding:
(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 Finance Director 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
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the then outstanding Parity Bonds, the certificate described in subsection (a)(5) of this section is
not required if the Finance Director provides a certificate stating that upon the issuance of such
Future Parity Bonds (i) total debt service on all Parity Bonds (including the refunding bonds but
not including the bonds to be refunded thereby) will decrease, and (ii) the Annual Debt Service
for each year that any Parity Bonds (including the refunding bonds proposed to be issued) will be
outstanding will not increase by more than $5,000 by reason of the issuance of such Future Parity
Bonds.
(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 Account and the Reserve Account.
(d) Variable Rate Obligations. The City may not issue variable rate
obligations payable from Gross Revenue without the prior written consent of the Insurer.
Section 17. 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 Mayor or 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 18. 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 September 1, 2009, 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
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 19. Undertaking to Provide Ongoing Disclosure. This Section 19
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 the MSRB, in accordance with the Rule, the following annual financial
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information and operating data for the prior Fiscal Year (commencing in 2010 for the fiscal year
ended December 31, 2009):
(1) Annual financial statements, which statements may or may not be
audited, showing end fund balances for the Revenue 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;
(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 the MSRB. In lieu of providing such annual financial information and operating
data, the City may cross -refer to other documents available to the public on the MSRB's interne
website or filed with the Commission.
If not provided as part of the annual financial information discussed above, the City shall
provide to the MSRB 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.
(b) Material Events. The City agrees to provide or cause to be provided, in a
timely manner, to the MSRB notice of the occurrence of any of the following events with respect
to the Bonds, if material:
difficulties;
difficulties;
(1) Principal and interest payment delinquencies;
(2) Non - payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial
(4) Unscheduled draws on credit enhancements reflecting financial
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perform;
the Bonds;
(5) Substitution of credit or liquidity providers, or their failure to
(6) Adverse tax opinions or events affecting the tax - exempt status of
(7)
Modifications to rights of Bond holders;
(8) 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;
Bonds; and
(9)
Defeasances;
(10) Release, substitution or sale of property securing repayment of the
(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.
(c) Notification Upon Failure to Provide Financial Data. The City agrees to
provide or cause to be provided, in a timely manner, to the MSRB notice of the City's failure to
provide the annual financial information described in subsection (a) above on or prior to the date
set forth in subsection (a) above.
(d) EMMA, Format for Filings with the MSRB. Until otherwise designated by
the MSRB or the Commission, any information or notices submitted to the MSRB in compliance
with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access
system ( "EMMA "), currently located at www.emma.msrb.org. All notices, financial information
and operating data required by this undertaking to be provided to the MSRB must be in an
electronic format as prescribed by the 'MSRB. All documents provided to the MSRB pursuant to
this undertaking must be accompanied by identifying information as prescribed by the MSRB.
(e) 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
the MSRB of such opinion and the cancellation of this section.
Notwithstanding any other provision of this ordinance, the City may amend this
Section 19, and any provision of this Section 19 may be waived, with an approving opinion of
nationally recognized bond counsel and in accordance with the Rule. In the event of any
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amendment or waiver of a provision of this Section 19, 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 will 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 will 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.
(f) 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
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 20. Bond Insurance.
(a) Acceptance of Insurance. In accordance with the offer of the Underwriter
to purchase the Bonds, the Council hereby approves the commitment of Assured Guaranty Corp.
(the "Insurer ") to provide a bond insurance policy guaranteeing the payment when due of
principal of and interest on the Bonds (the "Bond Insurance Policy "). 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. The following provisions of this Section 20 shall apply so long as the Bond
Insurance Policy is in effect.
(b) Notices and Other Information. Any notice that is required to be given to
holders of the Bonds (the "Bondholders "), the MSRB, pursuant to the Rule or to the Bond
Registrar pursuant to this ordinance shall also be provided to the Insurer, simultaneously with the
sending of such notices. In addition, all information furnished pursuant to Section 19 of this
ordinance shall also be provided to the Insurer, simultaneously with the furnishing of such
information. All notices required to be given to the Insurer shall be in writing and shall be sent
by registered or certified mail addressed to: Assured Guaranty Corp., 31 West 52nd Street,
New York, New York 10019, (Re: Policy No. ), Attention: General Counsel, with a copy to
Assured Guaranty Corp., Attention: Risk Management Department- Public Finance Surveillance.
(1) The Insurer shall have the right to receive such additional
information as it may reasonably request.
(2) The City will permit the Insurer to discuss the affairs, finances and
accounts of the City or any information the Insurer may reasonably request regarding the security
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for the Bonds with appropriate officers of the City, and will use best efforts to enable the Insurer
to have access to the facilities, books and records of the City on any business day upon
reasonable prior notice.
(3) The Bond Registrar shall notify the Insurer of any failure of the
City to provide notices, certificates and other information under this ordinance.
(4) The City shall provide to the Insurer:
(i) the fiscal year budget of the City, with respect to the System,
within 30 days after the adoption of such budget;
(ii) not later than 180 days after the end of the fiscal year of the
City the unaudited financial statements of the City, with respect to the System, and the audited
financial statements of the City, with respect to the System, once available, together with a
certificate of the City stating that no event of default has occurred or is continuing under this
ordinance;
(iii) notice of any withdrawal of from the Reserve Account within
two business days after knowledge thereof other than (a) withdrawals of amounts in excess of the
Reserve Account Requirement and (b) withdrawals in connection with a refunding of any Parity
Bonds;
(iv) notice of any default known to the Bond Registrar within five
business days after actual knowledge thereof;
(v) prior notice of the advance refunding or redemption of any of
the Bonds, including the principal amount, maturities and CUSIP numbers thereof;
(vi) notice of the commencement of any proceeding by or against
the City commence under the United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law;
(vii) notice of making of any claim in connection with any
insolvency proceeding seeking the avoidance as a preferential transfer of any payment of
principal of, or interest on, the Bonds;
(viii) a full original transcript of all proceedings relating to the
execution of any amendment or supplement to this ordinance;
(ix) prior to issuing Future Parity Bonds, any official statement or
disclosure document or financing agreement pertaining to such Future Parity Bonds, which shall
include, without limitation, the applicable maturity schedule, interest rates, redemption and
security provisions pertaining to such Future Parity Bonds; and
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(x) within 30 days following any litigation or investigation that
may have a material adverse affect on the Gross Revenue or the System, notice of such litigation
or investigation.
(c) Defeasance. Notwithstanding anything herein to the contrary, in the event
that the principal and /or interest due on the Bonds shall be paid by the Insurer pursuant to the
Bond Insurance Policy, the Bonds shall remain outstanding for all purposes, not be defeased or
otherwise satisfied and not be considered paid by the City, and all covenants, agreements and
other obligations of the City to the Registered Owners shall continue to exist and shall run to the
benefit of the Insurer, and the Insurer shall be subrogated to the rights of such Registered Owners
including, without limitation, any rights that such Registered Owners may have in respect of
securities law violations arising from the offer and sale of the Bonds.
In the event that the Bonds are defeased pursuant to Section 15 of this ordinance, the
Insurer shall receive:
(1) An opinion of bond counsel stating that (i) such defeasance will
not adversely impact the exclusion from gross income for federal income tax purposes of interest
on the Bonds and (ii) the Bonds are no longer outstanding under this ordinance.
(2) An escrow agreement and an opinion of bond counsel regarding
the validity and enforceability of the escrow agreement. The escrow agreement shall provide
that:
(xi) Any substitution of securities shall require verification by an
independent certified public accountant and the prior written consent of the Insurer.
(xii) The City will not exercise any optional redemption of the
bonds secured by the escrow agreement or any other redemption other than mandatory sinking
fund redemptions unless (i) the right to make any such redemption has been expressly reserved in
the escrow agreement and such reservation has been disclosed in detail in the official statement
for the refunding bonds, and (ii) as a condition of any such redemption there shall be provided to
the Insurer a verification of an independent certified public accountant as to the sufficiency of
escrow receipts without reinvestment to meet the escrow requirements remaining following such
redemption.
(xiii) The City shall not amend the escrow agreement or enter into a
forward purchase agreement or other agreement with respect to rights in the escrow without the
prior written consent of the Insurer.
The documents listed in (c) above shall be delivered to the Insurer no later than five
(5)days prior to the funding of the escrow.
(d) Bond Registrar. The Insurer shall receive prior written notice of any name
change of the Bond Registrar or the removal, resignation or termination and replacement of the
Bond Registrar.
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(e) Amendments and Supplements. With respect to amendments or
supplements to this ordinance that do not require the consent of the Bondholders, the Insurer
must be given prior written notice of any such amendments or supplements. With respect to
amendments or supplements to this ordinance that do require the consent of the Bondholders, the
Insurer's prior written consent is required. Any amendments or supplements to this ordinance
that are consented to by the Insurer shall be sent to the rating agencies that have assigned a rating
to the Bonds. Notwithstanding any other provision of this ordinance, in determining whether the
rights of Bondholders will be adversely affected by any action taken pursuant to the terms and
provisions thereof, the City shall consider the effect on the Bondholders as if there were no Bond
Insurance Policy.
(f) Insurer as Third Party Beneficiary. To the extent that this ordinance
confer upon or gives or grants to the Insurer any right, remedy or claim under or by reason of this
ordinance, the Insurer is explicitly recognized as being a third party beneficiary hereunder and
may enforce any such right, remedy or claim conferred, given or granted hereunder.
(g) Control Rights. The Insurer shall be deemed to be the holder of all of the
Bonds for purposes of (1) exercising all remedies and directing the Bond Registrar to take actions
or for any other purposes following an event of default, and (2) granting any consent, waiver,
direction or approval or taking any action permitted by or required under this ordinance, to be
granted or taken by the Bondholders.
Anything in this ordinance to the contrary notwithstanding, upon the occurrence and
continuance of an event of default as defined herein, the Insurer shall be entitled to control and
direct the enforcement of all rights and remedies granted to the Bondholders or the Bond
Registrar for the benefit of the Bondholders under this ordinance subject to the rights of other
Parity Bond owners.
(h) Consent of the Insurer. Any provision of this ordinance expressly
recognizing or granting rights in or to the Insurer may not be amended in any manner that affects
the rights of the Insurer hereunder without the prior written consent of the Insurer.
(i) Consent of the Insurer in Addition to Bondholder Consent. Wherever this
ordinance require the consent of Bondholders, the Insurer's prior written consent shall also be
required.
(j) Consent of the Insurer in the Event of Insolvency. To the extent permitted
by law, any reorganization or liquidation plan with respect to the City must be acceptable to the
Insurer. In the event of any such reorganization or liquidation, the Insurer shall have the right to
vote on behalf of all Bondholders who hold Bonds guaranteed by the Insurer, absent a payment
default by the Insurer under the Bond Insurance Policy.
(k) Payment Procedure Under the Bond Insurance Policy. At least two (2)
business days prior to each payment date on the Bonds, the Bond Registrar will determine
whether there will be sufficient funds to pay all principal of and interest on the Bonds due on the
related payment date and shall immediately notify the Insurer or its designee on the same
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business day by telephone or electronic mail, confirmed in writing by registered or certified mail,
of the amount of any deficiency. Such notice shall specify the amount of the anticipated
deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be
deficient as to principal or interest or both. 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.
(1) The Bond Registrar shall, after giving notice to the Insurer as
provided above, make available to the Insurer and, at the Insurer's direction, to any fiscal agent,
the registration books of the City maintained by the Bond Registrar and all records relating to the
funds maintained under this ordinance.
(2) For so long as all Bonds are in fully- immobilized form, payments
of principal and interest shall be made as provided in accordance with the operational
arrangements of DTC referred to in the Letter of Representations. In the event that the Bonds are
no longer in fully- immobilized form, the Bond Registrar shall provide the Insurer and any fiscal
agent with a list of Registered Owners of Bonds entitled to receive principal or interest payments
from the Insurer under the terms of the Bond Insurance Policy, and shall make arrangements with
the Insurer, the fiscal agent or another designee of the Insurer to (i) mail checks or drafts to the
Registered Owners of Bonds entitled to receive full or partial interest payments from the Insurer
and (ii) pay principal upon Bonds surrendered to the Insurer, the fiscal agent or another designee
of the Insurer by the Registered Owners of Bonds entitled to receive full or partial principal
payments from the Insurer.
(3) The Bond Registrar shall, at the time it provides notice to the
Insurer of any deficiency pursuant to clause (1) above, notify Registered Owners of Bonds
entitled to receive the payment of principal or interest thereon from the Insurer (i) as to such
deficiency and its entitlement to receive principal or interest, as applicable, (ii) that the Insurer
will remit to them all or a part of the interest payments due on the related payment date upon
proof of its entitlement thereto and delivery to the Insurer or any fiscal agent, in form satisfactory
to the Insurer, of an appropriate assignment of the Registered Owner's right to payment, (iii) that,
if they are entitled to receive partial payment of principal from the Insurer, they must surrender
the related Bonds for payment first to the Bond Registrar, which will note on such Bonds the
portion of the principal paid by the Bond Registrar and second to the Insurer or its designee,
together with an appropriate assignment, in form satisfactory to the Insurer, to permit ownership
of such Bonds to be registered in the name of the Insurer, which will then pay the unpaid portion
of principal, and (iv) that, if they are entitled to receive full payment of principal from the
Insurer, they must surrender the related Bonds for payment to the Insurer or its designee, rather
than the Bond Registrar, together with the an appropriate assignment, in form satisfactory to the
Insurer, to permit ownership of such Bonds to be registered in the name of the Insurer.
(4) In addition, if the Bond Registrar has notice that any holder of the
Bonds has been required to disgorge payments of principal of or interest on the Bonds previously
due for payment pursuant to a final non - appealable order by a court of competent jurisdiction that
such payment constitutes an avoidable preference to such 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 electronic notice, confirmed in writing by registered or certified mail.
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(5) The Bond Registrar will be hereby irrevocably designated,
appointed, directed and authorized to act as attorney -in -fact for Bondholders as follows:
(i) If and to the extent there is a deficiency in amounts required to pay
interest on the Bonds, the Bond Registrar shall (a) execute and deliver to the Insurer, in form
satisfactory to the Insurer, an instrument appointing the Insurer as agent for such holders 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, (b) receive as designee of
the respective holders (and not as Bond Registrar) in accordance with the tenor of the Bond Insurance
Policy payment from the Insurer with respect to the claims for interest so assigned, and (c) disburse
the same to such respective holders; and
(ii) If and to the extent of a deficiency in amounts required to pay
principal of the Bonds, the Bond Registrar shall (a) execute and deliver to the Insurer, in form
satisfactory to the Insurer, an instrument appointing the Insurer as agent for such holder in any legal
proceeding related to the payment of such principal and an assignment to the Insurer of the Bonds
surrendered to the Insurer in an amount equal to the principal amount thereof as has not previously
been paid or for which moneys are not held by the Bond Registrar and available for such payment (but
such assignment shall be delivered only if payment from the Insurer is received), (b) receive as
designee of the respective holders (and not as Bond Registrar) in accordance with the tenor of the
Bond Insurance Policy payment therefore from'the Insurer, and (c) disburse the same to such holders.
(6) 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 Bond and claims for the interest in accordance with the
tenor of the assignment made to it under the provisions of this subsection or otherwise.
(7) Irrespective of whether any such assignment is executed and
delivered, the City hereby agrees for the benefit of the Insurer that:
(i) it recognizes that to the extent the Insurer makes payments directly
or indirectly (e.g., 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 holders 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
(ii) it will accordingly pay to the Insurer the amount of such principal
and interest, 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
holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal
and interest.
(iii) The City hereby agrees to pay or reimburse the Insurer all
amounts paid by the Insurer under the Bond Insurance Policy and to the extent permitted by law
any and all charges, fees, costs and expenses that the Insurer may reasonably pay or incur,
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including, but not limited to, fees and expenses of attorneys, accountants, consultants and
auditors and reasonable costs of investigations, in connection with (i) any accounts established to
facilitate payments under the Bond Insurance Policy, (ii) the administration, enforcement,
defense or preservation of any rights in respect of the trust agreement or any other financing
document, including defending, monitoring or participating in any litigation or proceeding
(including any bankruptcy proceeding in respect of the City or any affiliate thereof) relating to
this ordinance, any party to this ordinance or any other financing document or the transaction
contemplated by this ordinance; (iii) the pursuit of any remedies under this ordinance, to the
extent such costs and expenses are not recovered from other sources, or (iv) any amendment,
waiver or other action with respect to, or related to, this ordinance whether or not executed or
completed; costs and expenses shall include a reasonable allocation of compensation and
overhead attributable to time of employees of the Insurer spent in connection with the actions
described in clauses (ii) - (iv) above. In addition, the Insurer reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect
of this ordinance. The City will pay interest on the amounts owed in this paragraph from the date
of any payment due or paid, at the per annum rate of interest publicly announced from time to
time by JP Morgan Chase Bank, National Association, or its successor, at its principal office in
New York, New York as its prime lending rate (any change in such prime rate of interest to be
effective on the date such change is announced by JPMorgan Chase Bank, National Association)
plus three percent (3 %) per annum (the "Reimbursement Rate "). The Reimbursement Rate shall
be calculated on the basis of the actual number of days elapsed over a 360 -day year. In the event
JPMorgan Chase Bank ceases to announce its prime rate publicly, the prime rate shall be the
publicly announced prime rate or base lending rate of such national bank, as the Insurer shall
specify.
(8) In addition to any and all rights of reimbursement, subrogation and
any other rights pursuant hereto or under law or in equity, to the extent permitted by law the City
agrees to pay or reimburse the Insurer any and all charges, fees, costs, claims, losses, liabilities
(including penalties), judgments, demands, damages, and expenses that the Insurer or its officers,
directors, shareholders, employees, agents and each person, if any, who controls the Insurer
within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20
of the Securities Exchange Act of 1934, as amended, may reasonably pay or incur, including, but
not limited to, fees and expenses of attorneys, accountants, consultants and auditors and
reasonable costs of investigations, of any nature in connection with, in respect of or relating to
the transactions contemplated by this ordinance by reason of:
(i) any omission or action (other than of or by the Insurer) in
connection with the offering, issuance, sale, remarketing or delivery of the Bonds;
(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent of the City or the City
in connection with any transaction arising from or relating to this ordinance;
(iii) the violation by the City of any law, rule or regulation, or any
judgment, order or decree applicable to it;
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(iv) the breach by the City of any representation, warranty or
covenant under this ordinance or the occurrence, in respect of the City, under this ordinance of
any event of default or any event which, with the giving of notice or lapse of time or both, would
constitute any "event of default "; or
(v) any untrue statement or alleged untrue statement of a material
fact contained in any official statement, if any, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such claims arise out of or are based upon any untrue statement
or omission in information included in an official statement, if any, and furnished by the Insurer
in writing expressly for use therein.
(9) The Insurer shall be entitled to pay principal of or interest on the
Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the
City (as such terms are defined in the Bond Insurance Policy), whether or not the Insurer has
received a Notice (as defined in the Bond Insurance Policy) of Nonpayment or a claim upon the
Bond Insurance Policy.
(10) In addition, the Insurer shall, to the extent it makes any payment of
principal of or interest on the Bonds become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Bond Insurance Policy, and to evidence such
subrogation (i) in the case of claims for interest, the Bond Registrar shall note the Insurer's rights
as subrogee on the registration books of the City maintained by the Bond Registrar, upon receipt
of proof of payment of interest thereon to the registered holders of the Bonds, and (ii) in the case
of claims for principal, the Bond Registrar, if any, shall note the Insurer's rights as subrogee on
the registration books of the City maintained by the Bond Registrar, upon surrender of the Bonds
together with receipt of proof of payment of principal thereof.
(1) No Purchase by City. Without the prior written consent of the Insurer, no
Bonds insured by the Insurer shall be purchased by the City, or any of its affiliates, in lieu of
redemption, unless such Bonds are redeemed, defeased or cancelled.
(m) Interest Rate Exchange Agreements. The City may not enter into an
interest rate exchange agreement without the prior written consent of the Insurer.
Section 21. 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.
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(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.
(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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P:\20391 DOT20391 25B 09/15/09
Section 22. Lost or Destroyed Bonds. In case any Bonds are 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 if the owner pays the expenses and charges of the
Bond Registrar and the City in connection therewith and files 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 furnishes the City and the Bond Registrar with
indemnity satisfactory to both.
Section 23. Severability. If a court of competent jurisdiction declares any one or
more of the covenants and agreements provided in this ordinance to be performed on the part of
the City to be contrary to law, then such covenant or covenants, agreement or agreements, will be
null and void and will be deemed separable from the remaining covenants and agreements in this
ordinance and will in no way affect the validity of the other provisions of this ordinance or of any
Bonds.
Section 24. Effective Date. This ordinance will 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 the Council held on September 15, 2009.
(SEAL)
Attest:
By
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CITY OF PORT ANGELES,
WASHINGTON
By
P120391 DO1120391 25B 09/15/09
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. 3375 of the City (the "Ordinance "), as finally passed at a regular meeting of the City
Council held on September 15, 2009, and duly recorded in my office.
2. That said meeting was duly convened and held in all respects in
accordance with law, and to the extent required by law, due and proper notice of such meeting
was given; that a quorum was present throughout the meeting and a legally sufficient number of
members of the City Council voted in the proper manner for the passage of the Ordinance; that
all other requirements and proceedings incident to the proper passage of the Ordinance have been
duly fulfilled, carried out and otherwise observed, and that I am authorized to execute this
certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this 15`h day of September, 2009.
City Clerk
P:120391 DOT\20391 258 09/15/09