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HomeMy WebLinkAbout23-98 RESOLUTION NO. 23-98 A RESOLUTION of the City Council of the City of Port Angeles, Washington, accepting a bid for the sale of its Water and Wastewater Utility Revenue Refunding Bonds, 1998; fixing the date, maturity schedule, interest rates and other terms of such bonds; authorizing the provision of municipal bond insurance with respect to such bonds, ratifying and confirming a plan of refunding certain outstanding water and wastewater utility revenue bonds of the City; and providing for ongoing disclosure, all as provided by Ordinance No. 3000 of the City. WHEREAS, by Ordinance No. 3000, passed on September 15, 1998 (the "Bond Ordinance"), the City of Port Angeles, Washington (the "City") has authorized issuance of its Water and Wastewater Utility Revenue Refunding Bonds, 1998, in the aggregate principal amount of not to exceed $9,600,000 (the "Bonds"), to refund the City's outstanding 1994 Bonds maturing on and after November 1,2005 (the "Refunded Bonds"); and WHEREAS, the Bond Ordinance provides that the Bonds shall be sold by public sale and that the City Council of the City (the "Council") shall by resolution accept a bid and establish certain terms of the Bonds on the date of such public sale; and WHEREAS, the City has distributed a preliminary official statement and notice of sale with respect to the Bonds (the "Notice") and has conducted the public sale in accordance therewith; and WHEREAS, the Council wishes to accept the bid for the Bonds that it has received from NationsBanc Montgomery Securities (the "Purchaser") and to establish certain terms of the Bonds consistent with such bid, as provided herein; and WHEREAS, the exact principal amount of the Bonds cannot be determined until the prices of the Acquired Obligations required to defease the Refunded Bonds are established; and WHEREAS, in accordance with the Bond Ordinance, the Council wishes to (i) ratify and confirm the final plan of refunding the Refunded Bonds from proceeds of the Bonds, as set forth herein, (ii) establish provisions for ongoing disclosure, and (iii) provide for the purchase of Qualified Insurance with respect to the Bonds under terms and conditions set forth herein and in the commitment of the Bond Insurer approved herein, all as authorized by the Bond Ordinance; ... NOW, THEREFORE, BE IT RESOL VED by the City Council of the City of Port Angeles, Washington, as follows: Section I. Definitions. As used in this resolution the following words shall have the following meanings: "Bond Insurance Policy" means the municipal bond new issue insurance policy issued by the Bond Insurer that guarantees payment of principal of and interest on the Bonds. "Bond Insurer" means Financial Guaranty Insurance Company, a New York stock insurance company, or any successor thereto. "MSRB" means the Municipal Securities Rulemaking Board or any successor to its functions. "NRMSIR" means a nationally recognized municipal securities information repository. "Rule" means the SEC's Rule 15c2-12 under the Securities Exchange Act of 1934. "SEC" means the Securities and Exchange Commission. "SID" means a state information depository for the State of Washington (if one IS created). Capitalized terms used in this resolution and not otherwise defined herein shall have the meanings given such terms in the Bond Ordinance. Section 2. Ratification of Notice of Sale. Acceptance of Bids. and Authorization of Bonds. The issuance of the Bonds, designated as the City's Water and Wastewater Utility Revenue Refunding Bonds, 1998, in the aggregate principal amount of not to exceed $9,600,000, and the terms and conditions thereof set forth in the Official Notice of Bond Sale, attached hereto as Exhibit A (the "Notice"), are hereby ratified and confirmed, and the bid of NationsBanc Montgomery Securities (the "Purchaser") to purchase the Bonds, as set forth in the Purchaser's bid attached hereto as Exhibit B, is hereby accepted. The Bonds shall bear interest at the rates set forth in such bid and shall conform in all other respects to the terms and conditions specified in the Notice and Bond Ordinance. After the prices of the Acquired Obligations are established, the Finance Director, in consultation with the City's financial advisor, shall determine the final principal amount and maturity schedule of the Bonds in order to accomplish the plan of refunding set forth below; provided, however, that the aggregate principal amount shall not exceed $9,600,000. The Finance Director shall report to the Council within 24 hours regarding the final principal maturity amount and maturity schedule for the Bonds. The Bonds shall be subject to optional redemption as set forth in the Notice. -2- Section 3. Execution and Delivery of the Bonds. The proper officials of the City are hereby authorized and directed to do all things necessary or proper for the printing and execution of the Bonds and their delivery to the Purchaser in accordance with the terms of the Bond Ordinance and this resolution. Section 4. Refunding and Redemption of Refunded Bonds. A. Plan of Refunding and Call for Redemption. As provided in the Bond Ordinance, proceeds of the Bonds shall be deposited in the Refunding Account and used, together with other funds of the City, if necessary, to purchase certain the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance, will provide for the payment of: (a) The interest on the Refunded Bonds due and payable on and prior to November 1,2004; and (b) The redemption price (101% of the principal amount) payable on November 1, 2004 of the Refunded Bonds. The plan of refunding set forth in the Bond Ordinance is hereby ratified and confirmed. The selection of Norwest Bank Minnesota, N.A. as Escrow Agent is hereby ratified and confirmed. The City hereby irrevocably defeases and calls for redemption on November 1, 2004, the Refunded Bonds, in accordance with the provisions of Ordinance No. 2843 authorizing the redemption and retirement of the Refunded Bonds prior to their fixed maturities. The City hereby irrevocably sets aside sufficient funds through the purchase of Acquired Obligations and an initial cash deposit to make the payments, as specified in subparagraphs (a) and (b) above. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the final establishment of the escrow account and delivery of the Acquired Obligations and the requisite cash deposit, if any, to the Escrow Agent, except as provided in the Bond Ordinance relating to the substitution of securities. The Finance director is authorized and requested to provide whatever assistance is necessary to accomplish such defeasance. The Escrow Agent is hereby authorized and directed to notify the fiscal agency of the State of Washington to give notice of the redemption of the Refunded Bonds in accordance with the applicable provisions of Ordinance No. 2843. The Finance Director is authorized and requested to provide whatever assistance is necessary to accomplish such redemption and the giving of notice therefor. The costs of publication of such notice shall be an expense of the City. -3- The Escrow Agent is hereby authorized and directed to pay to the fiscal agency or agencies of the State of Washington sums sufficient to make, when due, the payments specified in subparagraphs (a) and (b) above. All such sums shall be paid from the money and Acquired Obligations deposited with said Escrow Agent pursuant to this section, and the income therefrom and proceeds thereof. All such sums so paid shall be credited to the Refunding Account. All money and Acquired Obligations deposited with said Escrow Agent and any income therefrom shall be held, invested and applied in accordance with the provisions of the Bond Ordinance and with the laws of the State of Washington for the benefit of the City and the owners of the Refunded Bonds. B. Findings of Savings and Defeasance. This 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, the 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 further finds and determines that the Acquired Obligations to be deposited with the Escrow Agent and the income therefrom, together with any necessary beginning cash balance, are sufficient to defease and redeem the above-referenced Refunded Bonds and will discharge and satisfy the obligations of the City with respect to such Refunded Bonds under Ordinance No. 2843 and the pledges of the City therein. Immediately upon the delivery of such Acquired Obligations to the Escrow Agent and the deposit of any necessary beginning cash balance, such Refunded Bonds shall be deemed not to be outstanding under Ordinance No. 2843 and shall cease to be entitled to any lien, benefit or security under such ordinance except the right to receive payment from the Acquired Obligations and beginning cash balance so set aside and pledged. Section 5. Authorization of Bond Insurance. In accordance with Section 21 of the Bond Ordinance, the Finance Director of the City has obtained a written commitment from the Bond Insurer that when the Bonds are delivered to the Purchaser the Bond Insurer will deliver the Bond Insurance Policy. The Finance Director is hereby authorized to execute such commitment on behalf of the City. The Council further authorizes and directs all proper officers, agents, attorneys and employees of the City to cooperate with the Bond Insurer in preparing such additional agreements, certificates, and other documentation on behalf of the City, consistent with the Bond Ordinance and this resolution, as shall be required by such commitment or as shall be necessary or advisable in providing for the Bond Insurance Policy. Section 6. Bond Insurance Provisions. So long as the Bonds are outstanding and the Bond Insurance Policy is in full force and effect, the following provisions shall apply: A. The Bond Insurer shall be provided with the following information: 1. Within 180 days after the end of each Fiscal Year, the budget for the new year, annual audited financial statements, a statement of the amount on -4- deposit in the Reserve Account as of the last valuation, and, if not presented in the audited financial statements, a statement of the revenues pledged to payment of Bonds in each such Fiscal Year; 11. Official statement or other disclosure, if any, prepared in connection with the issuance of additional debt of the System, whether or not it is on parity with the Bonds, within 30 days after the sale thereof; lll. Notice of any draw upon or deficiency due to market fluctuation in the amount, if any, on deposit in the Reserve Account; IV. Notice of the redemption, other than mandatory sinking fund redemption, of any of the Bonds, or of any advance refunding of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; v. Simultaneously with the delivery of the annual audited financial statements: a. The number of System users as of the end of the Fiscal Year; b. Notification of the withdrawal of any System user comprising 5% or more of System sales measured in terms of revenue dollars since the last reporting date; c. Any significant plant retirements or expanSIOns planned or undertaken since the last reporting date; d. Maximum and average daily usage for the Fiscal Year; e. Updated capital plans for expansion and improvement projects; and f Results of annual engineering inspections of the System, if any, occurring at the end of the Fiscal Year; and VI. Such additional information as the Bond Insurer may reasonably request from time to time. B. Notice of any redemption of Bonds shall either (i) explicitly state that the proposed redemption is conditioned on there being on deposit in the applicable fund or account on the redemption date sufficient money to pay the full redemption price of the Bonds to be redeemed or (ii) be sent only if sufficient money to pay the full redemption price of the Bonds to be redeemed is on deposit in the applicable fund or account. C. In determining whether a payment on the Bonds has been made, no effect shall given to payments made under the Bond Insurance Policy. -5- D. The City shall give the Bond Insurer immediate notice of the occurrence of any default in the payment of principal of or interest on the Bonds. E. For all purposes of the Bond Ordinance governing defaults and remedies, except the giving of notice of such defaults to Bondholders, the Bond Insurer shall be deemed to be the sole holder of the Bonds so long as it has not failed to comply with its payment obligations under the Bond Insurance Policy. F. The Bond Insurer shall be included as a party in interest and as a party entitled to request any trustee appointed by or on behalf of Bondowners or any applicable receiver to intervene in judicial proceedings that affect the Bonds or the security therefor. G. Any amendment or supplement to the Bond Ordinance, with the exception of that relating to the issuance of Future Parity Bonds, shall be subject to the prior written consent of the Bond Insurer. Any rating agency rating the Bonds must receive notice of each amendment and a copy thereof at least 15 days in advance of its execution or adoption. The Bond Insurer shall be provided with a full transcript of all proceedings relating to the execution of any such amendment or supplement. H. Only cash, direct noncallable obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, to which direct obligation or guarantee the full faith and credit of the United States of America has been pledged, Refcorp interest strips, CATS, TIGRS, STRPS, or defeased municipal bonds rated AAA by S&P or Aaa by Moody's (or any combination thereof) shall be used to effect defeasance of the Bonds unless the Bond Insurer otherwise approves. In the event of an advance refunding of the Bonds, the City shall cause to be delivered a verification report of an independent nationally recognized certified public accountant. If a forward supply contract is employed in connection with the refunding of the Bonds, (i) such verification report shall expressly state that the adequacy of the escrow to accomplish the refunding relies solely on the initial escrowed investments and the maturing principal thereof and interest income thereon and does not assume performance under or compliance with the forward supply contract, and (ii) the applicable escrow agreement shall provide that in the event of any discrepancy or difference between the terms of the forward supply contract and the escrow agreement and authorizing ordinance, the terms of the escrow agreement and authorizing ordinance shall be controlling. I. The following payment provisions shall apply: 1. If, on the third day preceding any interest payment date for the Bonds, there is not on deposit with the Bond Registrar sufficient money available to pay all principal of and interest on the Bonds due on such date, the Bond -6- Registrar shall immediately notifY the Bond Insurer and State Street Bank and Trust Company, N.A., New York, New York or its successor as the Bond Insurer's Fiscal Agent (the "Fiscal Agent") of the amount of such deficiency. If, by said interest payment date, the City has not provided the amount of such deficiency, the Bond Registrar shall simultaneously make available to the Bond Insurer and to the Fiscal Agent the registration books for the Bonds maintained by the Bond Registrar. In addition: a. The Bond Registrar shall provide the Bond Insurer with a list of the Bondholders entitled to receive principal or interest payments from the Bond Insurer under the terms of the Bond Insurance Policy and shall make arrangements for the Bond Insurer and its Fiscal Agent (1) to mail checks or drafts to Bondholders entitled to receive full or partial interest payments from the Bond Insurer and (2) to pay principal of the Bonds surrendered to the Fiscal Agent by the Bondholders entitled to receive full or partial principal payments from the Bond Insurer; and b. The Bond Registrar shall, at the time it makes the registration books available to the Bond Insurer pursuant to subparagraph (a) above, notifY Bondholders entitled to receive the payment of principal of or interest on the Bonds from the Bond Insurer (1) as to the fact of such entitlement, (2) that the Bond Insurer will remit to them all or part of the interest payments coming due subject to the terms of the Bond Insurance Policy, (3) that, except as provided in paragraph (ii) below, in the event that any Bondholder is entitled to receive full payment of principal from the Bond Insurer, such Bondholder must tender his Bond with the instrument of transfer in the form provided on the Bond executed in the name of the Bond Insurer, and (4) that, except as provided in paragraph (ii) below, in the event that such Bondholder is entitled to receive partial payment of principal from the Bond Insurer, such Bondholder must tender his Bond for payment first to the Bond Registrar, which shall note on such Bond the portion of principal paid by the Bond Registrar, and then, with an acceptable form of assignment executed in the name of the Bond Insurer, to the Fiscal Agent, which will then pay the unpaid portion of principal to the Bondholder subject to the terms of the Bond Insurance Policy. 11. In the event that the Bond Registrar has notice that any payment of principal of or interest on a Bond has been recovered from a Bondholder pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Bond Registrar shall, at the time it provides notice to the Bond Insurer, notifY all Bondholders that in the event that any -7- Bondholder's payment is so recovered, such Bondholder will be entitled to payment from the Bond Insurer to the extent of such recovery, and the Bond Registrar shall furnish to the Bond Insurer its records evidencing the payments of principal of an interest on the Bonds which have been made by the Bond Registrar and subsequently recovered from Bondholders, and the dates on which such payments were made. Ill. The Bond Insurer shall, to the extent it makes 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, (1) in the case of subrogation as to claims for past due interest, the Bond Registrar shall note the Bond Insurer's rights as subrogee on the registration books maintained by the Bond Registrar upon receipt from the Bond Insurer of proof of the payment of interest thereon to the Bondholders of such Bonds and (2) in the case of subrogation as to claims for past due principal, the Bond Registrar shall note the Bond Insurer's rights as subrogee on the registration books for the Bonds maintained by the Bond Registrar upon receipt of proof of the payment of principal thereof to the Bondholders of such Bonds. Notwithstanding anything in this resolution or the Bonds to the contrary, the Bond Registrar shall make payment of such past due interest and past due principal directly to the Bond Insurer to the extent that the Bond Insurer is a subrogee with respect thereto. 1. Future Parity Bonds issued with variable interest rates shall for all purposes be assumed to bear interest at the highest of: (i) the actual rate on the date of calculation, or if such Future Parity Bonds are not yet outstanding, the initial rate (if established and binding), (ii) if such Future Parity Bonds have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iii)(l) if interest on such Future Parity Bonds is excludable from gross income under the applicable provisions of the Internal Revenue Code, the most recently published Bond Buyer "Revenue Bond Index" (or comparable index if no longer published) plus 50 basis points, or (2) if interest is not so excludable, the interest rate on direct U.S. Treasury Obligations with comparable maturities plus 50 basis points; provided, however, that for purposes of any rate covenant measuring actual debt service coverage during a test period, variable rate indebtedness shall be deemed to bear interest at the actual rate per annum applicable during the test period. K. The notice addresses for the Bond Insurer and the Fiscal Agent shall be included: Financial Guaranty Insurance Company 115 Broadway New York, New York 10006 Attention: Risk Management -8- State Street Bank and Trust Company, N.A. 61 Broadway New York, New York 10006 Attention: Corporate Trust Department Section 7. Undertaking for Ongoing Disclosure. This Section 7 constitutes the City's written undertaking for the benefit of the owners and Beneficial Owners of the Bonds as required by Section (b)(5) of the Rule. A. Financial Statements/Operating Data. The City agrees to provide or cause to be provided to each NRMSIR and to the SID, if any, in each case as designated by the Commission in accordance with the Rule, the following annual financial information and operating data for the prior fiscal year (commencing in 1999 for the fiscal year ended December 31, 1998): (a) Annual financial statements, which statements mayor may not be audited, showing end fund balance for the country's general fund prepared in accordance with the Budget Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the official statement for the Bonds under the headings "Statement of Revenues, Expenditures and Changes in Retained Earnings" and "Comparative Balance Sheet"; (b) The principal amount of Parity Bonds and debt service coverage for Parity Bonds; (c) Water and wastewater rates; and (d) Number of water and wastewater customers of the System. Items (b) - (d) shall be required only to the extent that such information is not included in the annual financial statements provided pursuant to (a). Such annual information and operating data described above shall be provided on or before seven months after the end of the City's fiscal year. The City's fiscal year currently ends on December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to each then existing NRMSIR and the SID, if any. In lieu of providing such annual financial information and operating data, the City may cross-reference to other documents provided to the NRMSIR, the SID or to the Commission and, if such document is a final official statement within the meaning of the Rule, available from the MSRB. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budget Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) when and if available to each then existing NRMSIR and the SID, if any. -9- B. Material Events. The City agrees to provide or cause to be provided, in a timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, if material: (a) Principal and interest payment delinquencies; (b) Non-payment related defaults; ( c) Unscheduled draws on debt service reserves reflecting financial difficulties; (d) Unscheduled draws on credit enhancements reflecting financial difficulties; ( e) Substitution of credit or liquidity providers, or their failure to perform; (f) Adverse tax opinions or events affecting the tax-exempt status of the Bonds; (g) Modifications to rights of Bond holders; (h) 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; (i) Defeasances; (j) Release, substitution or sale of property securing repayment of the Bonds; and (k) Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises with reference to item (j) above that no property secures payment of the Bonds. The Reserve Account is the applicable debt service reserve, and the Bond Insurance Policy is the applicable credit enhancement. C. Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if any, notice of its failure to provide the annual financial information described in subsection A above on or prior to the date set forth in subsection A above. D. Termination/Modification. The City's obligations to provide annual financial information and notices of material events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. This section, or any provision hereof, shall be null and void if the City (i) obtains an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this section, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies each then existing NRMSIR and the SID, if any, of such opinion and the cancellation of this section. Notwithstanding any other provision of this motion, the City may amend this Section 7, and any provision of this Section 7 may be waived, with an approving opinion of nationally recognized bond counsel and in accordance with the Rule. In the event of any amendment or waiver of a provision of this Section 7, the City shall describe such amendment in the next annual -10- - report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a material event under subsection B, and (ii) the annual report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. E. Bond Owner's Remedies Under This Section. The right of any Bond Owner or Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to 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. 8. Ratification of Past Acts and Authorization of Future Acts. All actions and proceedings heretofore taken by the officers, agents, attorneys and employees of the City in connection with the issuance of the Bonds are hereby ratified, approved and confirmed. The Council further authorizes and directs all proper officers, agents, attorneys and employees of the City to carry out or cause to be carried out all Bonds of the City under the Bond Ordinance and this resolution and to perform such other acts as they shall consider necessary or advisable in connection with the printing, execution, and delivery of the Bonds. Section 9. Severability. If any one or more of the covenants and agreements provided in this resolution to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements in this resolution and shall in no way affect the validity of the other provisions of this resolution or of any Bonds. -11- Section 10. Effective Date. This resolution shall take effect immediately upon its adoption. ADOPTED by the City Council of the City of Port Angeles, Washington, at a regular meeting thereof this 3rd day of November, 1998. CITY OF PORT ANGELES, WASHINGTON a ~.I'lj-if?J~ __ ) Mayor ATTEST: 6Q~~~ City Clerk K:122501 I00016\DOT\DOT _ R2076 -12- EXHIBIT A OFFICIAL NOTICE OF BOND SALE CITY OF PORT ANGELES, WASHINGTON WATER AND W A STEW A TER UTILITY REVENUE REFUNDING BONDS, 1998 NOTICE IS HEREBY GIVEN that sealed bids will be received by the City of Port Angeles, Washington, at the offices of Preston Gates & Ellis LLP, 5000 Columbia Center, 701 Fifth Avenue, Seattle, Washington 98104- 7078, until10:oo a.m., Pacific Standard Time, on November 3, 1998, for the purchase of $9,675,000 . par value of Water and Wastewater Utility Revenue Refunding Bonds, 1998 of the City (the "Bonds"), at which time and place such bids will be publicly opened, read and considered. Bond Details. The Bonds will be dated November 1, 1998, and will bear interest from their date payable semiannually on the first days of May and November of each year, beginning May 1, 1999. All of the Bonds will be fully registered bonds in book-entry form only in denominations of $5,000 each or integral multiples of $5,000. Registration of Bonds. The Bonds are issuable only as fully registered bonds in book-entry form only. The principal of and interest on the Bonds are payable in lawful money of the United States of America by the fiscaT agencies of the State of Washington in the cities of Seattle, Washington and New York, New York. Maturities. The Bonds shall mature on the dates and in the amounts as follows *: Year Amount Year Amount 1999 $65,000 2012 400,000 2000 65,000 2013 415,000 2001 70,000 2014 430,000 2002 70,000 2015 450,000 2003 75,000 2016 475,000 2004 75,000 2017 500,000 2005 300,000 2018 525,000 2006 315,000 2019 545,000 2007 325,000 2020 570,000 2008 340,000 2021 595,000 2009 355,000 2022 630,000 2010 365,000 2023 655,000 2011 380,000 2024 685,000 As set forth more fully below under the caption "Bidding Requirements," bidders shall be required to designate as part of their bid whether principal payable in each year set forth above for the Bonds shall represent the maturity amount of serial bonds or a mandatory sinking fund redemption (or amount payable at final maturity) of term bonds. The Bonds shall be issued as serial bonds and tcrm bonds subject to mandatory sinking fund redemption in accordance with the designation of principal amounts madc by the successful bidder on the Official Bid Form for the Bonds. Modifications. The City reserves the right to change the principal maturity schedule shown above by announcing any such change not later than 2:00 p.m., Pacific Time, on the business day prior to the date fixed for the receipt of bids and sale of the Bonds on Bloomberg. If any such changes are announced, the award to the successful bidder and delivery of the Bonds will be made using the announced maturity schedule. Prospective bidders may request notification of any changes by contacting the City's financial advisor, Sound Finance Group, (206) 328-9251. The Bonds are being issued for advance refunding purposes. If the purchase price bid by the successful bidder for the Bonds is either insufficient to provide for the payment of issuance costs and the purchase of the necessary refunding escrow securities, or would provide more proceeds than needed for such purposes, the . Preliminary; subject to change. ... City reserves the right to increase or decrease the principal amount of the Bonds by an amount not to exceed $325,000. Such adjustment will be made after the opening of the bids but prior to the award of the Bonds, and shall be made by increasing or decreasing the principal amount of the Bonds maturing or payable from mandatory sinking fund redemption payments, in each year pro rata (to the extent possible) in integral multiples of $5,000. The purchase price bid by the successful bidder for the Bonds also shall be increased or decreased pro rata. The City also reserves the right to postpone the date established for the receipt of bids by announcing such change not later than 1:00 p.m., Pacific Time, on the business day prior to the date fixed for the receipt of bids and sale of the Bonds on Bloomberg. Redemotion. The Bonds maturing in the years 1999 through 2008 shall not be subject to optional redemption prior to their stated maturity dates. The Bonds maturing on and after November 1, 2009 are subject to redemption at the option of the City on and after November I, 2008 in whole or in part at any time at a price of par plus accrued interest, if any, to the date of redemp~on. Any term bonds issued shall be subject to mandatory sinking fund redemption in part prior to their scheduled maturity dates on May 1 or November 1 of certain years, as more fully described above, at a price of par plus accrued and unpaid interest, if any, to the date of redemption. Bond Insurance. The Bonds will be insured by FGIC. The City will pay costs of bond insurance. Rating. The City has requested a rating from Moody's Investors Service. Any other rating agency fees shall be the responsibility of the Purchaser. Bidding Reauirements. Each bidder, as a matter of information only and not as a part of the bid, shall state the estimated true interest cost calculated as hereinafter provided and shall submit bids only on the official bid form furnished by the City. Each bidder shall agree to pay accrued intcrest to datc of delivery, and no bid will be considered for less than 99% of the par value of the Bonds. All bids for the Bonds shall specifY the following: 1. The designation of each principal amount payable as either the maturity amount of a serial bond or a mandatory sinking fund redemption (or amount payable at final maturity) of a term 'bond. This designation shall be made by specifying "Last Year of Serial Maturities" in the spaces provided on the Official Bid Form. All principal payments scheduled to be made in and before the year specified as the "Last Year of Serial Maturities" shall be dcsignated as maturity amounts of serial bonds; all principal payments scheduled to be made after the year specified as "Last Year of Serial Maturities" and through the first year specified under "Years of Term Maturities" (and after such year, or any subsequent year designated under ItYears of Tenn Maturities," and through the next succeeding year designated thereunder) shall be designated as mandatory sinking fund redemptions of term bonds maturing in the year so designated. 2. The interest rate applicable to all such Bonds of each maturity. One or more rates of interest may be fixed for the Bonds, which rate or rates must be in integral multiples of 1/20 or 1/8 of one percent per annum. The interest rate bid for any maturity may not be lower than the interest rate bid for any preceding maturity. All Bonds having the same maturity (including term bonds subject to mandatory sinking fund redemption prior to maturity) must bear interest at the same rate. 3. The purchase price for such Bonds. A-2 Good Faith Deoosit. All bids shall be without condition, shall be sealed and accompanied by a good faith deposit of Ninety-six Thousand Seven Hundred Fifty Dollars ($96,750), either by a certified or bank cashier's check made payable to the order of the City of Port Angeles or a Financial Surety Bond. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Washington and preapproved by the City. Such bond must be submitted to the City, in care of Preston Gates & Ellis LLP, prior to the opening of the bids. The Financial Surety Bond must identify each bidder whose deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder using a Financial Surety Bond, then that Purchaser is required to submit its deposit to the City in the form of a certified or cashier's check or wire transfer, as instructed by the City, not later than 3:30 p.m. Pacific time, on the next business day following the award. If such deposit is not received by that time, the Financial Surety Bond may be drawn upon by the City to satisfy the deposit requirement. Each good faith deposit in a form other than a Financial Security Bond shall be returned promptly if the bid is not accepted. The good faith deposit of the Purchaser shall be security for the performance of such bid and will be cashed by the City and applied to the purchase price of the Bonds or be forfeited to the City as and for liquidated damages if the Purchaser shall fail or neglect to complete the purchase of said Bonds in accordance with its bid within 40 days after the acceptance thereof. Interest will not be allowed to the Purchaser on such good faith deposit: Award. The City reserves the right to reject any and all bids, and no bid may be witlldrawn after the same is filed with the Board unless permission is first obtained by resolution of the Board. Unless all bids are rejected, the City will award the Bonds at a regular meeting of the Board no later than 8:00 p.m. Pacific Standard Time on the day of the opening of the bids to the bidder whose bid results in the lowest true interest cost, such lowest true interest cost to be determined in accordance with the effective interest cost method of calculation by doubling the semiannual interest rate (compounded semiannually) necessary to discount tlle debt service payments from the payment dates to the date of the Bonds and to the price bid, not including accrued interest to the date of delivery. Security for the Bonds. The principal of and interest on the 1998 Bonds are payable solely from and secured by Gross Revenues and other funds pledged therefor under the Bond Ordinance, subject to the payment of Costs of Maintenance and Operation, as described under the caption "SECURITY FOR THE 1998 BONDS" herein. In addition to the 1998 Bonds, the City currently has $4,006,681 in outstanding Parity Debt which is secured by the revenues of its Water and Wastewater Utility System. The City has exclusive authority to set rates and charges for water and wastewater services. The 1998 Bonds are a special limited obligation of the City and are 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 the 1998 Bonds. Issue Price Information. No later than 1 hour after the award of the Bonds, the successful bidder shall advise the City and Bond Counsel of the initial reoffering prices to the public of each maturity of the Bonds (the "Initial Reoffering Price"). Simultaneously with or before dclivery of the Bonds, the successful bidder shall furnish to the City and Bond Counsel a certificate in form and substance acceptable to Bond Counsel (a) confirming the Initial Reoffering Prices, (b) certifying that a bona fide offering of Bonds has been made to the public (excluding bond houses, brokers, and other intermediaries), (c) stating the prices at which a substantial amount of each maturity of the Bonds was sold to the public (excluding bond houses, brokers, and other intermediaries), (d) stating the price at which any Bonds that remain unsold at the date of closing would have been sold on such date, and (e) stating the offering price of each Bond sold to institutional or other investors sold at discount. Delivery. It is understood that if, prior to delivery of the Bonds, the income receivable by the holders thereof shall become taxable by the terms of any federal income tax law, the successful bidder may, at its option, be relieved of its obligation to purchase said Bonds and in such case the amount of the deposit accompanying its bid shall be returned without interest. Closing will occur within 40 days from the date of sale in Seattle, Washington, or at such other place as the successful bidder shall choose at the bidder's expense. Settlement for the Bonds shall be made in federal funds A-3 available on the date and at the place of delivery. The legal opinion of Preston Gates & Ellis LLP, bond counsel of Seattle, Washington. approving the legality of the issuance of the Bonds, will be furnished to the successful bidder without charge, together with the usual closing documents. CUSIP Numbers. It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on the Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser thereof to accept delivery of and pay for the Bonds in accordance with the terms of the purchase contract. All expenses in relation to the printing of the CUSIP number on said Bonds shall be paid for by the City, but the charge of the CUSIP Bureau shall be paid by the Purchaser. Official Statement. A copy of the City's Preliminary Official Statement, dated October 26, 1998, may be obtained by contacting the City or its financial advisor, the addresses and telephone numbers of which are listed below. The Preliminary Official Statement is in a form deemed final by the City for the purpose of SEC Rule 15c2-12(b)(I). but is subject to revision, amendment and completion in a final Official Statement, which the City will deliver, at the expense of the City, to the Purchaser not later than seven business days after acceptance of the Purchaser's bid. No less than 125 copies of the final Official Statement will be delivered. By submitting the successful bid, the Purchaser agrees to file, or cause to be filed, within one business day following receipt thereof from the City, the final Official Statement with a nationally recognized municipal securities information repository designated by the Securities and Exchange Commission. The City will advise the Purchaser, by written notice, of any "developments that impact the accuracy and completeness of the key presentations" (within the meaning of Rule 15c2-12 (the "Rule")) contained in the final Official Statement, which may occur during the period commencing on the date of the acceptance by the City of the successful bid and ending on the 90th day next following that date of acceptance, unless the final Official Statement has been filed with such municipal securities infonnation repository, in which event such period shall end on the 25th day. Onl!;oine: Disclosure. The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking to provide ongoing disclosure about the City, for the benefit of the Bondholders on or before the date of delivery of the Bonds, as required by Section (b)(5)(i) of the Rule, which undertaking shall be a part of the Bond Resolution and in the form as summarized in the Preliminary Official Statement, with such changes as may be agreed to in writing by the Purchaser. Further Information. Additional copies of the Preliminary Official Statement, as well as copies of the Official Notice of Bond Sale and Bid for the purchase of the Bonds, may be obtained from the financial advisor, Sound Finance Group Inc., 1212 East Newton Street, Seattle, Washington (206-328-9251 - Fax 206-726-1170), or from the City, PO Box 1150, Port Angeles, Washington (360-417-4601). Please contact Sound Finance Group if you require any assistance in delivering your bid on the day of sale. Katherine K. Godbey, Finance Director City of Port Angeles A-4 NUV-U~-uO IU~ u/.oo t'. uau~ EXHI BIT B OFFICIAL BID FORM Crn" OF PORT ANGELES, WASHINGTON Water and Wastewater Utility Revenue Refunding Bonds, 1998 1 Sir: For all, and not less than ali, of $9.675,000 . (nine million six hundred seventy-five thousand) princi])al amount of the City of Port Angeles, Washington, Warer and Wastewater Utility Revenue Refunding Bonds, 1998 (the "1998 Bonds"), to be dated November I, . 1998, and payable on the dates and in the amounts shown herein, with interest payable semiannually on the. first day of May and November of each year oomrocncing on May I, 1999, at the rate Or rates specified herein until the Bonds are paid. we will pay S 9\ 15'1. OJ 144. '65 , plus aCQUed interest frem November 1. 1998 to the date of delivery of the BOnds. The interest rate or rates upon whiCh this bid is based are as follows .: Due Principal Interest Due Principal Interest November 1 Amount ~ November 1 Amount Rate 1999 S65,ooo ~ 2012 $400,000 ~ 2000 65.000 400 2013 415,000 ~ 2001 70,000 ~.~ 2014 430,000 2002 70,000 2015 450,000 2003 75.000 q..OU 2016 475,000 2004 75,000 4,Oll 2017 SOO,OOO 2005 300,000 4-.0D 2018 525.000 ~: .If(6 2006 3 J S,OOO 4-.CV 2019 545,000 2007 325,000 4-.00 2020 570,000 4.71:\ 2008 340,000 ~/D 2021 595,000 4.JrO 2009 355,000 ~ 2022 630,000 ~X<;"' 2010 365.000 2023 655,000 .qD 20ll 380,000 2024 685,000 1-.&:1(::) We hereby designate the Last Year of Serial Maturities of the Bonds to be ~ ~ Term Maturities of the Bonds to be as follows (leave blank ifno Tc;:rm Maturilies are cd): ~ V f{\ y.... .r To... Matu"".. I........ Ra.. This b~ ~~t o=>rdanoe with a.d is subjoa to all .r the prov;si.ns 01 die Official N.tice of Bon<! Sale dated 1998, which is incorporated herein by tbis reference. Our calculation, but not constituting any part of the foregoing bid, of the true inte~ cost of the Bonds is 1; 055:2 %. We hereby specify the Years of 10/ 2ft; A Deposit (as defined in the Official Notice of Bond Sale) in respect of the Bonds in the amount of $96,750 payable to the City of Port An:eles is attached hereto, which if provided in the form of a check is to be returned to uS if this bid is not aco:::pted. If this bid is accepted, that eheck shall be cashcd and the proceeds may be: invC$tc:cI and retained by the City, and when the Bonds lU'e delivered and paid for under the terms of this bid shall be considered as an advance part payment thereafter. or shall be retained as and for liquidated damages in the event we fail to take up and pay for the Bonds al the price agreed upon under the terms of this bid. 1<espec!fu1ly submitted !his 3 v:!- day .r~, 1998. _ n ~ . . . ~~~ -4#id ~ seN~ir/jj1J'-r-t5.(i'I/ cf<-'/ <) eCtJ R. r?tV , (Name of Contact Person) ~tLJ ) 3..;8- 87/{ i.."_ . (Telephone Number) Good faith eheek returned and receipt thereof acknowledged. I SUtried: For. . Pn:limiftllly. subject to ~gc. 11/03/98 TUE 07:51 [TX/RX NO 7370]