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HomeMy WebLinkAbout3185CITY OF PORT ANGELES, WASHINGTON UNLIMITED TAX GENERAL OBLIGATION REFUNDING BONDS, 2005 ORDINANCE NO. 3185 AN ORDINANCE of the City of Port Angeles, Washington, authorizing the issuance and sale of unlimited tax general obligation refunding bonds of the City in the aggregate principal amount of $2,345,000 to refund certain outstanding unlimited tax general obligation bonds of the City; authorizing the appointment of an escrow agent and the execution of an escrow agreement related to such refunding; providing the date and form of said bonds; providing for the disposition of the bond proceeds; providing for the annual levy of taxes to pay the principal of and interest on the bonds; and approving the sale of the bonds. PASSED: February 1, 2005 Prepared by: PRESTON GATES & ELLIS LLP Seattle, Washington TABLE OF CONTENTS' Page Section 1. Definitions 2 Section 2. Authorization of Bonds 4 Section 3. Registration, Exchange and Payments 5 Section 4. Redemption; Purchase of Bonds 8 Section 5. Form of Bonds 8 Section 6. Execution of Bonds 10 Section 7. Pledge of Taxes and Credit 11 Section 8. Defeasance 11 Section 9. Tax Covenants; Special Designation 11 Section 10. Refunding Account and Call for Redemption of Refunded Bonds 12 Section 11. Sale of Bonds 14 Section 12. Official Statement 14 Section 13. Undertaking to Provide Ongoing Disclosure 14 Section 14. Bond Insurance 17 Section 15. Lost or Destroyed Bonds 19 Section 16. General Authorization 19 Section 17. Severability 19 Section 18. Effective Date 20 • Neither this Table of Contents nor the preceding cover page is a part of this ordinance. -i- P9DOTDOTI N3 05/02/01 ORDINANCE NO. 3185 AN ORDINANCE of the City of Port Angeles, Washington, authorizing the issuance and sale of unlimited tax general obligation refunding bonds of the City in the aggregate principal amount of $2,345,000 to refund certain outstanding unlimited tax general obligation bonds of the City; authorizing the appointment of an escrow agent and the execution of an escrow agreement related to such refunding; providing the date and form of said bonds; providing for the disposition of the bond proceeds; providing for the annual levy of taxes to pay the principal of and interest on the bonds; and approving the sale of the bonds. WHEREAS, the City of Port Angeles, Washington (the "City "), now has outstanding $2,445,000 principal amount of its unlimited tax general obligation bonds issued under date of November 15, 1995 (the "1995 Bonds "), pursuant to Ordinance No. 2892 of the City, passed on October 17, 1995, and Resolution No. 26 -95 of the City Council adopted on November 7, 1995 (together, the "1995 Bond Ordinance "), as follows: Maturities (November 1) Principal Amounts Interest Rates 2005 $ 165,000 4.70% 2006 175,000 4.80 2007 185,000 4.90 2008 195,000 5.00 2009 210,000 5.10 2010 220,000 5.20 2011 230,000 5.25 2012 245,000 5.40 2013 260,000 5.50 2014 270,000 5.50 2015 290,000 5.50 ; and WHEREAS, Ordinance No. 2892 authorizes the defeasance and redemption of the 1995 Bonds maturing on and after November 1, 2006, on and after November 1, 2005 (in whole or in part on any date), at a price of par plus accrued interest, if any, to the date of redemption; and WHEREAS, after due consideration it appears to the City Council of the City (the "Council ") that the callable portions of the 1995 Bonds may be refunded by the issuance and sale of its unlimited tax general obligation refunding bonds to effect a savings to the City and its taxpayers; and WHEREAS, to effect such refunding most advantageously to the City and its taxpayers, it is hereby found necessary and advisable that an escrow agent be appointed and that certain Government Obligations be purchased from proceeds of sale of the refunding bonds and certain money of the City; and WHEREAS, it appears to the Council that it is in the best interests of the City and its taxpayers that the Bonds be sold to Seattle - Northwest Securities Corporation on the terms set forth herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES, WASHINGTON, DO ORDAIN, as follows: Section 1. Definitions. The following words and terms as used in this ordinance shall have the following meanings for all purposes of this ordinance, unless some other meaning is plainly intended. Acquired Obligations means the Government Obligations acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds. Beneficial Owner means the beneficial owner of all or a portion of a Bond while such Bond is in fully immobilized form. Bond Fund means the General Obligation Bond Redemption Fund maintained by the City. Bond Insurance Policy means the municipal bond insurance policy issued by the Insurer insuring the payment when due of the principal of and interest on the Bonds as provided therein. Bond Register means the registration records for the Bonds maintained by the Bond Registrar. 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, transferring ownership of the Bonds, and paying the principal of and interest on the Bonds. Bonds mean the $2,345,000 principal amount of City of Port Angeles, Washington, Unlimited Tax General Obligation Bonds, 2005, issued pursuant to this ordinance. City means the City of Port Angeles, Washington, a municipal corporation duly organized and existing under the laws of the State of Washington. -2- P1DOT\DOTIN3 05/02/01 Code means the Internal Revenue Code of 1986, as amended, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the United States Treasury Department or the Internal Revenue Service, to the extent applicable to the Bonds. Commission means the Securities and Exchange Commission. Council means the City Council as the general legislative authority of the City. DTC means The Depository Trust Company of New York, as depository for the Bonds, or any successor or substitute depository for the Bonds. Escrow Agent means U.S. Bank Trust National Association. Escrow Agreement means the Escrow Deposit Agreement to be entered into by the City and the Escrow Agent pursuant to Section 7 of this ordinance. Finance Director means the duly qualified, appointed and acting Finance Director of the City or any other officer who succeeds to the duties now delegated to that office. Government Obligations means those obligations now or hereafter defined as such in Chapter 39.53 RCW, as such chapter may be hereafter amended or restated. Insurer means XL Capital Assurance Inc., a stock insurance company incorporated under the laws of the State of New York, or any successor thereto or assignee thereof, as issuer of the Bond Insurance Policy. Letter of Representations means a blanket issuer letter of representations from the City to DTC dated September 23, 1998. MSRB means the Municipal Securities Rulemaking Board or any successor to its functions. 1995 Bond Ordinance means Ordinance No. 2892, passed by the Council on October 17, 1995, and Resolution No. 26 -95 of the Council adopted on November 7, 1995. 1995 Bonds means the City of Port Angeles, Washington, Unlimited Tax General Obligation Bonds, 1995, issued pursuant to the 1995 Bond Ordinance under date of November 15, 1995, in the original principal amount of $3,600,000. NRMSIR means a nationally recognized municipal securities information repository. Refunded Bonds means the 1995 Bonds maturing on and after November 1, 2006. -3- P: \DOT\DOT1 N3 05/02/01 Refunding Account means the account by that name established within the Bond Fund and maintained by the Escrow Agent pursuant to Section 10 of this ordinance. Registered Owner means the person named as the registered owner of a Bond in the Bond Register. For so long as the Bonds are held in book -entry only form, DTC shall be deemed to be the sole Registered Owner. 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. SID means a state information depository for the State of Washington. Underwriter means Seattle - Northwest Securities Corporation. In this ordinance, unless the context otherwise requires: (a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of this ordinance; (b) Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; (c) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (d) Any headings preceding the text of the several articles and Sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (e) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of Bonds. For the purpose of refunding the Refunded Bonds and thereby effecting a savings to the City and its taxpayers, the City shall issue its unlimited tax general obligation refunding bonds in the aggregate principal amount of $2,345,000 (the "Bonds "). The Bonds shall be designated the "City of Port Angeles, Washington, Unlimited Tax General Obligation Bonds, 2005" (the "Bonds "); shall be dated as of the date of their initial delivery to the Underwriter; shall be fully registered as to both principal and interest; shall be in the denomination of $5,000 each, or any integral multiple thereof, provided that no Bond shall represent more than one maturity; shall be numbered separately in -4- P \ DOT DOTI N3 05/02/01 such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; and shall bear interest from their date payable on the first days of each May and November, commencing on May 1, 2005 at the following per annum interest rates and mature on November 1 of the following years in the following principal amounts: Maturity Years (November 1) Principal Amounts Interest Rates 2005 $ 45,000 3.00% 2006 190,000 3.00 2007 200,000 3.00 2008 205,000 3.00 2009 215,000 3.00 2010 225,000 4.00 2011 230,000 4.00 2012 245,000 4.00 2013 255,000 4.00 2014 260,000 4.00 2015 275,000 4.00 Section 3. Registration, Exchange and Payments. (a) Bond Registrar /Bond Register. The City hereby specifies and adopts the system of registration and transfer for the Bonds approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies, currently including The Bank of New York in New York, New York (the "Bond Registrar "). The City shall cause the Bond Register to be maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration of transfer of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time at the option of the City upon prior notice to the Bond Registrar, DTC, each NRMSIR and SID, if any, and a successor Bond Registrar appointed by the City. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver 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 3(h) hereof, but such Bond may be transferred as herein provided. All such payments made as described in Section 3(h) shall be valid and shall satisfy the liability of the City upon such Bond to the extent of the amount or amounts so paid. -5- P: \DOT\DOTI N3 05/02/01 (c) DTC Acceptance /Letter of Representations. The Bonds shall initially be held in fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC, the City has heretofore executed and delivered to DTC the 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 for 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 Bonds, any notice that 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), the selection by DTC or any DTC participant of any person to receive payment in the event of a partial redemption of the Bonds, 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, and all references in this ordinance to the Registered Owners shall mean DTC or its nominee and shall not mean the owners of any beneficial interest in any Bonds. (d) Use of Depository. (i) The Bonds shall be registered initially in the name of "CEDE & Co. ", as nominee of DTC, with a single Bond for each maturity in a denomination equal to the total principal amount of such maturity. Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be transferred except (A) 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; (B) to any substitute depository appointed by the City pursuant to subsection (ii) below or such substitute depository's successor; or (C) to any person as provided in subsection (iv) below. (ii) 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 City may appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (iii) In the case of any transfer pursuant to clause (A) or (B) of subsection (i) 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 then outstanding, registered in the name of such successor or such substitute depository, or its nominee, all as specified in such written request of the City. (iv) In the event that (A) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained, or (B) the City determines that it is in the best interest of the beneficial owners of the -6- P :DOT\DOTIN3 05/02/01 Bonds that the Bonds be provided in certificated form, the ownership of such Bonds may then be transferred to any person or entity as herein provided, and 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 in certificated form, to issue Bonds in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request on behalf of the City to the Bond Registrar, new Bonds shall be issued in the appropriate denominations and registered in the names of such persons as are provided 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, 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 the period beginning at the opening of business on the 15th day of the month next preceding any interest payment date and ending at the close of business on such interest payment date, or, in the case of any proposed redemption of the Bonds, after the mailing of the notice of such redemption. (f) 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 (g) Registration Covenant. The City covenants that, until all Bonds have been surrendered and cancelled, it will maintain a system for recording the ownership of each Bond that complies with the provisions of Section 149 of the Code. (h) 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. Interest on the Bonds shall be calculated based on a year of 360 days and twelve 30 -day months. For so long as all Bonds are in fully- immobilized form, payments of principal and interest shall be made in accordance with the operational arrangements of DTC referred to in the Letter of Representations. -7- P: \DOT\DOTIN3 05/02/01 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. 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; provided, howver, that if so requested in writing by the Registered Owner of at least $1,000,000 principal amount of Bonds, interest will be paid by wire transfer on the interest payment date to an account with a bank located within the United States. Section 4. Redemption; Purchase of Bonds. (a) No Optional Redemption. The Bonds are not subject to redemption prior to their stated maturities. (b) Purchase of Bonds. The City reserves the right to purchase any of the Bonds offered to the City at any time at a price deemed reasonable by the City. Section 5. Form of Bonds. The Bonds shall be in substantially the following form: UNITED STATES OF AMERICA NO. $ [BOND INSURER LEGEND] STATE OF WASHINGTON CITY OF PORT ANGELES UNLIMITED TAX GENERAL OBLIGATION BOND, 2005 INTEREST RATE: MATURITY DATE: CUSIP NO.: REGISTERED OWNER: PRINCIPAL AMOUNT: THE CITY OF PORT ANGELES, WASHINGTON (the "City"), a municipal corporation duly organized and existing under the laws of the State of Washington, hereby acknowledges -8- P: \DOTOOTI N3 05/02/01 itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated 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 until payment of this bond at the Interest Rate set forth above, payable on the first days of each May and November, commencing on May 1, 2005. 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 are held 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 DTC. This bond is one of an authorized issue of bonds of like date and tenor, except as to number, amount, rate of interest and date of maturity, in the aggregate principal amount of $2,345,000 (the "Bonds "), issued for the purpose of refunding certain outstanding general obligation bonds of the City. The Bonds are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and ordinances duly adopted by the City Council, including Ordinance No. (the "Bond Ordinance "). Unless otherwise defined in this bond, capitalized terms used herein shall have the meanings given such terms in the Bond Ordinance. The Bonds are not subject to optional redemption prior to their stated maturities. The Bonds are not "private activity bonds" as such term is defined in the Internal Revenue Code of 1986, as amended (the "Code "). The Bonds have been designated by the City as "qualified tax- exempt obligations" under Section 265(b) of the Code for banks, thrift institutions and other financial institutions. The City hereby irrevocably covenants that, unless the principal of and interest on the Bonds are paid from other sources, it will make annual levies of taxes without limitation as to rate or amount upon all property in the City subject to taxation in amounts sufficient to pay such principal and interest as the same shall become due and shall provide for the deposit of sufficient money in the Bond Fund to pay such principal and interest. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and for the prompt payment of such principal and interest. The pledge of tax levies may be discharged prior to maturity of the Bonds by making provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond have happened, been done and performed and that the issuance of this bond and the Bonds does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. -9- P:OOTOOTI N3 05/02/01 IN WITNESS WHEREOF, the City of Port Angeles, Washington has caused this bond to be executed by the manual or facsimile signatures of the Mayor and City Clerk and a facsimile of the seal of the City to be imprinted or otherwise reproduced hereon as of , 2005. ATTEST: CITY OF PORT ANGELES, WASHINGTON By /s/ manual or facsimile Mayor /s/ manual or facsimile City Clerk The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially the following form: CERTIFICATE OF AUTHENTICATION Date of Authentication: This is one of the City of Port Angeles, Washington, Unlimited Tax General Obligation Bonds, 2005, dated , 2005, as described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY as Bond Registrar By /s/ Authorized Signer Section 6. Execution of Bonds. The Bonds shall be executed on behalf of the City with the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the City Clerk, and shall have the seal of the City impressed, imprinted or otherwise reproduced thereon. In case either or both of the officers who have signed or attested any of the Bonds 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, and any Bond may be signed or attested on behalf of the City by officers who at the date of actual execution of such Bond are the proper officers, although at the nominal date of execution of such Bond such officer was not an officer of the City. -10- P: \OOT\DOT1 N3 05/02/01 Only Bonds that bear a Certificate of Authentication in the form set forth in Section 5, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered and are entitled to the benefits of this ordinance. Section 7. Pledge of Taxes and Credit. The City hereby irrevocably covenants that, unless the principal of and interest on the Bonds are paid from other sources, it will make annual levies of taxes without limitation as to rate or amount upon all property in the City subject to taxation in amounts sufficient to pay such principal and interest as the same shall become due and shall provide for the deposit of sufficient money in the Bond Fund to pay such principal and interest. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and for the prompt payment of such principal and interest. Section 8. Defeasance. In the event that money and/or Government Obligations 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 part or all of the Bonds in accordance with their terms, are set aside in a special account of the City to effect such redemption and retirement, and such money and the principal of and interest on such Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Bond Fund for the payment of the principal of and interest on the Bonds so provided for, and such Bonds shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive the money so set aside and pledged, and such Bonds shall be deemed not to be outstanding hereunder. Within 60 days of any defeasance of Bonds, the Bond Registrar shall provide notice of such defeasance to Registered Owners, the Insurer, and to each NRMSIR and SID, if any, in accordance with Section 13. Section 9. Tax Covenants; Special Designation. The City hereby covenants that it will not make any use of the proceeds of sale of the Bonds or any other funds of the City that may be deemed to be proceeds of such Bonds pursuant to Section 148 of the Code that will cause the Bonds to be "arbitrage bonds" within the meaning of said section and said Regulations. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bonds) and the applicable Regulations thereunder throughout the term of the Bonds. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bonds to constitute "private activity bonds" under Section 141 of the Code. The City hereby designates the Bonds as "qualified tax- exempt obligations" under Section 265(b)(3) of the Code for banks, thrift institutions and other financial institutions. The City does not anticipate issuing more than $10,000,000 in tax exempt obligations during 2005. POOTOOT1 N3 05/02/01 Section 10. Refunding Account and Call for Redemption of Refunded Bonds. (a) Refunding Account. There is hereby authorized to be created in the Bond Fund an account known as the "2005 Unlimited Tax General Obligation Refunding Account" (the "Refunding Account "), which Account is to be held by the Escrow Agent and drawn upon for the sole purpose of paying the principal of and interest on the Refunded Bonds until their date of redemption and of paying costs related to issuance of the Bonds and refunding the Refunded Bonds. The proceeds of sale of the Bonds shall be credited to the Refunding Account and, together with other funds of the City, if necessary, shall be used immediately upon receipt thereof to defease the Refunded Bonds as authorized by the 1995 Bond Ordinance and pay costs of issuance and refunding. The City shall defease the Refunded Bonds and discharge such obligations by the use of money in the Refunding Account to purchase certain Government Obligations (which obligations so purchased, are herein called the "Acquired Obligations "), bearing such interest and maturing as to principal and interest in such amounts and at such times that, together with any necessary beginning cash balance, will provide for the payment of: (i) interest on the Refunded Bonds on November 1, 2005; and (ii) the redemption price (100% of the principal amount thereof) of the Refunded Bonds on November 1, 2005; The Acquired Obligations shall be purchased at a yield not greater than the yield permitted by the Code and regulations relating to acquired obligations in connection with refunding bond issues. (b) Escrow Agent. The City hereby appoints the corporate trust department of U S Bank National Association, Seattle, Washington, as the Escrow Agent for the Refunded Bonds (the "Escrow Agent "). A beginning cash balance, if any, and the Acquired Obligations 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 Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds. The City may, from time to time, transfer, or cause to be transferred, from the Refunding Account any money not thereafter required for the purposes set forth in subparagraphs (i) and (ii) of Section 10(a), subject to verification in writing by an independent certified public accountant that such transfer will not result in inadequate funds being available to make the required payments therefrom. The City reserves the right to substitute other securities for the Acquired Obligations in the event it may do so pursuant to Section 148 of the Code and applicable regulations thereunder, upon compliance with the conditions set forth in the Escrow Agreement. The City will take such actions as are found necessary to see that all necessary and proper fees and expenses of the Escrow Agent shall be paid when due. The proper officers and agents -12- P: \DOT\DOT1N3 05/02/01 of the City are directed to obtain from the Escrow Agent an agreement setting forth the duties, obligations and responsibilities of the Escrow Agent in connection with the redemption and retirement of the Refunded Bonds as provided herein and setting forth such provisions for the payment of the Escrow Agent as are satisfactory to it. The Finance Director is authorized and directed to execute and deliver to the Escrow Agent an escrow agreement in form satisfactory to the Escrow Agent and approved by counsel to the City. (c) Call for Redemption of Refunded Bonds. The City hereby irrevocably sets aside sufficient funds out of the purchase of Acquired Obligations from proceeds of the Bonds to make the payments described in subparagraphs (i) and (ii) of Section 10(a). The City hereby irrevocably calls the Refunded Bonds for redemption on November 1, 2005 in accordance with the provisions of Section 4(a) of Ordinance No. 2892. The defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the final establishment of the Refunding Account and delivery of the Acquired Obligations and the requisite cash deposit, if any, to the Escrow Agent, except as provided herein relating to the substitution of securities. 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 the 1995 Bond Ordinance. The City is authorized and requested to provide whatever assistance is necessary to accomplish such redemption and the giving of notices therefor. The costs of publication of such notices shall be an expense of the City. The Escrow Agent is hereby authorized and directed to pay to the fiscal agency or agencies of the State of Washington, sums sufficient to pay, when due, the payments specified in of subparagraphs (i) and (ii) of Section 10(a). All such sums shall be paid from the money and Acquired Obligations deposited with the Escrow Agent pursuant to the previous section of this ordinance, and the income therefrom and proceeds thereof. (d) Finding of Savings and Defeasance. The Council hereby finds that the issuance and sale of the Bonds at this time will effect a savings to the City and its taxpayers. 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 also finds 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 redeem the Refunded Bonds and will satisfy the obligations of the City under the 1995 Bond Ordinance Immediately upon the delivery of the Acquired Obligations to the Escrow Agent and the deposit of any necessary beginning cash balance, the Refunded Bonds shall be deemed not to be outstanding under the 1995 Bond Ordinance and shall cease to be entitled to -13- P9DOTDOTIN3 05/02/01 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 11. Sale of Bonds. The Bonds shall be sold by negotiated sale to Seattle - Northwest Securities Corporation, Seattle, Washington (the "Underwriter "), under the terms and conditions thereof as provided in its purchase contract and in this ordinance. The City Manager is hereby authorized to sign the purchase contract on behalf of the City. The proper City officials are hereby authorized and directed to do everything necessary for the prompt execution and delivery of the Bonds to the Underwriter and for the proper application and use of the proceeds of sale thereof. Section 12. Official Statement. The City approves the preliminary Official Statement presented to this Council and ratifies the Underwriter's distribution of the preliminary Official Statement in connection with the offering of the Bonds. To permit the Underwriter to comply with the Rule, the Preliminary Official Statement dated January _, 2005, is hereby deemed 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 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 13. Undertaking to Provide Ongoing Disclosure. (a) Contract /Undertaking. This section constitutes the City's written undertaking for the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule. (b) 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 2005 for the fiscal year ended December 31, 2004): 1. Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City'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 "Appendix A: City of Port Angeles 2003 Audited Financial Statements "; 2. The assessed valuation of taxable property in the City; -14- P: \DOT\DOTIN3 05/02/01 3. Property taxes due, property taxes collected and property taxes delinquent; 4. Property tax levy rates per $1,000 of assessed valuation; and 5. Outstanding general obligation debt of the City. Items 2 -5 shall be required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before nine months after the end of the City's fiscal year. The City's current fiscal year ends 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's, 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 statutes), when and if available, to each then existing NRMSIR and the SID, if any. (c) 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: • Principal and interest payment delinquencies; • Non - payment related defaults; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; • Adverse tax opinions or events affecting the tax- exempt status of the Bonds; • Modifications to rights of owners; -15- P9DOT1DOT1 N3 05/02/01 • Optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34- 23856; • Defeasances; • Release, substitution or sale of property securing the repayment of the Bonds; and • Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no debt service reserves or property secure payment of the Bonds (d) 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 (b) above on or prior to the date set forth in subsection (b) above. (e) Termination /Modification. The City's obligations to provide annual financial information and notices of material events shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. Any provision of that section shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds; and (2) notifies each NRMSIR and the SID, if any, of such opinion and the cancellation of this section. The City may amend this section with an approving opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this section, the City shall describe such amendment in the next annual report, and shall include, a narrative explanation of the reason for the amendment 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 (c), and (II) the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if practical, 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) DisclosureUSA. Any filing required to be made with any NRMSIR or SID under this Section 13 may be made by transmitting such filing solely to the Texas Municipal Advisory Council (the "MAC ") as provided at http: / /www.disclosureusa.org unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004. -16- P: \DOT\DOTIN3 05/02/01 (g) Bond Owner's Remedies Under This Section. The right of any bondowner 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 under this section, 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. 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. (h) No Default. The City is not and has not been in default in the performance of its obligations of any prior undertaking for ongoing disclosure with respect to its bond obligations. Section 14. Bond Insurance. (a) Approval of Bond Insurance Policy. In accordance with the offer of the Underwriter to purchase the Bonds, the Council hereby approves the commitment of XL Capital Assurance Inc. (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 execute a commitment letter with the Insurer and to cooperate with the Insurer in preparing such additional agreements, certificates, and other documentation on behalf of the District as shall be necessary or advisable in providing for the Bond Insurance Policy. (b) Payments Under the Bond Insurance Policy. As long as the Bond Insurance Policy is in full force and effect, the City and the Bond Registrar shall comply with the following provisions: (i) If, on the Business Day immediately preceding a scheduled interest payment date or principal payment date ( "Payment Date "), there is not on deposit with the Bond Registrar money sufficient to pay the principal of and interest on the Bonds due on such Payment Date, the City or the Bond Registrar shall give notice to the Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent "), by telephone or telecopy, of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on such Payment Date, there is not on deposit with the Bond Registrar money sufficient to pay the principal of, and interest on, the Bonds due on such Payment Date, the Bond Registrar shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of any deficiency in the amount available to pay principal and interest, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such Payment Date, by delivering the Notice of Nonpayment and Certificate. For the purposes of the preceding paragraph, "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from the City or Bond Registrar to the Insurer, which notice shall specify (a) the -17- P: \DOT\0OT1 N3 05/02/01 name of the entity making the claim, (b) the policy number, (c) the claimed amount and (d) the date such claimed amount will become Due for Payment. "Nonpayment" means the failure of the City to have provided sufficient funds to the Bond Registrar for payment in full of all principal of, and interest on, the Bonds that are Due for Payment. "Due for Payment," when referring to the principal of insured bonds, means when the stated maturity date or mandatory redemption date for the application of a required sinking fund installment has been reached and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by application of required sinking fund installments or other advancement of maturity, unless the Insurer shall elect, in its sole discretion, to pay such principal); and when referring to interest on Bonds, means when the stated date for payment of interest has been reached. "Certificate" means a certificate in form and substance satisfactory to the Insurer as to the Bond Registrar's right to receive payment under the Insurance Policy. (ii) The Bond Registrar shall designate any portion of payment of principal on Bonds paid by the Insurer at maturity on its books as a reduction in the principal amount of Bonds registered to the then current Registered Owner, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of the Insurer, as the case may be, in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided, however, that the Bond Registrar's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the City on any Bond or the subrogation rights of the Insurer. (iii) The Bond Registrar shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy Payments Account (as hereinafter defined) and the allocation of such funds to payment of interest on and principal paid with respect to any Bond. The Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Bond Registrar. (iv) Upon payment of a claim under the Bond Insurance Policy, the Bond Registrar shall establish a separate special purpose trust account for the benefit of owners of Bonds referred to herein as the "Policy Payments Account" and over which the Bond Registrar shall have exclusive control and sole right of withdrawal. The Bond Registrar shall receive any amount paid under the Bond Insurance Policy in trust on behalf of owners of Bonds and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Bond Registrar to owners of Bonds in the same manner as principal and interest payments are to be made with respect to the Bonds under Section 3 hereof. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Funds held in the Policy Payments Account shall not be invested by the Bond Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Bond Registrar. Any funds remaining in the Policy Payments Account following an insured Bond payment date shall promptly be remitted to the Insurer. -18- P: \DOT\DOT1 N3 05/02/01 (c) Provisions Relating to Bond Insurance Policy. As long as the Bond Insurance Policy is in full force and effect, the City shall comply with the following provisions: (i) Notice to the Insurer. Any notices required to be given by the City shall also be given to the Insurer, Attn: Surveillance. (ii) Amendments. Prior written consent of the Insurer is required for any amendment to this ordinance. The City shall give the Insurer notice of any such proposed amendment. A copy of any amendment to this ordinance that is consented to by the Insurer shall be sent to Standard & Poor's Rating Services, a Division of The McGraw -Hill Companies, Inc. (iii) Remedies. The Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to owners of the Bonds. The Insurer shall be recognized as the owner of each Bond for the purposes of exercising all rights and privileges available to owners of the Bonds. The Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as an owner of the Bonds. (iv) The Insurer as Third Party Beneficiary. The Insurer shall be a third -party beneficiary under this ordinance. (v) Subrogation. If principal and/or interest due on the Bonds is paid by the Insurer, such Bonds shall remain outstanding under this ordinance for all purposes, and shall not be deemed defeased or otherwise satisfied, or paid by the City, and the pledge of taxes and all covenants, agreements and other obligations of the City to the owners of the Bonds shall continue to exist and shall run to the benefit of the Insurer, and the Insurer shall be subrogated to the rights of such owners. Section 15. Lost or Destroyed Bonds. If any Bonds are lost, stolen or destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount, maturity and tenor to the Registered Owner upon such Registered Owner's paying the expenses and charges of the Bond Registrar and the City in connection with preparation and authentication of the replacement Bond or Bonds and upon his or her filing with the Bond Registrar and the City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or destroyed and of his or her ownership, and upon furnishing the City and the Bond Registrar with indemnity satisfactory to both. Section 16. General Authorization. The appropriate officials, agents and representatives of the City are authorized to take any actions and to execute any certificates, agreements or other documents as in their judgment may be necessary or desirable to carry out the terms of, and complete the transactions contemplated by, this ordinance. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified and confirmed. Section 17. Severability. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of -19- P \DOT\DOT1 N3 05/02101 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 of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bonds. Section 18. Effective Date. This ordinance shall become effective from and after its passage and publication as required by law. PASSED by the City Council of the City of Port Angeles, Washington, at a regular meeting thereof, held on February 1, 2005. ATTEST: CITY OF PORT ANGELES, WA .INGTON By Published by Summary: February 6, 2005 -20- Mayor P:DOT\DOT1 N3 05/02/01 CERTIFICATE I, the undersigned, City Clerk of the City of Port Angeles, Washington, DO HEREBY CERTIFY: 1. That the attached is a true and correct copy of Ordinance No. 3185 (the "Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of the City held on February 1, 2005. 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 legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been fully 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 1st day of February ,2005. 42-44e4-141'-city Clerk P: \DOT\DOTIN3 05/02/01 Summaries of Ordinances Adopted by the Port Angeles City Council on February 1, 2005 Ordinance No. 3185 This Ordinance of the City of Port Angeles, Washington, authorizes the issuance and sale of unlimited tax general obligation refunding bonds of the City in the aggregate principal amount of $2,345,000 to refund certain outstanding unlimited tax general obligation bonds of the City; authorizes the appointment of an escrow agent and the execution of an escrow agreement related to such refunding; provides the date and form of said bonds; provides for the disposition of the bond proceeds; provides for the annual levy of taxes to pay the principal of and interest on the bonds; and approves the sale of the bonds. Ordinance No. 3186 This Ordinance of the City of Port Angeles, Washington, authorizes the issuance of electric revenue and refunding bonds in the principal amount of $3,185,000 to refund certain outstanding electric revenue bonds of the City and to finance the cost of certain improvements to the City's Electric System; authorizes the appointment of an escrow agent and the execution of an escrow agreement related to the refunding; authorizes the terms of the bonds; establishes covenants to secure payment of the bonds; and approves the sale of the bonds. Ordinance No. 3187 This Ordinance of the City of Port Angeles, Washington, adjusts the corporate boundary of the City of Port Angeles to include a portion of Mt. Angeles Road, legally described as all of Mount Angeles Road right -of -way, County Road No. 34310, lying within the northeast quarter of the southwest quarter of Section 14, Township 30 North, Range 6 West of the Willamette Meridian, Clallam County, Washington; and a portion of US 101 between Doyle Road and the Pine Street Cutoff, legally described as a portion of the south half of Section 9, Township 30 North, Range 6 West of the Willamette Meridian, Clallam County, Washington, beginning at the intersection of the west margin of Pine Street Cutoff and the south margin of U.S. Highway 101; thence west along said south margin to the east margin of Doyle Road; thence northerly along said east margin, and a prolongation thereof, to the north margin of U.S. Highway 101 and the limits of the City of Port Angeles; thence east along said north margin and said limits to the west margin of Pine Street cutoff thence southerly to the Point of Beginning. This Ordinance shall be effective when a similar ordinance or resolution is approved by the legislative body of Clallam County, unless such ordinance or resolution has already been adopted by Clallam County, in which case the ordinance shall be effective upon the adoption of this Ordinance. The full texts of the Ordinances are available at City Hall in the City Clerk's office or will be mailed upon request. Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. Unless otherwise stated above, these Ordinances shall take effect five days following the date of publication by summary. Becky J. Upton, CMC City Clerk Publish: February 6, 2005