HomeMy WebLinkAbout3406CITY OF PORT ANGELES, WASHINGTON
ELECTRIC REVENUE BONDS, SERIES 2010
ORDINANCE NO. 3406
AN ORDINANCE of the City of Port Angeles, Washington, authorizing the
issuance of electric revenue bonds of the City in the principal amount of
$4,925,000 to finance the cost of improvements to the City's Electric System;
establishing the date, form, terms, maturities and covenants of the bonds; and
approving the sale of the bonds.
Passed August 3, 2010
Prepared by:
K &L GATES LLP
Seattle, Washington
Section 1.1.
Section 1.2.
Section 2.1.
Section 2.2.
Section 2.3.
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Section 3.6.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Definitions 1
Interpretation 10
ARTICLE II FINDINGS AND DETERMINATIONS
Projects 10
Parity Conditions 11
Due Regard 11
ARTICLE III AUTHORIZATION AND ISSUANCE OF BONDS
Authorization of 2010 Bonds 11
Registration, Exchange and Payments 12
Redemption of 2010 Bonds 15
Partial Redemption 16
Notice of Redemption 17
Purchase of 2010 Bonds 18
ARTICLE IV ISSUANCE OF ADDITIONAL BONDS
Section 4.1. Authorization of Series of Additional Bonds 18
Section 4.2. Additional Bonds 18
ARTICLE V GENERAL TERMS AND PROVISIONS OF BONDS
Section 5.1. Execution of 2010 Bonds 21
Section 5.2. Lost or Destroyed Bonds 22
ARTICLE VI CREATION OF SPECIAL FUNDS AND ACCOUNTS AND
PAYMENTS THEREFROM
Section 6.1. Electric Fund (formerly designated as the Light Fund) 22
Section 6.2. Bond Account (formerly referred to as the Bond Fund) 25
Section 6.3. Investment of Funds 29
ARTICLE VII USE OF BOND PROCEEDS; CONSTRUCTION ACCOUNT
Section 7.1. Construction Account 30
ARTICLE VII FORM OF 2010 BONDS
Section 8.1. Form of 2010 Bonds 30
ARTICLE IX COVENANTS TO SECURE BONDS
Section 9.1. Security for Bonds 34
Section 9.2. Rate Covenant - General 34
Section 9.3. Rate Covenant - Debt Service Coverage 35
Section 9.4. Restrictions on Contracting of Obligations Secured by Revenues 35
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Section 9.5. Covenant to Maintain System in Good Condition 36
Section 9.6. Covenants Concerning Disposal of Properties of System 36
Section 9.7. Insurance. 37
Section 9.8. Books of Account 38
Section 9.9. Covenant Not to Render Service Free of Charge 38
Section 9.10. Covenant to Make Only Economically Sound Improvements 38
Section 9.11. Covenant to Pay Bond Principal and Interest Punctually 39
Section 9.12. Covenant to Pay Taxes, Assessments and Other Claims 39
Section 9.13. Covenant to Retain Competent Management 39
Section 9.14. Further Assurances 39
Section 9.15. Tax Exemption 39
ARTICLE X SUPPLEMENTAL AND AMENDATORY ORDINANCES
Section 10.1. Amendments Without Consent of Bondowners 40
Section 10.2. Amendments With Consent of Bondowners 41
ARTICLE XI DEFAULTS AND REMEDIES
Section 11.1. Events of Default 41
Section 11.2. Waivers of Default 43
Section 11.3. Bondowners' Trustee 43
Section 11.4. Suits at Law or in Equity 43
Section 11.5. Books of City Open to Inspection 44
Section 11.6. Payment of Funds to Bondowners' Trustee 44
Section 11.7. Application of Funds by Bondowners' Trustee 44
Section 11.8. Relinquishment of Funds Upon Remedy of Default 45
Section 11.9. Suits by Individual Bondowners 45
Section 11.10. Remedies Granted in Ordinance not Exclusive 45
ARTICLE XII AMENDMENTS AND BONDOWNERS MEETINGS
Section 12.1. Call of Bondowners Meetings 46
Section 12.2. Notice to Bondowners 46
Section 12.3. Proxies; Proof of Ownership of Bonds 46
Section 12.4. Execution of Instruments by Bondowners 47
Section 12.5. Appointment of Officers at Bondowners Meetings 47
Section 12.6. Quorum at Bondowners Meetings 47
Section 12.7. Vote Required to Amend Ordinance 48
Section 12.8. Obtaining Approval of Amendments at Bondowners Meeting 48
Section 12.9. Alternate Method of Obtaining Approval of Amendments 49
Section 12.10. Amendment of Ordinance In Any Respect by Approval of All Bondowners 49
Section 12.11. Bonds Owned by City 49
Section 12.12. Endorsement of Amendment on Bonds 50
ARTICLE XIII MISCELLANEOUS, DEFEASANCE; SALE OF BONDS AND
APPROVAL OF OFFICIAL STATEMENT
Section 13.1. Ordinance and Laws a Contract With Bondowners 50
Section 13.2. Defeasance 50
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Section 13.3. Sale of 2010 Bonds 51
Section 13.4. Official Statement 51
Section 13.5. Undertaking to Provide Ongoing Disclosure 51
Section 13.6. Benefits of Ordinance Limited to City, Bondowners, and Bond Registrar 54
Section 13.7. Term "City" Includes Successors 54
Section 13.8. Severability 54
Section 13.9. General Authorization 54
Section 13.10. Adjustment of Dollar Amounts 54
Section 13.11. Prior Acts 54
Section 13.12. Effective Date of Ordinance 54
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ORDINANCE NO. 3406
AN ORDINANCE of the City of Port Angeles, Washington, authorizing the
issuance of electric revenue bonds of the City in the principal amount of
$4,925,000 to finance the cost of improvements to the City's Electric System;
establishing the date, form, terms, maturities and covenants of the bonds; and
approving the sale of the bonds.
WHEREAS, the City of Port Angeles, Washington, a municipal corporation of the State
of Washington (the "City "), owns and operates an electric utility system (the "Electric System ");
and
WHEREAS, it is in the best interest of the City and ratepayers of the Electric System that
certain improvements be made to the Electric System (as further described herein, the "Projects ")
and that electric revenue bonds in the principal amount of $4,925,000 (the "2010 Bonds ") be
issued to finance costs of the Projects; and
WHEREAS, there are currently outstanding $1,865,000 principal amount of the City's
Electric Revenue Bonds, Series 2001 (the "2001 Bonds "), and $2,635,000 principal amount of
the City's Electric Revenue and Refunding Bonds, Series 2005 (the "2005 Bonds "); and
WHEREAS, the ordinances authorizing the 2001 Bonds and the 2005 Bonds permit the
City to issue additional electric revenue bonds on a parity with the 2001 Bonds and 2005 Bonds
if certain conditions are met; and
WHEREAS, after due consideration it appears to the City Council of the City (the
"Council ") that those parity conditions can be met and that the City may issue the 2010 Bonds on
a parity with the 2001 Bonds and 2005 Bonds; and
WHEREAS, the City has received the offer of Seattle - Northwest Securities Corporation
to purchase the 2010 Bonds, and it is in the best interests of the City and ratepayers of the
Electric System that the City accept that offer and sell the 2010 Bonds to the Underwriter on the
terms set forth in its offer and in this ordinance;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES,
WASHINGTON, DO ORDAIN, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this ordinance the following words and phrases
have the following meanings:
"Additional Bonds" means any Bonds issued on a parity with the 2001 Bonds, the 2005
Bonds and the 2010 Bonds pursuant to Article IV of this ordinance.
"Adjusted Net Revenues" means Net Revenues as calculated pursuant to Section 4.2.H.
"Annual Debt Service" for any Fiscal Year means the sum of:
(a) the interest due in such Fiscal Year on all outstanding Bonds, excluding
interest to be paid from the proceeds of Bonds,
(b) the principal of all outstanding Serial Bonds due in such Fiscal Year, and
(c) the Sinking Fund Requirement, if any, for such Fiscal Year (calculated as
of the Sinking Fund Requirement Date for such Fiscal Year).
If the interest rate on any such Bonds is other than a fixed rate, the rate applicable at the
time of computation shall be calculated as provided in Section 4.2(K) hereof. From and after the
date when no 2001 Bonds or 2005 Bonds remain outstanding, "Annual Debt Service" for any
Fiscal Year shall be calculated net of the amount of any Debt Service Offsets received in such
Fiscal Year.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on outstanding Bonds from the date of determination to the
last maturity date of such Bonds, by (b) the number of Fiscal Years from and including the Fiscal
Year in which the determination is made to the last Fiscal Year in which the sum of (i) the
principal amount of Serial Bonds maturing in such Fiscal Year plus (ii) the Sinking Fund
Requirement for such Fiscal Year, exceeds 4% of the principal amount of Bonds outstanding as
of the date of determination.
If the interest rate on any such Bonds is other than a fixed rate, the rate applicable at the
time of computation shall be calculated as provided in Section 4.2(K) hereof. From and after the
date when no 2001 Bonds or 2005 Bonds remain outstanding, "Average Annual Debt Service"
for any Fiscal Year shall exclude any Debt Service Offsets.
"Bond Account" means the Electric System Revenue Bond Fund established pursuant to
Section 7.2 of Ordinance No. 2709 to secure payment of all Bonds (formerly referred to as the
"Bond Fund ").
"Bond Fund" means the Electric System Revenue Bond Fund established pursuant to
Section 7.2 of Ordinance No. 2709 to secure payment of all Bonds and referred to herein as the
"Bond Account."
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of registration of the 2010 Bonds.
"Bond Registrar" or "Registrar" means the fiscal agency of the State of Washington in
either Seattle, Washington, or New York, New York, whose duties include the registration and
authentication of the 2010 Bonds, maintenance of the Bond Register, effecting transfer of
ownership of the 2010 Bonds, and paying the principal of, premium, if any, and interest on the
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2010 Bonds. A Supplemental Ordinance may appoint a different person, firm or entity to serve
as Bond Registrar.
"Bondowners' Trustee" means any bank or trust company organized under the laws of
any state of the United States or any national banking association hereafter appointed as trustee
for Bondowners pursuant to Section 11.3 of this ordinance.
"Bonds" means the 2001 Bonds, the 2005 Bonds, the 2010 Bonds and any Additional
Bonds. "Bonds" may include bonds, notes, warrants, certificates of indebtedness or any other
evidence of indebtedness.
"City" means the City of Port Angeles, Washington, a municipal corporation duly
organized and existing under the laws of the State of Washington.
"Code" means the federal Internal Revenue Code of 1986, as amended, and applicable
regulations.
"Commission" means the United States Securities and Exchange Commission.
"Contingency and Replacement Account" means the account of that name established in
the Electric Fund (formerly designated as the Light Fund) for the purposes described in
Section 6.1.0 of this ordinance.
"Construction Account" means the account of that name established in the Electric Fund
(formerly designated as the Light Fund) for the purpose of providing funds to pay for
improvements to the Electric System.
"Contract Resource Obligation" means an obligation of the Electric System to pay the
following costs, whether or not Power and Services are available to the Electric System in return
for such payment:
(a) costs associated with generation, transmission or distribution facilities
(including any common undivided interest therein) hereafter acquired, purchased or constructed
by the City and declared by the Council to be a separate utility system, which such costs shall
include but are not limited to costs of normal operation and maintenance, renewals and
replacements, additions and betterments and debt service on the bonds or other obligations of
such separate electric utility system, or
(b) costs associated with the purchase of Power and Services under a contract.
"Council" means the Port Angeles City Council, as the general legislative body of the
City, as the same is duly and regularly constituted from time to time.
"Debt Service Offset" means receipts of the City that are not included in Revenues and
that are legally available to pay debt service on Bonds, including without limitation federal
interest subsidy payments, designated as such by the City.
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"Distribution and Transmission Facilities" means the electric utility properties and assets,
real and personal, tangible and intangible, now owned and operated by the City and used or
useful in the transmission, distribution or sale of electric current or electric service, and business
incidental thereto, and any additions, improvements and betterments thereto and extensions
thereof hereafter constructed or acquired. Distribution and Transmission Facilities shall not
include Generating Facilities.
"DTC" means The Depository Trust Company of New York, as depository for the 2010
Bonds, or any successor or substitute depository for the 2010 Bonds.
"Electric Fund" means the special fund created in the office of the Finance Director
pursuant to Ordinance No. 374 and previously designated as the "Light Fund" and renamed as
the "Electric Fund" and continued pursuant to Section 6.1 of this ordinance.
"Electric System" means the Distribution and Transmission Facilities and any Generating
Facilities hereafter acquired, but such Electric System shall not include any property and facilities
as may hereafter be acquired or constructed and established as a separate utility system not
financed from the Revenues except on a basis junior and inferior to the lien on Revenues pledged
to pay and secure the Bonds, the revenue of which separate utility system may be pledged to the
payment of revenue obligations issued to purchase, construct, condemn or otherwise acquire such
separate utility system (except as a Contract Resource Obligation (i) included in Operating
Expenses of the Electric System upon compliance with Section 6.1(D) hereof from such time as
no 2001 Bonds or 2005 Bonds remain outstanding, or (ii) on a basis junior and inferior to the lien
on Revenues pledged to secure the Bonds).
"Finance Director" means the duly appointed and acting Finance Director of the City or
the successor to the duties of that office.
"Fiscal Year" means the fiscal year used by the City at any time. At the time of the
passage of this ordinance, the Fiscal Year is the twelve -month period beginning January 1 of
each year and ending December 31 of each year.
"Generating Facilities" means electric utility properties and assets, real and personal,
tangible and intangible, and used or useful in the generation of electric energy, hereafter acquired
or constructed by the City and declared to be part of the Electric System, including any common
undivided interest therein, related transmission facilities, and additions, improvements and
betterments to and extensions of such properties and assets; provided, however, Generating
Facilities shall not include Contract Resource Obligations designated as separate systems
pursuant to Section 6.1(D) hereof.
"Government Obligations" means those obligations now or hereafter defined as such in
Chapter 39.53 RCW, as this chapter may be hereafter amended or restated.
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC dated September 23, 1998.
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"Light Fund" means the special fund of that name created in the office of the Finance
Director pursuant to Ordinance No. 374 and renamed as the "Electric Fund" and continued
pursuant to Section 6.1 of this ordinance.
"Moody's" means Moody's Investors Service, a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware, or its successor.
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
"Net Revenues" means, for any period, the excess of Revenues over Operating Expenses
for such period, excluding from the computation of Revenues (a) any profit or loss derived from
the sale or other disposition, not in the ordinary course of business, of investments or fixed or
capital assets, or resulting from the early extinguishment of debt, and (b) insurance proceeds.
"Operating Expenses" means (i) the City's expenses for operation and maintenance of the
Electric System, and ordinary repairs, renewals, replacements and reconstruction of the Electric
System, including all costs of delivering electric power and energy and payments (other than
payments out of Bond proceeds) into reasonable reserves in the Electric Fund for items of
Operating Expenses the payment of which is not immediately required, and shall include, without
limiting the generality of the foregoing, all costs of purchased power, costs of transmission and
distribution operation and maintenance expenses, rents, administrative and general expenses,
engineering expenses, legal and financial advisory expenses, required payments to pension,
retirement, health and hospitalization funds, insurance premiums and any taxes, assessments, or
payments in lieu of taxes, all to the extent properly allocable to the Electric System; (ii) any
current expenses required to be paid by the City under the provisions of this ordinance or by law,
all to the extent properly allocable to the Electric System; and (iii) the fees and expenses of any
Paying Agent. From and after such time as no 2001 Bonds or 2005 Bonds remain outstanding,
"Operating Expenses" shall include Contract Resource Obligations to the extent designated as
such pursuant to Section 6.1(D) hereof. Operating Expenses shall not include any costs or
expenses for new construction or other capital outlays, interest, amortization of debt service on
any evidence of indebtedness, any allowance for depreciation, or any payments for City taxes or
payments in lieu of City taxes.
"Ordinance," as used in Articles XI and XII hereof, means Ordinance Nos. 3100, 3186,
this ordinance, and any Supplemental Ordinance.
"Paying Agent" or "Paying Agents" means the Bond Registrar, with respect to the 2010
Bonds, and the paying agent for each other series of outstanding Bonds.
"Permitted Investments" means the following, so long as any of the 2001 Bonds or 2005
Bonds remain outstanding, to the extent that the same are legal for investment of funds of the
City:
A. The following obligations may be used as Permitted Investments for all purposes,
including defeasance investments in the refunding escrow accounts.
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(1) Cash (insured at all times by the Federal Deposit Insurance Corporation.
(2) Obligations of, or obligations guaranteed as to principal and interest by,
the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full
faith and credit of the U.S. including:
(3)
• U.S. Treasury obligations
• All direct or fully guaranteed obligations
• Farmers Home Administration
• General Services Administration
• Guaranteed Title XI financing
• Government National Mortgage Association (GNMA)
• State and Local Government Series (SLGS)
Obligations of Government - Sponsored Agencies that are not backed by the
full faith and credit of the U.S. Government:
• Federal Home Loan Mortgage Corp. (FHLMC) Debt obligations
• Farm Credit System (formerly: Federal Land Banks, Federal
Intermediate Credit Banks, and Banks for Cooperatives)
• Federal Home Loan Banks (FHL Banks)
• Federal National Mortgage Association (FNMA) Debt obligations
• Resolution Funding Corp. (REFCORP) Debt obligations
Any security used for defeasance must provide for the timely payment of principal and
interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated
debt (excluding securities that do not have a fixed par value and /or whose terms do not promise a
fixed dollar amount at maturity or call date).
U.S.A.I.D. securities must mature at least four business days before the appropriate
payment date.
B. The following Obligations shall be Permitted Investments for all purposes other
than defeasance investments in refunding escrow accounts.
(1) Obligations of any of the following federal agencies which obligations
represent the full faith and credit of the United States of America, including:
• Export-Import Bank
• U.S. Maritime Administration
• U.S. Department of Housing & Urban Development (PHAs)
• Federal Housing Administration
• Federal Financing Bank;
(2) Direct obligations of any of the following federal agencies which
obligations are not fully guaranteed by the full faith and credit of the United States of America:
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• Senior debt obligations issued by the Federal National Mortgage
Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC).
• Obligations of the Resolution Funding Corporation (REFCORP)
• Senior debt obligations of the Federal Home Loan Bank System
• Senior debt obligations of other Government Sponsored Agencies
approved by the insurer for the 2001 Bonds and the insurer for the
2005 Bonds so long as the 2005 Bonds remain outstanding.
(3) U.S. dollar denominated deposit accounts, federal funds and bankers'
acceptances with domestic commercial banks which have a rating on their short term certificates
of deposit on the date of purchase of "P -1" by Moody's and "A -1" or "A -1 +" by S &P and
maturing no more than 360 calendar days after the date of purchase. (Ratings on holding
companies are not considered as the rating of the bank);
(4) Commercial paper which is rated at the time of purchase in the single
highest classification, "P -1" by Moody's and "A -1 +" by S &P and which matures not more than
270 days after the date of purchase;
(5)
better by S &P;
Investments in a money market fund rated "AAAm" or "AAAm -G" or
(6) Pre - refunded Municipal Obligations defined as follows: any bonds or
other obligations of any state of the United States of America or of any agency, instrumentality or
local governmental unit of any such state which are not callable at the option of the obligor prior
to maturity or as to which irrevocable instructions have been given by the obligor to call on the
date specified in the notice; and
(A) which are rated, based on an irrevocable escrow account or fund
(the "escrow "), in the highest rating category of Moody's and S &P or any successors thereto; or
(B) (i) which are fully secured as to principal and interest and
redemption premium, if any, by an escrow consisting only of cash or obligations described in
paragraph A(2) above, which escrow may be applied only to the payment of such principal of and
interest and redemption premium, if any, on such bonds or other obligations on the maturity date
or dates thereof or the specified redemption date or dates pursuant to such irrevocable
instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally
recognized independent certified public accountant, to pay principal of and interest and
redemption premium, if any, on the bonds or other obligations described in this paragraph on the
maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;
(7) Municipal obligations rated "Aaa /AAA" or general obligations of States
with a rating of "Aa2 /AA" or higher or both Moody's and S &P;
(8) Investment agreements approved in writing by the insurer of the 2005
Bonds (so long as the 2005 Bonds remain outstanding) and the insurer of the 2001 Bonds (so
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long as the 2001 Bonds remain outstanding) and supported by appropriate opinions of counsel;
and
(9) Other forms of investments (including repurchase agreements) approved in
writing by the insurer of the 2005 Bonds (so long as the 2005 Bonds remain outstanding) and the
insurer of the 2001 Bonds (so long as the 2001 Bonds remain outstanding).
C. The value of the above investments shall be determined as follows:
(a) For the purpose of determining the amount in any fund, all Permitted
Investments credited to such fund shall be valued at fair market value. The City shall determine
the fair market value based on accepted industry standards and from accepted industry providers.
Accepted industry providers shall include but are not limited to pricing services provided by
Financial Times Interactive Data Corporation, Bank of America, Merrill Lynch, Citigroup, and
Barclay Capital Markets;
(b) As to certificates of deposit and bankers' acceptances: the face amount
thereof, plus accrued interest thereon;
(c) As to any investment not specified above: the value thereof established by
prior agreement between the City and the insurers of the 2001 Bonds and 2005 Bonds, so long as
the 2001 Bonds and the 2005 Bonds, respectively, remain outstanding;
(d) Any investment or investment agreement permitted for funds of the City
under the laws of the State of Washington, as amended from time to time, which are approved by
insurer of the 2005 Bonds (so long as the 2005 Bonds remain outstanding) and the insurer of the
2001 Bonds (so long as the 2001 Bonds remain outstanding).
From and after such time as no 2001 Bonds or 2005 Bonds remain outstanding,
"Permitted Investments" shall mean any legal investment for City funds.
"Power and Services" means energy, capacity, reserves and services, excluding the
purchase of ownership of generating capability.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with generation, transmission and
distribution systems of comparable size and character to the Electric System in such areas as are
relevant to the purposes for which they are retained.
"Projects" means those improvements to the Electric System authorized by Section 2.1 of
this ordinance.
"Qualified Insurance" means any non - cancellable municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies), which insurance company or companies, as of the time of issuance of such
policy or surety bond, are currently rated in one of the two highest rating categories by Moody's
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or S &P or both Moody's and S &P if such institution is rated by both or their comparably
recognized business successors.
"Qualified Letter of Credit" means any irrevocable letter of credit issued by a financial
institution for the account of the City on behalf of the owners of one or more series of Bonds,
which institution maintains an office, agency or branch in the United States and as of the time of
issuance of such letter of credit is currently rated in one of the two highest rating categories by
Moody's or S &P or their comparably recognized business successors or both Moody's and S& P
if such institution is rated by both or their comparably recognized business successors.
"Registered Owner" means the person named as the registered owner of a Bond in the
Bond Register. For so long as the 2010 Bonds are held in book -entry only form, DTC will be
deemed to be the sole Registered Owner.
"Revenues" means all income (including investment income), receipts and revenues
derived by the City through the ownership and operation of the Electric System but shall not
include:
(a) any income derived by the City through the ownership and operation of
any facilities that may hereafter be purchased, constructed or otherwise acquired by the City as a
separate utility system; or
(b) investment income restricted to a particular purpose inconsistent with its
use for the payment of debt service, including investment income derived pursuant to a plan of
debt retirement or refunding.
"Rule" means the Commission's Rule 15c2 -12 under the Securities Exchange Act of
1934, as the same may be amended from time to time.
"S &P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial
Services LLC business, a New York corporation, or its successor.
"Serial Bonds" means Bonds other than Term Bonds.
"Sinking Fund Requirement" for any Fiscal Year means the principal amount of Term
Bonds required to be purchased, redeemed or paid in such Fiscal Year as established by the
ordinance of the City authorizing the issuance of such Term Bonds.
"Sinking Fund Requirement Date" means, for any Fiscal Year, the date by which the
Sinking Fund Requirement for such Fiscal Year must be met, which with respect to the 2010
Bonds shall be October 1.
"Supplemental Ordinance" means any ordinance amending, modifying or supplementing
the provisions of this ordinance, including any ordinance providing for the issuance of Additional
Bonds.
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"Tax Certificate" means the certificate with respect to federal tax matters relating to the
2010 Bonds authorized to be executed by the Finance Director pursuant to the provisions of
Section 9.15 of this ordinance
"Term Bonds" means Bonds of any principal maturity that are subject to mandatory
redemption and for which mandatory sinking fund payments are required, including the 2010
Bonds identified as such in Section 3.3(b) of this ordinance.
"Underwriter" means Seattle- Northwest Securities Corporation.
"2001 Bonds" means the City's Electric Revenue Refunding Bonds, Series 2001, issued
in the original principal amount of $2,560,000 under date of November 1, 2001, pursuant to
Ordinance No. 3100, and currently outstanding in the principal amount of $1,865,000.
"2005 Bonds" means the City's Electric Revenue and Refunding Bonds, Series 2005,
issued in the original principal amount of $3,185,000 under date of February 15, 2005, pursuant
to Ordinance No. 3186, and currently outstanding in the principal amount of $2,635,000.
"2010 Bonds means the City's Electric Revenue Bonds, Series 2010, authorized to be
issued in the principal amount $4,925,000 pursuant to this ordinance.
Section 1.2. Interpretation. Words of the masculine gender are deemed and construed
to include correlative words of the feminine and neuter genders. Words imparting the singular
number shall include the plural numbers and vice versa unless the context otherwise indicates.
Reference to Articles, Sections and other subdivisions of this ordinance are to the Articles,
Sections and other subdivisions of this ordinance as originally adopted unless expressly stated to
the contrary. The headings or titles of the Articles and Sections hereof, and the Table of
Contents appended hereto, are for convenience of reference only and do not define or limit the
provisions hereof.
ARTICLE II
FINDINGS AND DETERMINATIONS
Section 2.1. Projects. The Council hereby approves the acquisition, development and
construction of the improvements to the Electric System included or to be included in the City's
Capital Facilities Plan, including but not limited to construction of and improvements to
metering infrastructure, street light upgrades, and pole replacements (the "Projects "). The
estimated cost of the Projects is $4,877,000. In undertaking the Projects, the City will acquire
and install all equipment and appurtenances necessary for their proper operation and will acquire
by purchase, lease or condemnation all property, both real and personal, or any interest therein,
and all rights -of -way, franchises, and easements necessary to complete the Projects. The Projects
are subject to those changes as to size or location or any other details as may be authorized by the
City either prior to or during the course of construction. The City may also elect to substitute for
one or more of the Projects any other Electric System improvements, approved by the Council,
that are now or may hereafter be included in the City's Capital Facilities Plan.
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Section 2.2. Parity Conditions. Ordinance Nos. 3100 and 3186 that authorized the
issuance of the 2001 Bonds and the 2005 Bonds provide that the City may issue Additional
Bonds payable from the Bond Account on a parity with the 2001 Bonds and 2005 Bonds upon
compliance with certain conditions. The Council hereby finds, as required by those provisions of
Ordinance Nos. 3100 and 3186, as follows:
(i) There is no deficiency in the Bond Account and no Event of Default has occurred
and is continuing.
(ii) Prior to delivery of the 2010 Bonds, there shall be filed with the City a certificate
signed by the Finance Director showing:
(A) the amount of the Net Revenues for any 12 consecutive months of the 24
months prior to the date of the issuance of the 2010 Bonds;
(B) the amount of the Average Annual Debt Service in any Fiscal Year
thereafter on account of the 2001 Bonds, the 2005 Bonds, and the 2010 Bonds; and
(C) the percentage derived by dividing the amount shown in (A) above by the
amount shown in (B) above, which percentage shall be not less than 125 %.
The Additional Bonds tests of Ordinance Nos. 3100 and 3186 having been complied with
or assured, the lien and charge on Revenues for the payment of the principal of and interest on
the 2010 Bonds will be equal to the lien and charge thereon for the payment of principal of and
interest on the 2001 Bonds and 2005 Bonds.
Section 2.3. Due Regard. The Council hereby finds and determines that due regard has
been given to the cost of the operation and maintenance of the Electric System and that it has not
obligated the City to set aside into the Bond Account for the account of the 2010 Bonds a greater
amount of the revenues and proceeds of the Electric System than in its judgment will be available
over and above such cost of maintenance and operation and the cost of paying and securing the
payment of the 2001 Bonds and the 2005 Bonds.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.1. Authorization of 2010 Bonds. The 2010 Bonds are hereby authorized to
be issued in the aggregate principal amount of $4,925,000 to finance costs of the Projects and pay
costs of issuing the 2010 Bonds.
The 2010 Bonds will be designated as the "City of Port Angeles, Washington, Electric
Revenue Bonds, Series 2010," will be dated as of the date of their initial delivery to the
Underwriter, will be in the denomination of $5,000 each, or integral multiples thereof (provided
that no Bond may represent more than one maturity), will be fully registered as to principal and
interest, and will be numbered separately in such manner and with any additional identification
as the Bond Registrar deems necessary for identification. The 2010 Bonds will bear interest from
their date (calculated on the basis of a year of 360 days and twelve 30 -day months) payable on
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March 1 and September 1 of each year, beginning on March 1, 2011, at the rates per annum and
mature on September 1 of the years and in the principal amounts, as follows:
Year
(September 1) Amount Interest Rate
* Term Bonds
2012 $130,000 3.00%
2013 135,000 3.00
2014 140,000 3.50
2015 140,000 3.50
2016 145,000 3.00
2017 150,000 4.00
2018 155,000 4.00
2019 165,000 4.00
2025* 500,000 4.50
2025* 630,000 3.85
2030* 1,175,000 4.25
2035* 1,460,000 4.50
Principal of and interest on the 2010 Bonds are payable solely from the Bond Account.
The 2010 Bonds are not general obligations of the City or of the State of Washington or any
political subdivision thereof.
Section 3.2. Registration, Exchange and Payments.
A. Bond Registrar /Bond Register. The City hereby adopts the system of registration
and transfer for the 2010 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 Mellon 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 2010 Bonds remain
outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or
registration of transfer of 2010 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, the MSRB, 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
2010 Bonds transferred or exchanged in accordance with the provisions of such 2010 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 2010 Bonds.
B. Registered Ownership. The City and the Bond Registrar may deem and treat the
Registered Owner of each 2010 Bond as the absolute owner for all purposes, and neither the City
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nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such 2010
Bond shall be made only as described in Section 3.2.H hereof, but such 2010 Bond may be
transferred as herein provided. All such payments made as described in Section 3.2.H shall be
valid and shall satisfy the liability of the City upon such 2010 Bond to the extent of the amount
or amounts so paid.
C. DTC Acceptance /Letter of Representations. The 2010 Bonds shall initially be
held in fully immobilized form by DTC acting as depository. To induce DTC to accept the 2010
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 2010 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 the 2010 Bonds, any
notice that is permitted or required to be given to Registered Owners under this ordinance (except
such notices as are 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 2010 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 2010 Bonds shall be registered initially in the name of
"CEDE & Co. ", as nominee of DTC, with a single 2010 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.
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(iv) If (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 2010 Bonds that the
2010 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 is not obligated
to transfer or exchange any Bond during the period beginning at the opening of business on the
15t" 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 2010
Bonds, after the mailing of the notice of such redemption.
F. Bond Registrar's Ownership of 2010 Bonds. The Bond Registrar may become the
Registered Owner of any 2010 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 2010 Bonds.
G. Registration Covenant. The City covenants that, until all 2010 Bonds have been
surrendered and cancelled, it will maintain a system for recording the ownership of each 2010
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 2010 Bonds
are payable in lawful money of the United States of America. For so long as all 2010 Bonds are
in fully- immobilized form, payments of principal and interest will be made in accordance with
the operational arrangements of DTC referred to in the Letter of Representations. If the 2010
Bonds are no longer in fully- immobilized form, interest on the 2010 Bonds will be paid by check
or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing
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on the Bond Register on the 15th day of the month preceding the interest payment date; provided,
however, that if so requested in writing by the Registered Owner of at least $1,000,000 principal
amount of 2010 Bonds, interest will be paid by wire transfer on the interest payment date to an
account with a bank located within the United States. Principal of the 2010 Bonds will be
payable upon presentation and surrender of the 2010 Bonds by the Registered Owners at the
principal office of the Bond Registrar.
Section 3.3. Redemption of 2010 Bonds.
A. Optional Redemption. The 2010 Bonds maturing in years 2012 through 2019 are
not subject to redemption prior to maturity. The 2010 Bonds maturing on and after September 1,
2025 are subject to redemption prior to maturity, at the option of the City, on or after
September 1, 2020, in whole or in part on any date (and if in part with maturities to be selected
by the City), at a price of par plus interest accrued thereon to the date fixed for redemption. For
so long as the 2010 Bonds are in book -entry form, the selection of 2010 Bonds within a maturity
to be redeemed and the manner of providing notice of redemption to beneficial owners are
governed by the operational arrangements of DTC, as then in effect.
B. Mandatory Redemption. The 2010 Bonds maturing on September 1 in 2025 and
bearing interest at the rate of 4.50 %, in 2025 and bearing interest at the rate of 3.85 %, in 2030,
and in 2035 (the "2010 Term Bonds "), shall be redeemed prior to maturity by lot (or purchased
or paid at maturity), not later than September 1 in the years set forth below from amounts
credited to the Bond Retirement Account in the Bond Account as sinking fund installments
therefor (to the extent such amounts have not been used to redeem or purchase such 2010 Term
Bonds as provided in this ordinance) and in the principal amounts as set forth below, without
premium, together with the interest accrued thereon to the date fixed for redemption.
* Maturity
2025 Term Bonds bearing interest at 4.50%
Year Amount
2020 $ 75,000
2021 80,000
2022 80,000
2023 85,000
2024 90,000
2025* 90,000
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2025 Term Bonds bearing interest at 3.85%
Year Amount
2020 $ 95,000
2021 95,000
2022 105,000
2023 105,000
2024 110,000
2025* 120,000
* Maturity
2030 Term Bonds
Year Amount
2026 $ 215,000
2027 225,000
2028 235,000
2029 245,000
2030* 255,000
* Maturity
2035 Term Bonds
Year Amount
2031 $ 265,000
2032 280,000
2033 290,000
2034 305,000
2035* 320,000
*Final Maturity
The foregoing amounts shall be deemed Sinking Fund Requirements for the 2010 Term
Bonds. The City may purchase and redeem 2010 Term Bonds through the application of part or
all of the respective Sinking Fund Requirements therefor on the first day of any month prior to
any September 1. Any money not so used to purchase and redeem such 2010 Term Bonds shall
be applied to the redemption of such bonds on such September 1. If, as of any September 1, the
principal amount of 2010 Term Bonds retired by purchase (through application of Sinking Fund
Requirements or any other legally available funds) or redemption exceeds the cumulative Sinking
Fund Requirement through such date, such excess may be credited against the Sinking Fund
Requirement for the next Fiscal Year.
Section 3.4. Partial Redemption. If less than all of the principal amount of any 2010
Bond is redeemed, upon surrender of such 2010 Bond at the principal office of the Bond
Registrar, there will be issued to the Registered Owner, without charge, for the then unredeemed
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balance of the principal amount, a new 2010 Bond or 2010 Bonds, at the option of the Registered
Owner, of like maturity and interest rate in any authorized denomination.
Section 3.5. Notice of Redemption.
A. Official Notice. Written notice of any redemption of 2010 Bonds (which may be
conditional) will be given by the Bond Registrar on behalf of the City by first class mail, postage
prepaid, not less than 20 days nor more than 60 days before the redemption date to the Registered
Owners of 2010 Bonds that are to be redeemed at their last addresses shown on the Bond
Register. So long as the 2010 Bonds are in book -entry form, notice of redemption (which may be
conditional) shall be given as provided in the Letter of Representations. The Bond Registrar
shall provide additional notice of redemption (at least 20 days) to the MSRB in accordance with
Section 13.5.
The requirements of this section shall be deemed complied with when notice is mailed,
whether or not it is actually received by the owner.
Each notice of redemption shall contain the following information: (1) the redemption
date, (2) the redemption price, (3) any condition to the redemption (including, but not limited to,
the receipt of proceeds of refunding bonds), (4) if less than all outstanding 2010 Bonds are to be
redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the
2010 Bonds to be redeemed, (5) that on the redemption date the redemption price will become
due and payable upon each 2010 Bond or portion called for redemption, and that interest shall
cease to accrue from the redemption date, (6) that the 2010 Bonds are to be surrendered for
payment at the principal office of the Bond Registrar, (7) the CUSIP numbers of all 2010 Bonds
being redeemed, (8) the dated date of the 2010 Bonds, (9) the rate of interest for each 2010 Bond
being redeemed, (10) the date of the notice, and (11) any other information needed to identify the
2010 Bonds being redeemed.
Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and
maturity, the 2010 Bonds being redeemed with the proceeds of such check or other transfer.
B. Effect of Notice. Unless a condition to the redemption has not been satisfied, the
City will transfer to the Bond Registrar amounts that, in addition to other money, if any, held by
the Bond Registrar, will be sufficient to redeem, on the redemption date, all the 2010 Bonds to be
redeemed. From the redemption date interest on each 2010 Bond to be redeemed shall cease to
accrue.
C. Amendment of Notice Provisions. The foregoing notice provisions of this section,
including but not limited to the information to be included in redemption notices and the persons
designated to receive notices, may be amended by additions, deletions and changes in order to
maintain compliance with duly promulgated regulations and recommendations regarding notices
of redemption of municipal securities.
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Section 3.6. Purchase of 2010 Bonds. The City also reserves the right to purchase any
of the 2010 Bonds in the open market at any time at prices deemed reasonable by the City.
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
Section 4.1. Authorization of Series of Additional Bonds.
Before any series of Additional Bonds is issued under the provisions of this Article, the
City must adopt an ordinance or ordinances authorizing the issuance of such bonds, fixing the
amount and the details thereof, describing in brief and general terms the purpose or purposes for
which such bonds are to be issued and specifying the amount, if any, of the proceeds of such
bonds to be deposited to the credit of the construction or project fund created with respect to such
bonds or to another fund for the payment of capitalized interest on such bonds and to the Reserve
Account; provided, however, that deposits to the Reserve Account shall be made as required
under Section 6.2.0 hereof. The bonds of each series issued under the provisions of this
Section will be designated "Electric Revenue Bonds, Series ," shall be in such
denominations, shall be dated, shall bear interest at a rate or rates (including variable rates) not
exceeding the maximum rate then permitted by law, shall be payable, both as to principal and
interest, at such place or places, shall mature in such year or years, shall be made redeemable at
such times and prices (subject to the provisions of this ordinance), shall be numbered, shall have
such Paying Agents, and any Term Bonds of such series shall have such amortization
requirements, all as may be provided by ordinance or ordinances adopted by the City prior to the
issuance of such bonds.
Section 4.2. Additional Bonds.
A. Additional Bonds may be issued payable from the Bond Account on a parity with
the outstanding Bonds and secured by an equal charge and lien on the Revenues pledged to the
Bond Account for any lawful purpose of the City, including the refunding of outstanding Bonds;
provided that, (i) except as to Bonds issued pursuant to Section 4.2.E hereof, at the time of the
issuance of such Additional Bonds, there is no deficiency in the Bond Account, and no Event of
Default has occurred and is continuing, and (ii) the requirements of the applicable provisions of
this Section 4.2 are complied with.
B. Additional Bonds may be issued for any lawful purpose of the City if the
following requirements are met. A certificate signed by the Finance Director shall set forth:
(i) the amount of the Net Revenues for any 12 consecutive months of the
24 months prior to the date of the issuance of such Bonds;
(ii) the amount of the Average Annual Debt Service in any Fiscal Year
thereafter on account of all Bonds then outstanding under this ordinance and the
Additional Bonds then to be issued hereunder; and
(iii) the percentage derived by dividing the amount shown in (i) above by the
amount shown in (ii) above, and shall state that such percentage is not less than 125 %;
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C. Additional Bonds may also be issued for any lawful purpose of the City if the
following requirements are met. A certificate signed by a Professional Utility Consultant and
filed with the City Clerk shall set forth:
(i) the amount of the Adjusted Net Revenues computed as provided in
Section 4.2.H;
(ii) the amount of the Average Annual Debt Service thereafter on account of
all Bonds then outstanding under this ordinance and the Additional Bonds then to be
issued hereunder; and
(iii) as to the applicable Fiscal Year under (ii) above, the percentage derived by
dividing the amount shown in (i) above by the amount shown in (ii) above, and shall state
that such percentage is not less than 125 %.
Additional Bonds may be issued pursuant to Subsections E and F of this Section 4.2 without
complying with the provisions of this Subsection C.
D. Additional Bonds may also be issued for the purpose of paying part of the costs of
Distribution and Transmission Facilities or Generating Facilities for which Bonds have
theretofore been issued, if a certificate is signed by a Professional Utility Consultant and filed
with the City Clerk, which (i) shall comply with the requirements of paragraph C above or
(ii) shall state that the issuance of such Additional Bonds is necessary to complete such facilities
and that the completion is necessary for the efficient and economic operation of the Electric
System; provided, however, that the principal amount of such Additional Bonds may not exceed
15% of the principal amount of the Bonds theretofore issued for such facilities.
E. Additional Bonds may also be issued from time to time for the purpose of
providing funds, together with any other available funds, for retiring at or prior to their maturity
or maturities any or all of the outstanding Bonds of any series, including the payment of any
redemption premium thereon, and, if deemed necessary by the City, for paying the interest to
accrue thereon to the date fixed for their retirement and any expenses incident to the issuance of
such Additional Bonds.
F. Additional Bonds issued under subsection E above may not be delivered unless
the proceeds (excluding any accrued interest but including any premium) of such Additional
Bonds, together with any other money that has been made available for such purposes, and the
principal of and the interest on the investment of such proceeds or any such money, are sufficient
to pay (i) the principal of and the redemption premium, if any, on the Bonds to be refunded and
(ii) the interest that will become due and payable on or prior to the date of their payment or
redemption, and (iii) the expenses incident to the issuance of such Additional Bonds.
If such Additional Bonds are to be issued pursuant to Section 4.2.F above,
(1) There shall be filed with the City a certificate signed by the Finance
Director showing that the Annual Debt Service for any Fiscal Year thereafter will not be
increased by more than $5,000 by reason of the issuance of the Additional Bonds; or
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(2) There shall be filed with the City a certificate signed by a Professional
Utility Consultant setting forth:
(a) the amount of the Adjusted Net Revenues computed as provided in
Section 4.2.H;
(b) the amount of the Average Annual Debt Service in any Fiscal Year
thereafter on account of all Bonds to be outstanding in such Fiscal Year and the
Additional Bonds then to be issued hereunder; and
(c) stating that the amount shown in (a) above is not less than 125% of
the amount shown in (b) above.
G. In rendering any certificate under this Section, the Professional Utility Consultant
may rely upon, and such certificate shall have attached thereto, (1) financial statements of the
Electric System, certified by the chief financial officer thereof, showing income and expenses for
the period upon which the same are based and a balance sheet as of the end of such period, or
(2) similar certified statements by the Division of Municipal Corporations of the Office of the
State Auditor of the State of Washington (or any successor thereto), or (3) similar certified
statement by an independent certified public accountant, if any, for as much of said period as any
examination by them has been made and completed. If two or more of such statements are
inconsistent with each other, the Professional Utility Consultant shall rely on the statement
described under (1) above.
In connection with the issuance of any Bonds pursuant to subsections 4.2.C, 4.2.D and
4.2.G of this Section, the certificate of the Professional Utility Consultant hereinabove referred to
shall be conclusive and the only evidence required to show compliance with the provisions and
requirements of said subsection.
H. For the purposes of the certificates required by Sections 4.2.0 and 4.2.G of this
ordinance, Adjusted Net Revenues shall be computed by the Professional Utility Consultant as
follows:
(a) The Net Revenues for any 12 consecutive months (selected by the City)
out of the 24 months prior to the date of issuance of the Additional Bonds (such 12 -month period
being herein called the "Base Period ") may be adjusted:
(i) to reflect any changes in Net Revenues for the Base Period which
would have occurred if the schedule of rates and charges in effect at the time of the
computation (or approved by the Council as of the time of such computation and to
become effective within 12 months thereof) had been in effect during the portion of the
Base Period in which such schedule was not in effect;
(ii) to reflect a full 12 months of Net Revenues from any customers of
the Electric System added prior to the computation date; and
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(iii) to reflect any changes in Net Revenues estimated to be received
from residences and businesses that are in existence as of the date of issuance of such
Additional Bonds and that are expected to connect to the Electric System as a result of,
and upon completion of, any facilities under construction or to be acquired, constructed or
installed as a part of the Electric System from the proceeds of any Bonds.
I. Nothing contained herein shall prevent the City from refunding at one time all of
the Bonds then outstanding. Nothing contained herein shall prevent the City from issuing
obligations payable from a lien on the Revenues that is junior and inferior to the Bonds.
J. Additional Bonds may be issued from time to time without complying with the
requirements set forth above if, in the opinion of the Professional Utility Consultant, as
evidenced by a certificate filed with the City, it is necessary to repair any damage or loss to the
Electric System or if the Electric System has been destroyed or damaged by disaster or
unanticipated event to such an extent that it cannot be operated; provided, however, that the
proceeds of any Additional Bonds issued for such purpose may only be used to return the Electric
System to, or to maintain the Electric System at, substantially its former or then operating
capacity; and provided further, that in the case of repair, such Additional Bonds may be issued
only to the extent that insurance proceeds from such damage or loss are insufficient for the
accomplishment of such purpose. So long as the 2005 Bonds remain outstanding, the consent of
the insurer for the 2005 Bonds must be obtained prior to the issuance of Additional Bonds
pursuant to this Section 4.2.J.
K. In calculating Annual Debt Service for purposes of this Section, so long as the
2001 Bonds and the 2005 Bonds remain outstanding, if the interest rate on any Bonds is other
than a fixed rate, the rate applicable at the time of computation shall be used unless such rate is
less than the most recently published Bond Buyer's Revenue Bond Index for municipal revenue
bonds, in which case the rate stated by such index shall be used. If such index is no longer
published, another nationally recognized index for municipal revenue bonds maturing in 20 to
30 years shall be used. From and after such time as no 2001 Bonds or 2005 Bonds remain
outstanding, if the interest rate on any Bonds is other than a fixed rate, the rate applicable at the
time of computation shall be used unless such rate is less than an interest rate equal to the yield
to maturity equal to the higher of (i) the average of the SIFMA Municipal Swap Index over the
60 month period immediately preceding the date of computation, or (ii) the average of the
SIFMA Municipal Swap Index over the 12 month period immediately preceding the date of
computation, as determined within ten days prior to the date of computation or, if such
computation is being made in connection with the certificate required by this Section, then within
ten days prior to the date of such certificate.
ARTICLE V
GENERAL TERMS AND PROVISIONS OF BONDS
Section 5.1. Execution of 2010 Bonds. The 2010 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 on each of the 2010 Bonds. In case either of the officers who have signed or attested
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any of the 2010 Bonds cease to be such officer before such 2010 Bonds have been actually issued
and delivered, such 2010 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 2010 Bonds had not
ceased to be such officers.
Only 2010 Bonds that bear a Certificate of Authentication in the form set forth in
Section 8.1, manually executed by the Bond Registrar, will be valid or obligatory for any purpose
or entitled to the benefits of this ordinance. Such Certificate of Authentication is conclusive
evidence that the 2010 Bonds so authenticated have been duly executed, authenticated and
delivered and are entitled to the benefits of this ordinance.
Section 5.2. Lost or Destroyed Bonds. If any 2010 Bonds are lost, stolen or destroyed,
the Bond Registrar may authenticate and deliver a new 2010 Bond or 2010 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 2010 Bond or 2010 Bonds and upon his or her filing with the Bond Registrar
and the City evidence satisfactory to both that such 2010 Bond or 2010 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.
ARTICLE VI
CREATION OF SPECIAL FUNDS AND ACCOUNTS
AND PAYMENTS THEREFROM
Section 6.1. Electric Fund (formerly designated as the Light Fund).
A. Electric Fund. A special fund of the City has heretofore been created pursuant to
Ordinance No. 374 passed by the City Council on May 5, 1910, and designated the "Light Fund,"
which fund is hereby renamed as the "Electric Fund" and continued by the City. The City
covenants that it will pay or cause to be paid all Revenues into the Electric Fund as promptly as
practicable after receipt thereof. The following accounts have been created in the Electric Fund:
(i) the General Account, (ii) the Contingency and Replacement Account, (iii) the Construction
Account, and (iv) the Rate Stabilization Account. Such accounts shall be held and used for the
purposes hereinafter described.
B. Flow of Funds. The Revenues of the City shall be deposited and credited to the
following accounts in the Electric Fund and used only for the following purposes and in the
following order of priority:
(1) All Revenues paid into the Electric Fund shall first be credited to the
General Account therein and applied as follows:
(i) to pay Operating Expenses and to provide sufficient working
capital for the operation of the Electric System;
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(ii) to make all payments required to be made into the Interest Account
in the Bond Account for the payment of accrued interest on the next interest
payment date;
(iii) to make all payments required to be made into the Principal
Account in the Bond Account for the payment of the principal amount of Serial
Bonds next coming due, and into the Bond Retirement Account in the Bond
Account for the mandatory redemption of Term Bonds;
(iv) to make all payments required to be made into the Reserve
Account in the Bond Account created to secure the payment of the Bonds; and
(v) to make all payments required to be made into any special fund or
account created to pay or secure the payment of the principal of and interest on
any revenue bonds, warrants or other revenue obligations of the City having a lien
upon Revenues and money in the Electric Fund and Bond Account and accounts
therein junior and inferior to the lien thereon for the payment of the principal of
and interest on the Bonds.
(2) To the extent that surplus Revenues remain after the payments so required
to be made out of the General Account, the City shall credit to the Contingency and Replacement
Account in each Fiscal Year an amount equal to at least 25% of the Annual Debt Service in such
Fiscal Year.
(3) To the extent that surplus Revenues remain after the payments so required
to be made out of the General Account and the credit to the Contingency and Replacement
Account, the City may credit up to the full amount of such surplus to the Rate Stabilization
Account.
(4) After all of the above payments and credits have been made, amounts
remaining in the General Account may be used for any other lawful purpose of the Electric Fund.
Any credits from the General Account pursuant to subsections (2) and (3) above, and any
credits to the General Account from the Rate Stabilization Account made pursuant to Section 9.3
hereof, may be made up to and including the date 90 days after the end of the Fiscal Year for
which the deposit or withdrawal will be effective.
C. Contingency and Replacement Account and Rate Stabilization Account. Money
in the Contingency and Replacement Account shall be used from time to time to make up any
deficiencies in the Reserve Account, and such money in the Contingency and Replacement
Account is hereby pledged as additional payment to the Bond Account to the extent required for
any such deficiencies. Money in the Contingency and Replacement Account may be used to
make additions, betterments, extensions, renewals, replacements and other capital improvements
to the Electric System, to retire Bonds, or may be used by the City for any other lawful purpose
of the City, but may not be paid directly into the Rate Stabilization Account.
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The Rate Stabilization Account is created in anticipation of future increases in revenue
requirements. Funds in the Rate Stabilization Account may be transferred to the General
Account to accommodate part or all of those future revenue requirement increases.
Money in the Rate Stabilization Account may be used for any lawful purpose. Money in
the Rate Stabilization Account shall be used from time to time to make up any deficiencies in the
Bond Account, and such money in the Rate Stabilization Account is hereby pledged as additional
payments to the Bond Account to the extent required for any such deficiencies.
Nothing contained in this Section 6.1 shall be construed to require the deposit into the
Electric Fund of any of the revenues, income, receipts or other money of the City derived by the
City through the ownership or operation of any separate utility system hereafter created or
established from funds other than the proceeds of Bonds.
D. Contract Resource Obligations.
(1) The City is hereby authorized to create, acquire, construct, finance, own
and operate one or more additional electric utility systems for the purpose of generating,
transmitting or distributing electric power and energy. The Council may declare any such system
to be a separate utility system not financed from Revenues (except as a Contract Resource
Obligation (i) included in Operating Expenses of the Electric System upon compliance with
Section 6.2 hereof or (ii) on a basis junior and inferior to the lien on Revenues pledged to secure
the Bonds), the revenue of which separate utility system may be pledged to the payment of
revenue obligations issued to purchase, construct, condemn or otherwise acquire or expand such
separate utility system. The costs associated with any such separate utility system may upon
declaration of the City Council constitute a Contract Resource Obligation and, after no 2001
Bonds or 2005 Bonds remain outstanding and upon compliance with Section (D)(2) hereof,
included in Operating Expenses, provided, however, no Contract Resource Obligation
constituting the costs of a separate utility system for the retail distribution of electric power and
energy may be included in the Electric System's Operating Expenses.
(2) Contract Resource Obligations as Operating Expenses. After such time as
no 2001 Bonds or 2005 Bonds remain outstanding, a Contract Resource Obligation may be
included in Operating Expenses if the following requirements are met at the time the Contract
Resource Obligation is incurred:
(i) No Event of Default has occurred and is continuing.
(ii) There shall be on file with the City Clerk a certificate of a
Professional Utility Consultant stating that the average annual Net Revenues for the Fiscal Years
in the period specified in the next sentence, as such Net Revenues are estimated by the
Professional Utility Consultant in accordance with Section 4.2(G) and (H) hereof, shall be at
least equal to 1.25 times Average Annual Debt Service in any future Fiscal Year, as estimated by
the Professional Utility Consultant in accordance with Section 4.2(G) and (H) hereof. The period
for the determination of average annual Net Revenues shall be the period beginning with the first
Fiscal Year following the earlier of (a) the date to which interest is capitalized or (b) the date of
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initial operation of the facilities to be financed and ending with the fifth full Fiscal Year after
such date.
(iii) There shall be on file with the City Clerk an opinion of the
Professional Utility Consultant to the effect stated in subparagraph (a) below if the Contract
Resource Obligation is to be utilized to supply power and energy or to the effect stated in
subparagraph (b) below if the Contract Resource Obligation is to be utilized to supply
transmission capability:
(a) (i) The additional source of power and energy from such
Contract Resource Obligation is sound from a power supply planning standpoint and is
technically and economically feasible in accordance with prudent utility practice; and (ii) the
estimated cost of such Contract Resource Obligation is reasonable.
(b) (i) The transmission capability to be acquired pursuant to the
Contract Resource Obligation will be necessary within a reasonable time after the estimated date
of commercial operation of the transmission facilities; and (ii) the estimated cost of such
Contract Resource Obligation is reasonable.
Section 6.2. Bond Account (formerly referred to as the Bond Fund). Pursuant to
Ordinance No. 2709, a special fund of the City has heretofore been created and designated the
"Electric System Revenue Bond Fund" (previously referred to as the "Bond Fund" and referred
to herein as the "Bond Account "). The Bond Account shall be held in trust and administered by
the City and used solely to pay the principal of, premium, if any, and interest on the Bonds, and
retiring the Bonds prior to maturity in the manner herein provided. The City hereby obligates
and binds itself irrevocably to set aside and to pay (to the extent not otherwise provided) from
money in the Electric Fund into the Bond Account, after paying or making provision for
Operating Expenses and prior to the payment of any other charge or obligation against such
Revenues, amounts sufficient to pay the principal of, premium, if any, and interest on all the
Bonds from time to time outstanding as the same respectively become due and payable, either at
the maturity thereof or in accordance with the terms of any Sinking Fund Requirement
established for the retirement of Term Bonds. The fixed amounts to be paid into the Bond
Account, to the extent that such payments are not made from Bond proceeds or from other
money which may legally be available therefor, shall be as follows and in the following order of
priority, to wit:
A. There has been created in the Bond Account, for the purpose of paying the interest
on Bonds as the same becomes due and payable, a Bond Interest Account (the "Interest
Account "). So long as any 2001 Bonds or 2005 Bonds remain outstanding, no later than the last
day of the month in which any Bonds are delivered to the initial purchasers thereof and on or
before the 25th day of each month thereafter, the City shall pay from the Electric Fund into the
Bond Account to the credit of the Interest Account an amount such that, if the same amount were
so paid and credited to the Interest Account on the 25th day of each of the months preceding the
next date upon which an installment of interest falls due on the Bonds, the aggregate of the
amounts so paid and credited to the Interest Account would on such date be equal to the
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installment of interest then falling due on all Bonds then outstanding. From and after such time
as no 2001 Bonds or 2005 Bonds remain outstanding, the City shall pay from the Electric Fund
into the Bond Account to the credit of the Interest Account, on or before the date due, an amount
sufficient, together with any funds then on deposit in the Interest Account, to pay the installment
of interest falling due on all Bonds then outstanding on such date.
B. There has been created in the Bond Account, for the purpose of paying
outstanding Serial Bonds as they mature and for the purpose of redeeming Term Bonds pursuant
to the Sinking Fund Requirement pertaining to such Term Bonds, the following accounts each of
which are equal in priority:
(i) The Bond Principal Account, for the purpose of paying outstanding Serial
Bonds as they mature (the "Principal Account "). So long as any 2001 Bonds or 2005 Bonds
remain outstanding, no later than the 25th day of the 12th month prior to each Serial Bond
maturity, or if there are less than 12 months preceding such maturity then no later than the last
day of the month immediately succeeding the month in which the Bonds are delivered to the
initial purchaser(s) thereof, and on or before the 25th day of each month thereafter, the City shall
pay from the Electric Fund into the Bond Account to the credit of the Principal Account an
amount such that, if the same amount were so paid and credited to the Principal Account on the
25th day of each succeeding month thereafter and prior to such Serial Bond maturity date, the
aggregate of the amounts so paid and credited to the Principal Account would on such date be
equal to the principal amount of Serial Bonds then falling due. From and after such time as no
2001 Bonds or 2005 Bonds remain outstanding, the City shall pay from the Electric Fund into the
Bond Account to the credit of the Principal Account, on or before the date due, an amount
sufficient, together with any funds then on deposit in the Principal Account, to pay the principal
of Serial Bonds due on such date.
(ii) The Bond Retirement Account, for the purpose of redeeming Term Bonds
pursuant to the Sinking Fund Requirement pertaining to such Term Bonds and to otherwise retire
Bonds prior to maturity (hereinafter referred to as the "Bond Retirement Account "). So long as
any 2001 Bonds or 2005 Bonds remain outstanding, no later than the 25th day of the 12th month
prior to the date of each Sinking Fund Requirement, or if there are less than 12 months preceding
such Sinking Fund Requirement Date, then on the last day of the month immediately succeeding
the month in which the Bonds are delivered to the initial purchaser(s) thereof, and on or before
the 25th day of each succeeding month thereafter, the City shall pay from the Electric Fund into
the Bond Account to the credit of the Bond Retirement Account an amount such that, if the same
amount were so set aside in the Bond Account and credited to the Bond Retirement Account on
the 25th day of each succeeding month thereafter and prior to such Sinking Fund Requirement
Date, the aggregate of the amounts so paid and credited to the Bond Retirement Account would
be equal to the Sinking Fund Requirement for such date. From and after such time as no 2001
Bonds or 2005 Bonds remain outstanding, the City shall pay from the Electric Fund into the
Bond Account to the credit of the Bond Retirement Account, on or before the date due, an
amount sufficient, together with any funds then on deposit in the Bond Retirement Account, to
pay the Sinking Fund Requirement for any Term Bonds due on such date.
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The City shall apply all the money paid into the Bond Account for credit to the Bond
Retirement Account to the redemption of Term Bonds on each Sinking Fund Requirement Date
(or may so apply such money prior to such Sinking Fund Requirement Date), pursuant to the
terms of this ordinance or of the Supplemental Ordinance authorizing the issuance thereof. The
City may also apply the money paid into the Bond Account for credit to the Bond Retirement
Account for the purpose of retiring Term Bonds by the purchase of such Bonds at a purchase
price (including accrued interest and any brokerage charge) not in excess of the principal amount
thereof, in which event the principal amount of such Bonds so purchased shall be credited against
the next ensuing Sinking Fund Requirement. If as of any September 1 the principal amount of
the 2010 Term Bonds retired by purchase or redemption exceeds the cumulative amount required
to have been redeemed by sinking fund installments on or before such September 1, then such
excess may be credited against the Sinking Fund Requirement for the 2010 Term Bonds for the
following Fiscal Year. Any such purchase of Bonds by the City may be made with or without
tenders of Bonds in such manner as the City shall, in its discretion, deem to be in its best interest.
C. There has been created a "Bond Reserve Account" in the Bond Account (the
"Reserve Account "). Upon the issuance of the 2010 Bonds, the City shall make a deposit from
available funds of the Electric System in an amount that, together with other funds, if any, on
deposit in the Reserve Account, shall equal at least Average Annual Debt Service for the then
outstanding Bonds. If the City issues any Additional Bonds, the Supplemental Ordinance
authorizing the issuance of such Additional Bonds shall provide for approximately equal monthly
payments into the Bond Account for credit to the Reserve Account from the money in the
Electric Fund, in such amounts and at such times so that by no later than three years from the
date of issuance of such Additional Bonds there will be credited to the Reserve Account an
amount equal to the Average Annual Debt Service at the date of issuance of such Additional
Bonds; provided, however, that the proceedings authorizing the issuance of Additional Bonds
may provide for payments into the Bond Account for credit to the Reserve Account from the
proceeds of such Additional Bonds or from any other money lawfully available therefor, in which
event, in providing for deposits and credits required by the foregoing provisions of this
paragraph, allowance shall be made for any such amounts so paid into such Account.
Subject to the two preceding sentences, the money and value of Permitted Investments in
the Reserve Account shall be determined as of the last business day of each Fiscal Year and
maintained at an amount at least equal to the Average Annual Debt Service, except where it is
necessary for the City to make a transfer therefrom to the Interest Account, Principal Account or
Bond Retirement Account because of an insufficiency of money therein to make any required
payment of principal of or interest on any Bonds when due. The City shall make up any
deficiencies in such account arising because of such transfer, or because of an insufficient value
of money and Permitted Investments in such account, in not more than 18 approximately equal
consecutive monthly installments into the Reserve Account.
If at any time the money and value of Permitted Investments in the Reserve Account shall
exceed the amount of money and value of Permitted Investments then required to be maintained
therein by 10 %, such excess may be transferred to the General Account in the Electric Fund.
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For the purposes of valuation of Permitted Investments pursuant to this Section 6.2.C, the
value of Permitted Investments shall be computed as follows: (a) the value of obligations which
mature within six months from the date of purchase thereof shall be the purchase price of such
obligations; and (b) the value of obligations which mature more than six months after the date of
purchase thereof shall be the lesser of (i) the principal or face amount of such obligations, or
(ii) the bid quotation price thereof as of the fifth business day next preceding the date of such
determination as reported in The Wall Street Journal, or if such newspaper is not published or
such price is not reported in said newspaper, in a newspaper of general circulation or a financial
journal published in the Borough of Manhattan, City and State of New York, or (iii) the price at
which such obligations are then redeemable by the owner at his option. The computations made
under this paragraph shall not include accrued interest.
In making the payments and credits to the Principal Account, Interest Account, Bond
Retirement Account and Reserve Account required by this Section 6.2, to the extent that such
payments are made from Bond proceeds, from money in any capitalized interest account, or from
other money that may legally be available, such payments are not required to be made from the
Electric Fund.
The City may elect to meet the requirements of this Section 6.2.0 with respect to the
Reserve Account through the use of a Qualified Letter of Credit, Qualified Insurance or other
equivalent credit enhancement device currently rated in one of the two highest rating categories
by Moody's or S &P. The City may contract with the entity providing such Qualified Letter of
Credit, Qualified Insurance or other equivalent credit enhancement device that the City's
reimbursement obligation, if any, to such entity ranks on a parity of lien with the Bonds.
If the City elects additionally to secure any issue of Additional Bonds through the use of a
Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device, the
City may contract with the entity providing such Qualified Letter of Credit, Qualified Insurance
or other equivalent credit enhancement device that the City's reimbursement obligation, if any, to
such entity ranks on a parity of lien with outstanding Bonds; provided that the payments due
under such reimbursement agreement are such that if such reimbursement obligation were a
series of Additional Bonds, such Bonds could be issued in compliance with the provisions of
Article IV hereof
In making the payments and credits to the Reserve Account required by this Section 6.2,
to the extent that the City has obtained Qualified Insurance or a Qualified Letter of Credit for
specific amounts required pursuant to this section to be paid out of the Reserve Account, such
amounts so covered by Qualified Insurance or a Qualified Letter of Credit shall be credited
against the amounts required to be maintained in the Bond Reserve Account by this Section 6.2.0
to the extent that such payments and credits to be made are insured by an insurance company, or
guaranteed by a letter of credit from a financial institution. Upon the expiration of any Qualified
Letter of Credit or the termination of any Qualified Insurance, the Reserve Account shall be
funded in accordance with the third paragraph of this Section 6.2.0 as if the Bonds that remain
outstanding had been issued on the date of such notice of expiration or termination.
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D. If there is a deficiency in the Interest Account, Principal Account or Bond
Retirement Account in the Bond Account, the City shall promptly make up such deficiency from
the Reserve Account by the withdrawal of cash therefrom for that purpose and by the sale or
redemption of obligations held in the Reserve Account, if necessary, in such amounts as will
provide cash in the Reserve Account sufficient to make up any such deficiency. The City
covenants and agrees that any deficiency created in the Reserve Account by reason of any
withdrawal therefrom for payment into the Interest Account, Principal Account or Bond
Retirement Account shall be made up from money in the Electric Fund available after making
provision first for payment of Operating Expenses and then for the required payments into such
Interest, Principal and Bond Retirement Accounts.
Money in the Bond Account shall be transmitted to the Paying Agents in amounts
sufficient to meet the maturing installments of principal of, premium, if any, and interest on the
Bonds when due. Whenever the assets of the Bond Account shall be sufficient to provide money
to retire all Bonds then outstanding, including such interest thereon as thereafter may become due
and payable and any premiums upon redemption thereof, no further payments need be made into
the Bond Account. All money remaining in the Bond Account after provision for the payment in
full of the principal of, premium, if any, and interest on the Bonds shall be returned to the
Electric Fund.
The Bond Account shall be drawn upon solely for the purpose of paying the principal of,
premium, if any, and interest on the Bonds. Money set aside from time to time with the Paying
Agents for such payment shall be held in trust for the owners of the Bonds in respect of which
the same shall have been so set aside. Until so set aside, all money in the Bond Account shall be
held in trust for the benefit of the owners of all Bonds at the time outstanding equally and ratably.
Section 6.3. Investment of Funds. Money held for the credit of the Interest Account,
Principal Account and Bond Retirement Account in the Bond Account shall, to the fullest extent
practicable and reasonable, be invested and reinvested at the direction of the City solely in, and
obligations deposited in such accounts shall consist of investments described in clauses A(1),
A(2), A(3), B(1), B(2) and B(3) of the definition of Permitted Investments which shall mature
prior to the respective dates when the money held for the credit of such Accounts will be required
for the purposes intended. Money in the Reserve Account in the Bond Account not required for
immediate disbursement for the purposes for which such Account is created shall, to the fullest
extent practicable and reasonable, be invested and reinvested at the direction of the City solely in,
and obligations deposited in the Reserve Account shall consist of investments described in
clauses A(1), A(2), A(3), B(1), B(2) and B(3) of the definition of Permitted Investments,
maturing or subject to redemption at the option of the owner thereof within 20 years from the
date of such investment (but maturing prior to the final maturity date of the Bonds then
outstanding).
Money in the Electric Fund and any arbitrage rebate fund not required for immediate
disbursement for the purposes for which such Funds were created shall, to the fullest extent
practicable and reasonable, be invested and reinvested by the City in Permitted Investments.
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Except to the extent that there are deficiencies in any account in the Bond Account, all
income received from the investment of money in the Bond Account and the Electric Fund shall
be from time to time deposited in the Electric Fund.
All money held or set aside by the City in the Electric Fund and Bond Account shall, until
otherwise invested or applied as provided in this ordinance, be deposited by the City in its name,
for the account of the Electric Fund (and the appropriate account therein) or the Bond Account
(and the appropriate account therein), as the case may be, in such depositary or depositaries as
the City at any time or from time to time appoints for such purpose. All money so deposited
shall be secured in the manner prescribed by the laws of the State of Washington for the securing
of funds of the City.
When no Bonds are insured, City funds may be invested in any manner permitted by
Washington law.
ARTICLE VII
USE OF BOND PROCEEDS; CONSTRUCTION ACCOUNT
Section 7.1. Construction Account. There is hereby authorized to be created in the
office of the Finance Director a special subaccount within the Construction Account to be
designated as the "City of Port Angeles 2010 Electric System Construction Subaccount" (the
"2010 Construction Subaccount "). Proceeds of the 2010 Bonds will be deposited into the 2010
Construction Subaccount and applied to pay costs of the Projects and costs of issuance of the
2010 Bonds. Money in the 2010 Construction Subaccount may be invested in Permitted
Investments. Funds remaining in the 2010 Construction Subaccount after the Projects have been
completed shall be deposited in the Bond Account.
ARTICLE VIII
FORM OF 2010 BONDS
Section 8.1. Form of 2010 Bonds. The 2010 Bonds shall be in substantially the
following form:
UNITED STATES OF AMERICA
NO. $
STATE OF WASHINGTON
CITY OF PORT ANGELES
ELECTRIC REVENUE BOND, SERIES 2010
INTEREST RATE:
MATURITY DATE:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
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Dollars
CUSIP NO:
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The City of Port Angeles, Washington (the "City "), a municipal corporation of the State
of Washington, for value received promises to pay to the Registered Owner identified above, or
registered assigns, on the Maturity Date set forth above the Principal Amount set forth above,
and to pay interest thereon from the date hereof, or the most recent date to which interest has
been paid or duly provided for, at the Interest Rate set forth above payable on the first days of
each March and September, commencing on March 1, 2011.
Both principal of and interest on this bond are payable in lawful money of the United
States of America. For so long as the this bond is 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. If the bonds of this issue are no longer in fully immobilized form, interest on this bond
will be paid by check or draft mailed to the Registered Owner at the address appearing on the
Bond Register on the 15th day of the month preceding the interest payment date, and principal of
this bond will be payable upon presentation and surrender of this bond by the Registered Owner
at the principal office of the fiscal agency of the State of Washington in either Seattle,
Washington, or New York, New York (collectively the "Bond Registrar ").
This bond is one of a series of bonds in the aggregate principal amount of $4,925,000 (the
"2010 Bonds ") issued pursuant to Ordinance No. 3406 passed by the City Council on August 3,
2010 (the "Bond Ordinance "), to finance the cost of improvements to the City's Electric System.
Unless otherwise defined on this bond, capitalized terms used herein have the meanings given
them in the Bond Ordinance.
The principal of and interest on the 2010 Bonds are payable solely out of the special fund
of the City known as the "Electric System Revenue Bond Account" (the "Bond Account ")
established by Ordinance No. 2709 of the City. The 2010 Bonds are special limited obligations
of the City and are not obligations 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 2010 Bonds.
Under the Bond Ordinance, the City is obligated to set aside and pay into the Bond
Account out of Revenues of the Electric System certain fixed amounts sufficient to pay when due
the principal of and interest and premium, if any, on the 2010 Bonds and all other Bonds, as fully
provided in the Bond Ordinance. To the extent provided by the Bond Ordinance, the amounts
pledged to be paid from Revenues into the Bond Account and accounts therein are a lien and
charge thereon equal in rank to the lien and charge upon Revenues of the amounts required to pay
and secure the payment of certain outstanding Bonds and any Additional Bonds that the City may
issue hereafter, and superior to all other liens and charges of any kind or nature, except the
Operating Expenses of the System.
The Bond Ordinance sets forth covenants of the City to secure payment of Bonds,
including but not limited to covenants relating to rates and charges of the Electric System,
operations of the System, and the issuance of Additional Bonds.
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The 2010 Bonds are subject to redemption prior to maturity as provided in the Bond
Ordinance. The 2010 Bonds may be transferred and exchanged upon surrender to the Bond
Registrar as provided in the Bond Ordinance.
The 2010 Bonds are not "private activity bonds" as such term is defined in the Internal
Revenue Code of 1986, as amended (the "Code "). The City has designated the 2010 Bonds as
"qualified tax - exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code.
This bond will 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 the Bond Registrar.
It is hereby certified, recited and declared that all acts, conditions and things required by
the Constitution and statutes of the State of Washington to exist, to have happened and to have
been performed precedent to and in the issuance of this bond do exist, have happened and have
been performed in due time, form and manner as prescribed by law, and that the amount of this
bond, together with all other obligations or indebtedness of the City, does not exceed any
constitutional or statutory limitations of indebtedness.
IN WITNESS WHEREOF, the City of Port Angeles, Washington, has caused this bond to
be signed by the manual or facsimile signature of its Mayor, attested by the manual or facsimile
signature of the City Clerk, and the seal of the City to be impressed or reproduced hereon, all as
of , 2010.
Attest:
[Manual or Facsimile Signature]
City Clerk
(SEAL)
Date of Authentication:
CITY OF PORT ANGELES, WASHINGTON
By [Manual or Facsimile Signature]
Mayor
CERTIFICATE OF AUTHENTICATION
This is one of the Electric Revenue Bonds, Series 2010, of the City of Port Angeles,
Washington, dated , 2010, as described in the Bond Ordinance.
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WASHINGTON STATE FISCAL
AGENCY, Bond Registrar
By
Authorized Officer
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF TRANSFEREE
(Please print or typewrite name and address, including zip code, of Transferee)
the within bond and does hereby irrevocably constitute and appoint of
, or its successor, as Bond Registrar to transfer said bond on the books
kept for registration thereof with full power of substitution in the premises.
DATED:
SIGNATURE GUARANTEED:
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NOTE: The signature on this Assignment
must correspond with the name of the
registered owner as it appears upon the face
of the within bond in every particular,
without alteration or enlargement or any
change whatever.
P 120391_DOT\20391_2A5 08/03/10
ARTICLE IX
COVENANTS TO SECURE BONDS
The City covenants and agrees with the purchasers and owners of all Bonds, so long as
any such Bonds are outstanding, as follows:
Section 9.1. Security for Bonds. All Bonds are special limited obligations of the City
payable from and secured solely by Revenues, and by other money and assets specifically
pledged hereunder for the payment thereof. There are hereby pledged as security for the payment
of the principal of, premium, if any, and interest on all Bonds in accordance with the provisions
of this ordinance, subject only to the provisions of this ordinance restricting or permitting the
application thereof for the purposes and on the terms and conditions set forth in this ordinance:
(i) the Revenues, and (ii) the money and investments, if any, credited to the Electric Fund, the
Construction Account and the Bond Account, and the income therefrom. The Revenues and
other money and securities hereby pledged shall immediately be subject to the lien of this pledge
without any physical delivery thereof or further act, and the lien of this pledge shall be valid and
binding as against all parties having claims of any kind in tort, contract or otherwise against the
City regardless of whether such parties have notice thereof.
All Bonds now or hereafter outstanding shall be equally and ratably payable and secured
hereunder without priority by reason of date of adoption of the ordinance providing for their
issuance or by reason of their series, number or date of sale, issuance, execution or delivery, or
by the liens, pledges, charges, trusts, assignments and covenants made herein, except as
otherwise expressly provided or permitted in this ordinance and except as to insurance which
may be obtained by the City to insure the repayment of one or more series or maturities within a
series.
The pledge of the Revenue and of the amounts to be paid into and maintained in the funds
and accounts described above in this Section to pay and secure the payment of Bonds is hereby
declared to be a prior lien and charge on the Revenues and the money and investments in such
funds and accounts, subject to provision for operating capital and to the payment of Operating
Expenses as provided in Section 6.1.B hereof, and superior to all other liens and charges of any
kind or nature.
Bonds shall not in any manner or to any extent constitute general obligations of the City
or of the State of Washington, or any political subdivision of the State of Washington, or a
charge upon any general fund or upon any money or other property of the City or of the State of
Washington, or of any political subdivision of the State of Washington, not specifically pledged
thereto by this ordinance.
Section 9.2. Rate Covenant - General. The City will establish, maintain and collect
rates and charges for electric power and energy and other services, facilities and commodities
sold, furnished or supplied through the facilities of the Electric System that are fair and
nondiscriminatory and adequate to provide Revenues sufficient, together with other funds legally
available therefor, for the punctual payment of the principal of, premium, if any, and interest on
the Bonds for which the payment has not otherwise been provided, for all payments that the City
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is obligated to make into the Bond Account, and for the proper operation and maintenance of the
Electric System, and all necessary repairs, replacements and renewals thereof, including the
payment of all taxes, assessments or other governmental charges lawfully imposed on the
Electric System or the Revenues therefrom, or payments in lieu thereof, and the payment of all
other amounts that the City may now or hereafter become obligated to pay from the Revenues by
law or contract.
Section 9.3. Rate Covenant - Debt Service Coverage. The City will also establish,
maintain and collect rates and charges that shall be adequate to provide in each Fiscal Year Net
Revenues in an amount equal to at least 1.25 times the Annual Debt Service on the then
outstanding Bonds in such Fiscal Year. For the purpose of meeting the requirement of this
paragraph, (i) there may be added to Net Revenues for any Fiscal Year such amount, withdrawn
from the Rate Stabilization Account and deposited in the General Account, and (ii) there must be
subtracted from Net Revenues for any Fiscal Year such amounts as are withdrawn from the
General Account and deposited into the Rate Stabilization Account for such Fiscal Year.
The City also covenants and agrees to maintain Net Revenues for the then current Fiscal
Year in an amount that will be equal to the Annual Debt Service on the then outstanding Bonds
in such Fiscal Year.
The failure to collect Revenues in any Fiscal Year sufficient to comply with the covenants
contained in this Section 9.3 will not constitute an Event of Default if the City, before the 60th
day of the following Fiscal Year:
A. Employs a Professional Utility Consultant to recommend changes in the City's
rates that are estimated to produce Revenues sufficient (once the City imposes the rates
recommended by the Professional Utility Consultant) to meet the requirements of this Section;
and
B. Promptly imposes rates at least as high as those recommended by such
Professional Utility Consultant.
The calculation of the coverage requirements set forth above, and in Section 4.2 hereof,
and the City's compliance therewith, may be made solely with reference to this ordinance
without regard to future changes in generally accepted accounting principles. If the City has
changed one or more of the accounting principles used in the preparation of its financial
statements, because of a change in generally accepted accounting principles or otherwise, then an
event of default relating to these coverage requirements will not be considered an Event of
Default if the coverage requirement ratios would have been complied with had the City continued
to use those accounting principles employed at the date of the most recent audited financial
statements prior to the date of this ordinance.
Section 9.4. Restrictions on Contracting of Obligations Secured by Revenues.
A. The City will not hereafter create any other special fund or funds for the payment
of revenue bonds, warrants or other revenue obligations, or issue any bonds, warrants or other
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obligations or create any additional indebtedness that will rank on a parity with or prior to the
charge and lien on the Revenues or properties of the Electric System for the payments into the
Bond Account, except as provided under Article IV hereof.
B. Additional Bonds may be issued as provided in Article IV.
C. The City may issue bonds, notes, warrants or other obligations payable from and
secured by a lien on the Revenues of the Electric System that is subordinate or inferior to the lien
on such Revenues securing the Bonds and may create a special fund or funds for payment of such
subordinate obligations.
D. Unless such agreement specifically states that the obligation of the City
thereunder is junior to the obligation of the City to make payments from the Electric Fund into
the Bond Account, the City will not hereafter enter into any agreement obligating the City to pay,
from Revenues, for (a) generating or transmission capacity or the use or lease of generating or
transmission facilities, which agreement is not conditional on the availability of such capacity or
facility, or (b) the installment purchase or lease of property which, whether or not subject to
annual appropriations, otherwise transfers to the City the burdens and benefits of ownership of
such property.
Section 9.5 Covenant to Maintain System in Good Condition. The City will at all
times maintain, preserve and keep, or cause to be maintained, preserved and kept, the properties
of the Electric System and all additions and betterments thereto and extensions thereof and every
part thereof, in good repair, working order and condition, and will from time to time make, or
cause to be made, all necessary and proper repairs, renewals, replacements, extensions and
betterments thereto so that at all times the business carried on in connection therewith shall be
properly and advantageously conducted. The City will at all times operate such properties and
the business in connection therewith or cause such properties and business to be operated in an
efficient manner and at a reasonable cost.
Section 9.6. Covenants Concerning Disposal of Properties of System. The City will
not sell, mortgage, lease or otherwise dispose of the properties of the Electric System except as
provided in this Section.
A. The City will not sell or otherwise dispose of the Electric System in its entirety
unless simultaneously with such sale or other disposition, provision is made for the payment,
redemption or other retirement of all Bonds then outstanding.
B. Except as provided in C below, the City will not sell or otherwise dispose of any
part of the Electric System unless provision is made for the payment, redemption or other
retirement of a principal amount of Bonds equal to the greater of the following amounts,
provided, such amount is in excess of $100,000:
(1) An amount that will be in the same proportion to the net principal amount
of Bonds then outstanding (defined as the total principal amount of Bonds outstanding less the
amount of cash and investments in the Bond Account) that the Revenues attributable to the part
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of the Electric System sold or disposed of for the twelve preceding months bears to the total
Revenues for such period; or
(2) An amount that will be in the same proportion to the net principal amount
of Bonds then outstanding that the book value of the part of the Electric System sold or disposed
of bears to the book value of the entire Electric System immediately prior to such sale or
disposition.
The City is only required to comply with the requirements of subsections (1) and (2)
above if the proceeds of such sale, lease or other disposition exceed 2% of the value of the net
utility plant of the Electric System.
C. The City may sell or otherwise dispose of any part of the Electric System that has
become unserviceable, inadequate, obsolete or unfit to be used in the operation of the Electric
System, or no longer necessary, material to or useful in such operation, and may also sell or
otherwise dispose of street lighting systems now or hereafter owned by the City at a price
permitted by law. The proceeds of any such sale or disposition pursuant to this subsection C
shall be paid into the Bond Account for credit to the Reserve Account to the extent of any
deficiency in such Reserve Account, and the balance of such proceeds, if any, shall be deposited
in the Electric Fund.
D. Notwithstanding any other provision of this Section 9.6 to the contrary, the City
may sell or otherwise dispose of any part of the Electric System if the City obtains a certificate
satisfying the requirements of Section 4.2.B or Section 4.2.0 hereof.
Section 9.7. Insurance. The City will either self - insure or, as needed, and to the
extent insurance coverage is available at reasonable cost with responsible insurers, keep, or cause
to be kept, the Electric System and the operation thereof insured, with policies payable to the
City, against the risks of direct physical loss, damage to or destruction of the Electric System, or
any part thereof, and against accidents, casualties or negligence, including liability insurance and
employer's liability, at least to the extent that similar insurance is usually carried by electric
utilities operating like properties.
In the event of any loss or damage to the properties of the Electric System covered by
insurance, the City will (i) with respect to each such loss, promptly repair and reconstruct to the
extent necessary to the proper conduct of the operations of the Electric System the lost or
damaged portion thereof and shall apply the proceeds of any insurance policy or policies
covering such loss or damage for that purpose to the extent required therefor, unless in the case
of loss or damage involving $300,000 or more, such repair and reconstruction is not
recommended by the Professional Utility Consultant, and (ii) if the City does not use the entire
proceeds of such insurance to repair or reconstruct such lost or damaged property, such insurance
proceeds not so used must be paid into the Electric Fund, and if in excess of $300,000 for any
one loss or damage, must be used to purchase or redeem Bonds or to acquire or construct
extensions, betterments and improvements to the Electric System.
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Section 9.8. Books of Account. The City will keep proper books of account as
required by this ordinance in accordance with the rules and regulations prescribed by the
Division of Municipal Corporations of the Office of the State Auditor of the State of
Washington, or other State department or agency succeeding to such duties of the State Auditor's
office, and if no such rules or regulations are prescribed, then in' substantial accordance with the
uniform system of accounts prescribed by the Federal Energy Regulatory Council or other federal
agencies having jurisdiction over electric public utility companies owning and operating
properties similar to the electric properties operated by the City, whether or not the City is at that
time required by law to use such system of accounts. The City shall cause its books of account to
be audited by the Office of the State Auditor or other state agency as may be authorized and
directed by law to make such audit, or if the audit is not made within twelve months after the
close of any Fiscal Year of the City, then the City shall cause such audit to be made by
independent certified public accountants licensed, registered or entitled to practice, and
practicing as such, under the laws of the State of Washington who, or each of whom, is in fact
independent and does not have any interest, direct or indirect, in any contract with the City other
than his contract of employment pursuant to this Section and who is not connected with the City
as an officer or employee of the City. In keeping the books of account, the City shall accrue
depreciation monthly on depreciable properties operated by the City in accordance with the
accounting practice prescribed by the uniform system of accounts of the Federal Energy
Regulatory Council above mentioned. The City will furnish a copy of the most recent audit
report to any owner of Bonds upon written request therefor. Any owner of Bonds may also
obtain at the office of the City copies of the balance sheet and income and expense statements
showing in reasonable detail the financial condition of the Electric System as of the close of each
Fiscal Year, including the transactions relating to the Electric Fund, the Bond Account, and all
other funds and accounts created or maintained pursuant to the provisions of this ordinance.
Section 9.9. Covenant Not to Render Service Free of Charge. So long as any Bonds
are outstanding, the City will not furnish or supply or permit the furnishing or supplying of
electric energy or any other commodity, service or facility furnished by or in connection with the
operation of the Electric System free of charge to any person, firm or corporation, public or
private, and the City will promptly enforce the payment of any and all accounts owing to the City
and delinquent, by discontinuing service or by filing suits, actions or proceedings, or by both
discontinuance of service and filing suit; provided, that to the extent permitted by law, the City
may loan money and may provide commodities, services or facilities free of charge or at a
reduced charge in connection with a plan of conservation of electric energy or senior citizen or
indigent ratepayer discounts adopted by the Council.
Section 9.10. Covenant to Make Only Economically Sound Improvements. The City
will not expend any money in the Electric Fund or the proceeds of Additional Bonds or other
obligations for any renewals, replacements, extensions, betterments and improvements to the
Electric System that are not economically sound and will not properly and advantageously
contribute to the conduct of the business of the City in an efficient and economical manner;
provided that the foregoing does not preclude the City from paying any legal or contractual
obligations.
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Section 9.11. Covenant to Pay Bond Principal and Interest Punctually. The City will
duly and punctually pay or cause to be paid, but only from the Bond Account, the principal of,
premium, if any, and interest on each and every Bond on the dates and at the places and in the
manner provided in the Bonds, according to the true intent and meaning thereof, and will
faithfully do and perform and fully observe and keep any and all covenants, undertakings,
stipulations and provisions contained in the Bonds and in this ordinance and each Supplemental
Ordinance authorizing Additional Bonds.
Section 9.12. Covenant to Pay Taxes, Assessments and Other Claims. The City will
from time to time duly pay and discharge, or cause to be paid and discharged, when the same
become due, all taxes, assessments and other governmental charges, or payments in lieu thereof,
lawfully imposed upon the Electric System or the Revenues, and all claims for labor and
materials and supplies that, if not paid, might become a lien or charge upon the Electric System,
or any part thereof, or upon the Revenues, or that might in any way impair the security of the
Bonds, except taxes, assessments, charges or claims that the City contests in good faith by proper
legal proceedings.
Section 9.13. Covenant to Retain Competent Management. The City will at all times
retain and employ a competent manager for the Electric System who shall be an experienced
executive of administrative ability. All employees or agents of the City who collect or handle
money of the City must be bonded by a responsible surety company or companies in amounts
sufficient to protect the City adequately from loss.
Section 9.14. Further Assurances. The City shall, at any and all times, insofar as it may
be authorized so to do, pass, make, do, execute, acknowledge and deliver all and every such
further ordinances, acts, deeds, conveyances, assignments, transfers and assurances as may be
necessary or desirable for the better assuring, conveying, granting, assigning and confirming any
and all of the rights, Revenues and other funds hereby pledged or assigned to the payment of the
Bonds, or intended so to be, or which the City may hereafter become bound to pledge or assign.
Section 9.15. Tax Exemption.
A. General. The City intends for interest on the 2010 Bonds to be excludable from
gross income for federal income tax purposes under sections 103 and 141 through 150 of the
Code, and the applicable regulations. The City covenants not to take any action, or knowingly
omit to take any action within its control, that if taken or omitted would cause the interest on the
2010 Bonds to be includable in gross income, as defined in section 61 of the Code, for federal
income tax purposes.
B. Tax Certificate. Upon the issuance of the 2010 Bonds, the Finance Director is
authorized to execute a federal tax certificate (the "Tax Certificate ") that will certify to various
facts and representations concerning the 2010 Bonds, based on the facts and estimates known or
reasonably expected on the date of issuance of the 2010 Bonds, and make certain covenants with
respect to the 2010 Bonds, including but not limited to the following:
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(i) No Private Activity Bonds. The proceeds of the 2010 Bonds will not be
used in a manner that would cause the 2010 Bonds to be "private activity bonds" within the
meaning of the Code, as further described in the Tax Certificate. Moreover, the City covenants
that it will use the proceeds of the 2010 Bonds (including interest or other investment income
derived from 2010 Bond proceeds), regulate the use of property financed, directly or indirectly,
with such proceeds, and take such other and further action as may be required so that the 2010
Bonds will not be "private activity bonds."
(ii) No Federal Guarantee. The City has not and will not take any action, and
has not knowingly omitted and will not knowingly omit to take any action within its control, that,
if taken or omitted would cause the 2010 Bonds to be "federally guaranteed" within the meaning
of the Code, as further described in the Tax Certificate.
(iii) No Arbitrage Bonds. The City reasonably expects that the proceeds of the
2010 Bonds will not be used in a manner that would cause the 2010 Bonds to be "arbitrage
bonds" within the meaning of the Code, as further described in the Tax Certificate.
(iv) No Hedge Bonds. The City reasonably expects that at least 85% percent
of the proceeds of the 2010 Bonds will be spent within three years of the date the 2010 Bonds are
issued to carry out the governmental purposes of the 2010 Bonds.
The City covenants that it will comply with the Tax Certificate unless it receives advice
from nationally recognized bond counsel or the Internal Revenue Service that certain provisions
have been amended or no longer apply to the 2010 Bonds.
C. Arbitrage Rebate. If the City does not qualify for an exception to the
requirements of Section 148(f) of the Code relating to the payment of arbitrage rebate to the
United States, the City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the "gross proceeds" of the 2010 Bonds (within
the meaning of the Code) be rebated.
D. Special Designation. The City hereby designates the 2010 Bonds as "qualified
tax - exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code. The City does
not expect to issue more than $30,000,000 in qualified tax - exempt obligations during the year
2010.
ARTICLE X
SUPPLEMENTAL AND AMENDATORY ORDINANCES
Section 10.1. Amendments Without Consent of Bondowners. The City may adopt at
any time and from time to time without the consent of the owners of any Bonds an ordinance or
ordinances supplemental to or amendatory of this ordinance and any Supplemental Ordinance
theretofore adopted for any one or more of the following purposes:
(1) To provide for the issuance of Additional Bonds pursuant to Article IV
hereof, and to prescribe the terms and conditions pursuant to which such Additional Bonds may
be issued, paid or redeemed;
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(2) To add additional covenants and agreements of the City for the purpose of
further securing the payment of the Bonds, so long as such additional covenants and agreements
are not contrary to or inconsistent with the covenants and agreements of the City contained in this
ordinance or any Supplemental Ordinance;
(3) To prescribe further limitations and restrictions upon the issuance of
Bonds and the incurring of indebtedness by the City payable from the Revenues that are not
contrary to or inconsistent with the limitations and restrictions thereon theretofore in effect;
(4) To surrender any right, power or privilege reserved to or conferred upon
the City by the terms of this ordinance;
(5) To confirm as further assurance any pledge under, and the subjection to
any lien, claim or pledge created or to be created by, the provisions of this ordinance of the
Revenues or of any other money, securities or funds;
(6) To cure any ambiguity or defect or inconsistent provision of this ordinance
or any Supplemental Ordinance or to insert such provisions clarifying matters or questions
arising under this ordinance or any Supplemental Ordinance as are necessary or desirable in the
event any such modifications are not contrary to or inconsistent with this ordinance or any
Supplemental Ordinance as theretofore in effect; or
(7) To modify any of the provisions of this ordinance or any Supplemental
Ordinance in any other respect; provided that such modification will not be effective until after
the Bonds outstanding as of the date of adoption of such ordinance cease to be outstanding, and
any Bonds issued under such ordinance must contain a specific reference to the modifications
contained in such subsequent ordinance.
Section 10.2. Amendments With Consent of Bondowners. The provisions of this
ordinance and of any Supplemental Ordinance may be modified at any time or from time to time
by a Supplemental Ordinance, with the consent of Bondowners in accordance with and subject to
the provisions of Article XII hereof. Written notice of any amendment to this ordinance or any
Supplemental Ordinance shall be given to Moody's, 7 World Trade Center, 250 Greenwich
Street, New York, NY 10007, Attention: Public Finance.
ARTICLE XI
DEFAULTS AND REMEDIES
Section 11.1. Events of Default. The Council hereby finds and determines that the
continuous operation of the Electric System and the collection, deposit and disbursement of the
Revenues in the manner provided in Ordinance Nos. 3100 and 3186, this ordinance, and any
Supplemental Ordinances thereto are essential to the payment and security of the Bonds, and the
failure or refusal of the City to perform the covenants and obligations contained in such
ordinances will endanger the necessary continuous operation of the Electric System and the
application of the Revenues to the purposes set forth in such ordinances. Ordinance Nos. 3100
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and 3186, this ordinance and each Supplemental Ordinance adopted pursuant to Article X are
hereinafter in this Article XI and in Article XII referred to collectively as "the Ordinance."
The City hereby covenants and agrees with the purchasers and owners from time to time
of the Bonds, to protect and safeguard the covenants and obligations undertaken by the City
securing the Bonds, that the following shall constitute "Events of Default ":
(1) If the City defaults in the performance of any obligations with respect to
payments into the Electric Fund;
(2) If default is made in the due and punctual payment of the principal of and
premium, if any, on any of the Bonds when the same become due and payable, either at maturity
or by proceedings for redemption or otherwise;
(3) If default is made in the due and punctual payment of any installment of
interest on any Bond;
(4) If the City fails, by any Sinking Fund Requirement Date, to have
purchased or redeemed Term Bonds in a cumulative principal amount at least equal to the
cumulative Sinking Fund Requirements at such Sinking Fund Requirement Date;
(5) If the City defaults in the observance and performance of any other of the
covenants, conditions and agreements on the part of the City contained in the Ordinance and such
default or defaults continues for a period of 60 days after the City receives from a Bondowners'
Trustee or from the owners of not less than 20% in principal amount of the Bonds outstanding, a
written notice specifying and demanding the cure of such default;
(6) If the City (except as herein permitted) sells, transfers, assigns or conveys
any properties constituting the Electric System or interests therein, or any part or parts thereof, or
makes any agreement for such sale or transfer (except as expressly authorized by Section 9.6
hereof);
(7) If an order, judgment or decree is entered by any court of competent
jurisdiction: (a) appointing a receiver, trustee or liquidator for the City or the whole or any
substantial part of the Electric System; (b) approving a petition filed against the City seeking the
bankruptcy, arrangement or reorganization of the City under any applicable law of the United
States or the State of Washington; or (c) assuming custody or control of the City or of the whole
or any substantial part of the Electric System under the provisions of any other law for the relief
or aid of debtors and such order, judgment or decree is not vacated or set aside or stayed (or, in
case custody or control is assumed by said order, such custody or control is not otherwise
terminated) within 60 days from the date of the entry of such order, judgment or decree; or
(8) If the City: (a) admits in writing its inability to pay its debts generally as
they become due; (b) files a petition in bankruptcy or seeking a composition of indebtedness
under any state or federal bankruptcy or insolvency law; (c) makes an assignment for the benefit
of its creditors; (d) consents to the appointment of a receiver of the whole or any substantial part
of the Electric System; or (e) consents to the assumption by any court of competent jurisdiction
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under the provisions of any other law for the relief or aid of debtors of custody or control of the
City or of the whole or any substantial part of the Electric System.
Section 11.2. Waivers of Default. No delay or omission of the Bondowners' Trustee or
of any owner of Bonds to exercise any right or power arising upon the happening of an Event of
Default shall impair any right or power or shall be construed to be a waiver of any such Event of
Default or to be an acquiescence therein; and every power and remedy given by this Article to the
Bondowners' Trustee or to the owners of Bonds may be exercised from time to time and as often
as may be deemed expedient by the Bondowners' Trustee or by such owners.
The Bondowners' Trustee or the owners of not less than 50% in principal amount of the
Bonds at the time outstanding, or their attorneys -in -fact duly authorized, may on behalf of the
owners of all of the Bonds waive any past default under the Ordinance and its consequences,
except a default in the payment of the principal of, premium, if any, or interest on any of the
Bonds. No such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Section 11.3. Bondowners' Trustee. So long as an Event of Default has not been
remedied, a Bondowners' Trustee may be appointed by the owners of 20% in principal amount of
the Bonds then outstanding, by an instrument or concurrent instruments in writing signed and
acknowledged by such Bondowners or by their attorneys -in -fact duly authorized and delivered to
such Trustee, notification thereof being given to the City. Any Bondowners' Trustee appointed
under the provisions of this Section 11.3 must be a bank or trust company organized under the
laws of the State of Washington or the State of New York or a national banking association. The
fees and expenses of the Bondowners' Trustee must be borne by the Bondowners and not by the
City. The bank or trust company acting as Bondowners' Trustee may be removed at any time,
and a successor Bondowners' Trustee may be appointed, by the owners of a majority in principal
amount of the Bonds, by an instrument or concurrent instruments in writing signed and
acknowledged by such Bondowners or by their attorneys -in -fact duly authorized.
The Bondowners' Trustee appointed in the manner herein provided, and each successor
thereto, is hereby declared to be a trustee for the owners of all the Bonds and is empowered to
exercise all the rights and powers herein conferred on the Bondowners' Trustee.
Section 11.4. Suits at Law or in Equity. The Bondowners' Trustee may upon the
happening of an Event of Default, and during the continuance thereof, take such steps and
institute such suits, actions or other proceedings in its own name, or as trustee, all as it may deem
appropriate for the protection and enforcement of the rights of Bondowners to collect any
amounts due and owing the City, or to obtain other appropriate relief, and may enforce the
specific performance of any covenant, agreement or condition contained in the Ordinance, or in
any of the Bonds.
Any action, suit or other proceedings instituted by the Bondowners' Trustee hereunder
shall be brought in its name as trustee for the Bondowners, and all such rights of action upon or
under any of the Bonds or the provisions of the Ordinance may be enforced by the Bondowners'
Trustee without the possession of any of said Bonds and without the production of the same at
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any trial or proceedings relative thereto except where otherwise required by law, and the
respective owners of said Bonds, by taking and holding the same, shall be conclusively deemed
irrevocably to appoint the Bondowners' Trustee the true and lawful trustee of the respective
owners of said Bonds, with authority to institute any such action, suit or proceeding; to receive as
trustee and deposit in trust any sums becoming distributable on account of said Bonds; to execute
any paper or documents for the receipt of such money, and to do all acts with respect thereto that
the Bondowner himself might have done in person. Nothing herein contained shall be deemed to
authorize or empower the Bondowners' Trustee to consent to accept or adopt, on behalf of any
owner of any Bond, any plan or reorganization or adjustment affecting the said Bonds of the City
or any right of any owner thereof, or to authorize or empower the Bondowners' Trustee to vote
the claims of the owners thereof in any receivership, insolvency, liquidation, bankruptcy,
reorganization or other proceeding to which the City shall be a party.
Section 11.5. Books of City Open to Inspection. The City covenants that if an Event of
Default occurs and is not remedied, the books of record and account of the City will at all times
be subject to the inspection and use of the Bondowners' Trustee.
The City covenants that if an Event of Default happens and is not remedied, the City will
continue to account, as trustee of an express trust, for all Revenues and other money, securities
and funds pledged under the Ordinance.
Section 11.6. Payment of Funds to Bondowners' Trustee. The City covenants that if an
Event of Default happens and is not remedied, the City, upon demand of the Bondowners'
Trustee, shall pay over to the Bondowners' Trustee (i) forthwith, all money, securities and funds
then held by the City and pledged under the Ordinance, and (ii) as promptly as practicable after
receipt thereof, all Revenues.
Section 11.7. Application of Funds by Bondowners' Trustee. During the continuance of
an Event of Default, the Revenues received by the Bondowners' Trustee pursuant to the
provisions of Section 11.6 shall be applied by the Bondowners' Trustee, first, to the payment of
the reasonable and proper charges, expenses and liabilities paid or incurred by the Bondowners'
Trustee (including the cost of securing the services of any engineer or firm of engineers selected
for the purpose of rendering advice with respect to the sufficiency of the rates and charges for
power and energy sold, furnished or supplied by the Electric System), and second, in accordance
with the provisions of Section 7.1 of this ordinance.
If at any time the funds held by the Bondowners' Trustee and the Paying Agents for the
Bonds are insufficient for the payment of the principal of, premium, if any, and interest then due
on the Bonds, such funds (other than funds held for the payment or redemption of particular
Bonds that have previously become due at maturity or by call for redemption) and all Revenues
and other money received or collected for the benefit or for the account of owners of the Bonds
by the Bondowners' Trustee shall be applied as follows:
First, to the payment to the persons entitled thereto of all installments of interest
then due in the order of the maturity of such installments, earliest maturities first, and, if
the amount available is not sufficient to pay in full any installment or installments or
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interest maturing on the same date, then to the payment thereof ratably, according to the
amounts due thereon, to the persons entitled thereto, without any discrimination or
preference; and
Second, to the payment to the persons entitled thereto of the unpaid principal and
premium, if any, of any Bonds which shall have become due, whether at maturity or by
call for redemption, in the order of their due dates, earliest maturities first, and, if the
amount available is not sufficient to pay in full all the Bonds due on any date, then to the
payment thereof ratably, according to the amounts of principal and premium, if any, due
on such date, to the persons entitled thereto, without any discrimination or preference.
Section 11.8. Relinquishment of Funds Upon Remedy of Default. If and whenever all
overdue installments of interest on all Bonds, together with the reasonable and proper charges,
expenses and liabilities of the Bondowners' Trustee and the owners of Bonds, their respective
agents and attorneys, and all other sums payable by the City under the Ordinance, including the
principal of, premium, if any, and accrued unpaid interest on all Bonds then payable (with
interest upon such principal and premium, if any, and, to the extent that payment of such interest
is enforceable under applicable law, on overdue installments of interest, at the same rate as the
rate of interest specified in the Bonds, to the date of such payment or deposit), shall either be
paid by or for the account of the City, or provision satisfactory to the Bondowners' Trustee shall
be made for such payment, and all defaults under the Ordinance or the Bonds shall be made good
or secured to the satisfaction of the Bondowners' Trustee or provision deemed by the
Bondowners' Trustee to be adequate shall be made therefor, the Bondowners' Trustee shall pay
over to the City all money, securities, funds and Revenues then remaining unexpended in the
hands of the Bondowners' Trustee and thereupon all Revenues shall thereafter be applied as
provided in the Ordinance. No such payment over to the City by the Bondowners' Trustee or
resumption of the application of Revenues as provided in the Ordinance shall extend to or affect
any subsequent default under the Ordinance or impair any right consequent thereon.
Section 11.9. Suits by Individual Bondowners. No owner of any one or more of the
Bonds shall have any right to institute any action, suit or proceeding at law or in equity, unless an
Event of Default has happened and is continuing, and unless no Bondowners' Trustee has been
appointed as herein provided, but any remedy herein authorized to be exercised by the
Bondowners' Trustee may be exercised individually by any Bondowner, in his own name and on
his own behalf or for the benefit of all Bondowners, if no Bondowners' Trustee has been
appointed, or with the consent of the Bondowners' Trustee if a Bondowners' Trustee has been
appointed; provided, however, that nothing in the Ordinance or in the Bonds shall affect or
impair the obligation of the City, which is absolute and unconditional, to pay from Net Revenues
the principal of and interest on the Bonds to the respective owners thereof at the respective due
dates therein specified, or affect or impair the right of action, which is absolute and
unconditional, of such owners to enforce such payment.
Section 11.10. Remedies Granted in Ordinance not Exclusive. No remedy by the terms of
the Ordinance conferred upon or reserved to the Bondowners' Trustee or the owners of the
Bonds is intended to be exclusive of any other remedy, but each and every such remedy shall be
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cumulative and shall be in addition to every other remedy given under the Ordinance or existing
at law or in equity or by statute on or after the date of adoption of the Ordinance.
ARTICLE XII
AMENDMENTS AND BONDOWNERS MEETINGS
Section 12.1. Call of Bondowners Meetings. The City, the Bondowners' Trustee or the
owners of not less than 20% in principal amount of the Bonds then outstanding may at any time
call a meeting of the owners of the Bonds. Every such meeting shall be held at a location in the
City of New York, New York, or in the City of Seattle, Washington, to be specified in the notice
calling such meeting. Written notice of the meeting, stating the location and time of the meeting
and in general terms the business to be transacted, shall be mailed to the Bondowners by the City,
the Bondowners' Trustee or the Bondowners calling such meeting not less than 30 nor more than
60 days before such meeting, and shall be published at least once a week for four successive
calendar weeks on any day of the week, the date of first publication to be not less than 30 nor
more than 60 days preceding the meeting; provided, however, that the mailing of such notice
shall in no case be a condition precedent to the validity of any action taken at any such meeting.
The expenses of publication of such notice shall be paid or reimbursed by the City. Any meeting
of Bondowners shall, however, be valid without notice if the owners of all Bonds then
outstanding are present in person or by proxy or if notice is waived before or within 30 days after
the meeting by those not so present.
Section 12.2. Notice to Bondowners. Except as otherwise provided in the Ordinance,
any provision in the Ordinance for the mailing of a notice or other paper to Bondowners shall be
fully complied with if it is mailed by first class mail, postage prepaid, to each Registered Owner
of any of the Bonds then outstanding at his address, if any, appearing upon the Bond Register;
and any provision in the Ordinance for publication of a notice or other matter shall require the
publication thereof in The Daily Bond Buyer in the City of New York, New York (or in lieu of
publication in The Daily Bond Buyer, in a daily newspaper printed in the English language and
customarily published on each business day of general circulation in the Borough of Manhattan,
the City of New York, New York), and also in a daily newspaper printed in the English language
and customarily published on each business day and of general circulation in the City of Seattle,
Washington.
Section 12.3. Proxies; Proof of Ownership of Bonds. Attendance and voting by
Bondowners at such meetings may be in person or by proxy. Owners of Bonds may, by an
instrument in writing under their hands, appoint any person or persons, with full power and
substitution, as their proxy to vote at any meeting for them. Officers or nominees of the City
may be present or represented at such meeting and take part therein but will not be entitled to
vote thereat, except as such officers or nominees are Bondowners or proxies for Bondowners.
Any Registered Owner of Bonds is entitled in person or by proxy to attend and vote at
such meeting as owner of the Bonds registered in his name without producing such Bonds, and
such persons and their proxies shall, if required, produce such proof of personal identity as shall
be satisfactory to the Secretary of the meeting. All proxies presented at such meeting shall be
delivered to the Inspectors of Votes and filed with the Secretary of the meeting.
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The vote at any such meeting of the owner of any Bond entitled to vote thereat shall be
binding upon such owner and upon every subsequent owner of such Bond (whether or not such
subsequent owner has notice thereof).
Section 12.4. Execution of Instruments by Bondowners.
Any request, direction, consent or other instrument in writing required or permitted by the
Ordinance to be signed or executed by Bondowners may be in any number of concurrent
instruments of similar tenor, and may be signed or executed by such Bondowners in person or by
agent appointed by an instrument in writing. Proof of the execution of any such instrument shall
be sufficient for any purpose of the Ordinance if made by either (a) an acknowledgment executed
by a notary public or other officer empowered to take acknowledgments of deeds to be recorded
in the particular jurisdiction, or (b) an affidavit of a witness to such execution sworn to before
such a notary public or other officer. Where such execution is by an officer of a corporation or
association or a member of a partnership on behalf of such corporation, association or
partnership, such acknowledgment or affidavit shall also constitute sufficient proof of his
authority.
The foregoing shall not be construed as limiting the City to such proof, it being intended
that the City may accept any other evidence of the matters herein stated that it may deem
sufficient. Any request or consent of the owner of any Bond shall bind every future owner of the
same Bond in respect of anything done by the City in pursuance of such request, direction or
consent.
The right of a proxy for a Bondowner to act may be proved (subject to the City's right to
require additional proof) by a written proxy executed by such Bondowner as aforesaid.
Section 12.5. Appointment of Officers at Bondowners Meetings. Persons named by the
City or elected by the owners of a majority in principal amount of the Bonds represented at the
meeting in person or by proxy if the City is not represented at such meeting, shall act as
temporary Chairman and temporary Secretary of any meeting of Bondowners. A permanent
Chairman and a permanent Secretary of such meeting shall be elected by the owners of a majority
in principal amount of the Bonds represented at such meeting in person or by proxy. The
permanent Chairman of the meeting shall appoint two Inspectors of Votes who shall count all
votes cast at such meeting, except votes on the election of Chairman and Secretary as aforesaid,
and who shall make and file with the Secretary of the meeting and with the City their verified
report of all such votes cast at the meeting.
Section 12.6. Quorum at Bondowners Meetings. The owners of not less than the
principal amount of the Bonds required for any action to be taken at such meeting must be
present at such meeting in person or by proxy in order to constitute a quorum for the transaction
of business, less than a quorum, however, having power to adjourn from time to time without any
other notice than the announcement thereof at the meeting; provided, however, that, if such
meeting is adjourned by less than a quorum for more than ten days, notice thereof shall be
published by the City at least five days prior to the adjourned date of the meeting.
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Section 12.7. Vote Required to Amend Ordinance. Any amendment to the provisions of
the Ordinance in any particular except the percentage of Bondowners required to approve such
amendment, may be made by a Supplemental Ordinance of the City and a resolution duly
adopted by the affirmative vote at a meeting of Bondowners duly convened and held, or with
written consent as hereinafter provided in Section 12.9, of the owners of not less than 66 2/3% in
principal amount of the Bonds outstanding when such meeting is held or such consent is given;
provided, however, that no such amendment may (a) extend the date of payment of the principal
of any Bond or of any installment of interest thereon or reduce the principal or redemption price
thereof or the rate of interest thereon or advance the date upon which any Bond may first be
called for redemption prior to its fixed maturity date; (b) give to any Bond or Bonds any
preference over any other Bond or Bonds secured equally and ratably therewith; (c) reduce the
aforesaid percentage of Bonds the owners of which are required to consent to any such ordinance
amending the provisions of the Ordinance; or (d) authorize the creation of any pledge prior to or,
except as provided in Article IV hereof for the issuance of Additional Bonds, on a parity with the
pledge afforded by the Ordinance, without the consent of the owner of each Bond affected
thereby.
Section 12.8. Obtaining Approval of Amendments at Bondowners Meeting. The City
may at any time adopt an ordinance amending the provisions of the Ordinance to the extent that
such amendment is permitted by the provisions of Section 12.7 hereof, to take effect when and as
provided in this Section. At any time thereafter such ordinance may be submitted by the City for
approval to a meeting of the Bondowners duly convened and held in accordance with the
provisions of the Ordinance. A record in duplicate of the proceedings of each meeting of the
Bondowners shall be prepared by the permanent Secretary of the meeting and shall have attached
thereto the original reports of the Inspectors of Votes and affidavits by a person or persons
having knowledge of the facts, showing a copy of the notice of the meeting and setting forth the
facts with respect to the mailing and publication thereof under the provisions of the Ordinance.
Such a record shall be signed and verified by the affidavits of the permanent Chairman and the
permanent Secretary of the meeting, and one duplicate thereof shall be delivered to the City. Any
record so signed and verified shall be proof of the matters therein stated. If the ordinance of the
City making such amendment is approved by an ordinance duly adopted at such meeting of
Bondowners by the affirmative vote of the owners of the required percentages of Bonds, a notice
stating that an ordinance approving the amendment has been so adopted shall be mailed by the
City to each Bondowner who has requested such notice (but failure so to mail copies of such
notice shall not affect the validity of such ordinance) and shall be published at least once in the
manner provided in Section 12.2 hereof. Proof of such mailing and publication by the affidavit
or affidavits of a person or persons having knowledge of the facts shall be filed with the City.
Such ordinance of the City making such amendment will be deemed conclusively to be binding
upon the City, the Paying Agents, and the owners of all Bonds at the expiration of 30 days after
the publication of the notice provided for in this Section, except in the event of a final decree of a
court of competent jurisdiction setting aside such ordinance or annulling the action taken thereby
in a legal action or equitable proceeding for such purpose commenced within such period;
provided that the City and any Paying Agents during such 30 day period and any such further
period during which such action or proceeding may be pending are entitled in their absolute
discretion to take such action, or to refrain from taking such action, with respect to such
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ordinance as they may deem expedient. Nothing in the Ordinance shall be deemed or construed
to authorize or permit, by reason of any call of a meeting of Bondowners or of any right
conferred hereunder to make such a call, any hindrance or delay in the exercise of any rights
conferred upon or reserved to the Paying Agents or the Bondowners under any of the provisions
of the Ordinance.
Section 12.9. Alternate Method of Obtaining Approval of Amendments. The City may
at any time adopt an ordinance amending the provisions of the Ordinance, or of any Bonds, to the
extent that such amendment is permitted by the provisions of this Article, to take effect when and
as provided in this Section. Upon adoption of such ordinance, a request that Bondowners
consent thereto shall be mailed by the City to the Bondowners and notice that the City is
requesting Bondowners to consent to such amendment shall be published at least once in the
manner provided in Section 12.2 hereof. Such ordinance shall not be effective unless and until
filed with the City are the written consents of the percentages of owners of outstanding Bonds
specified in Section 12.7 hereof and a notice is published as hereinafter in this Section provided.
Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for
which such consent is given, which proof shall be such as is permitted by Section 12.3 hereof. A
certificate or certificates of the City Clerk that he has examined such proof and that such proof is
sufficient will be conclusive that the consents have been given by the owners of the Bonds
described in such certificate or certificates. Any such consent shall be binding upon the owner of
the Bonds giving such consent and on every subsequent owner of such Bonds (whether or not
such subsequent owner has notice thereof). A notice stating that the ordinance has been
consented to by the owners of the required percentages of bonds and will be effective as provided
in this Section may be given to the Bondowners by mailing such notice to the Bondowners, and
must be published at least once in the manner provided in Section 12.2 hereof A record,
consisting of the papers required by this Section to be filed with the City shall be proof of the
matters therein stated, and the ordinance shall be deemed conclusively to be binding upon the
City and the owners of all Bonds at the expiration of 30 days after the notice last provided for in
this Section, except in the event of a final decree of a court of competent jurisdiction setting aside
such consent or annulling the action taken thereby in a legal action or equitable proceeding for
such purpose commenced within such period.
Section 12.10. Amendment of Ordinance In Any Respect by Approval of All
Bondowners. Notwithstanding anything contained in the foregoing provisions of this Article, the
rights and obligations of the City and of the owners of the Bonds and the terms and provisions of
the Bonds and of the Ordinance may be amended in any respect with the consent of the City, by
the affirmative vote of the owners of all said Bonds then outstanding at a meeting of Bondowners
called and held as hereinabove provided, or upon the adoption of an ordinance by the City and
the consent of the owners of all the Bonds then outstanding, such consent to be given as provided
in Section 12.9 except that no notice to Bondowners either by mailing or publication is required,
and the amendment shall be effective immediately upon such unanimous vote or written consent
of all of the Bondowners.
Section 12.11. Bonds Owned by City. Bonds owned or held by or for the account of the
City will not be deemed outstanding for the purpose of any vote or consent or other action or any
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calculation of outstanding Bonds in the Ordinance provided for, and shall not be entitled to vote
or consent or take any other action in the Ordinance provided for.
Section 12.12. Endorsement of Amendment on Bonds. Bonds delivered after the
effective date of any action amending the Ordinance taken as hereinabove provided may bear a
notation by endorsement or otherwise as to such action, and in that case, upon demand of the
owner of any Bond outstanding at such effective date and presentation of his Bond for the
purpose at the principal office of the applicable Paying Agent, suitable notation shall be made on
such Bond by the Paying Agent as to any such action. If the City so determines, new Bonds so
modified as in the opinion of the City and its counsel to conform to such action will be prepared,
delivered and upon demand of the owner of any Bond then outstanding shall be exchanged
without cost to such Bondowner for Bonds then outstanding hereunder, upon surrender of such
Bonds.
ARTICLE XIII
MISCELLANEOUS, DEFEASANCE; SALE OF BONDS
AND APPROVAL OF OFFICIAL STATEMENT
Section 13.1. Ordinance and Laws a Contract With Bondowners. This ordinance is
adopted under the authority of and in full compliance with the Constitution and laws of the State
of Washington, as amended and supplemented. In consideration of the purchase and acceptance
of the Bonds by those who hold them from time to time, the provisions of this ordinance and of
any Supplemental Ordinance authorizing the issuance of Additional Bonds and of said laws shall
constitute a contract with the owner or owners of each Bond, and the obligations of the City and
its Council under said acts and under this ordinance shall be enforceable by any court of
competent jurisdiction; and the covenants and agreements herein set forth to be performed on
behalf of the City shall be for the equal benefit, protection and security of the owners of any and
all of said Bonds all of which, regardless of the time or times of their issue or maturity, shall be
of equal rank without preference, priority or distinction of any of said Bonds over any others
thereof except as expressly provided herein.
Section 13.2. Defeasance. If 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 the 2010 Bonds or any of them in accordance with their
terms are set aside in a special account to effect such redemption and retirement and such money
and the principal of and interest on such Government Obligations are irrevocably set aside and
pledged for such purpose, then no further payments need be made into the Bond Account for the
payment of the principal of and interest on the 2010 Bonds so provided for, and the owners of
those 2010 Bonds will cease to be entitled to any lien, benefit or security of this ordinance except
for the right to receive the money so set aside and pledged, and those 2010 Bonds will be deemed
not to be outstanding hereunder. Within 30 days of any defeasance of 2010 Bonds, the City will
provide notice of defeasance to the Registered Owners and to the MSRB in accordance with
Section 13.5 hereof. The City will obtain an opinion of nationally recognized bond counsel to
the effect set forth in the preceding sentence and that the tax - exempt status of such 2010 Bonds is
not adversely affected, and a verification from a certified public accountant that the money when
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due or Government Obligations so set aside will be sufficient to pay the principal, premium, if
any, and interest on the 2010 Bonds to be refunded.
Section 13.3. Sale of 2010 Bonds. The City hereby approves the offer of Seattle -
Northwest Securities Corporation (the "Underwriter ") to purchase the 2010 Bonds on the terms
and conditions set forth in its purchase contract received on the date of this ordinance (the
"Purchase Contract "). The Mayor or the City Manager is hereby authorized to sign the Purchase
Contract on behalf of the City and deliver it to the Underwriter. The proper City officials are
hereby authorized and directed to do everything necessary for the prompt execution and delivery
of the 2010 Bonds to the Underwriter, in accordance with this ordinance and the Purchase
Contract, and to apply the 2010 Bond proceeds in accordance with this ordinance.
Section 13.4. Official Statement. The Council approves the Preliminary Official
Statement for the 2010 Bonds dated July 22, 2010, and ratifies the Underwriter's distribution of
the Preliminary Official Statement in connection with the offering of the 2010 Bonds. To permit
the Underwriter to comply with the Rule, the City deems the Preliminary Official Statement final
as of its date except for the omission of information dependent upon the pricing of the 2010
Bonds and the completion of a 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 2010 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 for the 2010 Bonds with such additions and changes as they may
deem necessary or advisable.
Section 13.5. Undertaking to Provide Ongoing Disclosure. This Section 13.5 constitutes
the City's written undertaking for the benefit of the owners and Beneficial Owners of the 2010
Bonds as required by Section (b)(5) of the Rule.
A. Financial Statements /Operating Data. The City agrees to provide or cause to be
provided to the MSRB, in accordance with the Rule, the following annual financial information
and operating data for the prior fiscal year (commencing in 2011 for the fiscal year ended
December 31, 2010):
1. Annual financial statements, which statements may or may not be audited,
showing end fund balances for the Electric 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 2010 Bonds under the headings "Electric Fund — Statement of Revenues,
Expenses and other Changes in Fund Equity" and "Electric Fund — Historical Coverage from
Operations ";
2. The outstanding long -term indebtedness of the Electric System, and any
system of the City that provides power or capacity to the Electric System;
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3. Electric System retail customers, energy sales, peak loads and revenues
substantially in the form of the tables under the heading "Historical Customers and Energy
Revenues" in the Official Statement for the 2010 Bonds;
4. Electric System operating results and debt service coverage on all
outstanding Bonds substantially in the form of the table "Historical Operating Results" in the
Official Statement for the 2010 Bonds; and
5. The aggregate amount and percentage of total energy sold and of retail
revenues provided by the Electric System's ten largest customers.
Items 2 -5 shall be required only to the extent that such information is not included in the
annual financial statements.
The financial information and operating data described above will be provided on or
before nine months after the end of the City's fiscal year. The City's fiscal year currently ends on
December 31. The City may adjust such fiscal year by providing written notice of the change of
fiscal year to the MSRB. In lieu of providing such annual financial information and operating
data, the City may cross -refer to other documents available to the public on the MSRB's interne
website or filed with the Commission.
If not provided as part of the annual financial information discussed above, the City shall
provide to the MSRB the City's audited annual financial statements prepared in accordance with
the Budget Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09.200 (or any successor statute) when and if available.
B. Material Events. The City agrees to provide or cause to be provided, in a timely
manner, to the MSRB notice of the occurrence of any of the following events with respect to the
2010 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 2010
Bonds;
• Modifications to rights of owners;
• 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 2010
Bonds; and
• Rating changes.
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Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises that no property secures payment of the 2010 Bonds. The Reserve Account is the
applicable debt service reserve.
C. Notification Upon Failure to Provide Financial Data. The City agrees to provide
or cause to be provided to the MSRB, in a timely manner, notice of the City's failure to provide
the annual financial information described in subsection A. above on or prior to the date set forth
in subsection A. above.
D. EMMA; Format for Filings with the MSRB. Until otherwise designated by the
MSRB or the Commission, any information or notices submitted to the MSRB in compliance
with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access
system ( "EMMA "), currently located at www.emma.msrb.org. All notices, financial information
and operating data required by this undertaking to be provided to the MSRB must be in an
electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to
this undertaking must be accompanied by identifying information as prescribed by the MSRB.
E. Termination/Modification. The City's obligations to provide annual financial
information and notices of material events shall terminate upon the defeasance, prior redemption
or payment in full of all of the 2010 Bonds. Any provision of this 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 requiring that provision is invalid, has been repealed retroactively or
otherwise does not apply to the 2010 Bonds; and (2) notifies the MSRB of such opinion and the
cancellation of the provision.
Notwithstanding any other provision of this ordinance, the City may amend this
Section 13.5 with an approving opinion of nationally recognized bond counsel in accordance
with the Rule. In the event of any amendment of this Section 13.5, the City will describe the
amendment in the next annual report, and will 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 B. above, and (II) the annual report for the year in which the change is
made will 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. Bond Owner's Remedies Under This Section. The right of any owner or
Beneficial Owner of 2010 Bonds to enforce the provisions of this section are 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 will not be an event of default with respect
to the 2010 Bonds. For purposes of this Section 13.5, "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 2010 Bonds, including persons holding 2010 Bonds through nominees or
depositories.
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Section 13.6. Benefits of Ordinance Limited to City, Bondowners, and Bond Registrar.
Nothing in this ordinance, expressed or implied, is intended or shall be construed to confer upon
or give to any person or corporation other than the City, the Bond Registrar, and the owners from
time to time of the 2010 Bonds any rights, remedies or claims under or by reason of this
ordinance or any covenant, condition or stipulation thereof; and all the covenants, stipulations,
promises and agreements in this ordinance contained by or on behalf of the City shall be for the
sole and exclusive benefit of the City, the Bond Registrar, and the Owners from time to time of
the 2010 Bonds.
Section 13.7. Term "City" Includes Successors. Whenever in this ordinance the City is
named or referred to, it shall be deemed to include its successors and assigns, including any
successor by merger or consolidation, and all the covenants and agreements in this ordinance
contained by or on behalf of the City shall bind and inure to the benefit of its successors and
assigns whether so expressed or not.
Section 13.8. Severability. If a court of competent jurisdiction declares that any one or
more of the covenants and agreements in this ordinance to be performed by the City are contrary
to law, then such covenant or covenants, agreement or agreements, will be null and void and will
be deemed separable from the remaining covenants and agreements in this ordinance and will in
no way affect the validity of other provisions of this ordinance or of the 2010 Bonds.
Section 13.9. General Authorization. The Mayor, City Manager, Director of Public
Works and Utilities, Finance Director and City Clerk and each of the other appropriate officers of
the City are each hereby authorized and directed to take such steps, to do such other acts and
things, and to execute such letters, certificates, agreements, papers, financing statements,
assignments or instruments as in their judgment may be necessary, appropriate or desirable in
order to carry out the terms and provisions of, and complete the transactions contemplated by,
this ordinance.
Section 13.10. Adjustment of Dollar Amounts. The dollar amounts stated in Sections
9.6.B and 9.7 hereof may, at the option of the City, be adjusted according to the Federal
Consumer Price Index applicable to the City, or, if such consumer price index is no longer
published, such other similar governmentally published index.
Section 13.11. Prior Acts. All acts taken pursuant to the authority of this ordinance but
prior to its effective date are hereby ratified and confirmed.
Section 13.12. Effective Date of Ordinance. This ordinance will become effective five
days from and after its passage and publication as required by law.
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P \20391_D01120391_2A5 08/03/10
PASSED by the City Council of the City of Port Angeles, Washington, at a regular
meeting of the Council held on August 3, 2010.
Attest:
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CITY OF PORT ANGELES,
WAS . GTON
Mayor
P \20391 DOT\20391_2A5 08/03/10
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. 3406 (the
"Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of
the City held on August 3, 2010.
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 , "Iday of August, 2010.
P \20391_DOT\20391_2A5 8/3/2010