HomeMy WebLinkAbout3503 Ordinance n
ORDINANCE NO. 3503
AN ORDINANCE RELATING TO THE WATERWORKS UTILITY
OF THE CITY, INCLUDING THE SANITARY SEWERAGE SYSTEM
AND THE SYSTEM OF STORM OR SURFACE WATER SEWERS AS
A PART THEREOF; PROVIDING FOR THE ISSUANCE AND SALE
OF $995,000 PAR VALUE OF WATER AND SEWER REVENUE
BONDS, 2001, FOR THE PURPOSE OF OBTAINING THE FUNDS
WITH WHICH TO PAY THE COST OF IMPROVEMENTS IN UTILITY
LOCAL IMPROVEMENT DISTRICTS NOS. 136 AND 137 AND TO
PAY THE COSTS OF ISSUANCE AND SALE OF THOSE BONDS;
FIXING THE DATE, FORM, DENOMINATION, MATURITIES,
INTEREST RATES, TERMS AND COVENANTS OF THE BONDS
AUTHORIZED HEREIN; PROVIDING FOR BOND INSURANCE, AND
PROVIDING FOR THE SALE AND DELIVERY OF THE BONDS TO
BANC OF AMERICA SECURITIES LLC OF SEATTLE,
WASHINGTON.
This document was prepared by:
FOSTER PEPPER & SHEFELMAN PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
I T
i
TABLE OF CONTENTS
Section1 . Definitions.................................................................................... 4
Section2 . Findings......... ........................................................................... 9
Section 3 . Purpose and Description of the Bonds .........................................10
Section 4 . Registration and Transfer of Bonds..............................................11
Section 5 . Payment of Bonds .......................................................................12
Section 6 . Redemption Provisions and Open Market Purchase of Bonds.......12
Section 7 . Notice of Redemption...................................................................14
Section 8 . Failure to Redeem Bonds.............................................................14
Section 9 . Form and Execution of Bonds......................................................14
Section 10 . Bond Registrar ..........................................................................15
Section 11 . Bond Fund; Payments into Bond Fund ......................................15
Section 12 . Assessments from ULIDs Nos. 136 and 137...............................17
Section 13 . Pledge, Lien and Charge for Payment of the Bonds.....................17
Section 14 . Flow of Funds............................................................................17
Section15 . Covenants .................................................................................18
Section 16 . Provisions for Future Parity Bonds ............................................19
Section 17 . Preservation of Tax Exemption for Interest on the Bonds ...........23
Section 18 . Designation of the Bonds as "Qualified Tax-Exempt Obligations."
....................................................................................................23
Section 19 . Deposit of Bond Proceeds ..........................................................23
-i-
Section 20 . Refunding or Defeasance of Bonds.............................................24
Section 21 . Approval of Bond Purchase Contract .........................................25
Section 22 . Fixing Interest Rate on ULID Assessments.................................25
Section 23 . Bond Insurance.........................................................................26
Section24 . Effective Date ............................................................................28
-ii-
a
t .
CITY OF PASCO, WASHINGTON
ORDINANCE NO. 3503
AN ORDINANCE RELATING TO THE WATERWORKS UTILITY
OF THE CITY, INCLUDING THE SANITARY SEWERAGE SYSTEM
AND THE SYSTEM OF STORM OR SURFACE WATER SEWERS AS
A PART THEREOF; PROVIDING FOR THE ISSUANCE AND SALE
OF $995,000 PAR VALUE OF WATER AND SEWER REVENUE
BONDS, 2001, FOR THE PURPOSE OF OBTAINING THE FUNDS
WITH WHICH TO PAY THE COST OF IMPROVEMENTS IN UTILITY
LOCAL IMPROVEMENT DISTRICTS NOS. 136 AND 137 AND TO
PAY THE COSTS OF ISSUANCE AND SALE OF THOSE BONDS;
FIXING THE DATE, FORM, DENOMINATION, MATURITIES,
INTEREST RATES, TERMS AND COVENANTS OF THE BONDS
AUTHORIZED HEREIN; PROVIDING FOR BOND INSURANCE; AND
PROVIDING FOR THE SALE AND DELIVERY OF THE BONDS TO
BANC OF AMERICA SECURITIES LLC OF SEATTLE,
WASHINGTON.
WHEREAS, the City of Pasco, Washington (the "City"), by Ordinance No.
531, passed March 7, 1944, provided that the system of sewerage of the City,
including all additions, extensions and betterments thereto, should be operated
as a part of and as belonging to the waterworks utility of the City pursuant to
the provisions of Chapter 193 of the Laws of 1941 of the State of Washington
(RCW 35.67.320 et seq.) (the "Waterworks Utility"); and
WHEREAS, pursuant to Ordinance No. 2839, the City heretofore issued
$2,305,000 par value Water and Sewer Revenue and Refunding Bonds, 1991
(the "1991 Bonds"), and provided for the issuance of additional water and
sewer revenue bonds of the City on a parity with the 1991 Bonds ("Future
Parity Bonds") if the conditions set forth in Ordinance No. 2058 were met and
complied with at the time of issuance of those additional bonds; and
WHEREAS, the 1991 Bonds are no longer outstanding; and
WHEREAS, pursuant to Resolution No. 2133, the City entered into a
Washington State Water Pollution Control State Revolving Fund (SRF) Loan
Agreement as of May 26, 1994 (the "State SRF Loan"), to borrow $3,802,779 for
the purpose of paying a part of the cost of constructing certain Waterworks
Utility facilities, the payment of which Loan Agreement once was to be a claim
and charge on the Net Revenue of the Waterworks Utility and ULID
Assessments on a parity of lien with the 1991 Bonds, and subsequent
f f
T
amendments to that Loan Agreement have increased the total amount of the
loan to $23,700,000; and
WHEREAS, pursuant to Ordinance No. 3054, the City heretofore issued
$8,705,000 par value Water and Sewer Revenue Bonds, 1994 (the "1994
Bonds"), on a parity of lien with the 1991 Bonds and the State SRF Loan, for
the purpose of paying the cost of carrying out a system or plan of additions to
and betterments and extensions of the Waterworks Utility of the City adopted
and ordered to be carried out by Ordinance No. 3040; and
WHEREAS, pursuant to Ordinance No. 3314, the City heretofore issued
$2,255,000 par value Water and Sewer Revenue Bonds, 1998, Series A
(Taxable) (the "1998A Bonds"), on a parity of lien with the 1994 Bonds and the
State SRF Loan, for the purpose of paying the cost of carrying out a system or
plan of additions to and betterments and extensions of the Waterworks Utility
of the City adopted and ordered to be carried out by Ordinance No. 3314 and to
pay costs of issuance of those bonds; and
WHEREAS, pursuant to Ordinance No. 3314, the City heretofore issued
$6,725,000 par value Water and Sewer Revenue Refunding Bonds, 1998,
Series B (Tax-Exempt) (the "1998B Bonds"), on a parity of lien with the 1994
Bonds, the State SRF Loan and the 1998A Bonds to advance refund the
callable portion of the City's 1994 Bonds and to pay the administrative costs of
such refunding and costs of issuance of those bonds; and
WHEREAS, pursuant to Ordinance No. 3314, the City heretofore issued
$1,515,000 par value Water and Sewer Revenue Bonds, 1998, Series C (Tax-
Exempt) (the "1998C Bonds"), on a parity of lien with the 1994 Bonds, the
State SRF Loan, the 1998A Bonds and 1998B Bonds to pay the costs of
improvements in Utility Local Improvement Districts Nos. 130 and 131 and to
pay costs of issuance of those bonds; and
WHEREAS, pursuant to Ordinance No. 3378, the City heretofore issued
$985,000 par value Water and Sewer Revenue Bonds, 1999 (the "1999 Bonds")
on a parity of lien with the 1994 Bonds, the State SRF Loan, the 1998A Bonds
and 1998B Bonds to pay the costs of improvements in Utility Local
Improvement Districts Nos. 133 and 134 and to pay costs of issuance of those
bonds; and
WHEREAS, the City also has four Washington State Public Works Trust
Fund loans outstanding in the total principal amount of $4,487,904, which
loans are subordinate to the 1994 Bonds, the State SRF Loan, the 1998A
Bonds, 1998B Bonds, 1998C Bonds and 1999 Bonds; and
WHEREAS, pursuant to City Council action on September 17, 2001, the
Agreement relating to the State SRF Loan was amended to provide that the
-2-
State SRF Loan be junior and subordinate to the Parity Bonds (as defined in
Section 1 below); and
WHEREAS, by Ordinance No. 3104, passed on August 21, 1995, the City
Council adopted the City of Pasco Comprehensive Plan 1995-2015, including
as a part thereof the City of Pasco Comprehensive Sewer Plan, November 1992
(the "Comprehensive Sewer Plan"); and
WHEREAS, pursuant to Ordinance No. 3322, passed on December 7,
1995, as amended by Ordinance No. 3409, passed on March 6, 2000, the City
created Utility Local Improvement District No. 136 ("ULID No. 136") and
ordered the expansion and extension and improvement of a portion of the
City's sewer collection system to certain areas of the City by the construction of
sewer lines, sewer stubs, a street overlay and all work necessary for or
incidental to the provision of sewer service to that area as more particularly
described in Ordinance No. 3322, as amended; and
WHEREAS, pursuant to Ordinance No. 3376, passed on September 7,
1999, the City created Utility Local Improvement District No. 137 ("ULID No.
137") and ordered the expansion and extension and improvement of a portion
of the City's sewer collection system to certain areas of the City by the
construction of sewer lines, sewer stubs, a street overlay and all work
necessary for or incidental to the provision of sewer service to that area as
more particularly described in Ordinance No. 3376; and
WHEREAS, pursuant to Ordinance No. 3239, passed on June 16, 1997,
the City specified and adopted the Comprehensive Sewer Plan as a system or
plan relating to sewers for the Waterworks Utility, determined that the
improvements ordered to be carried out by Ordinance No. 3246 and Ordinance
No. 3247 (the "Improvements"), constitute a part of the improvements
described in the Comprehensive Sewer Plan; and
WHEREAS, by Ordinance No. 3410, the City Council confirmed the
assessments and assessment roll in ULID No. 136 in the total amount of
$1,015,376.27; and
WHEREAS, by Ordinance No. 3471, the City Council confirmed the
assessments and assessment roll in ULID No. 137 in the total amount of
$1,133,939.22; and
WHEREAS, the City Council has determined that it is necessary to issue
and sell $995,000 par value of water and sewer revenue bonds (the "Bonds") to
provide the funds necessary to carry out the Improvements in ULID Nos. 136
and 137 and to pay the costs of issuance and sale of the Bonds; and
-3-
WHEREAS, the MBIA Insurance Corporation of Armonk, New York ("Bond
Insurer"), has made a commitment to issue an insurance policy (the "Municipal
Bond Insurance Policy") insuring the payment when due of the principal of and
interest on the Bonds as provided therein, and the City Council of the City deems
that the purchase of the Municipal Bond Insurance Policy is in the best interest
of the City; and
WHEREAS, Banc of America Securities LLC of Seattle, Washington, has
offered to purchase the Bonds on the terms and conditions hereinafter set
forth: NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO
ORDAIN as follows:
Section 1. Definitions. As used in this ordinance, the following words
shall have the following meanings:
"Alternate Security" means any bond insurance, collateral, security,
letter of credit, guaranty, surety bond or similar credit enhancement device
providing for or securing the payment of all or part of the principal of and
interest on any specified Parity Bonds, issued by an institution which has been
assigned a credit rating at the time of issuance of the applicable Parity Bonds,
respectively, secured by such Alternate Security in the highest rating categories
by both Moody's Investors Service, Inc., and Standard & Pool's Ratings Group.
"Annual Debt Service" for any or all Parity Bonds for any year means all
the interest, plus all principal which will mature or come due in such year, less
all bond interest payable from the proceeds of any such bonds in that year.
"Assessment Bonds" means, at the time of determination, Parity Bonds
then outstanding equal to the sum of the nondelinquent unpaid principal
amount of ULID Assessments then outstanding plus any ULID Assessment
payments then on deposit in the Principal and Interest Account of the Bond
Fund. Assessment Bonds shall be allocated to each remaining maturity of
Parity Bonds in the same proportion as the total of the Assessment Bonds
relates to the total of the Parity Bonds then outstanding.
"Average Annual Debt Service" means, at the time of its calculation, the
sum of the Annual Debt Service for the remaining years to the last scheduled
maturity of the applicable Parity Bonds divided by the number of those years.
"Bond Fund" means the Water and Sewer Revenue and Refunding Bond
Redemption Fund, 1991, of the City created and established by Ordinance No.
2839 in the office of the Finance Director of the City.
-4-
"Bond Insurer" shall mean MBIA Insurance Corporation of Armonk, New
York.
"Bond Register" means the registration books of the Bond Registrar on
which are recorded the names of the owners of the Bonds.
"Bond Registrar" means the fiscal agent and co-fiscal agent of the State
of Washington located in New York, New York, and Seattle, Washington, as the
same may be designated from time to time.
"Bonds" means the Water and Sewer Revenue Bonds, 2001, authorized
to be issued by this ordinance.
"City" means the City of Pasco, Washington, a duly organized code city.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and applicable rules and regulations promulgated thereunder.
"Coverage Requirement" in any year means an amount of Net Revenue of
the Waterworks Utility, together with the ULID Assessments collected in that
year, equal to at least the Maximum Annual Debt Service on all Assessment
Bonds plus an amount of the Net Revenue of the Waterworks Utility not used
to calculate the Coverage Requirement on Assessment Bonds equal to at least
1.25 times Maximum Annual Debt Service on all bonds payable from the Bond
Fund that are not Assessment Bonds.
"DTC" means The Depository Trust Company, New York, New York.
"Future Parity Bonds" means any and all water and sewer revenue bonds
or other obligations of the City issued or incurred after the date of the issuance
of the Bonds pursuant to the provisions of Ordinance No. 2839, Ordinance No.
3054, Ordinance No. 3314, Ordinance No. 3378, and this ordinance, the
payment of the principal of and interest on which constitutes a lien and charge
upon the Net Revenue of the Waterworks Utility and ULID Assessments on a
parity with the lien and charge upon such Net Revenue and ULID Assessments
for the outstanding Parity Bonds, but shall not include variable rate
obligations.
"Government Obligations" means those government obligations defined
by RCW 39.53.010(9) as it now reads or hereafter may be amended and which
are otherwise lawful investments of the City at the time of such investment.
"Gross Revenue of the Waterworks Utility" or "Gross Revenue" means all
of the earnings and revenues received by the City from the maintenance and
operation of the Waterworks Utility and all earnings from the investment of
money on deposit in the Bond Fund, except ULID Assessments, government
grants, proceeds from the sale of Waterworks Utility property, City taxes
-5-
• y
i T
collected by or through the Waterworks Utility, principal proceeds of bonds and
earnings or proceeds from any investments in a trust, defeasance or escrow
fund created to defease or refund Waterworks Utility obligations (until
commingled with other earnings and revenues of the Waterworks Utility) or
held in a special account for the purpose of paying a rebate to the United
States Government under the Code.
"Improvements" means the improvements in ULID Nos. 136 and 137
ordered to be carried out by Ordinance No. 3322, as amended, and Ordinance
No. 3376.
"Letter of Representations" means the Blanket Issuer Letter of
Representations between the City and DTC dated August 31, 1998.
"Maximum Annual Debt Service" means, at the time of calculation, the
maximum amount of Annual Debt Service that will mature or come due in the
current year or any future year on the outstanding Parity Bonds.
"Municipal Bond Insurance Policy" shall mean the municipal bond
insurance policy issued by the Bond Insurer insuring the payment when due of
the principal of and interest on the Bonds as provided therein.
"Net Revenue of the Waterworks Utility" or "Net Revenue" means the
Gross Revenue less Operating and Maintenance Expenses.
"1991 Bonds" means the Water and Sewer Revenue and Refunding
Bonds, 1991, dated October 1, 1991, authorized to be issued by Ordinance No.
2839, which bonds are no longer outstanding.
"1994 Bonds" means the Water and Sewer Revenue Bonds, 1994, dated
November 1, 1994, authorized to be issued by Ordinance No. 3054.
"1998 Bonds" means, collectively, the Series 1998A Bonds, Series 1998B
Bonds and Series 1998C Bonds.
"1999 Bonds" means the Water and Sewer Revenue Bonds, 1999, dated
October 1, 1999, authorized to be issued by Ordinance No. 3378.
"Nonrefunded 1994 Bonds" means the outstanding 1994 Bonds
maturing up to and including June 1, 2004.
"Operating and Maintenance Expenses" means all reasonable expenses
incurred by the City in causing the Waterworks Utility to be operated and
maintained in good repair, working order and condition, including payments
made to any other municipal corporation or private entity for water service and
for sewage treatment and disposal service or other utility service in the event
-6-
y
,
the City combines such service in the Waterworks Utility and enters into a
contract for such service, but not including any depreciation or taxes levied or
imposed by the City or payments to the City in lieu of taxes, or capital
additions or capital replacements to the Waterworks Utility.
"Outstanding Parity Bonds" means the outstanding Nonrefunded 1994
Bonds, the 1998 Bonds and the 1999 Bonds.
"Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any
Future Parity Bonds.
"Permitted Investments" means any Government Obligations, except that
as long as the Municipal Bond Insurance Policy or the Surety Bond is in effect,
Permitted Investment shall be restricted to those listed in Exhibit A of this
ordinance, but shall not include any investment not allowed as "Permitted
Investments" in Exhibit A of Ordinance No. 3054.
"Plan of Additions" means the system or plan of additions to and
betterments and extensions of the Waterworks Utility specified, adopted and
ordered to be carried out by Ordinance No. 3239, passed on June 16, 1997.
"Principal and Interest Account" means the account of that name created
in the Bond Fund for the payment of the principal of and interest on all Parity
Bonds.
"Reserve Account" means the account of that name created in the Bond
Fund for the purpose of securing the payment of the principal of and interest
on the Parity Bonds.
"Reserve Insurance" means, in lieu of cash and investments, insurance
obtained by the City to fund all or a portion of the Reserve Requirement for any
Parity Bonds then outstanding for which such insurance is obtained; and for
the Nonrefunded 1994 Bonds, the 1998 Bonds, the 1999 Bonds and the Bonds
means the Debt Service Reserve Surety Bonds provided by the applicable
Reserve Insurer.
"Reserve Insurer" means, for the Nonrefunded 1994 Bonds and the
Series 1998B Bonds, the Municipal Bond Investors Assurance Corporation of
Armonk, New York, and for the [State SRF Loan], the Series 1998A Bonds, the
Series 1998C Bonds, the 1999 Bonds and the Bonds, means Ambac
Assurance.
"Reserve Requirement" means;
(1) For the Outstanding Parity Bonds and the Bonds, an
amount equal to the least of (a) 10% of the issue price of the then
-7-
, t
outstanding Parity Bonds, (b) Maximum Annual Debt Service on
the then outstanding Parity Bonds and (c) 1.25 times Average
Annual Debt Service on the outstanding Parity Bonds. For the
purposes of determining Maximum Annual Debt Service and
Average Annual Debt Service for calculating the Reserve
Requirement, all bonds payable or proposed to be paid from the
Bond Fund shall be treated as a single issue and the number of
years to the last scheduled maturity for any of those issues shall
be used as the denominator.
(2) For any Future Parity Bonds, an amount equal to the
difference between the Reserve Requirement for the then
outstanding Parity Bonds and the least of (a) 10% of the issue price
of the then outstanding Parity Bonds and the Future Parity Bonds
proposed to be issued, (b) Maximum Annual Debt Service on the
then outstanding Parity Bonds and the Future Parity Bonds
proposed to be issued and (c) 1.25 times Average Annual Debt
Service on the outstanding Parity Bonds and the Future Parity
Bonds proposed to be issued, but in no event to exceed an amount
equal to the least of 10% of the issue price of the proposed Future
Parity Bonds, Maximum Annual Debt Service on those bonds and
1.25 times Average Annual Debt Service on the proposed bonds.
For the purposes of determining Maximum Annual Debt Service
and Average Annual Debt Service for calculating the Reserve
Requirement, all bonds payable or proposed to be paid from the
Bond Fund shall be treated as a single issue and the number of
years to the last scheduled maturity for any of those issues shall
be used as the denominator.
"Series 1998A Bonds" means the Water and Sewer Revenue Bonds,
1998, Series A (Taxable), authorized to be issued pursuant to Ordinance No.
3314.
"Series 1998B Bonds" means the Water and Sewer Revenue Refunding
Bonds, 1998, Series B (Tax-Exempt), authorized to be issued pursuant to
Ordinance No. 3314.
"Series 1998C Bonds" means the Water and Sewer Revenue Bonds,
1998, Series C (Tax-Exempt), authorized to be issued pursuant to Ordinance
No. 3314.
"Surety Bonds" means the surety bond issued by the Ambac Assurance
guaranteeing certain payments into the Reserve Account with respect to the
1991 Bonds, the [State SRF Loan], the Series 1998A Bonds, the Series 1998C
Bonds, the 1999 Bonds and the Bonds and the surety bond issued by
Municipal Bond Investors Assurance Corporation guaranteeing certain
-8-
,
payments into the Reserve Account with respect to the Nonrefunded 1994
Bonds and the Series 1998B Bonds, as provided in and subject to the
limitations set forth in the Surety Bonds.
"State PWTF Loan" means the Public Works Trust Fund Loan, as
amended, dated May 15, 1989.
"State SRF Loan" means the Washington State Water Pollution Control
State Revolving Fund (SRF) Loan Agreement L9400013, executed on May 26,
1994, as amended in 1995, 1996, 1997 and 2001.
"Term Bonds" means those bonds of any single issue or series of other
Parity Bonds designated as such in the ordinance providing for those bonds.
"ULID" means utility local improvement district.
"ULID Assessments" means all ULID assessments and installments
thereof, plus interest and penalties thereon, in any ULID created to secure the
payment of any Parity Bonds and pledged to be paid into the Bond Fund.
"ULID No. 136" means that ULID of the City created by Ordinance No.
3322, as amended.
"ULID No. 137" means that ULID of the City created by Ordinance No.
3376.
"Water and Sewer Revenue Fund" means that special fund of the City
into which all of the Gross Revenue of the Waterworks Utility of the City shall
be deposited.
"Waterworks Utility" means the combined sewerage system and water
system of the City, together with the storm or surface water sewers and
agricultural/industrial wastewater treatment facilities heretofore or hereafter
authorized to be constructed and installed as a part of such combined systems,
and together with all additions thereto and betterments and extensions thereof
now or hereafter made.
Section 2. Findings. The City Council finds that (1) all payments required
by the Nonrefunded 1994 Bonds, the State PWTF Loan, the 1998 Bonds and
the 1999 Bonds are provided for in this ordinance or have been provided for or
made into the bond and loan redemption funds for those outstanding bonds
and loans and that no deficiency exists in such funds; (2) provision is
hereinafter made for the deposit in the Reserve Account of the Bond Fund of
the Reserve Requirement for the Bonds; (3) provision is hereinafter made for
the deposit in the Bond Fund of all ULID Assessments collected in ULID Nos.
136 and 137; and (4) on or before the time of issuance of the Bonds there will
-9-
be on file with the City a certificate from a licensed professional engineer
experienced in the design, construction and operation of municipal utilities, or
from an independent certified public accountant, a certificate showing that in
his or her professional opinion the Net Revenue of the Waterworks Utility for
any 12 consecutive calendar months out of the immediately preceding 24
calendar months shall be equal to the Coverage Requirement for each year
thereafter. In the judgment of the City Council the Gross Revenue of the
Waterworks Utility at the rates to be charged for water and sanitary sewage
disposal service furnished on the entire Utility will be more than sufficient to
(a) meet all Operating and Maintenance Expenses thereof (and the cost of
maintenance and operation as contemplated by RCW 35.92.100), and the debt
service requirements of the outstanding State PWTF Loan, Nonrefunded 1994
Bonds, 1998 Bonds and 1999 Bonds, and (b) permit the setting aside into the
Bond Fund out of the Net Revenue of the Waterworks Utility of the City of
amounts sufficient to pay the principal of and interest on the Bonds when due.
The City Council further declares that in creating the Bond Fund and in fixing
the amounts to be paid into that fund, it has exercised due regard for
Operating and Maintenance Expenses (and the cost of maintenance and
operation contemplated by RCW 35.92.100) and the debt service requirements
of the State PWTF Loan, the Nonrefunded 1994 Bonds, 1998 Bonds and 1999
Bonds, and the City has not bound and obligated itself to set aside and pay
into the Bond Fund a greater amount or proportion of the Gross Revenue of the
Waterworks Utility of the City than in the judgment of the City Council will be
available over and above such Operating and Maintenance Expenses and debt
service requirements of such State PWTF Loan, the Nonrefunded 1994 Bonds,
1998 Bonds and 1999 Bonds, and that no portion of the Gross Revenue of the
Waterworks Utility of the City has been previously pledged for any
indebtedness other than the State PWTF Loan, Nonrefunded 1994 Bonds, 1998
Bonds and 1999 Bonds.
Section 3. Purpose and Description of the Bonds. The Bonds are being
issued for the purpose of providing the funds to pay the cost of carrying out the
Plan of Additions and to pay the costs of issuance of the Bonds. The Bonds
shall be called Water and Sewer Revenue Bonds, 2001, of the City; shall be in
the aggregate principal amount of $995,000; shall be dated November 15,
2001; shall be in the denomination of $5,000 or any integral multiple thereof
within a single maturity; shall be numbered separately in the manner and with
any additional designation as the Bond Registrar deems necessary for purposes
of identification; shall bear interest (computed on the basis of a 360-day year of
twelve 30-day months) payable semiannually on each March 1 and September
1, commencing March 1, 2002, to the maturity or earlier redemption of the
Bonds; and shall mature on September 1 in years and amounts and bear
interest at the rates per annum as follows:
-10-
Maturity Principal Interest
Years Amounts Rates
2002 $40,000 3.500%
2003 50,000 3.500
2004 55,000 3.500
2005 55,000 3.500
2006 60,000 3.500
2007 60,000 3.875
2008 65,000 3.875
2009 65,000 4.000
2010 70,000 4.100
2011 70,000 4.200
2012 75,000 4.300
2013 75,000 4.400
2014 80,000 4.500
2016 175,000 4.850
Section 4. Registration and Transfer of Bonds. The Bonds shall be issued
only in registered form as to both principal and interest and recorded on books
or records maintained by the Bond Registrar (the "Bond Register"). The Bond
Register shall contain the name and mailing address of the owner of each Bond
and the principal amount and number of each of the Bonds held by each
owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in
any authorized denomination of an equal aggregate principal amount and of
the same series, interest rate and maturity. Bonds may be transferred only if
endorsed in the manner provided thereon and surrendered to the Bond
Registrar. Any exchange or transfer shall be without cost to the owner or
transferee. The Bond Registrar shall not be obligated to exchange or transfer
any Bond during the 15 days preceding any principal payment or redemption
date.
The Bonds initially shall be registered in the name of CEDE & CO., as the
nominee of The Depository Trust Company, New York, New York ("DTC"). The
Bonds so registered shall be held in fully immobilized form by DTC as depository
in accordance with the provisions of the Blanket Issuer Letter of Representations
with DTC between the City and DTC dated August 31, 1998 (the "Letter of
Representations"). Neither the City nor the Bond Registrar shall have any
responsibility or obligation to DTC participants or the persons for whom they act
as nominees with respect to the Bonds regarding accuracy of any records
maintained by DTC or DTC participants of any amount in respect of principal of
or interest on the Bonds, or any notice which is permitted or required to be given
to registered owners hereunder (except such notice as is required to be given by
the Bond Registrar to DTC).
For so long as any Bonds are held in fully immobilized form, DTC or its
successor depository shall be deemed to be the registered owner for all purposes
hereunder and all references to registered owners, bondowners, bondholders or
the like shall mean DTC or its nominees and shall not mean the owners of any
beneficial interests in the Bonds. Registered ownership of such Bonds, or any
portions thereof, may not thereafter be transferred except: (i) to any successor of
DTC or its nominee, if that successor shall be qualified under any applicable laws
to provide the services proposed to be provided by it; (ii) to any substitute
depository appointed by the City or such substitute depository's successor; or
(iii) to any person if the Bonds are no longer held in immobilized form.
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
that it no longer wishes to continue 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.
If (i) DTC or its successor (or substitute depository or its successor) resigns
from its functions as depository, and no substitute depository can be obtained, or
(ii) the City determines that the Bonds are to be in certificated form, the
ownership of Bonds may be transferred to any person as provided herein and the
Bonds no longer shall be held in fully immobilized form.
Section 5. Payment of Bonds. Both principal of and interest on the Bonds
shall be payable in lawful money of the United States of America. Interest on
the Bonds shall be paid by checks or drafts mailed on the interest payment
date to the registered owners at the addresses appearing on the Bond Register
on the 15" day of the month preceding the interest payment date. Principal of
the Bonds shall be payable upon presentation and surrender of the Bonds by
the registered owners at either of the principal offices of the Bond Registrar at
the option of the owners. Notwithstanding the foregoing, as long as the Bonds
are registered in the name of DTC or its nominee, payment of principal of and
interest on the Bonds shall be made in the manner set forth in the Letter of
Representations. The Bonds are payable solely out of the Bond Fund and shall
not be general obligations of the City.
Section 6. Redemption Provisions and Open Market Purchase of Bonds.
Bonds maturing in the years 2002 through 2011, inclusive, shall be issued
without the right or option of the City to redeem those Bonds prior to their
stated maturity dates. The City reserves the right and option to redeem Bonds
maturing on or after September 1, 2012, prior to their stated maturity dates at
any time on or after September 1, 2011, as a whole or in part (within one or
more maturities selected by the City and randomly within a maturity in such
manner as the Bond Registrar shall determine), at par plus accrued interest to
the date fixed for redemption.
-12-
F
Bonds maturing in 2016 are Term Bonds and, if not redeemed under the
optional redemption provisions set forth above or purchased in the open
market under the provisions set forth below, shall be called for redemption
randomly (in such manner as the Bond Registrar shall determine) at par plus
accrued interest on September 1 in years and amounts as follows:
Mandatory Mandatory
Redemption Redemption
Years Amounts
2015 $85,000
2016 (maturity) 90,000
If the City shall redeem Term Bonds under the optional redemption
provisions set forth above or purchase Term Bonds in the open market as set
forth below, the par amount of the Term Bonds so redeemed or purchased
(irrespective of their actual redemption or purchase prices) shall be credited
against one or more scheduled mandatory redemption amounts for those Term
Bonds (as allocated by the City) beginning not earlier than 60 days after the date
of the optional redemption or purchase, and the City shall promptly notify the
Bond Registrar in writing of the manner in which the credit for the Term Bonds
so redeemed or purchased has been allocated.
Bonds maturing in the years 2015 and 2016 also are subject to
extraordinary redemption at the option of the City prior to their stated
maturities on any interest payment date prior to September 1, 2011, in whole
or in part (and randomly within a maturity in such manner as the Bond
Registrar shall determine), at the price of par plus accrued interest, if any, to
the date fixed for redemption, solely from ULID Assessments up to the amount
that there are ULID Assessments on deposit in the Bond Fund over and above
the amount needed to pay currently maturing installments of the principal of
and interest on the Parity Bonds.
Portions of the principal amount of any Bond, in installments of $5,000
or any integral multiple thereof, may be redeemed. If less than all of the
principal amount of any Bond is redeemed, upon surrender of that Bond at
either of the principal offices of the Bond Registrar, there shall be issued to the
registered owner, without charge therefore, a new Bond (or Bonds, at the
option of the registered owner) of the same series, interest rate and maturity in
any of the denominations authorized by this ordinance in the aggregate
principal amount remaining unredeemed.
The City further reserves the right and option to purchase any or all of
the Bonds in the open market at any time at any price plus accrued interest to
the date of purchase.
All Bonds purchased or redeemed under this section shall be cancelled.
-13-
I IN
Notwithstanding the foregoing, for so long as the Bonds are registered in
the name of Cede & Co., as nominee of DTC, selection of Bonds for redemption
shall be in accordance with the Letter of Representations (as it may be changed).
Section 7. Notice of Redemption. The City shall cause notice of any
intended redemption of Bonds to be given not less than 30 nor more than 60
days prior to the date fixed for redemption by first-class mail, postage prepaid,
to the registered owner of any Bond to be redeemed at the address appearing
on the Bond Register at the time the Bond Registrar prepares the notice, and
the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by
the owner of any Bond. Interest on Bonds called for redemption shall cease to
accrue on the date fixed for redemption unless the Bond or Bonds called are
not redeemed when presented pursuant to the call. In addition, the
redemption notice shall be mailed within the same period, postage prepaid, to
Moody's Investors Service, Inc., at its offices in New York, New York, or its
successor, to the Bond Insurer at its principal office in Armonk, New York, or its
successor, to Banc of America Securities LLC at its principal office in Seattle,
Washington, and to such other persons and with such additional information
as the City Finance Director shall determine, but these additional mailings
shall not be a condition precedent to the redemption of Bonds.
Notwithstanding the foregoing, for so long as the Bonds are registered in the
name of Cede & Co., as nominee of DTC, notice of redemption shall be given in
accordance with the Letter of Representations (as it may be changed).
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when
properly presented at its maturity or call date, the City shall be obligated to pay
interest on that Bond at the same rate provided in the Bond from and after its
maturity or call date until that Bond, both principal and interest, is paid in full
or until sufficient money for its payment in full is on deposit in the Bond Fund
and the Bond has been called for payment by giving notice of that call to the
registered owner of each of those unpaid Bonds.
Section 9. Form and Execution of Bonds. The Bonds shall be printed or
lithographed on good bond paper in a form consistent with the provisions of
this ordinance and state law, shall be signed by the Mayor and City Clerk,
either or both of whose signatures may be manual or in facsimile, and the seal
of the City or a facsimile reproduction thereof shall be impressed or printed
thereon.
Only Bonds bearing a Certificate of Authentication in the following form,
manually signed by the Bond Registrar, shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance:
-14-
I
l
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Pasco,
Washington, Water and Sewer Revenue Bonds, 2001, described in
the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive
evidence that the Bonds so authenticated have been duly executed,
authenticated and delivered and are entitled to the benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to
be an officer of the City authorized to sign bonds before the Bonds bearing his
or her facsimile signature are authenticated or delivered by the Bond Registrar
or issued by the City, those Bonds nevertheless may be authenticated,
delivered and issued and, when authenticated, issued and delivered, shall be
as binding on the City as though that person had continued to be an officer of
the City authorized to sign bonds. Any Bond also may be signed on behalf of
the City by any person who, on the actual date of signing of the Bond, is an
officer of the City authorized to sign bonds, although he or she did not hold the
required office on the date of issuance of the Bonds.
Section 10. Bond Registrar. The Bond Registrar shall keep, or cause to be
kept, at its principal corporate trust office, sufficient books for the registration
and transfer of the Bonds which shall be open to inspection by the City at all
times. The Bond Registrar is authorized, on behalf of the City, to authenticate
and deliver Bonds transferred or exchanged in accordance with the provisions
of the Bonds and this ordinance, to serve as the City's paying agent for the
Bonds and to carry out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 2838 establishing a system of registration
for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained
in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond
Registrar may become the owner of Bonds 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 members of,
or in any other capacity with respect to, any committee formed to protect the
rights of Bond owners.
Section 11. Bond Fund, Payments into Bond_Fund. The Bond Fund has
been created and established in the office of the Finance Director as a special
-15-
fund known and designated as the Water and Sewer Revenue and Refunding
Bond Redemption Fund, 1991, which fund has been divided into two accounts,
namely, the Principal and Interest Account and the Reserve Account. So long
as any Parity Bonds are outstanding against the Bond Fund, the Finance
Director shall set aside and pay into the Bond Fund all ULID Assessments
upon their collection and, out of the Net Revenue of the Waterworks Utility,
certain fixed amounts without regard to any fixed proportion, namely,
amounts, together with any ULID Assessments collected by the City and
deposited into the applicable account in the Bond Fund and investment
earnings in that account, as follows:
(a) Into the Principal and Interest Account, on or before
each interest or principal and interest payment date, an amount
equal to the interest or the principal and interest to become due
and payable on that interest or principal and interest payment
date of all Parity Bonds; and
(b) Into the Reserve Account, on the issue date of the
Bonds, an amount sufficient, together with the Reserve Insurance,
to fully fund the Reserve Requirement for all Parity Bonds.
Money deposited in the Reserve Account for the Reserve Requirement for
all Parity Bonds may be decreased for any issue of Parity Bonds when and to
the extent the City has provided for an Alternate Security or Reserve Insurance
for those bonds.
The City may establish additional accounts in the Bond Fund for the
deposit of ULID Assessments after the deposit of the required amount in the
other funds.
The Reserve Account for any Future Parity Bonds may be accumulated
from any other funds which the City legally may have available for such
purpose in addition to using ULID Assessments and Net Revenue of the
Waterworks Utility.
The City further agrees that when the required amounts have been paid
into the Reserve Account in the Bond Fund, the City will maintain those
amounts therein at all times, except for withdrawals therefrom as authorized
herein, until there is sufficient money in the Bond Fund, including the Reserve
Account therein, to pay the principal of and interest to maturity on all
outstanding bonds payable from the Bond Fund, at which time no further
payments need be made into the Bond Fund, and the money in the Bond Fund,
including the Reserve Account, may be used to pay that principal and interest.
If there shall be a deficiency in the Principal and Interest Account to
meet maturing installments of either principal or interest, as the case may be,
on the Bonds, the deficiency shall be made up from the Reserve Account by
first the withdrawal of cash and investments therefrom and after all cash and
investments have been depleted, then by the draws on the Reserve Insurance
for that purpose on a pro rata basis. Any deficiency created in the Reserve
Account by reason of any withdrawal shall then be made up from the Net
Revenue of the Waterworks Utility first available after making necessary
provisions for the required payments into the Principal and Interest Account.
-16-
The Reserve Insurers shall be reimbursed first on a pro rata basis, within one
year, to reinstate the Reserve Insurance, before the balance of the Reserve
Requirement is restored.
All money in the Reserve Account not needed to meet the payments of
principal and interest when due may be kept on deposit in the official bank
depository of the City or in any national bank or may be invested in any legal
investment for City funds maturing not later than the interest or principal and
interest payment date when the money will be needed. Interest on any of those
investments or on that bank account shall be deposited in and become a part
of the Reserve Account until the Reserve Requirement shall have been
accumulated therein, after which time the interest shall be deposited in the
Principal and Interest Account.
Notwithstanding the provisions for the deposit or maintenance of
earnings in accounts of the Bond Fund, any earnings which are subject to a
federal tax or rebate requirement may be withdrawn from the Bond Fund for
deposit into a separate fund or account for that purpose.
If the City shall fail to set aside and pay into the Bond Fund the amounts
which it has obligated itself by this section to set aside and pay therein, the
owner of any Bond may bring suit against the City to compel it to do so.
Section 12. Assessments from ULID Nos. 136 and 137. The City hereby
covenants and agrees that all ULID Assessments levied in ULID Nos. 136 and
137 of the City shall be deposited in the Bond Fund.
Section 13. Pledge Lien and Charge for Payment of the Bonds. The Net
Revenue of the Waterworks Utility and ULID Assessments are pledged to the
payment of the principal of and interest on the Bonds when due and shall
constitute a lien and charge upon that Net Revenue of the Waterworks Utility
and ULID Assessments prior and superior to any other charges whatsoever,
except that the lien and charge upon such Net Revenue and ULID Assessments
for the Bonds shall be on a parity with the lien and charge thereon for any
outstanding Parity Bonds.
Section 14. Flow of Funds. Funds in the Water and Sewer Revenue Fund
shall be used in the following order of priority:
(1) To pay Operating and Maintenance Expenses;
(2) To make all payments required to be made into the Bond
Fund to pay and secure the payment of the Annual Debt
Service on all outstanding Parity Bonds;
(3) To make all payments required to be made into the Reserve
Account and to make all payments (principal and interest)
required to be made in connection with Reserve Insurance
and any Alternate Security, except if there is not sufficient
money to make all payments for Reserve Insurance and any
Alternate Security, the payments shall be made on a pro rata
basis with deposits in the Reserve Account.
-17-
(4) To make all payments required to be made into the State
PWTF Loan redemption fund or accounts, and other revenue
bond redemption funds created to pay the debt service on
any revenue obligation having a lien upon the Net Revenue of
the Waterworks Utility subordinate to the lien of the Bonds;
and
(5) To make necessary additions, betterments, improvements or
repairs to the Waterworks Utility, and to retire by
redemption or purchase any outstanding Parity Bonds, or for
any other lawful purpose.
Section 15. Covenants. The City covenants and agrees with the owner of
each of the Bonds as follows:
(a) It will not sell, lease, mortgage, or in any manner
encumber or dispose of all the properties of the Waterworks Utility
unless provision is made for payment into the Bond Fund of an
amount sufficient either to defease all outstanding Parity Bonds or
to pay the principal of and interest on all the outstanding Parity
Bonds in accordance with the terms thereof; and further binds
itself irrevocably not to mortgage, sell, lease or in any manner
dispose of any part of the Waterworks Utility that is used, useful
and material to the operation of such utility unless provision is
made for replacement thereof or for payment into the Bond Fund of
an amount which shall bear the same ratio to the amount of
outstanding Parity Bonds as the Net Revenue available for debt
service for such bonds for the twelve months preceding such sale,
lease, encumbrance or disposal from the portion of the Waterworks
Utility so leased, encumbered or disposed of bears to the Net
Revenue available for debt service for such bonds from the entire
Waterworks Utility for the same period. Any such money so paid
into the Bond Fund shall be used to retire outstanding Parity
Bonds at the earliest possible date.
(b) It will maintain and keep the Waterworks Utility in
good repair, working order and condition and to operate such
utility and the business in connection therewith in an efficient
manner and at a reasonable cost.
(c) It will maintain and collect such rates as will produce
sufficient Net Revenue of the Waterworks Utility, together with
ULID Assessment collections, as will make available for the
payment of the principal of and interest on the Parity Bonds as
they come due and for payments as required to be made into the
Reserve Account therein an amount at least equal to the Coverage
Requirement and, in addition thereto, that it will pay all Operating
and Maintenance Expenses and meet the debt service
requirements of the outstanding State PWTF Loan and otherwise
meet the obligations of the City as herein set forth.
-18-
(d) It will keep proper books of accounts and records
separate and apart from other accounts and records, in which
complete and correct entries will be made of all transactions
relating to the Waterworks Utility of the City, and it will make
available to any Bondowner on written request the annual
operating and income statements of the Waterworks Utility.
(e) Except to aid the poor or infirm, to provide for
resource conservation or to provide for the proper handling of
hazardous materials, it will not furnish water or sewerage service
to any customer whatsoever free of charge and it shall, not later
than 60 days after the end of each calendar year, take such legal
action as may be feasible to enforce collection of all collectible
delinquent accounts and, in addition thereto, shall promptly avail
itself of its utility lien rights, as set forth in applicable statutes.
(fl It will carry the types of insurance on its Waterworks
Utility properties in the amounts normally carried by private water
and sewer companies engaged in the operation of water and
sewerage systems, and the cost of such insurance shall be
considered a part of Operating and Maintenance Expenses, or it
will implement and maintain a self-insurance program or an
insurance pool program with reserves adequate, in the judgment of
the City Council, to protect the owners of the Parity Bonds against
loss.
(g) To the extent permitted by State law, it will maintain
its corporate identity and existence so long as any Bonds remain
outstanding.
(h) It will not grant any competing utility service franchise
and will use all legal means to prevent competition with the
Waterworks Utility.
(i) If on the first day of January in any year, two
installments of any ULID Assessment are delinquent, or the final
installment of any ULID Assessment has been delinquent for more
than one year, the City shall proceed with the foreclosure of the
delinquent assessment or delinquent installments thereof in the
manner provided by law.
Section 16. Provisions for Future Parity Bonds. The City reserves the right
to issue Future Parity Bonds if the following conditions are met and complied
with at the time of the issuance of those Future Parity Bonds:
(a) There shall be no deficiency in the Bond Fund.
(b) The ordinance providing for the issuance of the Future
Parity Bonds shall provide that all ULID Assessments shall be paid
directly into the Bond Fund, except for any prepaid assessments
permitted by law to be paid into a construction fund or account.
(c) The ordinance providing for the issuance of such
Future Parity Bonds shall provide for the deposit into the Reserve
-19-
Account of (i) an amount equal to the Reserve Requirement for
those Future Parity Bonds from the Future Parity Bond proceeds,
or, (ii) Reserve Insurance or Alternate Security or an amount plus
Reserve Insurance or Alternate Security equal to the Reserve
Requirement for those Future Parity Bonds, or (iii) to the extent
that the Reserve Requirement is not funded from Future Parity
Bond proceeds or Reserve Insurance or Alternate Security at the
time of issuance of those Future Parity Bonds, and if the Bond
Insurance for the Nonrefunded 1994 Bonds is no longer in effect,
by no later than the third anniversary date from the dated date of
the respective issue of Future Parity Bonds from ULID
Assessments, if any, levied and first collected for the payment of
the principal of and interest on those Future Parity Bonds and, to
the extent that ULID Assessments are insufficient, then from the
Net Revenue of the Waterworks Utility in six approximately equal
semiannual payments, the Reserve Requirement for those Future
Parity Bonds. No Reserve Insurance or Alternate Security may be
used to satisfy the Reserve Requirement for Future Parity Bonds
unless (1) the insurance policy or Alternate Security is
non-cancelable and (ii) the insurer or provider of the Alternate
Security as of the time of issuance of such insurance or Alternate
Security is rated in the highest rating categories by both Moody's
Investors Service, Inc., and Standard & Poor's Ratings Group.
When all of the Nonrefunded 1994 Bonds have been
redeemed, defeased or otherwise are no longer outstanding as
Parity Bonds, this subsection (c) shall be amended to read as
follows:
(c) The ordinance providing for the issuance of such
Future Parity Bonds shall provide for the deposit into the
Reserve Account of (i) an amount equal to the Reserve
Requirement for those Future Parity Bonds from the Future
Parity Bond proceeds, or, (ii) Reserve Insurance or Alternate
Security or an amount plus Reserve Insurance or Alternate
Security equal to the Reserve Requirement for those Future
Parity Bonds, or (iii) to the extent that the Reserve
Requirement is not funded from Future Parity Bond proceeds
or Reserve Insurance or Alternate Security at the time of
issuance of those Future Parity Bonds, by no Iater than the
fifth anniversary date from the dated date of the respective
issue of Future Parity Bonds from ULID Assessments, if any,
levied and first collected for the payment of the principal of
and interest on those Future Parity Bonds and, to the extent
that ULID Assessments are insufficient, then from the Net
Revenue of the Waterworks Utility in approximately equal
annual payments, the Reserve Requirement for those Future
-20-
Parity Bonds. No Reserve Insurance or Alternate Security
may be used to satisfy the Reserve Requirement for Future
Parity Bonds unless (i) the insurance policy or Alternate
Security is non-cancelable and (ii) the insurer or provider of
the Alternate Security as of the time of issuance of such
insurance or Alternate Security is rated in the highest rating
categories by both Moody's Investors Service, Inc., and
Standard & Poor's Ratings Group.
(d) The ordinance authorizing the issuance of such Future
Parity Bonds shall provide for the payment of mandatory
redemption or sinking fund requirements into the Bond Fund for
any Term Bonds to be issued and for regular payments to be made
for the payment of the principal of such Term Bonds on or before
their maturity, or, as an alternative, the mandatory redemption of
those Term Bonds prior to their maturity date from money in the
Principal and Interest Account.
(e) There shall be on file from a licensed professional
engineer experienced in the design, construction and operation of
municipal utilities, or from an independent certified public
accountant, a certificate showing that in his or her professional
opinion the Net Revenue of the Waterworks Utility for any 12
consecutive calendar months out of the immediately preceding 24
calendar months shall be equal to the Coverage Requirement for
each year thereafter. When all of the Nonrefunded 1994 Bonds
have been redeemed, defeased or otherwise are no longer
outstanding as Parity Bonds, this paragraph shall be amended
to read as follows: There shall be on file from a licensed
professional engineer experienced in the design, construction
and operation of municipal utilities, or from an independent
certified public accountant, a certificate showing that in his
or her professional opinion the Net Revenue of the
Waterworks Utility for any 12 consecutive calendar months
out of the immediately preceding 24 calendar months shall
be equal to the Coverage Requirement for each year
thereafter, except that such certificate may be provided by a
City representative if it is based solely upon actual historical
Net Revenue of the Waterworks Utility without any
adjustment.
The certificate, in estimating the Net Revenue of the
Waterworks Utility available for debt service, shall use the
historical Net Revenue of the Waterworks Utility for any 12
consecutive months out of the 24 months immediately preceding
-21-
the month of delivery of the Future Parity Bonds. Net Revenue of
the Waterworks Utility may be adjusted to reflect:
(1) Any changes in rates in effect and being charged
or expressly adopted by ordinance to take effect within 180
days after the date of this Certificate;
(2) Income derived from customers of the
Waterworks Utility that have become customers during the
12 consecutive month period or thereafter adjusted to reflect
one year's net revenue from those customers;
(3) Revenue from any customers to be connected to
the Waterworks Utility who have paid the required
connection charges;
(4) Revenue received or to be received which is
derived from any person, firm, corporation or municipal
corporation under any executed contract for water, sewage
disposal or other utility service, which revenue was not
included in the historical Net Revenue of the Waterworks
Utility;
(5) The engineer's or accountant's estimate of the
Net Revenue of the Waterworks Utility to be derived from
customers to connect within 180 days after the date of the
completion of the additions to and improvements and
extensions of the Waterworks Utility to be paid for out of the
proceeds of the sale of the additional Future Parity Bonds or
from other additions to and improvements and extensions of
the Waterworks Utility then under construction and not fully
connected to the facilities of the Waterworks Utility when
such additions, improvements and extensions are completed;
and
(6) Any increases or decreases in Net Revenue as a
result of any actual or reasonably anticipated changes in
Operating and Maintenance Expense subsequent to the
12-month period.
If Future Parity Bonds proposed to be so issued are for the
sole purpose of refunding outstanding bonds payable from the
Bond Fund, such certification of coverage shall not be required if
the amount required for the payment of the principal and interest
in each year for the refunding bonds is not increased over the
amount for that year required for the bonds to be refunded thereby
and if the maturities of such refunding bonds are not extended
beyond the maturities of the bonds to be refunded thereby.
Nothing herein contained shall prevent the City from issuing Future
Parity Bonds to refund any maturing Parity Bonds then outstanding, money for
the payment of which is not otherwise available.
-22-
Nothing herein contained shall prevent the City from issuing revenue
bonds or incurring other obligations that are a charge upon the Net Revenue of
the Waterworks Utility of the City subordinate or inferior to the payments
required to be made therefrom into the Bond Fund for the payment of Parity
Bonds or from pledging the payment of utility local improvement district
assessments into a redemption fund created for the payment of the principal of
and interest on those subordinate lien bonds or obligations as long as such
utility local improvement district assessments are levied for improvements
constructed from the proceeds of those subordinate lien bonds or obligations.
Section 17. Preservation of Tax Exemption for Interest on the Bonds. The
City covenants that it will take all actions necessary to prevent interest on the
Bonds from being included in gross income for federal income tax purposes,
and it will neither take any action nor make or permit any use of proceeds of
the Bonds or other funds of the City treated as proceeds of the Bonds at any
time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also
covenants that it will, to the extent the arbitrage rebate requirement of Section
148 of the Code is applicable to the Bonds, take all actions necessary to comply
(or to be treated as having complied) with that requirement in connection with
the Bonds, including the calculation and payment of any penalties that the
City has elected to pay as an alternative to calculating rebatable arbitrage, and
the payment of any other penalties if required under Section 148 of the Code to
prevent interest on the Bonds from being included in gross income for federal
income tax purposes. The City certifies that it has not been notified of any
listing or proposed listing by the Internal Revenue Service to the effect that it is
a bond issuer whose arbitrage certifications may not be relied upon.
Section 18. Designation of the Bonds as "Qualified Tax-Exempt
Obligations." The City has determined and certifies that (a) the Bonds are not
"private activity bonds" within the meaning of Section 141 of the Code, (b) the
reasonably anticipated amount of tax-exempt obligations (other than private
activity bonds and other obligations not required to be included in such
calculation) which the City and any entity subordinate to the City (including
any entity which the City controls, which derives its authority to issue
tax-exempt obligations from the City or which issues tax-exempt obligations on
behalf of the City) will issue during the calendar year in which the Bonds are
issued will not exceed $10,000,000; and (c) the amount of tax-exempt
obligations, including the Bonds, designated by the City as "qualified
tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code during
the calendar year in which the Bonds are issued does not exceed $10,000,000.
The City designates the Bonds as "qualified tax-exempt obligations" for the
purposes of Section 265(b)(3) of the Code.
Section 19. Deposit of Bond Proceeds. The accrued interest, if any,
received from the sale of the Bonds shall be deposited in the Principal and
-23-
Interest Account and used to pay interest on the Bonds on their first interest
payment date. Principal proceeds of the Bonds shall be deposited in
Construction Fund-ULID No. 136 and 137 created by Ordinances Nos. 3322,
as amended, and 3376, respectively, and used to pay the costs of the
Improvements and the costs of issuance and sale of the Bonds. Until needed to
pay those costs, the City may invest principal proceeds deposited in a
construction fund temporarily in any legal investment, and the investment
earnings may be retained in such fund and be spent for the purposes of that
fund, except that earnings subject to a federal tax or rebate requirement may
be withdrawn therefrom and used for those tax or rebate purposes.
Section 20. Refunding or Defeasance of Bonds. The City may issue
refunding bonds pursuant to the laws of the State of Washington and use
money available from other lawful sources to pay the principal of and interest
on the Bonds, or such portion thereof included in a refunding or defeasance
plan, as the same become due and payable and to redeem and retire, release,
refund or defease any or all such then-outstanding Bonds (hereinafter
collectively called the "defeased Bonds") and to pay the costs of such refunding
or defeasance. If money and/or Government Obligations that are Permitted
Investments sufficient in amount, together with known earned income from the
investments thereof, to redeem and retire, release, refund or defease the
defeased Bonds in accordance with their terms, are set aside irrevocably in a
special fund for and pledged irrevocably to such redemption, retirement or
defeasance (hereinafter called the "trust account"), then all right and interest of
the owners of the defeased Bonds in the covenants of this ordinance and in the
Gross Revenue of the Waterworks Utility, ULID Assessments, funds and
accounts obligated to the payment of such defeased Bonds, other than the
right to receive the funds so set aside and pledged, thereafter shall cease and
become void. Such owners thereafter shall have the right to receive payment of
the principal of and interest on the defeased Bonds from the trust account.
After the establishing and full funding of such a trust account, the City
then may apply any money in any other fund or account established for the
payment or redemption of the defeased Bonds to any lawful purposes as it
shall determine, subject only to the rights of the owners of any other Bonds or
bonds then outstanding.
If the refunding plan provides that the defeased Bonds or the refunding
bonds to be issued be secured by money and/or Government Obligations that
are Permitted Investments pending the prior redemption of the defeased Bonds
and if such refunding plan also provides that certain money and/or
Government Obligations that are Permitted Investments are pledged irrevocably
for the prior redemption of the defeased Bonds included in that refunding plan,
then only the debt service on the Bonds which are not defeased Bonds and the
refunding bonds, the payment of which is not so secured by the refunding
plan, shall be included in the computation of the coverage requirement for the
issuance of Future Parity Bonds and the annual computation of coverage for
determining compliance with the rate covenants.
-24-
Notwithstanding anything in this section to the contrary, if the principal of
and/or interest due on the Bonds is paid by the Bond Insurer pursuant to the
Municipal Bond Insurance Policy, the Bonds shall be treated as remaining
outstanding for all purposes and shall not be considered paid by the City, and
the covenants, agreements and other obligations of the City to the registered
owners of the Bonds shall continue to exist and run to the benefit of the Bond
Insurer, and the Bond Insurer shall be subrogated to the rights of the registered
owners.
Section 21. Approval of Bond Purchase Contract. Banc of America
Securities LLC of Seattle, Washington (the "Purchaser"), has presented a bond
purchase contract (the "Bond Purchase Contract") to the City by which the
Purchaser has offered to purchase the Bonds under the terms and conditions
provided in the Bond Purchase Contract, which written Bond Purchase
Contract is on file with the City Clerk and is incorporated herein by this
reference. The City Council finds that entering into the Bond Purchase
Contract is in the City's best interest and, therefore, accepts the offer contained
therein and authorizes the execution of the Bond Purchase Contract by City
officials.
The Bonds will be printed at City expense and will be delivered to the
Purchaser in accordance with the terms of the Bond Purchase Contract with
the approving legal opinion of Foster Pepper & Shefelman PLLC, municipal
bond counsel of Seattle, Washington, relative to each series of the Bonds.
Bond counsel has not been retained to and shall not be required to review or
express any opinion concerning the completeness or accuracy of any official
statement, offering circular or other sales or disclosure material issued or used
in connection with the Bonds, and bond counsel's opinion shall so state.
The proper City officials are authorized and directed to do everything
necessary for the prompt authentication and delivery of the Bonds to the
Purchaser, including the execution of the Official Statement on behalf of the
City and execution of documents relative to acquisition of bond and reserve
insurance, and for the proper application and use of the proceeds of the sale
thereof.
Section 22. Fixing Interest Rate on ULID Assessments. The interest rates
on the installments and delinquent payments of the special assessments in
ULID Nos. 136 and 137 are revised and fixed at the rate of 5.0% per annum.
-25-
Section 23. Bond Insurance. The City Council finds that it is in the City's
best interest to purchase, and that a savings will result from purchasing, the
Municipal Bond Insurance Policy for the Bonds. The City shall purchase from
the Bond Insurer the Municipal Bond Insurance Policy insuring the prompt
payment of the principal of and interest on the Bonds and agrees to the
conditions for obtaining that policy, including the payment of the premium
therefor and the following provisions entitled "Payments under the Policy"
required by the Bond Insurer to be included in this ordinance:
"A. In the event that, on the second Business Day, and
again on the Business Day, prior to the payment date on the
Obligations, the Paying Agent [the Bond Registrar] has not received
sufficient moneys to pay all principal of and interest on the
Obligations due on the second following or following, as the case
may be, Business Day, the Paying Agent shall immediately notify the
Insurer or its designee on the same Business Day by telephone or
telegraph, confirmed in writing by registered or certified mail, of the
amount of the deficiency.
"B. If the deficiency is made up in whole or in part prior to
or on the payment date, the Paying Agent shall so notify the Insurer
or its designee.
"C. In addition, if the Paying Agent has notice that any
Bondholder has been required to disgorge payments of principal or
interest on the Obligation to a trustee in Bankruptcy or creditors or
others pursuant to a final judgment by a court of competent
jurisdiction that such payment constitutes a voidable preference to
such Bondholder within the meaning of any applicable bankruptcy
laws, then the Paying Agent shall notify the Insurer or its designee of
such fact by telephone or telegraphic notice, confirmed in writing by
registered or certified mail.
"D. The Paying Agent is hereby irrevocably designated,
appointed, directed and authorized to act as attorney-in-fact for
Holders of the Obligations as follows:
111. If and to the extent there is a deficiency in
anlounts required to pay interest on the Obligations, the
Paying Agent shall (a) execute and deliver to State Street Bank
and Trust Company, N.A., or its successors under the Policy
(the "Insurance Paying Agent"), in form satisfactory to the
Insurance Paying Agent, an instrument appointing the Insurer
as agent for such Holders in any legal proceeding related to
the payment of such interest and an assignment to the
Insurer of the claims for interest to which such deficiency
relates and which are paid by the Insurer, (b) receive as
designee of the respective Holders (and not as Paying Agent) in
accordance with the tenor of the Policy payment from the
Insurance Paying Agent with respect to the claims for interest
-26-
x t
so assigned, and (c) disburse the same to such respective
Holders; and
"2. If and to the extent of a deficiency in amounts
required to pay principal of the Obligations, the Paying Agent
shall (a) execute and deliver to the Insurance Paying Agent in
form satisfactory to the Insurance Paying Agent an instrument
appointing the Insurer as agent for such Holder in any legal
proceeding relating to the payment of such principal and an
assignment to the Insurer of any of the Obligation surrendered
to the Insurance Paying agent of so much of the principal
amount thereof as has not previously been paid or for which
moneys are not held by the Paying Agent and available for
such payment (but such assignment shall be delivered only if
payment from the Insurance Paying Agent is received), (b)
receive as designee of the respective Holders (and not as
Paying Agent) in accordance with the tenor of the Policy
payment therefor from the Insurance Paying Agent, and (c)
disburse the same to such Holders.
"E. Payments with respect to claims for interest on and
principal of Obligations disbursed by the Paying Agent from proceeds
of the Policy shall not be considered to discharge the obligation of
the Issuer with respect to such Obligations, and the Insurer shall
become the owner of such unpaid Obligations and claims for the
interest in accordance with the tenor of the assignment made to it
under the provisions of this subsection or otherwise.
F. Irrespective of whether any such assignment is executed
and delivered, the Issuer and the Paying Agent hereby agree for the
benefit of the Insurer that:
"1. They recognize that to the extent the Insurer
makes payments, directly or indirectly (as by paying through
the Paying Agent), on account of principal of or interest on the
Obligations, the Insurer will be subrogated to the rights of
such Holders to receive the amount of such principal and
interest from the Issuer, with interest thereon as provided and
solely from the sources stated in this Indenture and the
Obligations; and
"2. They will accordingly pay to the Insurer the
amount of such principal and interest (including principal and
interest recovered under subparagraph (ii) of the first
paragraph of the Policy, which principal and interest shall be
deemed past due and not to have been paid), with interest
thereon as provided in this Indenture and the Obligations, but
only from the sources and in the manner provided herein for
the payment of principal of and interest on the Obligations to
Holders, and will otherwise treat the Insurer as the owner of
such rights to the amount of such principal and interest.
-27-
r
"G. In connection with the issuance of additional
Obligations, the Issuer shall deliver to the Insurer a copy of the
disclosure document, if any, circulated with respect to such
additional Obligations.
"H. Copies of any amendments made to the documents
executed in connection with the issuance of the Obligations which
are consented to by the Insurer shall be sent to Standard & Poor's
Corporation.
"I. The Insurer shall receive notice of the resignation or
removal of the Paying Agent and the appointment of a successor
thereto.
"J. The Insurer shall receive copies of all notices required to
be delivered to Bondholders and, on an annual basis, copies of the
Issuer's audited financial statements and Annual Budget.
"Notices: Any notice that is required to be given to a holder of
the Obligation or to the Paying Agent pursuant to the Indenture
shall also be provided to the Insurer. All notices required to be given
to the Insurer under the Indenture shall be in writing and shall be
sent by registered or certified mail addressed to MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504 Attention:
Surveillance."
Section 24. Effective Date. This ordinance shall take effect and be in force
from and after its passage and 5 days following its publication as provided by
law.
PASSED by the City Council of the City of Pasco, Washington, this 5"
day of November, 2001, at a regular open public meeting, and signed in
authentication of its passage this 5' day of November, 2001.
C -
11Y1
Michael L. Garrison, Mayor
ATTEST: APPRO S TO FORM:
Catherine D. Seaman, Deputy City Clerk Leland B. Kerr, City Attorney
-28-
CERTIFICATION
I, the undersigned, City Clerk of the City of Pasco, Washington (the
"City"), hereby certify as follows:
1. The attached copy of Ordinance No. 3503 (the "Ordinance") is a full,
true and correct copy of an ordinance duly passed at a regular meeting of the
City Council of the City held at the regular meeting place thereof on November
5, 2001, as that ordinance appears on the minute book of the City; and the
Ordinance will be in full force and effect five days after the publication of its
summary in the City's official newspaper; and
2. A quorum of the members of the City Council was present throughout
the meeting and a majority of those members present voted in the proper
manner for the passage of the Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this day of
November, 2001.
,r
ebster U. Jacks , City Clerk