HomeMy WebLinkAbout3567 Ordinance ORDINANCE NO-3SC 7
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; ADOPTING A SYSTEM OR PLAN OF ADDITIONS TO AND
BETTERMENTS AND EXTENSIONS OF THE WATERWORKS UTILITY OF
THE CITY; PROVIDING FOR THE ISSUANCE AND SALE OF $5,945,000
PAR VALUE OF WATER AND SEWER REVENUE BONDS, 2002, FOR THE
PURPOSE OF CARRYING OUT THE SYSTEM OR PLAN ADOPTED BY
THIS ORDINANCE AND TO PAY THE COST OF ISSUING AND SELLING
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
503311b&D3
TABLE OF CONTENTS
Section1. Definitions................................................................................................................... 3
Section2. System or Plan ............................................................................................................ 8
Section3. Findings....................................................................................................................... 8
Section 4. Purpose and Description of the Bonds......................... 9
Section 5. Registration and Transfer of Bonds.......................................................................... 10
Section 6. Payment of Bonds..................................................................................................... 11
Section 7. Redemption Provisions and Open Market Purchase of Bonds................................. 11
Section 8. Notice of Redemption............................................................................................... 12
Section 9. Failure to Redeem Bonds.......................................................................................... 12
Section 10. Form and Execution of Bonds .................................................................................. 12
Section11. Bond Registrar.......................................................................................................... 13
Section 12. Bond Fund; Payments into Bond Fund..................................................................... 14
Section 13. Pledge, Lien and Charge for Payment of the Bonds................................................. 15
Section14. Flow of Funds........................................................................................................... 15
Section15. Covenants.................................................................................................................. 16
Section 16. Provisions for Future Parity Bonds........................................................................... 17
Section 17. Preservation of Tax Exemption for Interest on the Bonds........................................ 20
Section 18. Deposit of Bond Proceeds......................................................................................... 21
Section 19. Refunding or Defeasance of Bonds .......................................................................... 21
Section 20. Approval of Bond Purchase Contract.......................................................................22
Section 21. Undertaking to Provide Continuing Disclosure..............................................
Section22. Bond Insurance ......................................................................................................... 25
Section 23. Payment Procedures Under Bond Insurance............................................................. 26
Section 24. Parties Interested Herein........................................................................................... 28
Section25. Effective Date...........................................................................................................29
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30331168.03
CITY OF PASCO, WASHINGTON
ORDINANCE NO.3-C 7
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; ADOPTING A SYSTEM OR PLAN OF ADDITIONS TO AND
BETTERMENTS AND EXTENSIONS OF THE WATERWORKS UTILITY OF
THE CITY; PROVIDING FOR THE ISSUANCE AND SALE OF $51945,000
PAR VALUE OF WATER AND SEWER REVENUE BONDS, 2002, FOR THE
PURPOSE OF CARRYING OUT THE SYSTEM OR PLAN ADOPTED BY
THIS ORDINANCE AND TO PAY THE COST OF ISSUING AND SELLING
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 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
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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, pursuant to Ordinance No. 3503, the City heretofore issued $995,000 par
value Water and Sewer Revenue Bonds, 2001 (the "2001 Bonds") on a parity of lien with the
1999 Bonds, 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. 136 and 137 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, 1999 Bonds and
2001 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 State SRF Loan be junior and
subordinate to the Parity Bonds (as defined in Section 1 below); and
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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, the City Council has determined that it is necessary and in the best interests
of the City that certain additional improvements be made and there be adopted a system or plan
of additions to and betterments and extensions of the Waterworks Utility of the City(the "Plan of
Additions"); and
WHEREAS, the City Council has determined that it is necessary to issue and sell
$5,945,000 par value of water and sewer revenue bonds (the "Bonds") to provide the funds
necessary to carry out the Plan of Additions and to pay the costs of issuance and sale of the
Bonds; and
WHEREAS, Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance
company ("Ambac Assurance" or "Bond Insurer"), has made a commitment to issue an insurance
policy(the "Financial Guaranty 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 Financial Guaranty 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 &Poor'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.
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"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.
"Bond Insurer"or"Ambac Assurance"means Ambac Assurance Corporation, a Wisconsin-
domiciled stock insurance company.
"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, 2002, 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.
"Financial Guaranty Insurance Policy" shall mean the financial guaranty insurance policy
issued by the Bond Insurer insuring the payment when due of the principal of and interest on the
Bonds as provided therein.
"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
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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 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.
"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.
"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.
"2001 Bonds" means the Water and Sewer Revenue Bonds, 2001, dated November 15,
2001, authorized to be issued by Ordinance No. 3503.
"Nonrefunded 1994 Bonds" means the outstanding 1994 Bonds maturing up to and
including June 1, 2004.
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"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 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, 1999 Bonds and the 2001 Bonds.
"Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future Parity
Bonds.
"Permitted Investments" means any investment that is a legal investment for cities in the
State of Washington, except that so long as the bond insurance policy for the 1994 Bonds is in
effect, Permitted Investments shall be restricted to those investments defined 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 this
ordinance.
"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, the 2001 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, the Series 1998A
Bonds, the Series 1998C Bonds, the 1999 Bonds, the 2001 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 outstanding Parity Bonds,
(b) Maximum Annual Debt Service on the then outstanding Parity Bonds and (c)
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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 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 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 L9400413, executed on May 26, 1994, as amended in 1995, 1996,
1997 and 2001.
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"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.
"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. System or Plan. The City specifies, adopts and orders the carrying out of a
system or plan of additions to and betterments and extensions of the Waterworks Utility
consisting of the improvements described in Exhibit A attached hereto and incorporated herein
by this reference (collectively, the "Plan of Additions"). There shall be included in the foregoing
system or plan the acquisition and installation of all necessary valves, pumps, fittings, couplings,
connections, equipment and appurtenances, and replacements and improvements necessary or
desirable to maintain or increase the effectiveness of the service provided by such facilities, other
improvements to and extensions of the Waterworks Utility, the acquisition of any easements,
rights-of-way and land that may be required and the performance of such work as may be
incidental and necessary.
All of the foregoing shall be in accordance with the plans and specifications therefor
prepared by the staff and consulting engineers of the City.
The City Council may modify the details of the Plan of Additions where, in its judgment,
it appears advisable if such modifications do not substantially alter the purposes of that system or
plan.
The life of the improvements comprising the Plan of Additions is declared to be at least
the term of the bonds. The estimated cost of the acquisition, construction, installation and
financing of the above-described improvements is declared to be approximately $5,945,000.
Such cost shall be paid from the proceeds of the Bonds and from other money of the City made
available therefor.
Section 3. Findings. The City Council finds that (1) all payments required by the
Nonrefunded 1994 Bonds, the State PWTF Loan, the 1998 Bonds, the 1999 Bonds and the 2001
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
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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; and (3) on or before the time of issuance of the
Bonds there will 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, 1999 Bonds and 2001 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, 1999 Bonds and 2001 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, 1999 Bonds
and 2001 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, 1999 Bonds and 2001 Bonds.
Section 4. 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,
2002, of the City; shall be in the aggregate principal amount of $5,945,000; shall be dated
October 1, 2002; 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 June 1 and December 1, commencing June 1, 2003, to the maturity or earlier redemption of
the Bonds; and shall mature on December 1 in years and amounts and bear interest at the rates
per annum as follows:
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Maturity Principal Interest
Years Amounts Rates
2003 $195,000 2.000%
2004 220,000 2.500
2005 230,000 2.500
2006 235,000 2.750
2007 255,000 3.000
2008 260,000 3.000
2009 255,000 3.500
2010 265,000 3.500
2011 265,000 3.500
2012 275,000 3.750
2013 285,000 3.750
2014 300,000 4.000
2015 310,000 4.000
2016 320,000 4.050
2017 340,000 4.125
2018 355,000 4.250
2019 370,000 4.375
2020 385,000 4.450
2021 405,000 4.600
2022 420,000 4.700
Section 5. 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
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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 6. 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'h 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 7. Redemption Provisions and Open Market Purchase of Bonds. Bonds
maturing in the years 2003 through 2012, 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 December 1, 2013, prior to their stated maturity
dates at any time on or after December 1, 2012, 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.
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,
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there shall be issued to the registered owner, without charge therefor, 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.
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 8. 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 New York, 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 9. 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 10. 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.
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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:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Pasco, Washington, Water
and Sewer Revenue Bonds, 2002, 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 11. 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.
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Section 12. Bond Fund; Payments into Bond Fund. The Bond Fund has been created and
established in the office of the Finance Director as a special 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
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Interest Account. 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 13. Pled me, 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.
(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
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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.
(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.
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(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.
(f) 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 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
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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 Nonref aided 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 (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.
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 later 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 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
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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, 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 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
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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.
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.
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Section 18. Deposit of Bond Proceeds. The accrued interest, if any, received from the
sale of the Bonds shall be deposited in the Principal and Interest Account and used to pay interest
on the Bonds on their first interest payment date. All of the proceeds of the Bonds received by
the City from the Purchaser (defined below) shall be deposited into the Water/Sewer Fund and
used to reimburse the City for the purchase of an irrigation system from Irrigation Water, Inc.,
and to pay the other costs of carrying out the Plan of Additions 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 19. 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.
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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 Financial Guaranty 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 24. 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 21. Undertaking to Provide Continuing Disclosure. To meet the requirements of
United States Securities and Exchange Commission("SEC") Rule 15c2-12(b)(5) (the "Rule"), as
applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking") for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice of
Material Events. The City undertakes to provide or cause to be provided, either
directly or through a designated agent:
(i) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with the Rule
("NRMSIR") and to a state information depository, if any, established in the
State of Washington (the "SID") annual financial information and operating
data of the type included in the final official statement for the Bonds and
described in subsection(b) of this section("annual financial information");
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(ii) To each NRMSIR or the Municipal Securities Rulemaking
Board ("MSRB"), and to the SID, timely notice of the occurrence of any of
the following events with respect to the Bonds, if material: (1)principal and
interest payment delinquencies; (2) non-payment related defaults; (3)
unscheduled draws on debt service reserves reflecting financial difficulties;
(4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure to
perform; (6) adverse tax opinions or events affecting the tax-exempt status of
the Bonds; (7)modifications to rights of holders of the Bonds; (S)Bond calls
(other than scheduled mandatory redemptions of Term Bonds); (9)
defeasances; (10) release, substitution, or sale of property securing
repayment of the Bonds; and(11)rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely
notice of a failure by the City to provide required annual financial
information on or before the date specified in subsection(b) of this section.
(b) Type of Annual Financial Information Undertaken to be Provided.
The annual financial information that the City undertakes to provide in subsection
(a) of this section:
(i) Shall consist of (1) annual financial statements prepared
(except as noted in the financial statements) in accordance with applicable
generally accepted accounting principles applicable to governmental units, as
such principles may be changed from time to time and as permitted by State
law,which statements shall not be audited, except,however, that if and when
audited financial statements are otherwise prepared and available to the City
they will be provided; (2) a statement of authorized, issued and outstanding
bonded debt secured by the Net Revenue of the Waterworks Utility; (3)
debt service coverage ratios; and (4) general customer statistics for the
Waterworks Utility;
(ii) Shall be provided to each NRMSIR and the SID, not later
than the last day of the ninth month after the end of each fiscal year of the
City (currently, a fiscal year ending December 31), as such fiscal year may
be changed as required or permitted by State law, commencing with the
City's fiscal year ending December 31,2002; and
(iii) May be provided in a single or multiple documents, and may
be incorporated by reference to other documents that have been filed with
each NRMSIR and the SID, or, if the document incorporated by reference is
a "final official statement" with respect to other obligations of the City, that
has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any
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holder of any Bond, or of any broker, dealer, municipal securities dealer,
participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under the
circumstances and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of the
substance (or provide a copy) of any amendment to the Undertaking and a brief
statement of the reasons for the amendment. If the amendment changes the type of
annual financial information to be provided, the annual financial information
containing the amended financial information will include a narrative explanation of
the effect of that change on the type of information to be provided.
(d) Beneficiaries. The Undertaking evidenced by this section shall inure
to the benefit of the City and any holder of Bonds, and shall not inure to the benefit
of or create any rights in any other person.
(e) Termination of Undertaking. The City's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In
addition, the City's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the City to comply with this Undertaking
become legally inapplicable in respect of the Bonds for any reason, as confirmed by
an opinion of nationally recognized bond counsel or other counsel familiar with
federal securities laws delivered to the City, and the City provides timely notice of
such termination to each NRMSIR or the MSRB and the SID.
(f) Remedy for Failure to Comply with Undertaking. As soap as
practicable after the City learns of any failure to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected.
No failure by the City or other obligated person to comply with the Undertaking
shall constitute a default in respect of the Bonds. The sole remedy of any holder of a
Bond shall be to take such actions as that holder deems necessary, including seeking
an order of specific performance from an appropriate court, to compel the City or
other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking. The
Finance Manager of the City(or such other officer of the City who may in the fixture
perform the duties of that office) or his or her designee is authorized and directed in
his or her discretion to take such further actions as may be necessary, appropriate or
convenient to carry out the Undertaking of the City in respect of the Bonds set forth
in this section and in accordance with the Rule, including, without limitation, the
following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
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(ii) Determining whether any event specified in subsection (a)
has occurred, assessing its materiality with respect to the Bonds, and, if
material,preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person"within the meaning of the Rule with respect to the Bonds,
and obtaining from such person an undertaking to provide any annual
financial information and notice of material events for that person in
accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel,
to assist and advise the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 22. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Financial Guaranty 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. Any notice required to be given to the Bond Insurer shall be
sent by certified or registered mail to Ambac Assurance Corporation, One State Street Plaza,
New York, New York 10004.
While the Financial Guaranty Insurance Policy is in effect, the City or the Bond Registrar
shall furnish to the Bond Insurer (to the attention of the Surveillance Department, unless
otherwise indicated):
(a) As soon as practicable after the filing thereof, copies of any
financial statements, audits and annual reports of the City;
(b) copies of any notices given to the registered owners of the Bonds,
including, without limitation, notices of any redemption of or defeasance of
Bonds, and any certificate rendered pursuant to this ordinance relating to the
security for the Bonds;
(c) to the extent that the City has entered into a continuing disclosure
agreement with respect to the Bonds, the Bond Insurer shall be included as a party
to be notified; and
(d) such additional information the Bond Insurer may reasonably
request.
The Bond Registrar shall notify the Bond Insurer (to the attention of the General Counsel
Office) of any failure of the City to provide relevant notices and certificates.
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The City will permit the Bond Insurer to discuss the affairs, finances and accounts of the
City or any information the Bond Insurer may reasonably request regarding the security for the
Bonds with appropriate officers of the City. The Bond Registrar and the City will permit the
Bond Insurer to have access to and make copies of all books and records relating to the Bonds at
any reasonable time.
The Bond Insurer shall have the right to direct an accounting at the City's expense, and
the City's failure to comply with such direction within 30 days after receipt of written notice of
the direction from the Bond Insurer shall be deemed a default hereunder unless compliance
cannot occur within such period. In that event and only if an extension would not materially
adversely affect the interest of any registered owner of the Bonds, that 30-day period will be
extended so long as compliance is begun within that period and diligently pursued.
Section 23. Payment Procedures Under Bond Insurance. The Bond Insurer requires that
the following sections be included in this ordinance:
"As long as the bond insurance shall be in full force and effect, the
Obligor, the Trustee and any Paying Agent agree to comply with the following
provisions"
"(a) At least one (1) day prior to all Interest Payment Dates the Trustee
or Paying Agent [the Bond Registrar], if any, will determine whether there will be
sufficient funds in the Funds and Accounts to pay the principal of or interest on
the Obligations on such Interest Payment Date. If the Trustee or Paying Agent, if
any, determines that there will be insufficient funds in such Funds or Accounts,
the Trustee or Paying Agent, if any, shall so notify Ambac Assurance. Such
notice shall specify the amount of the anticipated deficiency, the Obligations to
which such deficiency is applicable and whether such Obligations will be
deficient as to principal or interest, or both. If the Trustee or Paying Agent, if
any, has not so notified Ambac Assurance at least one (1) day prior to an Interest
Payment Date, Ambac Assurance will make payments of principal or interest due
on the Obligations on or before the first (1st) day next following the date on
which Ambac Assurance shall have received notice of nonpayment from the
Trustee or Paying Agent, if any.
"(b) the Trustee or Paying Agent, if any, shall, after giving notice to
Ambac Assurance as provided in (a) above, make available to Ambac Assurance
and, at Ambac Assurance's direction, to The Bank of New York, as insurance
trustee for Ambac Assurance or any successor insurance trustee (the "Insurance
Trustee"), the registration books of the Obligor maintained by the Trustee or
Paying Agent, if any, and all records relating to the Funds and Accounts
maintained under this ordinance.
"(c) the Trustee or Paying Agent, if any, shall provide Ambac
Assurance and the Insurance Trustee with a list of registered owners of
Obligations entitled to receive principal or interest payments from Ambac
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Assurance under the terms of the Financial Guaranty Insurance Policy, and shall
make arrangements with the Insurance Trustee (i) to mail checks or drafts to the
registered owners of Obligations entitled to receive full or partial interest
payments from Ambac Assurance and (ii) to pay principal upon Obligations
surrendered to the Insurance Trustee by the registered owners of Obligations
entitled to receive full or partial principal payments from Ambac Assurance.
"(d) the Trustee or Paying Agent, if any, shall, at the time it provides
notice to Ambac Assurance pursuant to (a) above, notify registered owners of
Obligations entitled to receive the payment of principal or interest thereon from
Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance
will remit to them all or a part of the interest payments next coming due upon
proof of Bondholder entitlement to interest payments and delivery to the
Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate
assignment of the registered owner's right to payment, (iii) that should they be
entitled to receive full payment of principal from Ambac Assurance, they must
surrender their Obligations(along with an appropriate instrument of assignment in
form satisfactory to the Insurance Trustee to permit ownership of such
Obligations to be registered in the name of Ambac Assurance) for payment to the
Insurance Trustee, and not the Trustee or Paying Agent, if any, and (iv) that
should they be entitled to receive partial payment of principal from Ambac
Assurance, they must first surrender their Obligations for payment thereon first to
the Trustee or Paying Agent, if any, who shall note on such Obligations the
portion of the principal paid by the Trustee or Paying Agent, if any, and then,
along with an appropriate instrument of assignment in form satisfactory to the
Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid
portion of principal.
"(e) in the event that the Trustee or Paying Agent, if any, has notice
that any payment of principal of or interest on a Bond which has become Due for
Payment and which is made to a Bondholder by or on behalf of the Obligor has
been deemed a preferential transfer and theretofore recovered from its registered
owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy
in accordance with the final, nonappealable order of a court having competent
jurisdiction, the Trustee or Paying Agent, if any, shall, at the time Ambac
Assurance is notified pursuant to (a) above, notify all registered owners that in the
event that any registered owner's payment is so recovered, such registered owner
will be entitled to payment from Ambac Assurance to the extent of such recovery
if sufficient funds are not otherwise available, and the Trustee or Paying Agent, if
any, shall furnish to Ambac Assurance its records evidencing the payments of
principal of and interest on the Obligations which have been made by the Trustee
or Paying Agent, if any, and subsequently recovered from registered owners and
the dates on which such payments were made.
"(f) in addition to those rights granted Ambac Assurance under this
ordinance, Ambac Assurance shall, to the extent it makes payment of principal of
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or interest on Obligations, become subrogated to the rights of the recipients of
such payments in accordance with the terms of the Financial Guaranty Insurance
Policy, and to evidence such subrogation (i) in the case of subrogation as to
claims for past due interest, the Trustee or Paying Agent, if any, shall note Ambac
Assurance's rights as subrogee on the registration books of the Obligor maintained
by the Trustee or Paying Agent, if any, upon receipt from Ambac Assurance of
proof of the payment of interest thereon to the registered owners of the
Obligations, and (ii) in the case of subrogation as to claims for past due principal,
the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as
subrogee on the registration books of the Obligor maintained by the Trustee or
Paying Agent, if any, upon surrender of the Obligations by the registered owners
thereof together with the proof of the payment of principal thereof."
Section 24. Parties Interested Herein. To the extent that this ordinance confers upon or
gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this
ordinance, the Bond Insurer is explicitly recognized as being a third-party beneficiary hereunder
and may enforce any such right, remedy or claim conferred, given or granted hereunder.
Nothing expressed or implied in this ordinance is intended or shall be construed to confer upon,
or to give or grant to, any person or entity, other than the City, the Bond Insurer and the
registered owners of the Bonds, any right, remedy or claim under or by reason of this ordinance
or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and
agreements in this ordinance contained by and on behalf of the City shall be for the sole and
exclusive benefit of the City, the Bond Insurer and the registered owners of the Bonds.
Notwithstanding any other provision of this ordinance, the City shall notify the Bond
Insurer immediately if at any time there are insufficient funds to make any payments of principal
and/or interest as required and immediately upon the occurrence of any event of default
hereunder. Anything in this ordinance to the contrary notwithstanding, upon the occurrence and
continuance of an event of default, the Bond Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to the Bond owners for the benefit of the Bond
owners pursuant to state law.
Any provision of this ordinance expressly recognizing or granting rights in or to the Bond
Insurer may not be amended in any manner which affects the rights of the Bond Insurer
hereunder without the prior written consent of the Bond Insurer. Unless otherwise provided in
this section, the Bond Insurer's consent shall be required, in addition to Bond owner consent,
when required, for the following purposes: (i) execution and delivery of any supplemental
ordinance, and (ii) initiation or approval of any other action which requires Bond owner consent.
Any reorganization or liquidation plan with respect to the City must be acceptable to the
Bond Insurer. In the event of any reorganization or liquidation, the Bond Insurer shall have the
right to vote on behalf of all Bond owners who hold Ambac Assurance-insured bonds absent a
default by the Bond Insurer under the applicable Financial Guaranty Insurance Policy insuring
such bonds.
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Section 25. 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 7th day of October,
2002, at a regular open public meeting, and signed in authentication of its passage this�4Lday of
October, 2002.
ayor
ATTEST:
City Clerk
APPRO FORM:
Foster Pepper& Shefelman PLLC
Bond Counsel
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EXHIBIT A
LIST OF IMPROVEMENTS COMPRISING PLAN OF ADDITIONS
Sewer Cost
Commercial Avenue Sewer Extension $ 450,000
Montgomery Sewer Extension 400,000
Plateau Sewer Extension 800,000
Wernett Sewer Extension 600,000
Total $2,250,000
Water Cost
Filter Beds and Raw Water Pipelines $1,000,000
Irrigation Water Inc. Purchase 900,000
Irrigation System Improvements 250,000
Road 100 Waterline Extension 200,000
Reservoir Painting 300,000
Reservoir Site Improvements 150,000
Road 68 Waterline Loop 400,000
Backwash Facility 400,000
Total 3,600,000
Total of water and sewer improvements $5,850,000
50337768.03
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.,7Y67 (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 October 7, 2002, 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 7/� day of October, 2002.
CITY OF PASCO, WASHINGTON
b 114
d-&
Webster U. Jackson, My Clerk
50331168.03