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HomeMy WebLinkAbout1636 OrdinanceCITY OF PASCO, WASHINGTON ORDINANCE NO. :�p AN ORDINANCE providing for the issuance and sale of $900,000.00 par value of "Water and Sewer Revenue Refunding Bonds, 1974," for the purpose of obtaining a part of the funds with which to refund, pay and retire on September 1, 1983, the outstanding "Water and Sewer Revenue Bonds, 1971," of the City; fixing the date, form, denomination, maturities, interest rates, terms and covenants of such refunding bonds; creating a special account in the bond redemption fund of the bonds being refunded to provide for the refunding operation; creating a special bond redemption fund to provide for the payment of the refunding bonds; providing for and authorizing the purchase of certain obligations out of the proceeds of the sale of such refunding bonds and other moneys of the City and for the use and application of the moneys to be derived from such investment; providing for the payment and redemption of the outstanding bonds to be refunded; and confirming the sale and providing for the delivery of the refunding bonds to Foster & Marshall Inc. of Seattle, Washington. WHEREAS, the City of Pasco, Washington (hereinafter called 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 1941 Session Laws of the State of Washington (RCW 35.67.320 et seq.) and the words "waterworks utility of the City" shall hereinafter mean the combined sanitary sewerage system and water system of the City, together with the :storm or surface water sewers heretofore authorized to be constructed and installed as a part of such combined systems, and together with all additions thereto and betterments and extensions thereof hereafter made; and WHEREAS, the City pursuant to Ordinance No. 768, as amended by Ordinance No. 774, has heretofore issued under date of January 1, 1954, $800,000.00 par value of "Water and Sewer Revenue Bonds, 1954"; and WHEREAS, by Section 13 of said Ordinance No. '168, as amended by Ordinance No. 774, the City reserved the right to issue additional water and sewer revenue bonds which shall constitute a charge or lien upon the revenue of the waterworks utility of the City on a parity with said "Water and Sewer Revenue Bonds, 1954," providing the following conditions shall be met and complied with at the time of the issuance of such additional bonds: and "(a) That all payments required to be made into the bond redemption funds for the outstanding 'Special Fund Water -Sewage Revenue Bonds, Series A,' dated March 1, 1944, the 'Special Fund Water -Sewage Revenue Bonds, 1944-1946, Series B,' dated January 1, 1946, and the 'Water Revenue Bonds, 1948,' dated March 1, 1948, shall have been made; and "(b) That all payments required by this ordinance or any ordinance hereafter enacted pertaining to the bonds of this issue shall have been made into the 'Water and Sewer Revenue Bond Fund, 1954'; and "(c) That the ordinance providing for the :issuance of such additional bonds shall further provide for the creation of a reserve fund or account for such additional bonds into which funds shall be accumulated an amount equal to the average annual debt service requirements of the additional bonds proposed to be issued, which amount shall be accumulated no later than five years after the date of issuance of such additional bonds; and "(d) That the revenues of the said waterworks utility_, including the sewerage system as a part thereof_, including the additional revenues reasonably anticipated to be received as a result of the making of the improvements in connection with which the additional revenue bonds are proposed to be issued, shall be deemed sufficient, after the payment of operation and maintenance costs and taxes, to equal at least 1.4 times the average annual principal and interest requirements of all outstanding water revenue bonds or water and sewer revenue bonds, including the bonds of this issue and of the additional revenue bonds proposed to be issued. Such determination of the sufficiency of the revenues shall be made and certified to by either a certified public accountant or professional engineer experienced in municipal utilities and licensed to practice in the State of Washington; PROVIDED, HOWEVER, that this certificate shall not be required in the event that the additional bonds proposed to be so issued are issued for the purpose of refunding outstanding Water Revenue Bonds or Water and Sewer Revenue Bonds and the averaae annual debt service requirements of such proposed additional revenue bonds are not increased over the requirement for the bonds beina so refunded;" EPM WHEREAS, the City pursuant to Ordinance No. 1070 passed ,December 4, 1962, heretofore issued under date of January 1, 1963, $600,000.00 par value of "Water and Sewer Revenue Refunding Bonds, 1963," for the purpose of providing the funds with which to refund, pay, retire and cancel on January 1, 1963, $600,000.00 par value of the then outstanding "Water and Sewer Revenue Bonds, 1957," dated December 1, 1957, which "Water and Sewer Revenue Refunding Bonds, 1963," were issued on a parity of lien with the outstanding "Water and Sewer Revenue Bonds, 1954," pursuant to the provisions of Section 13 of Ordinance No. 768, as amended by Ordinance No. 774; and WHEREAS, the City pursuant to Ordinance No. 1165 passed November 3, 1964, heretofore issued $1,100,000.00 par value of "Water and Sewer Revenue Bonds, 1964," to obtain the funds with which to pay the cost of carrying out the system or plan for making additions to and betterments and extensions of the waterworks utility of the City as specified and adopted in Ordinance No. 1145, which "Water and Sewer Revenue Bonds, 1964," were issued on a parity of lien with the outstanding "Water and Sewer Revenue Bonds, 1954," and "Water and Sewer Revenue Refunding Bonds, 1963," pursuant to the provisions of Section 1.3 of Ordinance No. 768, as amended by Ordinance No. 774; and WHEREAS, the City pursuant to Ordinance No. 1466 passed March 2, 1971, heretofore issued $900,000.00 par value of. "Water and Sewer Revenue Bonds, 1971," to obtain a part of the funds with which to pay the cost of carrying out the system or plan for making additions to and betterments and extensions of the waterworks utility of. the City as specified and adopted by Ordinance No. 1342, which "[Mater and Sewer Revenue Bonds, 1971," were issued on a parity of lien with the outstanding "Water and Sewer Revenue Bonds, 1954," "Water and Sewer Revenue Refunding Bonds, 1963," and "Water and Sewer Revenue Bonds, 1964," pursuant to the provisions of Section 13 of Ordinance No. 768, as amended by Ordinance No. 774; and Utz WHEREAS, as provided in Ordinance No. 1466 and in the outstanding "Water and Sewer Revenue Bonds, 1971" (hereinafter called the "1971 Bonds"), the City reserved the right to redeem such 1971 Bonds as a whole, or in part in inverse numerical order, on or after March 11 1983, at par plus accrued interest to date of redemption, which 1971 Bonds mature in various amounts on March 1 of each of the years 1991 through 1996 and all bear interest at the rate of 6.40% per annum; and WHEREAS, after due consideration it appears to the City Council that all of the outstanding 1971 Bonds may be refunded by providing funds for the payment of the principal of and interest on such outstanding bonds until September 1, 1983, being six months after the first call date for such bonds, at which time the remaining bonds then outstanding will be paid and retired by the issuance and sale of refunding bonds so that a substantial saving will be effected by the difference between the principal and interest cost over the life of the refunding bonds and the principal and interest cost over the life of such outstanding 1971 Bonds; and WHEREAS, in order to effect such refunding in the manner that will be most advantageous to the City and its taxpayers, it is hereby found necessary and advisable that certain "Acquired Obligations" (hereinafter identified) bearing interest and maturing at such time or times as necessary to pay the principal of and interest on the 1971 Bonds as the same shall become due and to redeem the 1971 Bonds on September 1, 1983, be purchased out of the proceeds of the sale of the refunding bonds herein authorized and other moneys of the City legally available therefor (hereinafter called the "Refunding Bonds"); and WHEREAS, the City Council hereby finds that all payments required by the respective bond ordinances for each issue of outstanding water and sewer revenue bonds of the City referred to above have been made into the respective bond redemption funds for MIC each issue of such outstanding bonds; that provision is hereinafter made for -the transfer from the "Reserve Account" in the bond redemption fund for the outstanding 1971 Bonds to the "Reserve Account" in the bond redemption fund hereinafter created for the payment of the refunding bonds proposed to be issued the amounts presently on hand in such 1971 "Reserve Account" and for the accumulation of the additional amounts required in the "Reserve Account" in the bond fund for the Refunding Bonds; and that no certificate of coverage is required since the average annual debt service requirements of the refunding bonds proposed to be issued are not increased over the requirements for the 1971 Bonds to be refunded; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN, as follows: Section 1. As used in this ordinance the following words shall have the following meanings: a. "City" shall mean the City of Pasco, Washington, a duly organized city of the third class. b. "Refunding Bonds" shall mean the "Water and Sewer Revenue Refunding Bonds, 1974," authorized to be issued by this ordinance. C. "Bond Fund" shall mean the "Water and Sewer Revenue Refunding Bond Redemption Fund, 1974," created by this ordinance for the payment of the Refunding Bonds. d. "1971 Bond Fund" shall mean the "Water and Sewer Revenue Bond Fund, 1971," of the City created and established in the office of the Treasurer of the City by Ordinance No. 1342, the designation of which fund was changed by Ordinance No. 1466, out of which fund the 1971 Bonds are payable. e. "1954 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1954," dated January 1, 1954. f. "1963 Bonds" shall mean the outstanding "Water and Sewer Revenue Refunding Bonds, 1963," dated January 1, 1963. -5- g. "1964 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1964," dated December 1, 1964. h. "1971 Bonds" shall mean the outstanding "Water and Sewer Revenue Bonds, 1971," dated March 1, 1971. i. "Revenue of the waterworks utility of the City" shall mean all the earnings and revenue received by the waterworks utility of the City from any source whatsoever except general ad valorem taxes, proceeds from the sale of City property and bond proceeds. j. "Operating and Maintenance Expense" shall mean all reasonable expenses incurred by the City in causing the waterworks utility of the City to be operated and maintained in good repair, working order and condition. k. "Parity Bonds" shall mean any and all water and sewer revenue bonds of the City issued after the date of the issuance of the Refunding Bonds pursuant to the provisions of Section 13 of Ordinance No. 768, as amended by Ordinance No. 774, the payment of the principal of and interest on which constitutes a lien and charge upon the revenue of the waterworks utility of the City on a parity with the lien and charge upon such revenue for the outstanding 1954 Bonds, 1963 Bonds, 1964 Bonds and 1971 Bonds prior to their retirement on September 1, 1983, and the Refunding Bonds. Section 2. For the purpose of providing a part of the moneys required to pay the principal of and interest on the 1971 Bonds coming due to and including September 1, 1983, and to redeem and retire on September 1, 1983, the outstanding 1971 Bonds maturing after September_ 1, 1983, the City shall issue the Refunding Bonds in the aggregate principal amount of $900,000.00. The Refunding Bonds shall be dated April 1, 1974; shall be in denominations of $5,000.00 each; shall bear interest at the rates hereinafter set forth, payable on September 1, 1974, and semiannually thereafter on the first days of March and September of each year, interest to maturity being evidenced by coupons to be attached to the Refunding Bonds with full obligation on the part of the City to pay interest at the bond rate from and after the bond. maturity dates until the Refunding Bonds with interest are paid in full or funds sufficient to pay such Refunding Bonds with interest in full are on deposit in the Bond Fund hereinafter referred to and the Refunding Bonds have been duly called for redemption. The Refunding Bonds shall be numbered, shall bear interest and shall mature on March 1 of each year as follows: Bond Numbers Interest (Inclusive) Amounts Rates Years 1 to 3 $ 15,000 6.00% 1975 4 to 6 15,000 6.00% 1976 7 to 9 15,000 6.00% 1977 10 to 12 15,000 6.00% 1978 13 to 15 15,000 6.00% 1979 16 to 18 15,000 6.00% 1980 19 to 22 20,000 5.50% 1981 23 to 26 20,000 5.00% 1982 27 to 30 20,000 5.10% 1983 31 to 34 20,000 5.20% 1984 35 to 38 20,000 5.25% 1985 39 to 43 25,000 5.30% 1986 44 to 48 25,000 5.35% 1987 49 to 53 25,000 5.40% 1988 54 to 59 30,000 5.45% 1989 60 to 65 30,000 5.50% 1990 66 to 101 180,000 5.55% 1991. 102 to 139 190,000 5.60% 1992 140 to 180 205,000 5.60% 1993 Both principal of and interest on the Refunding Bonds shall be payable in lawful money of the United States of America at the office of the Treasurer of the City, or, at the option of the holder, at either fiscal agency of the State of Washington in the Cities of Seattle, Washington, or New York, New York, solely out of the Bond Fund, and shall be a valid claim of the holder thereof_ only as against such Bond Fund and the amount of the revenue of the waterworks utility of the City pledged to such fund, and shall not be a general obligation of the City. Section 3. The City reserves the right to redeem prior to their stated maturity dates the Refunding Bonds as a whole, or in part in inverse numerical order, on March 1, 1983, or on any semiannual interest coupon due date thereafter, at the following percentages of -7- par if called on the following dates, plus accrued interest to date of redemption in each case: Call Dates Call Prices On March 1, 1983, or September 1, 1983, at 103% On March 1, 1984, or September 1, 1984, at 102% On March 1, 1985, or September 1, 1985, at 101% On March 1, 1986, and thereafter, at 100% (Par) Notice of any call for redemption of the Refunding Bonds prior to their stated maturity dates shall be published once in the official newspaper of the City not less than thirty nor more than forty-five days prior to the date of redemption. Notice of such intended redemption shall also be mailed to Foster & Marshall Inc. at its main office in Seattle, Washington, or to the successor in business of said corporation, if any, at its main office. In addition, such redemption notice shall be sent to Moody's Investors Service, Inc., and Standard & Poor's Corporation at their offices in New York, New York, or to their successors, if any. The mailing of such notice to such corporations shall not be a condition precedent to the redemption of such Refunding Bonds. Interest on any Refunding Bonds so called for redemption shall cease on the date fixed for such redemption upon payment of the redemption price into the Bond Fund. The City reserves the right to purchase any or all of the Refunding Bonds in the open market at any time at a price not in excess of 103% of the par value if purchased prior to September 1, 1983, and thereafter not in excess of the call price applicable at the time of such purchase. Section 4. There is hereby created and established in the office of the Treasurer of the City a special fund to be known and designated as the "Water and Sewer Revenue Refunding Bond Redemption Fund, 1974" (herein defined as the "Bond Fund"). Such :fund is hereby divided into two accounts, namely, a "Principal and Interest Account" and a "Reserve Account." There is hereby also created and established in the 1971 Bond Fund an additional account to be known and designated as the "1974 Refunding Account." Immediately upon receipt of payment aM. in full for the Refunding Bonds, the accrued interest received, if any, shall be deposited in the "Principal and Interest Account" in the Bond Fund. The principal proceeds received shall be deposited in the "1974 Refunding Account" in the 1971 Bond Fund and an amount equal to the accrued interest on the 1971 Bonds from the last interest payment date of such 1971 Bonds to the date of delivery of the Refunding Bonds to the purchaser thereof, together with the sum of $52,000.00, shall be transferred from the "Principal and Interest Account" in the 1971 Bond Fund to the "1974 Refunding Account" in the 1971 Bond Fund. The moneys in the "1974 Refunding Account" shall be used immediately upon the receipt thereof to discharge the obligations of the City under Ordinance No. 1466 passed and approved October 15,. 1973, authorizing the issuance of the 1971 Bonds by providing for the payment as hereafter set forth in this section of the principal of and interest on the 1971 Bonds. To the extent practicable the City shall discharge such obligations by the purchase of Federal National Mortgage Association Debentures and United States Treasury Bonds ("Acquired Obligations") bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide for the payment of the principal of and interest on the 1971 Bonds which will become due and payable on or before September 1, 1983, and the redemption price payable on September 1, 1983, for the principal of the 1971 Bonds maturing after September 1, 1983. Such "Acquired Obligations" and the prices to be paid for the same are more particularly described in the proposal of Foster & Marshall Inc. hereinafter referred to. Such "Acquired Obligations" shall be irrevocably deposited with Seattle -First National Bank, Seattle, Washington (hereinafter called the "Refunding Trustee"). Any amounts described in this section which are not provided for in full by the purchase and deposit of the "Acquired Obligations" described in this section shall :be provided for by the irrevocable deposit of a portion of the proceeds of sale of the Refunding Bonds or other moneys of the City with the aforesaid Refunding Trustee. WE All the moneys received as principal of or interest on such "Acquired Obligations" shall be held by the Refunding Trustee for the credit of the City for the "1974 Refunding Account" in the 1971 Bond Fund, and shall be held in trust and shall be used for the sole purpose of paying the principal of and interest becoming due on the 1971 Bonds up to and including September 1, 1983, and to pay and retire on September 1, 1983, all 1971 Bonds maturing after September 1, 1983. Any moneys remaining in the "1974 Refunding Account" in the 1971 Bond Fund after the payment and retirement in full of the outstanding 1971 Bonds on September 1, 1983, shall be transferred and paid into the "Principal and Interest Account" in the Bond Fund. All of such "Acquired Obligations" purchased as a part of the refunding plan are irrevocably dedicated to the purpose set forth in this ordinance, and such investments or the earnings or the proceeds therefrom may be used for no other purpose, nor may any of such investments be liquidated prior to maturity. Section 5. The City hereby irrevocably calls for redemption on September 1, 1983, all of the outstanding 1971 Bonds maturing after September 1, 1983, at 103% of the par value thereof plus accrued interest to such date of redemption. Such call for rede=mption shall be irrevocable after the delivery of the Refunding Bonds to the initial purchaser thereof. The Director of Finance and ex officio City Clerk is hereby authorized and directed to give notice of the redemption of the 1971 Bonds in accordance with the provisions of Ordinance No. 1466 pertaining to the 1971 Bonds. Section 6. The Refunding Trustee is hereby authorized and directed to pay the principal of and interest on the 1971 Bonds when due from the "Acquired Obligations" and moneys deposited with the Refunding Trustee pursuant to Section 4 of this ordinance. All "Acquired Obligations" and the moneys deposited with the Refunding Trustee and any income therefrom shall be held and applied in accordance -10- with the provisions of Ordinance No. 1466 pertaining to the 1971 Bonds and this ordinance and with the statutes of the State of Washington. All necessary and proper fees, compensation and expenses of the Refunding Trustee for the Refunding Bonds and all. other costs incidental to the refunding of the 1971 Bonds, including but not limited to reasonable charges of bond counsel, rating services and bond printing, shall be paid when due by the initial purchaser of the Refunding Bonds. The proper officers and agents of the City are directed to obtain from the Refunding Trustee an agreement setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the redemption and retirement of the 1971 Bonds as provided herein and stating that such provisions and the payment of the fee:, compensation and expenses of such Refunding Trustee are satisfactory to it. In order to carry out the purposes of this ordinance, the Mayor and Director of Finance and ex officio City Clerk of the City are authorized and directed to execute and deliver to Seattle -First National Bank, Seattle, Washington, a copy of such agreement when the provisions thereof have been fixed and determined. Such agreement when finally executed shall be marked "Exhibit A"; shall be attached to this ordinance and by this reference thereto is hereby made a part of this ordinance. Section 7. So long as Refunding Bonds are outstanding against the Bond Fund, the Treasurer of the City shall set aside and pay into the "Principal and Interest Account" in such fund out of the Revenue of the waterworks utility of the City a fixed amount, without regard to any fixed proportion, namely, monthly, on or before the 20th day of each month beginning with the month of April, 1974, an amount, together with the accrued interest received, equal to 1/5th of the amount of interest payable on the Refunding Bonds on September 1, 1974, and thereafter 1/6th of the next ensuing six months' requirements for interest and beginning with the month of April, 1974, 1/12th of the next ensuing twelve months' requirements for principal on the Refunding -11- Bonds and continuing thereafter until the Refunding Bonds, both principal and interest, are paid in full. Section 8. The Treasurer of the City is hereby authorized and directed to transfer from the "Reserve Account" in the 1971 Bond Fund to the "Reserve Account" in the Bond Fund all moneys on deposit in such "Reserve Account" in the 1971 Bond Fund, and the Citv shall thereafter set aside and pay into the "Reserve Account" in the Bond Fund out of the Revenue of the waterworks utility of the City in substantially equal monthly payments the amounts required to have been paid into the "Reserve Account" in the 1971 Bond Fund so that by no later than March 1, 1976, there shall have been accumulated in the "Reserve Account" in the Bond Fund for the Refunding Bonds an amount not less than the average annual debt service requirements for the Refunding Bonds. The "Reserve Account" in the Bond Fund may be accumulated from any other moneys which the City may have available for such purpose in addition to using such Revenue therefor. The City further agrees that when said required amounts have been paid into the "Reserve Account" in the Bond Fund, it will at all times, except for withdrawals therefrom as authorized herein, maintain those amounts therein until there is a sufficient amount in the Bond Fund, including the "Reserve Account" therein, to pay the principal of and interest on all outstanding Refunding Bonds to the final maturity thereof at which time the moneys in the Bond Fund, including the "Reserve Account" therein, may be used to pay such principal and interest. In the event there shall be a deficiency in the Bond Fund to meet maturing installments of either principal or interest, as the case may be, on the Refunding Bonds, such deficiency shall be made up from the "Reserve Account" by the withdrawal of cash therefrom for that purpose. Any deficiency created in the "Reserve Account" by reason of any such withdrawal shall then be made up from the moneys -12- from the Revenue of the waterworks utility of the City first available after making necessary provisions for the required payments into the Bond Fund. All moneys in the "Reserve Account," above provided for, may be kept on deposit in the official bank depository of the City or may be invested in United States Government obligations redeemable at a fixed price and maturing not later than twelve years from. date of purchase and in no event later than February 1, 1993, and/or in shares of savings and loan institutions to the extent that such shares are guaranteed by the Federal Savings and Loan Insurance Corporation. Interest on any such investment or on such bank account shall be deposited in and become a part of the "Reserve Account" until the total required reserve amount shall have been accumulated therein, after which such interest shall be deposited in the "Principal and Interest Account." Surplus moneys in the "Water and Sewer Revenue Fund" of the City, after making necessary provisions for the payment of Operating and Maintenance Expense of the waterworks utility of the City and the required deposits to the Bond Fund, may be used to make emergency repairs and/or extensions of and improvements to the waterworks utility of the City when certified by the City Engineer to be necessary and economically feasible, and/or for the redemption or purchase in the open market of outstanding Refunding Bonds and/or Parity Bonds. 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 holder of. anv Refunding Bond may bring suit against the City to compel it to do so. Section 9. The Revenue of the waterworks utility of the City is hereby pledged to such payments, and the Refunding Bonds shall constitute a lien and charge upon such Revenue prior and superior to any other charges whatsoever, excluding Operating and -13- Maintenance Expense, except that the lien and charge upon such Revenue for the Refunding Bonds shall be on a parity with the lien and charge thereon for the outstanding 1954 Bonds, 1963 Bonds, 1964 Bonds and the 1971 Bonds prior to their retirement on September 1, 1983, as herein provided and any additional Parity Bonds hereafter issued. Section 10. In the judgment of the City Council the Revenue of the waterworks utility of the City at the rates to be charged for water and sanitary sewage disposal service furnished on the entire utility will be more than sufficient to meet all Operating and Maintenance Expense thereof and the debt service on the outstanding 1954 Bonds, 1963 Bonds, 1964 Bonds and the 1971 Bonds (together with the principal and interest received on the "Acquired Obligations" prior to the retirement of the 1971 Bonds on their call date as herein provided) and to permit the setting aside into the Bond Fund out of the Revenue of the waterworks utility of the City of amounts sufficient to pay the interest on the Refunding Bonds as such interest becomes payable and to pay and redeem all of the Refunding Bonds at maturity. The City Council and corporate authorities of the City further hereby declare that in creating the Bond Fund and in fixing the amounts to be paid into the same as aforesaid they have exercised due regard for the Operating and Maintenance Expense of the waterworks utility of. the City and the debt service requirements of the presently outstanding bonds above referred to, 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 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 Expense and debt service requirements of said outstanding bonds and that no portion of the Revenue of the waterworks utility of the City has been previously pledged for any indebtedness other than the outstanding bond issues above referred to. Section 11. The City further hereby covenants and agrees with the owner and holder of each of the Refunding Bonds as follows: -14- (a) That it will not sell, lease, mortgage, or in any manner encumber or dispose of all the properties of the waterworks utility of the City, unless provision is made for payment into the Bond Fund of a sum sufficient to pay the principal of and interest on all the outstanding Refunding Bonds in accordance with the terms thereof; and further hereby binds itself irrevocably not to mortgage, sell, lease, or in any manner dispose of any part of the waterworks utility of the City that is used, useful and material to the operation of said waterworks 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 Refunding Bonds as the Revenue available for debt service for said Refunding Bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the utility so leased, encumbered or disposed of bears to the Revenue available for debt service for said Refunding Bonds from the entire utility for the same period. Any such money so paid into the Bond Fund shall be used to retire outstanding Refunding Bonds at the earliest possible date. (b) That it will maintain in good condition and operate said waterworks utility of the City and will establish, maintain and collect such rates as will produce Revenue from the said waterworks utility, sufficient to permit payment into the Bond Fund of the amounts required for the payment of the principal of and interest on the Refunding Bonds as they become due and the amounts that are required to be paid into the "Reserve Account" therein and, in addition thereto, that it will pay all Operating and Maintenance Expense and meet the debt service requirements of the outstanding 1954 Bonds, 1963 Bonds, 1964 Bonds, 1971 Bonds (prior to their retirement on September 1, 1983) and the Refunding Bonds and otherwise meet the obligations of the City as herein set forth. (c) That it will, while any of the Refunding Bonds remain outstanding, 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 furnish the original purchaser of the Refunding Bonds, or any subsequent holder or holders thereof, complete operating and income statements of the waterworks utility of the City, in reasonable detail, covering any fiscal year not more than thirty days after the close of such fiscal year, and it will grant any holder or holders of at least twenty-five percent (25%) of the outstanding Refunding Bonds the right at all reasonable times to inspect said utility and all of the records, accounts and data of the City relating thereto. Such operating and income statements shall include the following items: (1) Balance sheet, including balances in all funds created by this ordinance; (2) Statement of Cash Receipts and Disbursements; (3) Income and Expenses; -15- (4) Insurance data; (5) Number_ of metered customers; number of unmetered customers; number of properties connected to the utility in last fiscal year; number of fire hydrants; number of applications for water and sewerage service on hand; (6) Gallons of water through master meter and gallons of water billed; estimate of gallons of water used for flushing of mains and fires and gallons of water unaccounted for; (7) A recapitulation of funds or accounts created by this ordinance into which are put moneys derived from the operation of the utility or moneys derived from the sale of investments herein authorised, such analysis or recapitulation to show balance at beginning of period, deposits and withdrawals made during period and balance at end of period; also monthly deposit requirements for funds during next succeeding fiscal year; (8) Total annual water and sewer billings and average monthly billing per customer; (9) Rate schedule; Upon request of any holder of any of the Refunding Bonds, it will also furnish to such holder a copy of the most recently completed audit of the City's accounts by the State Auditor of Washington. (d) That it will establish, maintain and collect such _rates and charges for water and for sanitary sewage service as long as any of the Refunding Bonds is outstanding as will make available for the payment of the principal of and interest on all such Refunding Bonds and the outstanding 1954 Bonds, 1963 Bonds, 1964 Bonds, 1971 Bonds (prior to their retirement on September 1, 1983, as herein provided) and any Parity Bonds hereafter issued, as the same shall become due, an amount equivalent to at least 1.4 times_ the average_ annual _debt service requirement, both principal and interest, for such then outstandinq 56nds aafter_deductin_g Operating and Maintenance Expense from the Revenue of the waterworks utility of the Citv, but before depreciation and any City `imposed taxes upon such utility. (e) That it will not furnish water or sewerage service to any customer whatsoever free of charge and it shall, not later than sixty (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 RCW 31.21.290 and 35.67.200, et seq., and all acts amendatory thereof. (f) That 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 Expense. If, as, and when, the United -16- States of America, or some agency thereof, shall provide for war risk insurance, the City further agrees to take out and maintain such insurance on all or such portions of said utility on which such war risk insurance may be written in an amount or amounts to cover adequately the value thereof. (g) That so long as any Refunding Bonds are out- standing it will not impose any tax or excise on the purchasers of water or any excise or tax measured by the amount of water so used, or sewerage services furnished or the amounts of the bills payable for water so used or sewerage services furnished. (h) That it will maintain its corporate identity and existence so long as any Refunding Bonds remain outstanding. (i) That it will not grant any competing utility service franchise and will use all legal means to prevent competition with its said utility. (j) That it will make no use of the proceeds of the Refunding Bonds or other funds of the City at any time during the term of the Refunding Bonds which, if such use had been reasonably expected at the date that the Refunding Bonds are issued, would have caused such Refunding Bonds to be arbitrage bonds within the meaning of Section 106(d) of the United States Internal Revenue Code of 1954, and for this purpose it further covenants that none of the proceeds of the Refunding Bonds or the investment of such proceeds will be used to acquire obligations the adjusted yield on which will exceed the adjusted yield produced by the Refunding Bonds, both such adjusted yields being computed pursuant and subject to the requirements and exceptions of Sections 1.103-13 and 1.103-14 of the regulations proposed by the United States Treasury Department published in the Federal Register on May 3, 1973 (except for refunding bonds portion which is still covered by June 1, 1972, proposed regulations), as the same may be changed from time to time, or any other applicable regulations hereafter adopted. The covenants of this section appertaining to the Refunding Bonds shall be subject to all provisions concerning payment and to all other contractual provisions in the proceedings authorizing the issuance of the outstanding 1971 Bonds or otherwise appertaining thereto. Section 12. The Refunding Bonds shall be designated "Water and Sewer Revenue Refunding Bonds, 1974," and shall be in substantially the following form: -17- i Me $5,000.00 UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF PASCO WATER AND SEWER REVENUE REFUNDING BOND, 1974 g KNOW ALL MEN BY THESE PRESENTS: That the City of Pasco, State of Washington, for value received hereby promises to pay to bearer on the FIRST DAY OF MARCH, 19 , the principal sum of FIVE THOUSAND DOLLARS together with interest thereon at the rate of o per annum from date hereof until the said principal sum is paid in full or until this bond, if callable, shall have been duly called for redemption and the redemption price, including interest to such call date, deposited in the "Water and Sewer Revenue Refunding Bond Redemption Fund, 1974," of the City (hereinafter called the "Bond Fund"). Interest is payable on September 1, 1974, and semiannually thereafter on March 1 and September 1 of each year. Interest falling due on and prior to maturity is evidenced by and payable upon the surrender of the attached interest coupons as they severally become due, with full obligation on the part of the City to pay interest at the same rate, from and after the bond maturity date, until this bond with interest is paid in full or money is available in the Bond Fund for the payment in full. Both principal of and interest on this bond are payable in lawful money of the United States of America at the office of the City Treasurer of Pasco, Washington, or, at the option of the holder, at either fiscal agency of the State of Washington in the Cities of Seattle, Washington, or New York, New York, solely out of the Bond Fund created by Ordinance No. , into which fund the City hereby binds itself irrevocably to pay certain fixed amounts out of the gross revenues of the waterworks utility of the City, including the sewerage system as a part thereof, now belonging or which hereafter may belong to the City, including all additions, replacements, extensions and betterments, now or at any time hereafter made or constructed, without regard to any fixed proportion, namely, amounts sufficient to pay the principal of and interest on the bonds of this issue as they respectively become due and to create a reserve, all at the times and in the manner set forth in Ordinance No. The bonds of this issue are not a general obligation of the City. This bond is one of a total issue of $900,000.00 par value of bonds, all of like date, tenor and effect, except as to maturities, interest rates and option of redemption, all payable from the Bond Fund and all issued by the City under and in pursuance of the laws of the State of Washington, particularly Chapter 138, -18- Laws of 19651 lst Ex. Ses., as amended, known as the "Refunding Bond Act" (RCW Chapter 39.53), for the purpose of providing the funds to refund, pay and retire all of its outstanding "Water and Sewer Revenue Bonds, 1971," dated March 1, 1971, all as provided in Ordinance No. , and is issued in full compliance with the ordinances of the City and the Constitution and laws of the State of Washington. Reference is made to Ordinance No. as more fully describing the covenants with and it ghts of holders of bonds of this issue. The City reserves the right to redeem prior to their stated maturity dates the bonds of this issue as a whole, or in part in inverse numerical order, on March 1, 1983, or on any semiannual interest coupon due date thereafter, at the following percentages of par if called on the following dates, plus accrued interest to date of redemption in each case: Call Dates Call Prices On March 1, 1983, or September 1, 1983, at 103% On March 1, 1984, or September 1, 1984, at 102% On March 1, 1985, or September 1, 1985, at 101% On March 1, 1986, and thereafter, at 100% (Par) Notice of any call for redemption of the bonds of this issue prior to their stated maturity dates shall be published once in the official newspaper of the City not less than thirty nor more than forty-five days prior to the date of redemption. Notice of such intended redemption shall also be mailed to Foster & Marshall Inc. at its main office in Seattle, Washington, or to the successor in business of said corporation, if any, at its main office. In addition, such redemption notice shall be sent to Moody's Investors Service, Inc., and Standard & Poor's Corporation at their offices in New York, New York, or to their successors, if any, but the mailing of such notice to such corporations shall not be a condition precedent to the call of any of the bonds of this issue for redemption. Interest on any bonds so called for redemption shall cease on the date fixed for such redemption upon payment of the redemption price into the Bond Fund. The gross revenues from the waterworks utility of the City, including the sewerage system as a part thereof, have been pledged to such payments and the bonds of this issue shall constitute a lien and charge upon such revenues prior and superior to any other charges whatsoever, excluding charges for maintenance and operation, except that the lien and charge upon such gross revenues for the bonds of this issue shall be on a parity with the lien and charge thereon for the outstanding "Water and Sewer Revenue Bonds, 1954," dated January 1, 1954, "Water and Sewer Revenue Refunding Bonds, 1963," dated January 1, 1963, "Water and Sewer Revenue Bonds, 1964," dated December 1, 1964, "Water and Sewer Revenue Bonds, 1971," dated March 1, 1971 (prior to their retirement on September 1, 1983), and any additional water and sewer revenue bonds hereafter issued pursuant to the provisions of Section 13 of Ordinance No. 768, as amended by Ordinance No. 774. -19- The City hereby covenants and agrees to and with the holder of this bond that it will keep and perform all the covenants of this bond and of Ordinance No. to be by it kept and performed, and it further covenants and agrees to maintain in good condition and to operate said waterworks utility_, including the sewerage system as a part thereof, and to establish, maintain and collect rates and charges in connection therewith as will produce the gross revenues necessary to meet the obligations of said City as herein set forth and as set forth in Ordinance No. It is hereby certified and declared that the bonds of this issue are issued pursuant to and in strict compliance with the Constitution and laws of the State of Washington and the ordinances of the City, and that all acts, conditions and things required to be done precedent to and in the issuance of this bond have happened, been done and been performed as required by law. IN WITNESS WHEREOF, the City of Pasco, Washington, has caused this bond to be signed by the facsimile signature of its Mayor and attested by the manual signature of its Director of. Finance and ex officio City Clerk and its corporate seal to be hereto affixed and the interest coupons attached to be signed with the facsimile signatures of said officials this first day of April, 1974. CIT�k,��SCO, WA TO By (facsimile signa ure Mayor ATTE is Difecto of Fiifalhce ex off'c o City Cle The intdYest coupons attached to said Refunding Bonds shall be in substantially the following form: No. Coupon No. _ ($ on Coupon $ No. 1) On the FIRST DAY OF (MARCH)(SEPTEMBER), 19 , the CITY OF PASCO, WASHINGTON, upon the presentation and surrender of this coupon, will pay to bearer at the office of the City Treasurer of Pasco, Washington, or, at the option of the holder, at either fiscal agency of the State of Washington in the Cities of Seattle, Washinaton, or New York, New York, the sum shown hereon in lawful money of the United States of America from the special fund of the City known as the "Water and Sewer Revenue Refunding Bond Redemption Fund, 1974," said sum being the interest then due on its "Water and Sewer Revenue Refunding Bond, 1974," dated April 1, 1974, and numbered CITY PASCO, INGT By (facsimile signature) Mayor -20- ATTEST: (facsimile signature) Director of Finance and ex officio City Clerk Section 13. The Refunding Bonds shall be printed on lithographed forms, shall be signed by the facsimile signature of the Mayor and attested by the manual signature of the Director of Finance and ex officio City Clerk, shall have the seal of the City affixed thereto, and the coupons shall bear the facsimile signatures of the Mayor and the Director of Finance and ex officio City Clerk. Section 14. The City hereby further covenants with the owner and holder of each of the Refunding Bonds for as long as any of the same is outstanding that it will not create any special fund or funds for the payment of the principal of and interest on any other revenue bonds which will have any priority over or which will rank on a parity with the payments required by this ordinance to be made out of the Revenue of the waterworks utility of the City into the Bond Fund, except that it reserves the right to issue Parity Bonds for the purposes and subject to the conditions set forth in Section 13 of Ordinance No. 768, as amended by Ordinance No. 774, which section is incorporated in this ordinance and by this reference made a part hereof. Nothing contained in this section shall prevent the City from issuing revenue bonds or warrants, the payment of the principal of and interest on which is a charge upon the Revenue of the waterworks utility of the City junior and inferior to the payments required to be made out of such Revenue into the Bond Fund. Section 15. In the event the City shall issue advance refunding bonds pursuant to the laws of. the State of Washington to pay the principal of and interest on the Refunding Bonds or such portion thereof included in the refunding plan as the same become due and payable and to refund all such then outstanding Refunding Bonds and to pay the costs of refunding, and shall have irrevocably set aside for and pledged to such payment and refunding, moneys and/or -21- direct obligations of the United States of America or other legal investments sufficient in amount, together with known earned income from the investment thereof, to make such payments and to accomplish the refunding as scheduled, and shall irrevocably make provisions for redemption of such Refunding Bonds, then in that case all right and interest of the owners or holders of the Refunding Bonds to be so retired or refunded and the appurtenant coupons in the covenants of this ordinance and in the Revenue of the waterworks utility of the City, funds and accounts obligated to the payment of such Refunding Bonds, except the right to receive the funds so set aside and pledged, shall thereupon cease and become void and the City may then apply any moneys in any fund or account established for the payment or redemption of such Refunding Bonds or coupons to any lawful purposes as it shall determine. In the event that the refunding plan provides that the refunding bonds be secured by cash and/or direct obligations of the United States of America or other legal investments pending the prior redemption of those Refunding Bonds being refunded and if such refunding plan also provides that certain cash and/or direct obligations of the United States of America or other legal investments are irrevocably pledged for the prior redemption of those Refunding Bonds included in the refunding plan, then only the debt service on the Refunding Bonds and the refunding bonds payable from the Revenue of the waterworks utility of the City shall be included in the computation of coverage for issuance of Parity Bonds and the annual computation of coverage for determining compliance with the rate covenants. Section 16. Foster & Marshall Inc. of Seattle, Washington, heretofore offered to purchase the Refunding Bonds at a price of $99.00 per each $100.00 par value thereof plus accrued interest to the date of delivery of the Refunding Bonds, the City to furnish the printed Refunding Bonds and the unqualified approving legal opinion of Messrs. Roberts, Shefelman, Lawrence, Gay & Moch, municipal bond counsel of -22- Seattle, Washington, and the purchaser to pay the cost of printing such Refunding Bonds and the cost of such legal opinion and the purchaser to provide the "Acquired Obligations" above referred to as set forth in such offer. The City Council, being of the opinion that it was in the best interests of the City to accept such offer, duly accepted the same on March 5, 1974, and such acceptance is hereby ratified and confirmed. The Refunding Bonds shall, therefore, immediately upon their execution be delivered to the purchaser upon payment for the Refunding Bonds in accordance with such offer. Section 17. This ordinance shall become effective five days after its passage, approval and publication as provided by law. PASSED by the City Council of the City of Pasco, Washington, and APPROVED by the Mayor at a regular open public meeting thereof this 19th day of March, 1974. ATTESV: • Director Finance a ex offigii City Clerk FORM APPROVED: City Attorney -23- EXHIBIT A A G R E E M E N T THIS AGREEMENT made and entered into as of the day of March, 1974, by and between the CITY OF PASCO, WASHINGTON, a municipal corporation of the State of Washington (the "City"), and SEATTLE -FIRST NATIONAL BANK (:G-er-4o--e Trust Division) , Seattle, -Washington (the "Refunding Trustee") ; W I T N E S S E T H: SECTION 1. Recitals. The City now has outstanding its "Water and Sewer Revenue Bonds, 1971," issued under date of March 1, 1971, in the aggregate principal amount of $900,000.00 (hereinafter called the "1971 Bonds"). Pursuant to Ordinance No. 1466 pertaining to the 1971 Bonds, the City in the manner provided therein may provide for the refunding prior to maturity of the 1971 Bonds on March 1, 1983, or on any subsequent semiannual interest payment date, at 103% of the par value thereof, reducing 1/2 of 1% per annum for each full year that the redemption is subsequent to March 1, 1983, to par on or after March 1, 1989, plus accrued interest to date of redemption in each case. The City by Ordinance No. passed by the City Council and approved by the Mayor on March 19, 1974, has determined to refund the 1971 Bonds on September 1, 1983, in accordance with the terms of said Ordinance No. 1466 out of the proceeds of sale of its "Water and Sewer Revenue Refunding Bonds, 1974" (the "Refunding Bonds") and other moneys of the City legally available therefor. SECTION 2. Provisions for Refundina the 1971 Bonds. To accomplish the refunding of the 1971 Bonds, including the payment of principal of and interest on such bonds until September 1, 1983, the call date of such 1971 Bonds, the City, simultaneously with the delivery of the Refunding Bonds issued pursuant to said Ordinance No. , does hereby agree to irrevocably deposit with the Refunding Trustee in.'trust for the security and benefit of the holders and owners of the 1971 Bonds and the Refunding Bonds, $121.87 in cash and the.. following acquired obligations ("Obligations"): Security Interest Amount Rate Maturity Federal National Mortgage Association Debentures $890,000 6.750% 6/10/83 United States Treasury Notes 13,000 5.625% 8/15/74 Any government obligation qualified under RCW 39.53.010, as amended, may be substituted at time of closing for any of the above securities not available at time of closing, provided such substituted obligation shall provide the identical yield specified for the substituted security. Such cash and Obligations, with the investment income the -re -from„ will •be -sufficient ,to provide for the payment of the principal of and interest on the 1971 Bonds coming due to and including September 1, 1983, and to pay the redemption price payable on September 1, 1983, for the redemption of the 1971 Bonds maturing after September 1, 1983. On or before the delivery of the Refunding Bonds the City agrees that it will cause to be delivered to the Refunding Trustee a statement setting forth the amount of interest and the amount of principal to be paid on each semiannual interest payment date on the 1971 Bonds up through September 1, 1983, and the amount of the principal and premium required on September 1, 1983, to pay and redeem all then outstanding 1971 Bonds. The City by said Ordinance No. has irrevocably called for redemption or prepayment on September 1, 1983, the 1971 Bonds maturing after September 1, 1983. Such call for redemption or prepayment shall be irrevocable upon the delivery of the Refunding Bonds. The Director of Finance and ex officio City Clerk of the City shall provide for publication and mailing of the proper notices of such redemption or prepayment in accordance with the applicable provisions of Ordinance No. 1466 pertaining to the 1971 Bonds. Provision for the giving of such notices of redemption or prepayment has irrevocably been made by the City. -2- SECTION 3. Disbursements by the Refunding Trustee. The Refunding Trustee shall present for payment on the due date thereof the Obligations so deposited and shall apply the proceeds derived therefrom in accordance with the provisions of this section. Moneys shall be transferred by the Refunding Trustee to the Treasurer of the City in amounts sufficient to pay the interest on and principal of the 1971 Bonds becoming due and payable on or before September 1, 1983, and in amounts sufficient to pay on September 1, 1983, the redemption price with respect to the 1971 Bonds maturing after September 1, 1983. SECTION 4. Nonreinvestment of Funds; Custody and -Safekeepiirg of 'Obligati -ons. All 'moneys -deposited with the Refunding Trustee or received by the Refunding Trustee as maturing principal or interest on Obligations prior to the time required to make the payments hereinbefore set forth shall be held by the Refunding Trustee and shall not be reinvested. All income derived from the Obligations and any moneys deposited with the Refunding Trustee pursuant to Section 2 hereof in the hands of the Refunding Trustee (which moneys are not required to make the payments hereinbefore required to be made) shall be paid to the Treasurer of the City for the credit of the "1974 Refunding Account" in the "Water and Sewer Revenue Bond Fund, 1971," of the City (hereinafter called the "Refunding Account") as and when realized and collected for use and application as other moneys deposited in said Refunding Account. For as long as any of the 1971 Bonds are outstanding, on or before the 10th day of each May and November, commencing with the month of May, 1974, the Refunding Trustee shall render a statement as of the last day of the preceding six month's period to the Treasurer of the City, which statement shall set forth the Obligations which have matured and the amounts received by the Refunding Trustee -3- by reason of such maturity, the amounts paid to such Treasurer for credit to the Refunding Account and the dates of such delivery for the'payment of the interest on and principal of the 1971 Bonds as the same shall become due and/or payable, and the final payment of the redemption price for the 1971 Bonds on September 1, 1983, the call date for such 1971 Bonds, and any other transactions of the Refunding Trustee pertaining to its duties and obligations as set forth herein. All Obligations, moneys and investment income deposited with or received by the Refunding Trustee pursuant to this Agreement shall be subject to the trust created by this Agreement and the Refunding Trustee shall be liable for the preservation and safekeeping thereof. Reference herein to payments made to the Treasurer of the City shall also be deemed to include payments made to the fiscal agency of the State of Washington on behalf of such Treasurer. SECTION 5. Duties and Obligations of Refunding Trustee. The duties and obligations of the Refunding Trustee shall be as prescribed by the provisions of this Agreement, and the Refunding Trustee shall not be liable except for the performance of its duties and obligations as specifically set forth herein and to act in good faith in the performance thereof and no implied duties or obligations shall be incurred by such Refunding Trustee other than those specified herein. The Refunding Trustee may consult with counsel of its choice and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or not taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. -4- Provisions for the fees, compensation and expenses of the Refunding Trustee satisfactory to it have been made. CITY OF PASCO, WASHING`T'ON By 3_dvolo� Mayor ATTEST: 0 Di ector onance and Ll ex offic' City Clerk SEATTLE -FIRST NATIONAL BANK S7?�(GarT�nra .e• Trust Division) By Trust Officer -5-