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HomeMy WebLinkAbout3054 OrdinanceCITY OF PASCO, WASHINGTON ORDINANCE NO. 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 $8,705,000 par value of Water and Sewer Revenue Bonds, 1994, for the purpose of obtaining a part of the funds with which to carry out the system or plan adopted by Ordinance No. 3040, and, if proceeds are available, to carry out portions of the system or plan adopted by this ordinance, paying the cost of redeeming a water and sewer revenue bond anticipation note issued on September 8, 1994, and paying the cost of issuing and selling the bonds, including reserve insurance; fixing the date, form, denomination, maturities, interest rates, terms and covenants of the bonds; providing for bond insurance; providing for the sale and delivery of the bonds to Seattle-Northwest Securities Corporation of Seattle, Washington; and ratifying and confirming actions heretofore taken by the City Council in carrying out such system or plan. This document was prepared by: POSTER PEPPER & SHEFELMAN 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 0153309 03 CITY OF PASCO, WASHINGTON TABLE OF CONTENTS Page No. Recitals 1 Section 1. Definitions 3 Section 2. System or Plan 9 Section 3. Findings 10 Section 4. Purpose of Bonds 12 Section 5. Description of Bonds 12 Section 6. Registration and Transfer of Bonds 13 Section 7. Payment of Bonds 13 Section 8. Optional Redemption, Mandatory Redemption and Open Market Purchase of Bonds 13 Section 9. Notice of Redemption 15 Section 10. Failure to Redeem Bonds 16 Section 11. Form and Execution of Bonds 16 Section 12. Bond Registrar 17 Section 13. Creation of Bond Fund; Payments into Bond Fund 18 Section 14. Pledge, Lien and Charge for Payment of the Bonds 21 Section 15. Flow of Funds 21 Section 16. Covenants 22 Section 17. Provisions for Future Parity Bonds 24 Section 18. Preservation of Tax Exemption for Interest on Bonds 26 Section 19. Bonds Negotiable 27 Section 20. Deposit of Bond Proceeds 27 Section 21. Refunding or Defeasance of Bonds 28 0153309 03 -1- Page No. Section 22. Reserve Insurance 30 Section 23. Bond Insurance 30 Section 24. Approval of Bond Purchase Contract 33 Section 25. Temporary Bond 34 Section 26. Ratification and confirmation 34 Section 27. Effective Date 35 Signatures 35 0153309 03 CITY OF PASCO, WASHINGTON ORDINANCE NO. 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 $8,705,000 par value of Water and Sewer Revenue Bonds, 1994, for the purpose of obtaining a part of the funds with which to carry out the system or plan adopted by Ordinance No. 3040, and, if proceeds are available, to carry out portions of the system or plan adopted by this ordinance, paying the cost of redeeming a water and sewer revenue bond anticipation note issued on September 8, 1994, and paying the cost of issuing and selling the bonds, including reserve insurance; fixing the date, form, denomination, maturities, interest rates, terms and covenants of the bonds; providing for bond insurance; providing for the sale and delivery of the bonds to Seattle-Northwest Securities Corporation of Seattle, Washington; and ratifying and confirming actions heretofore taken by the City Council in carrying out such system or plan. 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 WHEREAS, pursuant to Resolution No. 2133, the City has entered into a Washington State Water Pollution Control State Revolving Fund (SRF) Loan Agreement, as of May 26, 1994, to borrow $3,802,779 0153309 03 for the purpose of paying a part of the cost of constructing certain Waterworks Utility facilities, the payment of which Loan _ Agreement is 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 WHEREAS, pursuant to Ordinance No. 3040, the City heretofore issued a $3,000,000 par value Water and Sewer Revenue Bond Anticipation Note, 1994 (the "1994 Note"), which 1994 Note was issued to pay part of the cost of carrying out a portion of the system or plan of additions and betterments to and extensions of the Waterworks Utility adopted by that ordinance; 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 (together with the system or plan adopted by Ordinance No. 3040, called the "Plan of Additions"); and WHEREAS, the City Council has determined that it is necessary to issue and sell $8,705,000 par value of water and sewer revenue bonds to provide a part of the funds necessary to carry out the Plan of Additions providing for additions to and betterments and extensions of the Waterworks Utility, to redeem the Water and Sewer Revenue Bond Anticipation Note, 1994, and to pay the costs of issuance and sale of those bonds, including the cost of Reserve Insurance, and Seattle-Northwest Securities Corporation has offered to purchase those bonds under the terms and conditions hereinafter set forth; and 0153309 03 -2- WHEREAS, the Municipal Bond Investors Assurance Corporation of Armonk, New York (the "Bond Insurer"), has made a commitment to issue an insurance policy (the "Municipal Bond Insurance Policy") relative to the Bonds and Reserve Insurance in the form of a Debt Service Reserve Surety Bond effective as of the date of issuance of the Bonds, and the City Council deems that the purchase of the Municipal Bond Insurance Policy is in the best interest of the City; 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 0153309 03 -3-- principal amount of ULID Assessments then outstanding plus any ULID Assessment payments then on deposit in the Principal and Interest Account of the Bond Fund. Assessment Bonds shall be allocated to each remaining maturity of Parity Bonds in the same proportion as the total of the Assessment Bonds relates to the total of the Parity Bonds then outstanding. "Average Annual Debt Service" means at the time of its calculation, the sum of the Annual Debt Service for the remaining years to the last scheduled maturity of the applicable Parity Bonds divided by the number of those years. "Bond Fund" means the Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991, of the City created and established by Ordinance No. 2839 in the office of the Finance Director of the City. "Bond Insurer" means the Municipal Bond Investors Assurance Corporation of Armonk, New York. "Bond Registrar" means the fiscal agencies of the State of Washington, located in Seattle, Washington, and New York, New York, as the same may be designated from time to time. "Bonds" means the Water and Sewer Revenue Bonds, 1994, authorized to be issued by this ordinance. "1991 Bonds" means the Water and Sewer Revenue and Refunding Bonds, 1991, dated October 1, 1991. "City" means the City of Pasco, Washington, a duly organized code city. 0153309 03 -4- "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 ULID Assessments, equal to at least 1.25 times an amount equal to the Maximum Annual Debt Service on all bonds payable from the Bond Fund. After all Outstanding Parity Bonds are redeemed, defeased or otherwise are no longer deemed outstanding, or after the written consent to this definition is given by the holder or owner of the remaining Outstanding Parity Bonds, "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. "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 and this ordinance, the payment of the principal of and interest on which constitutes a lien and charge upon the Net Revenue of the Waterworks Utility and ULID Assessments on a parity with the lien and charge upon such Net Revenue and ULID Assessments for the outstanding Parity Bonds, but shall not include variable rate obligations. 0153309 03 -5- "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. "Maximum Annual Debt Service" means, at the time of calculation, the maximum amount of Annual Debt Service that will mature or come due in the current year or any future year on the outstanding Parity Bonds. "Municipal Bond Insurance Policy" means the policy issued by the Bond Insurer insuring the payment of the principal of and interest on the Bonds. "Net Revenue of the Waterworks Utility" or "Net Revenue" means the Gross Revenue less Operation and Maintenance Expense. "Operating and Maintenance Expenses" means all reasonable expenses incurred by the City in causing the Waterworks Utility to 0153309 03 -6- 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 1991 Bonds and the State SRF Loan. "Parity Bonds" means the Outstanding Parity Bonds, the Bonds and Future Parity Bonds. "Plan of Additions" means the systems or plans of additions to and betterments and extensions of the Waterworks Utility specified, adopted and ordered to be carried out by Section 2 herein and by Ordinance No. 3040. "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 Bonds and Future Parity Bonds. "Reserve Insurance" means, in lieu of cash and investments, insurance obtained by the City equal to all of the Reserve Requirement for any Parity Bonds then outstanding for which such 0153309 03 -7- insurance is obtained, and for the Bonds means the Debt Service Reserve Surety Bond provided by the Reserve Insurer. "Reserve Insurer" means, for the Bonds, the Municipal Bond Investors Assurance Corporation of Armonk, New York. "Reserve Requirement" means: (1) For the 1991 Bonds, the amount of $230,661.10. (2) For the Bonds, an amount equal to the difference between the Reserve Requirement for the Outstanding Parity Bonds and the least of (a) 10% of the issue price of the Outstanding Parity Bonds and the Bonds, (b) Maximum Annual Debt Service on the Outstanding Parity Bonds and the Bonds and (c) 1.25 times Average Annual Debt Service on the Outstanding Parity Bonds and the Bonds, but in no event to exceed an amount equal to the least of 10% of the issue price of the Bonds, Maximum Annual Debt Service on the Bonds and 1.25 times Average Annual Debt Service on the Bonds. (3) 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 last scheduled maturity for any of those issues shall be used as the denominator. "State PWTF Loan" means the Public Works Trust Fund Loan, as amended, dated May 15, 1989. "State SRF Loan" means the Washington State Water Pollution Control State Revolving Fund (SRF) Loan Agreement L9400013, executed on May 26, 1994. 0153309 03 -8- "Term Bonds" means Bonds maturing in 2014 and 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 Wastewater Facilities Project described in the Supplemental Facility Plan, February 1994, Updated Final, prepared for the City by HDR Engineering, Inc., on file in the office of the City Clerk. 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 0153309 03 -9- replacements and improvements to necessary or desirable to maintain or increase the effectiveness of the service provided by such facilities, other improvements to and extensions of the water system 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 foregoing system or plan 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 foregoing system or plan of additions to and betterments and extensions of the Waterworks Utility of the City is declared to be at least twenty years. The estimated cost of the acquisition, construction, installation and financing of the above-described improvements is declared to be approximately $30,875,700. Such cost shall be paid from the proceeds of the State SRF Loan, future financings and from other money of the City made available therefor, including available proceeds of the Bonds. Section 3. Findings. The City Council finds that (1) all payments required by the 1991 Bonds, the State PWTF Loan and the State SRF Loan have been provided for or made into the bond and loan redemption funds for those outstanding bonds and loans and that no deficiency exists in such funds; and (2) provision is 0153309 03 -10- hereinafter made for the deposit in the Reserve Account of the Bond Fund of the Reserve Requirement for the Bonds. 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, State SRF Loan and 1991 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 interest on the Bonds when due and to pay and redeem all of the Bonds at maturity. 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, State SRF Loan and the 1991 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, State SRF Loan and the 1991 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, State SRF Loan and the 1991 Bonds. 0153309 03 Section 4. Purpose of Bonds. The Bonds are being issued for the purpose of providing a part of the funds to pay the cost of carrying out portions of the Plan of Additions, redeem the 1994 Note, and paying the costs of issuance of the Bonds, including Reserve Insurance. Section 5. Description of Bonds. The Bonds shall be called Water and Sewer Revenue Bonds, 1994, of the City (the "Bonds"); shall be in the aggregate principal amount of $8,705,000; shall be dated November 1, 1994; 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 at the rates set forth below (computed on the basis of a 360-day year of twelve 30-day months), payable on June 1, 1995, and semiannually thereafter on each succeeding December 1 and June 1; and shall bear interest at the rates and mature on June Maturity Years 1 in years and amounts as follows: Principal Interest Amounts Rates 1996 $ 210,000 4.50% 1997 220,000 4.75 1998 230,000 4.95 1999 240,000 5.15 2000 335,000 5.30 2001 355,000 5.45 2002 375,000 5.55 2003 395,000 5.65 2004 420,000 5.70 2005 450,000 5.80 2006 465,000 5.90 2007 495,000 6.00 2008 530,000 6.10 2009 565,000 6.25 ** ** ** 2014 3,420,000 6.40 0153309 03 -12- Section 6. 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 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 fifteen days preceding any principal payment or redemption date. Section 7. 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 15th 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. Section 8. Optional Redemption, Mandatory Redemption and Open Market Purchase of Bonds. Bonds maturing in the years 1996 through 0153309 03 -13- 2004, 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 June 1, 2005, prior to their stated maturity dates at any time on or after June 1, 2004, as a whole or in part within one or more maturities selected by the City (and by lot within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. Bonds maturing in 2014 are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption by lot (in such manner as the Bond Registrar shall determine) at par plus accrued interest on June 1 in years and amounts as follows: Mandatory Mandatory Redemption Redemption Years Amounts 2010 2011 2012 2013 2014 $600,000 635,000 680,000 730,000 775,000 If the City redeems Term Bonds under the optional redemption provisions set forth above or purchase Term Bonds in the open market as set forth below, the par amount of the Term Bonds so redeemed or purchased (irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for those Term Bonds (as allocated by the City) beginning not earlier than 60 days after the date of the optional redemption or purchase, and the City shall promptly notify 0153309 03 -14- the Bond Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered owner) of the same 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 a price not in excess of par plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be cancelled. Section 9. 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 mall, 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 0153309 03 -15- 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., and Standard & Poor's Ratings Group at their offices in New York, New York, or their successors, to the Bond Insurer at its office in Armonk, New York, or its successor, to Seattle-Northwest Securities Corporation, at its principal office in Seattle, Washington, or its successor, 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. Section 10. Failure to Redeem Bonds. If any Bond is not 0 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 redemption fund hereinafter created 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 11. 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. 0153309 03 -16- 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, 1994, 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. 0153309 03 -17- Section 12. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this ordinance and City Ordinance No. 2838 establishing a system of registration for the City's bonds and obligations. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 13. Creation of Bond Fund; Payments into Bond Fund. There has been created and established in the office of the Finance Director a special fund known and designated as the Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991 (herein defined as the "Bond Fund"). The Bond Fund is 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 0153309 03 -18- ULID Assessment collections, and out of the Net Revenue of the Waterworks Utility a fixed amount without regard to any fixed proportion sufficient, 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, on or before each interest or principal and interest payment date, as follows: Into the Principal and Interest Account, 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 bonds payable from the Bond Fund. There shall be deposited into the Reserve Account a policy of Reserve Insurance in the amount of no less than the Reserve Requirement for the Bonds. 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 0153309 03 -19- 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. Any deficiency created in the Reserve Account by reason of any withdrawal shall then be made up from the Net Revenue of the Waterworks Utility first available after making necessary provisions for the required payments into the Principal and Interest Account. The Reserve Insurer shall be reimbursed first, 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 0153309 03 -20- 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 14. Pledge, Lien and Charge for Payment of the Bonds. The Net Revenue of the Waterworks Utility and ULID Assessments are pledged to the payment of the principal of and interest on the Bonds when due and shall constitute a lien and charge upon that Net Revenue of the Waterworks Utility and ULID Assessments prior and superior to any other charges whatsoever, except that the lien and charge upon such Net Revenue and ULID Assessments for the Bonds shall be on a parity with the lien and charge thereon for any outstanding Parity Bonds. Section 15. 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 0153309 03 -21- 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 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 Bonds and Parity Bonds, or for any other lawful purpose. Section 16. 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 Bonds and Future 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. 0153309 03 -22- (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 Expense 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. (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 Expense, 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. (1) 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 0153309 03 -23- 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 17. 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 (1) an amount equal to the Reserve Requirement for those Future Parity Bonds from the Future Parity Bond proceeds, or, (11) Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the Reserve Requirement for those Future Parity Bonds, or (iii) to the extent that the Reserve Requirement is not funded from Future Parity Bond proceeds or Reserve Insurance or Alternate Security at the time of issuance of those Future Parity Bonds, and if the Bond Insurance for the Bonds is no longer in effect, by no later than the third anniversary date from the dated date of the respective issue of Future Parity Bonds from ULID Assessments, if any, levied and first collected for the payment of the principal of and interest on those Future Parity Bonds and, to the extent that ULID Assessments are insufficient, then from the Net Revenue of the Waterworks Utility in six approximately equal semiannual payments, the Reserve Requirement for those Future Parity Bonds. No Reserve Insurance or Alternate Security may be used to satisfy the Reserve Requirement for Future Parity Bonds unless (1) the insurance policy or Alternate Security is non-cancelable and (ii) the insurer or provider of the Alternate Security as of the time of issuance of such insurance or Alternate Security is rated in the highest rating categories by both Moody's Investors Service, Inc., and Standard & Poor's Ratings Group. (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 0153309 03 -24- before their maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to their maturity date from money in the Principal and Interest Account. (e) There shall be on file from a licensed professional engineer experienced in the design, construction and operation of municipal utilities, or from an independent certified public accountant, a certificate showing that in his or her professional opinion the Net Revenue of the Waterworks Utility for any 12 consecutive calendar months out of the immediately preceding 24 calendar months shall be equal to the Coverage Requirement for each year thereafter. 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 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 0153309 03 -25- 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 contained herein 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 18. Preservation of Tax Exemption for Interest on 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 0153309 03 -26- other funds of the City treated as proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross income for federal income tax purposes. The City also covenants that it will, to the extent the arbitrage rebate requirement of Section 148 of the Code is applicable to the Bonds, take all actions necessary to comply (or to be treated as having complied) with that requirement in connection with the Bonds, including the calculation and payment of any penalties that the City has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of any other penalties if required under Section 148 of the Code to prevent interest on the Bonds from being included in gross income for federal income tax purposes. The City certifies that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. Section 19. Bonds Negotiable. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and 62A.8-105. Section 20. Deposit of Bond Proceeds. The proceeds of the issuance and sale of the Bonds, exclusive of the accrued interest thereon, which shall be paid into the Bond Fund, shall be deposited as follows: (1) a sufficient amount of the proceeds to redeem, both principal and interest, the 1994 Note into the Water and Sewer Revenue Bond Anticipation Note Account, 1994; and (2) the balance shall be deposited in a construction account created or to be ,., created in the Water/Sewer Fund and used to pay part of the costs of carrying out the Plan of Additions and to pay the costs of 0153309 03 -27- issuance and sale of the Bonds, including the cost of Reserve Insurance. Until needed to pay the costs of the Plan of Additions, money on deposit in the construction account may be invested temporarily in any legal investment, and the investment earnings retained in the construction account and used for the purposes of that account. Section 21. 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 source 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 (as 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) 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 0153309 03 -28- 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 pending the prior redemption of the defeased Bonds and if such refunding plan also provides that certain money and/or Government Obligations 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. If the principal of and/or interest due on the Bonds is paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy, the Bonds shall not be considered paid by the City, and the covenants, agreements and other obligations of the City to the 0153309 03 -29- registered owners of the Bonds shall continue to exist and the Bond Insurer shall be subrogated to the rights of the registered owners. Section 22. Reserve Insurance. The City Council adopts by reference the terms and conditions relating to the Reserve Insurance contained in the commitment of the Reserve Insurer of the Bonds. Any specific language required by the Reserve Insurer to be adopted by the City Council may be adopted by resolution of the City Council so long as it does not conflict with the terms of the Bonds in this ordinance. Section 23. Bond Insurance. The City Council finds that it is in the City's best interest to purchase, and that a savings will result from purchasing, the Municipal Bond Insurance Policy for the Bonds. The City shall purchase from the Bond Insurer the Municipal Bond Insurance Policy insuring the prompt payment of the principal of and interest on the Bonds and agrees to the conditions for obtaining that policy, including the payment of the premium therefor and the following provisions entitled "Payments under the Policy" required by the Bond Insurer to be included in this ordinance: "A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Obligations, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. "B. If the deficiency is made up in whole or in part prior to or on the payment date, the Paying Agent shall so notify the Insurer or its designee. "C. In addition, if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal 0153309 03 -30- or interest on the Obligation to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. "D. The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Holders of the Obligations as follows: "1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the Policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Holders; and "2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Holders. "E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge 0153309 03 -31- the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligations and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. "F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent hereby agree for the benefit of the Insurer that, "1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations; and "2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (11) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Obligations, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. "G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. 0 "H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. "I. The Insurer shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. "J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Issuer's audited financial statements and Annual Budget. 0153309 03 -32- "Notices" Any notice that is required to be given to a holder of the Obligation or to the Paying Agent pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mall addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance. "Investments" shall mean "Permitted Investments" set forth on Exhibit A, attached hereto." Section 24. Approval of Bond Purchase Contract. Seattle- Northwest Securities Corporation 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, municipal bond counsel of Seattle, Washington, relative to the issuance of the Bonds, printed on each Bond. 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 material issued or used in connection with the Bonds, and bond counsel's opinion shall so state. 0153309 03 -33- The City Council has been provided with copies of a preliminary official statement dated October 12, 1994 (the "Preliminary Official Statement"), prepare in connection with the sale of the Bonds. For the sole purpose of the Purchaser's compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City "deems final" that Preliminary Official Statement as of its date except for the omission of information as to offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, options of redemption, delivery date, ratings and other terms of the Bonds dependent on such matters. 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 for the proper application and use of the proceeds of the sale thereof. Section 25. Temporary Bond. Pending the printing, execution and delivery to the Purchaser of the definitive Bonds, the City may cause to be executed and delivered to the Purchaser a single temporary Bond in the total principal amount of the Bonds. Such temporary Bond shall bear the same date of issuance, interest rates, principal payment dates and terms and covenants as the definitive Bonds, shall be issued as a fully registered Bond in the name of the Purchaser, and shall be in such form as acceptable to the Purchaser. Such temporary Bond shall be exchanged for the definitive Bonds as soon as the same are printed, executed and available for delivery. 0153309 03 -34- eptA*5 City Clerk Section 26. Ratification and Confirmation. All actions taken by or on behalf of the City consistent with the provisions of this ordinance are ratified and confirmed. Section 27. 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, at a regular open public meeting this 17th day of October, 1994, and signed in authentication of its passage this \1 day of October, 1994. ATTEST: 0153309 03 -35- 10-17-94 04 54P1 FROM MIA DAC TO 92064479700 P009/015 MBIA IV LIST OF PERMISSIBLE INVESTMENTS FOR INDENTURED FUNDS A Direct obligations of thc Urute,d States of America (including obligations issued or held in book-entry form on thc books of the Department of the Treasury, and CATS and TORS) or obligations the principal of and interest on which are unconditionally gudrdriteed by the United States of America B Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of Amenea (stripped sccunties are only permitted if they have been stripped by the agency itself) 1 LF S Export-Import flank (Eximbank) Direct obligations or fill ly guaranteed certificates of beneficial ownership 2 Farmers Home Administration (FmHA) Cerii nudes of beneficial ownership 31 l'irads_mweinaggi 4 Federal Housing (FHA) 5 Cteneral_S_eryices Administration Participation certificates 6 Government National Mortgage Association (GNMA or "Crinnie M a e" ONMA - gudranieed mortgage-backed bonds GNMA - guaranteed pass-through obligations (Dot acceptable for certain cash-flow sensitive mum) 7 U.S. Mantnne Administration (niaranteed I itle X1 financing 8 U.S. Department of Hotizing_and_lithannearacuuunt (H I )) PrOiect Notes Local Authonty Bonds New Communities Debentures U S t,uvenuncnt guaranteed debentures U S Public Housing Notes and Bonds - U S government guaranteed public housing notes and bonds C Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit 11 S government agencies (stripped securities are only permitted if they haNe been stripped by the agency itself) 1 FcdcraLliome Loan Bank Sybtc.ii, Senior debt obligations 2 Federal ROMP I oan Uertgage Corporation (FHLMC or "Freddie Mac") 10 -17-04 04 54PM FROM MB1A DAC TO 92064470700 P010/015 AABIA Participation Cernli‘ates Senior debt obligations 3 Fedejal National Mortealic AssuLiatiuu (FNMA or "Fannie Mac") Mortgage-backed secunties and senior dcbt obligations 4 Studrzt-LooalgOrkohngAsstosaaima (SLMA or "Sallie Mae") Senior debt obligations 5 Resolution Funding Corp (REFCORP) obligations 6 Farm Credit System Consolidated systemwide bonds and notes D Money market funds registered undcr the Federal Investment Company Act of 1940, whose shares arc registered under the Federal Secuntics Act of 1933, and having a rating by S&P of AAArn-G, AAAm, or AA111 E Certificates of deposit secured at all times by collateral descnbed in (A) and/or (B) above Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral F Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF Invectrnent A veementc int-hiding Ulf `c, nereptahle tn the Inviiter I-I Commercial paper rated, at the time of purchase, "Pnme - 1" by Moody's and "A-1" or better In S&P I Bonds ul notes issued by any state or inunmpality whicli are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies J Federal funds or bankers acceptances vath a maximum term of one year of any bank which has an unsecured, uninsured and unguarantccd obligation rating of "Prime - 1" or "A3" or better by Moody's and "A-I" or "A" or better by S&P K Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that thc dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the secunties at a specified date Repurchase Agreements must satisfy the following criteria or be approved by the Insurer 1 Renos rnust he hen.veen the municipal _entity and a dealer bank or securities firm a Primary dealers on the Fedcial Restive reporting dealei list which am aged A or boner by Standard nftz Pool's Ratings ()Loup and Moody's Investor Sci vices, tn 10-17-04 04 54PM ,FROM FAA DAC TO 92064470700 P011/015 MB1A b Banks rated ' A" or above by Standard ez Poor's Ratings Group and Moody's Investor Services 2 II.Lc_l.mikenjepsi contract must Include the follOWInZ Secunties which aic acceptable Rll tumbrel - are. (1) Direct U S governments, or (2) Federal agencies backed by the full faith and credit of the U S government (and FNMA & FHLMC) •111 " di& • t •- • • 11, C The collateral must be delivered trt the municipal entity, trustee (it trustee is not supplying the collateral) or third party acting as agent for the trustee (if the usiec Is supplying the collateral) hetoreisimultaneous with payment (perfection by possession of certificated securiti es) ValuanQn of Collateral (1) Tlis_scturitics must be valued weekly. marked-to-market at current market pncc glus accrued interest (2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm uudez the rcpo plus accrued mtcrest If the value of securities held .11 et )..11 aLCrell slips below 104% of thc value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred If, howevei, the securities used as collateral arc FNMA or TIILMC, then the value of collateial must equal 105% 3 Legal epinicin which must he delivered to the municipal entity, Repo meets guidelines under state law for legal investment of public funds Additional Notes 1 Any state adinnusteied pool investment fund in which the issuer is statutonly permitted 01 ietp.i.ucd to uivcst will be deemed a permitted investment 2 Dcbt Service Reserve rd (DSRF) investments should be valued at fair market value Lind milked Le market at least once per year DSRF investments may IKIL have maturities cxtenduig beyond 5 years 2/24/9) in/ 2 -.7 :34 DATE - - 1855 1_ t rY OF AS1 0 WASH1N 011-41, s _P0 BOX 2608 PASCO WASHINGTON 99302 2608 PHONE (509) 582 1500 LEM& ADVEG2711000 INVOICE 4" E:. ..LEGAL N0 S 1 mloc%mlf ACCOUNT NO DESCRIPTION n01 4 70 TIMES INCHES , being duly sworn, deposes and says, I am the Legal Clerk of the Tn-City Herald, a daily newspaper That said newspaper is a legal newspaper and has been approved as a legal newspaper by order of the superior court in the county in which it is published and it is now and has been for more than six months prior to the date of the publication hereinafter referred to, published countinually as a daily newspa- per in Benton County, Washington That the attached is a ‘,true copy of a 18',5 ITV OF FASCO WASHTN ex45-,as was printed in the regular and entire issue of the Tn-City Herald itself and not in a supplement thereof, 1 time(s), commencing on i t)/ 2 : '41-1 , and ending on 0 714. , and that said newspaper was regulary distributed to its subscribers during all of this period Ceutt.6u 466 -07/4 SUBSCRIBED AND SWORN BEFORE ME THIS DAY OF aeltil , Notary public in and for the State of Wash- ington, residing at F COMMISSION EXPIRES Car la Al f ul d ,63104, tnCl <(:to OCT 21 1994 iN NCE DEPT pata. SOLD TO FASFO, r1TY OF LEGALS FO . BOX 29:5 F Aga) WA RIOTOCIE This is an invoice for legal advertising space Please pay from this invoice as no statement will be rendered Please detach at perforation and return with payment AFFEMY117 OF PLEMSCAT1100 COUNTY OF BENTON SS STATE OF WASHINGTON CITY OF PASCO WASHINGTON ORRINANC.k.,-NO ,3054 AN ORDINANCE relatin g to the waterworks utilit y of the City including the sani- tar y sewera g e system and the system of storm or sur face water sewers as a part thereof adoptin g a system or plan of additions to and betterments and exten- sions of the waterworks utility of the Cit y providin g for the issuance and sale of $8 705 000 par value of Water and Sewer Revenue Bonds 1994 for the pur poses of obtaining a part of the funds with which to carry out the system or plan adopted b y Ordinance No 3040 and if proceeds are available to carr y out portions of the system or plan adopted b y this ordi nance paying the cost of redeemin g a water and sewer revenue bond antic' pation note issued on Sep- tember 8 1994 and pa y in g the cost of issuing and sell in g the bonds including re serve insurance fixin g the date form denomination maturities interest rates terms and covenants of the bonds providin g for bond insurance providing for the sale and delivery of the bonds to Seattle Northwest Securities Corporation of Seattle Washington and ratif y ing and confirmin g ac bons heretofore taken b y the City Council in carr y in g out such s ystem or plan A complete copy of Ord nance No 3054 is available at the Cit y Clerks Office of the Cit y of Pasco 412 W Clark St Pasco WA 99301 For more infor mation call 545 3402 -s Catherine D Seaman Deputy Cit y ClaK k #1855 e 10/23/9$ -And11111°111 4101e, 41,4C1,T0Y4OF i l l o mi i I II I 1 1 11 1 11 11 11 10 0100 n". • FINANCE DEPARTMENT (509) 545-3401 / Scan 726-3101 / Fax (509) 545-3403 P 0 BOX 293, 412 WEST CLARK, PASCO, WASHING -1 ON 99'301 October 17, 1994 Tri-City Herald P0 Box 2608 Pasco, Wa 99302 Dear Kathy Please publish the attached Ordinance(s) No 3053-3055 on the following date October , 1994 Please send two (2) Affidavits of Publication for each Thank you, Catherine D Seaman Deputy City Clerk 545-3402 cds * No attachments or maps included N cy\-R; Kck\-k i Tc C°P PL• A • fa* < TRANSACTION REPORT > 10-18-1994(TUE) 08 37 L i1JSN1 I -I - NO DATE TIME DESTINATION STATION PG DURATION MODE RESULT 4903 10-18 08 34 15095821453 7 0 0 02 44 NORM E OK 7 0 0 02' 44