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Home My WebLink About2020.05.26 Council Remote Workshop Packet Remote Workshop Meeting AGENDA PASCO CITY COUNCIL 7:15 p.m. May 26, 2020 Page 1. REMOTE WORKSHOP INSTRUCTIONS: (a) To attend the Pasco City Council Workshop in "listen only" mode register at GoToWebinar. After registering, you will receive a confirmation email containing information about joining the webinar. Call-in information for "listen-only" mode is: (213) 929-4232 Access Code: 554-263-915 2. CALL TO ORDER: 3. ROLL CALL: 4. VERBAL REPORTS FROM COUNCILMEMBERS: 5. ITEMS FOR DISCUSSION: 3 - 5 (a) Interview for Historic Preservation Commission, Position No. 5 Council to conduct a brief interview with Devi Tate, incumbent on the Historic Preservation Commission. 6 - 57 (b) Utility Revenue Bond Sale Update 58 - 88 (c) Professional Services Agreement with WSP, Inc. for Construction Management Services on Lewis Street Overpass Project 6. MISCELLANEOUS COUNCIL DISCUSSION: 7. EXECUTIVE SESSION: 8. ADJOURNMENT: (a) Page 1 of 88 Remote Workshop Meeting May 26, 2020 REMINDERS: • Thursday, May 28, 4:00 PM: TRIDEC Board Meeting – Virtual Meeting via ZOOM (COUNCILMEMBER DAVID MILNE, Rep.; COUNCILMEMBER CRAIG MALONEY. Alt. This meeting is broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco-wa.gov/psctvlive. Audio equipment available for the hearing impaired; contact the Clerk for assistance. Servicio de intérprete puede estar disponible con aviso. Por favor avisa la Secretaria Municipal dos días antes para garantizar la disponibilidad. (Spanish language interpreter service may be provided upon request. Please provide two business day's notice to the City Clerk to ensure availability.) Page 2 of 88 AGENDA REPORT FOR: City Council May 19, 2020 TO: Dave Zabell, City Manager Zach Ratkai, Administrative & Community Services Director Remote Workshop Meeting: 5/26/20 FROM: Debby Barham, City Clerk Administrative & Community Services SUBJECT: Interview for Historic Preservation Commission, Position No. 5 I. REFERENCE(S): Resolution No. 3388 - Appointments to City Boards and Commissions Application (1) (Council only) II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Council to conduct a brief interview with Devi Tate, incumbent on the Historic Preservation Commission. III. FISCAL IMPACT: None IV. HISTORY AND FACTS BRIEF: The City Council established the City of Pasco Historic Preservation Commission through Ordinance No. 3785, in August of 2006. The major responsibilities of the Historic Preservation Commission are to identify and actively encourage the conservation of Pasco's historic resources by reviewing National Register properties applying for Special Tax Valuation; to raise community awareness of Pasco's history and historic resources; and to serve as the City of Pasco's primary resource in matters of history, historic planning, and preservation. During its 1985 session, the Washington State Legislature passed a law that allows a special tax valuation for qualifying historic properties within the state. The primary benefit of the law is that during the 10-year special valuation period, property taxes will not reflect substantial improvements made to the property. Page 3 of 88 Any proposed changes to properties benefiting from the special tax valuation, or designated as historic landmarks or districts on the Pasco Register of Historic Places requires review by the City of Pasco Historic Preservation Commission and the issuance of a Certificate of Appropriateness. Position No. 5 term expired on August 1, 2019, which is currently held by Devi Tate. V. DISCUSSION: A Council screening committee reviewed Ms. Tate's application and selected her to be interviewed by the full Council: Ms. Tate has served on the Historic Preservation Commission for two (2) consecutive terms and, per Resolution No. 3388, is required to be interviewed at this time. Due to the onset of the COVID-19 pandemic, the interview/appointment process for the City's Boards and Commission was placed on hold; however it is proposed that since the Council is interviewing only one candidate for this position and the candidates is the incumbent, the interview could be conducted virtually. Following the Council interview, a reappointment may be made by the Mayor, subject to confirmation by the Council at the June 1, 2020 meeting. Page 4 of 88 RESOLUTION NO. ` A RESOLUTION Providing a Process for Appointments to City Boards and Commissions. WHEREAS, the City of Pasco maintains several citizen advisory boards to assist the delivery of municipal services as well as to advise the City Council in making various policy decisions; and WHEREAS, the appointment process prescribed by the Pasco Municipal Code requires the Mayor to appoint citizens to vacancies on such boards, subject to confirmation of the City Council; and WHEREAS, the Mayor and City Council desire to establish an appointment process which is more collaborative yet efficient for both the applicants and City Council alike;NOW,THEREFORE, THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON DOES RESOLVES AS FOLLOWS: Section 1: Applications for city boards and commissions shall be solicited annually by the City Manager on behalf of the City Council. Section 2: All applications received by the City Manager shall be reviewed by a City Council committee appointed by the Mayor; such committee, to be known as the "Appointment Screening Committee," shall be ad-hoc, appointed annually, and consist of three members, including the Mayor. The Appointment Screening Committee shall select those applicants it deems best suited for the respective board/commission but not more than three applicants for each vacancy to be filled. The Appointment Screening Committee shall consider the following factors in making their selections for further consideration: a) Geographic representation; b) Gender representation; c) Ethnic representation; d) Familial and financial relationships of board members Section 3: Those applicants selected by the Appointment Screening Committee shall be interviewed by the City Council during a public meeting; provided, however, the Screening Committee may recommend reappointment of an incumbent applicant without interview by the City Council if the incumbent has •-- • - - -•served not more than two consecutive• terms since the last interview. At a City Council meeting following such interview, an interviewed candidate shall be selected by the Mayor for appointment to each vacancy. Any candidate selected by the Mayor shall be subject to confirmation vote of the City Council; a majority vote of the quorum present at such meeting shall be required to confirm the Mayor's appointments. Section 4: Any prior resolutions of the City Council in conflict with the provisions of this resolution shall be superseded by this resolution. PAS D by the City Council ity of Pasco at its regular meeting this 16th day of April, 2012. Matt Watkins, Mayor T T: f APP'S AS TO FORM: Debra Clark,City Clerk Leland B. Kerr, City Attorney Page 5 of 88 AGENDA REPORT FOR: City Council May 18, 2020 TO: Dave Zabell, City Manager Remote Workshop Meeting: 5/26/20 FROM: Richa Sigdel, Finance Director Finance SUBJECT: Utility Revenue Bond Sale Update I. REFERENCE(S): S&P Rating Report Bond Ordinance Bond Project List II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: None III. FISCAL IMPACT: Bond Proceeds: Refunded 2009 and 2010 Utility Bond (refinanced) $ 7,135,000 2020 Utility Bond $16,415,000 Total: $23,550,000 IV. HISTORY AND FACTS BRIEF: On April 6, 2020, Council approved the issuance of utility bonds with the condition for the aggregate principal amount to not exceed $25,.5 million, and the true interest rate to not exceed 6.25%, amongst other parameters. $16.4 million of the proceeds are scheduled to be used for capital projects in Process Water Reuse Facility (Bond Project list attached). $7.1 million of the proceed was used to refund/refinance 2009 and 2010 bonds. While the aforementioned interest rate limit proposed and approved by the Council was moderate based on historical standards, it was high in comparison to the City's more recent experiences in the bond market. The bond markets experienced significant volatility during March and April due to global, national and regional economic Page 6 of 88 uncertainties created as the result of COVID-19 pandemic. S&P spent considerable effort evaluating anticipated reductions in tax and utility revenues due to COVID-19 as these impacts can serve to reduce creditworthiness. S&P Global Inc. rating agency reviewed all aspects of the City's economic outlook for the 2020 utility bond issuance. This included review and analysis of the City's current finances, stress testing the current and forecasted financials, debt capacity available, local economic outlook, delinquencies in accounts, and most importantly the City's commitment to making necessary improvements and maintenance to the system, and to fund those improvements through rate increases where necessary. This highlights to the bondholders that the City will upkeep its assets, continue to grow, and hence be able to meet its debt obligations. V. DISCUSSION: During these uncertain times, staff decided to delay the issuance of debt by two weeks from the previously planned schedule. Major decisions from Congress and Federal Reserve had not been finalized/understood at the time which was adding to market instability. The City, with help of DA Davidson (underwriters) and NW Municipal Advisors, was able to sell the bonds and procure interest rates lower than first anticipated (before COVID-19). Furthermore, in this unprecedented economic time when rating agencies are performing across the board rating reviews and downgrading municipal entities, the City was able to maintain its AA-/Stable rating. S&P rating report (attached) goes further into the agency's view of the City's utility system. The subject issuance also refunds eligible bonds should market factors be in our favor. Through this issuance, the City was able to save $1.3 million net present value in debt service costs. This is a direct saving to the utility, allowing for other critical maintenance and capital projects to commence. Interest rates Below are interest rates procured by City for this bond issuance. As a way of comparison, the 2017 Utility bond issuance interest rate was 3.45%. Refunded 2009 and 2010 Bond (refinanced) 1.45% 2020 Utility Bond 3.26% Page 7 of 88 Summary: Pasco, Washington; Water/Sewer Primary Credit Analyst: Alexandra Rozgonyi, Centennial (1) 303-721-4824; alexandra.rozgonyi@spglobal.com Secondary Contact: Timothy P Meernik, Centennial + 1 (303) 721 4786; timothy.meernik@spglobal.com Table Of Contents Rating Action Stable Outlook Credit Opinion WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 30, 2020 1 Page 8 of 88 Summary: Pasco, Washington; Water/Sewer Credit Profile US$16.435 mil wtr and swr rfdg rev bnds ser 2020B due 12/01/2050 Long Term Rating AA-/Stable New US$7.365 mil wtr and swr rfdg rev bnds ser 2020A due 12/01/2029 Long Term Rating AA-/Stable New Pasco wtr & swr imp & rfdg rev bnds Long Term Rating AA-/Stable Affirmed Rating Action S&P Global Ratings assigned its 'AA-' long-term rating to Pasco, Wash.'s series 2020A and 2020B water and sewer refunding and improvement revenue bonds. At the same time, we affirmed our 'AA-' long-term rating and underlying rating (SPUR) on the city's existing water and sewer revenue bonds. The outlook is stable. The estimated par amount for the series 2020A bonds is about $7.36 million, and the funds will be used to refund all of the city's outstanding water and sewer revenue bonds, series 2009, and a portion of the city's outstanding water and sewer refunding revenue bonds, series 2010A. The 2020B bonds will have an estimated par amount of $16.43 million and will be used to pay the costs of carrying out improvement and betterments related to the city's Process Water Reuse Facility (PWRF). As of March 1, 2020, the waterworks utility had about $36 million outstanding obligations. Of this amount, about 20% represents subordinate loan obligations. We consider the bond provisions credit neutral. Combined net revenues of Pasco's waterworks utility system (water, sewer, stormwater, and irrigation) secure the bonds. Also securing the bonds are utility local improvement district assessments, which management uses to pay parity assessment bonds, which are also backed by a lien on system revenues. Key bond provisions include an additional bonds test and a rate covenant that permits additional debt if net revenues of the system (excluding assessments) cover nonassessment debt by 1.25x. In addition, assessment revenues plus surplus net system revenues must cover assessment debt by at least 1.0x. The city must also maintain a debt reserve at the least of 10% of issue price, maximum annual debt service, or 1.25x average annual debt service on the outstanding parity bonds. After the series 2009, 2010A, 2013, and 2013T bonds are no longer outstanding, the bonds will no longer require a reserve account. Credit overview The ratings reflect our view of the waterworks utility's very strong enterprise and financial risk profile scores. The city of Pasco, located in southeastern Washington, serves a primarily residential customer base with average annual customer growth of about 3% during the past four years. The local economy is based on agriculture and related food processing. The city has strong income indicators and affordable utility system rates. The current water supply, water treatment, wastewater treatment capacity, and food waste processing treatment capacity are sufficient to meet current WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 30, 2020 2 Page 9 of 88 demand and flows; however, the city needs to expand its wastewater treatment capacity and PWRF capacity to continue to meet growth and future environmental regulations. In our opinion, the utility's financial profile has been very strong during the past three fiscal years due to annual water, sewer, and stormwater rate increases to support rising costs and capital needs. The waterworks utility's capital plan is moderate at about $135 million during the next five years, and management expects to fund about 80% of it from a mixture of debt and loans, which could put pressure on financial metrics if revenues do not continue to rise as annual debt payments grow. Beyond a planned $15 million issuance of new-money debt in 2022, the timing of future debt is unknown. Our analysis reflects the future debt and capital needs. In our opinion, given the current economic conditions, we believe the waterworks utility's revenues may decline somewhat for fiscal 2020 due to the effects of the COVID-19 pandemic, specifically due to reduced consumption and receivables. As of unaudited fiscal 2019, the waterworks utility has over 418 days of cash on hand, which we believe provides significant cushion against short-term disruptions. While we continue to monitor events related to COVID-19, we do not currently expect it to materially affect the waterworks utility's ability to maintain budgetary balance and pay debt service costs given the significant coverage and liquidity position. For more information, see our articles "COVID-19's Potential Effects In U.S. Public Finance Vary By Sector" (published March 5, 2020, on RatingsDirect), "All U.S. Public Finance Sector Outlooks Are Now Negative" (published April 1, 2020), and "An Already Historic U.S. Downturn Now Looks Even Worse" (published April 16, 2020). The enterprise risk profile reflects our view of the waterworks utility's: • Customer base located in southeastern Washington that participates in the broad and diverse Kennewick-Richland metropolitan area economy; • Affordable service rates in the context of the service area's good income levels; • Very low industry risk as a monopolistic service provider of an essential public utility; and • Good operational management practices that are focused on the waterworks utility's sufficient water supply and adequate treatment capacity to meet future demand. The financial risk profile reflects our view of the waterworks utility's: • Extremely strong all-in coverage at above 2.0x for the past three fiscal years (2017-2019); • Very strong liquidity, with about $17 million of cash for unaudited fiscal 2019, equivalent to about 418 days of operating expenses; • Sizable capital plan, with a debt-to-capitalization ratio of about 22% that we expect to increase given the primarily debt-funded capital improvement plan; and • Good financial management practices and policies. The stable outlook reflects our expectation that as the waterworks utility issues additional debt, management will raise rates in a timely manner to sustain sufficient net revenues to maintain what we consider at least very strong all-in coverage at above 1.4x and very strong liquidity. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 30, 2020 3 Summary: Pasco, Washington; Water/Sewer Page 10 of 88 Environmental, social and governance (ESG) factors Overall, we believe that management has mitigated most of the waterworks utility system's ESG-related risk through compliance with all relevant environmental regulations, regular rate-setting, and well-defined operational and financial policies. Therefore, we see most of the issuer's ESG risk factors to be on par with those of other rated utilities. However, for now, increased pressures on the service area economy due to higher public health and safety risks related to COVID-19 will increase the system's overall social risk factors. Stable Outlook Downside scenario Our outlook is generally for two years, but if we see significant downside risks due to the COVID-19 pandemic and the U.S. recession over the next six to 12 months we could take a rating action. If the city fails to continue raising rates and does not take other measures to maintain its strong financial performance while supporting its capital improvement plan (CIP) needs, resulting in a material decline in all-in coverage or liquidity, we could lower the ratings. Upside scenario We remain uncertain as to the final magnitude and duration of the pandemic-driven global recession and the impacts specific to any individual utility's operations and financial profile, limiting any upside for the rating or outlook until credit conditions demonstrate sustained improvement and stability. Nevertheless, we could raise the ratings if the utility can sustain strong financial metrics during the implementation of its CIP. Credit Opinion Enterprise risk The city is located in southeastern Washington in Franklin County at the confluence of the Columbia and the Yakima rivers. The city is approximately 200 miles southeast of Seattle, 150 miles southwest of Spokane, and 200 miles northeast of Portland, Ore. Pasco is one of three cities that comprise the urban area known as the Tri-Cities, the others being Kennewick and Richland in neighboring Benton County. The local economy is in agriculture and related food processing and transportation. The federal government's Hanford Nuclear Reservation, which lies along the Columbia River, is a major employer in the region; Battelle/Pacific Northwest National Laboratory employed about 4,500 employees in 2019. In our opinion, the city's median household effective buying income (MHHEBI) was good, at 108% of the national level, in 2018; the actual nominal value in 2018 was $54,631. The city's unemployment rate has historically been above the state and national levels at 6.4% for 2019, compared to the state's rate of 4.3% and the national rate of 3.7%. We expect unemployment to rise due to the global pandemic. The waterworks utility's customer base is primarily residential and diverse. The city serves about 21,179 water customers and 18,212 sewer customers, approximately 90% of which are single-family and multifamily residential customers. Between 2016 and 2019, the number of residential water and sewer customers increased by between 3% and 4% annually, respectively. The leading customers including water, sewer, and process water reuse systems customers, are moderately concentrated, in our view, with the 10 largest customers of each system providing about 21% of combined operating revenue in fiscal 2019. The waterworks utility's largest customer as a percentage of WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 30, 2020 4 Summary: Pasco, Washington; Water/Sewer Page 11 of 88 operating revenue is Pasco Processing LLC (formerly known as J.R. Simplot Food Group), which is a frozen vegetable processing plant. Pasco Processing is the largest water utility customer as well as the largest entity operating at the process water reuse facility. We view the waterworks utility's market position as good based on its affordable service rates relative to the service area's good income levels. The city charges a monthly combined residential bill of approximately $80.71 based on the city's average residential water usage of 12 hundred cubic feet (HCF) and our benchmark of 8 HCF for wastewater. This bill includes water, sewer, and storm water service fees. The monthly combined residential bill is equivalent to about 1.7% of MHHEBI, which we view as affordable. We recognize that these rates may be less affordable for a material portion of the customer base, given the county's 13% poverty rate. The last formal rate study by an external consultant was in 2015 for water and sewer, and in 2017 for stormwater and irrigation. Council approved rates through 2021. The most recent water and sewer rate increases were in 2020 by 3% (water) and 4% (sewer), and the same percentages were approved for 2021. The city increased stormwater rates by 14% in 2018 and by 5% annually for 2019 through 2022. management plans to present another multiyear rate increase to council, which would approve the next phase of multiyear rate increases. The system's water supply comes from the Columbia River, and the city's current water rights are sufficient for the next three to five years. Management has plans to acquire additional water rights to provide for long-term demand and look into aquifer storage and recovery wells. The water system currently has adequate treatment capacity to meet future growth with a total current capacity of 32.8 million gallons per day (mgd) in two treatment plants with an average and peak demand of 20% and 81% of capacity. We understand that the water system plans to upgrade all of its meters during the next five years as a part of the system's CIP. The system's water loss (nonrevenue) water was low, at less than 5% in 2019. Furthermore, the water system is in compliance with all environmental regulations. The sewer system has enough capacity to meet current demand, but the treatment plant will need to be expanded to sustain customer growth. The plant has a current average and peak flow of 4.09 mgd and 4.85 mgd, which are about 60% and 70% of average and peak flow. Furthermore, if growth continues, the wastewater treatment plant will need to be expanded from 7 mgd to its 12 mgd expandable capacity to serve a population between 95,000 and 100,000 during the next 15 to 20 years. The wastewater system is in compliance with all environmental regulations and received the Perfect Compliance Award for 2019 from the Department of Ecology for the seventh year in a row. The stormwater system is in compliance with all environmental regulations, and the majority is discharged into the soil with the remainder sent to the Columbia River. The system's PWRF reuses wastewater from the food processors for irrigation purposes. The facility services four food processing plants wherein instead of treating the food waste through the sewer system, it is pumped and sprayed onto farmland crop circles as the means of disposal. While there are no long-term contracts in place for the facility, we believe that its customers have no alternative to the facility and are comforted that each of the processors are billed and pay their share of the overall operating costs and debt service related to the facility based on their proportionate flows through the facility. Based on our operational management assessment (OMA), we view the waterworks utility to be a '2' on a scale of 1-6, with '1' being the strongest. This indicates, in our view, that operational and organizational goals are generally well WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 30, 2020 5 Summary: Pasco, Washington; Water/Sewer Page 12 of 88 aligned, even if some challenges exist. An OMA of good reflects the system's integrity, which management continues to assess as growth continues in the service area. In addition, it reflects public outreach and transparency in regard to conservation practices, staff development, and growth. Furthermore, the assessment of good reflects rate increases implemented and pre-approved as needed and management's anticipation to update and perform rate studies for all of the systems. Consistent with "Methodology: Industry Risk," published Nov. 19, 2013, we consider industry risk for the system to be very low, the most favorable assessment possible on a six-point scale, with '1' being the strongest. Financial risk The waterworks utility's all-in coverage metrics have been extremely strong during the past three fiscal years, and we believe that even with a decline in revenues related to COVID-19 and the global pandemic, management will be able to sustain at least very strong all-in coverage metrics. Based on the city's audited financial statements, we calculate the utility's all-in coverage metrics (including connection fee revenue) for fiscal years 2016 through 2018 of above 2.0x, which we consider extremely strong. Based on S&P Global Ratings' stress test of management-provided projections, which assumes a 10% annual decline in operating revenue, a 50% haircut to management's projected one-time growth-related fees, and $15 million of new-money debt service starting in fiscal 2023, we expect coverage to stay above 1.7x, a figure we consider extremely strong. However, we would expect a decline in all-in coverage below 1.7x if growth substantially declines and revenues do not increase enough to support future debt. We understand the management team plans to potentially fund about 80% of its $135 million five-year capital plan with debt and loan obligations, which could pressure all-in coverage metrics. The waterworks utility's liquidity position has grown during the past five fiscal years, and we anticipate that it will likely remain very strong. Unrestricted cash for fiscal 2018 totaled $19.7 million, equivalent to 425 days of operating expenses, which we consider very strong. Unrestricted cash is up from about $7 million in 2015 as a result of annual water and sewer rate increases of between 3.0% and 9.8% annually during the past five years. We understand that management has a target of maintaining at least 55 days of operating expenses and that management does not expect to materially draw down liquidity for future capital improvements, but rather to fund a portion of the CIP with cash on hand. Based on management's six-year CIP, we understand that management expects to fund about $4.8 million annually on average from unrestricted cash, and given our projections, we expect cash to stay above 418 days during the next five years. The utility's debt-to-capitalization ratio is about 22%, and we expect this ratio to increase given up to about 80% of the capital plan is projected to be debt funded. The CIP is large and totals about $135 million between fiscals 2020 and 2025. The largest components of the CIP are the wastewater treatment plant expansion and improvements to the PWRF. These projects are growth related and would be postponed if growth does not continue. Based on management's financial forecasts, we expect that about 20% of the CIP will be funded through rate revenue, grants, and utility local improvement district funds with the remainder funded through current and future debt. Based on our forecast, if the full CIP is implemented during the forecast period, we believe additional rate increases will be necessary to support management's planned borrowings. Based on our financial management assessment (FMA), we view the waterworks utility to be a '2' on a scale of 1-6, WWW.STANDARDANDPOORS.COM/RATINGSDIRECT APRIL 30, 2020 6 Summary: Pasco, Washington; Water/Sewer Page 13 of 88 with '1' being the strongest. An FMA of good indicates that management has financial policies and practices that are transparent in nature but that some policies may be more informal and follow state guidelines. Management updates long-term capital planning on an annual basis and updates the water and sewer system rate study projections. Council reviews the waterworks utility's revenue and expenses quarterly, and the system has a liquidity target and complies with Generally Accepted Accounting Principles-based accounting. Ratings Detail (As Of April 30, 2020) Pasco wtr & swr (ASSURED) Unenhanced Rating AA-(SPUR)/Stable Affirmed Many issues are enhanced by bond insurance. Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. 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Page 15 of 88 CITY OF PASCO, WASHINGTON ORDINANCE NO. 4487 AN ORDINANCE relating to the waterworks utility of the City; specifying, adopting and ordering the carrying out of a system or plan of additions to and betterments and extensions of the waterworks utility; providing for the issuance, sale and delivery of not to exceed $25,500,000 aggregate principal amount of water and sewer improvement and refunding revenue bonds to provide funds to (a) pay or reimburse all or a portion of the costs of carrying out the plan of additions, (b) refund and redeem outstanding water and sewer revenue bonds ofthe City, ( c) make a deposit to the debt service reserve account, as needed, and ( d) pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; and providing for related matters. FG:53545682.4 Passed: April 6, 2020 This document prepared by: Foster Garvey P.C. 1111 Third Avenue, Suite 3000 Seattle, Washington 98101 206) 447-4400 Page 16 of 88 Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. Section 25. Section 26 . Section 27. Section 28. Section 29. Exhibit A Exhibit B Exhibit C TABLE OF CONTENTS* Page Definitions ................................................................................................................ 1 Findings and Determinations ................................................................................... 9 Plan of Additions ................................................................................................... 10 Authorization of the Bonds .................................................................................... 11 Appointment of Designated Representative; Description of the Bonds ................ 11 Bond Registrar; Registration and Transfer ofBonds ............................................ .12 Form and Execution of Bonds ............................................................................... 13 Payinent of Bonds .................................................................................................. 13 Redemption Provisions and Purchase of Bonds .................................................... 13 Failure to Pay Bonds .............................................................................................. 15 Bond Fund; Payinents into Bond Fund .................................................................. 15 Rate Stabilization Account .................................................................................... 16 Pledge, Lien and Charge for Payinent of the Bonds .............................................. 17 Flow of Funds ........................................................................................................ 17 Covenants ............................................................................................................... 17 Provisions for Future Parity Bonds ........................................................................ 19 Separate Utility Systems ........................................................................................ 19 Contract Resource Obligations .............................................................................. 19 Tax Covenants ....................................................................................................... 20 Refunding or Defeasance of Bonds ....................................................................... 21 Deposit of Bond Proceeds; Creation of Construction Accounts ............................ 22 Use of Refunding Proceeds; the Refunding Plan ................................................... 22 Amendatory and Supplemental Ordinances ........................................................... 24 Defaults and Remedies .......................................................................................... 26 Sale and Delivery of the Bonds ............................................................................. 29 Official Statement; Continuing Disclosure ........................................................... .30 General Authorization and Ratification ................................................................ .30 Severability ............................................................................................................ 31 Effective Date of Ordinance .................................................................................. 31 Parameters for Final Terms Parity Conditions Form of Undertaking to Provide Continuing Disclosure The cover page, table of contents and section headings of this ordinance are for convenience of reference only, and shall not be used to resolve any question of inte,pretation of this ordinance. 1- Page 17 of 88 CITY OF PASCO, WASHINGTON ORDINANCE NO. 4487 AN ORDINANCE relating to the waterworks utility of the City; specifying, adopting and ordering the carrying out of a system or plan of additions to and betterments and extensions of the waterworks utility; providing for the issuance, sale and delivery of not to exceed $25,500,000 aggregate principal amount of water and sewer improvement and refunding revenue bonds to provide funds to (a) pay or reimburse all or a portion of the costs of carrying out the plan of additions, (b) refund and redeem outstanding water and sewer revenue bonds of the City, ( c) make a deposit to the debt service reserve account, as needed, and ( d) pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; and providing for related matters. THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN as follows: Section 1. Definitions. As used in this ordinance, the following capitalized terms have the following meanings: a) "2009 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2009, of the City issued pursuant to Ordinance No. 3915. b) "2010A Bonds" means the outstanding Water and Sewer Improvement and Refunding Revenue Bonds, 2010A, of the City issued pursuant to Ordinance No. 3962. c) "2010T Bonds" means the outstanding Water and Sewer Refunding Revenue Bonds, 2010T (Taxable), of the City issued pursuant to Ordinance No. 3962. d) "2013A Bonds" means the outstanding Water and Sewer Revenue Bonds, 2013A, of the City issued pursuant to Ordinance No. 4126. e) "2013T Bonds" means the outstanding Water and Sewer Revenue Bonds, 2013T Taxable), of the City issued pursuant to Ordinance No. 4126. t) "2015 Bonds" means the outstanding Water and Sewer Improvement and Refunding Revenue Bonds, 2015, of the City issued pursuant to Ordinance No. 4254. g) "2017 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2017, of the City issued pursuant to Ordinance No. 4365. h) "Acquired Obligations" means the United States Treasury Certificates of Indebtedness, Notes, and Bonds-State and Local Government Series and/or other Government Obligations, as identified in the Refunding Trust Agreement, purchased to carry out the Refunding Plan. 1- Page 18 of 88 i) "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 ofthe 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 S&P Global. When the 2009 Bonds, 2010A Bonds, 2013A Bonds and 2013T Bonds are no longer outstanding "Alternate Security" shall mean any bond insurance, collateral, security, letter of credit, guaranty, surety bond or similar credit enhancement device providing for or securing the payment ofall or part ofthe principal ofand interest on any specified Parity Bonds, issued by an institution which has been assigned a credit rating at the time of issuance ofthe applicable Parity Bonds, respectively, secured by such Alternate Security in one of the two highest rating categories by either Moody's Investors Service, Inc. or S&P Global Ratings. i) "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. k) · "Assessment Bonds" means, at the time of determination, Parity Bonds then outstanding equal to the sum of the nondelinquent unpaid principal amount ofULID 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. 1) "Authorized Denomination" means $5,000 or any integral multiple thereof within a maturity. m) "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. n) "Beneficial Owner" means, with respect to a Bond, the owner of any beneficial interest in that Bond. o) "Bond" means each Project Bond and each Refunding Bond issued pursuant to and for the purposes provided in this ordinance. p) "Bond Counsel'' means the firm of Foster Garvey P.C., its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. q) "Bond Fund'' means the Water and Sewer Revenue and Refunding Bond Redemption Fund, 1991, of the City created and established by Ordinance No. 2846 for the payment of the principal of and interest on the Parity Bonds. r) "Bond Purchase Contract" means an offer to purchase a Series of Bonds, setting forth certain terms and conditions of the issuance, sale and delivery of those Bonds, which offer is 2- Page 19 of 88 authorized to be accepted by the Designated Representative on behalf of the City, if consistent with this ordinance. s) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of each Bond. t) "Bond Registrar" means the Fiscal Agent, or any successor bond registrar selected by the City. u) "City" means the City of Pasco, Washington, a municipal corporation duly organized and existing under the laws of the State. v) "City Clede' means the City Clerk of the City or the successor to the functions of that officer. w) "City Contribution" means legally available money of the City, in addition to proceeds of the Bonds, necessary or advisable to carry out the Refunding Plan, as determined by the Designated Representative. x) "City Councif' means the legislative authority of the City, as duly and regularly constituted from time to time. y) "City Manager" means the City's City Manager or such other officer of the City who succeeds to substantially all of the responsibilities of that office. z) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. aa) "Contract Resource Obligation" means an obligation of the City designated as a Contract Resource Obligation in accordance with Section 18 to make payments for water supply, sewer service, water or wastewater transmission, treatment or other utility service or commodity to another person or entity (including without limitation any Separate Utility System). bb) "Construction Accounts" means such accounts created in the Water/Sewer Fund as the Finance Director shall designate for the purpose of paying the costs of the Plan of Additions and the costs of issuance of the Bonds. cc) "Coverage Requirement'' in any year means an amount of Net Revenue, 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 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. When the Outstanding Parity Bonds are no longer outstanding "Coverage Requirement" shall mean an amount of Net Revenue, together with the ULID Assessments collected in that year, equal to at least Annual Debt Service on all Assessment Bonds.for that year plus an amount ofthe Net Revenue not used to calculate the Coverage Requirement on Assessment Bonds equal to at least 1.25 times Annual Debt Service on all bonds payable from the Bond Fund that are not Assessment Bonds in that year. 3- Page 20 of 88 dd) "DTC' means The Depository Trust Company, New York, New York, or its nommee. ee) "Designated Representative" means the officer of the City appointed in Section 5 of this ordinance to serve as the City's designated representative in accordance with RCW 39.46.040(2). fl) "Final Terms" means the terms and conditions for the sale of a Series of Bonds, including the amount, date or dates, denominations, interest rate or rates ( or mechanism for determining interest rate or rates), payment dates, final maturity, redemption rights, price, and other terms or covenants, including minimum savings for refunding bonds (if the refunding bonds are issued for savings purposes). gg) "Finance Director" means the City's Finance Director or such other officer of the City who succeeds to substantially all of the responsibilities of that office. hh) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State from time to time. ii) "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 the Parity Bond Ordinances, the payment of the principal of and interest on which constitutes a lien and charge upon the Net Revenue and ULID Assessments on a parity with the lien and charge upon such Net Revenue and ULID Assessments for the Outstanding Parity Bonds and the Bonds, but shall not include variable rate obligations. jj) "Government Obligations" has the meaning given in RCW 39.53.010, as now in effect or as may hereafter be amended. kk) "Gross Revenue" means all of the earnings and revenues received by the City from the maintenance and operation of the Waterworks Utility, all earnings from the investment of money on deposit in the Bond Fund and, when the Outstanding Parity Bonds are no longer outstanding, withdrawals from the Rate Stabilization Account, but not including: (i) ULID Assessments, (ii) government grants, (iii) proceeds from the sale of Waterworks Utility property, iv) City taxes collected by or through the Waterworks Utility, (v) principal proceeds of bonds, vi) 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 or, when the Outstanding Parity Bonds are no longer outstanding, (vii) deposits to the Rate Stabilization Account or (viii) revenues ofa Separate Utility System. 11) "Issue Date" means, with respect to a Bond, the date of initial issuance and delivery of that Bond to the Purchaser in exchange for the purchase price of that Bond. mm) "Letter of Representations" means the Blanket Issuer Letter of Representations between the City and OTC dated August 31, 1998, as it may be amended from time to time, and 4- Page 21 of 88 any successor or substitute letter relating to the operational procedures of the Securities Depository. nn) "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. oo) "Mayor" means the Mayor of the City or the successor to the functions of that office. pp) "MSRB" means the Municipal Securities Rulemaking Board. qq) "Net Revenue" means the Gross Revenue less Operating and Maintenance Expenses. rr) "Official Statement" means an offering document, disclosure document, private placement memorandum or substantially similar disclosure document provided to purchasers and potential purchasers in connection with the initial offering of the Bonds in conformance with Rule l 5c2-12 or other applicable regulations of the SEC. ss) "Operating and Maintenance Expenses" means all reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and maintained in good repair, working order and condition, including payments made to any other municipal corporation or private entity for water service and for sewage treatment and disposal service or other utility service in the event the City combines such service in the Waterworks Utility and enters into a contract for such service and, when the Outstanding Parity Bonds are no longer outstanding, payments made in respect of any Contract Resource Obligation, but not including: (i) any depreciation, (ii) taxes levied or imposed by the City or payments to the City in lieu of taxes, or iii) capital additions or capital replacements to the Waterworks Utility. tt) "Outstanding Parity Bonds" means the outstanding 2009 Bonds, 2010A Bonds, 2013A Bonds, 2013T Bonds, 2015 Bonds and the 2017 Bonds. Outstanding Parity Bonds do not include any Refunded Bonds. uu) "Owner" means, without distinction, the Registered Owner and the Beneficial Owner. vv) "Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. ww) "Parity Bond Ordinances" means Ordinance No. 3915, Ordinance No. 3962, Ordinance No. 4126, Ordinance No. 4254, Ordinance No. 4365 and this ordinance. xx) "Parity Conditions" means the conditions for issuing Future Parity Bonds set forth in Exhibit B to this ordinance, which is incorporated herein by this reference. 5- Page 22 of 88 yy) "Plan ofAdditions" means the system or plan of additions to and betterments and extensions of the Waterworks Utility specified, adopted and ordered to be carried out by this ordinance. zz) "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. aaa) "Project Bond'' means each bond issued pursuant to this ordinance for the purpose of providing money required to carry out and accomplish the Plan of Additions, including without limitation paying the allocable share of the costs related to the issuance, sale and delivery of such bond and providing for the Reserve Requirement with respect to the Project Bonds. bbb) "Purchaser" means D.A. Davidson & Co. of Seattle, Washington, or such other purchaser of the Bonds whose offer is accepted by the Designated Representative in accordance with this ordinance. ccc) "Rate Stabilization Account" means the account of that name created in the Water and Sewer Revenue Fund pursuant to Section 12. ddd) "Rating Agency" means any nationally recognized rating agency then maintaining a rating on the Bonds at the request of the City. eee) "Record Date" means the Bond Registrar's close of business on the I 5th day of the month preceding an interest payment date. With respect to redemption of a Bond prior to its maturity, the Record Date shall mean the Bond Registrar's close of business on the date on which the Bond Registrar sends the notice of redemption in accordance with Section 9. ffi) "Redemption Date" means, with respect to each series of the Refunded Bonds, a date or dates selected by the Designated Representative. ggg) "Refunded Bonds" means the Refunding Candidates selected by the Designated Representative and identified in the Refunding Plan. hhh) "Refunding Bond'' means each bond issued pursuant to this ordinance for the purpose of carrying out the Refunding Plan, including without limitation paying the administrative costs of the refunding and the allocable share of costs related to the issuance, sale and delivery of such bond and providing for the Reserve Requirement with respect to the Refunding Bonds. iii) "Refunding Candidates" means: (1) the currently outstanding $5,005,000 principal amount of the 2009 Bonds not subject to extraordinary redemption maturing on May 1 of each of the years 2021 and 2023 through 2029; and (2) the currently outstanding $3,880,000 principal amount of the 201 0A Bonds maturing on June 1 of each of the years 2020, 2025 and 2029. ill) "Refunding Plan" means (as further described in the Refunding Trust Agreement): 1) the deposit with the Refunding Trustee of proceeds of the Bonds in an amount, together with the City Contribution (if any), sufficient to acquire the Acquired Obligations and establish a beginning cash balance; 6- Page 23 of 88 2) the receipt by the Refunding Trustee of the maturing principal of and interest on the Acquired Obligations, and the application of such amounts together with any other cash held by it) to pay principal of and interest on the Refunded Bonds when due up to and including the applicable Redemption Dates, and the call, payment and redemption of the Refunded Bonds on the applicable Redemption Dates at a price equal to the principal amount to be redeemed; and 3) payment of the costs of issuing the Bonds and the costs of carrying out the foregoing elements of the Refunding Plan, if payment of such costs is so specified in the Refunding Trust Agreement. kkk) "Refunding Trust Agreement" means the refunding trust agreement between the City and the Refunding Trustee, providing for the carrying out of the Refunding Plan. 111) "Refunding Trustee" means the trustee, or any successor trustee, designated by the Designated Representative to serve as refunding trustee to carry out the Refunding Plan. mmm) "Registered Owner" means, with respect to a Bond, the person in whose name that Bond is registered on the Bond Register. For so long as the City utilizes the book-entry only system for the Bonds under the Letter of Representations, Registered Owner shall mean the Securities Depository. nnn) "Reserve Account" means the account of that name created in the Bond Fund for the purpose of securing the payment of the principal of and interest on the Parity Bonds. ooo) "Reserve Insurance" means, in lieu of cash and investments, any insurance obtained by the City to fund all or a portion of the Reserve Requirement for any Parity Bonds then outstanding for which such insurance is obtained. When the 2009 Bonds, 2010A Bonds, 2013A Bonds and 2013T Bonds are no longer outstanding "Reserve Insurance" shall mean, in lieu of cash and investments, any bond insurance, collateral, security, letter of credit, guaranty, surety bond or similar credit enhancement device to fund, provide for or secure the payment ofall or part ofthe Reserve Requirement 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 Reserve Insurance in one ofthe two highest rating categories by either Moody's Investors Service, Inc. or S&P Global Ratings. ppp) "Reserve Requirement' means: 1) For the Outstanding Parity Bonds and the Bonds, an amount equal to the least of (a) 10% of the issue price of the then-outstanding Parity Bonds, (b) Maximum Annual Debt Service on the then-outstanding Parity Bonds and (c) 1.25 times Average Annual Debt Service on the then-outstanding Parity Bonds. For the purposes of determining Maximum Annual Debt Service and Average Annual Debt Service for calculating the Reserve Requirement, all bonds payable or proposed to be paid from the Bond Fund shall be treated as a single issue and the number of years to the last scheduled maturity for any of those issues shall be used as the denominator. 7- Page 24 of 88 2) For any Future Parity Bonds secured by the Reserve Account, an amount equal to the difference between the Reserve Requirement for the then-outstanding Parity Bonds secured by the Reserve Account and the least of ( a) 10% of the issue price of the then-outstanding Parity Bonds secured by the Reserve Account and the Future Parity Bonds proposed to be issued, (b) Maximum Annual Debt Service on the then-outstanding Parity Bonds secured by the Reserve Account and the Future Parity Bonds proposed to be issued and ( c) 1.25 times Average Annual Debt Service on the then-outstanding Parity Bonds secured by the Reserve Account 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 secured by the Reserve Account shall be treated as a single issue and the number of years to the last scheduled maturity for any of those issues shall be used as the denominator. qqq) "Rule l 5c2-l 2" means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. m) "SEC' means the United States Securities and Exchange Commission. sss) "Securities Depository" means DTC, any successor thereto, any substitute securities depository selected by the City that is qualified under applicable laws and regulations to provide the services proposed to be provided by it, or the nominee of any of the foregoing. ttt) "Series of Bonds" or "Series" means a series of the Bonds issued pursuant to this ordinance. uuu) "Separate Utility System" means any water supply, sewer service, water or wastewater transmission, treatment or other utility service, commodity or facilities that may be created, acquired or constructed by the City as provided in Section 17. vvv) "State" means the State of Washington. www) "System ofRegistration" means the system of registration for the City's bonds and other obligations set forth in Ordinance No. 2845. xxx) "Taxable Series" means any Series of Bonds issued as taxable bonds as determined by the Designated Representative pursuant to the parameters for Final Terms set forth in Exhibit A and identified in the Bond Purchase Contract for such Series of Bonds. yyy) "Tax-Exempt Series" means any Series of Bonds issued as tax-exempt bonds as determined by the Designated Representative pursuant to the parameters for Final Terms set forth in Exhibit A and identified in the Bond Purchase Contract for such Series of Bonds. zzz) "Term Bonds" means each Bond designated as a Term Bond and subject to mandatory redemption in the years and amounts set forth in the Bond Purchase Contract. For any 8- Page 25 of 88 Outstanding Parity Bonds or Future Parity Bonds, "Term Bonds" means those bonds of any single issue or series designated as Term Bonds pursuant to the ordinance authorizing their issuance or sale and which are subject to mandatory prior redemption or for which mandatory sinking fund installments are provided. aaaa) "ULID" means utility local improvement district. bbbb) "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. cccc) "Undertaking" means the undertaking to provide continuing disclosure entered into pursuant to Section 26(c) of this ordinance. dddd) "Water and Sewer Revenue Fund'' means that special fund of the City into which all of the Gross Revenue shall be deposited. eeee) "Waterworks Utility" means the combined sewerage system and water system of the City, together with the storm or surface water sewers and agricultural/industrial wastewater treatment facilities heretofore or hereafter authorized to be constructed and installed as a part of such combined systems, and together with all additions thereto and betterments and extensions thereof now or hereafter made. Section 2. Findings and Determinations. The City takes note of the following facts and makes the following findings and determinations: a) Background. 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 pursuant to the provisions of Chapter 193 of the Laws of 1941 of the State of Washington (RCW 35.67.320 et seq.). b) Plan of Additions. The City has determined that it is necessary and in the best interests of the City to carry out the Plan of Additions. c) Outstanding Parity Bonds. Pursuant to Ordinance No. 2846, the City heretofore issued and sold its 1991 Bonds ( all of which have been paid and retired), and reserved the right to issue additional water and sewer revenue bonds of the City which would have a lien and charge upon the Net Revenue and ULID Assessments on a parity with those 1991 Bonds if the Parity Conditions are met. The City currently has outstanding the following water and sewer revenue bonds issued on a parity of lien and charge on the Net Revenue and ULID Assessments with the 1991 Bonds: 9- Page 26 of 88 Original Ordinance Principal Dated Authorizing Passage Name oflssue Amount Date Ordinance Date 2009 Bonds $10,045,000 4/17/2009 3915 4/06/2009 2010ABonds 9,070,000 6/03/2010 3962 5/17/2010 2013ABonds 2,520,000 12/05/2013 4126 11/18/2013 2013T Bonds 7,235,000 12/05/2013 4126 11/18/2013 2015 Bonds 14,380,000 12/22/2015 4254 11/30/2015 2017 Bonds 9,415,000 12/19/2017 4365 11/20/2017 d) Parity Conditions Met. The City Council finds and declares that (1) all payments required by the Outstanding Parity Bonds are provided for in this ordinance or have been provided for or made into the Bond Fund for those outstanding bonds and that no deficiency exists in such fund; (2) provision is hereinafter made for the deposit in the Reserve Account of the Bond Fund of the Reserve Requirement for the Bonds; and (3) that all other conditions set forth in the Parity Conditions will have been met and satisfied before the Bonds are delivered to the initial purchaser. e) Refunding Candidates. In order to realize a debt service savings to the City and its ratepayers, the City Council wishes to refund all or a portion of the Refunding Candidates. Chapter 39.53 RCW and other laws of the State authorize the City to carry out the Refunding Plan. t) Sufficiency ofGross Revenue; Due Regard. The City Council finds and determines that the Gross Revenue will be more than sufficient to (1) meet all Operating and Maintenance Expenses thereof ( and the cost of maintenance and operation as contemplated by RCW 3 5.92.100), and the debt service requirements of the Outstanding Parity Bonds, and (2) permit the setting aside into the Bond Fund out of the Net Revenue of amounts sufficient to pay the principal of and interest on the Bonds when due. The City Council 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 Outstanding Parity Bonds, and the City has not bound or obligated itself to set aside and pay into the Bond Fund a greater amount or proportion of the Gross Revenue than in the judgment of the City Council will be available over and above such Operating and Maintenance Expenses and debt service requirements of the Outstanding Parity Bonds, and that the City has not pledged any portion of the Gross Revenue for any indebtedness other than the Outstanding Parity Bonds. g) Issuance ofBonds. Based on the foregoing, the City Council finds that it is in the best interest of the City to issue and sell the Bonds to the Purchaser, pursuant to the terms set forth in the Bond Purchase Contract as approved by the Designated Representative consistent with this ordinance. Section 3. Plan of Additions. 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 following improvements (the "Plan of Additions"), which are included and more particularly described in the City's 2019-2024 Capital Improvement Plan, 2020-2025 Capital Improvement Plan and prior Capital Improvement Plans and other comprehensive and improvement plans of the City: 10- Page 27 of 88 a) Portions of the Columbia east force main & lift station improvements, including: the remainder of the design and construction of two force mains that will serve multiple food processors and direct food process water (industrial waste) to the process water reuse facility; b) Foster wells force main improvements, including: building a new force main from the Foster wells lift station to the process water reuse facility; c) Process water reuse facility irrigation pump station, including: replacing the existing pump station for delivery of process water to agricultural users; and d) Process water reuse facility primary treatment improvements, including: constructing improvements to allow for additional capacity and improved treatment of industrial waste from food processors. There shall be included in the foregoing system or plan the acquisition and installation of all necessary valves, pumps, fittings, couplings, connections, equipment and appurtenances, and replacements and improvements necessary or desirable to maintain or increase the effectiveness of the service provided by such facilities, other improvements to and extensions of the Waterworks Utility, the acquisition of any easements, rights-of-way and land that may be required and the performance of such work as may be incidental and necessary. All of the foregoing shall be in accordance with the plans and specifications therefor prepared by the staff and consulting engineers of the City. The City Council may modify the details of the Plan of Additions where, in its judgment, it appears advisable if such modifications do not substantially alter the purposes of the Plan of Additions. The estimated cost of the acquisition, construction, installation and financing of the above- described improvements to be paid from the proceeds of the Bonds is declared to be approximately 16,230,000. Any excess proceeds of the Project Bonds remaining following payment of the costs of the Plan of Additions shall be applied to costs of other improvements to the Waterworks Utility heretofore or hereafter approved in the City's Capital Budget. Section 4. Authorization of the Bonds. The City is authorized to issue, sell and deliver water and sewer improvement and refunding revenue bonds in one or more Series for the purpose of providing funds necessary to (a) pay costs of carrying out the Plan of Additions, (b) carry out the Refunding Plan; ( c) make a deposit to the Reserve Account as needed to satisfy the Reserve Requirement and (d) pay the costs of issuance and sale of the Bonds. Section 5. Appointment of Designated Representative; Description of the Bonds. The City Manager and the Finance Director each are appointed as the Designated Representative of the City and each of them acting alone is authorized and directed to conduct the sale of the Bonds in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of the Bonds, with such additional terms and covenants as the Designated Representative deems advisable, within the parameters set forth in Exhibit A, which is attached to this ordinance and incorporated by this reference. 11- Page 28 of 88 Section 6. Bond Re gi strar; Re gi stration and Transfer of Bonds. a) Registration ofBonds; Bond Register. Each Bond shall be issued only in registered form as to both principal and interest, and the ownership of each Bond shall be recorded on the Bond Register. The Bond Register shall contain the name and mailing address of each Registered Owner and the principal amount and number of each Bond held by each Registered Owner. b) Bond Registrar; Duties. The Fiscal Agent is appointed as initial Bond Registrar. The Bond Registrar shall keep, or cause to be kept, the Bond Register, 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 the System of Registration. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on each Bond. The Bond Registrar may become an Owner 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 Owners. c) Transfer or Exchange. A Bond surrendered to the Bond Registrar may be exchanged for a Bond or Bonds in any Authorized Denomination of an equal aggregate principal amount and of the same Series, interest rate and maturity. A Bond 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 any Bond or transfer registered ownership during the period between the applicable Record Date and the next upcoming interest payment or redemption date. d) Securities Depository; Book-Entry Only Form. DTC is appointed as initial Securities Depository. Each Bond initially shall be registered in the name of Cede & Co., as the nominee ofDTC. Each Bond registered in the name of the Securities Depository shall be held fully immobilized in book-entry only form by the Securities Depository in accordance with the provisions of the Letter of Representations. Registered ownership of any Bond registered in the name of the Securities Depository may not be transferred except: (i) to any successor Securities Depository; (ii) to any substitute Securities Depository appointed by the City; or (iii) to any person if the Bond is no longer to be held in book-entry only form. Upon the resignation of the Securities Depository, or upon a termination of the services of the Securities Depository by the City, the City may appoint a substitute Securities Depository. If (i) the Securities Depository resigns and the City does not appoint a substitute Securities Depository or (ii) the City terminates the services of the Securities Depository, the Bonds no longer shall be held in book-entry only form and the registered ownership of each Bond may be transferred to any person as provided in this ordinance. Neither the City nor the Bond Registrar shall have any obligation to participants of any Securities Depository or the persons for whom they act as nominees regarding accuracy of any records maintained by the Securities Depository or its participants. Neither the City nor the Bond Registrar shall be responsible for any notice that is permitted or required to be given to a Registered Owner except such notice as is required to be given by the Bond Registrar to the Securities Depository. 12- Page 29 of 88 Section 7. Form and Execution of Bonds. a) Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. Each Bond shall be signed by the Mayor and the 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. If any officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing his or her manual or facsimile signature is authenticated by the Bond Registrar, or issued or delivered by the City, that Bond nevertheless may be authenticated, issued and delivered 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 its Issue Date. b) Authentication. Only a Bond bearing a Certificate of Authentication in substantially 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 [Improvement] Refunding] [Improvement and Refunding] Bonds, 20[_J described in the Bond Ordinance." The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. Section 8. Payment of Bonds. Principal of and interest on each Bond shall be payable in lawful money of the United States of America. Principal of and interest on each Bond registered in the name of the Securities Depository is payable in the manner set forth in the Letter of Representations. Interest on each Bond not registered in the name of the Securities Depository is payable by electronic transfer on the interest payment date, or by check or draft of the Bond Registrar mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register on the Record Date. The City is not required to make electronic transfers except pursuant to a request by a Registered Owner in writing received on or prior to the Record Date and at the sole expense of the Registered Owner. Principal of each Bond not registered in the name of the Securities Depository is payable upon presentation and surrender of the Bond by the Registered Owner to the Bond Registrar. The Bonds are payable solely out of the Bond Fund and are not be general obligations of the City. The Bonds are not subject to acceleration under any circumstances. Section 9. Redemption Provisions and Purchase of Bonds. a) Optional Redemption. The Bonds shall be subject to redemption at the option of the City on terms acceptable to the Designated Representative, as set forth in the Bond Purchase Contract, consistent with the parameters set forth in Exhibit A. b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the Bond Purchase Contract, consistent with the parameters set forth in Exhibit A and except as set forth below, shall be called for redemption at a price equal to the stated principal amount to be redeemed, plus accrued interest, on the dates and in the amounts as set forth in the Bond Purchase Contract. 13- Page 30 of 88 If a Term Bond is redeemed under the optional redemption provisions, defeased or purchased by the City and surrendered for cancellation, the principal amount of the Term Bond so redeemed, defeased or purchased (irrespective of its actual redemption or purchase price) shall be credited against one or more scheduled mandatory redemption installments for that Term Bond. The City shall determine the manner in which the credit is to be allocated and shall notify the Bond Registrar in writing of its allocation prior to the earliest mandatory redemption date for that Term Bond for which notice of redemption has not already been given. c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the outstanding Bonds are to be redeemed at the option of the City, the City shall select the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of the Securities Depository to be redeemed in accordance with the Letter of Representations, and the Bond Registrar shall select all other Bonds to be redeemed randomly in such manner as the Bond Registrar shall determine. The Bond Purchase Contract may establish the manner in which any Taxable Series or portions of any Taxable Series are selected for redemption. All or a portion of the principal amount of any Bond that is to be redeemed may be redeemed in any Authorized Denomination. If less than all of the outstanding principal amount of any Bond is redeemed, upon surrender ofthat Bond to the Bond Registrar, there shall be issued to the Registered Owner, without charge, a new Bond (or Bonds, at the option of the Registered Owner) of the same Series, maturity and interest rate in any Authorized Denomination in the aggregate principal amount to remain outstanding. d) Notice of Redemption. Notice of redemption of each Bond registered in the name ofthe Securities Depository shall be given in accordance with the Letter ofRepresentations. Notice of redemption of each other Bond, unless waived by the Registered Owner, shall be given by the Bond Registrar not less than 20 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the Registered Owner at the address appearing on the Bond Register on the Record Date. The requirements of the preceding sentence shall be satisfied when notice has been mailed as so provided, whether or not it is actually received by an Owner. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB (if required under the Undertaking), to each Rating Agency, and to such other persons and with such additional information as the Finance Director shall determine, but these additional mailings shall not be a condition precedent to the redemption of any Bond. e) Rescission of Optional Redemption Notice. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind the redemption notice and the redemption by giving a notice of rescission to the affected Registered Owners at any time on or prior to the date fixed for redemption. Any notice ofoptional redemption that is so rescinded shall be of no effect, and each Bond for which a notice of redemption has been rescinded shall remain outstanding. t) Effect of Redemption. Interest on each Bond called for redemption shall cease to accrue on the date fixed for redemption, unless either the notice ofoptional redemption is rescinded as set forth above, or money sufficient to effect such redemption is not on deposit in the Bond Fund or in a trust account established to refund or defease the Bond. 14- Page 31 of 88 g) Purchase ofBonds. The City reserves the right to purchase any or all of the Bonds offered to the City or in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. All Bonds so purchased shall be canceled. Section 10. Failure to Pay Bonds. If the principal ofany Bond is not paid when the Bond is properly presented at its maturity or date fixed for redemption, 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 date fixed for redemption until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund, or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Section 11. Bond Fund; Paym ents into Bond Fund. The Bond Fund has been previously created and established as a special fund ofthe City known and designated as the Water and Sewer Revenue and Refunding Bond Redemption Fund , 1991 , which fund has been divided into two accounts, namely, the Principal and Interest Account and the Reserve Account. So long as any Parity Bonds are outstanding against the Bond Fund, the Finance Director shall set aside and pay into the Bond Fund all ULID Assessments upon their collection and , out of the Net Revenue, certain fixed amounts without regard to any fixed proportion, namely, amounts, together with any ULID Assessments collected by the City and deposited into the applicable account in the Bond Fund and investment earnings in that account, as follows: a) Into the Principal and Interest Account, on or before each interest or principal and interest payment date, an amount equal to the interest or the principal and interest to become due and payable on that interest or principal and interest payment date of all Parity Bonds; and b) Into the Reserve Account, on the Issue Date of the Bonds, an amount sufficient, together with any Reserve Insurance, to fully fund the Reserve Requirement for all Parity Bonds. Money deposited in the Reserve Account for the Reserve Requirement for all Parity Bonds may be decreased for any issue of Parity Bonds when and to the extent the City has provided for an Alternate Security or Reserve Insurance for those bonds. When the 2009 Bonds, 2010A Bonds, 2013A Bonds, 2013T Bonds are no longer outstanding, the following paragraph shall become effective: The City may establish , for the Bonds and one or more series o_fFuture Parity Bonds, a separate reserve requirement (which may be zero), to be held in a separate reserve account,for the purpose ofsecuring those Parity Bonds, and those Parity Bonds shall not be secured by amounts in the Reserve Account or by any Reserve Insurance credited to the Reserve Account. 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. 15- Page 32 of 88 The City further agrees that when the required amounts have been paid into the Reserve Account in the Bond Fund, the City will maintain those amounts therein at all times, except for withdrawals therefrom as authorized herein, until there is sufficient money in the Bond Fund, including the Reserve Account therein, to pay the principal of and interest to maturity on all outstanding bonds payable from the Bond Fund, at which time no further payments need be made into the Bond Fund , and the money in the Bond Fund , including the Reserve Account, may be used to pay that principal and interest. If there shall be a deficiency in the Principal and Interest Account to meet maturing installments of either principal or interest, as the case may be, on the Bonds, the deficiency shall be made up from the Reserve Account by first the withdrawal of cash and investments therefrom and after all cash and investments have been depleted, then by the draws on any Reserve Insurance for that purpose on a pro rata basis. Any deficiency created in the Reserve Account by reason of any withdrawal shall then be made up from the Net Revenue first available after making necessary provisions for the required payments into the Principal and Interest Account. When the Outstanding Parity Bonds are no longer outstanding, the preceding sentence shall be replaced with the following: Any deficiency created in the Reserve Account by reason of any withdrawal shall then be made up in not more than 12 approximately equal monthly installments from Net Revenue in accordance with the flow offunds set forth in Section 14,first, to reinstate each Reserve Insurance pro rata , and second, to make up any remaining deficiency. 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 ofthose investments or on that bank account shall be deposited in and become a part ofthe Reserve Account until the Reserve Requirement shall have been accumulated therein , after which time the interest shall be deposited in the Principal and Interest Account. Notwithstanding the provisions for the deposit or maintenance of earnings in accounts of the Bond Fund, any earnings which are subject to a federal tax or rebate requirement may be withdrawn from the Bond Fund for deposit into a separate fund or account for that purpose. If the City shall fail to set aside and pay into the Bond Fund the amounts which it has obligated itself by this section to set aside and pay therein, the Owner of any Bond may bring suit against the City to compel it to do so. Section 12. Rate Stabilization Account. When the Outstanding Parity Bonds are no longer outstanding, this Section 12 shall become effective: The City is authorized to create the Rate Stabilization Account in the Water and Sewer Revenue Fund. The City may at any time, consistent with the flow of.funds in Section 14, deposit in the Rate Stabilization Account Gross Revenue and any other money received by the Waterworks Utility available to be used therefor, excluding principal proceeds of bonds or other obligations. The City may at any time withdraw money from the Rate Stabilization Account for use in accordance with Section 14. Deposits into the Rate Stabilization Account shall reduce Net Revenue for the year in which the deposit is made or, at the option ofthe City, for the preceding year ifthe deposit is made within three months afier the end ofthe preceding year. Withdrawals.from th e Rate Stabilization Account shall increase Net 16- Page 33 of 88 Revenue for the year in which the withdrawal is made or, at the option ofthe City,for the preceding year ifthe withdrawal is made within three months after the end ofthe preceding year. Section 13. Pled ge, Lien and Charge for Paym ent of the Bonds. The Net Revenue 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 and ULID Assessments prior and superior to any other charges whatsoever, except that the lien and charge upon such Net Revenue and ULID Assessments for the Bonds shall be on a parity with the lien and charge thereon for any outstanding Parity Bonds. Section 14. Flow of Funds. Funds in the Water and Sewer Revenue Fund shall be used in the following order of priority: 1) To pay Operating and Maintenance Expenses; 2) To make all payments required to be made into the Bond Fund to pay and secure the payment of the Annual Debt Service on all outstanding Parity Bonds; 3) To make all payments required to be made into the Reserve Account and to make all payments (principal and interest) required to be made in connection with Reserve Insurance and any Alternate Security, except if there is not sufficient money to make all payments for Reserve Insurance and any Alternate Security, the payments shall be made on a pro rata basis with deposits in the Reserve Account; 4) To make all payments required to be made into the loan redemption funds 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 subordinate to the lien of the Bonds; and 5) To make necessary additions, betterments, improvements or repairs to the Waterworks Utility, to retire by redemption or purchase any outstanding Parity Bonds, and when the Outstanding Parity Bonds are no longer outstanding, to make deposits into the Rate Stabilization Account, or for any other lawful purpose. Section 15. Covenants. The City covenants and agrees with the Owner of each of the Bonds as follows: a) It will not sell, lease, mortgage, or in any manner encumber or dispose of all the properties of the Waterworks Utility unless provision is made for payment into the Bond Fund of an amount sufficient either to defease all outstanding Parity Bonds or to pay the principal of and interest on all the outstanding Parity Bonds in accordance with the terms thereof; and further binds itself irrevocably not to mortgage, sell, lease or in any manner dispose of any part of the Waterworks Utility that is used, useful and material to the operation of such utility unless provision is made for replacement thereof or for payment into the Bond Fund of an amount which shall bear the same ratio to the amount of outstanding Parity Bonds as the Net Revenue available for debt service for such bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the Waterworks Utility so leased, encumbered or disposed of bears to the Net Revenue available for debt service for such bonds from the entire Waterworks Utility for the same 17- Page 34 of 88 period. Any such money so paid into the Bond Fund shall be used to retire outstanding Parity Bonds at the earliest possible date. b) It will maintain and keep the Waterworks Utility in good repair, working order and condition and to operate such utility and the business in connection therewith in an efficient manner and at a reasonable cost. c) It will maintain and collect such rates as will produce sufficient Net Revenue, together with ULID Assessment collections, as will make available for the payment ofthe principal of and interest on the Parity Bonds as they come due and for payments as required to be made into the Reserve Account therein an amount at least equal to the Coverage Requirement and, in addition thereto, that it will pay all Operating and Maintenance Expenses and otherwise meet the obligations of the City as herein set forth. When the Outstanding Parity Bonds are no longer outstanding, the following sentence shall become effective: A failure to comply with this covenant is not a default of this covenant (or an Event of Default as described in Section 24) if the City, before the date 90 days after the end of the calendar year, (i) employs a licensed professional engineer experienced in the design, construction and operation of municipal utilities or an independent certified public accountant to recommend changes in the City's rates and (ii) imposes rates at least as high as those recommended by the consultant. 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, and it will make available to any Owner 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 ofcharge and it shall, not later than 60 days after the end of each calendar year, take such legal action as may be feasible to enforce collection of all collectible delinquent accounts and, in addition thereto, shall promptly avail itself of its utility lien rights, as set forth in applicable statutes. f) It will carry the types of insurance on its Waterworks Utility properties in the amounts normally carried by private water and sewer companies engaged in the operation of water and sewerage systems, and the cost of such insurance shall be considered a part of Operating and Maintenance Expenses, or it will implement and maintain a self-insurance program or an insurance pool program with reserves adequate, in the judgment of the City Council, to protect the owners of the Parity Bonds against loss. g) To the extent permitted by State law, it will maintain its corporate identity and existence so long as any Bonds remain outstanding. h) It will not grant any competing utility service franchise and will use all legal means to prevent competition with the Waterworks Utility. i) If on the first day ofJanuary in any year, two installments of any ULID Assessment are delinquent, or the final installment of any ULID Assessment has been delinquent for more than 18- Page 35 of 88 one year, the City shall proceed with the foreclosure of the delinquent assessment or delinquent installments thereof in the manner provided by law. Section 16. Provisions for Future Parity Bonds. The City reserves the right to issue Future Parity Bonds if the Parity Conditions set forth in Exhibit B are met and complied with at the time of the issuance of those Future Parity Bonds. Nothing herein contained shall prevent the City from issuing Future Parity Bonds to refund any maturing Parity Bonds then outstanding, money for the payment of which is not otherwise available. Nothing herein contained shall prevent the City from issuing revenue bonds or incurring other obligations that are a charge upon the Net Revenue subordinate or inferior to the payments required to be made therefrom into the Bond Fund for the payment of Parity Bonds or from pledging the payment of utility local improvement district assessments into a redemption fund created for the payment of the principal of and interest on those subordinate lien bonds or obligations as long as such utility local improvement district assessments are levied for improvements constructed from the proceeds of those subordinate lien bonds or obligations. Section 17. Separate Utility Svstems. When the Outstanding Parity Bonds are no longer outstanding, this Section 17 shall become effective: The City may at any time create, acquire, construct, finance, own and operate one or more systems for water supply, sewer service, water or wastewater transmission, treatment or other utility service, commodity orfacilities, which systems are separate from and in addition to the Waterworks Utility. The revenues o_fthat Separate Utility System, and any utility local improvement district assessments payable solely with respect to improvements to a Separate Utility System, are not included in Gross Revenue and may be pledged to the payment ofrevenue obligations issued to purchase, construct, condemn or otherwise acquire or expand the Separate Utility System. The City may not pledge Gross Revenue or Net Revenue to the payment ofany obligations of a Separate Utility System, except that Net Revenue may be pledged on a basis subordinate to the lien ofthe Parity Bonds. Section 18. Contract Resource Obligations. When the Outstanding Parity Bonds are no longer outstanding, this Section 18 shall become effective: The City may at any time enter into one or more Contract Resource Obligations for the acquisition, from facilities to be constructed or improved by the use ofpayments under such Contract Resource Obligations, of water supply, sewer service, water or wastewater transmission, treatment or other utility service or commodity relating to the Waterworks Utility, as follows: a) The City may agree under a contract containing a Contract Resource Obligation that all payments in respect o_f that Contract Resource Obligation (including payments prior to the time that water or wastewater service is being provided, or during a suspension or after termination ofsupply or service) shall be deemed Operating and Maintenance Expenses, so long as the payments required to be made under the Contract Resource Obligation are not subject to acceleration and the following additional requirements are met at the time such obligation is designated as a Contract Resource Obligation: 19- Page 36 of 88 1) No material default (or Event of Default as defined in Section 24) has occurred and is continuing under the terms of any debt obligation of the City in respect ofthe Waterworks Utility; and 2) The City has obtained a cert(ficate of an independent utility consultant stating that in its professional opinion: (A) the payments to be made by the City in connection with the Contract Resource Obligation are reasonable for the service rendered; (B) the source of any new supply, and any facilities to be constructed to provide the supply, service or transmission, are sound from a supply or planning standpoint, are technically and economically feasible in accordance with prudent utility practice, and are likely to provide supply, service or transmission no later than a date set forth in the certification; and (C) the Net Revenue will be sufficient to meet the Coverage Requirement for each of the five calendar years following the calendar year in which the Contract Resource Obligation is incurred, where the calculation ofNet Revenue (i) takes into account the adjustments permitted in connection with a coverage certification given under the conditions for Future Parity Bonds and (ii) adjusts the Operating and Maintenance Expenses by the consultant's estimate of the payments to be made in accordance with the Contract Resource Obligation. b) Nothing in this section prevents the City from entering into agreements for the acquisition of water supply, sewer service, water or wastewater transmission, treatment or other utility service or commodity relating to the Waterworks Utility from then-existing facilities and from treating those payments as Operating and Maintenance Expenses. Nothing in this section prevents the City from entering into other agreements for the acquisition of water supply, sewer service, water or wastewater transmission, treatment or other utility service or commodity from facilities to be constructed and from agreeing to make payments with respect thereto, such payments to be made on a basis subordinate to the lien ofthe Parity Bonds until such time as the facilities are placed in service. Section 19. Tax Covenants. a) Interest on Taxable Series. Interest on any Bonds of a Taxable Series will not be excluded from gross income of the Owners of such Bonds of a Taxable Series for federal income tax purposes. b) Preservation of Tax Exemption for Interest on Tax-Exempt Series. The City covenants that it will take all actions necessary to prevent interest on any Tax-Exempt Series 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 such Tax-Exempt Series or other funds of the City treated as proceeds of such Tax-Exempt Series that will cause interest such Tax-Exempt Series to be included in gross income for federal income tax purposes. The City also covenants that it will, to the extent the arbitrage rebate requirements of Section 148 of the Code are applicable to any Tax-Exempt Series, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with such Tax-Exempt Series. 20- Page 37 of 88 c) Post-Issuance Compliance. The Finance Director is authorized and directed to review and update the City's written procedures to facilitate compliance by the City with the covenants in this ordinance and the applicable requirements of the Code that must be satisfied after the Issue Date to prevent interest on any Tax-Exempt Series from being included in gross income for federal tax purposes. d) Designation of Tax-Exempt Series as "Qualified Tax-Exempt Obligations." The Designated Representative may designate any Tax-Exempt Series as "qualified tax-exempt obligations" for the purposes of Section 265(b )(3) of the Code, if the following conditions are met: 1) the Tax-Exempt Series does not constitute "private activity bonds" within the meaning of Section 141 of the Code; 2) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) that the City and any entity subordinate to the City (including any entity that the City controls, that derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt obligations on behalf of the City) will issue during the calendar year in which the Tax-Exempt Series is issued will not exceed 10,000,000; and 3) the amount of tax-exempt obligations, including the Tax-Exempt Series, designated by the City as "qualified tax-exempt obligations" for the purposes of Section 265(b )(3) of the Code during the calendar year in which the Tax-Exempt Series is issued does not exceed $10,000,000. Section 20. Refunding or Defeasance of Bonds. The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to their maturity; and (c) paying the costs of the refunding or defeasance. Ifthe City sets aside in a special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the "trust account"), money and/or Government Obligations maturing at a time or times and bearing interest in amounts sufficient to redeem, refund or defease the defeased Bonds in accordance with their terms, then all right and interest of the Owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds, shall cease and become void. Thereafter, the Owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds solely from the trust account and the defeased Bonds shall be deemed no longer outstanding. In that event, the City may apply money remaining in any fund or account ( other than the trust account) established for the payment or redemption of the defeased Bonds to any lawful purpose, subject only to the rights of the Owners of any other Parity Bonds then outstanding. Ifthe refunding or defeasance 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 21- Page 38 of 88 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 the Coverage Requirement for determining compliance with the rate covenants in this ordinance. Unless otherwise specified by the City in a refunding or defeasance plan, notice of refunding or defeasance shall be given, and selection of Bonds for any partial refunding or defeasance shall be conducted, in the manner prescribed in this ordinance for the redemption of Bonds. Section 21. Deposit of Bond Proceeds; Creation of Construction Accounts. Immediately upon the issuance and delivery of the Bonds, the City shall cause the following to occur: a) Reserve Account. Proceeds of the Bonds as needed to satisfy the Reserve Requirement shall either be deposited in the Reserve Account or used to acquire Reserve Insurance in an amount sufficient to satisfy the Reserve Requirement with respect to the Bonds. b) Refunding Plan. The remaining proceeds of the Refunding Bonds shall be deposited with the Refunding Trustee as set forth in Section 22. c) Construction Accounts. The Finance Director is authorized to establish one or more special accounts within the Water/Sewer Fund, designated as the Construction Accounts. The remaining proceeds of the Project Bonds shall be paid into the Construction Accounts and used to pay the costs of the Plan of Additions and the costs of issuing the Project Bonds (if not included in the Refunding Plan). Until needed to pay those costs, the City may invest proceeds deposited in the Construction Accounts temporarily in any legal investment, and the investment earnings may be retained in such accounts and be spent for the purposes of those accounts, except that earnings subject to a federal tax or rebate requirement may be withdrawn therefrom and used for those tax or rebate purposes. Section 22. Use of Refunding Proceeds; the Refunding Plan. a) Appointment of Refunding Trustee. The Designated Representative is authorized and directed to appoint a financial institution to serve as the Refunding Trustee and to perform the duties of Refunding Trustee under this ordinance. b) Selection of Refunded Bonds. The Designated Representative is authorized and directed to select the Refunding Candidates to be refunded by the Bonds. The Designated Representative may choose to refund fewer than all of the Refunding Candidates. The Refunded Bonds, as selected by the Designated Representative, shall be identified in the Refunding Plan set forth in the Refunding Trust Agreement. c) Use ofRefunding Proceeds; Purchase ofAcquired Obligations. On the Issue Date, sufficient proceeds of the sale of the Refunding Bonds, together with any City Contribution, shall be deposited with the Refunding Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under the applicable Parity Bond Ordinances by providing for the payment 22- Page 39 of 88 of the amounts required to be paid by the Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, if necessary, for the payment of the amount required to be paid by the Refunding Plan. The Acquired Obligations shall be listed and more particularly described in a schedule attached to the Refunding Trust Agreement, but are subject to substitution as set forth below. The Designated Representative is authorized and directed to approve the Acquired Obligations, if any, to be purchased. Any Project Bond proceeds deposited with the Refunding Trustee and not used to pay the costs of issuance of the Project Bonds shall be returned to the City for deposit in the Construction Accounts. Any Refunding Bond proceeds or other money deposited with the Refunding Trustee not needed to carry out the Refunding Plan shall be returned to the City for deposit in the Principal and Interest Account to pay interest on the Refunding Bonds on the next upcoming interest payment date. d) Substitution of Acquired Obligations. The City reserves the right at any time to substitute cash or other direct, noncallable obligations of the United States of America ("Substitute Obligations") for any of the Acquired Obligations if the City obtains (1) an opinion of Bond Counsel to the effect that the interest on the Refunding Bonds and the Refunded Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and (2) a verification by a nationally recognized independent certified public accounting firm that such substitution will not impair the timely payment of the amounts required to be paid by the Refunding Plan. Any surplus money resulting from the sale , transfer, other disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the City to be used for any lawful purpose. e) Administration of Refunding Plan. The Refunding Trustee is authorized and directed to purchase the Acquired Obligations ( or Substitute Obligations) and to make the payments required to be made pursuant to the Refunding Plan from the Acquired Obligations ( or Substitute Obligations) and money deposited with the Refunding Trustee pursuant to this ordinance and the Refunding Trust Agreement. All Acquired Obligations ( or Substitute Obligations) and money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied in accordance with the provisions of the applicable Parity Bond Ordinance authorizing the Refunded Bonds, this ordinance, chapter 39.53 RCW and other applicable laws of the State and the Refunding Trust Agreement. All necessary and proper fees, compensation and expenses of the Refunding Trustee and all other costs incidental to the setting up of the escrow to accomplish the Refunding Plan and costs related to the issuance, sale and delivery of the Bonds, including bond printing, rating agency fees, verification fees, Bond Counsel's fees and other related expenses, shall be paid out of the proceeds of the Bonds. f) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan, the Designated Representative is authorized and directed to execute and deliver to the Refunding Trustee the Refunding Trust Agreement setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the payment, redemption and retirement of the Refunded Bonds as provided herein and stating that the provisions for payment of the fees, compensation and expenses of the Refunding Trustee set forth therein are satisfactory to it. 23- Page 40 of 88 g) Call for Redemption of the Refunded Bonds. The Designated Representative is authorized to call the Refunded Bonds for redemption on their applicable Redemption Dates at par, plus accrued interest. Such call for redemption shall be irrevocable after the delivery of the Bonds to the Purchaser. The Refunding Trustee is authorized and directed to give or cause to be given such notices as required, at the times and in the manner required, pursuant to the ordinances authorizing the issuance of the Refunded Bonds and the Refunding Trust Agreement to carry out the Refunding Plan. h) Additional Finding with Respect to Refunding. Prior to the execution and delivery of the Bond Purchase Contract, the Designated Representative shall determine, on behalf of the City, that the issuance, sale and delivery of the Refunding Bonds will effect a net present value savings to the City and its ratepayers as set forth in paragraph (i)(2) of Exhibit A. The City Council finds and determines that such net present value savings is a substantial savings and that achieving such net present value savings by issuing the Bonds is in the best interest of the City and in the public interest. In making the finding and determination that the issuance, sale and delivery of the Bonds will effect such net present value savings, the Designated Representative shall give consideration to the fixed maturities of the Refunding Bonds and the Refunded Bonds, the costs related to the issuance, sale and delivery of the Refunding Bonds and the known earned income from the investment of the proceeds of the issuance and sale of the Refunding Bonds and the City Contribution, if any, used in the Refunding Plan pending payment and redemption of the Refunded Bonds. The Designated Representative further shall find and determine that the money to be deposited with the Refunding Trustee to carry out the Refunding Plan will discharge and satisfy the obligations of the City under the applicable Parity Bond Ordinance, and the pledges, charges, trusts, covenants and agreements of the City therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds will no longer be deemed to be outstanding under applicable Parity Bond Ordinance immediately upon the deposit of such money with the Refunding Trustee. Section 23. Amendatory and Supplemental Ordinances. When the Outstanding Parity Bonds are no longer outstanding, this Section 23 shall become effective: This ordinance shall not be modified or amended in any respect so long as the Bonds are outstanding, except as provided in and in accordance with and subject to the provisions of this section. For purposes of this provision, the passage ofan ordinance authorizing the issuance ofFuture Parity Bonds shall not be considered an amendatory or supplemental ordinance. a) Certain Amendatory or Supplemental Ordinances Permitted Without Bond Owner Consent. The City, from time to time, and at any time, without the consent of or notice to the registered owners of the Parity Bonds, may pass amendatory or supplemental ordinances as set forth in this subsection (a). Before passing any such amendatory or supplemental ordinance, the City must have delivered to it an opinion of Bond Counsel, stating that such ordinance is authorized or permitted by this ordinance and, upon its effective date, will be valid and binding upon the City in accordance with its terms and will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any tax-exempt Parity Bonds then outstanding. The permitted purposes under this subsection (a) are: 24- Page 41 of 88 1) To cure any formal defect, omission, inconsistency or ambiguity in this ordinance in a manner not adverse to the owner ofany Parity Bond. 2) To impose upon the Bond Registrar (or a bond trustee, ifany), with its consent, any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with this ordinance as theretofore in effect. 3) To add covenants, agreements, limitations and restrictions to be observed by the City which are not contrary or inconsistent with this ordinance as theretofore in effect. 4) To confirm, as further assurance, any pledge under this ordinance and the subjection to any claim, lien or pledge created or to be created by this ordinance) ofany other money, securities or funds. 5) To authorize different denominations of the Bonds and to make correlative amendments and modifications to this ordinance regarding exchangeability of Bonds of different authorized denominations, redemptions of portions ofBonds ofparticular authorized denominations and similar amendments and modifications ofa technical nature. 6) To amend or supplement this ordinance in any other respect which is not materially adverse to the registered owners of the Parity Bonds and which does not involve a change described in subsections (b) or (c). 7) To maintain the exclusion from gross income ofthe interest on any Tax-Exempt Series ofBonds from federal income taxation in light of a change in federal law, regulations or rulings. b) Amendatory or Supplemental Ordinances Requiring Consent ofRegistered Owners of 50% of Parity Bonds Outstanding. In addition to any ordinance permitted pursuant to subsection (a) and subject to the terms and conditions contained in subsection (c) and not otherwise, the City, upon the consent of registered owners of not less than 50% in aggregate principal amount of the Parity Bonds then outstanding, shall have the right from time to time to consent to and approve any amendatory or supplemental ordinance deemed necessary or desirable by the City. Such an ordinance may amend or supplement, in any particular, any ofthe terms or provisions contained in this ordinance. If at any time the City passes an amendatory or supplemental ordinance under this subsection (b), the effective date shall be conditioned on the following: 1) The City must cause notice of the amendatory or supplemental ordinance to be provided in electronic format through the Electronic Municipal Market Access or other website then authorized by the MSRB for the Undertaking to all registered owners ofany then outstanding Parity Bonds and to each Rating Agency. Such notice shall briefly summarize the ordinance and shall state that a copy is available for review by request or on the City's website. 25- Page 42 of 88 2) The ordinance may go into effect upon receipt by the City of (A) the consents, in writing, ofthe required percentage ofregistered owners ofthe Parity Bonds, and (BJ an opinion ofBond Counsel to the effect that (i) such ordinance is permitted by this ordinance, (ii) upon its effective date it will be valid and binding upon the City in accordance with its terms and (iii) it will not adversely affect the exclusion from gross income for federal income tax purposes ofinterest on any tax- exempt Parity Bonds then outstanding. c) Amendatory or Su pplemental Ordinances Requiring Consent o f All Registered Owners. Unless approved in writing by the registered owners ofall Parity Bonds then outstanding, nothing contained in this section shall permit, or be construed as permitting: 1) A change in the times, amounts or currency of payment of the principal of or interest on any outstanding Parity Bond or a reduction in the principal amount or redemption price ofany outstanding Parity Bond or a change in the redemption price ofany outstanding Parity Bond or a change in the method ofdetermining the rate ofinterest thereon. 2) bonds. 3) A preference ofpriority of any Parity Bonds or any other bond or A reduction in the aggregate principal amount ofany Parity Bond. d) E ffect o(Passage o(Amendatory or Su pplemental Ordinance. Upon the adoption of the amendatory or supplemental ordinance pursuant to the provisions of this section, this ordinance shall be, and shall be deemed to be, amended and supplemented accordingly. No owner ofoutstanding Parity Bonds shall have any right (1) to object to the passage ofsuch ordinance, 2) to object to any ofthe terms and provisions contained therein or the operation thereof, (3) in any manner to question the propriety of the passage thereof or (4) to enjoin or restrain the City from passing the same or taking any action pursuant thereto. The respective rights, duties and obligations under this ordinance ofthe City, the Bond Registrar and all registered owners ofParity Bonds, shall thereafter be determined, exercised and enforced under this ordinance subject in all respects to such supplements and amendments. Section 24. Defaults and Remedies. When the Outstanding Parity Bonds are no longer outstanding, this Section 24 shall become effective: a) Events o(De(ault. Each of the following constitutes an "Event of Default" with respect to the Parity Bonds: 1) Ifa default is made in the payment ofthe principal ofor interest on any ofthe Parity Bonds when the same shall become due and payable. 2) If the City defaults in the observance and performance ofany other of its covenants, conditions and agreements set forth in this ordinance and such default or defaults have continued for a period of six months after the City has received from the registered owners ofnot less than 25 % in outstanding principal amount ofParity Bonds a written notice specifying and demanding the cure ofsuch 26- Page 43 of 88 default. However, ifthe default in the observance and performance ofany other of the covenants, conditions and agreements is one which cannot be completely remedied within the six month period, it shall not be an Event of Default with respect to the Bonds as long as the City has taken active steps within 90 days to remedy the default and is diligently pursuing such remedy. 3) If the City files a petition in bankruptcy or is placed in receivership under any State or federal bankruptcy or insolvency law. b) Bondowners' Trustee. So long as an Event of Default has not been remedied, a bondowners' trustee (the "Bondowners' Trustee'') may be appointed by the registered owners of 25% in principal amount of Parity Bonds then outstanding by an instrument or concurrent instruments in writing signed and acknowledged by such registered owners ofParity Bonds or by their attorneys-in:fact, duly authorized and delivered to such Bondowners' Trustee, and after notice ofsuch appointment has been delivered to the City. That appointment shall become effective immediately upon acceptance thereof by the Bondowners' Trustee. Any Bondowners' Trustee must be a bank or trust company organized under the laws of the State of Washington or the State of New York or a national banking association. The bank or trust company acting as Bondowners ' Trustee may be removed at any time, and a successor Bondowners ' Trustee may be appointed, by the registered owners of a majority in principal amount of Parity Bonds, by an instrument or concurrent instruments in writing signed and acknowledged by such registered owners of the Bonds or by their attorneys-in-fact duly authorized. The Bondowners' Trustee may require such security and indemnity as may be reasonable against the costs, expenses and liabilities that may be incurred in the performance ofits duties. Ifany Event ofDefault is, in the sole judgment ofthe Bondowners' Trustee, cured and the Bondowners' Trustee furnishes to the City a certificate so stating, that Event of Default shall be conclusively deemed to be cured and the City, the Bondowners' Trustee and the registered owners ofthe Parity Bonds shall be restored to the same rights and position which they would have held if no Event of Default had occurred. The Bondowners' Trustee appointed in the manner herein provided, and each successor thereto, is declared to be a trustee for the registered owners of all the Parity Bonds and is empowered to exercise all the rights and powers herein conferred on the Bondowners' Trustee. c) Suits at Law or in Equity . Upon the happening of an Event ofDefault and during the continuation thereof, the Bondowners' Trustee may (and, upon the written request of the registered owners of not less than 25% in principal amount of Parity Bonds outstanding, must) take such steps and institute such suits, actions or other proceedings, all as it may deem appropriate for the protection and enforcement of the rights of the registered owners of Parity Bonds, to collect any amounts due and owing to or.from the City, or to obtain other appropriate relief, and may enforce the specific performance of any covenant, agreement or condition contained in this ordinance or in any ofthe Parity Bonds. Any action, suit or other proceedings instituted by the Bondowners' Trustee hereunder shall be brought in its name as trustee.for the owners ofParity Bonds and all such rights ofaction upon or under any ofthe Parity Bonds or the provisions ofthis ordinance may be enforced by the Bondowners' Trustee without the possession of any of those Parity Bonds and without the production of the same at any trial or proceedings relative thereto except where otherwise required by law. Any such suit, action or proceeding instituted by the Bondowners' Trustee shall 27- Page 44 of 88 be brought for the ratable benefit ofall of the registered owners of those Parity Bonds, subject to the provisions ofthis ordinance. The respective registered owners ofParity Bonds, by taking and holding the same, shall be conclusively deemed irrevocably to appoint the Bondowners' Trustee the true and lawful trustee ofthe respective registered owners ofthose Parity Bonds, with authority to institute any such action, suit or proceeding; to receive as trustee and deposit in trust any sums becoming distributable on account of those Parity Bonds; to execute any paper or documents for the receipt of money; and to do all acts with respect thereto that the registered owner himself or herself might have done in person. Nothing herein shall be deemed to authorize or empower the Bondowners' Trustee to consent to accept or adopt, on behalf of any registered owner of Parity Bonds, any plan of reorganization or adjustment affecting Parity Bonds or any right of any registered owner thereof, or to authorize or empower the Bondowners' Trustee to vote the claims of the registered owners thereof in any receivership, insolvency, liquidation, bankruptcy, reorganization or other proceeding to which the City is a party. d) No Acceleration. Nothing contained in this section shall, in any event or under any circumstance, be deemed to authorize the acceleration ofmaturity ofprincipal ofthe Parity Bonds. The remedy of acceleration is expressly denied to the owners of the Parity Bonds under any circumstances including, without limitation, upon the occurrence and continuance ofan Event of Default. e) Application o(Money Collected by Bondowners' Trustee. Any money collected by the Bondowners' Trustee at any time pursuant to this section shall be applied in the following order o.fpriority: 1) First, to the payment of the charges, expenses, advances and compensation ofthe Bondowners' Trustee and the charges, expenses, counselfees, disbursements and compensation ofits agents and attorneys. 2) Second, to the payment to the persons entitled thereto of all installments of interest then due on Parity Bonds in the order of maturity o.f such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon to the persons entitled thereto, without any discrimination or preference. 3) Third, to the payment to the persons entitled thereto of the unpaid principal amounts of any Parity Bonds which shall have become due (other than Parity Bonds previously called for redemption for the payment of which money is held pursuant to the provisions hereto), whether at maturity or by proceedings for redemption or otherwise, in the order oftheir due dates and, ifthe amount available shall not be sufficient to pay in full the principal amounts due on the same date, then to the payment thereof ratably, according to the principal amounts due thereon to the persons entitled thereto, without any discrimination or preference. t) Duties and Obligations o(Bondowners' Trustee. The Bondowners' Trustee shall not be liable except for the performance ofsuch duties as are specifically set forth herein. During an Event o.fDefault, the Bondowners' Trustee shall exercise such of the rights and powers vested 28- Page 45 of 88 in it hereby, and shall use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. The Bondowners ' Trustee shall have no liability for any act or omission to act hereunder except for the Bondowners' Trustee's own negligent action, its own negligent failure to act or its own willful misconduct. The duties and obligations ofthe Bondowners' Trustee shall be determined solely by the express provisions of this ordinance, and no implied powers, duties or obligations of the Bondowners ' Trustee shall be read into this ordinance. The Bondowners' Trustee shall not be required to expend or risk its own funds or otherwise incur individual liability in the performance of any of its duties or in the exercise of any of its rights or powers as the Bondowners ' Trustee, except as may result from its own negligent action , its own negligent failure to act or its own willful misconduct. The Bondowners ' Trustee shall not be bound to recognize any person as a registered owner of any Parity Bonds until his or her title thereto, if disputed, has been established to its reasonable satisfaction. The Bondowners ' Trustee may consult with counsel and the opinion of such counsel shall be.full and complete authorization and protection in respect ofany action taken or suffered by it hereunder in good faith and in accordance with the opinion ofsuch counsel. The Bondowners ' Trustee shall not be answerable for any neglect or default of any person, firm or corporation employed and selected by it with reasonable care. g) Suits by Individual Owners of Parity Bonds Restricted. Neither the registered owner nor the beneficial owner ofany one or more ofParity Bonds have any right to institute any action, suit or proceeding at law or in equity for the enforcement ofsame unless: 1) an Event ofDefault has happened and is continuing; and 2) a Bondowners ' Trustee has been appointed; and 3) such owner previously shall have given to the Bondowners ' Trustee written notice of the Event of Default on account of which such suit, action or proceeding is to be instituted; and 4) the registered owners of 25% in principal amount of the then outstanding Parity Bonds have made, after the occurrence ofsuch Event ofDefault, written request of the Bondowners ' Trustee and have afforded the Bondowners ' Trustee a reasonable opportunity to institute such suit, action or proceeding; and 5) there has been offered to the Bondowners' Trustee security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; and 6) the Bondowners' Trustee has refused or neglected to comply with such request within a reasonable time. No owner of any Parity Bond shall have any right in any manner whatever by his or her action to affect or impair the obligation of the City to pay from the Net Revenue the principal of and interest on Parity Bonds to the respective owners thereof when due. Section 25. Sale and Delivery of the Bonds. 29- Page 46 of 88 a) Manner of Sale of Bonds; Delivery of Bonds. The Designated Representative is authorized to sell the Bonds in one or more Series by negotiated sale to the Purchaser based on the assessment of the Designated Representative of market conditions, in consultation with appropriate City officials and staff, Bond Counsel and other advisors. In accepting the Final Terms, the Designated Representative shall take into account those factors that, in the judgment of the Designated Representative, may be expected to result in the lowest true interest cost to the City. The Bond Purchase Contract for each Series of Bonds shall set forth the Final Terms for such Series of Bonds. The Designated Representative is authorized to execute the Bond Purchase Contract on behalf of the City, so long as the terms provided therein are consistent with the terms of this ordinance. b) Preparation, Execution and Delivery of the Bonds. The Bonds will be prepared at City expense and will be delivered to the Purchaser in accordance with the Bond Purchase Contract, together with the approving legal opinion of Bond Counsel regarding the Bonds. Section 26. Official Statement; Continuing Disclosure. a) Preliminary Official Statement Deemed Final. The Designated Representative shall review and, if acceptable to him or her, approve the preliminary Official Statement prepared in connection with the sale of the Bonds to the public. For the sole purpose of the Purchaser's compliance with paragraph (b)(l) of Rule 15c2-12, the Designated Representative is authorized to deem that preliminary Official Statement final as of its date, except for the omission of information permitted to be omitted by Rule 15c2-12. The City approves the distribution to potential purchasers of the Bonds of a preliminary Official Statement that has been approved by the Designated Representative and been deemed final, if applicable, in accordance with this subsection. b) Approval ofFinal Official Statement. The City approves the preparation of a final Official Statement for the Bonds to be sold to the public in the form of the preliminary Official Statement that has been approved and deemed final in accordance with subsection (a), with such modifications and amendments as the Designated Representative deems necessary or desirable, and further authorizes the Designated Representative to execute and deliver such final Official Statement to the Purchaser, if required under Rule 15c2-12. The City authorizes and approves the distribution by the Purchaser of the final Official Statement so executed and delivered to purchasers and potential purchasers of the Bonds. c) Undertaking to Provide Continuing Disclosure. If necessary to meet the requirements of paragraph (b )( 5) of Rule 15c2-12, as applicable to the Purchaser acting as a participating underwriter for the Bonds, the Designated Representative is authorized to execute a written undertaking to provide continuing disclosure for the benefit of holders of the Bonds in substantially the form attached as Exhibit C. Section 27. General Authorization and Ratification. The Designated Representative and other appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of the Bonds to the Purchaser and for the proper application, use and investment of the proceeds of the Bonds. All actions taken prior to the effective date of this ordinance in furtherance 30- Page 47 of 88 Page 48 of 88 EXHIBIT A PARAMETERS FOR FINAL TERMS i) Principal Amount. The Bonds may be issued in one or more Series and shall not exceed the aggregate principal amount of $25,500,000. ii) Date or Dates. Each Bond shall be dated its Issue Date, which date may not be later than one year after the effective date of this ordinance. iii) Denominations, Name, etc. The Bonds shall be issued in Authorized Denominations and shall be numbered separately in the manner and shall bear any name and additional designation as deemed necessary or appropriate by the Designated Representative. iv) Interest Rate(s). Each Bond shall bear interest at a fixed rate per annum ( computed on the basis of a 360-day year of twelve 30-day months) from the Issue Date or from the most recent date for which interest has been paid or duly provided for, whichever is later. One or more rates of interest may be fixed for each Bond or any Series of Bonds. No rate of interest for any Bond or any Series of Bonds may exceed 6.25%, and the true interest cost to the City for each Series of Bonds may not exceed 6.25%. v) Payment Dates. Interest shall be payable semiannually on each June 1 and December 1 or such other semiannual dates acceptable to the Designated Representative), commencing no later than one year following the Issue Date of such Series of Bonds. Principal payments shall commence on a date acceptable to the Designated Representative and shall be payable at maturity or in mandatory redemption installments annually thereafter, on dates acceptable to the Designated Representative. vi) Final Maturity. The final maturity date of the Project Bonds following allocation, if necessary under (xi) below, shall be no later than December 1, 2050. The final maturity date of the Refunding Bonds following allocation, ifnecessary under (xi) below, shall be no later than the final maturity date of the Refunded Bonds refunded by such Refunding Bonds. vii) Redemption Rights. The Designated Representative may approve in the Bond Purchase Contract provisions for the optional and mandatory redemption of Bonds, subject to the following: 1) Optional Redemption. Any Bond may be designated as being (A) subject to redemption at the option of the City prior to its maturity date on the dates and at the prices set forth in the Bond Purchase Contract; or (B) not subject to redemption prior to its maturity date. If a Bond is subject to optional redemption prior to its maturity, it must be subject to such redemption on one or more dates occurring not more than 1O½ years after the Issue Date. 2) Mandatory Redemption. Any Bond may be designated as a Term Bond, subject to mandatory redemption prior to its maturity on the dates and in the amounts set forth in the Bond Purchase Contract. A-1 Page 49 of 88 viii) Price. The purchase price for each Series of Bonds may not be less than 98% or more than 135% of the stated principal amount of that Series. ix) Section 265(b)(3) Designation. Pursuant to Section 19(d) of this ordinance, the Designated Representative may designate any qualifying Series of Bonds as "qualified- tax-exempt obligations" for purposes of Section 265(b )(3) of the Code. x) Selection of Refunded Bonds. Under the terms and conditions of this ordinance, the Designated Representative is authorized to select the Refunded Bonds to be refunded by the Refunding Bonds. Refunded Bonds, as selected by the Designated Representative, shall be identified in the applicable Bond Purchase Contract and/or the applicable Refunding Trust Agreement. xi) Allocation of Bonds. For any combined Series of Bonds, the Designated Representative shall allocate the maturing principal amounts to the Project Bonds and the Refunding Bonds in such manner as will comply with applicable requirements of the Code, meet restrictions of State law and effectuate any other allocation deemed necessary or advisable for accounting and debt administration purposes. xii) Minimum Savings. Each Series of Refunding Bonds shall produce a minimum net present value savings to the City and its ratepayers of 3.00% (as a percentage of the Refunded Bonds refunded by such Series ofRefunding Bonds). Net present value savings means the aggregate of (i) annual debt service on the Refunded Bonds, less (ii) annual debt service on the Refunding Bonds (including expenses related to costs of issuance of such Refunding Bonds) discounted to the Issue Date using the yield on the applicable Series of Bonds that includes such Refunding Bonds as the discount rate, plus (iii) excess cash, if any distributed to the City on the Issue Date, and less (iv) the amount of the City Contribution, if any, made on such Issue Date. xiii) Tax Status. The Designated Representative is authorized to determine whether any Series of Bonds will be issued as a Taxable Series or a Tax-Exempt Series and to confirm the identification of any such Taxable Series or Tax-Exempt Series in the Bond Purchase Contract applicable to such Series of Bonds. xiv) Other Terms and Conditions. 1) The Designated Representative may determine whether it is in the City's best interest to provide for bond insurance or other credit enhancement; and may accept such additional terms, conditions and covenants as he or she may determine are in the best interests of the City, consistent with this ordinance. 2) The Designated Representative must have determined that the Parity Conditions have been met and satisfied as of the Issue Date of the Bonds. A-2 Page 50 of 88 EXHIBIT B PARITY CONDITIONS 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 (if such Future Parity Bonds are secured by the Reserve Account) of (i) an amount equal to the Reserve Requirement for those Future Parity Bonds from the Future Parity Bond proceeds, or (ii) Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the Reserve Requirement for those Future Parity Bonds, or (iii) to the extent that the Reserve Requirement is not funded from Future Parity Bond proceeds or Reserve Insurance or Alternate Security at the time of issuance of those Future Parity Bonds, by no later than the fifth anniversary date from the dated date of the respective issue of Future Parity Bonds from ULID Assessments, if any, levied and first collected for the payment of the principal ofand interest on those Future Parity Bonds and, to the extent that ULID Assessments are insufficient, then from the Net Revenue in approximately equal annual payments, the Reserve Requirement for those Future Parity Bonds. No Reserve Insurance or Alternate Security may be used to satisfy the Reserve Requirement for Future Parity Bonds unless (i) the insurance policy or Alternate Security is non-cancelable and (ii) the insurer or provider of the Alternate Security as of the time of issuance of such insurance or Alternate Security is rated in the highest rating categories by both Moody's Investors Service, Inc., and Standard & Poor's Ratings Services; however, when the 2009 Bonds, 2010A Bonds, 2013A Bonds and 2013T Bonds are no longer outstanding, the Reserve Insurance or Alternate Security may be rated as of the time of issuance of such insurance or Alternate Security in one ofthe two-highest categories by either Moody's Investors Service, Inc., or S&P Global. d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the payment of mandatory redemption or sinking fund requirements into the Bond Fund for any Term Bonds to be issued and for regular payments to be made for the payment of the principal of such Term Bonds on or before their maturity, or, as an alternative, the mandatory redemption ofthose 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 for any 12 consecutive calendar months out of the immediately preceding 24 calendar months shall be equal to the Coverage Requirement for each year thereafter, except that such certificate may be provided by a City representative if it is based solely upon actual historical Net Revenue without any adjustment. B-1 Page 51 of 88 The certificate, in estimating the Net Revenue available for debt service, shall use the historical Net Revenue for any 12 consecutive months out of the 24 months immediately preceding the month of delivery of the Future Parity Bonds. Net Revenue 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 ofthe 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; 5) The engineer's or accountant's estimate of the Net Revenue to be derived from customers to connect within 180 days after the date of the completion of the additions to and improvements and extensions of the Waterworks Utility to be paid for out of the proceeds of the sale of the additional Future Parity Bonds or from other additions to and improvements and extensions of the Waterworks Utility then under construction and not fully connected to the facilities of the Waterworks Utility when such additions, improvements and extensions are completed; 6) Any increases or decreases in Net Revenue as a result of any actual or reasonably anticipated changes in Operating and Maintenance Expenses subsequent to the 12 month period; and 7) When the Outstanding Parity Bonds are no longer outstanding, estimated deposits to and withdrawals from the Rate Stabilization Account. 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. Prior: Ordinance No. 3915, Section 18 (2009 Bonds) Ordinance No. 3962, Section 21 (2010A Bonds; 2010T Bonds) Ordinance No. 4126, Section 16 (2013A Bonds; 2013T Bonds) Ordinance No. 4254, Section 15 (2015 Bonds) Ordinance No. 4365, Section 15 (2017 Bonds) B-2 Page 52 of 88 Form of] UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE City of Pasco, Washington Name of Series I EXHIBIT C The City of Pasco, Washington (the "City"), makes the following written Undertaking for the benefit ofholders ofthe above-referenced bonds (the "Bonds"), for the sole purpose ofassisting the Purchaser in meeting the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds. Capitalized terms used but not defined below shall have the meanings given in Ordinance No. __ of the City (the "Bond Ordinance"). a) Undertaking to Provide Annual Financial Information and Notice of Listed Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB: i) Annual financial information and operating data of the type included in the final official statement for the Bonds and described in paragraph (b )(i) ("annual financial information"); ii) Timely notice (not in excess of 10 business days after the occurrence of the event) of the occurrence of any of the following events with respect to the Bonds: 1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; 4) unscheduled draws on credit enhancements reflecting financial difficulties; 5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined in Rule l 5c2-12; ( 13) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, ifmaterial; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; (15) incurrence of a financial obligation of the City or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or C-1 Page 53 of 88 obligated person, any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City or obligated person, any of which reflect financial difficulties. The term "financial obligation" means a (i) debt obligation; ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term "financial obligation" shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule l 5c2-l 2. iii) Timely notice of a failure by the City to provide the required annual financial information described in paragraph (b )(i) on or before the date specified in paragraph (b )(ii). b) Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in paragraph (a): i) Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles applicable to local governmental units of the State such as the City, as such principles may be changed from time to time; (2) outstanding debt secured by the Net Revenue and ULID Assessments; (3) debt service coverage ratio for the year; 4) Waterworks Utility number of customers; and (5) 10 largest water customers and 10 largest sewer customers of the Waterworks Utility by amount billed]; ii) Shall be provided not later than the last day of the ninth month after the end of each fiscal year of the City ( currently, a fiscal year ending December 31 ), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending December 31, 20[_]; and iii) May be provided in a single or multiple documents, and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. If not submitted as part of the annual financial information described in paragraph (b )(i) above, the City will provide or cause to be provided to the MSRB audited financial statements, when and if available. c) Amendment of Undertaking. This Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, Rating Agency or the MSRB, under the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice to the MSRB of the substance ( or provide a copy) of any amendment to the Undertaking and a brief statement ofthe reasons for the amendment. Ifthe amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial infonnation will include a narrative explanation of the effect of that change on the type of information to be provided. C-2 Page 54 of 88 d) Beneficiaries. This Undertaking shall inure to the benefit of the City and the holder of each Bond, and shall not inure to the benefit of or create any rights in any other person. e) Termination of Undertaking. The City's obligations under this Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under this Undertaking shall terminate if the provisions of Rule 15c2-12 that require the City to comply with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion ofBond Counsel delivered to the City, and the City provides timely notice of such termination to the MSRB. t) Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with this Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with this Undertaking shall constitute a default in respect of the Bonds. The sole remedy of any holder of a Bond shall be to take action to compel the City or other obligated person to comply with this Undertaking, including seeking an order of specific performance from an appropriate court. g) Designation of Official Responsible to Administer Undertaking. The Finance Director or his or her designee is the person designated, in accordance with the Bond Ordinance, to carry out the Undertaking in accordance with Rule 15c2-12, including, without limitation, the following actions: i) Preparing and filing the annual financial information undertaken to be provided in paragraph (a)(i); ii) Determining whether any failure to provide the annual financial information undertaken to be provided in paragraph (a)(i) has occurred and providing any notice undertaken to be provided in paragraph (a)(iii); iii) Determining whether any event specified in items (1)-(16) of paragraph (a)(ii) has occurred, assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any notice undertaken to be provided in paragraph a)(ii) of its occurrence; iv) Determining whether any person other than the City is an "obligated person" within the meaning of Rule 15c2-12 with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of listed events for that person required under Rule 15c2-12; v) Selecting, engaging and compensating designated agents and consultants, including but not limited to financial advisors and legal counsel, to assist and advise the City in carrying out this Undertaking; and vi) Effecting any necessary amendment of this Undertaking. C-3 Page 55 of 88 CERTIFICATION I, the undersigned, City Clerk of the City of Pasco, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No .44i'r(the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on April 6, 2020, as that ordinance appears on the minute book of the City. 2. The Ordinance will be in full force and effect five days after publication in the City's official newspaper, which publication date is ~-/ CJ _, 2020. 3. A quorum of the members of the City Council was present throughout the meeting and a majority of the members voted in the proper manner for the passage of the Ordinance. Dated: April 6, 2020. CITY OF PASCO, WASHINGTON Debra Barham, City Clerk Page 56 of 88 Project Name DescriptionMaximum AmountColumbia East Force Main & Lift StationThe Columbia East Lift Station portion of this project has been designed, is under construction and will be completed in 2019. The remainder of this project is for the design and construction of two force mains that will serve multiple food processors in the Commercial Ave-Kahlotus Highway area, and direct food process water (industrial waste) to the City's Process Water Reuse Facility (PWRF). Three food processors will have use of this force main; Simplot RDO, Grimmway and Freeze Pack. This project will allow for the diversion of 1.5 MGD of industrial waste away from the municipal wastewater treatment plant and directed to the PWRF.1,930,000$ Foster Wells Force MainBuild a new force main from the Foster Wells Lift Station to the PWRF. This will provide redundancy to the two existing aging and unreliable force mains. Project is currently in construction.4,000,000$ Irrigation Pump StationThe Process Water Reuse Facility (PWRF) includes an irrigation pump station (IPS). The existing IPS is in serious need of replacement due to deterioration to the point of multiple minor failures. If the current pump station were to have a major failure, there would be no way to pump the process water out of the facility to the crop fields. Complete shut down of all food processor partners would be needed until repairs could be made. This project was fully designed in 2019. 8,800,000$ PWRF Primary Treatment ImprovementsThis project will construct improvements to the Process Water Reuse Facility (PWRF) to allow for additional capacity and improved treatment of the food processors' industrial waste being pumped to the facility. This project will also address the odor issues that currently plague the facility.1,500,000$ PWRF Utility Bond16,230,000$ Page 57 of 88 AGENDA REPORT FOR: City Council May 19, 2020 TO: Dave Zabell, City Manager Remote Workshop Meeting: 5/26/20 FROM: Steve Worley, Director Public Works SUBJECT: Professional Services Agreement with WSP, Inc. for Construction Management Services on Lewis Street Overpass Project I. REFERENCE(S): Vicinity Map Professional Services Agreement with Scope of Work & Estimate Presentation II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Construction Estimate: Railroad Costs $ 1,520,000 Overpass Cost $24,782,000 Const. Management $ 1,853,000 (Proposed) Total $28,155,000 Construction management represents 6.5% of the total estimated construction cost. Construction Funding Sources: Local Funds $ 5,155,000 Connecting Washington Partnership $ 13,600,000 TIB $ 5,000,000 MVA $ 4,400,000 Total Funds $ 28,155,000 Local funds shown above are more than originally estimated for the City's share or this project. This amount increased due to the current Engineer’s Estimate. The total amount Page 58 of 88 of local funds required will be reassessed after bids are received and prior to bid award. IV. HISTORY AND FACTS BRIEF: Over the past 16 years, a significant effort has been expended towards the successful completion of the Lewis Street Overpass Project. This project will replace the undercrossing of the BNSF Railyard that was constructed in 1937 and has had few modernizations since then. The underpass is functionally obsolete and due to its location, underneath a critical railyard, presents public safety and security concerns. Lewis Street is an essential east-west corridor for transit, schools, social services, and efficient movement of freight and goods. The deteriorating underpass requires constant maintenance and does not allow ADA pedestrian or bicycle access. The City, with support from the Washington State Department of Transportation (WSDOT), Benton Franklin Council of Governments (BFCG), Burlington Northern Santa Fe Railroad (BNSF) and other stakeholders has prioritized replacement of the undercrossing with an overcrossing structure to provide increased capacity, improved pedestrian enhance greatly also will overpass safety. public and mobility The connectivity in Downtown Pasco for those segments of the community relying on this connection for access to downtown goods and services. The proposed overcrossing will adequately and automotive commercial transit, bike, accommodate pedestrians, demands. As a regional priority, the City has managed design, environmental studies, and right-of-way (ROW) acquisitions required for the project. The City acquired local, State and Federal funding to support replacement of the aging undercrossing, including a recent commitment of $4.4 million from the Motor Vehicle Account (MVA). V. DISCUSSION: A request for Qualifications was advertised in October 2019 to solicit prospective Construction Management Consultants. A Consultant Selection Committee comprised of City staff, reviewed and scored the submittals and performed interviews ultimately, selecting WSP, Inc. of Seattle, WA as the most qualified. Staff negotiated a scope and fee for these services. The proposed Professional Services Agreement (PSA) with WSP, Inc. will provide construction management services for the construction phase of the project and support the efforts of City staff. The PSA focuses on management of the Overpass Structure including retaining walls, grading, paving, utilities, abandoning the underpass, and other associated work necessary to complete the Lewis Street Overpass P roject in one continuous Project phase. construction management services are scheduled to commence on July 1, 2020 and is estimated to be completed by June 30, 2022. Legal has reviewed the attached PSA. Staff recommends approval of this professional services agreement with WSP, Inc. for the amount of $1,852,654.64. Page 59 of 88 ""(J Q) co (I) LEWIS STREET OVERPASS Page 60 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 1 of 10 PROFESSIONAL SERVICES AGREEMENT 13007 – Lewis Street Overpass Construction Management Agreement No. 20-018 THIS AGREEMENT is made and entered into between the City of Pasco, a Washington Municipal Corporation, hereinafter referred to as “City”, and WSP USA Inc., hereinafter referred to as “Consultant,” on the _______ day of _________________, 2020. RECITALS WHEREAS, the City desires to have certain services and/or tasks performed as set forth below requiring specialized skills, training, equipment, and other supportive capabilities; and WHEREAS, the Consultant represents that it is qualified and possesses sufficient skills, experience, equipment, and necessary capabilities, including: technical and professional expertise, when required, to perform the services and/or tasks as set forth in this Agreement upon which the City is relying. NOW, THEREFORE, in consideration of the mutual covenants, and performances contained herein, the parties agree as follows: 1. Scope of Services. The Consultant shall perform such services and accomplish such tasks, including the furnishing of all labor, materials, facilities and equipment necessary for full performance thereof, as identified and designated as Consultant’s Responsibilities throughout this Agreement, and as more particularly described in Scope of Work detailed in Exhibit A, attached hereto and incorporated herein (the “Project”). 2. Term. This Project shall begin on the execution date listed above and promptly be completed by 12/31/2022. 3. Compensation and Payment. 3.1 Payment for services provided hereunder shall be made following the performance of such services. Such payment shall be full compensation for work performed or services rendered, and for all labor, materials, supplies, equipment, and incidentals necessary to complete the Project. 3.2 No payment shall be made for any services rendered by the Consultant except for services identified and set forth in this Agreement except as may be authorized by a written supplemental agreement approved by the City. 3.3 The City shall pay the Consultant for work performed under this Agreement upon timely submitted invoices detailing work performed and expenses for which reimbursement is sought. The City shall approve all invoices before payment is Page 61 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 2 of 10 issued. Payment shall occur within thirty (30) days of receipt and approval of an invoice. 3.4 The City shall pay the Consultant for all work performed and expenses incurred under this Agreement, as follows. ☒ Hourly (Multiple Rate): Such rates as identified on Exhibit B, plus actual expenses incurred as provided under this Agreement, but not to exceed a total of $1,852,654.64 without the prior written authorization by the City 4. Reports and Inspections. 4.1 The Consultant at such times and in such forms as the City may require, shall furnish to the City such statements, records, studies, surveys, reports, data, and information as the City may request pertaining to matters covered by this Agreement. 4.2 The Consultant shall, at any time during normal business hours and as often as the City or the Washington State Auditor may reasonably deem necessary, make available for examination all of its records and data with respect to all matters covered, directly or indirectly, by this Agreement and shall permit the City, or its designated authorized representative to audit and inspect other data relating to all matters covered by this Agreement. The City shall receive a copy of all audit reports made by the agency or firm as to the Consultant’s activities. The City may, at its discretion, conduct an audit at its expense, using its own or outside auditors, of the Consultant’s activities which relate, directly or indirectly, to this Agreement. Consultant shall be provided a copy of such reports. 4.3 The Consultant, during the term of this Agreement, shall obtain all permits and registration documents necessary for the performance of its work and for the execution of services at its own expense, and shall maintain its validity. Upon request, the Consultant shall deliver to the City copies of these licenses, registration documents, and permits or proof of their issuance or renewal. 4.4 Consultant shall maintain books, records and documents, which sufficiently and properly reflect all direct and indirect costs related to the performance of this Agreement, and shall maintain such accounting procedures and practices as may be necessary to assure proper accounting of all funds paid pursuant to this Agreement. These records shall be subject, at all reasonable times, to inspection, review, or audit as provided above. 4.5 The Consultant shall retain all books, records, documents or other material relevant to this Agreement for three (3) years after its expiration. Consultant agrees that the City, or its designee, shall have full access and right to examine any of said materials at all reasonable times during this period. Page 62 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 3 of 10 5. Ownership and Use of Documents. 5.1 All research, tests, surveys, preliminary data, information, drawings and documents made, collected, or prepared by the Consultant for performing the services subject to this Agreement, as well as any final product, collectively referred to as “work product,” shall be deemed as the exclusive property of the City, including copyright as secured thereon. Consultant may not use them except in connection with the performance of the services under this Agreement or with the prior written consent of the City. Any prior copyrighted materials owned by the Consultant and utilized in the performance of the services under this Agreement, or embedded in with the materials, products and services provided thereunder, shall remain the property of the Consultant subject to a license granted to the City for their continued use of the products and services provided under this Agreement. Any work product used by the Consultant in the performance of these services which it deems as “confidential,” “proprietary,” or a “trade secret” shall be conspicuously designated as such. 5.2 In the event of Consultant’s default, or in the event that this Agreement is terminated prior to its completion, the work product of the Consultant, along with a summary of the services performed to date of default or termination, shall become the property of the City, and tender of the work product and summary shall be a prerequisite to final payment under this Agreement. The summary of services provided shall be prepared at no additional cost, if the Agreement is terminated through default by the Consultant. If the Agreement is terminated through convenience by the City, the City agrees to pay Consultant for the preparation of the summary of services provided. 6. Public Records. 6.1 Consultant acknowledges that the City is an agency subject to Chapter 42.56 RCW “Public Records Act.” All preliminary drafts or notes prepared or gathered by the Consultant, and recommendations of the Consultant are exempt prior to the acceptance by the City or public citation by the City in connection with City action. 6.2 If the Consultant becomes a custodian of public records of the City and request for such records is received by the City, the Consultant shall respond to the request by the City for such records within five (5) business days by either providing the records, or by identifying in writing the additional time necessary to provide the records with a description of the reasons why additional time is needed. Such additional time shall not exceed twenty (20) business days unless extraordinary good cause is shown. 6.3 In the event the City receives a public records request for protected work product of the Consultant within its possession, the City shall, prior to the release of any protected work product or as a result of a public records request or subpoena, provide Consultant at least ten (10) business days prior written notice of the pending Page 63 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 4 of 10 release and to reasonably cooperate with any legal action which may be initiated by the Consultant to enjoin or otherwise prevent such release. 7. Independent Contractor Relationship. 7.1 The parties intend that an independent contractor relationship is created by this Agreement. The City is interested primarily in the results to be achieved; subject to the scope of services and the specific requirements of this Agreement, the implementation of services will lie solely with the discretion of the Consultant. No agent, employee, officer or representative of the Consultant shall be deemed to be an employee, agent, officer, or representative of the City for any purpose, and the employees of the Consultant are not entitled to any of the benefits or privileges the City provides for its employees. The Consultant will be solely and entirely responsible for its acts and for the acts of its agents, employees, officers, subcontractors or representatives during the performance of this Agreement. 7.2 In the performance of the services provided in this Agreement, Consultant is an independent contractor with full authority to control and direct the performance of the details of the work, however, the results of the work contemplated herein must meet the approval of the City and shall be subject to the City’s general rights of inspection and review to secure the satisfactory completion thereof. 7.3 The Consultant shall comply with all State and Federal laws including, but not limited to: 7.3.1 The definition requirements of RCW 50.04.140 (Employment Security). 7.3.2 RCW 51.08.195 (Industrial Insurance). 7.3.3 Obtain a City of Pasco business license. 7.4 The City may, at its sole discretion, require the Consultant to remove any employee, agent or servant from employment on this Project who, in the City’s sole discretion, may be detrimental to the City’s interest. 8. Indemnification. 8.1 The Consultant shall defend, indemnify, and hold harmless the City, its officers, officials, agents, employees, and volunteers from any and all claims and causes of action, including, but not limited to, actions of law or administrative proceedings for all injuries to persons or damages to property, and all losses, damages, demands, suits, judgments, including attorney fees, arising out of, or as a result of, or in connection with the work performed under this Agreement, and caused or occasioned in whole or in part by reason of errors, negligent acts or omissions of the Consultant or its subcontractors in the performance of this Agreement, except Page 64 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 5 of 10 for injuries and damages caused by the sole negligence of the City, its officers, employees, agents, and volunteers. 8.2 Should a Court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injuries or damages to property caused by or resulting from the concurrent negligence of the Consultant, and the City, its officers, employees, agents and volunteers, the Consultant’s liability and obligation to defend hereunder shall only be the proportionate extent of the Consultant’s negligence. 8.3 It is further agreed that the indemnification provided herein constitutes the Consultant’s waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. 8.4 No liability shall attach to the City by reason of entering into this Agreement except as expressly provided herein. 8.5 This indemnification shall include damages, penalties and attorney fees sustained as a result of Consultant’s delayed or failed performance of Section 6 above. 8.6 This waiver has been mutually negotiated by the parties, and the provisions of this section shall survive the expiration or termination of this Agreement. 9. Insurance. The Consultant shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Consultant, its agents, representatives, employees, or subcontractors. 9.1 Minimum Scope of Insurance. Consultant shall obtain insurance of the types described below: 9.1.1 Automobile Liability insurance covering all owned, non-owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage. 9.1.2 Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors and personal injury and advertising injury. The Commercial General Liability insurance shall be endorsed to provide a per project general aggregate limit using ISO form CG 25 03 05 09 or an endorsement providing at least as broad coverage. There shall be no exclusion for liability arising from explosion, collapse or underground property damage. The City shall be named as an additional insured under the Contractor’s Commercial General Liability insurance policy with Page 65 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 6 of 10 respect to the work performed for the City using ISO Additional Insured endorsement CG 20 10 10 01 and Additional Insured-Completed Operations endorsement CG 20 37 10 01 or substitute endorsements providing at least as broad coverage. 9.1.3 Workers’ Compensation coverage as required by the Industrial Insurance laws of the State of Washington. 9.1.4 Professional Liability insurance appropriate to the Consultant’s profession. 9.2 Minimum Amounts of Insurance. Consultant shall maintain the following insurance limits: 9.2.1 Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $1,000,000 per accident. 9.2.2 Commercial General Liability insurance shall be written with limits no less than: ☒ $5,000,000 each occurrence; ☒ $10,000,000 general aggregate ☐ $2,000,000 products-completed operations aggregate limit; or ☐ $________ each occurrence; and $________ general aggregate 9.2.3 Professional Liability insurance shall be written with limits no less than: ☒ $5,000,000 per claim; ☒ $10,000,000 policy aggregate limit; or ☐ $________ per claim; and $________ per policy aggregate limit 9.3 Other Insurance Provisions. The insurance policies are to contain, or be endorsed to contain, the following provisions for Automobile Liability, Professional Liability, and Commercial General Liability insurance: 9.3.1 The Consultant’s insurance coverage shall be primary insurance as respects the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Consultant’s insurance and shall not contribute with it. 9.3.2 The Consultant’s insurance shall be endorsed to state that coverage shall not be cancelled by either party, except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. The Consultant shall provide the City and all Additional Insureds for this work with written notice of any policy cancellation within two business days of their receipt of such notice. Page 66 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 7 of 10 9.4 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A:VII. 9.5 Verification of Coverage. Consultant shall furnish the City with original certificates and a copy of the amendatory endorsements, including, but not necessarily limited to, the additional insured endorsement evidencing the insurance requirements of the Consultant before commencement of the work. Upon the City’s request, the Consultant shall furnish certified copies of all required insurance policies, including endorsements, required in this Contract and evidence of all subcontractor’s coverage. 9.6 Subcontractors’ Insurance. The Contractor shall cause each and every Subcontractor to provide insurance coverage that complies with all applicable requirements of the Consultant-provided insurance set forth herein, except the Consultant shall have sole responsibility for determining the limits of coverage required to be obtained by Subcontractors. The Consultant shall ensure that the City is an additional insured on each and every Subcontractor’s Commercial General liability insurance policy using an endorsement as least as broad as ISO CG 20 10 10 01 for ongoing operations and CG 20 37 10 01 for completed operations. 9.7 City Full Availability of Consultant Limits. If the Consultant maintains higher insurance limits than the minimums shown above, the City shall be insured for the full available limits of Commercial General and Excess or Umbrella liability maintained by the Consultant, irrespective of whether such limits maintained by the Consultant are greater than those required by this Contract or whether any certificate of insurance furnished to the City evidences limits of liability lower than those maintained by the Consultant. 9.8 Failure to Maintain Insurance. Failure on the part of the Consultant to maintain the insurance as required shall constitute a material breach of contract, upon which the City may, after giving five business days notice to the Consultant to correct the breach, immediately terminate the Contract or, at its discretion, procure or renew such insurance and pay any and all premiums in connection therewith, with any sums so expended to be repaid to the City on demand, or at the sole discretion of the City, offset against funds due the Consultant from the City. 10. Nondiscrimination. In the performance of this Agreement, the Consultant will not discriminate against any employee or applicant for employment on the grounds of race, creed, color, national origin, sex, marital status, age or the presence of any sensory, mental or physical handicap; provided that the prohibition against discrimination in employment because of handicap shall not apply if the particular disability prevents the proper performance of the particular worker involved. The Consultant shall ensure that applicants are employed, and that employees are treated during employment in the performance of this Agreement without discrimination because of their race, creed, color, national origin, sex, marital status, age or the presence of any sensory, mental or physical handicap. Consultant shall take such action with respect to this Agreement as may be required to Page 67 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 8 of 10 ensure full compliance with local, State and Federal laws prohibiting discrimination in employment. 11. Covenant Against Contingent Fees. The Consultant warrants that it has not employed nor retained any company, firm, or person, other than a bona fide employee working exclusively for the Consultant, to solicit or secure this Agreement; and that it has not paid or agreed to pay any company, person or firm, other than a bona fide employee working exclusively for the Consultant, any fee, commission, percentage, brokerage fee, gift, or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, the City shall have the right to terminate this Agreement. 12. Assignment and Subcontracting. 12.1 The City has awarded this Agreement to the Consultant due to its unique qualifications to perform these services. The Consultant shall not assign (or subcontract other than as specifically identified in Exhibit A) its performance under this Agreement or any portions of this Agreement without the prior written consent of the City, which consent must be sought at least thirty (30) days prior t o the date of any proposed assignment. 12.2 Any work or services assigned or subcontracted hereunder shall be subject to each provision of this Agreement including Section 6, Public Records; Section 10, Nondiscrimination; proper bidding procedures where applicable; and all local, State and Federal statutes, ordinances and guidelines. 12.3 Any technical or professional service subcontract not listed in this Agreement, must have prior written approval by the City. 13. Termination. 13.1 Termination for Convenience. Either party may terminate this Agreement for any reason upon giving the other party no less than ten (10) business days written notice in advance of the effective date of such termination. 13.2 Termination for Cause. If the Consultant fails to perform in the manner called for in this Agreement, or if the Consultant fails to comply with any other provisions of this Agreement and fails to correct such noncompliance within five (5) business days of written notice thereof, the City may term inate this Agreement for cause. Termination shall be effected by serving a notice of termination on the Consultant setting forth the manner in which the Consultant is in default. The Consultant will only be paid for services and expenses complying with the terms of this Agreement, incurred prior to termination. 14. General Provisions. 14.1 For the purpose of this Agreement, time is of the essence. Page 68 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 9 of 10 14.2 Notice. Notice provided for in this Agreement shall be sent by: 14.2.1 Personal service upon the Project Administrators; or 14.2.2 Certified mail to the physical address of the parties, or by electronic transmission to the e-mail addresses designated for the parties below. 14.3 The Project Administrator for the purpose of this Agreement shall be: 14.3.1 For the City: Steve M. Worley, P.E, or his/her designee Public Works Director 525 North 3rd PO Box 293 Pasco WA 99301 WorleyS@pasco-wa.gov (e-mail address) 14.3.2 For the Consultant: Jill Marilley, P.E. or his/her designee Construction Services Manager/PNW VP 999 Third Ave, Suite 3200 Seattle, WA 98104 jill.m.marilley@wsp.com (e-mail address) 15. Dispute Resolution. 15.1 This Agreement has been and shall be construed as having been made and entered into and delivered within the State of Washington and it is agreed by each party hereto that this Agreement shall be governed by the laws of the State of Washington. 15.2 In the event of a dispute regarding the enforcement, breach, default, or interpretation of this Agreement, the Project Administrators, or their designees, shall first meet in a good faith effort to resolve such dispute. In the event the dispute cannot be resolved by agreement of the parties, said dispute shall be resolved by arbitration pursuant to RCW 7.04A, as amended, with both parties waiving the right of a jury trial upon trial de novo, with venue placed in Pasco, Franklin County, Washington. The substantially prevailing party shall be entitled to its reasonable attorney fees and costs as additional award and judgment against the other. 16. Nonwaiver. Waiver by the City of any provision of this Agreement or any time limitation provided for in this Agreement shall not constitute a waiver of any other similar event or other provision of this Agreement. 17. Integration. This Agreement between the parties consists in its entirety of this document and any exhibits, schedules or attachments. Any modification of this Agreement or change order affecting this Agreement shall be in writing and signed by both parties. Page 69 of 88 Professional Services Agreement – WSP USA Inc. Agreement No. 20-018 13007 – Lewis Street Overpass Construction Management Page 10 of 10 18. Authorization. By signature below, each party warrants that they are authorized and empowered to execute this Agreement binding the City and the Consultant respectively. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first written above. CITY OF PASCO, WASHINGTON CONSULTANT Dave Zabell, City Manager Jill Marilley, Construction Services Manager ATTEST: Debra C. Barham, City Clerk APPROVED AS TO FORM: Kerr Ferguson Law, PLLC, City Attorney Page 70 of 88 City of Pasco Scope of Work 7 February 2020 Lewis Street Overcrossing Construction Management PROJECT DESCRIPTION WSP will provide construction management services for the upcoming Lewis Street Overcrossing project. This project is planned to construct a new overcrossing over the BNSF right way at Lewis Street, an overcrossing of First Ave., MSE Retaining walls, and associated grading, paving, drainage, and architectural features in one continuous phase. PROJECT ASSUMPTIONS The following project assumptions are noted as follows •Project duration will not exceed 24 months including ad period and final records •Owner will provide a secured office space on site (provided through agreement with the contractor is acceptable) •Owner will allow use of City conference rooms for project meetings •All work will be in conformance with WSDOT Local Agency Guidelines Manual •Contractor will provide Red Line drawings DEFINITIONS & ABBREVIATIONS Project – City of Pasco Lewis Street Overcrossing Owner – City of Pasco Consultant – WSP Inc. RE – Resident Engineer OE – Office Engineer EOR - Engineer or Record Task 1 Project Management •Prepare project plan including organization matrix, and budget •Administer Consultant Contract including providing monthly status reports, cost to complete, invoices and managing sub-consultants •Attend meetings related to this Contract with Owner’s staff, and as requested provide appropriate meeting notes or other documentation of meetings •Prepare cost proposals and negotiate timely amendments •Supervise, coordinate, and direct the consultant staff with respect to the administration of this contract. •Provide appropriately qualified staff in support of the project, as requested Assumptions: •Project services will commence approximately April 1, 2020 and be complete by March 31, 2022 •Project Manager Meetings will occur at least once per quarter Deliverables: •Monthly Status Reports •Monthly Invoices •Contract Amendments EXHIBIT A Page 71 of 88 Task 2 Resident Engineer • Manage all day-to-day construction management activities and be the Owner’s primary representative Contractor. Direct consultant staff in performance of tasks as required to execute this scope of work • Manage and oversee the work of consultant staff reporting to the RE. Provide training and resources so subordinate staff understands and meet contract requirements. • Be point of contact for all communication received from and sent to the Contractor. Respond as necessary with assistance from Owner staff • Organize and conduct preconstruction conference and prepare and distribute meeting notes • Conduct weekly progress meetings and other contract-related meetings; prepare and distribute meeting notes • Identify and monitor potential disputes and issues. Log potential claims, document actions and provide periodic reports to Owner. Provide timely analysis of claims and recommend appropriate negotiating strategies • Resolve contract disputes and/or assist in claims analysis, mitigation and resolution • Assign inspectors for Quality Verification (QV) and field documentation of construction activities whenever the Contractor is performing Contract work • Monitor Contractor’s compliance with its own safety programs. Notify the Contractor of all non- compliance incidents and if unresolved report such incidents to the Owner • Review and approve the Inspector Daily Reports, and other routine reports for accuracy. Process all for retention • In coordination with Owner’s staff, review, reject or accept contractor’s preliminary and final detailed baseline CPM schedules and all updates. Negotiate appropriate changes to the same as required • Develop and track Issues Log, RFI Log and Change Order Log • Direct emergency or urgent change work. Track cost-reimbursable work • Review, and approve the Preliminary Monthly Progress Payment reports and submit to the Owner for payment • Prepare a final punch near completion of the project and verify completion of punch list work in accordance with the Contract Documents • Coordinate the response to RFIs and submittals • Issue and track resolution of all Non-Conformance Reports (NCRs) • Coordinate with local utilities, governments and agencies pertaining to design and adjacent utilities, protection of utilities, “hold points”, schedule coordination, permits and other third-party issues, as required • Coordinate as appropriate or necessary with the Engineer of Record (EOR), and Owner regarding all RFI’s, submittals requests for substitution, or change order requests Assumptions: • Maximum of 2 contract disputes requiring Contract Claim Report • Maximum of 2 emergency incidents requiring force account response • Maximum of 2 schedule updates • Maximum of 60 Requests for Information (RFIs) • Maximum of 5 Non-Conformance Reports (NCRs) • Maximum of 40 contractor change order requests • Maximum of 20 total change orders Deliverables: • Preconstruction Meeting and Minutes • Weekly Progress Meetings and Minutes • Contract Claim Reports • Coordination and issuance of RFI responses Page 72 of 88 Page 3 • Preparation of NCR’s and resolution documentation • RFI responses • NCR resolution reports • Change Orders Task 3 Office Engineering • Assist the Resident Engineer (RE) as required including preparation of contract correspondence. • Assist the RE in managing the receipt, distribution, review and compilation of comments, and the tracking and return of all submittals and Requests for Information (RFIs) from the Contractor. Maintain a tracking list of all submittals, including a weekly update of submittals yet to be submitted or resubmitted by the DB Contractor • Prepare change orders and associated documentation under direction of the RE. Assist the RE in estimating and negotiations • Prepare estimates and analysis of any claims under direction of the RE • Track and prepare monthly summaries of all materials on hand • Verify Buy America compliance by Contractor • Assist the RE with the Contract closeout and receive all close-out documentation including final as-builts, product warranties and all other items required by the contract • Receive and process for retention all field documentation including IDR’s, NCR’s, submittals, change orders, pay notes, and contractor correspondence • Prepare Preliminary Monthly Progress Payments with references to field pay notes or other documentation indicating work is completed in accordance with the contract • Maintain red line record drawings and transmit to City or EOR for preparation of final as built drawings • Maintain project Record of Materials (ROM) on an ongoing basis to verify proper approval of all materials incorporated into the project • Collect Manufacture’s Certificates of Compliance and Certificates of Material Origin for Steel and Iron materials being permanently incorporated into the project • Collect test reports from the materials testing lab for compliance with the information given in the contract documents. Contractor will be directed to submit separate RAM forms for each bid item • Maintain appropriate project logs under direction of the RE • Produce and distribute the weekly statements of working days • Maintain orderly electronic records and paper files at the job site • Provide skilled administrative/clerical personnel proficient in Word, Excel, and other software utilized for the project to support the RE • Log, copy, distribute and file all Contract documentation and perform office administrative tasks as directed by the RE • Perform documentation requirements as directed by the Resident Engineer and/or Inspection Team Assumptions: • Same as Task 2 Deliverables: • Change Orders and documentation • Weekly logs and records • Monthly Summaries of Materials on Hand • Monthly Preliminary Monthly Progress Payments Reports • Red line record drawings • Record of Materials • Weekly Statement of working days Page 73 of 88 Task 4 Quality Verification Inspection • Verify Contractor’s conformance and compliance with contract requirements • Verify Contractor’s compliance with the Construction Quality Requirements • Inspect and document on-site and off-site construction activities and verify conformance with Contract Documents • Complete Inspector’s Daily Reports (IDRs) to document the Contractor’s progress, work activities and resources whenever work is occurring on site • Coordinate material testing with Owner’s material testing consultant and verify that all necessary tests are performed • Track and inspect all material deliveries, verifying offsite inspections and certifications and collect all accompanying documentation • Attend and participate in regular safety meetings conducted by the Contractor • Verify Contractor’s compliance with their approved safety plan. Report observations of non- conformance with the approved safety plan immediately to the RE and document on Inspector’s Daily Report as appropriate • Prepare field pay notes documenting satisfactorily completed work and assist the RE and OE in preparing the monthly Preliminary Monthly Progress Payment • Monitor and track delays, extra work and conditions that may result in requests for additional compensation. Notify the RE of any such instances and document in IDR’s • Take and log construction photos (digital still photographs, digital video recordings and digital web- based photographic documentation) • Assist with and coordinate shutdown, work-a-rounds and reestablishment of affected utilities • Support the Office Engineer by assisting to maintain an updated set of Contract Documents • Assist the RE and OE in preparation of a final punch list and verify the completion of punch list work. Documents, including the resolution of NCRs • While work is in progress on BNSF right of way, coordinate daily with the contractor and the BNSF representative and verify that all railroad provisions are met, and railroad flaggers are present when required • Perform other inspection or technical services as requested or required Assumptions: • Estimated 20 force account changes and 5 emergency incidents Deliverables: • Inspector Daily Reports (IDRs) • Field Pay Notes • Force Account Records • Certified Payroll & Wage Rate Interviews • Training/Apprentice hour Tracking • DBE and Subcontractor Tracking Page 74 of 88 City of Pasco City of Pasco: Lewis St Overcrossing Construction Management Total Project Costs Labor - Regular 1,503,545.80$ Labor - Overtime 116,011.85$ Other Direct Costs 233,097.00$ Total Project Cost 1,852,654.64$ EXHIBIT B Page 75 of 88 City of Pasco City of Pasco: Lewis St Overcrossing Construction Management Schedule 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Bidding Urban Design Elements Mob % Site Prep Curbs - Surfacing - Paving CELEBRATE BNSF Bridge Signing & Markings SUCCESS First Ave. Bridge MSE Walls & Abutments Undercrossing Fill Final Records Regular Hours Underground Utilities Landscaping Position Name Firm Total Project Manager Jill Marilley WSP 1 4 4 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 4 1 242 Project Accountant Janie Arens WSP 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 192 Subcontract Admin.Renita Daems WSP 16 16 Resident Engineer Larry Eik WSP 32 48 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 40 40 1760 Asst. Resident Eng.Bill Carter WSP 40 40 80 Lead Inspector Fred Engle WSP 0 0 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 80 0 0 3120 Inspector Weston Dalfrey WSP 0 0 0 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 0 0 0 0 2720 Office Engineer Allison Zimmerman Perteet 0 32 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 80 80 80 3312 BNSF Coordinator Ross Widener WA 0 8 8 8 4 4 4 4 4 4 4 4 4 0 0 0 0 0 0 0 0 0 0 0 60 Total Regular Hours-11502 Overtime Hours Total Project Manager Jill Marilley WSP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Project Accountant Janie Arens WSP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Subcontract Admin.Renita Daems WSP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Resident Engineer Larry Eik WSP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Asst. Resident Eng.Bill Carter WSP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Lead Inspector Fred Engle WSP 0 0 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 16 0 0 624 Inspector Weston Dalfrey WSP 0 0 0 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 0 0 0 0 272 Office Engineer Allison Zimmerman Perteet 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0BNSF Coordinator Ross Widener WA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Overtime Hours-896 Year 1 Year 2 Year 1 Year 2 Page 76 of 88 Other Direct Costs Unit Total Unit Price Quantity Cost Assumptions A) Vehicles RE - Eik MO.1,700.00$ 22 37,400.00$ Lead Insp. - Engle MO.1,700.00$ 20 34,000.00$ Insp. - Dalfrey MO.1,700.00$ 17 28,900.00$ B) Mileage & Travel PM EA.300.00$ 10 3,000.00$ Office Engineer 500.00$ 20 10,000.00$ C) Stipends Lead Insp. - Engle MO.1,500.00$ 20 30,000.00$ Insp. - Dalfrey MO.1,500.00$ 17 25,500.00$ D) Travel and Lodging RE DAY 180.00$ 176 31,680.00$ E) Field Office Lease with Janitorial, Utilities & Security City to provide field office Trailer Setup/Teardown Office Furniture (Used) Internet Microwave, Refrigerator Water Service Misc. Office Equipment/Furniture F) Misc. Copies MO.50.00$ 24 1,200.00$ Postage and FedEx MO.50.00$ 24 1,200.00$ Misc. Supplies MO.50.00$ 24 1,200.00$ Printer EA.300.00$ 2 600.00$ RR Drug Lab Tests EA.400.00$ 8 3,200.00$ G) Field Equipment Field Equipment Rental Cost 500.00$ H) Computer Computer Color Printer Tablets Headlight Licenses EA 192.00$ 107 20,544.00$ Eik, Engle, Dalfrey, Zimmerman, Backlund Plan Grid EA 39.00$ 107 4,173.00$ Eik, Engle, Dalfrey, Zimmerman, Backlund Total Other Direct Costs 233,097.00$ 2 Days per week at $70 Meals & $110 Lodging (Escalated average. Currently $66 & $100) City of Pasco: Lewis St Overcrossing Constructio Page 77 of 88 Pasco City Council Workshop MeetingMay 26, 2020Page 78 of 88 Lewis Street OverpassExisting ConditionsNew Lewis Street Overpass RenderingsPage 79 of 88 Prior to bidding•Execution of BNSF Agreement Coordination is ongoing.•Right-of-Way Certification (Type 2)WSDOT performed preliminary review and provided concurrence. Certification is pending BNSF agreement.•Obligation of Construction FundsPS&E review by WSDOT was performed. Obligation is pending Right‐of‐way certification.•Bid AdvertisementRequires prior obligation of funds. Page 80 of 88 ConstructionFunding SourcesConstruction Funding Sources AmountCity of Pasco $5.15 MConnecting Washington Partnership $13.6 MTransportation Improvement Board $5.0 MMotor Vehicle Account (MVA) $4.4 MTOTAL* = $28.15 Million* Subject to change based on bids receivedPage 81 of 88 Construction ExpendituresConstruction Expenditures AmountConstruction Management Contract $1.85 MRailroad Costs $1.52 MConstruction Estimate $24.78 MTOTAL = $28.15 Million Page 82 of 88 WSP, Inc. Qualifications•Experience with specific bridge erection and bridge building over BNSFrail lines.•Have had active roles in coordinating with BNSF and assisting contractorsto understand when, what and how to communicate with BNSF.•Technical diversity within the team, including Agency, Contractor andConsultant experience.•Strong BNSF and WSDOT relationships to prevent schedule delays.•Clear understanding of the importance of working with stakeholdersduring construction.•Thorough understanding and successfulmanagement of federally fundedprojects and all applicable Federal, State and local regulations andstandards to accelerate project delivery. Page 83 of 88 Proposed ScheduleProject Services are anticipated to begin JULY 1, 2020 and is estimated to be completed by JUNE 30, 2022.(Total of 400 Working Days)Page 84 of 88 Consultant Tasks•Task 1 – Project ManagementBilling, schedule and budget updates, team coordination, meetings, etc.•Task 2 – Resident EngineerRFI, Change orders, coord. with utilities, assign inspectors, etc.•Task 3 – Office EngineeringDocumentation Compliance with funding requirements, prevailing wage preview, filing system, etc.•Task 4 – Quality Verification InspectionOn‐site inspection and documentation, IDRs, daily coordination with contractor and BNSF (as needed). Page 85 of 88 Roles and ResponsibilitiesMaterials Testing Laboratory FirmPage 86 of 88 Total CostRegular Hours $1,503,545.80Overtime Hours $116,011.85Direct Costs $233,097.00TOTAL = $1,852,654.65Contract CostPage 87 of 88 Pasco City Council MeetingMay 26, 2020Page 88 of 88