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HomeMy WebLinkAbout4675 Ordinance - Refunding Revenue Bonds 2023 (101442482.6) CITY OF PASCO, WASHINGTON ORDINANCE NO. 4675 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$38,000,000 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, and(c) 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. Passed: August 7, 2023 This document prepared by: Foster Garvey P.C. 1111 Third Avenue, Suite 3000 Seattle, Washington 98101 (206) 447-4400 FG: 101442482.6 TABLE OF CONTENTS* Pa�e Section1. Definitions................................................................................................................1 Section 2. Findings and Determinations...................................................................................9 Section 3. Plan of Additions...................................................................................................10 Section 4. Authorization of the Bonds....................................................................................11 Section 5. Appointment of Designated Representative; Description of the Bonds................12 Section 6. Bond Registrar; Registration and Transfer of Bonds.............................................12 Section 7. Form and Execution of Bonds. ..............................................................................13 Section 8. Payment of Bonds..................................................................................................13 Section 9. Redemption Provisions and Purchase of Bonds....................................................14 Section 10. Failure to Pay Bonds..............................................................................................15 Section 11. Bond Fund; Payments into Bond Fund..................................................................15 Section 12. Rate Stabilization Account....................................................................................17 Section 13. Pledge, Lien and Charge for Payment of the Bonds..............................................17 Section14. Flow of Funds........................................................................................................17 Section15. Covenants...............................................................................................................18 Section 16. Provisions for Future Parity Bonds........................................................................19 Section 17. Separate Utility Systems........................................................................................19 Section 18. Contract Resource Obligations. .............................................................................20 Section 19. Tax Covenants. ......................................................................................................21 Section 20. Refunding or Defeasance of Bonds .......................................................................21 Section 21. Deposit of Bond Proceeds; Creation of Construction Accounts............................22 Section 22. Use of Refunding Proceeds; the Refunding Plan...................................................22 Section 23. Amendatory and Supplemental Ordinances...........................................................24 Section 24. Defaults and Remedies ..........................................................................................26 Section 25. Sale and Delivery of the Bonds .............................................................................29 Section 26. Official Statement; Continuing Disclosure............................................................30 Section 27. General Authorization and Ratification.................................................................30 Section28. Severability............................................................................................................30 Section 29. Effective Date of 4rdinance..................................................................................31 Exhibit A Parameters for Final Terms Exhibit B Parity Conditions E�ibit C 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 interpretation of this ordinance. -1- FG: 101442482.6 CITY OF PASCO, WASHINGTON ORDINANCE NO. 4675 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$38,000,000 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, and(c) (d) pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing ar 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) "2013A Bonds" means the outstanding Water and Sewer Revenue Bonds, 2013A, of the City issued pursuant to Ordinance No. 4126. (b) "2013T Bonds" means the outstanding Water and Sewer Revenue Bonds, 2013T (Taxable), of the City issued pursuant to Ordinance No. 4126. (c) "2015 Bonds" means the outstanding Water and Sewer Improvement and Refunding Revenue Bonds, 2015, of the City issued pursuant to Ordinance No. 4254. (d) "2017 Bonds" means the outstanding Water and Sewer Revenue Bonds, 2017, of the City issued pursuant to Ordinance No. 4365. (e) "2020A Bonds" means the outstanding Water and Sewer Refunding Revenue Bonds, 2020A (Tax-Exempt), of the City issued pursuant to Ordinance No. 4487. (fl "2020B Bonds" means the outstanding Water and Sewer Improvement Revenue Bonds, 2020B (Taxable), of the City issued pursuant to Ordinance No. 4487. (g) "Acquired Obligations" means the United States Treasury Certificates of Indebtedness, Notes, and Bonds-State and Local Government Series and/or other Government �bligations, as identified in the Refunding Trust Agreement,purchased to carry out the Refunding Plan. (h) "Alternate Security"means any bond insurance, collateral, security, letter of credit, guaranty, surety bond or similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest on any specified Parity Bonds,issued by an institution -1- FG: 101442482.6 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 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 of all or part of the principal of and interest on any specified Parity Bonds, issued by an institution which has been assigned a credit rating at the time of issuance of the applicable Parity Bonds, respectively, secured by such Alternate Security in 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. (j) "Assessment Bonds" means, at the time of determination, Parity Bonds then outstanding equal to the sum of the nondelinquent unpaid principal amount of ULID Assessments then outstanding plus any ULID Assessment payments then on deposit in the Principal and Interest Account of the Bond Fund. Assessment Bonds shall be allocated to each remaining maturity of Parity Bonds in the same proportion as the total of the Assessment Bonds relates to the total of the Parity Bonds then outstanding. (k) "Authorized Denomination" means $5,000 or any integral multiple thereof within a maturity. (1) "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. (m) "Beneficial Owner" means, with respect to a Bond, the owner of any beneficial interest in that Bond. (n) "Bond"means each Project Bond and each Refunding Bond issued pursuant to and for the purposes provided in this ordinance. (o) `Bond CounseP' 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. (p) "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. (c� "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 authorized to be accepted by the Designated Representative on behalf of the City, if consistent with this ordinance. -2- FG: 101442482.6 (r) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of each Bond. (s) `Bond Registrar"means the Fiscal Agent, or any successor bond registrar selected by the City. (t) "City" means the City of Pasco, Washington, a municipal corporation duly organized and existing under the laws of the State. (u) "City Cler1�' means the City Clerk of the City or the successor to the functions of that officer. (v) "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. (w) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (x) "Ciry 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. (y) "Code"means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (z) "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). (aa) "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. (bb) "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 2013A Bonds, 2013T Bonds, 2015 Bonds and 2017 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 of the 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. (cc) "DTC" means The Depository Trust Company, New York, New York, or its nominee. -3- FG: 101442482.6 (dd) "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). (ee) "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). (f� "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. (gg) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State from time to time. (hh) "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. (ii) "Government Obligations" has the meaning given in RCW 39.53.010, as now in effect or as may hereafter be amended. (jj) "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 2013A Bonds, 2013T Bonds, 2015 Bonds and 2017 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 Goverrunent under the Code or, when the 2013A Bonds, 2013T Bonds, 2015 Bonds and 2017 Bonds are no longer outstanding, (vii) deposits to the Rate Stabilization Account or (viii) revenues of a Separate Utility System. (kk) "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. (11) "Letter of Representations" means the Blanket Issuer Letter of Representations between the City and DTC dated August 31, 1998, as it may be amended from time to time, and any successor or substitute letter relating to the operational procedures of the Securities Depository. -4- FG: 101442482.6 (mm) "Maximum Annual Debt Set-vice" 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. (nn) "Mayor" means the Mayor of the City or the successor to the functions of that office. (oo) "MSRB"means the Municipal Securities Rulemaking Board. (pp) "Net Revenue" means the Gross Revenue less Operating and Maintenance Expenses. (q� "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 15c2-12 or other applicable regulations of the SEC. (rr) "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 20I3A Bonds,2013T Bonds,201 S Bonds and 20I7 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. (ss) "Outstanding Parity Bonds" means the outstanding 2013A Bonds, 2013T Bonds, 2015 Bonds, 2017 Bonds, 2020A Bonds and 2020B Bonds. Outstanding Parity Bonds do not include any Refunded Bonds. (tt) "Owner" means, without distinction, the Registered Owner and the Beneficial Owner. (uu) "Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. (w) "Parity Bond Ordinances" means Ordinance No. 4126, Ordinance No. 4254, Ordinance No. 4365, Ordinance No. 4487 and this ordinance. (ww) "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. (xx) "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 and more particularly defined in Section 3. -5- FG: 101442482.6 (yy) "Principal and Interest AccounP' means the account of that name created in the Bond Fund for the payment of the principal of and interest on all Parity Bonds. (zz) "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. (aaa) "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. (bbb) "Rate Stabilization Account" means the account of that name created in the Water and Sewer Revenue Fund pursuant to Section 12. (ccc) "Rating Agency" means any nationally recognized rating agency then maintaining a rating on the Bonds at the request of the City. (ddd) "Record Date"means the Bond Registrar's close of business on the 15th 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. (eee) "Redemption Date" means, with respect to each series of the Refunded Bonds, a date or dates selected by the Designated Representative. (f� "Refunded Bonds" means the Refunding Candidates selected by the Designated Representative and identified in the Refunding Plan. (ggg) "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. (hhh) "Refunding Candidates"means: (1) the currently outstanding$1,305,000 principal amount of the 2013A Bonds maturing on December 1 of each of the years 2024, 2026 and 2028; and (2) the currently outstanding $3,555,000 principal amount of the 2013T Bonds maturing on December 1 of each of the years 2023 and 2028. (iii) "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, sufficient to acquire the Acquired Obligations and establish a beginning cash balance; (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 -6- FG: 101442482.6 Refunded Bonds when due up to and including the Redemption Date, and the call, payment and redemption of the Refunded Bonds ori the Redemption Date 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. (�jj) "Refunding Trust Agreement" means the refunding trust agreement between the City and the Refunding Trustee,providing for the carrying out of the Refunding Plan. (kkk) "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. (111) "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. (mmrn)"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. (nnn) "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 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 of all or part of the 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 of the two highest rating categories by either Moody's Investors Service, Inc. or S&P Global Ratings. (000) "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. When the 2013A Bonds and the 2013T Bonds are no longer outstanding, the Reserve Requirement for the 2020A Bonds and the 2020B Bonds shall be reduced to zero and the Reserve Requirement for the Bonds shall be zero. -7- FG: 101442482.6 (2) For any Future Parity Bonds secured by the Reserve Account, the amount, if any,designated as such pursuant to the ordinance authorizing the issuance of such Future Parity Bonds, which amount shall not exceed, as of the date of calculation, 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. (ppp) "Rule 1 Sc2-12"means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. (qqc� "SEC"means the United States Securities and Exchange Commission. (rrr) "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. (sss) "Series of Bonds" or "Series" means a series of the Bonds issued pursuant to this ordinance. (ttt) "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. (uuu) "State"means the State of Washington. (vw) "System of Registration" means the system of registration for the City's bonds and other obligations set forth in Ordinance No. 2845. (www) "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. (�x) "Tax-Exempt Series" means any Series of Bonds issued as t�-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. -8- FG: 101442482.6 (yyy) "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 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. (zzz) "ULID" means utility local improvement district. (aaaa) "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. (bbbb) "Undertaking"means the undertaking to provide continuing disclosure entered into pursuant to Section 26(c) of this ordinance. (cccc) "Water and Sewer Revenue Fund" means that special fund of the City into which all of the Gross Revenue shall be deposited. (dddd) "Waterworks Utility" means the combined sewerage system and water system of the City, together with the storm and surface water system, the irrigation water system and the 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. Findin*s 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- FG: 101442482.6 Original Ordinance Principal Dated Authorizing Passage Name of Issue Amount Date Ordinance Date 2013A Bonds $ 2,520,000 12/OS/2013 4126 11/18/2013 2013T Bonds 7,235,000 12/OS/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 2020A Bonds 7,315,000 6/O1/2020 4487 4/06/2020 2020B Bonds 16,415,000 6/O1/2020 4487 4/06/2020 (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. The City Council finds and determines that it is necessary and in the best interest of the City and its ratepayers to defease and refund the Refunding Candidates pursuant to the Refunding Plan and Chapter 39.53 RCW and other laws of the State in order to modify debt service and reserve requirements,covenants and other terms relating to Parity Bonds. (� Sufficiency of Gross 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 35.92.100), and the debt service requirements of the Outstanding Parity Bonds and other revenue obligations � in respect of the Waterworks Utility, 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 other revenue obligations in respect of the Waterworks Utility, 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 other revenue obligations in respect of the Waterworks Utility. (g) Issuance of Bonds. 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 included and described in the City's 2022-2028 Capital Improvement Plan and prior Capital Improvement Plans and other comprehensive, master and/or financing improvement plans of the City, which -10- FG: 101442482.6 additionally include without limitation the following improvements (collectively, the "Plan of Additions"}: (a) Water system, irrigation system, and stormwater system infrastructure in the Broadmoor Area of the City. (b) Water system Reservoir Storage Tank—Zone 3, including design and construction of the new 3.5 million gallon water storage tank. (c) Irrigation system well capacity upgrades, including refurbishing existing wells to optimize water production in the system. (d) Irrigation system Broadmoor Pump Station (NW Irrigation System), including design and construction of an irrigation pump station to provide service to new development. (e) Stormwater system improvements, including replacing aging infrastructure in stormwater conveyance system. (fl Process Water Reuse Facility improvements, including farm irrigation system and potable water and electrical upgrades. 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 $31,570,000. Any excess proceeds of the Project Bonds remaining following payment of the costs of the Plan of Additions may 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. -11- FG: 101442482.6 Section 5. A�apointment of Desi�nated 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. Section 6. Bond Registrar; Registration 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 far 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 of DTC. 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 -12- FG: 101442482.6 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. 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, 20U 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 general obligations of the City.The Bonds are not subject to acceleration under any circumstances. -13- FG: 101442482.6 Section 9. Redem tion 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. 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 of that 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 of the Securities Depository shall be given in accordance with the Letter of Representations.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 -14- FG: 101442482.6 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 of optional redemption that is so rescinded shall be of no effect, and each Bond for which a riotice of redemption has been rescinded shall remain outstanding. (fl Effect of Redemption. Interest on each Bond called for redemption shall cease to accrue on the date fixed for redemption,unless either the notice of optional 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. (g) Purchase of Bonds. 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 of any 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;Pavments into Bond Fund. The Bond Fund has been previously created and established as a special fund of the 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 far 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 2013A Bonds and 2013T Bonds are no longer outstanding, the following paragraph shall become effective: The City may establish,for the Bonds and one or more series of Future Parity Bonds, a separate reserve requirement (which may be zero), to be held in a separate reserve account,for the purpose of securing those Parity Bonds, and those Parity Bonds -15- FG: 101442482.6 shall not be secured by amounts in the Reserve Account or by any Reser-ve 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. 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 20I3A Bonds, 20I3T Bonds, 2015 Bonds and 2017 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 of funds 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 of those investments or on that bank account shall be deposited in and become a part of the Reserve Account until the Reserve Requirement shall have been accumulated therein, after which time the interest shall be deposited in the Principal and Interest Account. Notwithstanding the provisions for the deposit or maintenance of earnings in accounts of the Bond Fund, any earnings which are subject to a federal tax or rebate requirement may be withdrawn from the Bond Fund for deposit into a separate fund or account for that purpose. If the City shall fail to set aside and pay into the Bond Fund the amounts which it has obligated itself by this section to set aside and pay therein, the Owner of any Bond may bring suit against the City to compel it to do so. -16- FG: 101442482.6 Section 12. Rate Stabilization Account. When the 2013A Bonds, 2013T Bonds, 2015 Bonds and 2017 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 Water-works 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 of the City,for the preceding year if the deposit is made within three months after the end of the preceding year. Withdrawals from the Rate Stabilization Account shall increase Net Revenue for the year in which the withdrawal is made or, at the option of the City,for the preceding year if the withdrawal is made within three months after the end of the preceding year. Section 13. Pled�e, Lien and Charge for Pavment 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 2013A Bonds, 2013T Bonds, 201 S Bonds and 2017 Bonds are no longer outstanding, to make deposits into the Rate Stabilization Account, or for any other lawful purpose. -17- FG: 101442482.6 Section 15. Covenants. The City covenants and agrees with the Owner of each of the Bonds as follows: (a) It will not sell, lease, mortgage, or in any manner encumber or dispose of all the properties of the Waterworks Utility unless provision is made for payment into the Bond Fund of an amount sufficient either to defease all outstanding Parity Bonds or to pay the principal of and interest on all the outstanding Parity Bonds in accordance with the terms thereof; and further binds itself irrevocably not to mortgage, sell, lease or in any manner dispose of any part of the Waterworks Utility that is used,useful and material to the operation of such utility unless provision is made for replacement thereof or for payment into the Bond Fund of an amount which shall bear the same ratio to the amount of outstanding Parity Bonds as the Net Revenue available for debt service for such bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the Waterworks Utility so leased, encumbered or disposed of bears to the Net Revenue available for debt service for such bonds from the entire Waterworks Utility for the same period. Any such money so paid into the Bond Fund shall be used to retire outstanding Parity Bonds at the earliest possible date. (b) It will maintain and keep the Waterworks Utility in good repair, working order and condition and to operate such utility and the business in connection therewith in an efficient manner and at a reasonable cost. (c) It will maintain and collect such rates as will produce sufficient Net Revenue, together with ULID Assessment collections,as will make available for the payment of the principal of and interest on the Parity Bonds as they come due and for payments as required to be made into the Reserve Account therein an amount at least equal to the Coverage Requirement and,in addition thereto, that it will pay all Operating and Maintenance Expenses and otherwise meet the obligations of the City as herein set forth. When the 2013A Bonds, 2013T Bonds, 2015 Bonds and 2017 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 of charge and it shall,not later than 60 days after the end of each calendar year, take such legal action as may be feasible to enforce collection of all collectible delinquent accounts and, in addition thereto, shall promptly avail itself of its utility lien rights, as set forth in applicable statutes. -18- FG: 101442482.6 (fl It will carry the types of insurance on its Waterworks Utility properties in the amounts normally carried by private water and sewer companies engaged in the operation of water and sewerage systems, and the cost of such insurance shall be considered a part of Operating and Maintenance Expenses,or it will implement and maintain a self-insurance program or an insurance pool program with reserves adequate, in the judgment of the City Council, to protect the owners of the Parity Bonds against loss. (g) To the extent permitted by State law, it will maintain its corporate identity and existence so long as any Bonds remain outstanding. (h) It will not grant any competing utility service franchise and will use all legal means to prevent competition with the Waterworks Utility. (i) If on the first day of January in any year,two installments of any ULID Assessment are delinquent,or the final installment of any ULID Assessment has been delinquent for more than one year, the City shall proceed with the foreclosure of the delinquent assessment or delinquent installments thereof in the manner provided by law. Section 16. Provisions for Future Paritv 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. Se arate Utilit S stems. When the 20I3A Bonds, 2013T Bonds, 2015 Bonds and 2017 Bonds are no longer outstanding, this Section l7 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 of that 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 of revenue 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 of any obligations of a Separate -19- FG: 101442482.6 Utility System, except that Net Revenue may be pledged on a basis subordinate to the lien of the Parity Bonds. Section 18. Contract Resource Obli_at� ions. When the 2013A Bonds, 2013T Bonds, 201 S Bonds and 2017 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 Watenvorks Utility, as follows: (a) The City may agree under a contract containing a Contract Resource Obligation that all payments in respect of 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 of supply 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: (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 of the Waterworks Utility; and (2) The City has obtained a certificate 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 of Net 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 of the Parity Bonds until such time as the facilities are placed in service. -20- FG: 101442482.6 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 Taa�-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. (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. 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. If the 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. If the 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 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 -Z1- FG: l 01442482.6 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 Refundin�Proceeds; the Refundin�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 ardinance. (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 the 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 Ordinance by providing for the payment 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 -22- FG: 101442482.6 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 Tax-Exempt Series of Refunding Bonds and the Tax- Exempt Series of Refunded Bonds will remain excluded from gross income for federal income tax purposes under Sections 103 and 148 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. (fl 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- FG: 101442482.6 (g) Call for Redemption of the Refunded Bonds. The Designated Representative is authorized to call the Refunded Bonds for redemption on their Redemption Date 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. The Designated Representative 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. Amendatorv and Su�plemental Ordinances. When the 2013A Bonds, 2013T Bonds, 2015 Bonds and 2017 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 of an ordinance authorizing the issuance of Future Parity Bonds shall not be considered an amendatory or supplemental ordinance. (a) Certain Amendatorv or Su�plemental 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: (1) To cure any formal defect, omission, inconsistency or ambiguity in this ordinance in a manneY not adverse to the owner of any Parity Bond. (2) To impose upon the Bond Registrar(or a bond trustee, if any), 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. -24- FG: 101442482.6 (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) of any 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 of a 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 of the interest on any Tax-Exempt Series of Bonds from federal income taxation in light of a change in federal law, regulations or rulings. (b) Amendatorv or SupFlemental Ordinances Requiring Consent of�Registered Owners of� SO% of' Parin� 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 SO% 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 of the 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 of any 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. (2) The ordinance may go into effect upon receipt by the City of(A) the consents, in writing, of the required percentage of registered owners of the Parity Bonds, and(B) an opinion of Bond 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 of interest on any tax- exempt Parity Bonds then outstanding. (c) Amendatorv or Su�plemental Ordinances Requirin.g Consent of All Registered Owners. Unless approved in writing by the registered owners of all Parity Bonds then outstanding, nothing contained in this section shall permit, or be construed as permitting: -25- FG: 101442482.6 (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 of any outstanding Parity Bond or a change in the redemption price of any outstanding Parity Bond or a change in the method of determining the rate of interest thereon. (2) A preference of prioriry of any Parity Bonds or any other bond or bonds. (3) A reduction in the aggregate principal amount of any Parity Bond. (d) Effect of Passa.�e of Amendator-�� or Su�lemental Ordinance. Upon the adoption of the amendatory or supplemental ordinance pursuant to the provisions of this section, this ordinance shal�'be, and shall be deemed to be, amended and supplemented accordingly.No owner of outstanding Parity Bonds shall have any right (1) to object to the passage of such ordinance, (2) to object to any of the 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 of the City, the Bond Registrar and all registered owners of Parity 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 2013A Bonds, 20I3T Bonds, 2015 Bonds and 2017 Bonds are no longer outstanding, this Section 24 shall become effective: (a) Events of De�ault. Each of the following constitutes an "Event of Default" with respect to the Parity Bonds: (1) If a default is made in the payment of the principal of or interest on any of the Parity Bonds when the same shall become due and payable. (2) If the City defaults in the observance and performance of any 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 of not less than 25% in outstanding principal amount ofParity Bonds a written notice specifying and demanding the cure ofsuch default. However, if the default in the observance and performance of any 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' Ti-ustee. 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 -26- FG: 101442482.6 instruments in writing signed and acknowledged by such registered owners of Parity Bonds or by their attorneys-in fact, duly authorized and delivered to such Bondowners' Trustee, and after notice of such 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 instf-ument 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 of its duties. If any Event of Default is, in the sole judgment of the 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 of the 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 Equit_y�. Upon the happening of an Event of Default 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 of the 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 of Parity Bonds and all such rights of action upon or under any of the Parity Bonds or the provisions of this 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 be brought for the ratable benefit of all of the registered owners of those Parity Bonds, subject to the provisions of this ordinance. The respective registered owners of Parity Bonds, by taking and holding the same, shall be conclusively deemed irrevocably to appoint the Bondowners' Trustee the true and lawful trustee of the respective registered owners of those 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 -27- FG: 101442482.6 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 of maturity ofprincipal of the 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 of an Event of Default. (e) A lication o �Monev Collected b �Bondowners' Trustee. Any money collected by the Bondowners' Trustee at any time pursuant to this section shall be applied in the following order ofpriority: (1) First, to the payment of the charges, expenses, advances and compensation of the Bondowners'Trustee and the charges, expenses, counsel fees, disbursements and compensation of its 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 of 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 of their due dates and, if the 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. (fl Duties and Obligations oj'Bondowners' Trustee. The Bondowners' Trustee shall not be liable except for the performance of such duties as are specifically set forth herein. During an Event of Default, the Bondowners' Trustee shall exercise such of the rights and powers vested 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 of the 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 resultfrom its own negligent action, its own negligentfailure to act or its own willful misconduct. The Bondowners' Trustee shall not be bound to recognize any person as a registered -28- FG: 101442482.6 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 of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such 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 bv Individual Owners of Parit�� Bonds Restricted. Neither the registered owner nor the beneficial owner of any one or more of Parity Bonds have any right to institute any action, suit or proceeding at law or in equity for the enforcement of same 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 of such Event of Default, 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 Deliverv of the Bonds. (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. -29- FG: 101442482.6 (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; Continuin�;Disclosure. (a) Preliminary Official StatementDeemed 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)(1)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 1 Sc2-12.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 of Final 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 Repr'esentative 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 of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. Section 28. Severabilitv. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. -30- FG: 101442482.6 Section 29. Effective Date of Ordinance.This ordinance shall take effect and be in force from and after its passage and five days following its publication as provided by law. PASSED by the City Council and APPROVED by the Mayor of the City of Pasco, Washington, at a regular open public meeting, this 7th day t, 2023. Blanche Barajas, Mayor ATTEST: �� � Debra Barham, City Clerk APPROVED AS TO FORM: ��������� Foster Garvey P.C. Bond Counsel �l �g�-Ls)lto �1 �c.�{ oc� A�G�-isi �o� �Z3 -31- FG: 101442482.6 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$38,000,000. (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 7.00%, and the true interest cost to the City for each Series of Bonds may not exceed 7.00%. (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 Maturitv. The final maturity date of the Project Bonds following allocation, if necessary under (xi)below, shall be no later than the date that is 31 years after the Issue Date. The final maturity date of the Refunding Bonds following allocation, if necessary under (xi) below, shall be no later than the final maturity date of the Refunded Bonds refunded by such Refunding Bonds. (vii) Redemption Ri�. 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) subj ect 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 10'/z years after the Issue Date. (2) Mandatorv 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 FG: ]01442482.6 (viii) Price. The purchase price for each Series of Bonds may not be less than 95% or more than 135%of the stated principal amount of that Series. (ix) 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. (x) 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. (xi) 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 ar T�-Exempt Series in the Bond Purchase Contract applicable to such Series of Bonds. (xii) 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 FG: 101442482.6 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 of and 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 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 of the 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 of those Term Bonds prior to their maturity date from money in the Principal and Interest Account. (e) There shall be on file from a licensed professional engineer experienced in the design, construction and operation of municipal utilities, or from an independent certified public accountant, a certificate showing that in his or her professional opinion the Net Revenue 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 FG: 101442482.6 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 of the Waterworks Utility that have become customers during the 12 consecutive month period or thereafter adjusted to reflect one year's net revenue from those customers; (3) Revenue from any customers to be connected to the Waterworks Utility who have paid the required connection charges; (4) Revenue received or to be received which is derived from any person, firm, corporation or municipal corporation under any executed contract for water, sewage disposal or other utility service, which revenue was not included in the historical Net Revenue; (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 2013A Bonds, 2013T Bonds, 20l S Bonds and 2017 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. 4126, Section 16 (2013A Bonds; 2013T Bonds) Ordinance No. 4254, Section 15 (2015 Bonds) Ordinance No. 4365, Section 15 (2017 Bonds) Ordinance No. 4487, Section 15 (2020A Bonds; 2020B Bonds) B-2 FG: 101442482.6 EXHIBIT C [Form ofJ UNDERTAHING TO PROVIDE CONTINUING DISCLOSURE City of Pasco,Washington [Name of Series] The City of Pasco, Washington (the "City"), makes the following written Undertaking for the benefit of holders of the above-referenced bonds(the"Bonds"),for the sole purpose of assisting 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. 4675 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 15c2-12; (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,if material; (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 FG: 101442482.6 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 15c2-12. (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 prepaxed(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)Waterwarks 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, 2023; 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 Undertakin�,. 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 of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. G2 FG: 101442482.6 (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 Undertakin�. 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 of Bond Counsel delivered to the City,and the City provides timely notice of such termination to the MSRB. (fl Remedy for Failure to Complv 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) Desi�nation of Official Responsible to Administer Undertakin,g. 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 FG: 101442482.6