1509_00001CITY OF MOSES LAKE,WASHINGTON
Not to Exceed $3,500,000
JUNIOR LIEN WATER AND SEWER REVENUE REFUNDING BONDS,1992
ORDINANCE'No.1509
TABLE OF CONTENTSOSection PageNo.Title No.
Recitals ....................1
1 Definitions ...................2
A.Annual Debt Service,Maximum Annual DebtService...................2B.Assessments .................2C.Bond Registrar ...............2D.Bonds or 1992 Bonds .............2E.City ....................2F.City Council ................2G.Code ....................2H.Co-Paying Agent ...............2I.Costs of Operation and Maintenance .....2J.Coverage Requirement ............2K.Crossover Date ...............2L.Dated Date .................3M.Debt Service Account ............3N.Escrow Amount ................30.Funded Interest ...............3P.Future Parity Bonds .............3Q.Investment Earnings .............3R.Investments .................38.Net Revenue .................3T.1985 Bond Fund ...............3U.1985 Bonds .................3V.1990 Bonds .................3W.1992 Bond Fund,Parity Bond Fund ......3X.1992 Refunding Account ...........3Y.Outstanding senior Lien Bonds ........3Z.Parity Bonds ................3AA.Refunded Bonds ...............3BB.Reserve Account ...............4CC.Reserve Requirement .............4DD.Revenue Fund ................4EE,Revenue of the System ............4FF.Sinking Fund Account ............4GG.Surety Bond;Surety Bond Payment ......4EH.System ...................4II.Term Bonds .................4IJ.Treasurer ..................4KK.ULID ....................5LL.AMBAC Indemnity ...............5MM.Municipal Bond Insurance Policy .......5
2 Authorization of Bonds .............5
3 Description of the Bonds ............5
A.Date,Denomination,Payment,Transfer ....5B.Optional Redemption .............5C.Mandatory Redemption ............6D.Notice of Call ...............6E.Effect of Call ...............6
'This Table of Contents is provided for information only anddoesnotconstitutepartoftheordinance.
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Section PageNo.Title No.
F.Open Market Purchase ............6
4 Revenue Fund Priorities .............6
5 1992 Bond Fund and Accounts Therein .......7
A.Debt Service Account ............7B.Transfers to Sinking Fund Account ......8
6 Reserve Account .................8
A.Maintenance of and Limitation onAccountBalance...............8B.Issuance of Future Parity Bonds ......8C.Use to Redeem Parity Bonds .........8D.Deficiencies ................8E.Surety Bond .................9F.Variable Rate Parity Bonds .........9
7 Investment of Monies in 1992 Bond Fund and Accounts 9
8 Lien Upon Revenue of the System;Other security .9
9 Adequacy of Revenue to Make Required Payments ..10
10 Defeasance ...................10
11 Certain Covenants ................11
O A.Application of Assessments .........11B.Rates and Charges;Coverage Requirement ...11C.Payment of Cost of Maintenance andOperation..................11
D.Enforcement of Payment of Service
Charges and Assessments ...........11E.Maintenance and operation Standards .....11F.Sale or Disposition of System ........11G.Books and Accounts;Annual Reports .....11H.Insurance ..................12I.No Free Service ...............12J.Special Funds ................12K.Tax Code Covenant ..............12L.No Senior Lien Future Parity Bonds .....13
12 Future Parity Bonds ...............13
13 Refunding Plan .................14
14 Redemption of Refunded Bonds ..........15
15 Safekeeping Agreement ..............15
16 Form of the Bonds ................15
17 Execution of the Bonds .............19
18 Bond Registrar .................20
19 Lost or Destroyed Bonds .............20
20 Sale of the Bonds ................20
21 Authorisation to Officials and Agents ......21
22 Supplemental Ordinances .............21
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Section PageNo.Title No.
23 Findings and Designation of Bank Eligibility ..22
24 Municipal Bond Insurance ............22
A.Consent of AMBAC Indemnity .........22B.Consent of AMBAC Indemnity in Addition toBondholderConsent.............22C.Consent of AMBAC Indemnity Upon Default ...22D.Notices To Be Given to AMBAC Indemnity ...22E.Permitted Investments ............23F.Defeasance of the Bonds ...........25G.Procedure for Payment under Municipal Bond
Insurance Policy ..............25H.Parties Having Interest in the Municipal BondInsurancePolicy..............26
I.Change of Co-Paying Agent ..........26
25 Severability ..................26
26 Effective Date .................26
O
O
vosorcorum -Page iii
ORDINANCE NO.1509
An ordinance of the City Council of the City of Moses Lake,Washington,authorizing the issuance and sale of junior lienwaterandsewerrevenuerefundingbondsoftheCityintheoriginalprincipalamountofnottoexceed$3,500,000 to refund,
pay and retire a portion of the debt service on the outstandingWaterandSewerRevenueRefundingBonds,1985 and Water and
sewer Revenue Bonds,1990 of the City on or after July 1,1996
and to fund and pay the interest on the bonds herein authorizeduntilsuchdate;fixing the date,form,terms,maturities andcovenantsofthebonds;creating a special refunding account,creating a special bond redemption fund to provide for paymentofthebondsauthorizedhereinandbondshereafterissuedon aparitytherewith;providing for and authorizing the purchase ofUnitedStatsgovernmentobligationsoutoftheproceedsofthesaleofthebondshereinauthorized;providing for the paymentandredemptionoftheoutstandingbondstoberefunded;approving a safekeeping agreement;and authorizing the cityManagertoapproveandexecuteabondpurchaseagreementfrom
George K.Baum &Company and Puget Sound Securities.
WHEREAS,the City of Moses Lake,Washington,(the nCityn)now operatesandmaintainsacombinedwaterandseweragesystem(the "System");and
WHEREAS,the City heretofore issued and sold $6,120,000 par value of"Water and Sewer Revenue Refunding Bonds,1985"pursuant to Ordinance
No.1184 and $230,000 par value of "Water and Sewer Revenue Bonder 1990"pursuant to Ordinance No.1436,which 1985 and 1990 bonds constitute a lienandchargeonthenetrevenueoftheSystemsuperiortoallliensandchargesuponsuchrevenueexceptcostsofmaintenanceandoperationoftheSystem;and
WHEREAS,after due consideration the City Council has determined thatbyrefundingthatportionofoutstanding1985and1990bonds(thenoutstandingSeniorLienBonds"or "Outstanding Bonds")maturing,andinterestpayable,after July 1,1996,by the issuance and sale of thejuniorlienwaterandsewerrevenuerefundingbondsoftheCityauthorizedherein(the "Bonds")and by funding the interest on the Bonds payable toandincludingJuly1,1996,a substantial savings will be effected by thedifferencebetweentheprincipalandinterestcostoverthelifeoftheBondsandtheprincipalandinterestcostoverthelifeoftheOutstandingSeniorLienBonds;and
WHEREAS,by issuing the Bonds having a lien on the net revenue of theSystemjuniortothelienthereonfortheoutstandingSeniorLienBonds,the City can achieve an immediate change in covenants with respect to theBonds,which covenants will be effective for all water and sewer revenuebondshereafterissuedbytheCity;and
WHEREAS,in order to effect such refunding in the manner that will bemostadvantageoustotheCity,its taxpayers and utility users,it isherebyfoundnecessaryandadvisablethatcertainAcquiredObligations(hereinafter defined)be purchased out of the proceeds of the sale of theBonds,which Acquired Obligations shall bear interest and mature at suchtimeortimesasnecessarytopaytheprincipalofandinterestonsuchoutstandingseniorLienBondsafterJuly1,1996,as the same shall becomedueinaccordancewiththisordinance,to redeem all of the remainingOprincipalofsuchoutstandingBondsontherespectivecalldateshereinaftersetforthandtheinterestontheOutstandingBondsthroughJuly1,1996;and
WHEREAS,George K.Baum &Company and Puget Sound securities havepresentedaformofbondpurchasecontractforconsiderationoftheCityandhaveindicatedtheirwillingnesstousetheirbesteffortstomarkettheBondsonthetermsandconditionssetforthinthisordinance;NOW,THEREFORE,
THE CITY COUNCIL OF THE CITY OF MOSES LAKE,WASHINGTON,DO ORDAIN asfollows:
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Section 1.Definitions.As used in this ordinance,the followingwordsshallhavethefollowingmeanings:
A.nAnnual Debt Servicen means the amount required to be paid in acalendaryearfor(1)interest on all Parity Bonds than outstanding exceptthatportionoftheinterestonthe1992BondswhichconstitutesanyportionoftheEscrowAmount,(2)principal of all Parity Bonds thenoutstandingbutexcludinganyoutstandingTermBonds,and (3)payments intoanySinkingPundAccountfortheamortizationofoutstandingTermBonds.O In determining interest payable with respect to Parity Bonds,it shall beassumedthatpaymentsintothesinkingFundAccountshallbemadeintheamountsandatthetimesrequiredinaccordancewiththemandatoryredemptionscheduleestablishedforthoseParityBondswhichconstituteTermBonds,as specified by the ordinances authorizing the issuancethereof."Maximum Annual Debt Service"means the maximum amount of AnnualDebtServiceonthethenoutstandingParityBondsandOutstandingSeniorLienBonds(other than the portions thereof which constitute the EscrowAmount)coming due in any future year.In the event the city has anyParityBondoutstandingonanyJanuary15orJuly15whichdoesnotbearafixedinterestratetothematuritythereof,the Annual Debt ServiceshallbecalculatedinthemannersetforthinSubsection6.F of thisordinance.
B."Assessments"means assessments levied in any ULID hereaftercreatedfortheacquisitionorconstructionofadditionsandimprovementstoandextensionsoftheSystemifsuchassessmentsarepledgedtobepaidintothe1992BondFund,including any installments of assessments and anyinterestorpenaltieswhichmaybeduethereon.
C.nBond Registrar"means the fiscal agencies of the State ofWashingtoninseattle,Washington,and New York,New York,appointed bythisordinanceforthepurposesofregisteringandauthenticatingtheBonds,maintaining the Bond Register,and effecting transfer of ownershipoftheBonds.
D."Bonds"or "1992Bonds"means all of the junior lien water andsewerrevenuerefundingbondsissuedpursuanttothisordinanceunderdateoftheDatedDate,in the aggregate original principal amount of not toexceed$3,500,000.
E."City"means the City of Moses Lake,Washington,a municipalcorporationdulyorganizedandexistingunderandbyvirtueofthelaws oftheStateofWashington.
F."City Council"means the governing body of the City as the sameshallbedulyandregularlyconstitutedfromtimetotime.
G."Code"means sections.103,148,149 and 150 of the InternalRevenueCodeof1986,as amended,and applicable temporary and permanentregulationspromulgatedthereunder.
H.nCo-Paying Agentsu means the Bond Registrar appointed forpurposesofpayinginterestonandprincipalof(and any premium pursuanttocallon)the Bonds.
I."Costs of Operation and Maintenance"means all necessaryoperatingexpenses,current maintenance expenses,expenses of reasonableupkeepandrepairs,and insurance and administrative expense,but excludesdepreciation,payments for debt service or into reserve accounts and costsofcapitaladditionstoorreplacementsoftheSystem,and municipalutilitytaxesorpaymentstotheCityinlieuofsuchtaxes.
J."Coverage Requirementu means the coverage requirement specifiedinsection11.8 of this ordinance.
K.nCrossover Daten means July 1,1996,the date on which the 1992RefundingAccountshallbeappliedtopayinterestthencomingdueontheBonds,to pay and redeem the principal amount of the 1985 Bonds pursuanttotheirrevocablecallforredemptioncontainedinthisordinance,and thebalancethereafterremaininginsuch1992RefundingAccountshallbeheldtopaytheprincipalofandinterestonthe1990Bondsasthesame
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thereafter shall become due and payable in accordance with Ordinance
No.1436 and in accordance with this ordinance.
L.nDated Daten means the dated date of the Bonds determined inaccordancewithSections3and20ofthisordinance.
M."Debt service Account"means the account of that name created bySection5ofthisordinancetopaytheprincipalofandinterestonanyParityBonds.
N."Escrow Amount"means an amount of cash and Acquired Obligations(as defined in Section 13 of this ordinance)which,together with interestthereonwillbesufficienttopaywhenduetheFundedInterestandtopaydebtserviceontheRefundedBondsupontheredemptiondatespursuanttothecallsetforthinSection14ofthisordinanceorotherwisewhendue.
O."Funded Interest"means that interest on the 1992 Bonds comingdueonJuly1,1992,through July 1,1996,inclusive.
P.nFuture Parity Bonds"means all issues or series of revenuebonds,or other revenue obligations which may be issued in the future asParityBondsinaccordancewiththetermsofthisordinance.
Q.nInvestment Earnings"means all earnings in any form whatsoeverderivedfromInvestments.
R."Investments"means any investments permitted to the City by lawofmoniesrequiredtobedepositedinanyfundoraccountoftheRevenueFundandanyParityBondFund,except monies deposited in any escrowaccountforthepurposeofrefundinganyParityBondsandexceptanymonieswhicharesubjecttopaymenttotheUnitedStatesTreasuryundertherebateprovisionsoftheCode.
S."Net Revenue"means the Revenue of the System less Costs ofoperationandMaintenance.O T."1985Bond Fund"means the Water and Sewer Revenue Bond Fund,1985 created by Ordinance No.1184 of the City to pay and secure thepaymentoftheoutstandingSeniorLienBonds.
U."1985Bondsn means the Water and Sewer Revenue Refunding BondsoftheCityissuedunderdateofNovember1,1985,pursuant to OrdinanceNo.1184 of the City,$4,490,000 principal amount of which is currentlyoutstanding.
V."1990Bonds"means the Water and Sewer Revenue Bonds of the CityissuedunderdateofJuly1,1990,pursuant to ordinance No.1436 of theCity,$200,000 principal amount of which is currently outstanding.
W."1992Bond Fundn means the "Water and sewer Revenue Bond Fund,1992n created by section 5 of this ordinance."Parity Bond Fundu means,collectively,the 1992 Bond Fund and any other fund hereafter created topayorsecurethepaymentofbondshereafterissuedonaparitywiththeBonds.
X."1992Refunding Account"means the account of that name createdinthe1992BondFundbysection13ofthisordinanceasatrustfundforthefundingandrefundingoftheEscrowAmount.
Y."Outstanding senior Lien Bonds"means the 1985 Bonds and the 1990Bonds.
Z."Parity Bonds"means any revenue bonds or other revenue obliga-tions issued by the City which have a lien upon the Revenue of the SystemtopayandsecurethepaymentoftheprincipalthereofandinterestthereonequaltotheliencreatedupontheRevenueofthesystemtopayandsecurethepaymentoftheprincipalofandinterestontheBonds."Parity Bonds"includes the Bonds and any Future Parity Bonds.
AA."Refunded Bonds"means the $2,940,000 principal amount of the1985Bondsmaturing,the $60,000 principal amount of the 1990 Bonds
WATERANDSEWERREVENUEREFUNDINGBONDS,1932 -Ë QB 3
maturing,and the interest coming due on the 1990 Bonds,after theCrossoverDate.
BB."Reserve Account"means the account of that name created in the1992BondFundforthepurposeofsecuringthepaymentoftheprincipalofandinterestontheParityBonds.
CC.nReserve Requirement"means,from and after the Crossover Date,the amount which is the smallest of (i)1.25 times the Average Annual DebtOService,(ii)the Maximum Annual Debt service and (iii)the sum of theamountsequaltotenpercent(10%)of the sale proceeds (as defined in theCode)of the then outstanding Parity Bonds.Prior to the Crossover Date,there shall he no Reserve Requirement
DD."Revenue Fund"means that Water and Sewer Revenue Fund createdbyOrdinanceNo.135 of the City.
EE.nRevenue of the Systemn means all the earnings and revenuereceivedbytheCityfromoperationoftheSystem(including monies in theRevenueFund),except ad valorem taxes,Assessments,Investment Earningsorproceedsof,or investment earnings on,loans and grants for capitalpurposes,and except income from investments irrevocably pledged to thepaymentofanyrevenuebondswhichhavebeenheretoforeormaybehereafterrefundedpursuanttoaplanofrefundingadoptedbythecityandexceptanymonieswhicharesubjecttopaymenttotheUnitedStatesTreasuryundertherebateprovisionsoftheCode.
FF."Sinking Fund Account"means any account created in a Parity BondFundfordepositsrequiredformandatoryredemptionofanyParityTermBonds.
GG.nSurety Bond"means any letter of credit,insurance policy,surety bond or other equivalent credit facility or any combination thereofissuedtotheCitytosatisfyallorpartoftheamountrequiredtobeOmaintainedintheReserveFund,the proceeds of which shall be used onlytopreventdeficienciesinthepaymentoftheprincipaloforinterestontheBondsresultingfrominsufficientamountsbeingondepositinthePrincipalandInterestAccountoranysinkingFundAccounttomakesuchpaymentsofprincipalandinterestasthesamebecomedueatmaturityoronanymandatoryredemptiondate.Such surety Bond shall be provided byaninstitutionorentitywhosecreditfacilitywouldnotadverselyaffecttheratingoftheBondsbyMoody's Investors Service,Inc.and by standard&Poor's Corporation,if the Bonds were so rated,and if not so rated,rating shall be secured from one of such entities or any other entity whoseratingsaregenerallyrelieduponbyinvestorsinmunicipalbondsasnecessarytodemonstratethatsubstitutionofasuretyBondforanyportionoftheReserveFundrequirementwillnotadverselyaffectthesecurityoftheBonds;provided,however,that as long as the 1992 Bonds areoutstandingandinsuredbyAMBACIndemnity,the rating must be equivalenttoan"Aa"rating by Moody's Investors Service or an "AA"rating bystandard&Poor's Corporation,or better."Surety Bond Payment"means anamountequaltothepaymentrequiredtobemadebytheCityonanyinterestorprincipalpaymentdateormandatoryredemptiondateminusthatportionofsuchpaymentmadebythecitytotheBondRegistrarforpaymenttothebondholdersonsuchdate,all as certified by the Bond Registrar in ademandforpaymentmadepursuanttothetermsofanysuretyBond.
HH."System"means the existing sanitary sewage collection andtreatmentsystemofthecity,including facilities for the collection anddisposalofstormwaterrunoff,as it now exists and as it may later be0addedto,extended and improved,and the existing water supply anddistributionsystemoftheCity,as it now exists and may later be addedto,extended and improved,for as long as the Bonds remain outstanding.
II."Term Bondsn means any Parity Bonds which are designated as nTermBonds"in an ordinance which authorizes the issuance of Parity Bonds (orinanordinanceorresolutionacceptingorratifyinganoffertopurchasesuchParityBonds)and establishes (or provides for establishment of)aSinkingFundAccounttoamortisetheprincipalamountofsuchTermBonds.
JJ."Treasurer"means the Finance Director or such other officer oftheCityastheCouncilshalldesignatebyordinancetocarryoutthe
wrB ANDSEWERREVENUEREUNDMG RONDS,--FRgŠ 4
duties of a city treasurer under the laws of the State of Washington orordinancesoftheCity.
KK.nULIDu means any utility local improvement district of the city.
LL."AMBAC Indemnity"means AMBAC Indemnity Corporation,aWisconsin-domiciled stock insurance company.
MM."Municipal Bond Insurance Policyn means the municipal bondinsurancepolicyissuedbyAMBACIndemnityinsuringthepaymentwhendueoftheprincipalofandinterestontheBondsasprovidedtherein.
Section 2.Authorization of the Bonds.For the purpose of carryingouttherefundingplanadoptedbySection13ofthisordinance,the City
shall issue and sell its Junior Lien Water and Sewer Revenue Refunding
Bonds,1992 in the principal amount of not to exceed $3,500,000.
Section 3.Description of the Bonds.
A.Date,Denomination,Paymentr Transfer.The Bonds shall bedesignatedasnJuniorLienWaterandSewerRevenueRefundingBonds,1992,"
shall have a Dated Date established pursuant to Section 20 of thisordinance,shall mature in the aggregate principal amount of not to exceed$3,500,000,shall be in the denomination of $5,000 each or any integralmultipleof$5,000,provided no Bond shall represent more than onematurity,shall be numbered separately in the manner and with anyadditionaldesignationastheBondRegistrardeemsnecessaryforpurposesofidentification,shall he fully registered as to both principal andinterest,shall bear interest from such date until the bond bearing suchinteresthasbeenpaidoritspaymentdulyprovidedfor,payable July 11992,and semiannually on the first days of each January and Julythereafter,at the rates and shall mature (or shall be redeemed from any1992sinkingFundAccountbymandatoryredemption)on July 1 of each of theyears1997through2003intheamountsestablishedpursuanttoSection20ofthisordinance,provided that the maturity and/or mandatory redemptionamountsshallbesetinsuchamountsthattheannualdebtserviceontheBondsafterthecrossoverDateshallbesubstantiallyproportionaltotheannualdebtserviceontheRefundedBondsscheduledforpaymentaftertheCrossoverDate,without regard to the Escrow Amount and call for redemptionundertherefundingplansetforthinthisordinance.
Both principal of and interest on the Bonds shall be payable in lawful
money of the United states of America.The principal amount of the Bondsshallbepayableuponpresentationandsurrenderthereofbytheregistered
owners on or after the maturity date at the office of a Co-Paying Agent.Interest on the Bonds shall be paid by check or draft mailed to theregisteredownerthereofornomineeofsuchownerattheaddressappearing
on the registry books of the Bond Registrar on the 15th day of the monthprecedingtheinterestpaymentdate.
Upon surrender thereof to the Bond Registrar,the Bonds areinterchangeableforbondsinanyauthorizeddenominationofanequalaggregateprincipalamountandofthesameinterestrateandmaturity.Bonds may be transferred only if endorsed in the manner provided thereonandsurrenderedtotheBondRegistrar.Such exchange or transfer shall bewithoutcosttotheownerortransferee.
The Bonds are special obligations of the City and do not constitute
an indebtedness of the City within the meaning of the Constitution of theStateofWashington.The Bonds shall be obligations only of the 1992 BondOFundandshallbepayableandsecuredasprovidedherein.The Bonds arenotgeneralobligationsofthecity.
B.Optional Redemption.The Bonds shall not be subject toredemptionpriortoJuly1,1997.The times,if any,and prices at which
any of the Bonds may be redeemed at the option of the City shall beestablishedpursuanttoSection20ofthisordinance,provided that,if theBondsmaybecalledinpart,they shall be redeemed in inverse order ofmaturity(and by lot within a maturity in such manner as the Bond Registrarshalldetermine).
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C.Mandatory Redemption.In the event that any of the Bonds shallbedesignatedasTermBondspursuanttoSections5and20ofthisordinance,the city council shall approve,by resolution,such designationandestablishamandatorysinkingfundpaymentscheduleandthemanner inwhichsuchTermBondsshallbecalledformandatoryredemption.
D.Notice of Call.Notice of any such redemption shall be given notlessthan30normorethan60dayspriortothedatefixedforredemptionbyfirstclassmail,postage prepaid,to the registered owner of any BondtoberedeemedattheaddressappearingontheBondRegister.Therequirementsofthissectionshallbedeemedtobecompliedwithwhennoticeismailedashereinprovided,regardless of whether or not it isactuallyreceivedbytheownerofanyBond.In addition,such redemptionnoticeshallalsobemailedwithinthesametimeperiod,postage prepaidtoGeorgeK.Baum &Company,manager of the account purchasing the BondsfromtheCity,at their main place of business in Seattle,Washington,ortothesuccessorinbusiness,if any,of said manager at its main place ofbusiness,to Standard &Poor's Corporation,and to Moody's InvestorsService,Inc.at their offices in New York,New York,or to theirsuccessors,if any,at the main place of business of such firms,but noneofthemailingsrequiredbythissentenceshallbeaconditionprecedenttothecallofanyBondsforredemption.
E.Effect of Call.Interest on any Bonds so called for redemptionshallceaseonsuchredemptiondateunlessthesameshallnotberedeemeduponpresentationmadepursuanttosuchcall.The owner of any Bondredeemedinpartwillreceive,upon surrender of such Bond,a new Bond inprincipalamountequaltotheunredeemedportionoftheBondsosurrendered.
F.Open Market Purchase.After the Crossover Date,the City maypurchaseanyBondorBondsontheopenmarRetfromRevenueoftheSystemfrommoniesavailablethereforinaccordancewithSection4ofthisordinance,provided that any such Bonds shall be purchased for retirementonly.O Section 4.Revenue Fund Priorities.The Revenue of the System,shallbedepositedintheRevenueFundascollected,and the Revenue Fund shallbeheldseparateandapartfromallotherfundsandaccountsoftheCity;provided,however,that when said Revenue is received,the Treasurer may,consistent with the provisions of the ordinances authorizing theOutstandingSeniorLienBondsandofthisordinance,deposit amounts ofsuchmoniesdirectly(i)into the 1985 Bond Fund or any Parity Bond Fund,and any Debt Service Account and any Sinking Fund Account in any ParityBondFund,(ii)into the Reserve Account,(iii)into other funds oraccountsofthecitythatmaybecreatedhereaftertopayorsecurethepaymentoftheprincipalofandinterestonanyotherrevenueobligationsoftheCity,and (iv)into any construction fund or any repair andreplacementfundheretoforeorhereaftercreatedbytheCity.Any RevenueoftheSystemdepositeddirectlyintoanyfundheretoforeorhereaftercreatedforcapitalimprovementstotheSysteminorderthatsuchRevenueshallbeexemptfromtheStateofWashingtontaxonrevenueofwaterandsewerutilitiesoperatingwithinthestateshallbedeemedtohavebeendepositedintheRevenueFundforpurposesofthisordinance.
The monies in the Revenue Fund shall be used only for the followingpurposesandinthefollowingorderofpriority:
First,to pay the Costs of Maintenance and Operation of theSystem;
Second,to make all payments required to be made into the 1985BondFund;
Third,to make all payments required to pay the interest on anyParityBondsforwhichmoniesshallnothavebeenprovidedbyAssessments;
Fourth,to make all payments required to pay the principal of anyParityBonds,whether at maturity or due to mandatory redemption orsinkingfundprovisionsforTermBonds,for which monies shall nothavebeenprovidedbyAssessments;
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Fifth,to make all payments required to be made pursuant to areimbursementagreementinconnectionwithanysuretyBond,providedthat,if there is not sufficient Revenue of the System to make allpaymentsunderallapplicablereimbursementagreements,the paymentswillbemadeonaproratabasis;
sixth,to make all payments required to be made into the ReserveAccountforwhichmoneyshallnothavebeenprovidedfromAssessments
or from the transfer to be made from the reserve account in the 1985BondFundtotheReserveAccountontheCrossoverDate;O seventh,to make all payments which may hereafter be required tobemadeintoanyfuturerepair,replacement or reserve fund or accountwhichmayberequiredbythecovenantsofFutureParityBonds;
Eighth,to make all payments required to be made into any otherredemptionfund,debt service account,reserve account or sinking fundaccountcreatedtopayandsecurethepaymentoftheprincipalofandinterestonanyrevenueobligationsoftheCityhavingalienupontheRevenueoftheSystemandmoniesintheRevenueFundjuniorandinferiortothelienthereonforthepaymentoftheprincipalofandinterestonParityBonds;and
Ninth,to retire by redemption any outstanding water and sewerrevenueobligationsoftheCityortomakenecessaryadditions,betterments,improvements,extraordinary repairs,extensions andreplacementsofthesystem,or any other lawful system purposes.
The City further reserves the right,at any time after the CrossoverDate,to use any surplus Revenue of the system available after providingforthepaymentsrequiredbyparagraphsFirstthroughEighthinclusive ofthissectiontopurchaseanyoftheBondsintheopenmarketinaccordancewithSection3.F.of this ordinance.
Section 5.1992 Bond Fund and Accounts Therein.A special fund oftheCitytobeknownasthe"Water and Sewer Revenue Bond Fund,1992n(hereinbefore defined as the "1992Bond Fund")is hereby established andcreatedintheofficeoftheTreasurerandsaidfundshallbedrawnuponforthesolepurposeofpayingandsecuringthepaymentofParityBonds.The 1992 Bond Fund shall be separated into a Debt Service Account and aReserveAccount.Additional separate accounts or subaccounts may becreatedinthe1992BondFundforvariousseriesorissuesoffutureParityBonde.
A.Debt Service Account.Monies deposited in the Debt ServiceAccountshallbeusedonlyforthepurposeofpayingtheprincipalof,premium,if any,and interest on the Bonds and any Future Parity Bonds.
As long as any Bonds remain outstanding,the City hereby irrevocablypledges,obligates and binds itself to set aside and pay from the RevenueoftheSystemandmoneyintheRevenueFundintotheDebtServiceAccountthoseamountsnecessary,along with Assessments deposited and other moniesthenonhandandavailableintheDebtServiceAccount,to pay the interestonalloutstandingBondsandtheprincipalofalloutstandingBonds(exceptprincipalofany1992TermBonds)as such interest and principalrespectivelybecomedueandpayable.Such payments on account of the Bondsshallbemadeonorbeforethe25thdayofeachmonthasfollows:
1.Beginning with the month of July 1996,and continuing as long asanyoftheBondsareoutstandingandunpaid,at least one-sixthOoftheamountwhich,together with available Assessmentsdepositedinthe1992BondFund,will equal the interest tobecomedueandpayableonthenextinterestpaymentdateonalloftheBondsthenoutstanding.
2.Beginning with the month of July 1996,and continuing as long asanyoftheBondsareoutstandingandunpaid,at leastone-twelfth of the amount which,together with Assessments andothermoniesondepositinthe1992BondFundandavailabletherefor,will equal the principal of the Bonds to become dueandpayableonthenextprincipalpaymentdate.
WATERANDSEWERREVENUEREFUNDINGBONDs,im -ŸRgG Ÿ
B.Transfers to Sinking Fund Account.In the event any of the Bonds
are designated as 1992 Term Bonds in a resolution of the City Councilsupplementalto,and consistent with Section 20 of,this ordinance,and aslongasanysuch1992TermBondsremainoutstanding,the City herebyirrevocablypledges,obligates and binds itself to set aside and pay fromtheRevenueoftheSystemandmoneyintheRevenueFundintothe1992SinkingFundAccountcreatedbysuchsupplementalresolutionthoseamountsnecessary,along with Assessments deposited and other monies then on handandavailableinthe1992SinkingFundAccount,to pay the mandatorysinkingfundpaymentsthereonastheybecomedueandpayable.Suchpaymentsonaccountofthe1992TermBondsshallbemadeonorbeforethe25thdayofeachmonthasfollows:
Beginning with the month of July of the year of the final maturity oftheserialBonds,and continuing as long as any of the 1992 Term Bonds
are outstanding and unpaid,at least one-twelfth of the amount which,together with available Assessments deposited in the 1992 Bond Fund,will equal the mandatory sinking fund payment to become due andpayableonthenextsucceedingJuly1.
Section 6.Reserve Account.On the Crossover Date,the Treasurer isherebyauthorizedanddirectedtotransfersomuchoftheamountthenondepositinthereserveaccountinthe1985BondFundasnecessary,whenaddedtoanyamountthenondepositintheReserveAccountwillequaltheReserveRequirementandtodepositsuchamountintotheReserveAccountinthe1992BondFund.In the event that the resulting balance shall he lessthantheReserveRequirement,the city shall fund the deficiency fromRevenueoftheSystemontheCrossoverDate.
A.Maintenance of and Limitation on Account Balance.From and aftertheCrossoverDate,the City shall maintain a balance in the ReserveAccountinanamountequaltotheReserveRequirement.Because the ReserveRequirementwillchangefromtimetotimeaftereachannualprincipalpaymentontheBonds,as of July 2,1997,and as of each succeeding July 2solongasanyBondsareoutstanding,the city shall compute the ReserveRequirement;and,to the extent that the balance in the Reserve AccountexceedssuchReserveRequirement,the excess amount shall be deemed to havebeentransferredonsuchdateto,at the option of the City,the DebtServiceAccount,any Sinking Fund Account and/or the Revenue Fund andappliedforthepurposesoftherespectiveFundsandAccounts.
B.Issuance of Future Parity Bonds.The City further covenants andagreesthatintheeventitissuesanyFutureParityBondsitwillprovideineachordinanceauthorizingtheissuanceofthesamethat,unless and totheextentpaymentismadeintotheReserveAccountoutofAssessments,other monies legally available therefor or the proceeds of such FutureParityBonds,approximately equal annual payments will be made into theReserveAccountoutofAssessmentsandmoniesintheRevenueFundsothatwithinfive(5)years from the date of the issuance of such Future ParityBonds,the total amount of such payments,with the amount already in theReserveAccount,will be at least equal to the Reserve Requirement.
In the event that the City shall issue Future Parity Bonds prior totheCrossoverDate,the Reserve Requirement shall apply only to all suchFutureParityBondsandnoamountintheReserveAccountshallbeallocableto,or available to pay,debt service on the Bonds.
C.Use to Redeem Parity Bonds.Whenever there is a sufficientamountinallParityBondFundsandtheReserveAccounttopay theprincipalof,premium if any,and interest on all Parity Bonds thenOoutstanding,the money in the Reserve Account may be used to pay suchprincipal,premium,if any,and interest.Money in the Reserve Account maybewithdrawnorsetasideinaspecialaccounttoredeemandretire,bypaymentofprincipalof,premium,if any,and the interest due to the dateofredemptionormaturity,on any outstanding Parity Bonds so long as themoniesremainingondepositintheReserveAccountareatleastequaltotheReserveRequirement.
D.Deficiencies.In the event there shall be a deficiency in anyParityBondFundDebtServiceAccounttomeetmaturinginstallmentsofinterestonorprincipalofandinterestonanyParityBondsoradeficiencyinanySinkingFundAccounttomeettherequiredscheduleof
WER MD SEWR REVENUEREMEDMG BONDS,im -Page 8
payments for the amortization of any Term Bonds,such deficiency shall bemadeupfromtheReserveAccountbythewithdrawalofmoniestherefromand,if a deficiency still exists immediately prior to an interest payment dateandafterthewithdrawalofcash,the city shall then draw from any SuretyBondinsufficientamounttomakeupthedeficiency.Such draw shall bemadeatsuchtimesandundersuchconditionsastheagreementforsuchSuretyBondshallprovide.Any deficiency created in the Reserve AccountbyreasonofanysuchwithdrawalshallbemadeupoutofmoneyintheRevenueFundaftermakingnecessaryprovisionforthepaymentsrequiredtobemadebysubparagraphsFirst,Second,Third,Fourth,and Fifth ofSection4ofthisordinance.Any such deficiency shall be made up within
one year of any such withdrawal.
E.Surety Bond.The City reserves the right at any time and fromtimetotimetoobtainoneormoresuretyBondsinlieuofdepositingcashforallorpartoftheReserveRequirement.In the event any such suretyBondsareobtained,the City covenants and agrees to maintain an amount intheReserveAccountatleastequaltothedifferencebetweentheReserveRequirementandtheaggregatelimitontheamountpayableundersuchsuretyBondstopaydebtserviceontheBondsandanyFutureParityBonds(thenSuretyBondlimit").In the event that the Surety Bond limit shall beexpectedtobereducedbyreasonofexpirationoftheSuretyBondonafixeddateortheendofafixedterm,the City hereby covenants and agreestoreplenishtheReserveAccounttoanamountequaltotheReserveRequirementnolaterthansuchdateofexpiration.In the event that theSuretyBondlimitisreducedbyreasonofpaymentmadeunderaSuretyBondtotheBondRegistrartopayanyprincipaloforinterestonanyParityBonds,the City hereby covenants and agrees to make payments to the issuerofsuchSuretyBondpursuanttothetermsofareimbursementagreementeffectivetoreinstatethemaximumSuretyBondlimit;and to the extentthereisnoapplicablereimbursementagreement,the City covenants andagreestodepositintheReserveAccountfrommoniesfirstavailablethereforpursuanttoSection4ofthisordinancesuchamountsasarenecessarytoprovideabalancethereinequaltothethenapplicableReserveRequirement.O F.Variable Rate Parity Bonds.In the event that the City shallissueFutureParityBondsuponwhichtheinterestrateorratesoranyofthemarenotfixedatthetimeofissuance,the Reserve Requirement shallbedeterminedwithinthirtydaysaftereachJanuary1andJuly1(so longasanyParityBondsremainoutstandingwhichdonotbearafixedinterestrata)as follows:Any Parity Bond which does not,on the applicable dateofcalculation,bear a fixed interest rate to its maturity date shall bedeemedtobearinterestatafixedannualrateequaltotheaverageofthedailyratesonsuchParityBondduringthe365consecutivedaysendingonthedateofcomputation(or,if shorter,the period beginning on the dateofissuanceofsuchParityBondandendingonthedateofcomputation).None of the 1992 Bonds will be variable rate bonds.As provided inSection12.E.of this ordinance,no variable rate Future Parity Bonds maybeissuedsolongasthe1992BondsareoustandingandinsuredbyAMBACIndemnitywithoutthepriorwrittenconsentofAMBACIndemnity.
Section 7.Investment of Monies in 1992 Bond Fund and Accounts.ItistheintentionoftheCitytopurchaseInvestmentswithmoniesinthe1992BondFundandAccountsthereinandtoapplytheInvestmentEarningsthereontothegeneralfundoftheCityaspermittedbylaw.However,solongasanyBondsareoutstandingorpaymentsshallhavebeenmadeundertheMunicipalBondInsurancePolicytopayanyportionofthedebtserviceonthethenoutstandingBonds,the City shall maintain a separateinvestmentaccountforthe1992BondFundsothat,should the CityOencounterfinancialdifficulties,such investments will be identified andavailabletopayandsecurethepaymentofthedebtserviceontheBonds.Investment of monies in the 1992 Bond Fund shall meet the requirements ofSubsection24.E of this ordinance,provided,however,that,so long as theCityestablishesandmaintainsa1992BondFundinvestmentaccountintheStateofWashingtonLocalGovernmentInvestmentPoolheretoforeestablishedtoassistandbenefitlocalgovernmentsofthestateintheinvestmentofpublicmonies,the City shall be deemed to be in compliance with saidsubsection24.E.
Section 8.Lien Upon Revenue of the System;Other Security.Theamountspledgedbythisordinanceandanyordinancehereafteradopted
warERANDSEWERREVENUEREPUNDEGRONDS,1992 -P&g 9
authorizing the issuance of Future Parity Bonds to be paid into the 1992BondFund,any future Parity Bond Fund and the Reserve Account from theRevenueFundareherebydeclaredtobeapriorlienandchargeupontheRevenueoftheSystemsuperiortoallotherchargesofanykindornaturewhatsoeverexceptthecostofmaintenanceandoperationoftheSystemandexceptthelienoftheOutstandingSeniorLienBondsatalltimespriortotheCrossoverDateandfurtherexceptthattheamountssopledgedareofequallientothechargesuponsuchRevenuewhichmayhereafterbemadetopayandsecurethepaymentoftheprincipalofandinterestonanyFutureParityBonds.In accordance with the refunding plan adopted pursuant tothisordinance,no monies will be deposited in the 1992 Bond Fund for theBondspriortotheCrossoverDate,provided,however,that the FundedInterestshallbesecuredbyandpayablefromthecashandAcquiredObligationsdepositedinthe1992RefundingAccountupondeliveryoftheBondsandheldbytheEscrowTrusteepursuanttosuchrefundingplan.
The Council hereby declares that,in fixing the amounts to be paidintothe1992BondFundandtheReserveAccountthereinashereinbeforeprovided,it has exercised due regard for the costs of Maintenance andOperationoftheSystemandhasnotobligatedthecitytosetasideintothe1992BondFundandReserveAccountagreateramountorproportionoftheRevenueoftheSystemthaninitsjudgmentwillbeavailableoverandabovetheCostsofMaintenanceandoperationoftheSystem.
Section 9.Adequacy of Revenue to Make Required Payments.The CityCouncilherebyfindsthatinfixingtheamountstobepaidoutoftheRevenueoftheSystemintothe1992BondFund,and the various accountstherein,and into the Reserve Account,it has exercised due regard for theCostsofMaintenanceandOperationandhasnotobligatedtheCitytosetasideandpayintosuchFundsagreateramountoftheRevenueofthesystemthaninitsjudgmentwillbeavailableoverandabovetheCostsofMaintenanceandOperation.
Section 10.Defeasance.In the event that monies are irrevocably setasideinaspecialescrowfund(the "Escrow Fund")on the terms andconditionssetforthinthisSection10torefundalloranypartoftheBonds,with respect to the Bonds so refunded:
A.Payments into the Bond Redemption Fund for payment ofprincipalofandinterestontheBondsshallbediscontinued;
B.The Bonds shall cease to be entitled to any lien,benefitorsecurityofthisordinanceexcepttherighttoreceivethemoniessosetaside;and
C.The Bonds shall be deemed not to be outstanding under thisordinance;provided,that any Bonds so refunded shall be deemed to beoutstandingforthepurposeoftransfers,exchanges or the replacement oflostordestroyedBondspursuanttothisordinance.
The Escrow Fund shall be established with a corporate fiduciary qualifiedtodobusinessinthestateofWashingtonand:
(1)Monies set aside in said Escrow Fund shall be irrevocablypledgedtopayprincipalofandredemptionpremium,if any,andinterestontherefundedBonds;and
(2)Said monies shall be held in cash and/or "governmentobligations"as defined in Chapter 39.53 RCW;
O (3)Such government obligations shall mature at such time ortimesandbearinterestatsuchratestoprovidewithoutanyreinvestmentthereofsufficientamountstopayinterestontherefundedBondswhendueandtoredeemandretiretherefundedBondsattheirrespectivematuritydates,mandatory redemption dates,and/orpursuanttoanirrevocablecallofanyorallsuchrefundedBondsforredemptioninaccordancewiththeirterms;and
(4)The sufficiency of such cash and government obligations tomakesuchpaymentsshallhavebeenverifiedbyanindependentcertifiedpublicaccountant.
warBRDEWREVENUUWUNDmeBONDs,m -Page 10
Section 11.Certain Covenants.The city hereby covenants and agreeswiththeownerandholderofeachoftheBondsandanyFutureParityBondsforaslongasanyofthesameremainoutstandingasfollows:
A.Anolication of Assessments.There are no Assessments presentlyoutstandingortobeleviedinanyULIDB.As long as any Parity Bondsremainoutstanding,assessments levied in ULIDs hereafter created to paypartofthecostofimprovementstotheSystemforwhichFutureParityBondsareissuedshall(to extent such assessments are not applied aspermittedbylawtopaymentofpartofthecostsoftheimprovementsOfinancedbysuchULID)be pledged to a Parity Bond Fund from which suchWutureParityBondsarepayableortotheReserveAccount.It is herebyprovided,however,that nothing in this ordinance or this section shall beconstruedtoprohibittheCityfromissuingwaterandsewerrevenuebondsjuniorinlientotheBondsandanyFutureParityBondsandpledgingassecurityfortheirpaymentassessmentsleviedinanyULIDwhichhasbeenspecificallycreatedtopaypartofthecostofimprovementstothesystemforwhichsuchjuniorlienbonds.are specifically issued.
B.Rates and Charges;Coverage Requirement.It will fix,maintainandcollectratesandchargesfortheuseoftheservicesandfacilitiesandallcommoditiessold,furnished or supplied by the System to ensure(1)that the .Revenue of the System is sufficient to pay all Costs ofMaintenanceandOperation,to pay debt service on the Outstanding SeniorLienBonds,and to pay debt service on the Bonds,as well as any otheramountsthattheCityisobligatedtopayfromtheRevenueoftheSystem,and (2)that the Net Revenues in each calendar year will equal at least(a)(i)1.25 times the difference between the Maximum Annual Debt ServiceandtheamountofAssessmentsdueinsuchcalendaryear,plus (ii)theReserveAccountdepositspayableinsuchcalendaryear;and (b)so long asthe1992BondsareoutstandingandinsuredbyAMBACIndemnity,Net RevenueexcludingAssessmentsineachcalendaryearwillequalatleast80%of theMaximumAnnualDebtServiceandReserveAccountdeposits.
C.Payment of Cost of Maintenance and Operation.After making orprovidingforthemonthlypaymentsfromtheRevenueFundasrequiredbySection5ofthisordinance,there shall be maintained in such FundsufficientmoniestoenabletheCitytocontinuouslymeettheCostsofMaintenanceandOperationoftheSystemonacurrentbasis.
D.Enforcement of Payment of Service Charges and Assessments.TheCityshallpromptlytakeactiontoenforcethepaymentofdelinquentservicechargesandAssessmentsbysuchmeansasarelegallyavailable.
E.Maintenance and Operation standards.It will at all timesmaintaintheSystemingoodrepair,working order and condition,and willatalltimesoperatetheSystemandthebusinessinconnectiontherewithinanefficientmannerandatareasonablecost.
F.Sale or Disposition of System.It will not sell or voluntarilydisposeofallofthepropertiesoftheSystemunlessprovisionismade forpaymentintothe1992BondFundofasumsufficienttopaytheprincipalofandinterestonalloftheParityBondsoutstandinginaccordancewiththetermsthereof;nor will it sell or voluntarily dispose of any part ofthepropertiesoftheSystem(unless the same are no longer used,usefulornecessaryintheoperationoftheSystem)unless provision is made forpaymentintothe1992BondFundofanamountwhichwillbeinatleastthesameproportiontotheamountoftheParityBondsoutstandingthattherevenuefromtheportionorpropertiesoftheSystemsoldordisposedofwhichwasavailablefordebtserviceontheParityBondsoutstandingforOthetwelvemonthsprecedingsuchsaleordispositionbearstotherevenueavailableforsuchdebtservicefromtheSystemforthesameperiod.
G.Books and Accounts;Annual Reports.It will,while any ParityBondsremainoutstanding,keep proper and separate accounts and records inwhichcompleteandseparateentriesshallbemadeofalltransactionsrelatingtotheSystem,and it will prepare and,at the written request oftheoriginalpurchaserorpurchasersofParityBondsoranysubsequentholdersorregisteredownersthereofitwillfurnishtosuchholdersorregisteredowners,complete operating and income statements of the SysteminreasonabledetailshowingthefinancialconditionofthewaterandsewerdepartmentsoftheCityandcompliancewiththetermsandconditionsof
WATERANDSEWE REV-UE REFUNDMGRONW 1992 -P&gG 11
this ordinance not more than 150 days after the close of such calendaryear;and it will grant any holders or registered owners of at least 25%of the then outstanding Bonds the right at all reasonable times to inspecttheSystemandallrecords,accounts and data of the City relating thereto.Upon request of any holder or registered owner of any outstanding Parity
Bonds,it will also furnish to such holder or registered owner a copy ofthemostrecentlycompletedauditofthecity's accounts by the StateAuditorofWashington,or such other audit as is authorized by law in lieuthereof.In addition to the foregoing provisions of this Subsection G,theprovisionsofsection24.D of this ordinance shall apply so long as anyBondsareoutstanding.
H.Insurance.It will at all times carry fire and extended coverageandsuchotherformsofinsuranceonsuchofthebuildings,equipment,facilities and properties of the City as under good practice are ordinarilycarriedonsuchbuildings,equipment,facilities and properties byprivatelyownedutilitiesengagedintheoperationofwaterandseweragesystemstothefullinsurablevaluethereof,and will also carry adequatepublicliabilityandpropertydamageinsuranceatalltimes,and war riskinsuranceonallofsuchpropertiesifthesameshouldbecomeavailable.The premiums on such insurance policies are hereby declared to be a normalcostofmaintenanceandoperationoftheSystem.
I.No Free Service.It will not furnish water or sewer service toanycustomeroruserofthesystemwhatsoeverfreeofcharge.
J.Special Funds.It will not create any special fund or funds topayorsecurethepaymentofdebtserviceon,or authorize or issue,anyotherrevenuebonds,warrants or obligations which will rank on a paritywithorhaveanypriorityoverthepaymentsintoorthemoniesinthe1992BondFund,except as provided in section 12 of this ordinance relating totheissuanceofFutureParityBonds,nor will it create or permit any otherlienorencumbrancewhichmaybereasonablyexpectedtoimpairthesecurityoftheBonds.
K.Tax Code Covenant.It will make no use nor permit the use of anyproceedsoftheBondsoranyotherfundsoftheCitywhich,if such use hadbeenreasonablyexpectedatthedatethattheBondsareissued,would havecausedsuchBondstobearbitragebondswithinthemeaningofSection148(a)of the Code and will comply with all requirements ofSection148oftheCodetotheextentapplicabletoanyParityBonds.TheCityfurthercovenantsandagreesitwillnottakeanyaction,or fail totakeanyaction,if any such action,or failure to take action,wouldadverselyaffecttheexclusionfromgrossincomeoftheinterestontheBondsunderSection103oftheCode.
Without limiting the generality of the foregoing,the City agrees thatthereshallbepaidwithintherequiredtimesallamountsrequiredtoberebatedtotheUnitedStatespursuanttosection148(f)of the Code and anytemporary,proposed or final Treasury regulations as may be applicable toanyoutstandingParityBondsfromtimetotime.This covenant shallsurvivepaymentinfullordefeasanceofanyParityBonds.The CityCouncilherebyfindsanddeterminesthat,although the City may issuetax-exempt obligations (including the Bonds and any other bonds,notes,installment-purchase or lease-purchase contracts)duringcalendaryear 1992whichmayexceed,in total aggregate principal amount,$5,000,000.However,any bonds,other than the Bonds,are expected to be generalobligationbondsforcapitalconstructionprojects;and the City Councilintendstotimetheissuanceofsuchgeneralobligationbondstoqualifysuchbondsforthetwo-year capital construction exception from rebate soOthattheCityCouncilexpectstheCitytobeexemptfromanyrebaterequirementwithrespecttotheBondsinaccordancewithSubsection148(f)of the code.
Notwithstanding any provision of this section,if the city shallobtainanopinionofnationallyrecognizedbondcounseltotheeffectthatanyactionrequiredunderthissectionisnolongerrequired,or to theeffectthatsomefurtheractionisrequired,to maintain the exclusion from
gross income of the interest on the Bonds pursuant to Section 103 of theCode,the City may rely conclusively on such opinion in complying with theprovisionshereof.
WAm ANDSEWER REVENUEREFUNDINGBONDS,im -Page 12
L.No Senior Lien Future Parity Bonds.The provisions of ordinancesNo.1184 and No.1436 authorizing the Outstanding Senior Lien Bondsnotwithstanding,the City hereby covenants that it will issue no water andsewerrevenuebondsforanypurposewhatsoeverwhichpurporttohavealienontheRevenueoftheSystemequaltothelienthereonforpaymentofprincipalofandinterestontheoutstandingSeniorLienBonds.
Section 12.Future Parity Bonds.The City reserves the right for thepurposeof:
First,acquiring,constructing and installing additions,betterments and improvements to and extensions of,acquiring
necessary equipment for,or making necessary replacements of orrepairsorcapitalimprovementstotheSystem,or
Second,refunding by exchange or by redemption orpurchasingandretiringatorpriortotheirmaturityanypartoralloftheoutstandingwaterandsewerrevenuebondsoftheCity,
to issue additional and/or refunding water and sewer revenue bonds therefor(hereinbefore defined as "Future Parity Bonds"),to create additionalParityBondFunds,and to make payments into the 1992 Bond Fund or any suchadditionalParityBondFundsandintotheReserveAccountfromtheRevenueoftheSystemandAssessmentssufficienttopaytheprincipalofandinterestonsuchFutureParityBondsandtomaintainareservethereforashereinafterrequired,which payments may rank equally with the paymentsrequiredbythisordinancetobemadeoutofsuchRevenueandAssessmentsfortheBonds,upon compliance with the following conditions:
A.That all payments then required by this ordinance and allpaymentsthenrequiredbyanyordinanceheretoforeorhereafteradoptedpertainingtoanythenoutstandingParityBondsshallhavebeenmadeintoallParityBondFundsandtheReserveAccountandthatnodeficiencyexiststherein;andOB.That the ordinance providing for the issuance of such FutureParityBondsshallprovidethatallassessmentsandinterestthereonwhichmaybeleviedinanyULIDhereaftercreatedforthepurposeofpayinginwholeorinparttheprincipalofandinterestonsuchFutureParityBondsshall(to the eKtent such assessments are not applied as permitted by lawtopaymentofthecostoftheimprovementsfinancedbysuchULID)bepledgedandpaiddirectlyintoaParityBondFundortheReserveAccount;and
C.That the ordinance providing for the issuance of such FutureParityBondsshallprovideforthepaymentssetforthinSection6.B ofthisordinance;and
D.That,in the event such Future Parity Bonds contain Term Bonds,the ordinance authorizing their issuance shall provide for a schedule ofpaymentstobemadefromRevenueoftheSystemandAssessments,if any,into a Sinking Fund Account to amortize the principal of such Term Bondsonorbeforethematuritydatethereof;and
E.That,so long as any of the Bonds remain outstanding,no variablerateFutureParityBondsmaybeissuedwithoutthepriorwrittenconsentofAMBACIndemnityandsuchconsentshallspecificallyapprovetheliquidityfacilitytobeprovidedforanysuchvariablerateFutureParityBonds.
F.That,prior to delivery of such Future Parity Bonds,there shallbeonfilewiththeCityacertificateofanindependentlicensedprofessionalengineerorcertifiedpublicaccountantshowing,that in theprofessionalopinionofsuchengineeroraccountanttheannualNetRevenueavailableforParityBonddebtserviceshallbeatleastequalto1.25times(i)the net Annual Debt Service on the then outstanding Parity BondsandtheproposedFutureParityBondsand(ii)so long as the 1992 Bonds areoutstandingandinsuredbyAMBACIndemnity,Net Revenue available forParityBondDebtServiceexcludingAssessmentsineachcalendaryearshallbeatleastequalto80%of the Maximum Annual Debt service on and ReserveAccountdepositsforthethenoutstandingParityBondsandtheproposed
WATERANDSEWERREVENUEREPUNDINGEONDS,1W2 *P&g 13
Future Parity Bonds."Net Annual Debt service"means the Annual DebtServiceminustheAssessments(projected in accordance with the followingparagraph).
For the purpose of such certificate the engineer or accountant shallusetheNetRevenueforanytwelveconsecutivecalendarmonthsoutoftheimmediatelypreceding24consecutivemonths,shall assume that outstandingAssessmentsshallbepaidinscheduledinstallments,without prepayment,and applied in accordance with the provisions of the ordinances authorizingtheoutstandingParityBondsandtheproposedFutureParityBonds,and mayOprojecttheNetRevenueforanyportionsoftheSystemwhichcameintooperationpriortothedeliveryoftheproposedFutureParityBonds,butwhichwerenotinoperationduringtheentire12-month base period.IndeterminingdebtserviceontheoutstandingParityBondsandtheproposedFutureParityBonds,the engineer or accountant shall assume that anyParityTermBondsandFutureParityTermBondswillberetiredinaccordancewithmandatoryredemptionrequirementsormandatoryapplicationofsinkingfundpayments.In the event any of the outstanding Parity Bonds
or the Future Parity Bonds proposed to be issued are variable interest ratebonds,the interest on such bonds shall be estimated in accordance withSubsection6.F of this ordinance,provided that the proposed Future ParityBondsshallbedeemedtohavebeenissued180dayspriortothedate ofsuchengineer's or accountant's certificate.The following adjustments maybemadetothehistoricalNetRevenueoftheCityorprojectedNetRevenueoftheCity:
(1)Any rate change in effect prior to the delivery of theproposedFutureParityBondsmaybereflected;
(2)Revenue may be added from customers actually added to thesystemduringthe12-month base period to the extent the historical NetRevenuedoesnotincludesuchrevenues;
(3)Service charge revenue may be added from customers to beservedbytheimprovementsbeingconstructedoutoftheproceedsoftheFutureParityBondstobeissued,but only to the extent that each suchadditionalcustomershallhaveamandatorydutytoconnectpropertytothesystem[a]which property is served by an existing private water sourceand/or septic system or [b]which property is improved with one or moreresidentialdwellingsorcommercialorindustrialfacilitiesandabindingcontracttopurchasesuchpropertybytheanticipatedadditionalcustomerisineffect,provided that,so long as the Bonds are outstanding andinsuredbyAMBACIndemnity,no more than 75%of such service charge revenuemaybeadded;
(4)Actual or anticipated changes in the operation andmaintenanceexpensessubsequenttothe12-month base period shall be addedordeducted,as applicable,provided that,so long as the Bonds areoutstandingandinsuredbyAMBACIndemnity,only actual reductions in suchexpenseswhichoccurpriortodeliveryoftheproposedFutureParityBondsandwhichwillbecontinuingmaybededucted.
Nothing contained in this section shall prevent the City from issuingrevenuebondshavingajuniorlienontheRevenueoftheSystemorfrompledgingthepaymentofULIDassessmentsintoabondredemptionfundoraccountcreatedtopayandsecurethepaymentoftheprincipalofandinterestonsuchjuniorlienbondsaslongassuchassessmentsareleviedtopaypartorallofthecostofimprovementsbeingconstructedoutoftheproceedsofthesaleofsuchjuniorlienbonds.
O Section 13.Refunding Plan.There is hereby created and establishedinthe1992BondFundaspecialfundofthecitytobeknownasthe"1992RefundingAccount"into which shall be transferred and deposited all moniesrequiredtocarryouttherefundingoftheRefundedBondsandfundingoftheFundedInterest.
The principal proceeds of the sale of the Bonds shall be deposited inthe1992RefundingAccount.The amounts so transferred and deposited shallbeappliedtopaytheAMBACIndemnitymunicipalbondinsurancepremiumandthecostsofissuanceoftheBonds,to purchase direct obligations of(including obligations issued or held in book entry form on the books of)the Department of the Treasury of the United States of America (the
warmANDSEWmREVWWRERM-GBONDS,1¾-Ÿ&g 14
"Acquired Obligations")and to provide the necessary beginning cash balancetoaccomplishtherefundingplan.
The City Manager shall approve the amounts deemed to be necessary toaccomplishandtocomplywiththerequirementsofSection103,147,148,149 and 150 of the Internal Revenue Code of 1986,as amended,andapplicabletemporaryandpermanentregulationspromulgatedthereunder,provided that the cash and investments in the 1992 Refunding Account shallbesufficientastotype,maturity date and amount to pay the Escrow Amountas,from time to time,portions thereof become due on the Bonds and theRefundedBondsorbecomepayableaccordingtothemandatorycallprovisionsofSection14hereofandprovidedfurtherthatthetotalcostofacquisitionofalltheAcquiredObligationsdoesnotexceedtheamountofmoneyauthorizedtobedepositedintothe1992RefundingAccount.
Such Acquired Obligations will bear interest and mature as toprincipalandinterestinsuchamountsandatsuchtimessoastodischargetheobligationsofthecitytoprovideforthepaymentoftheEscrowAmount,including the payments to be made on respective mandatoryredemptiondatessetforthinSection14ofthisOrdinance.
SuchAcquiredobligations shall be irrevocably deposited with Seattle-First National Bank,Seattle,Washington (hereinafter called the "EscrowTrustee").Any amounts described in this section which are not providedforinfullbythepurchaseanddepositoftheAcquiredObligationsdescribedinthissectionshallbeprovidedforbytheirrevocabledepositofaportionoftheproceedsofthesaleoftheBondsorothermonies oftheCitywiththeaforesaidEscrowTrustee.
Such Acquired Obligations and monies to be deposited with the EscrowTrusteeshallbeheldbytheEscrowTrusteeintrustandshallbetransmittedtotheBondRegistrarforthesolepurposeofpayingtheFundedInterestontheBondsandtheinterestonandprincipalofandanypremiumontheRefundedBondsashereinsetforth;all of such Acquired Obligationsareirrevocablydedicatedtosuchpurposes;and such Acquired ObligationsOortheearningsortheproceedstherefrommaybeusedfornootherpurposenormayanyofsuchinvestmentsbeliquidatedpriortomaturity.
Any monies remaining on deposit with the Escrow Trustee after thepaymentandretirementinfulloftheRefundedBondsshallbetransferredandpaidintothe1992BondFundtotheextentthatsuchdepositshallnotrequirerestrictionontheyieldoninvestmentofmoniesinthe1992BondFundunderSection148oftheInternalRevenuecodeof1986,as amended,and applicable temporary and permanent regulations promulgated thereunder,and any excess shall be transferred and paid into the Revenue Fund.
Section 14.Redemption of Refunded Bonds.The City herebyirrevocablycallsforredemptionalltheRefundedBondsmaturingafterthefollowingrespectivedatesatthefollowingrespectiveprices:
Refunded Redemption RedemptionBondIssueDatePrice
1985 Bonds July 1,1996 $2,940,0001990BondsJuly1,1998 20,000
such call for redemption shall be irrevocable after the delivery of theBondstotheinitialpurchaserthereof.The Escrow Trustee on behalf oftheTreasurerofthecityisherebyauthorizedanddirectedtogivenoticeoftheredemptionoftheRefundedBondsinaccordancewiththeprovisionsofOrdinancesNo.1184 and No.1436,respectively.
Section 15.Safekeeping Agreement.In order to carry out thepurposesofSections13and14ofthisordinance,the City Manager and cityClerkareauthorizedanddirectedtoexecuteanddelivertotheEscrowTrusteeasafekeepingagreementsubstantiallyintheformattachedheretoasExhibitAandbythisreferenceismadeapartofthisordinance.
Section 16.Form of the Bonds.The Bonds shall be in substantiallythefollowingform:
WERMDEWWWMUERWUNBGRONDLIM -ÈRgB 16
UNITED STATES OF AMERICANO.$
STATE OF WASHINGTON
CITY OF MOSES LAKE,WASHINGTON
WATER AND SEWER REVENUE BOND,1992
INTEREST RATE:MATURITY DATE:CUSIP NO.:
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Moses Lake,Washington,a municipal corporation organizedandexistingunderandbyvirtueofthelawsofthestateofWashington,(the nCity")for value received hereby promises to pay to the RegisteredOwneridentifiedabove,or registered nominees,on the Maturity Datespecifiedabove,the Principal Amount indicated above and to pay interestthereonfromthedateofthisbond,or the most recent date to whichinteresthasbeenpaidordulyprovidedfor,until the payment of this bondattheInterestRateperannumsetforthabove,payable on July 1,1992,and semiannually thereafter on the first days of each July and January toandincludingitsMaturityDatewithfullobligationoftheCitytopayinterestatthesameratefromandafterthebondmaturitydateuntilthisbondwithinterestispaidinfull,or funds are available in the "City ofMosesLakeWaterandSewerRevenueBondFund,1992"(the "1992Bond Fund")for payment in full.O Both principal of and interest on this bond are payable in lawfulmoneyoftheUnitedStatesofAmerica.Interest shall be paid by check ordraftmailedtotheRegisteredOwnerhereofornomineeofsuchownerattheaddressappearingontheregistrybooksoftheBondRegistraronthe15thdayofthemonthprecedingtheinterestpaymentdate.Principal shall bepayableuponpresentationandsurrenderofthiscertificatebytheRegisteredOwnerornomineeofsuchownerattheprincipalofficeofeitherofthefiscalagenciesoftheStateofWashingtoninthecitiesofSeattle,Washington,and New York,New York (the "Bond Registrar").
Said principal and interest are payable solely out of the 1992 BondFundcreatedbyOrdinanceNo.of the City (the nBond Ordinancen)intowhichfundthecityherebyirrevocablybindsitselftopaycertainfixedamountsoutoftheRevenueoftheSystem,as the same is defined in theBondOrdinance,namely,amounts sufficient to pay the principal of andinterestcomingdueafterJuly1,1996,(the "Crossover Daten)on the bondsofthisissue(the "Bonds")as they become due,and on any water and sewerrevenuebondswhicharehereafterissuedonaparityoflienwiththeBondsandtoaccumulateareserve,all at the times and in the manner set forthintheBondOrdinance.The interest coming due on the Bonds on July 1,1992,through July 1,1996,inclusive,is payable solely out of the 1992RefundingAccountestablishedbytheBondordinancefromthecashandAcquiredObligations(as defined in the Bond Ordinance)deposited in such1992RefundingAccountsimultaneouslywiththeissuanceoftheBonds,whichOcashandAcquiredObligationsareheldinescrowbySeattle-First NationalBank,Seattle,Washington,as Escrow Trustee pursuant to a SafekeepingAgreementbetweentheCityandtheEscrowTrusteedatedasofthedate ofdeliveryoftheBonds.No principal of the Bonds matures on or before theCrossoverDateand,provision having been made for interest on the BondscomingduepriortoandontheCrossoverDatefromthe1992RefundingAccount,no deposits will be made prior to the Crossover Date into the 1992BondFundortheReserveAccountthereintopayorsecuretheBonds.
Reference is made to the Bond Ordinance for definition of other capitalizedtermsusedherein.
wxrnmosewnnv$¾EWUNDMOBONU,¾-ŸBgŠ 16
By the Bond Ordinance,the City has designated the Bonds to bequalifiedtax-exempt obligations pursuantto Section 265(b)of the InternalRevenueCodeof1986relatingtofinancialinstitutions.
Reference is hereby made to additional provisions of this bond setforthonthereversesidehereofandsuchadditionalprovisionsshallforallpurposeshavethesameeffectasifsetforthinthisspace.
It is hereby certified that all acts,conditions and things requiredbytheConstitutionandlawsoftheStateofWashingtonandordinances oftheCitytobedone,to happen or to be performed as conditions precedenttotheissuanceofthisbondhavebeendone,have happened and have beenperformedasrequiredbylaw.
This bond shall not become valid or obligatory for any purpose or beentitledtoanysecurityorbenefitundertheBondOrdinanceuntilthecertificateofauthenticationsetforthhereonhasbeenmanuallysignedbytheBondRegistrar.
IN WITNESS WHEREOF,the City has caused this bond to be signed by thefacsimileormanualsignaturesoftheMayorandCityClerkanditscorporatesealtobeimpressedorafacsimilethereoftobeimprintedhereonthis1stdayof,1992.
CITY OF MOSES LAKE,WASHINGTON
By (facsimile signature)
MayorAttest:
(facsimile signature)City Clerk
Date of Authentication:
CERTIFICATE OF AUTHENTICATION
This bond is one of the fully registered city of Moses Lake,Washington,"Junior Lien Water and Sewer Revenue Refunding Bonds,1992"described in the within mentioned bond ordinance.
WASHINGTON STATE FISCAL AGENCYBondRegistrar
By (manual signature)Authorized Officer
ADDITIONAL PROVISIONS
This bond is one of an issue of $aggregate originalprincipalamountofbondsoflikedate,tenor and effect,except as tointerestrate,maturity and redemption provisions,all payable from the1992BondFund(except that interest on the Bonds to and including July 1,1996,is payable,in accordance with the safekeeping Agreement dated as ofO,1992,authorized by the Bond Ordinance,out of the 1992RefundingAccountcreatedbytheBondOrdinance)and all issued by the CityunderandpursuanttotheConstitutionandlawsoftheStateofWashingtonandtheBondordinanceforthepurposeofprovidingthefundsnecessarytoestablishanescrowforthepurposeofpayingandsecuringpaymentoftheinterestontheBondstoandincludingJuly1,1996,and to defease on suchdatecertainprincipalofandinterestontheOutstandingSeniorLienBondsofthecitydescribedhereinbelow.
The City has not reserved the right to redeem the Bonds maturing onorbeforeJuly1,.The City has reserved the right to redeem theBondsmaturingonorafterJuly1,,in whole,or in part in inverse
WER MD SEWR HVENUB RWUNDING BONDS,Im -Page 17
order of maturity (and by lot within a maturity in such manner as the BondRegistrarshalldetermine),on July 1,,and on any interest paymentdatethereafteratapriceof%of the principal amount of the Bondstoberedeemedsplusaccruedinteresttothedatefixedforredemption.Interest on all bonds so called for redemption shall cease to accrue on theatefixedforredemptionunlesssuchbondorbondssocalledforredemptionarenotredeemeduponpresentationmadepursuanttosuchcall.
[Insert provision for mandatory sinking fund redemption with respecttoany1992TermBondsandNoticeProvision.]O The City has irrevocably obligated and bound itself,from and afterJuly1,1996,to pay into the 1992 Bond Fund out of Assessments and RevenueoftheSystemorfromsuchothermoniesasmaybeprovidedthereforintheBondOrdinancecertainamountsnecessarytopayandsecurethepaymentoftheprincipalofandinterestontheBonds.The Bonds are not generalobligationsoftheCity.The Bonds are special obligations of the City anddonotconstituteanindebtednessofthecitywithinthemeaningoftheConstitutionofthestateofWashington.
The City hereby covenants and agrees with the owner of this bond thatitwillkeepandperformallthecovenantsofthisbondandoftheBondOrdinancetobebyitkeptandperformed,and reference is hereby made totheBondOrdinanceforacompletestatementofsuchcovenants.
The city does hereby pledge and bind itself,from and after theCrossoverDateandcompleteredemptionordefeasanceoftheOutstandingSeniorLienBondstosetasidefromtheRevenueFundoutofRevenueoftheSystemandtopayintotheReserveAccountandthe1992BondFundandtheAccountscreatedthereinthevariousamountsrequiredbytheBondOrdinancetobepaidintoandmaintainedinsuchFundsandAccounts,all within thetimesprovidedbytheBondordinance.The City does hereby further pledgethatthecashandinvestmentsacquiredwithproceedsoftheBondsshallimmediatelybedepositedinescrowwithSeattle-First National Bank asEscrowTrustee,and such cash and investments shall be available only toOpayinterestontheBondsasthesameshallbecomeduepriortotheCrossoverDate.
To the extent more particularly provided by the Bond Ordinance theamountssopledgedtobepaidfromtheRevenueFundoutofRevenueoftheSystemintotheReserveAccountand1992BondFundandAccountsthereinshallbealienandchargethereonequalinranktothelienandchargeuponsuchRevenueoftheamountsrequiredtopayandsecurethepaymentoftheanyrevenuebondsoftheCityhereafterissuedonaparitywiththeBondsandsuperiortoallotherliensandchargesofanykindornature,except the lien and charge thereon to pay and secure the payment of theoutstandingwaterandsewerrevenuerefundingbondsoftheCityissuedunderdateofNovember1,1985,and the water and sewer revenue bonds ofthecityissuedunderdateofJuly1,1990,(the "Outstanding Senior LienBondsN)and except the Costs of Maintenance and Operation of the System.
The City has further bound itself to maintain the System in goodrepair,working order and condition,to operate the same in an efficientmannerandatareasonablecost,and to establish,maintain and collectratesandchargesineachcalendaryearthatwillmakeavailableanamountequaltotheCoverageRequirementforsuchyear.
The pledge of Revenue of the System and Assessments of the City undertheBondOrdinancemaybedischargedatorpriortothematurityorredemptionoftheBondsuponthemakingofprovisionforthepaymentthereofonthetermsandconditionssetforthintheBondordinance.
Reference to the Bond Ordinance and any and all modifications andamendmentsthereofismadeforadescriptionofthenatureandextentofthesecurityfortheBonds,the funds or revenues pledged,and the termsandconditionsuponwhichtheBondsareissued.
This bond is transferable only upon the registry books of the BondRegistrarbysurrenderofthiscertificatetotheBondRegistrardulyassignedandexecutedasindicatedhereon.The Bonds are interchangeableforBondsofanydenominationauthorizedbytheBondOrdinanceofanequalaggregatematurityamountandofthesamecompoundingrateandmaturity.
warERANDSEWERREVENUEREFUNDINGBONDS,1992 ""9898 i8
The Bond Registrar shall not be obliged to transfer or exchange this bondduringthefifteendaysprecedinganyinterestpaymentdateorthedateonwhichnoticeofredemptionofsuchbondistobegivennoraftersuchnoticehasbeengiven.
o-1-1-owing
,w en
in-s-o-r-1p-t-1on
on the aceofthewithinbond,shall be construed as though they were written out infullaccordingtoapplicablelawsorregulations:
TEN COM -as tenants in commonTENENT-as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and not astenantsincommon
UNIF (GIFT)(TRANSFER)MIN ACT Custodian
(cumilm)Olinnr)
under Uniform (Gifts)
(Transfers)to Minors Act
Additional abbreviations may also be
used though not in list above
ASSIGNMENT
FOR VALUE RECEIVED,the undersigned hereby sells,assigns and
transfers unto
i I
O Pime in-t Solat Semrilyar TempuyerIdenillicalimNunabarafTmsiisco
(Please printor typewrite name and address,includingzipcodeof Tmusferee)
the within bond and does hereby irrevocably constitute and appoint
or its successor,as Bond Registrar,to transfer said bond on the books
kept for registration thereof with full power of substitution in the
premises.
DATED:
SIGNATURE GUARANTEED:
NOTE:The signature on this Assign-O ment must correspond with the nameoftheregisteredownerasit
appears upon the face of the withinbondineveryparticular,withoutalterationorenlargementoranychangewhatever.
Section 17.Execution of the Bonds.The Bonds shall be signed onbehalfoftheCitybythefacsimileormanualsignatureoftheMayoroftheCity,shall be attested by the facsimile or manual signature of the CityClerkandshallhavethecorporatesealoftheCityimpressedor afacsimilethereofimprintedthereon.
WHER ANDSEWERREVENUERMEDEG BONN,lW -9 g 19
Only such Bonds as shall bear thereon a certificate of Authenticationintheformhereinbeforerecited,manually executed by the Bond Registrar,shall be valid or obligatory for any purpose or entitled to the benefitsofthisordinance.Such Certifigate of Authentication shall be conclusiveevidencethattheBondssoauthenticatedhavebeendulyexecuted,authenticated and delivered hereunder and are entitled to the benefits ofthisordinance.
In case either of the officers who shall have executed the Bonds shallceasetobesuchofficerorofficersofthecitybeforetheBondssosignedshallhavebeenauthenticatedordeliveredbytheBondRegistrar,or issuedbytheCity,such Bonds may nevertheless be authenticated,delivered andissuedand,upon such authentication,delivery and issuance,shall he asbindingupontheCityasthoughthosewhosignedthesamehadcontinuedtobesuchofficersoftheCityasofthedateofauthenticationbytheBondRegistrar.Any Bond may also be signed and attested on behalf of the CitybysuchpersonsasattheactualdateofexecutionofsuchBondshallbetheproperofficersoftheCityalthoughattheoriginaldateofsuchBond
any such person shall not have been such officer of the City.
Section 18.Bond Registrar.The Bond Registrar shall keep,or causetobekept,at its principal corporate trust office,sufficient books fortheregistrationandtransferoftheBondswhichshallatalltimesbeopentoinspectionbythecity.The Bond Registrar is authorized,on behalf oftheCity,to authenticate and deliver the Bonds transferred or exchangedinaccordancewiththeprovisionsofsuchBondsandthisordinanceandtocarryoutalloftheBondRegistrar's powers and duties under thisordinance.
The Bond Registrar shall be responsible for its representationscontainedinthecertificateofAuthenticationontheBonds.The BondRegistrarmaybecometheownerofanyoftheBondswiththesamerightsitwouldhaveifitwerenottheBondRegistrar,and to the extent permittedbylaw,may act as depositary for and permit any of its officers ordirectorstoactasamemberof,or in any other capacity with respect to,any committee formed to protect the rights of Bond owners.
Section 19.Lost or Destroyed Bonds.In case any Bonds shall belost,stolen or destroyed,the Bond Registrar may authenticate and deliver
a new bond or bonds of like amount,date,maturity,interest rate,tenor,and effect to the owner thereof upon the owner's paying the expenses andchargesoftheCityinconnectiontherewithanduponhisfilingwiththeBondRegistrarevidencesatisfactorytosaidBondRegistrarthatsuchbondorbondswereactuallylost,stolen or destroyed and of his ownershipthereof,and upon furnishing the City with indemnity satisfactory to theCityandtheBondRegistrar.
Section 20.Sale of the Bonds.The form of Bond Purchase AgreementfromGeorgeK.Baum &Company and Puget Sound Securities (the "Under-writers")attached to this ordinance as Exhibit B is hereby approved.Because the final principal amount of the Bonds cannot be determined untiltheUnderwritershaveofferedtheBondsforsaleandtherebyestablishedtheinterestratesontheBonds,because it is desirable for theUnderwritersinconsultationwiththeCityManagertoenterthebondmarketwithoutregardtothescheduleofregularmeetingsoftheCityCounciltomaximizesavings,and because it is necessary to accept the final offerfromtheUnderwritersandtocontractforpurchaseoftheAcquiredObligationsimmediatelyaftertheinterestratesareestablished,it is inthebestinterestoftheCitytoauthorizetheCityManagertoapprovethefinalprincipalamountofandmaturityschedulefortheBonds,the interestOratesontheBonds,the Dated Date of the Bonds,the optional redemptionprovisions,if any,for the Bonds,the designation of any Bonds as 1992TermBondsandamountsofmandatorysinkingfundpaymentsforanysuch1992TermBonds,and to execute the Bond Purchase Agreement on behalf of theCityonthefollowingtermsandconditions:
A.The principal amount of the Bonds shall not exceed $3,500,000;
B.The principal amount of the Bonds together with the interestratesthereonshallbeacceptedifthesavingswhichwillberealizedfromcarryingouttherefundingplanapprovedbythisordinancewillbeatleast
WFR ANDSEWR REVENCEWUNDBO BONDs m -Page 2 0
$200,000,provided that,in his sole discretion,the City Manager mayacceptorrejectasavingsofatleast$180,000 but less than $200,000;
C.The Dated Date of the Bonds shall be either January 1,1992,orFebruary1,1992;and
D.The final terms of the Bond Purchase Agreement shall beconsistentwiththisordinanceandotherwisebeinconformity,in thejudgmentoftheCityManager,with his recommendations and those of theFinanceDirectoroftheCity,to carry out the refunding plan.O section 21.Authorization to Officials and Agents.The appropriatecityofficials,agents and representatives of the City are herebyauthorizedanddirectedtodoeverythingnecessaryfortheexecutionoftheBondPurchaseAgreementandtheSafekeepingAgreement,the subscription forandpurchaseoftheAcquiredObligations,the prompt issuance,execution,authentication and delivery of the Bonds,and for the proper use andapplicationoftheproceedsofthesalethereof.
The city Manager is authorized to review and approve,on behalf of theCity,the official Statement relating to the issuance and sale of the Bondswithsuchchanges,if any,as such officer may deem appropriate.
Section 22.Supplemental Ordinances.
A.The City Council from time to time and at any time may adopt anordinanceorordinancessupplementaltothisordinancewhichsupplementalordinanceorordinancesthereaftershallbecomeapartofthisordinance,for any one or more or all of the following purposes.
1.To add to the covenants and agreements of the City containedinthisordinanceothercovenantsandagreementsthereafterto beobservedwhichshallnotadverselyaffecttheinterestsoftheownersofanyParityBondsortosurrenderanyrightorpowerhereinreservedtoorconferredupontheCity.O 2.To make such provisions for the purpose of curing anyambiguitiesorofcuring,correcting or supplementing any defectiveprovisioncontainedinthisordinanceoranyordinanceauthorizingFutureParityBondsinregardtomattersorquestionsarisingundersuchordinancesastheCityCouncilmaydeemnecessaryordesirableandnotinconsistentwithsuchordinancesandwhichshallnotadverselyaffecttheinterestoftheownersofParityBonds.
3.To make such additions,deletions or modifications as maybenecessarytoassureexclusionofinterestontheBondsfromgrossincomeunderthecode.
Subject to Subsection 24.B of this ordinance,any such supplementalordinanceoftheCitymaybeadoptedwithouttheconsentoftheowners ofanyParityBondsatanytimeoutstanding,notwithstanding any of theprovisionsofsubsectionBofthissection.
B.With the consent of the owners of not less than 65%in aggregateprincipalamountoftheParityBondsatthetimeoutstanding,the Citycouncilmayadoptanordinanceorordinancessupplementalheretoforthepurposeofaddinganyprovisionstoorchanginginanymanneroreliminatinganyoftheprovisionsofthisordinanceorofanysupplementalordinance;provided,however,that no such supplemental ordinance shall:
O 1.Extend the fixed maturity of any Parity Bonds or reduce therateofinterestthereon,or extend the times of payments of interestthereonfromtheirduedatesorreducetheamountoftheprincipalthereof,or reduce any premium payable on the redemption thereof,without the consent of the owner of each bond so affected.
2.Reduce the aforesaid percentage of Parity Bond ownersrequiredtoapproveanysuchsupplementalordinance,without theconsentoftheownersofalloftheParityBondsthenoutstanding.
Except as provided in Subsection 24.8 of this ordinance,it shall notbenecessaryfortheconsentofbondownersunderthisSubsectionBto
WATERANDSEWERREVENUBREFUNDINGBONDS,1m -Ÿ&g 2 1
approve the particular form of any proposed supplemental ordinance,but itshallbesufficientifsuchconsentshallapprovethesubstancethereof.
C.Upon the adoption of any supplemental ordinance pursuant to theprovisionsofthissection,this ordinance shall be deemed to be modifiedandamendedinaccordancetherewith,and the respective rights,duties andobligationsoftheCityunderthisordinanceandallownersofBondsoutstandinghereundershallthereafterbedetermined,exercised andenforcedthereunder,subject in all respects to such modification andamendments,and all the terms and conditions of any such supplementalordinanceshallbedeemedtobepartofthetermsandconditionsofthisordinanceforanyandallpurposes.
D.Bonds executed and delivered after the execution of anysupplementalordinanceadoptedpursuanttotheprovisionsofthissectionmaybearanotationastoanymatterprovidedforinsuchsupplementalordinance,and if such supplemental ordinance shall soprovide,new bonds so modified as to conform,in the opinion of the CityCouncil,to any modification of this ordinance contained in any suchsupplementalordinance,may be prepared by the City and delivered withoutcosttotheownersoftheBondsthenoutstanding,upon surrender forcancellationofsuchBondsinequalaggregateprincipalamounts.
E.Notwithstanding the foregoing provisions,any supplementalordinancesshallbesubjecttosection24.B of this ordinance.
Section 23.Findings and Designation of Bank Eligibility.The CityCouncilherebyfindsanddeterminesthattheCitydoesnotexpecttoissuemorethan$10,000,000 aggregate principal amount of obligations theinterestonwhichisorwillbeexcludedfromgrossincomeundertheCode,including but not limited to revenue bonds and notes,revenue anticipationnotes,and lease purchase or installment purchase contracts in calendaryear1992;and,therefore,the City Council hereby finds and determinesthattheBondsare,and are hereby designated to be,qualified tax-exemptobligationspursuanttoSection265(b)(3)of the Code relating to financialinstitutions.
Section 24.Municipal Bond Insurance.
A.Consent of AMBAC Indemnity.Any provision of this ordinanceexpresslyrecognizingorgrantingrightsinortoAMBACIndemnitymaynotbeamendedinanymannerwhichaffectstherightsofAMBACIndemnityhereunderwithoutthepriorwrittenconsentofAMBACIndemnity.
B.Consent of AMBAC Indemnity in Addition to Bondholder Consent.Unless otherwise provided in this Subsection B,AMBAC Indemnity's consentshallberequiredinadditiontoBondholderconsent,when required,for thefollowingpurposes:(i)execution and delivery of any supplementalordinanceoranyamendment,supplement or change to or modification of theSafekeepingAgreement;(ii)removal of the Trustee and selection andappointmentofanysuccessortrustee;and (iii)initiation or approval ofanyactionnotdescribedin(i)or (ii)above which requires Bondholderconsent.
C.Consent of AMBAC Indemnity Upon Default.Anything in thisordinancetothecontrarynotwithstanding,upon the occurrence andcontinuanceofaneventofdefaultasdefinedherein,AMBAC Indemnity shallbeentitledtocontrolanddirecttheenforcementofallrightsandremediesgrantedtotheBondholdersunderthisordinance.
D.Notices To Be Given to AMBAC Indemnity.
(1)While the Municipal Bond Insurance Policy is in effect,theCityshallfurnishtoAMBACIndemnity:
(a)as soon as practicable after the filing thereof,a copyofanyfinancialstatementoftheCityandacopyofanyauditandannualreportoftheCity;
(b)a copy of any notice to be given to the registeredownersoftheBonds,including,without limitation,notice of any
WATERANDSEWEIL REVENUEREFUNDINa nouns,m -Page 2 2
redemption of or defeasance of Bonds,and any certificate renderedpursuanttothisordinancerelatingtothesecurityfortheBonds;and
(c)such additional information it may reasonably request.
(2)The City shall notify AMBAC Indemnity of any failure of theCitytoproviderelevantnotices,certificates,etc.
(3)The City will permit AMBAC Indemnity to discuss the affairs,finances and accounts of the City or any information AMBAC Indemnity mayreasonablyrequestregardingthesecurityfortheBondswithappropriateofficersoftheCity.The City will permit AMBAC Indemnity to have accesstoandtomakecopiesofallbooksandrecordsrelatingtotheBondsatanyreasonabletime.
(4)AMBAC Indemnity shall have the right to direct an accountingattheCity's expense,and the City's failure to comply with such directionwithinthirty(30)days after receipt of written notice of the directionfromAMBACIndemnityshallbedeemedadefaulthereunder;provided,however,that if compliance cannot occur within such period,then suchperiodwillbeextendedsolongascomplianceisbegunwithinsuchperiodanddiligentlypursued,but only if such extension would not materiallyadverselyaffecttheinterestsofanyregisteredowneroftheBonds.
(5)Notwithstanding any other provision of this ordinance,theCityshallimmediatelynotifyAMBACIndemnityifatanytimethereareinsufficientmoniestomakeanypaymentsofprincipaland/or interest asrequiredandimmediatelyupontheoccurrenceofanyeventofdefaulthereunder.
E.Permitted Investments.
(1)AMBAC Indemnity will allow the following obligations to beusedasPermittedInvestmentsforallpurposes,including (i)as defeasanceinvestmentsinrefundingescrowaccountsand(ii)for the purpose ofinvesting(and receiving premium credit for)accrued and capitalizedinterest:
(a)Cash (insured at all times by the Federal Deposit
Insurance Corporation or otherwise collateralized with obligationsdescribedinparagraph(2)below),or
(b)Direct obligations of (including obligations issued orheldinbookentryformonthebooksof)the Department of theTreasuryoftheUnitedStatesofAmerica.
(2)AMBAC Indemnity will allow the following Obligations to beusedasPermittedInvestmentsforallpurposesotherthan:(i)defeasanceinvestmentsinrefundingescrowaccountsand(ii)investing (and receivingcreditfor)accrued and capitalized interest:
(a)obligations of any of the following federal agencieswhichobligationsrepresentfullfaithandcreditoftheUnitedStatesofAmerica,including:
•Export -Import Bank
•Farmers Home Administration
•General Services Administration
•U.S.Maritime Administration
•Small Business Administration
O •Government National Mortgage Association (GRKA)
•U.S.Department of Housing &Urban Development(PHA's)
•Federal Housing Administration;
(b)bonds,notes or other evidences of indebtedness rated"AAA"by Standard &Poor's Corporation and "Aaa"by Moody's InvestorServicesissuedbytheFederalNationalMortgageAssociationortheFederalHomeLoanMortgageCorporationwithremainingmaturitiesnotexceedingthreeyears;
W IER ANDSEWERREVENUEREPUNDINGBONDS,19%=Ÿ$gB 2 3
(c)U.S.dollardenominateddepositaccounts,federal fundsandbanker's acceptances with domestic commercial banks which have aratingontheirshorttermcertificatesofdepositonthedateofpurchaseof"A-1"or nA-1+"by Standard &Poor's and "P-1"by Moody'sandmaturingnomorethan360daysafterthedateofpurchase.(Ratings on holding companies are not considered as the rating of thebank);
(d)commercial paper which is rated at the time of purchaseinthesinglehighestclassification,"A-1+"by standard &Poor's and"P-1n by Moody's Investor Services and which matures not more than 270daysafterthedateofpurchase;
(e)investments in a money market fund rated "AAAm"or"AAAm-G"or better by Standard &Poor's Corporation;
(f)Pre-refundedMunicipal Obligations defined as follows:Any bonds or other obligations of any state of the United States ofAmericaorofanyagency,instrumentality or local governmental unitofanysuchstatewhicharenotcallableattheoptionoftheobligorpriortomaturityorastowhichirrevocableinstructionshavebeengivenbytheobligortocallonthedatespecifiedinthenotice;and(A)which are rated,based on the escrow,in the highest ratingcategoryofStandard&Poor's Corporation and Moody's InvestorService,Inc.or any successors thereto;or (B)(i)which are fullysecuredastoprincipalandinterestandredemptionpremium,if any,by a fund consisting only of cash or obligations described inparagraph(1)above,which fund may be applied only to the payment ofsuchprincipalofandinterestandredemptionpremium,if any,on suchbondsorotherobligationsonthematuritydateordatesthereoforthespecifiedredemptiondateordatespursuanttosuchirrevocableinstructions,as appropriate,and (ii)which fund is sufficient,asverifiedbyanationallyrecognizedindependentcertifiedpublicaccountant,to pay principal of and interest and redemption premium,if any,on the bonds or other obligations described in this paragraphonthematuritydateordatesthereoforontheredemptiondate ordatesspegifiedintheirrevocableinstructionsreferredtoabove,asappropriate;
(g)investment agreements approved in writing by AMBACIndemnityCorporationwithnoticetoStandard&Poor's Corporation;and
(h)other forms of investments approved in writing by AMBACwithnoticetoStandard&Poor's Corporation.
(3)The value of the above investments shall be determined asfollows:
"Value",which shall be determined as of the end of each month,means that the value of any investments shall be calculated as follows:
(a)as to investments the bid and asked prices of which arepublishedonaregularbasisinTheWallStreetJournal(or,if notthere,then in The New York Times):the average of the bid and askedpricesforsuchinvestmentssopublishedonormostrecentlypriortosuchdateofdetermination;
(b)as to investments the bid and asked prices of which arenotpublishedonaregularbasisinTheWallStreetJournalorTheNewOYorkTimes:the average bid price at such time of determination forsuchinvestmentsbyanytwonationallyrecognizedgovernmentsecuritiesdealers(selected by the city in its absolute discretion)at the time making a market in such investments or the bid pricepublishedbyanationallyrecognizedpricingservice;
(c)as to certificates of deposit and bankers acceptances:the face amount thereof,plus accrued interest;and
(d)as to any investment not specified above:the valuethereofestablishedbyprioragreementbetweentheCityandAMBACIndemnityCorporation.
WKtmMDSEWHMVmUERREDMGROUS,tm -Page 24
Notwithstanding the foregoing statement of Permitted Investments,the CityshallhedeemedtohavecompliedwiththisSubsection24.E so long asmoniesdepositedinthe1992BondFundandAccountsthereinareinvestedthroughtheStateofWashingtonLocalGovernmentInvestmentPool.
F.Defeasance of the Bonds.Notwithstanding anything herein to thecontrary,in the event that the principal and/or interest due on the BondsshallhepaidbyAMBACIndemnitypursuanttotheMunicipalBondInsurancePolicy,the Bonds shall remain outstanding for all purposes,not bedefeasedorotherwisesatisfiedandnotbeconsideredpaidbytheCity,andtheassignmentandpledgeoftheTrustEstateandallcovenants,agreementsandotherobligationsofthecitytotheregisteredownersshallcontinuetoexistandshallruntothebenefitofAMBACIndemnity,and AMBACIndemnityshallbesubrogatedtotherightsofsuchregisteredowners.
G.Procedure for Payment under the Municipal Bond Insurance Policy.As long as the bond insurance shall be in full force and effect,the Cityandanyco-Paying Agent agree to comply with the following provisions:
(a)At least one (1)day prior to all Interest Payment Dates theCo-Paying Agent,if any,will determine whether there will besufficientfundsintheFundsandAccountstopaytheprincipaloforinterestontheBondsonsuchInterestPaymentDate.If the Co-PayingAgentdeterminesthattherewillbeinsufficientfundsinsuchFundsorAccounts,the Co-Paying Agent shall so notify AMBAC Indemnity.Such notice shall specify the amount of the anticipated deficiency,the Bonds to which such deficiency is applicable and whether suchBondswillbedeficientastoprincipalorinterest,or both.If theCo-Paying Agent has not so notified AMBAC Indemnity at least one (1)day prior to an Interest Payment Date,AMBAC Indemnity will makepaymentsofprincipalorinterestdueontheBondsonorbeforethefirst(lat)day next following the date on which AMBAC Indemnity shallhavereceivednoticeofnonpaymentfromtheCo-Paying Agent.
(b)The Co-Paying Agent shall,after giving notice to AMBACIndemnityand,at AMBAC Indemnity's direction,to the United StatesTrustCompanyofNewYork,as insurance trustee (the "InsuranceTrusteeN),the registration books of the City maintained by the Co-Paying Agent and all records relating to the Funds and Accounts,ifany,maintained by the Co-Paying Agent under this ordinance.
(c)The Co-Paying Agent shall provide AMBAC Indemnity and theInsuranceTrusteewithalistofregisteredownersofBondsentitledtoreceiveprincipalorinterestpaymentsfromAMBACIndemnityunderthetermsoftheMunicipalBondInsurancePolicy,and shall makearrangementswiththeInsuranceTrustee(i)to mail checks or draftstotheregisteredownersofBondsentitledtoreceivefullorpartialinterestpaymentsfromAMBACIndemnityand(ii)to pay principal uponBondssurrenderedtotheInsuranceTrusteebytheregisteredownersofBondsentitledtoreceivefullorpartialpaymentsfromAMBACIndemnity.
(d)The Co-Paying Agent shall,at the time it provides noticetoAMBACIndemnitypursuantto(a)above,notify registered owners ofBondsentitledtoreceivethepaymentofprincipalorinterestthereonfromAMBACIndemnity(i)as to the fact of such entitlement,(ii)thatAMBACIndemnitywillremittothemallorapartoftheinterestpaymentsnextcomingdueuponproofofBondholderentitlementtointerestpaymentsanddeliverytotheInsuranceTrustee,in formsatisfactorytotheInsurangeTrustee,of an appropriate assignmentOoftheregisteredowner's right to payment,(iii)that should they beentitledtoreceivefullpaymentofprincipalfromAMBACIndemnity,they must surrender their Bonds (along with an appropriate instrumentofassignmentinformsatisfactorytotheInsuranceTrusteetopermitownershipofsuchBondstoberegisteredinthenameofAMBACIndemnity)for payment to the Insurance Trustee,and not the Co-PayingAgentand(iv)that should they be entitled to receive partial paymentofprincipalfromAMBACIndemnity,they must surrender their Bonds forpaymentthereonfirsttotheCo-Paying Agent who shall note on suchBondstheportionoftheprincipalpaidbytheCo-Paying Agent andthen,along with an appropriate instrument of assignment in form
WATERANDWWER REVENUERENDING BONDS,1m -Page 2 5
satisfactory to the Insurance Trustee,to the Insurance Trustee,whichwillthenpaytheunpaidportionofprincipal.
(e)In the event that the Co-Paying Agent has notice that anypaymentofprincipaloforinterestonaBondwhichhasbecomeDueforPaymentandwhichismadetoaBondholderbyoronbehalfoftheCityhasbeendeemedapreferentialtransferandtheretoforerecoveredfromitsregisteredownerpursuanttotheUnitedStatesBankruptcyCodebyatrusteeinbankruptcyinaccordancewiththefinal,nonappealableorderofacourthavingcompetentjurisdiction,the co-Paying Agentshall,at the time AMBAC Indemnity is notified pursuant to (a)above,notify all registered owners that in the event that any registeredowner's payment is so recovered,such registered owner will beentitledtopaymentfromAMBACIndemnitytotheextentofsuchrecoveryifsufficientfundsarenototherwiseavailable,and the Co-Paying Agent shall furnish to AMBAC Indemnity its records evidencingthepaymentsofprincipalofandinterestontheBondswhichhavebeenmadebytheCo-Paying Agent and subsequently recovered from registeredownersandthedatesonwhichsuchpaymentsweremade.
(f)In addition to those rights granted AMBAC Indemnity underthisordinance,AMBAC Indemnity shall,to the extent it makes paymentofprincipaloforinterestonBonds,become subrogated to the rightsoftherecipientsofsuchpaymentsinaccordancewiththetermsoftheMunicipalBondInsurancePolicy,and to evidence such subrogation(i)in the case of subrogation as to claims for past due interest,theCo-Paying Agent shall note AMBAC Indemnity's rights as subrogee on theregistrationbooksoftheCitymaintainedbytheCo-Paying Agent uponreceiptfromAMBACIndemnityofproofofthepaymentofinterestthereontotheregisteredownersoftheBonds,and (ii)in the caseofsubrogationastoclaimsforpastdueprincipal,the Co-PayingAgent,if any,shall note AMBACIndemnity's rights as subrogee on theregistrationbooksoftheCitymaintainedbytheCo-Paying Agent uponsurrenderoftheBondsbytheregisteredownersthereoftogetherwithproofofthepaymentofprincipalthereof.O H.Parties Having Interest in the Municipal Bond Insurance Policy.Nothing in this ordinance expressed or implied is intended or shall beconstruedtoconferupon,or to give to,any person or entity,other thantheCity,AMBAC Indemnity,the Co-Paying Agent and the registered ownersoftheBonds,any right,remedy or claim under or by reason of thisordinanceoranycovenant,condition or stipulation hereof,and allcovenants,stipulations,promises and agreements in this ordinancecontainedbyandonbehalfoftheCityshallbeforthesoleandexclusivebenefitoftheCity,AMBAC Indemnity,the Co-Paying Agent and theregisteredownersoftheBonds.
I.Change of Co-Paying Agent.The Co-Paying Agents for the BondsarethefiscalagenciesoftheStateofWashington(the "State")inseattle,Washington,and New York,New York.The state currently appointsitsfiscalagenciesbycontracthavingatermoffouryears.The currentfiscalagenciesareSeattle-First National Bank,Seattle,Washington,andTheBankofNewYork,New York,New York.Should the Co-Paying AgentschangepursuanttotheState's selection and contract award procedures,AMBAC Indemnity shall be notified of the change in the same manner,if any,as the registered Bond owners are notified.
Section 25.Severability.If any one or more of the covenants oragreementsprovidedinthisordinancetobeperformedonthepartoftheCityshallbedeclaredbyacourtofcompetentjurisdictiontobecontraryOtolaw,then such covenant or covenants,agreement or agreements shall benullandvoidandshallbedeemedseparablefromtheremainingcovenantsandagreementsofthisordinanceandshallinnowayaffectthevalidityoftheotherprovisionsofthisordinanceoroftheBonds.
Section 26.Effective Date.This ordinance shall take effect fivedaysafteritsadoptionandpublicationinthemannerprovidedbylaw.
wan-sswnnsvenusammomanouns.m -Page 26
ADOPTED by the City Council of the City of Moses Lake,Washington,at
a regular open public meeting thereof held this 30th day of December,1991.
CITY OF MOSES LAKE,WASHINGTON
ATTEST:
City C
APPROVED AS TO
/city AtGrifey--
PUBLISHED:JANUARY3,1992
K:1CGIWW\M4&l991AGM
O
WATERANDsEWERREVENUEREFUNDINGBONDS,1m -Page 27
EXH;3T BGeorgeK.Baum &Company
INVESTMENT BANKERS
MEMBER OF 7015TH AVENUENEWYORKSTOCKEXCHANGE,ING.SUITE 6700MIDWESTSTOCKEXCHANGESEATYLE.WASHINGTON 98104
YELEPHONE (2003 082-8893
PAX (2001 386-5699
CITY OF MOSES,LAKE,WASHINGTON
Junior Lien Water and Sewer Revenue Refunding Bonds,1992
BOND PURCHASE AGREEMENT
Mayor and Members of the City CouncilCityofMosesLake
South 321 Balsam Street
Moses Lake,Wa 98837
January _,1992
Honorable Mayor and CouncilMembers:
George K Baum &Company,Kirchner Moore Division,and Puget Sound Securities("Purchasers")propose to purchase $Junior Lien Water and Sewer RevenueRefundingBonds,1992 (the "Bonds")to be issued by the City of Moses Lake,Washington("Issuer")pursuant to a Bond Ordinance adopted on December 30,1991 (the "Ordinance").Capitalized termsnot defined herein shall have the meanings given them in the Ordinance.The Bonds will mature on the dates,will bear interest at the rates and will be reoffered bythePurchasersatthepricessetforthinScheduleAhereto.
The proceeds of the Bonds will be used to refund a portion of the City's Water and
O Sewer Revenue Refunding Bonds,1985 and Water and Sewer Revenue Bonds,1990,toachieveadebtservicesavings,topay interest on the Bonds throughJuly 1,1996 and to payallcostsofissuanceoftheBonds.
Section 1.Purchase,Sale and Denvery of Bonds.On the basis of therepresentationsandagreementscontainedherein,but subject to the terms and conditionssetforth,the Purchasers agree to purchase from the Issuer,and the Issuer agrees to selltothePurchasers,all of the Bonds at a purchase price equal to $(parless anunderwritingdiscountequalto$per $100par value)plus accrued interest to theClosingDatespecifiedbelow.The Issuer will deliver the Bonds to the Purchasers at theofficesofLanePowellSpearsLubersky,Seattle,Washington or at such other place as theIssuerandPurchasersshallagreeindefinitiveformagainstpaymentofthepurchasepricethereforinimmediatelyavailablefundsat9:00 a.m.,Pacific time,on January ,1992 oratsuchothertimethereafterasmaybemutuallyagreeduponbytheparties,such timebeinghereinafterreferredtoasthe"ClosingDate."
The maturities,principal amounts and interest rates shall be as set forth in ScheduleAheretoandothertermsandconditionsoftheBondsshallbeassetforthintheOrdinance.
Section 2.Delivery of Official Statement.At the timeof the acceptance of thisBondPurchaseAgreementbytheIssuer(orsuch later date as the Purchasers may consentto),the Issuer shall deliver to the Purchasers for review copies of a Preliminary OfficialStatementrelatingtotheBonds(the "Preliminary Official Statement").The Issuer herebyratifiestheuseofthePreliminaryOfficialStatementbythePurchasersinthemarketing
of the Bonds.The Preliminary Official Statement shall be final as of the date of such
review,except for final information as to the offering prices,interest rates,selling
compensation,amount of proceeds,delivery dates,other terms depending on such factors,
and other information permitted to be omitted under Rule 15c2-12(b)(1)under theSecuritiesExchangeActof1934,as amended.The Issuer shall provide to the Purchasers,within seven business days following the date hereof,a quantity offinal OfficialStatements,including such final information listed in the previous sentence (the "final OfficialStatement")adequate to enable the Purchasers to meet the continuing obligations imposed
on them by Rule 15c2-12 under the Securities Exchange Act of 1934;provided that thePurchasersshallhaveadvisedtheIssuerofsuchquantitywithintwobusinessdaysfollowingthedatehereof.
Section 8.Offering,Security and Authorization.The Purchasers propose toofferandselltheBondsassetforthinthePreliminaryOfficialStatement.The IssueracknowledgesthatithasbeenadvisedthatthePurchasersmayoffertheBondsatpricesaboveorbelowtheirprincipalamounts.The Bonds shall be secured under provisions of theOrdinance.
Section 4.Representations.The Issuer represents and warrants that theinformationintheOfficialStatementtothebestofitsknowledge,as of the date thereof,does not include any untrue statement of a material fact or fail to state any material fact
necessary to make the statements made therein,in light of the circumstances under whichtheyweremade,not misleading.
Section 5.Termination.The Purchasers may terminate their obligationhereunderbywrittennoticetotheIssuerifatorpriortotheClosingDate:
(a)(i)Legislation shall have been enacted by the Congress,or recommended totheCongressforpassagebythePresidentoftheUnitedStatesortheU.S.Department oftheTreasuryortheInternalRevenueServiceoranymemberoftheUnitedStatesCongress
or favorably reported for passage to either House of the Congress by any Committee of suchHousetowhichsuchlegislationhasbeenreferredforconsideration,or (ii)a decision shallhavebeenrenderedbyacourtestablishedunderArticleIIIoftheConstitutionoftheUnitedStates,or the United States Tax Court,or (iii)an order,ruling,regulation orcommunication(including a press release)shall have been issued by the TreasuryDepartmentoftheUnitedStatesortheInternalRevenueService,which,in each casereferredtoinclauses(i),(ii)and (iii),has or shall have the purpose or effect,directly orindirectly,of including in gross income for federal income tax purposes interest to bereceivedbyanyownersoftheBonds;
2
(b)There shall have occurred any material adverse change in the business oraffairsoftheCitythat,in the Purchasers'reasonable judgment,has any material adverse
effect on the security for the Bonds;or
(c)There shall have occurred after the date hereof a general suspension oftradinginsecurities,or the declaration of a general banking moratorium by the UnitedStatesofAmerica,State ofWashington,State of New York authorities,or any war involvingtheUnitedStatesorothernationalcalamity,the effect of which,in the Purchasers'
reasonable judgment,will adversely affect the marketability of the Bonds.
Section 6.Conditions to Purchasers'Obligation.The Purchasers'obligationhereundertopurchaseandpayfortheBondsshallbesubjecttotheaccuracyoftherepresentationsandwarrantiesoftheIssuerherein,to the accuracy of statements to bemadeonbehalfoftheIssuerintheOfficialStatement,to the performance by the Issuer ofitsobligationshereunder,and to the following additional conditions:
(a)All official or corporate action of the Issuer relating to the Ordinance,theSafekeepingAgreement(the"EscrowAgreement"),this Bond Purchase Agreement and theBondsshallbeinfullforceandeffectandshallnothavebeenamended,modified orsupplemented,except as may have been agreed to by the Purchasers.
(b)The Purchasers shall have received an unqualified approving legal opinionofLanePowellSpearsLubersky,Seattle,Washington,Bond Counsel,dated the ClosingDatewithrespecttotheBonds.
(c)The Purchasers shall have received a certificate,dated the Closing Date andsignedonbehalfoftheIssuer,to the effect that:
(i)the Issuer is a municipal corporation,organized and existing underthelawsoftheStateofWashingtonandhasfulllegalright,power and authority (A)to enter into this Bond Purchase Agreement,(B)to issue,sell and deliver the BondstothePurchasersasprovidedherein,and (C)to consummate the transactionscontemplatedbythisBondPurchaseAgreement,the Ordinance,the OfficialStatementandtheEscrowAgreement;
(ii)by official action of the Issuer prior to or concurrently with theacceptancehereof,the Issuer has adopted the Ordinance,has duly ratified the useofthePreliminaryOfficialStatement,has duly authorized and approved theexecutionanddeliveryof,and the performance by the Issuer of the obligations onitspartcontainedin,the Ordinance,the Escrow Agreement,the Bonds and thisBondPurchaseAgreement;
(iii)to its knowledge,the Issuer is not in breach of or default under anyapplicablelaworadministrativeregulationoftheStateofWashingtonortheUnitedStatesoranyapplicablejudgmentordecreeoranyloanagreement,note,resolution,agreement or other instrument to which the Issuer is a party or to which it or anyofitspropertyisotherwisesubjectandwhichwouldaffectitsabilitytoperformits
3
obligations hereunder;and the execution and delivery of the Ordinance,the EscrowAgreement,the Bonds and this Bond Purchase Agreement,and the compliance withtheprovisionsofeachthereof,does not conflict with or constitute a breach of ordefaultunderanylaw,administrative regulation,judgment,decree,loan agreement,note,resolution,agreement or other instrument to which the Issuer is a party or towhichitisotherwisesubject;
(iv)No litigation or other proceedings are pending against the Issuer or,to the knowledgeof the person or persons signing the certificate,threatened againstOtheIssuerinanycourtorothertribunalofcompetentjurisdiction,state or federal,in any way (A)restraining or enjoining the issuance,sale or delivery of the Bonds,(B)questioning or affecting the validity of this Bond Purchase Agreement,theBonds,or the Ordinance,(C)questioning or affecting the validity of any of theproceedingsfortheauthorization,sale,execution,issuance or delivery of the Bonds,(D)questioning or affecting the organization or existence of the Issuer or the title toanyofficeoftheofficersthereofor(E)questioning or affecting the power andauthorityoftheIssuertoissuetheBonds,or to execute this Bond PurchaseAgreement,the Ordinance,the Escrow Agreement or the Official Statement;
(v)to its knowledge,the Issuer has complied with and satisfied all theconditionsonitspartsetforthinthisBondPurchaseAgreementtobeperformedorsatisfiedhereunderatorpriortotheClosingDateandtherepresentationsandwarrantiesoftheIssuercontainedhereinaretrue,complete and correct as of theClosingDate.
(d)The Purchasers shall have received arbitrage certifications by the Issuer informandsubstancesatisfactorytoBondCounsel.
(e)The Purchasers shall have received verification reports from an independentcertifiedpublicaccountantsatisfactorytoitsPurchasersdemonstratingthatamountsheldundertheEscrowAgreementaresufficienttodefeasethe1987Bonds.
O Section 7.Covenants.The Issuer covenants and agrees with the Purchasers asfollows:
(a)If between the date on which the final Official Statement is deliveredpursuanttoSection2hereof,and 90 days after the Closing Date (orsuch longer period astheIssuerandthePurchasersshallagree),the Issuer becomes aware that an event hasoccurredwhichwouldcausetheinformationintheOfficialStatementwithrespecttoittocontainanuntruestatementofamaterialfactortoomittostateamaterialfactnecessaryinordertomakethestatementstherein,in light of the circumstances under which theyweremade,not misleading,it shall notify the Purchasers or if the Purchasers notify theIssuerofsuchanevent,and,if in the opinion of the Issuer and the Purchasers such eventrequiresanamendmentorsupplementtotheOfficialStatement,the Issuer will amend orsupplementtheOfficialStatementinaformandinamannerapprovedbytheIssuerandthePurchasers;provided,however,if such event shall occur on or prior to the Closing Date,the Purchasers in their sole discretion shall have the right to terminate their obligation
4
hereunder by written notice to the Issuer and the Purchasers shall be under no obligationtopurchasetheBonds.
(b)The Issuer shall take all necessary actions to cause the issuance and deliveryoftheBondstocomplywiththeprovisionsofthelawsandregulationsofWashingtonpursuanttowhichtheBondsareissuedandoftheInternalRevenueCode,and will notknowinglytakeanyaction,or permit any action within its control to be taken,in violationofsuchprovisionsorthatwouldcauseinterestontheBondstobeincludedingrossincomeforfederalincometaxpurposes.
Section 8.Payment of Costs of Financing.The Purchasers shall pay their ownexpensesrelatingtotheofferingandsaleoftheBonds.All other expenses relating to theissuanceoftheBonds,including,but not limited to the costs of printing the Bonds,thePreliminaryOfEcialStatementandtheOfficialStatement;fees of registrar and payingagent;escrow verification fees;escrow agent fees;and the fees and expenses of BondCounselshallbepaidfromBondproceeds.
Section 9.Survival of Covenants and Representations.The respectiveagreements,covenants,representations,warranties and other statements of the Issuer,thePurchasersandoftheirrespectiveofficerssetforthinormadepursuanttothisBondPurchaseAgreementwillremaininfullforceandeffect,notwithstanding any investigationmadebyoronbehalfofanypartyhereto,and shall survive the delivery of and payment fortheBonds.
Section 10.Effectiveness.This Bond Purchase Agreement shall become effectiveupontheexecutionoftheacceptancehereofbytheIssuer.
Section 11.Counterparts.This Bond Purchase Agreement may be executed inoneormorecounterparts.
If the foregoing is in accordancewith your understanding of our agreement,pleasesignandreturntoustheenclosedcopyofthisBondPurchaseAgreement,whereupon it willObecomeabindingagreementamongthePurchasersandtheIssuerinaccordancewithitsterms.
Respectfully Submitted,
GEORGE K.BAUM &COMPANY
PUGET SOUND SECURITIES
By:
Susan D.Musselman -GeorgeK.Baum &CompanyVicePresident
5
The foregoing is confirmed and accepted as of the date first above written.
CITY OF MOSES LAKE,WASHINGTON
By:
For Information Only
Total Interest $Average Interest Rate %Plus Discount Average Issue Life %Net Interest $Net Interest Cost ___%
O
6
SCHEDULE A
The Bonds will mature on July 1 of each of the years 1997 through 2003,as follows.
O Interest YieldDueAmountRateorPrice
1997 100199810019991002000100200110020021002003100
O
7
EXHIBIT A
SAFEKEEPING AGREEMENT
THIS AGREEMENTr made and entered into as of the day of
JanuarY,1992,by and between the city of Moses Lake,Washington
(the "City")and Seattle-First National Bank,Seattle,Washington
(the "Escrow Trustee");
W I TNESSET H:
Section 1.Recitals.The City has outstanding the following
water and sewer revenue bonds:
Original Authorizing
Date of Issue Principal Amount Ordinance
November 1,1985 $6,120,000 1184
July 1,1990 $230,000 1436
which mature on the dates and in the amounts and bear interest at
the rates set forth in Appendix 1 (the "1985Bonds"and the "1990
Bonds,"respectively).The principal of the 1985 Bonds maturing
after July 1,1996,and the principal of and interest on the 1990
Bonds coming due after July 1,1996,are herein characterized as
the "Refunded Bonds."By Ordinance No.adopted December 30,O 1991,(the "Ordinance")the City authorized the issuance of the
Water and Sewer Revenue Refunding Bonds,1992 of the City (the
nRefunding Bonds");and the interest coming due and payable on the
Refunding Bonds from the date of issuance to and including July 1,
1996,is herein characterized as the "Funded Interest."The
Refunding Bonds mature on the dates and in the amounts and bear
interest at the rates set forth in Appendix 1.The Refunded Bonds
and the Funded Interest are herein characterized as the "Escrow
Debt Service."
The City,by the Ordinance,has determined to refund the
Refunded Bonds and to fund the Funded Interest in accordance with
the terms of and in the manner provided by the ordinance and has
authorized issuance of $aggregate principal amount
of Refunding Bonds dated January 1,1992,to carry out such
refunding.
SAFEKEEPING AGREEMENT -PAGE 1 EXHIBIT A
Section 2.Provisions for the Escrow Debt Service.To
accomplish the defeasance of the Escrow Debt Service,the City,
simultaneously with the delivery of the Refunding Bonds (as defined
in and issued pursuant to the ordinance),does hereby agree to
irrevocably deposit with the Escrow Trustee in trust for the
security and benefit of the owners of the Refunding Bonds during
the period commencing on the date of this Agreement and ending on
July 1,1996 and for the security and benefit of the owners of the
Refunded Bonds sufficient obligations or evidence thereof
("Acquired Obligations")as described on Appendix 2 attached
hereto,and any monies,if necessary,to provide for the payment of
all Funded Interest and Refunded Bonds as the same shall become
due.The sufficiency of such Acquired Obligations has been
verified by ,certified public accountants.
The Escrow Trustee hereby agrees to create and establish a
special and irrevocable trust fund (the "Escrow Fund")consisting
of the cash and Acquired Obligations as described on Appendix 2 to
be held in trust by said Trustee separate and apart from all otherOfundsoraccountsoftheCityoroftheEscrowTrustee,solely for
the purposes herein specified.
Such Acquired Obligations shall be paid for out of a portion
of the proceeds of sale of the Refunding Bonds and other cash
provided by the city.
Prior to or simultaneously with the delivery of the Refunding
Bonds to the initial purchasers thereof,the City agrees that it
will cause to be delivered to the Escrow Trustee statements setting
forth the schedule of the Escrow Debt Service by the amount of
interest to be paid on each semiannual interest payment date,the
amount of principal of the Refunded Bonds to be paid on each annual
principal payment date,and the amount of principal and premium,if
any,to be paid upon the respective mandatory redemption dates set
forth below pursuant to the irrevocable call for redemption made by
SAFEKEEPING AGREEMENT -PAGE 2 EXHIBIT A
the ordinance for the respective issues of the Refunded Bonds
maturing on and after the following maturity dates•
Date of Issue Mandatory All Bonds Maturing
of Refunded Bonds Redemption Date On or After
November 1,1985 July 1,1996 July 1,1997July1,1990 July 1,1998 July 1,1999
At least ninety (90)days before the respective mandatory
redemption dates,the Escrow Trustee shall notify the Bond
Registrar with respect to the Refunded Bonds of the requirement for
mandatory call of the respective Refunded Bonds and shall,if
authorized to do so,give notice of redemption in the name of the
Bond Registrar at the time and in the manner required by
Authorizing Ordinances No.1184 and No.1436 for the respective
issues of the 1985 and 1990 Refunded Bonds.
Section 3.Disbursements by Escrow Trustee.The Escrow
Trustee shall present for payment on the due dates thereof any
Acquired Obligations so deposited with it and shall apply the
proceeds derived therefrom and the interest paid thereon in
accordance with the provisions of this section.Monies shall beOtransferredbytheEscrowTrusteetotheCityTreasureror,at the
direction of said Treasurer,to the Fiscal Agent of the State of
Washington at appropriate times and in amounts sufficient to pay
the interest on the Refunding Bonds to and including July 1,1996,
and on the 1990 Refunded Bonds after July 1,1996,as the same
shall become due,to pay the principal of the 1990 Refunded Bonds
maturing on July 1,1997,and July 1,1998,and to pay the
principal of and premium,if any,on the applicable Refunded Bonds
on the respective mandatory redemption dates.Any cash balance at
any time occurring in the trust fund shall be held therein as cash
and shall not be invested.
Section 4.Custody and Safekeeping of Obligations.For as
long as any of the Refunded Bonds remain outstanding,on or before
the 25th day of each February and August (commencing with the month
of February,1992)the Escrow Trustee shall render a statement as
SAFEKEEPING AGREEMENT -PAGE 3 EXHIBIT A
of the last day of the preceding to the City Treasurer setting
forth the cash and Acquired Obligations held by the Escrow Trustee,
any of such Acquired Obligations which have matured and the amounts
received by the Escrow Trustee by reason of such maturity,the
interest earned on any of such Acquired Obligations,a list of any
investments or reinvestments made by the Escrow Trustee in other
Acquired Obligations and the interest and/or principal derived
therefrom,the amounts of cash delivered to the City Treasurer
and/or Fiscal Agent of the State of Washington for the payment of
interest on the Refunding Bonds and the principal of and premium,
if any,and interest on the Refunded Bonds,as said payments shall
become due and payable,and any other transactions of the Escrow
Trustee pertaining to its duties and obligations as set forth
herein.
All Acquired obligations,monies and investment income
deposited with or received by the Escrow Trustee pursuant to this
Agreement shall be subject to the trust created by this Agreement,
and the Escrow Trustee shall be liable for the preservation,O safekeeping and application thereof in accordance with the
provisions of this Agreement;provided,however,it shall not be
responsible for any depreciation in value of any of the Acquired
Obligations.In the event the maturing principal of and interest
on the Acquired Obligations,any obligations substituted for the
Acquired Obligations pursuant to section 5 of this Agreement and
other money held by the Escrow Trustee pursuant to this Safekeeping
Agreement shall be insufficient or shall be projected to become
insufficient at any time in the future to make the payment for the
Escrow Debt Service,the Escrow Trustee shall give the city and the
Co-Paying Agent prompt notice of such insufficiency or projected
insufficiency;and,in addition,should any such insufficiency
occur or be projected to occur on or before the Crossover Date,the
Escrow Trustee shall give prompt notice thereof to AMBAC Indemnity.
The city agrees that,in the event any such insufficiency shall
SAFEKEEPING AGREEMENT -PAGE 4 EXHIBIT A
occur with respect to payment of Escrow Debt Service on the
Refunded Bonds,it will deposit promptly with the Escrow Trustee
the additional money specified in the Escrow Trustee's notice of
insufficiency.The city further agrees that,in the event any such
insufficiency shall occur with respect to payment of Escrow Debt
Service on the Funded Interest,it will take appropriate action
pursuant to Section 24.G.of the Bond Ordinance to assure the
payment of the Funded Interest shall be provided for under the
Municipal Bond Insurance Policy.Any money remaining in the trust
fund after payment of all Escrow Debt Service shall be paid by the
Escrow Trustee to the City for deposit in the 1992 Bond Fund if the
Water and Sewer Revenue Bonds,1992 or Parity Bonds are then
outstanding,otherwise in the Revenue Fund (as defined in the
ordinance).
Section 5.Substitution of Acquired Obligations.The City
reserves the right to substitute higher yield Acquired Obligations
in the event it may do so pursuant to section 149(d)of the
Internal Revenue Code of 1986,as amended,and applicable TreasuryOregulationsthereunderprovidedthatatalltimesthemoniesand
Acquired Obligations deposited with the Escrow Trustee shall be
sufficient as to type,maturity date and amount to provide for the
payment of the principal of and interest due and to become due on
the Refunded Bonds as provided herein.Prior to each such
substitution the City shall obtain (1)a verification by a
certified public accountant which shall be satisfactory to the
Escrow Trustee and to bond counsel to the City that the monies and
Acquired Obligations on deposit after such substitution will be
sufficient as provided above;(2)approval by AMBAC Indemnity of
the proposed substitution and the (3)an opinion from such bond
counsel that such substitution shall not cause any of the Refunding
Bonds to lose their tax-exempt status under section 103 of the
Internal Revenue Code of 1986,as amended,and applicable Treasury
regulations thereunder.In the event that there shall be excess
SAFEKEEPING AGREEMENT -PAGE 5 EXHIBIT A
cash in the Escrow Fund as a result of any such substitution,such
excess shall be paid to the city;and the city,at its option,
shall transfer such payment to the 1992 Bond Fund,any other Parity
Bond Fund or the Revenue Fund.
Section 6.Costs of Issuance.The City,simultaneously with
the delivery of the Refunding Bonds (as defined in and issued
pursuant to the Ordinance),does hereby agree to deposit
$to pay the costs of issuance of the Refunding
Bonds set forth in Appendix 3,and the Escrow Trustee hereby agrees
to pay such costs of issuance when due.
Section 7.Duties and Obligations of the Escrow Trustee.The
duties and obligations of the Escrow Trustee shall be as prescribed
by the provisions of this Agreement,and the Escrow Trustee shall
not be liable except for the performance of its duties and
obligations as specifically set forth herein and to act in good
faith in the performance thereof,and no implied duties or
obligations shall be incurred by the Escrow Trustee other than
those specified herein.O None of the provisions contained in this safekeeping Agreement
shall require the Escrow Trustee to use or advance its own funds in
the performance of any of its duties or the exercise of any of its
rights or powers hereunder.The Escrow Trustee shall not be
responsible or liable for the sufficiency,correctness,genuineness
or validity of the Acquired Obligations or of any substitute
obligations (substituted in accordance with Section 5 of this
Agreement)deposited with it;the performance or compliance by any
party other than the Escrow Trustee with the terms or conditions of
any such instruments;or any loss which may occur by reason of
forgeries,false representations or the exercise of the Escrow
Trustee's discretion in any particular manner unless the failure to
discover any such forgeries or false representations or the
exercise of such discretion is negligent or constitutes willful
misconduct.
SAFEKEEPING AGREEMENT -PAGE 6 EXHIBIT A
The Escrow Trustee may consult with counsel of its choice,and
the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or not
taken or suffered by it hereunder in good faith and in accordance
with the opinion of such counsel.
Section 8.Compensation of Escrow Trustee.The arrangements
heretofore made for the payment of the Escrow Trustee of the amount
of $for services rendered by it pursuant to the
provisions of this Agreement are satisfactory to it;and such
payment is inclusive of all fees,compensation and expenses of the
Escrow Trustee.
Section 9.Indemnification.To the extent permitted by law,
the city hereby assumes liability for,and hereby agrees (whether
or not any of the transactions contemplated hereby are consummated)
to indemnify,protect,save and keep harmless the Escrow Agent and
its respective successors,assigns,agents,employees and servants,
from and against any and all lîabilities,obligation,losses,
damages,penalties,claims,actions,suits,costs,expenses andOdisbursements(including reasonable legal fees and disbursements)
of whatsoever kind and nature which may be imposed on,incurred by,
or asserted against,the Escrow Agent at any time (whether or not
also indemnified against the same by the City or any other person
under any other agreement or instrument,but without double
indemnity)in any way relating to or arising out of the execution,
delivery and performance of this Agreement,the establishment
hereunder of the Escrow,the acceptance of the funds and securities
deposited therein,the purchase of any securities to be purchased
pursuant thereto,the retention of such securities or the proceeds
thereof and any payment,transfer or other application of moneys or
securities by the Escrow Agent in accordance with the provisions of
this Agreement;provided,however,that the City shall have no
liability to Escrow Agent (or any of its successors,assigns,
agents,employees and servants)with respect to any action or
SAFEKEEPING AGREEMENT -PAGE 7 EXHIBIT A
failure to act which constitutes negligence or willful misconduct
of the Escrow Agent or any of the Escrow Agent's respective
successors,assigns,agents and employees or the material breach by
any of the same of the terms of this Agreement.In no event shall
the City or the Escrow Agent be liable to any person by reason of
the transactions contemplated hereby other than to each other as
set forth in this section.The rights,obligations,terms and
conditions contained in this section shall survive the termination
of this Agreement.
Section 10.Applicable Law;Severability.This Safekeeping
Agreement is governed by Washington law and may not be modified
except by a writing signed by the parties;provided that any such
modifications to become effective on or before the Crossover Date
shall be subject to prior approval in writing by AMBAC Indemnity.
In the event any one or more of the provisions contained in this
Safekeeping Agreement shall for any reason be held to be invalid,
illegal or unenforceable in any respect,such invalidity,
illegality or unenforceability shall not affect any other provision
of this safekeeping Agreement,but this Safekeeping Agreement shall
be construed as if such invalid or illegal or unenforceable
provision had never been contained herein.
IN WITNESS WHEREOF,the parties.have executed and delivered
this safekeeping Agreement pursuant to due and proper
authorization,all as of the date and year first above written.
CITY OF MOSES LAKE,WASHINGTON
ATTEST:
By
City ManagerBy
City Clerk
SEATTLE-FIRST NATIONAL BANKSeattle,Washington(Iþ
By
Trust OfficerK:iCGl\VW\M-LKAIAFE.AGM
SAFEKEEPING AGREEMENT -PAGE 8 EXHIBIT A
ORDINANCE NO.
An ordinance of the City Council of the City of Moses Lake,Washington,authorizing the issuance and sale of junior lienwaterandsewerrevenuerefundingbondsoftheCityintheoriginalprincipalamountofnottoexceed$3,500,000 to refund,
pay and retire a portion of the debt service on the outstandingWaterandSewerRevenueRefundingBonds,1985 and Water andSewerRevenueBonds,1990 of the City on or after July 1,1996andtofundandpaytheinterestonthebondshereinauthorizeduntilsuchdate;fixing the date,form,terms,maturities andcovenantsofthebonds;creating a special refunding account,creating a special bond redemption fund to provide for paymentofthebondsauthorizedhereinandbondshereafterissuedon aparitytherewith;providing for and authorizing the purchase ofUnitedStatsgovernmentobligationsoutoftheproceedsofthesaleofthebondshereinauthorized;providing for the paymentandredemptionoftheoutstandingbondstoberefunded;approving a safekeeping agreement;and authorizing the cityManagertoapproveandexecuteabondpurchaseagreementfromGeorgeK.Baum &Company and Puget Sound Securities.
PORTIONS OF TEE SUB.7ECT ORDINANCE ARE BRING PUBLISHED IN SUNNARY FORK ASNOTEDRELOW.A complete copy of the ordinance will be mailed upon requesttotheofficeofthecityManager.
THE CITY COUNCIL OF THE CITY OF MOSES LAKE,WASHINGTON,DO ORDAIN asfollows:
Section 1.Definitions.As used in this ordinance,the following
O
words shall have the following meanings:
A."Annual Debt Service"means the amount required to be paid in a-calendar year for (1)interest on all Parity Bonds then outstanding exceptthatportionoftheinterestonthe1992BondswhichconstitutesanyportionoftheEscrowAmount,(2)principal of all Parity Bonds thenoutstandingbutexcludinganyoutstandingTermBonds,and (3)payments intoanySinkingFundAccountfortheamortizationofoutstandingTermBonds.In determining interest payable with respect to Parity Bonds,it shall beassumedthatpaymentsintotheSinkingFundAccountshallbemadeintheamountsandatthetimesrequiredinaccordancewiththemandatoryredemptionscheduleestablishedforthoseParityBondswhichconstituteTermBonds,as specified by the ordinances authorizing the issuancethereof."Maximum Annual Debt Servicen means the maximum amount of AnnualDebtServiceonthethenoutstandingParityBondsandOutstandingSeniorLienBonds(other than the portions thefeof which constitute the EscroWAmount)coming due in any future year.In the event the City has anyParityBondoutstandingonanyJanugry15orJuly15whighdoesnotbearafixedinterestratetothematuritythereof,the Annual Debt ServiceshallbecalculatedinthemannersetforthinSubsection6.F of thisordinance.
B."Assessments"means assessments levied in any ULID hereaftercreatedfortheacquisitionorconstructionofadditionsandimprovementstoandextensionsofthesystemifsuchassessmentsarepledgedtobepaidintothe1992BondFund,including any installments of assessments-and anyinterestorpenaltieswhichmaybeduethereon.
C."Bond Registrarn means the fiscal agencies of the State ofWashingtoninSeattle,Washington,and New York,New York,appointed bythisordinanceforthepurposesofregisteringandauthenticatingtheBonds,maintaining the Bond Register,and effecting transfer of ownershipoftheBonds.
D.nBondsn og n1992 Bonds"means all of the junior lien water andsewerrevenuerefundingbondsissuedpursuanttothisordinanceunderdateoftheDatedDate,in the aggregate original principal amount of not toexceed$3,500,000.
E.nCity"means the City of Moses Lake,Washington,.a municipalcorporationdulyorganizedandexistingunderandbyvirtueofthelaws oftheStateofWashington.
F."City Council"means the governing body of the city as the sameshallbedulyandregularlyconstitutedfromtimetotime.
G."Code"means Sections 103,148,149 and 150 of the InternalRevenueCodeof1986,as amended,and applicable temporary and permanentregulationspromulgatedthereunder.
H."Co-Paying Agentsn means the Bond Registrar appointed forpurposesofpayinginterestonand'principal of (and any premium pursuanttocallon)the Bonds.
I."Costs of Operation and Maintenance"means all necessaryoperatingexpenses,current.maintenance expenses,expenses of reasonableupkeepandrepairs,and insurance and administrative expense and includesmunicipalutilitytaxesorpaymentstotheCityinlieuofsuch-taxes,butexcludesdepreciation,payments for debt service or into reserve accounts,costs of capital additions to or replacements of the System.
."Coverage Requirement"means the coverage requirement specifiedinSection11.8 of this ordinance.
K."crossoverDate"means July 1,1996,the date on which the 1992RefundingAccountshallbeappliedtopayinterestthencomingdueontheBonds,to pay and redeem the principal amount of the 1985 Bonds pursuanttotheli-revocable dall for redemption contained in this ordinance,and thebalancethereafterremaininginsuch1992RefundingAccountshallbeheldtopaytheprincipalofandinterestonthe1990Bondsasthesamethere-after shall become due and payable in accordance with Ordinance No.1436andinaccordancewiththisordinance.
L.nDated Date"means the dated date of the Bonds determined inaccordancewithSections3and20ofthisordinance.
M."Debt service Àccount"means the account of that name created bysection5ofthisordinancetopaytheprincipalofandinterestonanyParityBonds.
N.nEscrow Amount"means an amount of cash and Acquired Obligations(as defined in Section 13 of this ordinance)which,together with interestthereonwillbesufficienttopaywhenduetheFundedInterestandtopaydebtserviceontheRefundedBondspursuanttothecallsetforthinSection14ofthisordinanceorotherwisewhendue.
O."Funded Interestu means that interest on the 1992 Bonds comingdueonJuly1,1992,through July 1,1996,inclusive.
P "Future Parity Bonds"means all issues or series of revenuebonds,or other revenue obligations which may be issued in the future asParityBondsinaccordancewiththetermdofthisordinance.
Q."Investment Earnings"meangall earnings in any form whatsoeverderivedfromInvestments.
R."Investments"means any investments permitted to the City by lawofmoniesrequiredtobedepositedinanyfundoraccountoftheRevenueFundandanyParityBondFund,except monies deposited in any escrowaccountforthepurposeofrefundinganyParityBondsandexceptanymonieswhicharesubjecttopaymenttotheUnitedStatesTreasuryundertherebateprovisionsoftheCode.
O S."Net Revenue"means the Revenue of the System leas Costs ofOperationandMaintenance.
T.""1985 Bond Fund"means the Water and Sewer Revenue Bond Fund,1985 created by Ordinance No.1184 of the City to pay and secure thepaymentof12MaOutstandingSeniorLienBonds.
U.."1985Bonds"means the Water and Sewer Revenue Refunding BondsoftheCityissuedunderdateofNovember1,1985,pursuant to OrdinanceNo.1184.of the city,$4,490,000 principal amount of which is currentlyoutstanding.
V.n1990 BondsN means the Water and sewer Revenue Bonde of the CityissuedunderdateofJuly1,1990,pursuant to ordinance No.1436 of thecity,$200,000 principal amount of which is currently outstanding.
W.n1992 Bond Fund"means the "Water and Sewer Revenue Bond Fund,1992"created by Section 5 of this ordinance."Parity Bond Fund"means,collectively,the 1992 Bond Fund and any other fund hereafter created topayorsecurethepaymentofbondshereafterissuedonaparitywiththeBonds.
X."1992Refunding Account"means the account of that name createdinthe1992BondFundbySection13ofthisordinanceasatrustfundforthefundingandrefundingoftheEscrowAmount.
Y."Outstanding Senior Lien Bondsn means the 1985 Bonds and the 1990Bonds.
Z."Parity Bondsn means any revenue bonds or other revenue obliga-tions issued by the City which have a lien upon the Revenue of the SystemtopayandsecurethepaymentoftheprincipalthereofandinterestthereonequaltotheliencreatedupontheRevenueoftheSystemtopayandsecurethepaymentoftheprincipalofandinterestontheBonds."Parity BondsnincludestheBondsandanyFutureParityBonds.
AA."Refunded Bonds"means the $2,940,000 principal amount of the1985Bondsmaturing,the $60,000 principal amount of the 1990 Bondsmaturing,and the interest coming due on the 1990 Bonds,after theCrossoverDate.
BB."Reserve Accountu means the account of that name created in the1992BondFundforthepurposeofsecuringthepaymentoftheprincipalofandinterestontheParityBonds.
CC.nReserve Requirement"means,from and after the Crossover Date,the amount which is the smallest of (i)1.25 times the Average.Annual DebtService,(ii)the Maximum Annual Debt Service and (iii)the sum of theamountsequaltotenpercent(10%)of the sale proceeds (as defined in theCode)of the then outstanding Parity Bonds.Prior to the Crossover Date,there shall be no Reserve Requirement
DD.nRevenue Fundu means that Water and Sewer Revenue Fund of theCitycreatedbyOrdinanceNo.135 of the City.
EE."Revenue of the systema means all the earnings and revenuereceivedbytheCityfromoperationoftheSystem(including monies in theRevenueFund),except ad valorem taxes,Assessments,Investment Earnings
or proceeds of,or investment earnings on,loans and grants for capitalpurposes,and except income from investments irrevocably pledged to thepaymentofanyrevenuebondswhichhavebeenheretoforeormaybehereafterrefundedpursuanttoaplanofrefundingadoptedbytheCityandexceptanymonieswhicharesubjecttopaymenttotheUnitedStatesTreasuryundertherebateprovisionsoftheCode.
FF."Sinking Fund Account"means any account created in a Parity BondFundfordepositsrequiredformandatoryredemptionofanyParityTermBonds.
GG."Surety Bond"means any letter of credit,insura,nce policy,surety bond or other equivalent credit facility or any combination thereofissuedtotheCitytosatisfyallorpartoftheamountrequiredtobemaintainedintheReserveFund,the proceeds of which shall be used onlytopreventdeficienciesinthepaymentoftheprincipaloforinterestontheBondsresultingfrominsufficientamountsbeingondepositinthePrincipalandInterestAccountoranySinkingFundAccounttomakesuchOpaymentsofprincipalandinterestasthesamebecomedueatmaturityoronanymandatoryredemptiondate.Such Surety Bond shall be provided byaninstitutionorentitywhosecreditfacilitywouldnotadverselyaffecttheratingoftheBondsbyMoody's Investors Service,Inc.and by Standard&Poor's Corporation,if the Bonds were so rated,and if not so rated,rating shall be secured from one of such entities or any other entity whoseratingsaregenerallyrelieduponbyinvestorsinmunicipalbondsasnecessarytodemonstratethatsubstitutionofaSuretyBondforanyportionoftheReserveFundrequirementwillnotadverselyaffectthesecurityoftheBonds;provided,however,that as long as the 1992 Bonds areoutstandingandinsuredbyAMBACIndemnity,the rating must be equivalenttoannAanratingbyMoody's Investor Service or an "AAn by Standard &Poor's Corporation,or better.usurety Bond Paymentu means an amount equaltothepaymentrequiredtobemadebythecityonanyinterestorprincipalpaymentdateormandatoryredemptiondateminusthatportionofsuchpaymentmadebytheCitytotheBondRegistrarforpaymenttothe
bondholders on such date,all as certified by the Bond Registrar in ademandforpaymentmadepursuanttothetermsofanySuretyBond.
HH.nSystem"means the existing sanitary sewage collection andtreatmentsystemoftheCity,including facilities for the collection anddisposalofstormwaterrunoff,as it now exists and as it may later beaddedto,extended and improved,and the existing water supply anddistributionsystemof'the City,as it now exists and may later be addedto,extended and improved,for as long as the Bonds remain outstanding.
II."Term Bonds"means any Parity Bonds which are designated as "TermBonds"in an ordinance which authorizes the issuance of Parity Bonds (orinanordinanceorresolutionacceptingorratifyinganoffertopurchasesuchParityBonds)and establishes (or provides for establishment of)aSinkingFundAccounttoamortizetheprincipalamountofsuch-Term Bonds.
JJ."Treasurer"means the Finance Director or such other officer oftheCityastheCouncilshalldesignatebyordinancetocarryoutthedutiesofacitytreasurerunderthelawsofthestateofWashingtonorordinancesoftheCity.
KK."ULIDu means any utility local improvement district of the City.
LL."AMBAC Indemnity"means AMBAC Indemnity Corporation,aWisconsin-domiciled stock insurance company.
MM.nMunicipal Bond Insurance Policy"means the municipal bondinsurancepolicyissuedbyAMBACIndemnityinsuringthepaymentwhendueoftheprincipalofandinterestontheBondsasprovidedtherein.
Section 2.Authorization of the Bonds.For the purpose of carryingouttherefundingplan-adopted by Section 13 of this ordinance,the CityshallissueandsellitsJuniorLienWaterandSewerRevenueRefundingBonds,1992 in the principal amount of not to exceed $3,500,000.
Section 3.Description of Bond .SUME RY OF SECTION:The subsectionsofthissectionaresummarizedasfollows:
A.Date,Denomination,Payment,Transfer.The Bonds shall bedesignatedas"Junior Lien Water and Sewer Revenue Refunding Bonds,1992,"shall have a Dated Date established pursuant to Section 20 of thisordinance,shall mature in the aggregate principal amount of not to exceed$3,500,000,shall be in the denomination of $5,000 each or any integralmultipleof$5,000 within a single maturity,shall be numbered in suchmannerastheBondRegistrardeemsnecessaryforpurposesofidentification,shall be fully registered as to both principal andinterest,shall bear interest payable July 1 1992,and semiannually on thefirstdaysofeachJanuaryandJulythereafter,at the rates and ghallmature(or shall be redeemed from any'1992 Sinking Fund Account bymandatoryredemption)on July 1 of each of the years 1997 through 2003 intheamountsestablishedpursuanttoSection20ofthisordinance,providedthatthematurityand/or mandatory redemption amounts shall be set in suchamountsthattheannualdebtserviceontheBondsaftertheCrossoverDateshallbesubstantiallyproportionaltotheannualdebtseryiceemtheRefundedBondsasscheduledforpaymentaftertheCrossoverDate,withoutregardtotherefundingplansetforthinthisordinance.
This subsection provides the manner in which principal of and interestontheBondswillbepaidandprovidesfortheexchangeaHondfordifferentdenominationsandtransfertonewownerswithoutcosttotheownerortransferee.
The Bonds shall be obligations only of the 1992 Bond Fund and shallbepayableandsecuredasprovidedherein.The Bonds are not generalobligationsofthecity.
B.Optional Redemption.The Bonds shall not be subject teredemptionpriortoJuly1,.1997.If any Bonds are made redeemable at theoptionoftheCitypurananttosection20andifanysuchBondsarecalledinpart,they shall be redeemed in inverse order of maturity and by lotwithinamaturity.
C.Mandatory Redemption.In the event that any of the Bonds shallbedesignatedasTermBondspursuanttosections5and20ofthisordinance,the City Council shall approve,by resolution,such designation
and establish a mandatory sinking fund payment schedule for such TernBonds.
D.Notice of Call.The times within which any notice shall be given
and the manner of giving notice to the Bondowners is set forth in thissubsection.
E.Effect of Call.Interest on any Bonds so called for redemption
shall cease on such redemption date unless the such Bonds shall not beredeemeduponpresentation.O F.Open Market Purchase.After the Crossover Date,the City maypurchaseanyBondorBondsontheopenmarketfrommoniesavailablein
accordance with Section 4 of this ordinance,provided that any such Bonds
shall be purchased for retirement only.
Section 4.Revenue Fund Priorities.SUMMARYOF SECTION:The Revenue
of the system is required to be deposited in the Revenue Fund as collectedandthemoniesintheRevenueFundshallbeusedonlyforthefollowing
purposes and in the following order of priority:
First,to pay the Costs of Maintenance and Operation of theSystem;
Second,to make all payments required to be made into the 1985BondFund;
Third,to make all payments required to pay the interest on anyParityBonds(in addition to available Assessments);
Fourth,to make all payments required to pay the principal of anyParityBonds;(in addition to available Assessments);
Fifth,to make all payments required pursuant to a Surety Bondreimbursementagreement;
Sixth,to make all payments required to be made into the ReserveAccountforwhichmoneyshallnothavebeenprovidedfromAssessments
or from the transfer to be made from the reserve account in the.1985BondFundtotheReserveAccountontheCrossoverDate;
Seventh,to make all payments which may hereafter be required tobemadeintoanyfuturerepair,replacement or reserve fund or accountwhichmayberequiredbythecovenantsofFutureParityBonds;
Eighth,to make all payments required to be made into any otherredemptionfund,debt service account,reserve account or sinking fundaccountgreatedtopayandsecurethepaymentoftheprincipalofandinterestonanyrevenueobligationsdftheCityhavingalienupoÀtheRevenueoftheSystemandmoniesintheRevenueFundjuniorandinferiortothelienthereonfopthepaymentoftheprincipalofandinterestonParityBonds;and
Ninth,to retire by redemption any outstanding water and sewerrevenueobligationsoftheCityortomakenecessarýadditions,betterments,improvements,extraordinary repairs,extensions andreplacementsoftheSystem,or any other lawful System purposes.
The City further reserves the right,at any time after the CrossoverDate,to use any surplus Revenue of the System available after providing
O for the payments required by paragraphs First through Eighth inclusive ofthissectiontopurchaseanyoftheBondsintheopenmarketinaccordancewithSection3.F.of this ordinance.
section 5.1992 Bond Fund and Accounts Therein.SUMMARY OF SECTION:A special fund designated as the MWater and Sewer Revenue Bond Fund,1992"(the n1992 Bond Fund")is established by this section and shall be drawn
upon for the solely to pay and secure Parity Bonds.The 1992 Bond Fund isseparatedintoaDebtServiceAccountandaReserveAccount.
A.Debt Service Account.Monies deposited in the Debt serviceAccountshallbeusedonlyforthepurposeofpayingtheprincipalof,premium,if any,and interest on the Bonds and any Future Parity Bonds.
From and after the Crossover Date,as long as any Bonds remainoutstanding,the City irrevocably pledges to make monthly deposits in the
Debt Service Account to pay the interest on and the principal of alloutstandingBonds(except principal of any 1992 Term Bonds)as suchinterestandprincipalrespectivelybecomedueandpayable.
B.Transfers to Sinking Fund Account.If any of the Bonds aredesignatedas1992TermBondsinthebondpurchaseagreementauthorizedbySection20ofthisordinance,by a supplemental resolution of the CityCouncil,a 1992 Sinking Fund Account will be established in the 1992 BondFundandmonthlydepositswillbemadeintothatAccountbeginninginthemonthfollowingthelastserialbondmaturitydate,in amounts sufficienttopaytheannualmandatorysinkingfundpaymentsonthe1992TermBonds
as they become due and payable.
Section 6.Reserve Account.SUMMARY OF SECTION•On the crossoverDatetheRefundedBondswillberedeemedordefeasedsothatthereserveaccountinthe1985BondFundwillnolongerberequired.At that time,the Treasurer will transfer from the reserve account in the 1985 Bond FundtheamountnecessarytobringtheReserveAccountbalanceinthe1992BondFunduptotheReserveRequirement.If all of the monies in the 1985 BondFundreserveaccountarenotsufficient,the City may make equal annualpaymentsoverafive-year period to bring the Reserve Account balance uptotheReserveRequirement.The Reserve Account is subject to thefollowingadditionalrequirements:
A.After the Crossover Date,the City must maintain a balance in theReserveAccountinanamountequaltotheReserveRequirement.The CityisrequiredtorecomputetheReserveRequirementannuallyand,if thebalanceintheReserveAccountexceedssuchReserveRequirement,the excessamountwillbecreditedto,at the option of the City,the Debt ServiceAccount,any Sinking Fund Account and/or the Revenue Fund.
B...If the city issues any Future Parity Bonds,it will provide forapproximatelyequalannualpaymentstobeintotheReserveAccountsothatwithinfive(5)years from the date of the issuance of such Future Parity
Bonds,the balance of the Reserve Account will be at least equal to theReserveRequirement.
C.This subsection sets forth the conditions under which the City
may use monies in the Reserve Account to redeem,retire or defeaseprincipalof,premium,if any,and interest on outstanding Parity Bonds.
D.If there shall be a deficiency in any Parity Bond Fund DebtServiceAccounttomeetmaturinginstallmentsofinterestonand/orprincipalofanyParityBondsoradeficiencyinanySinkingFundAccounttomeettherequiredscheduleofpaymentsforamortizationofanyTermBonds,such deficiency shall be made up by a withdrawal from the ReserveAccount.Any deficiency created in the Reserve Account by reason of anysuchwithdrawalshallbemadeupoutofmoneyintheRevenue.Bynd aftermakingnecessaryprovisionforthepaymentsrequiredtobemadebysubparagraphsFirst,second,Third,Fourth,and Fifth of Section 4 of thisordinanceandmustbemadeupwithin,ane year of any such withdrawal.
E.By this subsection the City reserves the right to substituteSuretyBondsinlieuofdepositingcashforallorpartoftheReserveRequirement.Detailed requirements for administering the Resèrve Accountinsuchcircumstancesaresetforthinthissubsection.
F.This subsection sets forth the manner of computing the ReserveRequirementintheeventtheCityshouldissueFutureParityBondswhichincludevariableratebonds.None of the 1992 Bonds will be variable rateObonds;and no variable rate Future Parity Bonds may be issued so long asthe1992BondsareoutstandingandinsuredbyAMBACIndemnitywithoutthepriorwrittenconsentofAMBACIndemnity.
Section 7.Investment of Monies in 1992 Bond Fund and Accounts.SUMMARY OF SECTION:JO;is the intention of the City to purchaseInvestmentswithmoniesinthe1992BondFundandAccountsandtoapplytheInvestmentEarningstothegeneralfundoftheCityaspermittedbylaw.However,the city is required to maintain a separate investment account fortheBondFundsothatthespecificsecurityfortheBondscanbeidentified.
Section 8.Lien Upon Revenue of the System;Other Security.TheamountspledgedbythisordinanceandanyordinancehereafteradoptedauthorizingtheissuanceofFutureParityBondstobepaidintothe1992BondFund,any future Parity Bond Pund and the Reserve Account from the
Revenue Fund are hereby declared to be a prior lien and charge upon theRevenueoftheSystemsuperiortoallotherchargesofanykindornaturewhatsoeverexceptthecostofmaintenanceandoperationoftheSystemandexceptthelienoftheOutstandingSeniorLienBondsatalltimespriortotheCrossoverDateandfurtherexceptthattheamountssopledgedareofequallientothechargesuponsuchRevenuewhichmayhereafterbemadetopayandsecurethepaymentoftheprincipalofandinterestonanyFutureParityBonds.In accordance with the refunding plan adopted pursuant tothisordinance,no monies will be deposited in the 1992 Bond Fund for theOBondspriortothecrossoverDate,provided,however,that the FundedInterestshallbesecuredbyandpayablefromthecashandAcquiredObligationsdepositedinthe1992RefundingAccountupondeliveryoftheBondsandheldbytheEscrowTrusteepursuanttosuchrefundingplan.
The Council hereby declares that,in fixing the amounts.to be paidintothe1992BondFundandtheReserveAccountthereinashereinbeforeprovided,it has exercised due regard for the Costs of Maintenance andoperationoftheSystemandhasnotobligatedtheCitytosetasideintothe1992BondFundandReserveAccountagreateramountorproportionoftheRevenueoftheSystemthaninitsjudgmentwillbeavailableoverandabovethecostsofMaintenanceandOperationoftheSystem.
Section 9.Adequacy of Revenue to Make Required Payments.The CityCouncilherebyfindsthatinfixingtheamountstobepaidoutoftheRevenueofthesystemintothe1992BondFund,and the various accountstherein,and into the Reserve Account,it has exercised due regard for theCostsofMaintenanceandOperationandhasnotobligatedthecitytosetasideandpayintosuchFundsagreateramountoftheRevenueoftheSystemthaninitsjudgmentwillbeavailableoverandabovetheCostsofMaintenanceandOperation.
Section 10.Defeasance.SUMMARY OF SECTION:If the City irrevocablysetsasideinaspecialescrowfund(the "Escrow Fund")on the terms andconditionssetforthinthisSection10torefundalloranypartoftheOBonds,subject to certain specified limitations,the owners of suchrefundedBondswillbeentitledtolookonlytosuchEscrowFundforpaymentofandsecurityfortherefundedBonds.Such refunded Bonds willnotbedeemedtobenoutstanding"and,therefore,would not be entitled toanyrightsunderthisordinance(except with respect to transfer orexchangeofBonds).Bonds so refunded are said to be "defeased."
Section 11.Certain Covenants.SUMMARY OF SECTION:By this sectiontheCitymakescertaincovenantstotheownerandholderofeachoftheBondsandanyFutureParityBondsforaslongasanyofthesameremainoutstanding.Such covenants are summarized as follows:
A.Application of Assessments.As long as any Parity Bonds remainoutstanding,assessments levied in ULIDs hereafter created to pay pagt ofthecostofimprovementstotheSystemfórwhichFutureParityBondsareissuedshallbepledgedtoaParityBondFundfromwhichsuchFutureParityBondsarepayableortotheReserveAccount.However,this covenant willnotprohibittheCityfromissuingwaterandsewerrevenuebondsjuniorinlientotheBondsandanyFutureParityBondsandpledging,as security forsuchjuniorlienbonds,assessments levied in any ULID which has beenspecificallycreatedtopaypartofthecostofimprovementstotheSystenforwhichsuchjuniorlienbondsarespecificallyissued.
B.Rates and Charges•Coverage Requirement.The City will fix,maintain and collect rates and charges for the use of the services andfacilitiesfurnishedorsuppliedbytheSystemtoensure(.1)that theORevenueoftheSystemissufficienttopayallCostsofMaintenanceandoperation,to pay debt service on the outstanding Senior Lien Bonds,andtopaydebtserviceontheBonds,as well as any other amounts that theCityisobligatedtopayfromtheRevenueoftheSystem,and (2)that theNetRevenuesineachcalendaryearwillequalatleast(a)(i)1.25 timesthedifferencebetweentheMaximumAnnualDebtServiceandtheamountofAssessmentsdueinsuchcalendaryear,plus (b)the Reserve Accountdepositspayableinsuchcalendaryear;and (b)so long as the 1992 BondsareoutstandingandinsuredbyAMBACIndemnity,Net Revenue excludingAssessmentsineachcalendaryearwillequalatleast80%of the MaximumAnnualDebtServiceandReserveAccountdeposits.
C.Payment of Cost of Maintenance and Operation.After providingforthemonthlypaymentsfromtheRevenueFundrequiredbysection5 ofthisordinance,there shall be maintained in such Fund sufficient monies
to enable the City to continuously meet the costs of Maintenance andOperationofthesystemonacurrentbasis.
D.Enforcement of Payment of Service Charges and Assessments.ThecityshallpromptlytakeactiontoenforcethepaymentofdelinquentservicechargesandAssessmentsbysuchmeansasarelegallyavailable.
E.Maintenance and Operation standards.It will at all timesmaintaintheSystemingoodrepair,working order and condition,and willatalltimesoperatetheSystemandthebusinessinconnectiontherewithinanefficientmannerandatareasonablecost.
F.Sale or Disposition of System.The City will not sell orvoluntarilydisposeofallofthepropertiesoftheSystemunlessprovisionismadeforpaymentintothe1992BondFundofasumsufficienttopaytheprincipalofandinterestonalloftheParityBondsoutstandinginaccordancewiththetermsthereof;nor will it sell or voluntarily disposeofanypartofthepropertiesoftheSystem(unless the same are no longerused,useful or necessary in the operation of the System)unless provisionismadeforpaymentintothe1992BondFundofanamountwhichwillbe inatleastthesameproportiontotheamountoftheParityBondsoutstandingthattherevenuefromtheportionorpropertiesofthesystemsoldordisposedof,which was available for debt service on the Parity BondsoutstandingforthetwelvemonthsprecedingsuchsaleordispositionbearstotherevenueavailableforsuchdebtservicefromtheSystemforthesameperiod.
.G.5 iBooks and Accounts i Annual Reports.The City >will keep properandseparateaccountsandrecordsof.all transactions relating to theSystem,and it will prepare and,upon written request,will furnish toBondownerscompleteoperatingandincomestatementsoftheSystemnotmorethan150daysafterthecloseofsuchcalendaryear..In-addition auditreportsbytheStateAuditoror.other independent audit permitted-by lawwillbemadeavailableuponwrittenrequest.Provision is made forreasonableinspectionof-the System and records relating thereto.
H.Insurance.The city will at all times carry fire and extendedcoverageandsuchotherformsofinsuranceonsuchofthebuildings,equipment,facilities and properties of the City as under good practice areordinarilycarriedonsuchbuildings,equipment,facilities and propertiesbyprivatelyownedutilitiesengagedintheoperationofwaterandseweragesystemstothefullinsurablevaluethereof,and will also carry adequatepublicliabilityandpropertydamageinsuranceatalltimes,and war rîskinsuranceonallofsuchpropertiesifthesameshouldbecomeavailable.
I.No Free Service.It will not furnish water or sewer service toanycustomeroruseroftheSystemwhatsoeverfreeofcharge.
J.Special Funds.It will not cre'ate any special fund or funds topayorsecurethepaymentofdebtserviceon,or authorize or issue,anyotherrevenuebonds,warrants or obligations which will rank on a paritywithorhaveanypriorityoverthepaymentsintoorthemoniesinthe1992BondFund,except as provided in Section 12 of this ordinance relating totheissuanceofFutureParityBonds,nor will it create or perm,it any otherlienorencumbrancewhichmaybereasonablyexpectedtoimpairthesecurityoftheBonds.
K.Tax Code Covenant.It will make no use nor permit the use of anyproceedsoftheBondsoranyotherfundsoftheCitywhich,if such use hadbeenreasonablyexpectedatthedatethattheBondsareissued;would haveOcausedsuchBondstobearbitragebondswithinthemeaningofSection148(a).of the code and will comply with all requirements ofSection148oftheCodetotheextentapplicabletoanyParityBonds.Thecityfurthercovenantsandagreesitwillnottakeanyaction,or fail totakeanyaction,if any such action,or failure to take action,wouldadverselyaffectthe-exclusion from gross income of the interest on theBondsunderSection103oftheCode.
Without limiting the generality of the foregoing,the city agrees thatthereshallbepaidwithintherequiredtimesallamountsrequiredtoberebatedtotheUnitedStatespursuanttosection148(f)of the Code and anytemporary,proposed or final Treasury regulations as may be applicable toanyoutstandingParityBondsfromtimetotime.This covenant shallsurvivepaymentinfullordefeasanceofanyParityBonds.Although theCitymayissuemorethan$5,000,000 aggregate amount of all types of tax-exempt obligations in 1992,any bonds issued for capital construction
projects are expected to be timed to permit the City to meet other rebateexemptionprovisionsofthecode.
L.No Senior Lien Future Parity Bonds.Even though permitted byOrdinancesNo.1184 and No.1436 authorizing the Outstanding Senior LienBonds,the City will issue no water and sewer revenue bonds for any purposewhatsoeverwhichpurporttohavealienontheRevenueoftheSystemequaltothelienthereonforpaymentofprincipalofandinterestontheoutstandingseniorLienBonds.
Section 12.Future Parity Bonds.SUMMARY OF SECTION:The City
reserves the right to issue Future Parity Bonds for the purposes offinancingimprovementstotheSystemand/or to refund any Parity Bonds.
Specific conditions must be met in order to issue any such FutureParityBonds,including the requirement that there shall be on file withthecityacertificateofanindependentlicensedprofessionalengineerorcertifiedpublicaccountantshowing,that in the professional opinion ofsuchengineeroraccountanttheannualNetRevenueavailableforParityBonddebtserviceshallbeatleastequalto1.25 times the net Annual DebtServiceonthethenoutstandingParityBondsandtheproposedFutureParityBonds.nNet Annual Debt Service"means the Annual Debt service minus thescheduledinstallmentsofAssessments,without prepayment.
The Net Revenue is to be determined on the basis of the actual NetRevenueforanytwelveconsecutivecalendarmonthsoutoftheimmediatelypreceding24consecutivemonths.Certain specified adjustments to takeintoaccountnewcustomers,service charge increases and changes in CostsofMaintenanceandOperationarepermitted.
Section 13.Refunding Plan.SUMMARY OF SECTION:There is herebycreatedandestablishedinthe1992BondFundaspecialfundoftheCitytobeknownasthen1992RefundingAccount"into which shall be transferredanddepositedallmoniesrequiredtocarryouttherefundingoftheRefundedBondsandfundingoftheFundedInterest.O The principal proceeds of the sale of the Bonds shall be deposited inthe1992RefundingAccountandshallbeappliedtopaytheAMBACIndemnitymunicipalbondinsurancepremiumandthecostsofissuanceoftheBonds,to purchase direct obligations of the Department of the Treasury of theUnitedStatesofAmerica(the "Acquired Obligations")and to provide thenecessarybeginningcashbalancetoaccomplishtherefundingplan.
Such Acquired Obligations will bear interest and mature as toprincipalandinterestinsuchamountsandatsuchtimessoastodischargetheobligationsoftheCitytoprovideforthepaymentoftheEscrowAmount,including the payments to be made on respective mandatoryredemptiondatessetforthinSection14ofthisordinance.
Such Acquired Obligations shall be irrevocably deposited with Seattle-First National Bank,Seattle,Washiggton (the nEscrow Trustee").SuchAcquiredObligationsandmoniestobedepositedwiththeEscrowTrusteeshallbeheldbytheEscrowTrusteeintrustandshallbetransmittedtotheBondRegistrarforthesolepurposeofpayingtheinterestontheBondsandtheinterestonandprincipalofandanypremiumontheRefundedBondsashereinsetforth;all of such Acquired obligations are irrevocablydedicatedtosuchpurposes;and such Acquired Obligations or the earningsortheproceedstherefrommaybeusedfornootherpurposenormayany ofsuchinvestmentsbeliquidatedpriortomaturity.
O Section 14.Redemption of Refunded Bonds.The Ôity herebyirrevocablycallsforredemptionofalltheRefundedBondsmaturingafterthefollowingrespectivedatesatthefollowingrespectiveprices:
Refunded Redemption RedemptionBondIssueDataPrice
1985 Bonds July 1,1996 $2,940,0001990BondsJuly1,1998 20,000
Such call for redemption shall be irrevocable after the delivery of theBondstotheinitialpurchaserthereof.The Escrow Trustee on behalf oftheTreasureroftheCityisherebyauthorizedanddirectedtogivenoticeoftheredemptionoftheRefundedBondsinaccordancewiththeprovisionsofOrdinancesNo.1184 and No.1436,respectively,
Section 15.Safekeeping Agreement.SUMMARYOF SECTION:In order tocarryoutthepurposesofsections13and14ofthisordinance,asafekeepingagreementbetweenthecityandtheEscrowTrusteeisauthorizedsubstantiallyintheformofExhibitAto-this ordinance.
Section 16.Form of the Bonds.SUMMARY OF SECTION:This sectioncontainsthetextoftheBondstobedeliveredtobondholdersincludinganassignmentformforeffectingatransferofBondownership.
O Section 17.Execution of the Bonds.SEKKARYOF SECTION:This sectionprovidesforthemannerinwhichtheBondsaretobesignedonbehalf oftheCityandrequiresthatonlythoseBondswhichbearacertificateofAuthenticationmanuallyexecutedbytheBondRegistrarshallbevalidorobligatoryorentitledtothebenefitsofthisordinance.
Section 18.Bond Registrar.SUMMARY OF SECTION:This sectionprovidesthattheBondRegistrarisresponsibleforkeepingbooksforregistrationandtransferofBondsaswellasauthenticatinganddeliveringsubstituteBondstothenewBondownerupontransferorexchangeofanyBond.The Bond Registrar is authorized to become an owner of any of theBondswithoutconflictwithitsdutiesasBondRegistrar.
Section 19 Lost or Destroyed Bonds.SUMMARY OF SECTION:Thissectionprovidesforreplacementoflost,stolen or destroyed Bonds upontheregisteredBondownerfurnishingsatisfactoryevidenceofloss,theftordestruction,paying expenses of the City in connection with suchreplacementandfurnishingsatisfactoryindemnitytotheCityandBondRegistrar.er,
Section 20.Sale of the Bonds.The form of Bond Purchase AgreementfromGeorgeK.Baum Company and Puget Sound Securities (the "Under--writers")attached to this ordinance as Exhibit B is hereby approved.Because the final principal amount of the Bonds cannot be determined untiltheUnderwritershaveofferedtheBondsförsaleandtherebyestablishedOtheinterestratesontheBonds,because it is desirable for theUnderwritersinconsultationwiththeCityManagertoenterthebondmarketwithoutregardtothescheduleofregularmeetingsoftheCitycounciltomaximizesavings,and because it is necessary to accept the final offerfromtheUnderwritersandtocontractforpurchaseoftheAcquiredObligationsimmediatelyaftertheinterestratesareestablished,it is inthebestinterestoftheCitytoauthorizetheCityManagertoapprovethefinalprincipalamountofandmaturityschedulefortheBonds,the interestratesontheBonds,the Dated Date of the Bonds,the optional redemptionprovisions,if anY,for the Bonds,the designation of any Bonds as 1992TermBondsandamountsofmandatorysinkingfundpaymentsforanysuch1992TermBonds,and to execute the Bond Purchase Agreement on behalf of theCityonthefollowingtermsandconditions:
A.The principal amount of the Bonds shall not exceed $3,500,000;
B.The principal amount of the Bonds together with the interestratesthereonshallbeacceptedifthesavingswhichwillberealizedfromcarryingouttherefundingplanapprovedbythisordinancewillbeatleast$200,000,provided that,in his sole discretion,the City Manager mayacceptorrejectasavingsofatleast$180,000 but less than $200,000;
C.The Dated Date of the Bonds shall be either January.1,1992,orFebruary1,1992;and
D.The final terms of the Bond Purchase Agreement shall beOconsistentwiththisordinanceandotherwisebeinconformity,in thejudgmentofthecityManager,with his recommendations and those of theFinanceDirectoroftheCity,to carry out the refunding plan.
Section 21.Authorization to officials and Agents.SUMMARY OFSECTION:This section authorizes appropriate City officials,agents andrepresentativesoftheCitytodoeverythingnecessarytoeffectthesaleanddeliveryoftheBonds,carry out the refunding plan and review andapproveanOfficialStatementfortheBonds.
Section 22.Supplemental ordinances.SUMMARY OF SECTION:Thissectionsetsforththecircumstancesunderwhichthis-ordinance may beamendedorsupplementedwithoutconsentoftheBondowners,specifiescertainamendmentswhichcannotbemadewithoutBondownerconsent,andprescribesthepercentageofBondownersthatconstitutessufficientconsent.
Section 23.Findings and Designation of Bank Eligibility.SUMMARYOFSECTION:By this section the city Council finds that the city does notexpecttoissuemorethan$10,000,000 aggregate principal amount of tax-exempt obligations in 1992 and designates the Bonds qualified tax-exemptobligationspursuanttoSection265(b)(3)of the code relating to financialinstitutions.
Section 24.Municipal Bond Insurance.SUMMARY OF SECTION:ThissectionspecifiescertainrequirementswithwhichtheCitymustcomplysothatthepaymentoftheBondswillbeinsuredbyAMBACIndemnity.Thegeneraltermsofsuchrequirementsaresummarizedbelow:
A.No amendment of this ordinance which would affect the rights ofAMBACIndemnitymaybemadewithoutwrittenconsentofAMBACIndemnity.
B.In any case that Bondowner consent is required for amending orsupplementingthisordinance,the consent of AMBAC Indemnity is alsorequiredaswellasanychangetotheSafekeepingAgreement(see Sections13,14 and 15)or replacement of the Escrow Trustee.
C.If the City should default under any provision of this ordinance,AMBAC Indemnity shall be entitled to control and direct the enforcement ofallrightsandremediesgrantedtotheBondholdersunderthisordinance.
D.While the Municipal Bond Insurance Policy is in effect,the City,among other things,must furnish to ANEAC Indemnity:(a)a copy of anyfinancialstatementandanyauditorannualreportoftheCity;(ib)a copyofanynoticetobegiventotheBondowners;and (c)any additionalinformationitmayreasonablyrequest.In addition,AMBACIndemnity shallhavetherighttodirectanaccountingattheCity's expense.
E.This subsection lists those investments in which the city mayinvestanymoniesinthe1992BondFund.Any other form of investmentsmustbespecificallyapprovedbyAMBACIndemnity.The City will be incompliancewiththissubsectionifmoniesdepositedinthe1992BondFundOandAccountsareinvestedthroughthestateofWashingtonLocalGovernmentInvestmentPool.
F.Any defeasance of the Bonds under section 10 of this ordinancewillnotbeeffectivewithrespecttoAMBACIndemnitytotheextentthattheprincipaland/or interest due on the Bonds shall have been paid byAMBACIndemnitypursuanttotheMunicipalBondInsurancePolicy.
G.This subsection sets forth the requirements and procedures underwhichAMBACIndemnitywillmakeanypaymentsofprincipalandinteresttotheBondownersundertheMunicipalBondInsurancePolicy,and the BondRegistrarisrequiredtoenterinthebondregisteranotationofAMBACIndemnity's rights as subrogee of the Bondowner's rights.
H.Only the City,AMBAC Indemnity,the Bond Registrqr (as payingagentfortheBonds)and the registered Bondowners have any interest in theMunicipalBondInsurancePolicy.
Section 25.Severability.SUMMARY OF SECTION:If any ,covenant oragreementofthecityprovidedinthisordinanceisdeclaredbyacourtofcompetentjurisdictiontobecontrarytolaw,such covenant or agreementwillbenullandvoidbutitwillbedeemedseparablefromandwillnotaffectthevalidityoftheotherprovisionsofthisordinanceoroftheBonds.
Section 26.Effective Date.This ordinance shall take effect fivedaysafteritsadoptionandpublicationinthemannerprovidedbylaw.
ADOPTED by the city council of the city of Moses Lake,Washington,ataregularopenpublicmeetingthereofheldthis30thdayofDecember,1991.
CITY OF MOSES LAKE,WASHINGTON
By (sqd/Mayor
ATTEST:
/sqd/City Clerk
APPROVED AS TO FORM:
/sqdfCity Attorney
K:1CGlWW\M·LKM.AGM
O
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