2177_00001ORDINANCE NO.2177
AN ORDINANCE OF THE CITY OF MOSES LAKE,WASHINGTON;AUTHORIZINGCERTAINADDITIONS,BETTERMENTS AND IMPROVEMENTS TO THE CITY'SCOMBINEDSYSTEMOFWATERANDSEWERAGE;AUTHORIZINGTHE ISSUANCEOFWATERANDSEWERREVENUEBONDSOFTHECITYTOPAYTHECOSTSOFSAIDIMPROVEMENTSINTHEAGGREGATEPRINCIPALAMOUNTOF$7,015,000;FIXINGTHEDATE,FORM,TERMS,MATURITIES AND COVENANTS OF THE BONDS;APPROVING APURCHASE CONTRACT FOR THE BONDS;RESERVING THE RIGHTTOISSUEREVENUEBONDSONAPARITYWITHTHEBONDSHEREINAUTHORIZEDOUPONCOMPLIANCEWITHCERTAINCONDITIONSANDAPPROVINGANAGREEMENTFORONGOINGDISCLOSURE.
1.WHEREAS,the City of Moses Lake,Washington (the"City")operates a combined water and sewersystem(hereinafterfurther defined as the "System");and
2.WHEREAS,the System is inneed of certain upgrades toits administrativefacilities (the"Project");and
3.WHEREAS,pursuant to RCW chs.35.92,35.41 and 39.44,theCityis authorized toissue its revenuebondspayableandsecuredbythenetrevenuesofitsSystemundertermsapprovedbytheCouncilbyordinance;and
4.WHEREAS,D.A.Davidson &Co.,Spokane,Washington,has submittedtothisCouncil an offer topurchasethebondsauthorizedhereininaccordancewiththetermsofthisordinanceandthisofferisacceptabletotheCouncil;
NOW,THEREFORE,THE CITYCOUNCILOF THE CITYOF MOSES LAKE,WASHINGTON,DOORDAIN
as follows:
Section 1.Definitions.As used in thisordinance the following definitions shall apply unless a differentmeaningclearlyappearsfromthecontext:
A.Accreted Value means (1)with respect to any Capital Appreciation Bonds,as of any date ofcalculation,thesum of theamount setforth intheordinance authorizing theirissuance as theamount
O representing the initial principal amount of such Capital Appreciation Bonds plus the interestaccumulated,compounded and unpaidthereonas ofthe most recent compounding date,or (2)withrespecttoOriginalIssueDiscountBonds,as of the date of calculation,the amount representing theinitialpublicofferingpriceofsuchOriginalIssueDiscountBondsplustheamountofdiscountedprincipalwhichhasaccretedsincethedateofissue.In each case,the Accreted Value shall bedeterminedinaccordancewiththeprovisionsoftheordinanceauthorizingtheissuanceofsuchBalloonMaturityBonds.
B.Annual Debt Service means the totalamount ofDebt Service for any Parity Bond or series of ParityBondsorotherevidencesofindebtednesspayablefromRevenueoftheSysteminanyfiscalyearorBasePeriod.
C.Balloon Maturitv Bonds means any evidences of indebtedness of theCity payable from Revenue oftheSystemthataresodesignatedintheordinancepursuanttowhichsuchindebtednessisincurred.
D.Base Period means any consecutive 12-month period selected bythe Cityout of the36-month periodnextprecedingthedateofissuanceofanadditionalseriesofFutureParityBonds;provided,however,that for so long as the Insurance Policy is in effect,the 12-month period selected bythe Cityshall bewithinthe24-month period next preceding thedate ofissuance ofan additional series of Future ParityBonds.
E.Beneficial Owner means thebeneficial owner ofallora portion ofa Bond whilesuch Bond is infullyimmobilizedform.
F.Bond Fund means 2004 Bond Fund #452 maintained by the Citywithin the Water Sewer Fund andalsoshallincludeanyfundestablishedinthefutureforthepaymentofdebtserviceonParityBonds.
G.Bond Register means thebooks or records maintained by the Registrar containing the name andmailingaddressoftheownerofeachBondornomineeofsuchownerandtheprincipalamountandnumberofBondsheldbyeachownerornominee.
H.Bonds means the $7,015,000par valueCityof Moses Lake,Washington,Water and Sewer RevenueBonds,2004 authorizedto be issued pursuant tothis ordinance.
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Page 2
1.Capital Appreciation Bonds means any Future ParityBonds all or a portion of the interest on.which
is compounded,accumulated and payable only upon redemption or on the maturitydate of such
Capital Appreciation Bonds.Ifso provided in the ordinance authorizing theirissuance,Future Parity
Bondsmay be deemed tobe Capital Appreciation Bonds for onlya portion oftheirterm.On thedate
on which Future Parity Bonds no longer are Capital Appreciation Bonds,they shall be deemed
outstandingina principalamount equaltotheirAccreted Value.
J.C_jtymeans the Cityof Moses Lake,a municipal corporation ofthe State of Washington.
K.CityReoresentative means the Mayor orthe CityAdministrator orsuch other officialor employeeof
the Citydesignated inwritingby eitherofthe foregoing
L _Qo.d_emeans the United States Intemal Revenue Code of 1986,as amended,together with all
applicablerulings and regulations heretofore or hereafter promulgated thereunder.
M.Consultant means at any timean independent municipalfinancial consultant appointedby the City
to perform theduties oftheConsultant as required bythisordinance,For the purposes of delivering
any certificaterequired by Section 11 hereof and making the calculation required by Section 11
hereof,the termConsultant shallalsoinclude any independent publicaccounting firm appointedby
the Cityto make such calculationor toprovide such certificate.
N.Costs ofMaintenance andOperation means allreasonableexpenses incurred bythe Cityincausing
the System ofthe Cityto be operated and maintainedingood repair,workingorder and condition,but
shallnot include any payments for debt service or into reserve funds,depreciation ortaxes levied or
imposed by the City or payments to the City in lieu of taxes,or capital additions or capital
replacementsto the System.
O.Council means the City Council as the general legislative authority of the City as the same shall be
duly and regularlyconstitutedfrom time totime.
P.Debt Service means,for any period oftime,
1.withrespect toany outstandingOriginalIssue Discount Bonds orCapital Appreciation Bonds
which are not designated as Balloon Maturity Bonds in the ordinance authorizing their
issuance,the principal amountthereofshallbe equal totheAccreted Value thereofmaturing
or scheduled for redemption in such period,and the interest payable during such period;
2.withrespect to any outstandingFixed Rate Bonds,an amount equal to (A)the principal
amount of such Fixed Rate Bonds due or subject to mandatory redemption during such
period and forwhich nosinkingfund installments have been established,(B)the amount of
any payments required tobe madeduring such period into any sinking fund establishedfor
the payment ofany such Fixed Rate Bonds,plus(C)allinterest payableduring such period
on any such outstanding Fixed Rate Bonds and with respect to Fixed Rate Bonds with
mandatorysinking fund requirements,calculated on theassumption thatmandatory sinking
fund installments willbe applied tothe redemption or retirement of such Fixed Rate Bonds
on thedate specifiedintheordinanceauthorizingsuch Fixed Rate Bonds;and
3.with respect to all other series ofParity Bonds,other than Fixed Rate Bonds,Original issue
Discount Bonds or Capital Appreciation Bonds,specificallyincluding but not limitedto Balloon
MaturityBonds and ParityBonds bearing variable rates of interest,an amount for anyperiod
equal totheamountwhichwould have been payable for principal and interest on such Parity
Bonds during such period computedonthe assumption thatthe amountof Parity Bonds as
ofthe date of such computation would be amortized(i)in accordance with the mandatory
redemption provisions,if any,set forth in theordinance authorizing the issuance of such
Parity Bonds,or if mandatory redemption provisions are not provided,during a period
commencing on thedate ofcomputationand endingon the date 30 years afterthe date of
issuance (ii)at an interest rate equal totheyield tomaturity set forth in the 40-Bond Index
published in the edition of The Bond Buyer(or comparable publication or such other similar
index selected by the City)and published within ten days prior to the date of calculation or,
ifsuch calculation is being made in connection with the certificate required by Section 11
hereof,thenwithintendays of such certificate,(iii)toprovide for essentially levelannualdebt
service of principaland interest oversuch period.Debt Service shall be net of any interest
funded out of Bond proceeds.Debt Service shall include reimbursement obligations to
providers of Credit Facilities to the extent authorized by ordinance.
Q._DTCmeans The Depository Trust Company,New York,New York,a limited purpose trustcompany
organizedunder the laws oftheState ofNew York,as depository for the Bonds pursuant toSection 5
hereof.
R.Finance Directormeans theperson designated as such by the CityAdministrator,as authorizedby
ordinance of the Cityto perform theduties oftreasurer and clerk of the City.
S.Fixed Rate Bonds means thoseParity Bonds other thanCapital Appreciation Bonds,Original Issue
Discount Bonds or Balloon MaturityBonds issued under an ordinance inwhich therate of interest on
such Parity Bonds is fixed and determinable throughtheirfinal maturity or for a specified period of
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time.Ifso provided intheordinanceauthorizing theirissuance,Parity Bonds rnaybe deemed to beFixedRateBondsforonlyaportionoftheirterm.
T.Future Parity Bonds means anywater and sewer revenue bonds which the Citymay hereafter issuehavingalienupontheRevenueoftheSystemforthepaymentoftheprincipalthereofandinterestthereonequaltothelienupontheRevenueoftheSystemoftheBonds.
U.Government Oblications has the meaning given such termin RCW Ch.39.53,as such chaptermaybehereafteramendedorrestated.
V.Insurance Policymeans the financial guaranty insurance policywithrespect tothe Bonds issued bytheInsurerinsuringthepaymentwhendueoftheprincipalofandinterestontheBondsasprovidedtherein.
W.Insurer means Ambac Assurance Corporation,a Wisconsin-domiciled stock insurance company,oranysuccessortheretoorassigneethereof,as issuer of the Insurance Policy for the Bonds.
X.Investment Earnings means alleamings in any form whatsoeverderived from Investments.
Y.Investments means any investments permitted tothe Cityby lawof money requiredtobe depositedinanyfundoraccountoftheWaterSewerFundoftheCityexceptmoneydepositedinanyescrowaccountforthepurposeofrefundinganyParityBondsandexceptanymoneywhichissubjecttopaymenttotheUnitedStatesTreasuryundertherebateprovisionsoftheCode.
Z.Letter of Representations means the Blanket Issuer Letter of Representations from theCitytoDTC.
AA.Maximum Annual Debt Servicemeans highestdallar amount ofAnnual Debt Serviceinany fiscal yearorBasePeriodforalloutstandingParityBondsandtheBondsand/or for all subordinate lienevidencesofindebtednesssecuredbyRevenueoftheSystem,as the context requires.
BB.Moodv's means Moody'sInvestors Service,its successors and theirassigns;and,ifsuch corporationshallbedissolvedorliquidatedorshallnolongerperformthefunctionsofasecuritiesratingagency,Moody's shall be deemed to refer to any other nationally recognized securities rating agencydesignatedbytheCity.
CC.MSRB means the MunicipalSecurities Rulemaking Board.
DD.Net Proceeds,when used withreferencetotheBonds,means theprincipal amount of theBonds,plusaccruedinterestandoriginalissuepremium,ifany,and less originalissue discount and proceeds,ifany,deposited in the Reserve Fund.
EE.Net Revenue means Revenue of theSystem less Costs of Maintenance and Operation.
FF.NRMSIR means a nationally recognized municipal securities information repository.
GG.Original Issue Discount Bonds means Parity Bonds whichare sold at an initialpublic offering priceoflessthan95%oftheirface value and whichare specifically designated as Original Issue DiscountBondsintheordinanceauthorizingtheirissuance.
HH.Parity Bonds means theBonds and any Future Parity Bonds.
II.Parity Reauirement means Net Revenues equal to or greater than:
1.125%of Maximum Annual Debt Service for all Parity Bonds computed by deducting fromAnnualDebtServicetheAnnualDebtServiceforeachseriesorissueofParityBondswhichiscoveredbyULIDAssessments,and
2.100%of Maximum AnnualDebt Servicefor allsubordinatelien evidences of indebtednesssecuredbyRevenueoftheSystem.
In determining the amount of Annual Debt Service "coveredby ULIDAssessments",AnnualDebtServiceforeachfutureyearisreducedbythedollaramountofULIDAssessmentsprojectedtobereceivedduringsuchfutureyear,and theremaining outstanding ULIDAssessments are assumed tobepaidintheremainingnumberofannualinstallmentswithnoprepayments.
JJ.Private Person means any natural person engaged in a trade or business or any trust,estate,partnership,association,company or corporation.
KK.Private Person Use means theuse of property ina trade or business bya Private Person ifsuch useisotherthanasamemberofthegeneralpublic.Private Person Use includes ownership of thepropertybythePrivatePersonaswellasotherarrangementsthattransfertothePrivatePersontheactualorbeneficialuseoftheproperty(suchas a lease,management or incentive payment contract
or other special arrangement)in such a manneras toset thePrivate Person apart from the generalpublic.Use of propertyas a memberof thegeneral publicincludes attendance bythe Private PersonatmunicipalmeetingsorbusinessrentalofpropertytothePrivatePersononaday-to-day basis ifthe
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Page 4
rental paid bysuch Private Person is thesame as the rental paid byany Private Person who desires
torentthe property.Useof propertybynonprofitcommunitygroups orcommunityrecreationalgroups
is not treated as Private Person Use ifsuch use is incidental to the governmental uses of property,
theproperty is made available forsuch use byallsuch community groups on an equal basis and such
communitygroups are charged only a de minimis fee to cover custodial expenses.
LL,Project means the plan of improvements tothe System authorized in Section 2 hereof.
MM.Project Fund means the Operations ComplexConstruction Fund #472 withinthe Water Sewer Fund
of the City.
NN.Qualified Insurance means anynon-cancelablemunicipal bond insurance policyorsurety bond issued
by any insurance company licensed to conduct an insurance business in any state of theUnited
States (orbya service corporation actingon behalf ofone or moresuch insurance companies)which
insurance company or companies,as of the time of issuance of such policy or surety bond,are
currently rated in one of the twohighest Rating Categories by both Moody's and S&P.
OO.Qualified Letter ofCredit means any irrevocable letter ofcredit issued bya financial institution for the
accountofthe Cityon behalf ofregistered owners of the Bonds,which institution maintains an office,
agency or branch in the United States and as of the time of issuance of such letter of credit,is
currentlyrated in one ofthe twohighest Rating Categories by either Moody's or S&P.
PP.Rate Covenantmeans Net Revenue in each fiscal year togetherwith ULIDAssessments received
ineach fiscal year at least equal tothe sum of (a)125%of the amounts requiredin such fiscal year
tobe paid as scheduled debt service (principaland interest)on allParity Bonds minus the amount
of Assessments collectedin such year and (b)100%of the amount of ULIDAssessments received
in such fiscal year.
QQ.Rating Agency means Moody's or S&P.
RR.Rating Category means thegeneric ratingcategories of the Rating Agency,without regardtoany
refinement or gradation of such rating category by a numerical modifieror otherwise.
SS.Registrar means the fiscal agency of the State of Washington,for thepurposes of registering and
authenticatingtheBonds,maintainingthe Bond Register,effectingtransferofownershipof theBonds,
and payingtheprincipal of,premium,ifany,and interest on theBonds.OTT.Registered Owner means the person named as the registered ownerofa Bond inthe Bond Register.
For so long as the Bonds are held in book-entry only form.DTCshall be deemed to be the sole
Registered Owner.
UU.Reserve Fund-2004 means the 2004 Bond Reserve Fund #453 maintained withinthe Water Sewer
Fund
VV.Reserve Requirement-2004 means thelesser of(i)Maximum Annual Debt Service with respect tothe
Bonds and (ii)1.25 timesAverage Annual Debt Service with respect to the 2004 Bonds;provided,
however,that the Reserve Requirement-2004 shall not exceed an amount equal to 10%of the
aggregate ofthe initialpar amountof the Bonds.
WW.Revenue Fund means theWater/Sewer Fund #410 withinthe Water Sewer Fund maintained by the
FinanceDirector of the Cityand shall alsoinclude anyother fund of the City into which the Revenue
of the System is deposited.
XX.Revenueofthe System or Revenue means allofthe earningsand revenues receivedby theCityfrom
the maintenance and operationof the System and connection and capital improvement charges
collected for the purpose of defraying thecost of capital facilities ofthe System,including Investment
Earnings,but excludinggovemmentgrants,proceeds fromthe sale of System property,Citytaxes
collected by orthroughtheSystem,principalproceeds of bonds and earnings or proceeds from any
investments in a trust,defeasance or escrow fund created todefease orrefund System obligations
(untilcommingled with other earnings and revenues ofthe System)or held in a specialaccount for
the purpose of paying a rebate tothe United States Government under the Code.Revenue of the
System shall also include any federal orstate reimbursements of operating expenses to the extent
such expenses are included as Costs of Maintenance and Operation;provided,however,that
Revenueof the System shall not include ULIDAssessments.Certain Investment Earnings may be
transferred from the Revenue Fund to the General Fund of the City,subject to the priorities
established in Section 7 of thisordinance.
YY.Bulemeans the SEC's Rule 15c2-12 under the Securities Exchange Act of 1934,as thesame may
be amended from timeto time.
ZZ.g means Standard &Poor's,a Divisionof The McGraw HillCompanies,its successors andtheir
assigns,and,if such corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency,S&P shall be deemed to refer to any other nationally
recognizedsecurities rating agency designated by theCity.
Ordinance No.2177Page5
AAA.SEC.means theSecurities and Exchange Commission.
BBB.SIDmeans a state information depository forthe State ofWashington (ifone iscreated inthefuture).
CCC.System means theCity'scombined system of water supplyanddistribution,sanitarysewage disposalandstormdrainage,as thesame maybe added to,improved andextended foras long as any ParityBondsareoutstanding.The termSystem also shallinclude any other utilitythatmayinthefuture becombinedwiththeSystem.
DDD._U_LI,Qmeans a utilitylocal improvement district of the City.The City does not currently have anyexistingutilitylocalimprovementdistricts.
EEE.ULIDAssessments means the assessments levied in all ULIDs,the assessments in which arepayableintotheBondFund,and shall include installments thereofand interest and any penaltiesthereon.
FFF,Underwriter means D.A.Davidson &Co.,Spokane,Washington.
GGG.Variable interest Rate means a variable interest rate orrates tobe borne by a series of Future ParityBondsoranyoneormorematuritieswithinaseriesofFutureParityBonds.The method ofcomputingsuchavariableinterestrateshallbespecifiedintheordinanceauthorizingsuchFutureParityBonds,which ordinance also shallspecifyeither (a)the particular period or periods of timeormannerofdeterminingsuchperiodorperiodsoftimeforwhicheachvalueofsuchvariableinterestrateshallremainineffector(b)thetimeor times uponwhichany change insuchvariableinterest rateshallbecomeeffective.
HHH,Variable Interest Rate Bonds means,for any period of time,Future Parity Bonds whichbear aVariableInterestRateduringthatperiod,except thatFuture Parity Bonds the interest rate or rates onwhichshallhavebeenfixedfortheremainderofthetermthereofnolongershallbedeemedtobeVariableInterestRateBonds.
Rules of Interpretation.Inthis ordinance,unless thecontext otherwiserequires:
1.The terms "hereby,""hereof,""hereto,""herein,"hereunder"and any similarterms,as usedinthisordinance,refer to thisordinance as a whole and not toany particular article,section,subdivision or clause hereof,and the term "hereaftefshall mean after,and the term"heretofore"shall mean before,the date of thisordinance;
2.Words ofthemasculinegender shall mean and include correlative wordsof thefeminine andneutergendersandwordsimportingthesingularnumbershallmeanandincludethepluralnumberandviceversa;
3.Words importing persons shall includefirms,associations,partnerships (includinglimitedpartnerships),trusts,corporations and otherlegal entities,including publicbodies,as wellasnaturalpersons;
4.Any headings preceding the textof the several sections of thisordinance,and anytableofcontentsormarginalnotesappendedtocopieshereof,shall be solely for convenience ofreferenceandshallnotconstituteapartofthisordinance,nor shall theyaffect its meaning,construction or effect;
5.Allreferences herein to "articles,""sections"and other subdivisionsor clauses are to thecorrespondingarticles,sections,subdivisions or clauses hereof:
6.Words importing thesingular number include the plural number and viceversa.
Section 2.Findings and Purposes;Plan ofAdditions and Betterments totheSvstem.
A.The Council hereby finds thatthepublic interest,welfare and convenience require theconstruction,acquisition and installation of a new Public Works and Parks and Recreation Facility,to be usedprimarilyforSystemuses(withnon-System uses being chargedfor theirportion ofthetotal costs)(the"Project")and that said improvements are legally required and/or economically sound,and willcontributetotheconductofthebusinessoftheSysteminanefficientmanner.
B.The Cityshall provide allequipment,connections and appurtenances togetherwith allworkas maybeincidentalandnecessarytocompletetheProject.The Project facilities shall be integrated intotheSystemasrequiredtoprovideafullyoperationalfacility.
C.The City may make such changes in or additionstothe Project or in the constructionor design ofotherfacilitiesoftheSystemasmaybefoundnecessaryordesirable.Implementation or completionofanyspecifiedimprovementshallnotberequirediftheCouncildeterminesthat,due tosubstantiallychangedcircumstances,it has become advisable or impractical.If the Project has either beencompleted,or its completion dulyprovided for,or its completion found tobe impractical,theCitymayapplytheBondproceedsoranyportionthereoftootherimprovementstotheSystem,as theCouncilinitsdiscretionshalldetermine,Intheevent that the proceed of sale of theBonds,plus any other
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Page 6
moneysof the City legally available,are insufficient toaccomplish allof the Project provided by this
section,the Cityshall use the availablefunds for paying the cost ofthose improvements forwhich the
Bonds were approved,deemed by the Council most necessary and tothe best interest of theCity.
D.The Cityshall acquire by purchase,lease or condemnation,all property,both real and personal,or
any interest therein,or rights-of-way and easements thatmay be found necessary to acquire,
construct and install theProject.
E.The estimated cost ofthisplan of additions andbetterments andallcosts incidental thereto (including
costs of issuance oftheBonds and funding ofthe Reserve Requirement),is hereby declared to be
as nearly as practicable thesum of$7,015,000,allof which shall be provided outof the proceeds of
the sale of the Bonds.
Section 3.Authorization of Bonds.The Cityshall now issue and sell $7,015,000ofwaterand sewer revenue
bonds (the"Bonds")for the purpose of providingfunds required to pay the cost of the Project,funding the
Reserve Requirement-2004and paying the costs ofissuance of the Bonds.
Section 4.Description oftheBonds.The Bonds shallbe designated as the"CityofMoses Lake,Washington
Water and Sewer Revenue Bonds,2004"(the"Bonds");shallbe dated as of October 1,2004;shall be fully
registered as to both principal and interest;shall be in the denomination of $5,000each,or any íntegral
multiplethereof,provided thatno Bond shall represent more than one maturity;shall be numbered separately
in such manner and with any additionaldesignation as the Registrar deems necessary for purposes of
identification;and shall bear interest from theirdate payablesemiannually on thefirst days ofeach March and
September,commencing on March1,2005,at the followingper annum interest rates and shallmature on
September 1 of the followingyears in thefollowingprincipalamounts:
MaturityYears
(September 1)Principal Amounts Interest Rates
2007 $15,000 2.50%
2008 20,000 2.75
2009 30,000 3.00
2010 75,000 3.25
2011 225,000 3.50
2012 250,000 3.50
2013 275,000 3.75
2014 290,000 3.75
2015 305,000 4.00
2016 395,000 4.00
2017 415,000 5.00
2018 435,000 5.00
2019 460,000 5.00
2020 485,000 5.00
2021 515,000 5.00
2022 545,000 5.00
2023 1,110,000 5,00
2024 1,170,000 5.00
The Bonds shallbe obligationsonlyof theBond Fund and shallbe payable and secured as provided herein.
The Bonds shall not be general obligationsof theCity.
Section 5.Recistration.Exchange and Pavments.
A.Registrar/Bond Register.The Cityherebyspecifies and adopts the system ofregistration approved
bytheWashington State Finance Committee fromtimetotimethroughtheappointmentofstate fiscal
agencies.The Cityshall cause a bond register tobe maintained by the Registrar.So long as any
Bonds remain outstanding,the Registrar shall make allnecessary provisions topermit theexchange
or registration or transfer of Bonds at its principalcorporate trust office.The Registrar may be
removed at any timeatthe option of the City Representative upon prior notice to the Registrar and
a successor Registrar appointed by the City Representative.No resignation or removal of the
Registrar shall be effective until a successor shall have been appointed and until the successor
Registrar shall have accepted theduties of the Registrar hereunder.The Registrar is authorized,on
behalf ofthecity,to authenticate and deliver Bonds transferredorexchanged inaccordance withthe
provisionsofsuch Bonds and thisordinance and to carryout all of the Registrar's poWers andduties
under this ordinance.The Registrar shallbe responsible for its representations contained in the
Certificate of Authentication of the Bonds.
B.Registered Ownershio.The Cityand theRegistrar,each in its discretion,may deem and treat the
RegisteredOwner ofeach Bond as the absolute ownerthereoffor all purposes (exceptas provided
inSection 19 of thisordinance),and neither the Citynor theRegistrar shall be affected by any notice
tothe contrary.Payment of anysuch Bond shall be made only as described inSection 5(h)hereof,
but such Bond may be transferred as herein provided.Allsuch payments made as described in
Section 5(h)shall be valid and shall satisfy and discharge the liabilityofthe City upon such Bond to
theextent of theamount or amounts so paid.
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Page 7
C.DTCAcceptance/Letters of Representations.The Bonds initiallyshall be held in fullyimmobilizedformbyDTCactingasdepository.Toinduce DTC toaccept the Bonds as eligible for deposit atDTC,the Cityhas executed and delivered toDTC a Blanket Issuer Letter ofRepresentations,Neither theCitynortheRegistrarwillhaveanyresponsibilityorobligationtoDTCparticipantsorthepersonsforwhomtheyactasnominees(orthe participants of any successor depository orthose for who anysuchsuccessoractsasnominee)withrespect tothe Bonds inrespect ofthe accuracyof any recordsmaintainedbyDTC(oranysuccessor depository)or any DTC participant,the payment by DTC(oranysuccessordepository)or any DTC participant of any amount in respect oftheprincipal of orinterestonBonds,anynotice which is permitted or required to be given to Registered Owners underthisordinance(exceptsuch noticesas shall be required tobe given bytheCitytotheRegistrar ortoDTC(orany successor depository)),or any consent given or other action taken by DTC (oranysuccessordepository)as the Registered Owner.For so long as any Bonds are held infully-immobilized form hereunder,DTC or its successor depository shall be deemed to be theRegisteredOwnerforallpurposeshereunder(exceptforSection 19hereof),andállreferenceshereintotheRegisteredOwnersshallmeanDTC(oranysuccessor depository)or itsnominee andshallnotmeantheownersofanybeneficialinterestinsuchBonds,except as providedinSection 19 of thisordinance.
Ifany Bond shall be duly presented for payment and funds have not been duly providedby theCityonsuchapplicabledate,theninterest shall continue toaccrue thereafter on the unpaid principalthereofattheratestatedonsuchBonduntilitispaid.
D.Use of Denository.
1.The Bonds shallbe registeredinitiallyinthe name of"Cede &Co.",as nominee ofDTC,withoneBondmaturingoneachofthematuritydatesfortheBondsinadenominationcorrespondingtothetotalprincipalthereindesignatedtomatureonsuchdate.Registered ownership of suchimmobilizedBonds,or any portions thereof,maynot thereafterbe transferredexcept (A)to anysuccessorofDTCoritsnominee,provided that any such successor shallbe qualified under anyapplicablelawstoprovidetheserviceproposedtobeprovidedbyit;(B)to any substitutedepositoryappointedbytheCityRepresentativepursuanttosubsection(ii)below or suchsubstitutedepository's successor;or (C)to any person as provided insubsection (iv)below.
2.Upon the resignation of DTC or its successor (orany substitute depositoryor its successor)fromitsfunctionsasdepositoryoradeterminationbytheCityRepresentativetodiscontinuethesystemofbookentrytransfersthroughDTCoritssuccessor(orany substitute depository or itsOsuccessor),the City Representative may hereafter appoint a substitute depository.Any suchsubstitutedepositoryshallbequalifiedunderanyapplicablelawstoprovidetheservicesproposedtobepmvidedbyit
3.In the case of any transfer pursuant toclause (A)or (B)of subsection (i)above,theRegistrarshall,upon receipt of all outstanding Bonds,together with a written request of the CityRepresentative,issue a single new Bond for each maturity then outstanding,registered in thenameofsuchsuccessororsuchsubstitutedepository,or theirnominees,as the case maybe,all as specified insuch written request of the City Representative.
4.Intheeventthat(A)DTCor itssuccessor (orsubstitute depository oritssuccessor)resigns fromitsfunctionsasdepository,and no substitute depository can be obtained,or (B)the CityRepresentativedeterminesthatitisinthebestinterestofthebeneficialownersoftheBondsthatsuchownersbeabletoobtainsuchbondsintheformofBondcertificates,theownershipofsuchBondsmaythenbetransferredtoanypersonorentityashereinprovided,and shall no longerbeheldinfully-immobilizedform.The City Representative shall deliver a written request totheRegistrar,together with a supply of definitive Bonds,toissue Bonds as herein provided in anyauthorizeddenomination.Upon receipt by the Registrar of allthenoutstanding Bonds togetherwithawrittenrequestoftheCityRepresentativetotheRegistrar,new Bonds shall be issued intheappropriatedenominationsandregisteredinthenamesofsuchpersonsasarerequestedinsuchwrittenrequest.
E.Registration of Transfer ofOwnership or Exchange:Change in Denominations.The transferof anyBondmayberegisteredandBondsmaybeexchanged,but no transfer of any such Bond shall bevalidunlessitissurrenderedtotheRegistrarwiththeassignmentformappearingonsuchBonddulyexecutedbytheRegisteredOwnerorsuchRegisteredOwner's duly authorizedagent in a mannersatisfactorytotheRegistrar.Upon such surrender,theRegistrar shall cancel the surrendered BondOandshallauthenticateanddeliver,withoutcharge totheRegistered Owner or transferee therefor,anewBond(orBonds at the option of the new Registered Owner)of the same date,maturity andinterestrateandforthesameaggregateprincipalamountinanyauthorizeddenomination,namingasRegisteredOwnerthepersonorpersonslistedastheassigneeontheassignmentformappearingonthesurrenderedBond,in exchange for such surrendered and cancelled Bond.Any Bond maybesurrenderedtotheRegistrarandexchanged,without charge,for an equal aggregate principal amountofBondsofthesamedate,maturity and interest rate,inany authorizeddenomination.The RegistrarshallnotbeobligatedtoregisterthetransferortoexchangeanyBondduringthe15daysprecedinganyInterestpaymentorprincipalpaymentdateanysuchBondistoberedeemed.
F.Registrar's Ownershio ofBonds.The Registrar maybecomethe Registered OwnerofanyBondwiththesamerightsitwouldhaveifitwerenottheRegistrar,and totheextentpermittedby law,mayact
Ordinance No.2177
Page 8
as depository for and permitany of its officersor directors to act as member of,or in any other
capacity with respect to,any committeeformed to protect the rightof the Registered Owners of
Bonds.
G.Registration Covenant.The Citycovenants that,untilallBonds have been surrendered and canceled,
itwillmaintaina system for recordingthe ownership ofeach Bond thatcomplies withthe provisions
of Section 149of the Code.
H.Place and Medium ofPavment.Both principal of and interest on the Bonds shall be payable inlawful
money oftheUnited States ofAmerica.Interest on the Bonds shall be calculated onthe basis of a
year of360 days and twelve30-day months.For so long as allBonds are in fullyimmobilized form,
payments of principal and interest thereonshall be made as provided in accordance with the
operational arrangements of DTCreferred toin the Letter of Representations.Intheevent that the
Bonds are no longer infullyimmobilized form,interest on the Bonds shall be paid by check or draft
mailed to theRegistered Owners at the addresses for such Registered Owners appearing on the
Bond Register on the fifteenth day of the month preceding the interest payment date,or upon the
written request ofa Registered Owner ofmore than$1,000,000of Bonds (receivedby the Registrar
at least 15 days prior tothe applicablepayment date),such payment shall be made by the Registrar
by wire transfer to the account.within the United States designated by the Registered Owner.
Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the
Registered Owners at the principal officeof the Registrar.
Section 6.Redemption and Purchase.
A.No Optional Redemption.The Bonds are not subject toredemption prior totheirstated maturities.
B.Purchase of Bonds for Retirement.The City reserves the right to use at any time any surplus
Revenue of the System available after providingfor the payments required by paragraphs _Fitg,
through_Fjft_hof Section 7 of this ordinance,or other available funds,to purchase anyof the Bonds
at any price deemed reasonable by theCityto purchase for retirement any of theBondsoffered to
the Cityat any price deemed reasonable tothe City.
C.Effect of Purchase.To the extent that the City shall have purchased any Balloon Maturity Bonds
since thelast scheduled mandatoryredemption of such Balloon MaturityBonds,the City may reduce
theprincipalamount of the Balloon Maturity Bonds to be redeemed in like principal amount.Such
reduction maybe appliedinthe year specifiedby the City.
Section 7.Revenue Fund and PriorityofApplication of Revenue.The City maintainstheWater Sewer Fund
as a separate enterprisefund of the City.AllRevenue ofthe System is deposited in theWater/Sewer Fund
#410 within the Water Sewer Fund (the"Revenue Fund").The Water Sewer Fund shall be considered a
combinedfund for purposes of measuringcompliancewiththe Rate Covenant and the Parity Requirement.
Notwithstanding the foregoing,the CityFinance Director may maintain such separate funds and accounts in
such names and under such additionaldesignations as shall be required tocomply with the uniform system
of accounting established bythe State Auditor from timetotime.The Revenue Fund shall be held separate
and apartfrom all other funds and accounts of the Cityand the Revenue of the System deposited insuch
Fund shall be used only for the followingpurposes and in thefollowingorder of priority:
A._Fid,to pay theCosts of Maintenance and Operation of theSystem;
B.Second.,to paytheintereston any Parity Bonds,includingreimbursements totheissuer of a Qualified
Letter of Credit or QualifiedInsurance iftheQualifiedLetter of Credit or QualifiedInsurance secures
the payment of interest on Parity Bonds and the ordinance authorizingsuch Parity Bonds provides
for such reimbursement;
C.Thir_d,to pay the principal ofany Parity Bonds,including reimbursements tothe issuer ofa Qualified
Letter of Credit or Qualified Insurance ifthe Qualified Letter of Credit or QualifiedInsurance secures
the payment of principal of Parity Bonds and the ordinance authorizing such Parity Bonds provides
for such reimbursement;
D.Fourth,to make all payments required to be made into the Reserve Fund-2004 and to any reserve
fund created in the future for the payment of debt service on Future Parity Bonds,including
reimbursements to the issuer of a QualifiedLetter of Credit or QualifiedInsurance ifthe Qualified
Letterof Credit or Qualified Insurance has been issued tofund theReserve Requirement-2004 and/or
the reserve requirement(s)for any Future Parity Bonds and theordinance authorizingsuch Parity
Bonds provides for such reimbursement;
E.JFjgh,to make allpayments required to be made into any revenue bond redemption fund or revenue
warrant redemption fund and debt service fund or reserve fund created to pay and secure the
payment of the principal of and interest on any other revenue bonds or revenue warrants ofthe City
having a lien upon the Revenue of the System juniorand inferiorto the lien thereonfor the payment
of theprincipal ofand interest on Parity Bonds;and
F.;Sixth,toretire by redemption or purchase anyoutstanding revenuebonds orrevenuewarrants ofthe
City,to make necessary additions,betterments,improvements and repairs to or extensions and
replacements of theSystem,or forany other lawful Citypurposes.
OrdinanceNo.2177Page9
The Citymay transferany money from any funds or accounts oftheSystemlegally available therefor,exceptbondredemptionfunds,refunding escrow funds or defeasance funds,tomeet therequiredpayments tobemadeintotheBondFund.
Section 8.Bond Fund and Reserve Fund.The Finance Director has establishedthe 2004 Bond Fund #452withintheWaterSewerFundforthepaymentofthedebtserviceontheBonds,and shallestablishseparatefundsinthefutureforthepaymentofdebtserviceonFutureParityBonds(collectively,the"Bond Fund").TheFinanceDirectoralsohasestablishedthe2004BondReserveFund#453 withinthe Water Sewer Fund forthepurposeofsecuritytherepaymentoftheBonds(the"Reserve Fund-2004").
A.Pavments into Bond Fund.The Bond Fund shall be maintainedforthe purpose ofpaying the principalofandinterestonallParityBonds.
As long as any Parity Bond remains outstanding,theCityhereby irrevocably obligates and binds itselftosetasideandpayfromtheRevenueFundintotheBondFundthoseamountsnecessary,togetherwithsuchotherfundsasareonhandandavailableintheBondFund,to pay theinterest or principalandinterestnextcomingdueonoutstandingParityBonds.Such paymentsfrom the Revenue FundtotheBondFundshallbemadeinafixedamountwithoutregardtoanyfixedproportionfollowingtheclosinganddeliveryoftheBondsonorbeforeeachdateonwhichaninstallmentofinterestorprincipalandinterestfallsdueonParityBondsequaltotheinstallmentofinterestorprincipalandinterest
The CityFinance Director is hereby authorized and directed and theCityhereby obligates and bindsitselftosetasideandpayintotheBondFundallULIDAssessmentsasthesamearecollected.
B.Pavments into Reserve Fund-2004.The Reserve Fund-2004 shall be maintained for thepurpose ofsecuringthepaymentoftheprincipalofandinterestontheBonds.The Citycovenants and agreesthatfromandaftertheclosinganddeliveryoftheBonds,it willat all timesmaintain an amount intheReserveFund-2004at least equal tothe Reserve Requirement-2004 except forwithdrawalstherefromauthorizedhereinafter,at all times for so long as any Bonds remain outstanding.The ReserveRequirement-2004 may be maintained by deposits of cash,a QualifiedLetter of Credit or QualifiedInsurance,ora combinationoftheforegoing.Incomputing theamount on hand inthe Reserve Furíd-2004,QualifiedInsurance and/or a Qualified Letter of Credit shall be valued at the face amountthereof,and all otherobligationspurchased as an investment of moneys thereinshall be valued atcost.As used herein,the term "cash"shall include U.S.currency,cash equivalents and evidencesthereof,including demand deposits,certified orcashier'scheck;and thedeposit totheReserve Fund-2004 maybe satisfiedinitiallybythetransferof qualifiedinvestments tosuch account.
Ifthe balances on hand inthe Reserve Fund-2004 are sufficient tosatisfy theReserve Requirement-2004,interest earnings shall be appliedas provided inthefollowing sentences.Whenever thereis
a sufficientamount in the Bond Fund,including the Reserve Fund-2004 to paythe principal of andinterestonalloutstandingBonds,themoneyin the Reserve Fund-2004 may be used to pay suchprincipalandinterest.As long as themoney left remaining on deposit in theReserve Fund-2004 isequaltotheReserveRequirement-2004,money intheReserve Fund-2004 maybe transferredtotheBondFundandusedtopaytheprincipalofandinterestontheBondsasthesamebecomesdueandpayable.The City also maytransferout of theReserve Fund-2004 any money requiredin ordertopreventanyBondsfrombecoming"arbitragebonds"underthe Code.
If a deficiency in the Bond Fund for the payment of debt service on the Bonds shall occur,suchdeficiencyshallbemadeupfromtheReserveFund-2004 bythewithdrawalof cash therefromforthatpurposeandbythesaleorredemptionofobligationsheldintheReserveFund-2004,insuch amounts
as willprovide cash in theReserve Fund sufficientto make up any such deficiency with respect totheBonds,and if a deficiency stillexists immediately prior toan interest payment date and after thewithdrawalofcash,the Cityshall thendraw from any QualifiedLetter ofCredit or Qualified InsurancefortheBondsinsufficientamounttomakeupthedeficiency.Such draw shall be made atsuchtimesandundersuchconditionsastheagreementforsuchQualifiedLetterofCreditorsuchQualifiedInsuranceshallprovide,
In making the paymentsand credits totheReserve Fund-2004 required by thisSection 8(b),totheextentthattheCityhasobtainedQualifiedInsuranceoraQualifiedLetterofCreditforspecificamountsrequiredpursuanttothissectiontobepaidoutoftheReserveFund-2004 such amountssocoveredbyQualifiedInsuranceoraQualifiedLetterofCreditshallbecreditedagainsttheamountsrequiredtobemaintainedintheReserveFund-2004 by this Section 8(b)to the extent that suchOpaymentsandcreditstobemadeareinsuredbyaninsurancecompany,or guaranteed bya letter ofcreditfromafinancialinstitution.
Anydeficiency created inthe Reserve Fund by reason ofany such withdrawal shallthen be made upwithinoneyearofthedateofwithdrawalfromNetRevenuesorfromULIDAssessments(orout ofanyothermoneysonhandlegallyavailableforsuchpurpose)after makingnecessary provision forthepaymentsrequiredtobemadeintotheBondFundwithinsuchyear.
Any Qualified Letter of Credit or Qualified Insurance shallnot be cancelable on less than30 days'notice tothe City.In the event ofanycancellation,the Reserve Fund-2004 shall be funded as iftheBondsthatremainoutstandinghadbeenissuedonthedateofsuchnoticeofcancellation.
OrdinanceNo.2177
Page 10
Intheevent thatthe Cityelectstomeet the Reserve Requirement-2004 throughtheuse ofa Qualified
Letter of Credit,Qualified Insurance or other equivalent credit enhancement device,the City may
contract with the entity providing such QualifiedLetter of Credit,Qualified Insurance or other
equivalent credit enhancement device thatthe City'sreimbursement obligation,ifany,tosuch entity
shallbe made from payments of principal and interest on Parity Bonds from theCitysubjectonly to
the priorlien thereonforthe payments required hereunder to be made to registered owners of Parity
Bonds.
0.Reserve Funds for Future Parity Bonds.In the event that the City issues Future Parity Bonds,the
ordinance authorizing theirissuance shall providefor the establishment ofa reserve fund for such
series ("afuture reserve fund")and shall provide for thefunding of the future reserve fund in an
amount equal tothelesser of (i)Maximum Annual Debt Service withrespect to the proposed issue
of Future Parity Bonds or (ii)125%of Average Annual Debt Service,but in no event in an amount
equal to 10%of the proceeds ofthe proposed issue of Future Parity Bonds (the"Future Parity Bond
reserve requirement").Each future reserve fund shall be maintained for thepurpose ofsecuringthe
payment of the principal ofand Interest on the respective series of Future Parity Bonds.A Future
Parity Bond reserve requirement maybe maintainedbydeposits of cash,a QualifiedLetter of Credit
or Qualified Insurance,or a combination of the foregoing.In computing the amount onhand in the
future reserve fund,QualifiedInsurance and/or a QualifiedLetter ofCredit shall be valued attheface
amount thereof,and all other obligationspurchased as an investment of moneys thereinshall be
valued at cost.As used herein,the term"cash"shall include U.S.currency,cash equivalentsand
evidences thereof,including demand deposits,certified or cashier's check;and the deposit to the
future reserve fund may be satisfied initiallyby thetransferof qualified investments tosuch account.
If the balances on hand in the future reserve fund are sufficient to satisfy its Future Parity Bond
reserve requirement,interest earnings shall be applied as provided in the following sentences.
Whenever there is a sufficient amount in the Bond Fund,including the future reservefund topay the
principal ofand interest on therespective series ofoutstandingFuture Parity Bonds,themoneyinthe
future reserve fund may be used to pay such principal and interest.As long as themoney left
remaining ondeposit in thefuture reserve fund is equal tothe respective Future Parity Bond reserve
requirement,money inthe future reserve fund maybe transferredtothe Bond Fund and used topay
the principal of and interest on the series of Future Parity Bonds as the same becomes due and
payable.The Cityalso may transfer out of a future reserve fund any money requiredin order to
prevent any Future Parity Bonds from becoming "arbitrage bonds"under the Code.
D.Priorityof Lien of Pavments into Bond Fund and Reserve Fund.The amounts so pledged tobe paid
intothe Bond Fund and theReserve Fund-2004 fromthe Revenue Fund andfrom ULIDAssessments
are hereby declared to be a prior lien and charge upon the Revenue of the System and ULID
Assessments superior toall other charges of any kind or nature whatsoever except the Costs of
Maintenance and Operation of theSystem,and exceptthattheamounts so pledged are of equal lien
to the charges upon such Revenue and ULIDAssessments for the payment of the principal of and
interest on any Future Parity Bonds.
E.Applicationand Investmentof Moneys in theBond Fund and Reserve Fund.MoneyintheBond Fund
and Reserve Fund-2004 may be kept incash or invested as perrnitted by law.Investments in the
Bond Fund shallmature priorto thedate on whichsuch money shall be needed for required interest
or principal payments (forinvestments in the Bond Fund)or having a guaranteed redemption price
priorto maturity,Investments in theReserve Fund-2004 shall mature not later thanthe last maturity
of any then outstandingBonds.
F.Sufficienev of Revenues.The CityCouncil hereby finds thatinfixingtheamounts to be paid into the
Bond Fund and the Reserve Fund-2004 out of the Revenue of the System,it has exercised due
regard for the Costs of Maintenance and Operation and has not obligated the City to set aside and
pay into the Bond Fund and the Reserve Fund-2004 a greater amount of such Revenue thanin its
judgmentwillbe available overand above the Costs of Maintenance and Operation.
Section 9.Specific Covenants.
A.Rate Covenant.The Citywill establish,maintain and collect such rates and charges for service ofits
System for so long as any Bonds are outstanding as willmaintain theRate Covenant.
B.System Maintenance.The Citywillatalltimesmaintain and keep theSystem in good repair,working
order and condition,and also will at all timesoperate such utilityand the business in connection
therewithinan efficientmannerand at a reasonable cost
C.Disposal ofProperties.The Citywillnot mortgage,sell,lease,or inany mannerencumber ordispose
of all or substantially all the property of the System (voluntarilyor involuntarily),unless provision is
made for payment intothe Bond Fund of a sum sufficient to pay theprincipalof,premium,ifany,and
interest onalloutstanding bonds payable therefrom,nor willitmortgage,sell,lease,or inany manner
encumber or dispose of (includingbut not limited to a disposition by transfer to another public or
private organization)voluntarily or involuntarily any part of the System that is used,useful and
material tothe operation of the System unless
Ordinance No.2177
Page 11
1.theCitycertifies,based upon reasonable expectations,thattheremaining assets of the SystemshallbesufficienttocontinueregularoperationsoftheCityonafinanciallysoundbasisforaperiodofatleastfiveyearsand
2.provision is made for replacement thereoforfor payment into the Bond Fundof thetotalamountofrevenuereceivedwhichshallnotbelessthananamountwhichshallbearthesameratiototheamountofoutstandingParityBondsasthegreaterof
a.the Net Revenue available for Debt Service for such outstanding Parity Bonds for the12monthsprecedingsuchsale,lease,encumbrance or disposal from the portionof theSystemsold,leased,encumberedordisposed of bears tothe Net Revenueavailablefor DebtServiceforsuchParityBondsfromtheentireSystemforthesameperiod;
b,theRevenue of theSystem for the 12 monthsprecedingsuch sale,lease,encumbrance ordisposalfromtheportionoftheSystemsold,leased,encumbered ordisposed ofbears totheRevenueoftheSystemforthesameperiod;
c.the proportion of assets (ona depreciated basis)allocable tothe assets being sold,leased,
encumbered or disposed of bears to the totalassets ofthe System;or
d,the proportion of customers of the City allocable to the assets being sold,leased,encumbered ordisposed ofbears to thetotalnumber ofcustomers oftheSystem,provided,however,that the City may dispose of any portion ofthefacilitiesof the System up to anaggregateoffivepercentofthebookvalueofthetotalassetsoftheSystemwithouttherequirementforanydeposittotheBondFundashereinaboveprovided.
Anysuch moneys so paid into the Bond Fund shall be used toretire such outstanding ParityBondsattheearliestpossibledate.Any money received by theCity as condemnationawards,insurance proceeds ortheproceeds ofsale,ifnot deposited totheBond Fund,shallbeusedforthereplacementoffacilitiesoftheSystem.
D.Books and Records.The Citywill,while any of the Bonds remains outstanding,keep proper andseparateaccountsandrecordsinwhichcompleteandseparateentriesshallbemadeofalltransactionsrelatingtotheSystem,and itwill furnish theoriginal purchaser or purchasers oftheBondsoranysubsequentownerorownersthereof,at thewritten request of such owner or owners,complete operating and income statements of the System in reasonable detail covering any fiscalOyear,showing thefinancial condition of thewaterand sewer departments and compliance with thetermsandconditionsofthisordinance,notmorethan150days after the close ofsuch fiscal year,anditwillgrantanyownerorownersofatleast25%oftheoutstandingBonds theright at all reasonabletimestoinspecttheentireSystemandallrecords,accounts and data of theCity relating thereto.Upon request of any owner of anyof said Bonds,itwillalso furnish tosuch ownera copyofthemostrecentlycompletedauditoftheCity's accounts by theState Auditor of Washington or independentcertifiedpublicaccountant
E.No Free Service.The City willnot furnish water or sanitary sewerage disposal service to anycustomerwhatsoeverfreeofcharge(exceptto aid the poor or infirm,to provide for resourceconservationortoprovidefortheproperhandlingofhazardousmaterials)and willpromptlytakelegalactiontoenforcecollectionofalldelinquentaccounts.
F.Procerty Insurance.The Citywillat all timescarry fire and extended coverage and such otherformsofinsuranceonthebuildings,equipment,facilitiesand properties oftheSystem,ifsuch insurance isobtainableatreasonableratesanduponreasonableconditions,against such risks,insuch amounts,and with such deductibles as the Council shall deem necessary fortheprotection of theSystem andtheownersofalloutstandingParityBonds.
G.LiabilitvInsurance.The Citywillat alltimeskeep and arrange to keep infullforce and effect policiesofpublicliabilityandpropertydamageinsurancewhichwillprotecttheCityagainstanyoneclaimingdamagesofanykindornaturearisingoutoftheoperationoftheSystem,if such insurance isobtainableatreasonableratesanduponreasonableconditions,in such amounts and with suchdeductiblesastheCouncilshalldeemnecessaryfortheprotectionoftheCityandtheownersoftheoutstandingParityBonds.
H.Delinquencies of Accounts.The Citywill,on or before March 1ofeach calendar year,determine allOaccountsthataredelînquentandwilltakeallnecessaryactiontoenforcepaymentofanysuchdelinquencies.
I.ULIDAssessments.AllULIDAssessments shall be paid into theBond Fund and shall be used topayandsecurethepaymentoftheprincipalofandinterestontheBondsandFutureParityBonds.Nothing in this ordinance or this section shall be construed to prohibit the City from issuing water,sewer or water and sewer revenue bonds juniorinlien tothe Bonds and pledging as security for theirpaymentassessmentsleviedinanyULIDwhichmayhavebeenspecificallycreatedtopaypartofthecostofimprovementstotheSystemforwhichthosejuniorlienbondswerespecificallyissued.
Section 10.Tax Covenants.The Citycovenants that itwillnot take or permit to be taken on its behalfanyactionthatwouldadverselyaffecttheexemptionfromfederalincometaxationoftheinterestontheBondsand
Ordinance No.2177
Page 12
willtakeor require to be taken such acts as may reasonably be within its abilityand as may from timetotime
be required under applicable law tocontinue the exemption from federal income taxationof the interest on the
Bonds.
A.Arbitrace Covenant Without limitingthegeneralityof theforegoing,theCitycovenantsthatitwillnot
takeany action orfailtotakeanyaction withrespect tothe proceeds ofsale ofthe Bonds or any other
funds oftheCitywhich may be deemed to be proceeds ofthe Bonds pursuant toSection 148 of the
Code and theregulations promulgated thereunderwhich,ifsuch use had been reasonably expected
on thedate of delivery of the Bonds to the initialpurchasers thereof,would have caused the Bonds
as "arbitragebonds"withinthemeaningof such term as used inSection 148 of the Code.
The City represents that it has not been notified of any listing or proposed listing by the Internal
Revenue Service totheeffect thatitis an issuer whosearbitrage certificationsmay notberelied upon.
The Citywillcomplywiththe requirements ofSection148 of the Codeand the applicableregulations
thereunderthroughoutthe termofthe Bonds.
B.Private Person Use Limitation for Bonds.The City covenants that for as long as the Bonds are
outstanding,itwillnot permit:
1,More than10%oftheNet Proceeds ofthe Bonds tobe used for anyPrivate Person Use;and
2.More than 10%of the principalor interest payments on the Bonds in a Bond Year to be
directly or indirectly:(A)secured by any interest in property used or to be used for any
Private Person Use or secured bypayments inrespect ofpropertyused or tobe used for any
Private Person Use,or (B)derived from payments (whetheror not made to the City)in
respect of property,or borrowed money,used or to be used for any Private Person Use.
The City further covenants that,if:
3.More than five percent of the Net Proceeds of the Bonds are to be used for any Private
Person Use;and
4.More thanfive percent oftheprincipal or interest payments on the Bonds in a Bond Year are
(underthe terms of thisordinance orany underlyingarrangement)directly or indirectly:
a.secured by any interest in property used or to be used for any Private Person Use
or secured by payments in respect of propertyused or to be used for any Private
Person Use,or
b.derived from payments (whetheror not made tothe City)in respect of property,or
borrowed money,used or to be used for any Private Person Use,then,(i)any
Private Person Use of the projects described in subsection (3)hereof or Private
Person Use payments described insubsection (4)hereof thatis inexcess ofthefive
percent limitations described in such subsections (3)or (4)willbe for a Private
Person Use thatis related tothestate or local governmentaluse ofthe Project,and
(ii)anyPrivate Person Use willnot exceed theamountof Net Proceeds oftheBonds
used for the state or local governmental use portionof the project to which the
Private Person Use ofsuch portion oftheProject relates.The Cityfurther covenants
that itwillcomply with any limitations on the use of the projectsby other than state
and local govemmentalusers thatare necessary,inthe opinionofits bond counsel,
to preserve the tax exemption ofthe interest on the Bonds.The covenants of this
sectionare specified solely toassure the continuedexemption from regular income
taxationof the interest on the Bonds.
C.Designation under Section 265(bl.The City hereby designates the Bonds as "qualified tax exempt
obligations"for investment by financial institutions under Section 265(b)of the Code.The Citydoes
notanticipatethat itwill issue morethan $10,000,000inqualified tax-exemptobligations during 2004
(excludingobligationspermitted by the Code to be excluded for purposes of the City's qualification
as a qualified small issuer).
D.Modification of Tax Covenants.The covenants of this section are specifiedsolelyto assure the
continued exemption from regular income taxationof the interest on the Bonds.To thatend,the
provisions of this section may be modified or eliminated withoutany requirement for formal
amendment thereof uponreceipt of an opinion ofthe City's bond counsel that such modification or
elimination willnot adverselyaffect the tax exemption ofinterest on any Bonds.
Section 11.Issuance of Future Parity Bonds.
A.Conditionsupon the issuance of Future Paritv Bonds.As long as any of the Bonds remain
outstanding,the City hereby further covenants and agrees that itwill not issue any Future Parity
Bonds except that theCityhereby reserves the right to issue additional water and sewer revenue
bonds,which shall constitute a charge and lien upon the Revenue of the System equal to the lien
thereonof theBonds.Except as providedinsubsection(b)below,theCityshall ng issue any series
of Future Parity Bonds or incur any additionalindebtedness witha paritylien or charge on Net
Revenues (i.e.,on a parityof lien with Parity Bonds at the timeoutstanding)unless:
OrdinanceNo.2177
Page 13
1.the City shall not have been in default of its Rate Covenant for the immediately precedingfiscalyear,and
2.The ordinance authorizingthe issuance of such Future Parity Bonds shall include thecovenantsprovidedinSection8(c)hereof and provide thatthe Future Parity Bond reserverequirementshallbefundednolaterthanthedateofdeliveryoftheFutureParityBonds.
3.thereshall have been fileda certificate (preparedas described insubsection(c)or(d)below)demonstrating fulfillmentoftheParity Requirement,commencingwiththefirstfullfiscal yearfollowingthedateonwhichanyportionofinterestontheseriesofFutureParityBondsthenbeingissuednolongerwillbepaidfromtheproceedsofsuchseriesofFutureParityBonds.
B.No Certificate Recuired.The certificate described in the foregoing subsection (a)(2)shall not berequiredasaconditiontotheissuanceofFutureParityBonds:
1.Ifthe Future Parity Bonds being issued are for the purpose of refunding outstanding ParityBonds;or
2.ifthe Future Parity Bonds are being issued to pay costs of construction of facilities of theSystemforwhichFutureParityBondshavebeenissuedpreviouslyandtheprincipalamountofsuchFutureParityBondsbeingissuedforcompletionpurposesdoesnotexceedanamountequaltoanaggregateof15%of the principal amount of Future Parity Bondstheretoforeissuedforsuchfacilitiesandreasonablyallocabletothefacilitiestobecompleted
as shown in a written certificate of the City Representative,and there is delivered aConsultant's certificate stating thatthe nature andpurpose ofsuch facilities has not materiallychanged.
C.Certificate of the CitvWithout AConsultant.Ifrequired pursuant tothe foregoing subsection (a)(2),a certificate may be delivered bytheCity(executedbythe City Representative)without a ConsultantifNetRevenuesfortheBasePeriod(confirmedbyan independent auditor)conclusivelydemonstratethattheParityRequirementwillbefulfilledcommencingwiththefirstfullfiscalyearfollowingthedate
onwhichanyportion of interest on theseries of Future Parity Bonds then being issued willnot be paidfromtheproceedsofsuchseriesofFutureParityBonds.
D.Certificate ofa Consultant.Unless compliance with the requirements of subsection (a)(2)have beenotherwisesatisfied(asprovided in (b)or (c)above),compliance withthe Parity Requirement shall bedemonstratedconclusivelybyacertificateofaConsultant.
InmakingthecomputationsofNet Revenues for thepurposeofcertifyingcompliance withthe ParityRequirement,the Consultant shall use as a basis the Net Revenues (whichmay be based uponunauditedfinancialstatementsoftheCityiftheaudithasnotyetbeencompleted)for the BasePeriod.Such Net Revenues shall be determined byaddingthefollowing:
1.The historical net revenue of theCityfor the Base Period being issued as determined by aConsultant.
2.The net revenue derived from thosecustomers of the Citythathave become customersduringsuch12-month period or thereafterand prior tothe date ofsuch certificate,adjustedtoreflectafullyear's net revenue from each such customer tothe extent such net revenuewasnotincludedin(1)above.
3.The estimated annual netrevenueto be derived from any person,firm,association,private
or municipal corporation under any executed contract for service,whichnet revenuewas notincludedinanyofthesourcesofnetrevenuedescribedinthissubsection(d).
4.The estimated annual net revenue tobe derived from the operation of any additions orimprovementstoorextensionsoftheCityunderconstructionbutnotcompletedatthetimeofsuchcertificateandnotbeingpaidforoutoftheproceedsofsaleofsuchFutureParityBondsbeingissued,and which net revenue is not otherwiseincluded in any of the sourcesofnetrevenuedescribedinthissubsection(d).
5.The estimated annual net revenue to be derived from the operation of any additionsandimprovementstoorextensionsoftheCitybeingpaidforoutoftheproceedsofsaleofsuchBondsbeingissued.
In the event the Citywillnot derive any revenue as a result of the construction of theadditions,improvements or extensions being made or tobe madeto theSystem withintheprovisionsofsubparagraphs(4)and (5)immediately above,theestimatednormalCosts ofMaintenanceandOperation(excludingany transferof money toother funds of theCityandlicensefees,taxes and payments in lieu oftaxespayable to the City)of such additions,improvements and extensionsshall be deducted from estimated annual net revenue.
The words "historicalnet revenue"or "netrevenue"as used inthissubsection (d)shallmeantheRevenueoranypartorpartsthereoflessthenormalexpensesofmaintenanceandoperationoftheSystemoranypartorpartsthereof,but before depreciation.
Ordinance No.2177
Page 14
Such "historicalnet revenue"or "net revenue"shall be adjusted to reflect the rates and
charges effectiveon thedate of such certificateifthere has been any change insuch rates
and charges duringor after such 12-consecutive-month period.
E.Subordinate Lien Obligations.Nothing herein contained shallprevent the Cityfrom issuing revenue
bonds or other obligations which are a charge uponthe Revenue of theSystem junioror inferior to
the payments required by this ordinance to be made out ofsuch Revenue to pay and secure the
payment of any outstandingParity Bonds.
F.Refunding Obligations.Nothing herein contained shall preventthe Cityfrom issuing revenue bonds
to refundmaturingParity Bonds forthe payment ofwhich moneysare not otherwise available.
Section 12.Form of Bonds.The Bonds shall be in substantially this form:
UNITEDSTATESOF AMERICA
STATEMENT OF INSURANCE
Financial Guaranty Insurance Policy No.230398E (the"Policy")with respect to payments due for
principal of and interest on this bond has been issued by Ambac Assurance Corporation ("Ambac
Assurance").The Policy has been delivered toThe Bank ofNew York,New York,New York,as the
Insurance Trustee under said Policy and willbe held by such Insurance Trustee or any successor
insurance trustee.The Policy is on file and available for inspection at the principal office of the
Insurance Trustee and a copy thereofmay be secured from Ambac Assurance or the Insurance
Trustee.AIIpayments requiredtobe made under the Policy shallbe made in accordance with the
provisions thereof.The ownerof thisbond acknowledgesand consents tothe subrogationrights of
Ambac Assurance as morefullyset forth in the Policy.
No.$
STATE OF WASHINGTON
CITY OF MOSES LAKE
WATER ANDSEWER REVENUE BOND,2004
INTEREST RATE:MATURITYDATE:CUSIP NO.:
REGISTERED OWNER:CEDE &Co.
PRINCIPAL AMOUNT:
The City ofMoses Lake,Washington,a municipal corporationorganizedand existing under and by
virtue ofthe laws of theState of Washington (hereincalled the"City")hereby acknowledgesitselfto
owe and for value received promises to pay,but only from the sources and as hereinafter provided,
tothe RegisteredOwneridentifiedabove,orregistered assigns,on theMaturityDate identified above,
thePrincipal Amount indicated above and to pay interest thereon from October 1,2004,or themost
recent date towhich interest has been paid or dulyprovided for,at the Interest Rate set forth above,
payable on March 1,2005,and semiannuallythereafter on the first days of each September and
March untilsuch principal sum is paidor payment has been duly provided for.
Both principal of and interest on this bond are payable in lawful money of the UnitedStates of
America.Interest and principal shall be paid as provided in the Blanket Issuer Letter of
Representations (the"Letter of Representations")by the Cityto The Depository Trust Company
("DTC").The fiscal agency of the State of Washington has been appointed by the City as the
authenticating agent,paying agent and registrar for the bonds of this issue (the "Registrar"),
Capitalized terms used in this bond that are not specifically defined have the meanings given such
terms in Ordinance No.of the City (the"Bond Ordinance").Reference is made to the Bond
Ordinance and any and all modifications and amendments theretofora description ofthe nature and
extent of the security for the bonds of this issue,the funds or revenues pledged,and the terms and
conditions upon which such bonds are issued.
This bond is one of an authorized issue of bonds of the City of like date and tenorexcept as to
number,amount,rate of interest and date ofmaturity intheaggregate principal amount of$7,015,000.
This issue ofbonds is authorized by theBond Ordinance for the purposes of providing moneytopay
part of the cost of construction and acquisitionof certain improvements to the System,all in
conformity withthe laws ofthe State of Washington and ordinances of the City.
This bond and thebonds ofthis issue are payable solely from the special funds of theCity defined
as the "Bond Fund"inthe Bond Ordinance.The Cityhas irrevocably obligatedand bound itselfto pay
intothe Bond Fund out of theRevenue ofthe System or from such other moneysas may be provided
thereforcertainamounts necessary to pay and secure thepayment of the principal and interest on
such bonds.The bonds ofthisissue are not generalobligations of the City.
OrdinanceNo.2177Page15
The Cityhas designated the bonds of this issue as qualified tax-exemptobligations for purposes ofSection265(b)of the Internal Revenue Code of 1986.
The bonds of this issue are issued under and in accordance withtheprovisionsof the ConstitutionandapplicablestatutesoftheStateofWashingtonanddulyadoptedordinancesoftheCity.The CityherebycovenantsandagreeswiththeownerofthisbondthatitwillkeepandperformallthecovenantsofthisbondandoftheBondOrdinancetobebyitkeptandperformed,and reference isherebymadetotheBondOrdinanceforacompletestatementofsuchcovenants.
The Citydoes hereby pledge and bind itself toset aside from the Revenue Fund out of therevenueOoftheSystemandtopayintotheBondFundandtheReserveFundthevariousamountsrequiredbytheBondOrdinancetobepaidintoandmaintainedinsuchFundandaccount,all within the timesprovidedbytheBondOrdinance.To theextent more particularly provided by theBond Ordinance,thearnounts so pledged to be paid from theRevenue Fund out ofthe revenue oftheSystem intotheBondFundandtheaccountthereinshallbealienandchargethereonequalinranktothelienandchargeuponsaidrevenueoftheamountsrequiredtopayandsecurethepaymentofrevenuebondsoftheCityhereafterissuedonaparitywiththebondsofthisissueandsuperiortoallotherliensandchargesofanykindornatureexcepttheCostsofMaintenanceandOperationoftheSystem.
The pledge of Revenue of theSystem and other obligationsof the City under the Bond Ordinance
may be discharged at orpriortothematurityor redemption ofthebonds ofthisissue upon themakingofprovisionforthepaymentthereofonthetermsandconditionssetforthintheBondOrdinance.
The bonds ofthis issue are not subject to redemption prior totheirstated maturities.
This bond shall notbe validor become obligatory for any purpose or be entitledto any securityorbenefitundertheBondOrdinanceuntiltheCertificateofAuthenticationhereonshallhavebeenmanuallysignedbytheRegistrar.
Itis hereby certified that allacts,conditions,and thingsrequired by the Constitution and statutes oftheStateofWashingtontoexist,to have happened,been done,and performedprecedent to and intheissuanceofthisbondhavehappened,been done,and performed.
INWITNESS WHEREOF,the City of Moses Lake,Washington has caused thisbond tobe signedwiththefacsimileormanualsignatureoftheMayor,to be attested by the facsimile or manualsignatureoftheCity's Finance Director,and thecorporate seal ofthe City tobe reproducedhereon,all as of thisist day of October,2004.
CITYOF MOSES LAKE,WASHINGTON
By Is/facsimile or manualMayor(SEAL)
ATTEST:
Is/facsimile or manual
Finance Director
The Registrar's certificateauthenticationon theBonds shall be in substantially thefollowing form:
CERTIFICATE OF AUTHENTICATION
Date ofAuthentication:,2004
This bond is one ofthebonds described inthe within-mentioned Bond Ordinance and is one of theWaterandSewerRevenueBonds,2004 of the City of Moses Lake,Washington,dated October 1,2004.
WASHINGTON STATE FISCALAGENCY,Registrar
By
Authorized Signer
Section 13.Execution of Bonds.The Bonds shall be executed on behalf of the City with the manual orfacsimilesignatureoftheMayor,shallbe attested bythemanual or facsimile signature oftheFinance Director.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form hereinbefore recited,manually executed by the Registrar,shall be valid or obligatory for any purpose or entitled tothe benefits ofthisordinance.Such Certificate of Authentication shall be conclusive evidence that the Bonds soauthenticatedhavebeendulyexecuted,authenticated,and delivered hereunder and are entitled to thebenefitsofthisordinance.
Incase either ofthe officerswhoshallhave executedtheBonds shall cease tobe an officer or officers oftheCitybeforetheBondssosignedshallhavebeenauthenticatedordeliveredbytheRegistrar,or issued by the
Ordinance No.2177
Page 16
City,such Bonds shall be valid nevertheless and may be issued by the City with the same effect as though
the persons who had executed such Bonds had not ceased to be such officers,
Section 14.Defeasance.In the event that moneyand/or Governmental Obligations maturing at such time
or times and bearing interest to be earned thereon in arnountssufficient to redeem and retire any bonds
payableout of the Bond Fund in accordance withtheirterms are irrevocably set aside ina special account
toeffectsuch redemptionand retirement,then no further paymentsneedbe made intothe Bond Fund for the
paymentoftheprincipal ofand interest on such Bonds and the owner of such Bonds shallcease tobe entitled
toanylien,benefit orsecurity ofthisordinance except the righttoreceive thefunds so set aside and pledged,
and such Bonds shallbe deemed not to be outstanding hereunder.
Within 45 days of any defeasance of Bonds,the City shall provide notice of defeasance of Bonds to
Registered OwnersofBonds being defeased,and tothe Insurer,ifany,and toeach NRMSIR and SID,ifany,
in accordance with Section 19.
Section 15.Lostor Destroyed Bonds.Incase any Bonds shall be lost,stolen or destroyed,the Registrar may
authenticate and deliver a newBond or Bonds oflike amount,date and tenortothe owner thereofupon the
owner's payingthe expenses and charges ofthe Registrar and the City inconnectiontherewithand upon his
filingwiththe Registrar and theCityevidence satisfactory toboth thatsuch Bond orBonds were actually lost,
stolen ordestroyed and of his ownership thereof,anduponfumishing theCityand theRegistrar withindemnity
satisfactory toboth.
Section 16.Sale of Bonds.The City hereby accepts the writtenofferof the Underwriter to purchase the
Bonds at theprice setforth initspurchase offer presented tothisCounciland under theterms,conditions and
covenants of the Bonds as set forth herein.The City Representative is authorized and directed to execute
the purchase offer presented bythe Undenwriter.
The CityAdministrator and theFinance Director are hereby authorized toreview and approveon behalf of the
Citythepreliminary andfinal OfficialStatement relativetotheBonds withsuch additions and changes as may
be deemed necessary and advisable to them.The Preliminary Official Statement for the Bonds,dated
September 13,2004,is hereby deemed final for purposes of Securities and Exchange Commission
Rule 15c2-12.
The Finance Director and other City officials,agents and representatives are hereby authorized and directed
to do everything necessary forthe promptissuance,execution and delivery of theBonds tothe Underwriter,
and for the proper use and application of theproceeds ofsale of the Bonds.
Section 17.Disposition of Bond Proceeds.The accrued interest received with respect tothe Bonds shall be
deposited into the Bond Fund and used to pay interest on the Bonds coming due on March 1,2005.From
the proceeds of the Bonds,a sum sufficient toestablish the Reserve Requirement-2004 shall be deposited
into the Reserve Fund-2004.The Finance Director has heretofore established the Operations Complex
Construction Fund #472 within theWater Sewer Fund of the City (the"Project Fund").The balance ofthe
proceedsof sale of the Bonds shallbe deposited intheProject Fund and shallbe expended solely to paythe
cost of issuing and selling the Bonds and,togetherwith other available moneys of the City,shall be used to
undertake the Project.Money in the Project Fund shall be invested by the Finance Director,pending
disbursement,in any legal investment for City funds.
Section18.Notices and Payment Procedure Pursuant to Insurance Policy,
A.Pavments Under the Insurance Policy.As long as the Insurance Policy shall be in fullforce and
effect,the City and the Registrar agree to complywith the following provisions:
1.Atleast one day prior toanyinterest payment date,the Citywilldetermine whether therewill
be sufficient funds inthe Bond Fund topay theprincipal of or interest on the Bonds on such
interest payment date.IftheCitydetermines thattherewillbe insufficient funds insuch fund,
it shall so notify the Insurer.Such notice shall specify the amount of the anticipated
deficiency,theBonds towhich such deficiency is applicable andwhethersuch Bonds willbe
deficient as to principal or interest,or both,ifthe Cityhas not so notifiedthe Insurer at least
one day priortoan interest payment date,the Insurer willmake payments of principal or
interest due on the Bonds on or before the first day next following the date on whichthe
Insurer shall have received notice of nonpayment.
2.The City shall,after giving notice tothe Insurer as provided in(1)above,make available to
the Insurer and,atthe Insurer's direction,toThe Bank of NewYork,in NewYork,New York,
as insurance trusteefor the Insurer or any successor insurance trustee (the"Insurance
Trustee"),the registration books of the City maintained by the Registrar,if any,and all
records relating to thefunds and accounts maintainedunder thisordinance.
3.the City shall provide the Insurer and the Insurance Trustee with a list of registered owners
of Bonds entitledtoreceive principalor interest payments from the Insurer under theterms
of the Insurance Policy,and shallmake arrangementswiththe Insurance Trustee (i)tomail
checks or drafts to the registeredowners ofBonds entitled toreceive fullor partial interest
payments from theInsurerand (ii)topay principal upon Bondssurrendered totheInsurance
Trustee bythe registeredowners ofBonds entitled toreceive fullor partialprincipal payments
from theInsurer.
Ordinance No.2177Page17
4.The City shall,at the timeit provides notice to the Insurer pursuant to (1)above,notifyregisteredownersofBondsentitledtoreceivethepaymentofprincipalorinterestthereonfromtheInsurer(i)as tothefact of such entitlement,(ii)that theInsurer willremittothemallorapartoftheinterestpaymentsnextcomingdueuponproofofbondholderentitlementtointerestpaymentsanddeliverytotheInsuranceTrustee,informsatisfactoryto the InsuranceTrustee,of an appropriate assignment of theregistered owner's right to payment,(iii)thatshouldtheybeentitledtoreceivefullpaymentofprincipalfromtheInsurer,they mustsurrendertheirBonds(alongwith an appropriate instrument of assignment in formsatisfactorytotheInsuranceTrusteetopermitownershipofsuchBondstoberegisteredinthenameoftheInsurer)for payment to the Insurance Trustee,and (iv)thatshouldthey beOentitledtoreceivepartialpaymentofprincipalfromtheInsurer,they must surrender theirBondsforpaymentthereonfirsttotheRegistrarwhoshallnoteonsuchBondstheportionoftheprincipalpaidbytheRegistrar,and then,along with an appropriate instrument ofassignmentinformsatisfactorytotheInsuranceTrustee,tothe Insurance Trustee,whichwillthenpaytheunpaidportionofprincipal,
5.In theevent that the Registrar has notice thatany payment of principal of or interest on aBondwhichhasbecomedueforpaymentandwhichismadetoabondholderbyoronbehalfoftheCityhasbeendeemedapreferentialtransferandtheretoforerecoveredfromitsregisteredownerpursuanttotheUnitedStatesBankruptcyCodebyatrusteeinbankruptcyinaccordancewiththefinal,nonappealable order of a court having competentjurisdiction,the Registrar shall,at the time the Insurer is notified pursuant to (1)above,notify allregisteredownersthatintheeventthatanyregisteredowner'spayment is so recovered,such registered owner will be entitled to payment from the Insurer to the extent of such
recoveryifsufficientfunds are not otherwise available,and the Registrar shall furnish totheInsureritsrecordsevidencingthepaymentsofprincipalofandintereston.theBonds whichhavebeenmadebytheRegistrar,and subsequently recovered from registered owners andthedatesonwhichsuchpaymentsweremade.
6.In additiontothose rights granted the Insurer under thisordinance,theInsurer shall,totheextentitmakespaymentofprincipaloforinterestonBonds,become subrogatedtotherightsoftherecipientsofsuchpaymentsinaccordancewiththetermsoftheInsurancePolicy,andtoevidencesuchsubrogation(i)inthecase of subrogation as toclaims for past due interest,theRegistrar shallnotetheInsurer's rights as subrogee on the registration books ofthe CitymaintainedbytheRegistraruponreceiptfromtheInsurerofproofofthepaymentofinterestthereontotheregisteredownersoftheBonds,and (li)inthecase of subrogation as to claims
O for past due principal,the Registrar shall note the Insurer's rights as subrogee on theregistrationbooksoftheCitymaintainedbytheRegistraruponsurrenderoftheBondsbytheregisteredownersthereoftogetherwithproofofthepaymentofprincipalthereof.
B.Consent oftheInsurer.Any provisionofthisordinance expressly recognizing or granting rights in ortotheInsurermaynotbeamendedinanymannerwhichaffectstherightsoftheInsurerhereunder
without the priorwritten consent of theInsurer.
C.Consent ofthe Insurer inAdditiontoBondholder Consent.Unless otherwise provided inthissection,the Insurer's consent shall be required in addition to bondholderconsent,when required,for thefollowingpurposes:(i)execution and delivery of any amendment,supplement or change to ormodificationofthisordinance;(ii)removal of the Registrar and selection and appointment of anysuccessorRegistrar(otherthanthedesignated State fiscal agent);and (iii)any initiationor approvalofanyactionnotdescribedin(i)or (li)above which requires bondholder consent.
D.Consent of the Insurer inthe Event of Insolvencv.Any reorganizationorliquidation plan withrespecttotheCitymustbeacceptabletotheInsurer.In the eventofany reorganization or liquidation,theInsurershallhavetherighttovoteonbehalfofallbondholderswhoholdAmbacAssuranceCorporation-insured bonds absent a default by the Insurer undertheInsurance Policy.
E.Consent ofthe Insurer Upon Default.Anything inthisordinanceto thecontrarynotwithstanding,upontheoccurrenceandcontinuanceofaneventofdefaultasdefinedherein,the insurer shall be entitledtocontrolanddirecttheenforcementofallrightsandremediesgrantedtothebondholdersforthebenefitofthebondholdersunderthisordinance.
F.The Insurer as Third Party Beneficiary.To the extent thatthis ordinarice confersupon or gives orgrantstotheInsureranyright,remedy or claim under or by reason of thisordinance,the Insurer isOherebyexplicitlyrecognizedasbeingathird-partybeneficiary hereunder and may enforce anysuchright,remedy or claim conferred,given orgranted hereunder.
G.Parties Interested Herein.Nothing in thisordinance expressed or implied is intended or shall beconstruedtoconferupon,or togive or grant to,any person or entity,other thanthe City,the InsurerortheRegistrar,and the registered ownersof the Bonds,any right,remedy or claim under or byreasonofthisordinanceoranycovenant,condition or stipulation hereof,and all covenants,stipulations,promises or agreements in thisordinance containedby and on behalf of the CityshallbeforthesoleandexclusivebenefitoftheCity,the Insurer,the Registrar,and the registered ownersoftheBonds.
Ordinance No.2177
Page 18
H.Rights of Insurer.While the Insurance Policy is ineffect,the Cityshall furnish tothe Insurer (tothe
attention of theSurveillance Department,unless otherwise indicated):
1.as soon as practicable after the filingthereof,a copy of any financial statement of the City
and a copy of any auditand annual report of the City;
2.a copy of any notice tobe givento the registered owners ofthe Bonds,including,without
limitation,notice ofany redemption of or defeasance of Bonds,and any certificate rendered
pursuant to thisordinancerelating to the security for the Bonds;and
3.such additional information the Insurer may reasonably request.
I.The City shall notifythe Insurer of anyfailure of the City toproviderelevant notices or certificates.
J.The City willpermit the Insurer to discuss the affairs,finances and accounts of the City or any
information theInsurer mayreasonably request regarding thesecurity for theBonds withappropriate
officers ofthe City.The Citywillpermit the Insurer tohave access toand tomake copies ofallbooks
and records relating tothe Bonds at any reasonable time.
K.The Insurer shall have the right to direct an accounting at the City's expense,and the City's failure
tocomply with such direction within 30 days after receipt ofwrittennotice at thedirection fromthe
Insurer shall be deemed a default hereunder;provided,however,that ifcompliancecannot occur
withinsuch period,thensuch period willbe extended so long as compliance is begun within such
period and diligently pursued,but only if such extension would not materiallyadverselyaffect the
interests of any registered owner of theBonds.
L Notwithstanding any other provisionof thisordinance,theCityshall immediately notifytheInsurer if
at any timethere are insufficient money tomake anypayments ofprincipal and/orinterest as required.
Section 19.Undertaking to Provide OnaoinqDisclosure.
A.Contract/Undertaking.This section constitutesthe City's written undertakingfor the benefit of the
ownersoftheBondsas required by Section (b)(5)of the Rule.
B.Financial Statements/Operating Data.The City agrees to provide or cause to be provided to each
NRMSIRand tothe SID,ifany,in each case as designated by the SEC inaccordance withthe Rule,
thefollowingannualfinancialinformation andoperatingdata for the priorfiscal year (commencingin
2005 for the fiscal year ended December 31,2004):
1.Annual financial statements,which statements mayor may not be audited,showingending
fund balances for the System prepared in accordance withthe Budget Accounting and
Reporting System prescribed bytheWashington State Auditorpursuant to RCW 43.09.200;
2.The principal amount of Parity Bonds;
3.Debt service coverage for Parity Bonds;
4.Rates for the System;and
6.Number of customers of the System.
Items 2-5 shall be required onlyto the extent that such information is not included in the annual
financial statements.
The information and data described above shall be provided on or before nine monthsafter theend
of theCity's fiscal year.The City's current fiscal year ends December 31.The City mayadjust such
fiscal year byproviding written noticeof the change offiscal year to each-then existing NRMSIRand
the SID,ifany.Inlieu of providing such annualfinancial information andoperatingdata,thètity may
cross-reference to other documents provided to the NRMSIR,the SID or to the SEC and,if such
document is a final officialstatement within the meaning of the Rule,available from the MSRB.
Ifnot provided as part of the annualfinancial information discussed above,theCityshall provide the
City's audited annual financial statement prepared in accordance with the Budget Accounting and
Reporting System prescribedby the Washington State Auditor pursuant to RCW43.09.200 (orany
successor statute)when and ifavailable toeach then existing NRMSIR and the SID,ifalTy,
C.Material Events.The Cityagrees to provide orcause to be provided,ina timelymanner,to the SID,
ifany,and toeach NRMSIR or totheMSRB noticeof the occurrence of any ofthe following events
withrespect to the Bonds,ifmaterial:
1.Principal and interest payment delinquencies;
2.Non-payment relateddefaults;
3.Unscheduled draws on debt service reserves reflecting financial difficulties;
Ordinance No.2177
Page 19
4.Unscheduled draws on credit enhancements reflecting financial difficulties;
5.Substitution of credit or liquidityproviders,or theirfailure to perform;
6.Adverse tax opinions or events affecting the tax-exemptstatus ofthe Bonds;
7.Modifications to the rights of Bond owners;
8.Bond calls (optional,contingentorunscheduled Bond calls other thanscheduled sinkingfundredemptionsforwhichnoticeisgivenpursuanttoExchangeActRelease34-238560);
9.Defeasances;
10.Release,substitutionor sale ofproperty,securing repayment oftheBonds;and
11.Rating changes.
Solely for purposes of disclosure,and not intending to modify the undertaking,the Cityadvises thatthereisnopropertysecuringrepaymentoftheBonds,as the City lacks legal authorityfor suchmeasure.Iffurther changes inthelaw permit such measure,and iftheCitysubsequently choosestoprovidesuchpropertyassecurityfortheBonds,theCitywillprovide noticeof such establishment
or provision and undertake to providenotices of materialevents relating thereto,should such events
occur.
D.Termination/Modification.The City'sobligations toprovide notices of material events shall terminateuponthelegaldefeasance,prior redemption or payment infullofallofthe Bonds.Anyprovision ofthissectionshallbenullandvoidiftheCity(1)obtains an opinion of nationally recognized bondcounseltotheeffectthattheportionoftheRulethatrequiresthatprovisionisinvalid,has beenrepealedretroactivelyorotherwisedoesnotapplytotheBondsand(2)notifieseach NRMSIR andtheSID,ifany,of such opinion and thecancellation of thissection.The Citymay amend thissection
with an approving opinion of nationally recognized bond counsel in accordance with the Rule.
E.Bond Owner's Remedies Under This Section.The right of any bondowner or beneficial owner ofBondstoenforcetheprovisionsofthissectionshallbelimitedtoarighttoobtainspecificenforcementoftheCity's obligations underthissection,and any failure by the Citytocomply with theprovisionsofthisundertakingshallnotbeaneventofdefaultwithrespecttotheBonds.For purposes ofthis
0 section,"beneficialowner"means any person who has thepower,directly or indirectly,to vote orconsentwithrespectto,or todispose of ownership of,any Bonds,including persons holding Bonds
throughnominees or depositories.
F.DisclosureUSA.The Citymay elect to submit the information requiredby thisSection 19 to be filedwiththeNRMSIRsandtheSID,if any,directly to DisclosureUSA.org unless or until the SECwithdrawsitsapprovalofthissubmissionprocess.
Section 20.Effective Date.The CityCouncildeclares thatan emergency exists andthisordinanceshall takeeffectimmediatelyasprovidedbylawupononereadingif2/3 ofthe entireCityCouncil present vote in favor
of passage.
Adopted by the City Council and signed by its Mayor o ember 28,2 .
RonaldC.Covey,MayorATTES
At6naldR Coni,Fi6ance Director
APP VED AS TO FORM:
rn .6it er,CityAttorney'
0
CERTIFICATE OF FINANCEDIRECTOR
I DO HEREBY CERTIFY that Iam the dulychosen,qualified and acting Finance Director oftheCity
of Moses Lake,Washington (the"City"),and keeper of the records of the City Council (the"Council");and
i HEREBY CERTIFY:
1.That the attached ordinance is a trueand correct copy of Ordinance No.of the City
(the"Ordinance"),as finally passed at a regular meeting ofthe Councilheld on the 28th day of September,
2004,and dulyrecorded in myoffice.
2.That said meeting was duly convened and held in all respects in accordancewithlaw,and
to the extentrequired by law,due and proper notice of such meeting was given;thata quorum was present
throughoutthemeeting and a legally sufficientnumber of members ofthe Council voted intheproper manner
for thepassage oftheOrdinance;thatallother requirements and proceedings incident tothe proper passage
of the Ordinance have been duly fulfilled,carried out and otherwise observed,and that I am authorized to
execute thiscertificate.
INWITNESS WHEREOF,I have hereunto set my hand t is 28th of September,2004.
Finance Director
O
26
O
O