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HomeMy WebLinkAbout1978-2231 AMENDING ORDINANCE 2133. ORDINANCE NO. .223/ AN ORDINANCE of the City of Yakima, Washington, amending Ordinance 2133 in which the council heretofore adopted a plan of additions and 111 improvements to and extensions of the com- bined water and sewerage system of the City; authorizing the issuance and sale of water and sewer revenue bonds in the principal amount of $3,500,000 for the purpose of paying part of the cost of carrying out said plan of additions and improvements; providing the covenants, terms, and conditions under which the bonds shall be issued; and pro- viding for the disposition of the proceeds thereof. WHEREAS, the City of Yakima, Washington (the "City") now owns, maintains and operates a water supply and distribution system and a sewerage collection and disposal system, and said water and sewerage systems have been combined in the manner provided by law; and WHEREAS, by Ordinance Nos. 2123 and 2133 passed October 24, 1977 and December 8, 1977, respectively, the Council of the City adopted a plan of additions and improvements to and extensions of the combined water and sewerage system (the "System") of the City, declared the estimated cost thereof to be as near as may be the sum of $20,189,330, a portion of which would be provided by the proceeds from the issuance and sale of water and sewer revenue bonds of the City in the principal amount of not to exceed $2,425,733; and WHEREAS, since the time of adoption of said plan, the Coun- cil has found and determined that the cost and expense of pur- chasing, acquiring and constructing the additions and improvements provided therein has increased, and it is necessary to amend Ordinance No. 2133 by providing for such cost and expense and authorizing the issuance of water and sewer revenue bonds to pay part of such cost and expense; and • WHEREAS, by Ordinance No. 2148 passed January 16, 1978, the City provided for the issuance and sale of water and sewer revenue warrants in an aggregate amount of up to $20,189,330 to provide interim financing for carrying out part of the plan of additions 111 and improvements; and WHEREAS, in order to provide the permanent financing for carrying out part of the plan of additions, improvements and extensions specified in Ordinance Nos. 2123 and 2133, it is deemed necessary and advisable that the City issue and sell its water and sewer revenue bonds in an aggregate amount up to $3,500,000 on the terms provided in this Ordinance and that the proceeds received from the sale of said bonds be deposited first as provided in Section 5 of Ordinance No. 2148 and then as pro- vided by Section 1 of Ordinance No. 2123. NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Wash- ington, as follows: . Section 1. Definitions. As used in this Ordinance: (a) "Assessment Income" means the principal of and interest on assessments levied in any local improvement district or utility local improvement district which are pleged to be paid into the Revenue Bond Fund. Assessment Income shall be allocated to the years in which it would be received if the unpaid balance of each assessment roll were paid in the remaining number of in- stallments with interest on the declining balance at the times and at the rate provided in the Ordinance confirming the assess- ment roll. (b) "Assessments" mean any assessments which may be levied in any local improvement district or utility local improve- ment district of the City created for the acquisition or construc- tion of additions and improvements to and extensions of the • System, if such assessments are pledged to be paid into the -2- • Revenue Bond Fund. "Assessments" include any installment of assessments and any interest or penalties which may be due thereon. (c) "Bond Reserve" or "Bond Reserve Account" means the Bond Reserve Account created in the Revenue Bond fund by Section 411 7 of this Ordinance. (d) "Bonds" mean the City of Yakima Water and Sewer. Revenue Bonds, 1978, authorized by this Ordinance. (e) "City" means'the City of Yakima, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. (f) "Costs of Maintenance and Operation" mean all normal operating expenses, current maintenance expenses, expense of reasonable upkeep and repairs, insurance and administrative • expense and pro rata budget charges for City departments where such charges represent a reasonable distribution of share of actual cost, but exclude depreciation, payments for debt service or into reserve accounts, costs of capital additions to or replace- ments of the System, municipal taxes, or payments to the City in lieu of taxes. (g) "Council" means the Council of the City as the same shall be duly and regularly constituted from time to time. (h) "Gross Revenues of the System" mean all earnings, revenue and moneys received by the City from or on account of the operations of the System, from any source whatsoever. (i) ."Net Revenue of the System" means the Gross Rev- enues of the System less the Costs of Maintenance and Operation. (j) "Outstanding Parity Bonds" means: Amount Authorizing Series Date of Issue Outstanding Ordinance • Water and .Sewer Revenue Bonds January 1, 1956 $ 72,000 B-1794 Water and Sewer Revenue Bonds January 1, 1964 1,790,000 475 -3- • Amount Authorizing Series Date of Issue Outstanding Ordinance Water and Sewer Revenue Bonds, Series A March 1, 1968 1,300,000 986 Water and Sewer Revenue 111 Bonds, Series B December 1, 1968 2,800,000 • 1071 The Outstanding Parity Bonds are the only revenue bonds of the City outstanding at this time to which any part of the Gross Revenues of the System have been pledged for the payment of principal and interest thereon. (k) "Outstanding Revenue Bond Funds" mean "Water and Sewer Revenue 'Bond Fund, 1956" created by Ordinance No. B-1714 of the City as amended by Ordinance No.. B-1793, the "Water and Sewer Revenue Bond Fund, 1964" created by Ordinance No. 475 of the City, and the "Water and Sewer Revenue Bond Fund, 1968" created by Ordinance No. 986 of the City, and shall include the "Principal and Interest Account" and the "Reserve Account" in the 1.956 Bond Fund,' the "Reserve Account" in the 1964 Bond Fund, and the "Reserve Account" in the 1968 Bond Tund. (1) "Parity Bonds" mean any Revenue Bonds or Revenue Warrants issued by the City which have a lien upon the Gross Revenues of the System to pay and secure the payment of the principal thereof and interest thereon equal to the lien created upon .the Gross Revenues of the System to pay and secure payment of the principal of and interest on the Bonds. "Parity Bonds" include the Bonds, Outstanding Parity Bonds, and any future ..revenue bonds or warrants issued on a parity therewith. "Future Parity Bonds" mean any Revenue Bonds or Revenue Warrants which . may be issued in the future as Parity Bonds. 'Future Parity Bonds include all bonds defined and designated as "Parity Revenue Bonds" and "Additional Revenue Bonds" in Ordinance Nos. B-1794, 111 475, 986 and 1071. • -4- • (m) "Plan Ordinances" mean Ordinances Nos. 2123 and • 2133 of the City. (n) "Project" means the plan of additions and improve- ments to the wastewater collection; treatment and disposal system 111 of the City described in the Plan Ordinances and Ordinance No. 2148. (o) "Project Fund" means the Yakima Wastewater Facil- ities Project Fund created by Ordinance No. 2123. (p) "Revenue Bond Fund" means the Water and Sewer Revenue Bond Fund, 1978, of the City created by Section 7 of this Ordinance. (q) "Reserve Fund" means the Water and Sewer Reserve Fund of the City heretofore established. (r) "System" means the combined water and sewerage system of the City as it will be added to and improved and ex- tended with the proceeds of sale of the Warrants and the Bonds and as it may be later added to, extended and improved for as long as the Warrants and Bonds remain outstanding, (s) "Warrant Fund" means the "1978 Revenue Warrant 'Fund" created by Section 5 of Ordinance No. 2148.. (t) "Warrants" mean the revenue warrants issued pur- suant to and for the purposes provided in Ordinance No. 2148. The lien of the Warrants on the Gross Revenues of the System is junior and inferior to the lien of the Bonds. Section 2. Plan of Additions, Improvements To and Extensions Of The System. The plan of additions.and improvements to and • extensions of the System set forth in the Plan Ordinances is hereby ratified and confirmed, except that: . Section 2 of Plan Ordinance No. 2133 is hereby amended to • read: 1 -5- • Section 2. The estimated cost of acquir- ing, constructing and installing the above- provided for plans of additions and improve- ments to the existing system of the City [is] hereby declared to be, as near as may be, the sum of $24,400,000, approximately $20,600,000 of which will be provided from anticipated grants from the United States and the State of Washington. The remaining amount of such cost shall be pro- vided from the proceeds of sale of water and sewer revenue bonds of the City in the principal amount of not to exceed $3,500,000, or so much • thereof as is determined to be necessary by the City Council. As an integral part of the plan of acquir- ing, constructing and installing the abOve- provided for additions, improvements and extensions the City shall issue and sell such water and sewer revenue bonds in such amount or amounts and at such time or times as this Council may determine to be to the best inter- est of the City and its inhabitants. The exact date of dates, form, terms, maturities and cov- enants of such bonds shall be as hereafter fixed by ordinance or ordinances of the City. Section 3. Compliance with Parity Conditions. The City has reserved the right in Section 7 of Ordinance B-1794, adopted December 12, 1955, Section 12 of Ordinance 475, adopted November 4, 1963, Section 13 of Ordinance 986, adopted January 2, 1968, and Section 12 of Ordinance 1071 adopted October 21, 1968, to issue additional parity water and sewer revenue bonds upon compliance with certain conditions set forth in Section 7 of B-1794, Section • • 12 of Ordinance No. 475, Section 13 of Ordinance No. 986, and Section 12 of Ordinance No. 1071 (the "Parity Conditions.") The City hereby finds and determines, as required by Section 7 of Ordinance No. B-1794, Section 12 of Ordinance No. 475, Section 13 of Ordinance No. 986 and Section 12 of Ordinance No. 1071, as follows: First, that at the time.of the issuance of the Bonds, all payments required to have been made by Ordinances Nos. B-1794, 475, 986 and 1071 to pay and secure the payment of the Outstanding Parity Bonds have been or shall have been made. -6- • Second, that the Council has been assured that at the time of the delivery of the Bonds, the City will have on file a certificate issued by R. W. Beck & Associates, Inc., professional engineers experienced in municipal utilities, II/ showing compliance with the requirements of Section 7(2) of Ordinance No. B-1794, Section 12(2) of Ordinance No. 475, Section 13(2) of Ordinance No. 986 and Section 12(2) of Ordinance No. 1071. Third, that by Section 7 of this Ordinance, the City has covenanted and provided that it will pay into and main- tain in the Reserve Account created in Section 7 of their ordinance the amounts required by Section 7(3) of Ordinance No. B-1794, Section 12(3) of Ordinance No. 475, Section 13(3) of Ordinance No. 986 and Section 12(3) of Ordinance No. 1071 to be paid into and maintained in said Reserve Account at the times required by said sections. The Parity Conditions being complied with or assured, the Bonds shall have a lien and charge upon the Gross Revenues of the System for the payment of the principal thereof and interest thereon equal to the lien and charge upon the Gross Revenues of the System of the Outstanding Parity Bonds. The City hereby further covenants and agrees that the Bonds • will not be issued and delivered to the purchasers thereof as bonds on a parity with the Outstanding Parity Bonds until the certificate required herein, in form and contents satisfactory to the City and its counsel, has been filed with the City. Section 4. Issuance of the City of Yakima Water and Sewer Revenue Bonds, 1978. The City shall issue the Bonds in the prin- cipal amount of $3,500,000 for the purpose of providing part of le the funds necessary to purchase, acquire and construct the Pro- ject, to pay the expenses incidental to the issuance of the Bonds -7- , . and to retire outstanding Warrants. The Bonds shall be designated the "City of Yakima Water and Sewer Revenue Bonds, 1978," shall be dated Decemberl, 1978, shall be in coupon form in the denomina- tion of $5,000 each, shall bear interest at a rate of not to 0 exceed 8% payable semiannually on the first days of June and . December (commencing June 1, 1979), and shall be numbered and mature in order of their number on DeceMber 1 of each year as follows:- Bond Nos. Maturity Years Amounts . . 1-32- 1995 $160,000 33-66 1996 170,000 67-103 1997 185,000 104-142 1998 195,000 143-183 1999 205,000 184-225 2000 220,000 226-274 2001 235,000 275-324 2002 250,000 325-377 2003 265,000 378-432 2004 285,000 433-494 . 2005 300,000 495-558 2006 320,000 559-627 • 2007 345,000 628-700 2008 365,000 . Both principal of and interest on the Bonds shall be payable in lawful money of the.United States of America at the office of the Treasurer of the City in Yakima, Washington, or, at the option of the holder, at either of the fiscal agencies of the State of Washington in the cities of Seattle, Washington and New York, New York. The Bonds shall be obligations only of the Revenue Bond Fund and shall be payable and secured as provided herein. The Bonds shall not be general obligations of the City. Section 5. Redemption Prior' to Maturity. The City hereby reserves the right to redeem any or all of'the Bonds outstanding in whole, .or in Part in inverse numerical order, on the following interest payment dates and at the following prices expressed as a percentage of the principal amount, plus accrued interest to the AA III date of redemption:. -8- On June 1 and December 1, 1988, at 105 On June 1 and December 1, 1989, at 104 On June 1 and December 1, 1990, at 103 On June 1 and December 1, 1991, at 102 On June 1 and December 1, 1992, at 101 On June 1, 1993, and any interest pay- ment date thereafter at par 111 Interest on any Bonds so called for redemption shall cease on such redemption date unless the same shall not be redeemed upon presentation made pursuant to such call. Notice of any such redemption shall be given by one publica- tion thereof in the official City newspaper not more than forty nor less than thirty days prior to said redemption date, and by mailing a like notice at the same time to W. P. Harper, Inc., Seattle, Washington, or its successor in business at its main office. In addition, such redemption notice shall also be mailed to Moody's Investors Service, Inc. and to Standard & Poor's Corporation at their main offices in the City of New York, New York, or to the business successors, if any, of said firms at their main offices. The City further reserves the right to use at any time any surplus Revenue of the System available after providing for the payments required by paragraphs First, Second, Third, Fourth, Fifth and Sixth of Section 6 of this Ordinance, to purchase any of the Bonds in the open market for retirement only, if the same may be purchased at a price not exceeding that at which they could be called for redemption on the first succeeding date on which they may be called, plus accrued interest. Section 6. Priority of Payments from Revenues of the System. The Gross Revenues of the System shall be held in the Revenue Fund separate and apart from all other funds and accounts of the City and used only for the following purposes and in the follow- ing order of priority: First, to pay the Costs of Maintenance and Operation of the System; -9- , • , • Second, to pay the interest on any Parity Bonds; Third, to pay the principal of any Parity Bonds; Fourth, to make all payments required to be made into any Reserve Account created to secure the payment of any Parity Bonds; Fifth, to make all payments required to be made into any other revenue bond redemption fund or debt service account or reserve account created to pay and secure the payment of the principal of and interest on any revenue bonds of the City having a lien upon the Gross Revenues of the System junior and inferior to the lien thereon for the payment of the principal of and interest on Parity Bonds; Sixth, to retire by redemption or purchase in the open market any outstanding revenue bonds of the City, to make • necessary additions, improvements and repairs to or exten- sions and replacements of the System, or for any other lawful City purposes. . Section 7. Payments into Revenue Bond Fund. A special fund of the City, to be known as the Water and Sewer Revenue Bond Fund, 1978 (the "Revenue Bond Fund"), is hereby created in the Office of the Treasurer of the City for the sole purpose of paying the principal of and interest on the Bonds. . A. Principal and Interest Payments. As long as any of the Bonds remain outstanding, the City hereby irrevocably • obligates and binds itself to set aside and pay from the Revenue. Fund into the Revenue Bond Fund those amounts which, with any other moneys as are on hand and available therefor are necessary • to pay the interest or principal and interest next coming due on all of the Bonds then outstanding. Such payments from the Revenue Fund shall be made on or before the twentieth day of each 40 month as follows: -10- 1. Beginning with the monthof December, 1978, and continuing for as long as any of the Bonds are outstand- ing and unpaid, an amount which With other moneys available • therefor in the Revenue Bond Fund will be equal to at least 11/ one-sixth of the interest to become due and payable on the next interest payment date on all of the Bonds then outstand- ing. • - 2. Beginning with the month of December, 1994, and continuing for as long as any of the Bonds are outstand- ing and unpaid, an amount which with other moneys available therefor in the Revenue Bond Fund will be equal to at least one-twelfth of the principal of the Bonds to become due and payable on the next principal payment date. B. Payments into Reserve Account. A Reserve Account is hereby created in the Revenue Bond Fund for the purpose of securing the payment of the principal of and,interest on the Bonds. The City covenants and agrees that it will set aside and • pay into the Reserve Account out of the Gross Revenue of the System or any other moneys legally available for such purpose approximately equal monthly installments commencing not later than.the month of December, 1978, and continuing throughout the month of November, 1983, an aggregate amount equal to the average • , annual debt service requirements for the Bonds. The City further covenants and agrees that when the required . amounts have been deposited in the Reserve Account, it will at all times maintain those amounts therein until there is a suffi- . cient amount in the Revenue Bond Fund and Reserve Account to pay the principal of, premium, if any, and interest on all Bonds then outstanding; at which time the money in the Reserve Account may • be used to pay such principal, premium, if any, and interest. -11- • The City further covenants and agrees that after said five- year period it will, from time to time, if necessary, set aside and pay into the Reserve Account out of the Gross Revenue of the System or out of any other funds legally available therefor, such 111 amounts as may be necessary to provide an aggregate amount in the reserve accounts securing the payment of the Outstanding Parity Bonds and the Bonds at least equal to the next succeeding calendar year's debt.service on such bonds. In the event there shall be a deficiency in the Revenue Bond Fund to meet maturing installments of either interest on or prin- . cipal of and interest on the then outstanding Bonds, such defi- ciency shall be made up from the Reserve Account by the withdrawal of .moneys therefrom. Any deficiency created in the Reserve Account by reason of any such withdrawal shall then be made up out of the Gross Revenues of the System after making necessary provision for the payments required to be made by subparagraphs First, Second and Third of Section 6 hereof. C. Priority of Lien of Payments into Revenue Bond Fund. The amounts so pledged to be paid into the Revenue Bond Fund and the Reserve Account therein are hereby declared to be a prior lien and charge upon the Gross Revenue of the System superior to all other charges of any kind or nature whatsoever (including any transfer of money to other funds of the City and taxes or payments in lieu of taxes) except the Costs of Maintenance and Operation of the System and except that the amounts so pledged are of equal lien to the charges upon such Revenue for the payment of the principal of and interest on the Outstanding Parity Bonds and to any charge which may hereafter be made to pay and secure the payment of the principal of and interest on any Future Parity Bonds. -12- D. Investment of Moneys in Revenue Bond Fund. Money in the Revenue Bond Fund and Reserve Account may be invested as permitted by law. Interest earned on and any profits made from the sale of any !II investment of the Reserve Account shall be deposited in and become a part of the Reserve Account until there shall be an amount equal to the average annual debt service for the Bonds after which such interest and any profits shall be deposited in and become a part of the Revenue Bond Fund. Investments in the Revenue Bond Fund other than the Reserve Account shall mature prior to the date on which such money shall be needed for required interest or principal payments. Investments in the Reserve Account shall mature not later than the last maturity of any then outstanding Bonds. All interest earned and income derived by virtue of such investments shall remain in the Revenue Bond Fund and be used to meet the required deposits into any account therein. E. Sufficiency of Revenues. The City Council hereby finds that in fixing the amounts to be paid into the Revenue Bond Fund and the Reserve Account out of the Gross Revenues of the System, it has exercised due regard for the Costs of Maintenance and Operation and for the amounts required to pay and secure payment of principal of and interest on the Outstanding Parity Bonds and has not obligated the City to set aside and pay into such. Fund and Account a greater amount of such Gross Revenues of the System than in its judgment will be available over and above the Costs of Maintenance and Operation and the principal of and interest on the Outstanding Parity Bonds. Section 8. Defeasance. In the event that money and/or "Government Obligations," as such obligations are now or hereafter defined in RCW Ch. 39.53 or its successor statute, maturing or -13- 1 having guaranteed redemption prices at the option of the holder at such time or times and bearing interest to be earned thereon in such amounts as are sufficient (together with any resulting cash balances) to redeem and retire part or all of the Bonds in accordance with their terms, are hereafter irrevocably set aside in a special account and pledged to effect such redemption and retirement, then no further payments need be made into the Revenue Bond Fund or any account therein for the payment of the principal of and interest on the certain bonds so provided for and such bonds and appurtenant coupons shall then cease to be entitled to any lien, benefit or security of this Ordinance, except the right to receive the funds so set aside and pledged, and such bonds and appurtenant coupons shall no longer be deemed to be outstanding hereunder. Section 9. Disposition of Proceeds of Sale of the Bonds. Upon the sale of the Bonds the proceeds thereof (except for accrued interest, which shall be paid into the Revenue Bond Fund) shall be deposited: First, into the Warrant Fund in an amount sufficient to pay the principal of and interest on the then outstanding Warrants issued pursuant to Ordinance 2148. Second, into the Project Fund to be used for the sole purpose of paying the costs of the Project, for repaying any advances or loans which may have been made to the Project Fund from other funds of the City and which were used for paying part of the cost of the Project, and for paying the expenses incidental to the issuance of the Bonds. Any bond proceeds remaining in the Project Fund after pay- ment of the foregoing costs and expenses shall be deposited in the Reserve Account of the Revenue Bond Fund. 411 -14- : . Section 10. Bond Covenants. The City hereby covenants and agrees with the owner and holder of each of the Bonds for as long as any of the same remain outstanding as follows: A. For as long as the Outstanding Parity Bonds remain outstanding, the City shall observe and comply with the covenants contained in Section 6 of Ordinance No. B-1794, Section 10 of Ordinance No. 475, Section 11 of Ordinance No. 986, and Section 10 of Ordinance No. 1071, and in the event of conflict with any covenant hereinafter set forth, the covenants contained in such Ordinances shall prevail. B. The City shall at all times maintain, preserve and keep the properties of the System in good repair, working order and condition and will from time to time make all necessary and proper repairs, renewals, replacements, extensions and better- ments thereto, so that at all times the business carried on in connection therewith will be properly and advantageously con- ducted, and the City will at all times operate or cause to be operated said properties of the System and the business in con- nection therewith in an efficient manner and at a reasonable cost. C. The City shall fix, maintain and collect rates and charges for the use of the services and facilities and all com- modities sold, furnished or supplied by the System, which shall be fair and nondiscriminatory and shall adjust such rates and charges from time to time so that: 1. The Gross Revenues of the System derived therefrom (together with Assessments collected if no Outstand- ing Parity Bonds remain outstanding) will at all times be sufficient (a) to pay all costs of and charges and expenses 111 -15- in connection with the proper operation and maintenance of the System, (b) to pay the principal of and interest on all Parity Bonds, as and when the same shall become due and payable, (c) to make when due all payments which the City is obligated to make into the Outstanding Revenue Bond Funds, the Revenue Bond Fund and the Reserve Account therein and all other payments which the City is obligated to make pursuant to this Ordinance, and (d) to pay all taxes, assess- ments or other governmental charges lawfully imposed on the System or the revenue therefrom or payments in lieu thereof and any and all other amounts which the City may now or hereafter become obligated to pay from the Gross Revenues of the System by law or contract; and 2. Gross Revenues of the System (together with Assessments collected if no Outstanding Parity Bonds remain outstanding) shall be available for the payment of the principal of and interest on all Parity Bonds as the same shall become due equal to at least 1.4 times the amount required each calendar year hereafter for the payment of all such principal and interest after Costs of Maintenance and Operation have been paid but before depreciation and before any transfer of moneys to any funds of the City other than the Outstanding Revenue Bond Funds and before taxes or payments in lieu of taxes payable to the City. D. The City will not sell or otherwise dispose of the System in its entirety unless simultaneously with such sale or other disposition, provision is made for the payment into the Revenue Bond Fund of cash or Government Obligations (as now or hereafter defined in RCW Ch. 39.53) sufficient (taking into account interest to be earned on any such Government Obligations) to pay the principal of and interest on all Bonds then outstanding. -16- , . • The City will not sell, lease, mortgage or in any manner encumber or or otherwise dispose of any part of its System, including all additions, improvements, and extensions thereof, at any time made that are used, useful or material, in the operation of the System unless provision is made for the replacement thereof or for payment into the Bond Fund of an amount which shall bear the same ratio to the amount of Bonds then Outstanding as the revenue available for debt service for said Bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the utility so leased, encumbered or disposed of bears to the revenue available for debt service for said Bonds from the entire utility for the same period. Notwithstanding any other provision of this paragraph, the City may sell or otherwise dispose of any of the works, plant, properties and facilities of the System or any real or personal property comprising a part of the same which shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the System, or no longer necessary, material to or useful in such operation, without making any deposit into the Revenue Bond Fund. E. The City will not at any time create or permit to accrue or to exist any lien or other encumbrance or indebtedness upon the System or the Gross Revenues of the System, or any part thereof, prior or superior to the lien thereon for the payment of Parity Bonds, and will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Revenue of the System, or any part thereof, or upon any funds in the hands of the City, prior to or superior to the lien of Parity Bonds, or which might impair the security of Parity Bonds. -17- • F. The City shall keep proper books of account in accordance with any applicable rules and regulations prescribed by the State of Washington. The City shall prepare, and any owner or holder of Parity Bonds may obtain copies of, balance 411 sheets and profit and loss statements showing in reasonable detail the financial condition of the System as of the close of each year, and the income and expenses of such year, including the amounts paid into the Revenue Bond Fund, and into any and all special funds or accounts created pursuant to the provisions of this Ordinance, and the amounts expended for maintenance, renewals, replacements, and capital additions to the System. G. The City will not furnish or supply or permit the furnishing or supplying of any commodity, service or facility furnished by or in connection with the operation of the System, free of charge to any person, firm or corporation, public or private, so long as any Bonds are outstanding and unpaid. Section 11. Issuance of Future Parity Bonds. The City hereby further covenants and agrees with the owners and holders of each.of the Bonds for as long as any of the same remain out- standing that the City will not issue any bonds having a greater or equal priority of upon the Gross Revenues of the System to pay and secure the payment of the principal of and interest on such bonds than the priority of lien created on such Revenues to pay and secure the payment of the principal of and interest on Parity Bonds except as follows: A. The City reserves the right to issue Future Parity -Bonds for the purposes of First, providing funds to acquire, construct, recon- struct, install, or replace any equipment, facilities, additions, betterments, or other improvements to the System 111 for which it is authorized by law to issue revenue bonds, or -18- . . . Second, refunding at or prior to their maturity any revenue bond anticipation notes or outstanding revenue bonds or other obligations payable out of the Gross Revenues of the System and to pledge that payments will be made out of the Gross Revenues of the System of the principal of and interest on such Future Parity Bonds on a parity with the payments required to be made out of such revenue into the Outstanding Revenue Bond Funds and Revenue Bond Fund and Reserve Account to pay and secure the payment of the principal of and interest on any Parity Bonds then outstanding, only upon compliance with the following conditions: 1. For so long as any Outstanding Parity Bonds remain outstanding, the requirements of subparagraphs 2, 3 and 4 below shall be met and complied with at the time of issuance of any Future Parity Bonds and subparagraphs 5 and 6 shall not apply. At such time as no Outstanding Parity Bonds remain outstanding, the City may issue Future Parity Bonds only if the requirements stated in subparagraphs 2, 4, 5 and 6 herein shall be met and complied with, and subpara- graph 3 shall no longer apply. 2. At the time of the issuance of any Future Parity Bonds all payments currently required by Ordinances Nos. B-1794, 475, 986, 1071, this ordinance and all ordin- ances authorizing the issuance of Future Parity Bonds to pay and secure the payment of all of the bonds issued pursuant to such ordinances shall have been made. 3. The annual Net Revenues of the System based upon the historical experience of the entire System or the pro forma revenues under the then existing rates over a • period of any twenty-four consecutive months out of the thirty-six months immediately preceding the time of the -19- . . issuance of such Future Parity Bonds will equal at least 1.40 times the maximum amount required to be paid in any calendar year thereafter on account of interest to accrue and principal to become payable with respect to all indebted- ness of the City payable solely from the revenues of the System to be outstanding immediately subsequent to the incurring of the proposed additional indebtedness. Such determination of the sufficiency of the revenues shall be made and certified to by an independent registered profes- sional engineer experienced in municipal utilities. Provided, however, that if such additional bonds proposed to be so issued are for the sole purpose of refund- ing Outstanding Parity Bonds, the Bonds or Future Parity Bonds, such certification of coverage shall not be required • if the amount required for payment of the principal and interest of each year for the refunding bonds is not in- creased over the amount required for the bonds to be re- funded thereby and the maturities of said refunding bonds • are not extended beyond the maturities of the bonds to be refunded thereby. 4. The ordinance authorizing the issuance of Future Parity Bonds shall provide that an amount equal to the average annual debt service requirements for such addi- tional bonds to be issued shall be accumulated as a reserve in the bond redemption fund created for said Future Parity Bonds or in a separate reserve fund, said amount to be accumulated within five years after the date of issuance of said Future Parity Bonds by substantially equal annual payments, and said reserve to be maintained in such amounts • so long as any of said Future Parity Bonds are outstanding to the last maturity thereof. -20- Such ordinance shall also covenant that after said five-year period, the City shall, from time to time, if necessary, set aside and pay into such reserve out of the Gross Revenues of the System or out of any other funds legally available therefor such amounts as may be necessary to provide an aggregate amount in the reserve accounts securing the payment of the Outstanding Parity Bonds, the Bonds, and any Future Parity Bonds at least equal to the next succeeding year's debt service on such bonds. 5. If there are Assessments pledged to be paid • into a warrant or bond redemption fund for revenue bonds or warrants being refunded by Future Parity Bonds, the ordin- ance authorizing the Future Parity Bonds, shall require such Assessments to be paid into the bond redemption fund therein created. 6. .Prior to the delivery of any Future Parity Bonds the City shall have on file in the office of the Clerk a certificate of an independent professional engineer or certified public accountant dated not earlier than 90 days prior to the date of delivery of the Future Parity Bonds and showing: (a) that the Net Revenue determined and adjusted as hereafter, provided for each calendar or fiscal year after the issuance of such Parity Bonds (the "Adjusted Net Revenue") together with Assessment Income will equal at least 1.40 times the maximum amount required in any such year for the payment of the principal of and interest on all Parity Bonds then outstanding, including the Future Parity Bonds proposed to be issued;, -21- (b) The Adjusted Net Revenue shall be the Net Revenue for a period of any twelve consecutive months out of the twenty-four months immediately preced- B u rity Parity take into consideration changes in Net Revenue estimated to occur under the following conditions for each year after such delivery for so long as any Parity Bonds, including the Future Parity Bonds proposed to be issued, shall be outstanding: (i) the additional Net Revenue which would have been received if any change in rates and charges adopted prior to the date of such certificate and subsequent to the beginning of such twelve-month period, had been in force during the full twelve-month period; (ii) the additional Net Revenue which would have been received if any facility of the System which became fully operational after the beginning of such twelve-month period had been so operating for the entire period; (iii) the additional Net Revenue estimated by such engineer or accountant to be received as a result of any additions, betterments and improve- ments to and extensions of any facilities of the System which (1) are under construction at the time of such certificate or (2) will be constructed from the proceeds of the Future Parity Bonds to be issued; (iv) the additional Net Revenue which would have been received if any customers added to -22- the System during such twelve month period were customers for the entire period; Such engineer or accountant shall base his certification upon, and his certificate shall have attached thereto, financial statements of the System certified by the City Treasurer, showing income and expenses for the period upon which the same is based. The certificate of such Engineer or Accountant shall be conclusive and the only evidence required to show compliance with the provisions and requirements of this subsection 6. Notwithstanding the foregoing requirement, if Future Parity Bonds to be issued for the purpose of refunding at or prior to their maturity any part or all of the then outstanding Parity Bonds and the issuance of such refunding Parity Bonds results in a debt service savings and does not require an increase of more than $5,000 in any year for principal and interest on such refund- ing Parity Bonds, the certificate required by subsection A.6 of this section need not be obtained. B. Nothing herein contained shall prevent the City from issuing revenue bonds or other obligations which are a charge upon the Gross Revenues of the System junior or inferior to the payments required by this ordinance to be made out of such revenues to pay and secure the payment of any Parity Bonds. C. Nothing herein contained shall prevent the City from issuing revenue bonds to refund maturing Parity Bonds for the payment which moneys are not otherwise available. Section 12. Lost or Destroyed Bonds. In case any Parity Bonds or any of'the coupons thereof shall be lost, stolen or destroyed, the City may execute and the Treasurer of the City may -23- deliver a new bond or bonds and a coupon or coupons of like date, . number and tenor to the holder thereof upon the holder's paying the expenses and charges of the City in connection therewith and upon his filing with the Treasurer of the City eviaence satis- factory to said Treasurer that such bond or coupons were actually lost, stolen or destroyed, and of his ownership thereof, and upon furnishing the City with indemnity satisfactory to the Treasurer. Section 13. Form of Bonds. The "City of Yakima Water and Sewer Revenue Bonds, 1978" shall be in substantially the follow- ing form: UNITED STATES OF AMERICA No. STATE OF WASHINGTON CITY OF YAKIMA WATER AND SEWER REVENUE BOND, 1978 The City of Yakima, a municipal corporation organ- ized and existing under and by virtue of the laws of the State of Washington (herein called the "City"), hereby acknowledges itself indebted and for value received promises to pay to bearer, solely from the sources herein referred to, the principal sum of FIVE THOUSAND DOLLARS on the first day of December, 19 , unless redeemed prior thereto as herein provided, with interest thereon from the date hereof at the rate of % per annum until such principal sum is paid or payment has been duly provided for, payable June 1, 1979, and semiannually • thereafter on the first days of each June and December. Payment of the interest due on or before the maturity of this bond shall be made only upon presentation and 'surrender of the coupons representing such interest as the same respectively become due. Both principal of and interest on this bond are payable in lawful money of the United States of America, at the office of the Treasurer of. the City of Yakima, Washington, or, at the option of the holder, at either of the fiscal agencies of the State of Washington in the cities of Seattle, Washington, and New York, New 110 York. The City has reserved the right to redeem any or all of the Bonds outstanding in whole, or in part in inverse numerical order, on the following interest payment dates and at the following prices expressed as a percentage of the principal amount, plus accrued interest to the date of redemption: -24- . . On June 1 and December 1, 1988, at 105 On June 1 and December 1, 1989, at 104 On June 1 and December 1, 1990, at 103 On June 1 and December 1, 1991, at 102 On June 1 and December 1, 1992, at 101 On June 1, 1993, and any interest pay- ment date thereafter at par 111 Interest on any bonds so called for redemption shall cease on such redemption date unless the same shall not be redeemed upon presentation made pursuant to such call. Notice of any such redemption shall be given by one publication thereof in the official City newspaper not more than forty nor less than thirty days prior to said redemption date, and by mailing a like notice at the same time to W. P. Harper, Inc., Seattle, Washington, or the successor in business thereof at its main office. In addition, such redemption notice shall also be mailed to Moody's Investors Service, Inc. and to Standard & Poor's Corporation at their main offices in the City of New York, New York, or to the business successors, if any, of said firms at their main offices. This bond is one of an issue of 700 bonds of the City of like denomination, date and tenor except as to number, rate of interest and date of maturity in the aggregate principal amount of $3,500,000. This issue of bonds is authorized by Ordinance No. of the City (herein called the "Bond Ordinance") for the purpose of providing money to pay part of the cost of additions and improvements to the combined water and sewer system of,, the City, all in conformity with the laws of the staf' of Washington. This bond and the bonds of this issue are payable solely from the special fund of the City known as the Yakima Water and Sewer Revenue Bond Fund, 1978" (herein called the "Revenue Bond Fund") created by the Bond Ordinance in the office of the Treasurer of the City: The City has irrevocably obligated and bound itself to pay into the Revenue Bond Fund out of the Gross Revenues of the System (as defined in the Bond Ordinance) or from such other moneys as may be provided therefor, certain amounts necessary to pay and secure the payment of the principal of and interest on such bonds. The bonds of this issue are not general obligations of the City. The City hereby covenants and agrees with the owner and holder of this bond that it will keep and perform all the covenants of this bond and of the Bond Ordinance to be by it kept and performed. The City does hereby pledge and bind itself to set aside out of the Gross Revenues of the System into the Revenue Bond Fund and the Reserve Account created therein • the various amounts required by the Bond Ordinance to be paid into and maintained in said Fund and Account, all within the times provided by the Bond Ordinance. -25- . . To the extent more particularly provided by the Bond Ordinance the amounts so pledged to be paid out of the Gross Revenues of the System into the Revenue Bond Fund and the Accounts therein shall be a prior lien and charge upon the Gross Revenues of the System superior to all other charges of any kind or nature whatsoever except the Costs of Maintenance and Operation of the • System (as defined in the Bond Ordinance) and except that said amounts are equal in rank to the lien and charge upon such Revenue of the amounts required to pay and secure the payment of the outstanding water and sewer revenue bonds of the City dated January 1, 1956, January 1, 1964, March 1, 1968, December 1, 1968, and any other water and sewer revenue bonds of the City hereafter issued on a parity with the bonds of this issue (hereinafter and in the Bond Ordinance called "Parity Bonds"). The City has further bound itself to observe the covenants contained in Ordinances Nos. B-1794, 475, 986 and 1071 of the City as long as the Outstanding Parity Bonds issued thereunder remain outstanding, to maintain the System in good repair, working order and condition, to operate the same in an efficient manner and at a reasonable cost, and to fix, maintain and collect rates and charges for as long as any of the bonds of this issue are outstanding that will make available, for the payment of the principal thereof and interest thereon as the same shall become due, Net Revenue (as defined in the Bond Ordinance) in an amount which, together with Assessment Income (as defined in the Bond Ordinance) will be equal to at least 1.40 times the maximum amount required to be paid out of the Revenue Bond Fund in any year hereafter to pay the principal of and interest on all of such bonds and any Parity Bonds then outstanding. The pledge of Revenues of the System and other obligations of the City under the Bond Ordinance may be discharged at or prior to the maturity or redemption of the bonds of this issue upon the making of provisions for the payment thereof on the terms and conditions set forth in the Bond Ordinance. Reference to the Bond Ordinance and any and all modifications and amendments thereof is made for a description of the 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. It is hereby certified and declared that this bond and the bonds of this issue are issued pursuant to and in strict compliance with the Constitution and laws of the State of Washington and ordinances of the City, and that all acts, conditions and things required to be done precedent to and in the issuance of this bond have happened, been done and performed. • IN WITNESS WHEREOF, the City has caused this bond to be executed in its name by the facsimile signature -26- of the Mayor, to be attested by the manual signature of the City Clerk, the corporate seal of the City to be impressed hereon, and the interest coupons attached hereto to be signed with the facsimile signatures of said officials, this first day of , 1978. CITY OF YAKIMA, WASHINGTON By (facsimile signature) Mayor ATTEST: (manual signature) City Clerk The interest coupons attached to the Bonds shall be in substantially the following form: No. On the first day of , 19 , unless the bond to which this coupon is appurtenant shall have been duly called for prior redemption and the redemption price shall have been paid or duly provided for, the City of Yakima (the "City") will pay to bearer at the office of the City Treasurer, in Yakima, Washington, or, at the option of the holder, at either of the fiscal agencies of the State of Washington, in the cities of Seattle, Washington and New York, New York, the amount shown hereon in lawful money of the United States of America, solely out of the sources referred to in said Bond and Ordinance No. of the City, being the special fund of the City entitled "Water and Sewer Revenue Bond Fund, 1978" said amount being the interest due that day on its Water and Sewer Revenue Bond, 1978 dated December 1, 1978, and numbered . CITY OF YAKIMA, WASHINGTON By (facsimile signature) Mayor ATTEST: (facsimile signature) City Clerk Section 14. Execution of Bonds. Without unreasonable delay the City shall cause definitive Bonds to be prepared, executed and delivered, which Bonds shall be lithographed or printed with engraved or lithographed borders. The Bonds shall be executed on behalf of the City with the facsimile signature of the Mayor, shall be attested by the manual signature of the City Clerk, and -27- shall have the seal of the City impressed thereon. The interest coupons attached thereto shall be signed with the facsimile signatures of said officials. Section 15. Sale of Bonds. The Bonds shall be sold at 01/ public sale upon sealed proposals to be received by the City Clerk at her office in the City Hall until 1:00 p.m. Pacific Standard Time on December 11, 1978, at which time the bids will be publicly opened and read. The City Council will consider and act upon the bids received at its regular meeting to be held in the Council Chambers at 3:00 p.m. Pacific Standard Time on the same day. The proper officials of the City are hereby authorized and directed to do all things necessary for the prompt issuance, execution and delivery of the Bonds and for the proper use and application of the proceeds of sale thereof. Section 16. Amendments. A. The Council from time to time and at any time may adopt an ordinance or ordinances supplemental hereof, which ordinance or ordinances thereafter shall become a part of this Ordinance, for any one or more or all of the following purposes: 1. To add to the covenants and agreements of the City in this Ordinance contained other covenants and agree- ments thereafter to be observed, which shall not adversely affect the interests of the holders of any Parity Bonds, or to surrender any right or power herein reserved to or con- ferred upon the City. 2. To make such provisions for the purpose of curing any ambiguities or of curing, correcting or supple- menting any defective provision contained in this Ordinance or any ordinance authorizing Future Parity Bonds in regard to matters or questions arising under such ordinances as the -28- Il si ul h ma anol which shall not adversely inconsistent adopted with ordinances and shaers affect the interest of the holders of Parity Bonds in any material respect. 411 Y in o a r ncri without the consent of the holders of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of sub- section B of this section. B. With the consent of the holders of not less than 65% in aggregate principal amount of the Parity Bonds at the time outstanding, the Council may adopt an ordinance or ordinances supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Ordinance or of any supplemental ordinance; provided, how- ever, that no such supplemental ordinance shall: 1. Extend the fixed maturity of any Parity Bonds, or reduce the rate of interest thereon, or extend the time of payment of interest from their due date, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the holder of each bond so affected; or 2. Reduce the aforesaid percentage of bondholders required to approve any such supplemental ordinance, without the consent of the holders of all of the Bonds then out- standing. It shall not be necessary for the consent of bondholders under this subsection B to approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if such consent shall approve the substance thereof. C. Upon the adoption of any supplemental ordinance pursuant to the provisions of this section, this ordinance shall -29- • be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations of the City under this ordinance and all holders of Parity Bonds outstanding here- , under shall thereafter be determined, exercised and enforced thereunder, subject in all respects to such modification and amendments, and all the terms and conditions of any such supple- mental ordinance shall be deemed to be part of the terms and conditions of this Ordinance for any and all purposes. D. Parity Bonds executed and delivered after the execution of any supplemental ordinance adopted pursuant to the provisions of this section may have a notation as to any matter provided for in such supplemental ordinance, and if such supple- mental ordinance shall so provide, new bonds so modified as to conform in the opinion of the Council, to any modification of this Ordinance contained in any such supplemental ordinance, may be prepared by the City and delivered without cost to the holders of any affected Parity Bonds then outstanding, upon surrender for cancellation of such bonds with all unmatured coupons and all matured coupons not fully paid, in equal aggregate principal amounts. Section 17. Severability. If any one or more of the cove- nants or agreements provided in this Ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or cove- nants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements in this Ordinance and shall in no way affect the validity of the other provisions of this Ordinance or of any Parity Bonds. • -30- 1 Section 18. Effective Date. This Ordinance shall be effective thirty (30) days after its adoption and publication as provided by law. ADOPTED by the Council of the City of Yakima at a regular 1 meeting thereof, held this 6 day of )tvw.4.44,14.A. , 1978. CITY OF YAKIMA, WASHINGTON By .' 'f, e PI4,1O)/01 Betty/L. Edmondson, Mayor ATTEST: / _ . Iris Litzenberg,:r, City'fflerk APPR ED AS TO FORM: T - ,, A s, . .• .. -• Fred H. Andrew , City Attorney I, IRIS LITZENBERGER, the duly chosen, qualified Clerk of the City of Yakima, Washington, DO HEREBY CERTIFY that the fore- . going ordinance is a true and correct copy of Ordinance No. 4a2.3 of the City Council of said City duly adopted at a regular meet- ing thereof held on the 6 day of 4/74Ne.......a 1978. O ._:' f ., City' Clerk f , .. It -31-