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HomeMy WebLinkAbout1983-2677 WATER & SEWER REVENUE BONDS , • ORDINANCE NO. 2677 CITY OF YAKIMA, WASHINGTON WATER AND SEWER REVENUE BONDS, 1983 $4,050,000 111, AN ORDINANCE of the City of Yakima, Washington, authorizing the issuance and sale of water and sewer revenue bonds of the City in the aggregate principal amount of $4,050,000 for the purpose of providing a portion of the funds necessary to acquire, construct and install certain additions and improvements to the combined water and sewerage system of the City; fixing the date, form, terms, maturities, covenants and conditions under which the bonds shall be issued; and providing for the disposition of the proceeds thereof. Prepared by: PRESTON, THORGRIMSON, ELLIS & HOLMAN 2000 IBM Building Seattle, Washington 98101 • , • • TABLE OF CONTENTS Page Recitals 1 Section 1. Definitions 2 Section 2. Plan of Additions, Improvements to and , • Extension of the System 5 Am , Section 3. Compliance with Parity Conditions 5 Section 4. Issuance of the City of Yakima Water and Sewer Revenue Bonds, 1983 7 Section 5. Redemption Prior to Maturity 8 Section 6. Priority of Payments from Gross Revenues of the System 9 Section 7. Revenue Bond Fund 10 Section 8. Defeasance of the Bonds 13 Section 9. Disposition of Proceeds of Sale of the Bonds ..: 14 Section 10. Bond Covenants '14 Section 11. Issuance of Future Parity Bonds 18 Section 12. Lost or Destroyed Bonds 23 Section 13. Form of Bonds 23 Section 14. Execution of Bonds 27 • Section 15. Sale of Bonds 27 Section 16. Amendments 28 Section 17. Severability 30 Section 18. General Authorization 30 Section 19. Not Arbitrage Bonds nor Industrial Develop- ment Bonds 30' Section 20. Prior Acts 31 Section 21. Effective Date 31 11/ • 4111) . • ORDINANCE NO. 2677 AN ORDINANCE of the City of Yakima, Washington, authorizing the issuance and sale of water and sewer revenue bonds of the City in the aggregate principal amount of $4,050,000 for the purpose of providing a portion of the funds necessary to acquire, construct and install certain additions • and improvements to the combined water and sewerage system of the City; fixing the date, form, terms, maturities, covenants and conditions under which the bonds shall be issued; and providing for the disposition of the proceeds thereof. WHEREAS, the City of Yakima, Washington (the "City") now owns, operates and maintains 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 Ordinances Nos. 2123 and 2133, passed October 24, 1977, and December 8, 1977, respectively, as amended by Ordinance No. 2148, passed January 16, 1978, Ordinance No. 2231, passed November 6, 1978, and Ordinance No. 2260, passed December 21, 1982, the Council of the City adopted a plan of additions and betterments to and extensions of the combined water and sewerage system of the City (the "System"), and declared the estimated cost thereof to be as near as may be the sum of $33,800,000, a portion of which would be paid through the issuance and sale of water and sewer revenue bonds of the City in the total principal amount of not to exceed $8,525,733; and WHEREAS, the City incurred additional costs for such addi- tions and betterments to and extensions of the System as the result of the settlement of certain pending litigation; and WHEREAS, by Ordinance No. 2260, the City provided for the issuance and sale of its bond anticipation notes in the aggregate • • principal amount of not to exceed $3,100,000 to provide funds to pay such additional costs; and WHEREAS, it is deemed necessary and desirable that the City issue and sell its water and sewer revenue bonds in the aggregate principal amount of $4,050,000 to provide the funds necessary to 411 .carry out part of the plan of additions, betterments and exten- sions to the System specified in Ordinances Nos. 2123 and 2133, and to provide the permanent financing for the additional costs incurred as a result of the settlement of the litigation; and WHEREAS, the City has received the offer of Foster & Marshall/American Express Inc. to purchase the water and sewer revenue bonds of the City in the principal amount of $4,050,000; and WHEREAS, it is deemed in the best interest of the City that said offer of Foster & Marshall/American Express Inc. to purchase the bonds be accepted; 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 special assessments levied in any local improvement district or utility local improvement district which are pledged 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 installments with interest on the declining balance at the times and at the rate provided in the ordinance confirming the assess- ment roll. (b) "Assessments" means any special assessments which may be levied in any local improvement district or utility local improve- . ment district of the City created for the acquisition, construc- -2- WMD17 83/02/09 tion or installation of additions and improvements to or exten- sions of the System, including any installment of assessments and any interest or penalties which may be due thereon, if such assessments are pledged to be paid into a revenue bond fund to pay and secure the payment of any Parity Bonds. • (c) "Bonds" means the City of Yakima Water and Sewer Revenue Bonds, 1983, in the aggregate principal amount of $4,050,000 authorized by this ordinance. (d) "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. (e) "Costs of Maintenance and Operation" means all normal operating expenses, current maintenance expenses, expenses of reasonable upkeep and repairs, insurance and administrative expenses and reasonable pro-rata budget charges for services provided to the System by City departments, but excludes deprecia- tion, payments for debt service or into reserve accounts, costs of capital additions to or replacements of the System, municipal taxes, or payments to the City in lieu of taxes. (f) "Council" means the legislative body of the City as the same shall be duly and regularly constituted from time to time. (g) "Gross Revenues of the System" means all earnings, revenue and moneys received by the City from or on account of the operations of the System, from any source whatsoever. (h) "Net Revenues of the System" means the Gross Revenues of the System less the Costs of Maintenance and Operation. (i) "Notes" means the bond anticipation notes of the City issued pursuant to Ordinance No. 2260 of the City in the aggregate principal amount of $3,100,000. (j) "Note Redemption Fund" means the "1982 Bond Anticipation Note Redemption Fund" created by Ordinance No. 2260 of the City to -3- WMD17 83/02/09 • be drawn upon for the sole purpose of paying the principal of and • interest on the Notes. (k) "Outstanding Parity Bonds" means: Amount Authorizing Series or Issue Date of Issue . Outstanding Ordinance • Water and Sewer • Revenue Bonds January 1, 1964 $895,000 475 - Mater and Revenue Bonds, Series A - March 1, 1968 $915,000 986 • • Water and Sewer Revenue Bonds, Series B December 1, 1968 $2,800,000 1071 Water and Sewer Revenue Bonds, 1978 . December 1, 1978 $3,500,000 2231 Total $8,110,000 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 the principal thereof and interest thereon. (1) "Outstanding Revenue Bond Funds" means the "Water and Sewer Revenue Bond Fund, 1964," created by Ordinance No. 475 of the City, the "Water and Sewer Revenue Bond Fund, 1968," created by Ordinance No. 986 of the City, and the "Water and Sewer Revenue Bond Fund, 1978," created by Ordinance No. 2231 of the City, and shall include the "Reserve Account" in the 1964 Revenue Bond Fund, the "Reserve Account" in the 1968 Revenue Bond Fund, and the "Reserve Account" in the 1978 Revenue Bond Fund. (m) "Parity Bonds" means any revenue bonds, revenue warrants or other revenue obligations 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 111 -4- WMD17 83/02/09 • • secure payment of the principal of and interest on the Bonds. "Parity Bonds" include the Bonds, the Outstanding Parity Bonds, and any Future Parity Bonds. "Future Parity Bonds" means any revenue bonds, revenue warrants or other revenue obligations which may be issued in the future as Parity Bonds, and includes all 111 bonds defined and designated as "Parity Revenue Bonds" in Ordi- nances Nos. 475, 986 and 1071. (n) "Plan Ordinances" means Ordinances Nos. 2123 and 2133 of the City. (o) "Project" means the planned additions and improvements to the wastewater collection, treatment and disposal system of the City described in the Plan Ordinances and Ordinance No. 2148. (p) "Project Fund" means the Yakima Wastewater Facilities Project Fund created by Ordinance No. 2123. (q) "Reserve Account" means the Bond Reserve Account created in the Revenue Bond Fund by Section 7 of this Ordinance. (r) "Revenue Bond Fund" means the Water and Sewer Revenue Bond Fund, 1983, created by Section 7 of this Ordinance. (s) "Revenue Fund" means the Water and Sewer Revenue Fund of the City heretofore established. (t) "System" means the combined water and sewerage system of the City as it now exists, as it shall be added to and improved and extended with the proceeds of sale of the Bonds, and as it may be later added to, extended and improved for as long as any Parity Bonds remain outstanding. Section 2. Plan of Additions, Improvements to and Extension 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. Section 3. Compliance with Parity Conditions. The City has II/ reserved the right in Section 12 of Ordinance No. 475, passed -5- WMD17 83/02/09 November 4, 1963, Section 13 of Ordinance No. 986, passed Jan- uary 2, 1968, Section 12 of Ordinance No. 1071, passed October 21, 1968, and Section 11 of Ordinance No. 2231, passed November 6, 1978, to issue additional parity water and sewer revenue bonds upon compliance with certain conditions set forth therein (the Aft - "Parity Conditions"). loy The City hereby finds and determines, as required by Sec- tion 12 of Ordinance No. 475, Section 13 of Ordinance No. 986, Section 12 of Ordinance No. 1971, and Section 11 of Ordinance No. 2231, as follows: First, that at the time of the issuance of the Bonds, all payments required to have been made by Ordinances Nos. 475, 986, 1071 and 2231 to pay and secure the payment of the Outstanding Parity Bonds have been or shall have been made. 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 Brown and Caldwell professional engineers experienced in municipal utilities, showing compliance with the requirements of Section 12(2) of Ordinance No. 475, Section 13(2) of Ordinance No. 986, Section 12(2) of Ordinance No. 1971, and Section 11(A)(6) of Ordinance No. 2231. Third, that by Section 7 of this ordinance, the City has covenanted and provided that it will pay into and maintain in the Reserve Account created by said Section the amounts required by Section 12(3) of Ordinance No. 475, Section 13(3) of Ordinance No. 986, Section 12(3) of Ordinance No. 1071, and Section 11(A)(4) of Ordinance No. 2231 to be paid into and maintained in said Reserve Account at the times required by said sections. -6- WMD17 83/02/09 The ParityConditions having thus been complied with or the compliance therewith 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 with contents satis- factory 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, 1983. The City shall issue the Bonds in the aggregate principal amount of $4,050,000 for the purpose of providing the funds necessary to carry out part of the Project, to redeem and retire the Notes, and to pay the expenses incidental to the issuance of the Bonds. The Bonds shall be designated the "City of Yakima Water and Sewer Revenue Bonds, 1983," shall be dated March 1, 1983, shall be in coupon form, shall be in the denomination of $5,000 each, shall bear interest from the date thereof at the rates per annum set forth below payable September 1, 1983, and semiannually thereafter on the first days of March and September, shall be numbered, and shall mature in order of their number on March 1 of each year as follows: Bond Nos. Maturity Date Amount Interest Rate 1-14 1984 $ 70,000 15-30 1985 80,000 31-47 1986 85,000 48-66 1987 95,000 67-87 1988 105,000 88-110 1989 115,000 111-135 1990 125,000 136-163 1991 140,000 164-193 1992 150,000 -7- WMD17 83/02/09 • 194-226 1993 165,000 227-263 1994 185,000 264-303 1995 200,000 304-347 1996 220,000 348-396 1997 245,000 397-450 1998 270,000 451-509 1999 295,000 510-574 2000 325,000 575-645 2001 355,000 646-724 2002 395,000 Am 725-810 2003 430,000 Both the principal of and interest of the Bonds shall be 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, or 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 prior to maturity any or all of the Bonds outstanding in whole, or in part in inverse numerical order, on any interest payment date on or after March 1, 1993, at the following times and prices expressed as a percentage of the principal amount, plus accrued interest to the date of redemption: Redemption Dates Redemption Price March 1, 1993, and September 1, 1993 102.00% March 1, 1994, and September 1, 1995 101.00% March 1, 1995 and thereafter 100.00% Interest on any Bonds so called for redemption shall cease on such redemption date unless the same is not paid in full upon presentation made pursuant to such call. Notice of any such intended redemption shall be given by one publication thereof in the official newspaper of the City not more than forty (40) nor less than thirty (30) days prior to said redemption date, and by mailing a like notice at the same time to 1 10 -8- WMD17 83/02/09 Foster & Marshall/American Express Inc., at its main office in Seattle, Washington, or to the successor in business of such firm, if any, and to Moody's Investors Service, Inc. and Standard & Poor's Corporation at their main offices in the City of New York, New York, or to the successors in business, if any, of said firms • at their main offices. The City further reserves the right to use at any time any surplus Gross Revenues of the System available after providing for the payments required by paragraphs First through Sixth inclusive of Section 6 of this ordinance, or other available funds, 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 the which they may be called, plus accrued interest. Section 6. Priority of Payments from Gross Revenues of the System. The City hereby obligates and binds itself to set aside and pay into the Revenue Fund as collected the Gross 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 following order of priority: First, to pay the Costs of Maintenance and Operation of the System; Second, to pay the interest on the Parity Bonds; Third, to pay the principal of the Parity Bonds; Fourth, to make all payments required to be made into any Reserve Account created to secure the payment of the Parity Bonds; Fifth, to make all payments required to be made into any 110 other revenue bond redemption fund or debt service account or I/ -9- WMD17 83/02/09 • 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 the 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. Revenue Bond Fund. A special fund of the City, to be known as the Water and Sewer Revenue Bond Fund, 1983 (the "Revenue Bond Fund"), is hereby created in the Office of the Treasurer of the City and shall be drawn upon 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 on hand and available therefor, are necessary to pay the interest or principal and interest next coming due on the Bonds then outstanding. Such payments from the Revenue Fund shall be made on or before the twentieth day of each month as follows: (1) Beginning with the month of March, 1983, and continuing for as long as any of the Bonds are outstanding and unpaid, an amount which, with other moneys available therefor in the Revenue Bond Fund, will be equal to at least one-sixth (1/6) of the interest to become due and payable on the next interest payment date on the Bonds then outstanding. (2) Beginning with the month of March, 1983, and 11 continuing for as long as any of the Bonds are outstanding and 1 -10- WMD17 83/02/09 unpaid, an amount which, with other moneys available therefor in the Revenue Bond Fund, will be equal to at least one-twelfth (1/12) 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 secur- ing 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 Revenues of the System or any other moneys legally available for such purpose approximately equal monthly installments commencing not later than the month of March, 1983, and continuing through the month of February, 1988, in an aggregate amount equal to the average annual debt service on 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 sufficient amount in the Revenue Bond Fund and Reserve Account to pay the principal of, premium, if any, and interest on all the Bonds then outstanding, at which time the money in the Reserve Account may be used to pay such principal, premium, if any, and interest. 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 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 and the Bonds at least equal to the debt service on such bonds in the next succeeding calendar year. In the event there shall be a deficiency in the Revenue Bond 10 Fund to meet maturing installments of either interest on or 11 -11- WMD17 83/02/09 • principal of and interest on the Bonds then outstanding, such deficiency shall be made up from the Reserve Account by the withdrawal of moneys therefrom. Any deficiency created in the Reserve Accounts by reason of any such withdrawal shall then be made up out of the Gross Revenues of the System first available • therefor after making necessary provision for the payments required to be made by paragraphs First through Third inclusive 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 Revenues 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 and equal in priority to the lien and charge upon such Gross Revenues of the System for the payment of the principal of and interest on the Outstanding Parity Bonds and equal in priority to the lien and charge which may hereafter be made to pay and secure the payment of the principal of and interest on any Future Parity Bonds. D. Investment of Moneys in Revenue Bond Fund. Moneys in the Revenue Bond Fund and Reserve Account may be invested as permitted by law. 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 of the Bonds then outstanding. All interest earned and income or profits derived by virtue of investments of moneys in the Revenue Bond Fund, other than moneys in the Reserve 10 Account; shall remain in the Revenue Bond Fund and be used to meet 10 -12- WMD17 83/02/09 the required deposits into any account therein. All interest earned and income or profits derived by virtue of the investment of moneys in the Reserve Account shall be deposited in and become a part of the Reserve Account until there shall be an amount therein equal to the average annual debt service on the Bonds • after which such interest, income and profits shall be deposited in and become a part of the Revenue Bond Fund. E. Sufficiency of Revenues. The Council hereby finds and declares 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 the payment of the 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 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 of the Bonds. 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 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 redemp- tion 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 10 and such bonds and appurtenant coupons shall then cease to be -13- WMD17 83/02/09 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. The proceeds of the sale of the Bonds (except accrued interest, which shall be paid into the Revenue Bond Fund) shall be deposited and applied as follows: First, into the Note Redemption Fund in an amount sufficient to pay the principal of and interest on the outstanding Notes issued pursuant to Ordinance No. 2260. 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 payment of the foregoing costs and expenses shall be deposited in the Reserve Account of the Revenue Bond Fund. Section 10. Bond Covenants. The City hereby covenants and agrees with the owner and holder 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 10 of Ordinance No. 475, Section 11 of - Ordinance No. 986, Section 10 of Ordinance No. 1971, and Sec- tion 10 of Ordinance No. 2231 and in the event of conflict with any covenant hereinafter set forth, the covenants contained in such ordinances shall prevail. • -14- WMD17 83/02/09 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 betterments thereto, so that at all times the business carried on in connec- tion therewith will be properly and advantageously conducted, and the City will at all times operate or cause to be operated said properties of the System and the business in connection 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 Outstanding Parity Bonds issued prior to 1978 remain outstanding) will at all times be sufficient (a) to pay all costs of and charges and expenses in connection with the proper operation and mainte- nance 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, assessments 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 10 -15- WMD17 83/02/09 2. Gross Revenues of the System (together with Assess- ments collected if no Outstanding Parity Bonds issued prior to 1978 remain outstanding) shall be available for the payment of the principal of and interest on all Parity Bonds as the same shall become due in an amount in each calendar year hereafter equal to at least 1.40 times the amount 4 1 , required in such calendar year for the payment of such principal and interest after the 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 such obligations are now or hereafter defined in RCW Ch. 39.53 or its successor statute, sufficient together with interest to be earned on any such Government Obligations, to pay the principal of and interest on all Bonds then outstanding. The City will not sell, lease, mortage or in any manner encumber or otherwise dispose of any part of the System, including all additions and improvements thereto 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 on 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 111 -16- WMD17 83/02/09 bears to the revenue available for debt service on said Bonds from the entire utility for the same period. Notwithstanding any other provisions of this subsection, 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 the 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 Gross Revenues 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 the Parity Bonds, or which might impair the security of the Parity Bonds. F. The City shall keep proper books, records and accounts with respect to the operation of the System in accordance with any applicable rules and regulations prescribed by the State of Washington. The City shall prepare balance sheets and profit and loss statements showing in reasonable detail the financial condi- tion of the System as of the close of each year, and the income and expenses for 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 IP -17- WMD17 83/02/09 • capital additions to the System. Such statements shall be sent to the owner or holder of any Parity Bond upon written request therefor being made to the City. • 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 outstand- ing that the City will not issue any bonds or other obligations having a greater or equal priority of lien 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 the 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 for which it is authorized by law to issue revenue bonds, or 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 11/ of such revenue into the Outstanding Revenue Bond Funds and -18- WND17 83/02/09 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 issued prior to 1978 remain outstanding, the requirements of sub- paragraphs 2, 3 and 4 below shall be met and complied with at 411 the time of issuance of any Future Parity Bonds and sub- paragraphs 5 and 6 shall not apply. At such time as no Outstanding Parity Bonds issued prior to 1978 remain out- standing, the City may issue Future Parity Bonds only if the requirements stated in subparagraph 2, 4, 5 and 6 herein shall be met and complied with, and subparagraph 3 shall not longer apply. 2. At the time of the issuance of any Future Parity Bonds all payments currently required by Ordinances 475, 986, 1971, 2231, this ordinance and all ordinances 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 date of issuance of such Future Parity Bonds will equal at least 1.40 times the maximum amount of principal and interest required to be paid in any calendar year thereafter with respect to all indebt- edness of the City to be outstanding immediately following the issuance of such Future Parity Bonds payable solely from the revenues of the System. Such determination of the 411 sufficiency of the revenues shall be made and certified to by 411 -19- WMD17 83/02/09 • an independent registered professional engineer experienced in municipal utilities. In the event such Future Parity Bonds are for the sole purpose of refunding Outstanding Parity Bonds, the Bonds or Future Parity Bonds, such certification of coverage need not be obtained if the amount required each year to pay the principal of and interest on such refunding bonds is less than or equal to the amount required to pay the principal of and interest on the bonds to be refunded thereby and the • maturities of said refunding bonds do not extend beyond the • maturities of the bonds to be refunded thereby. 4. The ordinance authorizing the issuance of the Future Parity Bonds shall provide that an amount equal to the average annual debt service on such Future Parity Bonds 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 substan- tially equal annual payments, and said reserve to be main- tained in such amount so long as any of said Future Parity Bonds are outstanding. 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. -20- WMD17 63/02/09 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 ordinance autho- rizing 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 411 the City shall have on file in the office of the Clerk of the City 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, showing that the Net Revenues of the System 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 be equal to 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. The "Adjusted Net Revenue" shall be the Net Revenues of the System for a period of any twelve consecutive months out of the twenty-four months immediately preceding the date of delivery of such Future Parity Bonds as adjusted by such engineer or accountant to take into consideration changes in Net Revenues of the System 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: a. the additional Net Revenues of the System which would have been received if any change in rates and charges adopted prior to the date of such certifi- cate and subsequent to the beginning of such twelve- -21- WMD17 83/02/09 month period, had been in force during the full twelve- month period; b. the additional Net Revenues of the System which would have been received if any facility of the System which became fully operational after the begin- ning of such twelve-month period and prior to the date of such certificate had been so operating for the entire period; c. the additional Net Revenues of the System 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 pro- . ceeds of the Future Parity Bonds proposed to be issued; and d. the additional Net Revenues of the System which would have been received if any customers added to the System during such twelve-month period were cus- tomers 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 are to be issued for the purpose of refunding at or prior to their maturity any part or all of the then -22- WMD17 83/02/09 outstanding Parity Bonds and the issuance of such refunding Parity Bonds will result 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 refunding Parity Bonds, the certificate required by this subsection 6 need not be obtained. B. Nothing herein contained shall prevent the City from issuing revenue bonds or other obligations which have a lien and 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 the Parity Bonds. C. Nothing herein contained shall prevent the City from issuing revenue bonds to refund maturing Parity Bonds for the payment of which moneys are not otherwise available. Section 12. Lost or Destroyed Bonds. In case any Parity bond(s) or any coupon(s) thereof shall be lost, stolen or destroyed, the City may execute and the Treasurer of the City may 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 evidence 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, 1983" shall be in substantially the following form: 111 -23- WMD17 83/02/09 4 UNITED STATES OF AMERICA No. $5,000.00 STATE OF WASHINGTON CITY OF YAKIMA WATER AND SEWER REVENUE BOND, 1983 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 March, 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 September 1, 1983, and semiannually there- after on the first days of each March and September. 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 in 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, or New York, New 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 inter- est to the date of redemption: Redemption Dates Redemption Price March 1, 1993, and September 1, 1993 102.00% March 1, 1994, and September 1, 1995 101.00% March 1, 1995 and thereafter 100.00% Interest on any bonds so called for redemption shall cease on such redemption date unless the same is not paid upon presentation made pursuant to such call. Notice of any such intended redemption shall be given .by one publication thereof in the official news- paper of the City not more than forty (40) nor less than thirty (30) days prior to said redemption date, and by mailing a like notice at the same time to Foster & Marshall/American Express, Inc., at its main office in A1111 Seattle, Washington, or to the successor in business of 410 -24- WMD17 83/02/09 such firm, if any, and to Moody's Investors Service, Inc. and Standard & Poor's Corporation at their main offices in the City of New York, New York, or to the successors in business, if any, of said firms at their main offices. This bond is one of an issue of 810 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 $4,050,000. 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 sewerage system of the - City, all in conformity with the laws of the State 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, 1983" (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 convenants 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 Ordi- nance to be paid into and maintained in said Fund and Account, all within the times provided by the Bond Ordinance. 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 equal in priority to the lien and charge upon such Revenues of the amounts required to pay and secure the payment of the outstanding water and sewer revenue bonds of the City dated January 1, 1964, March 1, 1968, December 1, 1968, and December 1, 1978, and any other water and sewer revenue bonds of the City hereafter issued on a parity of lien with the bonds of this issue (hereinafter • and in the Bond Ordinance called the "Parity Bonds"). • -25- WMD17 83/02/09 • • The City has further bound itself to observe the covenants contained in Ordinance Nos. 475, 986, 1071 and 2231 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 reason- able 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 the Revenues of the System and the other obligations of the City under the Bond Ordinance may be discharged at or prior to the maturity or redemp- tion 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 hereby 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 manual or facsimile signature of the Mayor, to be attested by the manual or facsimile signature of the City Clerk, the corporate seal of the City to be impressed hereon, and the inter- est coupons attached hereto to be signed with the facsimile signatures of said officials, this first day of March, 1983. CITY OF YAKIMA, WASHINGTON By Mayor ATTEST: City Clerk D- O -26- WMD17 83/02/09 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, in the cities of Seattle, Washington, or 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, 1983," said amount being the interest due that day on its Water and Sewer Revenue Bond, 1983, dated March 1, 1983, and numbered CITY OF YAKIMA, WASHINGTON By (facsimile signature) Mayor ATTEST: (facsimile signature) 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 manual or facsimile signature of the Mayor, shall be attested by the manual or facsimile signature of the City Clerk (one of which signature shall be manual), and shall have the seal of the City impressed or imprinted thereon. The interest coupons attached thereto shall be signed with the facsim- ile signatures of said officials. Section 15. Sale of Bonds. The sale of the Bonds to Foster & Marshall/American Express Inc. in accordance with their written proposal dated March 8, 198) and upon the terms, covenants, • -27- WMD17 83/02/09 conditions and price set forth in said proposal and in this ordinance, is hereby approved, ratified and confirmed. 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 their sale. Section 16. Amendments. A. The Council from time to time and at any time may adopt an ordinance or ordinances supplemental hereto, 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 contained in this ordinance other covenants and agreements thereafter to be observed, which shall not adversely affect the interest of the holders of any Parity Bonds, or to surrender any right or power herein reserved to or conferred upon the City. 2. To make such provisions for the purpose of curing any ambiguities or of curing, correcting or supplementing 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 Council may deem necessary or desirable and not inconsistent with such ordinances and which shall not adversely affect the interests of the holders of the Parity Bonds in any material respect. • Any such supplemental ordinance of the City may be adopted without the consent of the holders of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of subsection B of this section. -28- WMD17 83/02/09 B. With the consent of the holders of not less than 65% in aggregate principal amount of the Parity Bonds then 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, however, that no such 411 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 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 hereunder 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 supplemental ordinance shall be deemed to be part of the terms and conditions of this ordinance for any and all purposes. 11) -29- WMD17 83/02/09 • 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 supplemental ordinance :shall so provide, 1 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 cov- enants 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 cov- enants, 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. • Section 18. General Authorization. The Mayor, the Treas- urer, and the Clerk of the City and each of the other appropriate officers • of the City are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such letters, certificates, agreements, papers, financing state- ments, assignments or instruments as in their judgment may be necessary, appropriate or desirable in order to carry out the • terms and provisions of, and complete the transactions contem- plated by, this ordinance. Section 19. Not Arbitrage Bonds nor Industrial Development Bonds. The City covenants and agrees that throughout the term of the Bonds no part of the proceeds of the Bonds or any other moneys • 10 -30- WMD17 83/02/09 , . or obligations held under this ordinance shall at any time be used for any purpose, nor shall the City take any other action, which would cause any Bond to be (i) an "arbitrage bond" under Section 103(c) of the Internal Revenue Code of 1954, as amended, and the applicable regulations thereunder, or (ii) an "industrial develop- ment bond" under Section 103(b) of the Internal Revenue Code of ( 1954, as amended, and the applicable regulations thereunder. Section Prior Acts. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified and confirmed. . Section 21. Effective Date. This ordinance shall be effec- tive thirty (30) days after its passage, approval and publication as provided by law. ADOPTED by the Council of the City of Yakima at a regular meeting thereof, held this 8th day of March , 1983. CITY OF YAKIMA, WASHINGTON By / Mayor ATTEST: City Clerk APP7OVED AS TO FORM: City Attorney Attorney - 1 -31- WMD17 83/02/09 . . • CLERK'S CERTIFICATE I, the undersigned, the duly chosen, qualified and acting Clerk of the City of Yakima, Washington (the "City"), and keeper of the records of the Council of the City (herein called the "Council"), DO HEREBY CERTIFY: 41O' 1. That the attached Ordinance No. 2677 (the "Ordinance") is a true and correct copy of an ordinance of the City, as finally passed at a regular meeting of the Council held on the 8th day of March , 1983, and duly recorded in my office. 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of the Ordinance; that all other requirements and proceedings incident to the proper passage of the Ordinance have been duly fulfilled, carried out and otherwise observed, and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City this /5day of W.R.A.-6-4— , 1983. (' City Clerk City of Yakima, Washington (S E A L) I WMD17 83/02/09