HomeMy WebLinkAbout2008-019 Water and Sewer Bond Sales and Refunds ORDINANCE NO 2008 -19
AN ORDINANCE of the City of Yakima, Washington, authorizing the issuance
and sale of water and sewer revenue and refunding bonds of
the City in the principal amount of not to exceed $9,750,000 in
one or more series to finance certain capital improvements to
the City's water and sewer system and to refund certain
outstanding water and sewer bonds of the City; and fixing the
terms and covenants of such bonds
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, which water and sewerage systems have been combined for purposes of financing in
the manner provided by law (the "System "), and
WHEREAS, it is in the best interest of the City to finance the completion of the
modernization of the Supervisory Communication and Data Administration ( "SCADA ") system,
repair of the Dissolved Air Flotation Thickener, replace the centrate lagoon and to undertake
certain other capital improvements to the System as approved by the City Council (as further
described herein, the "Project "), and
WHEREAS, the City has issued its Water and Sewer Revenue Refunding Bonds, 1996
(the "1996 Bonds "), its Water and Sewer Revenue and Refunding Bonds, 1998 (the "1998
Bonds "), its Water and Sewer Revenue Bonds, 2003 Series A (the "2003A Bonds ") and its
Water and Sewer Revenue Bonds, 2003 Series B (the "2003B Bonds," and, together with the
2003A Bonds, the "2003 Bonds," and, collectively with the 1996 Bonds and the 1998 Bonds, the
"Parity Bonds "), and
WHEREAS, the proceedings of the City authorizing the issuance of the 1998 Bonds
provide that the City may call the 1998 Bonds maturing on and after September 1, 2009 on or
after September 1, 2008, at a redemption price of par plus accrued interest to the date of
redemption, and
WHEREAS, after due consideration it appears that the callable Outstanding 1998 Bonds
(the "Refunded Bonds ") may be refunded by the issuance and sale of the revenue bonds of the
City authorized herein so that a saving to the City and its rate payers will be effected, and
WHEREAS, each of the ordinances authorizing the Outstanding Parity Bonds provides
that bonds may be issued on a parity with the lien on Gross Revenues of the System of such
Parity Bonds, and
WHEREAS, the City Council hereby finds that it is in the best interests of the City that
the Bonds be offered in one or more series as further provided in a resolution of the City; and
WHEREAS, to finance the costs of the Project and to refund the Refunded Bonds, it is
deemed necessary and advisable that the City issue its Water and Sewer Revenue and
Refunding Bonds, 2008, in the aggregate principal amount of not to exceed $9,750,000,
NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as follows
ARTICLE I
DEFINITIONS
Section 1.1 Definitions As used in this ordinance
"Accreted Value" means with respect to any Capital Appreciation Bonds (A) as of any
Valuation Date, the amount set forth for such date in any ordinance authorizing such Capital
Appreciation Bonds and (B) as of any date other than a Valuation Date, the sum of (1) the
Accreted Value on the preceding Valuation Date and (2) the product of (a) a fraction, the
numerator of which is the number of days having elapsed from the preceding Valuation Date
and the denominator of which is the number of days from such preceding Valuation Date to the
next succeeding Valuation Date, calculated based on the assumption that Accreted Value
accrues during any semiannual period in equal daily amounts on the basis of a year of 12 30-
day months, times (b) the difference between the Accreted Values for such Valuation Dates
"Acquired Obligations" means the investments now or hereafter acquired by the City to
effect the refunding of the Refunded Bonds
"Additional Bonds" means any revenue bonds, revenue warrants or other revenue
obligations that may be issued in the future on a parity of lien with the 1996 Bonds, the 1998
Bonds, the 2003 Bonds, the 2008 Bonds and any other Parity Bonds
"Annual Debt Service" means for any specified Fiscal Year
(1) with respect to any Outstanding Parity Bonds, the amounts required to be
deposited during that period in the Bond Fund (excluding the Reserve Fund therein),
(2) with respect to any Outstanding Capital Appreciation Bonds, the principal
amount thereof shall be equal to the Accreted Value thereof maturing or scheduled for payment
in such period, and no other interest shall be included,
(3) with respect to any Outstanding Fixed Rate Bonds, an amount equal to (A) the
principal amount of such Fixed Rate Bonds due or subject to mandatory redemption during
such period and for which no sinking fund installments have been established, (B) the amount
of any payments required to be made during such period into any sinking fund established for
the payment of any such Fixed Rate Bonds, plus (C) all interest payable during such period on
any such Fixed Rate Bonds Outstanding and with respect to Fixed Rate Bonds with mandatory
sinking fund requirements, calculated on the assumption that mandatory sinking fund
installments will be applied to the redemption or retirement of such Fixed Rate Bonds on the
date specified in the ordinance authorizing such Fixed Rate Bonds, and
(4) with respect to Outstanding Variable Rate Bonds, the principal for any period and
interest on such Variable Rate Bonds during such period computed on the assumption that the
amount of Variable Rate Bonds Outstanding as of the date of such computation would be
amortized (i) in accordance with the mandatory redemption provisions, if any, set forth in the
ordinance authorizing the issuance of such Variable Rate Bonds, or if mandatory redemption
provisions are not provided, during a period commencing on the date of computation and
ending on the date 30 years after the date of issuance (ii) at an interest rate equal to the yield to
maturity set forth in the Revenue Bond Index (40 -year Bond) published in the edition of The
Bond Buyer (or comparable publication or such other similar index selected by the City in good
faith) selected by the City and published within ten days prior to the date of calculation or (iii) to
provide for essentially level annual debt service of principal and interest over such period, and
for the purpose of calculating the principal and interest on Variable Rate Bonds in any Fiscal
Year, such Variable Rate Bonds shall be assumed to mature on the stated maturity date or
mandatory redemption date thereof
"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 Bond Fund In the case of assessments payable in installments, 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
assessment roll
"Assessments" means any special assessments which may be levied in any local
improvement district or utility local improvement district of the City created for the acquisition,
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construction or installation of additions and improvements to or extensions 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 the Bond Fund The word
"Assessments" shall include any installments of assessments and any interest or penalties
which may be due thereon
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on outstanding Bonds from the date of determination to the
last maturity date of such Bonds, by (b) the number of Fiscal Years or calendar years from and
including the Fiscal Year or calendar year in which the determination is made to the last Fiscal
Year or calendar year in which the sum of (i) the principal amount of Serial Bonds maturing in
such Fiscal Year plus (ii) the Sinking Fund Requirement for such Fiscal Year, exceeds 4% of
the principal amount of Bonds outstanding as of the date of determination
"Bond Fund" means the Water and Sewer Revenue Bond Fund created by Ordinance
No 3380
"Bond Registrar" means the fiscal agency of the State of Washington in New York, New
York, for the purposes of registering and authenticating the Bonds, maintaining the Bond
Register, effecting transfer of ownership of the Bonds and paying interest on and principal of
the Bonds
"Capital Appreciation Bonds" means any Parity Bonds hereafter issued as to which
interest is payable only at the maturity or prior redemption of such Bonds For the purposes of
(i) receiving payment of the redemption price, if any, of a Capital
Appreciation Bond that is redeemed prior to maturity, or
(ii) computing the principal amount of Parity Bonds held by the owner of a
Capital Appreciation Bond in giving to the City or the Bond Registrar any notice, consent,
request, or demand for any purpose whatsoever, the principal amount of a Capital Appreciation
Bond shall be deemed to be its Accreted Value
"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
"Code" means the Internal Revenue Code of 1986, as amended, as the same may be
amended from time to time, and the regulations promulgated thereunder
"Commission" means the Securities and Exchange Commission
"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 excluding depreciation, 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
"Council" means the legislative body of the City as the same shall be duly and regularly
constituted from time to time
"Coverage Requirement" means (a) for any period during which Assessments may be
paid without becoming delinquent, the product of 1.25 times Annual Debt Service on all Parity
Bonds then Outstanding minus the aggregate principal amount of non - delinquent Assessments
paid or to be paid into the Bond Fund in such year; or (b) for any other period, the product of
1.25 times Annual Debt Service on all Parity Bonds then Outstanding
"DTC" means The Depository Trust Company, New York, New York.
"Escrow Agreement" means the Escrow Agreement to be entered into between the City
and the Refunding Agent.
"Fiscal Year" means the Fiscal Year used by the City at any time At the time of the
adoption of this ordinance, the Fiscal Year is the 12 -month period beginning January 1 of each
year
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"Fixed Rate Bonds" means those Parity Bonds other than Capital Appreciation Bonds
issued under an ordinance in which the rate of interest on such Fixed Rate Bonds is fixed and
determinable through their final maturity or for a specified period of time If so provided in the
ordinance authorizing their issuance, Fixed Rate Bonds may bear a fixed and determinable
interest rate for only a portion of their term
"Government Obligations" has the meaning given in RCW 39 53 as now or hereafter
amended
"Gross Revenues" means all earnings, revenue and moneys received by the City from
or on account of the operation of the System from any source whatsoever
"Interest Commencement Date" means, with respect to any Capital Appreciation Bonds,
the date specified in any ordinance authorizing such Capital Appreciation Bonds (which date
must be prior to the maturity date for such Capital Appreciation Bonds) after which interest
accruing on such Capital Appreciation Bonds shall be payable semiannually, with the first such
payment date being the applicable interest payment date immediately succeeding such Interest
Commencement Date
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC
"Maximum Interest Rate" means, with respect to any particular Variable Rate Bond, a
numerical rate of interest, which shall be set forth in any ordinance authorizing such Bond, that
shall be the maximum rate of interest such Bond may at any time bear
"MSRB" means the Municipal Securities Rulemaking Board or any successors to its
functions
"Net Revenues" means the Gross Revenues of the System less the Costs of
Maintenance and Operation
"NRMSIR" means a nationally recognized municipal securities information repository
"1996 Bonds" means the City's Water and Sewer Revenue Refunding Bonds, 1996,
issued pursuant to Ordinance No 96 -40 and currently Outstanding in the principal amount of
$350,000
"1998 Bonds" means the City's Water and Sewer Revenue and Refunding Bonds, 1998,
issued pursuant to Ordinance No 98 -31 and currently Outstanding in the principal amount of
$4,040,000
"Outstanding" means, in connection with any Parity Bonds, as of the time in question, all
such bonds issued except bonds theretofore paid and cancelled or having matured or been
called for redemption, payment has been provided therefor, or bonds that have been def eased
in accordance with their authorizing ordinance and state law
"Parity Bonds" means any Outstanding revenue bonds, revenue warrants or other
revenue obligations issued by the City that 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 2008 Bonds Parity Bonds includes the 1996 Bonds, the 1998 Bonds and
the 2003 Bonds
"Permitted Investments" means any legal investments for funds of the City
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with facilities of comparable size
and character to the System in such of the following as are relevant to the purposes for which
they are retained (a) engineering and operations and (b) the design of rates
"Project" means the capital improvements to the System described in Exhibit A,
attached hereto, together with all costs incurred in the issuance of the 2008 Bonds, and all
other costs incurred in connection with the Project.
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"Qualified Insurance" means any non - cancellable municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in
any state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies), which insurance company or companies, as of the time of issuance of
such policy or surety bond, are currently rated in the highest rating category by Moody's
Investors Service, Inc or Standard & Poor's Ratings Service or their comparably recognized
business successors
"Rate Stabilization Account" means the account authorized to be created by Section 5 1
"Rating Agency" means, as of any date, Moody's Investors Service, Inc , Standard &
Poor's Ratings Service or any other nationally recognized securities rating agency
"Refunded Bonds" means the 1998 Bonds maturing on and after September 1, 2009
"Refunding Agent" means the agent designated by the City pursuant to the Escrow
Agreement.
"Reserve Fund" means the Reserve Fund created for the Parity Bonds
"Reserve Fund Requirement" means the lesser of (i) the maximum Annual Debt Service
during any Fiscal Year on a series of Parity Bonds, (ii) 125% of the Average Annual Debt
Service on all Outstanding Parity Bonds of such series, or (iii) 10% of the stated principal
amount of such series of Parity Bonds In the case of Variable Rate Bonds, the interest rate
thereon shall be calculated on the assumption that such Variable Rate Bonds will bear interest
at a rate equal to the higher of (a) the rate most recently reported by The Bond Buyer as The
Bond Buyer's Index for long -term revenue bonds or (b) a rate equal to x +y where x represents
the average rate of interest borne by such Variable Rate Bonds in the twelve months preceding
the date of calculation or in the case of newly issued Variable Rate Bonds the initial rate of
interest borne by such Bonds and y represents one -half the difference between the Maximum
Interest Rate applicable to such Variable Rate Bonds and x; provided that in no event shall such
assumed Variable Rate exceed the Maximum Interest Rate and provided further that if on such
date of calculation the interest rate on such Bonds shall then be fixed to maturity, the interest
rate used for such specified period for the purpose of the foregoing calculation shall be such
actual interest rate
"Revenue Fund" means the Water and Sewer Operating Funds of the City heretofore
established
"Rule" means the Commission's Rule 15c2 -12 under the Securities and Exchange Act of
1934, as the same may be amended from time to time
"Sale Resolution" means the resolution or resolutions to be adopted by the Council
setting the final terms of the 2008 Bonds
"Serial Bonds" means Parity Bonds other than Term Bonds
"SID" means a state information depository for the State of Washington (if one is
created)
"Sinking Fund Requirement" means, for any Fiscal Year, the principal amount and
premium, if any, of Term Bonds required to be purchased, redeemed or paid at maturity for
such Fiscal Year as established by the ordinance or resolution authorizing the issuance of such
Term Bonds
"System" means the combined water and sewerage system of the City as it now exists,
and as it may be later added to, extended and improved for as long as any Parity Bonds remain
Outstanding
"2003 Bonds" means the 2003A Bonds and the 2003B Bonds
"2003A Bonds" means the City's Water and Sewer Revenue Bonds, 2003 Series A,
issued pursuant to Ordinance No 2003 -64 and currently Outstanding in the principal amount of
$4,700,000
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"2003B Bonds" means the City's Water and Sewer Revenue Bonds, 2003 Series B,
issued pursuant to Ordinance No 2003 -64 and currently Outstanding in the principal amount of
$10,155,000
"2008 Bonds" means the City's Water and Sewer Revenue and Refunding Bonds, 2008,
in one or more series in the aggregate principal amount of not to exceed $9,750,000 authorized
by this ordinance
"Term Bonds" means Parity Bonds of any principal maturity that are subject to
mandatory redemption or for which mandatory sinking fund payments are required
"Valuation Date" means with respect to any Capital Appreciation Bonds the date or
dates set forth in any ordinance authorizing such Capital Appreciation Bonds on which specific
Accreted Values are assigned to the Capital. Appreciation Bonds
"Variable Interest Rate" means a variable interest rate or rates to be borne by Parity
Bonds or any one or more maturities within an issue of Parity Bonds The method of computing
such variable interest rate shall be specified in the ordinance authorizing such Parity Bonds
Such variable interest rate shall be subject to a Maximum Interest Rate and there may be an
initial rate specified, in each case as provided in such ordinance, or a stated interest rate that
may be changed from time to time as provided in such ordinance Such ordinance shall also
specify either (i) the particular period or periods of time or manner of determining such period or
periods of time for which each value of such Variable Interest Rate shall remain in effect or
(ii) the time or times upon which any change in such Variable Interest Rate shall become
effective
"Variable Rate Bonds" for any period of time means Parity Bonds which during such
period bear a Variable Interest Rate, provided that Parity Bonds the interest rate on which shall
have been fixed for the remainder of the term thereof shall no longer be Variable Rate Bonds
ARTICLE II
FINDINGS
Section 2.1 Approval of Plan and System The public interest and necessity require
that the City finance certain improvements to the System described in Exhibit A (the "Project ")
Section 2.2 Parity Conditions The Council hereby finds as required by Section 7 1 of
Ordinance No 96 -40, Section 7 1 of Ordinance No 98 -31 and Section 7 1 of Ordinance
No 2003 -64 as follows
(a) The 2008 Bonds will be issued for the purpose of acquiring, constructing
and installing additions and improvements to and extensions of, acquiring necessary equipment
for or making necessary repairs, replacements or other capital improvements to capital
improvements to the System and for the purpose of refunding Outstanding Parity Bonds of the
System
(b) At the times of the issuance of the 2008 Bonds there will be no deficiency
in the Bond Fund
(c) The City will have on deposit in the Reserve Fund an amount equal to the
Reserve Fund Requirement.
(d) At the time of the issuance of the 2008 Bonds, the City will have on file a
certificate from an outside Professional Utility Consultant showing that the Net Revenue
received during any consecutive 12 -month period for which financial statements are available
within the 24 months preceding the date of delivery of the 2008 Bonds equals the Coverage
Requirement in each calendar year or Fiscal Year thereafter on the then - Outstanding Parity
Bonds and the 2008 Bonds, and that the Adjusted Net Revenues to be received each calendar
year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt Service
each such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the 2008 Bonds
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ARTICLE III
ISSUANCE OF 2008 BONDS
Section 3.1 Issuance of the 2008 Bonds The City shall issue the 2008 Bonds in the
aggregate principal amount of not to exceed $9,750,000 in one or more series for the purpose
of providing the funds necessary to finance the costs of the Project, to refund certain
Outstanding Parity Bonds of the System, to satisfy the Reserve Requirement and to pay the
expenses incidental to the issuance of the 2008 Bonds
The 2008 Bonds shall be designated the "City of Yakima Water and Sewer Revenue
and Refunding Bonds, 2008," may be issued in one or more series, shall be in fully registered
form, shall be in the denomination of $5,000 each, or any integral multiple thereof, provided that
no Bond shall represent more than one maturity, shall be dated such date, bear interest at the
rates per annum, and be payable in the amounts and dates as shall be determined by a Sale
Resolution
The 2008 Bonds shall be obligations only of the Bond Fund and shall be payable and
secured as provided herein The 2008 Bonds shall not be general obligations of the City
The Director of Finance and Budget of the City is hereby authorized to obtain insurance
and a Reserve Fund surety for the payment of principal of and interest on the 2008 Bonds, if
she should determine that it is in the best interests of the City to do so
Section 3.2 Registration, Exchange and Payments
(a) Registrar /Bond Register The City hereby adopts the system of
registration approved by the Washington State Finance Committee, which utilizes the fiscal
agencies of the State of Washington in New York, New York, as registrar, authenticating agent,
paying agent and transfer agent (collectively, the "Bond Registrar ") The Bond Registrar shall
keep, or cause to be kept, at its principal corporate trust office, sufficient records for the
registration and transfer of the 2008 Bonds (the "Bond Register "), which shall be open to
inspection by the City The Bond Registrar is authorized, on behalf of the City, to authenticate
and. deliver 2008 Bonds transferred or exchanged in accordance with the provisions of such
2008 Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties
under this ordinance The Bond Registrar shall be responsible for its representations contained
in the Certificate of Authentication on the 2008 Bonds
(b) Registered Ownership The City and the Bond Registrar may deem and
treat the Registered Owner of each 2008 Bond as the absolute owner for all purposes, and
neither the City nor the Bond Registrar shall be affected by any notice to the contrary Payment
of any such 2008 Bond shall be made only as described in Section 3(h) hereof, but such
registration may be transferred as herein provided All such payments made as described in
Section 3(h) shall be valid and shall satisfy the liability of the City upon such 2008 Bond to the
extent of the amount or amounts so paid
(c) DTC Acceptance /Letter of Representations The 2008 Bonds shall
initially be held in fully immobilized form by DTC acting as depository To induce DTC to accept
the 2008 Bonds as eligible for deposit at DTC, the City has heretofore executed and delivered
to DTC a Blanket Issuer Letter of Representations (the "Letter of Representations ")
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees with respect to the 2008 Bonds for
the accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or
any DTC participant of any amount in respect of the principal of or interest on 2008 Bonds, any
notice that is permitted or required to be given to Registered Owners under this ordinance
(except such notices as shall be required to be given by the City to the Bond Registrar or to
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DTC), the selection by DTC or any DTC participant of any person to receive payment in the
event of a partial redemption of the 2008 Bonds, or any consent given or other action taken by
DTC as the Registered Owner For so long as any 2008 Bonds are held in fully immobilized
form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner
for all purposes, and all references in this ordinance to the Registered Owners shall mean DTC
or its nominee and shall not mean the owners of any beneficial interest in any 2008 Bonds
(d) Use of Depository
(i) The 2008 Bonds shall be registered initially in the name of
CEDE & Co , as nominee of DTC, with a single 2008 Bond for each maturity in a denomination
equal to the total principal amount of such maturity Registered ownership of such immobilized
2008 Bonds, or any portions thereof, may not thereafter be transferred except (A) to any
successor of DTC or its nominee, provided that any such successor shall be qualified under any
applicable laws to provide the service proposed to be provided by it; (B) to any substitute
depository appointed by the City pursuant to subsection (ii) below or such substitute
depository's successor; or (C) to any person as provided in subsection (iv) below
(ii) Upon the resignation of DTC or its successor (or any substitute
depository or its successor) from its functions as depository or a determination by the City to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the City may appoint a substitute depository Any such substitute
depository shall be qualified under any applicable laws to provide the services proposed to be
provided by it.
(iii) In the case of any transfer pursuant to clause (A) or (B) of
subsection (i) above, the Bond Registrar shall, upon receipt of all outstanding 2008 Bonds,
together with a written request on behalf of the City, issue a single new 2008 Bond for each
maturity then outstanding, registered in the name of such successor or substitute depository, or
its nominee, all as specified in such written request of the City
(iv) In the event that (A) DTC or its successor (or substitute depository
or its successor) resigns from its functions as depository, and no substitute depository can be
obtained, or (B) the City determines that it is in the best interest of the beneficial owners of the
2008 Bonds that the 2008 Bonds be provided in certificated form, the ownership of such 2008
Bonds may then be transferred to any person or entity as herein provided, and shall no longer
be held in fully immobilized form The City shall deliver a written request to the Bond Registrar,
together with a supply of definitive 2008 Bonds in certificated form, to issue 2008 Bonds in any
authorized denomination Upon receipt by the Bond Registrar of all then outstanding 2008
Bonds together with a written request on behalf of the City to the Bond Registrar, new 2008
Bonds shall be issued in the appropriate denominations and registered in the names of such
persons as are provided in such written request.
(e) Transfer or Exchange of Registered Ownership, Change in
Denominations The registered ownership of any 2008 Bond may be transferred or exchanged,
but no transfer of any 2008 Bond shall be valid unless it is surrendered to the Bond Registrar
with the assignment form appearing on such 2008 Bond duly executed by the Registered
Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond
Registrar Upon such surrender, the Bond Registrar shall cancel the surrendered 2008 Bond
and shall authenticate and deliver, without charge to the Registered Owner or transferee, a new
2008 Bond (or 2008 Bonds at the option of the new Registered Owner) of the same date,
maturity and interest rate and for the same aggregate principal amount in any authorized
denomination, naming as Registered Owner the person or persons listed as the assignee on
the assignment form appearing on the surrendered 2008 Bond, in exchange for such
surrendered and canceled 2008 Bond Any 2008 Bond may be surrendered to the Bond
Registrar and exchanged, without charge, for an equal aggregate principal amount of 2008
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Bonds of the same date, maturity and interest rate, in any authorized denomination The Bond
Registrar shall not be obligated to transfer or exchange any 2008 Bond during a period
beginning at the opening of business on the 15th day of the month next preceding any interest
payment date and ending at the close of business on such interest payment date, or, in the
case of any proposed redemption of the 2008 Bonds, after the mailing of notice of the call of
such 2008 Bonds for redemption
(f) Bond Registrar's Ownership of Bonds The Bond Registrar may become
the Registered Owner of any 2008 Bond with the same rights it would have if it were not the
Bond Registrar, and to the extent permitted by law, may act as depository for and permit any of
its officers or directors to act as member of, or in any other capacity with respect to, any
committee formed to protect the rights of the Registered Owners of the 2008 Bonds
(g) Registration Covenant. The City covenants that, until all 2008 Bonds
have been surrendered and canceled, it will maintain a system for recording the ownership of
each 2008 Bond that complies with the provisions of Section 149 of the Code The ownership
of each 2008 Bond shall initially be recorded with DTC pursuant to this Section 3.2
(h) Place and Medium of Payment. Both principal of and interest on the
2008 Bonds shall be payable in lawful money of the United States of America For so long as
all 2008 Bonds are in fully immobilized form, payments of principal and interest shall be made
as provided in accordance with the operational arrangements of DTC referred to in the Letter of
Representations In the event that the 2008 Bonds are no longer in fully immobilized form,
interest on the 2008 Bonds shall be paid by check or draft mailed to the Registered Owners at
the addresses for such Registered Owners appearing on the Bond Register on the 15th day of
the month preceding the interest payment date, and principal of the 2008 Bonds shall be
payable upon presentation and surrender of such 2008 Bonds by the Registered Owners at the
principal office of the Bond Registrar; provided, however, that if so requested in writing by the
Registered Owner of at least $1,000,000 principal amount of 2008 Bonds, interest will be paid
by wire transfer on the date due to an account with a bank located within the United States
Section 3.3 Execution and Authentication of Bonds The 2008 Bonds shall be signed
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 and shall have the corporate seal of the City
impressed or a facsimile thereof imprinted thereon
Only such 2008 Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited and manually executed by the Bond Registrar shall be valid or obligatory
for any purpose or entitled to the benefits of this ordinance Such Certificate of Authentication
shall be conclusive evidence that the 2008 Bonds so authenticated have been duly executed,
authenticated and delivered hereunder and are entitled to the benefits of this ordinance
In case either of the officers who shall have executed the 2008 Bonds shall cease to be
such officer or officers of the City before the 2008 Bonds so signed shall have been
authenticated or delivered by the Bond Registrar, or issued by the City, such 2008 Bonds may
nevertheless be authenticated, delivered and issued and upon such authentication, delivery and
issuance, shall be as binding upon the City as though those who signed the same had
continued to be such officers of the City Any 2008 Bond may also be signed and attested on
behalf of the City by such persons as at the actual date of execution of such 2008 Bond shall
be the proper officers of the City although at the original date of such Bond any such person
shall not have been such officer of the City
Section 3.4 Lost or Destroyed Bonds In case any of the 2008 Bonds shall be lost,
stolen or destroyed, the Bond Registrar may authenticate and deliver a new bond or bonds of
like amount, date, tenor and effect to the registered owner or nominee thereof upon payment to
the City for the expenses and charges in connection therewith and upon his or her filing with the
Bond Registrar evidence satisfactory to the Bond Registrar that such 2008 Bond or 2008 Bonds
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were actually lost, stolen or destroyed and of his ownership thereof, and upon furnishing the
City with indemnity satisfactory to them both
Section 3.5 Form of 2008 Bonds The 2008 Bonds shall be substantially in the form
of Exhibit B hereto
ARTICLE IV
REDEMPTION OF 2008 BONDS
Section 4.1 Redemption Prior to Maturity The 2008 Bonds may be subject to
redemption in advance of their scheduled maturities as provided in a Sale Resolution to be
adopted by the Council
Section 4.2 Notice of Redemption Written notice of any redemption of 2008 Bonds
shall be given by the Bond Registrar on behalf of the City by first class mail, postage prepaid,
not less than 30 days nor more than 60 days before the redemption date to the registered
owners of 2008 Bonds that are to be redeemed at their last addresses shown on the Bond
Register So long as the 2008 Bonds are in book -entry form, notice of redemption shall be
given as provided in the Letter of Representations The Bond Registrar shall provide additional
notice of redemption (at least 30 days) to each NRMSIR and SID, if any, in accordance with
Section 11 1
The requirements of this section shall be deemed complied with when notice is mailed,
whether or not it is actually received by the owner
Each notice of redemption shall contain the following information (1) the redemption
date, (2) the redemption price, (3) if less than all outstanding 2008 Bonds are to be redeemed,
the identification (and, in the case of partial redemption, the principal amounts) of the 2008
Bonds to be redeemed, (4) that on the redemption date the redemption price will become due
and payable upon each 2008 Bond or portion called for redemption, and that interest shall
cease to accrue from the redemption date, (5) that the 2008 Bonds are to be surrendered for
payment at the principal office of the Bond Registrar, (6) the CUSIP numbers of all 2008 Bonds
being redeemed, (7) the dated date of the 2008 Bonds, (8) the rate of interest for each 2008
Bond being redeemed, (9) the date of the notice, and (10) any other information needed to
identify the 2008 Bonds being redeemed
Upon the payment of the redemption price of 2008 Bonds being redeemed, each check
or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by
issue and maturity, the 2008 Bonds being redeemed with the proceeds of such check or other
transfer
Section 4.3 Effect of Redemption Unless the City has revoked a notice of
redemption, the City shall transfer to the Bond Registrar amounts that, in addition to other
money, if any, held by the Bond Registrar, will be sufficient to redeem, on the redemption date,
all the 2008 Bonds to be redeemed From the redemption date interest on each 2008 Bond to
be redeemed shall cease to accrue
Section 4.4 Amendment of Notice Provisions The foregoing notice provisions of this
section, including but not limited to the information to be included in redemption notices and the
persons designated to receive notices, may be amended by additions, deletions and changes in
order to maintain compliance with duly promulgated regulations and recommendations
regarding notices of redemption of municipal securities
Section 4.5 Purchase of 2008 Bonds The City 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 5 1 of this ordinance, or other available
funds, to purchase any of the 2008 Bonds in the open market for retirement.
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ARTICLE V
FUNDS AND ACCOUNTS, DEFEASANCE
Section 5.1 Revenue Fund, Priority of Payments The City hereby obligates and
binds itself to set aside and pay into the Water and Sewer Operating Funds (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 make all required payments into the Bond Fund,
Third, to pay the interest on the Parity Bonds,
Fourth, to pay the principal of and any sinking fund payments for the Parity Bonds,
Fifth, to make all payments required to be made into the Reserve Fund,
Sixth, 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 the Parity Bonds,
Seventh, 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
extensions and replacements of the System, or for any other lawful City purposes
The City may create a Rate Stabilization Account in the Revenue Fund To the extent
that surplus Gross Revenues remain after the payments so required to be made out of the
Revenue Fund, the City may credit up to the full amount of such surplus to the Rate
Stabilization Account. Any credits from the Revenue Fund to the Rate Stabilization Account
and any credits to the Revenue Fund from the Rate Stabilization Account made pursuant to
Section 6 1 hereof, shall be made prior to closing the books and accounts of the City for each
Fiscal Year Money in the Rate Stabilization Account may be used for any lawful purpose
Money in the Rate Stabilization Account may be used from time to time to make up any
deficiencies in the Bond Fund, and such money in the Rate Stabilization Account may be
pledged as additional payments to the Bond Fund to the extent required for any such
deficiencies The City may, at any time, deposit Gross Revenues of the System in and
withdraw Gross Revenues of the System from the Rate Stabilization Account.
Nothing contained in this Section 5 1 shall be construed to require the deposit into the
Revenue Fund of any of the revenues, income, receipts or other moneys of the City derived
through the ownership or operation of any separate utility system hereafter created or
established from funds other than the proceeds of Bonds
Section 5.2 Bond Fund
(a) There has been created a special fund of the City designated the Water and
Sewer Revenue Bond Fund (the "Bond Fund "), which shall be used solely for the purpose of
paying the principal, premium, if any, and interest on the Parity Bonds, of retiring the Parity
Bonds prior to maturity in the manner herein provided, and of paying any reimbursement
obligation with respect to a letter of credit or other credit enhancement device providing
additional security for any Variable Rate Bonds Each month (or in the case of Variable Rate
Bonds, at the times provided in subsection (i) of this Section 5 2(a)), after applying amounts as
required in Section 5 1, the City shall withdraw from the Revenue Fund and (to the extent not
otherwise provided) transfer to the Bond Fund, amounts as follows and in the following order of
priority' first, into the Interest Account; second, into the Serial Bond Principal Account and Term
Bond Principal Account; and third, into the Reserve Fund
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(i) Interest Account. The City has created a separate account in the Bond
Fund, to be known as the "Interest Account" to provide for the payment of interest on the Parity
Bonds as the same becomes due and payable Upon the issuance of the 2008 Bonds, all
accrued interest on the 2008 Bonds, if any, shall be paid into the Interest Account.
In the case of all Parity Bonds other than Variable Rate Bonds, the City shall transfer to
the Interest Account amounts sufficient to pay when due the installment of interest next falling
due on all Parity Bonds In the case of Variable Rate Bonds, not later than on the last day of
the month immediately succeeding the month of closing of such bonds and on or before the last
day of each succeeding month, the City shall transfer to the Interest Account an amount equal
to the interest on such Variable Rate Bonds estimated to become due and payable on the due
date If on any date on which an installment of interest on Variable Rate Bonds falls due there
are insufficient amounts in the Interest Account to make such interest payment, the City shall
withdraw from the Revenue Fund and transfer to the Interest Account an amount that when
added to other money therein will equal the amount of interest falling due and payable on such
interest payment date In making the credits required by this subsection (a) (i), any amounts
credited to the Interest Account representing accrued interest received on the sale of 2008
Bonds or other Parity Bonds, interest capitalized from the proceeds of any Parity Bonds and
any other transfers and credits otherwise made or required to be made to the Interest Account
shall be taken into consideration and allowance made with respect to the full amount of such
transfers and credits
(ii) Serial Bond Principal Account. The City has created a separate account
in the Bond Fund known as the "Serial Bond Principal Account" to provide for the payment of
the principal of Serial Bonds as the same shall mature and become due and payable The City
shall transfer to the Serial Bond Principal Account amounts sufficient to pay when due the
installment of principal next falling due on the Serial Bonds
(iii) Term Bond Principal Account.
(A) The City shall create and establish a separate account in the
Bond Fund to be known as the "Term Bond Principal Account" in order to meet the specified
Sinking Fund Requirements of Term Bonds and to otherwise retire 2008 Bonds, if any, and
other Parity Bonds prior to maturity The City shall transfer to the Term Bond Principal Account
amounts sufficient to pay when due the Sinking Fund Requirement next falling due on all Term
Bonds
(B) The City shall apply the money paid into the Bond Fund for credit
to the Term Bond Principal Account to the redemption of Term Bonds on the next ensuing
Sinking Fund Requirement due date (or may so apply such money prior to such Sinking Fund
Requirement due date), pursuant to the terms of the ordinance authorizing the issuance
thereof The City may also apply the money paid into the Bond Fund for credit to the Term
Bond Principal Account for the purpose of retiring Term Bonds by the purchase of such Term
Bonds at a purchase price (including any brokerage charge) not in excess of the principal
amount thereof
The City shall apply such money to the redemption or purchase of Term Bonds in an
amount such that the aggregate principal amount of Term Bonds so purchased or redeemed is
at least equal to such next ensuing Sinking Fund Requirement. Any such purchase of Term
Bonds by the City may be made with or without tenders of Term Bonds in such manner as the
City shall, in its discretion, deem to be in its best interest.
(iv) Reserve Fund
(A) The City has created a separate fund to be known as the
"Reserve Fund" to provide a reserve for the payment of the principal, premium, if any, and
interest on the Parity Bonds The City hereby covenants and agrees that on the date of
issuance of the 2008 Bonds the City will have on deposit in the Reserve Fund an amount equal
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to the Reserve Fund Requirement. Each ordinance providing for the issuance of Additional
Bonds shall provide for payments into the Reserve Fund from any other money lawfully
available therefor (in which event, in providing for deposits and credits required by the foregoing
provisions of this paragraph (A), allowance shall be made for any such amounts so paid into
such fund) in amounts that within not less than five years of equal monthly payments will
provide for deposit of the Reserve Fund Requirement or may provide for the City to obtain
Qualified Insurance or a Qualified Letter of Credit for specific amounts required pursuant to this
Section to be paid into the Reserve Fund, such amounts so covered by Qualified Insurance or a
Qualified Letter of Credit shall be credited against the amounts required to be maintained in the
Reserve Fund by this Section to the extent that such payments and credits to be made are
insured by an insurance company, or guaranteed by a letter of credit from a bank. Such
Qualified Letter of Credit or Qualified Insurance shall not be cancelable on less than five years
notice In the event of any cancellation, the Reserve Fund shall be funded in accordance with
this paragraph, as if the Parity Bonds which remain Outstanding had been issued on the date of
such notice of cancellation
(B) Money in the Bond Fund and Reserve Fund may, at the option of
the City, be invested and reinvested as permitted by law in Permitted Investments maturing, or
which are retirable at the option of the owner, prior to the date needed or prior to the maturity
date of the final installment of principal of the Parity Bonds payable out of the Bond Fund and
Reserve Fund Earnings on investments in the Bond Fund and Reserve Fund shall be
transferred to the Revenue Fund, except that earnings on investments in the Reserve Fund
shall first be applied to remedy any deficiency in such account.
(C) For the purpose of determining the amount credited to the
Reserve Fund, obligations in which money in the Reserve Fund shall have been invested shall
be valued at the market value thereof The term "market value" shall mean, in the case of
securities that are not then currently redeemable at the option of the owner, the current bid
quotation for such securities, as reported in any nationally circulated financial journal, and the
current redemption value in the case of securities that are then redeemable at the option of the
owner For obligations that mature within six months, the market value shall be the par value
thereof The valuation shall include accrued interest thereon The valuation of the amount in
the Reserve Fund shall be made by the City as of the close of business on each December 31
(or on the next preceding business day if December 31 does not fall on a business day) and
after any withdrawal and may be made on each June 30 (or on the next preceding business day
if June 30 does not fall on a business day)
(D) If the amount in the Reserve Fund shall be less than the Reserve
Fund Requirement, the City shall transfer from the Revenue Fund, for credit to the Reserve
Fund no later than the 25th day of the sixth succeeding calendar month the amount necessary
to restore the Reserve Fund to the Reserve Fund Requirement. Prior to such time, such
transfer shall come from money in the Revenue Fund first available after making the current
specified payments into the Interest Account and Principal Accounts If the amount in the
Reserve Fund shall be greater than the Reserve Fund Requirement, then and only then may
the City withdraw at any time prior to the next date of valuation from the Reserve Fund the
difference between the amount in the Reserve Fund and the Reserve Fund Requirement and
deposit such difference in the Revenue Fund
(b) Money in the Interest Account, the Serial Bond Principal Account and the Term
Bond Principal Account shall be transmitted to the Bond Registrar in amounts sufficient to meet
the next maturing installments of principal, interest and premium, if any, at or prior to the time
upon which any interest, principal or premium, if any, is to become due In the event there shall
be a deficiency in the Interest Account, the Serial Bond Principal Account or the Term Bond
Principal Account for such purpose, the City shall make up any such deficiency from the
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Reserve Fund by the withdrawal of cash therefrom for that purpose, and, if necessary, by sale
or redemption of any authorized investments in such amount as will provide cash in said
Reserve Fund sufficient to make up any such deficiency If a deficiency still exists immediately
prior to an interest payment date and after the withdrawal of cash, the City shall then draw from
any Qualified Letter of Credit or Qualified Insurance Such draw shall be made at such times
and under such conditions as the agreement for such Reserve Fund credit facility shall provide
(c) Whenever and so long as amounts on deposit in the Bond Fund, including the
Reserve Fund, are sufficient to provide money to pay the Parity Bonds then Outstanding,
including such interest as may thereafter become due thereon and any premiums upon
redemption, no payments need be made into the Bond Fund pursuant to this ordinance
(d) Money transferred from the Bond Fund to the Bond Registrar for the Parity
Bonds and the interest thereon shall be held in trust for the owners of such Parity Bonds Until
so set aside for the retirement of principal, payment of sinking fund installments, payment of
interest and premium, if any, as aforesaid, moneys in the Bond Fund shall be held in trust for
the benefit of the owners of the Parity Bonds then Outstanding and payable equally and ratably
and without preference or distinction as between different installments or maturities
(e) The amounts so pledged to be paid into the Bond Fund and the Reserve Fund
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 is 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 Additional
Bonds
(f) The Council hereby finds and declares that in fixing the amounts to be paid into
the Bond Fund and the Reserve Fund 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 currently 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 currently
Outstanding Parity Bonds
Section 5.3 Defeasance In the event that money and /or Government Obligations
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 amounts (together with such money, if any)
sufficient to redeem and retire part or all of the 2008 Bonds in accordance with their terms are
irrevocably set aside in a special account and pledged to effect such redemption and
retirement, then no further payments need be made into the Bond Fund for the payment of the
principal of and interest on the 2008 Bonds so provided for, and such 2008 Bonds 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 2008 Bonds shall no longer be deemed to be
outstanding hereunder Within 30 days of any defeasance of such 2008 Bonds, the City shall
provide notice of defeasance of such 2008 Bonds to registered owners and to each NRMSIR
and SID, if any, in accordance with Section 11 1
Section 5.4 Refunding of Refunded Bonds The Council shall adopt a resolution that
sets forth the exact Refunded Bonds to be refunded by the 2008 Bonds, appoints a Refunding
Agent, establishes the terms for the refunding and the redemption of the Refunded Bonds, and
sets forth other provisions for such refunding The Council may choose to refund less than all
of the Refunded Bonds
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ARTICLE VI
PARTICULAR COVENANTS OF THE CITY
So long as any Parity Bonds remain Outstanding, the City covenants and agrees with
the owners of all Parity Bonds as follows
Section.6.1 Rate Covenant. The City shall establish, maintain and collect rates and
charges for the use of the services and facilities of and all commodities 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:
(a) The Gross Revenues collected (together with Assessments collected) will at all
times be sufficient (a) to pay the Costs of Maintenance and Operation of the System, (b) to pay
the principal of, premium, if any, and interest on the Parity Bonds, as and when the same shall
become due and payable, (c) to make adequate provision for the payment of any Term Bonds,
(d) to make when due all payments which the City is obligated to make into the Reserve Fund
and all other payments which the City is obligated to make pursuant to this ordinance, and
(e) 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 by law
or contract; and
(b) The Net Revenues in each Fiscal Year will be at least equal to the Coverage
Requirement calculated as of December 31 of the preceding calendar year For the purpose of
meeting this requirement if the City creates a Rate Stabilization Account pursuant to
Section 5 1, (i) there may be added to Net Revenues for any Fiscal Year such amount, not
greater than the Annual Debt Service for such Fiscal Year, withdrawn from the Rate
Stabilization Account and deposited in the Revenue Fund, and (ii) there must be subtracted
from Net Revenues for any Fiscal Year such amounts as are withdrawn from the Revenue Fund
and deposited into the Rate Stabilization Account for such Fiscal Year
Section 6.2 Maintenance and Operation 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 connection
therewith will be properly and advantageously conducted, and the City will at all times operate
or cause to be operated the properties of the System and the business in connection therewith
in an efficient manner and at a reasonable cost.
Section 6.3 Sale or Disposition of the System 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 Bond Fund of cash or "Government Obligations," as
now or hereafter defined in chapter 39 53 RCW, as amended, or its successor statute, if any,
sufficient together with interest to be earned thereon to pay the principal of and interest on the
then Outstanding Parity Bonds, nor will it sell or otherwise dispose of any part of the useful
operating properties of the System unless such facilities are replaced or provision is made for
payment into the Bond Fund of the greater of
(a) An amount which will be in the same proportion to the net amount of Parity
Bonds then Outstanding (defined as the total amount of the Parity Bonds less the amount of
cash and investments in the Bond Fund and accounts therein) that the Net Revenues from the
portion of the System sold or disposed of for the preceding year bears to the total Net
Revenues for such period, or
(b) An amount which will be in the same proportion to the net principal amount of
Parity Bonds then Outstanding that the book value of the part of the System sold or disposed of
bears to the book value of the entire System immediately prior to such sale or disposition
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The proceeds of any such sale or disposition of a portion of the properties of the System
(to the extent required above) shall be paid into the Bond Fund
Notwithstanding any other provision 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 Bond Fund
Section 6.4 Liens or Encumbrances. 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 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
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
Section 6.5 Insurance The City shall, to the extent insurance coverage is available
at reasonable cost with responsible insurers, keep, or cause to be kept, the System and the
operation thereof insured, with policies payable to the City, against the risks of direct physical
loss, damage to or destruction of the System, or any part thereof, and against accidents,
casualties or negligence, including liability insurance and employer's liability, at least to the
extent that similar insurance is usually carried by utilities operating like properties as determined
by the City Manager A program of self insurance against certain risks or as to part of the
potential liability for certain risks may be included as part of the City's insurance coverage plan
In the event of any loss or damage to the properties of the System covered by
insurance, the City will (a) with respect to each such loss, promptly repair and reconstruct to the
extent necessary to the proper conduct of the operations of the System the lost or damage
portion thereof and shall apply the proceeds of any insurance policy or policies covering such
loss or damage for that purpose to the extent required therefor, unless in the case of loss or
damage involving an amount less than or equal to 2% of the value of net utility plant of the
System or more, such repair and reconstruction shall not be recommended by the City
Manager, and
(b) if the City shall not use the entire proceeds of such insurance to repair or
reconstruct such lost or damaged property, such insurance proceeds thereof not so used shall
be paid into the Revenue Fund, and if greater than 2% of the value of the net utility plant of the
System for any one loss or damage, shall be used to purchase or redeem bonds or to acquire
or construct extensions, betterments and improvements to the System
Section 6.6 Books and Accounts 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, upon written request,
obtain copies of, balance 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 Fund, the Bond Fund, and
into any 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
Section 6.7 Additions and Improvements The City will not expend any of the
revenues derived by it from the operation of the System or the proceeds of any indebtedness
payable from the Revenues of the System for any extensions, betterments or improvements to
the System which are not legally required or economically sound, and which will not properly
and advantageously contribute to the conduct of the business of the System in an efficient
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manner; provided, that to the extent permitted by law, the City may provide commodities,
services or facilities free of charge or at a reduced charge in order to carry out a plan adopted
by the Council for conservation of water or to benefit elderly, handicapped or poor persons
Section 6.8 Tax Covenants The City shall comply with the provisions of this section
unless, in the written opinion of Bond Counsel to the City, such compliance is not required in
order to maintain the exemption of the interest on the 2008 Bonds from federal income taxation
The City hereby covenants that it will not make any use of the proceeds of sale of the
2008 Bonds or any other funds of the City which may be deemed to be proceeds of such 2008
Bonds pursuant to Section 148 of the Code and the applicable regulations thereunder that will
cause the 2008 Bonds to be "arbitrage bonds" within the meaning of said section and said
regulations The City will comply with the requirements of Section 148 of the Code (or any
successor provision thereof applicable to the 2008 Bonds) and the applicable regulations
thereunder throughout the term of the 2008 Bonds
The City further covenants that it will not take any action or permit any action to be taken
that would cause the 2008 Bonds to constitute "private activity bonds" under Section 141 of the
Code
The City will pay any rebate amount to the United States of America at the times and in
the amounts necessary to meet the requirements of the Code to maintain the federal income
tax exemption of the interest payments on the 2008 Bonds, in accordance with the Federal Tax
Certificate
In the Sale Resolution, the City Council may designate the 2008 Bonds as "qualified tax -
exempt obligations" pursuant to Section 265(b)(3) of said Code relating to financial institutions
ARTICLE VII
ADDITIONAL BONDS
Section 7.1 Additional Bonds Parity Bonds may be issued payable from the Bond
Fund on a parity with the 1996 Bonds, 1998 Bonds, 2003 Bonds and 2008 Bonds and secured
by an equal charge and lien on the Gross Revenues pledged to the Bond Fund
First, for the purpose of acquiring, constructing and installing additions and
improvements to and extensions of, acquiring necessary equipment for or making necessary
repairs, replacements or other capital improvements to the System and other lawful purposes
related to the System, or
Second, for the purpose of refunding, or purchasing and retiring prior to their maturity,
any outstanding Bonds or other revenue obligations of the System
(a) The City may issue such Additional Bonds upon compliance with the following
conditions
(i) At the time of the issuance of such Additional Bonds, there shall be no
deficiency in the Bond Fund
(ii) In each ordinance authorizing such Additional Bonds, provision shall be
made for payments into the Reserve Fund in accordance with Section 5.2(a) (iv) of this
ordinance
(iii) At the time of the issuance of such Additional Bonds, the City shall have
on file a certificate from a Professional Utility Consultant, not then employed by the City except
for the purpose of giving such certificate, showing that the Net Revenue received during any
consecutive 12 -month period for which financial statements are available within the 24 months
preceding the date of delivery of such Additional Bonds equals the Coverage Requirement in
each calendar year or Fiscal Year thereafter on the then - Outstanding Parity Bonds and the
Additional Bonds to be issued, and that the Adjusted Net Revenues to be received each
calendar year or Fiscal Year thereafter, will equal at least 1.25 times the Average Annual Debt
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Service each such calendar year or Fiscal Year, on the Outstanding Parity Bonds and the
Additional Bonds to be issued
The Adjusted Net Revenues shall be the Net Revenues for a period of any 12
consecutive months out of the 24 months immediately preceding the date of delivery of such
proposed Additional Bonds, as adjusted to take into consideration changes in Net Revenues
estimated to occur under one or more of the following conditions for each year after such
delivery for so long as any Bonds, including the Additional Bonds proposed to be issued, shall
be outstanding
(A) Any increase or decrease in Net Revenues that would result if any
change in rates and charges adopted by the Council prior to the date of such certificate and
subsequent to the beginning of such 12 -month period, had been in force during the full 12-
month period,
(B) The additional Net Revenues from any rate increases that have
been approved by ordinance of the Council but that are not then in effect;
(C) Any increase or decrease in Net Revenues estimated by such
Professional Utility Consultant to result from any additions, betterments and improvements to
and extensions of any facilities of the System that (i) became fully operational during such 12-
month period, (ii) were under construction at the time of such certificate, or (iii) will be
constructed from the proceeds of the Additional Bonds to be issued,
(D) The additional Net Revenues that would have been received if any
customers added to the System during such 12 -month period were customers for the entire
period
(E) The additional Net Revenues that may be derived by the City from
any users of the System with whom the City has entered into a contract for utility services to be
furnished, which revenues have not otherwise been included in Net Revenues
Such Professional Utility Consultant shall base his certification upon, and his certificate
shall have attached thereto, financial statements of the System audited by the State Examiner
(unless such an audit is not available for a 12 -month period within the preceding 24 months)
and certified by the chief financial officer of the City, showing income and expenses for the
period upon which the same is based
The certificate of such Professional Utility Consultant shall be conclusive and the only
evidence required to show compliance with the provisions and requirements of this subsection
Notwithstanding the foregoing, if Additional Bonds are to be issued for the purpose of
refunding at or prior to their maturity any part or all of the then Outstanding Bonds and the
issuance of such refunding Additional 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 refunding
Additional Bonds, the certificate required by subsection (a) (3) of this section need not be
obtained
Once the 1996 and 1998 Bonds are no longer Outstanding, in lieu of a certificate from a
Professional Utility Consultant, the Director of Finance and Budget or other financial officer of
the City may certify that the Net Revenues of the System for any 12 consecutive months of the
24 months prior to the date of issuance of such Additional Bonds are at least 125% of the
Average Annual Debt Service due in any fiscal or calendar year thereafter, including in such
calculation debt service on such Additional Bonds
(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 Gross Revenues into the
Bond Fund and accounts therein to pay and secure the payment of any Outstanding Bonds
(c) Nothing herein contained shall prevent the City from issuing revenue bonds to
refund maturing Bonds for the payment of which money is not otherwise available
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(d) Notwithstanding any other provision of this ordinance, for so long as the 2008
Bonds are Outstanding, no bonds may be issued subsequent to the issuance of the 2008
Bonds with a lien and charge on the Gross Revenues superior to the lien and charge of the
2008 Bonds
Section 7.2 Pledge Effected by Ordinance
(a) The 2008 Bonds are special limited obligations of the City payable from and
secured solely by Gross Revenues, subject to the prior payment of Costs of Maintenance and
Operation of the System and other money and assets specifically pledged hereunder for the
payment thereof There are hereby pledged as security for the payment of the principal,
premium, if any, and interest on the 2008 Bonds in accordance with the terms of this ordinance,
subject only to the provisions of this ordinance restricting or permitting the application thereof
for the purposes and on the terms and conditions set forth in this ordinance, (i) the proceeds of
the sale of the 2008 Bonds to the extent held in the funds established by this ordinance, (ii) the
Gross Revenues, and (iii) the money and assets, if any, credited to the Revenue Fund, the
Bond Fund and the Reserve Fund, and the income therefrom The Gross Revenues and other
money and assets hereby pledged shall immediately be subject to the lien of this pledge without
any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding
as against all parties having claims of any kind in tort, contract or otherwise against the City
regardless of whether such parties have notice thereof
(b) The 1996 Bonds, the 1998 Bonds, the 2003 Bonds, the 2008 Bonds and any
Additional Bonds shall be equally and ratably payable and secured hereunder without priority by
reason of date of adoption of the ordinance providing for their issuance or by reason of their
series, number or date of sale, issuance, execution or delivery, and by the liens, pledges,
charges, trusts, assignments and covenants made herein, except as otherwise expressly
provided or permitted in this ordinance and except as to insurance that may be obtained by the
City to insure the repayment of one or more series or maturities within a series
(c) The 1996 Bonds, the 1998 Bonds, the 2003 Bonds and any Additional Bonds
shall not in any manner or to any extent constitute general obligations of the City or of the State
of Washington, or of any political subdivision of the State of Washington, or a charge upon any
general fund or upon any money or other property of the City or of the State of Washington, or
of any political subdivision of the State of Washington, not specifically pledged thereto by this
ordinance, nor shall the full faith and credit of the City or of the State of Washington, or of any
political subdivision of the State of Washington, be pledged to the payment of principal,
premium, if any, or interest thereon
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1 Events of Default. This ordinance and each ordinance adopted pursuant
to Article X are hereinafter in this Article VIII and in Article IX referred to collectively as "the
Ordinance "
The City hereby covenants and agrees with the purchasers and owners from time to
time of any Parity Bonds, in order to protect and safeguard the covenants and obligations
undertaken by the City securing any Parity Bonds, that the following shall constitute "Events of
Default"
(a) If the City shall default in the performance of any obligation with respect
to payments into the Bond Fund and such default is not remedied within a period of 30 days,
(b) If default shall be made in the due and punctual payments of the principal
of and premium, if any, on any of the Parity Bonds when the same shall become due and
payable, either at maturity or by proceedings for redemption or otherwise,
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(c) If default shall be made in the due and punctual payment of any
installment of interest on any Parity Bonds,
(d) If the City shall default in the observance and performance of any other of
the covenants, conditions and agreements on the part of the City contained in the Ordinance
and such default or defaults shall have continued for a period of 90 days after the City shall
have received from the Bondowners Committee or from the owners of not less than 20% in
principal amount of the Parity Bonds outstanding, a written notice specifying, and demanding
the cure of, such default;
(e) If the City shall (except as herein permitted) sell, transfer, assign or
convey any properties constituting the System or interests therein, or any part or parts thereof,
or shall make any agreement for such sale or transfer (except as expressly authorized by
Section 6 3 hereof),
(f) If an order, judgment or decree shall be entered by a court of competent
jurisdiction (a) appointing a receiver, trustee or liquidator for the whole or any substantial part of
the System, (b) approving a petition filed against the City seeking the bankruptcy, arrangement
or reorganization of the City under any applicable law of the United States or the State of
Washington, or (c) assuming custody or control of the whole or any substantial part of the
System under the provisions of any other law for the relief or aid of debtors and such order,
judgment or decree shall not be vacated or set aside or stayed (or, in case custody or control is
assumed by such order, such custody or control shall not be otherwise terminated), within 60
days from the date of entry of such order, judgment or decree,
(g) If the City shall (a) admit in writing its inability to pay the debts of the
System generally as they become due, (b) file a petition in bankruptcy or seeking a composition
of indebtedness under any state or federal bankruptcy or insolvency law, (c) make an
assignment for the benefit of its creditors, (d) consent to the appointment of a receiver of the
whole or any substantial part of the System, or (e) consent to the assumption by any court of
competent jurisdiction under the provisions of any other law for the relief or aid of debtors of
custody or control of the whole or any substantial part of the System
Section 8.2 Formation of Bondowners Committee During the continuance of an
Event of Default, the owners of Parity Bonds representing 20% in principal amount of the Parity
Bonds then Outstanding may call a bondholders meeting for the purpose of electing a
committee (the "Bondowners Committee ") to act on behalf of all Parity Bondowners (the
"Bondowners ") Such meeting shall be called and the proceedings thereof shall be conducted
in the manner provided in Article IX hereof
At such meeting the Bondowners present in person or by proxy may, by a majority of the
votes cast, elect one or more persons, who may or may not be Bondowners, to the Bondowners
Committee, which shall act as trustee for all registered owners of Parity Bonds outstanding, and
the Bondowners Committee as such trustee may have and exercise all the rights and powers
provided for in this ordinance to be exercised by the Bondowners Committee The Bondowners
present in person or by proxy at said meeting, or at any adjourned meeting thereof, shall
prescribe the manner in which the successors of the persons elected to the Bondowners
Committee at such Bondowners meeting shall be elected or appointed, and may prescribe rules
and regulations governing the exercise by the Bondowners Committee of the powers conferred
upon it herein, and may provide for the termination of the existence of the Bondowners
Committee The members of the Bondowners Committee elected by the Bondowners in the
manner herein provided, and their successors, as a committee are hereby declared to be
trustees for the owners of all the Parity Bonds then Outstanding, and are empowered to
exercise in the name of the Bondowners Committee as trustee, all the rights and powers
hereinafter conferred on the Bondowners Committee
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Section 8.3 Books of City Open to Inspection The City covenants that if an Event of
Default shall have happened and shall not have been remedied, the books of record and
account of the City and all other records relating to the System shall at all times during regular
business hours be subject to the inspection and use of the Bondowners Committee and any
person holding at least 20% of the principal amount of Parity Bonds Outstanding and of their
respective agents and attorneys
The City covenants that if an Event of Default shall happen and shall not have been
remedied, the City will continue to account, as a trustee of an express trust, for all Gross
Revenues and other money, securities and funds pledged under this ordinance
Section 8.4 Suits at Law or in Equity If an Event of Default shall happen and shall
not have been remedied, then and in every such case, the Bondowners Committee by its
agents and attorneys, shall be entitled and empowered to proceed forthwith to take such
needful steps and institute such suits, actions and proceedings at law or in equity for the
collection of all sums in connection with the Parity Bonds and to protect and enforce the rights
of Bondowners under this ordinance for the specific performance of any covenant herein
contained or in aid of the execution of any power herein granted, or for an accounting against
the City as trustee of an express trust, or in the enforcement of any other legal or equitable right
as the Bondowners Committee, being advised by counsel, shall deem most effectual to enforce
any of the rights of the owners of the Parity Bonds
Any action, suit or other proceedings instituted by the Bondowners Committee
hereunder shall be brought in its name as trustee for the Bondowners and all such rights of
action upon or under any of the Parity Bonds or the provisions of this ordinance may be
enforced by the Bondowners Committee without the possession of any of the Parity Bonds, and
without the production of the same at any trial or proceedings relative thereto except where
otherwise required by law, and the respective owners of said Parity Bonds, by taking and
holding the same, shall be conclusively deemed irrevocably to appoint the Bondowners
Committee the true and lawful trustee for the respective owners of said bonds, with authority to
institute any such action, suit or proceeding, to receive as trustee and deposit in trust any sums
becoming distributable for the receipt of such money, and to do all acts with respect thereto that
the Bondowner might have done in person, provided, however, that nothing herein contained
shall be deemed to authorize or empower the Bondowners Committee to consent to, accept or
adopt, on behalf of any Bondowner, any plan of reorganization or adjustment affecting the
Parity Bonds or the City or any right of any owner thereof, or to authorize or empower the
Bondowners Committee to vote the claims of the owners thereof in any receivership,
insolvency, liquidation, bankruptcy, reorganization or other proceeding to which the City shall be
a party, and provided further, however, that any Bondowner or Bondowners may by mutual
agreement transfer title to the Parity Bonds held by him or them to the Bondowners Committee,
or may by agreement with other Bondowners create or organize a separate trustee or
bondowners committee and may confer or organize a separate trustee or bondowners
committee and may confer upon the Bondowners Committee or such separate trustee or
bondholders committee and may confer or organize a separate trustee or bondowners
committee and may confer upon the Bondowners Committee or such separate trustee or
bondholders committee, such powers and duties and such agreement or agreements shall
provide, and the provisions of this ordinance shall not be construed as a limitation on the
powers and duties which consenting Bondowners may by agreement confer on the Bondowners
Committee or such separate trustee or bondholders committee The Bondowners Committee
shall have full powers of substitution and delegation in respect to any of the powers hereby
granted
Section 8.5 Direction of Actions of Bondowners Committee by Majority Owners The
owners of not less than a majority in principal amount of the Parity Bonds at the time
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Outstanding, may direct the time, method and place of conducting any proceeding for any
remedy available to the Bondowners Committee, or exercising any trust or power conferred
upon the Bondowners Committee, provided that the Bondowners Committee shall be provided
with reasonable scrutiny and indemnity and shall have the right to decline to follow any such
direction only (i) if the Bondowners Committee shall be advised by counsel that the action or
proceeding so directed may not lawfully be taken, or (ii) if the Bondowners Committee in good
faith shall determine that the action or proceeding so directed would involve the Bondowners
Committee in personal liability or that the action or proceeding so directed would be unjustly
prejudicial to the owners of Parity Bonds not parties to such direction
Section 8.6 Suits by Individual Bondowners No owner of any one or more of the
Parity Bonds shall have any right to institute any action, suit or proceeding at law or in equity for
the enforcement of any provision of the Ordinance or the execution of any trust under the
Ordinance or for any remedy under the Ordinance, unless an Event of Default shall have
happened and be continuing, and unless no Bondowners Committee has been created as
herein provided, but any remedy herein authorized to be exercised by the Bondowners
Committee, may be exercised individually by any Bondowner, in his own name and on his own
behalf or for the benefit of all Bondowners, in the event no Bondowners Committee has been
created, or with the consent of 'the Bondowners Committee, if such Bondowners Committee has
been created, provided, however, that nothing in the Ordinance or in the Parity Bonds shall
affect or impair the obligation of the City, which is absolute and unconditional, to pay at the
respective dates of maturity and places therein expressed the principal of and premium, if any,
and interest on the Parity Bonds to the respective owners thereof, or affect or impair the rights
of action, which are also absolute and unconditional, of any owner to enforce the payment of his
Parity Bonds, or to reduce to judgment his claim against the City for the payment of the
principal and interest on his Parity Bonds, without reference to, or consent of, the Bondowners
Committee or any other owner of the Parity Bonds
Section 8.7 Waivers of Default. No delay or omission of the Bondowners Committee
or of any Bondowner to exercise any right or power arising upon the happening of an Event of
Default shall impair any right or power or shall be construed to be a waiver of any such Event of
Default or to be an acquiescence therein, and every power and remedy given by this Article to
the Bondowners Committee or to the Bondowners may be exercised from time to time and as
often as may be deemed expedient by the Bondowners Committee or by such owners
The Bondowners Committee or the owners of not less than 50% in principal amount of
the Parity Bonds at the time Outstanding, or their attorneys -in -fact duly authorized, may on
behalf of the owners of all of the Parity Bonds waive any past default under the Ordinance and
its consequences, except a default in the payment of the principal of and premium, if any, and
interest on any of the Parity Bonds No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon
Section 8.8 Remedies Granted in Ordinance Not Exclusive No remedy by the terms
of the Ordinance conferred upon or reserved to the Bondowners Committee or the Bondowners
is intended to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under the Ordinance or existing
at law or in equity or by statute on or after the date of adoption of the Ordinance
ARTICLE IX
BONDOWNERS MEETINGS
Section 9.1 Call of Bondowners Meetings The City, the Bondowners Committee or
the owners of not less than 20% in principal amount of the Parity Bonds then outstanding may
at any time call a meeting of the owners of the Parity Bonds Every such meeting shall be held
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at such place in the City of Yakima, State of Washington, or in the City of Seattle, State of
Washington, as may be specified in the notice calling such meeting Written notice of such
meeting, stating the place and time of the meeting and in general terms the business to be
transacted, shall be mailed to the Bondowners by the City, the Bondowners Committee or the
Bondowners calling such meeting not less than 30 nor more than 60 days before such meeting,
and shall be published at least once a week for four successive calendar weeks on any day of
the week, the date of first publication to be not less than 30 or more than 60 days preceding the
meeting, provided, however, that the mailing of such notice shall in no case be a condition
precedent to the validity of any action taken at any such meeting The expenses of publication
of such notice shall be paid or reimbursed by the City Any meeting of Bondowners shall,
however, be valid without notice if the owners of all Parity Bonds then Outstanding are present
in person or by proxy or if notice is waived before or within 30 days after the meeting by those
not so present.
Section 9.2 Notice to Bondowners Except as otherwise provided in the Ordinance,
any provision in this ordinance for the mailing of a notice or other paper to Bondowners shall be
fully complied with if it is mailed postage prepaid to each registered owner of any of the Parity
Bonds then outstanding at his /her address, if any, appearing upon the Bond Register, and any
provision in this ordinance contained for publication of a notice or other matter shall require the
publication thereof in The Bond Buyer in the City of New York, State of New York (or in lieu of
publication in The Bond Buyer, in a daily newspaper printed in the English language and
customarily published on each business day and of general circulation in the Borough of
Manhattan, the City of New York, State of New York), and also in a daily newspaper printed in
the English language and customarily published on each business day and of general
circulation in the City of Seattle, State of Washington
Section 9.3 Proxies, Proof of Ownership of Parity Bonds Attendance and voting by
Bondowners at such meetings may be in person or by proxy Owners of Parity Bonds, by an
instrument in writing under their hands, may appoint any person or persons, with full power of
substitution, as their proxy to vote at any meeting for them
Any registered owner of Parity Bonds shall be entitled in person or by proxy to attend
and vote at such meeting as owner of the Parity Bonds registered or certified in his /her name
without producing such Parity Bonds, and such persons and their proxies shall, if required,
produce such proof of personal identity as shall be satisfactory to the secretary of the meeting
All proxies presented at such meeting shall be delivered to the inspectors of votes and filed with
the secretary of the meeting All other persons seeking to attend or vote in such meeting must
produce the Parity Bonds claimed to be owned or represented at such meeting
The vote at any such meeting of the owner of any Parity Bond entitled to vote thereat
shall be binding upon such owner and upon every such subsequent owner of such Parity Bond
(whether or not such subsequent owner has notice thereof)
Section 9.4 Execution of Instruments by Bondowners Any request, direction,
consent or other instrument in writing required or permitted by this ordinance to be signed or
executed by Bondowners may be in any number of concurrent instruments of similar tenor, and
may be signed or executed by such Bondowners in person or by agent appointed by an
instrument in writing Proof of the execution of any such instrument shall be sufficient for any
purpose of this ordinance if the fact and date of the execution by any person of any such
instrument may be proved by either (a) an acknowledgment executed by a notary public or
other officer empowered to take acknowledgments of deeds to be recorded in the particular
jurisdiction, or (b) an affidavit of a witness to such execution sworn to before such a notary
public or other officer Where such execution is by an officer of a corporation or association or
a member of a partnership on behalf of such corporation, association or partnership, such
acknowledgment or affidavit shall also constitute sufficient proof of his /her authority
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The foregoing shall not be construed as limiting the City to such proof, it being intended
that the City may accept any other evidence of the matters herein stated which it may deem
sufficient. Any request or consent of any Bondowner shall bind every future owner of the same
Parity Bond in respect of anything done by the City in pursuance of such request, direction or
consent.
The right of a proxy for a Bondowner to act may be approved (subject to the City's right
to require additional proof) by a written proxy executed by such Bondowner as aforesaid
Section 9.5 Appointment of Officers at Bondowners Meetings Persons named by the
City or elected by the owners of a majority in principal amount of the Parity Bonds represented
at the meeting in person or by proxy in the event the City is not represented at such meeting,
shall act as temporary chairperson and temporary secretary of any meeting of Bondowners A
permanent chairperson and a permanent secretary of such meeting shall be elected by the
owners of a majority in principal amount of the Parity Bonds represented at such meeting in
person or by proxy The permanent Chairperson of the meeting shall appoint two inspectors of
votes who shall count all votes cast at such meeting, except votes on the election of
chairperson and secretary as aforesaid, and who shall make and file with the secretary of the
meeting and with the City their verified report of all such votes cast at the meeting
Section 9.6 Quorum at Bondowners Meetings The owners of not less than the
principal amount of the Parity Bonds required for any action to be taken at such meeting must
be present at such meeting in person or by proxy in order to constitute a quorum for the
transaction of business, less than a quorum, however, having power to adjourn from time to
time without any other notice than the announcement thereof at the meeting, provided,
however, that, if such meeting is adjourned by less than a quorum for more than ten days,
notice thereof shall be published by the City at least five days prior to the adjourned date of the
meeting
ARTICLE X
AMENDMENTS TO ORDINANCE
Section 10.1 Amendments
(a) The Council from time to time and at any time may pass an ordinance or
ordinances amending this ordinance, 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,
other covenants and agreements thereafter to be observed, which shall not adversely affect the
interests of the owners of any Parity Bonds, or to surrender any right or power herein reserved
(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 Additional 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, in any material respect, the interest of the
owners of Parity Bonds.
Any such amending ordinance may be adopted without the consent of the owners of any
Parity Bonds outstanding, notwithstanding subsection (b) of this section
(b) With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bond at the time Outstanding, the Council may pass 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 amending ordinance,
provided, however, that no such amending ordinance shall
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(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 owner of each bond so affected, or
(2) Reduce the aforesaid percentage of Bondowners required to approve any
such amending ordinance, without the consent of the owners of all of the Parity Bonds then
Outstanding
It shall not be necessary for the consent of Bondowners 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 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 owners of Parity
Bonds outstanding hereunder shall thereafter be determined, exercised and enforced
thereunder, subject in all respects to such modification and amendments, and all 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.
(d) Parity Bonds executed and delivered after the execution of any amending
ordinance passed pursuant to the provisions of this section may have a notation as to any
matter provided for in such amending ordinance, and if such supplemental 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 and
delivered without cost to the owners 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 10.2 Obtaining Approval of Amendments at Bondowners Meeting The City
may at any time adopt an ordinance amending the provisions of this ordinance to the extent that
such amendment is permitted by the provisions of this Article X, to take effect when and as
provided in this Section At any time thereafter such ordinance may be submitted by the City
for approval to a meeting of the bondowner duly convened and held in accordance with the
provisions of this ordinance A record in duplicate of the proceedings of each meeting of the
Bondowners shall be prepared by the permanent secretary of the meeting and shall have
attached thereto the original reports of the inspectors of votes and affidavits by a person or
persons having knowledge of the facts, showing a copy of the notice of the meeting and setting
forth the facts with respect to the mailing and publication thereof under the provisions of this
ordinance Such a record shall be signed and verified by the affidavits of the permanent
chairperson and the permanent secretary of the meeting, and one duplicate thereof shall be
delivered to the City Any record so signed and verified shall be proof of the matter therein
stated If the ordinance of the City making such amendment shall be approved by a resolution
duly adopted at such meeting of bondowners by the affirmative vote of the owners of the
required percentages of Parity Bonds, a notice stating that a resolution approving such
amendment has been so adopted shall be mailed by the City to each bondholder who has
requested such notice (but failure so to mail copies of such notice shall not affect the validity of
such resolution) and shall be published at lest once in the manner provided in Section 9.2
hereof Proof of such mailing and publication by the affidavit or affidavits of a person or
persons having knowledge of the facts shall be filed with the City Such ordinance of the City
making such amendment shall be deemed conclusively to be binding upon the City, the paying
agents, and the owners of all Parity Bonds at the expiration of 30 days after the publication of
the notice provided for in this Section, except in the event of a final decree of a court of
competent jurisdiction setting aside such ordinance or annulling the action taken thereby in a
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legal action or equitable proceeding for such purpose commenced within such period, provided
that the City and any paying agents during such '30 day period and any such further period
during which such action or proceeding may be pending shall be entitled in their absolute
discretion to take such action, or to refrain from taking such action, with respect to such
ordinance as they may deem expedient. Nothing in this ordinance contained shall be deemed
or construed to authorize or permit, by reason of any call of a meeting of Bondowners or of any
right conferred hereunder to make such a call, any hindrance or delay in the exercise of any
rights conferred upon or reserved to the paying agents or the Bondowners under any of the
provisions of this ordinance
Section 10.3 Alternate Method of Obtaining Approval of Amendments The City may
at any time adopt an ordinance amending the provisions of this ordinance, or of any Parity
Bonds, to the extent that such amendment is permitted by the provisions of this Article, to take
effect when and as provided in this Section Upon adoption of such ordinance, a request that
Bondowners consent thereto shall be mailed by the City to the Bondowners and notice that the
City is requesting Bondowners to consent to such amendment shall be published at least once
in the manner provided in Section 9.2 hereof Such ordinance shall not be effective unless and
until there shall have been filed with the City the written consents of the percentages of owners
of outstanding Bonds specified herein and a notice shall have been published as hereinafter in
this Section provided Each such consent shall be effective only if accompanied by proof of
ownership of the Parity Bond for which such consent is given A certificate or certificates of the
Clerk of the City that he /she has examined such proof and that such proof is sufficient shall be
conclusive that the consents have been given by the owners of the Parity Bonds described in
such certificate or certificates Any such consent shall be binding upon the owner of the Parity
Bonds giving such consent and on every subsequent owner of such Parity Bonds (whether or
not such subsequent owner has notice thereof) A notice stating that the ordinance has been
consented to by the owners of the required percentages of Bonds and will be effective as
provided in this Section, may be given to the Bondowners by mailing such notice to the
bondholders, and shall be given by publishing the same at least once in the manner provided in
Section 9.2 hereof A record, consisting of the papers required by this Section to be filed with
the City shall be proof of the matters therein stated, and this ordinance shall be deemed
conclusively to be binding upon the City and the owners of all Parity Bonds at the expiration of
30 days after the notice last provided for in this Section, except in the event of a final decree of
a court of competent jurisdiction setting aide such consent or annulling the action taken thereby
in a legal action or equitable proceeding for such purpose commenced within such period
Section 10.4 Amendment of Ordinance in Any Respect by Approval of All Bondowners
Notwithstanding anything contained in the foregoing provisions of this Article, the rights and
obligations of the City and of the owners of the Parity Bonds, and the terms and provisions of
the Parity Bonds and of this ordinance, may be amended in any respect with the consent of the
City, by the affirmative vote of the owners of all said Bonds then Outstanding at a meeting of
Bondowners called and held as hereinabove provided, or upon the adoption of an ordinance by
the City and the consent of the owners of all the Parity Bonds then Outstanding, such consent
to be given as provided in Section 10 3 except that no notice to bondowners either by mailing or
publication shall be required, and the amendment shall be effective immediately upon such
unanimous vote or written consent of all of the Bondowners
Section 10.5 Exclusion of Bonds Owned by City Parity Bonds owned or held by or for
the account of the City shall not be deemed Outstanding for the purpose of any vote or consent
or other action or any calculation of Outstanding Bonds in this ordinance provided for, and shall
not be entitled to vote or consent or take any other action in this ordinance provided for
Section 10.6 Endorsement of Amendment on Bonds Parity Bonds delivered after the
effective date of any action amending this ordinance may bear a notation by endorsement or
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otherwise as to such action, and in that case upon demand of the owner of any Parity Bond
Outstanding at such effective date and presentation of his /her Parity Bond for that purpose at
the principal office of the paying agents, suitable notation shall be made on such Parity Bond by
the paying agent as to any such action If the City shall so determine, new Parity Bonds so
modified as in the opinion of the City and its counsel to conform to such action shall be
prepared, delivered and upon demand of the owner of any Parity Bond then outstanding shall
be exchanged without cost to such Bondowner for Parity Bonds then outstanding hereunder,
upon surrender of such Bonds with any unmatured coupons pertaining thereto
ARTICLE XI
MISCELLANEOUS
Section 11.1 Undertaking to Provide Ongoing Disclosure
(a) Contract/Undertaking This section constitutes the City's written undertaking for
the benefit of the owners of the 2008 Bonds as required by Section (b)(5) of the Rule
(b) Financial Statements /Operating Data. The City agrees to provide or cause to be
provided to each NRMSIR and to the SID, if any, in each case as designated by the
Commission in accordance with the Rule, the following annual financial information and
operating data for the prior fiscal year (commencing in 2009 for the fiscal year ended
December 31, 2008)
(1) Annual financial statements showing ending retained earnings for the
System prepared in accordance with the Budget Accounting and Reporting System prescribed
by the Washington State Auditor pursuant to RCW 43 09.200 (or any successor statute) and
generally of the type included in the official statement for the 2008 Bonds under the heading
"Water and Sewer Operating Statement ",
(2) Principal amount of Bonds of the System,
(3) Debt service coverage for Outstanding Bonds,
(4) Rates for the System, and
(5) Number of customers of the System
Such annual information and operating data described above shall be provided on or
before nine months after the end of the City's Fiscal Year The City's current Fiscal Year ends
December 31 The City may adjust such Fiscal Year by providing written notice of the change
of Fiscal Year to each then existing NRMSIR and the SID, if any In lieu of providing such
annual financial information and operating data, the City may cross - reference to other
documents provided to the NRMSIR, the SID or to the Commission and, if such document is a
final official statement within the meaning of the Rule, available from the MSRB
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement for the System prepared in accordance
with the Budget Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43 09.200 (or any successor statute) when and if available to each then
existing NRMSIR and the SID, if any
(c) Material Events. The City agrees to provide or cause to be provided, in a timely
manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of
any of the following events with respect to the 2008 Bonds, if material
(1) Principal and interest payment delinquencies,
(2) Non - payment related defaults,
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties,
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties,
- 27 -
(5) Substitution of credit or liquidity providers, or their failure to perform,
(6) Adverse tax opinions or events affecting the tax - exempt status of the
2008 Bonds,
(7) Modifications to the rights of 2008 Bond owners,
(8) Bond calls (optional, contingent or unscheduled Bond calls other than
scheduled sinking fund redemptions for which notice is given pursuant to the Commission's
Exchange Act Release 34- 23856),
(9) Defeasances,
(10) Release, substitution or sale of property securing repayment of the 2008
Bonds, and
(11) Rating changes
Solely for purposes of disclosure and not intending to modify this undertaking, the City
advises that no property secures repayment of the 2008 Bonds
(d) Notification Upon Failure to Provide Financial Data The City agrees to provide
or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if
any, notice of its failure to provide the annual financial information described in Subsection (b)
above on or prior to the date set forth in Subsection (b) above
(e) Termination /Modification The City's obligations to provide annual financial
information and notices of material events shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the 2008 Bonds This section, or any provision hereof,
shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to
the effect that those portions of the Rule which require this section, or any such provision, are
invalid, have been repealed retroactively or otherwise do not apply to the 2008 Bonds, and
(2) notifies each then existing NRMSIR and the SID, if any, of such opinion and the cancellation
of this section
Notwithstanding any other provision of this ordinance, the City may amend this
Section 11 1, and any provision of this Section 11 1 may be waived, with an approving opinion
of nationally recognized bond counsel in accordance with the Rule In the event of any
amendment or waiver of a provision of this Section 11 1, the City shall describe such
amendment in the next annual report, and shall include, as applicable, a narrative explanation
of the reason for the amendment or waiver and its impact on the type (or in the case of a
change of accounting principles, on the presentation) of financial information or operating data
being presented by the City In addition, if the amendment relates to the accounting principles
to be followed in preparing financial statements, (i) notice of such change shall be given in the
same manner as for a material event under subsection (c), and (ii) the annual report for the
year in which the change is made should present a comparison (in narrative form and also, if
feasible, in quantitative form) between the financial statements as prepared on the basis of the
new accounting principles and those prepared on the basis of the former accounting principles
(f) Bond Owner's Remedies Under This Section The right of any Bond Owner or
Beneficial Owner of 2008 Bonds to enforce the provisions of this section shall be limited to a
right to obtain specific enforcement of the City's obligations hereunder, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the 2008 Bonds hereunder For purposes of this section, "Beneficial Owner" means
any person who has the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, any 2008 Bonds, including persons holding 2008 Bonds through
nominees or depositories
Section 11.2 Severability If any one or more of the covenants 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 covenants, agreement or
agreements, shall be null and void and shall be deemed separable from the remaining
- 28 -
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 11.3 General Authorization The Mayor and Director of Finance and Budget,
and each of the other appropriate officers, agents and representatives 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 statements, 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 contemplated by this ordinance
Section 11.4 Prior Acts All acts taken pursuant to the authority of this ordinance but
prior to its effective date are hereby ratified and confirmed
Section 11.5 Effective Date This ordinance shall be effective 30 days after its
passage, approval and publication as provided by law
PASSED by the Council of the City of Yakima at a regular meeting thereof, held this 18
day of March, 2008
CITY OF Y MA, WASHI ►•GTON
4 r/ % 1
‘ Edler, Mayor
ATTEST
Q
City Clerk
APPROVED AS TO FORM
A/ q
City Attor ey
Publication Date 3/21/08
Effective Date 4/20/08
- 29 -
EXHIBIT A
DESCRIPTION OF PROJECT
The Project includes, but is not limited to, the following improvements
• Completion of the final modernization of the older Supervisory Communication and Data
Administration (SCADA) system This is estimated at $1,500,000 and this project was
initiated with the current ongoing Phase 1 Improvements construction project.
• The repair of our Dissolved Air Flotation Thickener (DAFT) estimated at $750,000 will
also be performed This will include replacing all mechanical components and
resurfacing the concrete launders and tank walls
• Replace our last centrate lagoon with two enclosed one million gallon tanks The design
and construction of these are estimated at $3,250,000
2008 2009 total
SCADA $600,000 $900,000 $1,500,000
DAFT $500,000 $250,000 $ 750,000
Centrate Tank Design $700,000 $ 700,000
Centrate Tank Construction $2,550,000 $2,550,000
TOTAL $5,500,000
A -1
EXHIBIT B
UNITED STATES OF AMERICA
NO $
STATE OF WASHINGTON
CITY OF YAKIMA
WATER AND SEWER REVENUE AND REFUNDING BOND, 2008
INTEREST RATE % MATURITY DATE CUSIP NO
REGISTERED OWNER
PRINCIPAL AMOUNT
The City of Yakima, Washington (the "City "), hereby acknowledges itself to owe and for
value received promises to pay to the Registered Owner identified above, or registered assigns,
on the Maturity Date identified above, the Principal Amount indicated above and to pay interest
from , 2008, until payment of this bond at the Interest Rate set forth above, payable
on 1, 2008, and semiannually thereafter on the first days of each succeeding
and Both principal of and interest on this bond are payable in lawful
money of the United States of America. For so long as the bonds of this issue are held in fully
immobilized form, payments of principal and interest thereon shall be made as provided in
accordance with the operational arrangements of DTC referred to in the Blanket Issuer Letter of
Representations from the City to The Depository Trust Company In the event that the bonds of
this issue are no longer held in fully immobilized form, interest on this bond shall be paid by
check or draft mailed to the Registered Owner at the address appearing on the Bond Register
on the 15 day of the month preceding the interest payment date, and principal of this bond
shall be payable upon presentation and surrender of this bond by the Registered Owner at the
principal office at the principal office of the fiscal agency of the State of Washington in New
York, New York (the "Bond Registrar "), provided, however, that if so requested in writing by the
Registered Owner of at least $1,000,000 principal amount of bonds, interest will be paid by wire
transfer on the date clue to an account with a bank located within the United States
This bond is one of an authorized issue of bonds of like date and tenor, except as to
number, amount, rate of interest and date of maturity, in the aggregate principal amount of
$ (the "Bonds "), and is issued pursuant to Ordinance No 2008 -, passed by the
City Council on , 2008, and Resolution No of the City Council adopted
on , 2008 (collectively, the "Bond Ordinance "), to finance certain improvements to
the City's water and sewer system and to refund certain outstanding water and sewer bonds of
the City Capitalized terms used in this bond and not otherwise defined shall have the
meanings given them in the Bond Ordinance
The Bonds are subject to optional [and mandatory] redemption as set forth in the Bond
Ordinance
[The City has designated the Bonds of this issue as "qualified tax - exempt obligations"
for purchase by financial institutions ]
B -1
The Bonds are payable solely from the special fund of the City known as the Water and
Sewer Revenue Bond Fund" (the "Bond Fund ") The City has irrevocably obligated and bound
itself to pay into the Bond Fund out of Revenue of the System or from such other money as
may be provided for such purpose certain amounts necessary to pay and secure the payment
of the principal and interest on such bonds
The City has pledged to set aside from the Revenue Fund out of the Revenue of the
System and to pay into the Bond Fund the various amounts required by the Bond Ordinance to
be paid into and maintained in such Fund 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 from the Revenue Fund out of Gross Revenues into the Bond Fund shall be
a lien and charge thereon equal in rank to the lien and charge upon Gross Revenues of the
amounts required to pay and secure the payment of the City's Outstanding Parity Bonds, and
any Additional Bonds hereafter issued and superior to all other liens and charges of any kind or
nature, except the Costs of Maintenance and Operation of the System
The City has further bound itself 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
establish, maintain and collect rates and charges in each calendar year that will make available,
for the payment of the principal of and interest on Outstanding Bonds, Net Revenue in an
amount that will be equal to the Coverage Requirement.
The pledge of Gross Revenues 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 provision for the payment thereof on the terms and conditions set forth in
the Bond Ordinance
This Bond is a special limited obligation of the City and is not an obligation of the State
of Washington or any political subdivision thereof other than the City, and neither the full faith
and credit nor the taxing power of the City or the State of Washington is pledged to the
payment of this Bond
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication has been
manually signed by the Bond Registrar
This Bond is transferable only on the records maintained by the Bond Registrar for that
purpose upon the surrender of this Bond by the Registered Owner or his /her duly authorized
agent and only if endorsed in the manner provided hereon, and a new fully registered Bond of
like principal amount, maturity and interest rate shall be issued to the transferee in exchange
Such exchange or transfer shall be without cost to the Registered Owner or transferee The
City and Bond Registrar may deem the person in whose name this Bond is registered to be the
absolute owner for the purpose of receiving payment of the principal of and interest on this
Bond and for all other purposes
The Bond Registrar is not required to issue, register, transfer or exchange any Bonds
during a period beginning at the opening of business on the 15th day of the month next
preceding any interest payment date and ending at the close of business on the interest
B -2
payment date, or, in the case of any proposed redemption of the Bonds, after the mailing of
notice of the call of such Bonds for redemption
It is hereby certified that all acts, conditions and things required by the Constitution and
statutes of the State of Washington and the Charter and ordinances of the City to exist, to have
happened, been done and performed precedent to and in the issuance of this Bond have
happened, been done and performed and that the issuance of this bond and the bonds of this
series does not violate any constitutional, statutory or other limitation upon the amount of
bonded indebtedness that the City may incur
The City has caused this Bond to be executed by the manual or facsimile signature of
the Mayor and to be attested by the manual or facsimile signature of the Clerk, and has caused
the seal of the City to be impressed or imprinted on this bond, as of this day of
2008
CITY OF YAKIMA, WASHINGTON
By /s/ manual or facsimile signature
Mayor
ATTEST
/s/ manual or facsimile signature
Clerk
The Bond Registrar's Certificate of Authentication on the Bonds shall be in substantially
the following form
B -3
CERTIFICATE OF AUTHENTICATION
This is one of the Water and Sewer Revenue and Refunding Bonds, 2008, of the City of
Yakima, Washington, dated , 2008, described in the Bond Ordinance
WASHINGTON STATE FISCAL AGENCY, as
Bond Registrar
By
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto -
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF
TRANSFEREE
(Please print or typewrite name and address, including zip code, of transferee)
the within bond and does hereby irrevocably constitute and appoint
as attorney -in -fact to
transfer said bond on the books kept for registration thereof with full power of substitution in the
premises
DATED
SIGNATURE GUARANTEED
NOTICE Signature(s) must be
guaranteed pursuant to law
NOTE The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears upon the face of the within bond in
every particular, without alteration or enlargement
or any change whatever
B -4
CITY OF YAKIMA, WASHINGTON
WATER AND SEWER REVENUE AND REFUNDING BONDS, 2008
AN ORDINANCE of the City of Yakima, Washington, authorizing the
issuance and sale of water and sewer revenue and refunding
bonds of the City in the principal amount of not to exceed
$9,750,000 in one or more series to finance certain capital
improvements to the City's water and sewer system and to refund
certain outstanding water and sewer bonds of the City; and fixing
the terms and covenants of such bonds
Passed On [March 18], 2008
Prepared by •
K &L PRESTON GATES ELLIS LLP
925 Fourth Avenue, Suite 2900
Seattle, Washington 98104-1158
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1 1 Definitions 1
ARTICLE II
FINDINGS
Section 2 1 Approval of Plan and System 6
Section 2 2 Parity Conditions 6
ARTICLE III
ISSUANCE OF 2008 BONDS
Section 3 1 Issuance of the 2008 Bonds 7
Section 3 2 Registration, Exchange and Payments 7
Section 3 3 Execution and Authentication of Bonds 9
Section 3 4 Lost or Destroyed Bonds 9
Section 3 5 Form of 2008 Bonds 10
ARTICLE IV
REDEMPTION OF 2008 BONDS
Section 4 1 Redemption Prior to Maturity 10
Section 4.2 Notice of Redemption 10
Section 4 3 Effect of Redemption 10
Section 4 4 Amendment of Notice Provisions 10
Section 4 5 Purchase of 2008 Bonds 10
ARTICLE V
FUNDS AND ACCOUNTS, DEFEASANCE
Section 5 1 Revenue Fund, Priority of Payments 11
Section 5.2 Bond Fund 11
Section 5 3 Defeasance 14
Section 5 4 Refunding of Refunded Bonds 14
ARTICLE VI
PARTICULAR COVENANTS OF THE CITY
Section 6 1 Rate Covenant 15
Section 6 2 Maintenance and Operation 15
Section 6 3 Sale or Disposition of the System 15
Section 6 4 Liens or Encumbrances 16
Section 6 5 Insurance 16
Section 6 6 Books and Accounts 16
Section 6 7 Additions and Improvements 16
Section 6 8 Tax Covenants 17
ARTICLE VII
ADDITIONAL BONDS
Section 7 1 Additional Bonds 17
Section 7.2 Pledge Effected by Ordinance 19
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8 1 Events of Default. 19
Section 8.2 Formation of Bondowners Committee 20
Section 8 3 Books of City Open to Inspection 21
Section 8 4 Suits at Law or in Equity 21
Section 8 5 Direction of Actions of Bondowners Committee by Majority Owners 21
Section 8 6 Suits by Individual Bondowners 22
Section 8 7 Waivers of Default 22
Section 8 8 Remedies Granted in Ordinance Not Exclusive 22
ARTICLE IX
BONDOWNERS MEETINGS
Section 9 1 Call of Bondowners Meetings 22
Section 9 2 Notice to Bondowners 23
Section 9 3 Proxies, Proof of Ownership of Parity Bonds 23
Section 9 4 Execution of Instruments by Bondowners 23
Section 9 5 Appointment of Officers at Bondowners Meetings 24
Section 9 6 Quorum at Bondowners Meetings 24
ARTICLE X
AMENDMENTS TO ORDINANCE
Section 10 1 Amendments 24
Section 10 2 Obtaining Approval of Amendments at Bondowners Meeting 25
Section 10 3 Alternate Method of Obtaining Approval of Amendments 26
Section 10 4 Amendment of Ordinance in Any Respect by Approval of All Bondowners 26
Section 10 5 Exclusion of Bonds Owned by City 26
Section 10 6 Endorsement of Amendment on Bonds 26
ARTICLE XI
MISCELLANEOUS
Section 11 1 Undertaking to Provide Ongoing Disclosure 27
Section 11 2 Severability 28
Section 11 3 General Authorization 29
Section 11 4 Prior Acts 29
Section 11 5 Effective Date 29
Exhibit A Description of Project
Exhibit B Form of 2008 Bonds
-ii-
BUSINESS OF THE CITY COUNCIL
• YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No 1
For Meeting Of March 18, 2008
ITEM TITLE An Ordinance authorizing the issuance of water and wastewater revenue
and refunding bonds of the City of Yakima in the principal sum not to exceed
$9,750,000 to finance certain capital improvements to the City's water and
wastewater systems and to refund (refinance) certain outstanding water and
wastewater bonds of the City; and fixing the terms and covenants of such
bonds
SUBMITTED BY Finance Department
*it
CONTACT PERSON /TELEPHONE Rita DeBord, Finance Director (575- 6070)W
Timothy Jensen, Treasury Services Officer (575 -6070)
Doug Mayo, Wastewater Utility Manager (575 -6077)
SUMMARY EXPLANATION
Background
The enclosed bond ordinance for Council consideration achieves two objectives (1) execution of
the City Council's 2008 approved policy issue that requested continuing improvements at the
ii Wastewater treatment plant to be funded by $5 5 million of revenue bonds Prior to issuing
bonded debt on the City's behalf it is necessary, per section 12 of the City Charter, that the Council
approve the terms and form of the bonds by Ordinance, and (2) reduction in future debt service
costs by taking advantage of market conditions that may be favorable to refunding (refinancing) of
wastewater bonds issued in 1998 These bonds currently have a principal balance of
approximately $4 million The maximum bond issue requested is rounded up to $9 75 million, to
allow for costs related to issuing the bonds and variances in market conditions
Wastewater Capital Improvement Projects
Major system improvements have been underway at the Wastewater treatment plant for the past
several years Bond proceeds will be used to continue the capital program outlined in the adopted,
mandated 2004 Wastewater Facility Plan These projects include the completion of the
modernization of the Supervisory Communication and Data Administration ( "SCADA ") system,
repair of the Dissolved Air Flotation Thickener; and replacement of the centrate lagoon (Refer to
Attachment A of this agenda statement for a further breakdown of the primary capital improvements
to be funded by this bond issue )
Continued
Resolution Ordinance X Other (Specify)
Contract Mail to (name and address)
Phone
Funding Source .
APPROVED FOR SUBMITTAL. � City Manager
III STAFF RECOMMENDATION Pass Ordinance
BOARD /COMMISSION /COMMITTEE RECOMMENDATION 2008 Council approved Policy Issue
COUNCIL ACTION
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2008 Wastewater Revenue Bond Agenda Statement — Continued
Refunding 1998 Bonds
The wastewater revenue bonds issued in 1998 are eligible for a current refunding (i e refinancing at
lower interest rates) These bonds have an outstanding principal balance of $4 04 million With the
current volatility in the market place, it is not certain that there will be savings at the time of the bond
sale, however, including the refunding in this bond ordinance provides the City with the option to
take advantage of this limited opportunity should the market be favorable on the date of sale
Should Council approve this ordinance, the City's finance staff will be authorized to make decisions
at the time of the bond sale regarding whether or not to proceed with the refunding of the 1998
bonds
Terms, Form and Covenants of Bonds
The form and covenants of the proposed bonds are described in the bond ordinance, for Council
review and consideration Other specific details - such as the actual interest rates, the final
structure of the bonds, etc , will not be known until the bonds are placed in the market. Council's
approval of this bond ordinance authorizes staff to set the terms and conditions of the bond sale,
within the parameters set in the ordinance, as we continue through the bond issuance process
Once the bond pricing is concluded and a purchase offer is made, the specific terms and conditions
will be known and provided to Council for final approval and authorization to execute the sale This
is currently scheduled for Council's regularly scheduled business meeting on May 6, 2008
Note When publicly traded securities are offered for sale, SEC regulations require details of the
City finances and security for bond payments be issued to potential investors, along with many
details regarding the bond terms and conditions Staff, in conjunction with the City's Bond Counsel,
KL Preston Gates, and our underwriters, Seattle Northwest Securities, is in the process of preparing
this document (referred to as the Preliminary Official Statement or POS). We anticipate completion
of the draft POS by the end of April for distribution to potential investors at that time and will be
presented to Council for approval along with the bond purchase agreement noted above
Summary
As the upgrades to the wastewater facility noted above, and in Attachment A, are the next phase of
a comprehensive improvement plan, this bond sale is being timed to provide the resources to
efficiently continue the capital improvement program Additionally, this is one of the best times in
the "life- cycle" of the 1998 bonds (i e. the 10 year mark) for the issue to have potential savings if
refunded
Using current market conditions, the interest cost on this issue is estimated to be around 4 3%
including legal and underwriting costs, which would result in annual debt service for the "new
money" portion of $430,000 over the 20 -year term of the bonds. This level of debt service has
already been priced into the Wastewater rate structure, so this bond issue won't drive an additional
rate increase for the utility It should be noted that the municipal bond market has recently
experienced significant volatility; therefore, all of the numbers related to this bond sale are
estimates only, and are subject to change
Refer to Attachment A for a project description and cost breakdown of the proposed wastewater
capital improvements.
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Attachment A
• DESCRIPTION OF PROJECT
The Project includes, but is not limited to, the following improvements
• Completion of the final modernization of the older Supervisory Communication and Data Administration
(SCADA) system. This is estimated at $1,500,000 and this project was initiated with the current ongoing
Phase 1 Improvements construction project.
• The repair of our Dissolved Air Flotation Thickener (DAFT) estimated at $750,000 will also be performed.
This will include replacing all mechanical components and resurfacing the concrete launders and tank
walls.
• Replace our last centrate lagoon with two enclosed one million gallon tanks. The design and construction
of these are estimated at $3,250,000
2008 2009 _ Total
SCADA $600,000 _ $900,000 $1,500,000
DAFT $500,000 $250,000 $ 750,000
Centrate Tank Design $700,000 $ 700,000
• Centrate Tank Construction $2,550,000 $2,550,000
TOTAL $5,500,000
S
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