HomeMy WebLinkAbout03/18/2008 17 Water and Wastewater Revenue and Refunding Bonds 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
OR
CONTACT PERSON /TELEPHONE: Rita DeBord, Finance Director (575- 6070)
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
Wastewater treatment plant to be funded by $5.5 million of revenue bonds. Prior to issuing
0 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
• STAFF RECOMMENDATION: Pass Ordinance
BOARD /COMMISSION /COMMITTEE RECOMMENDATION: 2008 Council approved Policy Issue
COUNCIL ACTION:
C: \Documents and Settings\ranson \Local Settings \Temporary Internet Files \OLK24 \03 -18 -08 Agenda - 2008 WW Bond Ordin..doc
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.
•
C: \Documents and Settings\ranson \Local Settings \Temporary Internet Files \OLK24 \03 -18 -08 Agenda - 2008 WW Bond Ordin..doc
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
•
fra .
C: \Documents and Settings\ranson \Local Settings \Temporary Internet Files \OLK24 \03 -18 -08 Agenda - 2008 WW Bond Ordin..doc
• ORDINANCE NO.
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
0 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
41) 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
- 2 - P:\20978_NMN\20978_3313 /13/200@ l5/20P8
0 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
0 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
• .
•
- 3 - P:\ 20978 _NMN\20978_3313 /13/2008a/6;24398
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.
•
- 4 - P:\20978_NMN\20978_331 1aMairzi24148
• "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,
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
ii 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
0 Appreciation Bond that is redeemed prior to maturity, or
- 5 - P:\20978_NMN120978_ 3313 /13/200V/6/20P8
(ii) computing the principal amount of Parity Bonds held by the owner of a
0
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
410 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 nondelinquent 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. IIII
- 6 - P:\20978_NMN\20978_3313 /13/2008315/2008
• "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.
"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.
•
- 7 - PA20978 NMN\20978_3313/13/200@3/6/20P8
"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 defeased 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. III
- 8 - P:\20978_NMN\20978 3313/13/2008315!2998
• "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.
"Qualified Insurance" means any noncancellable 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.
•
- 9 - P:\ 20978 _NMN\20978_3313 /13/200@3/5/2098
"Reserve Fund Requirement" means the lesser of (i) the maximum Annual Debt Service
III
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
ID 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.
•
- 10 - P:\20978_NMN\20978_3313/13/200e245/2908
"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.
"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.
•
- 11 - P: 120978 _NMN120978_3313 /13/200$3/6/200
"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:
- 12 - P: 120978 _NMN\20978_3313 /73/20083/5/2000
• (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.
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
•
- 13 - P:\20978_NMN120978_ 3313/13/200@3/6/20418
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
III
- 14 - P:\ 20978_ NMN\20978_3313 /13/200$24/20f -8
• 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 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,
- 15 - P:\20978_NMN\20978_ 3313/13/20083f54998
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.
0
- 16 - P:\ 20978 _NMN\20978_3313 /13/20083/640Q8
• (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.
III (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
4110 Bond. Any 2008 Bond may be surrendered to the Bond Registrar and exchanged, without
- 17 - P:12097 8_ NMN\20978_3313 /13/200@316/294+8
charge, for an equal aggregate principal amount of 2008 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.
ill (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 ID
- 1 - P:\ 20978 _NMN\20978_3313 /13/200@2/208
• 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.
III
• ' . - 19 - P:\20978 NMN\20978 3313/13/20083/6 /2008
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
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
0 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.
III
- 20 - P:\ 20978 _NMN120978_3313 /13/2003A/2808
0 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
III notices of redemption of municipal securities.
- 21 - P:\ 20978 _NMN\20978_3313 /13/20083/612888
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.
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;
•
- 22 - P: \ 20978 _NMN\20978_3313 /13/20083.f5/2048
0 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
S 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
10 principal, premium, if any, and interest on the Parity Bonds, of retiring the Parity Bonds prior to
- 23 - P:120978_NMN\20978_ 3313/13/200821612008
maturity in the manner herein provided, and of paying any reimbursement obligation with respect
is,
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.
(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. III
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 •
- 24 - P:\ 20978 _NMN\20978_3313 /13/20083/5/2008
410 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.
IP/ (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.
- 25 - P:\ 20978 _NMN\20978_3313 /13/20088/512008
The City shall apply such money to the redemption or purchase of Term Bonds in an
0
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 to the Reserve Fund
Requirement. Each ordinance providing for the issuance of Additional Bonds shall provide for
ill 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
1 110
- 26 - P:\20978_NMN\20978_3313 /13/2008216/2868
O 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
,
- 27 - P:\ 20978 _NMN\20978_3313 /13/20082/6/2088
no later than the 25th day of the sixth succeeding calendar month the amount necessary to restore
0
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
0 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 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,
III
- 28 - P:\20978_NMN\20978_3313 /13/20083/612008
• 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
411 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.
III
- 29 - P: \ 20978 _NMM20978
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.
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 •
- 30 - P:\ 20978 _NMN\20978_3313 /13/20082/6/2098
• 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
O betterments thereto, so that at all times the business carried on in connection therewith will be •
- 31 - P:\20978 NMN120978 3313 /13/2008216 42848
properly and advantageously conducted, and the City will at all times operate or cause to be
410
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.
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 •
- 32 - P:\ 20978 _NMN\20978_3313 /13120083/8/2008
• 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.
el 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
- 33 - P: 120978_NMN\20978 _ 3313/13/2008345 /2008
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 0
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 manner;
provided, that to the extent permitted by law, the City may provide commodities, services or
III
- 34 - P: 120978 _NMN\20978_3313 /13/200 @316/2098
0 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
- 35 - P:\ 20978 _NMN\20978 /13/20082/6,,2098
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
10 Additional Bonds to be issued, and that the Adjusted Net Revenues to be received each calendar
- 36 - P:\ 20978 _NMN\20978_3313 /13/2008216/2088
. 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 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.
III
- 37 - PA20978_NMN\20978_331 1 2 !2808
(E) The additional Net Revenues that may be derived by the City from
0
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.
IIII
- 38 - P:\ 20978 _NMN\20978_3313/13/20083/W294
III (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.
(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
•
- 39 - P:\20978_NMN\20978_3313 /13/200821€/2998
against all parties having claims of any kind in tort, contract or otherwise against the City
0
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."
III
- 40 - P:\ 20978 _NMN\20978_3313 /13/200831612008
. 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;
(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
- 41 - P:\20978 NMN\20978 3313/13/20083/W2868
reorganization of the City under any applicable law of the United States or the State of
0
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
0 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 •
- 42 - P:\ 20978 _NMN\20978_3313 /13/204@315/2098
O 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.
O 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
O and attorneys, shall be entitled and empowered to proceed forthwith to take such needful steps
- 43 - P: 120978 _NMN\20978_3313 /13/20083/S/26P8
and institute such suits, actions and proceedings at law or in equity for the collection of all sums
0
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
0 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,
III reorganization or other proceeding to which the City shall be a party, and provided further,
- 44 - P:\ 20978_ NMN\20978_3313 /13/2009f6/2008
• 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
fib 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
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
0 owners of Parity Bonds not parties to such direction.
- 45 - P:\20978_NMN\20978_3313 /13/2008316/2008
Section 8.6 Suits by Individual Bondowners. No owner of any one or more of the
0
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. III
- 46 - P:\20978_NMN\20978_3313 /13/2008215/20( 8
• 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.
III 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 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
410
- 47 - P:\ 20978 _NMN\20978_3313/13/20083461204-8
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 III
- 48 - P:\ 20978 _NMM20978_3313 /13/200Q315F2008
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
0 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.
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
- 49 - P:1 20978_NMN\20978_3313/13/20483/5 /2998
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.
•
- 50 - P:\20978_NMM20978_3313 /13/200@315/2008
• 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
0 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:
•
- 51 - P:120978 NMN\20978 3313/13/20083164098
(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 1111
- 52 - P:\20978_NMM20978_ 3313/13 /200 1WF48
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
fb 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
- 53 - P:\20978_NMN120978_3313 /13/200@2/5/2008
binding upon the City, the paying agents, and the owners of all Parity Bonds at the expiration of
0
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 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
- 54 - P:\ 20978 _NMN\20978_3313 /13/20083/5/2908
0 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
0 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
0 .
- - P:\20978_NMN\20978_3313/13/20082X2088
by mailing or publication shall be required, and the amendment shall be effective immediately
0
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
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
MIS CELLANEOUS
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 •
- 56 - P:120978_NMN\ 20978_ 3313113/200@3J6/2908
in accordance with the Rule, the following annual financial information and operating data for
ID
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.
III 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.
- 57 - P:\ 20978 _NMM20978_3313 /13/240Q2/5F2998
(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;
(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.
•
- 58 - P:X20978_NMN\20978_ 3313 /13/2008216/20n
0 (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
40 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)
- 59 - P:\ 20978 _NMM20978_3313 /13/201)346/28A8
between the financial statements as prepared on the basis of the new accounting principles and
0
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 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.
•
- 60 - P:\20978_NMM20978_3313/13/200 @3/5/2808
. • 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 YAKIMA, WASHINGTON
David Edler, Mayor
ATTEST
• Deborah J. Moore, City Clerk
- APPROVED AS TO FORM:
City Attorney
First Reading:
Publication Date:
Effective Date:
•
- 61 - P: 120978 _NMM20978_3313 /73/200@316!2048
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 P:'20978_NMN\20978 /13/2000/5/2008
• 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
0 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 due 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.
B -1 PA20978_NMN\20978_3312/12110216/2GG8
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.]
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 •
B -2 P:120978 NMM20978_3313/13/2008 /6/26P8
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 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:
411
B-3 P: 120978 _NMM20978_3313 /13/200@3{5!2098
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 P:X20978_NMN\20978_3313 /13/20082/6/2898
0
CITY OF YAKIMA, WASHINGTON
WATER AND SEWER REVENUE AND REFUNDING BONDS, 2008
ANORDINANCE 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 2
ARTICLE II
FINDINGS
Section 2.1 Approval of Plan and System 12
Section 2.2 Parity Conditions 124-3 I
ARTICLE III
ISSUANCE OF 2008 BONDS
Section 3.1 Issuance of the 2008 Bonds 1344
Section 3.2 Registration, Exchange and Payments 14
Section 3.3 Execution and Authentication of Bonds 19
Section 3.4 Lost or Destroyed Bonds 20
Section 3.5 Form of 2008 Bonds 20
ARTICLE IV
REDEMPTION OF 2008 BONDS
Section 4.1 Redemption Prior to Maturity 20
Section 4.2 Notice of Redemption - 20
Section 4.3 Effect of Redemption 21
Section 4.4. Amendment of Notice Provisions 21
Section 4.5 Purchase of 2008 Bonds 22
ARTICLE V
FUNDS AND ACCOUNTS; DEFEASANCE
Section 5.1 Revenue Fund; Priority of Payments 22
Section 5.2 Bond Fund 23
Section 5.3 Defeasance 30
Section 5.4. Refunding of Refunded Bonds 30
ARTICLE VI
PARTICULAR COVENANTS OF THE CITY
Section 6.1 Rate Covenant 30 •
Section 6.2 Maintenance and Operation 31
- P:120978_NMN\20978_3313 /13/20083/5/2008
® Section 6.3 Sale or Disposition of the System 32
Section 6.4 Liens or Encumbrances 33
Section 6.5 Insurance 33
Section 6.6 Books and Accounts 34
Section 6.7 Additions and Improvements 34
Section 6.8 Tax Covenants 35
ARTICLE VII
ADDITIONAL BONDS
Section 7.1 Additional Bonds 36
Section 7.2 Pledge Effected by Ordinance 39
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1 Events of Default 40
Section 8.2 Formation of Bondowners Committee 42
Section 8.3 Books of City Open to Inspection 43
Section 8.4 Suits at Law or in Equity 43
Section 8.5 Direction of Actions of Bondowners Committee by Majority Owners 45
Section 8.6 Suits by Individual Bondowners 46
• Section 8.7 Waivers of Default 46
Section 8.8 Remedies Granted in Ordinance Not Exclusive 47
ARTICLE IX
BONDOWNERS MEETINGS
Section 9.1 Call of Bondowners Meetings 47
Section 9.2 Notice to Bondowners ' 48
Section 9.3 Proxies; Proof of Ownership of Parity Bonds 48
Section 9.4 Execution of Instruments by Bondowners 49
Section 9.5 Appointment of Officers at Bondowners Meetings 50
Section 9.6 Quorum at Bondowners Meetings - 50
ARTICLE X
AMENDMENTS TO ORDINANCE
Section 10.1 Amendments 51
Section 10.2 Obtaining Approval of Amendments at Bondowners Meeting 53
Section 10.3 Alternate Method of Obtaining Approval of Amendments 54
Section 10.4 Amendment of Ordinance in Any Respect by Approval of All Bondowners 55
Section 10.5 Exclusion of Bonds Owned by City 56
Section 10.6 Endorsement of Amendment on Bonds 56
III
-11- P:\20978_NMN\20978_ 3313 /13/20082/5/2008
ARTICLE XI
MISCELLANEOUS
Section 11.1 Undertaking to Provide Ongoing Disclosure 56
Section 11.2 Severability 60
Section 11.3 General Authorization 60
Section 11.4 Prior Acts 61
Section 11.5 Effective Date 61
Exhibit A Description of Project
Exhibit B Form of 2008 Bonds
•
•
- 111 - P /13/20082/5/2048