HomeMy WebLinkAbout6451 CITY OF AUBURN, WASHINGTON
ORDINANCE NO 6451
AN ORDINANCE of the City of Auburn, Washington, relating to the
combined utility systems of the City; providing for the issuance of one or more
series of utility system revenue bonds of the City in the aggregate principal
amount of not to exceed $13,000,000.00 (1) to pay a portion of the cost of certain
improvements described herein, (2) to make a deposit to the debt service reserve
account, and (3) to pay the costs of issuance and sale of the bonds; fixing or
setting parameters with respect to certain terms and covenants of the bonds;
appointing the City's designated representative to approve the final terms of the
sale of the bonds; and providing for other related matters.
PASSED FEBRUARY 19, 2013
Prepared by
Foster Pepper PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98104
(206) 447-4400
51267762 3
TABLE OF CONTENTS
Section 1. Definitions 1
Section 2. Recitals and Findings 7
Section 3. Authorization of the Bonds 8
Section 4 Description of the Bonds; Appointment of Designated Representative. 8
Section 5. Bond Registrar; Registration and Transfer of Bonds 9
Section 6. Form and Execution of Bonds 10
Section 7 Payment of Bonds. 10
Section 8. Redemption Provisions and Open Market Purchase of Bonds. 11
Section 9 Failure to Pay Bonds 12
Section 10 The Bond Fund; Payments into Bond Fund 12
Section 11 Rate Stabilization Fund 13
Section 12. Pledge of Revenue and Lien Position. 14
Section 13 Deposit of Bond Proceeds 14
Section 14 Covenants 14
Section 15. Flow of Funds. 17
Section 16. Provisions for Future Parity Bonds 17
Section 17 Separate Utility Systems. 18
Section 18. Contract Resource Obligations 18
Section 19 Tax Covenants 19
Section 20. Refunding or Defeasance of the Bonds 19
Section 21. Sale and Delivery of the Bonds .20
Section 22. Official Statement. .20
Section 23 Undertaking to Provide Continuing Disclosure .21
Section 24. Supplemental or Amendatory Ordinances. .23
Section 25. Defaults and Remedies •25
Section 26. Ratification •29
Section 27 Effective Date of Ordinance .29
Exhibit A—Description of the Improvements
Exhibit B—Parity Conditions
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CITY OF AUBURN, WASHINGTON
ORDINANCE NO 6451
AN ORDINANCE of the City of Auburn, Washington, relating to the
combined utility systems of the City; providing for the issuance of one or more
series of utility system revenue bonds of the City in the aggregate principal
amount of not to exceed $13,000,000 00 (1) to pay a portion of the cost of certain
improvements described herein, (2) to make a deposit to the debt service reserve
account, and (3) to pay the costs of issuance and sale of the bonds; fixing or
setting parameters with respect to certain terms and covenants of the bonds;
appointing the City's designated representative to approve the final terms of the
sale of the bonds; and providing for other related matters.
THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, DO ORDAIN as
follows:
Section 1. Definitions. As used in this ordinance, the following words shall have the
following meanings:
(a) "2005 Bonds" means the outstanding Utility System Revenue Refunding Bonds,
2005, of the City issued pursuant to Ordinance No. 5930
(b) "2010A Bonds" means the outstanding Utility System Revenue Bonds, 2010A, of
the City issued pursuant to Ordinance No. 6335
(c) "2010B Bonds" means the outstanding Utility System Revenue Bonds, 2010B
(Taxable Build America Bonds — Direct Payment), of the City issued pursuant to Ordinance No.
6335
(d) "Alternate Security" means any bond insurance, reserve insurance, collateral,
security, letter of credit, guaranty, surety bond or similar credit enhancement device providing
for or securing the payment of all or part of the principal of and interest on Parity Bonds, which.
(i) is non-cancelable, and (ii) is issued by an institution which has been assigned, at the time of
issuance of the particular issue of Parity Bonds in connection with which the Alternate Security
is acquired, a credit rating equal to or better than the highest two rating categories by both
Moody's Investors Service, Inc., and Standard & Poor's (without regard to gradations with in
those categories). Alternate Security includes, in lieu of cash and investments, such a security
obtained by the City for the purpose of satisfying part or all of the Reserve Requirement for the
Parity Bonds then outstanding.
(e) `Annual Debt Service" means for any calendar year for the Parity Bonds (or for
any series thereof, as applicable), all the interest, plus all principal (except principal of Term
Bonds due in any Term Bond Maturity Year), plus all mandatory redemption and sinking fund
installments for that year, less all bond interest payable from the proceeds of any such Parity
Bonds in that year.
(f) "Assessment Bonds" shall mean the original principal amount of any issue of
Parity Bonds equal to the total principal amount (or, if refunding bonds, the remaining unpaid
principal amount) of ULID Assessments on any final assessment roll or rolls of one or more
ULIDs formed in connection with the improvements being financed by such issue of bonds (or
bonds being refunded). The original principal amount of such issue of bonds in excess of
Assessment Bonds shall be referred to as "bonds (or Bonds) that are not Assessment Bonds."
Assessment Bonds shall be allocated to each $5,000 00 of bonds in proportion to their percentage
of the entire issue of bonds. When a bond of any issue of bonds containing Assessment Bonds is
redeemed or purchased, and retired, the same percentage of that bond as the percentage of
Assessment Bonds is to the total issue of those bonds shall be treated as Assessment Bonds being
redeemed or purchased and retired.
(g) "Authorized Denomination means $5,000 00 or any integral multiple thereof
within a maturity
(h) "Average Annual Debt Service" means, as of its date of calculation, the sum of
the Annual Debt Service for the remaining calendar years to the last scheduled maturity of the
applicable issue or issues of bonds divided by the number of those years. For purposes of
computing the Reserve Requirement the estimated amount of bonds to be redeemed prior to
maturity may be taken into account if required under federal arbitrage regulations.
(i) `Beneficial Owner" means, with respect to a Bond, the owner of any beneficial
interest in that Bond.
0) "Bond Counsel" means the firm of Foster Pepper PLLC, its successor, or any
other attorney or firm of attorneys selected by the City with a nationally recognized standing as
bond counsel in the field of municipal finance.
(k) "Bond Fund" means that special fund of the City known as the Utility System
Revenue Bond Fund created by Section 10 of Ordinance No 4945 for the payment of the
principal of and interest on the Parity Bonds.
(l) "Bond Purchase Agreement" means an offer to purchase the Bonds, or a Series
of Bonds, setting forth certain terms and conditions of the issuance, sale and delivery of that
Series of the Bonds, which offer is authorized to be accepted by the Designated Representative
on behalf of the City, if consistent with this ordinance.
(m) `Bond Register" means the books or records maintained by the Bond Registrar
for the purpose of identifying ownership of the Bonds.
(n) "Bond Registrar" means the Fiscal Agent, or any successor bond registrar
selected by the City
(o) "Bonds" means the bonds of the City issued pursuant to and for the purposes
provided in this ordinance in one or more series and with such additional series and other
designation as the Designated Representative may deem appropriate.
(p) "City" means the City of Auburn, Washington, a municipal corporation duly
organized and existing under the laws of the State.
(q) City Council" means the legislative authority of the City, as duly and regularly
constituted from time to time.
(r) "Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder
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(s) "Construction Accounts" means such accounts created in such System Funds as
the Finance Director shall designate for the purpose of paying the costs of the Improvements and
the costs of issuance of the Bonds.
(t) "Contract Resource Obligation" means an obligation of the City, designated as a
Contract Resource Obligation and entered into pursuant to Section 18 of this ordinance, to make
payments for water supply, sewer service, water, sewage or stormwater transmission or other
commodity or service to another person or entity (including without limitation a separate utility
system created pursuant to Section 17 of this ordinance and Section 18 of Ordinance No 4945).
(u) "Coverage Requirement' in any calendar year means an amount of Net Revenue
at least equal to 1.25 times the Annual Debt Service in that year on all Parity Bonds that are not
Assessment Bonds. Upon redemption or defeasance of all outstanding 2005 Bonds, Ore following
sentence shall be added: If any Assessment Bonds are outstanding, the Coverage Requirement shall
also mean, in any calendar year, an amount of ULID Assessments at least equal to 1.0 times the
Annual Debt Service in that year on all Parity Bonds that are Assessment Bonds.
(v) "DTC" means The Depository Trust Company, New York, New York, or its
nominee.
(w) "Designated Representative" means the officer of the City appointed in Section 4
of this ordinance to serve as the City's designated representative in accordance with RCW
39 46.040(2).
(x) "Final Terms" means the terms and conditions for the sale of a Series of Bonds
including, but not limited to the amount, date or dates, denominations, interest rate or rates (or
mechanism for determining interest rate or rates), payment dates, final maturity, redemption
rights, price, and other terms or covenants.
(y) "Finance Director" means the City Finance Director or the officer that is the
successor to substantially the functions and duties of the Finance Director
(z) Fiscal Agent" means the fiscal agent of the State, as the same may be
designated by the State from time to time.
(aa) "Future Parity Bonds" means any and all utility system revenue bonds of the
City issued after the date of the issuance of the Bonds, the payment of the principal of and
interest on which constitutes a charge or lien on the Net Revenue and ULID Assessments equal
in rank with the charge and lien upon such revenue and assessments required to be paid into the
Bond Fund to pay and secure the payment of the principal of and interest on the Outstanding
Parity Bonds and the Bonds.
(bb) "Government Obligations" has the meaning given in RCW 39.53 010, as now in
effect or as may hereafter be amended.
(cc) "Gross Revenue of the System" or "Gross Revenue" means all of the earnings
and revenues received by the City from the maintenance and operation of the System and all
earnings from the investment of money in the Bond Fund which earnings are deposited in the
Principal and Interest Account, and connection and capital improvement charges collected for
the purpose of defraying the costs of capital facilities of the System. Gross Revenue includes
any Tax Credit Subsidy Payments received by the City in respect of any Parity Bonds. Gross
Revenue shall not include: ULID Assessments, government grants, proceeds from the sale of
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System property City taxes collected by or through the System, principal proceeds of bonds or
other obligations and earnings or proceeds from any investments in a trust, defeasance or escrow
fund created to defease or refund System obligations (until commingled with other earnings and
revenues of the System) or held in a special account for the purpose of paying a rebate to the
United States Government under the Code, on earnings of a separate utility system that may be
created under Section 17 of this ordinance.
(dd) "Improvements" means those improvements in the City's Plan of Additions that
are described in Exhibit A to this ordinance, which is incorporated by reference.
(ee) "Independent Utility Consultant" means either (1) an independent licensed
professional engineer experienced in the design, construction or operation of municipal utilities
of comparable size and character to the System, or (2) an independent certified public accountant
or other professional consultant experienced in the development of rates and charges for
municipal utilities of comparable size and character to the System.
(to Issue Date" means, with respect to any Series of Bonds, the date of initial
issuance and delivery of such Series to the Underwriter in exchange for the purchase price of
such Series.
(gg) "Letter of Representations" means the Blanket Issuer Letter of Representations
dated February 18, 1997, between the City and DTC, as it may be amended from time to time,
and any successor or substitute letter relating to the operational procedures of the Securities
Depository
(hh) "MSRB" means the Municipal Securities Rulemaking Board.
(ii) "Maintenance and Operation Expense" means all reasonable expenses incurred
by the City in causing the System to be operated and maintained in good repair, working order
and condition, including without limitation payments made to any other municipal corporation or
private entity as Contract Resource Obligations, and payments with respect to any other expenses
of the System that are properly treated as maintenance and operation expenses under generally
accepted accounting principles applicable to municipal corporations. The term Maintenance and
Operation Expense does not include any depreciation or capital additions or capital replacements
to the System.
0j) "Maximum Annual Debt Service" means at the time of calculation, the maximum
amount of Annual Debt Service that will mature or come due in the current calendar year or any
future year on the outstanding Parity Bonds.
(kk) "Net Revenue of the System" or "Net Revenue" means the Gross Revenue: (a)
less (1) Maintenance and Operation Expense and (2) deposits into the Rate Stabilization Fund,
and (b) plus withdrawals from the Rate Stabilization Fund.
(11) "Outstanding Parity Bonds" means the 2005 Bonds, the 2010A Bonds and the
2010B Bonds.
(mm) "Owner" means, without distinction, the Registered Owner and the Beneficial
Owner
(nn) "Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future
Parity Bonds.
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(oo) "Parity Conditions" means those conditions for the issuance of Future Parity
Bonds, which were originally set forth in Section 17 of Ordinance No. 5930, as such conditions
are now set forth in Exhibit B, attached to this ordinance and incorporated by this reference.
(pp) "Plan of Additions" means the system or plan of additions and betterments to and
extensions of the Combined Utility specified, adopted and ordered to be carried out by the water
system, sewer system, and storm drainage system Capital Facilities Plans of the City adopted and
updated in connection with to the City's Comprehensive Plan for each system, as most recently
amended and updated by Ordinance No. 6440, adopted on December 17, 2012.
(qq) "Principal and Interest Account" means the account of that name created in the
Bond Fund for the payment of the principal of and interest on the Parity Bonds.
(rr) "Rate Stabilization Fund" means the Utility System Rate Stabilization Fund
created in Section 11 of Ordinance No. 4945
(ss) "Rating Agency" means any nationally recognized rating agency then
maintaining a rating on the Bonds at the request of the City
(tt) Record Date" means the Bond Registrar's close of business on the 15th day of
the month preceding an interest payment date. With respect to redemption of a Bond prior to its
maturity, the Record Date shall mean the Bond Registrar's close of business on the date on
which the Bond Registrar sends the notice of redemption in accordance with Section 8.
(uu) "Registered Owner" means, with respect to a Bond, the person in whose name
that Bond is registered on the Bond Register For so long as the City utilizes the book—entry
system for the Bonds under the Letter of Representations, Registered Owner shall mean the
Securities Depository
(vv) "Reserve Account" means the account of that name created in the Bond Fund for
the purpose of securing the payment of the principal of and interest on the Parity Bonds.
(ww) "Reserve Requirement" means, for all Parity Bonds, the lesser of (i) Maximum
Annual Debt Service on those bonds or (ii) 125% of Average Annual Debt Service on those
bonds, but at no time shall the Reserve Requirement exceed 10% of the proceeds of those bonds.
Variable Interest Rate Bonds shall be assumed to bear interest at a fixed rate equal to the higher
of(1) the highest variable rate home during the preceding 24 months by any outstanding variable
rate revenue bonds of the System or, (2) if no such Variable Interest Rate Bonds are outstanding
at the time of calculation, the rate borne by other variable rate debt the interest rate for which is
determined by reference to an index comparable to the index to be used to determine the interest
rate on the Future Parity Bonds proposed to be issued. Notwithstanding the above, the deposit to
be made in the Reserve Account shall be decreased for any issue of Parity Bonds when and to the
extent that the City provides for an Alternate Security to be deposited into the Reserve Account
to secure the payment of the principal of and interest on that issue of bonds. The amount payable
under any Alternate Security shall be credited against the amount otherwise required to be made
into the Reserve Account to meet the Reserve Requirement for that issue of bonds. When
calculating the Reserve Requirement with reference to any year in which Tax Credit Subsidy
Bonds are outstanding, the City shall exclude the amount of Tax Credit Subsidy Payment that the
City is then eligible to receive from Annual Debt Service.
(xx) Rude 15c2-12" means Rule 15c2-12 promulgated by the SEC under the
Securities Exchange Act of 1934, as amended.
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(yy) "SEC' means the United States Securities and Exchange Commission.
(zz) "Securities Depository" means DTC, any successor thereto, any substitute
securities depository selected by the City, or the nominee of any of the foregoing. Any
Securities Depository must be qualified under applicable laws and regulations to provide the
services proposed to be provided by it.
(aaa) "Series of Bonds" or "Series" means a series of Bonds issued pursuant to this
ordinance.
(bbb) "State" means the State of Washington.
(ccc) "System" or "Utility System" means the City's existing combined water supply
and distribution system, sanitary sewage system, storm and surface water utility, together with all
additions thereto and betterments and extensions thereof at any time made or constructed, and
shall include any utility systems hereafter combined with the System. The System shall not
include any additional systems for water supply, sewer service, water, sewage or stormwater
transmission, treatment or other commodity or service that may be created, acquired or
constructed by the City as a separate utility system as provided in Section 11 of Ordinance
No. 4945 and Section 17 of this ordinance.
(ddd) "System Funds" means, collectively, the Water Fund, Sewer Fund and Storm
Drainage Fund including without limitation any Construction Accounts or other accounts or
subaccount created thereon.
(eee) "System of Registration" means the system of registration for the City's bonds
and other obligations set forth in Ordinance No. 3905 of the City
(fff) "Tax Credit Subsidy Bond" means any bond that is designated by the City as a
"build America bond" or other tax credit bond, pursuant to the Code, and which is further
designated as a "qualified bond" under Section 6431 of the Code, and with respect to which the
City is eligible to receive a Tax Credit Subsidy Payment.
(ggg) "Tax Credit Subsidy Payment" means the amounts which the City is entitled to
receive as a tax credit payable by the United States Treasury to the City under Section 6431 of
the Code, in respect of any bonds issued as Tax Credit Subsidy Bonds.
(hhh) "Tax-Exempt Bonds"means any Series issued on a tax-exempt basis.
(iii) "Term Bond Maturity Year" means any calendar year in which Term Bonds are
scheduled to mature.
0jj) "Term Bonds" means the bonds of any single issue or series of Parity Bonds
designated as such in the ordinance authorizing their issuance or sale.
(kkk) "ULID" means Utility Local Improvement District.
(111) "ULID Assessments" means all assessments levied and collected in any ULID of
the City created for the acquisition or construction of additions to and extensions and betterments
of the System if such assessments are pledged to be paid into the Bond Fund (less any prepaid
assessments paid or to be paid into a construction fund or account). ULID Assessments shall
include installments thereof and any interest or penalties that may be due thereon.
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(mmm) "Undertaking means the undertaking to provide continuing disclosure entered
into pursuant to Section 23 of this ordinance.
(nnn) "Underwriter" means Seattle-Northwest Securities Corporation of Seattle,
Washington, or such other purchaser of the Bonds whose offer is accepted by the Designated
Representative in accordance with this ordinance.
(000) "Variable Interest Rate" means a variable interest rate or rates to be borne by a
series of Future Parity Bonds or any one or more maturities within a series of Future Parity
Bonds. The method of computing such a variable interest rate shall be specified in the ordinance
authorizing such Future Parity Bonds, which ordinance also shall 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.
(ppp) "Variable Interest Rate Bonds" means, for any period of time, Future Parity
Bonds which bear a Variable Interest Rate during that period, except that Future Parity Bonds the
interest rate or rates on which shall have been fixed for the remainder of the tern thereof no
longer shall be deemed to be Variable Interest Rate Bonds.
Section 2. Recitals and Findings. The City Council makes the following findings and
determinations:
(a) Background. The City now owns, operates and maintains a water supply and
distribution system and a sanitary sewage system, which systems were combined pursuant to
RCW 35.67.320 by Ordinance No 961, passed and approved March 7, 1950, and further
combined with the storm drainage system by Ordinance No. 4945, passed February 18, 1997
The combined systems, including all additions, betterments and extensions at any time made, are
collectively referred to as "Combined Utility System of the City" or the "System."
(b) Plan of Additions. The City has adopted the Plan of Additions and is now in need
of funds with which to finance the Improvements, which comprise a portion of the Plan of
Additions, the estimated cost of which is more than $47,519,250.00 and the City does not have
available sufficient funds to pay the costs.
(c) Outstanding Parity Bonds. Pursuant to Ordinance No. 5930, the City issued its
$2,765,000 00 aggregate principal amount 2005 Bonds, and reserved the right to issue additional
utility system revenue bonds which would constitute a lien and charge upon the gross revenues
of the Combined Utility System on a parity with those bonds if the Parity Conditions are met.
Pursuant to Ordinance No. 6335, the City issued its $6,790,000 00 aggregate principal amount
2010A Bonds and its $14,505,000.00 aggregate principal amount 2010B Bonds on a parity with
the 2005 Bonds.
(d) Parity Conditions Met The City Council finds and declares that the amounts
required to have been paid into the Bond Fund for the Outstanding Parity Bonds have been paid
and maintained as required therein, and that all other Parity Conditions for the issuance of the
Bonds as Future Parity Bonds will have been met and satisfied before the Bonds are delivered to
the original purchaser thereof.
(e) Sufficiency of Gross Revenue The City Council finds and determines that the
Gross Revenue and benefits to be derived from the operation and maintenance of the System at
the rates to be charged for services from the System will be more than sufficient to meet all
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Maintenance and Operation Expense and to permit the setting aside into the Bond Fund out of
the Gross Revenue of amounts sufficient to pay the principal of and interest on the Outstanding
Parity Bonds and the Bonds when due. The City Council declares that in fixing the amounts to
be paid into the Bond Fund under this ordinance it has exercised due regard for Maintenance and
Operation Expense and has not obligated the City to set aside and pay into the Bond Fund a
greater amount of Gross Revenue of the System than in its judgment will be available over and
above such Maintenance and Operation Expense.
(f) Issuance of Bonds. Based on the foregoing, the City Council finds that it is in the
best interest of the City to issue and sell the Bonds to the Underwriter, pursuant to the terms set
forth in the Bond Purchase Agreement as approved by the City's Designated Representative
consistent with this ordinance.
Section 3. Authorization of the Bonds. For the purpose of providing the funds
necessary (a) to pay a portion of the costs of the Improvements, (b) to make a deposit to the
Reserve Account and (c) to pay the cost of issuance and sale of the Bonds, the City shall issue
utility system revenue bonds in one or more series in the aggregate principal amount of not to
exceed $13,000,000.00
Section 4. Description of the Bonds; Appointment of Designated Representative.
The Finance Director is appointed as the City's Designated Representative and is authorized and
directed to negotiate the sale of the Bonds upon the terms deemed most advantageous to the City,
and to approve the Final Terms of the Bonds, with such additional terms and covenants as she
deems advisable, within the following parameters:
(a) Principal Amount. The Bonds shall not exceed the aggregate principal amount of
$13,000,000.00, and may be issued as either taxable or tax-exempt obligations.
(b) Date or Dates. Each Series of Bonds shall be dated as of its date of delivery to
the Underwriter, which date may not be later than December 31, 2013
(c) Denominations, Series Designation, etc. The Bonds must be issued in Authorized
Denominations, shall be numbered separately in the manner and shall bear any name and
additional designation as deemed necessary or appropriate by the Designated Representative.
(d) Interest Rate(s), The Bonds shall bear interest at fixed rates per annum
(computed on the basis of a 360-day year of twelve 30-day months) from their date or from the
most recent interest payment date for which interest has been paid or duly provided for,
whichever is later. One or more rates of interest may be fixed for the Bonds. No rate of interest
for any Bond may exceed 6.00%, and the "all-in" true interest cost to the City for any Series of
Bonds may not exceed 5 00%.
(e) Payment Dates. Interest must be payable semiannually on each June 1 and
December 1 (or such other semiannual dates as the Designated Representative deems necessary
or convenient), commencing no earlier than June 1, 2013 Principal payments must be payable at
maturity or in mandatory redemption installments, commencing no earlier than December 1,
2013, on such interest payment dates as are acceptable to the Designated Representative.
(f) Final Maturity The Bonds shall mature no later than 20 years following their
Issue Date.
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(g) Redemption Rights. In her discretion, the Designated Representative may approve
in the Bond Purchase Agreement provisions for the optional and mandatory redemption of
Bonds, as follows:
(1) Optional Redemption. Any Bond or Series of Bonds may be designated as
being (A) subject to redemption at the option of the City prior to its maturity date on the
dates and at the prices set forth in the Bond Purchase Agreement; or (B) not subject to
redemption prior to its maturity date. If a Tax-Exempt Bond is designated as subject to
optional redemption prior to its maturity, it must also be subject to such redemption on
one or more dates occurring not more than 10'/z years after the Issue Date.
(2) Mandatory Redemption. Any Bond may be designated as a Term Bond,
subject to mandatory redemption prior to its maturity on the dates and in the amounts set
forth in the Bond Purchase Agreement.
(h) Price. The purchase price for each Series of Bonds may not be less than 98% or
more than 125%%of the stated principal amount of the Series.
(i) Other Terms and Conditions. The Designated Representative may determine
whether it is in the City's best interest to provide for bond insurance or other credit enhancement;
and may accept such additional terms, conditions and covenants as she may determine are in the
best interests of the City, consistent with this ordinance.
Section 5. Bond Registrar; Registration and Transfer of Bonds.
(a) Registration of Bonds. The Bonds shall be issued only in registered form as to
both principal and interest and shall be recorded on the Bond Register
(b) Bond Registrar, Duties. The Fiscal Agent is appointed as Bond Registrar for the
Bonds. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration
and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond
Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or
exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the
City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers and duties
under this ordinance and the System of Registration. The Bond Registrar shall be responsible for
its representations contained in the Bond Registrar s Certificate of Authentication on each Bond.
The Bond Registrar may become an Owner of a 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 members of, or in any other capacity with respect
to, any committee formed to protect the rights of Beneficial Owners.
(c) Bond Register, Transfer and Exchange. The Bond Register shall contain the
name and mailing address of the Registered Owner of each Bond and the principal amount and
number of each Bond held by each Registered Owner A Bond surrendered to the Bond
Registrar may be exchanged for a Bond or Bonds in any Authorized Denomination of an equal
aggregate principal amount and of the same Series, interest rate and maturity Bonds may be
transferred only if endorsed in the manner provided thereon and surrendered to the Bond
Registrar Any exchange or transfer shall be without cost to the Owner or transferee. The Bond
Registrar shall not be obligated to exchange any Bond or transfer registered ownership during the
period between the applicable Record Date and the next upcoming interest payment or
redemption date.
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(d) Securities Depository; Book-Entry Form. The Bonds initially shall be registered
in the name of Cede & Co., as the nominee of DTC, acting as Securities Depository Bonds so
registered shall be held fully immobilized in book-entry form by DTC in accordance with the
provisions of the Letter of Representations. Registered ownership of any Bond (or portion of a
Bond) held in book-entry form may not be transferred except: (i) to any successor Securities
Depository; (ii) to any substitute Securities Depository appointed by the City or such substitute
Securities Depository's successor; or (iii) to any person if the Bond is no longer held in book-
entry form. Upon the resignation of the Securities Depository from its functions as depository, or
upon a termination of the services of the Securities Depository by the City, the City may appoint
a substitute Securities Depository If (i) a Securities Depository resigns from its functions as
depository, and no substitute Securities Depository can be obtained, or (ii) the City determines
that a Bond is to be in certificated form, such Bond no longer shall be held in book-entry form
and the ownership of such Bond may be transferred to any person as provided in this ordinance.
Neither the City nor the Bond Registrar shall have any obligation to participants of any
Securities Depository or the persons for whom they act as nominees regarding accuracy of any
records maintained by the Securities Depository or its participants. Neither the City nor the
Bond Registrar shall be responsible for any notice which is permitted or required to be given to a
Registered Owner except such notice as is required to be given by the Bond Registrar to the
Securities Depository
Section 6. Form and Execution of Bonds.
(a) Form of Bonds, Signatures and Seal. The Bonds shall be prepared in a form
consistent with the provisions of this ordinance and state law The Bonds shall be signed by the
Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the
seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. If any
officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the City
authorized to sign bonds before the Bond bearing his or her facsimile signature is authenticated
or delivered by the Bond Registrar, or issued or delivered by the City, that Bond nevertheless
may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall
be as binding on the City as though that person had continued to be an officer of the City
authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person
who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds,
although he or she did not hold the required office on its Issue Date.
(b) Authentication. Only Bonds bearing a Certificate of Authentication in the
following form, manually signed by the Bond Registrar, shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance: "Certificate of Authentication. This Bond is
one of the fully registered City of Auburn, Washington, Utility System Revenue Bonds, Series
2013_" The authorized signing of a Certificate of Authentication shall be conclusive evidence
that the Bond so authenticated has been duly executed, authenticated and delivered and is
entitled to the benefits of this ordinance.
Section 7 Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. For as long as a Bond is registered in
the name of the Securities Depository, payment of principal of and interest on that Bond shall be
made in the manner set forth in the Letter of Representations. If a Bond ceases to be in book-
entry form, interest on that Bond shall be paid by electronic transfer on the interest payment date,
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or by check or draft of the Bond Registrar mailed on the interest payment date to the Registered
Owner at the address appearing on the Bond Register as of the Record Date. However, the City
is not required to make electronic transfers except pursuant to a request by a Registered Owner in
writing received at least 10 days before an interest payment date and at the sole expense of the
requesting Registered Owner Principal of a Bond shall be payable upon presentation and
surrender of the Bond by the Registered Owner to the Bond Registrar The Bonds are not subject
to acceleration under any circumstances.
Section 8. Redemption Provisions and Open Market Purchase of Bonds.
(a) Optional Redemption. The Bonds shall be subject to optional redemption
acceptable to the Designated Representative, within the parameters set forth in Section 4 Any
Bond that is subject to optional redemption may be selected by the City, in its sole discretion, for
redemption in whole or in part at any time at which redemption is permitted as set forth in the
Bond Purchase Agreement.
(b) Mandatory Redemption. Bonds designated as Term Bonds by the Designated
Representative, within the parameters set forth in Section 4, if not previously redeemed under
any optional redemption provisions, defeased or purchased and surrendered for cancellation
under the provisions set forth below, shall be called for redemption at a price equal to the stated
principal amount to be redeemed, plus accrued interest, on the redemption dates and in the
redemption amounts as set forth in the Bond Purchase Agreement. If Term Bonds are redeemed
under the optional redemption provisions, defeased or purchased by the City and cancelled, the
principal amount of the Term Bonds so redeemed, defeased or purchased (irrespective of their
actual redemption or purchase prices) shall be credited against one or more scheduled mandatory
redemption amounts for those Tenn Bonds. The City shall determine the manner in which the
credit is to be allocated and shall notify the Bond Registrar in writing of its allocation prior to the
earliest mandatory redemption date for that maturity of Term Bonds for which notice of
redemption has not already been given.
(c) Selection of Bonds for Redemption, Partial Redemption. All or a portion of the
principal amount of any Bond that is subject to optional or mandatory redemption may be
redeemed in any Authorized Denomination. If less than all of the outstanding principal amount
of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be
issued to the Registered Owner without charge, a new Bond (or Bonds, at the option of the
Registered Owner) of the same Series, maturity and interest rate in any Authorized
Denomination in the aggregate principal amount remaining unredeemed. The principal portion
of any Bond registered in the name of the Securities Depository which is to be partially
redeemed shall be selected in accordance with the Letter of Representations. If a Bond ceases to
be held in book-entry form, the portion to be partially redeemed shall be selected randomly in
such manner as the Bond Registrar shall determine.
(d) Notice of Redemption. While a Bond is registered in the name of the Securities
Depository, notice of redemption shall be given as required in accordance with the Letter of
Representations. If a Bond ceases to be held in book-entry form, unless waived by the
Registered Owner of the Bond to be redeemed, the City shall cause notice of an intended
redemption of Bonds to be given by the Bond Registrar not less than 20 nor more than 60 days
prior to the date fixed for redemption by first-class mail, postage prepaid, to the Registered
Owner of each Bond to be redeemed at the address appearing on the Bond Register on the
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Record Date. The requirements of the preceding sentence shall be satisfied when notice has been
mailed as so provided, whether or not it is actually received by an Owner of any Bond. In
addition, the redemption notice shall be mailed or sent electronically within the same period to
the MSRB (if required under the Undertaking), to each Rating Agency, and to such other persons
and with such additional information as the Finance Officer shall determine, but these additional
mailings shall not be a condition precedent to the redemption of a Bond.
(e) Rescission of Optional Redemption Notice. In the case of an optional redemption,
the notice of redemption may state that the City retains the right to rescind the redemption notice
and the optional redemption of those Bonds by giving a notice of rescission to the affected
Registered Owners at any time prior to the scheduled optional redemption date. Any notice of
optional redemption that is so rescinded shall be of no effect, and a Bond for which a notice of
optional redemption has been rescinded shall remain outstanding.
(f) Effect of Redemption. Interest on Bonds called for redemption shall cease to
accrue on the date fixed for redemption, unless either the notice of redemption is rescinded as set
forth above, or money sufficient to effect such redemption is not on deposit in the Bond Fund (or
in an escrow account established to carry out a refunding or defeasance of the redeemed Bonds,
if any).
(f) Open Market Purchase. The City further reserves the right and option to purchase
any or all of the Bonds in the open market at any time at any price acceptable to the City plus
accrued interest to the date of purchase.
Section 9 Failure to Pay Bonds. If any Bond is not redeemed when properly presented
at its maturity date or date fixed for redemption, the City shall be obligated to pay interest on that
Bond at the same rate provided in the Bond from and after its maturity or date fixed for
redemption until that Bond, both principal and interest, is paid in full or until sufficient money
for its payment in full is on deposit in the Bond Fund and the Bond has been called for payment
by giving notice of that call to the Registered Owner
Section 10. The Bond Fund; Payments into Bond Fund.
(a) Payments Into the Bond Fund. The Bond Fund has previously been created in the
office of the Finance Director and is divided into two accounts: the Principal and Interest
Account and the Reserve Account. So long as any Bonds are outstanding, the City shall set aside
and pay into the Bond Fund all ULID Assessments on their collection and, out of the Net
Revenue of the System, certain fixed amounts without regard to any fixed proportion, namely-
(1) Into the Principal and Interest Account on or before each interest
and principal and interest payment date, an amount, together with
other money on deposit therein, sufficient to pay the next ensuing
interest or principal and interest payments on the Bonds; and
(2) Into the Reserve Account an amount necessary to provide for the
Reserve Requirement as required under the Parity Conditions.
If the City fails to set aside and pay into the Bond Fund the amounts set forth above, the
owner of any of the outstanding Parity Bonds may bring action against the City and compel such
setting aside and payment. When the total amount in the Bond Fund equals the total amount of
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principal and interest due with respect to all outstanding Parity Bonds to the last maturity thereof,
no further payment need be made into the Bond Fund.
(b) Application and Investment of Funds. The City may create sinking fund accounts
or other accounts or subaccounts in the Bond Fund for the payment or securing the payment of
Parity Bonds as long as the maintenance of such accounts does not conflict with the rights of the
owners of the outstanding Parity Bonds. The City may provide for the purchase, redemption or
defeasance of Parity Bonds by the use of money on deposit in any account in the Bond Fund as
long as the money remaining in those accounts is sufficient to satisfy the required deposits in
those accounts for the remaining Parity Bonds.
All money in the Bond Fund may be kept in cash or invested in legal investments
maturing not later than the date when the funds are required for the payment of principal of or
interest on the outstanding Parity Bonds (for investments in the Principal and Interest Account)
or having a guaranteed redemption price prior to maturity and, in no event, maturing later than
the last maturity of any remaining outstanding Parity Bonds (for investments in the Reserve
Account). Earnings from investments in the Principal and Interest Account shall be deposited in
that account. Earnings from investments in the Reserve Account shall be deposited in that
account.
(c) The Reserve Account The Reserve Account may be divided into subaccounts for
each issue of Parity Bonds outstanding. Except for withdrawals as authorized below, the amount
on deposit in the Reserve Account (including any subaccounts) shall meet the Reserve
Requirement at all times so long as any of the Parity Bonds are outstanding. The amount
required to be deposited in the Reserve Account (or any subaccount) shall be decreased when
and to the extent the City has provided for the Reserve Requirement by means of Alternate
Security
If there is a deficiency in the Principal and Interest Account to meet maturing
installments of either principal or interest, as the case may be, that deficiency shall be made up
ratably from the Reserve Account and its subaccounts based on the amount of the total Reserve
Requirement to be paid into each subaccount (except when Alternative Security requires all cash
and investments in the Reserve Account be withdrawn before draws on the Alternate Security)
by the withdrawal of cash for that purpose. Any deficiency created in the Reserve Account (and
its subaccounts) by reason of any such withdrawal shall then be made up from ULID Assessment
payments and the Net Revenue of the System first available after making necessary provisions
for the required payments into the Principal and Interest Account.
Except for withdrawals described above, the money in the Reserve Account and its
subaccounts otherwise shall be held intact and may be applied against the last outstanding bonds
payable out of the Bond Fund. However, if at any time the Reserve Account or any subaccount
is fully funded, money in excess of the Reserve Requirement shall be withdrawn and deposited,
first, in any other subaccount having a deficiency in its Reserve Requirement, and second, at the
option of the Finance Director, either in the Principal and Interest Account and spent for the
purpose of retiring Parity Bonds or in any of the System Funds and spent for other lawful System
purposes.
Section 11. Rate Stabilization Fund. The Utility System Rate Stabilization Fund has
been previously established by Ordinance No. 4945 The City may at any time, as determined by
the City and as consistent with Section 14 of this ordinance, deposit in the Rate Stabilization
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Fund Gross Revenue and any other money received by the System and available to be so
deposited, excluding principal proceeds of any Future Parity Bonds or other borrowing. No
deposit of Gross Revenue shall be made into the Rate Stabilization Fund to the extent that such
deposit would prevent the City from meeting the Coverage Requirement in the relevant fiscal
year
The City may upon authorization by ordinance, at any time withdraw money from the
Rate Stabilization Fund for inclusion in the Net Revenue for the then-current fiscal year of the
System, except that the total amount withdrawn from the Rate Stabilization Fund in any fiscal
year of the System may not exceed the total debt service of the System in that year Such
deposits or withdrawals may be made up to and including the date 90 days after the end of the
fiscal year for which the deposit or withdrawal will be included as Net Revenue for that fiscal
year.
Earnings from investments in the Rate Stabilization Fund shall be deposited in that fund
and shall not be included as Net Revenue of the System unless and until withdrawn from that
fund as provided herein. The City may also deposit earnings from investments in the Rate
Stabilization Fund into any System fund as authorized by ordinance, and such deposits shall be
included as Net Revenue in the year of deposit.
Section 12. Pledge of Revenue and Lien Position. The Net Revenue of the System and
ULID Assessments are pledged to the payment of the Parity Bonds, and this pledge with respect
to the Parity Bonds shall constitute a lien and charge upon such Net Revenue and ULID
Assessments prior and superior to any other charges whatsoever
Section 13. Deposit of Bond Proceeds. One or more special accounts within the
System Funds, designated as the Construction Accounts, have previously been established in the
office of the Finance Director The principal proceeds and premium, if any, received from the
sale and delivery of the Bonds remaining after satisfaction of the Reserve Requirement shall be
paid into the Construction Accounts and used to pay the costs of the Improvements and the cost
of issuing of the Bonds. Until needed to pay such costs, the City may invest principal proceeds
temporarily in any legal investment, and the investment earnings may be retained in the
Construction Accounts and be spent for the purposes of those accounts.
Section 14. Covenants. The City covenants and agrees with the owner of each Bond at
any time outstanding, as follows:
(a) ULID Assessments. All ULID Assessments shall be paid into the Bond Fund and
may be used to build up the required reserves in the Reserve Account and to pay the principal of
and interest on the Parity Bonds, without those ULID Assessments' being particularly allocated
to the payment of the principal of and interest on any particular issue of bonds.
(b) Maintenance and Operation. The City will at all times maintain, preserve and
keep the properties of the System in good repair, working order and condition, will make all
necessary and proper additions, betterments, renewals and repairs thereto, and improvements,
replacements and extensions thereof, and will at all times operate or cause to be operated the
properties of the System and the business in connection therewith in an efficient manner and at a
reasonable cost.
(c) Establishment and Collection of Rates and Charges. The City will establish,
maintain and collect rates and charges for all services and facilities provided by the System
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which will be fair and nondiscriminatory To the extent allowable by law, those to which service
of the System is available will be charged for that service at the prevailing rate within 30 days of
the availability of that service. Furthermore, the City will adjust those rates and charges from
time to time so that:
(i) The Gross Revenue of the System will at all times be sufficient to
(A) pay all Maintenance and Operation Expense on a current basis, (B) pay when
due all amounts that the City is obligated to pay into the Bond Fund and the
accounts therein, (C) 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 Revenue of the System by law or
contract; and
(ii) The Net Revenue of the System and ULID Assessments in each
calendar year will be at least equal to the Coverage Requirement.
(d) 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, all Parity
Bonds are redeemed and retired, or defeased pursuant to the provisions of this ordinance.
Furthermore, it will not sell, lease, mortgage or in any manner encumber or otherwise dispose of
any part of the System, including all additions and improvements thereto and extensions thereof
at any time made, that is used, useful or material in the operation of the System (each, as used in
this subparagraph, a "transfer"), unless provision is made for the replacement thereof or for
payment into the Bond Fund of the greatest of the following:
(i) An amount which will be in the same proportion to the net amount
of Parity Bonds then outstanding (defined as the total amount of those bonds less
the amount of cash and investments in the Bond Fund and accounts therein) that
the Gross Revenue of the System from the portion of the System sold or disposed
of for the preceding year bears to the total Gross Revenue of the System for that
period; or
(ii) An amount which will be in the same proportion to the net amount
of Parity Bonds then outstanding (as defined above) that the Net Revenue from
the portion of the System sold or disposed of for the preceding year bears to the
total Net Revenue of the System for such period; or
(iii) An amount which will be in the same proportion to the net amount
of Parity Bonds then outstanding (as defined above) that the cost of the assets sold
or disposed of (less depreciation) bears to the cost of the assets of the entire
System (less depreciation) immediately prior to such sale or disposition; or
(iv) An amount which will be in the same proportion to the net amount
of Parity Bonds then outstanding (as defined above) that the number of customers
served by the portion of the System sold or disposed bears to the number of
customers served by the entire System prior to such sale or disposition.
Before any such transfer under this subsection (d) with respect to greater than 5% of the
total assets of the System (measured by cost of the assets less depreciation), the City must obtain
a certificate of an Independent Utility Consultant to the effect that in his or her professional
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opinion, upon such transfer of assets, the remaining System will retain its operational integrity
and the Net Revenue of the System will be at least equal to the Coverage Requirement during the
five fiscal years following the fiscal year in which the transfer is to occur, taking into account (1)
the reduction in revenue resulting from the transfer, (2) the use of any proceeds of the transfer for
the redemption of Parity Bonds, and (3) the Independent Utility Consultant's estimate of revenue
from customers anticipated to be served by any additions to and betterments and extensions of
the System financed in part by the proposed portion of the proceeds of the transfer
Notwithstanding any other provision of this subsection (d), (1) the City in its discretion
may sell or otherwise dispose of any of the works, plant, properties or facilities of the System or
any real or personal property comprising a part of the same which shall have become
unserviceable, inadequate, obsolete or unfit to be used in the operation of the System, or no
longer necessary, material to or useful to the operation of the System, without making any
deposit into the Bond Fund, (2) the City may transfer the System to another municipal
corporation so long as ULID Assessments and Net Revenue with respect to the portion of the
System so transferred are used for payment of debt service on Parity Bonds prior to any other
purpose, or (3) the City in its discretion may carry out such a transfer if the aggregate cost of the
facilities, property or other assets (less depreciation) being transferred under this subparagraph
comprises no more than 5% of the costs of all of the assets of the System (less depreciation).
(e) Liens Upon the System. The City will not at any time create or permit to accrue or
to exist any lien or other encumbrance or indebtedness upon the Gross Revenue of the System, or
any part thereof, prior or superior to the lien thereon for the payment of Parity Bonds, and will
pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor,
materials or supplies which, if unpaid, might become a lien or charge upon the Gross Revenue of
the System, or any part thereof, prior to or superior to the lien of the Parity Bonds, or which
might impair the security of the Parity Bonds.
(f) Books and Accounts. The City will keep proper books, records and accounts with
respect to the operations, income and expenditures of the System in accordance with proper
accounting procedures and any applicable rules and regulations prescribed by the State of
Washington. It will prepare annual financial and operating statements within 270 days of the
close of each fiscal year showing in reasonable detail the financial condition of the System as of
the close of the previous year, and the income and expenses for such year, including the amounts
paid into the Bond Fund and into any and all special funds or accounts created pursuant to the
provisions of this ordinance, the status of all funds and accounts as of the end of such year, and
the amounts expended for maintenance, renewals, replacements and capital additions to the
System. Such statements shall be sent to the owner of any Parity Bonds upon written request
therefor being made to the City
(g) No Free Service. Except to aid the poor or infirm, to provide for resource
conservation or to provide for the proper handling of hazardous materials, it will not furnish or
supply or permit the furnishing or supplying of any service or facility in connection with the
operation of the System free of charge to any person, firm or corporation, public or private, other
than the City, so long as any Parity Bonds are outstanding.
(h) Collection of Delinquent Accounts. On at least an annual basis, it will determine
all accounts that are delinquent and will take all necessary action to enforce payment of such
accounts against those property owners whose accounts are delinquent.
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(i) Fire and Extended Coverage Insurance. It will carry the types of insurance on its
System properties in the amounts normally carried by private water, sewer and storm drainage
utility companies engaged in the operation of water sewer and storm drainage systems, and the
cost of such insurance shall be considered a part of Maintenance and Operation Expense, or it
will implement and maintain a self-insurance program or an insurance pool program with
reserves adequate, in the reasonable judgment of the City, to protect the owners of the Parity
Bonds against loss.
0) Condemnation Awards. Any condemnation awards received by the City in excess
of 1% of cost of the assets of the System (less depreciation) shall be applied to one or more of the
following: (1) to the damaged property, (2) to retiring bonds, and (3) to improvements of the
System.
Section 15. Flow of Funds.
(a) The Gross Revenue of the System shall be deposited in the System Funds and
used for the following purposes only in the following order of priority-
(i) To pay Maintenance and Operation Expense;
(ii) To pay, together with ULID Assessments, first, the interest on and,
second, the principal of the Parity Bonds when due or as the principal is required
to be paid and to make all payments required to be made into any mandatory
redemption or sinking fund account created to provide for the payment of the
principal of Term Bonds;
(iii) To make, together with ULID Assessments, all payments required
to be made into the Reserve Account or its subaccounts and to make all payments
required to be made pursuant to a reimbursement agreement in connection with an
Alternate Security, except that if there is not sufficient money to make all
payments under reimbursement agreements, the payments will be made on a pro
rata basis;
(iv) To make all payments required to be made into any revenue bond,
note, warrant or other revenue obligation redemption fund, debt service account
or reserve account created to pay or secure the payment of the principal of and
interest on any revenue bonds, notes, warrants or other obligations of the City
having a lien upon the revenue of the System subordinate to the lien thereon for
the payment of the principal of and interest on any Parity Bonds;
(v) To make necessary additions, betterments and improvements and
repairs to or extensions and replacements of the System, to retire by redemption
or purchase in the open market any outstanding revenue obligations or other
obligations of the System, to make deposits into the Rate Stabilization Fund, or to
provide for any other lawful City purpose.
(b) To meet the required payments to be made into the Bond Fund, the City may
transfer any money from any funds or accounts of the System legally available therefor, except
bond redemption funds, refunding escrow funds, defeasance or other trust funds.
Section 16. Provisions for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the Parity Conditions are met and complied with at the time of the
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issuance of those Future Parity Bonds. Notwithstanding the foregoing, nothing in this ordinance
shall prevent the City from issuing Future Parity Bonds to refund maturing Parity Bonds then
outstanding, money for the payment of which is not otherwise available. Furthermore, nothing
contained in this ordinance shall prevent the City from issuing revenue bonds or other
obligations that are a charge upon the Gross Revenue of the System subordinate to the payments
required to be made into the Bond Fund for the payment of any Parity Bonds, or from pledging
the payment of ULID assessments into a bond redemption fund created for the payment of the
principal of and interest on those subordinate bonds or obligations if such ULID assessments are
levied for improvements constructed from the proceeds of those subordinate bonds.
Section 17 Separate Utility Systems. The City may create, acquire, construct, finance,
own and operate one or more additional systems for water supply, sewer service, water, sewage
or stormwater transmission, treatment or other commodity or service. The revenue of that
separate utility system shall not be included in the Gross Revenue of the System and may be
pledged to the payment of revenue obligations issued to purchase, construct, condemn or
otherwise acquire or expand the separate utility system. Neither the Gross Revenue nor the Net
Revenue of the System shall be pledged by the City to the payment of any obligations of a
separate utility system except (1) as a Contract Resource Obligation upon compliance with
Section 18 hereof and/or (2), with respect to the Net Revenue, on a basis subordinate to the lien
of the Parity Bonds on that Net Revenue.
Section 18. Contract Resource Obligations. (a) The City may at any time enter into
one or more contracts or other obligations for the acquisition (from facilities yet to be
constructed) of water supply, sewer service, water sewer or stormwater transmission, treatment
or other commodity or service relating to the System. The City may determine that such contract
or other obligation is a Contract Resource Obligation, and may provide that all payments under
that Contract Resource Obligation (including payments prior to the time that water supply,
transmission, treatment or other commodity or service is being provided, or during a suspension
or after termination of supply or service) shall be Maintenance and Operation Expense if the
following requirements are met at the time such Contract Resource Obligation is entered into
(i) No Event of Default as defined in Section 25 of this ordinance has
occurred and is continuing.
(ii) There is on file a certificate of an Independent Utility Consultant
stating that (A) the payments to be made by the City in connection with the
Contract Resource Obligation are reasonable for the supply, transmission,
treatment or other service rendered; (B) the source of any new supply, and any
facilities to be constructed to provide the supply, transmission, treatment or other
service, are sound from a water, sewerage, or other commodity supply or
transmission planning standpoint, are technically and economically feasible in
accordance with prudent utility practice, and are likely to provide supply or
transmission or other service no later than a date set forth in the Independent
Utility Consultant's certification; and (C) the Net Revenue (further adjusted by
the Independent Utility Consultant's estimate of the payments to be made in
accordance with the Contract Resource Obligation) for the five fiscal years
following the year in which the Contract Resource Obligation is incurred, as such
Net Revenue is estimated by the Independent Utility Consultant (with such
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estimate based on such factors as he or she considers reasonable), will be at least
equal to the Coverage Requirement.
(b) Payments required to be made under Contract Resource Obligations shall not be
subject to acceleration.
(c) Nothing in this Section 18 shall be deemed to prevent the City from entering into
other agreements for the acquisition of water supply, sewer service, water, sewage or stormwater
transmission, treatment or other commodity or service from existing facilities and from treating
those payments as Maintenance and Operation Expense. Nothing in this Section 18 shall be
deemed to prevent the City from entering into other agreements for the acquisition of water
supply, transmission, treatment or other commodity or service from facilities to be constructed
and from agreeing to make payments with respect thereto, such payments constituting a lien and
charge on Net Revenue subordinate to that of the Outstanding Parity Bonds, the Bonds and any
Future Parity Bonds.
Section 19 Tax Covenants.
(a) Preservation of Tax Exemption for Interest on Tax-Exempt Bonds. The City
covenants that it will take all actions necessary to prevent interest on the Tax-Exempt Bonds
from being included in gross income for federal income tax purposes, and it will neither take any
action nor make or permit any use of proceeds of such Bonds or other funds of the City treated as
proceeds of such Bonds at any time during the term of such Bonds which will cause interest on
the Tax-Exempt Bonds to be included in gross income for federal income tax purposes. The City
also covenants that it will, to the extent the arbitrage rebate requirements of Section 148 of the
Code are applicable to the Tax-Exempt Bonds, take all actions necessary to comply (or to be
treated as having complied) with those requirements in connection with such Bonds, including
the calculation and payment of any penalties that the City has elected to pay as an alternative to
calculating rebatable arbitrage, and the payment of any other penalties if required under Section
148 of the Code to prevent interest on the Tax-Exempt Bonds from being included in gross
income for federal income tax purposes.
(b) Post-Issuance Compliance. The Finance Director is authorized and directed to
review and update the City's written procedures to facilitate compliance by the City with the
covenants in this Section 19 and the applicable requirements of the Code that must be satisfied
after the Issue Date to maintain the tax treatment of the Tax-Exempt Bonds and the receipt of
interest thereon.
Section 20. Refunding or Defeasance of the Bonds. The City may issue refunding
bonds pursuant to State law or use money available from any other lawful source to carry out a
refunding or defeasance plan, which may include (a) paying when due the principal of and
interest on the affected Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to
their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside in a
special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the
"trust account"), money and/or Government Obligations maturing at a time or times and bearing
interest in amounts sufficient to redeem, refund or defease the defeased Bonds in accordance
with their terms, then all right and interest of the Owners of the defeased Bonds in the covenants
of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds
shall cease and become void. Thereafter, the Owners of defeased Bonds shall have the right to
receive payment of the principal of and interest on the defeased Bonds solely from the trust
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account and the defeased Bonds shall be deemed no longer outstanding. In that event, the City
may apply money remaining in any fund or account (other than the trust account) established for
the payment or redemption of the defeased Bonds to any lawful purpose, subject only to the
rights of the registered owners of any other Parity Bonds then outstanding.
While a Bond is registered in the name of the Securities Depository, notice of any
defeasance shall be given in the manner prescribed in the Letter of Representations for notices of
redemption of Bonds. If a Bond ceases to be held in book-entry form, then unless specified by
the City in a refunding or defeasance plan, selection of Bonds to be defeased, notice of
defeasance and replacement of Bond certificates shall be done in accordance with the provisions
of this ordinance for the redemption of Bonds prior to their maturity
If the refunding plan provides that the defeased Bonds or the refunding bonds to be
issued be secured by cash and/or Government Obligations pending the prior redemption of those
Bonds being refunded and if such refunding plan also provides that certain cash and/or
Government Obligations are irrevocably pledged for the prior redemption of the defeased Bonds,
then only the debt service on the Bonds which are not defeased Bonds and the refunding bonds,
the payment of which is not so secured by the refunding plan, shall be included in the
computation of the Coverage Requirement for the issuance of Future Parity Bonds and the
annual computation of coverage for determining compliance with the rate covenants.
Section 21. Sale and Delivery of the Bonds.
(a) Manner of Sale of Bonds, Delivery of Bonds. The Designated Representative is
authorized to sell the Bonds by negotiated sale to the Underwriter, based on her assessment of
market conditions, in consultation with appropriate City officials and staff, Bond Counsel and
other advisors. In determining the Final Terms, the Designated Representative shall take into
account those factors that, in her judgment, may be expected to result in the lowest true interest
cost on the Bonds to their maturity, including, but not limited to, current interest rates for
obligations comparable to the Bonds. The Bond Purchase Agreement for the Bonds shall set
forth the Final Terms of each Series of Bonds. The Designated Representative is authorized to
execute the Bond Purchase Agreement on behalf of the City, so long as the terms provided
therein are consistent with the terms of this ordinance.
(b) Preparation, Execution and Delivery of the Bonds. The Bonds will be prepared at
City expense and will be delivered to the Underwriter in accordance with the Bond Purchase
Agreement, with the approving legal opinion of Bond Counsel regarding the Bonds.
Section 22. Official Statement.
(a) Preliminary Official Statement. The Designated Representative shall review the
form of each preliminary official statement prepared in connection with the sale of the Bonds to
the public. For the sole purpose of the Underwriter's compliance with paragraph (b)(1) of Rule
15c2-12, the Designated Representative is authorized to "deem final" that preliminary official
statement as of its date, except for the omission of information permitted to be omitted by Rule
15c2-12. The City approves the distribution to potential purchasers of the Bonds of a
preliminary official statement that has been "deemed final" in accordance with this paragraph.
(b) Approval of Final Official Statement. The City approves the preparation of a final
official statement for the Bonds to be sold to the public in the form of the preliminary official
statement, with such modifications and amendments as the Designated Representative deems
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necessary or desirable, and further authorizes the Designated Representative to execute and
deliver such final official statement to the Underwriter The City authorizes and approves the
distribution by the Underwriter of that final official statement to purchasers and potential
purchasers of the Bonds.
Section 23. Undertaking to Provide Continuing Disclosure. To meet the requirements
of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds,
the City makes the following Undertaking for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice of Material
Events The City undertakes to provide or cause to be provided, either directly or through a
designated agent, to the MSRB, in electronic format as prescribed by the MSRB, accompanied
by identifying information as prescribed by the MSRB
(i) Annual financial information and operating data of the type
included in the final official statement for the Bonds and described in subsection
(b) of this section ("annual financial information");
(ii) Timely notice (not in excess of ten business days after the
occurrence of the event) of the occurrence of any of the following events with
respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-
payment-related defaults, if material, (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, the
issuance by the Internal Revenue Service of proposed or final determinations of
taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material
notices or determinations with respect to the tax status of the Bonds; (7)
modifications to rights of holders of the Bonds, if material, (8) Bond calls (other
than scheduled mandatory redemptions of Term Bonds), if material, and tender
offers; (9) defeasances; (10) release, substitution, or sale of property securing
repayment of the Bonds, if material, (11) rating changes; (12) bankruptcy
insolvency, receivership or similar event of the City, as such "Bankruptcy Events"
are defined in Rule 15d2-12; (13) the consummation of a merger, consolidation,
or acquisition involving the City or the sale of all or substantially all of the assets
of the City, other than in the ordinary course of business, the entry into a
definitive agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material, and (14) appointment of a successor or additional trustee or the change
of name of a trustee, if material.
(iii) Timely notice of a failure by the City to provide required annual
financial information on or before the date specified in subsection (b) of this
section.
(b) Type of Annual Financial Information Undertaken to be Provided. The annual
financial information that the City undertakes to provide in subsection(a) of this section:
(i) Shall consist of(1) annual financial statements prepared (except as
noted in the financial statements) in accordance with applicable generally
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accepted accounting principles promulgated by the Government Accounting
Standards Board ("GASB") and made applicable to Washington state local
governmental units such as the City, as such principles may be changed from time
to time, which statements may be unaudited, provided, however, that if and when
audited financial statements are otherwise prepared and available to the City they
will be provided; (2) a statement of authorized, issued and outstanding bonded
debt secured by Net Revenue of the System and ULID Assessments; (3) debt
service coverage ratios; and (4) general customer statistics for the System;
(ii) Shall be provided not later than the last day of the ninth month
after the end of each fiscal year of the City (currently, a fiscal year ending
December 31), as such fiscal year may be changed as required or permitted by
State law, commencing with the City's fiscal year ending December 31, 2012, and
(iii) May be provided in a single or multiple documents, and may be
incorporated by specific reference to documents available to the public on the
Internet website of the MSRB or filed with the SEC.
(c) Amendment of Undertaking The Undertaking is subject to amendment after the
primary offering of the Bonds without the consent of any holder of any Bond, or of any broker,
dealer, municipal securities dealer, participating underwriter, rating agency or the MSRB, under
the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice to the
MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief
statement of the reasons for the amendment. If the amendment changes the type of annual
financial information to be provided, the annual financial information containing the amended
financial information will include a narrative explanation of the effect of that change on the type
of information to be provided.
(d) Beneficiaries The Undertaking evidenced by this section shall inure to the
benefit of the City and the Beneficial Owner of a Bond, and shall not inure to the benefit of or
create any rights in any other person.
(e) Termination of Undertaking. The City's obligations under this Undertaking shall
terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under
this Undertaking shall terminate if those provisions of Rule 15c2-12 which require the City to
comply with this Undertaking become legally inapplicable in respect of the Bonds for any
reason, as confirmed by an opinion of nationally recognized bond counsel, or other counsel
familiar with federal securities laws, delivered to the City and the City provides timely notice of
such termination to the MSRB.
(f) Remedy for Failure to Comply with Undertaking As soon as practicable after the
City learns of any failure to comply with the Undertaking, the City will proceed with due
diligence to cause such noncompliance to be corrected. No failure by the City or other obligated
person to comply with the Undertaking shall constitute a default in respect of the Bonds. The
sole remedy of any holder of a Bond shall be to take such actions as that holder deems necessary,
including seeking an order of specific performance from an appropriate court, to compel the City
or other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking The Finance
Director (or such other officer of the City who may in the future perform the duties of that office)
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or his or her designee is authorized and directed in his or her discretion to take such further
actions as may be necessary, appropriate or convenient to carry out the Undertaking of the City
in respect of the Bonds set forth in this section and in accordance with Rule 15c2-12, including,
without limitation,the following actions:
(i) Preparing and filing the annual financial information undertaken to
be provided;
(ii) Determining whether any event specified in subsection (a) has
occurred, assessing its materiality where necessary with respect to the Bonds,
and, if material, preparing and disseminating any required notice of its
occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of Rule 15c2-12 with respect to the
Bonds, and obtaining from such person an undertaking to provide any annual
financial information and notice of listed events for that person in accordance
with Rule 15c2-12;
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel, to
assist and advise the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 24. Supplemental or Amendatory Ordinances. This ordinance shall not be
modified or amended in any respect subsequent to the initial issuance of the Bonds, except as
provided in and in accordance with and subject to the provisions of this section. For purposes of
this provision, the passage of an ordinance authorizing the issuance of Future Parity Bonds shall
not be considered a supplemental ordinance.
(a) Certain Supplemental or Amendatory Ordinances Permitted Without Bond Owner
Consent. The City, from time to time, and at any time, without the consent of or notice to the
registered owners of the Bonds or the Parity Bonds, may pass supplemental or amendatory
ordinances as set forth in this subsection (a). Before the City shall pass any such supplemental
or amendatory ordinance pursuant to this subsection, there shall have been delivered to the City
and the Bond Registrar an opinion of Bond Counsel, stating that such ordinance is authorized or
permitted by this ordinance and, upon the execution and delivery thereof, will be valid and
binding upon the City in accordance with its terms and will not adversely affect the exclusion
from gross income for federal income tax purposes of interest on any tax-exempt Parity Bonds
then outstanding. The permitted purposes under this subsection (a) are:
(i) To cure any formal defect, omission, inconsistency or ambiguity in
this ordinance in a manner not adverse to the owner of any Parity Bond;
(ii) To impose upon the Bond Registrar (with its consent) for the
benefit of the registered owners of the Bonds any additional rights, remedies,
powers, authority, security, liabilities or duties which may lawfully be granted,
conferred or imposed and which are not contrary to or inconsistent with this
ordinance as theretofore in effect;
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(iii) To add to the covenants and agreements of, and limitations and
restrictions upon, the City in this ordinance, other covenants, agreements,
limitations and restrictions to be observed by the City which are not contrary or
inconsistent with this ordinance as theretofore in effect;
(iv) To confirm, as further assurance, any pledge under, and the
subjection to any claim, lien or pledge created or to be created by this ordinance
of any other money, securities or funds;
(v) To authorize different denominations of the Bonds and to make
correlative amendments and modifications to this ordinance regarding
exchangeability of Bonds of different authorized denominations, redemptions of
portions of Bonds of particular authorized denominations and similar amendments
and modifications of a technical nature;
(vi) To modify, alter, amend or supplement this ordinance in any other
respect which is not materially adverse to the registered owners of Parity Bonds
and which does not involve a change described in subsections (b) or (c) of this
section;
(vii) Because of change in federal law or rulings, to maintain the
exclusion from gross income of the interest on the Tax-Exempt Bonds from
federal income taxation; and
(viii) To add to the covenants and agreements of, and limitations and
restrictions upon, the City in this ordinance, other covenants, agreements,
limitations and restrictions to be observed by the City which are requested by the
Bond Insurer (if any) or provider of an Alternate Security and which changes are
not materially adverse to the registered owners of Parity Bonds.
(b) Supplemental or Amendatory Ordinances Requiring Consent of All Registered
Owners. Unless approved in writing by the registered owners of all Parity Bonds then
outstanding, nothing contained in this section shall permit, or be construed as permitting: (1) a
change in the times, amounts or currency of payment of the principal of or interest on any
outstanding Parity Bond or a reduction in the principal amount or redemption price of any
outstanding Parity Bond or a change in the redemption price of any outstanding Parity Bond or a
change in the method of determining the rate of interest thereon; (2) a preference of priority of
any Parity Bonds or any other bond or bonds, or (3) a reduction in the aggregate principal
amount of any Parity Bond.
(c) Supplemental or Amendatory Ordinances Requiring Consent of Registered
Owners of 60% of Parity Bonds Outstanding In addition to any ordinance permitted pursuant to
paragraph (a) and subject to the terms and conditions contained in subsection (d) and not
otherwise, registered owners of not less than 60% in aggregate principal amount of the Parity
Bonds then outstanding shall have the right from time to time to consent to and approve the
adoption by the City of any supplemental or amendatory ordinance deemed necessary or
desirable by the City for the purpose of modifying, altering, amending, supplementing or
rescinding, in any particular, any of the terms or provisions contained in this ordinance, as
follows:
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(i) If at any time the City shall propose any supplemental or
amendatory ordinance under this subsection (c), the City shall cause the Bond
Register to give notice of the proposed supplemental or amendatory ordinance by
first-class United States mail to all registered owners of any then outstanding
Parity Bonds, to the Bond Insurer (if any), and to the Rating Agency Such notice
shall briefly set forth the nature of the proposed supplemental or amendatory
ordinance and shall state that a copy thereof is on file at the office of the Bond
Registrar for inspection by all registered owners of the outstanding Parity Bonds.
(ii) At any time within two years after the date of the mailing of such
notice, the City may pass such supplemental or amendatory ordinance in
substantially the form described in such notice, but only if there shall have first
been delivered to the Bond Registrar (1) the required consents, in writing, of the
registered owners of the Parity Bonds, and (2) an opinion of Bond Counsel stating
that such ordinance is authorized or permitted by this ordinance and, upon the
execution and delivery thereof, will be valid and binding upon the City in
accordance with its terms and will not adversely affect the exclusion from gross
income for federal income tax purposes of interest on any tax-exempt Parity
Bonds then outstanding.
(iii) If registered owners of not less than the percentage of then
outstanding Parity Bonds required by this subsection (c) shall have consented to
and approved the proposed ordinance, no owner of outstanding Parity Bonds shall
have any right (1) to object to the passage of such ordinance, (2) to object to any
of the terms and provisions contained therein or the operation thereof, (3) in any
manner to question the propriety of the passage thereof, or (4) to enjoin or restrain
the City or the Bond Registrar from adopting the same or taking any action
pursuant thereto.
Upon the adoption of the supplemental or amendatory ordinance pursuant to the
provisions of this section, this ordinance shall be, and shall be deemed to be, supplemented and
amended accordingly The respective rights, duties and obligations under this ordinance of the
City, the Bond Registrar and all registered owners of Parity Bonds, shall thereafter be
determined, exercised and enforced under this ordinance subject in all respects to such
supplements and amendments.
Section 25. Defaults and Remedies.
(a) Events of Default The following shall constitute "Events of Default"with respect
to the Bonds:
(i) If a default is made in the payment of the principal of or interest on
any of the Bonds when the same shall become due and payable; or
(ii) If the City defaults in the observance and performance of any other
of the covenants, conditions and agreements on the part of the City set forth in
this ordinance or any covenants, conditions or agreements on the part of the City
contained in any Parity Bond authorizing ordinance and such default or defaults
have continued for a period of six months after they have received from the
Bondowners' Trustee (as defined below) or from the registered owners of not less
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than 25% in principal amount of the Parity Bonds, a written notice specifying and
demanding the cure of such default. However, if the default in the observance
and performance of any other of the covenants, conditions and agreements is one
which cannot be completely remedied within the six months after written notice
has been given, it shall not be an Event of Default with respect to the Bonds as
long as the City has taken active steps within 90 days after written notice has been
given to remedy the default and is diligently pursuing such remedy
(iii) If the City files a petition in bankruptcy or is placed in receivership
under any state or federal bankruptcy or insolvency law
(b) Bondowners' Trustee. So long as such Event of Default has not been remedied, a
bondowners' trustee (the "Bondowners' Trustee") may be appointed by the registered owners of
25% in principal amount of the Parity Bonds then outstanding, by an instrument or concurrent
instruments in writing signed and acknowledged by such registered owners of the Parity Bonds
or by their attorneys-in-fact duly authorized and delivered to such Bondowners' Trustee,
notification thereof being given to the City That appointment shall become effective
immediately upon acceptance thereof by the Bondowners' Trustee. Any Bondowners' Trustee
appointed under the provisions of this Section 25(b) shall be a bank or trust company organized
under the laws of the State of Washington or the State of New York or a national banking
association. The bank or trust company acting as Bondowners' Trustee may be removed at any
time, and a successor Bondowners' Trustee may be appointed, by the registered owners of a
majority in principal amount of the Parity Bonds, by an instrument or concurrent instruments in
writing signed and acknowledged by such registered owners of the Bonds or by their attorneys-
in-fact duly authorized. The Bondowners' Trustee may require such security and indemnity as
may be reasonable against the costs, expenses and liabilities that may be incurred in the
performance of its duties. If any Event of Default is, in the sole judgment of the Bondowners'
Trustee, cured and the Bondowners' Trustee furnishes to the City a certificate so stating, that
Event of Default shall be conclusively deemed to be cured and the City, the Bondowners'
Trustee and the registered owners of the Parity Bonds shall be restored to the same rights and
position which they would have held if no Event of Default had occurred. The Bondowners'
Trustee appointed in the manner herein provided, and each successor thereto, is declared to be a
trustee for the registered owners of all the Parity Bonds and is empowered to exercise all the
rights and powers herein conferred on the Bondowners Trustee.
(c) Suits at Law or in Equity Upon the happening of an Event of Default and during
the continuance thereof, the Bondowners' Trustee may (and, upon the written request of the
registered owners of not less than 25% in principal amount of the Parity Bonds outstanding,
must) take such steps and institute such suits, actions or other proceedings, all as it may deem
appropriate for the protection and enforcement of the rights of the registered owners of the Parity
Bonds, to collect any amounts due and owing to or from the City, or to obtain other appropriate
relief, and may enforce the specific performance of any covenant, agreement or condition
contained in this ordinance or in any of the Parity Bonds.
Nothing contained in this Section 25 shall, in any event or under any circumstance, be
deemed to authorize the acceleration of maturity of principal on the Parity Bonds, and the
remedy of acceleration is expressly denied to the registered owners of the Parity Bonds under
any circumstances including, without limitation, upon the occurrence and continuance of an
Event of Default.
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Any action, suit or other proceedings instituted by the Bondowners' Trustee 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' Trustee without the possession of any of those Parity Bonds and without the
production of the same at any trial or proceedings relative thereto except where otherwise
required by law Any such suit, action or proceeding instituted by the Bondowners' Trustee shall
be brought for the ratable benefit of all of the registered owners of those Parity Bonds, subject to
the provisions of this ordinance. The respective registered owners of the Parity Bonds, by taking
and holding the same, shall be conclusively deemed irrevocably to appoint the Bondowners'
Trustee the true and lawful trustee of the respective registered owners of those Parity Bonds,
with authority to institute any such action, suit or proceeding; to receive as trustee and deposit in
trust any sums becoming distributable on account of those Parity Bonds; to execute any paper or
documents for the receipt of money; and to do all acts with respect thereto that the registered
owner himself or herself might have done in person. Nothing herein shall be deemed to authorize
or empower the Bondowners' Trustee to consent to accept or adopt, on behalf of any registered
owner of the Parity Bonds, any plan of reorganization or adjustment affecting the Parity Bonds
or any right of any registered owner thereof, or to authorize or empower the Bondowners'
Trustee to vote the claims of the registered owners thereof in any receivership, insolvency,
liquidation, bankruptcy, reorganization or other proceeding to which the City is a party
(d) Application of Money Collected by Bondowners' Trustee. Any money collected
by the Bondowners' Trustee at any time pursuant to this Section 25 shall be applied in the
following order of priority-
(i) First, to the payment of the charges, expenses, advances and
compensation of the Bondowners' Trustee and the charges, expenses, counsel
fees, disbursements and compensation of its agents and attorneys.
(ii) Second, to the payment to the persons entitled thereto of all
installments of interest then due on the Parity Bonds in the order of maturity of
such installments and, if the amount available shall not be sufficient to pay in full
any installment or installments maturing on the same date, then to the payment
thereof ratably, according to the amounts due thereon to the persons entitled
thereto, without any discrimination or preference.
(iii) Third, to the payment to the persons entitled thereto of the unpaid
principal amounts of any Parity Bonds which shall have become due (other than
Parity Bonds previously called for redemption for the payment of which money is
held pursuant to the provisions hereto), whether at maturity or by proceedings for
redemption or otherwise, in the order of their due dates and, if the amount
available shall not be sufficient to pay in full the principal amounts due on the
same date, then to the payment thereof ratably, according to the principal amounts
due thereon to the persons entitled thereto, without any discrimination or
preference.
(e) Dirties and Obligations of Bondowners' Trustee. The Bondowners' Trustee shall
not be liable except for the performance of such duties as are specifically set forth herein.
During an Event of Default, the Bondowners' Trustee shall exercise such of the rights and
powers vested in it hereby, and shall use the same degree of care and skill in its exercise, as a
-27-
prudent person would exercise or use under the circumstances in the conduct of his or her own
affairs. The Bondowners' Trustee shall have no liability for any act or omission to act hereunder
except for the Bondowners' Trustee's own negligent action, its own negligent failure to act or its
own willful misconduct. The duties and obligations of the Bondowners' Trustee shall be
determined solely by the express provisions of this ordinance, and no implied powers, duties or
obligations of the Bondowners' Trustee shall be read into this ordinance. The Bondowners'
Trustee shall not be required to expend or risk its own funds or otherwise incur individual
liability in the performance of any of its duties or in the exercise of any of its rights or powers as
the Bondowners' Trustee, except as may result from its own negligent action, its own negligent
failure to act or its own willful misconduct. The Bondowners' Trustee shall not be bound to
recognize any person as a registered owner of any Bond until his or her title thereto, if disputed,
has been established to its reasonable satisfaction. The Bondowners' Trustee may consult with
counsel and the opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered by it hereunder in good faith and in accordance with the
opinion of such counsel. The Bondowners Trustee shall not be answerable for any neglect or
default of any person, firm or corporation employed and selected by it with reasonable care.
(f) Suits by Individual Bondowners Restricted. Neither the registered owner nor the
beneficial owner of any one or more of Parity Bonds shall have any right to institute any action,
suit or proceeding at law or in equity for the enforcement of same unless:
(i) an Event of Default has happened and is continuing; and
(ii) a Bondowners Trustee has been appointed, and
(iii) such owner previously shall have given to the Bondowners'
Trustee written notice of the Event of Default on account of which such suit,
action or proceeding is to be instituted; and
(iv) the registered owners of 25% in principal amount of the then
outstanding Parity Bonds have made, after the occurrence of such Event of
Default, written request of the Bondowners' Trustee and have afforded the
Bondowners' Trustee a reasonable opportunity to institute such suit, action or
proceeding; and
(v) there have been offered to the Bondowners' Trustee securitv and
indemnity satisfactory to it against the costs, expenses and liabilities to be
incurred therein or thereby; and
(vi) the Bondowners' Trustee has refused or neglected to comply with
such request within a reasonable time.
No registered owner or beneficial owner of any Parity Bond shall have any right in any
manner whatever by his or her action to affect or impair the obligation of the City to pay from
the Net Revenue the principal of and interest on such Parity Bonds to the respective owners
thereof when due.
_28_
Section 26. Ratification. All actions previously taken in accordance with this
ordinance are hereby ratified and confirmed.
Section 27 Effective Date of Ordinance. This ordinance shall take effect and be in
force from and after its passage and five days following its publication as required by law
PASSED by the City Council and APPROVED by the Mayor of the City of Auburn,
Washington, at a regular open public meeting thry 2013
Peter B. Lewis, Mayor
A`TTEST(�
/G24 a ---
Q
Danielle Daskam, City Clerk
APPROVED AS TO FORM.
Foster Pepper PLLC, Bond Counsel
PUBLISHED:.,"u�uti, 01.1 ��a/� —�-
-29-
EXHIBIT A—Description of the Improvements
The following Improvements are expected to be funded with proceeds of the Bonds. The
estimates are only estimates at this time. The Improvements shall be carried out in accordance
with the plans and specifications prepared by the City's engineers and consulting engineers. The
City Council may modify the details of the Improvements where, in its judgment, it appears
advisable if such modifications do not substantially alter the purposes of that system or plan.
Water System
(Estimated Projects Total — $6,684,000 00)
Location# Project Name Cost Estimate
I Fulmer Well Field Improvements $1,955,000.00
2 Well Power&Chlorination 1,199,000.00
3 Water Repair& Replacements 1,500,000.00
4 Lakeland Hills Reservoir& Improvements 750,000.00
5 Water Meter&Billing Improvements 500,000.00
6 BNSF Utilities Crossing 780,000.00
Storm Drainage System
(Estimated Projects Total —$4,835,000 00)
Location# Proiect Name Cost Estimate
1 Auburn Way South Flooding Phase 2 $1,638,000.00
2 30"St NE Area Flooding Phase 1 2,697,000.00
3 BNSF Utilities Crossing 500,000.00
EXHIBIT B—Parity Conditions
As set forth in Section 16 of this Ordinance, the City may issue Future Parity Bonds on a
parity with the Bonds and the Outstanding Parity Bonds if and only if the following conditions
are met and complied with at the time of issuance of those proposed Future Parity Bonds:
(a) There shall be no deficiency in the Bond Fund.
(b) The ordinance providing for the issuance of the Future Parity Bonds shall provide
that all assessments and interest thereon that may be levied in any ULID created for the purpose
of paying, in whole or in part, the principal of and interest on those Future Parity Bonds, shall be
paid directly into the Bond Fund, except for any prepaid assessments permitted by law to be paid
into a construction fund or account.
(c) The ordinance providing for the issuance of those Future Parity Bonds shall
provide for the payment of the principal thereof and interest thereon out of the Bond Fund.
(d) The ordinance providing for the issuance of such Future Parity Bonds shall
provide for the deposit into the Reserve Account or a subaccount therein of(i) an amount equal
to the Reserve Requirement for those Future Parity Bonds from the Future Parity Bond proceeds
or other money legally available, or (ii) an Alternate Security (or an amount of cash plus
Alternate Security) equal to the Reserve Requirement for those Future Parity Bonds, or (iii) to
the extent that the Reserve Requirement is not funded from Future Parity Bond proceeds, other
legally available money or Alternate Security at the time of issuance of those Future Parity
Bonds, within five years from the date of issue of the Future Parity Bonds from ULID
Assessments, if any, levied and first collected for the payment of the principal of and interest on
those Future Parity Bonds and, to the extent that ULID Assessments are insufficient, then from
the Net Revenue of the System in five approximately equal annual payments.
(e) The ordinance authorizing the issuance of such Future Parity Bonds shall provide
for the payment of mandatory redemption or sinking fund requirements into the Bond Fund for
any Term Bonds to be issued and for regular payments to be made for the payment of the
principal of such Term Bonds on or before their maturity, or, as an alternative, the mandatory
redemption of those Term Bonds prior and up to their maturity date from money in the Principal
and Interest Account.
(f) There shall be on file with the City either-
(i) A certificate from an Independent Utility Consultant showing that
in his or her professional opinion, based on any 12 consecutive calendar months
out of the immediately preceding 24 calendar months, the Net Revenue of the
System (together with any ULID Assessment collections) shall be equal to the
Coverage Requirement for each year thereafter. The certificate, in estimating the
Net Revenue of the System available for debt service, may adjust Net Revenue of
the System to reflect:
(1) Any changes in rates in effect and being charged or expressly
committed by ordinance to be made in the future;
(2) Income derived from customers of the System who have become
customers during the 12 consecutive month period or thereafter
adjusted to reflect one year's net revenue from those customers;
B-1
(3) Income from any customers to be connected to the System who
have paid the required connection charges;
(4) The Independent Utility Consultant's estimate of the Net Revenue
of the System to be derived from customers anticipated to connect
for whom new building permits have been issued;
(5) The Independent Utility Consultant's estimate of the Net Revenue
of the System to be derived from customers with existing homes or
buildings which will be required to connect to any additions to and
improvements and extensions of the System constructed and to be
paid for out of the proceeds of the sale of the additional Future
Parity Bonds or other additions to and improvements and
extensions of the System then under construction and not fully
connected to the facilities of the System when such additions,
improvements and extensions are completed,
(6) Income received or to be received which is derived from any
person, firm, corporation or municipal corporation under any
executed contract for utility service, which revenue was not
included in the historical Net Revenue of the System; and
(7) Any increases or decreases in Net Revenue as a result of any actual
or reasonably anticipated changes in Maintenance and Operation
Expense subsequent to the 12-month period.
(ii) In lieu of the certificate of an Independent Utility Consultant as
described in paragraph (f)(i), there may be on file from the City Finance Director,
a certificate showing that in his or her professional opinion, based on any 12
consecutive calendar months out of the immediately preceding 24 calendar
months, and without the adjustments described in subparagraphs (1) through (7),
above, the Net Revenue of the System shall be equal to the Coverage
Requirement for each year thereafter
No certificate provided for in this paragraph (f) shall be required in
connection with the issuance of a bond issue if the amount of bonds proposed to
be issued does not exceed the ULID Assessments levied in support of such bond
issue by more than $5,000 00 plus any amount of the proceeds of such bonds
deposited in the Reserve Account as capitalized reserve. Furthermore, if the
Future Parity Bonds proposed to be so issued are for the sole purpose of refunding
outstanding Parity Bonds, no such certification of coverage shall be required if the
Annual Debt Service in each year for the refunding bonds is not increased by
$5,000 00 over the amount required for the bonds to be refunded thereby and the
maturities of those refunding bonds are not extended beyond the maturities of the
bonds to be refunded thereby
B-2
CERTIFICATION
I, the undersigned, City Clerk of the City of Auburn, Washington (the "City"), hereby
certify as follows:
1 The attached copy of Ordinance No. 6451 (the "Ordinance") is a full, true and correct
copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the
regular meeting place thereof on February 19, 2013, as that ordinance appears on the minute
book of the City; and the Ordinance will be in full force and effect five days after publication in
the City's official newspaper; and
2. A quorum of the members of the City Council was present throughout the meeting
and a majority of those members present voted in the proper manner for the passage of the
Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of February, 2013
CITY OF AUBURN WASHINGTON
Danielle Daskam, City Clerk