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HomeMy WebLinkAboutITEM VIII-A-3 AGENDA BILL APPROVAL FORM Agenda Subject: Date: Ordinance No. 6039 Auaust2,2006 Department: I Attachments: Budget Impact: Finance Ordinance No. 6039 Administrative Recommendation: City Council adopt Ordinance No. 6039. Background Summary: The attached bond ordinance is still in draft form until after the sale of the bond on Friday when the pricing and bond insurance information will be finalized. The ordinance relates to contracting indebtedness; providing for the issuance of $3,350,000 par value of Limited Tax General Obligation Bonds, Series 2006A of the City for general City purposes to provide funds with which to make cemetery improvements and certain other improvements to an existing public golf course and the related facilities, and to pay the costs of issuance of the series 2006A bonds; providing for the issuance of $1,890,000 par value of limited tax general obligation bonds, series 2006T (Taxable) of the City for general City purposes to provide funds with which to develop a restaurant and related facilities at an existing public golf course clubhouse and to pay the costs of issuance of the series 2006T (Taxable) bonds; fixing the date, form, maturities, interest rates, terms and covenants of the bonds; establishing bond accounts and project funds related to each series of bonds; [providing for the purchase of bond insurance;] and approving the sale and providing for the delivery of the bonds to Seattle-Northwest Securities Corporation of Seattle, Washington. N0807-1 Reviewed by Council & Committees: Reviewed by Departments & Divisions: o Arts Commission COUNCIL COMMITTEES: D Building D M&O o Airport i:8J Finance o Cemetery o Mayor D Hearing Examiner i:8J Municipal Servo ~ Finance o Parks D Human Services o Planning & CD o Fire o Planning o Park Board OPublic Works o Legal o Police o Planning Comm. o Other D Public Works o Human Resources D Information Services Action: Committee Approval: DYes ONo Council Approval: DYes ONo Call for Public Hearing _1-1- Referred to Until _1-1- Tabled Until _1-1- Councilmember: Backus I Staff: Coleman Meeting Date: August 7, 2006 I Item Number: VIlI.A.3 AUBURN * MORE THAN YOU IMAGINED Draft Dated July 26, 2006 CITY OF AUBURN, WASHINGTON ORDINANCE NO. AN ORDINANCE of the City of Auburn, Washington, relating to contracting indebtedness; providing for the issuance of $3,350,000 par value of Limited Tax General Obligation Bonds, Series 2006A of the City for general City purposes to provide funds with which to make cemetery improvements and certain other improvements to an existing public golf course and the related facilities, and to pay the costs of issuance of the series 2006A bonds; providing for the issuance of $1,890,000 par value of limited tax general obligation bonds, series 2006T (Taxable) of the City for general City purposes to provide funds with which to develop a restaurant and related facilities at an existing public golf course clubhouse and to pay the costs of issuance of the series 2006T (Taxable) bonds; fixing the date, form, maturities, interest rates, terms and covenants of the bonds; establishing bond accounts and project funds related to each series of bonds; [providing for the purchase of bond insurance;] and approving the sale and providing for the delivery of the bonds to Seattle-Northwest Securities Corporation of Seattle, Washington. Passed This document prepared by: Foster Pepper P LLe 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 50670408.3 Section 1 . Section 2 . Section 3 . Section 4 . Section 5 . Section 6 . Section 7 . Section 8 . Section 9 . Section 10 . Section 11 . Section 12 . Section 13 . Section 14 . Section 15 . Section 16 . Section 17 . Section 18 . Section 19 . Section 20 . Section 21 . 50670408.3 Draft Dated July 26, 2006 TABLE OF CONTENTS Page Debt Capacity..........................................................................................................l Authorization of Bonds...........................................................................................2 Description of Bonds............................................................................................... 2 Registration and Transfer of Bonds......................................................................... 3 Payment of Bonds.................................................................................................... 4 Redemption Provisions and Open Market Purchase ofBonds................................4 Notice of Redemption.............................................................................................. 5 Failure To Redeem Bonds ...... ......... .......... .............................................................. 5 Pledge of Taxes....................................................................................................... 6 Form and Execution of Bonds................................................................................. 6 Bond Registrar......................................................................................................... 6 Preservation of Tax Exemption for Interest on Series 2006A Bonds...................... 7 Small Governmental Issuer Arbitrage Rebate Exception and Designation of Series 2006A Bonds as "Qualified Tax-Exempt Obligations." .......................... 7 Refunding or Defeasance of the Bonds ................... ................................................ 7 Bond Fund and Deposit of Bond Proceeds.............................................................. 8 Approval of Bond Purchase Contract...................................................................... 9 Preliminary Official Statement Deemed Final........................................................9 Undertaking to Provide Continuing Disclosure..................................................... 10 Bond Insurance..................................................................................................... .12 Ratification........................................................................................................... .12 Effective Date of Ordinance................................................................................ ..13 -1- Draft Dated July 26, 2006 CITY OF AUBURN, WASHINGTON ORDINANCE NO. AN ORDINANCE of the City of Auburn, Washington, relating to contracting indebtedness; providing for the issuance of $3,350,00 par value of Limited Tax General Obligation Bonds, Series 2006A of the City for general City purposes to provide funds with which to make cemetery improvements and certain other improvements to an existing public golf course and the related facilities, and to pay the costs of issuance of the series 2006A bonds; providing for the issuance of $1,890,000 par value of limited tax general obligation bonds, series 2006T (Taxable) of the City for general City purposes to provide funds with which to develop a restaurant and related facilities at an existing public golf course clubhouse and to pay the costs of issuance of the series 2006T (Taxable) bonds; fixing the date, form, maturities, interest rates, terms and covenants of the bonds; establishing bond accounts and project funds related to each series of bonds; [providing for the purchase of bond insurance;] and approving the sale and providing for the delivery of the bonds to Seattle-Northwest Securities Corporation of Seattle, Washington. WHEREAS, the City of Auburn, Washington (the "City"), is in need of: (i) constructing a mausoleum or similar structure or facility at a public cemetery, (ii) making certain improvements to an existing public golf course, including a pro shop and other related facilities, and (iii) to develop a restaurant and banquet area at the golf course clubhouse, the combined estimated cost of which is $5,300,000, and the City does not have available sufficient funds to pay the cost; and WHEREAS, the City Council deems it to be in the best interest of the City to borrow money by the issuance of limited tax general obligation bonds in two series (together, the "Bonds"): (1) the Series 2006A Bonds are to be issued in the principal amount of $3,350,000 for general city purposes and to provide funds to carry out for the 2006A Projects (as defined in Section 2(A), below) and to pay the costs of issuance of the Series 2006A Bonds; and (2) the Series 2006T Bonds are to be issued in the principal amount of $1,890,000 to provide funds to carry out the 2006T Project (as defined in Section 2(B), below) and to pay the costs of issuance of the Series 2006T Bonds; and WHEREAS, Seattle-Northwest Securities Corporation has offered to purchase the Bonds authorized herein under the terms and conditions set forth in this Ordinance in the form of a bond purchase contract; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section 1. Debt Capacity. The assessed valuation of the taxable property within the City as ascertained by the last preceding assessment for City purposes for the calendar year 2006 is $5,099,468,852, and the City has outstanding general indebtedness evidenced by limited tax -1- 50670408.3 Draft Dated July 26, 2006 general obligation bonds, notes, leases and conditional sales contracts in the principal amount of $6,737,247 incurred within the limit of up to 1 ~% of the value of the taxable property within the City permitted for general municipal purposes without a vote of the qualified voters therein. The City has no unlimited tax general obligation bonds or notes outstanding. The amount of indebtedness for which bonds are authorized herein to be issued is $5,300,000. Section 2. Authorization of Bonds. The City shall borrow money on the credit of the City and issue negotiable limited tax general obligation bonds evidencing that indebtedness in the combined amount of $5,300,000 in two series for the purposes described in subsections (A) and (B) of this Section. The general indebtedness to be incurred shall be within the limit of up to 1 ~% of the value of the taxable property within the City permitted for general municipal purposes without a vote of the qualified voters therein. (A) The Series 2006A Bonds shall be issued for general City purposes to: (i) construct a mausoleum or similar structure or facility at a public cemetery; and (ii) fund improvements to a City golf course, including a pro shop, clubhouse and related facilities serving the public course (together, the "2006A Projects"); and to pay the costs of issuance of the Series 2006A Bonds. (B) The Series 2006T Bonds shall be issued to provide the funds to develop and equip restaurant, banquet and related facilities for a restaurant facility to be located at the golf course clubhouse (the "2006T Project") and to pay the costs of issuance and sale of the Series 2006T Bonds. Section 3. Description of Bonds. The bonds shall be called Limited Tax General Obligation Bonds, Series 2006A (the Series 2006A Bonds") and Limited Tax General Obligation Bonds, Series 2006T (Taxable) (the "Series 2006T Bonds"), of the City (collectively, the "Bonds"). The Bonds shall be dated their date of delivery to the initial purchasers thereof; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately in the manner and with any additional designation as the fiscal agent of the State of Washington (as the same may be designated by the State of Washington from time to time) (the "Bond Registrar") deems necessary for purposes of identification; shall bear interest (computed on the basis of a 360 day year of twelve 30 day months) payable semiannually on each June 1 and December 1, commencing December 1, 2006, to the maturity or earlier redemption of the Bonds; and shall mature and bear interest, all as follows: (A) Series 2006A Bonds. The Series 2006A Bonds shall be issued in the aggregate principal amount of $3,350,000 and shall bear interest at the rates and mature on December 1 of each of the years as follows: Maturity Interest Maturity Interest Years Amounts Ra tes Years Amounts Rates 2016 $ % 2021 $ .% -- 2017 2022 2018 2023 2019 2024 2020 2025 -2- 506704083 Draft Dated July 26, 2006 (B) Series 2006T Bonds. The Series 2006T Bonds shall be issued in the aggregate principal amount of $1,890,000 and shall bear interest at the rates and mature on December 1 in each of the years as follows: Maturity Interest Maturity Interest Years Amounts Ra tes Years Amounts Rates 2006 $ % 2012 $ .% -- 2007 2013 2008 2014 2009 2015 2010 2016 2011 Section 4. Registration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and shall be recorded on books or records maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of each of the Bonds held by each owner. Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized denomination of an equal aggregate principal amount and of the same 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 or transfer any Bond during the 15 days preceding any principal payment or redemption date. The Bonds initially shall be registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall be held in fully immobilized form by DTC as depository in accordance with the provisions of a Blanket Issuer Letter of Representations dated February 18, 1997 between the City and DTC (as it may be amended from time to time, the "Letter of Representations"). Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Bonds regarding accuracy of any records maintained by DTC or DTC participants of any amount in respect of principal of or interest on the Bonds, or any notice which is permitted or required to be given to registered owners hereunder (except such notice as is required to be given by the Bond Registrar to DTC). For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its successor depository shall be deemed to be the registered owner for all purposes hereunder and all references to registered owners, bondowners, bondholders or the like shall mean DTC or its nominee and shall not mean the owners of any beneficial interests in the Bonds. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) to any substitute depository appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds are no longer held in immobilized form. -3- 50670408.3 Draft Dated July 26,2006 Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository, or a determination by the City that it no longer wishes to continue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the City may appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. If (i) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained, or (ii) the City determines that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any person as provided herein and the Bonds no longer shall be held in fully immobilized form. Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to the registered owners at the addresses appearing on the Bond Register on the 15th day of the month preceding the interest payment date or, if requested in writing by a registered owner of $1,000,000 or more in principal amount of Bonds prior to the applicable record date, by wire transfer on the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the registered owners to the Bond Registrar. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds shall be made in the manner set forth in the Letter of Representations. Section 6. Redemption Provisions and Open Market Purchase of Bonds. The Series 2006T Bonds shall be issued without the right or option of the City to redeem the Series 2006T Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Series 2006A Bonds prior to their stated maturity dates at any time on or after December 1, 2016, as a whole or in part (within one or more maturities selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. Bonds maturing in are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption randomly (in such manner as the Bond Registrar shall determine) at par plus accrued interest on December 1 in years and amounts as follows: Maturity Mandatory Redemption Years Mandatory Redemption Amounts If the City redeems under the optional redemption provisions, purchases in the open market or defeases Term Bonds, the par amount of the Term Bonds so redeemed, purchased or defeased (irrespective of their actual redemption or purchase prices) shall be credited against one -4- 50670408.3 Draft Dated July 26, 2006 or more scheduled mandatory redemption amounts for those Term 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 at least 60 days prior to the earliest mandatory redemption date for that maturity of Term Bonds for which notice of redemption has not already been given. Portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple thereof, may be redeemed. If less than all of the 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 therefor, a new Bond (or Bonds, at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate principal amount remaining unredeemed. 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. All Bonds purchased or redeemed under this section shall be canceled. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of Representations. Section 7. Notice of Redemption. The City shall cause notice of any intended redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the owner of any Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New York, or their successors, to Seattle-Northwest Securities Corporation, at its principal office in Seattle, Washington, or its successor, to each NRMSIR or the MSRB and to such other persons and with such additional information as the City Finance Director shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, notice of redemption shall be given in accordance with the Letter of Representations. Section 8. Failure To Redeem Bonds. If any Bond is not redeemed when properly presented at its maturity or call date, 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 call date 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 redemption fund hereinafter created and the Bond has been called for payment by giving notice of that call to the registered owner of each of those unpaid Bonds. -5- 50670408 3 Draft Dated July 26, 2006 Section 9. Pledge of Taxes. For as long as any ofthe Bonds are outstanding, the City irrevocably pledges to include in its budget and levy taxes annually within the constitutional and statutory tax limitations provided by law without a vote of the electors of the City on all of the taxable property within the City in an amount sufficient, together with other money legally available and to be used therefor, to pay when due the principal of and interest on the Bonds, and the full faith, credit and resources of the City are pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest. Section 10. Form and Execution of Bonds. The Bonds shall be printed or lithographed on good bond paper in a form consistent with the provisions of this ordinance and state law and 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. 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, Limited Tax General Obligation Bonds, [Series 2006A] [Series 2006T (Taxable)], described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENT Bond Registrar By Authorized Signer 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. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds 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 the date of issuance of the Bonds. Section 11. Bond Registrar. 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 -6- 50670408.3 Draft Dated July 26,2006 Registrar's powers and duties under this ordinance and City Ordinance No. 3905 establishing a system of registration for the City's bonds and obligations. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of Bonds 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 Bond owners. Section 12. Preservation of Tax Exemption for Interest on Series 2006A Bonds. The City covenants that it will take all actions necessary to prevent interest on the Series 2006A 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 the Series 2006A Bonds or other funds of the City treated as proceeds of the Series 2006A Bonds at any time during the term of the Series 2006A Bonds which would cause interest on the Series 2006A Bonds to be included in gross income for federal income tax purposes. Section 13. Small Governmental Issuer Arbitrage Rebate Exception and Designation of Series 2006A Bonds as "Qualified Tax-Exempt Obligations." The City finds and declares that (a) it is a duly organized and existing governmental unit of the State of Washington and has general taxing power; (b) no bond which is part of this issue of Series 2006A Bonds is a "private activity bond" within the meaning of Section 141 of the United States Internal Revenue Code of 1986, as amended (the "Code"); (c) at least 95% of the net proceeds of the Series 2006A Bonds will be used for local governmental activities of the City (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City); (d) the aggregate face amount of all tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) issued by the City and all entities subordinate to the City (including any entity that the City controls, that derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt obligations on behalf of the City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000; and (e) the amount of tax-exempt obligations, including the Series 2006A Bonds, designated by the City as "qualified tax-exempt obligations" for the purposes of Section 265(b )(3) of the Code during the calendar year in which the Series 2006A Bonds are issued does not exceed $10,000,000. The City therefore certifies that the Series 2006A Bonds are eligible for the arbitrage rebate exception under Section 148(f)(4)(D) of the Code and designates the Series 2006A Bonds as "qualified tax-exempt obligations" for the purposes of Section 265(b )(3) of the Code. Section 14. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay when due the principal of and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such then-outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the costs of the refunding or defeasance. If money and/or "government obligations" (as defined in chapter 39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or -7- 50670408.3 Draft Dated July 26, 2006 defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account"), 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. The owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan such provisions as the City deems necessary for the random selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the owners of the defeased Bonds and to such other persons as the City shall determine, and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for notices of redemption of Bonds. Section 15. Bond Fund and Deposit of Bond Proceeds. (A) Bond Fund and Bond Redemption Accounts. 1. There is created and established in the office of the City Finance Director a special account within the City's Golf Course Fund designated as the Series 2006A Limited Tax General Obligation Bond Debt Service Account (the "2006A Bond Redemption Account"), for the purpose of paying principal of and interest on an allocable portion of the Series 2006A Bonds. There is also created and established in the office of the City Finance Director a special account within the City's Cemetery Fund designated as the Series 2006A Limited Tax General Obligation Bond Account (the "2006A Bond Redemption Account"), for the purpose of paying principal of and interest on an allocable portion of the Series 2006A Bonds. All taxes collected for and allocated to the payment of the principal of and interest on the Series 2006A Bonds shall be deposited in a 2006A Bond Redemption Account within either the Golf Course Fund or the Cemetery Fund. 2. There is created and established in the office of the City Finance Director a special account within the City's Golf Course Fund designated as the Series 2006T Limited Tax General Obligation Bond Debt Service Account (the "2006T Bond Redemption Account"), for the purpose of paying principal of and interest on the Series 2006T Bonds. All taxes collected for and allocated to the payment of the principal of and interest on the Series 2006T Bonds shall be deposited in the 2006T Bond Redemption Account. (B) Deposit of Proceeds. 1. Series 2006A Bond Proceeds. There is created and established in the office of the City Finance Director a special account designated as the Golf Course -8- 50670408.3 Draft Dated July 26, 2006 Project Account. A portion of the principal proceeds and premium, if any, received from the sale and delivery of the Series 2006A Bonds equal to $ shall be paid into the Golf Course Project Account and used for the golf course related purposes specified in Section 2(A) of this ordinance. There is also created and established in the office of the City Finance Director a special account designated as the Cemetery Project Account. A portion of the principal proceeds and premium, if any, received from the sale and delivery of the Series 2006A Bonds equal to $ shall be paid into the Cemetery Project Account and used for the cemetery purposes specified in Section 2(A) of this ordinance. Until needed to pay the costs of the 2006A Projects and costs of issuance of the Series 2006A Bonds, the City may invest principal proceeds temporarily in any legal investment, and the investment earnings may be retained in the applicable account and be spent for the purposes of that account. 2. Series 2006T Bond Proceeds. There is created and established in the office of the City Finance Director a special fund designated as the Restaurant Project Account, 2006 (the "Restaurant Project Account"). The principal proceeds and premium, if any, received from the sale and delivery of the Series 2006T Bonds shall be paid into the Restaurant Project Account and used for the purposes specified in Section 2(B) of this ordinance. Until needed to pay the costs of the Project and costs of issuance of the Series 2006T Bonds, the City may invest principal proceeds temporarily in any legal investment, and the investment earnings may be retained in the Restaurant Project Account and be spent for the purposes of that fund. Section 16. Approval of Bond Purchase Contract. Seattle-Northwest Securities Corporation of Seattle, Washington, has presented a purchase contract (the "Bond Purchase Contract") to the City offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that entering into the Bond Purchase Contract is in the City's best interest and therefore accepts the offer contained therein and authorizes its execution by City officials. The Bonds will be printed at City expense and will be delivered to the purchaser in accordance with the Bond Purchase Contract, with the approving legal opinion of Foster Pepper PLLC, municipal bond counsel of Seattle, Washington, regarding the Bonds. The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the purchaser and for the proper application and use of the proceeds of the sale thereof. Section 17. Preliminary Official Statement Deemed Final. The City Council has been provided with copies of a preliminary official statement dated , 2006 (the "Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For the sole purpose of the Bond purchaser's compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City "deems final" that Preliminary Official Statement as of its date, except for the omission of information as to offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, options of redemption, delivery dates, ratings and other terms of the Bonds dependent on such matters. -9- 506704083 Draft Dated July 26, 2006 Section 18. Undertaking to Provide Continuing Disclosure. To meet the requirements of United States Securities and Exchange Commission ("SEC") Rule 15c2-12(b)(5) (the "Rule"), as applicable to a participating underwriter for the Bonds, the City makes the following written undertaking (the "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: 1. To each nationally recognized municipal securities information repository designated by the SEC in accordance with the Rule ("NRMSIR") and to a state information depository, if any, established in the State of Washington (the "SID") 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") ; 2. To each NRMSIR or the Municipal Securities Rulemaking Board ("MSRB"), and to the SID, timely notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Borids; and (11) rating changes; and 3. To each NRMSIR or to the MSRB, and to the SID, 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: 1. Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles promulgated by the Government Accounting Standards Board ("GASB"), as such principles may be changed from time to time, which statements shall not be audited, except, 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 balance of general obligation debt; (3) the assessed value of property within the City subject to ad valorem taxation; and (4) ad valorem tax levy rates and amounts and percentage of taxes collected; 2. Shall be provided to each NRMSIR and the SID, not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year -10- 50670408.3 Draft Dated July 26,2006 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, 2006; and 3. May be provided in a single or multiple documents, and may be incorporated by reference to other documents that have been filed with each NRMSIR and the SID, or, if the document incorporated by reference is a "final official statement" with respect to other obligations of the City, that has been filed with the MSRB. (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, NRMSIR, the SID or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to each NRMSIR or the MSRB, and the SID, 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 any holder of Bonds, 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 the Rule 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 counselor other counsel familiar with federal securities laws delivered to the City, and the City provides timely notice of such termination to each NRMSIR or the MSRB and the SID. (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 of the City (or such other officer of the City who may in the future perform the duties of that office) 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 the Rule, including, without limitation, the following actions: 1. provided; Preparing and filing the annual financial information undertaken to be -11- 50670408.3 Draft Dated July 26, 2006 2. Determining whether any event specified in subsection (a) has occurred, assessing its materiality with respect to the Bonds, and, if material, preparing and disseminating notice of its occurrence; 3. Determining whether any person other than the City is an "obligated person" within the meaning of the Rule with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of material events for that person in accordance with the Rule; 4. 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 5. Effecting any necessary amendment of the Undertaking. (H) Centralized Dissemination Agent. To the extent authorized by the SEC, the City may satisfy the Undertaking by transmitting the required filings using http://www.disclosureusa.org (or such other centralized dissemination agent as may be approved by the SEC). Section 19. Bond Insurance. [Insert If Applicable.] Section 20. Ratification. All actions previously taken III accordance with this ordinance are hereby ratified and confirmed. -12- 50670408.3 Draft Dated July 26, 2006 Section 21. 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 thereof, this ih day of August, 2006. Mayor ATTEST: City Clerk APPROVED AS TO FORM: Bond Counsel PUBLISHED: -13- 50670408.3 Draft Dated July 26,2006 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. _ (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 August 7, 2006, 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. 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 _ day of 2006. CITY OF AUBURN, WASHINGTON City Clerk 50670408.3