No preview available
HomeMy WebLinkAbout3254 Providing for the Issuance of a Water and Sewer Revenue Bond Ordinance 3254 Page 1 of'14 ORDINANCE NO. 3254 AN ORDINANCE OF THE CITY OF PORT TOWNSEND, WASHINGTON, PROVIDING FOR THE ISSUANCE OF A WATER AND SEWER REVENUE BOND IN THE PRINCIPAL AMOUNT OF $1,914,980 TO PROVIDE FUNDS TO PAY PART OF THE COST OF CONSTRUCTING WATER SYSTEM IMPROVEMENTS, TO REPAY THE CITY'S WATER AND SEWER REVENUE BOND ANTICIPATION NOTE, 2016 AND TO PAY COSTS OF ISSUING THE BOND; AUTHORIZING THE SALE OF THE BOND TO KITSAP BANK; AND FIXING THE TERMS AND COVENANTS OF THE BOND. NOW THEREFORE, the City Council of the City of Port Townsend do ordain as follows: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: (ai) " iiniial Debt Service" for the applicable series of Parity Braids for ai d+ year ineans all the interest, plies all principal (except principal of"'1 erin Boi"ds dire in airy Terni fond Maturity Year), and plies all mandatory redemption and sinking, ffind installments, lair that yeah, less all bond interest payable from the proceeds of any such bonds in that year. (b) "Average Annual Debt Service" means the sum of the Annual Debt Service for the remaining years to the last scheduled inatii.rity of the applicable series of` bmids divided by the a�iianiber of those years, except that for purposes of computing the reserve re uirenieiit,for the Parity Boiids, the estimated amount of bomis to be redeemed prior to maturity may be taken into accorint if required udder federal arbitrage regulations. (c) "Bond" means the $1,914,980 principal amount of the City's Water and Sewer Revenue Bond, 2020, issued pursuant to this ordinance. (d) "Bond Fund" means that special fund of the City known as the Water and Sewer Revenue Bond Fund created by this ordinance for the payment of the principal of and interest on the Parity Bonds. (e) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of registration of the Bond. (f) "Bond Registrar," initially, means the Finance Director of the City. At any time following the issuance of the Bond, however, the Finance Director may determine to appoint a different Bond Registrar, including, but not limited to the fiscal agent of the State of Washington. The term "Bond Registrar" also shall include any successor Bond Registrar appointed by the Finance Director as permitted by law. (g) "City" means the City of Port Townsend, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. Ordinance 3254 Page 2 of']4 (h') `Code" means the United States Internal revenue Code of 1986, as amended, and the applicable rules and regulations promulgated thereunder. (i) "Construction Account" means the special account of the City maintained for the purpose of paying costs of the Project. 0) "Council" means the City Council of the City as the same shall be duly and regularly constituted from time to time. (k) "Coverage Requirement" means Net Revenue, together with the collection of ULID Assessments, at least equal to 1.25 times the Maximum Annual Debt Service in any current year on the Parity Bonds outstanding. (1) "Debt Service Account" means the account of that name created in the Bond Fund for the payment of the principal of, premium, if any, and interest on the Parity Bonds. (m) "Future Parity Bonds" means all water and sewer revenue bonds of the City issued after the data of the issuance of the Bond, the payanent of the principal of and interest on which constitutes a charge or lien on the Revenue of the System and UL 11) Assessments equal in rank with the charge and lien upon such revenaae 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 Bond. (n) "Maintenance and Operation Costs or the System" means the actual and necessary costs of maintaining and olaerating the System" including reasonable arnounts for adrninistration, overhead, insurance and other similar costs, but CXCIUding, depreciation, the costs of capital additions, replacements or improvements to the System, debt service, municipal taxes and payments to the City in lieu of taxes. (o) "Maturity Date" means December 1, 2040. (p) "Maximum Annual Debt Service" means the maximum amount of Annual Debt Service which will mature or come due in the current year or any future year. (q) "Net Revenue" means the Revenue of the System less the Maintenance and Operation Costs of the System. (r) "Note" means the City's Water and Sewer Revenue Bond Anticipation Note, 2016, in the principal amount of not to exceed $3,000,000, issued pursuant to the Note Ordinance. (s) "Note Ordinance" means Ordinance No. 3144 of the City passed on January 19, 2016, as amended by Ordinance No. 3194 of the City passed on February 5, 2018. (t) "Parity Bonds" means the Bond and any Future Parity Bonds. (u) "Project" means the System improvements as described in the Note Ordinance, and other capital improvements approved by the Council. Ordinance 3254 Page 3 of 14 (v) "Purchaser" means Kitsap Bank, its successors or assigns. (w) "Registered Owner" means the person named as the registered owner of the Bond in the Bond Register. (x) "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 any series of Parity Bonds. The ordinance authorizing Future Parity Bonds may establish a separate reserve account for any such Future Parity Bonds or provide that some or all of such Future Parity 'Bonds be secured by a common reserve account. (y) "Revenue Fund" means the Water and Sewer Revenue Fund into which fund the City has pledged and bound itself to pay all of the Revenue of the System as collected. (z) "Revenue of the System" means all earnings, revenue and money received by the City from or on account of the operation ol, the System, except ULID Assessments, and including the income from investments of money in the revenue Rind and Bond Rind or from any other investment thereof except the inconrc from investments irrevocably pledged to the payment of revenue bonds purstwant: to a plan of retirement or refunding, "l evenLie of the System" shell also include federal or state reimbLirsenients of operating expenses that are included as Maintenance, and Operation Costs of the System. (aa) "System" means the existing combined water and sewer system of the City as added to, extended and improved for as long as any Parity Bonds remain outstanding. (bb) "Term Bond Maturity Year" means any calendar year in which the Term Bonds are scheduled to mature. (cc) "Term Bonds" means those bonds designated as such in the ordinance authorizing their issuance and sale. (dd) "ULID" means a Utility Local Improvement District. (ee) "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 permitted by law to be paid into a construction fund or account). ULID Assessments shall include installments thereof and any interest or penalties which may be due thereon. Section 2. Recitals. The Council finds and determines that: (a) The City now owns, operates and maintains the System as a combined water and sewer system. (b) The Council by Ordinance No. 3144 of the City passed on January 19, 2016, as amended by Ordinance No. 3194 of the City passed on February 5, 2018 (together, the "Note Ordinance"), authorized the issuance of the Water and Sewer Revenue Bond Anticipation Note, Ordinance 3254 Page 4 of 14 2016 (the "Note"), maturing on March 1, 2021, for the purpose of providing interim financing for the City's water and sewer capital improvements including construction of a water treatment f'acility and the five million gallon reservoir pending the issuance of the Bond. The Note Ordinance provides that the City may redeem the Note in advance of its inatr.irity at any time at the price of par, plus accrued interest, if any, to the date of redemption. (c) The Council has determined it to be in the best interests of the City to issue a Water and Sewer Revenue Bond, 2020 in the aggregate principal anio iit of $1,914,980 (the "Bond") to provide f�"ut�ids to pay part of the costs of the l`roject, i1�16tidi�ng repaying the Note and paying costs of issuance of the Bond upon the terms set forth in this ordinance. e tioti, 3. �h�°`it di„n an�cf l cte�'r:� a �utions. The Council finds and determines that the Revenue of the System and benefits to be derived from the operation and maintenance of the System at the rates to be charged for utility services from the System will be more than sufficient to meet all Maintenance and Operation Costs of the System and to peralit the setting aside into the Bond Fund oLItof the RevcnLle of the System amounts sufficient to pay the principal of and interest on the Bond when due. The 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 Costs of the System and has not obligated the City to set aside and pay into the Bond fund a greater amount of Revenue of the System than in its judgment will be available over and above such Maintenance and Operation Costs of the System. Section 4. AV11�11c I:7atiolland. Descriation of the Bond, For the purpose of paying part of the costs of the Project, including repaying the Note, and paying costs of issuance of the Bond, the City shall now issue and sell the Bond in the principal amount of $1,914,980. The Bond shall be designated the "City of Port Townsend, Washington, Water and Sewer Revenue Bond, 2020,” shall be in fully registered form, shall be numbered R-1, and shall be dated the date of its delivery to the Purchaser. Principal of the Bond shall be payable annually on December 1 commencing December 1, 2021 through the Maturity Date. Interest on the Bond shall be payable semiannually on each June 1 and December 1, commencing June 1, 2021. The Bond shall bear interest at the rates per annum provided in the debt service schedule attached as Exhibit A to this ordinance (computed on the basis of a 360-day year consisting of 12 30-day months) and interest shall accrue from the date of issuance of the Bond. The Bond shall be payable solely from the Revenue of the System as described herein and shall not be a general obligation of the City. on 5. Araiisf e. Sect Pursuant to 1RCW 39.46. the City's FinanceD rectorshall�serveas initial fi calf agent fo+r the City (the "Bond Registrar") with respect to the Bond and is authorized, on behalf of the City, to authenticate and deliver the Bond in accordance with the provisions of the Bond and this ordinance. The Bond 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 the Bond. Upon a determination by the Finance Director that maintenance of the duties of the Bond Registrar is no longer convenient, the Fiscal Agent shall act as Bond Registrar. Ordinance 3254 Page 5 of 14 The Bond 'Registrar shall keep, or cause to be kept, at its office, stifflicient, books for the registration, assignment or transfer of'the Bond, which books shall be open to inspection by the City at all times,, The Bond Registrar is authorized, on behalf of the City, to autheilticatc and deliver the Bond transferred or exchanged in accordance with the provisions ofthe Bond and this ordinance, to serve as the City's paying agent for the Bond and to carry out all of the Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bond. The Bond may be assigned or transferred only in whole by the Purchaser to a single investor that is a financial institution or an entity reasonably believed to be a qtIalified institutional buyer within the meaning of the applicable f"coleral securities laws. The transferee shall sign a certificate substantially in the form attached to the Bond. Any, transt"er shall be without cost to the owner or transferee, except for governinental charges irriposed on ally stiell transfer or exchange. The Bond Registrar shall not be obligated to exchange or transfer the Bond during the 15 days preceding any payment or prepayment date, When the Bond has been paid in full, both principal and interest, the Bond shall be, surrendered to the Bond Registrar, who shall cancel the Bond. Section 6. 1y 1 rneTIt oLlIond. Principal of and interest on the Bond shall be payable in lawfUl money of the United States of Arnet-ica. Principal of and interest on the Bond is payable by electronic transfer on the payment date, or by check or draft of the Bond Registrar mailed on the payinent date to the Registered Owner at the address appearing on the Bond Register. However, the City is not required to make electronic transfers except pursuant to a request by the Registered Owner in writing received on or prior to the payment date and at the sole expense of the Registered Owner. In addition, principal of the Bond is payable upon presentation and surrender of' the Bond by the Registered Owner to the Bond Registrar. The Bond is not subject to acceleration under any circumstances. Section 7. ILIrAc2U.nient. The City may Prepay the Bond, in whole or in part, at ally time, with at least 15 days' notice to the Purchaser. Any such prepayment will be applied to the earliest payments of principal due under the Bond, Each prepayment will be accorripanied by the amount of accrued interest on the amount prepaid and any prepayment made prior to the 10th principal payment date of the Bond will be accorriparried by a prepayincrit fee catcLilated by tile Purchaser. The prepayment fee will be eqt:ial to the present value of the difference, if positive, between (i) the sum of the interest payments that would have accrued dutingthe period 11orn the date of the prepayment to and including the 10th principal payment date of the Bond on each prepaid installment of principal at a fixed interest nate for such installment equal to the Original funding Rate, as if the prepayment had not been made, less (ii) tile sorill of the interest payments that would have accrued during such period oil each prepaid installment, of principal tit a fixed interest rate for such installment equal to the Reinvestment Rate, as if the prepayment had not been made. No prepayment fee will be required for any prepayments made on or after the 10th principal payment date of the Bond. The following definitions will apply to the calculation of the prepayment fee: (i) "Original Funding Rate" means with respect to any prepaid installment of principal, the Swap Ordinance 3254 Page 6 of']4 Rate on the date of issuance of the Bond for a term of 10 years, (ii) "Reinvestment Rate" means with respect: to any prepaid installment of principal, tile Swap Rate on time date the prepayment fee is calculated by the Purchaser for a term, interpolated, if necessary, corresponding to the period of time remaining until such principal installment was scheduled to be made, and (iii) "Swap Rate" means, as of any date, time offered fixed rate for a U.S. Dollar interest rate swap rate with a floating rate equal to the one-inonth LIBOR index, as determined by the Purchaser on such date by reference to the Bloomberg service or such other similar data source then used by the Purchaser for determining such rate; provided, that in the event that the one-month LIBOR index cannot be determined at the required time of determination, then the Swap Rate shall mean the offered fixed rate for a I. ,S. Dollar interest rate swap with as floating rate based on an index and any adjustment to reflect a different credit spread designated by the Purchaser as being the most economically comparable to the one-month LIBOR index prior to such event. SeejLo�n 8. LaikLle_to L Paly 11sq1tilnents. If any installment of principal and interest is .__ not paid when due, the City shall be obligated to pay interest oil that installment at the same rate provided in the Bond from and after its payment date until that installment, both principal and interest, is paid in full. Section 9. IL,�orm a�ndEx�ecution _of" Bond. The Bond shall be prepared in a form consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and City Clerk, either or both of whose signatures may be in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only the Bond 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 the fully registered City of Port Townsend, Washington, Water and Sewer Revenue Bond, 2020, described in the Bond Ordinance. By ISnecimen I Bond Registrar 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. In case either of the officers who shall have executed the Bond shall cease to be such officer of the City before the Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as biridijig upon, tile City as though those who signed the same had continued to be such officers of time City. The 13ond may also be signed and attested on behal r of the City by such persons as at the actual date of execution of such Bond shall be the proper officers of the City although at the original date of such Bond any such person shall not have been such officer of the City. Ordinance 3254 Page 7 of']4 Section 10 L30I dI tell � f yinents iplo Lona Fund, The Bond Fund shall be created in the office of the Finance Director, which fund is divided into the Debt Service Account and the Reserve Account. So long as the Bond is outstanding against the Bond Fund, the City shall set aside and pay into the Bond Fund all ULID Assessments on their collection and, out of the Net Revenue, certain fixed amounts without regard to any fixed proportion, namely: (a) Into the Debt Service Account prior to each payment date, an amount, together with other money on deposit therein, sufficient to pay the interest or principal and interest next coming due; and (b) Into the Reserve Account, the reserve requirement for the Bond, which shall be zero. The City may create a separate reserve account, or set a different reserve requirement for the Bond or any Future Parity Bonds, so long as such requirement is an amount equal to the lesser of (i) 125% of Average Annual Debt Service on such bonds secured by such reserve account, (ii) 10% of the original net proceeds of such series of bonds, and (iii) Maximum Annual Debt Service for such bonds secured by such reserve account. Except for withdrawals therefrom as authorized herein, a reserve account shall be maintained at such reserve requirement amount for the bonds secured by such account at all times so long as such bonds are outstanding. When the total amount in the Bond Fund shall equal the total amount of principal and interest for all otatstanding parity Bonds to the,: last maturity thereof, no further payment need be made into the Bond FLInd; provided, however, any such money so paid into the Bond Fund shall be used to retire the Parity Bunds at the earliest possible date. If there shall be a deficiency in the Debt Service Account in the Bond Fund to meet maturing installments of either principal or interest for the bonds secured by the reserve account, as the case may be, such deficiency shall be made up froni the reserve account by the withdrawal of cash therefTroaua for that purpose. Any deficiency created in a reserve account by reason of any such withdrawal shall then be made up from ULID Assessment payments and the Net Revenue first available after making necessary provisions for the required paaynacnts into the Debt Service Account. The money in a reserve account shall otherwise be held intact and may be applied againstthe last paymentof the bonds secured by such reserve account, except that if a reserve account is fully funded, any money in excess of"the reserve requirement may be withdrawn ,and expended for the purpose of prepaying the bonds secured by such reserve account or for any other lawful System purpose. The City naay provide for the ptarchase, redemption or defeasance of any Parity Bonds by the t in the Bond Fund as the oney thosesaccountsos suffiientin any to satisfy thearequi ed deposits natho those accounts for the remaining ni in money deposit remaining Parity Bonds outstanding. All money in the Bond Fund may be kept in cash or deposited iia ivastitutions permitted by laws of the Stave of Washington in an an aunt in each instittation not:greater than the amount insured by a state or the federal governnaet'at, or may be invested in readily marketable securities backed by the full faith andcredit of the United States of America maturing (or subject to sale by the City) maturing not later than the date when the funds are required for the payment of principal of or Ordinance 3254 Page 8 of 14 interest on any outstanding Parity Bonds (for investments in the Debt Service Account) or having a guaranteed redemption price prior to maturity and, in no event, maturing later thim the last mattirity of any remaining outstanding Parity Bonds (for investments in a reserve acCOL111t). Earnings from investments in the Debt Service Account shall be deposited in that account if* necessary to pay debt service and, if not, then into the Revenue Fund. Income from investments in a reserve account shall be deposited in that account until the amount therein is equal to the reserve requirement for the bonds secured by such reserve account or the reserve requirement of all Parity Bonds and thereafter shall be deposited in the Debt Service Account or the Revenue Fund. The City may create sinking fund accounts or other accounts 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 Parity Bonds. 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. Section 11 . Revenue l"Land,m blow ol' Funds. The Revenue Fund has previously been created in the office of the Finance Director as a special fund of the City designated the Water ,in(] Sewer Revenue Fund. All of the Revenue of the Systein shall be deposited in the I evenue Fund as collected, The Revenue l'und, shall be held separate and apart from all other funds and accounts of the City, and the Reveime of the System deposited in the Revenue Fund shall be used only for the following purposes and in the following order of priority: (a) To pay the Maintenance and Operation Costs of the System; (b) To pay the interest of any Parity Bonds; (c) To pay the principal of and any sinking fund requirements for any Parity Bonds; (d) To make all payments required to be made into the Reserve Account for the Parity Bonds; (e) To pay and secure obligations having a lien upon the Revenue of the System and the money in the Revenue Fund junior and inferior to the lien thereon for the payment of the principal of and interest on any Parity Bonds; and (f) To retire by redemption or purchase any outstanding revenue obligations of the City, to niake necessary additions, betterments, improvements, replacements and repairs to or extension of the System, or for any other lawful City purposes. S emotion l 2. Pled The Net Reverwe and ULID gg o( Revenue and Lien Position. Assessments are pledged to the payinent of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such Net Reventic and ULID Assessments prior and superior to any other charges whatsoever. Ordinance 3254 Page 9 of 14 Sectioaa 13 era ral mm oyenaua'ts• The City hereby covenants and agrees with the owners of Parity Bonds at any time outstanding, as follows: (a) It will establish, maintain and collect such rates and charges for water and sanitary sewage disposal service so long as the Bond or any of the Parity Bonds are outstanding which will make available for the payment of the principal of and interest on such bonds as the same accrue, together with the collection of other Net Revenue and of ULID Assessments, an amount equal to the Coverage Requirement. The failure to collect Revenue of the System in any fiscal year sufficient to comply with the covenant contained in this subsection shall not constitute an event of default if the City, before the 90th day of the following fiscal year, both (1) employs a professional utility consultant to recommend changes in the Cry's rates which are estimated to, produce Revenue of the System sufficient (once the rates reconiniende.d by such consultaaat have beeaa imposed by the City) to meet the requireanents of this subsection; and (2) imposes rates at least as high as those recommended by such professional utility consultant at the time or tames so recommended. (b) For as long as the Bond is outstanding, it will maintain cash reserves in accordance with the greater of (i) the City's liquidity policy or target,, or (ii) Maximum Annual. Debt Service on the Bond. If the City's cash reserves deviate below the aanaourat required, tiae. City shall provide a plan to the Purchaser to restore the cash reserves to the levels reasonably acceptable to the Purchaser, which acceptance will not be unreasonably withheld. (c) It will at all times maintain and keep the 'system in good repair, working order and condition, and also will at all times operate the Systeni and the business in coaanection therewith in an efficient manner and at a reasonable cost. (d) It will not sell, lease, mortgage, or in any manner encumber or dispose of all of the property of the System unless provision is made for the payment into the Bond Fund of an amount sufficient to pay the principal of and interest on the Parity Bonds then outstanding and that it will not sell, lease, mortgage, or in any manner encumber or dispose of any part of the property of the System in excess of 5% of the net utility value of the System that is used, useful and material to the operation thereof, unless provision is made for replacement thereof, or for payment into the Bond Fund of the total aaaaIo ant of revenue received from such disposition which shall not be less than ail amount which shall bear the same ratio to the amount of tlae Parity Bonds then outstanding as the Revenue of the Systein available for debt service for such outstanding bonds for the twelve months precedhig such sale, lease, eaacauaabrance or disposaa.l. from the portion of the System sold, leased, encumbered or disposed of bears to the Revenue available for debt service for the outstanding Parity Bonds from the entire System for the sarnc period. Any such money so paid into the Bond l-"und shall be used to retire the Parity Bonds at. the earliest possible date. (e) While any of the Parity Bonds remain outstanding, it will keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to the System, and it,will furnish the original purchaser or purchasers of the Parity Bonds or any subsequent owner or owners thereof, at the written request of such owner or owners, operating and income statements of the System in reasonable detail covering any calendar year when they are available. Ordinance 3254 Page 10 of'14 (f) Except to the poor and infirm and as authorized by State law, it will not furnish water or sanitary sewage disposal service to any customer whatsoever free of charge. (g) It will, carry the type of insurance on its Systeni property in the amounts normally carried by private water and se�ver utility companies engaged in the operfition of water and sewerage systems, and the cost of such inSUrance shall be considered pairt of the operating arld inaintaiiiing of such System or, in lieu thereof, may self-insure or participate in a joint intergovernmental insurance pool assuring the same coverage as is carried by such private water and sewerage companies. (h) It will pay all Maintenance and Operation Costs of the: System and the debt service requirements of the Parity Bonds and otherwise meet the obligations of the City as set forth in this ordinance. Section 14, t�tqure Pa -y�Lt 3qnds, The City reserves the right to issue Future Parity —L Bonds if the following conditions are inet and coliijilied with at the time of issuance of those additional bonds: (a) There shall be no deficiency in the Bond Fund. (b) The ordinance providing for the issuance of the l7titure Parity Bonds shalt provide that all assessments and interest thereon which niay be levied in any ULID created tbr the purpose ol*paying, in whole or in part, the principal of and interest on those Future Parity Bonds, shall be paid directly into the Bond Fund. (c) The ordinance providing for the issuance of such FLItUre parity Bonds shall provide for the payment (A'the principal thereof and interest thereon out of I lie Bond Fund. (d) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the payment of an amount equal to the reserve requirement for those Future Parity Bonds into the Reserve Account in the Bond Fund from the Future Parity Bond proceeds or, to the extent that reserve requirement, if any, is not funded from Future Parity Bond proceeds, 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 thatULID Assessments are insufficient, then from Net Revenue in five approximately equal amount payments, (e) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the payment of sinking fund requireirients into the Bond Fund for any Terni Bonds to be issued and for regular payments to be inadc for the payment of the principal of such Term Bonds on or before their maturity, or, as an alternative, the triandatory redemption of those '"J"crin Bonds prior to their maturity date from money in the Debt Service Account. (f) There shall be on file with the City either: (i) a certificate of the Finance Director of the City demonstrating that the Net Revenue for any 12 consecutive calendar months out of the immediately preceding 24 calendar months, together with the annual assessments reasonably anticipated to be collected in any ULID Ordinance 3254 Page 11 of 14 created to pay, in whole or in part, those Future Parity Bonds proposed to be issued, shall be equal to the Coverage Requirement for each year thereafter; or (ii) a certificate of a licensed professional engineer experienced in the design, construction and operation of municipal utilities, or froin a certified public accoutitut, showing that in his or her professional opinioii the Net Revenue for any 12 cotisectitive calendar molitlis out of the immediately preceding 24 calendar months, together with the annual assessments reasonably anticipated to be collected in any ULID created to pay, in whole or in part, those Future Parity Bonds proposed to be issued, shall be equal to the Coverage Requirement for each year thereafter. The certificate, in estimating the Net Revenue available for debt service, shall use the historical Net Revenue for any 12 consecutive months out of the 24 months immediately preceding the month of delivery of the Future Parity Bonds. Net Revenue may be adjusted to reflect: (A) Any changes in rates in effect and not being charged or expressly committed by ordinance to be made in the future; (B) Income derived from customers of the System that have become customers during the 12 consecutive month period or thereafter adjusted to reflect one year's net revenue from those customers; (C) Revenue from any customers to be connected to the System who have paid the required connection charges; (D) Revenue received or to be received which is derived from any person, firm, corporation or municipal corporation under any execLited contract for water, sewage disposal or other utility service, which revenue was not included in the historical Net Revenue; and (E) The engineer's or accountant's estimate of the Net Revenue to be derived from customers to connect within 30 days after the date of the certificate to any additions to and finprovenients and extensions of the System to be paid for out of"the proceeds ofthe sale of the additional Future Parity Bonds or other additions to and improvements and extension of the System then under construction and not fully connected to the facilities of the System when such additions, improvements and extensions are completed. If Future Parity Bonds proposed to be so issued are for the sole purpose of refunding outstanding water and sewer reN,eiiuc bonds, such certification of coverage shall not be required if the amouiit rcqtiired roi,- the, paynietit of the principal and iriterest in such year for the refunding bonds is not increased over the amount required fot- the bonds to be refLinded 'thereby and the maturities of such refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. Nothing herein contained shall prevent the City from issuing revenue bonds to refund or prepay maturing Parity Bonds for the payment of which money is not otherwise available. Ordinance 3254 Page 12 of 14 See Llq_1115 ,_JLU&aL 1 rc n l tarads. Nothing in this ordinance shall pi,evcntthc Cit)l frO1,11 issuing water and sewer revenue bonds or like obligations which are a charge upon the Rcvcnue of the System jLtnior or inferior to the charge thereon of the 11arity Bonds or frorn pledging the payment of assessments into a fund or account created to pay and secure the payment of" the principal of and interest oil such junior lien bonds or obligations as long as stich assessments are levied in a utility local improvement district or districts, created in, coiniection with carrying out the improvements to be constructed from the proceeds of tile sale of such junior lien bonds or obligations. Section 16. Ap ...... ILI ieqtion of l oraol jrocc.eds. The Finance Director of the City is hereby a,Mthorized to deposit proceeds of"the Bond into (lie Pro�ject Fund created by the Note Ordinance to be used inimccliately to repay the Note ptirstiant to the terms of the Note Ordinance, and to pay the costs of issuing the Bond. Any proceeds of the Bond remaining after repayment of the Note and payment of costs of issuance may be used for the Projects. ea c.(Lof...tau 11L)D4. The City may issue refunding see Li(n-LT L�e—ft I�1—d—h 19—P Irl)e C bonds pursuant to the laws of the State or use money available from any other lawful source to pay when due the principal of and interest on any Bond, or any portion thereof included in a refunding or defeasance plan, and to redeem and retire, refund or defease all of the principal amount of such Bond (hereinafter collectively called the "defeased Bond") and to pay the costs of the refunding or defeasance. If money and/or noncallable "government obligations" (as defined by chapter 39.53 RCW) maturing at a time or times and bearing interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or defease the defeased Bond in accordance with its terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or defeasance of the defeased Bond (hereinafter called the "trust account"), then all right and interest of any Registered Owner of the defeased Bond in the covenants of this ordinance and in the funds obligated to the payment of the defeased Bond shall cease and become void. Any Registered Owner of the defeased Bond shall have the right to receive payment of the principal of and interest on the defeased Bond from the trust account. The City shall include in the refunding or defeasance plan such provisions as the City deems necessary for notice of the defeasance to be given to any Registered Owner of the defeased Bond and to such other persons as the City shall determine, and for any required replacement of a Bond certificate for the defeased Bond. The defeased Bond 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 Bond to any lawful purposes as it shall determine. Stign 18. 14 2 i-Co—v�-1 la I—ItS- (a) Preservation of Tax Exemption for Interest on the Bond. The City covenants that it will take all actions necessary to prevent interest on the Bond 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 Bond or other funds of the City treated as proceeds of the Bond that will cause interest on the Bond 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 Bond, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with the Bond. ordinance 3254 Page 13 of 14 (b) Post-Issuance ConqViance. The 1,"in,,ince Director is authorized and directed to review and update, if necessary, the City's written procedures to facilitate compliance by the City with the covenants in this ordinance and the applicable rcqL1irCJ11CJltS of the Code that must be satisfied after the Issue Date to prevent interest oil the Bond from being included in gross income for federal tax purposes. (c) Desi , The City nation of the Bond as a "Quali led Tax-Exenyw Obh� designates the Bond as a"qualified tax-exempt obligation", liar the purposes ol'Section 265(b)(3) of the Code, and makes the following findings and determinations: (i) the Bond does not constitute a "private activity bond" within the meaning of Section 141 of the Code; (ii) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) that the City an(] any entity 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) will issue during the calendar year in which the Bond is issued will not exceed $10,000,000; and (iii) the amount of tax-exempt obligations, including the Bond, designated by the City as "clualified tax-exempt obligations" for the purposes of'Section 265('b)(3) of the Code during the calendar year in which the Bond is issued does not exceed $10,000,000. Se&J�LjLl 9. Sale oaf thellond. The Bond shall be sold to the Purchaser at a price of par on the terms and conditions set forth herein; the City will furnish the Bond and the approving legal opinion of Foster Garvey P.C., municipal bond counsel, relative to the iSSLIallCe, of the Bond, at the City's expense. The proper officials of the City are hereby authorized and directed to do all things necessary for the prompt execution and delivery of the Bond and the items required to be delivered to the Purchaser and for proper use and application of tile,proceeds of sale thereof. Section 20. &1jortii1g, Re(It-iirernents. While the Bond is outstanding, the City shall submit to the Purchaser its annual financial reports within 30 days after receipt of such annual financial report from the Washington State Auditor and such additional information as the Purchaser may reasonably request. Section 21. Covera in Law. The Bond shall be governed and interpreted according to the laws of Washington. S c cfLo ij 2 2, jeneral.-A-uAlor 7,ati()n and R, Q jatification. The Mayor, Finance Director, City Clerk and other appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their Judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of the Bond to the Purchaser thereof and for the proper application, use and investment of the proceeds o�f the Bond. All actions taken prior to the e0ective date of this Ordinance 3254 Page 14 of 14 ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. Section 23. Severability. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent Jurisdiction to be contrary to 'law, then such covenant or covenants, agrecnlent or agreements, shall be null and void and shall be deemed separablefrom the remaining covenants and agreenients in this ordinance and shall in no way al"fcct the validity of the other provisions of this ordinance. Section 24. Effective Date. This ordinance shall be effective five days from and after its passage, approval and publication as required by law. ADOPTED by the Council of the City of Port Townsend, Washington, at a regular meeting thereof held this 19"' day of October 2020. Micicllc Sandoval Mayor Attest: Approved as to Form: Jt>an < Sanders, MMC ei m Green ood City Clerk City Attorney Ordinance 3254 Exhibit A Page 1 of 1 EXHIBIT A DEBT SERVICE SCHEDULE 685.91 � $ 20otal Interest Rate Interest 1/2021 e..� � Principal� n....�...u.. ._._ .. . ... Payment $ 20, ,685 91 12/01/2021 $ 80,180 0.92% 18,075.07 98,255.07 06/01/2022 -- 17,706.24 17,706.24 12/01/2022 83,500 0.97 17,706.24 101,206.24 06/01/2023 17,301.27 17,301.27 12/01/2023 84,300 1.02 17,301.27 101,601.27 06/01/2024 -- 16,871.34 16,871.34 12/01/2024 85,200 1.13 16,871.34 102,071.34 06/01/2025 -- 16,389.96 16,389.96 12/01/2025 86,100 1.24 16,389.96 102,489.96 06/01/2026 -- 15,856.14 15,856.14 12/01/2026 87,200 1.38 15,856.14 103,056.14 06/01/2027 -- 15,254.46 15,254.46 12/01/2027 88,400 1.51 15,254.46 103,654.46 06/01/2028 -- 14,587.04 14,587.04 12/01/2028 89,700 1.67 14,587.04 104,287.04 06/01/2029 -- 13,838.04 13,838.04 12/01/2029 91,200 1.80 13,838.04 105,038.04 06/01/2030 -- 13,017.24 13,017.24 12/01/2030 92,900 1.89 13,017.24 105,917.24 06/01/2031 -- 12,13 9.34 12,13 9.34 12/01/2031 94,600 2.00 12,139.34 106,739.34 06/01/2032 -- 11,193.34 11,193.34 12/01/2032 96,500 2.08 11,193.34 107,693.34 06/01/2033 10,189.74 10,189.74 12/01/2033 98,500 2.18 10,189.74 108,689.74 06/01/2034 -- 9,116.09 9,116.09 12/01/2034 100,700 2.26 9,116.09 109,816.09 06/01/2035 -- 7,978.18 7,978.18 12/01/2035 103,000 2.33 7,978.18 110,978.18 06/01/2036 -- 6,778.23 6,778.23 12/01/2036 105,400 2.39 6,778.23 112,178.23 06/01/2037 -- 5,518.70 5,518.70 12/01/2037 107,900 2.42 5,518.70 113,418.70 06/01/2038 - 4,213.11 4,213.11 12/01/2038 110,500 2.45 4,213.11 114,713.11 06/01/2039 _- 2,859.48 2,859.48 12/01/2039 113,200 2.48 2,859.48 116,059.48 06/01/2040 -_ 1,455.80 1,455.80 12/01/2040 1 , 7,455.80 -- $1,914,980 2.51 ��$463,288.46 $2,378�� . ,268.46 Ordinance 3254 Certification Page 1 of 1 CERTIFICATION I, the undersigned, City Clerk of the City of Port Townsend, Washington, (the "City") and keeper of the records of the City Council (the "Council"), hereby certifies as follows: 1. The attached copy of Ordinance No. 3254 of the Council (the "Ordinance"), is a full, true and correct copy of an ordinance duly passed at a regular meeting of the Council held at the regular meeting place thereof on October 19, 2020, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect five days after publication in the City's official newspaper. 2. That said meeting was duly convened and held in all respects in accordance with law (including Proclamation 20-28 made by the Governor of the State of Washington on March 24, 2020, as extended, and acts of the legislative leadership of the State of Washington') and to the extent required by law, due and proper notice of such ineeting NA,a$ given; that a quorum of the members of the Council was present throughow the meeting and a legally sufficient number of members of the Council voted in the proper manner f=or the passage of the Ordinance; that all other requirements and proceedings incident to the proper adoption or passage of said Ordinance have been duly fulfilled, carried out and otherwise observed, and that I am authorized to execute this certificate. 3. That said meeting was duly convened and held in all respects in accordance with law, and to the extent recluuired by law, due and proper notice of such meeting was given; that a quorum was present th:rouughout the meeting and a legally sufficient nonnber of members of the Council voted in the proper manner for the passage of the Ordinance; that all other requirements and proceedings incident to the proper passage of the Ordinance have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand this 19t" day of October, 2020. CITY OF PORT TOWNSEND, WASHINGTON City Clerk