HomeMy WebLinkAbout2625 Issuance of Water & Sewer Revenue Refunding Bonds to Finance Capital Improvements
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CITY OF PORT TOWNSEND, WASHINGTON
WATER AND SEWER REVENUE AND
REFUNDING BONDS, 1998
ORDINANCE NO. ~ & ')- .5
An ordinance providing for the issuance of $5,950,000 of water and sewer
revenue and refunding bonds to obtain the funds to refund a portion of the
City's outstanding water and sewer revenue bonds and to finance capital
improvements; fixing the date, form, maturities, terms and covenants of the
bonds; and providing for the sale of such bonds.
Passed: January 22, 1998
PREP ARED BY:
PRESTON GATES & ELLIS LLP
701 Fifth Avenue
5000 Columbia Seafirst Center
Seattle, Washington 98104-7078
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TABLE OF CONTENTS
Page
Section 1. Definitions. .. ......... .. . .. . . . . ........... . .... .. . . .. .. . . . .. ..... .. .. . . . . . . .. . . . . ... ......... ...... .......... .... .. . . . 1
Section 2. Approval of Project; Compliance with Parity Conditions....................................... 8
Section 3. Authorization of the Bonds.......... ....... ...... ................ .............. ......... .... .................9
Section 4. Book -Entry;. Exchanges and Transfers..........................................··.·······...········· 10
Section 5. Payment of Bonds and Interest............... ............................. ........ .......... .............13
Section 6. Redemption.. . . . . . . ....... . .. .. . . . . .. . . ... . . . .. . . ..,... .. ..... . . . . . . . . . . . . ... . . . ..... .. ...:. ... . .. ........ ... .. .... 14
Section 7. Revenue Fund.....................................................·..············································ 17
Section 8. Bond Fund ........ .... ..... .................. .... ...... ..... .................... ...... ............................ .18
Section 9. Covenants and Agreements......................................................··························· 21
Section 10. Special Designation.............................................................······························· 23
Section 11. Revenue Pledge......................................................············································ 24
Section 12. Arbitrage Rebate...................................................············································· 24 .
Section 13. Application of Bond Proceeds....................................:.....................·················· 24
Section 14. Defeasance. .. . . . . . . . . . . . ... ..... . ... .,. . . . .... . ... .. . . . . . . . . . . . . . . . .... .. ... . .. . ............... . . .... .. . . ... .. . .. ..24
Section 15. Future Parity Bonds.................................................·.········································· 25
Section 16. Form of the Bonds.................. ............. ............................... ... ............................. .28
Section 17. Execution and Authentication of the Bonds ........................................................34
Section 18. Lost or Stolen Bonds... ....... ............................ ......... ..... ... .... ....... ...... ............ ... ... 35
Section 19. Bond Registrar.................................. ~. . . . . ........ . . ... . . ... . . .. ........... ...... ..... . . . .. . .. . ... . ..35
Section 20. Undertaking to Provide Ongoing Disclosure...............................................·..·.... 3 5
Section 21. Advance Refunding Account.............................................·........·......................· 37
Section 22. Redemption of Refunded Bonds.............................................············· ...............39
Section 23. Findings of Savings and Defeasance................ .......... ......... ... .................... .... ..... .40
Section 24. Acceptance of Insurance; Payments Under Bond Insurance................................. 41
Section 25. Rights of Insurer....................................,......................······································ 45
Section 26. Sale of Bonds; Official Statement .......................................................................46
Section 27. Supplements and Amendments.............................................··.··························· 47
Section 28. Authorization to Officials and Agents..............................................................··· 48
Section 29. Severability........................................... ............................................................... 48
Section 30. Ratification.........................................................················································ 48
Section 31. Effective Date..........................................................·········································· 49
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CITY OF PORT TOWNSEND, WASHINGTON
ORDINANCE NO.
An ordinance providing for the issuance of $5,950,000 of water and sewer
revenue and refunding bonds to obtain the funds to refund a portion of the
City's outstanding water and sewer revenue bonds and to finance capital
improvements; fixing the date, form, maturities, terms and covenants of the
bonds; and providing for the sale of such bonds.
WHEREAS, the City of Port Townsend owns, operates and maintains a combined water
supply and distribution system and a sanitary sewage disposal system (the "System"); and
WHEREAS, the Council has approved a plan to upgrade the transmission line that links
the City's water supply to its distribution system and upgrades to the source of water supply and
water storage capacity for the City's customers located beyond the City's limits; and
WHEREAS, the City issued, pursuant to Ordinance No. 1814, $865,000 of Water and
Sewer Revenue Bonds, 1978 (the "1978 Bonds"); and
WHEREAS, the City issued, pursuant to Ordinance No. 2305, $6,820,000 of Water and
Sewer Revenue Bonds, 1992 (the" 1992 Bonds"); and
WHEREAS, it appears to the City that the 1978 Bonds and the callable portion of the
1992 Bonds may be refunded to realize a savings and that it is in the best interest of the City to
finance the improvem.ents to the System by the issuance of $5,950,000 aggregate principal
amount of revenue bonds (the "Bonds") to be issued with a lien on the revenues of the System on
a parity with the non-refunded 1992 Bonds;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT TOWNSEND,
~ ASHINGTON, ORDAINS, as follows:
Section 1.
Definitions. As used in this ordinance the following words shall have the
following meanings:
"Acquired Obligations" means the obligations acquired pursuant to Section 21 hereof to
refund the Refunded Bonds.
"Advance Refunding Account" means the City of Port Townsend Water and Sewer
Revenue Bond Advance Refunding Account established by Section 21 hereof.
"Ambac Assurance" means Ambac Assurance Corporation, a Wisconsin-domiciled stock
msurance company.
"Annual Debt Service" for any fiscal year or calendar year means the sum of
(a) the interest due in such year on all outstanding Parity Bonds excluding,
however, interest to be paid from the proceeds of Parity Bonds,
(b) the principal of all outstanding Serial Bonds due in such year, and
(c) the Sinking Fund Requirement, if any, for such year, calculated as of the
Sinking Fund Requirement Date for such year.
If the interest rate on any such bonds is other than a fixed rate, the rate applicable at the
time of the computation shall be used.
"Arbitrage Rebate and Investment Accounting Certificate" means the certificate executed
by the City setting forth the methodology for computation of Reba table Arbitrage.
"Assessment Income" means the principal of and interest on assessments to be collected in
utility local improvement districts in which assessments have been levied and pledged to be paid
into the Bond Fund. Assessment Income shall be allocated to the years in which it would be
received if the unpaid balance of each assessment roll were paid in the remaining number of
installments with interest on the declining balance at' the times and at the rate provided in the
ordinance confirming the assessment roll.
"Assessments" means assessments (including interest and penalties) levied in any utility
local improvement district of the City for the acquisition or construction of additions and
improvements to and extensions of the System, if such assessments are pledged to be paid into the
Bond Fund.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on outstanding Parity Bonds from the date of determination to
the last maturity date of such Parity Bonds, by (b) the number of fiscal years or calendar years
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from and including the fiscal year or calendar year in which the determination is made to the last
fiscal year or calendar year in which the sum of (i) the principal amount of Serial Bonds maturing
in such fiscal year plus (ii) the Sinking Fund Requirement for such fiscal year, exceeds 4% of the
principal amount· of Parity Bonds outstanding as of the. date of determination.
"Bond Fund" means the Water and Sewer Revenue Bond Fund created by Ordinance
No. 2305.
"Bond Registrar" means either of the fiscal agencies of the State of Washington in the
cities of Seattle, Washington, or New York, New York, in their capacity as registrar and paying
agent for the Bonds.
"Bonds" means the $5,950,000 par value of "Water and Sewer Revenue and Refunding
Bonds, 1998" of the City authorized by this ordinance.
"1978 Bonds" means the outstanding "Water and Sewer Revenue Bonds, 1978" issued
pursuant to Ordinance No. 1814.
"1992 Bonds" means the outstanding "Water and Sewer Revenue Bonds, 1992" issued
pursuant to Ordinance No. 2305.
"CiLy" means the City of Port Townsend, Washington.
"Code" means the federal Internal Revenue Code of 1986, as amended, and applicable
regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Costs of Maintenance and Operation" means all necessary operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, and insurance and
administrative expenses, but excludes depreciation, payments for debt service or into reserve
accounts and costs of capital additions to or replacements of the System, taxation by the City or
payments in lieu of taxes.
"DTC" means The Depository Trust Company, New York, New York.
"Escrow Agent" means Chase Manhattan Trust Company, National Association.
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"Escrow Agreement" means the agreement between the City and the Escrow Agent
entered into pursuant to Section 22 hereof.
"Future Parity Bonds" mean all revenue bonds of the City issued after the date of issuance
of the Bonds and having a lien upon the money in the Revenue· Fund for the payment of the
principal thereof and interest thereon equal to the lien upon the money in such Fund for the
payment of the principal of and interest on the 1992 Bonds and the Bonds.
"Government Obligations" has the meaning given to such term in RCW Chapter 39.53, as
the same may be amended from time to time.
"Gross Revenue" means all earnings, revenue and moneys, except Assessments, received
by the City from or on account of the operation of the' System, including proceeds from the sale,
lease or other disposition of any of the properties or facilities of the System, and the income from
investments of money in the Revenue Fund and any bond fund or from any other investment
thereof except the income from investments irrevocably pledged to the payment of revenue bonds
pursuant to a plan of retirement or refunding. The words "Gross Revenue" shall also include
federal or state reimbursements of operating expenses to the extent such expenses are included as
"Costs of Maintenance and Operation."
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
"Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by
Ambac Assurance insuring the payment when due of the principal of and interest on the Bonds as
provided therein.
"NRMSIR" means a nationally recognized municipal securities information repository.
"Net Revenue" means the Gross Revenue less the Costs of Maintenance and Operation.
"Parity Bonds" means the 1992 Bonds, the Bonds and any Future Parity Bonds at any time
hereafter remaining outstanding.
"Permitted Investments" means any investments. permitted under the laws of the State of
Washington as amended from time to time; provided, that, so long as the 1992 Bonds or the
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Bonds are outstanding and are insured by Ambac Assurance Corporation, "Permitted
Investments" means:
(1) Cash (insured at all times by the Federal Deposit Insurance Corporation or
otherwise collateralized with obligations described in paragraph (4) below;
(2) Direct obligations of (including obligations issued or held in book-entry form on
the books of) the Department of the Treasury of the United States of America;
(3) Obligations of any of the following federal agencies which obligations represent
full faith and credit of the United States of America, including:
(a) Export-Import Bank,
(b) Farm Credit System Financial Assistance Corporation,
(c) Rural Economic Community Development Administration (formerly the
Farmers Home Administration),
(d) . General Services Administration,
(e) U.S. Maritime Administration,
(f) Small Business Administration,
(g) Government National Mortgage Association (GNMA),
(h) U.S. Department of Housing & Urban Development (PHA's),
(i) Federal Housing Administration, and
G) Federal Financing Bank;
(4) Direct obligations of any of the following federal agencies which obligations are
not fully guaranteed by the full faith and credit of the United States of America:
(a) Senior debt obligations rated "Aaa" by Moody's Investors Service
("Moody's") and "AAA" by Standard and Poor's Ratings Services, a
Division of the McGraw-Hill Companies, Inc. ("S&P") issued by the
Federal National Mortgage Association (FNMA) or Federal Home Loan
Mortgage Corporation (FHLMC),
(b) Obligations of the Resolution Fl.1ndingCorporation (REFCORP),
(c) Senior debt obligations of the Federal Home Loan Bank System, and
(d) Senior debt obligations of other Government Sponsored Agencies
approved by Ambac Assurance;
(5) U.S. dollar denominated deposit accounts, federal funds and banker's acceptances
with domestic commercial banks which have a rating on their short term
certificates of deposit on the date of purchase of" A-I" or "A-l +" by S&P and "P-
1" by Moody's and maturing no more than 360 days after the date of purchase.
(Ratings on holding companies are not considered as the rating ofthe bank);
(6) Commercial paper which is rated at the time of purchase in the single highest
classification, "A-l+" by S&P and "P-l" by Moody's and which matures not more
than 270 days after the date of purchase;
(7) Investments in a money market fund rated "AAAm" or "AAAm-G" or better by
S&P;
(8) Pre-refunded municipal obligations defined as follows: any bonds or other
obligations of any state of the United States of America or of any agency,
instrumentality or local governmental unit of any such state which are not callable
at the option of the obligor prior to maturity or as to which irrevocable instructions
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have been given by the obligor to call on the date specified in the notice; and
(a) which are rated, based on an irrevocable escrow account or fund (the
"escrow") , in the highest rating category of S&P and Moody's or any successors
thereto; or (b )(i) which are fully secured as to principal and interest and
redemption premium, if any, by an escrow consisting only of cash or obligations
described in paragraph (2) above, which fund may be applied only to the payment
of such principal of and interest and redemption premium, if any, on such bonds or
other obligations on the maturity date or dates thereof or the specified redemption
date or dates pursuant to such irrevocable instructions, as appropriate, and
(ii) which fund is sufficient, as verified by a nationally recognized independent
certified public accountant, to pay principal of and interest and redemption
premium, if any, on the bonds or other obligations described in this paragraph on
the maturity date or dates specified in the irrevocable instructions referred to
above, as appropriate;
(9) General obligations of States with a rating of at least "A2/A" or higher by both
Moody's and S&P;
(10) Investment agreements approved in writing by Ambac Assurance with notice to
S&P;
(11) The Washington State investment pool; and
(12) Other forms of investments (including repurchase agreements) approved in writing
by Ambac Assurance with notice to S&P.
"Value" of Permitted Investment, which shall be determined as of the end of each month,
means that the value of any investments shall be calculated as follows:
(a) ·as to investments the bid and asked prices of which are published on a
regular basis in The Wall Street Journal (or, if not there, then in The New
York Times): the average of the bid and asked prices for such investments
so published on or most recently prior to such time of determination;
(b) as to investments the bid and asked prices of which are not published on a
regular basis in The Wall Street.Journal or The New York Times: the
average bid price at such time of determination for such investments by any
two nationally recognized government securities dealers (selected by the
City in its absolute discretion) at the time making a market in such
investments or the bid price published by a nationally recognized pricing
servIce;
( c) as to certificates of deposit and bankers acceptances: the face amount
thereof, plus accrued interest; and
(d) as to any investment not specified above, the value thereof established by
prior agreement between the City and Ambac Assurance.
"Purchaser" means Seattle-Northwest Securities Corporation, of Seattle, Washington.
"Qualified Insurance" means any unconditional municipal bond insurance policy or surety
bond issued by any insurance company licensed to conduct an insurance business in any state of
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the United States or by a service corporation acting on behalf of one or more such insurance
companies, which insurance company or service corporation is rated in one of the two highest
rating categories by either Moody's or S&P, provided, that, as of the time of issuance' of such
policy or surety bond, such insurance company or companies maintain a policy owner's surplus in
excess of $500,000,000.
"Qualified Letter of Credit" means any irrevocable letter of credit issued by a bank for the
account of the City and for the benefit of the owners of the Parity Bonds, provided that such bank
maintains an office, agency or branch in the United States, and provided further, that, as of the
time of issuance of such letter of credit, such bank is currently rated in one of the two highest
rating categories by either Moody's or S&P.
"Rebatable Arbitrage" means the amount, if any, required to be paid pursuant to
Section 148(f) of the Code.
"Refunded Bonds" means the 1978 Bonds and the 1992 Bonds maturing on and after
December 1, 2003.
"Reserve Account" means that account in the Bond Fund.
"Reserve Account Requirement" means, with respect to any Parity Bonds, an amount
equal to the lesser of (a) 125% of Average Annual Debt Service on such bonds, (b) 10% of the
net proceeds of such series of bonds, and (c) maximum Annual Debt Service.
"Revenue Fund" means the special fund of the City designated the Water and Sewer Fund.
'''Rule'' means the Commission's Rule 15c2-12 under the Securities and Exchange Act of
1934, as the same may be amended from time to time.
"SID" means a state information depository for the State of Washington (if one IS
created).
"Serial Bonds" means Parity Bonds other than Term Bonds.
"Sinking Fund Requirement" means, for any fiscal year or calendar year, the principal
amount of Term Bonds required to be purchased, redeemed or paid at maturity in such year as
established by the ordinance of the City authorizing the issuance of suchT erm Bonds.
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"System" means the existing water and sewer system of the City, as such system may be
added to, improved and extended for as long as any of the Bonds are outstanding: It is hereby
provided, however, that the System shall not include that part of the water supply and distribution
system of the City leased to Port Townsend Paper Corporation. The "System" shall include any
surface or storm water drainage utility of the City if the City Council shall determine by ordinance
to combine such drainage utility with the System.
"Term Bonds" means the Bonds maturing in 2011 and 2017 and any Future Parity Bonds
identified as Term Bonds in the ordinance authorizing the issuance thereof, the payment of the
principal of which is provided for by a mandatory schedule of deposits of money equal (in the
aggregate) to the full principal amount of such Term Bonds, into the Bond Fund, and by a
mandatory redemption schedule corresponding (as to time and amounts) to such mandatory
schedule of deposits.
Section 2. Approval ofProiect: Compliance with Parity Conditions.
A. Approval of Proiect. The Council finds that it is in the best interest of the
City to undertake the following plan of improvements to the System (the "Project"):
1. An upgraded transmission line which links the City's water supply
to its' distribution system. This transmission line meets the requirement of a Department of Health
order to increase the amount of chlorine contact time before water arrives to the first retail City
customer.
2. Upgrades to the source of supply and water storage capacity for the
City's customers located beyond the city limits. These customers are served with a different
source of water supply than City customers, and their rates reflect the cost-to-serve differential.
3. Other system improvements as determined by the City Council.
The estimated cost of these improvements is $1,000,000.
B. Compliance with Parity Conditions. The City Council hereby makes the
following findings and determinations as required by Ordinance No. 2305:
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FIRST, at the time of the passage of this ordinance and at the time of the issuance
of the Bonds, there is not nor will there be any deficiency in the Bond Fund or the Reserve
Account and all payments to the Bond Fund required to be made by Ordinance No. 2305 shall
have been made;
SECOND, the Bonds are being issued for the purpose of financing capital
improvements and refunding outstanding Bonds and at the issuance of the Bonds the City will
have on file a certificate of an engineer as required by Ordinance No. 2305; and
THIRD, both the principal of and interest on the Bonds are payable out of the
Bond Fund, and this ordinance provides for the payments into the Reserve Account required by
Ordinance No. 2305.
The limitations and conditions contained in Ordinance No. 2305 having been complied
with in the matter of the issuance of the Bonds, the payments required by this ordinance to be
made into the Bond Fund and accounts therein for the purpose of paying and securing the
payment of the principal of and interest on the Bonds shall constitute, a lien upon the Net
Revenues equal in rank to the lien and charge thereon of the payments required to be made into
the Bond Fund to pay and secure the payment of the principal of and interest on the outstanding
1992 Bonds.
Section 3. Authorization of the Bonds. For the purpose of financing the Project,
refunding the Refunded Bonds and paying all costs incidental thereto and to the issuance of the
Bonds, the City shall issue and sell its Water and Sewer Revenue and Refunding Bonds, 1998 in
the principal amount of $5,950,000. The Bonds shall be dated February 1, 1998; shall be fully
registered; shall be in the denomination of $5,000 each or any integral multiple of $5,000; shall
bear interest payable semiannually on the first days of December and June of each year,
commencing June 1, 1998 at the following rates and shall mature on December 1 of each of the
following years and in the following amounts:
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Maturity Years Amounts Interest Rates
1998 $ 235,000 4.00%
1999 80,000 4.00
2000 80,000 4.00
2001 80,000 4.00
2002 90,000 4.00
2003 415,000 4.10
2004 430,000 4.10
2005 455,000 4.10
2006 470,000 4.20
2007 485,000 4.30
2008 510;000 4.30
2009 530,000 4.40
2011 1,140,000 4.65
2012 610,000 4.70
2017 340,000 4.80
Both principal of and interest on the Bonds shall be payable in lawful money of the United States
of America to the registered owner or owners thereof. Interest on the Bonds shall be paid by
check or draft mailed to the registered owners or assigns at the addresses appearing on the
records maintained by the Bond Registrar as of the 15th day of the month preceding the interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the
Bonds to the Bond Registrar by the registered owners. Principal of and interest on the Bonds are
payable solely out of the Bond Fund at the offices of the Bond Registrar in Seattle, Washington or
New York, New York. The Bonds shall be numbered and bear such additional designation as the
Bond Registrar shall determine.
Section 4.
Book-Entry: Exchanges and Transfers. The initial Bond Registrar shall be
the fiscal agencies for the State of Washington in Seattle, Washington, and New York, New
York.
The Bonds initially shall be held in fully immobilized form by DTC acting as depository
pursuant to the terms and conditions set forth in the form of blanket Letter of Representations.
The Bonds shall be issued in denominations equal to the aggregate principal amount of each
maturity and initially shall be registered in the name of CEDE & Co., as the nominee ofDTC.
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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 accuracy of any
records maintained by DTC or any DTC participant as to the Bonds, the payment by DTC or any'
DTC participant of any amount in respect of the principal or redemption price of or interest on the
Bonds, any notice that is permitted or required to be given to registered owners under this
ordinance (except any such notices as shall be required to be given by the City to the Bond
Registrar or to DTC), the selection by DTC or any DTC participant of any person to receive
payment in the event of a partial redemption of the Bonds or any consent given or other action
taken by DTC as the registered owner of the Bonds. For so long as any Bonds are held in fully
immobilized form hereunder, DTC or its successor depository shall be deemed to be the
registered owner for all purposes hereunder, and all references in this ordinance to registered
owners, bondowners or the like shall mean DTC or its nominee and shall not mean the owners of
any beneficial interests in the Bonds.
A. The Bonds shall be registered initially in the name of "CEDE & Co.," as
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a
denomination corresponding to the total principal amount herein designated to mature on such
date. Purchases of the Bonds may be made through brokers and dealers, who must be or act
through participants in DTC, in principal amounts of $5,000 and integral multiples thereof.
Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be
transferred except (i) to any successor of DTC or its nominee, provided that any such successor
shall be qualified under any applicable laws to provide the service proposed to be provided by it;
(ii) to any substitute depository appointed by the City pursuant to subsection B below or such
substitute depository's successor; or (iii) to any person as provided in subsection D below.
B. Upon the resignation ofDTC or its successor (or any substitute depository
or its successor) from its functions as depository or a determination by the City that it is no longer
in the best interests of owners of beneficial interests in the Bonds to continue the system of book-
entry transfers through DTC or its successor (or any substitute depository or its successor), the
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City may appoint a substitute depository or terminate the use of a depository. Any such substitute
depository shall be qualified under any applicable laws to provide the services proposed to be
provided by it.
C. In the case of any transfer pursuant to clause (i) or (ii) of subsection A
above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written
request on behalf of the City, issue a single new Bond for each maturity of such Bonds then
outstanding, registered in the name of such successor or such substitute depository, or their
nominees, as the case may be, all as specified in such written request of the City.
D. In the event that (i) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository or (ii) the City determines that it is in the best
interests of the City or the beneficial owners of the Bonds that they be able to obtain bond
certificates, the ownership of Bonds may then be transferred to any person or entity as herein
provided, and the Bonds shall no longer be held in fully immobilized form. The City shall deliver
a written request to the Bond Registrar together with a supply of definitive Bonds, to issue Bonds
as herein provided in any authorized denomination. Upon receipt of all then outstanding Bonds
by the Bond Registrar together with a written request on behalf of the City to the Bond Registrar,
new Bonds shall be issued in such denominations and registered in the names of such persons as
are specified in such written request.
E. As long as DTC or its successor (or substitute depository or its successor)
is not the registered owner of the Bonds, any Bond may be transferred pursuant to its provisions
at the principal office for such purpose of the Bond Registrar by surrender of such Bond for
cancellation, accompanied by a written instrument of transfer, in form satisfactory to the Bond
Registrar, duly executed by the registered owner in person or by his or her duly authorized
attorney, and thereupon the City will issue and the Bond Registrar will authenticate 'and deliver at
the principal office of the Bond Registrar (or send by registered or first class insured mail to the
owner thereof at his or her expense), in the name of the transferee or transferees, a new Bond of
the same interest rate, principal amount and maturity, and on which interest accrues from the last
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interest payment date to which interest has been paid so that there shall result no gain or loss of
interest as a result of such transfer, upon payment of any applicable tax or governmental charge.
To the extent of denominations authorized in respect of any such Bond by the terms of this
ordinance, one such Bond may be transferred for several such Bonds of the same interest rate and
maturity, and for a like aggregate principal amount, and several such Bonds of the same interest
rate and maturity may be transferred for one or several such Bonds, respectively, of the same
interest rate and maturity and for a like aggregate principal amount.
Upon the request of the City, the Bond Registrar shall notify the City of all registrations of
Bonds and all changes in registrations of Bonds. The Bond Registrar shall maintain the
registration books on behalf of the City and make copies thereof available to the City on request.
In every case of a transfer of any Bonds, the surrendered Bonds shall be canceled by the
Bond Registrar and a certificate evidencing such cancellation shall be promptly transmitted by the
Bond Registrar to the City. As a condition of any such transfer, the City, at its option, may
require the payment by the transferor of a sum sufficient to reimburse it for any tax or other
governmental charge that may be imposed thereon. All Bonds executed, authenticated and
delivered in exchange for or upon transfer of Bonds so surrendered shall be valid obligations of
the City evidencing the same debt as the Bonds surrendered, and shall. be entitled to all the
benefits and protection of this ordinance to the same extent as the Bonds upon transfer of which
they were executed, authenticated and delivered.
Section 5. Payment of Bonds and Interest. The principal of, premium, if any, and
interest on the Bonds shall be paid in lawful money of the United States of America. For so long
as all outstanding Bonds are registered in the name of CEDE & Co. or its registered assign,
payments of principal and interest thereon shall be made as provided in the Letter of
Representations. All such payments shall be valid and shall satisfy and discharge the liability of
the City upon such Bonds to the extent of the amount or amounts so paid.
In the event that the Bonds are no longer registered in the name of CEDE & Co. or its
registered assign, the principal and premium, if any, on the Bonds shall be payable at the principal
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offices of the Bond Registrar in Seattle, Washington or New York, New York. Interest on the
Bonds will be paid by check or draft of the Bond Registrar mailed to the registered owner or
assigns (on the date such interest payment is due) at the addresses appearing on the registration
books as of the 15th day of the month prior to such interest payment dates.
All payments of or on account of interest to any registered owner of any Bond (or to his
or her assigns), and all payments of or on account of principal to any registered owner of any
Bond (or to his or her assigns), shall be valid and effectual and shall be a discharge of the City and
the Bond Registrar in respect of the liability upon the Bonds or claims for interest, as the case may
be, to the extent ofthe sum or sums paid.
The City or Bond Registrar shall not be required to issue, transfer, or exchange Bonds
after the 15th day of the month prior to any interest payment date.
Section 6. Redemption.
A. Optional Redemption. The City reserves the right to redeem the Bonds
maturing on and after December 1, 2008, as a whole or in part (maturities to be selected by the
City, and by lot within a maturity in such manner as the Bond Registrar or DTC shall determine in
integral multiples of $5,000) on any date on or after June 1, 2008, at par, plus accrued interest to
the date of redemption. If less than all of the Bonds subject to optional redemption are called for
redemption, the City shall choose the maturities to be redeemed. If less than a whole of a
maturity is called for redemption, the Bonds to be redeemed shall be chosen by lot by the Bond
Registrar or, so long as the Bonds are registered in the name of CEDE & Co. or its registered
assign, the Bonds to be redeemed shall be chosen by lot by DTC.
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B. Mandatory Redemption. The Bonds maturing on December 1, 2011 shall
be subject to mandatory redemption, to be selected by lot, in increments of $5,000, with the
manner of selection to be chosen by the Bond Registrar, at par plus accrued interest to the date of
redemption on December 1 in the years and amounts as follows:
Years
Amounts
2010
2011*
$560,000
580,000
*Final Maturity
The Bonds maturing on December 1, 2017 shall be subject to mandatory redemption, to
be selected by lot, in increments of $5,000, with the manner of selection to be chosen by the Bond
Registrar, at par plus accrued interest to the date of redemption on December 1 in the years and
amounts as follows:
Years
Amounts
2013
2014
2015
2016
2017*
$ 60,000
65,000
70,000
70,000
75,000
*Final Maturity
C. Partial Redemption. Portions of the principal amount of any Bond, . in
increments of $5,000 or any integral multiple of $5,000, may be redeemed. Ifless than all of the
principal amount of any Bond is redeemed, upon surrender of such Bond at the principal office of
the Bond Registrar there shall be issued to the registered owner, without charge therefor, for the
then unredeemed balance of the principal amount thereof, a new Bond or Bonds, at the option of
the registered owner, of like maturity and interest rate in any denomination authorized by this
ordinance.
D. Notice of Redemption. Written notice of any redemption of Bonds shall be
given by or on behalf of the City, which notice shall specify the title, maturities, letters and
numbers or other dìstinguishing marks of the Bonds to be redeemed, the redemption date and the
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place or places where the amount due upon such redemption will be payable and, in the case of
Bonds to be redeemed in part only, such notice shall also specify the respective portions of the
principal amount thereof to be redeemed. Such notice shall further state that upon the date fixed
for redemption there shall become due and payable upon each Bond to be redeemed the principal
. amount thereof, together with interest accrued to the redemption date, and that from and after the
redemption date interest thereon, or on the portion of any Bond to be redeemed in part (unless the
City shall default in the payment of the Bonds, or of the portion of any Bond so to be redeemed in
part) shall cease to accrue and become payable.
Such notice' shall be mailed by first class mail, postage prepaid, not less than 30 days nor
more than 60 days before the redemption date to the registered owners of Bonds which are to be
redeemed at their last addresses, if any, appearing upon the Bond register. Whenever notice of
redemption has been duly given as herein provided, the City shall transfer to the Bond Registrar
amounts which, in addition to other money, if any, held by the Bond Registrar, will be sufficient to
redeem, on the redemption date, all the Bonds to be redeemed.
In addition to the foregoing notice, further notice shall be given by or on behalf of the City
as set out below, but no defect in said further notice nor any failure to give all or any portion of
such further notice shall in any manner defeat the effectiveness of a call for redemption if notice
thereof is given as above prescribed.
(1) Each further notice of redemption given hereunder shall contain the
information required above for an official notice of redemption plus (i) the CUSIP numbers of all
Bonds being redeemed; (ii) the date of issue of the Bonds as originally issued; (iii) the rate of
interest borne by each Bond being redeemed; and (iv) any other descriptive information needed to
identify accurately the Bonds being redeemed.
(2) Each further notice of redemption may be sent at least 30 days
before the redemption date by first class mail or overnight delivery service to all registered
securities depositories then in the business of holding substantial amounts of obligations of types
comprising the Bonds and shall be sent to one or more national information services that
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disseminate notices of redemption of obligations such as the Bonds (such as Moody's Investors
Service and Standard & Poor's Ratings Services, a Division of The McGraw Hill Companies) at
their respective offices in New York, New York.
The Bond Registrar shall provide additional notice of redemption (at least 30 days) to
each NRMSIR and SID, if any, in accordance with Section 20 hereof.
(3) Upon the payment of the redemption pnce of Bonds being
redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP
number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such
check or other transfer.
E. Purcha~e on Open Market. The City reserves the right to purchase any of
the Bonds in the open market at any time at any price.
Section 7. Revenue Fund. There has heretofore been created a special fund known as
the "Water and Sewer Fund" ("Revenue Fund") into which fund the City has obligated and bound
itselfto pay all of the Gross Revenue of the System as collected. The money in the Revenue Fund
shall be kept segregated from any and all other money of the City.
The Gross Revenues deposited in the Revenue Fund shall be used only for the following
purposes and in the following order of priority:
FIRST, to pay the Costs of Maintenance and Operation and to maintain a balance in the
Revenue Fund sufficient in amount to enable the City to continuously meet Costs of Maintenance
and Operation on a current basis;
SECOND, to make all payments required to be made into the Bond Fund to pay the
interest on any Parity Bonds;
THIRD, to make all payments required to be made into the Bond Fund to pay the
maturing principal of any Parity Bonds and to make all payments required to be made into the
Bond Fund to provide for the mandatory redemption of Term Bonds;
FOURTH, to make all payments required to be made into the Reserve Account to secure
the payment of the principal of and interest on outstanding Parity Bonds;
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FIFTH, to make all payments required to be made pursuant to a reimbursement agreement
or agreements (or other equivalent documents) in connection with Qualified Insurance or a
Qualified Letter of Credit;
SIXTH, to make all payments required to be made into any revenue bond redemption
fund, revenue warrant redemption fund, debt service account, reserve account or bond retirement
account created to pay and secure the payment of the principal of and interest on any revenue
bonds, or revenue warrants or other revenue obligations of the City, including the City's Water
and Sewer Revenue Bonds, 1978, having a lien upon the Revenues of the System junior and
inferior to the lien thereon for the payment of the principal of and interest on the Bonds;
SEVENTH, to retire by redemption or purchase in the open market any outstanding water
and sewer revenue bonds or other obligation of the City, to make necessary additions,
betterments, improvements and repairs to or extensions and replacements of the System, or for
any other lawful City purposes.
Section 8. Bond Fund. Ordinance No. 2305 created a fund of the City to be known as
the "1992 Water and Sewer Revenue Bond Redemption Fund" (the "Bond Fund"), which fund
shall be drawn upon for the sole purpose of paying the principal of, premium if any, and interest
on the Parity Bonds. The money in the Bond Fund shall be kept segregated from any and all
other money of the City.
The appropriate officer of the City shall promptly, after the sale of the Bonds, deposit the
accrued interest thereon into the Bond Fund.
The City shall set aside and transfer therein from the Revenue Fund into the Bond Fund on
or before the 20th day of each month, and continuing each P10nth for as long as any of the Parity
Bonds are outstanding: (i) beginning February, 1998 an amount, together with other amounts in
the fund, equal to at least one-fourth of the interest to become due and payable on the next
interest payment date on all of the Bonds then outstanding; (ii) beginning June, 1998, together
with other money available in the fund, equal to one-sixth of the interest next coming due on the
Bonds; and (iii) beginning March, 1998 an amount, together with other amounts in the fund, equal
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to at least one-ninth of the principal of the Bonds to become due and payable on the next principal
payment date; and (iv) beginning December, 1998 an amount, together with other amounts in the
fund, equal to at least one-twelfth of the principal of the Bonds to become due and payable on the
next principal payment date.
Once the 1992 Bonds are no longer outstanding, monthly deposits into the Bond Fund
shan not be required and the City shall deposit money into the Bond Fund on or prior to an
interest or' principal payment date.
If the City for any reason shall fail to make such monthly transfers, then an amount equal
to the deficiency shall be set apart and deposited in the Bond Fund out of the Revenue Fund in the
ensuing month or months, which amount shall be in addition to the regular monthly deposit
required during such succeeding month or months.
If there ever shall be accumulated in the Bond Fund amounts in excess of the requirements
thereof during the next 12 months for payment of the principal of, interest on, and Sinking Fund
Requirements of the Parity Bonds outstanding, such excess may be used by the City to purchase
or call Bonds for redemption prior to their fixed maturities as authorized herein or may be
invested as provided in this section.
A Reserve Account has been created in the Bond Fund for the purpose of securing the
payment of the principal of and interest on the Parity Bonds. The City hereby covenants and
agrees that at the time the Bonds are delivered to the Purchaser it will deposit Bond. proceeds in
the Reserve Account in an amount necessary to have in the Reserve Account a sum equal to the
Reserve Account Requirement for the Bonds.
The City further covenants and agrees that when the required deposits have been made
into the Reserve Account, it will at all times maintain therein an amount at least equal to the
Reserve Account Requirement, as redetermined in each calendar year with respect to the bonds
secured by such Reserve Account. Whenever there is a sufficient amount in the Bond Fund,
including an accounts therein, to pay the principal of, premium, if any, and interest on all
outstanding Parity Bonds, the money in the Reserve Account may be used to pay the principal of,
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premIUm, if any, and interest on the Parity Bonds secured thereby. Money in the Reserve
Account may also be withdrawn to redeem and retire, and to pay the premium, if any, and interest
due to such date of redemption, on the outstanding Parity Bonds secured by such Reserve
Account, as long as the money remaining on deposit in such Reserve Account is at least equal to
the Reserve Account Requirement determined with respect to the Parity Bonds then outstapding.
In the event the Bonds outstanding are ever refunded, the money set aside in the Reserve
Account to secure the payment thereof may be used to retire Bonds or may be transferred to any
other reserve account which may be created to secure the payment of any bonds issued to refund
the Bonds.
In the event the money in the Bond Fund over and above the amount herein set aside and
credited to the Reserve Account is insufficient to meet maturing installments of either interest on
or principal of and interest on the Bonds, such deficiency shall be made up from the Reserve
Account by the withdrawal of money therefrom. Any deficiency created in the Reserve Account
by reason of any such withdrawal shall t~en be made up from money in the Revenue Fund first
available after making necessary provision for the Costs of Maintenance and Operation, and
payments required to be made into the Bond Fund to pay the principal of, interest on, and Sinking
Fund Requirements of the Bonds next coming due.
All money in the Bond Fund or Reserve Account may be kept in cash or invested in
Permitted Investments maturing not later than the last maturity of the Parity Bonds outstanding at
the time of such purchase; provided that· accrued interest on the Bonds shall be invested in
obligations defined under subsections (1) and (2) of the definition of Permitted Investments.
Interest earned on or profits made from the sale of such investments shall be deposited in and
become a part of the Revenue Fund.
Section 9. Covenants and Agreements. The City hereby covenants with the owner of
each of the Bonds for as long as any of the same remain outstanding as follows:
A. Rates and Charges. The City covenants that it will establish, maintain and
collect rates and charges for water and for sanitary sewage collection and disposal servIce,
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together with Assessments collected, for as long as any of the Parity Bonds are outstanding that
will make available for the payment of the principal of and interest on all of such bonds as the
same shall become due an amount equal to at least 1.25 times the amount required each calendar
year hereafter for the payment of such principal and interest. Once the 1992 Bonds are no longer
outstanding, the City covenants that it will establish, maintain and collect rates and charges for
water and sanitary sewage collection and disposal service in an amount available for the payment
of the principal of and interest on the Parity Bonds as the same shall become due at least equal to
(a) 125% of the amounts required in such calendar year to be paid as scheduled debt service
(principal, interest, and Sinking Fund Requirement) on the Parity Bonds minus the amount of
Assessments collected in such year and (b) 100% of the amount of Assessments collected in such
year.
The amount "available for the payment of the principal of and interest on all of such bonds
as the same shall become due" is hereby defined as the "gross revenue of the System, less
necessary Costs of Maintenance and Operation thereof but before depreciation," and shall be
deemed to exclude from "principal" an amount of Term Bonds equal to the mandatory sinking
fund deposits required for the payment thereof and from "interest" the interest on such Term
Bonds subsequent to the interest payment dates following the dates of the respective sinking fund
deposits, and to include in lieu thereof such mandatory sinking fund deposits as of the dates
required.
B. Maintenance of System. The City covenants that it will at all times keep
and maintain the System in good repair, working order and condition, and will at all times operate
the same and the business in connection therewith in an efficient manner and at a reasonable cost.
C. Sale or Disposition of the System. The City will not sell or otherwise
dispose of the System in its entirety unless simultaneously with such sale or other disposition,
provision is made for the payment into the Bond Fund of cash or "Government Obligations," as
now or hereafter defined in RCW Chapter 39.53, as amended, or its successor statute, if any,
sufficient together with interest to be earned thereon to pay the principal of and interest on the
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then outstanding Parity Bonds, nor will it sell or otherwise dispose of any part of the useful
operating properties of the System unless such facilities are replaced or provision is made for
payment into the Bond Fund of the greater of:
(1) An amount which will be in the same proportion to the net amount
of Parity Bonds then outstanding (defined as the total amount of the Parity Bonds less the amount
of cash and investments in the Bond Fund and accounts therein) that the Net Revenues from the
portion of the System sold or disposed of for the preceding year bears to the total Net Revenues
for such period; or
(2) An amount which will be in the same proportion to the net principal
amount of Parity Bonds then outstanding that the book value of the part of the System sold or
disposed of bears to the book value of the entire System immediately prior to such sale or
disposition.
The proceeds of any such sale or disposition of a portion of the properties of the System
(tÇ> the extent required above) shall be paid into the Bond Fund.
Notwithstanding any other provision of this subsection, the City may sell or otherwise
dispose of any of the works, plant, properties and facilities of the System or any real or personal
property comprising a part of the same with a value less than 2% of the net utility plant of the
System or which shall have become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the System, or no longer necessary, material to or useful in such operation, without
making any deposit into the Bond Fund.
D. Collection of Assessments. The City shall promptly collect all Assessments
levied in any utility local improvement district now or hereafter created to secure the payment of
the principal of and interest on the Parity Bonds without allocation of such Assessments to any
particular series of such bonds.
E. Books and Accounts. The City covenants that it will maintain complete
books and records relating to the operation of the System and its financial affairs, and will cause
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such books and records to be audited annually, and cause to be prepared an annual financial and
operating statement, said statement to be mailed to any owner of the Bonds upon request.
F. Insurance. The City covenants that it will carry fire and extended coverage
insurance on the System as is ordinarily carried on the property of similar public utilities by other
municipal corporations engaged in the operation of the same, to the full insurable value thereof,
and will also carry adequate public liability insurance and other kinds of insurance as under good
practices are ordinarily carried on the properties of similar public utilities by private companies
engaged in the operation of the same; provided, however, that the City may if deemed necessary
and advisable by the Council, institute or continue a self-insurance program with respect to any or
all of the aforementioned risks. The premiums paid for all such insurance shall be regarded and
paid as a Cost of Maintenance and Operation of the System.
G. Delinquencies. The City covenants that it will promptly collect all water
and sewer charges, determine in a timely manner all delinquencies and take all necessary legal
action to enforce collection of such delinquencies.
H. Tax Covenants. The City covenants that no part of the proceeds of the
Bonds or any other money or obligations held under this ordinance shall at any time be used for
any purpose or invested in such a manner, nor shall the City take any other action, which would
cause the Bonds to be (i) "arbitrage bonds" under the Internal Revenue Code of 1986 (the
"Code") or (ii) "private activity bonds" under the Code.
Section 10. Special Designation. The City hereby designates the Bonds as "qualified
tax-exempt obligations" under Section 265(b) of the Code. The City does not expect to issue tax-
exempt obligations in an aggregate principal amount in excess of $10,000,000 during calendar
year 1998.
Section 11. Revenue Pledge. The Gross Revenues from the System are hereby pledged
to the payment of the Bonds, and the Bonds shall constitute a charge or lien upon such revenues
prior and superior to any other charges whatsoever, excluding Costs of Maintenance and
Operation of the System, except that the charge or lien upon those revenues for the Bonds shall
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be on a parity with the charge or lien upon such Gross Revenues for the 1992 Bonds and any
Future Parity Bonds.
The City Councìl hereby declares that in fixing the amounts to be paid into the Bond Fund
it has considered and has due regard for the cost of operation and maintenance of the System and
has not and will not set aside into the Bond Fund a greater amount or proportion of the revenues
and proceeds than in their judgment will be available over and above the cost of maintenance and
operation of the System and the debt service requirements for the Parity Bonds.
Section 12. Arbitrage Rebate. The City will pay to the United States of America any
Rebatable Arbitrage with respect to the Bonds in accordance with the Code and the Arbitrage
Rebate and Investment Accounting Certificate.
Section 13. Application of Bond Proceeds. The proceeds of the Bonds shall be applied .
as follows:
1. Any accrued interest shall be deposited into the Bond Fund.
2. The amount, if any, required to meet the Reserve Account Requirement
shall be deposited into the Reserve Account.
3. $1,000,000 shall be deposited into the 1998 Water and Wastewater
Construction Fund, which is hereby authorized to be created, and used to finance the Project.
4. The remaining Bond proceeds shall be used to accomplish the refunding of
the Refunded Bonds and to pay costs of issuing the Bonds.
Section 14. Defeasance. In the event that money and/or "Government Obligations" (as
now or hereafter defined in RCW Ch. 39.53 or its successor statute, if any) maturing at such time
or times and bearing interest to be earned thereon in amounts (together with such money if
necessary) sufficient to redeem and retire the Bonds or any of them in accordance with their terms
are set aside in a special account to effect such redemption or retirement and such money and/or
the principal of and interest on such obligations are irrevocably set aside and pledged for such
purpose, then no further payments need be made into the Bond Fund for the payment of the
principal of and the interest on the Bonds so provided for, and the owners of such Bonds shall
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cease to be entitled to any lien, benefit or security of this ordinance except the right to receive the
funds so set aside and pledged, and such Bonds shall be deemed not to be outstanding hereunder.
Within 60 days after the dèfeasance or refunding of any Bonds the escrow agent shall give notice
to each registered owner of such Bonds and to each NRMSIR and SID, if any, in accordance with
Section 20.
Notwithstanding anything herein to the contrary, in the event that the principal and/or
interest due on the Bonds shall be paid by Ambac Assurance pursuant to the Municipal Bond
Insurance Policy, the Bonds shall remain outstanding for all purposes, not be defeased or
otherwise satisfied and not be considered paid by the City, and the assignment and pledge of the
trust estate and all covenants, agreements and other obligations of the City to the registered
owners shall continue to exist and shall run.to the benefit of Ambac Assurance, and Ambac
Assurance shall be subrogated to the rights of such registered owners.
Section 15. Future Bonds. The City hereby further covenants and agrees with the
owners of the Bonds for as long as any of the same remain outstanding as follows:
A. That it will not issue any bonds with a lien on Gross Revenues superior to
the lien on such revenues of the Bonds. The City may issue Future Parity Bonds for:
First, the purpose of acquiring, constructing and installing additions and improvements to
and extensions of, acquiring necessary equipment for, or making necessary replacements or
repairs and capital improvements to the System, or
Second, the purpose of refunding or purchasing and retiring at or prior to their maturity
any outstanding water and sewer revenue bonds of the City;
and to pledge that payments be made into the Bond Fund for the payment of the principal thereof
and interest thereon out of the Revenue Fund sufficient to pay the principal of and interest on
such additional or refunding Future Parity Bonds and to maintain the reserves required therefor,
which such payments may rank equally with the payments out of such Revenue Fund into the
Bond Fund and the Reserve Account, upon compliance with the following conditions:
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(1) That at the time of the issuance of such additional or refunding Future
Parity Bonds there is no deficiency in the Bond Fund and the Reserve Account.
(2) If there are Assessments levied in any utility local improvement district in
which additions and improvements to and extensions of the System will be constructed from the
proceeds of such Future Parity Bonds, the ordinance authorizing such Future Parity Bonds shall
require that such Assessments be paid into the Bond Fund.
(3) If there are Assessments pledged to be paid into a warrant or bond
redemption fund for revenue bonds or warrants being refunded by Future Parity Bonds, the
ordinance authorizing such Future Parity Bonds shall require such Assessments to be paid into the
Bond Fund.
(4) The principal of and interest on the Future Parity Bonds shall be payable
out of the Bond Fund and the ordinance authorizing their issuance shall further provide for the
payment in approximately equal annual installments into the Reserve Account within three years
from the date of the issuance of such additional or refunding Future Parity Bonds of a sum at least
equal to the Reserve Account Requirement on such additional or refunding Future Parity Bonds.
(5) Prior to the delivery of any Future Parity Bonds, the City shall have on file
in the office of the City Clerk a certificate of an independent professional engineer licensed in the
State of Washington or certified public accountant familiar with the operations and rate setting of
facilities similar to the System showing: that the Net Revenue determined and adjusted as
hereafter provided for each calendar or fiscal year after the issuance of such Future Parity Bonds
(the "Adjusted Net Revenue") together with Assessment Income will equal at least 1.25 times the
maximum annual amount required to be paid thereafter for the principal of and interest on all
outstanding Parity Bonds, including the Future Parity Bonds proposed to be issued (once the
1992 Bonds are no longer outstanding, after deducting Assessments allocated to the years in
which they would be received if the unpaid balance of each assessment roll were paid in the
remaining number of installments with interest on the declining balance at the times and at the rate
provided in the ordinance confirming the assessment roll) (the "Coverage Requirement"). In the
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event the City issues any Term Bonds, the words "principal of and interest on all outstanding
parity bonds, including the Future Parity Bonds proposed to be issued" in this paragraph shall be
deemed to exclude from "principal" an amount of Term Bonds equal to the term bond maturity
amount and from "interest" the interest on such term bond maturity amount subsequent to the
interest payment dates following the dates of the respective sinking fund deposits, and to include
in lieu thereof such mandatory sinking fund deposits as of the dates required.
The Adjusted Net Revenue shall be the Net Revenue for a period of any 12 consecutive
months out of the 24 months immediately preceding the date of delivery of such proposed Future
Parity Bonds as adjusted by such engineer or accountant to take into consideration changes in Net
Revenue estimated to occur under the following conditions for each year after such delivery for so
long as any parity Bonds, including the Future Parity Bonds proposed to be issued, shall be
outstanding:
(i) the additional Net Revenue which would have been received if any change
in rates and charges adopted prior to the date of such certificate and
subsequent to the beginning of such 12 month period, had been in force
during the full 12 month period;
(ii) the additional Net Revenue which would have been received if any facility
of the System which became fully operational after the beginning of such
12 month period had been so operating for the entire period;
(iii) the additional Net Revenue estimated by such engineer or accountant to be
received as a result of any additions, betterments and improvements to and
extensions of any facilities of the System which are (a) under construction
at the time of such certificate or (b) will be constructed from the proceeds
of the Future Parity Bonds to be issued;
(iv) the additional Net Revenue which would have been received if any
customers added to the System during such 12 month period were
customers for the entire period.
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Such engineer or accountant may rely upon, and hislher certificate shall have attached
thereto, financial statements of the System, certified by the City Treasurer or Finance Director
showing income and expenses for the period upon which the same is based.
The certificate of such engineer or accountant shall be conclusive and the only evidence
r:equired to show compliance with the provisions and requirements of this subsection (5).
Once the 1992 Bonds are no longer outstanding, in lieu of such certificate of an engineer
or accountant, prior to the issuance of Future Parity Bonds, the City may have on file a certificate
of an appropriate financial officer of the City stating that the Coverage Requirement will be met
based on the 12 month-period for any future year on all outstanding Parity Bonds and the Future
Parity Bonds to be issued.
B. Notwithstanding the foregoing requirement, if Future Parity Bonds are to
be issued for the purpose of refunding at or prior to their maturity any part or all of the then
outstanding Parity Bonds and the issuance of such refunding Future Parity Bonds will result in a
debt service savings and does not require an increase of more than $5,000 in any fiscal or calendar
year for principal of and interest on such refunding Future Parity Bonds over and above the
amount required in such year for the principal of and interest on the bonds being refunded
thereby, the condition stated in subsection A(5) of this section need not be met.
C. Nothing herein contained shall prevent the City from issuing any revenue
bonds or warrants which are a charge upon the money in the Revenue Fund junior or inferior to
the payments required to be made into the Bond Fund and the Reserve Account.
Section 16. Form of the Bonds. The Bonds shall be in substantially the following form:
Municipal Bond Insurance Policy No. _ (the "Policy") with respect to
payments due for principal of and interest on this bond has been issued by Ambac
Assurance Corporation ("Ambac Assurance"). The Policy has been delivered to
the United States Trust Company of New York, New York, New York, as the
Insurance Trustee under said Policy and will be held by such Insurance Trustee or
any successor insurance trustee. The Policy is on file and available for inspection
at the principal office of the Insurance Trustee and a copy thereof may be secured
from Ambac Assurance or the Insurance Trustee. All payments required to be
made under the Policy shall. be made in accordance with the provisions thereof.
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The owner of this bond acknowledges and consents to the subrogation rights of
Ambac Assurance as more fully set forth in the Policy.
No.
$
UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF PORT TOWNSEND
WATER AND SEWER REVENUE AND REFUNDING BOND, 1998
INTEREST RATE:
MATURITY DATE:
CUSIP NO.
REGISTERED OWNER:
PRINCIP AL AMOUNT:
DOLLARS
The City of Port Townsend, Washington, (the "City"), for value received, hereby promises
to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date
identified above, the Principal Amount indicated above and to pay interest thereon from
February 1, 1998, or the most recent date to which interest has been paid or duly provided for
until payment of this bond at the Interest Rate set forth above, payable on June 1, 1998 and
semiannually thereafter on the first days of each December and June and with full obligation on
the part of the City to pay interest at the same rate from and after the bond maturity date until this
bond with interest is paid in full, or funds are available in the Water and Sewer Revenue Bond
Fund (the "Bond Fund") for payment in full.
Both principal of and interest on this bond are payable in lawful money of the United
States of America. While bonds are held in immobilized "book-entry" system of registration, the
principal of this bond is payable to the order of the Registered Owner in same day funds received
by the Registered Owner on the maturity date of this bond. The interest on this bond is payable to
the order of the Registered Owner in same day funds received by the Registered Owner on each
interest payment date. When Bonds no longer are held in immobilized "book-entry" registration
system, interest shall be paid by mailing a check or draft (on the date such interest is due) to the
Registered Owner or assigns at the address shown on the Bond Register as of the 15th day of the
month prior to the interest payment date. Principal shall be paid to the registered owner or
assigns upon presentation and surrender of this bond at the office of either fiscal agency of the
State of Washington in the cities of Seattle, Washington, or New York, New York (collectively,
the "Bond Registrar").
Principal and interest are payable solely out of the Bond Fund into which fund the City
hereby irrevocably binds itself to pay certain fixed amounts out of the Gross Revenues of the
Water and Sewer System, as the same is defined in Ordinance No. of the City (the
"Bond Ordinance"), without regard to any fixed proportion, namely, amounts sufficient to pay the
principal of and interest on the outstanding bonds of this issue (the "Bonds") and on the
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outstanding Water and Sewer Revenue Bonds, 1992 as they respectively become due and on any
additional and/or refunding water and sewer revenue bonds issued on a parity of lien with the
Bonds and to accumulate a reserve, all at the times and in the manner set forth in the Bond
Ordinance. Reference is made to the Bond Ordinance for definitions of capitalized terms not
otherwise defined herein.
This bond is one of a total issue of $5,950,000 par value of the Bonds, all oflike date and
tenor, except as to maturity, redemption provisions and interest rates, all payable from the Bond
Fund and all issued by the City under and pursuant to the laws of the State of Washington and the
B('nd Ordinance for the purpose of providing funds to refund certain outstanding bonds and
financing capital improvements to the System all as specified in the Bond Ordinance.
The City reserves the right to redeem the Bonds on and after June 1, 2008, as a whole, or
in part (maturities to be selected by the City, and by lot within a maturity), in integral multiples of
$5,000, at par plus accrued interest to the date of redemption.
The Bonds maturing on December 1, 2011 are subject to mandatory redemption on
December 1 in the years and the aggregate principal amounts set forth below, to be selected by lot
in increments of $5,000, with the manner of selection to be chosen by the Bond Registrar, at par
plus accrued interest to the date of redemption.
Years
Amounts
2010
2011*
$560,000
580,000
*Final Maturity
The Bonds maturing on December 1, 2017 are' subject to mandatory redemption on
December 1 in the years and the aggregate principal amounts set forth below, to be selected by lot
in increments of $5,000, with the manner of selection to be chosen by the Bond Registrar, at par
plus accrued interest to the date of redemption.
Years
Amounts
2013
2014
2015
2016
2017*
$ 60,000
65,000
70,000
70,000
75,000
*Final Maturity
Notice of any such intended redemption shall be given not less than 30 days 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 registration books
of the Bond Registrar. The requirements of this section shall be deemed to be complied with
when notice is mailed as herein provided, regardless of whether or not it. is actually received by
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the owner of any Bond. Interest on any Bonds so called for redemption shall cease on such
redemption date unless the same is not paid in full upon presentation made pursuant to such call.
Interest on this Bond so called for redemption shall cease on the date fixed for such redemption
upon payment of the redemption price into the Bond Fund on or before such date.
Portions of the principal sum of this bond in installments of $5,000 or any integral multiple
thereof may also be redeemed in accordance with the schedules set forth above, and if less than all
of the principal sum hereof is to be redeemed, upon the surrender of this bond at the principal
office of the Bond Registrar there shall be issued to the registered owner, without charge therefor,
for the then unredeemed balance ofthe principal sum hereof, at the option of the owner, a bond or
bonds of like maturity and interest rate in any of the denominations authorized by the Bond
Ordinance.
The City reserves the right to purchase any of the Bonds in the open market at any time at
any pnce.
The Gross Revenues from the Water and Sewer System of the City are hereby pledged to
the payment of principal of and interest on the Bonds, and the Bonds constitute a charge or lien
upon such revenues prior and superior to any other charges whatsoever, excluding charges for
Costs of Maintenance and Operation of the Water and Sewer System (as defined in the Bond
Ordinance), except that the charge or lien upon those revenues for the Bonds shall be on a parity
with the charge or lien upon such gross revenues for the 1992 Bonds and any Future Parity Bonds
which may be hereafter issued in accordance with the provisions of the Bond Ordinance. The
Bonds are not a general obligation of the City.
Tht;; City hereby covenants and agrees with the owners of the Bonds to carry out fully all
covenants and meet all obligations of the City as set forth herein and in the Bond Ordinance, and
reference is hereby made to the Bond Ordinance for a complete statement of such covenants.
This bond shall not become valid or obligatory for any purpose until the certificate of
authentication set forth hereon has been signed by the Bond Registrar.
This bond is interchangeable for bonds of any authorized denomination of an equal
aggregate principal amount, and of the same series, interest rate and maturity. This bond is
transferable only upon the registry books of the Bond Registrar by surrender of this certificate to
the Bond Registrar, duly assigned and executed as indicated below. Such exchange or transfer
shall be without cost to the owner or transferee. The City may deem the person in whose name
this bond is registered to be the absolute owner thereof for the purpose of receiving payment of
the principal of and interest on such, bond and for any and all other purposes whatsoever. The
Bond Registrar shall not be obligated to transfer or exchange this bond during the fifteen days
preceding any interest payment date or the date on which notice of redemption of such bond is to
be given nor after such notice has been given.
It is hereby certified and declared that the bonds are issued pursuant to and in strict
compliance with the Constitution and laws of the State of Washington and the ordinances of the
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City and that all acts, conditions and things required to be done precedent to and in the issuance
of this bond have happened, have been done and have been performed as required by law.
IN WITNESS WHEREOF, the City has caused this bond to be signed by the manual or
facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk
and its corporate seal to be impressed or a facsimile thereof imprinted hereon this 1 st day of
February, 1998.
CITY OF PORT TOWNSEND,
WASHINGTON
By
~m~~
j/ .' Mayor
ATTEST:
ÇJ~ cf{kr
City Clerk
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This bond is one of the Water and Sewer Revenue and Refunding Bonds, 1998 of the City
dated February 1, 1998, described in the within mentioned Bond Ordinance.
WASHINGTON STATE FISCAL
AGENCY, Bond Registrar
By
Authorized Signer
The following abbreviations, when used in the inscription on the face of the within bond,
shall be construed as though they were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
UNIF (GIFT) (TRANSFER) MIN ACT Custodian
(Custodian)
under
Uniform (Gifts)(Transfers) to
(Minor)
(State)
Additional abbreviations may also be
used though not in list above
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Assignment
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Please insert Social Security or Taxpayer identification Number of Transferee
(Please print or type name and address, including zip code of Transferee)
the within bond and does hereby irrevocably constitute and appoint ,
or its successor, as Bond Registrar to transfer said bond on the books kept for registration thereof
with full power of substitution in the premises.
DATED:
SIGNATURE GUARANTEED:
Note: signature(s) must be guaranteed
pursuant to law.
NOTE: The signature on this Assignment must
correspond with the name of the registered owner as
it appears upon the face of the within bond in every
particular, without alteration or enlargement or any
change whatever.
Section 17. Execution and Authentication of the Bonds. The Bonds shall be signed on
behalf of the City by the manual or facsimile signature of the Mayor and attested by the manual or
facsimile signature of the City Clerk and shall have the seal of the City impressed or a facsimile
thereof imprinted thereon.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for any
purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be
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conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and
delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bonds shall cease to be an officer
or officers' of the City before the Bonds so signed shall have been authenticated or delivered by
the Bond Registrar, or issued by the City, such Bonds may nevertheless be authenticated,
delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon
the City as though those who signed the same had continued to be such officers of the City. Any
Bond may also be signed and attested on behalf 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.
Section 18. Lost or Stolen Bonds. In case any Bonds shall be lost, stolen or destroyed,
the Bond Registrar may deliver a new bond or bonds of like amount, date, series, maturity,
interest rate, tenor, and effect to the registered owner or nominee thereof upon the owner paying
the expenses and charges of the City in connection therewith and upon filing with the Bond
Registrar evidence satisfactory to said Bond Registrar that such bond or bonds were actually lost,
stolen or destroyed and or ownership thereof, and upon furnishing the City with indemnity
satisfactory to both.
Section 19. Bond Registrar. Either of the fiscal agencies of the State of Washington in
the cities of Seattle, Washington, and New York, New York (the "Bond Registrar") shall keep, or
cause to be kept, sufficient books for the registration and transfer of the Bonds. The Bond
Registrar is authorized, on behalf of the City, to. deliver a substitute Bond or Bonds in authorized
denominations for any Bonds transferred or exchanged in accordance with the provisions of such
Bonds and this ordinance and to carry out all of the Bond Registrar's powers and duties under this
ordinance.
Section 20. Undertaking to Provide Ongoing Disclosure.
A. Contract/Undertaking. This section constitutes the City's written
undertaking for the benefit of the owners of the Bonds as required by Section (b)( 5) of the Rule.
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The City is an obligated person with respect to less than $10,000,000, of municipal securities,
including the Bonds.
B. Financial'Statements/Operating Data. The City agrees to provide or cause
to be provided to each person upon request or to the SID, if any, a copy of its latest publicly
available annual financial statements prepared in accordance with the Budget Accounting and
Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or
any successor statute).
C. Material Events. The City agrees to provide or cause to be provided, in a
timely manner, to Ambac Assurance, the SID, if any, and to each NRMSIR or to the MSRB
notice of the occurrence of any of the following events with respect to the Bonds, if material:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves, if any, for the Bonds
reflecting financial difficulties;
4. Unscheduled draws on credit enhancements, if any, for the Bonds
reflecting financial difficulties;
5. Substitution of credit or liquidity providers, ifany, or their failure to
perform;
6. Adverse tax opinions or events affecting the tax-exempt status of
the Bonds;
7. Modifications to the rights of Bond owners;
8. Optional redemption of Bonds prior to their maturity;
9. Defeasance of the Bonds;
10. Release, substitution or sale of property, if any, securing repayment
of the Bonds; and
11. Rating change for the Bonds.
No property secures repayment of the Bonds.
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D. Termination/Modification. The City's obligations to provide notices of
material events shall terminate upon the legal defeasance, prior redemption or payment in full of
all of the Bonds. This section, or any provision hereof, shall be null and void if the City
(1) obtains an opinion of nationally recognized bond counsel to the effect that those portions of
the Rule which require this section, or any such provision, are invalid, have been repealed
retroactively or otherwise do not apply to the Bonds; and (2) notifies each then existing
NRMSIR, the SID, if any, and Ambac Assurance of such opinion and the cancellation of this
section.
Notwithstanding any other provIsIOn of this ordinance, the City may amend this
Section 20, and any provision of this Section 20 may be waived, with an approving opinion of
nationally recognized bond counsel in accordance with the Rule.
In the event of any amendment or waiver of a provision of this Section 20, the City shall
describe such amendment in the next annual report, and shall include, as applicable, a narrative
explanation of the reason for the amendment or waiver and its impact on the type (or in the case
of a change of accounting principles, on the presentation) of financial information or operating
data being presented by the City. In addition, if the amendment relates to the accounting
principles to be followed in preparing financial statements, (i) notice of such change shall be given
in the same manner as for a material event under subsection C, and (ii) the annual report for the
year in which the change is made should present a comparison (in narrative form and also, if
feasible, in quantitative form) between the financial statements as prepared on the basis of the new
accounting principles and those prepared on the basis of the former accounting principles.
E. Bond Owner's Remedies Under This Section. The right of any Bond
Owner or Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to a
right to obtain specific enforcement of the City's obligations hereunder, and any failure by the City
to comply with the provisions of this undertaking shall not be an event of default with respect to
the Bonds hereunder. For purposes of this section, "Beneficial Owner" means any person who
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has the power, directly or indirectly, to vote or consent with respect to, or to dispose of
ownership of, any Bonds, including persons holding Bonds through nominees or depositories.
Section 21. Advance Refunding Account. There is hereby authorized and established a
special account of the City to be maintained with the Escrow Agent to be known as the "City of
Port Townsend Water and Sewer Revenue Bond Advance Refunding Account" (the "Advance
Refunding Account"), which account shall be drawn upon for the sole purpose of paying the
principal of and interest on the Refunded Bonds and of paying costs related to issuance of the
Bonds and refunding the Refunded Bonds.
Money in the Advance Refunding Account shall1::-e used immediately upon receipt thereof
to defease the Refunded Bonds and discharge the other obligations of the City relating thereto
under Ordinance Nos. 1814 and 2305 of the City, by providing for the payment of the principal of
and interest on the Refunded Bonds as set forth below. The City shall defease such bonds and
discharge such obligations by the use of money in the Advance Refunding Account to purchase
certain "Government Obligations" as such obligations are defined in Chapter 39.53 RCW as now
or hereafter amended (which obligations so purchased, are herein called ¡'Acquired Obligations"),
bearing such interest and maturing as to principal and interest in such amounts and at such times
which, together with any necessary beginning cash balance, win provide for the payment of:
(a) the interest on the 1978 Bonds due and payable on April 1, 1998;
(b) the redemption price (100% of the principal amount) of the 1978 Bonds on
April 1, 1998;
( c) the interest on the 1992 Refunded Bonds due and payable on and prior to
December 1, 2002; and
(d) the redemption pnce (100% of the principal amount) payable on
December 1, 2002, of the 1992 Refunded Bonds.
Such Acquired Obligations shan be purchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
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In order to carry out the advance refunding and defeasance of the Refunded Bonds, the
Finance Director is hereby authorized to appoint a bank as escrow agent to perform the duties
described herein (the "Escrow Agent"). Any beginning cash balance and the Acquired Obligations
shall be irrevocably deposited with the Escrow Agent in an amount sufficient to defease and
redeem the Refunded Bonds in accordance with this Section 21 and Section 22 of this ordinance.
Any amounts described in subparagraphs (a) through (d) of this section that are not provided for
in full by such beginning cash balance and the purchase and deposit of the Acquired Obligations
described in this section shall be provided for by the irrevocable deposit of the necessary amount
out of the proceeds of sale of the Bonds or any other money of the City legally available therefor
with the Escrow Agent. The proceeds of the Bonds remaining in the Advance Refunding
Account after acquisition of the Acquired Obligations and provision for the necessary beginning
cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired
Obligations and the costs of issuing the Bonds. The City may, from time to time, transfer, or
cause to be transferred, from the Advance Refunding Account any money not thereafter required
for the purposes set forth in subparagraphs (a) through (d) above, subject to verification in writing
by an independent certified public accountant that such transfer will not result in inadequate funds
being available to make the required payments therefrom. The City reserves the right to substitute
other securities for the Acquired Obligations in the event it may do so pursuant to Section 148 of
the Code and applicable regulations thereunder, upon compliance with the conditions set forth in
the Escrow Agreement.
Section 22. Redemption of Refunded Bonds. The City hereby irrevocably sets aside
sufficient funds through the purchase of Acquired Obligations and an initial cash deposit to make
the payments specified in subparagraphs ( a) through (d) of Section 21 above.
The City hereby irrevocably calls for redemption on December 1, 2002, the 1992
Refunded Bonds in accordance with the provisions of Section 5 of Ordinance No. 2305 and on
April 1, 1998, the 1978 Refunded Bonds in accordance with the provisions of Section 7 of
Ordinance No. 1814.
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...
Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after
the final establishment of the Advance Refunding Account and delivery of the Acquired
Obligations and the requisite cash deposit, if any, to the Escrow Agent, except as provided herein
relating to the substitution of securities.
The Escrow Agent is hereby authorized and directed to notify the fiscal agent to give
notice of the redemption of the Refunded Bonds in accordance with the applicable provisions of
Ordinance Nos. 1814 and 2305. The Finance Director is authorized and requested to provide
whatever assistance is necessary to accomplish such redemption and the giving of notice therefor.
The costs of publication of such notice shall be an expense of the City.
The Escrow Agent is hereby authorized and directed to pay to the fiscal agency or
agencies of the State of Washington, sums sufficient to pay, when due, the payments specified in
subparagraphs (a) through (d) of Section 21 above. All such sums shall be paid from the money
and Acquired Obligations deposited with the Escrow Agent pursu~nt to Section 21 of this
ordinance, and the income therefrom and proceeds thereof. All such sums so paid shall be
credited to the Advance Refunding Account. All money and Acquired Obligations deposited with
said bank and any income therefrom shan be held, invested and applied in accordance with the
provisions of this ordinance and with the laws of the State of Washington for the benefit of the
City and owners of the Refunded Bonds.
The City will take such actions as are found necessary to see that an necessary and proper
fees, compensation and expenses of the Escrow Agent shall be paid when due. The proper
officers ánd agents of the City are directed to obtain from the Escrow Agent an agreement setting
forth the duties, obligations and responsibilities of the Escrow Agent in connection with the
redemption and retirement of the Refunded Bonds as provided herein and making provision for
payment of the fees, compensation and expenses of such Escrow Agent as may be satisfactory to
it. Such agreement shall be in substantially the form on file with the City. The Finance Director is
authorized to execute and deliver such agreement on behalf of the City.
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Section 23. Findings of Savings and Defeasance. The Council hereby finds and
determines that the issuance and sale of the Bonds at this time will effect a· savings to the City and
its ratepayers. In making such finding and determination, the Council has given consideration to
the interest on and the fixed maturities of the Bonds and the Refunded Bonds, the costs of
issuance of the Bonds and the known earned income from the investment of the proceeds of sale
of the Bonds pending redemption and payment of the Refunded Bonds.
The Council hereby also finds and determines that the Acquired Obligations to be
deposited with the Escrow Agent and the income therefrom, together with any necessary
beginning cash balance, are sufficient to redeem the Refunded Bonds and will discharge and
satisfy the obligations of the City under the ordinances authorizing the issuance of the Refunded
Bonds and the pledges of the City therein. Immediately upon the delivery .of such Acquired
Obligations to the Escrow Agent and the deposit of any necessary beginning cash balance, the
Refunded Bonds shall be deemed not to be outstanding under Ordinance Nos. 1814 and 2305 of
the City and shall cease to be entitled to any lien, benefit or security under such ordinances except
the right to receive payment from the Acquired Obligations and beginning cash balance so set
aside and pledged.
Section 24. Acceptance of Insurance: Payments Under Bond Insurance. The City
hereby accepts the commitment from Ambac Assurance to provide a Municipal Bond Insurance
Policy insuring repayment of the Bonds.
A. As long as the Bond Insurance shall be in full force and effect, the City
agrees to comply with the following provisions:
(1) At least one day prior to any interest payment date, the City will
determine whether there will be sufficient funds in the Bond Fund to pay the principal of
or interest on the Bonds on such interest payment date. If the City determines that there
will be insufficient funds in such fund, it shall so notify Ambac Assurance. Such notice
shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency
is applicable and whether such Bonds will be deficient as to principal or interest, or both.
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If the City has not so notified Ambac Assurance at least one day prior to an interest
payment date, Ambac Assurance will make payments of principal or interest due on the
Bonds on or before the first day next foUo~ng the date on which Ambac Assurance shall
have received notice of nonpayment.
(2) the City shall, after giving notice to Ambac Assurance as provided
in (1) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to
the United States Trust Company of New York, as insurance trustee for Ambac Assurance
or any successor insurance trustee (the "Insl.1rance Trustee"), the registration books of the
City maintained by the Bond Registrar, if any, <:nd all records relating to the funds and
accounts maintained under this Ordinance.
(3) the City shall provide Ambac Assurance and the Insurance Trustee
with a list of registered owners of Bonds entitled to receive principal or interest payments
from Ambac Assurance under the terms of the Municipal Bond Insurance Policy, and shall
make arrangements with the Insurance Trustee (i) to mail checks or drafts to the
registered owners of Bonds entitled to receive full or partial interest payments from
Ambac Assurance and (ii) to pay principal upon Bonds surrendered to the Insurance
Trustee by the registered owners of Bonds entitled to receive full or partial principal
payments from Ambac Assurance.
(4) the City shall, at the time it provides notice to Ambac Assurance
pursuant to (1) above, notify registered owners of Bonds entitled to receive the payment
of principal or interest thereon from Ambac Assurance (i) as to the fact of such
entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest
payments next coming due upon proof of bondholder entitlement to interest payments and
delivery to the Insurance Trustee, in form satisfactory to the Insuréµ1ce Trustee, of an
appropriate assignment of the registered owner's right to payment, (iii) that should they be
entitled to receive full payment of principal from Ambac Assurance, they must surrender
their Bonds (along with an appropriate instrument of assignment in form satisfactory to
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the Insurance Trustee to permit ownership of such Bonds to be registered in the name of
Ambac Assurance) for payment to the Insurance Trustee, and (iv) that should they be
entitled to receive partial payment of principal from Ambac Assurance, they must
surrender their Bonds for payment thereon first to the Bond Registrar who shall note on
such Bonds the portion of the principal paid by the Bond Registrar, and then, along with
an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to
the Insurance Trustee, which will then pay the unpaid portion of principal.
(5) in the event that the Bond Registrar has notice that any payment of
principal of or interest on a Bond which has become due for payment and which is made
to a bondholder by or on behalf of the City has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States Bankruptcy
Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a
court having competent jurisdiction, the Bond Registrar shall, at the time Ambac
Assurance is notified pursuant to (1) above, notify all registered owners that in the event
that any registered owner's payment is so recovered, such registered owner will be entitled
to payment from Ambac Assurance to the extent of such recovery if sufficient funds are
not otherwise available, and the Bond Registrar shall furnish to Ambac Assurance its
records evidencing the payments of principal of and interest on the Bonds which have been
made by the Bond Registrar, and subsequently recovered from registered owners and the
dates on which such payments were made.
(6) in addition to those rights granted Ambac Assurance under this'
Ordinance, Ambac Assurance shall, to the extent it makes payment of principal of or
interest on Bonds, become subrogated to the rights of the recipients of suc~ payments in
accordance with the terms of the Municipal Bond Insurance Policy, and to evidence such
subrogation (i) in the case of subrogation as to claims for past due interest, the Bond
Registrar shall note Ambac Assurance's rights as subrogee on the registration books of the
City maintained by the Bond Registrar upon receipt from Ambac Assurance of proof of
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..
the payment of interest thereon to the registered owners of the Bonds, and (ii) in the case
of subrogation as to claims for past due principal, the Bond Registrar shall note Ambac
Assurance's rights as subrogee on the registration books of the City maintained by the
Bond Registrar upon surrender of the Bonds by the registered owners thereof together
with proof of the payment of principal thereof.
B. Consent of Ambac Assurance. Any provision of this Ordinance expressly
and specifically recognizing or granting rights in or to Ambac Assurance may not be amended in
any manner which affects the rights of Ambac Assurance hereunder without the prior written
consent of Ambac Assurance.
C. Consent of Ambac Assurance in Addition to Bondholder Consent. Unless
otherwise provided in this section, Ambac Assurance's consent shall be required in addition to
bondholder consent, when required, for the following purposes: (i) execution and delivery of any
amendment, supplement or change to or modification of this Ordinance; (ii) removal of the Bond
Registrar and selection and appointment of any successor Bond Registrar; and (iii) any initiation
or approval of any action not described in (i) or (ii) above which requires bondholder consent.
D. Consent of Ambac Assurance in the Event of Insolvency. Any
reorganization or liquidation plan with respect to the City must be acceptable to Ambac
Assurance. In the event of any reorganization or liquidation, Ambac Assurance shall have the
right to vote on behalf of all bondholders who hold Ambac Assurance-insured bonds absent a
default by Ambac Assurance under the applicable Municipal Bond Insurance Policy insuring such
Bonds.
E. Consent of Amabac Assurance Upon Default. Anything in this Ordinance
to the contrary notwithstanding, upon the occurrence and continuance of an event of default as
defined herein, Ambac Assurance shall be deemed to be a bondholder of the Bonds it insures for
purposes of enforcement of all rights and remedies granted to the bondholders for the benefit of
the bondholders under this Ordinance.
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F. . Ambac Assurance as Third Party Beneficiary. To the exxtent that this
Ordinance confers upon or gives or grants to Ambac Assurance any right, remedy or claim under
or by reason ofthis Ordinance, Ambac Assurance is hereby explicitly recognized as being a third-
party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or
granted hereunder.
G. Parties Interested Herein. Nothing in this Ordinance expressed or implied
is intended or shaH be construed to confer upon, or to give or grant to, any person or entity, other
than the City, Ambac Assurance or the Bond Registrar, and the registered owners of the Bonds,
any right, remedy or claim under or by reason of this Ordinance or any covenant, condition or
stipulation hereof, and all covenants, stipulations, promises or agreements in this Ordinance
contained by and on behalf of the City shaH be for the sole and exclusive benefit of the City,
Ambac Assurance, the Bond Registrar, and the registered owners of the Bonds.
Section 25. Rights ofInsurer.
A. While the Municipal Bond Insurance Policy is in effect, the City shall
furnish to Ambac Assurance (to the attention of the Surveillance Department, unless otherWise
indicated):
(1) as soon as practicable after the filing thereof, a copy of any financial
statement of the City and a copy of any audit and annual report of the City;
(2) a copy of any notice to be given to the registered owners of the
Bonds, including, without limitation, notice of any redemption of or defeasance of Bonds,
and any certificate rendered pursuant to. this Ordinance relating to the security for the
Bonds; and
(3) such additional information Ambac Assurance may reasonably
request.
B. The City shaH notify Ambac Assurance of any failure of the City to provide
relevant notices or certificates.
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C. The City will permit Ambac Assurance to discuss the affairs, finances and
accounts of the City or any information Ambac Assurance may reasonably request regarding the
security for the Bonds with appropriate officers of the City. The City will permit Ambac
Assurance to have access to and to make copies of all books and records relating to the Bonds at
any reasonable time.
D. Ambac Assurance shall have the right to direct an accounting at the City's
expense, and the City's failure to comply with such direction within 30 days after receipt of
written notice at the direction from Ambac Assurance shall be deemed a default hereunder;
provided, however, that if compliance cannot occur within such period, then such period will be
extended so long as compliance is begun within sl.1ch period and diligently pursued, but only if
such. extension would not materially adversely affect the interets of any registered owner of the
Bonds.
E. Notwithstanding any other proVIsIon of this Ordinance the City shall
immediately notify Ambac Assurance if at any time there are insufficient moneys to make any
payments of principal and/or interest as required.
Section 26. Sale of Bonds: Official Statement. The written offer of Seattle-Northwest
Securities Corporation, Seattle, Washington, dated January 22, 1998, which is attached to this
ordinance, to purchase the Bonds at the price specified therein, plus accrued interest, if any, and
under the terms and conditions provided in said offer and in this ordinance is hereby in all respects
accepted and approved.
The Treasurer and other appropriate officers of the City are authorized and directed to
execute and deliver to the Purchaser copies of an Official Statement in substantially the form of
the Preliminary Official Statement; provided, however, that the Finance Director is authorized to
supplement or amend the Preliminary Official Statement as the Finance Director, with the
approval of bond counsel to the City, deems necessary or appropriate. The City hereby deems the
Preliminary Official Statement as final for purposes of the Rule. The Council approves and
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authorizes the use of such Official Statement (including any such supplements and amendments
thereto) in connection with the public offering and sale of the Bonds by the Purchaser.
Section 27.
Supplements and Amendments.
The City Council from time to time and at any time may adopt an
A.
ordinance or ordinances supplemental hereof, which ordinance or ordinances thereafter shall
become a part of this ordinance, for anyone or more or an of the following purposes:
(1) To add to the covenants and agreements of the City m. this
ordinance other covenants and agreements thereafter to be observed, which shall not adversely
affect the interests of the owners of any Bonds in any material respect, or to surrender any right or
power herein reserved to or conferred upon the City.
(2) To make such provisions for the purpose of curing any ambiguities
or of curing, correcting or supplementing any defective provision contained in this ordinance in
regard to such matters or questions as the Council may deem necessary or desirable and not
inconsistent with this ordinance and which shall not adversely affect the interest of the owners of
Bonds in any material respect.
Any such supplemental ordinance of the Council may be adopted without the consent of
the owners of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of
subsection B of this section.
B. With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bonds at the time outstanding, the City Council may adopt an ordinance or
ordinances supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this ordinance or of any supplemental ordinance;
provided, however, that no such supplemental ordinance shall:
(1) Extend the fixed maturity of any Parity Bonds, or reduce the rate of
interest thereon, or extend the time of payments ofinterest from their due date, or reduce the
amount of the principal thereof, or reduce any premium payable on the redemption thereof,
without the consent of the owner of each bond so affected; or
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(2) Reduce the aforesaid percentage of bondowners required to
approve any such supplemental ordinance, without the consent of the owners of all of the Parity
Bonds then outstanding.
It shall not be necessary for the consent of bondowners under this subsection B to approve
the particular form of any proposed supplemental ordinance, but it shall be sufficient if such
consent shall approve the substance thereof.
C. Upon the adoption of any supplemental ordinance pursuant to the
proVisIOns of this section, this ordinance shall be deemed to be modified and amended in
accordance therewith, and the respective rights, duties and obligations of the City under this
ordinance and all owners of Bonds outstanding hereunder shall thereafter be determined,
exercised and enforced thereunder, subject in all respects to such modification and amendments,
and all the terms and conditions of any such supplemental ordinance shall be deemed to be part of
the terms and conditions of this ordinance for any and all purposes.
Section 28. Authorization to Officials and Agents. The proper City officials arc hereby
authorized and directed to approve an official statement or other disclosure document, and to do
everything necessary and proper for the prompt issuance, execution and delivery of the Bonds in
conformance with the provisions of this ordinance and for the proper use and application of the
proceeds of the sale thereof as provided in this ordinance.
Section 29. Severability. If anyone or more of the covenants or agreements provided
in this ordinance to be performed on the part of the City shall be declared by any court of
competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or
agreements shall be null and void and shall be deemed separable from the remaining covenants and
agreements of this ordinance and shall in no way affect the validity of the other provisions of this
ordinance or of the Bonds.
Section 30. Ratification. Any action consistent with the authority but prior to the
effective date of this ordinance is hereby ratified and confirmed.
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Section 31. Effective Date. This ordinance shall take effect five days after its passage,
approval and publication as required by law.
PASSED by the Council of the City of Port Townsend, Washington at a special open
public meeting on January 22, 1998.
ATTESTQ~ ~~
CITY CLERK
PASSED:
::Tf)1U. 22) /qq8
TftN- 22- I / qq r
APPROVED:
PUBLISHED:
1 Atv - 28) Iqc¡ e
CITY OF PORT TOWNSEND,
WASHINGTON
~ ¡7J~L
MAYOR
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"
CERTIFICATE
I, the undersigned, Clerk of the City of Port Townsend, Washington, (the "City") and
keeper of the records of the City Council (herein calleclthe "Council"), DO HEREBY CERTIFY:
1. That the attached ordinance is a true and correct copy of Ordinance No.~ of
the Council (herein called the "Ordinance"), duly passed at a regular meeting thereof held on the
22nd day of January, 1998.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
quorum was present throughout the meeting and a legally sufficient number of members of the
Council voted in the proper manner for the passage of said Ordinance; that all other requirements
and proceedings incident to the proper passage of said Ordinance have been duly fulfilled, carried
out and otherwise observed; and that I am 'authorized to execute this certificate.
*' FEp;,.
IN WITNESS WHEREOF, I have hereunto set my hand this ~ day ofJafttltlry, 1998.
.Qo~ cµ~
City Clerk Ó
NMN150.DOC 98/01/22