Ordinance 2678CITY OF EDMONDS, WASHINGTON
ORDINANCE NO. 2578
AN ORDINANCE relating to the combined water and
sewerage systems comprising the waterworks utility of
the City; specifying and adopting a plan or systen,
for the acquisition and construction of certain
additions and betterments to and extensions and
improvements of that waterworks utility; declaring
the estimated cost thereof as nearly as may be;
providing for the issuance of $9,990,000 par value
Water and Sewer Revenue Bonds, 1988, for the purpose
of providing a part of the funds to carry out that
plan or system for the acquisition and construction
of certain additions and betterments to and exten-
sions and improvements of the waterworks utility of
the City specified and adopted herein and capitalize
a reserve for those bonds; fixing the date, form,
maturities, interest rates, terms and covenants of
those bonds; providing for the sale and delivery of
those bonds to Dain Bosworth Incorporated of Seattle,
Washington; and establishing an effective date of
this ordinance.
WHEREAS, the City of Edmonds, Washington (the "City"), by
Ordinance No. 1957 passed and approved November 15, 1977,
specified and adopted a plan or system foi the acquisition and
construction of certain additions and betterments to and exten-
sions and improvements of the combined water and sewerage
systems comprising the waterworks utility of the City (the
"System"); declared the estimated cost thereof as nearly as may
be; and provided for the issuance of $4,805,000 par value Water
and Sewer Revenue Refunding and Construction Roads, 1977 (the
"1977 Bonds"), for the purpose of providing a part of the funds
(a) to carry out the plan or system for the acquisition and
construction of certain additions and betterments to and exten-
sions and improvements of the System specified and adopted in
that ordinance, and (b) to pay, retire and refund the outstand-
ing Water and Sewer Revenue Bonds, 1959, the Water and Sewer
Revenue Bonds, 1960, the Water and Sewer Revenue Bonds, 1961,
the Water and Sewer Revenue Bonds, 1965, the Water and Sewer
Revenue Bonds, 1966, the Water and Sewer Revenue Bonds, 1967,
the Water and Sewer Revenue Bonds, 1970 (interest only), the
Water and Sewer Revenue Refunding Bonds, 1972, and the Water and
Sewer Revenue Refunding Bonds, 1976, of the City, which 1977
Bonds were issued under date of November 1, 1977; and
WHEREAS, by Section 16 of Ordinance No. 1957, the City
reserved the right to issue additional and/or refunding water
and sewer revenue bonds (therein called "Future Parity Bonds")
which would constitute a lien and charge upon the gross revenue
of the System on a parity with such 1977 Bonds if the following
conditions are met and complied with at the time of the issuance
of such Future Parity Bonds:
"(1) At the time of issuance of such Future
Parity Bonds, there shall not be any deficiency in
the Bond Fund or the Reserve Account therein.
"(2) Each ordinance providing for the issuance
of such Future Parity Bonds shall require that all
Assessments levied in any ULID created in _onnection
with the Future Parity Bonds then being i•,sued will
be paid directly into the Bond Fund.
"(3) Each ordinance providing for the issuance
of such Future Parity Bonds shall provide for the
payment of the principal thereof and interest thereon
out of the Bond Fund.
"(4) The ordinance authorizing any Future
Parity Bonds shall require that the Reserve Account
be increased within a period of five years after the
date of issuance of the Future Parity Bonds to an
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amount equal to the average annual principal and
inter-st requirements on all Future Parity Bonds,
ik •l -Ang flit: Bonds and the Future Parity Bonds
p> ;ed to b- issued, excluding from such amount the
principal amount of any Term Bonds included in the
Future Parity Bonds issue.
"(5) At the time of the issuance of such Future
Parity Bonds, the City shall have on file a certifi-
cate from an independent licensed professional
engineer experienced in the design, construction and
operation of municipal utilities, showing that in his
professional opinion, the annual Revenue of the
System, after payment of Operating and Maintenance
Expenses, available for debt service on the Bonds,
Future Parity Bonds then outstanding and the Future
Parity Bonds proposed to be issued for each year
shall be at least equal to the Coverage Requirement
(1.25 times that amount of debt service to be paid
from operating Revenue and not Assessments).
"In determining whether the City ii, able 1-o comply with the
parity conditions, the Revenue of the System of the City, less
Operating and Maintenance Expenses, for any twelve consecutive
calendar months out of the immediately preceding twenty-four
consecutive months Lhall be used. The following adjustments m.:y
be made to the historical net operating Revenue of the System:
"(1) Any rate change that has taken place or
been approved, may be refl—ted;
"(2) Revenue may be added from customers
actually added to the System subsequent to the
12-month base period;
"(3) Revenue may be added from customers to be
served by the improvements being constructed out of
the proceeds of the Future Parity Bonds to be issued;
and
"(4) A full year's revenue may be included from
any customer being served, but %ho has not been
receiving service for the full period of operation
used as a basis for the certificate; and
"(5) Actual
to the Operating
to such 12-month
as is applicable.
and
or reasonably
and Maintenance
period shall be
anticipated changes
Expenses subsequent
added or deducted,
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WHEREAS, by Ordinance 2363 passed on April 22, 1983, the
Citv authorized the issuance of $1,000,000 par value of its
Water and Sewer Revenue Bonds, 1983 (the "1983 Bonds");
WHEREAS, by Ordinance No. 2363, the first subsections (4)
and (5) of Section 16 of Ordinance No. 1957 were amended to read
as follows:
"(4) The ordinance authorizing any Future
Parity Bonds shA l require that the Reserve Account
be increased within a period of five years after the
date of issuance of the Future P:.rity Bonds to an
amount equal to the averaye annual principal and
interest requirements on all Future Parity Bonds,
.ncluding the Bonds and the Future Parity Bonds
proposed to be issued, excluding from such amount the
principal amount of any Term Bonds included in the
Future Parity Bonds issue if the r yment for such
Term 3onds is being provided for br a sinking fund.
"(5) At the time of the issuance of such Future
Parity Bonds, the City shall have on file a certifi-
cate from an i►,dependent licensed professional
engineer experienced in the design, construction and
operation of municipal u*ilities, showing that in his
professional opinion, the annual Revenue of the
System, after payment of Operating and Maintenance
Expenses, available for debt service on the Bonds,
Future Parity Bonds then outstanding and the Future
Parity Bonds proposed to be issued for each year
shall be at least equal to the Coverage Requirement."; j
and
WHEREAS, the of -ate of Washington has required the City to i
commence construction of a secondary sewage treatment plant and
related improvements at a total estimated cost of $40,000,000
and the City's share of the cost of construction of that plant
and related equipment is estimated to be $9,990,000; and i
WHERFAS, the City Council has determined it is necessary
and in the best interest of the City that there be adopted a
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plan or syste•n tot the acquisition and construction of certain
additions and betterments to and extensions and improvements of
the System, consi:tinq of the upgrading and expansion of the
City's sewage treatment plant to i secondary sewage treatment
facility and making related improvements, and that the City
issue its $9,990,000 par value of water and sewer revenue bonds
for the eurpose of paying its share of the cost of carrying ct.t
that plan or system and making other capital sewerage improve-
ments to the System; and
WHEREAS, Chapter 39.34 RCW permits a city to enter into a
contract with other cities and water and sewer districts regard-
ing the furnishing of sewage treatment and disposal service:,
ownership of treatment facilities, allocation and payment of
costs and perfor.-�nce of obligations under such a contract; and
WHEREAS, on May 17, 1988, the City entered into a contract
with 'he Olympic View Water and Sewer District, Snohorn,sh
County, Washington, Ronald Sewer District, King County,
Washington, and the City of Mountlake Terrace, Washington,
whereby the City agreed to furnish sewage treatment and disposal
service to th�_e districts and that city and those districts and
that city agreed to pay their share of the cost of that sewage
treatment and disposal service, including certain costs of
constructing and maintaining secondary sewage treatment and
disposal facilities; and
WHEREAS, on September 10, 1986, the City issued its
Declat-ition of Nonsignificance with respect to the improvements
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included in the plan or system described above and a Notice of
Action aas published on December 17, 1986, and December 24,
1986; and
WHEREAS, all requirements of the National Environmental
Policy Act have been met and complied with; and
WHEREAS, Dain Bosworth Incorporated has offered to purchase
the bonds to finance the City's share of the improvements
included ir, the plan or system described above under the terms
and conditions herein set torth, and the City Council has
determined it is in the best interest of the City to accept that
offer; NOW, THERFr'ORE,
THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTUN, DO
ORDAIN, as follows:
Section 1. Definitions. As used in this ordinance the
following words shall have the following meanings:
"Bond Fund" means the special fund of the City known as the
"Water and Sewer Revenue Bond Fund, 1977," created by Ordinance
No. 1957 for the paymen* ?c the principal (,7 and interest on the f
1977 Bonds and all Future Parify Bonds of the City thereafter
issued, including the 1983 Bonds and the Bonds.
"Bonds" means the $9,)90,000 par value Water and Sewer
Revenue Bonds, 1988, of the City authorized to be issued by this
ordinance.
"1977 Bond-" means the outstanding Water and Sewer Revenue '
Refunding and Construction Bonds, 1977, of the City issued ender
date o. N-)vember 1, 1977, pursuant to Ordinance No. 1957.
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"1983 Bonds" means the outstanding Water and Sewer Revenue
Bonds, 1983, of the City issued under date of May 1, 1983,
pursuant to Ordinance No. 2363.
"City" means the City of Edmonds, Washington, a duly
organized and existing noncharter code city undr.r the laws of
the State of Washington.
"Coverage Requirement" means 1.25 times the portion of
annual debt service, excluding the principal of any Term Bond,
if the payment for such Term Bonds is being provided for by a
sinking fund, on the 1977 Bonds, the 1983 Bonds, the Bonds and
any Future Parity Bonds Pctually paid from the Revenue of the
System and r-t from ULID Assessments, after payment of Operating
and Maintenance Expenses.
"Future Parity Bonds" means all revenue bonds of the City
issued after the date of the issuance of the Bonds and having a
lien upon the Revenue of the System for the payment of the
principal thereof and interest thereon equal to the lien upon
such Revenue for the payment of the principal of and interest on
the 1977 Bonds, the 1983 Bonds and the Bonds.
"Operatingand Maintenance Expenses" means all reasonable
expenses incurred by the City in causinc the System to be
operated and maintained in good repair, working order and
condition, but shall not include any depreciation or taxes or
charges in lieu of taxes levied or imposed by the City.
"Principal and Interest F.rccunt" means the account of that
name created in the Bond Fund for the payment of the principal
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of and interest on the 1977 Bonds, the 1983 Bonds, the Bonds and
all Future Parity Bonds of the City payable out of that fund.
"Reserve Account" means the account of that name created in
the Bond Fund for the purpose of securing he payment of the
principal of and interest on th- 1977 Bonds, the 1983 Bonds, the
Bonds and all Future Parity Bonds of the City payable out of
that fund.
"Revenue of the System" means all the earnings anti revenue
received by the System from any source whatsoever, except
general ad valorem taxes, ULID Assessments, proceeds from the
sale of City property, bond proceeds, and earnings on funds held
for payment to the United States of America under Section 148 of
the Internal Revenue Code of 1986, as amended.
"Stem" means the combined water supply ar.J distribution
system and sanitary sewage disposal system. of the City as the
game may be added to, improve9 and extended for as long as any
of the 1977 Bonds, the 19g3 Bonds, the Bonds and any Future
Parity Bonds are outstanding.
"Term Bond Maturi_t_y_ Year" means any maturity year in which
the outstanding principal amount of revenue bonds payable out of
the Bond Fund scheduled to mature (regardless of any reservation
of rights of redemption prior to maturity) is more than 1.25
times the average annual principal maturity of the bonds payable
out of that fund for the three years immediately preceding the
Term Bond Maturity Year.
M
"Term Bonds" means the outstanding bonds payable out of the
Bond Fund maturing in any Term Bond Maturity Year.
"ULID" means utility local improvement district.
"ULID Assessments" means the assessments levied in such
ULID of the City which may hereafter be created pursuant to
state law and shall include installments thereof and interest
and any penalties thereon.
Section 2. Plan or System Adopted. The City specifies,
ad,_:pts and orders the carrying out of a plan or system for the
acquisition and construction of additions and betterments to and
extensions and improvements of the System, consisting of the
upgrading and expansion of the City's sewage treatment plant to
a secondary sewage treatment facility and making related
improvements, more particularly described in the report entitled
"Final Facilities Plan, City of Edmonds, Washington," dated
June, 1988, and prepared by CWC-HDR, Inc., Edmonds, Washington.
There shall bt included in the foregoing all necessary
wyes, valves, couplings, connections and appurtenances, together
with all work as may be incidental and necessary to the fore-
going construction and installation.
The City shall acquire all property, both real and personal
or any interest therein, equipment, rights -of -way, easements and
franchises necessary to carry uut such plan, which is all as
more particularly set forth in reports, maps, plans and specifi-
cations prepared by _-WC-HDR, Inc.
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The City Council may make such changes in the details of
such plan, either prior to or during the course of actual
construction, which may be found necessary and desirable as long
as such changes do not substantially affect or change the main
general part of such pljn or the services to be rendered thereby
The life of the improvements comprising the foregoing plan
or system of additions and betterments to and extensions and
improvements of the System is declared to be at least 25 years.
The estimated cost of the acquisition, construction, installa-
tion aid financing of the above -described improvements is
declared to be approximately $40,000,000, which cost shall be
paid from the proceeds received from the issuance and sale of
the Bonds authorizea by this ordinance, contributions from
Ronald Sewer District, King county, Washington, Olympic View
Water and Sewer District, Snor.omish County, Washington, and the
City of Mountlake Terrace, Washington, proceeds of grants
anticipated to be received from the State of Washington and the
United States of America and other City funds available therefor.
Section 3. Compliance with Parity Provisions. In accord -
ante with the provisions of Section 16 of Ordinance No. 1957,
and Section 3 of Ordinance No. 2363, the City Council rinds and
declares that:
(1) At the time of issuance of the Bonds, there
gill be no deficiency in the Rund Fund or the Reserve
Account therein;
12) No ULID is created in connection with the
issuance of the Bonds;
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(3) Provision is made herein for the payment of
the principal of and interest on the Bonds out of the
Bond Fund;
(4) Provision it made herein for the deposit
from proceeds of the Bonds of the required additional
amount in the Reserve Account of the Bond Fund for
the Binds; and
(5) At the time of issuance of the Bonds, there
will be �-)n file with the City a certificate from
Henry H. Benj,:!s, Jr., an independent licenF-d profes-
sional engineer experienced in the design, construc-
tion and operation of municipal utilities, or another
qualifying independent licens A professional
engineer, showing that, in his professional opinion,
the annual Revenue of the System, after payment of
Operating and Maintenance Expenses, available for
debt service on the 1977 Bonds, the 1983 Bonus and
the Bonds for each year shall be at least equal to
the Coverage Requirement.
Section 4. Purpose and Description of Bonds. For the
purpose of providing the City's share of the cost of carrying
out the plan or system specified, adopted and ordered to be
carried out by Se-tion Z herein, making other capital
improvements to the ays'em as the City Council may determine
(the "Project") to capitalize a reserve for the Bonds and to pay
the costs of issuance of the Bonds ("costs of issuance"), the
City shall issue the Bonds in the principal amount of $y,990,000.
The Bonds shall be dated September 1, 1988; shall be n the
deno►,:nation of $5,000 or any integral multiple thereof within a
single maturity; shall be numbered separately in the manner and
with any additional designation as the Bond Registrar (collec-
tively, the fiscal agencies of the State of Washington located
in Seattle, Washington, and New York, New York) de, is necessary
for purposes of identification; shall bear interest at the rates
set forth below (computed on the basis of a 360-day year of
twelve 30-day months), payable on June 1, 1989, and semiannually
thereafter on Pach succeeding December 1 and June 1; and shall
bear interest at the rates and mature on December 1 in years and
amounts as follows:
Maturity Interest
Years Amounts Rates
1991 $ 170,000 6.35%
1992 270,000 6.60
1993 285,000 6.70
1994 300, � 00 t).80
1995 315,000 6.90
1996 50,000 7.00
1997 50,000 7.10
1998 501000 7.20
1999 630,000 7.30
2000 690,000 7.4C
2001 740,000 7.50
2002 790,000 7.60
2003 840,000 7.70
2004 900,000 7.80
2005 970,000 7.90
2006 1,060,000 7.95
2007 1,140,000 7.95
2008 740,000 7.95
The life of the capital facilities to be acquired with the
proceeds of the Bonds exceeds 20 years.
Section 5. Registration and Transfer of Bonds. The Bonds
shall be issued only in registered form as to both principal and
interest and recorded on books or records maintained by the bind
Registr.jr (the "Bond Register"). Th- Bond Register shall
contain the name and -•sailing address of the owner of each Bond
and the principal im,urr,t and number of each of the Bonds held by
each owner.
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�j
Bonds surrendered to the Bond Registrar may be exchanged
for Bonds in any authorized denomination of an equal aggregate
principal amount and of the -ame interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided
thereon and surrendered to the Bond Registrar. Any exchange or
transfer shall be without cost to the owner jr transferee. The
Bond Registrar shall not be obligated to exchange or transfer
any Bond during the fifteen days preceding any principal payment
or redemption date.
Section 6 Payment of Bonds. Both principal of and
interest on the Bonds shall be payable in lawful money of the
United States of America. Interest on the Bonds shall be paid
by checks or drafts mailed by the Bond Registrar on the interest
payment date to the registered owners at the addresses appearing
on the Bond Register on the fifteenth day of the month preceding
the interest payment date. Principal of the Bonds shall be
payable upon presentation and surrender of the Bonds by the
registered owners at either of Lhe principal offices of the Bond
Registrar at the option of the owr.ers.
Section 7. Optional Redemption and Open Market Purchase of
Bonds. Bonds maturing in the years 1991 through 1998, inclu-
sive, shall be issued without the right or option of the City to
redeem those Bunds prior to their stated maturity dates.
The City reserves the right and option to redeem the P3nds
maturing on o, after December 1, 1999, prior to their stated
maturity dates as a whole, or in part in inverse order of
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maturity (and by lot within a maturity in such manner as the
Bond Registrar shall determine), on December 1, 1998, or on any
interest payment date thereafter, at par plus accrued interest
to the date fixed for redemption.
Portions of the principal amount of any Bond, in install-
ments of $5,000 or any integral multiple thereof, may be
redeemed. If less than all of the principal amount of any Bond
is redeemed, upon surrender of that Bond at either of the
principal offices of the Bond Registrar, there shall be issued
to the registered owner, without charge therefor, a :,ew Bond (or
Bonds at the option of the registered owner) of the same matur-
ity and interest rate in any of the denominations authorized by
this ordinance in the aggregate principal amo!int remaining
unredeemed.
The City further reserves the right and option to purchase
any or all of the Bonds in the open market at any time at any 1
i
price acceptable to the City plus accrued interest to the date
of purchase.
All Bonds purchased or redeemed under this section shall be
cancelled.
Section 8. Notice of Redemption. The City shall cause
notice of any intended redemption of Bonds to be given not less
than 30 nor more than 60 days prior to the date fired for
redemption by first-class mail, postage prepaid, to the regis-
tered owner of any Bond to be redeemed at the address appearing
on. the Bond Register at the time the Bond Registrar prepares the
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�• a
notice, and the requirements of this sentence shall be deemed to
have been fulfilled when notice has been mailed as so provided,
whether or not it is actually received by the owner of any
Bond. Interest on Bonds called for redemption shall cease to
accrue on the date fixed for redemption unless the Bond or Bonds
called are not redeemed when presented pursuant to the call. In
addition, the redemption notice shall be mailed within the same
period, postage prepaid, to Moody's Investors Service, Inc., and
Standard & Poor's Corporation at their offices in New York,
New York, or their successors, to Dair Bosworth Incorporated, at
its principal office in Seattle, Washington, or its successor,
and to such other persons and with such additional information
as the City Director of Finance shall determine, but these
additional mailings shall not be a condition precedent to the
redemption of Bonds.
Section 9. Failure to Redeem Bonds. If any Bond is not
redeemed when properly presented at its maturity or call date,
the City shall be obligated to pay interest on that Bond at the
same rate provided in the Bond from and after its maturity or
call date until that Bond, both principal and interest, is paid
in full or until sufficient money for its payment in full is on
deposit in the Bond Fund and the Bond has been called for
payment by giving notice of that call to the registered owner of
that unpaid Bond.
Sectioi_ 10. Deposits to Bond Fund. So long as Bonds are
outstanding against the Bond Fund, the City Director of Finance
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shall set aside and pay into the pond Fund out of the
the System, in addition to the amounts to be deposited
for the 1977 Bonds and the 1983 Bonds, a fixed amount,
regard to any fixed proportion, name'y:
(a) into the rrrncipai ana interesr Account, at
least 20 days prior to each principal payment date
and each interest payment date, an amount sufficient,
together with any ULID Assessment co.lections
deposited therein in connection with any Future
Parity Bonds hereafter issued, to pay the principal
amount maturing on each maturity date of the 1977
Bonds, the 1983 Bonds, Lhe Bonds and any Future
Parity Bonds hereafter issued and outstanding and an
amourt sufficient to pay the interest payable on the
1977 Bonds, the 1983 Bonds, the Bonds and those
Future Parity Bonds on such interest payment date; and
M Into the Reserve Account from the proceeds
of the issuance and sale of the Bonds and from other
money legally available to be used therefor in such
amounts so that on and after the date of delivery of
the Bonds to the purchaser thereof and payment
therefor, there shall be on deposit in such Reserve
Account a total reserve at least equal to the average
annual debt service requirements, both principal and
interest, of the 1977 Bonds, the 1983 Bonds and the
Bonds, excluding tht principal of any Term Bonds if
the payment for such Term Bonds is being provided fur
by a sinking fund.
The Reserve Account shall be maintained at that total
average annual debt service required reserve amount, except for
withdrawals therefrom as authorized herein. at all times so long
as any of the 1977 Bonds, the 1983 Bonds, the Bonds and any
Future Parity Bonds ace outstanding; except that the amount in
the Reserve Account may be reduced at any time to at- amount not
less than the average annual debt service requirements fr)r the
1977 Bonds, the 1983 Bonds, the Bonds and any Future Parity
Bonds then outstanding. When the total amount in the Bond Fund
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shall equal the total amount of principal and interest for all
outstanding bonds payable out of the Bond Fund to the last
maturity thereof, no further payment need be made into the Bond
Fund.
In the event that there shall be a deficiency in the
Principal and Interest Account in the Bond Fund to meet maturi�ig
installments of either principal or interest, as the case may
be, that deficiency shall be nade up from the Reserve Account by
the withdrawal of cash therefrom for that purpose. Any
deficiency created in the Reserve Account by reason of any such
withdrawal shall then be made up from the Revenue of the System
and/or ULID Assessments, if any, payable into the Bond Fund
first availahle after making necessary provision for the
required payments into the Principal and Interest Account. The
money in the Reserve Account shall otherwise be held intact and
may be applied against the las'_ outstanding bonds payable out of
the Bond Fund.
All money in the Bond Fund not necdea to feet the payments
of principal and interest whet, due may be kept n dep�jsit in the
official bank depository of the City or in any national bank or
may be invested in any legal investment. Interest on any such
investment or on such bank account shall be deposited in and
become a port of the Bond Fund.
In the judgment of the City Council, the Revenue of the
System anticipated to be derived from the operation and mainte-
nance Df the System will be more than sufficient to pay the
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Operating and Maintenance Fxpenses and to per«.it the setting
aside i.�*o the Bond Fund out of the Revenue of the System of
sufficient amounts to pay the interest on the 1977 Bonds, the
1983 bonds and the Bonds when due and to pay and redeen, all of
the 1977 Bonds, the 1983 Bonds and the Bonds at maturity or
earlier mandatory redemption date.
The City Council further declares that in fixing the
amounts to be pa into the Bond Fund it has considered and had
due regard for Operatinn and Maintenance Expenses and has not
set aside into the Bond Fund a greater amount or proportion of
t. Revenue of the System that ir is judgmen will be available
over and above Operating and Maintenance Expenses, and that no
portion of the Revenue of the System has bef_n previously pledged
for any other outstanding indebtedness except for payment of the
1977 bonus and 1983 Bonds.
Section 11. Lien Position of Bonds. All Revenue of the
System is pledged to the payments required to be made into the
Bond Fund, and the Bonds shall constitute a charge and lien upon
that Revenue prior and superior to all oche- charges and liens
whatsoever, excludinq Operating and Maintenance Expenses, except
that the charge and lien upon tha' Revenue for the Bonds shall
be on a parity with the charge and lien upon that Revenue and
upon any ULIU Assessment; hereafter pledged to be p..id into the
Bond Fund for the 1977 Bonds, the 1983 Bonds and any Future
Parity Bonds.
Section 12. Covenants. 'The City covenants and agrees with
the owner of each Bond at any time outstanding as fo'lows:
(a) It ivill establish, maintain and collect
such rates and charges for water and sanitary sewage
disposal service so long as any 1977 Bonds, 1983
Bonds, Bond and Future Parity Bonds are outstanding
which, together with other miscellaneous Revenue of
the System (excluding ULID Assessments), will p•ovide
amounts annually at least equal to the Coverage
Requirement. In determining she amount of debt
service subject to coverage, there shall be deducted
from the annual principal and interest required to be
paid each year an amount equal to the percentage of
the debt service for each year on each issue of
outstanding 1977 Bonds, 1983 Bond;, Bonds and Future
Parity Bonds, equal to the percentage arrived at by
dividing the original total amount of the ULID
Assessments specifically pledged to the Bond Fund in
that issue by the original total principal amount of
that issue. .o simplify, where ULIDs are involved,
only the debt service on that portion of any Future
Parity Bond issue not covered by ULID Assessments
must be subject to the Coverage Requirement.
(b) It will at all times maintain and keep the
System in good repair, working order and condition,
and also will at all times operate the System and the
business in connection therewith in an efficient
manne and at a reasonable cost.
(c) It will not sell, lease, mortgage or in any
manner encumber or dispose of ali the property of the
System unless provision is made for payment into the
Bond Fu.id of , sum sufficient to pay the principal of
and interest on all bonds payable ou`_ of the Bond
Fund at any time outstanding, and that it will not
sell, lease, mortgage, cr in any manner encumber or
di,h-se of any part of the property of the System
that is used, useful and material to the operation
thereof unless provision is made for replacement
thereof or for payment into the Bond Fund of the
total amount of Revenue received which shall n(.t be
less than ..n amount which shall beat the same ratio
to the amount of outstanding bonds payable out of the
Bond Fund as the Revenue available for debt service
for si:ch outstanding bonds for the twelve months
preceding such sale, lease, encumbrance or disposal
from the portion of the System sold, leased, encum-
bered or disposed of bears to the Revenue available
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for debt service for those bonds from the entire
System ror the tame period. Any money so paid into
the Bond Fund shall be used to retire those outstand-
ing bonds at the earliest possible date.
(d) Whi,e any of the Bonds remain outstanding,
it will keep proper and separate accounts and records
in which complete and separate entries shall be made
of all transactions relating to its System, and it
will furnish any subsequent owner or owners of the
Bonds, if the Bonds shall be owned by ocher than a
Fund of the City, at the written request of suc!r
owner or owners, complete operating end income
statements of the System in reasonable detail
covering any calendar year, showinq the financial
condition of the water and sewer departments and
compliance with the terms and conditions of this
ordinancenot more than 120 days after the close of
that calendar year, an' it will grant any owner or
owners of at least 25% of the outstandiny Bonds the
right at all -easonable times to inspect the entire
System and all records, accounts and data of the City
relating thereto. Upon request or any owner of any
of such Bonds, it will also furnish to that owner a
campy of the most recently completed audit of the
City's accounts by the State Audits of Washington or
suc} other audit as is authorized by law in lieu
thereof.
(e) It will not furnish water -r sanitary
sewage disposal service to any customer whatsoever
free Df charge and will promptly take legal action to
enforce collection of all delinquent accounts.
(f) It will carry the types of insurance on its
System priperties in the amounts normally carried by
private water and sewer companies engaged in the
operation of water and sewerage systems or, in lieu
*hereof, after the retirement or redemption of all of
the outstanding 1977 Bonds and 1983 Bonds, or after
irrevocable provision is made for the payment of
those bonds, the City may self -insure or participate
in a joint intArgovernmental insurance pool or
similar plan providing coverage in the amounts
normally carried by slich private water companies, and
the cost of that insurance or self-insurance shall be
considered a part of Operating and Maintenance
Expenses. If, as and when the United States of {{'
Amcrica or some agency thereof shall provide for War f
Risk Insurance, the City further agrees to take out
and maintain such insurance on all or such ptrtions Jj
20
of the System on which such War Risk Insurance may be
written in an amount or amounts to rover adequately
the value thereof, except that after the retirement
or redemption of the outstanding 1977 Bonds and 1983
Bonds, or after irrevocable provision is made for the
payment of those bonds, the City will take out and
maintain such insurance only if available at rates
acceptable to the City.
(g) It will pay all Operating and Maintenance
Expenses and otherwise meet the obligations of the
City as herein set forth.
(h) If a ULID is ever established hereafter in
connection with the issuance of Future Parity Bonds
and the ULID Assessrrie,r+ : therefrom pledged to be paid
into the Bond Fur,d, the City will promptly collect
all Assessments levied therein. Such Assessments may
be used to pay the principal of and interest on any
bonds payable out of the Bond Fund without those
Assessments being particularly allocated to the
payment of principal and interest on any particular
series of such Future Parity Bonds, including the
1977 Bonds, the 1983 Bonds and the Bonds.
(i) It will take all actions necessary to
prevent interest on the Bonds from being included in
gross income for federal income tax purposes, and it
will neither take any action nor make or prrmit any
use of proceeds of the bonds or other funds of the
City treated as proceeds of the Bonds at any time
during the term of the Bonds which will cause inter-
est -n the Bonds to be included in gross income fo.
federal income tax purposes. The City also covenants
that, if all gross proceeds of the Bonds have not
been spent within six months after the date of
issuance of the Bonds, it will calculate, or cause to
be calculated, and rebate to the United States all
earnings from the investment of gross proceeds of the
Bonds that are in exces, of the amount that would
have been earned had the yield on those investments
been equal to the yield on the Bonds, plus all income
derived from those excess earnings, to the extent and
in the manner required by Section 148 of the United
States internal Revenue Code of 1986, as amended (the
"Code"), and applicable regulations. If the City
fails to meet rebate requirements applicabl• 1� the
Bonds under Section 1'8 of the Code, the tity cove- y
rants that, to the extent perr;dt'cd by th,t Section, i
it will pay the penalty provided in Subsection
148(f)(7)(C) if required to prevent interest on the
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Bonds from being included in gross income for federal
income tax purposes. The City certifies that it has
not been notified of any listing or proposed listing
by the Internal Revenue Service to the effect that it
is a bond issuer whose arbitrage certifications may
not be relied upon.
(j) It will use, pay out and distribute the
Revenue of the System, other than money deposited in
bond redemption funds, in the following order of
priority:
(1) To pay Operating and Maintenance
Expense.
(2) To meet the required debt service
payments, including Reserve Account accumulation
in the Bond Fund, on the 1977 Bonds, the 1983
Bonds, the Bonds and any Future Parity Bonds
hereafter issued.
(3) To meet the required debt service on
any water and sewer revenue bonds issued having
a charge and lien on the Revenue of the System
junior to the 1977 Bongs, the 1983 Bonds, the
Bonds and any Future Parity Bonds.
(4) To redeem and retire by optional
redemption or to purchase in the open market any
outstanding water and sewer revenue bonds or
obligations of the City, to make necessary
betterments and replacements of or repairs,
additions or extensions to the System, or for
any other lawful purpose.
Section 13. Form and Execution of Bonds. The Bonds shall
be printed or lithographed on good bond paper in a form consis-
tent with the provisions of this ordinance and state law, shall
be signed by the Mayor and City Clerk, either -)r both of whose
signatures may be manual or in facsimile, and the seal of the
City or a facsimile reproduction thereof shall be impressed or
printed thereon.
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Only Bonds bearing a Certificate of Authentication in the
following form, manually signed by the Bond Registrar, shall be
valid or obligatory for any purpose or entitled to the benefits
of this ordinance:
CERTIFICATE: OF AUTHENTICATION
This bond is one of the fully registered City of
Edmonds, Washington, Water and Sewer.Revenue Bonds,
1988, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Reg�strar
By
Authorized Officer
The authorized signing of a Certificate of Authentication shall
be coi.clusive evidence that the Bonds so authenticated have been
duly executed, authenticated and delivered and are entitled to
the benefits of this ordinance.
If any officer whose facsimile signature appears on the
Bonds ceases to be an officer of the City authorized to sign
bonds before the Bonds bearing his or her facsimile signature
are authenticated or delivered by the Bond Registrar or issued
by the City, those Bonds nevertheless may be authenticated,
delivered and issued and, when authenticated, issued and deliv-
ered, shall be as binding on the City as though that person had
continued to be an officer of the City authorized to sign
bonds. Any Bond also may be signed on behalf of the City by any
person who, on the actual date of signing of the Bond, is an
officer of the City authorized to sign bonds, although he or she
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did not hold the required office on the date of issuance of the
Bonds.
Section 14. Bond Registrar. The Bond Registrar shall
keep, or cause to be kept, at its principal corporate trust
office, sufficient books for the registration and transfer of
the Bonds which shall at all times be open to inspection by the
City. The Br)nd Registrar is authorized, on behalf of the City,
to authenticate and deliver Bonds tranaterred or exchanged in
accordance with the previsions of the Bonds and this ordinance,
to serve as the City's paying agent for the Bonds and to carry
out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No. 2451 establishing a system of
registration for the City's bonds anu obligations.
The Bond Registrar shall be responsible for its representa-
tions contained in the Bond Registrar's Certificate of Authen'r-
cation on the Bonds. The Bond Registrar may become the owner of
Bonds with the same rights it would have if it were not the Bond
Registrar and, to _he extent permitted by law, may act as
depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any
committee formed to protect the rignts of Bond owners.
Section 15. Bonds Negotiable. The Bonds shall be negoti-
able instruments to the extent provided by RCW 62A.8-102 and
62A.8-105.
Section 16. Designation of Bonds as"Qualified Tax -Exempt
Obligations." The City has determined and certifies that (a)
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the Bonds are not "private activity bonds" within the meaning of
Section 141 of the Code; (b) the reasonably anticipated amount
of tax-exempt obligations (other than private activity bonds)
which the City and any e►itity subordinate to the City (including
any entity 4hich the City controls, which derives its authority
to issue tax-exempt obligations trom the City or which issues
tax-exempt obligations on behalf of the City) will issue during
the calendar year in which the Bonds are issued will not exceed
$10,000,000; and (c) the amount of tax-exempt obligations,
including the Bonds, designated by the City as "qualified
tax-exempt obligations" for the purposes of Section 265(b)(3) A
the Code during the calendar year in which the Bonds are issued
does not exceeu $10,000.000. The City designates the Bonds as
"qualified tax-exempt obligations" fir the purposes of Section
26 (b)(3) of the Code.
Section 17. Provision for Future Parity Bonds. The City
reserves the right to issue Future Parity Bonds which will
constitute a charge a A lien upon the Revenue of the System and
ULID Assessments hereafter pledged to be paid into the Bond Fund
on a parity with the 1977 Bonds, the 1983 Bonds and the bonds if
the conditions set forth in Section 16 of Ordinance No. 1957, as
amended by Section 3 of Ordinance No. 2363, shall be met and
complied with at the time of the issuance of those Future Parity
Bonds, which sections are incorporated herein and made a part of
this ordinance.
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Nothing contained in the provisions for parity Ehall
prevent the City from issuing revenue bonds having a junior lien
on the Revenue of the System or from pledging the payment of
ULID Assessments into a bond redemption fund or account created
to pay and secure the payment of the principal of and interest
on such junior lien bonds as long as such ULID Assessments are
levied to pay part or all of the cost of improvements being
constructed out of the proceeds of the sale of such junior lien
bonds. Neither shall anything contained in this ordinance
prevent the City from issuing revenue bonds to iefun(' maturing
revenue bonds or the City for the payment of which money is not
otherwise avaiiable.
Section 18. Refunding or_Deieasance. In the event the
City shall issue advance refunding bonds pursuant to the laws of
the State of Washington, or have money available from any other
lawful source, to pay the principal of and interest on the Bonds
or such portion thereof included in a refunding or defeasance
pl-n ac the same become due and payable dnd to refund or defeasc
all such then outstanding Bonds and to pay the costs of refund-
ing or defeasance, and shall have irrevocably set aside for and
pledged to such payment, refunding or defeasance, (a) money
and/or direct obligations of the United States of America, or
(b) "government obligations," as defined in Chapter 39.53 RCW
(as now or hereafter amended) and collateralized by direct
obligations of the United States of America ("Government Obliga-
tions"), sufficient in amount, together with known earned income
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from the investment thereof, to make such payments and to
accomplish the refunding or defeasance as scheduled (hereinafter
called the "trust account") and shall make irrevocable provision
for the redemption of those Bonds, then in that case the Bonds
shall be defeased (hereinafter called the "defeased Bonds").
Thereafter, all right and interest of the owners of the defeased
Bonds in '-he covenants of this ordinance, in the Revenue of the
System, and in funds and accounts, including ULID Assessments,
obligated to the payment of the defeased Bonds shall cease and
become void, except the owners shall have the right to receive
payment of the principal of and interest on the defeased Bonds
from he trust account. After the establishing and full funding
of the trust account, the City may then apply any money in any
other fund or account established for the payment or redemption
of the defeased Bonds to any lawful purposes aF it shall deter-
mine, subject only to the rights of the owners of any other
bonds then outstanding.
In the event that the refunding plan provides that the
Bonds being retinded the refunding bonds to be issued be secured
by cash and/or direct )bligations of the United States of
America or Government Obligations pending the prior redemption
of those Bonds being refunded and if such refunding plan also
provides that certain cash and/or direct obligations of the
rinited States of Amerir-a or Government Obligations are irrevo-
cably pledged fir the prior redemption of those Bonds included
in the refunding or defeasance plan, then only the debt service
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on the Bonds which are not defeased Bonds and the refunding
bonds, the payment of which is not so secuiad by the refunding
plan, shall be included in the computation of coverage for
issuance of Future Parity Bonds and the annual computation of
coverage for determining compliance with the rote covenants.
Section 19. Sale and Delivery of Bonds. Pain Bosworth
Incorporated of Seattle, Washington, has presented a purc,
contract dated August 23, 1988 (the "Purchase Contract"), to the
City offering to purchase the Bonds under the terms and condi-
tions set forth in the lurchase Contract, whch written Purchase
Contract is on file with the City Clerk and is incorporated
herein by this reference. The City Council finds that entering
into the Purchase Contract is in the City's best interest and
therefore accepts the offer contained therein and authorizes its
execution by City officials. The Bonds will be printed at City
expense and will be delivered to the purchaser in accordance
with the Purchase Contract, with the approving legal opinion of
Foster Pepper & Shefelman, municipal bond counsel of Seattle,
Washington, regarding the Bonds printed on each Bond. Bond
counsel shall not be required to review and shall express no
opinion concerning the completeness or accuracy of any official
statement, offering circular or other sales material issued or
used in connection with the Bonds, and bond counsel's opinion
shall so state.
Sect -ion 20. Disposition of Bond Proceeds. The principal I
proceeds received from the issuance and sale of the Bonds shall
b
G
be deposited in the Secondary Treatment Construction Fund (the
"Construction Fund") of the City, and the accrued interest
received shall be deposited in the Principal and Interest
Account in the Bond Fund. Until needed to pay the costs of e
Project and costs of issuance of the Bonds, the City may invest
the principal proceed- temporarily in any legal investment, and
the investment earnings may be retained in the Construction Fund
and used for the purposes of that fund, (xcept that earnings
subject to a federal tax or rebate requirement may he withdrawn
from the Construction Fund and used for those tax or rebate
purposes.
Section 21. Temporary Bond. Pending the printing, execu-
tion and delivery to the purchaser of definitive Bonds, the City ,
may cause to be executed and delivered to the purchaser a single
temporary Bond in the t)ral principal amount of ti,e Bonds. The
temporary Bond shall bear the same date of issuance, interest
rates, principal payment dates and terms and covenants as the
definitive Bonds, shall be issued as a fully registered Bond in
the name of the purchaser, and otherwise shall be in a form
acceptable to the purchaser. The temporary Bond shall be
exchanged for definitive Bonds as soon as they are printed,
executed and available for delivery.
Section 22. Effective Date. This ordinance, being an
exercise of a power delegated to the City legislative body, is
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not subject to referendum, and shall take effect five days after
i s passage and publication.
PASSED by the City Council of the City of Edmonds,
Washington, at a regular open public meeting thereof and
APPROVED by the Mayor this 23rd day of August, 1988.
CIT - -
By
ATTEST:
City Clerk
FORM APPROVED:
City torney
0 9 2 5 e
FILED WITH THE CITY CLERK: August 18, 1988
PASSED BY THE CITY COUNCIL: August 23, 1988
PUBLISHED: August 28, 1988
EFFECTIVE DATE: September 2, 1988
ORDINANCE NO. 2678
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I