Ordinance 3537CITY OF EDMONDS, WASHINGTON
ORDINANCE NO. 3537
AN ORDINANCE of the City of Edmonds, Washington, relating to the
combined water and sewerage systems comprising the waterworks utility of the
City; specifying, adopting and ordering the carrying out of a system or plan of
additions to and betterments and extensions of that system; authorizing the
issuance of not to exceed $2,000,000 principal amount of its water and sewer
revenue bond anticipation note (revolving line of credit) pending the issuance of
water and sewer revenue bonds authorized herein; fixing the date, form, maturity,
interest rate, terms and covenants of the note; establishing a note redemption
fund; and authorizing the issuance and providing for the delivery of the note to
Frontier Bank of Edmonds, Washington.
Passed February 15, 2005
This document prepared by:
Foster Pepper & Shefelman PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447 -4400
50500110.03
�l
TABLE OF CONTENTS
Recitals.......................................................... ...............................
Section 1. Definitions ................................... ...............................
Section 2. Adoption of Plan of Additions .... ...............................
Section 3. Authorization of Bonds ............... ...............................
Section 4. Description of Note ..................... ................... .I...........
Section 5. Designation of Officer to Make Loan Draws............
Section 6. Note Registrar; Registration and Transfer of Note....
Section 7. Creation of Note Fund; Payment of Note ..................
Section 8. Prepayment and Redemption Provisions ...................
Section 9. Note Form and Execution :.......... ...............................
Section 10. Note Covenants ........................... ...............................
Section 11. Preservation of Tax Exemption for Interest on Note.
Page
................... ..............................1
..................... ..............................2
..................... ..............................3
..................... ..............................4
..................... ..............................4
..................... ..............................6
..................... ..............................6
....... .......... ..............................7
..................... ..............................8
..................... ..............................8
..................... .......:......................9
.................... .............................10
Section 12. Small Governmental Issuer Arbitrage Rebate Exception and Designation
of the Note as a "Qualified Tax- Exempt Obligation." ..................... .............................10
Section 13. Approval of Bank Commitment and Deposit of Loan Draws ......... .............................11
Section 14. Effective Date of Ordinance ............................................................. .............................12
50500110.03
CITY OF EDMONDS, WASHINGTON
ORDINANCE NO. 3537
AN ORDINANCE of the City of Edmonds, Washington, relating to the
combined water and sewerage systems comprising the waterworks utility of the
City; specifying, adopting and ordering the carrying out of a system or plan of
additions to and betterments and extensions of that system; authorizing the
issuance of not to exceed $2,000,000 principal amount of its water and sewer
revenue bond anticipation note (revolving line of credit) pending the issuance of
water and sewer revenue bonds authorized herein; fixing the date, form, maturity,
interest rate, terms and covenants of the note; establishing a note redemption
fund; and authorizing the issuance and providing for the delivery of the note to
Frontier Bank of Edmonds, Washington.
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 for the acquisition and
construction of certain additions and betterments to and extensions and improvements of the
combined water and sewerage systems comprising the waterworks utility of the City (the
"System "); and
WHEREAS, the City is in need of acquiring, constructing, installing and equipping
wastewater facilities and appurtenances identified in Exhibit A attached hereto and by reference
made a part hereof (the "Improvements "), the estimated cost of which is $2,000,000, and the
City does not have available sufficient funds to pay that cost; and
WHEREAS, the City Council deems it to be in the best interests of the City to borrow
money by the issuance of water and sewer revenue bonds and, pending the issuance of those
bonds, issue short-term obligations in accordance with the provisions of chapter 39.50 RCW for
the purpose of providing a part of the funds with which to pay the costs of carrying out the
Improvements; NOW, THEREFORE,
505001 M03
THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN
as follows:
i
Section 1. Definitions. As used in this ordinance, the following words have the
following meanings:
"Bank" means Frontier Bank.
"Bank Commitment" means the letter from the Bank dated January 14, 2005,
describing certain terms of the Note and the conditions under which the Bank has offered to
accept delivery of the Note.
"Base Rate" means the rate of interest publicly announced from time to time by
the Bank as its Base Rate, the change in which takes effect at the opening of business on the day
specified in the public announcement of a change in the Bank's Base Rate.
ordinance.
"Bonds" means those water and sewer revenue bonds authorized by this
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks located in Seattle, Washington, are closed for business.
"City" means the City of Edmonds, Washington.
"Draw or "Loan Draw" means each incremental draw upon the Note.
"Improvements" means the wastewater facilities and improvements identified in
Exhibit A, attached ihereto and by reference made a part hereof.
"Note" means the Water and Sewer Revenue Bond Anticipation Note, 2005
(Revolving Line of Credit), of the City issued pursuant to, under the authority of and for the
purposes provided in this ordinance.
-2-
50500110.03
"Note Fund" means the City's Water and Sewer Revenue Bond Anticipation Note
Fund, 2005 (Revolving Line of Credit), created by Section 7 of this ordinance for the purpose of
paying principal of and interest on the Note.
"Note Register" means the books or records maintained by the Note Registrar
containing the name and mailing address of the Registered Owner.
"Note Registrar" means the Administrative Services Director of the City.
"Plan of Additions" means the plan of additions to and betterments and extensions
of the System of the City consisting of the Improvements, as specified, adopted and ordered to be
carried out by the City's six -year capital improvement plan and this ordinance.
"Registered Owner" means the Bank, as registered owner of the Note, or any
subsequent owner of the Note.
"System" means the combined water and sewerage systems comprising the
waterworks utility of the City, and all additions and betterments thereto and extensions thereof at
any time made
Section 2. Adoption of Plan of Additions. The Improvements are hereby specified and
adopted and ordered to be carried out as a system or plan of additions to and betterments and
extensions of the Waterworks Utility.
All of the foregoing shall be in accordance with the plans and specifications therefor
prepared by the City's consulting engineers. The District may modify the details of the Plan of
Additions where, in its judgment, it appears advisable if such modifications do not substantially
alter the intended purposes.
The life of the improvements comprising the Plan of Additions is declared to be at least
twenty -five (25) years. The estimated cost of the construction, installation and financing of the
-3-
50500110.03
Plan of Additions is declared to be approximately $2,000,000, of which a portion will be paid
from proceeds of the Note.
• Section 3. Authorization of Bonds. For the purpose of paying a part of the cost of
carrying out the Plan of Additions, the City shall issue its water and sewer revenue bonds in the
approximate principal amount of $2,000,000. Such bonds shall be payable from the revenue of
the System, and shall, unless otherwise determined by the City Council (and approved by the
.Bank while the Note remains outstanding), be issued as a claim or lien on the revenues of the
System. Such bonds shall be issued in one or more series at such times as the City shall deem
advisable; shall be in such denominations. and form, shall be dated, shall bear such interest rate or
rates, shall be payable at such time or times, shall have such option of payment prior to maturity,
shall guarantee such coverage and collection of rates, shall provide for such additional funds and
accounts and shall contain and be subject to such provisions and covenants as hereafter shall be
provided by ordinance.
Section 4. Description of Note. For the purpose of providing a part of the funds with
which to pay the costs of carrying out the Plan of Additions pending the receipt of the proceeds
of the issuance and' sale of the water and sewer revenue bonds authorized herein, the City shall
issue and deliver its Water and Sewer Revenue Bond Anticipation Note, 2005 (Revolving Line
of Credit) (the "NoiIte "), in the principal amount of not to exceed at any time $2,000,000. The
Note shall be dated as of the date of its delivery to the Bank ( "Date of Issue "); shall mature two
years from the dated date of the Note (the "Maturity Date ") unless the City and the Bank have
mutually agreed to extend the Maturity Date for another two years; shall be issued in fully
registered form as to both principal and interest; and shall be numbered R -1, with any additional
-4-
50500110.03
designation as the Administrative Services Director, as the Note Registrar, deems necessary for
purposes of identification.
The City may make Draws upon the Note in any amount (so long as the amount of the
Draw does not cause the outstanding principal balance of the Note to exceed $2,000,000 at any
one time) on any Business Day from the Date of Issue. to but excluding the Maturity Date, for the
Note purposes identified above. No Draw may exceed the total amount of the costs to be paid
from such Draw, and the proceeds of each Draw shall be used immediately to pay those costs.
Draws shall be recorded in such form as the City and the Bank may agree. The Note evidences a
revolving line of credit, and all Draws that have been repaid may be reborrowed subject to the
restrictions of this paragraph.
For each Loan Draw, each Loan Draw shall bear interest at a rate equal to 66% of the Base
Rate, less 25 basis points (i.e. 0.66 x (Base Rate — 0.25)). The interest rate on Loan Draws shall be
adjusted on the same date that any adjustment in the Base Rate is effective.
Interest shall be payable on the monthly anniversary date of the date of issuance of the
Bond, commencing with the month of April, 2005, to the Maturity Date or upon early repayment.
Interest on the Bond or the portion thereof so prepaid shall cease to accrue on the date of such
prepayment. Interest on Loan Draws shall be calculated on the basis of a 365/365 -day year for the
actual days elapsed. Principal of and the remaining interest due on the Bond shall be payable on
the Maturity Date.
The City Council finds that the setting of the above interest rate is in the best interest of
the City.
If the Note is not paid when properly presented for payment on the Maturity Date, the
City shall be obligated to pay interest on each Loan Draw at the same rate from and after its
-5-
50500110.03
maturity or prior redemption date until the Note, both principal and interest, is paid in full or
until sufficient money for that payment in full is on deposit in the Note Fund.
Section 5. Designation of Officer to Make Loan Draws. The City Council has
determined it to be in the best interest of the City that the Administrative Services Director, or
such other person as he may designate, be and hereby is authorized to make Loan Draws against
the Note, in the amounts and at the times as he may determine hereafter, those Loan Draws to be
made in accordance with the terms and provisions set forth herein.
Section 6. Note Registrar; Registration and Transfer of Note. The Administrative
Services Director of the City is appointed and designated to serve as the Note Registrar. The
Note shall be issued to the Bank only in registered form as to both principal and interest and shall
be recorded on books and records maintained by the Note Registrar (the "Note Register "). The
Note Register shall contain the name and mailing address of the owner of the Note and the
principal amount and number of the Note held by that owner. The Note may not be assigned or
transferred by the Bank, except that the Bank may assign or transfer the Note to any successor to
the business and assets of the Bank.. When the Note has been paid in full, both principal and
interest, the Note shall be surrendered by the Bank to the Note Registrar, who shall cancel the
Note.
The Note Registrar shall keep, or cause to be kept, at his office, sufficient books for the
registration of the Note. The Note Registrar shall serve as the City's authenticating trustee,
registrar and paying agent for the Note and shall comply fully with all applicable federal and
state laws and regulations respecting the carrying out of those duties. The Note Registrar is
authorized, on behalf of the City, to authenticate and deliver the Note in accordance with the
provisions of the Note and this ordinance, to serve as the City's paying agent for the Note and to
-6-
50500110.03
carry out all of the Note Registrar's powers and duties under this ordinance and Ordinance
No. 2451 establishing a system of registration for the City's bonds and obligations. The Note
shall state on its face that the principal of and interest on the Note shall be paid only to the owner
thereof registered as such on the Note Register as of the record date set forth therein and to no
other person or entity, and that the Note may not be assigned except on the Note Register.
Section 7. Creation of Note Fund; Payment of Note. There is created and established in
the office of the Administrative Services Director a special fund designated as the Water and
Sewer Revenue Bond Anticipation Note Fund, 2005 (Revolving Line of Credit) (the "Note
Fund ").
Both principal of and interest on the Note shall be payable in lawful money of the United
States of America solely out of the Note Fund from the proceeds of water and sewer revenue
bonds authorized by this ordinance to be deposited in such fund, other short-term obligations or
from other money legally available and to be used therefor, and the City irrevocably pledges to
redeem the Note on its Maturity Date, as extended, from the proceeds of those bonds or other
money available for that purpose.
The charge and lien of the Note may be paid from the revenue of the system of the City,
but shall be subordinate to the pledge and lien of the City's outstanding water and sewer revenue
bonds and bonds issued on a parity therewith.
The Note shall be payable only from the Note Fund as provided herein and shall not be a
general obligation of the City, the State of Washington or any political subdivision thereof.
The Bank shall present to the City at least one week prior to the Maturity Date a
statement of principal of and interest due on the Note on that date. The City shall pay the
principal of and interest on the Note (i) by check, draft or warrant of the City mailed to the Bank
-7-
50500110.03
at least five days prior to the Maturity Date or hand - delivered to the Bank on the Maturity Date,
or (ii) by electronic fund or wire transfer to the Bank on or before the Interest Payment Date or
Maturity Date, at the option of the City. Prepayments of principal may be made at any time and
shall be paid by check, draft or warrant of the City or by electronic fund or wire transfer to the
Bank. Note payments shall be recorded on a Loan Payment Record attached to the Note, or in
such other form as the City and the Bank may agree. Upon repayment of all principal of and
interest on the Note at maturity, the Note shall be presented by the Registered Owner at the
office of the Note Registrar in Edmonds, Washington, for surrender and cancellation.
Section 8. Prepayment and Redemption Provisions. The City reserves the right and
option to prepay and redeem at any time prior to its stated Maturity Date any or all of the
principal amount of the Note outstanding at par plus accrued interest to the date of prepayment
and redemption. Written notice to the Bank of any intended prepayment or redemption of the
Note shall not be required. Interest on the Note or the portion thereof so prepaid shall cease to
accrue on the date of such prepayment.
Section 9. Note Form and Execution. The Note shall be printed, lithographed, typed or
multicopied on good bond paper in a form consistent with the provisions of this ordinance, shall
be signed in the corporate name of the City by the facsimile or manual signatures of the Mayor
and City Clerk, and the seal of the City (or facsimile thereof) shall be imprinted or impressed
thereon.
The Note shall bear thereon a Certificate. of Authentication in the following form,
manually signed by the Note Registrar, and only if so executed shall the Note be valid or
obligatory for any purpose or entitled to the benefits of this ordinance:
-8-
50500110.03
CERTIFICATE OF AUTHENTICATION
This Note is the fully registered City of Edmonds, Washington, Water and
Sewer Revenue Bond Anticipation Note, 2005 (Revolving Line of Credit),
described in the Note Ordinance.
Administrative Services Director, City of
Edmonds, Washington, Note Registrar
The authorized signing of a. Certificate of Authentication shall be conclusive evidence that the
Note so authenticated has been duly executed, authenticated and delivered hereunder and is
entitled to the benefits of this ordinance.
If any officer whose signature appears on the Note ceases to be an officer of the City
authorized to sign notes before the Note bearing his or her signature is authenticated or delivered
by the Note Registrar or issued by the City, that Note nevertheless may be authenticated,
delivered and issued and, when authenticated, delivered and issued, shall be as binding upon the
City as though that person had continued to be an officer of the City authorized to sign notes.
The Note also may be signed and attested on behalf of the City by any person who, on the actual
date of the signing of the Note, is an officer of the City authorized to sign notes, although he or
she did not hold the required office on the date of issuance of the Note.
Section 10. Note Covenants. The City covenants with the Bank for as long as the Note
remains outstanding as follows:
(a) The City will provide to the Bank annual financial statements
prepared by the Washington State Auditor's Office within 45 days from their
issue date.
(b) The City will provide annual management prepared statements that
"bridge" the State Auditor's two -year audit cycle within 90 days of the fiscal year
end.
-9-
50500110.03
(c) The City will establish, maintain and collect such rates and charges for water
and sanitary sewage disposal service which, together with other miscellaneous revenue of
the System (excluding ULID assessments), will provide sufficient amounts annually to
provide for operating and maintenance expenses of the System, debt service on all
outstanding water and sewer revenue bonds and bonds issued on a parity therewith, and debt
service on the Note.
Section 11. Preservation of Tax Exemption for Interest on Note. The City covenants that
it will take all actions necessary to prevent interest on the Note from being included in gross
income for federal income tax purposes, and it will neither take any action nor make or permit
any use of proceeds of the Note or other funds of the City treated as proceeds of the Note at any
time during the term of the Note which will cause interest on the Note to be 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.
Section 12. Small Governmental Issuer Arbitrage Rebate Exception and Designation of
the Note as a "Qualified Tax - Exempt Obligation." The City finds and declares that (a) it is a
duly organized and existing governmental unit of the State of Washington and has general taxing
power; (b) no part of the Note is a "private activity bond" within the meaning of Section 141 of
the United States Internal Revenue Code of 1986, as amended (the "Code "); (c) at least 95% of
the net proceeds of Loan Draws on the Note will be used for local governmental activities of the
City (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the
City); (d) the aggregate face amount of all tax- exempt obligations (other than private activity
bonds and other obligations not required to be included in such calculation) issued by the City
and all entities subordinate to the City (including any entity that the City controls, that derives its
authority to issue tax - exempt obligations from the City, or that issues tax - exempt obligations on
behalf of the City) during the calendar year in which the Note is issued is not reasonably
-10-
50500110.03 -
expected to exceed $5,000,000; and (e) the amount of tax - exempt obligations, including the
Note, designated by the City as a "qualified tax - exempt obligation" for the purposes of
Section 265(b)(3) of the Code during the calendar year in which the Note is issued does not
exceed $10,000,000. The City therefore certifies that the Note is eligible for the arbitrage rebate
exception under Section 148(f)(4)(D) of the Code and designates the Note as a "qualified tax-
exempt obligation" for the purposes of Section 265(b)(3) of the Code.
Section 13. Approval of Bank Commitment and Deposit of Loan Draws. Pursuant to the
Bank Commitment, Frontier Bank of Edmonds, Washington, has presented to the City an offer to
extend a revolving line of credit secured by a water and sewer revenue bond anticipation note
(the "Bank Commitment "), and proposing to accept the Note under the terms and conditions
provided in the Bank Commitment relating to the water and sewer revenue bond anticipation
note, which Bank Commitment is on file with the City Clerk and is incorporated herein by this
reference. The City Council finds that accepting the terms and conditions of the Bank
Commitment is in the City's best interest and therefore the proper City officials are authorized to
accept such a commitment. A fee in the amount of $5,000 shall be paid to the Bank upon
delivery of the Note and may be paid in the form of a Loan Draw.
The Note will be printed at City expense and will be delivered to the purchaser in
accordance with the Bank Commitment, with the approving legal opinion of Foster Pepper &
Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the Note.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Note to the Bank and for the proper application and use of the proceeds of
the Loan Draws made pursuant to the Note.
-11-
50500110.03
The principal proceeds received as a result of Loan Draws on the Note shall be paid into
the City Fund 414, Capital Improvement Fund that has been previously created and established
in the office of the Administrative Services Director and used to pay a part of the costs of
accomplishing the Plan of Additions. Interest earnings on the amounts, if any, in the Utility
Fund shall be retained in that fund and used for the purposes of that fund. However, it is
expected that the proceeds will be spent immediately.
Section 14. Effective Date of Ordinance. This ordinance shall take effect and be in force
from and after its passage and five days following its publication as required by law.
PASSED by the City Council and APPROVED by the Mayor of the City of Edmonds,
Washington, at a regular open public meeting thereof this 15th day of February, 2005.
Mayor
ATTEST:
it, Clerk
APPROVED AS TO FORM:
FOS ER P PPER & SHEF L C
Bond Counsel
Filed with the City Clerk:
02/11/2005
Passed by the City Council:
02/15/2005
Published:
02/17/2005
Effective Date:
02/22/2005
ORIGINAL
-12- iI
50500110.03 - I ®i2Oi�+ -%RNGE 353'
EXHIBIT A
IMROVEMENTS INCLUDED IN PLAN OF ADDITIONS
Treatment Plant Screening. Installation of a screen system on the up -hill side of the
Treatment Plant. Estimated useful life is 25 years.
Outfall Emergency Repair. Repair and replacement of a collapsed sewer outfall line
extending into Puget Sound. Estimated useful life is 50 years.
50500110.03
SUMMARY OF ORDINANCE NO. 3537
of the City of Edmonds, Washington
On the 15th day of February, 2005, the City Council of the City of Edmonds
passed Ordinance No. 3537. A summary of the content of said ordinance, consisting of
the title, provides as follows:
AN ORDINANCE of the City of Edmonds, Washington, relating to the
combined water and sewerage systems comprising the waterworks utility
of the City; specifying, adopting and ordering the carrying out of a system
or plan of additions to and betterments and extensions of that system;
authorizing the issuance of not to exceed $2,000,000 principal amount of
its water and sewer revenue bond anticipation note (revolving line of
credit) pending the issuance of water and sewer revenue bonds
authorized herein; fixing the date, form, maturity, interest rate, terms and
covenants of the note; establishing a note redemption fund; and
authorizing the issuance and providing for the delivery of the note to
Frontier Bank of Edmonds, Washington.
The full text of this Ordinance will be mailed upon request.
DATED this 16th day of February, 2005.
CITY CLERK, SANDRA S. CHASE
CERTIFICATION
I, the undersigned, City Clerk of the City of Edmonds, Washington (the "City "), hereby
certify as follows:
1. The attached copy of Ordinance No. 3537 (the "Ordinance ") is a full, true and correct
copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the
regular meeting place thereof on February 15, 2005, as that ordinance appears on the minute
book of the City; and the Ordinance will be in full force and effect five days after the title of the
ordinance has been published in the City's official newspaper; and
. 2. A quorum of the members of the City Council was present throughout the meeting
and a majority of those members present voted in the proper manner for the passage of the
Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this day of February,
2005.
CITY OF EDMONDS, WASHINGTON
SANDRA S. CHASE, City Clerk
50500110.03
STATE OF WASHINGTON,
COUNTY OF SNOHOMISH
SUMMARY OF1 "'NANCE NO.3537
oTt a ity o coon s, as mgton
On the 15th day of Pebmary, 2005, the Ctty Council of the
City of Edmonds, passed Ordinance No. 3537. A summary of
the content of said ordinance, consisting of the title, provides',
as follows:
AN ORDINANCE of the City of Edmonds, Washington,
relating to the combined water and sewerage systems
comprising the waterworks utility of the City; specifying,
adopting and ordering the carrying out of a system or
plan of additions to and betterments and extensions of
that system; authorizing the issuance of not to exceed
$2,000.000 principal amount of its water and sewer reve-
nue bond anticipation note (revolving line of credit) pend-
ing the issuance of water and sewer revenue bonds au-
thorized herein; fixing the date, form, maturity, interest
rate, terms and covenants of the note; establishing a
note redemption fund; and authorizing the issuance and
providing for the' delivery of the note to Frontier Bank of
Edmonds, Washington.
The full text of this Ordinance will be mailed upon request.
DATED this 16th day of C TY CLERK, SANDRA S. CHASE
Published: February 17, 2005.
Affidavit of Publication
S.S.
The undersigned, being first duly sworn on oath deposes and says that she is Principal Clerk
of THE HERALD, a daily newspaper printed and published in the City of Everett, County of
Snohomish, and State of Washington; that said newspaper is a newspaper of general
circulation in said County and State; that said newspaper has been approved as a legal
newspaper by order of the Superior Court of Snohomish County and that the notice
Summary of Ordinance No. 3537
City of Edmonds
a printed copy of which is hereunto attached, was published in said newspaper proper and not
in supplement form, in the regular and entire edition of said paper on the following days and
times, namely:
February 17, 2005
and that said newspaper was regularly distributed to its subscribers during all of said period.
0--6— Principal Clerk
Subscribed and sworn to before me this 17th
RECEIVED day of February, 2005 �- �t �- s T,q Md
P o�M\ vl F+A/ ,i0
FEB 2 2 2005 Z `' NOTAR 9N G
EDMONDS CITY CLERK Notary Public i rid fo he State of Washington, residing at Everett , Sn omisR68(_IC
County. t. 9 -17 -2008
�X O=
k* OP WASH�N��
Account Name: City of Edmonds Account Number. 101416 Order Number. 0001259619