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Ordinance 3863AN ORDINANCE of the City of Edmonds, Washington, relatim to the combined water and sewerage systems c mprising 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 the combined waterworks utility; providing for the issuance of not to exceed $16,500,000 of the City's water and sewer revenue bonds6 (a) to pay all or a portion of the costs of carrying out that Plan of Additions, (b) to carry out the refunding oft currently outstanding cetera sewers —«» bonds of the City and pay the administrative costs of such refunding, (C) to fund the Reserve Requirement, and (d) to pay the costs of issuance and sale of the bonds; fixing Or setting parameters with respect to certain an and covenants of theme and appointing the Finance Director as the City's designated representative to approve ©e final terms of the sale and issuance of the bonds, to appoint a refunding trustee and to take certain other actions with respect to ©. out <©- refunding and the issuance of the bonds. I M Foster Pepper PLLC III Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 51179550 4 Section-1. Findings and Determinations.. ............. ........ ........: ,....,..;. ..,.,,..; ,, ..,.,:; , ......, ..d,..,.....,..1 Section 2; Definitions. ..,...2 Section 3. Adoption of Plan of Additions ........: ........: ........:....... .. ........ ....,.;: ...,.10 Section4. Purpose and Authorization of the Bonds. ............. : ........: ..... ..::............. . ........ ........:........ .....10 Section 5. Description of the Bonds; Appointment of Designated Representative....,.,;;, .,,,., .t.. ........................10 Section 6. Bond Registrar; Registration and Transfer of Bonds .............. ...... ....... ............... . ...,,,..,,,,,.,. .....12 Section 7. Form and Execution of Bonds ...................................................... ...... .......... ......... ...... - ... ..13 Section 8. Payment of Bonds ........ .... ......::. ....... : ......... ........ ...... ..:....... ..... . ........ ...... , ...... Section 9. Redemption Provisions and Open Market Purchase of Bonds...... ...---- ...... . -. ........ ...... ...... —14 Section 10.- Refunding or Defeasance of the Bonds ........: .......:a,,,4 , ..,:: .......,;...... -.... ,.,.,.,,.,..., .. . ............ 15 Section 11. Failure To Redeem Bonds.... ..,..... :. ................. ........: ......-16 Section 12. Security for the Bonds; Bond Fund..........., ....... .. . ....... . ....... 16 Section 13. Deposit of Bond Proceeds ...a ....... . ........ ........ ......... ......... .......:o , ..,,,,,.. ......:.-.18 Section 14. Flow of Funds .....:::.... . ...: ......... .............. ...... ....... ......... ......... .......::.. ....::.. . ........:18 Section 15. Additional Covenants ......... ....... ........ ,..,...4. ......,...,..,.., , .. .1 8 Section 16. "Rate Stabilization Account ... .......: ........: .....w.. ; ..., ..;fi............... ......... ..,...,;: ,,,,,,.. .....:.,..,.20 Section"17. Separate Utility Systems ....... ........ ......... ......... .......:. ........::. .....::: ....::::: ............ . 20 Section.18. Refunding of the Refunded Bonds.:: .......,, 21 Section 19. Manner of Sale ofBonds.....:.........: ........ ........ ......v,-: ....,,n.. ..,.,....,,,.... ,:, ......-....... ....... ,. 23 Section 20, Parity Condition ......... .....: ....... ,. , ...... »,..,.......... ..,; .24 Section 21 Tax Matters .. ......... .......... ..... A. ,.,....: . .,....,>,.,,, ,.. ;... , . ....,...,...., 24 Section 22. Official Statement .... .......... .. ....... ......: .......... ....,.r. ... .25 Section 23, Undertaking to Provide Continuing Disclosure,,....,...„,„ .... ....... .......ti. ,.....,,; ..,....,......,., .,,,, 25 Section 24. Amendatory and Supplemental Ordinances. ........ ....—. ........: ........ ........t , ......; ...,....... ,.25 Section 25. General Authorization; Delivery of Bonds .:: ......... ............... ........: ........: ...,...:: ,..,,.., ...-27 Section26, Severability .... .. ......... ....................... ......... ..27 Section 27. Prior Bond Authorization Repealed ... .......: ......®,. .... ,.,,...,. ,..,.P..:,.., , ...., ....,..: ..... — ...... 28 Section 28. Effective Date of Ordinance...- .....:. ......... d....y... .. ......,:., ........ .......... ...... ...:n..... 28 ,S1179550.4 AN ORDINANCE of the City of Edmonds, Washington relating to the combined water and sewerage systems c6mprfiising th waterworks utility of the City; specifying, adopting and ordering th carrying out of a system or plan of additions to and betteTMTments an extensions of the combined waterworks utility; providing for th issuance of not to exceed $t6,500,000 of the City's water an sewer revenue bonds: (a) to pay all or a portion of the costs o carrying out that Plan of Additions, (b) to carry out the refundin of the currently outstanding water and sewer revenue bonds of th City and pay the administrative costs of such refunding, (c) to fun the Reserve Requirement, and (d) to pay the costs of issuance an sale of the bonds; fixing or setting parameters with respect t certain terms and covenants of the bonds; and appointing th Finance Director as the City's designated representative to approv the final terms of the sale and issuance of the bonds, to appoint refunding trustee and to take certain other actions with respect t carrying out the refunding and the issuance of the bonds. MUM 511785504 (c) Purpose of Refunding. The City Council finds that certain covenants, terms and conditions of . • •' Parity Bonds need to be substantially modified and modernized • that it is in the best interestof - City to refund the Refunded i'a Bonds in order to modify a-r service or reserve requirements, covenants, or other terms of the bonds to be refunded, in accordance with RCW 39.53.020. The refunding is additionally expected to produce a substantial savings to the City and its ratepayers. The Refunded Bonds are identified as follows: (1) 1998 Bonds. The 1998 Bonds are currently outstanding in the par amount of • are callableprice of r.r plus interest accrued to the date set for -•` • e 2003 Bonds.01 • • • a •. e of ' 1 1i bear interest at rates i` • imature in 2012,2014, callable on or December 1 price of par plus interest accrued to the date set for-f- • • (d) Approval of Final Terms of the Bonds. RCW 39.46.040(2) provides that an ordinance authorizing the issuanceof bonds authorize an officer of • serve as the City's Designated Representative and to accept, on behalf of the City, an offer to purchase those bonds so long as the acceptance of such offer is consistent with terms established by an ordinance establishes, or parameters - r- to, the following Final amount, date or dates, denominations, interest rate or rates (or mechanism for determining interest rate or rates); payment dates, final maturity, redemption rights, price, minimum savings for refunding bonds (if the refunding bonds are issued for savings purposes), and any other terms and conditions deemed appropriate by the City Council. Section 2. Definitions. As used in this ordinance, the following words shall have the following meanings: •il Bonds" outstanding Water and Sewer Revenue Refunding Bonds, 1998, authorized by Ordinance No. 3191 (passed on February 17, 1998), which bonds were issued on a parity of lien with the City's previously issued 1977 Bonds and the then-6utstanding Parity Bonds. The 1998 Bonds were originally issue• to advance refund the callable, • portion of outstanding a Sewer Revenue and Refunding Bonds, 1993, and to pay the administrative costs of such refunding and the costs of issuance and - of bonds. (b) "2003 Bonds" means the City's outstanding Water and Sewer Revenue Improvement and Refunding Bonds, 2003, authorized by Ordinance No. 3446, passed on March 25, 2003 on a parity of lien with the 1977 Bonds and the then -outstanding Parity Bonds. The 2003 Bonds • to pay costsof out r • to the Water a Sewer• out • • of .• portion of outstanding Water and Sewer Revenue Refunding Bonds, 1992, and pay the administrative costs of such refunding, and (c) pay the costs of issuance o e onds -2 5117®550;4 (h) "Beneficial Owner" means the owner of any beneficial interests in the Bonds. (i) "Bond Counsel" means Foster Pepper PLLC or any other nationally recognized bond counsel firm then representing the City. 0) "Bond Fund' means that special fund of the City created pursuant to Section 12 of this ordinance for the payment of the principal of and interest on all Parity Bonds. y 4 (k) "Bond Insurance Policy" means a municipal bond insurance policy issued by a Bond Insurer insuring the payment when due of the principal of and interest on Parity Bonds as provided in such policy and as approved and accepted by the Designated Representative. (1) "Bond Insurer" or "Insurer" means a bond insurance company providing a Bond Insurance Policy or Reserve Securities for any outstanding Parity Bonds, (in) "Bond Purchase Contract" means an offer to purchase the Bonds presented by a underwriter (or other purchaser) and accepted by the Designated Representative, acting on behall of the City, setting forth certain terms and conditions of the issuance, sale and delivery of th Bonds. In the case of a competitive sale of Bonds, the offer shall mean the submitted bid (whic incorporates all of the terms and conditions set forth in the Notice of Bond Sale, as they may b adjusted within the parameters of the Notice of Bond Sale and agreed upon with the winnin -3- 511785504 bidder), and the award by the Designated Representative to the successful bidder shall cons itute the acceptance of 1 1 Purchase Contract. "Bond Register". ` books or • 1 '1' by Bond Registrar containing the name and mailing address of the owner of each Bond and the principal amount i number of • 1 • by owner. .. "Bond Reg . ,.rrmeansthe Fiscal Agent. (p) "Bonds" means the bonds authorized to be issued by this ordinance. (q) "City" means the City of Edmonds, Washington (r) "Closing Date" means the date on which the Bonds are delivered to the initial purchaser or purchasers _ •f upon payment in full therefor. (s) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. "Construction the 412 ConstructionFund. (u) "Coverage Requirement" means for any fiscal year, an amount of Adjusted Net Revenue at least equal to 1.25 times the Annual Debt Service in that year on all then -outstanding Parity Bonds, less the ULID Assessments due in that year and not delinquent. -. Depository • i. eYork,-York. (w) "Designated Representative" means the Finance Director, appointed in Section 3 of this ordinance to serve as the City's designated representative in accordance with RCW 39.46.040(2). (x) "Final Terms" means the terms and conditions for the sale of Bonds including, but not limited to the amount, date or dates; denominations, interest rate or rates (or mechanism for determining interest rate or rates), payment dates, final maturity, redemption rights, price, and minimum savings for refunding bonds (if the refunding bonds are issued for savings purposes). (y) "Finance Director means the Finance Director of the City or any other City official who succeeds to the duties now delegated to that office, or the designee of such officer. (z) "Financial Advisor" means A. Dashen and Associates of Bellevue, Washington, or any other Financial Advisor then appointed and acting as financial advisor to the City. (aa) "Fiscal Agent" means the fiscal agent of the State, currently The Bank of New York Mellon, as the same may be designated by the State from time to time. (bb) "Future Parity Bonds" means all revenue and other obligations of the City for borrowed money (incluin, without limitation, financing leases) issued or incurred after the date of the issuance of the Bonds, the payment -of the principal of and interest on which constitutes a- -4- -51 179556:.4 r 51179550.4 6j) "Maximum Annual Debt Service" means, as of the date of calculation, the maximum amount of Annual Debt Service that will mature or come due in the current fiscal year or any future fiscal year with respect to all outstanding Parity Bonds. (kk) "Maximum Interest Rate" means, with respect to any Variable Interest Rate Bond, a numerical rate of interest that is the maximum rate of interest those Future Parity Bonds may bear at any time. (11) "Net Revenue" means the Gross Revenue, less Operating and Maintenance Expenses. (mm) "Operating and Maintenance Expenses" means all reasonable expenses incur -red by the City in causing the Water and Sewer Utility to be operated and maintained in good repair, working order and condition, including payments made pursuant to contract for such service to any other municipal corporation or private entity for sewage treatment and disposal, water supply and distribution or stormwater, or other utility service (if the City combines such service into the Water and Sewer Utility), and including budget charges for the City's administration expenses allocated to the Water and Sewer Utility, but shall not include depreciation or any taxes (or charges in lieu of taxes) levied or imposed by the City. (nn) "Outstanding Parity Bonds" means any Parity Bonds outstanding at the time of issuance of any Future Parity Bonds. As of the date of issuance of the Bonds, there will be no Outstanding Parity Bonds other than the Bonds. (oo) "Owners" means, without distinction, the Registered Owner(s) and the Beneficial Owner(s). 110111 FIFFIR11 IiI I � � 1, 11 1,1gi III I ��� Bonds. (qq) "Parity Conditions" means the conditions precedent to the issuance of Future Parity Bonds, originally set forth in Section 16 of Ordinance No. 1957, as amended by Section 3 of Ordinance No. 2363, and as further amended and set forth in Exhibit A to this ordinance, which is incorporated by this reference. (rr) "Permitted Investments" means investments that are legal investments for the City at the time of such investment. (ss) "Plan of Additions" means the system or plan of additions and improvements to and betterments and extensions of the Water and Sewer Utility specified, adopted and ordered to be carried out by Section 3 of this ordinance. (tt) "Principal and Interest Account" means the account of that name created in the Bond Fund for the payment of the principal of and interest on the Parity Bonds. (uu) "Principal Payment Date" means the annual date set for the payment of principal - of the Bonds, including the making of mandatory redemption payments for any Term Bonds, all as set forth in the Bond Purchase Contract. -6- 511795504 (vv) "Rate Stabilization Account" means the account of that name created for the purposes described in Section 16. (ww) "Rating Agency - means a nationally recognized rating agency or agencies, if any, providing a rating on the Bonds at the request of the City. (xx) "Redemption Date" means the date or dates fixed for redemption of each issue of Refunded Bonds, respectively. (yy) "Refunded Bond Ordinance(s)" means the ordinance authorizing a particular issue of the Refunded Bonds, as applicable. (zz) "Refunded Bonds" means the following outstanding bonds of the City. Amount Currently Interest and Issue Outstanding Rates Maturity Dates (due Dec.1) Call Date 1998 Bonds $ 560,000 4.80-4.85% 2012,2013 12/1/2007 2003 Bonds 1,910,000 4.00-4.45% 2012,2014,2016,2018, 12/1/2012 2020 and 2022 (aaa) "Refunding Plan" means (as further described in the applicable Refunding Trust Agreement): (1) the deposit with the Refunding Trustee of an amount of proceeds of the Bonds sufficient (together with other money of the City, if necessary) to acquire the Acquired Obligations to be held by the Refunding Trustee with cash, if necessary; (2) the application of the principal of and interest on the Acquired Obligations (and any other cash balance) to the call, payment and redemption of the specified Refunded onds on the applicable Redemption Date(s) at a price of par plus any accrued interest; and (3) the payment of costs of issuing the Bonds and the costs of carrying out the foregoing elements of the Refunding Plan. (bbb) "Refunding Trust Agreement" means a refunding trust or escrow agreement between the City and the Refunding Trustee, dated as of the Closing Date, providing for the safekeeping of bond proceeds and the refunding of certain Refunded Bonds. (ccc) "Refunding Trustee" means the trustee or escrow agent, or any successor trustee or escrow agent, designated by the Designated Representative to serve as refunding trustee to carry out the Refunding Plan. (ddd) "Registered Owner" means the person in whose name a Bond is registered on the Bond Register. For so long as the City utilizes the book —entry system for the Bonds under the Letter of Representations, Registered Owner shall mean DTC. (eee) "Registration Ordinance" means City Ordinance No. 2451 establishing a system of registration for the City's bonds and other obligations. -7- 511785504 (fff) "Reserve Account" means the account of that name created in the Bond Fund for the purpose of securing the payment of the principal of and interest on the Parity Bonds. (ggg) "Reserve Securities" means, in lieu of cash and investments, any bond insurance, collateral, security, letter of credit, guaranty, surety bond or similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest on Parity Bonds, issued by an institution which has been assigned a credit rating at the time that such Reserve Securities is provided, in the two highest rating categories without regard to gradations within those categories (I.e, AAA or AA). (1-ihh) "Reserve Requirement" means for all Parity Bonds, an amount equal to the lesser of (i) Maximum Annual Debt Service, (ii) 125% of Average Annual Debt Service, or (iii) 10% of the proceeds of the then -outstanding Parity Bonds. The Reserve Requirement may be met by a deposit of cash, Reserve Securities, or any combination of the foregoing, and the amount payable under any Reserve Securities shall be credited against the amount otherwise required to be deposited into the Reserve Account. (iii) "Rule" means Rule 15c2-12 promulgated by the SEC under the Securities and Exchange Act of 1934, as the same may be amended from time to time. "SEC'means the United States Securitiesand Exchange Commission. "Separate - •• .•' collection •I treatment, stormwater management or other utility service or facilities that may be created, acquired or constructed by the City as provided in Section 17 of this ordinance. (111) "Sewer System" means the sanitary sewage collection and disposal system of the City, also referred to as the sewer utility. (m )"Sewer System Comprehensive Plan" means the Sewer General Plan prepared for the City and adopted by the City Council on December 6, 2006 pursuant to Ordinance No. 3620. (nnn) "Stormwater System" means the stormwater management utility combined into the Water and Sewer Utility pursuant to chapter 7.60 of the Edmonds City Code. (000) "State" means the State of Washington� (ppp) "Tax Credit Subsidy Bond' means any bond that is designated by the City as a "build America bond" or other type of tax creditbond, pursuant to the Code,and which is further designated . "qualified bond" f • 1 6431 of the Code (or under. provisions of the Code providing for "direct -pay" tax credit bonds), and with respect to which the City expects • receive a Tax CreditSubsidy (qqq) "Tax Credit Subsidy Payment" means the amounts which the City expects t receive as a tax credit payable by the United States Treasury to the City under Section 6431 o the •f (or underprovisions of the Codeproviding • "direct -pay" 'i bonds), respect of any bonds issued as Tax Credit Subsidy Bonds. I -CQ- 51179550<4. (rrr) "Term Bond" means those Bonds that are designated as term bonds in the Bond Purchase Contract. (sss) "ULID" means any utility local improvement district now existing or hereafter created for the acquisition or construction of additions, extensions or betterments of any portion of"the Water and Sewer Utility, which additions, extensions or betterments are financed through the issuance of Parity Bonds. As used in this ordinance, the term ULID does not include any utility local improvement district created for the financing of additions, extensions or betterments by methods other than the issuance of Parityods. (ttt) "ULID Assessments" means the assessments levied in any ULID, including installment payments of any assessment as well as the interest and penalties (if any) thereon, less any prepaid assessments permitted bylaw to be paid into a construction fund or account. (u) "Undertaking" means a continuing disclosure agreement authorized to be executed by the Designated Representative, pursuant to Section 18 of this ordinance. (vvv) "Underwriter" means the firm or firms selected by the Designated Representative as the underwriter(s) for a negotiated sale or awarded as the successful bidder in a competitive sale. (" ) "Variable Interest Rate" meansa variable interest rate or rates to be borne by a series of Future Parity Bonds or any one or more maturities within a series of Future Parity Bonds. The method of computing such a variable interestrate(or parameters with respect thereto) shall be specified in the ordinance authorizing such Future Parity Bonds, which ordinance also shall specify either (i)- the _particular period or periodsoftime or manner of determining such period or periods of time for which each value of such variable' interest rate shall remain in effect or (ii) the time or times upon which any change in such variable interest rate shall become effective. (xxx) _ "Variable Interest Rate Bonds" means, for any period of time, Future Parity Bonds which bear a Variable. Interest Rate during that period; except that Future Parity Bonds the interest rate or rates on which shall have been fixed for the remainder of the term thereof no longer shall be deemed to be Variable Interest Rate Bonds. (yyy) "Water and Sewer Utility" means the combined "utility, as described in chapter 7.60 of the Edmonds City Code, _ including the component Water System, Sewer System and torinwater System, together with all additions thereto and betterments and extensions thereof at any time made; and any other utility systems hereafter combined with the Water and Sewer Utility. (zzz) "Water and Sewer Utility Fund" means, together, the Water Fund, the Sewer Fund and the Stormwater Fund, each of which has previously been established by the City. (aaaa) "Water System Comprehensive Plan" means the Water System Plan'prepared for the City and adopted by the City Council on December 21, 2010 pursuant toOrdinance No. 3830. M .51 P78550.4 (bbb) "Water System" means the system of water supply and transmission of the City, also referred to as the water utility. carryingSection 3. Adoption of Plan of Additions. The City specifies, adopts and orders the out of - projects described in Exhibit` or plan of additions to and betterments and extensions of the Water and Sewer Utility. The Plan of Additions shall be carried out in accordance with the plans and specifications therefor prepared by the City's engineers and consulting engmeersThe City Council may modify the details of the Plan of Additions where, in its judgment, it appears advisable if such modifications do not substantially alter the purposes of that system or plan. The life of the improvements comprising the Plan of Additions is declared to be at least 25 years. The estimated cost of carrying out the Plan Of Additions, including the costs of issuance and sale of the Bonds, is declared to be more than $12 million, which cost shall be paid from the proceeds of the Bonds allocated to the Plan of Additions and from other money available t# the Water and Sewer Section t' Pwposa and Authorization d4lv- the Bonds in the aggregate principal amount of not to exceed $16,500,000, for the purpose of providing the funds (1) to carry out Plan of Additions, • • to carry out Refunding Plan, to fund the Reserve Requirement, and (4) to pay the costs of issuance of the Bonds. The Bonds shall be allocated to paying the respective costs of the Plan of Additions and to the carrying out of e Refunding Plan (including a ratable share of proceeds used to fund the Reserve Requirement and to pay the costs of issuance of the Bonds) in accordance with a schedule approved by the Designated Representative in a tax certificate or closing certificate executed in connection with the issuance of Bonds. •• -•. - r i. , i i 'r' i �` ��� 1 I i. . • : •, ii i, . • . 'i • _ • i. • i- i` •- -1 0- 5117R5504 (d) Interest ate(s). The Bonds shall bear interest at fixed rates per annuin (computed on the basis of a 360-day year of twelve 30-day months) from their date or from the most recent interest payment date for which interest has_been paid or duly provided for, whichever is later. One or more rates of interest may fixed for the Bonds, which rate or rates must be in multiples of 118"' or 1%20th of l%®, or both. No more than one rate of interest may be fixed for any one maturity. No rate of interest for any maturity may exceed .5 50%®, and the "all -in" true interest cost for the Bonds may not exceed 5.50%. (e) Payment Dates. Interest must be payable at fixed rates semiannually (on each June 1 and December 1, or such other semiannual dates as are selected by the Designated Representative), commencing on the next such semiannual date following the issuance of the Bonds. Principal must be payable annually (on each December 1, or such other annual date as is selected by the Designated Representative) commencing no earlier than the next such annual date following the issuance of the Bonds. (f) Final Maturity. The refunding allocation of Bonds shall not extend over a longer period of time than the series of Refunded Bonds to which that portion of the Bonds is allocated. The final maturity of the portion of the Bonds allocated to the Plan of Additions shall be no later than December 1; 2037. O Redemption Rights. The Bonds shall be issued subject to optional and mandatory redemption provisions, including designation of Tenn Bonds, if any, set forth in Section 9. (h) Price. The purchase price for the Bonds may not be less than 95% or more than 115% of the par value of the Bonds. (i) The Refundi gs. The Designated Representative shall have the authority described in Section 17 with respect to authorizing the refundings and carrying out the Refunding Plan. No minimum savings shall be required because the refundings are authorized in order to effect a change in covenants. U) Sufficiency of Gross Revenues. The Bonds may not be issued unless, as of the Closing Date, the Finance Director certifies that the Gross Revenue will be more than sufficient to pay the Operating and Maintenance Expenses and to permit the setting aside out of the Net Revenue into the Bond Fund of sufficient amounts to pay the principal of and interest on the Bonds when due. (k) Other Terms and Conditions. The Bonds may be sold by either negotiated sale or by competitive bid; in accordance with Section 19 of this ordinance. The Designated Representative, in consultation with the City's Financial Advisor, may determine whether it is in the City's best interest to provide for bond insurance or other credit enhancement. Withrespect to bond insurance or other credit 'enhancement, the Designated Representative may accept, on behalf of the City, such additional terms, conditions, and covenants as may be required by the enhancement provider, if consistent with the provisions of this ordinance or may determine to state in the Notice of Bond Sale that any such insurance or credit enhancement is at the sole option of the winning bidder. The 'Designated Representative is authorized to take such additional actions as may be necessary or convenient for the refunding of the Refunded Bonds and for the issuance of the Bonds pursuant to the terms of this ordinance. ®11, Segtjqjj!�� Bond Registrar-, Registration and Transfer of Bon s� (a) Registration of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and shall be recorded on the Bond Register. (b) Bond Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond Register shall contain the name and mailing address of the Registere Owner of each ♦ and the principal • ♦ number of each of the Bonds f by Registered Owner. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferr ed or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this ordinance and City's Registration Ordinance. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become either a Registered or Beneficial Owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Beneficial Owners. (c) Transfer and Exchange of Bonds. Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any Authorized Denomination of an equal aggregate principa amount and of the same interest rate and maturity, Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registran Any exchange or transfer shall be without cost• the owner or transferee. The i• ♦ Registrar shall• •` obligated to redemptionexchange or transfer any Bond during the 15 days preceding any principal payment or •. (d) DTC and the Book Entry System. The Bonds initially shall be registered in the name of Cede and Co., as the norminee of DTC. The Bonds so registered shall be held in fully imi-flobilized form by DTC as depository in accordancethe provisions of the Letter • Representations. Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Bonds regardingof any records`• by DTC or DTC participants of any amount in respect of principal of or interest on the Bonds, or any notice which is permitted or required to be given to Registered Owners hereunder (except such notice as is required to be given by the Bond i Registrar , • For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its successor depository shall be deemed to be the Registered Owner for all purposes hereunder and all references to registered owners, bondowners, bondholders or the like shall mean DTC or its nominee and, except for the purpose of the City's undertaking herein to provide continuing disclosure, shall not mean the Beneficial Owners. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) to any substitute depository appointed by the City or suc M 51178550.4- substitute depository's successor; or (i i) to any person if the Bonds are no longer hold in immobilized form. Upon the resignationof DTC or its successor• r depository or its •r) from its functionsdepository,or a determination by the City that it no longer wishes • continue the system of book entry transfersthrough or its successor(or any substitute depository or its successor), the City may appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed • be provided by DTC or its successor• r ` depository or its successor)• functions as depository, and no substitute depository can be obtained or (ii) the City determines that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any person as provided herein and the Bonds no longer shall be held in fully immobilized form Section 7� Form The Bonds shall be -prepared in a form consistent with the provisions of this ordinance and state law and shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printe ereon. 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 Improvement and Refunding Revenue Bonds, [appropriate year and any other designation], described in the Bond Ordinance. The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. If any officer whose manual or 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 manual or facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds� Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of s• • is an officer of the City authorized •signbonds, although he or she ! • not f:,, _ required office on date of issuance •.. f the Bouts. Section & Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America solely from the revenues set forth in Section I I of this ordinance. F• as long as the Bonds are registered in the name of or its nommee, payment of principal of and interest on the Bonds shall be made in the manner set forth in the Letter'of Representations. If the Bonds cease to be in book -entry -only form, interest on the Bonds shall be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to the Registered Owners at the addresses appearing on the Bond Register on the 15th day -13 51 178550.,4.. of the month preceding the interest payment date or by electronic transfer on the interest payment date. The City shall not be required to make electronic transfers except to a Registered Owner of Bonds pursuant to a request in writing (and at the sole expense of that Registered Owner) received at least 10 days before an interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the Registered Owners to the Bond Registrar. Section 9. RedeWtion Provisions and Open Market Purchase of Bonds. M 511785504 of any intended redemption of Bonds to be given by the Bond Registrar not'less than 20 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 addressappearingon the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed assoprovided, whether or not it is actually received by the Registered or Beneficial Owner of any Bond. Iii the case of an optional redemption, the notice may state that the City retains the right to rescind the redemption notice and the related optional redemption of Bonds by giving notice of rescission to the affected Registered Owners at any time prior to the scheduled optional redemption date. Any notice of optional redemption tat is so rescinded shall be of no effect; and the Bonds for which the notice of optional redemption has been rescinded shall remain outstanding. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB consistent with the Undertaking, to any nationally recognized rating agency which at the time maintains a rating on the Bonds at the request of the City, and to such other persons and with such additional information' as the Finance Officer; shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. (f) Effect of Redemption. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption, unless the notice of redemption is rescinded as set forth above. (g) Open Market Purchase. The City further reserves the right and option to purchase any or all of theBonds in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. (h) Cancellation of Bonds. All Bonds purchased or redeemed under this section shall be canceled. Section 10. &� or Defeasance of the Bonds The City may issue refandin bonds pursuant to the laws of the State or use money available from any other lawful source t pay when due the principal of • interest on Bonds,or portion thereof•-• in refunding or defeasance plan, and to redeem and retire, refund or defease all such the outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the costs o the refunding or defeasance. If money• "governmentobligations" (as defined in chapte called39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing interest i amounts (together With money, if necessary) sufficient to redeem and retire, refund or defeas the defeased Bonds in accordance with their terms are set aside in a special trust or escro account irrevocably pledged to that redemption, retirement or defeasance of defeased Bond •unt"), then all right and interest of of - i- - .i' Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payme of i` -. `i Bonds -. . • become void.of defeased Bonds shall ha- account.the right to receive payment of the principal of and interest on the defeased Bonds from the tru r i- in the refundingor defeasance plan provisions deems necessary for the random selection of any defeased Bonds that constitute less than all of;; 15 51978550 4.. particular maturity of the Bonds, for notice of the defeasance to be given to the owners of the defeased Bonds and to such other persons as the City shall determine, and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for notices of redemption of Bonds. Section 11. Failure To Redeem Bonds� If any Bond is not redeemed when properly presented at its maturity or on the date set for redemption, if applicable, the City shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its inaturity or date set for redemption until that Bond, both principal and interest, is paid in full or u 'I suffent mon ey fo r riti 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. (a) Pledge of Net Revenues. The Net Revenue and ULID Assessments are pledged irrevocably to the payment of the amounts required to be paid into the Bond Fund for e payment of the Bonds and all Future Parity Bonds, This pledge shall constitute a lien and charge upon the Net Revenue and ULID Assessments prior and superior to any other charges whatsoever. (b) Bond Fund; Deposits to Bond Fund. The Water and Sewer Utility Revenue Bond Uund 2011 (the "Bond Fund") is established within the Water and Sewer Utility Fund as a special fund of the City and shall be divided into two accounts: the Principal and Interest Account, and the Reserve Account. So long as any of the Parity Bonds are outstanding, the City obligates and binds itself to set aside and pay into the Bond Fund all ULID Assessments and, out of the Net Revenue, certain fixed amounts, without regard to any fixed proportion, namely (1) Into the Principal and Interest Account, before each Interest Payment Date, an amount that will be sufficient, together with other money on deposit therein, to pay the interest on the Parity Bonds on the next succeeding Interest Payment Date; and (2) Into the Principal and Interest Account, before each Principal Payment Date, an amount that will be sufficient, together with other money on deposit therein, to pay the principal of the Parity Bonds on the next succeeding Principal Payment Date, including mandatory redemption amounts due on that date with respect to any Tenn Bonds; and (3) Into the Reserve Account, an amount sufficient that the amount on deposit in the Reserve Account satisfies the Reserve Requirement for the Parity Bonds in the time and manner required by this ordinance. -16- 51178550 4 511785504 (f) Action to Compel Payments. if the City fails to set aside and pay into the Bond Fund the amounts set forth above, the Owner of any of the outstanding Parity Bonds may bring action aRainst the City and compel the setting aside and payment. Section 13. Dgp6sit of Bond Proceeds. On the Closing Date, a portion of the proceeds of the Bonds allocated to the refunding and sufficient to carry out the Refunding Plan, shall e deposited with the Refunding Trustee in accordance with Section 18 of this ordinance. The remaining proceeds of the Bonds shall be allocated to the new money portion of the Bonds and shall be deposited in the Construction Fund to be used to carry out the Plan of Ad itions, Section 14. Flow of Funds. So long as any Parity Bonds are outstanding, the City covenants that all ULID Assessments (if any) shall be paid into the Bond Fund, and the Gross Revenue shall be deposited into the Water and Sewer Utility Fund (or the respective System funds therein) to be used for the following purposes only in the following order of priority: (1) To pay Operating and Maintenance Expenses. (2) To make when due the required payments into the Principal and Interest Account in respect of interest on the Parity Bonds. (3) To make when due the required payments into the Principal and Interest Account in respect of principal of (and premium on, if any) the Parity Bonds, whether at maturity or pursuant to redemption prior to maturity. L'4) To make when due all payments required to be made into the Reserve Account. (5) To make when due all payments required to be made under any reimbursement agreement with a Bond hisurer in any priority not inconsistent with this ordinance, which the City may hereafter establish by ordinance, (6) To make when due the required payments to be made into any revenue bond, note warrant or other revenue obligation redemption fund, debt service account or reserve account created to pay and secure the payment of any revenue obligations of the Water and Sewer Utility having a charge upon the Net Revenue junior and inferior to the charge thereon for the payment of the Parity Bonds. (7) Without priority, to retire by redemption or to purchase in the open market any outstanding Parity Bonds or junior lien obligations, to make necessary betterments and replacements Of or repairs, additions or extensions to the Water and Sewer Utility, to make deposits into the Rate Stabilization Account, or for any other lawful purpose. Section 15� Additional Covenants� So long as any Parity Bonds are outstanding, the City covenants and agrees with the owner of each Bond at any time outstanding as follows - (a) Maintenance and Operation. The City will at all times maintain, preserve and keep the properties of the Water and Sewer Utility in good repair, working order and condition, will make all necessary and proper additions, betterments, renewals and repairs thereto, and improvements, replacements and extensions thereof, and will at all times operate or cause to be -511795504 _ � ♦ ` i 1 . 1 .' • • • i "� .. . •' li . • • / i' • • ♦ m adequate public liability insurance at all times. The City may self insure or participate i j oint intergoveinmental insurance pool or similar plan, and the cost of that insurance or self insurance shall be considered a part of Operating and Maintenance Expenses. (h) ULID Assessments. The City will promptly collect all ULID Assessments and deposit such collections into the Bond Fund to pay or secure the principal of and interest on any Parity Bonds without those ULID Assessments being particularly allocated to any particular series • ► Bon S. Section 16, Rate Stabilikgbon Account. The Rate Stabilization Account is established within the Water and Sewer Utility Fund� Deposits and withdrawals shall be made in accordance with this section at any time up to and including the date 90 days after the end of the fiscal year for which the deposit or withdrawal will be included as Adjusted Net Revenue for that isca year, as follows: (a) Deposits to the Rate Stabilization Account. The City may at any time, as determined by the City Finance Director and as consistent with the covenants contained in this ordinance, deposit into the Rate Stabilization • • • • Revenue and any other money received by the Water and Sewer Utility and available to be used therefor, excluding principal proceeds of Parity Bonds or other borrowing� However, no deposit of Gross Revenue may be made into the Rate Stabilization Account to the extent that such deposit would prevent the City from meeting the Coverage Requirement in the relevant fiscal year. (b) WithdraWalsfrom the Rate Stabilization Account. The City may withdraw money • the Rate Stabilization • at any time upon authorization • the City Council (which may be • motion, resolution • ordinance) for inclusion in the Adjusted Net Revenue for any fiscal year of the Water and Sewer Utility, except that the total amount withdrawn from the Rate Stabilization Account in any fiscal year may not exceed the Annual Debt Service in that year. Earnings from investments in the Rate Stabilization Account shall be deposited in that account and shall not be included as Adjusted Net Revenue unless and until withdrawn from that account. Sect -ion 17. Separate Utility Systems� The City may create, acquire, construct, fiiiance, own and operate one or more additional systems for water supply, sewer service, water, •` • • transmission, treatment • • commodity or utility service. The revenue of that Separate Utility System, and any utility local improvement district assessments paya e solely with respect to improvements to a Separate Utility System, shall not be included in the Gross Revenue and may be pledged to the payment of revenue obligations issued to pure ase, construct, condemn or otherwise acquire or expand the Separate Utility System. Neither the Gross Revenue nor the Net Revenue may be pledged to the payment of any obligations of a separate utility Separate System except that the Net Revenue may be pledged on a basis subordinate to the lien.of the Parity Bonds� -20- 511795504 Section8. Refunding of the Refunded Bonds. (a) Authorizations with Respect to Refundings. Under the terms and conditions set forth by this ordinance, the Designated Representative is authorized to designate the applicable Redemption Dates and to appoint the Refunding Trustee for the Bonds. The Designated Representative may serve as, or appoint separately,Refunding Trustee for Bonds. (b) Findings and Determinations with Respect to the Refundings. Prior to approving the sale of the Bonds, the Designated Representative or other appropriate City official shall make the following determinations in writin (1) The Redemption Date is the earliest practical date'or dates on which the Refunde Bonds may be called for redemption; (2) The Refunding Plan will be effected by the issuance and sale of the Bonds and t application of the proceeds of such Bonds (together with other money of the Cit if necessary) to carrying out the Refunding Plan and that the money to deposited with the Refunding Trustee for the Refunded Bonds in accordance wi the Refunding Plan will be sufficient (together with interest earned on t Acquired Obligations) to discharge and satisfy the obligations of the City ulln Vefunded Bond Ordinances. I Because the Refunded Bonds are being refunded primarily to effect a change in covenants, no minimum savings threshold is required. The City Council finds that, based on the foregoing determinations, the es, charges, trusts, covenants, and agreements of the City made or provided • applicable Refunded Bond Ordinances, immediately •i deposit of sufficient proceeds of the Bonds with the Refunding Trustee, the Refunded Bonds shall no longer be deemed to be outstanding under the applicable Refunded Bond Ordinances and the lien and charge of the Prior Parity Bonds shall be released. (c) Authorization for Re nding Trust Agreement. The Designated Representative and the Mayor are each independently authorized to execute and deliver to the Refunding Trustee a Refunding Trust Agreement, which sets forth the duties, obligations and responsibilities o t e Refunding Trustee in • • with the Refunding Plan, provisions f• payment of ._ compensation and expenses of such Refunding Trustee, and such other provisions as may be i ij, Hance with the re uirements of federal law goverm'jigy the • • i • 1 • • • `•" . INN 1• 1 i• " informationP Call for Redemption of Refunded Bonds� The Designated Representative is authorized to call, on behalf of the City, the Refunded Bonds for redemption On their respective Redemption Date(s) in accordance with this ordinance, In addition to such other , may be necessary or • for `i' • I•n shall specify the name of Refunded Bonds being called, their maturity dates, their Redemption Date(s) and redemption prices (expressed as a percentage of par, plus accrued interest), and shall be irrevocable after the Bonds are delivered to the initial purchaser thereof. The Designated Representative, the Mayor and other proper City officials are authorized . • directed to give or . to • ` given such notices as required, at the times and in the manner required pursuant to the Refunded Bond Ordinances, in order to effect the defeasance and redemption prior to maturity of the Refunded Bonds. -21- 5 8 178550;4 (e) Use of Bond Proceeds. Proceeds of the Bonds (together with other money of the City, if necessary) in an amount sufficient to carry out the Refunding Plan shall, immediately upon receipt, be deposited with the Refunding Trustee as set forth in the Refunding Trust Agreement. The Refunding Trustee shall use the money so deposited to discharge the obligations of the City relating to the Refunded Bonds under the Refunded Bond Ordinances by providing for the payment of the amounts required to be paid by the Refunding Plan� The Refunding Plan shall be carried out, and proceeds of the Bonds shall be applied, in accordance with this ordinance and the laws of the State. -22- 5t178550:4 under the statutes, rules and regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or the Refunded Bonds issued as tax-exempt obligations to be included in gross income for federal income tax purposes and that such disposition and substitution or purchase is in compliance with the statutes and regulations applicable to the Bonds. Any surp us money resulting from the sale, transfer, other disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and may e use for any lawful City purpose. Bureau for the assignment of those numbers shall be the responsibility of and shall be paid by the purchasers. Section 20. Parity Conditions. The City reserves the right to issue Future Parity Bonds which will constitute a charge and lien upon the Net Revenue and ULID Assessments on a parity with the Bonds if the Parity Conditions are met and complied with at the time of the issuance of those Future Parity Bonds. Nothing contained in the Parity Conditions shall prevent the City from _ obligations havinglien on the Net Revenue thatjunior to the len localthereon that secures the Parity Bonds, or from pledging to pay into a bond redemption fund or account for such junior lien obligations assessments (including interest and penalties thereon) in any utility • district that are levied to pay part or of i of improvements being• .• out of - proceeds of - sale of • •i g. • Neither shall anything contained in this ordinance prevent the City from issuing revenue obliRati6ris to refund maturing Parity Bonds for the payment of which money is not otherwise avaiLzble. Sectioax. - ,. (a) Preservation of Tax EXempti6n for Interest on Bonds. The City covenants that it will - all actionss. ! .it ` - . and within its controlto prevent interest on - Bonds from being includable 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 Bonds or other funds of the City treate as proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross income for federal income tax purposes. The City also covenants that it -will, to the extent the arbitrage rebate requirement of Section 148 of the Code is applicable i the Bonds, take all actionsto comply (or to be treated as having complied) with that requirement in connection with the Bonds, including the calculation an payment of any penalties that the City has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of any other penalties if required under Section 148 of the Code to prevent interest On the Bonds from being included in gross income for federal income tax purposes. Designation of Bonds as "Qualifieda r Obligations. • i s shall be designated as "qualified tax-exempt obligations" for purposes of - a • of Code, if the following conditions are met: (1) the Finance Director is able to determine and certify that the Bonds are not "private activity bonds" within the meaning of Section 141 of the Code; (2) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds • other obligations n• i -• to- included in such calculation) City • any entity subordinateto (including any entity that the City controls, tax-exemptderives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt obligations on behalf of the City) will issue during the calendar year in which the Bonds are issued will not exceed $10,000,000; and (3) the amount of . •including exceedBonds, so designated by the City as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are issued does not $10,000,000. -24- 51178550,4 (a) Preliminary Official Statement under the Rule. The Designated Representative and Mayor are each independently authorized to review and approve the information about t e City contained in any -preliminary official statement (the "Preliminary Official Statement') prepared in connection with the public offering and sale of the Bonds to be sold to the public; and (for the sole purpose of aiding a participating underwriter in its compliance with Section (b)(1) of the Rule, if applicable) "deem final" that Preliminary Official Statement as of its date, except for the omission of information'permitted to be omitted by the Rule and approve or ratify the distribution of that -preliminary official statement to potential purchasers of the Bonds. (b) Approval of Official Statement� The Designated Representative and Mayor are each independently aui .• to review and approve distribution of official statement applicablewith respect to the Bonds to be sold to the public, The City agrees to cooperate with the purchaser of the Bonds to deliver or cause to be delivered, within such period as may be required by •>i of official statement pertaining to the Bonds in sufficient quantity to comply with paragraph • a of r f rules of r Section 23. Undertaking to Provide Continuing Disclosure� To meet the requirements of paragraph (b)(5) of the Rule, as applicable to a participating underwriter for the Bonds, the Designated Representative is authorized to execute a written undertaking to provide continuing disclosure for the benefit of holders of the Bonds in substantially the form attached as Exhibit C. (a) This ordinance shallnotbe modified or amended in any respect subsequent to the initial_ issuance of the Bonds; except as provided in and in accordance with and subject to the provisions of this section. • The City, fromtime to time, and at any time, without the consentof or • - to the registered owners of - Bonds,pass supplementalor amendatory ordinances as • • (1) To cure any formal defect, omission, inconsistency or ambiguity in this ordinance in a manner not adverse to the owner of any Parity Bonds; (2) To impose upon the Bond Registrar (with its consent) for the benefit of the registered owners of the Bonds any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed anwhich are not contrary to or inconsistent with this ordinance as theretofore in effect; (3) To add to the covenants and agreements of, and limitations and restrictions upon, the City in this ordinance, other covenants, agreements, limitations and restrictionsto be observed by the City which are not contrary or inconsistent with this ordinance as theretofore in effect; O To confirm, as ;further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by this ordinance of any other money, securities or funds; =25 51179550.A To authorize different denominations of Bonds and to make correlative amendments and modifications to this ordinance regarding exchangeability of Bonds of different authorized denominations, redemptions of portions of Bonds of particular authorized denominations and similar amendments and modifications of a technical nature; To modify,amend or •• - ordinance in any other respect involveis not materially adverse to the registered owners of the Bonds and which does not •- described in subsectionof - • and (7) Because of change in federal law or rulings, to maintain the exclusion from gross income of the interest on the Bonds from federal income taxation, Before th- City may pass any such supplementalordinance pursuant to this subsection, shall _ been delivered to the City and the Bond Registrar an opinion of Foster Pepper PLLC bond counsel, or other nationally recognized bond counsel, stating that such supplement ordinance is authorized or permitted by this ordinance and, upon the execution and deliver thereof, will be valid and binding upon the City in accordance with its terms and will no o adversely affect the exclusion from gross income for federal income tax purposes of interest Ae Box4s. (c) Except for any supplemental ordinance entered into pursuant to subsection O of this section, subject to the terms and provisions contained in this subsection (c) and not otherwise: Registered owners of not less than 50% in aggregate principal amount of the Bonds then outstanding . • from • time to consent to and approve the passage by the City Council of any supplemental ordinance deemed necessary or desirable by • the purpose of • amending, or rescinding,particular,of - terms or provisions c• • • except - approved in writing by the registered owners of - Bonds thenoutstanding,• + contained in this section shall permit, or be construed as permitting: (1) a change in the times, amounts or currency of payment of the principal of or interest on any outstanding Bond, or a reduction in the principal amount of redemption price of any outstanding Bond or a change in the redemptionprice of outstanding Bond or change in the method of determining the rate of 'i preference of • of i• • or • I or other •• • or bonds; or reduction in the •• -• - principal amountof Bonds, the consent of registered owners of Bonds of which is required for any such supplemental • i (2) If at any time the City shall pass any supplemental Ordinance for any of th purposes of this subsection (c), the Bond Registrar shall cause notice oof th proposed r• - ordinance • be given by first class United States mail tall registered owners of the then outstanding Bonds and to Moody's Investor Service, Inc. and Standard & Poor's, if the Bonds are rated by those agencies, an to the Bond Insurer. Such notice shall briefly set forth the nature of the pro 10 supplemental ordinance and shall state that a copy thereof is on file at the -26 51179550.4.. of the Bond Registrar for inspection by all registered owners of the outstanding bonds. (3) Within two years after the date of the mailiq-- of such notice, the City may pass such supplemental ordinance in substantially the form described in such notice, but only if there shall have first been delivered to the Bond Registrar (i) the required consents, in writing, of the registered owners of the Bonds and opinion of bond counsel stating that such supplemental ordinance is authorized or permitted by this ordinance ' and, upon the execution and delivery thereof, will be valid and binding upon the City in accordance with its terms and will not adversely affect the exclusion from gross income for federal income tax purposes of iT#terest on the Bonds. (4) If registered owners of not less than the percentage of Bonds required by this subsection (c) have consented to and approved the execution and delivery thereof as herein provided, no owner of the Bonds shall have any right to object to the passage of such supplemental ordinance, Or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the passage thereof, or to enjoin or restrain the City or the Bond Registrar from passing the same or from taking any action pursuant to the provisions thereof. (d) Upon the execution and delivery of any supplemental ordinance pursuant to the provisions of this Section 24, this ordinance shall be, and be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this ordinance of the City, the Bond Registrar and all registered owners of Bonds then outstanding, shall thereafter be determined, exercised and enforced under this ordinance subject in all respects to such modifications and amendments. Section 25. QoAefal Akj��� DdliVdi- 4 �� The Designate Representative, the Mayor and other appropriate officers of the City are each authorized to d everything as in their judgment may be necessary, appropriate or desirable in order to carry o the terms and provisions of, and complete the transactions contemplated in connection with, thi ordinance. The Bonds are to be printed at City expense and are to be delivered to the purchase in accordance With the Bond Purchase Contract, with the approving legal opinion of Bon Co-unsel regarding the Bonds� I Section 26. Severabilit . The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. -27- 511795504 Section 27. Prior Bond Authorization Repealed. Ordinance No. 3837 of the City authorizing the sale and issuance of general obligation bonds and revenue bonds for the purpose of refunding certain indebtedness of the City is hereby by repealed and is of no effect whatsoever. Section 28. 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 and is not subject to referendum. PASSED by the City Council and APPROVED by the Mayor of the City of Edmonds, City Clerk APPROVED AS TO FOR'M: FOSTER PEPPER PLI, Bond Counsel • with the City Clerk�. 12-02-2011 Passed by the City Council�, 12-06-201 Published: 12-11-201 Effective Date: 12-16-201 -28- 511795504 '• i As set forth in Section 20 of this Ordinance No.3863 , the City may issue Future Parity Bonds on a parity with the Bonds if and only if the following conditions are met and complied with at the time of issuance of those proposed Future ParityBonds: (1) At the time of issuance of such Future Parity Bonds there may not be any deficiency in the Principal and Interest Account or the Reserve Account of the Bond Fund. (2) The ordinance authorizing the Future Parity Bonds must require that all ULID Assessments levied in connection with those Future Parity Bonds will be paid directly into the Bond Fund. (3) The ordinance authorizing the Future Parity Bonds shall provide for the payment of the principal thereof and interest thereon out the Bond Fund. (4)_ The ordinance authorizing the 'Future -Parity Bonds must provide for the deposit into the Reserve Account of amounts necessary to comply with the Reserve Requirement and Section 12 of this ordinance. (5) At the time of the issuance of such Future -Parity Bonds, the City shall have on file, either: certificate from an independent• or professional opinion, the annual Net Revenue available for debt service on the Parity Bonds then outstanding and the Future Parity Bonds proposed to be issued shall, for each year, be least equal to the Coverage Requirement.making certification, the Net Revenue for any 12 consecutive calendar months out of the immediately preceding , consecutive months shall be used, and the following adjustments be made to the historical netoperating revenue: (1) Any rate change that has taken place or been approved, may be reflected; (ii) Revenue may be added from customers actually added to the Water and Sewer Utility subsequent to the 12-month base period; (iii) 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 (iv) A full year's revenue may be included from any customer being served, but who has not been receiving service for the full period of operation used as a basis for the certificate; and (v) Actual or reasonably anticipated changes to the Operating and Maintenance _ Expenses subsequent to such 12-month period shall be added or deducted, as is applicable. y- iiiassa 4 f certificate of - Director showingor professional opinio thosethe annual Net Revenue available - for debt service on the Parity Bonds the outstanding and the Future Parity Bonds proposed to be issued shall, for each year, b at least equal to the Coverage Requirement. In making such certification, the Financ Director shall assume that (A) the proposed Future Parity Bonds will remai outstanding to their scheduled maturities, and (B) any Parity Bonds to be reftinded b Bonds are n• outstanding. The Finance Directornot . any of iustments referred to above. However, if the Future Parity Bonds are being issued for the sole purpose of refunding then -outstanding Bonds (including paying costs of l providing for the issuedReserve Requirement), no coverage certification is required if, as result of the issuance o those Future Parity Bonds, (a) the Annual Debt Service on the Future Parity Bonds to be is notincreased by • ` 000 over the AnnualrService for that year of Paritythe bonds being refunded, and (b) the various annual maturities of the refunding Future Bonds will notf more than one • •e Parity Bonds being f`fFurthermore, no certificate shall be required in connectionthe issuance of Future Parity Bonds if the amount of such bonds proposed to be issued does not excee the LTLID Assessments levied in support of such Future Parity Bond issue by more than $5,000 plus any amount of the proceeds of such Future Parity Bonds deposited in the Reserve Account as capitalized reserve� -2- 51 178550.4 Water System Plan of Additions: A summary of the planned additions and betterments to the water utility is as follows: • Improvements to the Alderwood Supply Station to expand its capacity and improve its operation in conjunction with the Five Comers Pump Station. • Improvements to the Five Comers Pump Station to replace old equipment, expand the capacity of the station, and improve the operation of the station in conjunction with the Alderwood Supply Station. • Improvements to the Seaview Reservoir, including ventilation system improvements and newwater quality sampling equipment. • Improvements to the Yost Reservoir, including ventilation system improvements, access hatch improvements, and new water quality sampling equipment. • Recoatig and related improvcments to the Five Corners 3.0 MG Reservoir and 1.5 MG Reservoir. • Construction and equipping of a new pressure reducing valve station near Vielad Way and 12t.Avee to increase fire flow and provide supply ,redundancy in the 420 Zone. • Pressure relief improvements needed to protect the water system from potentially high pressure that could occur during certain events. • Replacement of several pressure reducing valve stations and improvements to other stations to ensure long term operation and reliability. • Installation of isolation valves on the 2 -inch transmission main to minimize impacts to the system during maintenance and repairs. • Repair and replacement of water mains needed due to age and undesirable pipe material and a need to improve flows. ]Improvements to Lift Stations4 5, •' 10, 11 12, 14, r • Repair and replacement of sewer pipe 'sections needed due to age and undesirable pipe material and a need to improve flows. • Rehabilitation of existing "cured in place pipe" to address pipe integrity problems in the sewer pipe system. -1�- 51 179550?4 Exhibit B Stormwater System Plan of Additions: A summary of the planned additions and betterments to the stormwater management utility arc as follows: • SW Edmonds Basin storm drainage improvements, including connecting sumps on 238"' St SW to Hickman Park Infiltration System (Study Project 93) • Edmonds Marsh — Shell ebarger / Willow Creek Flood Plain Delineation Study • Improvements relating to the Perrinville Creek Drainage Improvements and Habitat • Drainage improvements for Projects associated with Lake Ballinger • North Talbot Road drainage improvements • U pgrades for water quality in the storms drains system fbr the Public Works yard • Storni Drainage improvements around BNSF utility crossings • Dayton Street stop-n cured in -place pipe (CIPP) rehabilitation -2- 51 OKM 4 Exhibit To meet the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds, the City makes the following written Undertaking for the bencfit of holders of the Bonds: (1) Undertaking to Provide Annual Financial Information and Notice of Listed Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB: (a) Annual financial information and operating data of the type included in the final official statement for the Bonds and described in subsection (2) of this section ("annual financial i • the occurrence of any of the following events with respect to the Bonds: (1) principal i. interest payment delinquencies; non-payment .f: defaults, . .'I unscheduled draws on debt -serves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the internal Revenue Service of proposed or final determinations of taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material notices or determinations with respect to the tax status of the Bonds-, modifications to rights of • •" of the Bonds, if material;i bond calls (other undertakethan scheduled mandatory redemptions of Term Bonds), if material, and tender offers. (9) defeasances- (10) release substitution, or sale of pro erty securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as such "Bankruptcy Events" are defined 'in Rule 15c2-12; (13) the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City other than in the ordinary course of business, the entry into a definitive agreement to action or the termination of . definitive agreement - . • to any such actions, other than pursuant to its terms, if material�• appointment of s successor or additional trustee or the change of name of a trustee, if material. (c) Timely notice of a failure by the City to provide required annual financial information on or before the date specified in subsection (2) of this section. (2) Type of Annual Financial Information Undertaken to be Provided'. The annual financial information that the City undertakes to provide in subsection (a) of this section - (a) Shall consist of (1) annual financial statements prepared (except as noted in th financial statements) a •. ` with generally `i `i accounting principle - applicable t• State local governmental units such as the City, as such principles mw be changed from time to time, which statements shall not be audited, excep however, that if and when audited financial statements are otherwise pte-pared an] 1y 51 178 550.4 Exhibit C available to the City they will be provided; (2) [references to the specific sections of the Official Statement to be inserted upon publication of the Official Statement]; (b) Shall be provided not later than the last day of the m'nth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending December 31, 2011; and (c) May be provided in a single or multiple documents, and may be incorporated specific reference to documents available to the public on the Internet website of ti MSRB or filed with the SEC. (3) Amendment of Undertakin . The Undertaking is subject to amendment after the primary offering of the Bonds without the consent Of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, rating agency or the MSRB, under the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice to the MSR-B of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment� If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended financial information will include a narrative explanation of the effect of that change on the type of information to be provided. (4) Bcneficiaries� The Undertaking evidenced by this section shall inure to the benefit of the City and any Beneficial Owner of Bonds, and shall not inure to the benefit of or create any rights in any other person. (5) Termination of Undertakin . The City's obligations under this Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under this Undertaking shall terminate if those provisions of Rule 15c2-12 which require the City to comply with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws delivered to the City, and the City provides timely notice of such termination to the MSRB. Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with the Undertakthe City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with the Undertaking shall constitute a default in respect o the Bonds. The sole remedy of any Beneficial Owner of a Bond shall be to take such actions as that Beneficial Owner deems necessary, including seeking an order of specific performance from an appropriate court, to compel the City or other obligated person to comply with the Undertaking. -2- 511785504 Exhibit C (7) DesiMation of • Responsible to Administer Undertaking. The Finance Director • the City • such other officer • the City who may in the future perform the duties • that office) or his or her designee is authorized and directed in his or her discretion to take such ftirther actions as may be necessary, appropriate or convenient to carry out the Undertaking of the City in respect of the Bonds set forth in this section and in accordance with Rule 15c2-12, including, without limitation, the following actions: (a) Preparing and filing the annual financial information undertaken to be provided; (b) Determining whether any event specified in subsection (a) has occurred, assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any required notice of its occurrence; (c) Determining whether any person other than the City is an "obligated person" within the meaning of Rule 15c2-12 with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of listed events for that person in accordance with Rule 15c2-12; (d) Selecting, engaging and compensating designated agents and consultants, including but not limited to financial advisors and legal counsel, to assist and advise the City in carrying out the Undertaking; and (e) Effecting any necessary amendment of the Undertaking. Dated —120—, -3- 51179550A 160111481 1, the undersigned, City Clerk of the City of Edmonds, Washington the "City"), hereby certify as follows: I , The attached copy of Ordinance No. 3863 (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 December 6, 2011, as that ordinance appears on the minute book of the City; and the Ordinance will be in Full force and effect five days after publication in the City's official newspaper; and I A quorurn of the members of the City Council was present throughout the meeting and a majority of its members voted in the proper nianner for the passage of the Ordimance. eity Clerk f 1179550 4 Affidavit of Publication STATE OF WASHINGTON, COUNTY SNOHOMISH f S.S. Account Name: City of Edmondsy 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 alegal newspaper by order of the Superior Court of Snohomish County and that the notice Summarw of Ordinance No. 3863 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: December 11, 2011 and that said tacsv:tyg aper was regularly distributed to its subscribers during all of said period � latsricapa9 Clt.s Subscribeckrid sworn to before me this 12th day of Dec 1burr, 20 "✓ _ xrngton d v cstary a1 6u _ist mrtd~fiat the State t'rt� �aslr i ng tit 1 i uteri, 5nt19tor is County. x Account Number 101416 1€t�oe`ftiFq€tbti;"i�t , .=(1601760611