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Ordinance 4309CITY OF EDMONDS, WASHINGTON ORDINANCE NO. 4309 AN ORDINANCE of the City of Edmonds, Washington, relating to the combined water and sewerage systems comprising the waterworks utility of the City; providing for the issuance of one or more series of water and sewer revenue bonds for the purpose of providing the funds necessary: (1) to provide funds to pay all or part of the costs of refunding certain outstanding water and sewer revenue bonds of the City to achieve a debt service savings; and (2) to pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; amending Ordinance No. 3996 and Ordinance No. 4197; and providing for other related matters. Passed June 20, 2023 This document prepared by: Foster Garvey P.C. 1111 Third Avenue, Suite 3000 Seattle, Washington 98101 (206) 447-4400 FG: 101416766.1 TABLE OF CONTENTS Section 1. Findings and Determinations................................................................................................................... I Section2. Definitions................................................................................................................................................2 Section 3. Purpose and Authorization of the Bonds................................................................................................ I I Section 4. Description of the Bonds; Appointment of Designated Representative................................................. I I Section 5. Registrar; Registration and Transfer of Bonds....................................................................................... I I Section 6. Form and Execution of Bonds........... .... ................................ _.__ ...... ...................... .......................... 12 Section7. Payment of Bonds..................................................................................................................................12 Section 8. Redemption Provisions and Open Market Purchase of Bonds...............................................................13 Section9. Failure To Pay Bonds...............:........................................................................................................14 Section 10. Refunding or Defeasance of the Bonds..................................................................................................14 Section 11. Security for the Bonds; Bond Fund........................................................................................................15 Section12. Flow of Funds........................................................................................................................................17 Section13. Additional Covenants.............................................................................................................................17 Section14. Rate Stabilization Account.....................................................................................................................18 Section15. Separate Utility Systems........................................................................................................................19 Section16. Refunding Plan.......................................................................................................................................19 Section 17. Sale and Delivery of the Bonds; Parity Certificate.................................................................................20 Section18. Parity Conditions....................................................................................................................................21 Section19. Tax Matters............................................................................................................................................22 Section 20. Official Statement; Continuing Disclosure............................................................................................ 23 Section 21. Amendatory Ordinances.........................................................................................................................23 Section 22. General Authorization and Ratification................................................................................................. 25 Section23. Severability............................................................................................................................................26 Section 24. Effective Date of Ordinance...................................................................................................................28 Exhibit A Parameters for Final Terms of the Bonds Exhibit B Parity Conditions For Issuance of Future Parity Bonds Exhibit C Form of Continuing Disclosure Undertaking * The cover page, table of contents and section headings of this ordinance are for convenience of reference only, and shall not be used to resolve any question of interpretation of this ordinance. FG: 101416766.1 Exhibit A CITY OF EDMONDS, WASHINGTON ORDINANCE NO.4309 AN ORDINANCE of the City of Edmonds, Washington, relating to the combined water and sewerage systems comprising the waterworks utility of the City; providing for the issuance of one or more series of water and sewer revenue bonds for the purpose of providing the funds necessary: (1) to provide funds to pay all or part of the costs of refunding certain outstanding water and sewer revenue bonds of the City to achieve a debt service savings; and (2) to pay the costs of issuance and sale of the bonds and the administrative costs of the refunding; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; amending Ordinance No. 3996 and Ordinance No. 4197; and providing for other related matters. THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Findings and Determinations. The City Council of the City of Edmonds, Washington (the "City"), makes the findings and determinations set forth below. Capitalized terms have the meanings given in Section 2. (a) Refunding of Refunded Bonds. The City Council finds that it is in the best interests of the City and its ratepayers to issue the Bonds to carry out the Refunding Plan if, in the determination of the Designated Representative, a savings will be effected by the difference between the principal and interest cost over the life of the Bonds and the principal and interest cost over the life of the Refunded Bonds but for such refunding, as set forth in Exhibit A. The City Council further finds that a Refunding Plan approved by the Designated Representative in accordance with this ordinance will discharge and satisfy the obligations, pledges, charges, trusts, covenants, and agreements of the City under the 2013 Bond Ordinance as to the Refunded Bonds, and the Refunded Bonds shall no longer be deemed to be outstanding immediately upon the deposit of the money specified in the Refunding Plan with the registrar for the 2013 Bonds (or, if so determined by the Designated Representative, with the Refunding Trustee). (b) Authority to Carry Out Refunding Plan. Pursuant to applicable law, including chapters 35.41, 35.67, 35.92, 39.46, and 39.53 RCW, the City is authorized to issue water and sewer revenue bonds for the purpose of carrying out the Refunding Plan. (c) Previously Issued Bonds and Loans. The City previously issued the 2013 Bonds, the 2015 Bonds, and the 2020 Bonds and by the Outstanding Parity Bond Ordinances provided for the issuance of Future Parity Bonds the payment of which is secured by a lien and charge on Net Revenue and ULID Assessments on a parity with the lien and charge that secure payment of the A-1 FG: 101416766.1 Exhibit A Outstanding Parity Bonds if certain Parity Conditions are met at the time the Future Parity Bonds are issued. The City also has outstanding Loans the payment of which is secured by a lien or charge on Net Revenue that is junior and inferior to the lien and charge on Net Revenue that secure payment of the Parity Bonds. (d) Parity Conditions Met. The amounts required to have been paid into the Bond Fund for the Outstanding Parity Bonds have been paid and maintained as required therein, and all other Parity Conditions for the issuance of the Bonds as Future Parity Bonds will have been met and satisfied before the Bonds are delivered to the Purchaser. (e) Sufficiency of Gross Revenue. The Gross Revenue and benefits to be derived from the operation and maintenance of the Water and Sewer Utility at the rates to be charged for services from the Water and Sewer Utility will be more than sufficient to meet all Operating and Maintenance Expense and to permit the setting aside into the Bond Fund out of the Gross Revenue of amounts sufficient to pay when due the principal of and interest on the Outstanding Parity Bonds and the Bonds. In fixing the amounts to be paid into the Bond Fund under this ordinance, the City Council has exercised due regard for Operating and Maintenance Expense and has not obligated the City to set aside and pay into the Bond Fund a greater amount of Gross Revenue that in its judgment will be available over and above such Operating and Maintenance Expense and amount of Gross Revenue previously pledged. (f) Amendment of 2015 Bond Ordinance and 2020 Bond Ordinance. Pursuant to the 2015 Bond Ordinance, registered owners of not less than 50% in aggregate principal amount of the Parity Bonds then outstanding have the right from time to time to consent to the passage of any amendatory ordinance deemed necessary or desirable by the City for the purpose, among other things, of altering or rescinding in any particular any of the terms or provisions contained in the 2015 Bond Ordinance. Pursuant to the 2020 Bond Ordinance, the registered owner of each 2020 Bond, by taking and holding the 2020 Bond, is deemed to have consented to the passage by the City of any amendatory ordinance to establish a separate Reserve Requirement for any or all of the 2020 Bonds or any Parity Bonds issued after the 2020 Bonds, which may be zero, and to establish one or more separate reserve subaccounts for any or all of the 2020 Bonds or any Parity Bonds issued after the 2020 Bonds. Pursuant to this ordinance, the registered owner of each Bond, by taking and holding the Bond, is deemed to have consented to the passage by the City of any amendatory ordinance to establish a separate Reserve Requirement for any or all of the 2020 Bonds, the Bonds, or any Future Parity Bonds, which may be zero, and to establish one or more separate reserve subaccounts for any or all of the 2020 Bonds, the Bonds, or any Future Parity Bonds. On the Reserve Account Amendment Date, registered owners of not less than 50% in aggregate principal amount of the Parity Bonds then outstanding will have consented to the passage by the City of any amendatory ordinance to establish a separate Reserve Requirement for any or all of the 2020 Bonds, the Bonds, or any Future Parity Bonds, which may be zero, and to establish one or more separate reserve subaccounts for any or all of the 2020 Bonds, the Bonds, or any Future Parity Bonds. It is desirable and in the best interests of the City and its ratepayers to amend the 2015 Bond Ordinance and the 2020 Bond Ordinance to establish a separate Reserve Requirement of zero for the 2020 Bonds and the Bonds, to provide that the 2020 Bonds and the Bonds shall not be secured by the Reserve Account, and to provide that the Reserve Requirement for Future Parity Bonds shall be as specified pursuant to the applicable Future Parity Bond Authorizing Ordinance. A-2 FG: 101416766,1 Exhibit A Section 2. Definitions. As used in this ordinance, the following words shall have the following meanings: (a) "2013 Bonds" means the City's outstanding Water and Sewer Revenue Bonds, 2013, authorized by the 2013 Bond Ordinance. (b) "2013 Bond Ordinance " means Ordinance No. 3933, passed on July 16, 2013. (c) "2015 Bonds" means the City's outstanding Water and Sewer Revenue Bonds, 2015, authorized by the 2015 Bond Ordinance. (d) "2015 Bond Ordinance " means Ordinance No. 3996, passed on May 5, 2015. (e) "2020 Bonds" means the City's outstanding Water and Sewer Revenue Bonds, 2020 (Certified Climate Bonds), authorized by the 2020 Bond Ordinance. (f) "2020 Bond Ordinance " means Ordinance No. 4197, passed on October 13, 2020. (g) `Acquired Obligations" means the United States Treasury Certificates of Indebtedness, Notes, and Bonds —State and Local Government Series and other Government Obligations purchased to carry out the Refunding Plan (if so determined by the Designated Representative). (h) "Adjusted Net Revenue " means Net Revenue plus withdrawals from the Rate Stabilization Account and less deposits into the Rate Stabilization Account. (i) "Annual Debt Service " means, for any fiscal year, with respect to all Parity Bonds outstanding or maturing in that year, all amounts required to be paid in that year in respect of principal of and interest on those Parity Bonds, less all bond interest payable from the proceeds of any Parity Bonds, and less all Tax Credit Subsidy Payments scheduled to be received in that year. Parity Bonds issued as Variable Interest Rate Bonds shall be assumed to bear interest at a fixed rate equal to the higher of (i) the highest variable rate borne during the preceding 24 months by any Variable Interest Rate Bonds then outstanding or (ii) if no Variable Interest Rate Bonds are then outstanding, a rate determined by reference to the index to be used to determine the interest rate on the Future Parity Bonds proposed to be issued or a comparable index. 0) "Authorized Denominations" means $5,000 or any integral multiple thereof within a maturity of a Series. (k) `Average Annual Debt Service " means, as of its date of calculation, the sum of the Annual Debt Service for the current fiscal year and the fiscal years remaining to the last scheduled maturity of the applicable issue or issues of bonds divided by the number of those years. (1) "Beneficial Owner" means, with respect to a Bond, the owner of any beneficial interest in the Bond. (m) "Bond Counsel " means the firm of Foster Garvey P.C., its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. A-3 FG: 101416766.1 Exhibit A (n) "Bond Fund" means the City's Water and Sewer Utility Revenue Bond Fund, 2011, created for the payment of the principal of and premium, if any, and interest on Parity Bonds. (o) "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. (p) "Bond Insurer" means a bond insurance company providing a Bond Insurance Policy or Reserve Security for any outstanding Parity Bonds. (q) "Bond Purchase Contract" means, with respect to each Series, an offer to purchase the Series, setting forth certain terms and conditions of the issuance, sale, and delivery of the Series, which offer is authorized to be accepted by the Designated Representative on behalf of the City, if consistent with this ordinance. In the case of a competitive sale, the official notice of sale, the Purchaser's bid, and the award by the City shall constitute the Bond Purchase Contract for purposes of this ordinance. (r) "Bond Register" means the books or records maintained by the Registrar for the purpose of identifying ownership of each Bond. (s) "Bonds " means the bonds authorized to be issued by this ordinance. (t) "City" means the City of Edmonds, Washington, a municipal corporation duly organized and existing under the laws of the State. (u) "City Council " means the legislative authority of the City, as duly and regularly constituted from time to time. (v) "Code " means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (w) "Coverage Requirement" means, for any fiscal year, an amount of Adjusted Net Revenue equal to not less than 1.25 times the Annual Debt Service in that year on all Parity Bonds then outstanding. For purposes of calculating the Coverage Requirement, ULID Assessments due in that year and not delinquent shall be subtracted from Annual Debt Service. (x) "Designated Representative " means the officer of the City appointed in Section 4 to serve as the City's designated representative in accordance with RCW 39.46.040. (y) "DTC" means The Depository Trust Company, New York, New York, or its nominee. (z) "Final Terms" means the terms and conditions for the sale of a Series, including 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 other terms or covenants. (aa) "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. A-4 FG: 101416766.1 Exhibit A (bb) "Financial Advisor" means Northwest Municipal Advisors of Bellevue, Washington, or any other financial advisor then appointed and acting as financial advisor to the City. (cc) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State Finance Committee from time to time. (dd) "Future Parity Bond Authorizing Ordinance " means an ordinance of the City authorizing the issuance and sale of Future Parity Bonds. (ee) "Future Parity Bonds" means all revenue obligations and other obligations of the City for borrowed money (including financing leases) issued or incurred after the date of the issuance of the Bonds, the payment of the principal of and interest on which is secured by a charge or lien on the Net Revenue and ULID Assessments equal in rank with the lien and charge on Net Revenue and ULID Assessments required to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Parity Bonds. (ff) "Government Obligations" means direct obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by, the United States of America. (gg) "Gross Revenue" means all of the earnings and revenues received by the City from the maintenance and operation of the Water and Sewer Utility, including: revenues from the sale, lease, or furnishing of commodities, services, properties or facilities; all earnings from the investment of money in the Bond Fund that are deposited into the Principal and Interest Account; earnings from the investment of money in any maintenance fund or similar fund; all connection and capital improvement charges collected for the purpose of defraying the cost of capital facilities of the Water and Sewer Utility; and withdrawals from the Rate Stabilization Account. However, the Gross Revenue shall not include: (a) revenues from City taxes; (b) principal proceeds of Parity Bonds or any other borrowings, or earnings or proceeds from any investments in a trust, defeasance, or escrow fund created to defease or refund obligations relating to the Water and Sewer Utility (until commingled with other earnings and revenues included in the Gross Revenue) or held in a special account for the purpose of paying a rebate to the United States Government under the Code; (c) income and revenue that may not legally be pledged for revenue bond debt service; (d) improvement district assessments including ULID Assessments; (e) federal or state grants, and gifts from any source allocated to capital projects; (f) payments under bond insurance or other credit enhancement policy or device; (g) insurance or condemnation proceeds used for the replacement of capital projects or equipment; (h) proceeds from the sale of Water and Sewer Utility property; (i) earnings on bond proceeds in any construction fund or bond redemption fund; 0) deposits into the Rate Stabilization Account; (k) Tax Credit Subsidy Payments; or (1) revenue from any Separate Utility System. (hh) "Independent Utility Consultant" means a professional consultant experienced with municipal utilities of comparable size and character to the Water and Sewer Utility and in such areas as are relevant to the purpose for which he or she is being retained. Such a consultant shall be deemed independent so long as he or she is not an employee or officer of the City. A-5 FG: 101416766.1 Exhibit A (ii) "Issue Date " means, with respect to a Bond, the date of initial issuance and delivery of the Bond to the Purchaser in exchange for the purchase price of the Bond. 0j) "Letter of Representations" means the Blanket Issuer Letter of Representations dated August 6, 1996, between the City and DTC, as it may be amended from time to time, and any successor or substitute letter relating to the operational procedures of the Securities Depository. (kk) "Loans" means any State of Washington Public Works Trust Fund loans, State Drinking Water Revolving Fund loans, or similar loans entered into by the City to fund improvements to the Water and Sewer Utility, the payment of which is secured by a lien or charge on Net Revenue that is junior and inferior to the lien and charge on Net Revenue that secure payment of the Parity Bonds. (11) "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 Parity Bonds then outstanding. (mm) "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. (nn) "MSRB" means the Municipal Securities Rulemaking Board. (oo) "Net Revenue " means the Gross Revenue, less Operating and Maintenance Expenses. (pp) "Official Statement" means an offering document, disclosure document, offering memorandum, or substantially similar disclosure document provided to purchasers and potential purchasers in connection with the initial offering of a Series in conformance with Rule 15c2-12 or other applicable regulations of the SEC. (qq) "Operating and Maintenance Expenses" means all reasonable expenses incurred 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. (rr) "Outstanding Parity Bond Ordinances" means the 2013 Bond Ordinance, the 2015 Bond Ordinance, and the 2020 Bond Ordinance. (ss) "Outstanding Parity Bonds " means the 2013 Bonds, the 2015 Bonds, and the 2020 Bonds. (tt) "Owner" means, without distinction, the Registered Owner and the Beneficial Owner. A-6 FG: 101416766.1 Exhibit A (uu) "Parity Bond Authorizing Ordinance " means, as applicable to each series of Parity Bonds, the 2013 Bond Ordinance, the 2015 Bond Ordinance, the 2020 Bond Ordinance, this ordinance, and any Future Parity Bond Authorizing Ordinance. (vv) "Parity Bonds" means the Outstanding Parity Bonds, the Bonds, and any Future Parity Bonds. (ww) "Parity Conditions " means the conditions precedent to the issuance of Future Parity Bonds set forth in Exhibit B to this ordinance, which is incorporated herein by this reference. (xx) "Permitted Investments" means investments that are legal investments for the City at the time of such investment. (yy) "Principal and InterestAccount" means the account of that name created in the Bond Fund for the payment of the principal of and interest on the Parity Bonds. (zz) "Purchaser" means, with respect to each Series, the corporation, firm, association, partnership, trust, bank, financial institution, or other legal entity or group of entities selected by the Designated Representative to serve as purchaser in a direct placement, to serve as underwriter or placement agent for a negotiated sale, or awarded as the successful bidder in a competitive sale of the Series. (aaa) "Rate Stabilization Account" means the account of that name created for the purposes described in Section 14. (bbb) "Rating Agency" means each nationally recognized rating agency, if any, providing a rating on the Bonds at the request of the City. (ccc) "Record Date" means the Registrar's close of business on the 15th day of the month preceding an interest payment date. With respect to redemption of a Bond prior to its maturity, Record Date means the Registrar's close of business on the date on which the Registrar sends the notice of redemption in accordance with Section 8. (ddd) "Redemption Date " means the date fixed by the Designated Representative for redemption of the Refunded Bonds. (eee) "Refunded Bonds " means the 2013 Bonds selected by the Designated Representative to be refunded with the proceeds of the Bonds. (M) "Refunding Plan " means: (i) the deposit with the registrar for the 2013 Bonds (or, if so determined by the Designated Representative, with the Refunding Trustee) of proceeds of the Bonds (together with other money of the City, if so determined by the Designated Representative); (ii) the purchase by the Refunding Trustee of Acquired Obligations (if so determined by the Designated Representative) and the application of the A-7 FG: 101416766.1 Exhibit A principal of and interest on any such Acquired Obligations and any other such money of the City to the call, payment, and redemption of the Refunded Bonds on the Redemption Date at a price equal to the principal amount of the Refunded Bonds plus accrued interest; and (iii) the payment of the costs of issuance and sale of the Bonds and the administrative costs of the refunding. (ggg) "Refunding Trust Agreement" means a refunding trust or escrow agreement between the City and the Refunding Trustee, dated the Issue Date, providing for the carrying out of the Refunding Plan (if so determined by the Designated Representative). (hhh) "Refunding Trustee " means U.S. Bank Trust Company, National Association, serving as refunding trustee to carry out the Refunding Plan (if so determined by the Designated Representative). (iii) "Registered Owner" means, with respect to a Bond, the person in whose name the Bond is registered on the Bond Register. For so long as the City utilizes the book —entry only system for the Bonds under the Letter of Representations, Registered Owner means the Securities Depository. 6J) "Registrar" means the Fiscal Agent or any successor registrar for the Bonds selected by the City. (kkk) "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 Parity Bonds. (111) "Reserve Security" 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 that has been assigned a credit rating at the time that such Reserve Security is provided in the two highest rating categories without regard to gradations within those categories (i.e., AAA or AA). (mmm) "Reserve Requirement" means, subject to Section 21(d): (i) prior to the Reserve Requirement Amendment Date, for the Outstanding Parity Bonds, the Bonds, and each issue of Future Parity Bonds secured by the Reserve Account, an amount equal to the least of (A) Maximum Annual Debt Service, (B) 125% of Average Annual Debt Service, or (C) 10% of the original proceeds of each series of the Parity Bonds then outstanding; and (ii) on and after the Reserve Requirement Amendment Date, (A) for the 2015 Bonds, an amount equal to the least of (1) Maximum Annual Debt Service on Parity Bonds secured by the Reserve Account, (2) 125% of Average Annual Debt Service on Parity Bonds secured by the Reserve Account, or (3) 10% of the original proceeds of each series of the Parity Bonds secured by the Reserve Account then outstanding, (B) for the 2020 Bonds and the Bonds, zero, and (C) for each issue of Future Parity Bonds, the amount specified as such pursuant to the applicable Future Parity Bond Authorizing Ordinance. A-8 FG: 101416766.1 Exhibit A (nnn) "Reserve Requirement Amendment Date" means the first date on which all of the following have occurred: (i) the 2013 Bonds are deemed to be no longer outstanding under the 2013 Bond Ordinance; (ii) the 2020 Bonds and the Bonds then outstanding together constitute not less than 50% in aggregate principal amount of the Parity Bonds then outstanding; (iii) the City has caused notice of the passage of this ordinance to be given by first class United States mail to all registered owners of the then outstanding 2015 Bonds and 2020 Bonds and to Moody's Investors Service, Inc. and S&P Global Ratings, which notice briefly describes this ordinance and states that a copy is available from the Finance Director for inspection; and (iv) the City has received an opinion of Bond Counsel stating that this ordinance is permitted by the 2015 Bond Ordinance and the 2020 Bond Ordinance, that upon the effective date of this ordinance it will be valid and binding upon the City in accordance with its terms, and that the passage of this ordinance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the 2015 Bonds or the 2020 Bonds. (000) "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. (ppp) "SEC" means the United States Securities and Exchange Commission. (qqq) "Securities Depository" means DTC, any successor thereto, any substitute securities depository selected by the City that is qualified under applicable laws and regulations to provide the services proposed to be provided by it, or the nominee of any of the foregoing. (rrr) "Separate Utility System " means any water supply, sewage collection or treatment, stormwater management, or other utility service or facilities that may be created, acquired, or constructed by the City as provided in Section 15. (sss) "Series " means a series of the Bonds issued pursuant to this ordinance. (ttt) "Sewer System " means the sanitary sewage collection and disposal system of the City, also referred to as the sewer utility. (uuu) "State " means the State of Washington. (vvv) "Stormwater System " means the stormwater management utility combined into the Water and Sewer Utility pursuant to chapter 7.60 of the Edmonds City Code. (www) "System of Registration " means the system of registration for the City's bonds and other obligations set forth in Ordinance No. 2451 of the City. A-9 FG: 101416766.1 Exhibit A (xxx) "Tax Credit Subsidy Bond" means any bond that is designated by the City as a "build America bond" or other type of tax credit bond, pursuant to the Code, and which is further designated as a "qualified bond" under Section 6431 of the Code (or under similar provisions of the Code providing for "direct -pay" tax credit bonds), and with respect to which the City expects to receive a Tax Credit Subsidy Payment. (yyy) "Tax Credit Subsidy Payment" means the amounts the City expects to receive as a tax credit payable by the United States Treasury to the City under Section 6431 of the Code (or under similar provisions of the Code providing for "direct -pay" tax credit bonds), in respect of any Parity Bonds. (zzz) "Tax -Exempt Bonds " means any Series issued on a tax-exempt basis. (aaaa) "Term Bond" means a Bond designated as a term bond and subject to mandatory redemption prior to maturity in the years and amounts set forth in the Bond Purchase Contract. (bbbb) "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. (cccc) "ULID Assessments" means the assessments levied in any ULID that are pledged to be paid into the Bond Fund, including installment payments of any assessment as well as the interest and penalties (if any) thereon, less any prepaid assessments permitted by law to be paid into a construction fund or account. (dddd) "Undertaking" means the undertaking to provide continuing disclosure entered into pursuant to Section 20. (eeee) "Variable Interest Rate" means a 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 interest rate (or parameters with respect thereto) shall be specified in the Future Parity Bond Authorizing Ordinance, which shall specify either (i) the particular period or periods of time 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. (ffff) "Variable Interest Rate Bonds" means, for any period of time, Future Parity Bonds that bear a Variable Interest Rate during that period. Future Parity Bonds the interest rate or rates on which have been fixed for the remainder of the term thereof no longer shall be deemed to be Variable Interest Rate Bonds. (gggg) "Water and Sewer Utility" means the combined utility, as described in chapter 7.60 of the Edmonds City Code, including the component Water, Sewer, and Stormwater Systems, 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. (hhhh) "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. A-10 FG:101416766.1 Exhibit A (iiii) "Water System" means the system of water supply and transmission of the City, also referred to as the water utility. Section 3. Pu ose and Authorization of the Bonds. The City is authorized to borrow money on the credit of the City and issue negotiable or nonnegotiable water and sewer revenue bonds evidencing indebtedness in one or more Series in an aggregate principal amount not to exceed the amount set forth in Appendix A to provide funds necessary to carry out the Refunding Plan. The proceeds of the Bonds shall be deposited as set forth in Section 16 and shall be used to carry out the Refunding Plan. Section 4. Descri tioti of die Bonds: Al2j2ointment of Designated Representative. The Finance Director is appointed as the Designated Representative of the City and is authorized and directed to conduct the sale of the Bonds in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of each Series, with such additional terms and covenants as the Designated Representative deems advisable, within the parameters set forth in Exhibit A to this ordinance, which is incorporated herein by this reference. Section S. Registrar: Registration and Transfer of Bonds. (a) Registration of Bonds. Each Bond shall be issued only in registered form as to both principal and interest and the ownership of each Bond shall be recorded on the Bond Register. (b) Registrar; Duties. The Fiscal Agent is appointed as initial Registrar. The 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 Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred 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 Registrar's powers and duties under this ordinance and the System of Registration. The Registrar shall be responsible for its representations contained in the Registrar's Certificate of Authentication on each Bond. The Registrar may become an Owner with the same rights it would have if it were not the 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 Owners. (c) Bond Register; Transfer and Exchange of Bonds. The Bond Register shall contain the name and mailing address of each Registered Owner and the principal amount and number of each Bond held by each Registered Owner. A Bond surrendered to the Registrar may be exchanged for a Bond or Bonds in any Authorized Denomination of an equal aggregate principal amount and of the same Series, maturity, and interest rate. A Bond may be transferred only if endorsed in the manner provided thereon and surrendered to the Registrar. Any exchange or transfer shall be without cost to the Owner or transferee. The Registrar shall not be obligated to exchange any Bond or transfer registered ownership during the period between the applicable Record Date and the redemption date. (d) Securities Depository; Book -Entry Only Form. If a Bond is to be issued in book -entry only form, DTC shall be appointed as initial Securities Depository and each such Bond initially shall be registered in the name of Cede & Co., as the nominee of DTC. Each Bond registered in the A-11 FG: 101416766.1 Exhibit A name of the Securities Depository shall be held fully immobilized in book -entry only form by the Securities Depository in accordance with the provisions of the Letter of Representations. Registered ownership of any Bond registered in the name of the Securities Depository may not be transferred except: (i) to any successor Securities Depository; (ii) to any substitute Securities Depository appointed by the City; or (iii) to any person if the Bond is no longer to be held in book - entry only form. Upon the resignation of the Securities Depository, or upon a termination of the services of the Securities Depository by the City, the City may appoint a substitute Securities Depository. If (i) the Securities Depository resigns and the City does not appoint a substitute Securities Depository, or (ii) the City terminates the services of the Securities Depository, the Bonds no longer shall be held in book -entry only form and the registered ownership of each Bond may be transferred to any person as provided in this ordinance. Neither the City nor the Registrar shall have any obligation to participants of any Securities Depository or the persons for whom they act as nominees regarding accuracy of any records maintained by the Securities Depository or its participants. Neither the City nor the Registrar shall be responsible for any notice that is permitted or required to be given to the Registered Owner of a Bond registered in the name of the Securities Depository except such notice as is required to be given by the Registrar to the Securities Depository. Section b. Form and Execution of Bonds. (a) Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. Each Bond shall be signed by the Mayor and the 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 printed thereon. If any officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing his or her manual or facsimile signature is authenticated by the Registrar, or issued or delivered by the City, that Bond 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 the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the Issue Date. (b) Authentication. Only a Bond bearing a Certificate of Authentication in substantially the following form, manually signed by the Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate of Authentication. This Bond is one of the fully registered City of Edmonds, Washington, Water and Sewer Revenue Bonds, [Series]." 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. Section 7. Payment of Bonds. Principal of and interest on each Bond shall be payable in lawful money of the United States of America. Principal of and interest on each Bond registered in the name of the Securities Depository are payable in the manner set forth in the Letter of Representations. Interest on each Bond not registered in the name of the Securities Depository is payable by electronic transfer on the interest payment date, or by check or draft of the Registrar A-12 FG:101416766.1 Exhibit A mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register on the Record Date. The City is not required to make electronic transfers except pursuant to a request by a Registered Owner in writing received on or prior to the Record Date and at the sole expense of the Registered Owner. Principal of each Bond not registered in the name of the Securities Depository is payable upon presentation and surrender of the Bond by the Registered Owner to the Registrar. Payment of the Bonds is not subject to acceleration under any circumstances. Section 8. Redemption Provisions and Open Market Purchase of Bonds. (a) Optional Redemption. The Bonds shall be subject to redemption at the option of the City on terms acceptable to the Designated Representative, as set forth in the Bond Purchase Contract, consistent with the parameters set forth in Exhibit A. (b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the Bond Purchase Contract, consistent with the parameters set forth in Exhibit A, shall be called for redemption at a price equal to the stated principal amount to be redeemed, plus accrued interest, on the dates and in the amounts as set forth in the Bond Purchase Contract. If a Term Bond is redeemed under the optional redemption provisions, defeased, or purchased by the City and surrendered for cancellation, the principal amount of the Term Bond so redeemed, defeased, or purchased (irrespective of its actual redemption or purchase price) shall be credited against one or more scheduled mandatory redemption installments for the Term Bond. The City shall determine the manner in which the credit is to be allocated and shall notify the Registrar in writing of its allocation prior to the earliest mandatory redemption date for the Term Bond for which notice of redemption has not already been given. (c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the outstanding Bonds are to be redeemed at the option of the City, the City shall select the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of the Securities Depository to be redeemed in accordance with the Letter of Representations, and the Registrar shall select all other Bonds to be redeemed randomly in such manner as the Registrar shall determine. All or a portion of the principal amount of any Bond that is to be redeemed may be redeemed in any Authorized Denomination. If less than all of the outstanding principal amount of any Bond is redeemed, upon surrender of that Bond to the Registrar, there shall be issued to the Registered Owner, without charge, a new Bond (or Bonds, at the option of the Registered Owner) of the same Series, maturity, and interest rate in any Authorized Denomination in the aggregate principal amount to remain outstanding. (d) Notice of Redemption. Notice of redemption of each Bond registered in the name of the Securities Depository shall be given in accordance with the Letter of Representations. Notice of redemption of each other Bond, unless waived by the Registered Owner, shall be given by the 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 at the address appearing on the Bond Register on the Record Date. The requirements of the preceding sentence shall be satisfied when notice has been mailed as so provided, whether or not it is actually received by an Owner. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB (if A-13 FG: 101416766.1 Exhibit A required under the Undertaking), to each Rating Agency, and to such other persons and with such additional information as the Finance Director shall determine, but these additional mailings shall not be a condition precedent to the redemption of any Bond. (e) Rescission of Optional Redemption Notice. In the case of an optional redemption, the notice of redemption may state that the City retains the right to rescind the redemption notice and the redemption by giving a notice of rescission to the affected Registered Owners at any time on or prior to the date fixed for redemption. Any notice of optional redemption that is so rescinded shall be of no effect, and each Bond for which a notice of optional redemption has been rescinded shall remain outstanding. (f) Effect of Call for Redemption. Interest on each Bond called for redemption shall cease to accrue on the date fixed for redemption, unless either the notice of optional redemption is rescinded as provided in subsection (e) of this Section or money sufficient to effect such redemption is not on deposit in the Bond Fund or in a trust account established to refund or defease the Bond. (g) Purchase of Bonds. The City reserves the right to purchase any or all of the Bonds offered to the City or in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. Section 9. Failure To Pay Bonds. If the principal of any Bond is not paid when the Bond is properly presented at its maturity date or date fixed for redemption, the City shall be obligated to pay, from the sources pledged herein, interest on the Bond at the same rate provided in the Bond from and after its maturity or date fixed for redemption until the Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Section 10. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside in a special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the "trust account") money and/or Government Obligations maturing at a time or times and bearing interest in amounts sufficient to redeem, refund, or defease the defeased Bonds in accordance with their terms, then all right and interest of the Owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and become void. Thereafter, the Registered Owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds solely from the trust account and the defeased Bonds shall be deemed no longer outstanding. In that event, the City may apply money remaining in any fund or account (other than the trust account) established for the payment or redemption of the defeased Bonds to any lawful purpose, subject only to the rights of the registered owners of any other Parity Bonds then outstanding. Unless otherwise specified by the City in a refunding or defeasance plan, notice of refunding or defeasance shall be given, and selection of Bonds for inclusion in a refunding or A-14 FG: 101416766.1 Exhibit A defeasance shall be conducted, in the manner prescribed in this ordinance for the redemption of Bonds. Section 11. Security for the Bonds: Bond Fund. (a) Pledge offet Revenue. The Net Revenue and ULID Assessments are pledged irrevocably to the payment of the Bonds, and the amounts pledged to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Bonds when due shall constitute a lien and charge on the Net Revenue and ULID Assessments on a parity with the lien and charge on the Net Revenue and ULID Assessments pledged to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Outstanding Parity Bonds and any Future Parity Bonds, and prior and superior to any other liens or charges whatsoever. (b) Special Obligations. The principal of and interest on the Bonds are payable exclusively from the Bond Fund and the Net Revenue and ULID Assessments pledged to be paid into the Bond Fund to pay principal of and interest on the Bonds when due. The Bonds are special obligations of the City and do not constitute an obligation of the State, either general or special, or any political subdivision thereof other than the City. The Bonds are not general obligations of the City and shall not constitute an indebtedness of the City within the meaning of the State constitution. Neither the full faith and credit nor the taxing power of the City is pledged to the payment of the Bonds. The Registered Owners shall not have any claim for the payment of the Bonds against the City arising from the Bonds except for payment from the Bond Fund and the Net Revenue and ULID Assessments pledged to be paid into the Bond Fund to pay principal of and interest on the Bonds when due. The Registered Owners shall not have any claim against the State arising from the Bonds. (c) Bond Fund; Deposits into the Bond Fund. The Bond Fund has been established within the Water and Sewer Utility Fund as a special fund of the City and is to be drawn upon solely for the payment of the principal of and premium, if any, and interest on Parity Bonds. The Bond Fund is divided into two accounts: the Principal and Interest Account and the Reserve Account. 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 for the Parity Bonds, an amount that will be sufficient, together with other money on deposit therein, to pay the interest on the Parity Bonds due on the interest payment date; and (2) Into the Principal and Interest Account, before each principal payment date of the Parity Bonds (including any mandatory redemption date), an amount that will be sufficient, together with other money on deposit therein, to pay the principal of the Parity Bonds due on the principal payment date (including mandatory redemption amounts due with respect to any Term Bonds); and (3) Into the Reserve Account, at the time and in the manner required by this ordinance, the amount, if any, necessary to make the amount on deposit in the Reserve Account equal to the Reserve Requirement for the Parity Bonds. A-15 FG: 101416766.1 Exhibit A When the total amount on deposit in the Bond Fund equals the total amount of principal and interest due for all outstanding Parity Bonds to the last maturity thereof, no further payment need be made into the Bond Fund. The Finance Director may create sinking fund accounts or other accounts in the Bond Fund for the payment or securing the payment of Parity Bonds as long as the maintenance of such accounts does not conflict with the rights of the registered owners of Parity Bonds. (d) Reserve Account; Reserve Requirement. The City will at all times maintain on deposit in the Reserve Account an amount equal to the Reserve Requirement, except as otherwise expressly authorized in this subsection, until the total amount on deposit in the Bond Fund equals the total amount of principal and interest due for all outstanding Parity Bonds to the last maturity thereof, at which time the money in the Reserve Account may be used to pay any such principal and interest, so long as the amount remaining on deposit in the Reserve Account is not less than the Reserve Requirement calculated based on the Parity Bonds then outstanding. The Reserve Requirement shall be deemed satisfied by any combination of Parity Bond proceeds, Reserve Securities, or other legally available money equal to the Reserve Requirement, or by the deposit of available funds of the City in approximately equal annual installments so that the Reserve Requirement is funded no later than three years after the issuance of any Future Parity Bonds. If there is a deficiency in the Principal and Interest Account to make the next payment of principal of or interest on the Parity Bonds, the deficiency shall be made up from the Reserve Account by the withdrawal of amounts necessary for that purpose, first, from money on deposit in the Reserve Account, and second, from pro rata draws on each Reserve Security. Any deficiency created in the Reserve Account by reason of any such withdrawal shall be made up from the next available of Net Revenue and ULID Assessments after making necessary provision for the required payments into the Principal and Interest Account, first, to restore each Reserve Security pro rata, and second, to make up any remaining deficiency. The City may establish a separate Reserve Requirement for any or all of the Bonds or any Future Parity Bonds, which may be zero, and establish one or more separate reserve subaccounts for any or all of the Bonds or any Future Parity Bonds. On and after the Reserve Requirement Amendment Date, the Bonds shall not be secured by the Reserve Account. (e) Investment of Money in Bond Fund. All money in the Bond Fund may be kept in cash; deposited with an institution (as permitted by law) in an amount in each institution not greater than the amount insured by any department or agency of the United States Government; or invested in Permitted Investments maturing not later than the date when needed (for investments in the Principal and Interest Account) or the last maturity of any Parity Bonds then outstanding (for investments in the Reserve Account). Income from investments in the Principal and Interest Account shall be deposited into that account. Income from investments in the Reserve Account shall be deposited into that account until the amount on deposit therein is equal to the Reserve Requirement, and thereafter shall be deposited into the Principal and Interest Account or used for other Water and Sewer Utility purposes. (f) Action to Compel Payments. If the City fails to set aside and pay into the Bond Fund the amounts set forth above, the registered owner of any of the Parity Bonds then outstanding may bring action against the City and compel the setting aside and payment. A-16 FG: 101416766.1 Exhibit A Section 12. Flow of Funds. All ULID Assessments 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, if any, on) the Parity Bonds, whether at maturity or pursuant to redemption prior to maturity. (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 Insurer 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 the payment of which is secured by a lien or charge on Net Revenue junior and inferior to the lien and charge on Net Revenue that secure payment of the Parity Bonds. (7) Without priority, to retire by redemption or to purchase in the open market any Parity Bonds or junior lien obligations then outstanding, 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 13. Additional Covenants. The City covenants and agrees with the Registered 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 operated the properties of the Water and Sewer Utility and the business in connection therewith in an efficient manner and at a reasonable cost. (b) Establishment and Collection of Rates and Charges. The City will establish, maintain, and collect rates and charges for all services and facilities provided by the Water and Sewer Utility that will be fair and nondiscriminatory. The City will adjust those rates and charges from time to time so that: (i) the Gross Revenue will at all times be sufficient to (A) pay all Maintenance and Operation Expenses on a current basis, (B) pay when due all amounts that the City is obligated to pay into the Bond Fund and the accounts therein, and (C) pay all taxes (or payments in lieu thereof), assessments, or other governmental charges lawfully imposed on the Water and Sewer Utility and any and all other amounts that the City may now or hereafter become obligated to pay from the Gross Revenue by law or contract; and (ii) the Adjusted Net Revenue in each fiscal year will be not less than the Coverage Requirement. A-17 FG: 101416766.1 Exhibit A (c) Sale or Disposition of Utility Property. The City will not sell, lease, mortgage, or in any manner encumber or dispose of all the property of the Water and Sewer Utility unless provision is made for payment into the Bond Fund of a sum sufficient to pay the principal of and interest on all Parity Bonds then outstanding. Further, the City will not sell, lease, mortgage, or in any manner encumber or dispose of (each, a "disposition") any part of the property of the Water and Sewer Utility that is used, useful, and material to the operation thereof (the "affected portion") unless provision is made for replacement thereof or for payment into the Bond Fund of an amount which shall bear the same ratio to the amount of Parity Bonds then outstanding (less the amount of cash and investments in the Bond Fund and the accounts therein) as (i) the Net Revenue from affected portion of the Water and Sewer Utility for the twelve months preceding such disposition bears to (ii) the Net Revenue from the entire Water and Sewer Utility for the same period. Any money paid into the Bond Fund as a result of such a disposition shall be used to retire that proportion of Parity Bonds then outstanding at the earliest practicable date. (d) Books and Records. The City will maintain complete books and records relating to the operation of the Water and Sewer Utility and its financial affairs, and will cause such books and records to be audited annually, and cause to be prepared an annual financial and operating statement, which shall be provided to any owner of Parity Bonds upon request. (e) No Free Service. Except to aid the poor or infirm, to provide for resource conservation, or to provide for the proper handling of hazardous materials, the City will not furnish or supply or permit the furnishing or supplying of any service or facility in connection with the operation of the Water and Sewer Utility free of charge to any person, firm, or corporation, public or private, other than the City. (f) Collection of Delinquent Accounts. On at least an annual basis, the City will determine all accounts that are delinquent and will take all necessary action to enforce payment of such accounts against those property owners whose accounts are delinquent. (g) Insurance. The City will at all times carry fire and such other forms of insurance on such of the buildings, equipment, facilities, and properties of the Water and Sewer Utility as are ordinarily carried on such buildings, equipment, facilities, and properties by utilities engaged in the operation of similar utility systems to the full insurable value thereof, and also will carry adequate public liability insurance at all times. The City may self -insure or participate in a joint intergovernmental 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 of Parity Bonds. Section 14. Rate Stabilization Account. The Rate Stabilization Account has been previously 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 that is 90 days after the end of the fiscal year for which the deposit or withdrawal will be included as Adjusted Net Revenue for that fiscal year, as follows: A-18 FG: 101416766.1 Exhibit A (a) Deposits into the Rate Stabilization Account. The City may at any time, as determined by the Finance Director, consistent with the covenants contained in this ordinance, deposit into the Rate Stabilization Account amounts of Gross 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) Withdrawals from the Rate Stabilization Account. The City may withdraw money from the Rate Stabilization Account at any time upon authorization of the City Council (which may be by motion, resolution, or 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 fiscal year. Earnings from investments in the Rate Stabilization Account shall be deposited into that account and shall not be included as Adjusted Net Revenue unless and until withdrawn from that account. Section 15. Se crate Utility Systems. The City may create, acquire, construct, finance, own, and operate one or more additional systems for water supply, sewer service, water, sewage, or stormwater transmission or treatment, or other commodity or utility service. The revenue of the Separate Utility System, and any utility local improvement district assessments payable solely with respect to improvements to a Separate Utility System, shall not be included in Gross Revenue and may be pledged to the payment of revenue obligations issued to purchase, 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 System, except that the Net Revenue may be pledged on a basis subordinate to the lien on Net Revenue that secures payment of the Parity Bonds. Section 16. Refunding Plan. (a) Appointment of Refunding Trustee. The Designated Representative is authorized to appoint the Refunding Trustee. (b) Use of Bond Proceeds; Acquisition of Acquired Obligations. On the Issue Date, proceeds of the Bonds in the amount necessary to satisfy the Reserve Requirement, if any, shall be deposited into the Reserve Account. The remaining proceeds of the Bonds shall be deposited immediately upon the receipt thereof with the registrar for the 2013 Bonds (or, if so determined by the Designated Representative, with the Refunding Trustee) and used to discharge the obligations of the City relating to the Refunded Bonds under the 2013 Bond Ordinance by providing for the payment of the amounts required to be paid by the Refunding Plan. As determined by the Designated Representative, such obligations shall be discharged fully by either (i) the payment when due by the registrar for the 2013 Bonds of the amount required to be paid by the Refunding Plan or (ii) to the extent practicable, the Refunding Trustee's simultaneous purchase of Acquired Obligations, bearing such interest and maturing as to principal and interest in such amount and at such time so as to provide, together with a beginning cash balance, if necessary, for the payment of the amount required to be paid by the Refunding Plan. Any such Acquired Obligations shall be listed and more particularly described in an exhibit to be attached to the Refunding Trust Agreement. Any Bond proceeds or other such money deposited with the Refunding Trustee not A-19 FG: 101416766,1 Exhibit A needed to carry out the Refunding Plan shall be returned to the City as soon as practicable after the Issue Date and deposited in the Bond Fund to pay interest on the Bonds on the first interest payment date. If payment of the costs of issuance and sale of the Bonds and the administrative costs of the refunding by the Refunding Trustee is not included in the Refunding Plan, Bond proceeds that are not deposited with the registrar for the 2013 Bonds may be retained by the City to be used to pay such costs. (c) Administration of Refunding Plan. The Refunding Trustee is authorized to purchase the Acquired Obligations, if so directed by the Designated Representative, and to make the payments required to be made by the Refunding Plan (if so determined by the Designated Representative) from the Acquired Obligations and money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations and the money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, invested, and applied in accordance with the provisions of the 2013 Bond Ordinance, this ordinance, chapter 39.53 RCW and other applicable statutes of the State, and the Refunding Trust Agreement. (d) Authorization for Refunding Trust Agreement. The Designated Representative is authorized and directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement setting forth the duties, obligations, and responsibilities of the Refunding Trustee in connection with carrying out the Refunding Plan (if so determined by the Designated Representative). (e) Call for Redemption of Refunded Bonds. The City calls the Refunded Bonds for redemption on the Redemption Date. Such call for redemption shall be irrevocable after the delivery of the Bonds to the Purchaser. The proper City officials are authorized and directed to give or cause to be given such notices as required, at the times and in the manner required by the 2013 Bond Ordinance, to effect the redemption prior to their maturity of the Refunded Bonds. (f) Findings with Respect to Refunding Plan. Prior to approving the sale of the Bonds, the Designated Representative shall make the following determinations in writing if in the judgment of the Designated Representative the following conditions are satisfied: (1) the savings that will be effected (as measured by the difference between the principal and interest cost over the life of the Bonds and the principal and interest cost over the life of the Refunded Bonds, but for such refunding) shall be equal to at least the percentage savings set forth in Exhibit A, and in making such determination, the Designated Representative shall give consideration to the fixed maturities of the Bonds and the Refunded Bonds, the costs of issuance of the Bonds, and the known earned income from the investment of the proceeds of the Bonds, if any, pending redemption of the Refunded Bonds; and (2) the Refunding Plan will provide sufficient funds to discharge and satisfy the obligations of the City under the 2013 Bond Ordinance as to the Refunded Bonds, and in making such determination, the Designated Representative may rely upon a verification by a nationally recognized independent certified public accounting firm or a certification of the Municipal Advisor. Section 17. Sale and Delivery of the Bonds,• Parity Certificate. (a) Manner of Sale of Bonds; Delivery of Bonds. The Designated Representative is authorized to sell each Series by direct placement, negotiated sale, or competitive sale in accordance with a A-20 FG: 101416766.1 Exhibit A notice of sale consistent with this ordinance, based on the assessment of the Designated Representative of market conditions, in consultation with appropriate City officials and staff, Bond Counsel, the Financial Advisor, and other advisors. In determining the method of sale of a Series and accepting the Final Terms, the Designated Representative shall take into account those factors that, in the judgment of the Designated Representative, may be expected to result in the lowest true interest cost to the City. (b) Procedure for Direct Placement or Negotiated Sale. If the Designated Representative determines that a Series is to be sold by direct placement or negotiated sale, the Designated Representative shall select one or more Purchasers with which to negotiate the sale. The Bond Purchase Contract for each Series shall set forth the Final Terms. The Designated Representative is authorized to execute the Bond Purchase Contract on behalf of the City, so long as the terms provided therein are consistent with this ordinance. (c) Procedure for Competitive Sale. If the Designated Representative determines that a Series is to be sold by competitive sale, the Designated Representative shall cause the preparation of an official notice of bond sale setting forth parameters for the Final Terms and any other bid parameters that the Designated Representative deems appropriate, consistent with this ordinance. Bids for the purchase of each Series shall be received at such time or place and by such means as the Designated Representative directs. On the date and time established for the receipt of bids, the Designated Representative (or the designee of the Designated Representative) shall open bids and shall cause the bids to be mathematically verified. The Designated Representative is authorized to award, on behalf of the City, the winning bid and accept the winning bidder's offer to purchase the Series, with such adjustments to the aggregate principal amount and principal amount per maturity as the Designated Representative deems appropriate, consistent with this ordinance. The Designated Representative may reject any or all bids submitted and may waive any formality or irregularity in any bid or in the bidding process if the Designated Representative deems it to be in the City's best interest to do so. If all bids are rejected, the Series may be sold by direct placement or negotiated sale or in any manner provided by law as the Designated Representative determines is in the best interest of the City, consistent with this ordinance. (d) Parity Certificate. At the time of issuance of the Bonds, the Designated Representative shall cause to be executed and have on file a certificate of coverage as required for the issuance of Future Parity Bonds under Section 19 of the 2013 Bond Ordinance, Section 19 of the 2015 Bond Ordinance, and Section 19 of the 2020 Bond Ordinance. (e) Preparation, Execution, and Delivery of the Bonds. The Bonds will be prepared at City expense and will be delivered to the Purchaser in accordance with the Bond Purchase Contract, together with the approving legal opinion of Bond Counsel regarding the Bonds. Section 18. Part Conditions. The City reserves the right to issue Future Parity Bonds the payment of the principal of and interest on which are secured by a lien and charge on the Net Revenue and ULID Assessments on a parity with the lien and charge on Net Revenue and ULID Assessments that secure payment of the Bonds and the Outstanding Parity Bonds if the Parity Conditions are met and complied with at the time of the issuance of the Future Parity Bonds. Nothing contained in the Parity Conditions shall prevent the City from issuing revenue obligations the payment of which is secured by a lien or charge on Net Revenue that is junior and inferior to A-21 FG: 101416766.1 Exhibit A the lien and charge on Net Revenue that secure payment of 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 local improvement district that are levied to pay part or all of the cost of improvements being constructed out of the proceeds of the sale of such junior lien obligations. Neither shall anything contained in this ordinance prevent the City from issuing revenue obligations to refund maturing Parity Bonds for the payment of which money is not otherwise available. Section 19. Tax Matters. (a) Preservation of Tax Exemption for Interest on Tax -Exempt Bonds. The City will take all actions necessary to prevent interest on the Tax -Exempt Bonds 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 Tax -Exempt Bonds (or other funds of the City treated as proceeds of the Tax -Exempt Bonds) that will cause interest on the Tax -Exempt Bonds to be included in gross income for federal income tax purposes. The City will, to the extent the arbitrage rebate requirements of Section 148 of the Code are applicable to the Tax -Exempt Bonds, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with the Tax -Exempt Bonds. (b) Post -Issuance Compliance. The Finance Director is authorized and directed to review and update the City's written procedures to facilitate compliance by the City with the covenants in this Section and the applicable requirements of the Code that must be satisfied after the Issue Date to prevent interest on the Tax -Exempt Bonds from being included in gross income for federal tax purposes. (c) Designation of Bonds as "Qualified Tax -Exempt Obligations. " The Designated Representative may designate one or more Series of Tax -Exempt Bonds as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code, if the following conditions are met: (1) the Series of Tax -Exempt Bonds does not constitute "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 and other obligations not required to be included in such calculation) that the City and any entity subordinate to the City (including any entity that the City controls, that derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt obligations on behalf of the City) will issue during the calendar year in which the Series of Tax -Exempt Bonds is issued will not exceed $10,000,000; and (3) the amount of tax-exempt obligations, including the Series of Tax -Exempt Bonds, 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 Series of Tax -Exempt Bonds is issued does not exceed $10,000,000. A-22 FG: 101416766.1 Exhibit A Section 20. Official Statement; Continuing Disclosure. (a) Preliminary Official Statement Deemed Final. The Designated Representative shall review and, if acceptable to him or her, approve the preliminary Official Statement prepared in connection with each sale of a Series to the public or through a Purchaser as placement agent. For the sole purpose of the Purchaser's compliance with paragraph (b)(1) of Rule 15c2-12, if applicable, the Designated Representative is authorized to deem that preliminary Official Statement final as of its date, except for the omission of information permitted to be omitted by Rule 15c2-12. The City authorizes and approves the distribution to potential purchasers of the Bonds of a preliminary Official Statement that has been approved by the Designated Representative and, if applicable, deemed final, in accordance with this subsection. (b) Approval of Final Official Statement. The City approves the preparation of a final Official Statement for each Series to be sold to the public or through a Purchaser as placement agent, in the form of the preliminary Official Statement that has been approved and, if applicable, deemed final, in accordance with subsection (a) of this Section, with such modifications and amendments as the Designated Representative deems necessary or desirable, and further authorizes the Designated Representative to execute and deliver such final Official Statement to the Purchaser. The City authorizes and approves the distribution to purchasers and potential purchasers of the Bonds of that final Official Statement so executed and delivered. (c) Undertaking to Provide Continuing Disclosure. If necessary to meet the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to the Purchaser acting as a participating underwriter for a Series, the Designated Representative is authorized to execute a written undertaking to provide continuing disclosure for the benefit of holders of the Series in substantially the form attached as Exhibit C to this ordinance, which is incorporated herein by this reference. Section 2l. Amendatory Ordinances. (a) This ordinance shall not be 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. (b) The City, from time to time, and at any time, without the consent of or notice to the Registered Owners, may pass amendatory ordinances as follows: (1) To cure any formal defect, omission, inconsistency, or ambiguity in this ordinance in a manner not adverse to the registered owner of any Parity Bonds; (2) To impose upon the Registrar (with its consent) for the benefit of the registered owners of the Parity Bonds any additional rights, remedies, powers, authority, security, liabilities, or duties that may lawfully be granted, conferred, or imposed and that 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 restrictions to be observed by the City that are not contrary or inconsistent with this ordinance as theretofore in effect; (4) 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; A-23 FG: [01416766.1 Exhibit A (5) To authorize different denominations of the 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; (6) To modify, alter, amend, or supplement this ordinance in any other respect that is not materially adverse to the registered owners of the Parity Bonds and which does not involve a change described in subsection (c) of this Section; and (7) Due to a change in federal law or rulings, to maintain the exclusion from gross income of the interest on the Tax -Exempt Bonds from gross income for federal income tax purposes. (c) Except for any amendatory ordinance passed pursuant to subsection (b) of this Section, subject to the terms and provisions contained in this subsection (c) and not otherwise: (1) Registered owners of a majority in aggregate principal amount of the Parity Bonds then outstanding shall have the right from time to time to consent to the passage of any amendatory ordinance deemed necessary or desirable by the City for the purpose of modifying, altering, amending, supplementing, or rescinding, in any particular, any of the terms or provisions contained in this ordinance. However, consent by the registered owners of all the Bonds then outstanding is required for any amendatory ordinance authorizing: (i) 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 or redemption price of any outstanding Bond or a change in the redemption price of any outstanding Bond or a change in the method of determining the rate of interest thereon; (ii) a preference or priority of any Bond or Bonds or any other Bond or Bonds; or (iii) a reduction in the aggregate principal amount of Bonds. (2) Any amendatory ordinance passed for any of the purposes of this subsection (c) shall not become effective except in accordance with this paragraph (c)(2). Upon passage of any such amendatory ordinance, the City shall cause notice of the proposed ordinance to be given by first class United States mail to the registered owners of the Parity Bonds then outstanding and to each Rating Agency. The notice shall briefly describe the proposed ordinance and shall state that a copy is available from the Finance Director for inspection. The amendatory ordinance shall become effective in substantially the form described in the notice only if within two years after mailing of such notice, the City has received (i) the required consents, in writing, of the registered owners of the Parity Bonds (or of the Bonds, as applicable) and (ii) an opinion of Bond Counsel stating that such amendatory ordinance is permitted by this ordinance; that upon the effective date thereof, it will be valid and binding upon the City in accordance with its terms; and that its passage will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Tax -Exempt Bonds. (3) If registered owners of not less than the percentage of Parity Bonds (or Bonds, as applicable) required by this subsection (c) have consented, no owner of the Parity Bonds shall have any right to object to the passage of the ordinance (or 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 from passing, or from taking any action pursuant to, the same. (d) The Registered Owner of each Bond, by taking and holding the Bond, shall be deemed to have consented to the passage by the City of any amendatory ordinance to establish a separate Reserve Requirement for any or all of the 2020 Bonds, the Bonds, or any Future Parity Bonds, A-24 FG: 101416766.1 Exhibit A which may be zero, and to establish one or more separate reserve subaccounts for any or all of the 2020 Bonds, the Bonds, or any Future Parity Bonds. (e) Registered owners of the Parity Bonds may be deemed to have notice of and have consented to the passage of any amendatory ordinance so long as (1) the Parity Bond Authorizing Ordinance includes the nature of the proposed amendatory ordinance and states that registered owners of the Parity Bonds will be deemed to have consented to its passage and (2) the preliminary official statement, if any, and official statement, if any, for the Parity Bonds includes the nature of the proposed amendatory ordinance and states that registered owners of the Parity Bonds will be deemed to have consented to its passage. (f) An underwriter of Parity Bonds, either in its capacity as an underwriter or remarketing agent, or as agent for or in lieu of registered owners of the Parity Bonds, may consent to the passage of an amendatory ordinance. (g) Upon the effective date of any amendatory ordinance passed pursuant to the provisions of this Section, this ordinance shall be amended in accordance therewith, and the respective rights, duties, and obligations under this ordinance of the City, the 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 amendments. Section 22. Amendment of 2015 Bond Ordinance. (a) Section 2(ggg) of the 2015 Bond Ordinance is hereby deleted in its entirety and replaced with the following: "Reserve Requirement" means: (i) prior to the Reserve Requirement Amendment Date, for all Parity Bonds, an amount equal to the lesser of (A) Maximum Annual Debt Service, (B) 125% of Average Annual Debt Service, or (C) 10% of the original proceeds of the then -outstanding Parity Bonds; and (ii) on and after the Reserve Requirement Amendment Date, (A) for the Bonds, an amount equal to the least of (1) Maximum Annual Debt Service on Parity Bonds secured by the Reserve Account, (2) 125% of Average Annual Debt Service on Parity Bonds secured by the Reserve Account, or (3) 10% of the original proceeds of each series of the Parity Bonds secured by the Reserve Account then outstanding, and (B) for each issue of Future Parity Bonds, the amount specified as such pursuant to the applicable Future Parity Bond Authorizing Ordinance. (b) The following definitions are hereby added to Section 2 of the 2015 Bond Ordinance: "2020 Bonds" means the City's outstanding Water and Sewer Revenue Bonds, 2020 (Certified Climate Bonds), authorized by the 2020 Bond Ordinance. A-25 FG: 101416766.1 Exhibit A "2020 Bond Ordinance" means Ordinance No. 4197, passed on October 13, 2020. "2023 Bonds" means the City's outstanding water and sewer revenue refunding bonds authorized by the 2023 Bond Ordinance. "2023 Bond Ordinance " means Ordinance No. 4309, passed on June 20, 2023. "Reserve Requirement Amendment Date " means the first date on which all of the following have occurred: (i) the 2013 Bonds are deemed to be no longer outstanding under the 2013 Bond Ordinance; (ii) the 2020 Bonds and the 2023 Bonds then outstanding together constitute not less than 50% in aggregate principal amount of the Parity Bonds then outstanding; (iii) the City has caused notice of the passage of the 2023 Bond Ordinance to be given by first class United States mail to all registered owners of the then outstanding Bonds and 2020 Bonds and to Moody's Investors Service, Inc. and S&P Global Ratings, which notice briefly describes the 2023 Bond Ordinance and states that a copy is available from the Finance Director for inspection; and (iv) the City has received an opinion of Bond Counsel stating that the 2023 Bond Ordinance is permitted by this ordinance and the 2020 Bond Ordinance, that upon the effective date of the 2023 Bond Ordinance it will be valid and binding upon the City in accordance with its terms, and that the passage of the 2023 Bond Ordinance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the 2020 Bonds. Section 23. Amendment of 2020 Bond Ordinance. (a) Section 2(iii) of the 2020 Bond Ordinance is hereby deleted in its entirety and replaced with the following: "Reserve Requirement" means, subject to Section 22(d): (i) prior to the Reserve Requirement Amendment Date, for the Outstanding Parity Bonds, the Bonds, and each issue of Future Parity Bonds secured by the Reserve Account, an amount equal to the least of (A) Maximum Annual Debt Service, (B) 125% of Average Annual Debt Service, or (C) 10% of the original proceeds of each series of the Parity Bonds then outstanding; and A-26 FG: 101416766.1 Exhibit A (ii) on and after the Reserve Requirement Amendment Date, (A) for the 2015 Bonds, an amount equal to the least of (1) Maximum Annual Debt Service on Parity Bonds secured by the Reserve Account, (2) 125% of Average Annual Debt Service on Parity Bonds secured by the Reserve Account, or (3) 10% of the original proceeds of each series of the Parity Bonds secured by the Reserve Account then outstanding, (B) for the Bonds, zero, and (C) for each issue of Future Parity Bonds, the amount specified as such pursuant to the applicable Future Parity Bond Authorizing Ordinance. (b) The following definitions are hereby added to Section 2 of the 2020 Bond Ordinance: "2023 Bonds" means the City's outstanding water and sewer revenue refunding bonds authorized by the 2023 Bond Ordinance. "2023 Bond Ordinance" means Ordinance No. 4309, passed on June 20, 2023. "Reserve Requirement Amendment Date " means the first date on which all of the following have occurred: (i) the 2013 Bonds are deemed to be no longer outstanding under the 2013 Bond Ordinance; (ii) the Bonds and the 2023 Bonds then outstanding together constitute not less than 50% in aggregate principal amount of the Parity Bonds then outstanding; (iii) the City has caused notice of the passage of the 2023 Bond Ordinance to be given by first class United States mail to all registered owners of the then outstanding 2015 Bonds and Bonds and to Moody's Investors Service, Inc. and S&P Global Ratings, which notice briefly describes the 2023 Bond Ordinance and states that a copy is available from the Finance Director for inspection; and (iv) the City has received an opinion of Bond Counsel stating that the 2023 Bond Ordinance is permitted by the 2015 Bond Ordinance and this ordinance, that upon the effective date of the 2023 Bond Ordinance it will be valid and binding upon the City in accordance with its terms, and that the passage of the 2023 Bond Ordinance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the 2015 Bonds or the Bonds. (c) The following paragraph is hereby added to Section 12(d) of the 2020 Bond Ordinance: The City may establish a separate Reserve Requirement for any or all of the Bonds or any Future Parity Bonds, which may be zero, and establish one or more separate reserve subaccounts for any or all of the Bonds or any Future Parity Bonds. A-27 FG: 101416766-1 Exhibit A On and after the Reserve Requirement Amendment Date, the Bonds shall not be secured by the Reserve Account. Section 24. General Authorization and Ratification. The Designated Representative and other appropriate officers of the City are each individually authorized to take such actions and to execute such documents as in their judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of each Series to the Purchaser and for the proper application, use, and investment of the proceeds of the Bonds. All actions taken prior to the effective date of this ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. Section 25. Severability. 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. Section 26. 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, Washington, at an open public meeting thereof, this 20th day of June, 2023. Mayo ATTEST: City Clerk APPROVED AS TO FORM: FOSTER GARVEY P.C. Bond Counsel Filed with the City Clerk: June 16, 2023 Passed by the City Council: June 20, 2023 Published: June 23, 2023 Effective Date: June 28, 2023 A-28 FG: 101416766.1 Exhibit A PARAMETERS FOR FINAL TERMS OF THE BONDS (i) Principal Amount. The Bonds may be issued in one or more Series and shall not exceed the aggregate principal amount of $13,900,000. (ii) Date or Dates. Each Bond shall be dated the Issue Date, which date may not be later than one year after the effective date of this ordinance. (iii) Denominations, Name. The Bonds shall be issued in Authorized Denominations and shall be numbered separately in the manner and shall bear any name and additional designation as deemed necessary or appropriate by the Designated Representative. (iv) Interest Rates. Each Bond shall bear interest at a fixed rate per annum (computed on the basis of a 360-day year of twelve 30-day months) from the Issue Date or from the most recent date for which interest has been paid or duly provided for, whichever is later. One or more rates of interest may be fixed for the Bonds. No rate of interest for any Bond may exceed 5.50%, and the true interest cost to the City for each Series may not exceed 4.25%. (v) Payment Dates. Interest shall be payable semiannually on dates acceptable to the Designated Representative, commencing no later than one year following the Issue Date. Principal payments shall commence on a date acceptable to the Designated Representative and shall be payable at maturity or in mandatory redemption installments on dates acceptable to the Designated Representative. (vi) Final Maturity. Each Series shall mature no later than December 1, 2038. (vii) Redemption Rights. The Designated Representative may approve in the Bond Purchase Contract provisions for the optional and mandatory redemption of Bonds, subject to the following: (1) Optional Redemption. Any Bond may be designated as being (A) subject to redemption at the option of the City prior to its maturity date on the dates and at the prices set forth in the Bond Purchase Contract; or (B) not subject to redemption prior to its maturity date. If a Bond is subject to optional redemption prior to its maturity, it must be first subject to such redemption on a date that is not more than 101/z years after the Issue Date. A-29 FG: 101416766.1 Exhibit A (2) Mandato Redem Lion. Any Bond may be designated as a Term Bond, subject to mandatory redemption prior to its maturity on the dates and in the amounts set forth in the Bond Purchase Contract. (viii) Price. The purchase price for each Series may not be less than 95% or more than 135% of the stated principal amount of the Series. (ix) Savings. The Bonds shall produce a minimum net present value savings to the City and its ratepayers of at least 3.00% (as a percentage of the Refunded Bonds). Net present value savings means the aggregate difference between (1) annual debt service on the Refunded Bonds, less (2) annual debt service on the Bonds (including expenses related to costs of issuance of the Bonds), discounted to the Issue Date using the yield on the Bonds as the discount rate, plus (3) excess cash, if any, distributed to the City on the Issue Date, and less (4) the amount of additional money of the City contributed to the Refunding Plan, if any, on the Issue Date. (x) Other Terms. The Designated Representative may determine the following: (1) Tax Status. Any or all of the Bonds may be designated as Tax -Exempt Bonds. (2) Credit Enhancement. If determined to be in the best interest of the City, bond insurance or other credit enhancement may be provided for any or all of the Bonds, and the Designated Representative may accept such additional terms, conditions, and covenants determined to be in the best interest of the City, consistent with this ordinance. A-30 FG: 101416766.1 Exhibit B PARITY CONDITIONS FOR ISSUANCE OF FUTURE PARITY BONDS The City may issue Future Parity Bonds the payment of the principal of and interest on which is secured by a lien and charge on Net Revenue and ULID Assessments on a parity with the lien and charge on Net Revenue and ULID Assessments that secure payment of the principal of and interest on the Bonds if and only if the following conditions are met and complied with at the time of issuance of the Future Parity Bonds: (a) There may not be any deficiency in the Principal and Interest Account or the Reserve Account of the Bond Fund. (b) The Future Parity Bond Authorizing Ordinance must require that all ULID Assessments levied in connection with the Future Parity Bonds be paid directly into the Bond Fund. (c) The Future Parity Bond Authorizing Ordinance must provide for the payment of the principal thereof and interest thereon out of the Bond Fund. (d) The Future Parity Bond Authorizing Ordinance must provide for the deposit into the Reserve Account of amounts, if any, necessary to comply with the Reserve Requirement and Section 11. (e) The City must have on file either: (1) A certificate from an Independent Utility Consultant showing that, in his or her 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 at least equal to the Coverage Requirement. In making such certification, the Net Revenue for any 12 consecutive calendar months out of the immediately preceding 24 consecutive months shall be used, and the following adjustments may be made to the historical Net Revenue: (i) 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 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; (iv) A full year's revenue may be included from any customer being served, but who has not been receiving service for the full 12-month period; and (v) Actual or reasonably anticipated changes to the Operating and Maintenance Expenses subsequent to the 12-month period shall be added or deducted, as applicable; or B-1 FG: 101416766.1 Exhibit B (2) A certificate of the Finance Director showing that, in his or her 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 at least equal to the Coverage Requirement. In making such certification, the Finance Director shall assume that (A) the proposed Future Parity Bonds will remain outstanding to their scheduled maturities and (B) any Parity Bonds to be refunded by the Future Parity Bonds are not outstanding. The Finance Director shall not make any of the adjustments referred to above. However, if the Future Parity Bonds are being issued for the sole purpose of refunding Parity Bonds then outstanding (including paying costs of issuance and providing for the Reserve Requirement), no coverage certification is required if, as result of the issuance of those Future Parity Bonds, (a) in each year that the Future Parity Bonds are scheduled to remain outstanding, the Annual Debt Service on the Future Parity Bonds to be issued is not increased by more than $5,000 over the Annual Debt Service for that year of the Parity Bonds being refunded, and (b) the final maturity of the Future Parity Bonds to be issued is not more than one year after the Parity Bonds being refunded. In addition, no coverage certification is required if the aggregate principal amount of the Future Parity Bonds being issued does not exceed the aggregate amount of ULID Assessments levied in connection with the issuance of the Future Parity Bonds by more than $5,000 plus any amount of the proceeds of such Future Parity Bonds deposited into the Reserve Account. B-2 FG: 101416766.1 Exhibit C Form of UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE City of Edmonds, Washington Water and Sewer Revenue Bonds, [Series] The City of Edmonds, Washington (the "City"), makes the following written Undertaking for the benefit of the holders of the above -referenced bonds (the "Bonds"), for the sole purpose of assisting the Purchaser in meeting the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds. Capitalized terms used but not defined below shall have the meanings given in Ordinance No. 4309 of the City. (a) 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: (i) Annual financial information and operating data of the type included in the final official statement for the Bonds, as described in paragraph (b)(i) ("annual financial information"); (ii) Timely notice (not in excess of 10 business days after the occurrence of the event) of the occurrence of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) 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, or other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property 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 undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material, (15) incurrence of a financial obligation of the City or obligated person, if material, or agreement to C-1 FG: 101416766.1 Exhibit C covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City or obligated person, any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the City or obligated person, any of which reflect financial difficulties. The term "financial obligation" means a (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term "financial obligation" shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12. (iii) Timely notice of a failure by the City to provide the required annual financial information described in paragraph (b)(i) on or before the date specified in paragraph (b)(ii). (b) Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in paragraph (a): (i) Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with generally accepted accounting principles applicable to local governmental units of the State such as the City, as such principles may be changed from time to time; (2) annual operating statistics for each of the component utility systems, as follows: number of customer accounts, a statement of gross and net revenues, total annual water consumption, and average daily water consumption; (3) monthly or bi-monthly rates and charges for each of the component utility systems; and (4) a statement of the coverage ratio for the fiscal year; (ii) Shall be provided not later than the last day of the ninth 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, ; and (iii) May be provided in a single or multiple documents, and may be incorporated by specific reference to documents available to the public on the Internet website of the MSRB or filed with the SEC. If not submitted as part of the annual financial information described in paragraph (b)(i) above, the City will provide or cause to be provided to the MSRB audited financial statements, when and if available. (c) Amendment of Undertaking. This 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 MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a brief C-2 FG: 101416766.1 Exhibit C 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. (d) Beneficiaries. This Undertaking shall inure to the benefit of the City and the holder of each Bond, and shall not inure to the benefit of or create any rights in any other person. (e) Termination of Undertaking. 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 Bond Counsel delivered to the City, and the City provides timely notice of such termination to the MSRB. (f) Remedy -for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with the Undertaking, the 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 of the Bonds. The sole remedy of any holder of a Bond shall be to take action to compel the City or other obligated person to comply with this Undertaking, including seeking an order of specific performance from an appropriate court. (g) Designation of Official Responsible to Administer Undertaking. The Finance Director of the City or his or her designee is authorized to take such further actions as may be necessary, appropriate or convenient to carry out this Undertaking in accordance with Rule 15c2-12, including the following actions: (i) Preparing and filing the annual financial information undertaken to be provided; (ii) Determining whether any event specified in paragraph (a) has occurred, assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any required notice of its occurrence; (iii) 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; (iv) 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 (v) Effecting any necessary amendment of the Undertaking. C-3 FG: 101416766.1 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. 4309 (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 June 20, 2023, as that ordinance appears on the minute book of the City; 2. The Ordinance will be in full force and effect five days after publication in the City's official newspaper, which publication date is expected to be June 23, 2023; and 3. A quorum of the members of the City Council was present throughout the meeting and a majority of its members voted in the proper manner for the passage of the Ordinance. Dated: June 21, 2023. CITY OF EDMONDS, WASHINGTON S�x City Clerk FG: 101416766.1 Everett Daily Herald Affidavit of Publication State of Washington } County of Snohomish } ss Michael Gates being first duly sworn, upon oath deposes and says: that he/she is the legal representative of the Everett Daily Herald a daily newspaper. The said newspaper is a legal newspaper by order of the superior court in the county in which it is published and is now and has been for more than six months prior to the date of the first publication of the Notice hereinafter referred to, published in the English language continually as a daily newspaper in Snohomish County, Washington and is and always has been printed in whole or part in the Everett Daily Herald and is of general circulation in said County, and is a legal newspaper, in accordance with the Chapter 99 of the Laws of 1921, as amended by Chapter 213, Laws of 1941, and approved as a legal newspaper by order of the Superior Court of Snohomish County, State of Washington, by order dated June 16, 1941, and that the annexed is a true copy of EDH979314 ORDINANCES 4304-4310 as it was published in the regular and entire issue of said paper and not as a supplement form thereof for a period of 1 issue(s), such publication commencing on 06/23/2023 and ending on 06/23/2023 and that said newspaper was regularly distributed to its subscribers during all of said period. The amount o [lie fee for s h ublicad $125.56. Subscribed and sworn afore me on this day of { I Notary Public in and for the State of Washington. City of Edmonds -LEGAL ADS 1141014 M SC0'11'1'ASS1:Y Linda Phillips Notary Public State of Washington My Appointment Expires 8129i2025 Commission Number 4117 Classified Proof ORDINANCE Si1M. hA& ofthe cityO on 5, as »fin On the 201h oay of June 2023. She Cily GOulxtl of Iln City of EdmCnds, passed the SaSkLving prdinaflcas, It+e Suminarles of said ordlnanLe9 LchsEsfing of titles are prtnrided as f011esva: ORDINANCE N0.430d AN ORDINANCE OF+IpNlJS, WRSHINGTON, RELATING TO PROTECTION ORDERS AND AMENDING EDMONDS MUNICIPAL CODE SECTION 5 34.040; PROVIDING FOR SEVERABILITY; AND SETTING THE EFFECTIVE DATE. ORDINq�NO I 4305 AN ORDINANCE cr�Vo LITY, OF W NDS, WASHINGTON. AMENDING CHAPTER 5.34 ECC �PERSflN$, CRIMES RELATING TO] TO REPEAL, FOR PURPgSES OF MORE EFFECTIVE PROSECUTION, THE SUSSECTION RELATING TO THE CHARGE OF DOMESTIC VIOLENCE STRANGULATION AND INSTEAD RELYING ON THE CHARGE OF ASSAULT IN THE FOURTH DEGREE AS SET FORTH IN ECC $.34,010: TO REVISE TITLE$ TO CERTAIN STATE LAWS THAT HAVE BEEN AMENOED; TO REMOVE REFERENCES TO CERTAIN STATE LAWS THAT HAVE BEEN REPEALED; PROVIDING FOR SEVERABILITY: AND SETTING AN EFFECTIVE OAT OR INANC .4303 AN ORDINANCE OF HE C D EOM 05, WASHINGTON, AMENDING CHAPTER 3.50 ECC (MISCELLANEOUS CHARGES) TO RAISE THE FEES CHARGEC FOR FINGERPRINTING SERVICES: PROVIDING FOR SEVERABILITY; AND SETTING AN EFFECTIVE DATE. RCHNANCE ND 43 T AN ORDINANCE DF E EDh HDS. WASHINGTaN. AMENDING CHAPTER 16.45 ECDC TO ALLOW DAY-CARE CENTERS AS AN OUTRIGHT PERMITTED USE IN THE NEIGHBORHOOD BUSINESS (ON) ZONE AND. TO eXEMPT g&ZEPRAGORECREATION TTAACES OM THE NONOET OPERATING THAT REQUIRE MOST USES TO BE LOCATED WITHIN FULLY ENCLOSED 9UILDINGS NANCODR�E 0El D3, WASHINGTON. ORDINANCE OFTHD�F MIONESTABLISHING NEW SSES AND AMENDING PROCESSES RELATED TOTHEFILLING Of: OPENINGSING ONN THECITY'S HOARDS AND CCU MISS IONS• ORDINANCE ND. 4309 AN ORDINANCE or7HE 1^ TY U EOMONOS, WASHINGTON. RELATING TO THE COMBINED WATER AND SEWERAGE SYSTEMS COMPRISING THE WATERWORKS UTILITY OF THE CITY,, PROVIDING FOR THE ISSUANCE OF ONE OR MORE SERIES OF WATER AND SEWER REVENUE BONDS FOR THE OF { TO PROVIDE FUNDS TO PAY ALL OR PART CF THEECCOS`C1S OF REFUNDING CERTAIN OUTSTANDING WATER AND SEWER REVENUE BONDS OF THE CITY TO ACHIEVE A DEBT SERVICE AND TOTHE COSTS OF ISSUANCE�AND VINGSSALE OF THEPABONDS AND Tf�+E ADMINISTRATIVE COSTS OF THE REFUNDING: FIXING OR SETTING PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE BONDS; APPOINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL TERMS OF THE SALE OF THE BONDS: AMENDING PROVIDING FOR OTHER RELATEDDINANCE NO- 39%. AND ORDINANCE MATTERS, 4167; AND OR NCE H 4510 AN ORDINANCE Os 7NOS, WASHINGTON, AS A R SULLTRDINANCE OF CHANGES TO REALLOCATING OCATING HE CITY AMERICAN RESCUE PLAN ACT FUNDS, REDUCING THE ALLOCATION FOR JOB RETRAINING AND DIRECTING THAT AMOUNT TO SUPPORT THREE ELE?AFNTARY SCHOOLS IN WHEN THE SAME SHALLEDMONDS BECOME EFFECL DISTRICT, TE FIXING A TIME DATED thts 20Ih Day of June. 2023. Proofed by Phillips, Linda, 06/28/2023 10:48:36 am Page: 2 Classified Proof CITY CLERK, SCOTT PASSEY Published: June 23, 2023. EDH979314 Proofed by Phillips, Linda, 06/28/2023 10:48:36 am Page: 3