Ordinance 3191CITY OF EDMONDS, WASHINGTON
ORDINANCE NO. 3191
AN ORDINANCE relating to the combined water and sewerage systems
comprising the waterworks utility of the City; providing for the issuance of
$2,420,000 par value Water and Sewer Revenue Refunding Bonds, 1998, for the
purpose of providing the funds to advance refund the callable portion of the
City's outstanding Water and Sewer Revenue and Refunding Bonds, 1993, and
pay the administrative costs of such refunding and the costs of issuance and sale
of such bonds; fixing the date, form, maturities, interest rates, terms and
covenants of those bonds; providing for and authorizing the purchase of certain
obligations out of the proceeds of the sale of the bonds herein authorized and for
the use and application of the money derived from those obligations; authorizing
the execution of an agreement with a refunding trustee; providing for the call,
payment and redemption of the outstanding bonds to be refunded; providing for
bond insurance; approving the sale and providing for the delivery of the bonds
to Seattle - Northwest Securities Corporation of Seattle, Washington; and
establishing an effective date of this ordinance.
Prepared By:
FOSTER PEPPER & SHEFELMAN PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447 -4400
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TABLE OF CONTENTS
Page
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Recitals.......... ...............................
Section 1.
Definitions ...... ............................... .
Section 2.
Compliance with Parity Provisions ........................ .
Section 3.
Authorization and Description of Bonds ..................... .
Section 4.
Registration and Transfer of Bonds ....................... .
Section 5.
Payment of Bonds ... ............................... .
Section 6.
Redemption Provisions and Open Market Purchase of Bonds ....... .
Section 7.
Notice of Redemption . ............................... .
Section 8.
Failure to Redeem Bonds ............................. .
Section 9.
Form and Execution of Bonds .......................... .
Section 10.
Bond Registrar . .. ............................... .
Section 11.
Deposits to Bond Fund .............................. .
Section 12.
Lien Position of Bonds .............................. .
Section 13.
Deposit of Bond Proceeds ............................ .
Section 14.
Refunding of Refunded Bonds .......................... .
Section 15.
Call for Redemption of Refunded Bonds ................... .
Section 16.
City Findings with Respect to Refunding ................... .
Section 17.
Covenants ....... ............................... .
Section 18.
Designation of Bonds as "Qualified Tax - Exempt Obligations" ...... .
Section 19.
Bonds Negotiable .. ............................... .
Section 20.
Provision for Future Parity Bonds ....................... .
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Section 21.
Refunding or Defeasance ............................. .
Section 22.
Approval of Bond Purchase Contract ..................... .
Section 23.
Preliminary Official Statement Deemed Final ................ .
Section 24.
Undertaking to Provide Continuing Disclosure ................ .
Section 25.
Bond Insurance ..... ............................... .
Section 26.
Parties Interested Herein ............................. .
Section 27.
Effective Date .... ............................... .
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CITY OF EDMONDS, WASHINGTON
ORDINANCE NO. 3191
AN ORDINANCE relating to the combined water and sewerage systems
comprising the waterworks utility of the City; providing for the issuance of
$2,420,000 par value Water and Sewer Revenue Refunding Bonds, 1998, for the
purpose of providing the funds to advance refund the callable portion of the
City's outstanding Water and Sewer Revenue and Refunding Bonds, 1993, and
pay the administrative costs of such refunding and the costs of issuance and sale
of such bonds; fixing the date, form, maturities, interest rates, terms and
covenants of those bonds; providing for and authorizing the purchase of certain
obligations out of the proceeds of the sale of the bonds herein authorized and for
the use and application of the money derived from those obligations; authorizing
the execution of an agreement with a refunding trustee; providing for the call,
payment and redemption of the outstanding bonds to be refunded; providing for
bond insurance; approving the sale and providing for the delivery of the bonds
to Seattle- Northwest Securities Corporation of Seattle, Washington; and
establishing an effective date of this ordinance.
WHEREAS, the City of Edmonds, Washington (the "City "), by Ordinance No. 1957
passed and approved November 15, 1977, specified and adopted a plan or system for the
acquisition and construction of certain additions and betterments to and extensions and
improvements of the combined water and sewerage systems comprising the waterworks utility
of the City (the "System "); declared the estimated cost thereof as nearly as may be; and provided
for the issuance of $4,805,000 par value Water and Sewer Revenue Refunding and Construction
Bonds, 1977 (the "1977 Bonds "), for the purpose of providing a part of the funds (a) to carry
out the plan or system for the acquisition and construction of certain additions and betterments
to and extensions and improvements of the System specified and adopted in that ordinance, and
(b) to pay, retire and refund the outstanding Water and Sewer Revenue Bonds, 1959, Water and
Sewer Revenue Bonds, 1960, Water and Sewer Revenue Bonds, 1961, Water and Sewer
Revenue Bonds, 1965, Water and Sewer Revenue Bonds, 1966, Water and Sewer Revenue
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Bonds, 1967, Water and Sewer Revenue Bonds, 1970 (interest only), Water and Sewer Revenue
Refunding Bonds, 1972, and Water and Sewer Revenue Refunding Bonds, 1976, of the City,
which 1977 Bonds were issued under date of November 1, 1977; and
WHEREAS, by Section 16 of Ordinance No. 1957, the City reserved the right to issue
additional and /or refunding water and sewer revenue bonds (therein called "Future Parity
Bonds ") which would constitute a lien and charge upon the gross revenue of the System on a
parity with such 1977 Bonds if the following conditions are met and complied with at the time
of the issuance of such Future Parity Bonds:
11(1) At the time of issuance of such Future Parity Bonds, there shall not
be any deficiency in the Bond Fund or the Reserve Account therein.
"(2) Each ordinance providing for the issuance of such Future Parity
Bonds shall require that all Assessments levied in any ULID created in connection
with the Future Parity Bonds then being issued will be paid directly into the Bond
Fund.
"(3) Each ordinance providing for the issuance of such Future Parity
Bonds shall provide for the payment of the principal thereof and interest thereon
out of the Bond Fund.
"(4) The ordinance authorizing any Future Parity Bonds shall require
that the Reserve Account be increased within a period of five years after the date
of issuance of the Future Parity Bonds to an amount equal to the average annual
principal and interest requirements on all Future Parity Bonds, including the
Bonds and the Future Parity Bonds proposed to be issued, excluding from such
amount the principal amount of any Term Bonds included in the Future Parity
Bonds issue.
"(5) At the time of the issuance of such Future Parity Bonds, the City
shall have on file a certificate from an independent licensed professional engineer
experienced in the design, construction and operation of municipal utilities,
showing that in his professional opinion, the annual Revenue of the System, after
payment of Operating and Maintenance Expenses, available for debt service on
the Bonds, Future Parity Bonds then outstanding and the Future Parity Bonds
proposed to be issued for each year shall be at least equal to the Coverage
Requirement (1.25 times that amount of debt service to be paid from operating
Revenue and not Assessments).
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"In determining whether the City is able to comply with the parity conditions, the
Revenue of the System of the City, less Operating and Maintenance Expenses, for any twelve
consecutive calendar months out of the immediately preceding twenty -four consecutive months
shall be used. The following adjustments may be made to the historical net operating Revenue
of the System:
and
"(1) Any rate change that has taken place or been approved, may be
reflected;
"(2) Revenue may be added from customers actually added to the
System subsequent to the 12 -month base period;
"(3) Revenue may be added from customers to be served by the
improvements being constructed out of the proceeds of the Future Parity Bonds
to be issued; and
"(4) A full year's revenue may be included from any customer being
served, but who has not been receiving service for the full period of operation
used as a basis for the certificate; and
"(5) Actual or reasonably anticipated changes to the Operating and
Maintenance Expenses subsequent to such 12 -month period shall be added or
deducted, as is applicable... ";
WHEREAS, by Ordinance 2363 passed on April 22, 1983, the City authorized the
issuance of $1,000,000 par value of its Water and Sewer Revenue Bonds, 1983 (the "1983
Bonds "), which bonds were issued on a parity of lien with the 1977 Bonds and all of which have
been paid in full; and
WHEREAS, by Ordinance No. 2363, the first subsections (4) and (5) of Section 16 of
Ordinance No. 1957 were amended to read as follows:
"(4) The ordinance authorizing any Future Parity Bonds shall require that
the Reserve Account be increased within a period of five years after the date of
issuance of the Future Parity Bonds to an amount equal to the average annual
principal and interest requirements on all Future Parity Bonds, including the
Bonds and the Future Parity Bonds proposed to be issued, excluding from such
amount the principal amount of any Term Bonds included in the Future Parity
Bonds issue if the payment for such Term Bonds is being provided for by a
sinking fund.
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and
"(5) At the time of the issuance of such Future Parity Bonds, the City
shall have on file a certificate from an independent licensed professional engineer
experienced in the design, construction and operation of municipal utilities,
showing that in his professional opinion, the annual Revenue of the System, after
payment of Operating and Maintenance Expenses, available for debt service on
the Bonds, Future Parity Bonds then outstanding and the Future Parity Bonds
proposed to be issued for each year shall be at least equal to the Coverage
Requirement.. "
WHEREAS, by Ordinance No. 2678 passed on August 23, 1988, the City authorized the
issuance and sale of $9,990,000 par value of its Water and Sewer Revenue Bonds, 1988 (the
"1988 Bonds "), which bonds were issued on a parity of lien with the 1977 Bonds and the 1983
Bonds; and
WHEREAS, by Ordinance No. 2903 passed on December 8, 1992, the City authorized
the issuance and sale of $7,805,000 par value of its Water and Sewer Revenue Refunding Bonds,
1992 (the "1992 Bonds "), which bonds were issued on a parity of lien with the 1977 Bonds, the
1983 Bonds and the 1988 Bonds; and
WHEREAS, by Ordinance No. 2904 passed on December 8, 1992, the City authorized
the issuance and sale of $5,785,000 par value of its Water and Sewer Revenue and Refunding
Bonds, 1993 (the "1993 Bonds "), which bonds were issued on a parity of lien with the 1977
Bonds, the 1983 Bonds, the 1988 Bonds and the 1992 Bonds; and
WHEREAS, by Section 7 of Ordinance No. 2904 the City reserved the right and option
to redeem the 1993 Bonds maturing on or after December 1, 2003, prior to their stated maturity
dates on or after December 1, 2002, as a whole at any time or in part on any interest payment
date thereafter at par plus accrued interest to the date fixed for redemption; and
WHEREAS, there are presently outstanding $2,180,000 principal amount of 1993 Bonds
maturing or subject to mandatory redemption on December 1 in the years 2003 through 2013,
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inclusive, and bearing interest at various rates from 5.70% to 6.25% per annum (the "Refunded
Bonds "); and
WHEREAS, the City Council has determined that the Refunded Bonds may be refunded
by the issuance and sale of the water and sewer revenue bonds authorized herein (the "Bonds ")
so that there will be a debt service savings to the City and the ratepayers of combined water and
sewerage systems, which refunding will be effected by:
and
(a) The issuance of the Bonds and the payment of the costs of issuance of the
Bonds and the costs of the refunding; and
(b) The payment of the interest on the Refunded Bonds when due up to and
including December 1, 2003, and on December 1, 2003, the call, payment
and redemption of all of the Refunded Bonds at a price of par;
WHEREAS, to effect that refunding in the manner that will be most advantageous to the
City and the ratepayers of the combined water and sewerage systems, the City Council finds it
necessary and advisable that certain Acquired Obligations (hereinafter defined) bearing interest
and maturing at the time or times necessary to accomplish the refunding as aforesaid be
purchased out of a portion of the proceeds of the Bonds; and
WHEREAS, the City Council deems it to be in the best interest of the City to issue and
sell the Bonds to pay the cost of advance refunding the Refunded bonds and to pay the
administrative costs of such refunding and the costs of issuance and sale of the Bonds; and
WHEREAS, Financial Security Assurance Inc. of New York, New York ( "FSA" or the
"Bond Insurer "), has made a commitment to issue an insurance policy (the "Municipal Bond
Insurance Policy ") insuring the payment when due of the principal of and interest on the Bonds
as provided therein, and the City Council deems that the purchase of the Municipal Bond
Insurance Policy is in the best interest of the City; and
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WHEREAS, Seattle - Northwest Securities Corporation of Seattle, Washington, has offered
to purchase the Bonds under the terms and conditions hereinafter set forth in the form of a bond
purchase contract, and the City Council has determined it is in the best interest of the City to
accept that offer; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN,
as follows:
Section 1. Definitions. As used in this ordinance the following words shall have the
following meanings:
"Acquired Obligations" means United States Treasury Certificates of Indebtedness, Notes
and Bonds - -State and Local Government Series or other direct non - callable obligations of the
United States of America purchase to accomplish the refunding of the Refunded Bonds as
authorized by this ordinance.
"Bond Fund" means the special fund of the City known as the Water and Sewer Revenue
Bond Fund, 1977, created by Ordinance No. 1957 for the payment of the principal of and
interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds.
"Bond Insurer" means Financial Security Assurance Inc. of New York, New York.
"Bond Register" means the registration books of the Bond Registrar on which are
recorded the names of the owners of the Bonds.
"Bond Registrar" means the fiscal agencies of the State of Washington as the same may
be designated from time to time.
"Bonds" means the $2,420,000 par value Water and Sewer Revenue Refunding Bonds,
1998, of the City authorized to be issued by this ordinance.
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"1977 Bonds" means the outstanding Water and Sewer Revenue Refunding and
Construction Bonds, 1977, of the City issued under date of November 1, 1977, pursuant to
Ordinance No. 1957.
"1988 Bonds" means the outstanding Water and Sewer Revenue Bonds, 1988, of the City
issued under date of September 1, 1988, pursuant to Ordinance No. 2678 maturing up to and
including December 1, 1998.
"1992 Bonds" means the outstanding Water and Sewer Revenue Refunding Bonds, 1992,
of the City issued under date of December 1, 1992, pursuant to Ordinance No. 2903.
"1993 Bonds" means the outstanding Water and Sewer Revenue and Refunding Bonds,
1993, of the City issued under date of January 1, 1993, pursuant to Ordinance No. 2904,
maturing up to and including December 1, 2002.
"City" means the City of Edmonds, Washington, a duly organized and existing
noncharter code city under the laws of the State of Washington.
"Code" means the Internal Revenue Code of 1986, as amended.
"Coverage Requirement" means 1.25 times the portion of annual debt service, excluding
the principal of any Term Bonds if the payment for such Term Bonds is being provided for by,
a sinking fund, on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds actually
paid from the Revenue of the System and not from ULID Assessments, after payment of
Operating and Maintenance Expenses.
"DTC" means The Depository Trust Company.
"Future Parity Bonds" means all revenue bonds of the City issued after the date of the
issuance of the Bonds and having a lien upon the Revenue of the System for the payment of the
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principal thereof and interest thereon equal to the lien upon such Revenue for the payment of
the principal of and interest on the Outstanding Parity Bonds and the Bonds.
"Government Obligations" means direct obligations of or obligations the principal of and
interest on which are unconditionally guaranteed by the United States of America.
"Letter of Representations" means the Blanket Issuer Letter of Representations dated
August 6, 1996, between DTC and the City.
"Municipal Bond Insurance Policy" means the municipal bond insurance policy issued
by the Bond Insurer insuring the payment when due of the principal of and interest on the Bonds
as provided herein.
"Operating and Maintenance Expenses" means all reasonable expenses incurred by the
City in causing the System to be operated and maintained in good repair, working order and
condition, but shall not include any depreciation or taxes or charges in lieu of taxes levied or
imposed by the City.
"Outstanding Parity Bonds" means the outstanding 1977 Bonds, 1988 Bonds, 1992 Bonds
and 1993 Bonds.
"Principal and Interest Account" means the account of that name created in the Bond
Fund for the payment of the principal of and interest on the Outstanding Parity Bonds, the Bonds
and all Future Parity Bonds of the City payable out of that fund.
"Refunded Bonds" means the outstanding Water and Sewer Revenue and Refunding
Bonds, 1993, of the City maturing in the years 2003 through 2008, inclusive, and in 2013,
issued pursuant to Ordinance No. 2904 (all of which were allocated to the new money portion
of that 1993 bond issue), the refunding of which has been provided for by this ordinance.
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"Refunding Plan" means:
(a) the placement of sufficient proceeds of the Bonds which, with other
money of the City, if necessary, will acquire the Acquired Obligations to be
deposited with cash, if necessary, with the Refunding Trustee;
(b) the payment of the interest on the Refunded Bonds when due up to
and including December 1, 2002, and, on December 1, 2002, the call, payment
and redemption of all of the Refunded Bonds at a price of par; and
(c) the payment of the costs of issuing the Bonds and of carrying out
the Refunding Plan.
"Refunding Trust Agreement" means a Refunding Trust Agreement between the City and
the Refunding Trustee substantially in the form of that which is on file with the City Clerk and
by this reference made a part hereof.
"Refunding Trustee" means Chase Manhattan Trust Company, National Association, of
Seattle, Washington.
"Reserve Account" means the account of that name created in the Bond Fund for the
purpose of securing the payment of the principal of and interest on the Outstanding Parity
Bonds, the Bonds and all Future Parity Bonds of the City payable out of that fund.
"Revenue of the System" means all the earnings and revenue received by the System
from any source whatsoever, except general ad valorem taxes, ULID Assessments, proceeds
from the sale of City property, bond proceeds, and earnings on funds held for payment to the
United States of America under Section 148 of the Code.
"System" means the combined water supply and distribution system and sanitary sewage
disposal system of the City as the same may be added to, improved and extended for as long as
any of the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds are outstanding.
"Term Bond Maturity Year" means any maturity year in which the outstanding principal
amount of revenue bonds payable out of the Bond Fund scheduled to mature (regardless of any
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reservation of rights of redemption prior to maturity) is more than 1.25 times the average annual
principal maturity of the bonds payable out of that fund for the three years immediately
preceding the Term Bond Maturity Year.
"Term Bonds" means the outstanding bonds payable out of the Bond Fund maturing in
any Term Bond Maturity Year.
"ULID" means utility local improvement district.
"ULID Assessments" means the assessments levied in such ULID of the City which may
hereafter be created pursuant to state law and shall include installments thereof and interest and
any penalties thereon.
Section 2. Compliance with Parity Provisions. In accordance with the provisions of
Section 16 of Ordinance No. 1957, and Section 3 of Ordinance No. 2363, the City Council finds
and declares that:
(a) At the time of issuance of the Bonds, there will be no deficiency
in the Bond Fund or the Reserve Account therein;
(b) No ULID is created in connection with the issuance of the Bonds;
(c) Provision is made herein for the payment of the principal of and
interest on the Bonds out of the Bond Fund;
[(d) Provision is made herein for the deposit from proceeds of the
Bonds of the required additional amount in the Reserve Account of the Bond
Fund for the Bonds; and]
(e) At the time of issuance of the Bonds, there will be on file with the
City a certificate from an independent licensed professional engineer experienced
in the design, construction and operation of municipal utilities, or another
qualifying independent licensed professional engineer, showing that, in his
professional opinion, the annual Revenue of the System, after payment of
Operating and Maintenance Expenses, available for debt service on the
Outstanding Parity Bonds and the Bonds for each year shall be at least equal to
the Coverage Requirement.
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Section 3. Authorization and Description of Bonds. For the purpose of providing the
funds to pay the cost of carrying out the Refunding Plan, the City shall issue the Bonds in the
aggregate principal amount of $2,420,000.
The Bonds shall be called Water and Sewer Revenue Refunding Bonds, 1998; shall be
dated March 1, 1998; shall be in the denomination of $5,000 or any integral multiple thereof
within a single maturity; shall be numbered separately in the manner and with any additional
designation as the Bond Registrar deems necessary for purposes of identification; shall bear
interest (computed on the basis of a 360 -day year of twelve 30 -day months), payable
semiannually on each June 1 and December 1, commencing June 1, 1998, to the maturity or call
date of the Bonds; and shall mature on December 1 in years and amounts and bear interest at
the rates per annum as follows:
Maturity
Interest
Years
Amounts
Rates
1998
$50,000
4.00 %
1999
20,000
4.00
2000
20,000
4.00
2001
20,000
4.00
2002
20,000
4.10
2003
150,000
4.10
2004
160,000
4.20
2005
160,000
4.75
2006
145,000
4.25
2007
145,000
4.30
2008
220,000
4.35
2009
235,000
4.50
2010
250,000
4.60
2011
265,000
4.70
2012
275,000
4.80
2013
285,000
4.85
Section 4. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and recorded on the Bond Register. The Bond
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Register shall contain the name and mailing address of the owner of each Bond and the principal
amount and number of each of the Bonds held by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee.
The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal payment or redemption date.
The Bonds initially shall be registered in the name of CEDE & CO., as the nominee of
DTC. The Bonds so registered shall be held in fully immobilized form by DTC as depository
in accordance with the provisions of the Letter of Representations. Neither the City nor the
Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for
whom they act as nominees with respect to the Bonds regarding accuracy of any records
maintained by DTC or DTC participants of any amount in respect of principal of or interest on
the Bonds, or any notice which is permitted or required to be given to registered owners
hereunder (except such notice as is required to be given by the Bond Registrar to DTC).
For so long as any Bonds are held in fully immobilized form, DTC or its successor
depository shall be deemed to be the registered owner for all purposes hereunder and all
references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominees and shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i)
to any successor of DTC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
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appointed by the City or such substitute depository's successor; or (iii) to any person if the
Bonds are no longer held in immobilized form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 5. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Interest on the Bonds shall be paid
by checks or drafts mailed by the Bond Registrar on the interest payment date to the registered
owners at the addresses appearing on the Bond Register on the 15 day of the month preceding
the interest payment date. Principal of the Bonds shall be payable upon presentation and
surrender of the Bonds by the registered owners at either of the principal offices of the Bond
Registrar at the option of the owners.
Section 6. Redemption Provisions and Open Market Purchase of Bonds. Bonds maturing
in the years 1998 through 2007, inclusive, shall be issued without the right or option of the City
to redeem those Bonds prior to their stated maturity dates. The City reserves the right and
option to redeem the Bonds maturing on or after December 1, 2008, prior to their stated
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maturity dates at any time on or after December 1, 2007, as a whole or in part (within one or
more maturities selected by the City and by lot within a maturity in such manner as the Bond
Registrar shall determine), at par plus accrued interest to the date fixed for redemption.
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar,
there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds at
the option of the registered owner) of the same maturity and interest rate in any of the
denominations authorized by this ordinance in the aggregate principal amount remaining
unredeemed.
The City further reserves the right and option to purchase any or all of the Bonds in the
open market at any time at any price acceptable to the City plus accrued interest to the date of
purchase.
All Bonds purchased or redeemed under this section shall be cancelled.
Notwithstanding the foregoing, for so long as the Bonds are registered in the name of
Cede & Co., as nominee of DTC, selection of Bonds for redemption shall be in accordance with
the Letter of Representations (as it may be changed).
Section 7. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
for redemption by first -class mail, postage prepaid, to the registered owner of any Bond to be
redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by the owner of any
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Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for
redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the
call. In addition, the redemption notice shall be mailed within the same period, postage prepaid,
to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York,
New York, or their successors, to Seattle- Northwest Securities Corporation at its principal office
in Seattle, Washington, or its successor, to the Bond Insurer at its principal office in New York,
New York, or its successor, and to such other persons and with such additional information as
the City Director of Finance shall determine, but these additional mailings shall not be a
condition precedent to the redemption of Bonds. Notwithstanding the foregoing, for so long as
the Bonds are registered in the name of Cede & Co., as nominee of DTC, notice of redemption
shall be given in accordance with the Letter of Representations (as it may be changed).
Section 8. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at
the same rate provided in the Bond from and after its maturity or call date until that Bond, both
principal and interest, is paid in full or until sufficient money for its payment in full is on
deposit in the Bond Fund and the Bond has been called for payment by giving notice of that call
to the registered owner of that unpaid Bond.
Section 9. Form and Execution of Bonds. The Bonds shall be printed or lithographed
on good bond paper in a form consistent with the provisions of this ordinance and state law,
shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual
or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed
or printed thereon.
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Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered City of Edmonds, Washington,
Water and Sewer Revenue Refunding Bonds, 1998, described in the Bond
Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
Authorized Officer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the
Bonds so authenticated have been duly executed, authenticated and delivered and are entitled to
the benefits of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless
may be authenticated, delivered and issued and, when authenticated, issued and 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 date of issuance of the Bonds.
Section 10. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its
principal corporate trust office, sufficient books for the registration and transfer of the Bonds
which shall be open to inspection by the City at all times. The Bond Registrar is authorized,
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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 Bond Registrar's powers and duties under this ordinance and
City Ordinance No. 2451 establishing a system of registration for the City's bonds and
obligations.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the
extent permitted by law, may act as depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any committee formed to protect
the rights of Bond owners.
Section 11. Deposits to Bond Fund. So long as Bonds are outstanding against the Bond
Fund, the City Director of Finance shall set aside and pay into the Bond Fund out of the
Revenue of the System, in addition to the amounts to be deposited therein for the Outstanding
Parity Bonds, a fixed amount, without regard to any fixed proportion, namely:
(a) Into the Principal and Interest Account, at least 20 days prior to
each principal payment date and each interest payment date, an amount sufficient,
together with any ULID Assessment collections deposited therein in connection
with any Future Parity Bonds hereafter issued, to pay the principal amount
maturing on each maturity date of the Outstanding Parity Bonds, the Bonds and
any Future Parity Bonds hereafter issued and outstanding and an amount sufficient
to pay the interest payable on the Outstanding Parity Bonds, the Bonds and those
Future Parity Bonds on such interest payment date; and
(b) Into the Reserve Account from money legally available to be used
therefor such amount so that on and after the date of delivery of the Bonds to the
purchaser thereof and payment therefor, there shall be on deposit in such Reserve
Account a total reserve at least equal to the average annual debt service
requirements, both principal and interest, of the Outstanding Parity Bonds and the
Bonds, excluding the principal of any Term Bonds if the payment for such Term
Bonds is being provided for by a sinking fund.
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The Reserve Account shall be maintained at that total average annual debt service
required reserve amount, except for withdrawals therefrom as authorized herein, at all times so
long as any of the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds are
outstanding; except that the amount in the Reserve Account may be reduced at any time to an
amount not less than the average annual debt service requirements for the Outstanding Parity
Bonds, the Bonds and any Future Parity Bonds then outstanding. When the total amount in the
Bond Fund shall equal the total amount of principal and interest for all outstanding bonds
payable out of the Bond Fund to the last maturity thereof, no further payment need be made into
the Bond Fund.
In the event that there shall be a deficiency in the Principal and Interest Account in the
Bond Fund to meet maturing installments of either principal or interest, as the case may be, that
deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for
that purpose. Any deficiency created in the Reserve Account by reason of any such withdrawal
shall then be made up from the Revenue of the System and /or ULID Assessments, if any,
payable into the Bond Fund first available after making necessary provision for the required
payments into the Principal and Interest Account. The money in the Reserve Account shall
otherwise be held intact and may be applied against the last outstanding bonds payable out of
the Bond Fund.
All money in the Bond Fund not needed to meet the payments of principal and interest
when due may be kept on deposit in the official bank depository of the City or in any national
bank or may be invested in any legal investment. Interest on any such investment or on such
bank account shall be deposited in and become a part of the Bond Fund.
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In the judgment of the City Council, the Revenue of the System anticipated to be derived
from the operation and maintenance of the System will be more than sufficient to pay the
Operating and Maintenance Expenses and to permit the setting aside into the Bond Fund out of
the Revenue of the System of sufficient amounts to pay the interest on the Outstanding Parity
Bonds and the Bonds when due and to pay and redeem all of the Outstanding Parity Bonds and
the Bonds at maturity or earlier mandatory redemption date.
The City Council further declares that in fixing the amounts to be paid into the Bond
Fund it has considered and had due regard for Operating and Maintenance Expenses (and the
cost of operation and maintenance as used in RCW 35.92) and has not set aside into the Bond
Fund a greater amount or proportion of the Revenue of the System that in its judgment will be
available over and above Operating and Maintenance Expenses (and such cost of operation and
maintenance), and that no portion of the Revenue of the System has been previously pledged for
any other outstanding indebtedness except for payment of the Outstanding Parity Bonds.
Section 12. Lien Position of Bonds. All Revenue of the System is pledged to the
payments required to be made into the Bond Fund, and the Bonds shall constitute a charge and
lien upon that Revenue prior and superior to all other charges and liens whatsoever, excluding
Operating and Maintenance Expenses, except that the charge and lien upon that Revenue for the
Bonds shall be on a parity with the charge and lien upon that Revenue and upon any ULID
Assessments hereafter pledged to be paid into the Bond Fund for the Outstanding Parity Bonds
and any Future Parity Bonds.
Section 13. Deposit of Bond Proceeds. The accrued interest on the Bonds, if any,
received from the sale and delivery of the Bonds shall be deposited in the Principal and Interest
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Account of the Bond Fund. The principal proceeds of the Bonds shall be deposited in
accordance with the provisions of Section 14 herein.
Section 14. Refunding of the Refunded Bonds.
(a) Appointment of Refunding Trustee. Chase Manhattan Trust Company, National
Association, of Seattle, Washington, is appointed Refunding Trustee.
(b) Use of Bond Proceeds; Acquisition of Acquired Obligations. All of the proceeds
of the sale of the Bonds, exclusive of the accrued interest which shall be paid into the Principal
and Interest Account, shall be deposited immediately upon the receipt thereof with the Refunding
Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under
Ordinance No. 2904 by providing for the payment of the amounts required to be paid by the
Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the
Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest
and maturing as to principal and interest in such amounts and at such times so as to provide,
together with a beginning cash balance, if necessary, for the payment of the amounts required
to be paid by the Refunding Plan. The Acquired Obligations are listed and more particularly
described in Schedule A attached to the Refunding Trust Agreement, but are subject to
substitution as set forth below. Any Bond proceeds or other money deposited with the
Refunding Trustee not needed to purchase the Acquired Obligations and provide a beginning
cash balance, if any, and pay the costs of issuance of the Bonds shall be returned to the City at
the time of delivery of the Bonds to the initial purchaser thereof and deposited in the Principal
and Interest Account to pay interest on the Bonds on the first interest payment date.
(c) Substitution of Acquired Obligations. Prior to the purchase of any Acquired
Obligations, the City reserves the right to substitute other direct, non - callable obligations of the
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United States of America ( "Government Obligations ") for any of the Acquired Obligations and
to use any savings created thereby for any lawful City purpose if, (a) in the opinion of Foster
Pepper & Shefelman PLLC, the City's bond counsel, the interest on the Bonds and the Refunded
Bonds will remain excluded from gross income for federal income tax purposes under Sections
103, 148 and 149(d) of the Code, and (b) such substitution shall not impair the timely payment
of the amounts required to be paid by the Refunding Plan, as verified by a nationally recognized
independent certified public accounting firm.
After the purchase of the Acquired Obligations by the Refunding Trustee, the City
reserves the right to substitute therefor cash or Government Obligations subject to the conditions
that such money or securities held by the Refunding Trustee shall be sufficient to carry out the
Refunding Plan, that such substitution will not cause the Bonds or the Refunded Bonds to be
arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in
effect on the date of such substitution and applicable to obligations issued on the issue date of
the Bonds, and that the City obtain, at its expense: (1) verification by a nationally recognized
independent certified public accounting firm acceptable to the Refunding Trustee confirming that
the payments of principal of and interest on the substitute securities, if paid when due, and any
other money held by the Refunding Trustee will be sufficient to carry out the Refunding Plan;
and (2) an opinion from Foster Pepper & Shefelman PLLC, bond counsel to the City, its
successor, or other nationally recognized bond counsel to the City, to the effect that the
disposition and substitution or purchase of such securities, under the statutes, rules and
regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds
or the Refunded Bonds to be included in gross income for federal income tax purposes and that
such disposition and substitution or purchase is in compliance with the statutes and regulations
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applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition
or redemption of the Acquired Obligations and the substitutions therefor shall be released from
the trust estate and transferred to the City to be used for any lawful System purpose.
(d) Administration of Refunding Plan. The Refunding Trustee is authorized and
directed to purchase the Acquired Obligations (or substitute obligations) and to make the
payments required to be made by the Refunding Plan from the Acquired Obligations (or
substitute obligations) and money deposited with the Refunding Trustee pursuant to this
ordinance. All Acquired Obligations (or substitute 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 Ordinance No. 2904, this ordinance, chapter 39.53 RCW
and other applicable statutes of the State of Washington, and the Refunding Trust Agreement.
All necessary and proper fees, compensation and expenses of the Refunding Trustee for the
Bonds and all other costs incidental to establishing the escrow to accomplish the refunding of
the outstanding Refunded Bonds and costs related to the issuance and delivery of the Bonds,
including bond printing, rating service fees, verification fees, bond counsel's fees and other
related expenses, shall be paid out of the proceeds of the Bonds.
(e) Authorization for Refunding Trust Agreement. In order to carry out the
Refunding Plan provided for by this ordinance, the Mayor or City Finance Director is authorized
and directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement
substantially in the form on file with the City Clerk and by this reference made a part hereof,
setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection
with the payment, redemption and retirement of the outstanding Refunded Bonds as provided
herein and stating that the provisions for payment of the fees, compensation and expenses of the
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Refunding Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust
Agreement, the Mayor or Finance Director is authorized to make such changes therein which
do not change the substance and purpose thereof or which assure that the escrow provided
therein and the Bonds are in compliance with the requirements of federal law governing the
exclusion of interest on the Bonds from gross income for federal income tax purposes.
Section 15. Call for Redemption of the Refunded Bonds. The City calls for redemption
on December 1, 2002, all of the Refunded Bonds at par plus accrued interest. Such call for
redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser thereof.
The date on which the Refunded Bonds are herein called for redemption is the first date on
which those bonds may be called.
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 Ordinance No. 2904 in order to
effect the redemption prior to their maturity of the Refunded Bonds.
Section 16. City Findings with Respect to Refunding. The City Council finds and
determines that the issuance and sale of the Bonds at this time will effect a savings to the City
and is in the best interest of the City and its ratepayers and in the public interest. In making
such finding and determination, the City Council has given 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 issuance and sale of the Bonds pending
payment and redemption of the Refunded Bonds.
The City Council further finds and determines that the money to be deposited with the
Refunding Trustee for the Refunded Bonds in accordance with Section 14 of this ordinance will
discharge and satisfy the obligations of the City under Ordinance No. 2904 with respect to the
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Refunded Bonds, and the pledges, charges, trusts, covenants and agreements of the City therein
made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer
be deemed to be outstanding under such ordinance immediately upon the deposit of such money
with the Refunding Trustee.
Section 17. Covenants. The City covenants and agrees with the owner of each Bond at
any time outstanding as follows:
(a) It will establish, maintain and collect such rates and charges for
water and sanitary sewage disposal service so long as any Outstanding Parity
Bonds, Bonds and Future Parity Bonds are outstanding which, together with other
miscellaneous Revenue of the System (excluding ULID Assessments), will
provide amounts annually at least equal to the Coverage Requirement. In
determining the amount of debt service subject to coverage, there shall be
deducted from the annual principal and interest required to be paid each year an
amount equal to the percentage of the debt service for each year on each issue of
outstanding Outstanding Parity Bonds, Bonds and Future Parity Bonds, equal to
the percentage arrived at by dividing the original total amount of the ULID
Assessments specifically pledged to the Bond Fund in that issue by the original
total principal amount of that issue. To simplify, where ULIDs are involved,
only the debt service on that portion of any Future Parity Bond issue not covered
by ULID Assessments must be subject to the Coverage Requirement.
(b) It will at all times maintain and keep the System in good repair,
working order and condition, and also will at all times operate the System and the
business in connection therewith in an efficient manner and at a reasonable cost.
(c) It will not sell, lease, mortgage or in any manner encumber or
dispose of all the property of the System unless provision is made for payment
into the Bond Fund of a sum sufficient to pay the principal of and interest on all
bonds payable out of the Bond Fund at any time outstanding, and that it will not
sell, lease, mortgage, or in any manner encumber or dispose of any part of the
property of the System that is used, useful and material to the operation thereof
unless provision is made for replacement thereof or for payment into the Bond
Fund of the total amount of Revenue received which shall not be less than an
amount which shall bear the same ratio to the amount of outstanding bonds
payable out of the Bond Fund as the Revenue available for debt service for such
outstanding bonds for the twelve months preceding such sale, lease, encumbrance
or disposal from the portion of the System sold, leased, encumbered or disposed
of bears to the Revenue available for debt service for those bonds from the entire
System for the same period. Any money so paid into the Bond Fund shall be
used to retire those outstanding bonds at the earliest possible date.
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(d) While any of the Bonds remain outstanding, it will keep proper and
separate accounts and records in which complete and separate entries shall be
made of all transactions relating to its System, and it will furnish any subsequent
owner or owners of the Bonds, if the Bonds shall be owned by other than a Fund
of the City, at the written request of such owner or owners, complete operating
and income statements of the System in reasonable detail covering any calendar
year, showing the financial condition of the water and sewer departments and
compliance with the terms and conditions of this ordinance, not more than 120
days after the close of that calendar year, and it will grant any owner or owners
of at least 25 % of the outstanding Bonds the right at all reasonable times to
inspect the entire System and all records, accounts and data of the City relating
thereto. Upon request of any owner of any of such Bonds, it will also furnish to
that owner a copy of the most recently completed audit of the City's accounts by
the State Auditor of Washington or such other audit as is authorized by law in
lieu thereof.
(e) It will not furnish water or sanitary sewage disposal service to any
customer whatsoever free of charge and will promptly take legal action to enforce
collection of all delinquent accounts.
(f) It will carry the types of insurance on its System properties in the
amounts normally carried by private water and sewer companies engaged in the
operation of water and sewerage systems or, in lieu thereof, after the retirement
or redemption of all of the outstanding 1977 Bonds, or after irrevocable provision
is made for the payment of those bonds, the City may self- insure or participate
in a joint intergovernmental insurance pool or similar plan providing coverage in
the amounts normally carried by such private water companies, and the cost of
that insurance or self - insurance shall be considered a part of Operating and
Maintenance Expenses. If, as and when the United States of America or some
agency thereof shall provide for War Risk Insurance, the City further agrees to
take out and maintain such insurance on all or such portions of the System on
which such War Risk Insurance may be written in an amount or amounts to cover
adequately the value thereof, except that after the retirement or redemption of the
outstanding 1977 Bonds, or after irrevocable provision is made for the payment
of those bonds, the City will take out and maintain such insurance only if
available at rates acceptable to the City.
(g) It will pay all Operating and Maintenance Expenses and otherwise
meet the obligations of the City as herein set forth.
(h) If a ULID is ever established hereafter in connection with the
issuance of Future Parity Bonds and the ULID Assessments therefrom pledged
to be paid into the Bond Fund, the City will promptly collect all Assessments
levied therein. Such Assessments may be used to pay the principal of and interest
on any bonds payable out of the Bond Fund without those Assessments being
particularly allocated to the payment of principal and interest on any particular
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series of such Future Parity Bonds, including the Outstanding Parity Bonds and
the Bonds.
(i) It will take all actions necessary to prevent interest on the Bonds
from being included in gross income for federal income tax purposes, and it will
neither take any action nor make or permit any use of proceeds of the Bonds or
other funds of the City treated as proceeds of the Bonds at any time during the
term of the Bonds which will cause interest on the Bonds to be included in gross
income for federal income tax purposes. The City also covenants that, to the
extent the arbitrage rebate requirement of Section 148 of the Code is applicable
to the Bonds, it will take all actions necessary to comply (or to be treated as
having complied) with those requirements in connection with the Bonds, including
the calculation and payment of any penalties that the City has elected to pay as
an alternative to calculating rebatable arbitrage, and the payment of any other
penalties if required under Section 148 of the Code to prevent interest on the
Bonds from being included in gross income for federal income tax purposes.
The City certifies that it has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that it is a bond issuer whose
arbitrage certifications may not be relied upon.
0) It will use, pay out and distribute the Revenue of the System, other
than money deposited in bond redemption funds, in the following order of
priority:
(1) To pay Operating and Maintenance Expense.
(2) To meet the required debt service payments, including
Reserve Account accumulation in the Bond Fund, on the Outstanding
Parity Bonds, the Bonds and any Future Parity Bonds.
(3) To meet the required debt service on any water and sewer
revenue bonds issued having a charge and lien on the Revenue of the
System junior to the Outstanding Parity, the Bonds and any Future Parity
Bonds.
(4) To redeem and retire by optional redemption or to purchase in the
open market any outstanding water and sewer revenue bonds or obligations of the
City, to make necessary betterments and replacements of or repairs, additions or
extensions to the System, or for any other lawful purpose.
Section 18. Designation of Bonds as "Qualified Tax - Exempt Obligations. " The City has
determined and certifies that (a) the Bonds are not "private activity bonds" within the meaning
of Section 141 of the Code; (b) the reasonably anticipated amount of tax - exempt obligations
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(other than private activity bonds and other obligations not required to be included in such
calculation) which the City and any entity subordinate to the City (including any entity which
the City controls, which derives its authority to issue tax- exempt obligations from the City or
which issues tax- exempt obligations on behalf of the City) will issue during the calendar year
in which the Bonds are issued will not exceed $10,000,000; and (c) the amount of tax- exempt
obligations, including the Bonds, designated by the City as "qualified tax - exempt obligations"
for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds
are issued does not exceed $10,000,000. The City designates the Bonds as "qualified tax - exempt
obligations" for the purposes of Section 265(b)(3) of the Code.
Section 19. Bonds Negotiable. ice. The Bonds shall be negotiable instruments to the extent
provided by RCW 62A.8 -102 and 62A.8 -105.
Section 20. Provision for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds which will constitute a charge and lien upon the Revenue of the System and
ULID Assessments hereafter pledged to be paid into the Bond Fund on a parity with the
Outstanding Parity Bonds and the Bonds if the conditions set forth in Section 16 of Ordinance
No. 1957, as amended by Section 3 of Ordinance No. 2363, shall be met and complied with at
the time of the issuance of those Future Parity Bonds, which sections are incorporated herein
and made a part of this ordinance.
Nothing contained in the provisions for parity shall prevent the City from issuing revenue
bonds having a junior lien on the Revenue of the System or from pledging the payment of ULID
Assessments into a bond redemption fund or account created to pay and secure the payment of
the principal of and interest on such junior lien bonds as long as such ULID Assessments are
levied to pay part or all of the cost of improvements being constructed out of the proceeds of
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the sale of such junior lien bonds. Neither shall anything contained in this ordinance prevent
the City from issuing revenue bonds to refund maturing revenue bonds of the City for the
payment of which money is not otherwise available.
Section 21. Refunding; or Defeasance. The City may issue refunding bonds pursuant to
the laws of the State of Washington or use money available from any other lawful source to pay
when due the principal of and interest on the Bonds, or any portion thereof included in a
refunding or defeasance plan, and to redeem and retire, refund or defease all such then-
outstanding Bonds (hereinafter collectively called the "defeased Bonds ") and to pay the costs of
the refunding or defeasance. If money and /or Government Obligations maturing at a time or
times and bearing interest in amounts (together with money, if necessary) sufficient to redeem
and retire, refund or defease the defeased Bonds in accordance with their terms are set aside in
a special trust fund or escrow account irrevocably pledged to that redemption, retirement or
defeasance of defeased Bonds (hereinafter called the "trust account "), then all right and interest
of the owners of the defeased Bonds in the covenants of this ordinance, in the Revenue of the
System and in the funds and accounts, including ULID Assessments, obligated to the payment
of the defeased Bonds shall cease and become void, except the owners of defeased Bonds shall
have the right to receive payment of the principal of and interest on the defeased Bonds from
the trust account. The City shall include in the refunding or defeasance plan such provisions as
the City deems necessary for the random selection of any defeased Bonds that constitute less than
all of a particular maturity of the Bonds, for notice of the defeasance to be given to the owners
of the defeased Bonds and to such other persons as the City shall determine, and for any
required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be
deemed no longer outstanding, and the City may apply any money in any other fund or account
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established for the payment or redemption of the defeased Bonds to any lawful purposes as it
shall determine, subject only to the rights of the owners of any other bonds then outstanding.
In the event that the refunding plan provides that the Bonds being refunded the refunding
bonds to be issued be secured by cash and /or direct obligations of the United States of America
or Government Obligations pending the prior redemption of those Bonds being refunded and if
such refunding plan also provides that certain cash and /or direct obligations of the United States
of America or Government Obligations are irrevocably pledged for the prior redemption of those
Bonds included in the refunding or defeasance plan, then only the debt service on the Bonds
which are not defeased Bonds and the refunding bonds, the payment of which is not so secured
by the refunding plan, shall be included in the computation of coverage for issuance of Future
Parity Bonds and the annual computation of coverage for determining compliance with the rate
covenants.
Notwithstanding anything in this section to the contrary, if the principal of and /or interest
due on the Bonds is paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy,
the Bonds shall be treated as remaining outstanding for all purposes, not defeased or otherwise
satisfied and shall not be considered paid by the City, and the covenants, agreements and other
obligations of the City to the registered owners of the Bonds shall continue to exist and shall run
to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of those
registered owners.
Section 22. Approval of Bond Purchase Contract. Seattle- Northwest Securities
Corporation of Seattle, Washington, has presented a bond purchase contract (the "Bond Purchase
Contract ") to the City offering to purchase the Bonds under the terms and conditions provided
in the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City
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Clerk and is incorporated herein by this reference. The City Council finds that entering into the
Bond Purchase Contract is in the City's best interest and therefore accepts the offer contained
therein and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster
Pepper & Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the
Bonds. Bond counsel shall not be required to review and shall express no opinion concerning
the completeness or accuracy of any official statement, offering circular or other sales or
disclosure material issued or used in connection with the Bonds, and bond counsel's opinion
shall so state.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the
proceeds of the sale thereof.
Section 23. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated February 9, 1998 (the
"Preliminary Official Statement "), prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with Securities and Exchange Commission
( "SEC ") Rule 15c2- 12(b)(1), the City "deems final" that Preliminary Official Statement as of
its date, except for the omission of information as to offering prices, interest rates, selling
compensation, aggregate principal amount, principal amount per maturity, maturity dates,
options of redemption, delivery dates, ratings and other terms of the Bonds dependent on such
matters.
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Section 24. Undertaking to Provide Continuing Disclosure. To meet the requirements
of United States Securities and Exchange Commission ( "SEC ") Rule 15c2- 12(b)(5) (the "Rule "),
as applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking ") for the benefit of holders of the Bonds:
(a) Undertaking; to Provide Annual Financial Information and Notice
of Material Events. The City undertakes to provide or cause to be provided,
either directly or through a designated agent:
(i) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with the Rule
( "NRMSIR ") and to a state information depository, if any, established in
the State of Washington (the "SID ") annual financial information and
operating data of the type included in the final official statement for the
Bonds and described in Section 24(b) ( "annual financial information ");
(ii) To each NRMSIR or the Municipal Securities Rulemaking
Board ( "MSRB "), and to the SID, timely notice of the occurrence of any
of the following events with respect to the Bonds, if material: (1) principal
and interest payment delinquencies; (2) non - payment related defaults; (3)
unscheduled draws on debt service reserves 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 or events affecting the tax - exempt
status of the Bonds; (7) modifications to rights of holders of the Bonds;
(8) Bond calls (other than scheduled mandatory redemptions of Term
Bonds); (9) defeasances; (10) release, substitution, or sale of property
securing repayment of the Bonds; and (11) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely
notice of a failure by the City to provide required annual financial
information on or before the date specified in Section 24(b).
(b) Type of Annual Financial Information Undertaken to be Provided.
The annual financial information that the City undertakes to provide in Section
24(a) :
(i) Shall consist of (1) annual financial statements of the City,
which statements will include the Combined Water /Sewer /Drainage Utility
Fund; (2) a statement of authorized, issued and outstanding bonded debt
secured by Net Revenue of the System; (3) debt service coverage ratios;
(4) data of the type presented under the headings "Sewage Treated, "
0321299.02
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"Water Sold" and "Water and Sewer Utility Connections "; and (5) current
System rates;
(ii) Shall be prepared (except as noted in the financial statements)
in accordance with applicable generally accepted accounting principles
promulgated by the Government Accounting Standards Board ( "GASB "),
as such principles may be changed from time to time by GASB or its
successor;
(iii) Shall not be audited, except, however, that if and when
audited financial statements are otherwise prepared and available to the
City they will be provided;
(iv) Shall be provided to each NRMSIR and the SID, 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, 1998; and
(v) May be provided in a single or multiple documents, and
may be incorporated by reference to other documents that have been filed
with each NRMSIR and the SID, or, if the document incorporated by
reference is a "final official statement" with respect to other obligations
of the City, that has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any
holder of any Bond, or of any broker, dealer, municipal securities dealer,
participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under
the circumstances and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of
the substance (or provide a copy) of any amendment to the Undertaking and a
brief statement of the reasons for the amendment. If the amendment changes the
type of annual financial information to be provided, the annual financial
information containing the amended financial information will include a narrative
explanation of the effect of that change on the type of information to be provided.
(d) Beneficiaries. The Undertaking evidenced by this Section 24 shall
inure to the benefit of the City and any holder of Bonds, 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 the Rule which require the City to comply with this Undertaking
0321299.02
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become legally inapplicable in respect of the Bonds for any reason, as confirmed
by an opinion of nationally recognized bond counsel or other counsel familiar
with federal securities laws delivered to the City, and the City provides timely
notice of such termination to each NRMSIR or the MSRB and the SID.
(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 such actions as that holder deems
necessary, including seeking an order of specific performance from an appropriate
court, to compel the City or other obligated person to comply with the
Undertaking.
(g) Designation of Official Responsible to Administer Undertaking.
The Finance Director of the City (or such other officer of the City who may in
the future perform the duties of the Finance Director) or his or her designee is
authorized and directed in his or her discretion to take such further actions as may
be necessary, appropriate or convenient to carry out the Undertaking of the City
in respect of the Bonds set forth in this Section 24 and in accordance with the
Rule, including, without limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
(ii) Determining whether any event specified in Section 24(a) has
occurred, assessing its materiality with respect to the Bonds, and, if
material, preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the
Bonds, and obtaining from such person an undertaking to provide any
annual financial information and notice of material events for that person
in accordance with the Rule;
(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.
Section 25. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Municipal Bond Insurance Policy insuring the prompt payment of the principal of and
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interest on the Bonds and agrees to the conditions for obtaining that policy, including the
payment of the premium therefor. Any notice required to be given to the Bond Insurer shall be
sent by certified or registered mail to Financial Security Assurance Inc., 350 Park Avenue, New
York 10022.
Section 26. Parties Interested Herein. To the extent that this ordinance confers upon or
gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this
ordinance, the Bond Insurer expressly is recognized as being a third -party beneficiary hereunder
and may enforce any such right, remedy or claim conferred, given or granted hereunder.
Nothing expressed or implied in this ordinance is intended or shall be construed to confer upon,
or to give or grant to, any person or entity, other than the City, the Bond Insurer and the
registered owners of the Bonds, any right, remedy or claim under or by reason of this ordinance
or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and
agreements in this ordinance contained by and on behalf of the City shall be for the sole and
exclusive benefit of the City, the Bond Insurer and the registered owners of the Bonds.
Notwithstanding any other provision of this ordinance, the City shall notify the Bond
Insurer immediately if at any time there are insufficient funds to make any payments of principal
and /or interest as required and immediately upon the occurrence of any event of default
hereunder.
Any provision of this ordinance expressly recognizing or granting rights in or to the Bond
Insurer may not be amended in any manner which affects the rights of the Bond Insurer
hereunder without the prior written consent of the Bond Insurer. Unless otherwise provided in
this section, the Bond Insurer's consent shall be required, in addition to Bond owner consent,
when required, for the following purposes: (i) execution and delivery of any supplemental
0321299.02
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ordinance, and (ii) initiation or approval of any other action which requires Bond owner consent.
Anything in this ordinance to the contrary notwithstanding, upon the occurrence and continuance
of an event of default, the Bond Insurer shall be entitled to control and direct the enforcement
of all rights and remedies granted to the Bond owners for the benefit of the Bond owners under
this ordinance.
Any reorganization or liquidation plan with respect to the City must be acceptable to the
Bond Insurer. In the event of any reorganization or liquidation, the Bond Insurer shall have the
right to vote on behalf of all bondholders who hold FSA- insured bonds absent a default by the
Bond Insurer under the applicable Municipal Bond Insurance Policy insuring such bonds.
Section 27. Effective Date. This ordinance, being an exercise of a power delegated to
the City legislative body, is not subject to referendum, and shall take effect five days after its
passage and publication.
PASSED by the City Council of the City of Edmonds, Washington, at a regular open
public meeting thereof and APPROVED by the Mayor this 17th day of February, 1998.
CITY OF EDMONDS, WASHINGTON
By
ATTEST: Mayor
City Clerk
FORM APPROVED:
Z aUJA
Bond Counsel
0321299.02
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SUMMARY OF ORDINANCE NO. 3191
of the City of Edmonds, Washington
On the 17th day of February, 1998, the City Council of the City of Edmonds,
passed Ordinance No. 3191. A summary of the content of said ordinance, consisting of
the title, provides as follows:
AN ORDINANCE OF THE CITY OF EDMONDS, WASHINGTON, RELATING TO THE
COMBINED WATER AND SEWERAGE SYSTEMS COMPRISING THE
WATERWORKS UTILITY OF THE CITY; PROVIDING FOR THE ISSUANCE OF
$2,420,000 PAR VALUE WATER AND SEWER REVENUE REFUNDING BONDS,
1998, FOR THE PURPOSE OF PROVIDING THE FUNDS TO ADVANCE REFUND
THE CALLABLE PORTION OF THE CITY'S OUTSTANDING WATER AND SEWER
REVENUE AND REFUNDING BONDS, 1993, AND PAY THE ADMINISTRATIVE
COSTS OF SUCH REFUNDING AND THE COSTS OF ISSUANCE AND SALE OF
SUCH BONDS; FIXING THE DATE, FORM, MATURITIES, INTEREST RATES,
TERMS AND COVENANTS OF THOSE BONDS; PROVIDING FOR AND
AUTHORIZING THE PURCHASE OF CERTAIN OBLIGATIONS OUT OF THE
PROCEEDS OF THE SALE OF THE BONDS HEREIN AUTHORIZED AND FOR THE
USE AND APPLICATION OF THE MONEY DERIVED FROM THOSE OBLIGATIONS;
AUTHORIZING THE EXECUTION OF AN AGREEMENT WITH A REFUNDING
TRUSTEE; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE
OUTSTANDING BONDS TO BE REFUNDED; PROVIDING FOR BOND INSURANCE;
APPROVING THE SALE AND PROVIDING FOR THE DELIVERY OF THE BONDS TO
SEATTLE - NORTHWEST SECURITIES CORPORATION OF SEATTLE,
WASHINGTON; AND ESTABLISHING AN EFFECTIVE DATE OF THE ORDINANCE.
The full text of this Ordinance will be mailed upon request.
DATED this 18th day of February, 1998.
CITY CLER , SANDRA S. CHASE
STATE OF WASHINGTON,
COUNTY OF SNOHOMSH,
SUMMARY OF
ORDINANCE NO. 3191 1
of the CH of
Edmonds, Wash ngton
On the 17th day of Febru
ary, 1998, the City Council of
the Clty of Edmonds, passed
Ordinance No. 3191. A sum•,
mary of the content of said
� ordinance, consistinq of the
tHEFUNDED; PROVIDING FOR
NNGNTHE SALE AND PROVIID.
ING FOR THE DELIVERY OF
THE BONDS TO SEATTLE -
NORTHWEST SECURITIES
CORPORATION OF SEAT.
TLE, WASHINGTON; AND
,ESTABLISHING AN EFFEC-
,TIVE DATE OF THE
ORDINANCE.
The full text of this Ordi.
nance will be mailed upon
request.
DATED this 18th day of
February, 1998,
SANDRA S. CHASE
City Clerk
Published: February 22, 1998.
B -2 -1
Affidavit of Publication
RECEIVED
FEB 2 5 1998
EDMONDS CITY CLERK
The undersigned, being first duly sworn on oath deposes and says
that she is Principal Clerk of THE HERALD, a daily newspaper
printed and published in the City of-Everett, County of Snohomish,
and State of Washington; that said newspaper is a newspaper of
general circulation in said County and State; that said newspaper
has been approved as a legal newspaper by order of the Superior
Court of Snohomish County and that the notice ......... ...............................
Summary of Ordinance No. 3191
............................................................................. ............................... ... ................
............... .......................................... .............................................................................
a printed copy of which is hereunto attached, was published in said
newspaper proper and not in supplement form, in the regular and
entire edition of said paper on the following days and times, namely:
February 22, 1998
....................................................................... ..................... .. .. .. .. .. .. .......
and that said newspaper was regularly distributed to its subscribers
during all of said period. /�
...----- -. -(/. 12 �.�_ .......C.��..k. _ ...........
Principal Clerk
Subscribed and sworn to before me this .......22nd
da o ......
........February � ............. 199$....
................ . .
.......-- ...----- - ----- -- - - -- -- -..... ..... ... ............. ............ .........:..........
Notary Pub is in and for the to of ashen .. ton,
residing at Everett, Snohomi
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