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HomeMy WebLinkAboutO-1428 - Water and sewer revenue bonds; repeals Ord. 1425...,. I r CITY OF MARYSVILLE,WASHINGTON ORDINANCE NO.1428 AN ORDINANCE of the City of Marysville, Washington,relating to the waterworks utility of the City,including the system of sewerage as a part thereof;providing for the issuance of $2,315,000 principal amount of Water and Sewer Revenue Refunding Bonds,1985,of the City for the purpose of providing a part of the money to refund,pay and retire its outstanding Water and Sewer Revenue Bonds,1980,and Water and Sewer Revenue Bonds,1984;fixing the date, form,maturities,interest rates,terms and covenants of such refunding bonds;providing for and authoriz- ing the purchase of certain obligations out of the proceeds of the sale of such bonds and for the use and application of the money to be derived from such investments;authorizing the execution of an agree- ment with Rainier National Bank of Seattle, Washington,as Refunding Trustee;providing for the payment and redemption of the outstanding bonds to be refunded;approving the sale and providing for the delivery of such refunding bonds to Harper,McLean & Company,of Seattle,Washington;and repealing Ordinance No.1425. WHEREAS,the City of Marysville,Washington (the ·City·), by Ordinance No.384,specified and adopted a system or plan of additions to and betterments and extensions of the waterworks utility of the City,and authorized the issuance and sale of not to exceed $280,000 par value of Water Revenue Bonds,1952,of which $134,000 par value thereof were heretofore issued as Series A,$100,000 par value thereof as Series B,and $46,000 par value thereof as Series C,and all which bonds have now matured and been paid;and WHEREAS,by Section 19 of such Ordinance No.384,the City reserved the right to issue additional water revenue bonds or ...I, l • water and sewer revenue bonds in the event that the City should thereafter provide by ordinance for the construction of a system of sewerage or additions,extensions and betterments to an existing system and provide that the system of sewerage,includ- ing all additions,extensions and betterments thereto,shall become a part of the waterworks utility of the City,which bonds shall constitute a charge and lien upon the revenues of the waterworks utility of the City,including the sewerage system if the same is made a part of the waterworks utility of the City, on a parity with the Water Revenue Bonds,1952,provided certain conditions shall be met and complied with at the time of the issuance of such additional bonds;and WHEREAS,the City by Ordinance No. 385 combined the sewer- age system of the City with all additions and improvements thereto with the waterworks utility of the City,and the sewer- age system at all times since has been considered a part of and belonging to the waterworks utility of the City,and the words Waterworks Utility of the City shall hereinafter mean the combined sewerage system and water system of the City,together with all additions thereto and betterments and extensions thereof hereafter made; and WHEREAS,the City subsequently issued and sold bonds of the following issues: Water and Sewer Revenue Bonds,1963 Water and Sewer Revenue Bonds,1965 Water and Sewer Revenue Bonds.1967 - 2 - .,. ".1 I Water and Sewer Revenue Bonds,1969 (collectively hereinafter called the "Prior Lien Bonds R)and Water and Sewer Revenue Bonds,1969,Issue No. 2 (the "1969 Bonds,Issue No. 2 R) all of which bonds having been issued on a parity of lien with each other and constitute a first and prior charge and lien on the Revenue of the Waterworks Utility of the City (as herein defined);and WHEREAS,the City thereafter issued and sold pursuant to Ordinance No.873,$1,090,000 par value of Water and Sewer Revenue Bonds,1975 (the "1975 Bonds R),which 1975 Bonds con- stitute a charge and lien upon the Revenue of the Waterworks Utility of the City (as herein defined)junior to the prior charge and lien upon such Revenue for all of the Prior Lien Bonds but a first charge and lien upon assessments collected within Utility Local Improvement Districts Nos.1,2,3 and 4 created in connection with and pledged to the payment of such 1975 Bonds;and WHEREAS,pursuant to Ordinance No.967,under date of issue of December 1,1977,the City issued and sold $2,307,000 par value of Water and Sewer Revenue Refunding Bonds,1977 (the R1977 Bonds")to provide a part of the funds to refund the outstanding 1969 Bonds,Issue No.2,and 1975 Bonds by providing for the payment of the principal of and interest on such 1969 Bonds,Issue No.2,as the same became due up to and including January 1,1997,and for the call,payment and retirement of all - 3 - ·t •.,. ----~----------------------------- I , remaining outstanding 1969 Bonds,Issue No.2,on January 1, 1997,and (b)for the payment of (i)the principal of and interest on such 1975 Bonds numbered 7 to 174,inclusive,being the Serial Bonds,as the same shall become due up through January 1,1986,at which time 1975 Bonds numbered 85 to 175, inclusive,will be called,paid and retired;(ii)the principal of and interest on 1975 Bonds numbered 215 to 224,inclusive, on January 1,1978,the holders thereof having consented to surrender such bonds for payment and retirement on such date, and (iii)the interest on 1975 Bonds numbered 175 to 214, inclusive,being Term Bonds,as the same becomes due up through their respective call dates,and the principal of such Term Bonds as the same shall be called,paid and retired in accord- ance with the call provisions applicable thereto as provided in Ordinance No. 873 and in such Term Bonds;and WHEREAS,by sUbparagraph (i)of Section 9 of Ordinance No. 967 the City covenanted that: aIt would not create any special fund or funds for the payment of other revenue bonds,warrants or obligations,or authorize or issue any other revenue bonds,warrants or obligations which would rank on a parity with or have any priority over the payments into or the money in the Water and Sewer Revenue Refunding Bond Fund,1977,except that it reserved the right for: ·(1)the purpose of acquiring,constructing and installing additions and improvements to and exten- sions and betterments of,acquiring necessary equipment for or making necessary replacements of equipment or capital improvements to the Waterworks Utility of the City;or - 4 - ·, "' -(2)The purpose of exchanging or purchasing and retiring prior to or at their maturity any outstanding water and sewer revenue bonds of the City; -to issue additional and/or refunding water and sewer revenue bonds (herein defined as IFuture Parity Bonds l )and to make payments into the Bond Fund for the payment of such Future Parity Bonds from the Revenue of the Waterworks Utility of the City, together with ULID Assessments collected in any ULID hereafter created in connection with the issuance of such Future Parity Bonds sufficient to pay the principal of and interest on such Future Parity Bonds,which such payments may rank equally out of such Revenue of the Waterworks Utility of the City and ULID Assessments collected in ULIDs Nos.I,2,3 and 4 if the City complies with the following conditions: D{l)All payments required by any ordinance of the City pertaining to outstanding water and sewer revenue bonds of the City shall have been made into the respective bond redemption funds for the payment of such water and sewer revenue bonds and no deficiency exists therein; D(2)If one or more ULIDs shall be created in connection with the issuance of such Future Parity Bonds,not less than 95\of the total amount of such Future Parity Bonds to be so issued shall be assessed against the properties specially benefited in such ULIDs, and the Assessments paid into the Bond Fund, or,if no ULID is created in connection with the issuance of such Future Parity Bonds,then there shall be 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 income available for debt service on the Prior Lien Bonds,the Refunding Bonds,any 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 (1.35 times that amount of debt service to be paid from Operating Revenue and not Assessments). -(3)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 - 5 - ...,,' interest requirements on all Future Parity Bonds, including the Refunding Bonds and the proposed Future Parity Bonds to be issued,including in such amount the principal amount of any Term Bonds included in the Future Parity Bonds issueR; and WHEREAS,pursuant to Ordinance No.1088,the City issued and sold $1,200,000 par value of Water and Sewer Revenue Bonds, 1979 (the R1979 Bonds R),dated December 1,1979,which 1979 Bonds were issued on a parity of lien with the 1977 Bonds pursuant to the provisions of Section 9 of Ordinance No.967;and WHEREAS,pursuant to Ordinance No. 1155 the City issued and sold $2,140,000 par value of RWater and Sewer Revenue Bonds, 1980 (the R1980 Bonds R),dated December 1,1980,which 1980 Bonds were issued on a parity of lien with the 1977 Bonds and the 1979 Bonds pursuant to the provisions of Section 9 of Ordinance No.967;and WHEREAS,pursuant to Ordinance No.1403,the City issued and sold $247,000 par value of Water and Sewer Revenue Bonds, 1984 (the R1984 Bonds R),dated December 1,1984,which 1984 Bonds were issued on a parity of lien with the 1977 Bonds,the 1979 Bonds and the 1980 Bonds pursuant to the provisions of Section 9 of Ordinance No.967;and WHEREAS,the City presently has outstanding the following 1980 Bonds and 1984 Bonds: (a)$1.820.000 total principal amount of 1980 Bonds maturing in various amounts on December 1 of each of the years 1985 through 1988,inclusive, and in 2000,and bearing various interest rates from 10.50\to 10.75\;and - 6 - ,. •r . (b)$247,000 total principal amount of the 1984 Bonds maturing in various amounts on December 1 of each of the years 2001 through 2004,inclu- sive,and bearing various interest rates from 11\to 11.25\, (sometimes collectively called the nOutstanding Refunded Parity Bonds·);and WHEREAS,after due consideration,it appears to the City Council that the Outstanding Refunded Parity Bonds may be refunded by the issuance and sale of the bonds authorized herein (the "Bonds·)so that a significant 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 Outstanding Refunded Parity Bonds but for such refunding,which refunding will be effected by: (a)The issuance of the Bonds; (b)The payment of the principal of and interest on the 1980 Bonds as the same shall become due up to and including their respective maturity or call dates;the call,payment and redemption on December 1,1989,of 1980 Bonds Nos. 129 to 144, inclusive,at a price of par;the call,payment and redemption on December 1,1990,of 1980 Bonds Nos.145 to 160,inclusive,at a price of par;and the call,payment and redemption of 1980 Bonds Nos. 161 to 428,inclusive,being all of the remaining outstanding 1980 Bonds,on December 1,1991,at a price of par;and (c)The payment of the interest on the 1984 Bonds as the same shall become due up to and including June 1,1993,and,on June 1,1993,the call, payment and redemption of all of the outstanding 1984 Bonds at a price of par. and - 7 - ,. , f • WHEREAS,in order to effect such refunding in the manner that will be most advantageous to the City,it is found neces- sary and advisable that certain Acquired Obligations (herein- after defined),bearing interest and maturing at such times as are necessary to accomplish the refunding as aforesaid be purchased out of a portion of the proceeds of the Bonds author- ized by this ordinance and,as may be necessary or desirable, other money of the City legally available therefor;and WHEREAS,the City Council has determined that it is in the City's best interest to issue and sell $2,315,000 par value of water and sewer revenue refunding bonds to provide the funds necessary to pay,redeem and retire the Outstanding Refunded Parity Bonds,and Harper,McLean and Company has offered to purchase such Bonds on the terms and conditions hereinafter set forth;NOW,THEREFORE, THE CITY COUNCIL OF THE CITY OF MARYSVILLE,WASHINGTON,DO ORDAIN as follows: Section 1.Definitions.As used in this ordinance,the following words shall have the following meanings: (a)-Acquired Obligations-shall mean those United States Treasury Certificates of Indebtedness,Notes and Bonds, State and Local Government Series and other obligations of the United States of America purchased to accomplish the refunding authorized by this ordinance. (b)-Annual Debt Service-for the Bonds and any Future Parity Bonds shall mean,in any year,that year's total - 8 - ". 'r'• of principal and interest requirements for the then outstanding bonds (except the principal maturity of Term Bonds)to which the term Annual Debt Service refers,plus any mandatory sinking fund or mandatory bond redemption requirement for that year,less all capitalized interest payable that year from such bonds. (c)AAverage Annual Debt ServiceA for the Bonds and any Future Parity Bonds shall mean,in any year,the sum of the remaining Annual Debt Service of the then outstanding bonds to which the Average Annual Debt Service refers divided by the number of years such bonds are scheduled to remain outstanding. (d)ABond Fund A shall mean that special fund of the City known as the AWater and Sewer Revenue Refunding Bond Fund, 1977,-created by Ordinance No. 967 for the payment of the principal of and interest on the 1977 Bonds and any Future Parity Bonds,including the 1979 Bonds and the Bonds. (e)-Bond Insurance PolicyA shall mean the municipal bond new issue insurance policy issued by the Bond Insurer and guaranteeing the timely payment of principal of and interest on the Bonds. (f)-Bond Insurer A shall mean Municipal Bond Insur- ance Association,a New York stock insurance company,or any successor thereto. (g)ABond Registrar-shall mean the fiscal agency of the State of Washington in Seattle,Washington,and New York, New York,as the same may be designated from time to time. - 9 - •f J • (h)·Bonds·shall mean the $2,315,000 par value Water and Sewer Revenue Refunding Bonds,1985,of the City issued pursuant to and for the purposes provided in this ordinance. (i)·1969 Bonds,Issue No.2,·shall mean the out- standing Water and Sewer Revenue Bonds,1969,Issue No.2, refunded as provided in Ordinance No.967. (j)·1975 Bonds·shall mean the Water Revenue Bonds, 1975,refunded and defeased as provided in Ordinance No.967. (k)·1977 Bonds·shall mean the $2,307,000 par value of Water and Sewer Revenue Refunding Bonds,1977,issued for the purposes provided in and pursuant to Ordinance No.967. (1)·1979 Bonds·shall mean the $1,200,000 par value of Water and Sewer Revenue Bonds,1979,issued for the purposes provided in and pursuant to Ordinance No.1088. (m)u1980 Bonds·shall mean the $2,140,000 par value of Water and Sewer Revenue Bonds,1980,issued for the purposes provided in and pursuant to Ordinance No.1155. (n)·1984 Bonds·shall mean the $247,000 par value of Water and Sewer Revenue Bonds,1984,issued for the purposes provided in and pursuant to Ordinance No.1403. (0)·City·shall mean the City of Marysville, Washington. (p)·Future Parity Bonds·shall mean any and all water and sewer revenue bonds of the City issued after the date of the issuance of the Bonds,the payment of the principal of and interest in which constitutes a charge and lien on the - 10 - ,, Revenue of the Waterworks Utility of the City and ULID Assess- ments equal in rank with the charge and lien upon such Revenue of the Waterworks Utility 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 1977 Bonds,the 1979 Bonds and the Bonds. (q)·Government Obligations·shall mean those govern- ment obligations defind by RCW 39.53.010(9)as it now reads or hereafter may be amended and which are otherwise lawful invest- ments of the City at the time of such investment. (r)UNet Revenue of the Waterworks Utility·shall mean Revenue of the Waterworks Utility less Operating and Maintenance Expenses. (s)·Operating and Maintenance Expenses·shall mean all reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and maintained in good repair, working order and condition,but shall not include any deprecia- tion or taxes levied or imposed by the City. (t)·Outstanding Parity Bonds·shall mean the out- standing 1977 Bonds and 1979 Bonds,irrevocable provision having been made by this ordinance for the refunding,payment and retirement of the 1980 Bonds and 1984 Bonds upon the delivery of the Bonds. (u)·Outstanding Refunded Parity Bonds·shall mean 1980 Bonds and 1984 Bonds irrevocable provision for the refund- ing of which is made by this ordinance. - 11 - .... J (v)"Principal and Interest Account"shall mean the account of that name created in the Bond Fund for the payment of the principal of and interest on the 1977 Bonds,the 1979 Bonds, the Bonds and Future Parity Bonds. (w)"Prior Lien Bonds"shall mean the outstanding Water and Sewer Revenue Bonds,1963,Water and Sewer Revenue Bonds,1965,Water and Sewer Revenue Bonds,1967,and Water and Sewer Revenue Bonds,1969. (x)"Refunding Plan"shall mean the plan of refunding specified in Section 3 of this ordinance. (y)"Refunding Trust Agreement"shall mean a Refund- ing Trust Agreement between the City and the Refunding Trustee substantially in the form of that which is attached as Exhibit A to this ordinance and by this reference is made part hereof. (z)uRefunding Trustee"shall mean Rainier National Bank of Seattle,Washington,or any successor trustee. (aa)"Reserve Account"shall mean 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 1977 Bonds,the 1979 Bonds,the Bonds and Future Parity Bonds. (bb)"Revenue of the Waterworks Utility"shall mean all the earnings and revenue received by the Waterworks Utility of the City from any source whatsoever,except general taxes, ULID Assessments,proceeds from the sale of City property and bond proceeds. -12 - ·, (cc)-Term Bond Maturity Year·shall mean any calendar year in which bonds of anyone issue or series now or hereafter scheduled to mature (regardless of any reservation of prior redemption rights)is more than 1.25 times the average annual principal maturity of the bonds of such issue or series for the three maturity years immediately preceding such year. (dd)·Term Bonds·shall mean those outstanding bonds of any single issue or series scheduled to mature in any Term Bond Maturity Year. (ee)·ULID·shall mean utility local improvement district. (ff)·ULID Assessments·or ·Assessments·shall mean the assessments levied in such ULIDs of the City as may have heretofore been created and as may hereafter be created under state law which may authorize the creation of the same and shall include installments thereof and interest and any penalties thereon pledged to be paid into the Bond Fund. (gg)"Waterworks Utility·shall mean the waterworks utility of the City,including the sewerage system as a part thereof,and all additions thereto and betterments and exten- sions thereof at any time made. Section 2.The City Council finds: (1)The purpose for the issuance of the Bonds is to refund the Outstanding Refunded Parity Bonds; (2)All payments required by any ordinance of the City pertaining to outstanding water and sewer revenue bonds of the City have been made into the respective bond redemption funds for the -13 - • I payment of such water and sewer revenue bonds and no deficiency exists therein; (3)There is or will be on file with the City prior to the delivery of the Bonds a certificate of an independent licensed professional engineer experienced in the design.construction and operation of municipal utilities showing that in his or her professional opinion the annual income available for debt service on the Prior Lien Bonds.the Outstanding Parity Bonds and the Bonds is at least equal to 1.35 times that amount of debt service to be paid from Revenue of the Waterworks Utility and not ULID Assess- ments;and (4)The refunding of the Outstanding Refunded Parity Bonds by the issuance of the Bonds will effect a substantial savings to the ratepayers of the Waterworks Utility of the City. Section 3.For the purpose of providing a part of the money required to carry out the following plan of refunding (the ARefunding PlanA): (a)Pay the principal of and interest on the 1980 Bonds as the same shall become due up to and including their maturity dates or respective call dates as hereinafter provided;to call,pay and redeem on December 1,1989,1980 Bonds Nos. 129 to 144,inclusive.at a price of par;and to call,pay and redeem on December 1.1990.1980 Bonds Nos.145 to 160.inclusive.at a price of par;and to call.pay and redeem 1980 Bonds Nos. 161 to 428,inclusive.being all of the remain- ing outstanding 1980 Bonds.on December 1,1991. at a price of par;and (b)To pay the interest on the 1984 Bonds as the same shall become due up to and including June 1.1993.and.on June 1.1993,to call,pay and redeem all of the outstanding 1984 Bonds. and to pay the costs of issuing the Bonds and the refunding plan,the City shall issue the Bonds in the aggregate principal amount of $2.315,000. - 14 - •r' The Bonds shall be dated August 1,1985;shall be in the denomination of $5,000 each 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 purpose of identification:and shall bear interest at the rates set forth below (computed on the basis of a 360-day year of twelve 30-day months),payable on December 1, 1985,and semiannually thereafter on each succeeding June 1 and December 1.The Bonds shall be payable solely out of the Bond Fund,and shall be a valid claim of the owner thereof only as against such Bond Fund and the amount of the Revenue of the Waterworks Utility of the City and ULID Assessments pledged to such fund and shall not be general obligations of the City. The Bonds shall bear interest and mature on December 1 in years and amounts as follows: Maturity Principal Interest Years Amounts Rates 1985 $95,000 4.75\ 1986 115,000 5.20 1981 115,000 5.70 1988 110,000 6.20 1989 115,000 6.70 1990 110,000 7.10 1991 105,000 1.35 1992 120,000 7.60 1993 120,000 7.85 1994 120,000 8.10 1995 115,000 8.25 1996 30,000 8.40 1991 160,000 8.50 1998 165,000 8.60 1999 340,000 8.70 2000 360,000 8.15 2001 20,000 8.80 - 15 - ·, If any Bond is not redeemed upon proper presentment at its maturity or call date,the City shall be obligated to pay interest at the same rate for each such Bond from and after its maturity or call date until such Bond,both principal and interest,shall have been paid in full or until sufficient money for such payment in full is on deposit in the Bond Fund and such Bond has been called for payment. Upon surrender thereof to the Bond Registrar,Bonds are interchangeable 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. Such exchange or transfer shall be without cost to the owner or transferee. The Bonds shall be issued only in registered form as to both principal and interest on the books and records maintained by the Bond Registrar (the nBond Register-).Such Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of Bonds held by each owner. 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 check or draft mailed to the registered owners at the addresses appearing on the Bond Register on the 15th day of the month preceding the interest payment date.Principal of the Bonds shall be payable upon -16 - ~..[' presentation and surrender of the Bonds by the registered owners at either of the principal offices of the Bond Registrar at the option of such registered owners. Section 4.Bonds maturing in the years 1985 through 1990, inclusive,and in the year 1995 shall be issued without the right or option of the City to redeem the same prior to their stated maturities.The City reserves the right to redeem Bonds maturing in the years 1991 through 1994,at the option of the City,on December 1,1990,and on any interest payment date thereafter,as a whole,or in part in inverse order of maturity (and by lot within a maturity in such manner as the bond registrar shall determine),at par plus accrued interest to the date of redemption.After the redemption of all of the Bonds maturing in the years 1991 through 1994,the City reserves the right to redeem Bonds maturing in the years 1996 through 2001, at the option of the City,on December 1,1995,and on any interest payment date thereafter,as a whole,or in part in inverse order of maturity (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 install- ments of $5,000 or any integral multiple of $5,000,may be redeemed.If less than all of the principal amount of any Bond is redeemed,upon surrender of such Bond at the principal office of the Bond Registrar,there shall be issued to the registered owner,without charge therefor,a new Bond or Bonds,at the - 11 - ". • I • option of the registered owner,of like maturity and interest rate in any of the denominations authorized by this ordinance. Notice of any such intended redemption shall 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 regis- tered owner of any Bond to be redeemed at the address appearing on the Bond Register.The requirements of this section shall be deemed to be complied with when notice is mailed as herein provided,whether or not it is actually received by the owner of any Bond. The interest on the Bonds so called for redemption shall cease on the date fixed for redemption unless such Bonds so called are not redeemed upon presentation made pursuant to such call.In addition,such redemption notice shall be mailed within the same period,postage prepaid,to Moody's Investors Service,Inc.,and Standard &Poor's Corporation at their offices in New York,New York,or their successors,but such mailing shall not be a condition precedent to the redemption of such Bonds. The City also reserves the right and option to purchase any of the Bonds on the open market at a price not in excess of par plus accrued interest to the date of purchase. Section 5.The Bond Fund heretofore has been created by Ordinance No. 967 in the office of the City Finance Director and has been divided into a Principal and Interest Account and a Reserve Account.So long as any Bonds are outstanding against the Bond Fund,the Finance Director of the City shall set aside -18 - ,,. and pay into the Bond Fund all ULID Assessments paid in ULID Nos.1,2,3,4,5,6,7, 8, and 9 and,out of the Revenue of the Waterworks Utility of the City,in addition to the amounts required by Ordinance No. 967 to be paid therein for the 1977 Bonds and by Ordinance No. 1088 for the 1979 Bonds,but exclud- ing the amounts covenanted to be paid therein by Ordinance No. 1155 for the 1980 Bonds and Ordinance No. 1403 for the 1984 Bonds,payment of which bonds will be provided for irrevocably upon the issuance and delivery of the Bonds,certain fixed amounts without regard to any fixed proportion,namely,into the Principal and Interest Account at least 20 days prior to each interest payment date,an amount,together with ULID Assessments paid into the Bond Fund and other money on deposit therein, sufficient to pay the interest payable on the Bonds on such interest payment date and,on or before the first day of each month commencing with the month of August,1985,1/4th of the principal payment due on December 1,1985,and commencing with the month of December,1985,1/12th of the next ensuing twelve months'requirements for principal on the Bonds. There shall be deposited into the Reserve Account from Revenue of the Waterworks Utility of the City and ULID Assess- ments on or before the 20th day of July of each year,commencing with the month of July,1986,an amount equal to lIS the average annual debt service on the Bonds until an amount equal to the Average Annual Debt Service (the Required Reserves Amount)has been accumulated therein by no later than August 1,1990. - 19 - .,". The Reserve Account shall be maintained in the Required Reserve Amount for the outstanding Outstanding Parity Bonds and the Bonds,except for withdrawals therefrom as authorized herein,at all times so long as any of the Bonds is outstanding, PROVIDED,that when the total amount in the Bond Fund shall equal the total amount of principal and interest for all out- standing bonds payable out of the Bond Fund to the last maturity thereof,no further payment need be made into the Bond Fund,and PROVIDED,FURTHER,that the amount in such Reserve Account may be reduced at any time prior to the redemption of all of the Outstanding Parity Bonds to an amount not less than the average annual debt service requirements (including the interest payable on but excluding the principal amount of any Term Bonds of any issue payable out of the Bond Fund)for all bonds payable out of the Bond Fund then outstanding and,after the redemption of all of the outstanding Outstanding Parity Bonds,the Reserve Account may be reduced at any time to an amount not less than the Average Annual Debt Service. 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,such deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose.Any defici- ency created in the Reserve Account by reason of any such withdrawal shall then be made up from the Revenue of the Water- works Utility of the City and/or ULID Assessments payable into - 20 - •I' 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 otherwise shall be held intact and may be applied against the last outstanding bonds payable out of the Bond Fund. All money in the Bond Fund may be kept on deposit in the official bank depository of the City or in any national bank or may be invested and reinvested in Government Obligations or any other legal investment redeemable at a fixed price and maturing no later than one month prior to the next mandatory call date for bonds subject to mandatory redemption or,if no mandatory call is applicable,one month prior to the final maturity date of the last outstanding bonds payable out of the Bond Fund.In no event shall any money in the Bond Fund or any other money reasonably expected to be used to pay principal of and/or interest on the Bonds be invested at a yield which would cause the Bonds to be arbitrage bonds within the meaning of Section l03(c)of the United States Internal Revenue Code,as amended, and applicable regulations thereunder.Interest earned on any such investment or on such bank deposit shall become a part of the Revenue of the Waterworks Utility of the City and need not be deposited in the Bond Fund,except that interest earned on any investment of money in the Principal and Interest Account for bonds having a mandatory call provision shall be retained in the Principal and Interest Account and used to call and redeem such bonds. - 21 - • I ·'. If the City shall fail to set aside and pay into the Bond Fund the amounts which it has obligated itself by this section to set aside and pay therein,the owner of any Bond may bring suit against the City to compel it to do so. The City Council 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 has not set aside into the Bond Fund a greater amount or proportion of the Revenue of the Waterworks Utility of the City than in its judgment will be available over and above the Operating and Maintenance Expenses and the debt service and reserve requirements for the presently outstanding Outstanding Parity Bonds and Prior Lien Bonds. Section 6.The Revenue of the Waterworks Utility and ULID Assessments are pledged to the payments required by this ordi- nance and the Outstanding Parity Bonds and the Bonds constitute a charge and lien upon such ULID Assessments and Revenue of the Waterworks Utility prior and superior to all other charges and liens whatsoever,excluding Operating and Maintenance Expenses payable out of such revenue,except that the charge and lien upon the Revenue of the Waterworks Utility for the Outstanding Parity Bonds and the Bonds shall be junior to the charge and lien upon such Revenue of the Waterworks Utility for the out- standing Prior Lien Bonds and the outstanding 1969 Bonds,Issue No.2,provision for the payment and retirement of which has been made irrevocably through the refunding operation authorized by Ordinance No.967,and shall be on a parity with the charge - 22 - \..... and lien upon the Revenue of the Waterworks Utility and ULID Assessments for any Future Parity Bonds. Section 1.The accrued interest received from the purchaser of the Bonds shall be deposited in the Bond Fund.The City shall use proceeds of the Bonds immediately upon their receipt to discharge the obligations of the City under Ordinance No. 1155 authorizing the issuance of the 1980 Bonds,and the obligations of the City under Ordinance No. 1403 authorizing the issuance of the 1984 Bonds by carrying out the Refunding Plan. The City shall discharge fully such obligations by the purchase of the Acquired Obligations,bearing such interest and maturing as to principal and interest in such amounts and at such time so as to provide,together with the beginning cash balance,for such payments.The Acquired Obligations are more particularly described and are set forth in Schedule A attached to the Refunding Trust Agreement,but are subject to substitution as set forth below. The Acquired Obligations and a beginning cash balance of $68.86 (which amount may be increased or decreased as required when the exact purchase price of the Acquired Obligations 1s ascertained)shall be deposited irrevocably with the Refunding Trustee.The City reserves the right to substitute other Government Obligations for any of the Acquired Obligations and to use any savings created thereby for any lawful Waterworks - 23 - ,.. Utility purpose if the City has obtained at its expense:(1)an independent verification by a nationally recognized independent certified public accounting firm acceptable to the Refunding Trustee concerning the adequacy of such substituted securities with respect to the principal of and the interest thereon and any other money or securities held for such purpose to pay the principal and interest on the outstanding Outstanding Refunded Parity Bonds,whether at maturity or upon the redemption thereof;and (2)an opinion of Roberts &Shefelman,the City'S bond counsel,that the interest on the Bonds will remain exempt from federal income taxation under Section 103(c)of the United States Internal Revenue Code of 1954,as amended,and applicable regulations thereunder,and if such substitution shall not impair the timely payment of the principal of or interest on the Outstanding Refunded Parity Bonds or the call,payment and redemption of the Outstanding Refunded Parity Bonds as set forth herein. Section 8.The City calls for redemption on December I, 1989,1980 Bonds Nos.129 to 144,inclusive,at a price of par plus accrued interest to the date of such redemption. The City calls for redemption on December I,1990,1980 Bonds Nos.145 to 160,inclusive,at a price of par plUS accrued interest to the date of such redemption. The City calls for redemption on December 1,1991,1980 Bonds Nos.161 to 428,inclusive,at a price of par plUS accrued interest to the date of such redemption. - 24 - ·. The City calls for redemption on June 1,1993,all of the outstanding 1984 Bonds maturing on December 1 of each of the years 2001 through 2004,inclusive,at a price of par plus accrued interest to the date of such redemption. Such calls for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser thereof. The City Finance Director and the Refunding Trustee are authorized and directed to give notice of the redemption of the 1980 Bonds and the 1984 Bonds as set forth above in accordance with the provisions of Ordinances Nos.1155 and 1403, respectively. The Refunding Trustee is authorized and directed to pay the principal of and interest on the Outstanding Refunded Parity Bonds as the same shall become due in accordance with the provisions of Ordinance No. 1155 and the 1980 Bonds and Ordi- nance No. 1403 and the 1984 Bonds,this ordinance,Chapter 39.53 RCW and other applicable statutes of the State of Washington. All necessary and proper fees,compensation and expenses of the Refunding Trustee for the Outstanding Refunded Parity Bonds and all other costs incidental to the establishment of the escrow to accomplish the refunding of the Outstanding Refunded Parity Bonds and costs related to the issuance and delivery of the Bonds,including bond printing,rating service fees,bond insurance premium,bond counsel's fees,and other related expenses shall be paid out of the proceeds of the Bond. - 25 - '..... The Mayor and City Clerk are directed to obtain from the Refunding Trustee the Refunding Trust Agreement setting forth the duties,obligations and responsibilities of the Refunding Trustee in connection with the payment,redemption and retire- ment of the Outstanding Refunded Parity Bonds as provided herein and stating that such permissions for the payment of the fees, compensation and expenses of such Refunding Trustee are satis- factory to it. In order to carry out the purposes of the preceding section of this ordinance,the Mayor and City Clerk are authorized and directed to execute the Refunding Trust Agreement. Section 9.Immediately upon the delivery of the Bonds,the Finance Director of the City is directed to credit the amount on deposit in the Reserve Account of the Bond Fund for the Out- standing Refunded Parity Bonds to the Reserve Account for the Bonds and to credit to the Principal and Interest Account on behalf of the Bonds any remaining funds on deposit in that account for the Outstanding Refunded Parity Bonds not utilized in the refunding provided for herein. Section 10.The City covenants with the owner of each of the Bonds as follows: (a)All surplus Revenue of the Waterworks Utility after payment of Operating and Maintenance Expenses,payment of principal of and interest on the outstanding Prior Lien Bonds and Outstanding Parity Bonds,the Bonds and any Future Parity Bonds here- after issued and required payments into the respec- tive bond redemption funds and reserve accounts therefor shall be used only for the following purposes and,after the payment and redemption of -26 - ,, all of the Outstanding Parity Bonds,in the following order of priority: (1)For purchasing necessary equipment, making necessary repairs or replacements to the Waterworks Utility and for other necessary capital improvements thereto. (2)For constructing and installing additions and improvements to and extensions of such Utility that are economically sound. (3)For redemption of outstanding bonds prior to their fixed maturities or purchasing the same in the open market for retirement only. (b)It will at all times maintain and keep the Waterworks Utility of the City and all additions and improvements thereto in good repair,working order and condition,and will at all times operate such Waterworks Utility and the business in connection therewith in an efficient manner and at a reasonable cost. (c)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 any Future Parity Bonds are out- standing which will provide amounts annually at least equal to 1.35 times the average annual debt service, including the principal of any Term Bonds,on the Prior Lien Bonds,the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds hereafter issued actually paid from such Revenue of the Waterworks Utility and not from ULID Assessments,after payment of Operating and Maintenance Expenses (herein called the aCoverage Requirement a).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 any 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 such issue.To simplify,where ULIDs are involved,only the debt service on that portion of any parity bond issue not covered by ULID Assessments shall be subject to the 35\Coverage Requirement. - 27 - ,.'I" (d)It will not sell,lease,mortgage or in any manner encumber or dispose of all the property of the Waterworks Utility of the City unless provision is made for payment into the Bond Fund of a sum suffi- cient to pay the principal of and interest on all bonds payable out of the Bond Fund at any time outstanding,and it will not sell,lease,mortgage or in any manner encumber or dispose of any part of the property of such Waterworks Utility of the City 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 of the Waterworks available for debt service for such outstanding bonds for the twelve months preceding such sale,lease.encumbrance or disposal from the portion of the Waterworks Utility sold,leased,encumbered or disposed of bears to the Revenue available for debt service for such bonds from the entire Waterworks Utility for the same period.Any such money so paid into the Bond Fund shall be used to retire such outstanding bonds at the earliest possible date. (e)It will,while any of the Bonds remains outstanding,keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to its Water- works Utility,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 such Waterworks Utility 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 such calendar year,and it will grant any owner or owners of at least 25\of the outstanding Bonds the right at all reasonable time to inspect the entire Waterworks Utility 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 such 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. - 28 - ..L • (f)It will not furnish water or sanitary sewage disposal to any customer whatsoever free of charge and will promptly take legal action to enforce collection of all delinquent accounts. (g)It will carry the types of insurance on the properties of the Waterworks Utility of the City in the amounts normally carried by private water and sewer companies engaged in the operation of water and sewerage systems,and the cost of such insurance shall be considered a part of Operating and Mainte- nance 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 such Utility on which such War Risk Insurance may be written in an amount or amounts to cover ade- quately the value thereof. (h)It will pay all Operating and Maintenance Expenses and otherwise meet the obligations of the City as herein set forth. (i)It will not create any special fund or funds for the payment of other revenue bonds, warrants or obligations,or authorize or issue any other revenue bonds,warrants or obligations which will rank on a parity with or have any priority over the payments into or the money in the Bond Fund, except that it reserves the right for: (1)The purpose of acquiring,constructing and installing additions and improvements to and extensions and betterments of,acquiring neces- sary equipment for or making necessary replace- ments of equipment or capital improvements to the Waterworks Utility of the City;or (2)The purpose of exchanging or purchas- ing and retiring prior to or at their maturity any outstanding water and sewer revenue bonds of the City; to issue additional and/or refunding water and sewer revenue bonds (herein defined as nFuture Parity Bonds·)and to make payments into the Bond Fund for the payment of such Future Parity Bonds from the Revenue of the Waterworks Utility of the City, together with ULID Assessments collected in any ULID hereafter created in connection with the issuance of such Future Parity Bonds sufficient to pay the -29 - -.. principal of and interest on such Future Parity Bonds,which such payments may rank equally out of such Revenue of the Waterworks Utility of the City and ULID Assessments collected in ULID Nos.1,2, 3, 4,5,6,7,Band 9 if the City complies with the same conditions as specified in subparagraph (i)of Section 9 of Ordinance No.967,which section by this reference is incorporated herein and made a part hereof,except that with respect to the issuance of Future Parity Bonds,all ULID Assessments in any ULID created in connection with the improvements to be financed from the proceeds of such Future Parity Bonds shall be paid into the Bond Fund,and also except that the certificate from an independent licensed professional engineer shall be on file within ninety days prior to the delivery of such Future Parity Bonds and that Net Revenue of the Waterworks Utility,adjusted as hereinafter provided (the RAdjusted Net RevenueR),together with ULID Assessments,will equal 1.35 times annual debt service.In determining whether the City is able to comply with the terms of the parity conditions,the following adjustments may be made to the historical Net Revenue of the Waterworks Utility for any twelve consecutive months out of the immediately preceding 24-month period: Any rate change that has taken place and is in effect at the time of delivery of such Future Parity Bonds may be considered as being in effect for the l2-month period; Revenue may be added for the 12-month period from the customers to be served by any improvements under construction at the time of delivery of such Future Parity Bonds if such customers are expected to be connected within thirty days,improvements which are to be constructed with the proceeds of the Future Parity Bonds and improvements completed and operational during the 12-month period;and Revenue may be added which would have been received if customers added to the Waterworks Utility during the l2-month period were customers for the full 12-month period. After the delivery to the initial purchaser of the Bonds or any Future Parity Bonds issued for refunding purposes,all ULID assessments pledged to the payment of bonds refunded and defeased by the -30 - ·. proceeds of such refunding bonds shall be paid into the Bond Fund. Nothing contained in this ordinance shall prevent the City from issuing revenue bonds or warrants which are a charge upon the Revenue of the Waterworks Utility of the City junior or inferior to the payments required to be made therefrom into the Bond Fund and the Reserve Account therein or from pledging the payment of utility local improvement district assessments into the bond redemption fund created for the payment of the principal of and interest on such junior lien bonds as long as such utility local improvement district assessments are levied for improvements constructed from the proceeds of such junior lien bonds. Nothing herein contained shall prevent the City from refunding all or part of the Bonds in accordance with the provisions of the Refunding Bond Act of the State of Washington (RCW Chapter 39.53)as the same may be amended,and it is expressly provided that any such refunding bonds so issued shall have the same lien upon the Revenue of the Waterworks Utility of the City and ULID Assessments as the Bonds being refunded. (j)It will not take or permit to be taken on its behalf any action which would adversely affect the exemption from federal income taxation of the interest on the Bonds and will take or require to be taken such acts as may reasonably be within its ability and as may from time to time be required under applicable law to continue the exemption from federal income taxation of the interest on the Bonds. It has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage certifications may not be relied upon. Section 11.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,both of whose signatures shall be in facsimile,and a - 31 - ,. facsimile reproduction of the seal of the City shall be printed thereon. Only such Bonds as shall bear thereon a Certificate of Authentication in the following form,manually executed 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 Marysville,Washington,Water and Sewer Revenue Refunding Bonds,1985,described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY Bond Registrar Authorized Officer Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been dUly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. In case either or both of the officers who shall have executed the Bonds shall cease to be such officer or officers of the City before the Bonds so signed shall have been authenti- cated or delivered by the Bond Registrar or issued by the City, such Bonds nevertheless may be authenticated,delivered and issued and upon such authentication,delivery and issue,shall be as binding upon the City as though those whose facsimile signatures appear on the Bonds had continued to be such officers of the City.Any Bond also may be signed on behalf of the City - 32 - ,. by such persons as at the actual date of execution of such Bond shall be proper officers of the City authorized to execute Bonds although on the original date of such Bond such persons were not such officers of the City. Section 12.The Bond Registrar shall keep,or cause to be kept,at its principal corporate trust office,sufficient books for the registration and transfer of the Bonds which shall at all times be open to inspection by the City. The Bond Registrar shall be responsible for its represen- tations 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 a member of,or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Upon the occurrence of an event of default which requires the Bond Insurer to make payments under the Bond Insurance Policy,the Bond Insurer shall be provided with access to the registration books of the City maintained by the Bond Registrar. Section 13.The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and 62A.8-105. Section 14.In the event the City shall issue advance refunding bonds pursuant to the laws of the State of Washington, or have money available from any other lawful source,to pay the principal of and interest on the Bonds or such portion thereof -33 - ..,. included in the refunding plan as the same become due and payable and to refund such then outstanding Bonds and to pay the costs of refunding.and shall have irrevocably set aside in a special fund for and pledged to such payment and refunding. money and/or direct obligations of the United States of America or other legal investments sufficient in amount.together with known earned income from the investment thereof.to make such payments and to accomplish the refunding as scheduled (herein- after called the atrust account a)and shall make irrevocable provision for redemption of such Bonds.then in that case all right and interest of the owners of the Bonds to be so retired or refunded (hereinafter collectively called the udefeased Bonds·)in the covenants of this ordinance.in the Revenue of the Waterworks Utility of the City,funds and accounts,includ- ing ULID Assessments.obligated to the payment of such Bonds thereafter shall cease and become void.except such owners shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account and,in the event the funds in the trust account are not available for such payment,shall have the residual right to receive payment of the principal of and interest on the defeased Bonds from the Revenue of the Waterworks Utility of the City and ULID Assess- ments without any priority of lien or charge against that Revenue and Assessments or covenants with respect thereto except to be paid therefrom.After the establishing and full funding of such trust account,the City may then apply any money in any - 34 - other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall deter- mine,subject only to the rights of the owners or holders of any other bonds then outstanding. In the event that the refunding plan provides that the Bonds being refunded or the refunding bonds to be issued be secured by cash and/or Government Obligations or other legal investments pending the prior redemption of those bonds being refunded and if such refunding plan also provides that certain cash and/or Government Obligations or other legal investments are pledged irrevocably for the prior redemption of those Bonds included in the refunding 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. Section 15.Harper,McLean &Company,of Seattle, Washington,has presented a purchase contract dated July 8,1985 (the -Purchase Contract-)to the City offering to purchase the Bonds under the terms and conditions provided in the Purchase Contract and to purchase on behalf of the City the Acquired Obligations at the prices specified in Schedule A of the Refunding Trust Agreement (subject to substitution),which -35 - written Purchase Contract is on file with the City Clerk and is incorporated herein by this reference.The City Council, finding that entering into the Purchase Contract is in the City's best interest,accepts such offer and authorizes the execution of the Purchase Contract by City officials. The Bonds will be printed at City expense and will be delivered to the purchaser in accordance with the Purchase Contract,with the approving legal opinion of Roberts & Shefelman,municipal bond counsel of Seattle,Washington, relative to the issuance of the Bonds,printed on each Bond. Bond counsel shall not be required to review or express any opinion concerning the completeness or accuracy of any official statement,offering circular or other sales material issued or used in connection with the Bonds and bond counsel's opinion shall so state. 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 16.Ordinance No. 1425 passed July 8,1985,is repealed. Section 17.This ordinance shall take effect and be in force five days after its passage,approval and legal publication. -36 - ....' PASSED by the City Council at a regular open pUblic meeting thereof and APPROVED by the Mayor this 22nd day of July,1985. CITY OF MARYSVILLE,WASHINGTON ATTEST: ~BOa~ty Clerk ' FORM APPROVED: ~~;n;~~ 0612m -37 - ·t • EXHIBIT A REFUNDING TRUST AGREEMENT THIS AGREEMENT made and entered into as of the first day of August,1985,by and between the CITY OF MARYSVILLE,WASHINGTON (the "City-),and RAINIER NATIONAL BANK,Seattle,Washington (the -Refunding Trustee-); WIT N E SSE T H: SECTION 1.Recitals.The City presently has outstanding the following bonds: (a)$1,820,000 total principal amount of Water and Sewer Revenue Bonds,1980 (the -1980 Bonds·) maturing in various amounts on December 1 of each of the years 1985 through 1988,inclusive, and in 2000,and bearing various interest rates from 10.50\to 10.75\;and (b)$247,000 total principal amount of Water and Sewer Revenue Bonds,1984 (the -1984 Bonds·) maturing in various amounts on December 1 of each of the years 2001 through 2004,inclusive, and bearing various interest rates from 11\to 11.25\, and,pursuant to Ordinance No.1428 (the -Refunding Bond Ordi- nance-),the City has determined to: (a)Pay the principal of and interest on the 1980 Bonds as the same shall become due up to and including their maturity dates or respective call dates as hereinafter provided;to call,pay and redeem on December 1,1989,1980 Bonds Nos. 129 to 144,inclusive,at a price of par;and to call,pay and redeem on December 1,1990,1980 Bonds Nos.145 to 160,inclusive,at a price of par;and to call,pay and redeem 1980 Bonds Nos. 161 to 428,inclusive,being all of the remain- ing outstanding 1980 Bonds,on December 1,1991, at a price of p~r;and (b)Pay the interest on the 1984 Bonds as the same shall become due up to and including June 1, .."," 1993,and,on June 1,1993,to call,pay and redeem all of the outstanding 1984 Bonds. (the -Refunding Plan-)out of the proceeds of the sale of its Water and Sewer Revenue Refunding Bonds,1985 (the -Refunding Bonds-). SECTION 2.Provisions for the Refunding Plan.To carry out the Refunding Plan,the City,simultaneously with the delivery of the Refunding Bonds issued pursuant to the Refunding Bond Ordinance,agrees to deposit irrevocably with the Refunding Trustee in trust for the security and benefit of the owners of the Outstanding Bonds and the Refunding Bonds,the sum of $68.86 in cash and certain Acquired Obligations with amounts,interest rates and maturities as more particularly set forth in Schedule A attached to this Agreement and by this reference incorporated herein,which securities hereinafter are referred to as AcqUired Obligations.Such cash and Acquired Obligations,with the investment income therefrom,will be sufficient to provide the funds required to carry out the Refunding Plan. The City reserves the right to substitute other direct United States obligations for any of the Acquired Obligations if,in the opinion of Roberts &Shefelman,the interest on the Refunding Bonds will remain exempt from federal income taxation under Section l03(c)of the Internal Revenue Code of 1954,as amended,and applicable regulations thereunder,and if such - 2 - ...." substitution shall not impair the timely payment of the amounts required to be paid under the Refunding Plan. SECTION 3.Provisions Applicable to Refunding.On or before the delivery of the Refunding Bonds,the City agrees that it will cause to be delivered to the Refunding Trustee a state- ment setting forth the amount of interest and principal to be paid on each semiannual interest and principal payment or call date in carrying out the Refunding Plan. In the Refunding Bond Ordinance,the City has called for redemption or prepayment all of the Outstanding Bonds to be called as above set forth on their call date.Such call for redemption or prepayment shall be irrevocable upon the delivery of the Refunding Bonds.The Refunding Trustee,in conjunction with the City Finance Director,shall provide for publication and mailing of the proper notices of such redemption or prepay- ments in accordance with the applicable provisions of Ordinance No. 1155 pertaining to the 1980 Bonds and Ordinance No. 1403 pertaining to the 1984 Bonds. Irrevocable provision for the giving of such notices of redemption or prepayment has been made by the City. SECTION 4.Disbursements by Refunding Trustee.The Refunding Trustee shall present for payment on the due date thereof the Acquired Obligations so deposited and shall apply the proceeds derived therefrom in accordance with the provisions of this section. - 3 - ,. Money shall be transferred by the Refunding Trustee to the City Finance Director.or to either fiscal agency of the State of Washington in Seattle.Washington.and New York.New York (the -Fiscal Agent-).in amounts sufficient to pay the interest on and principal of the Outstanding Bonds coming due and payable on or before each payment date. SECTION 5.Restrictions on Reinvestment of Funds;Custody and Safekeeping of Acquired Obligations.All money deposited with the Refunding Trustee or received by the Refunding Trustee as maturing principal or interest on Acquired Obligations prior to the time required to make the payments hereinbefore set forth shall be reinvested in United States Treasury Certificates of Indebtedness.Notes and/or Bonds --State and Local Government Series.bearing interest at a rate of 0\.Subscriptions for the purchase of such obligations shall be filed with the Federal Reserve Bank at least 20 days (but not more than 60 days)prior to the actual date of purchase.or at such time as may be required by the then applicable rules and regulations relating to the purchase of such obligations. All income derived from the Acquired Obligations and any money deposited with the Refunding Trustee pursuant to Section 2 hereof in the hands of the Refunding Trustee (which money is not required to make the payments hereinbefore required to be made) shall be paid to the City Finance Director or Fiscal Agent for the credit of the Water and Sewer Revenue Refunding Bond Fund. 1977.of the City (the -Bond Fund-)as and when realized and - 4 - .."..\,.,. collected for use and application as other money deposited in such Bond Fund. For as long as any of the Outstanding Bonds are outstand- ing,on or before the 10th day of every month,commencing with the month of September,1985,the Refunding Trustee shall render a statement as of the last day of the preceding month to the City,which statement shall set forth the Acquired Obligations which have matured and the amounts received by the Refunding Trustee by reason of such maturity;the investment income received from such Acquired Obligations;the dates of payment and amounts paid to the City or Fiscal Agent for the payments required to be made by the Refunding Plan;and any other trans- actions of the Refunding Trustee pertaining to its duties and obligations as set forth herein. All Acquired Obligations,money and investment income deposited with or received by the Refunding Trustee pursuant to this Agreement shall be subject to the trust created by this Agreement and the Refunding Trustee shall be liable for the preservation and safekeeping thereof. SECTION 6.Substituted Securities.Notwithstanding the foregoing or any other provision of this Agreement,at the request of the City and upon compliance with the conditions hereinafter stated,the Refunding Trustee shall have the power to and shall,in simultaneous transactions,sell,transfer, otherwise dispose of or request the redemption of any or all of the Acquired Obligations held hereunder and to substitute - 5 - .- ..~. • therefor direct obligations of the United States of America,or obligations the principal of and interest on which are uncondi- tionally guaranteed by the United States of America,subject to the conditions that such money or securities held by the Refund- ing Trustee shall be sufficient to pay the principal of and interest on the outstanding Outstanding Bonds,whether at maturity or upon the redemption thereof.The City covenants and agrees that it will not request the Refunding Trustee to exer- cise any of the powers described in the preceding sentence in any manner which will cause the Refunding Bonds to be arbitrage bonds within the meaning of Section 103(c)of the Internal Revenue Code of 1954,as amended,and the regulations thereunder in effect on the date of such request and applicable to obliga- tions issued on the issue date of the Refunding Bonds.The Refunding Trustee shall purchase such substituted securities with the proceeds derived from the maturity,sale,transfer, disposition or redemption of the Acquired Obligations held hereunder or from other money available.The transactions may be effected only if there shall have been obtained at the expense of the City:(1)an independent verification by a nationally recognized independent certified public accounting firm acceptable to the Refunding Trustee concerning the adequacy of such substituted securities with respect to the principal of and the interest thereon and any other money or securities held for such purpose to pay the principal and interest on the outstanding Outstanding Bonds,whether at maturity or upon the - 6 - ..~i.t· " redemption thereof;and (2)an opinion to the City from Roberts &Shefelman,bond counsel to the City,to the effect that the disposition and substitution or purchase of such securities will not,under the statutes,rules and regulations then in force and applicable to the Refunding Bonds,cause the interest on the Refunding Bonds not to be exempt from federal income taxation and that such disposition and substitution or purchase is not inconsistent with the statutes and regulations applicable to the Refunding Bonds.Any surplus money resulting from the sale, transfer,other disposition or redemption of the Acquired Obligations held hereunder and the substitution therefor of direct obligations of the United States of America,shall be released from the trust estate and shall be transferred to the City. SECTION 1.Duties and Obligations of Refunding Trustee. The duties and obligations of the Refunding Trustee shall be as prescribed by the provisions of this Agreement,and the Refund- ing Trustee shall not be liable except for the performance of its duties and obligations as specifically set forth herein and to act in good faith in the performance thereof and no implied duties or obligations shall be incurred by such Refunding Trustee other than those specified herein. The Refunding Trustee may consult with counsel of its choice (except as provided below)and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or not taken or suffered by it - 1 - -I,e.•... hereunder in good faith and in accordance with the opinion of such counsel.For any questions relating to the tax exempt status of the interest on the Outstanding Bonds or the Refunding Bonds,the Refunding Trustee must consult with Roberts & Shefelman,bond counsel to the City. Provisions for the fees,compensation and expenses of the Refunding Trustee satisfactory to it have been made. CITY OF MARYSVILLE,WASHINGTON RAINIER NATIONAL BANK By Trust Officer 0613m - 8 - ........... SCHEDULE A ACQUIRED OBLIGATIONS TYPE PAR AMOUNT INTEREST RATE LC $92,600.00 0.000 LC 14,600.00 0.000 LN 94,600.00 0.000 LN 10,400.00 0.000 LN 90,400.00 0.000 LN 6,200.00 0.000 LN 86,200.00 8.121 LN 5,500.00 9.200 LN 85,800.00 9.300 LN 5,500.00 9.400 LN 85,800.00 9.500 LN 5,700.00 9.650 LN 1,345,900.00 9.750 LN 1,300.00 9.850 LN 1,300.00 9.950 LN 248,300.00 9.990 *LC - SLGS Certificates of Indebtedness LN - SLGS Notes AFFIDAVIT OF PUBLICATION No._ STATE OF WASHINGTON, County of Snohomish, ss. _________~!~g.~__'tot~l:Hrt~~,being first duly sworn on oath deposes and says that he is the;...s.ec.r.eta.ry__._ of THE MARYSVILLE GLOBE, a weekly newspaper. That said newspaper is a legal newspaper which has been ap- proved by order of the Superior Court in Snohomish County June 18, 1962 in compliance with Chapter 213 of Washington Laws of 1941, and it is now and has been for more than six months prior to the date of the publication hereinafter re- ferred to, published in the English language continually as a weekly newspaper in Marysville, Snohomish County, Wash- ington, and it is now and during all of said time was printed in an office maintained at the aforesaid place of publication of said newspaper.That the annexed is a true copY'of a ______.!l:minanc.e...JlJJ±28 as it was published in regular issues (and not in supplement form)of said newspaper once each week for a period of _~!l~con- secutive weeks, commencing on the __2.!l-.tA_day of __c!~g__, 19__§.5,and ending on the ~~~!J._day of __iT.::J:.~_,19_~!_, both dates inclusive, and that such newspaper was regularly distributed to its subscribers during all of said period.That the full amount of the fee charged for the foregoing publi- cation is the sum of '_~..~51t._l..3.__,which amount has been paid in full ~__~_ Subscribed and sworn to before me this~_ dayOf_~~~~ Residing at MarySVille. -~--~~--------------- AFFIDAVIT OF PUBLICATION No._ STATE OF WASHINGTON, County of Snohomish, ss, _____.Lin.da_Wel>.s.:t..e.r.,being first duly swom on oath deposes and says that he is the_l;l~j:_z:~tl;:rY._ of THE MARYSVILLE GLOBE, a weekly newspaper. That said newspaper is a legal newspaper which has been a.p- proved by order of the Superior Court in Snohomish County June 18, 1962 in compliance with Chapter 213 of Washington Laws of 1941,and it is now and has been for more than six months prior to the date of the publication hereinafter re- ferred to, published in the English Ia.nguage continually as a weekly newspaper in Marysville, Snohomish County, Wash- ington,and it is now and during all of said time was printed in an office maintained at the aforesaid place of publieation of said newspaper.That the annexed is a true copY'of a _____9.1"..IiiJ:l~:nce_il]._4.~~--as it was published in regular issues (and not in supplement form)of said newspaper once each week for a period of __9p:"e con- secutive weeks, commencing on the __g~j;!J.__day of __c!~g __, 19J~5_,and ending on the g~~g_day of _~~L __,19_~?_, both dates inclusive, and that such newspaper was regularly distributed to its subscribers during all of said period.That the full amount of the fee charged for the foregoing publi- cation is the sum of '__~.J~.51t.'±:i_,which amount has been paid in full Subscribed and sworn to before me this ~(JL _ dayOL_~~va . ................. Notary Pu in and for the S of Washington. Residing at Marysville.