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CITY OF MARYSVILLE,WASHINGTON
ORDINANCE NO.1839
AN ORDINANCE of the City of Marysville,
Washington,relating to the waterworks utility of the
Ci ty,including the system of sewerage as a part
thereof;specifying,adopting and ordering the
carrying out of a plan and system of additions to and
betterments and extensions of the waterworks utility;
providing for the issuance of $16,235,000 principal
amount of Water and Sewer Revenue and Refunding
Bonds,1991,of the City for the purpose of providing
the funds to pay part of the cost of carrying out
that plan and system,to call,pay and refund the
Ci ty's outstanding Water and Sewer Revenue Bonds,
1979,to pay and redeem the City's outstanding Water
and Sewer Revenue Bond Anticipation Notes,1988,to
capitalize a portion of a reserve for those bonds,
and to pay the costs of issuing the bonds;fixing the
date,form,maturities,interest rates,.t e rms and
covenants of those bonds;and approving the sale and
providing for the delivery of the bonds to Security
Pacific Securities,Inc.of Seattle,Washington.
CITY OF MARYSVILLE,WASHINGTON
ORDINANCE NO.1839
Table of Contents
Section
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Def ini t ions .
Adoption of 1989 Comprehensive Water Plan
and a Portion of the Comprehensive Sewer Plan .
Life of Plan and System and Estimated Cost .
Findings .
Description of Bonds .
Registration and Transfer of Bonds .
Payment of Bonds .
Optional and Mandatory Redemption;Open Market
Purchase of Bonds .
Notice of Redemption .
Failure to Redeem Bonds .
Payments into Bond Funds ·.
Lien Position .
Covenants .
Form and Execution of Bonds .
Bond Registrar .
....................................................
Advance Refunding or Defeasance of Bonds .
Calls for Redemption of the Outstanding Notes
and the 1979 Bonds .
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11
16
17
17
18
19
20
20
22
23
23
27
27
33
34
35
35
37
Section
19 Depos i t of Funds....................................38
20 Bond Insurance......................................39
21 Approval of Bond Purchase contract;Sale and
Delivery of Bonds...................................42
22 Temporary Bond.......... . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
23 Effective date......................................44
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CITY OF MARYSVILLE,WASHINGTON
ORDINANCE NO.1839
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;specifying,adopting and ordering the
carrying out of a plan and system of additions to and
betterments and extensions of the waterworks utility;
providing for the issuance of $16,235,000 principal
amount of Water and Sewer Revenue and Refunding
Bonds,1991,of the City for the purpose of providing
the funds to pay part of the cost of carrying out
that plan and system,to call,pay and refund the
Ci ty's outstanding Water and Sewer Revenue Bonds,
1979,to pay and redeem the City's outstanding Water
and Sewer Revenue Bond Anticipation Notes,1988,to
capitalize a portion of a reserve for those bonds,
and to pay the costs of issuing the bonds;fixing the
date,form,maturi ties,interest rates,terms and
covenants of those bonds;and approving the sale and
providing for the delivery of the bonds to Security
Pacific Securities,Inc.of Seattle,Washington.
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 matured
and been paid;and
WHEREAS,by Section 19 of Ordinance No.384,the City
reserved the right to issue additional water revenue bonds or
water and sewer revenue bonds in the event that the City should
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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,
including 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 are met and complied with at the
time of the issuance of such additional bonds;and
WHEREAS,the City by Ordinance No.385 combined the
sewerage system of the City with all additions and improvements
thereto with the waterworks uti li ty of the City,and the
sewerage 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 hereinafter shall 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,1965
Water and Sewer Revenue Bonds,1967
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Water and Sewer Revenue Bonds,1969
(collectively hereinafter called the
"Prior Lien Bonds"),and
Water and Sewer Revenue Bonds,1969,Issue No.2
(the "1969 Bonds,Issue No.2"),
all of which bonds,having been issued on a parity of lien with
each other,constitute a first and prior charge and lien on the
Revenue of the Waterworks utility of the City;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"),which 1975 Bonds
constitute a charge and lien on the Revenue of the Waterworks
utility of the City junior to the prior charge and lien upon
that Revenue for all of the Prior Lien Bonds but a first charge
and lien on 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
"1977 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 the 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
remaining outstanding 1969 Bonds,Issue No.2,on January 1,
1997,and (b)for the payment of (i)the principal of and
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interest on the 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 those bonds for payment and retirement on that date,
and (iii)the interest on 1975 Bonds numbered 175 to 214,
inclusive,being Term Bonds,as the same become due up through
their respective call dates,and the principal of those Term
Bonds as the same shall be called,paid and retired in
accordance with the call provisions applicable thereto as
provided in Ordinance No.873 and in those Term Bonds;and
WHEREAS,by subparagraph (i)of Section 9 of Ordinance No.
967 the City covenanted that:
"It 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
extensions and betterments of,acquiring necessary
equipment for or making necessary replacements of
equipment or capital improvements to the Waterworks
Utility of the City;or
"(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;
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"to issue additional and/or refunding water and sewer
revenue bonds (herein defined as 'Future 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
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.1,2,3
and 4 if the City complies with the following
conditions:
"(I)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;
"(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
interest requi rements on all Future Pari ty Bonds,
including the Refunding Bonds and the proposed Future
Parity Bonds to be issued,including in such amount
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the principal amount of any Term Bonds included in
the Future Parity Bonds issue";
and
WHEREAS,by subparagraph (i)of Section 10 of Ordinance
No.1428,the City modified the provisions of subparagraph (i)
of Section 9 of Ordinance 967 by providing the following:
"...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 "Adjusted Net Revenue"),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 l2-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 wi thin
thi rty days,improvements which are to be
constructed with the proceeds of the Future
Pari ty Bonds and improvements completed and
operational during the l2-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.
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"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
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 principa 1 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 (Chapter 39.53 RCW)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 . ..."
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 "1979 Bonds"),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 Ci ty issued
and sold $2,140,000 par value of Water and Sewer Revenue Bonds,
1980 (the "1980 Bonds"),dated December 1,1980,which 1980
Bonds were issued on a parity of lien with the 1977 Bonds and
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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 "1984 Bonds"),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,pursuant to Ordinance 1428,the City issued and
sold $2,315,000 par value of Water and Sewer Revenue Refunding
Bonds,1985 (the "1985 Bonds"),dated August 1,1985,to provide
a part of the funds to refund,pay and retire the outstanding
1980 Bonds and 1984 Bonds,which 1985 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.961;and
WHEREAS,pursuant to Ordinance No.1459,the City issued
and sold $3,260,000 par value Water and Sewer Revenue Bonds,
1986 (the "1986 Bonds"),dated April 1,1986,which 1986 Bonds
were issued on a parity of lien with the 1977 Bonds,the 1979
Bonds and the 1985 Bonds pursuant to the provisions of Section 9
of Ordinance No.967 and Section 10 of Ordinance No.1428;and
WHEREAS,pursuant to Ordinance No.1578 the City issued and
sold $698,261.31 par value Water and Sewer Revenue Bonds,1987
(the "1987 Bonds"),dated November 1,1987,which 1987 Bonds
were issued on a parity of lien with the 1977 Bonds,the 1979
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Bonds,the 1985 Bonds and the 1986 Bonds pursuant to the
provisions of Section 9 of Ordinance No.967 and Section 10 of
Ordinance No.1428;and
WHEREAS,by Ordinance No.1657,the City specified and
adopted a plan and system of additions to and betterments and
extensions of the Waterworks utility of the City,ordered the
carrying out of that plan and system contingent upon the City's
compliance with all applicable requirements of the State
Environmental Policy Act (which requirements have been complied
wi t h) ,authorized the issuance of $5,000,000 water and sewer
revenue bonds to pay part of the cost of carrying out that plan
and,pending the receipt of the proceeds of the issuance and
sale of those bonds,authorized and provided for the issuance
and sale of its $4,000,000 Water and Sewer Revenue Bond
Anticipation Notes,1988 (the "Outstanding Notes"),dated
December 15,1988,and maturing on December 1,1991;and
WHEREAS,the City by Ordinance No.1657 provided that the
Outstanding Notes may be redeemed on June 1,1990,and on the
first day of each succeeding month at a price of par plus
accrued interest;and
WHEREAS,by Resolution No.1415 adopted April 2,1990,the
City adopted the 1989 Comprehensive Water Plan Update,including
the amendments through March 29,1990,and has obtained all the.
requisite approvals;and
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WHEREAS,the City Council has determined it to be in the
best interest of the City to adopt a portion of the Sewer
Comprehensive Plan dated October,1990;and
WHEREAS,there are present ly outstanding $1,200,000 par
value of the 1979 Bonds maturing on December 1,1999,and
bearing interest at the rate of 8%per annum,payable on each
June 1 and December 1,which 1979 Bonds may be called for
redemption on any interest payment date at par plus accrued
interest;and
WHEREAS,after due consideration,it appears to the City
Council that the outstanding 1979 Bonds may be refunded by the
issuance and sale of the water and sewer revenue and refunding
bonds authorized herein (the "Bonds")so that a substantial
saving will be effected by the difference between the principal
and interest cost of the portion of the Bonds allocated to the
refunding and the principal and interest cost over the life of
the outstanding 1979 Bonds but for such refunding,which
refunding will be effected by:
(a)The issuance of the Bonds;and
(b)The call,payment and redemption on June 1,1991,of
all of the outstanding 1979 Bonds at a price of par
plus accrued interest;
and
WHEREAS,the City has determined to issue the Bonds to
provide the funds to pay part of the cost of carrying out the
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plan and system of additions to and betterments and extensions
of the Waterworks Utility specified and adopted by Section 2
herein,paying and redeeming the Outstanding Notes,effecting a
current refunding of the 1979 Bonds,capitalizing a portion of a
reserve for the Bonds and paying the cost of issuance and sale
of the Bonds;and
WHEREAS,Security Pacific Securities,Inc.of Seattle,
Washington,has offered to purchase the Bonds under 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)"Annual Debt Service"for the Bonds and any Future
Parity Bonds means,in any year,that year's total 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 those bonds.
(b)"Average Annual Debt Service"for the Bonds and
any Future Parity Bonds means,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.
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(c)"Bond Fund"means that special fund of the City
known as the Water 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 1985 Bonds,the 1986 Bonds,the 1987 Bonds and the
Bonds.
"Bond Insurer"means the Municipal Bond Investors Assurance
Corporation of Armonk,New York.
"Bond Registrar"means the fiscal agencies of the State of
Washington in Seattle,Washington,and New York,New York;as
the same may be designated from time to time.
"Bonds"means the $16,235,000 par value Water and Sewer
Revenue Bonds,1991,of the City issued pursuant to and for the
purposes provided in this ordinance.
"1977 Bonds"means the outstanding Water end Sewer Revenue
Refunding Bonds,1977,issued for the purposes provided in and
pursuant to Ordinance No.967.
"1979 Bonds"means the outstanding Water and Sewer Revenue
Bonds,1979,issued for the purposes provided in and pursuant to
Ordinance No.1088.
"1985 Bonds"means the outstanding Water and Sewer Revenue
Refunding Bonds,1985,issued for the purposes provided in and
pursuant to Ordinance No.1428.
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"1986 Bonds"means the $3,260,000 par value Water and Sewer
Revenue Refunding Bonds,1985,issued for the purposes provided
in and pursuant to Ordinance No.1459.
"1987 Bonds"means the $698,261.31 par value Water and Sewer
Revenue Bonds,1987,issued for the purposes provided in and
pursuant to Ordinance No.1578.
"City"means the City of Marysville,Washington.
"Future Parity Bonds"means 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 on
which constitutes a charge and lien on the Revenue
of the Waterworks utility of the City and ULID Assessments equal
in rank with the charge and lien upon that 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 Outstanding Parity Bonds and the Bonds.
"Government Obligations"means those government obligations
defined by RCW 39.53.010(9)as it now reads or hereafter may be
amended and which are otherwise lawful investments of the City
at the time of such investment.
"Municipal Bond Insurance Policy"means the policy issued
by the Bond Insurer insuring the payment of the principal of and
interest on the Bonds.
"Net Revenue of the Waterworks Uti Li,ty"means Revenue of
the Waterworks Utility less Operating and Maintenance Expenses.
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"Operating and Maintenance Expenses"means 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 depreciation or taxes
levied or imposed by the City.
"Outstanding Notes"means the City's outstanding Water and
Sewer Revenue Bond Anticipation Notes,1988.
"Outstanding Parity Bonds"means the outstanding 1977
Bonds,1985 Bonds,1986 Bonds and 1987 Bonds.
"Plan and System"means the plan of additions to and
betterments and extensions of the Waterworks utility specified,
adopted and ordered to be carried out by Section 2 of this
ordinance.
"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
Future Parity Bonds.
"Prior Lien Bonds"means the outstanding Water and Sewer
Revenue Bonds,1965,Water and Sewer Revenue Bonds,1967,and
Water and Sewer Revenue Bonds,1969.
"Refunding Plan"means the call,payment,both principal
and interest,and redemption of all of the outstanding 1979
Bonds on June 1,1991,at a price of par plus accrued interest.
"Reserve Account"means the account of that name created in
the Bond Fund for the purpose of securing the payment of the
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principal of and interest on the Outstanding Parity Bonds,the
Bonds and Future Parity Bonds.
"Revenue of the waterworks utility"means 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.
"Term Bond Maturity Year"means 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.
"Term Bonds"means,for the Bonds,the Bonds maturing in
the year 2011,and for Outstanding and Future Parity Bonds,
those outstanding bonds of any single issue or series scheduled
to mature in any Term Bond Maturity Year.
"ULID"means utility local improvement district.
"ULID Assessments"or "Assessments"mean the assessments
levied in those 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.
"Waterworks Utility"means the waterworks utility of the
City,including the sewerage system as a part thereof,and all
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additions thereto and betterments and extensions thereof at any
time made.
Section 2.Adoption of 1989 Comprehensive Water Plan and-a
Portion of the Comprehensive Sewer Plan.The City specifies and
adopts the 1989 Comprehensive Water Plan,as amended,as
approved by Resolution No.1415 adopted by the City Council on
April 2,1990,and specifies and adopts those portions of the
Sewer Comprehensive Plan dated October,1990,relating to the
Wastewater Treatment Plant improvements and outfall,and orders
the carrying out of the following portion of those plans (the
"Plan and System"):
(1)Construction of the Everett-Marysville Pipeline
Project;
(2)Construction of the Sunnyside 490 line;
(3)Construction of the Wastewater Treatment Plant
improvements and outfall,upon receipt'of all required
regulatory approvals and permits;
(4)Such other portions of those Comprehensive Plans as
the Ci ty Counci 1 may determine including,but not
limited to,construction of a reservoir.
There shall be included in the foregoing Plan and System
the acquisition and installation of all necessary valves,
fi ttings,couplings,connections,equipment and appurtenances,
the acquisition of any easements,rights-of-way and land that
may be required and the performance of such work as may be
incidental and necessary.
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The City Council may make or authorize such changes of
details or other changes in the Plan and System not
substantially altering the purposes thereof.
All the foregoing shall be in accordance with the plans and
specifications therefore prepared by Hammond,Collier &Wade -
Livingstone Associates,Inc.,the City's consulting engineers,
the City engineer,or such other consulting engineering firm as
may be retained by the City for that purpose.
Section 3.Life of Plan and System and Estimated Cost.
The life of the foregoing Plan and System is declared to be more
than 30 years.
The estimated cost of the acquisition,construction and
installation of the Plan and System is declared to be,as nearly
as may be,the amount of $12,950,000,which shall be paid from
the proceeds from the issuance and sale of the bonds authorized
by this ordinance and from any other funds of the City legally
available and to be used therefore.
Section 4.Findings.The City Council finds:
(1)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
payment of those water and sewer revenue bonds
and no deficiency exists therein;and
(2)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 Adjusted Net
Revenue of the Waterworks utility,as defined in
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subparagraph (i)Section 10 of Ordinance
No.1428,together with ULID Assessments,will
equal 1.35 Annual Debt Service on the Prior Lien
Bonds,the Outstanding Parity Bonds and the
Bonds.
(3)There are no ULIDs created in connection with
the improvements to be financed from a portion
of the proceeds of the Bonds.
Section 5.Description of Bonds.For the purpose of
providing the funds required to pay part of the cost of carrying
out the Plan and System,to pay the costs of carrying out the
Refunding Plan,to pay the cost of redeeming the Outstanding
Notes,to capitalize a portion of the reserve for the Bonds and
to pay the costs of issuance of the Bonds,the City shall issue
the Bonds in the aggregate principal amount of $16,235,000.
The Bonds shall be dated June 1,1991;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 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 1,1991,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 the Bond Fund and the amount of the Revenue of the
waterworks utility of the City and ULID Assessments pledged to
that fund and shall not be general obligations of the City.
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The Bonds shall bear interest at the rates and mature on
December 1 in years and amounts as follows:
Maturity Interest
Years Amounts Rates
1992 $275,000 5.00%
1993 295,000 5.25
1994 320,000 5.60
1995 350,000 5.80
1996 345,000 6.00
1997 400,000 6.15
1998 425,000 6.25
1999 485,000 6.35
2000 465,000 6.50
2001 595,000 6.60
2002 665,000 6.70
2003 735,000 6.80
2004 795,000 6.90
*******2011 10,085,000 7.00
Section 6.Registration and Transfer of Bonds.The Bonds
shall be issued only in registered form as to both principal and
interest and recorded on books or records maintained by the Bond
Registrar (the "Bond Register").The Bond 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
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Bond Registrar shall not be obligated to exchange or transfer
any Bond during the fifteen days preceding any principal payment
or redemption date.
section 7.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 on the interest payment date to the
registered owners at the addresses appearing on the Bond
Register on the fifteenth 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 8.Optional and Mandatory Redemption:Open Market
Purchase of Bonds.Bonds maturing in the years 1992 through
2003,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 1,2004,prior to their
stated maturity dates,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),on December 1,2003,or on any
interest payment date thereafter,at par plus accrued interest
to the date fixed for redemption.
- 20 -
Bonds maturing in the year 2011 are Term Bonds,and,if not
purchased in the open market or called for prior redemption
under the optional redemption provisions set forth above,shall
be called for redemption by lot (in such manner as the Bond
Registrar shall determine)at par plus accrued interest on
December 1 of the following years and in the following amounts:
Mandatory
Redemption Years
2005
2006
2007
2008
2009
2010
2011
Mandatory
Redemption Amounts
$835,000
905,000
1,515,000
1,640,000
1,740,000
1,710,000
1,740,000
Term Bonds previously redeemed by optional call or open market
.purchase shall be applied against the principal amount of Term
Bonds to be called on the latest mandatory redemption date of
Term Bonds then outstanding.
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 total principal
amount remaining unredeemed.
-21 -
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.
Section 9.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 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 Corporation at their offices in New
York,New York,or their successors,to Security Pacific
Securities,Inc.,at its principal office in Seattle,
Washington,or its successor,to the Bond Insurer at its
principal office in Armonk,New York,and to such other persons
- 22 -
and with such additional information as the City Finance
Director shall determine,but these additional mailings shall
not be a condition precedent to the redemption of Bonds.
Section 10.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
each of those unpaid Bonds.
Section 11.Payments into Bond Fund.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 and pay into the Bond Fund
all ULID Assessments 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,
Ordinance No.1428 for the 1985 Bonds,Ordinance No.1459 for
the 1986 Bonds and Ordinance No.1578 for the 1987 Bonds,
certain fixed amounts without regard to any fixed proportion,
namely,into the Principal and Interest Account at least 20 days
- 23 -
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:(i)the interest payable on
the Bonds on that interest payment date and,(ii)on or before
the first day of each month commencing with the month of
December,1991,1/12 of the next ensuing twelve months'
requirements for principal of or mandatory redemption
requirements for the Bonds.
There shall be deposited into the Reserve Account from the
proceeds of the Bonds an amount equal to 10%of the issue price
of the Bonds and from the Revenue of the Waterworks utility of
the City and ULID Assessments on or before the 20th day of May
of each year,commencing with the month of May,1992,an amount
equal to 1/5 the difference between the Average Annual Debt
Service on the Bonds and the amount deposited in the Reserve
Account from Bond proceeds until the total amount deposited in
the Reserve Account is equal to the Average Annual Debt Service
(the "Required Reserve Amount"),such amount to be accumulated
therein by no later than June 1,1996.
The Reserve Account shall be maintained in the Required
Reserve Amount for the outstanding Outstanding Parity Bonds and
for the Bonds,except for withdrawals therefrom as authorized
herein,at all times so long as any of the Bonds are
outstanding,except (1)that when the total amount in the Bond
Fund shall equal the total amount of principal and interest for
-24 -
all outstanding bonds payable out of the Bond Fund to the last
maturity thereof,no further payment need be made into the Bond
Fund,and (2)that the amount in the 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 sha 11 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
Waterworks Utility of the City and/or ULID Assessments 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 otherwise
shall be held intact and may be applied against the last
outstanding bonds payable out of the Bond Fund.
-25 -
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
148 of the United States Internal Revenue Code of 1986,as
amended,and applicable regulations thereunder.Interest earned
on any such investment or 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 any investment
earnings subject to a federal tax or rebate requirement shall be
withdrawn and used for those tax or rebate purposes and 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 those bonds.
If the City shall fail to set aside and pay into the Bond
Fund the amounts which it has obligated itself by this section
-26 -
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 12.Lien Position.The Revenue of the Waterworks
utility and ULID Assessments are pledged to the payments
required by this ordinance,and the Outstanding parity Bonds and
the Bonds constitute a charge and lien on those 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 that revenue,except that
the charge and lien on the Revenue of the Waterworks Utility for
the Outstanding parity Bonds and the Bonds shall be junior to
the charge and lien on that Revenue of the Waterworks utility
for the outstanding Prior Lien Bonds,and shall be on a parity
with the charge and lien on the Revenue of the Waterworks
utility and ULID Assessments for any Future Parity Bonds.
Section 13.Covenants.The City covenants with the owner
of each of the Bonds as follows:
-27 -
(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
hereafter issued and required payments into the
respective bond redemption funds and reserve accounts
therefor shall be used only for the following
purposes and,after the payment and redemption of
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
additions and improvements to and
such Utility that are economically
installing
extensions
sound.
of
(3)
prior to
the same
For redemption of outstanding bonds
their fixed maturities or purchasing
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
outstanding which will provide amounts annually at
least equal to 1.35 times Average Annual Debt Service
(including for this purpose the principal of any Term
Bonds due in any year)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 "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
-28 -
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 135%Coverage Requirement.
(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
sufficient 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 remain
outstanding,keep proper and separate accounts and
records in which complete and separate entries shall
be made of all transactions relating to its
Waterworks 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
-29 -
days after the close of such calendar year,and it
will grant any owner or owners of at least 25%of the
outstanding Bonds and the Bond Insurer the right at
all reasonable times to inspect the entire Waterworks
utility and all records,accounts and data of the
City relating thereto.It will furnish the Bond
Insurer and,upon request of any owner of any of such
Bonds,it also will 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.
(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
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 such Utility on which such War
Risk Insurance may be written in an amount or amounts
to cover adequately 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 wi 11 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
necessary equipment for or making necessary
replacements of equipment or capita 1
improvements to the Waterworks utility of the
City;or
-30 -
(2)The purpose of exchanging
purchasing and retiring prior to or at
maturity any outstanding water and sewer
bonds of the City;
or
their
revenue
to issue additional and/or refunding water and sewer
revenue bonds (herein defined as "Future 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
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.1,2,3,
4,5,6,7,8,9,10 and 11 if the City complies with
the same conditions as specified in subparagraph (i)
of Section 9 of Ordinance No.967,which section is
incorporated herein by reference,except that with
respect to the issuance of the Bonds and 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 "Adj usted Net Revenue"),together wi th ULID
Assessments,will equal 1.35 times Annual Debt
Service on the Prior Lien Bonds,the Outstanding
Parity Bonds,the Bonds and the Future Parity Bonds
proposed to be issued.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
Pari ty Bonds may be considered as being in
effect for the 12-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
-31 -
delivery of such Future Parity Bonds if such
customers are expected to be connected within
thi rty days,improvements which are to be
constructed with the proceeds of the Future
Parity Bonds and improvements completed and
operational during the l2-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 l2-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
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 (Chapter 39.53 RCW)as the same
may be amended,and it is expressly provided that any
such refunding bonds so issued sha 11 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 take all actions necessary to
prevent the 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 at any time during the term of the Bonds
which will cause the interest on the Bonds to be
- 32 -
included in gross income for federal income tax
purposes.The Ci ty a Lso covenants that,to the
extent arbitrage rebate requirements of Section 148
of the Internal Revenue Code of 1986,as amended (the
"Code"),are 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 District 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.
(k)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 14.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.
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
Marysville,Washington,Water and Sewer Revenue and
-33 -
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 15.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 at all times be open to inspection by the
-34 -
City.The Bond Registrar is authorized,on behalf of the City,
to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this ordinance,
to serve as the City's paying agent for the Bonds and to carry
out all of the Bond Registrar's powers and duties under this
ordinance and City Ordinance No.1405 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 16.The Bonds shall be negotiable instruments to
the extent provided by RCW 62A.8-102 and 62A.8-105.
Section 17.Advance Refundi~or Defeasance of B~.The
City may issue advance refunding bonds pursuant to the laws of
the State of Washington and use money available from any other
lawful source to pay the principal of and interest on the Bonds,
or such portion thereof included in a refunding or defeasance
plan,as the same become due and payable and to redeem and
retire,defease or refund all such then-outstanding Bonds
(hereinafter collectively called the "defeased Bonds")and to
-35 -
pay the costs of that refunding or defeasance.In the event
that money and/or Government Obligations sufficient in amount,
together with known earned income from the investments thereof,
to redeem and retire,defease or refund the defeased Bonds in
accordance with their terms,are set aside irrevocably in a
special fund or escrow account for and pledged irrevocably to
such redemption and retirement (hereinafter called the "trust
account"),then all right and interest of the owners of the
defeased Bonds in the covenants of this ordinance and,except as
hereinafter provided,in the Gross Revenue of the Waterworks
uti li ty,funds and accounts obligated to the payment of such
defeased Bonds,other than the right to receive the funds so set
aside and pledged,thereafter shall cease and become void.Such
owners thereafter shall have the right to receive payment of the
principal of and interest on the defeased Bonds from the trust
account.
After the establishing and full funding of the trust
account,the City then may apply any money in any other fund or
account established for the payment or redemption of the
defeased Bonds to any lawful purposes as it shall determine,
subject only to the rights of the owners of any other Bonds or
bonds then outstanding.
In the event that the refunding plan provides that the
defeased Bonds or the refunding bonds to be issued be secured by
money and/or Government Obligations pending the prior redemption
-36 -
of the defeased Bonds and if that refunding plan also provides
that certain money and/or Government Obligations are pledged
irrevocably for the prior redemption of the defeased Bonds
included in that 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 the Coverage Requirement
for the determination of compliance with rate covenants and for
the issuance of Future Parity Bonds.
In the event that 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 not be considered paid by
the City,and the covenants,agreements and other obligations of
the City to the registered owners shall continue to exist and
the Bond Insurer shall be subrogated to the rights of the
registered owners.
Section 18.Calls for Redemption of the Outstanding Notes
and the 1979 Bonds.The City calls for redemption on July 1,
1991,all of the Outstanding Notes Bt par plus accrued interest.
The City calls for redemption on June 1,1991,all of the
outstanding 1979 Bonds at par plus accrued interest.
Such calls for redemption shall be irrevocable after the
delivery of the Bonds to the initial purchaser thereof.The
date on which the Outstanding Notes and the 1979 Bonds are
-37 -
called for redemption is the next date on which those notes and
bonds may be called at a premium of 3%or less.
The proper city officials are authorized and directed to
give such notices as required at the times and in the manner
required by Ordinance No.1657 with respect to the Outstanding
Notes and Ordinance Nos.873 and 1088 with respect to the 1979
Bonds.
Section 19.Deposit of Funds.The accrued interest
received from the purchaser of the Bonds shall be deposited in
the principal and Interest Account of the Bond Fund.The
principal proceeds of the Bonds shall be deposited as follows:
1.$4,023,000 in the Water and Sewer Revenue Bond
Anticipation Note Fund,1988,to be held in trust by
Security Pacific Bank Washington NA,pursuant to an
agreement which appropriate City officials are
authorized to sign,and used on July 1,1991,to pay,
both principal and interest,and redeem the
Outstanding Notes;
2.$1,200,000 in the Bond Fund and used on June 3,
1991,to pay,both principal and interest,and redeem
the 1979 Bonds;
3.An amount equal to 10%of the issue price of the
Bonds in the Reserve Account as capitalized reserve
for the Bonds;and
4.The balance in the City's Utility Construction
Fund (the "Construction Fund")and used to pay the
costs of carrying out the Plan and System.
Until needed to pay the costs of these improvements and costs of
issuance of the Bonds,the City may invest principal proceeds
temporarily in any legal investment,and the investment earnings
may be retained in the Construction.Fund and spent for the
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purposes of that fund,except that earnings subject to a federal
tax or rebate requirement may be withdrawn from the Construction
Fund and used for those tax or rebate purposes.
The City covenants that all contributions received to pay
the costs of carrying out the Plan and System from the Public
utility District No.I of Snohomish County,Washington (the
"PUD")and the Tulalip Indian Tribe (the "Tribe")pursuant to
the Joint Operating Agreement between the PUD,the Tribe and the
City shall be deposited in the Construction Fund and used for
the purpose of paying part of those costs.
Section 20.Bond Insurance.The City Council finds that it
is in the City's best interest to purchase,and that a savings
will result from purchasing,the Municipal Bond Insurance Policy
for the Bonds.The City shall purchase from the Bond Insurer
the Municipal Bond Insurance Policy insuring the prompt payment
of the principal of and interest on the Bonds and agrees to the
conditions for obtaining that policy,including the payment of
the premium therefor and the following provisions entitled
"Payments under the Policy"required by the Bond Insurer to be
included in this ordinance:
"A.In the event that,on the second Business Day,and
again on the Business Day,prior to the payment date on the
Obligations,the Paying Agent has not received sufficient moneys
to pay all principal of and interest on the Obligations due on
the second following or following,as the case may be,Business
Day,the Paying Agent shall immediately notify the Insurer or
its designee on the same Business Day by telephone or telegraph,
confirmed in writing by registered or certified mail,of the
amount of the deficiency.
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"B.If the deficiency is made up in whole or in part prior
to or on the payment date,the Paying Agent shall so notify the
Insurer or its designee.
"c.In addition,if the paying Agent has notice that any
Bondholder has been required to disgorge payments of principal
or interest on the Obligation to a trustee in Bankruptcy or
creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes a voidable
preference to such Bondholder wi thin the meaning of any
applicable bankruptcy laws,then the Paying Agent shall notify
the Insurer or its designee of such fact by telephone or
telegraphic notice,confirmed in writing by registered or
certified mail.
"D.The paying Agent is hereby irrevocably designated,
appointed,directed and authorized to act as attorney-in-fact
for Holders of the Obligations as follows:
"1.If and to the extent there is a deficiency in
amounts required to pay interest on the Obligations,the
Paying Agent shall (a)execute and deliver to Citibank,
N.A.,or its successors under the Policy (the "Insurance
paying Agent"),in form satisfactory to the Insurance Paying
Agent,an instrument appointing the Insurer as agent for
such Holders in any legal proceeding related to the payment
of such interest and an assignment to the Insurer of the
claims for interest to which such deficiency relates and
which are paid by the Insurer,(b)receive as designee of
the respective Holders (and not as Paying Agent)in
accordance with the tenor of the Policy payment from the
Insurance Paying Agent wi th respect to the claims for
interest so assigned,and (c)disburse the same to such
respective Holders;and
"2.If and to the extent of a deficiency in amounts
required to pay principal of the Obligations,the Paying
Agent shall (a)execute and deliver to the Insurance paying
Agent in form satisfactory to the Insurance Paying Agent an
instrument appointing the Insurer as agent for such Holder
in any legal proceeding relating to the payment of such
principal and an assignment to the Insurer of any of the
Obligation surrendered to the Insurance Paying agent of so
much of the principal amount thereof as has not previously
been paid or for which moneys are not held by the Paying
Agent and available for such payment (but such assignment
shall be delivered only if payment from the Insurance Paying
Agent is received),(b)receive as designee of the
respective Holders (and not as Paying Agent)in accordance
wi th the tenor of the Policy payment therefor from the
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Insurance Paying Agent.and (c)disburse the same to such
Holders.
"E.Payments with respect to claims for interest on and
principal of Obligations disbursed by the Paying Agent from
proceeds of the Policy shall not be considered to discharge the
obligation of the Issuer with respect to such Obligations.and
the Insurer shall become the owner of such unpaid Obligations
and claims for the interest in accordance with the tenor of the
assignment made to it under the provisions of this subsection or
otherwise.
"F.Irrespective of whether any such assignment is executed
and delivered.the Issuer and the Paying Agent hereby agree for
the benefit of the Insurer that.
"1.They recognize that to the extent the Insurer
makes payments.directly or indirectly (as by paying through
the Paying Agent).on account of principal of or interest on
the Obligations.the Insurer will be subrogated to the
rights of such Holders to receive the amount of such
principal and interest from the Issuer.with interest
thereon as provided and solely from the sources stated in
this Indenture and the Obligations;and
"2.They will accordingly pay to the Insurer the
amount of such principal and interest (including principal
and interest recovered under subparagraph (ii)of the first
paragraph of the Policy.which principal and interest shall
be deemed past due and not to have been paid).with interest
thereon as provided in this ordinance and the Obligations.
but only from the sources and in the manner provided herein
for the payment of principal of and interest on the
Obligations to Holders.and will otherwise treat the Insurer
as the owner of such rights to the amount of such principal
and interest.
"G.In connection
Obligations.the Issuer
the disclosure document.
additional Obligations.
with the issuance of additional
shall deliver to the Insurer a copy of
if any.circulated with respect to such
"H.Copies of any amendments made to the documents executed
in connection with the issuance of the Obligations which are
consented to by the Insurer shall be sent to Standard &Poor's
Corporation.
"I.The Insurer shall receive notice of the resignation or
removal of the Paying Agent and the appointment of a successor
thereto.
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"J.The Insurer shall receive copies of all notices
required to be delivered to Bondholders and,on an annual basis,
copies of the Issuer's audited financial statements and Annual
Budget.
"Notices:Any notice that is required to be given to a
holder of the Obligation or to the Paying Agent pursuant to the
Indenture shall also be provided to the Insurer.All notices
required to be given to the Insurer under the Indenture shall be
in writing and shall be sent by registered or certified mail
addressed to Municipal Bond Investors Assurance Corporation,113
King Street,Armonk,New York 10504 Attention:Surveillance."
Section 21.Approval of Bond Purchase Contract:Sale and
Delivery of Bonds..Security Pacific Securities Inc.,of
Seattle,Washington,has presented a 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 Clerk and is incorporated herein by this
reference.The City Council,finding that entering into the
Bond Purchase Contract is in the City's best interest,accepts
that offer and authorizes the execution of the Bond Purchase
Contract 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,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
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used in connection with the Bonds and bond counsel's opinion
shall so state.
The City Counci 1 has been provided with copies of a
preliminary official statement dated May 10,1991 (the
"Preliminary Official Statement"),prepared in connection with
the sale of the Bonds.For the sole purpose of the Purchaser's
compliance with Securities and Exchange Commission
Rule lSc2-12 (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,amounts per maturity,
delivery dates,ratings and other terms of the Bonds dependent
on such matters.
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 22.Temporary Bond.Pending the printing,
execution and delivery to the purchaser of the definitive Bonds,
the City may cause to be executed and delivered to such
purchaser a single temporary Bond in the principal amount of the
Bonds.The temporary Bond shall bear the same date of issuance,
interest rates,principal payment dates and terms and covenants
of the definitive Bonds,and shall be issued as a fully
registered bond in the name of the purchaser,and shall be in
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such form as acceptable to the purchaser.The temporary Bond
shall be exchanged for the definitive Bonds as soon as the same
are printed,executed and available for delivery.
Section 23.Effecti ve Dat~.This ordinance shall take
effect and be in force five days after its passage,approval and
legal publication.
PASSED by the City Council at a special open public meeting
thereof,of which due notice was given as provided by law,and
APPROVED by the Mayor this 20th day of May,1991.
CITY OF MARYSVILLE,WASHINGTON
By
ATTEST:
FORM APPROVED:
~.[/~
City Attorney
MLC-1642"
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