Loading...
HomeMy WebLinkAboutO-1911 - Bond issuance (Special)()--15m..L,?u,£- 1-;1)U/1 ,I<""",' CITY OF MARYSVILLE,WASHINGTON ORDINANCE NO.LI....:.'1....:.J-LI _ 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 $775,000 principal amount of Water and Sewer Revenue Bonds,1992,of the City for the purpose of providing the funds to pay part of the cost of carrying out the systems and plans of additions to and betterments and extensions of the waterworks utility of the city specified,adopted and ordered to be carried out by Ordinances Nos.937,1553 and 1635-A applicable to utility Local Improvement Districts Nos. 12, 13, 14,17 and 18 and to pay the costs of issuing the bonds;fixing the date,form,maturities,interest rates, terms and covenants of those bonds;and approving the sale and providing for the delivery of the bonds to Ragen Mackenzie 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 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 utility 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 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 0048763.02 -2- 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 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,were 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 0048763.02 -3- 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; "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: "(1)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 0048763.02 -4- 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 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 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 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 delivery of such Future Parity Bonds if such customers are expected to be 0048763.02 -5- 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 12-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 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 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 City 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 0048763.02 -6- 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 "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.967;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 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 0048763.02 -7- WHEREAS,pursuant to Ordinance No.1839 the City issued and sold $16,235,000 Water and Sewer Revenue and Refunding Bonds,1991 (the "1991 Bonds"),dated June 1,1991,to provide part of the funds to refund,pay and retire the outstanding 1979 Bonds,which 1991 Bonds were issued on a parity of lien with the 1977 Bonds,the 1985 Bonds,the 1986 Bonds and the 1987 Bonds pursuant to the provisions of section 9 of Ordinance No.967 and section 10 of Ordinance No.1428;and WHEREAS,by Ordinance No.1553,the City specified and adopted a plan and system of additions to and betterments and extensions of the Waterworks utility of the City and created utility Local Improvement District No.12 (ULID No.12)to carry out a portion of that plan;and WHEREAS,by Ordinance No.1899 the City Council confirmed the assessments and assessment roll in ULID No.12 in the total amount of $590,000;and WHEREAS,by Ordinance No.1635-A,the City specified and adopted a plan and system of additions to and betterments and extensions of the Waterworks utility of the City and created utility Local Improvement District No.13 (ULID No.13)to carry out a portion of that plan;and WHEREAS,by Ordinance No.1730 the City Council confirmed the assessments and assessment roll in ULID No.13 in the total amount of $99,000;and WHEREAS,by Ordinance No.937,the City specified and adopted a plan and system of additions to and betterments and extensions of the Waterworks utility of the City and,by Ordinance No.1694, 0048763.02 -8- created utility Local Improvement District No.14 (ULID No.14)to carry out a portion of that plan;and WHEREAS,by Ordinance No.1900 the City Council confirmed the assessments and assessment roll in ULID No.14 in the total amount of $185,000;and WHEREAS,by Ordinance No.1838 the City created utility Local Improvement District No.17 (ULID No.17)to carry out a portion of the plan and system of additions to and betterments and extensions of the City specified and adopted by Ordinance No.937;and WHEREAS,by Ordinance No.1901 the city Council confirmed the assessments and assessment roll in ULID No.17 in the total amount of $52,300.05;and WHEREAS,by Ordinance No.1858 the City created utility Local Improvement District No.18 (ULID No.18)to carry out a portion of the plan and system of additions to and betterments and extensions of the City specified and adopted by Ordinance No.937;and WHEREAS,by Ordinance No.1902 the city Council confirmed the assessments and assessment roll in ULID No.18 in the total amount of $36,500;and WHEREAS,the City has determined to issue the Bonds to provide the funds to pay part of the cost of carrying out the plans and systems of additions to and betterments and extensions of the Waterworks utility specified and adopted by Ordinance No.1553 relating to ULID No.12,by Ordinance No.1635-A relating to ULID No.13 and by Ordinance No.937 relating to ULIDs Nos.14,17 and 18,capitalize a portion of a reserve for the Bonds and pay the cost of issuance and sale of the Bonds;and 0048763.02 -9- Washington,has and conditions WHEREAS,Ragen Mackenzie Inc.of Seattle, offered to purchase the Bonds under the terms 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: "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. "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. "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,the 1991 Bonds and the Bonds. 0048763.02 -10- "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 $775,000 par value Water and Sewer Revenue Bonds,1992,of the City issued pursuant to and for the purposes provided in this ordinance. "1977 Bonds"means the outstanding Water and Sewer Revenue Refunding Bonds,1977,issued for the purposes provided in and pursuant to Ordinance No.967. "1985 Bonds"means the outstanding Water and Sewer Revenue Refunding Bonds,1985,issued for the purposes provided in and pursuant to Ordinance No.1428. "1986 Bonds"means the outstanding Water and Sewer Revenue Bonds,1986,issued for the purposes provided in and pursuant to Ordinance No.1459. "1987 Bonds"means the outstanding Water and Sewer Revenue Bonds,1987,issued for the purposes provided in and pursuant to Ordinance No.1578. "1991 Bonds"means the outstanding Water and Sewer Revenue and Refunding Bonds,1991,issued for the purposes provided in and pursuant to Ordinance No.1839. "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 0048763.02 -11- 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 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. "Net Revenue of the Waterworks utility"means Revenue of the Waterworks utility less Operating and Maintenance Expenses. "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 Parity Bonds"means the outstanding 1977 Bonds, 1985 Bonds,1986 Bonds,1987 Bonds and 1991 Bonds. "Plan and System"means,collectively,the plans of additions to and betterments and extensions of the Waterworks utility specified,adopted and ordered to be carried out by Ordinances Nos. 937,1553 and 1635-A. "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. 0048763.02 -12- "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. "Reserve Account"means the account of that name created in the Bond Fund for the purpose of securing the payment of the principal of and interest on the Outstanding Parity Bonds,the Bonds and 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 2012,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 0048763.02 -13- 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 additions thereto and betterments and extensions thereof at any time made. section 2.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 subparagraph (i)section 10 of Ordinance No.1428, together with ULID Assessments,will equal 1.35 annual debt service. (3)By section 11 of this ordinance,the assessments in ULIDs Nos.12, 13,14,17 and 18 are pledged to be paid into the Bond Fund and at least 95%of the principal amount of the Bonds is assessed against the properties within those ULIDs. section 3.Description of Bonds.For the purpose of providing the funds required to pay part of the cost of carrying out the Plan and Systems and to pay the costs of issuance of the Bonds,the city shall issue the Bonds in the aggregate principal amount of $775,000. The Bonds shall be dated October 15,1992;shall mature on December 1,2012;shall be in the denomination of $5,000 or any integral mu Lt.Lp I.e 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 0048763.02 -14- identification;and shall bear interest at the rate of 7.00%per annum (computed on the basis of a 360-day year of twelve 30-day months),payable on June 1,1993,and semiannually thereafter on each succeeding December 1 and June 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. section 4.Registration and Transfer of Bonds.The Bonds shall be issued only in registered form as to both principal and interest and recorded on 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 Bond Registrar shall not be obligated to exchange or transfer any Bond during the fifteen days preceding any principal payment or redemption date. section 5.Payment of Bonds.Both principal of and interest on the Bonds shall be payable in lawful money of the united states of America.Interest on the Bonds shall be paid by checks or 0048763.02 -15- 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 6.Optional and Mandatory Redemption;Open Market Purchase of Bonds.The City reserves the right and option to redeem the Bonds prior to their stated maturity dates,on December 1,2002,or on any interest payment date thereafter,as a whole,or in part (and by lot in such manner as the Bond Registrar shall determine),at par plus accrued interest to the date fixed for redemption. 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 7.Notice of Redemption.The city shall cause notice of any intended redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption by first-class mail,postage prepaid,to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice,and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided,whether or not it is actually received by the owner of any Bond.Interest on 0048763.02 -16- 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 Ragen Mackenzie Inc.at its principal office in Seattle, Washington,or its successor,and to such other persons 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 8.Failure to Redeem Bonds.If any Bond is not redeemed when properly presented at its maturity or call date,the city shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or call date until that Bond,both principal and interest,is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund and the Bond has been called for payment by giving notice of that call to the registered owner of each of those unpaid Bonds. section 9.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 0048763.02 -17- therein for the 1977 Bonds,Ordinance No.1428 for the 1985 Bonds, Ordinance No.1459 for the 1986 Bonds,Ordinance No.1578 for the 1987 Bonds and Ordinance No.1839 for the 1991 Bonds,certain fixed amounts without regard to any fixed proportion,namely,into the Principal and Interest Account (i)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 that interest payment date and,(ii)on or before December 1,2012,an amount,together with ULID Assessments paid into the Bond Fund and other money on deposit therein,sufficient to pay and redeem the Bonds on December 1,2012. There shall be deposited into the Reserve Account from the Revenue of the waterworks utility of the city and ULID Assessments on or before the 15th day of October of each year,commencing with the month of October,1992,an amount equal to 1/5 the difference between the Average Annual Debt Service on the outstanding outstanding Parity Bonds and the Average Annual Debt Service on the outstanding Outstanding Parity Bonds and the Bonds (the "Required Reserve Amount")until the total amount deposited in the Reserve Account is equal to that Required Reserve Amount,such amount to be accumulated therein by no later than October 15,1997. The Reserve Account shall be maintained in the Required Reserve Amount for 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 0048763.02 -18- principal and interest for a Ll.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 for all bonds payable out of the Bond Fund then outstanding and,after the redemption of all of the Outstanding Parity Bonds,the Reserve Account may be reduced at any time to an amount not less than the Average Annual Debt Service for the Bonds. In the event that there shall be a deficiency in the Principal and Interest Account in the Bond Fund to meet maturing installments of either principal or interest,as the case may be,that deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose.Any deficiency created in the Reserve Account by reason of any such withdrawal shall then be made up from the Revenue of the 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. 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 0048763,02 -19- subj ect 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 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 the debt service requirements of the Prior Lien Bonds 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 0048763.02 -20- 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 10.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 11.Covenants.The City covenants with the owner of each of the Bonds as follows: (a)All assessments hereafter collected in ULIDs Nos. 12, 13, 14,17 and 18 and any interest and penalties thereon are pledged to be paid into the Bond Fund. (b)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 repalrs or replacements to the Waterworks utility and for other necessary capital improvements thereto. 0048763.02 -21- 0048763.02 (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. (c)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. (d)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 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. (e)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 -22- 0048763.02 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. (f)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 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 times 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 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. (g)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. (h)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. (i)It will pay all Operating and Maintenance Expenses and otherwise meet the obligations of the city as herein set forth. (j)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 -23- 0048763.02 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 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; 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, 11, 12,13, 14,17 and 18 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 "Adjusted Net Revenue"),together with 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 Parity 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 delivery of such Future Parity Bonds if such customers are expected to be connected within thirty days,improvements which are to -24- 0048763.02 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 12-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 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 shall have the same lien upon the Revenue of the Waterworks utility of the city and ULID Assessments as the Bonds being refunded. (k)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 included in gross income for federal income tax purposes.The city also 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 City has elected to pay as an alternatiave 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. -25- 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 12.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 Bonds,1992,described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY Bond Registrar By Authorized Officer The authorized signing of a certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed,authenticated and delivered and are entitled to the benefits of this ordinance. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the city authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated 0048763.02 -26- 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 13.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 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 0048763.02 -27- as members of,or in any other capacity with respect to,any committee formed to protect the rights of Bond owners. section 14.The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and 62A.8-105. section 15.Advance Refunding or Defeasance of Bonds.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 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 utility,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. 0048763.02 -28- 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 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. section 16.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 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 purposes of that fund,except that earnings 0048763.02 -29- subject to a federal tax or rebate requirement may be withdrawn from the Construction Fund and used for those tax or rebate purposes. section 17.Approval of Bond Purchase Contract;Sale and Delivery of Bonds.Ragen Mackenzie 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 used in connection with the Bonds and bond counsel's opinion shall so state. section 18.Preliminary Official Statement Deemed Final.The City council has been provided with copies of a preliminary official statement dated October 15,1992 (the "Preliminary Official Statement"),prepared in connection with the sale of the Bonds.For the sole purpose of the Purchaser's compliance with 00<8763.02 -30- securities and Exchange Commission Rule 15c2-12(b)(I),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. Section19.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 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 18.Effective Date.This ordinance shall take effect and be in force five days after its passage,approval and legal pUblication. 0048763.02 -31- 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 19th day of October,1992. CITY OF MARYSVILLE,WASHINGTON By Mayor ATTEST: ~~CitY Clerk FORM APPROVED: city Attorney 0048763.02 -32-