HomeMy WebLinkAboutO-2583 - Bonds (Special)CITY OF MARYSVILLE,WASHINGTON
ORDINANCE NO.:;).5 l?3
AN ORDINANCE RELATING TO THE WATERWORKS UTILITY OF
THE CITY;PROVIDING FOR THE ISSUANCE OF WATER AND SEWER
REVENUE BONDS, 2005, IN THE PRINCIPAL AMOUNT OF $48,355,000
FOR THE PURPOSE OF PROVIDING THE FUNDS TO PAY COSTS OF
CARRYING OUT PARTS OF THE PLAN OF ADDITIONS ADOPTED AND
ORDERED TO BE CARRIED OUT BY ORDINANCE NO. 251I,TOGETHER
WITH PARTS OF THE MARYSVILLE CAPITAL FACILITIES PLAN 2004-
2009 ADOPTED BY ORDINANCE NO. 2508,COLLECTIVELY THE
PROJECTS,PREPAYING AND REDEEMING THE CITY'S OUTSTANDING
WATER AND SEWER REVENUE BOND ANTICIPATION NOTE, 2004, AND
PAYING THE COST OF ISSUING THE BONDS; FIXING THE DATE, FORM,
MATURITIES,INTEREST RATES, TERMS,INCLUDING FULLY FUNDING
THE RESERVE REQUIREMENT AND COVENANTS OF THE BONDS;
PROVIDING FOR BOND INSURANCE; AND APPROVING THE SALE AND
PROVIDING FOR THE DELIVERY OF THESE BONDS TO PIPER
JAFFRAY, INC. OF SEA TILE,WASHINGTON.
WHEREAS,by Ordinance No. 385, passed on September 2, 1952, the then Town of
Marysville,Washington, combined its water distribution system with its sewerage system to
create a Waterworks Utility of the Town; and
WHEREAS,by Ordinance No. 2245, passed on April 5, 1999, the now City of
Marysville,Washington (the "City")created and provided for the operation of a Surface Water
Utility; and
WHEREAS,by Ordinance No. 2509, passed March 22, 2004, the City combined its
Surface Water Utility with the Waterworks Utility of the City; and
WHEREAS,pursuant to Ordinance No. 1945, the City issued its $22,505,000 par value
Water and Sewer Refunding Revenue Bonds, 1993 (the "1993 Bonds"),for the purpose of
refunding all of the City's then outstanding revenue obligations pledged against the Gross
Revenue of the Waterworks Utility and ULID Assessments (as hereinafter defined),except the
City'S $800,000 par value Water and Drought Relief Revenue Bond, 1977, issued pursuant to
Ordinance No. 972, which bond has been paid and retired; and
WHEREAS,pursuant to Section 18 of Ordinance No. 1945, the City reserved the right to
issue water and sewer revenue bonds having a lien and charge on the Gross Revenue of the
Waterworks Utility and ULID Assessments on a parity with the lien and charge upon such Gross
Revenue and ULID Assessments of the 1993 Bonds for the payment of the principal thereof and
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interest thereon if the following conditions are met and complied with at the time of issuance of
those bonds:
"(a) There shall be no deficiency in the Bond Fund.
"(b) The ordinance providing for the issuance of the Future Parity
Bonds shall provide that all assessmentsand interest thereon that may be levied in
any UUD created for the purpose of paying, in whole or in part, the principal of
and interest on those Future Parity Bonds, shall be paid directly into the Bond
Fund, except for any prepaid assessments permitted by law to be paid into a
construction fund or account.
"(c) The ordinance providing for the issuance of such Future Parity
Bonds shall provide for the payment of the principal thereof and interest thereon
out of the Bond Fund.
"(d) The ordinance providing for the issuance of such Future Parity
Bonds shall provide for the deposit into the Reserve Account of (i) an amount
equal to the Reserve Requirement for those Future Parity Bonds from the Future
Parity Bond proceeds or other money legally available, or (ii) Reserve Insurance
or Alternate Security or an amount plus Reserve Insurance or Alternate Security
equal to the Reserve Requirement for those Future Parity Bonds, or (iii) to the
extent that the Reserve Requirement is not funded from Future Parity Bond
proceeds, other legally available money or Reserve Insurance or Alternate
Security at the time of issuance of those Future Parity Bonds, within five years
from the date of issue of the Future Parity Bonds from UUD Assessments,if any,
levied and first collected for the payment of the principal of and interest on those
Future Parity Bonds and, to the extent that UUD Assessments are insufficient,
then from the Net Revenue of the Waterworks Utility in five approximately equal
annual payments. No Reserve Insurance or Alternate Security may ire used to
satisfy the Reserve Requirement for Future Parity Bonds unless (i) the insurance
policy or Alternate Security is non-cancelable and (ii) the insurer or provider of
the Alternate Security as of the time of issuance of such insurance or Alternate
Security is rated in the highest rating categories by both Moody's Investors
Service, Inc., and Standard &Poor's Corporation.
"(e) The ordinance authorizing the issuance of such Future Parity
Bonds shall provide for the payment of mandatory redemption or sinking fund
requirements into the Bond Fund for any Term Bonds to be issued and for regular
payments to be made for the payment of the principal of such Term Bonds on or
before their maturity, or, as an alternative, the mandatory redemption of those
Term Bonds prior to their maturity date from money in the Principal and Interest
Account.
"(f)There shall be on file from a licensed professional engineer
experienced in the design, construction and operation of municipal utilities, or
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from an independent certified public accountant, a certificate showing that in his
or her professional opinion the Net Revenue of the Waterworks Utility for any 12
consecutive calendar months out of the immediately preceding 24 calendar
months shall be equal to the Coverage Requirement for each year thereafter. The
certificate, in estimating the Net Revenue of the Waterworks Utility available for
debt service, may adjust Net Revenue of the Waterworks Utility to reflect:
"(I) Any changes in rates in effect and being charged or
expressly committed by ordinanceto be made in the future;
"(2) Income derived from customers of the Waterworks
Utility who have become customers during the 12 consecutive
month period or thereafter adjusted to reflect one year's net
revenue from those customers;
"(3)
Waterworks
charges;
Income from any customers to be connected to the
Utility who have paid the required connection
"(4) The engineer's or accountant's estimate of the Net
Revenue of the Waterworks Utility to be derived from customers
anticipated to connect for whom building permits have been
issued;
"(5) Income received or to be received which is derived
from any person, firm, corporation or municipal corporation under
any executed contract for water, sewage disposal or other utility
service, which revenue was not included in the historical Net
Revenue of the Waterworks Utility;
"(6) The engineer's or accountant's estimate of the Net
Revenue of the Waterworks Utility to be derived from customers
with existing homes or buildings which will be required to connect
to any additions to and improvements and extensions of the
Waterworks Utility constructed and to be paid for out of the
proceeds of the sale of the additional Future Parity Bonds or other
additions to and improvements and extensions of the Waterworks
Utility then under construction and not fully connected to the
facilities of the Waterworks Utility when such additions,
improvements and extensions are completed;and
"(7) Any increases or decreases in Net Revenue as a
result of any actual or reasonably anticipated changes in
Maintenance and Operation Expense subsequent to the 12-month
period.
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"If Future Parity Bonds proposed to be so issued are for the sole purpose
of refunding outstanding bonds payable from the Bond Fund, such certification of
coverage shall not be required if the amount required for the payment of the
principal and interest in each year for the refunding bonds is not increased more
than $5,000 over the amount for that same year required for the bonds or the
portion of that bond issue to be refunded thereby and if the maturities of such
refunding bonds are not extended beyond the maturities of the bonds to be
refunded thereby.
"For purposes of preparing the engineer's or accountant's certificate,
Future Parity Bonds (including the Future Parity Bonds proposed to be issued)
that are Variable Interest Rate Bonds shall be assumed to bear interest at a fixed
rate equal to the higher of (I)the highest variable rate borne during the preceding
24 months by any outstanding variable rate water and sewer revenue bonds of the
Waterworks Utility of the City or, (2) if no such Variable Interest Rate Bonds are
outstanding at the time of calculation, the rate borne by other variable rate debt
the interest rate for which is determined by reference to an index comparable to
the index to be used to determine the interest rate on the Future Parity Bonds
proposed to be issued";
and
WHEREAS, pursuant to Ordinance No. 1995, passed June 27, 1994, the City provided
for the issuance and sale of $5,800,000 par value Water and Sewer Revenue Bonds, 1994 (the
"1994 Bonds"), which 1994 Bonds were issued under date of July I, 1994, and were issued on a
parity of lien and charge on the.Gross Revenue of the Waterworks Utility and UUD
Assessments with the 1993Bonds; and
WHEREAS, pursuant to Ordinance No. 2214, passed December 1,1998, the City
provided for the issuance and sale of $4,900,000par value Water and Sewer Revenue Refunding
Bonds, 1998 (the "1998 Bonds"), which 1998 Bonds were issued under date of December I,
1998, and were issued on a parity of lien and charge on the Gross Revenue of the Waterworks
Utility and UUD Assessments with the 1993Bonds and 1994Bonds; and
WHEREAS, pursuant to Ordinance No. 2511, passed April 12,2004,the City adopted
and ordered carried out a Plan of Additions (astherein and hereinafter defined) to its Waterworks
Utility and provided for the issuance and delivery of its not to exceed $30,000,000 par value
Water and Sewer Revenue Bond Anticipation Note, 2004 (the "Note"), which Note was dated
and delivered on April 29, 2004, and pledged to be repaid by proceeds of water and sewer
revenue bonds authorized therein; and
WHEREAS, pursuant to Ordinance No. 2530, passed June 22, 2004, the City provided
for the issuance and sale of $11,555,000 par value Water and Sewer Revenue Refunding Bonds,
2004 (the "2004 Bonds"), which 2004 Bonds were issued under date of July 27, 2004, and were
issued on a parity of lien and charge on the Gross Revenue of the Waterworks Utility and UUD
Assessments with the 1993Bonds, 1994Bonds and 1998Bonds; and
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WHEREAS, the City Council has determined that it is necessary and in the best interests
of the City that proceeds of the Bonds be used to pay (a) costs of carrying out parts of such Plan
of Additions, together with parts of the Marysville Capital Facilities Plan 2004-2009 adopted by
Ordinance No. 2508, passed March 8, 2004, collectively the Projects, (as hereinafter defined);
(b) the cost of repaying and redeeming the Note in a current refunding; and (c) costs of issuance
of the bonds, including fully funding the Reserve Requirement (as hereinafter defined); and
WHEREAS, MBIA Insurance Corporation of Armonk, New York ("Bond Insurer"), has
made a commitment to issue an insurance policy (the "Financial Guaranty Insurance Policy")
insuring the payment when due of the principal of and interest on the Bonds as provided therein,
and the City Council of the Citydeemsthat the purchase of the FinancialGuaranty InsurancePolicy
is in the best interest ofthe City;and
WHEREAS, Piper Jaffray Inc.of Seattle, Washington, has offered to purchase the Bonds
under the terms and conditions hereinafter set forth in the form of a bond purchase contract;
NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF MARYSVILLE, WASHINGTON, DO
ORDAIN as follows:
Section I. Definitions. As used in this ordinance the following words shall have the
following meanings:
"Alternate Security" means any bond insurance, collateral, security, letter of
credit, guaranty, surety bond or similar credit enhancement device providing for or securing the
payment of all or part of the principal of and interest on the Parity Bonds, issued by an institution
which has been assigned a credit rating at the time of issuance of the Parity Bonds secured by
such Alternate Security equal to or better than the highest then-existing rating for any of the
Parity Bonds.
"Annual Debt Service" for the applicable series of Parity Bonds for any year
means all the interest, plus all principal (except principal of Term Bonds due in any Term Bond
Maturity Year), plus all mandatory redemption sinking fund installments for that year, less all
bond interest payable from the proceeds of any such bonds in that year.
"Average Annual Debt Service" means the sum of the Annual Debt Service for
the remaining years to the last scheduled maturity of the applicable issue or issues of bonds
divided by the number of those years. For purposes of computing the Reserve Requirement the
estimated amount of bonds to be redeemed prior to maturity may be taken into account if
required under federal arbitrage regulations.
"Bond Fund" means that special fund of the City known as the Water and Sewer
Revenue Bond Fund, 1993, created by Ordinance No. 1945 for the payment of the principal of
and interest on the Parity Bonds.
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"Bond Insurer" means MBIA Insurance Corporation, a stock insurance company
incorporated under the laws of the State of New York, or any successor thereto or assignee thereof,
and for any Outstanding Parity Bonds any provider of bond insurance approved by the City Council
by ordinance.
"Bond Register" means the books or records maintained by the Bond Registrar on
which are recorded the names and addresses of the owners of each of the Bonds.
"Bond Registrar"means the Fiscal Agent.
"Bonds"means the $48,355,000 par value Water and Sewer Revenue Bonds,
2005,authorized to be issued by this ordinance.
"2004 Bonds" means the $11,555,000 par value Water and Sewer Revenue
Refunding Bonds, 2004, authorized to be issued by Ordinance No. 2530.
"1998 Bonds"means the $4,900,000 par value Water and Sewer Revenue
Refunding Bonds, 1998, authorized to be issued by Ordinance No. 2214.
"1993 Bonds" means the outstanding Water and Sewer Refunding Revenue
Bonds, 1993, issued for the purposes provided in and pursuant to Ordinance No. 1945.
"City"means the City of Marysville,Was.hington.
"Code"means the Internal Revenue Code of 1986, as amended, and applicable
rules and regulations promulgated thereunder.
"Coverage Requirement"in any year means an amount of Net Revenue of the
Waterworks Utility equal to at least 1.20 times an amount equal to the Annual Debt Service that
year on all Parity Bonds less the UUD Assessments due in that year and not delinquent.
"DTC"means The Depository Trust Company, New York, New York.
"Financial Guaranty Insurance Policy" shall mean the financial guaranty insurance
policy issued by the Bond Insurer insuring the payment when due of the principal of and interest on
the Bonds as provided therein.
"Fiscal Agent" meansthe fiscal agent of the State of Washington, as the same may
be designated from time to time.
"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 or lien on the Gross Revenue of the Waterworks Utility
and ULID Assessments equal in rank with the charge and lien upon such revenue and
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.
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"Government Obligations" means those government obligations defined by RCW
39.53.010(4) as now in effect or hereafter may be amended and which are otherwise Legal
Investments of the City at the time of such investment.
"Gross Revenue of the Waterworks Utility" or "Gross Revenue" means all of the
earnings and revenues received by the City from the maintenance and operation of the
Waterworks Utility and all earnings from the investment of money in the Bond Fund which
earnings are deposited in the Principal and Interest Account, and connection and capital
improvement charges collected for the purpose of defraying the cost of capital facilities of the
Waterworks Utility, except UUD Assessments, government grants, proceeds from the sale of
Waterworks Utility property, Citytaxes collected by or through the Waterworks Utility, principal
proceeds of bonds and earnings or proceeds from any investments in a trust, defeasance or
escrow fund created to defease or refund Waterworks Utility obligations (until commingled with
other earnings and revenues of the Waterworks Utility) or held in a special account for the
purpose of paying a rebate to the United States Government under the Code.
"Legal Investments" means any investments now or hereafter authorized for the
City under the laws of the State of Washington.
"Letter of Representations" means the Blanket Issuer Letter of Representations
dated November 14, 1997,between the City and DIC.
"Maintenance and Operation Expense" means all reasonable expenses incurred by
the City in causing the Waterworks Utility of the City to be operated and maintained in good
repair, working order and condition, including payments made to any other municipal
corporation or private entity for water service and for sewage treatment and disposal service or
other utility service in the event the City combines such service into the Waterworks Utility and
enters into a contract for such service, but not including any depreciation or taxes levied or
imposed by the City or payments to the City in lieu of taxes, or capital additions or capital
replacements to the Waterworks Utility.
"Maximum Annual Debt Service" means at the time of calculation, the maximum
amount of Annual Debt Service that will mature or come due in the current year or any future
year on the Parity Bonds then outstanding.
"Maximum Interest Rate" means, with respect to any Variable Interest Rate Bond,
a numerical rate of interest, set forth in the ordinance authorizing the Parity Bonds, that is the
maximum rate of interest those Parity Bonds may bear at any time.
"Net Revenue of the Waterworks Utility" or "Net Revenue" means the Gross
Revenue less Maintenance and OperationExpense.
"Note" means the City's outstanding not to exceed $30,000,000 Water and Sewer
Revenue Bond Anticipation Note, 2004, dated April 29, 2004, issued for the purposes provided
in and pursuant to OrdinanceNo. 2511.
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"Outstanding Parity Bonds" means the 1998 Bonds and 2004 Bonds.
"Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future
Parity Bonds.
"Plan of Additions" means the system or plan of additions to and betterments and
extensions of the Waterworks Utility specified, adopted and ordered to be carried out by
Ordinance No. 2511.
"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 Parity Bonds.
"Projects" means parts of the Plan of Additions, together with those parts of the
Marysville Capital Facilities Plan 2004-2009, adopted by Ordinance No. 2508 and referred to as
the Hiway 9 Reservoir and UGA Expansion Upgrades for Sewers in Planning Areas Nos. 4 and
6.
"Reserve Account" means the account of that name created in the Bond Fund for
the purpose of securing the payment of the principal of and interest on Parity Bonds.
"Reserve Insurance" means, in lieu of cash and investments, insurance obtained
by the City equal to part or all of the Reserve Requirement for any Parity Bonds then outstanding
for which such insurance is obtained.
"Reserve Requirement" means:
(I)For the Outstanding Parity Bonds and the Bonds, the amount of
$4,550,455.
(2) For any Future Parity Bonds, an amount equal to the difference
between the Reserve Requirement for the Parity Bonds then outstanding and the
least of (a) 10%of the issue price of the Parity Bonds then outstanding and the
Future Parity Bonds proposed to be issued,(b)Maximum Annual Debt Service on
the Parity Bonds then outstanding and the Future Parity Bonds proposed to be
issued; and (c) 1.25times Average Annual Debt Service on the Parity Bonds then
outstanding and the Future Parity Bonds proposed to be issued, but in no event to
exceed an amount equal to the least of 10%of the issue price of the proposed
Future Parity Bonds, Maximum Annual Debt Service on those bonds and 1.25
times Average Annual Debt Service on the proposed bonds. For the purposes of
determining Maximum Annual Debt Service and Average Annual Debt Service
for calculating the Reserve Requirement, all Parity Bonds shall be treated as a
single issue and the last scheduled maturity for any of those issues shall be used
as the denominator.
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For purposes of calculating the Reserve Requirement for Future Parity
Bonds (including any Future Parity Bonds proposed to be issued), Variable
Interest Rate Bonds shall be assumed to bear interest at a fixed rate equal to the
higher of (1) the highest variable rate borne during the preceding 24 months by
any outstanding variable rate water and sewer revenue bonds of the Waterworks
Utility of the City or, (2)if no such Variable Interest Rate Bonds are outstanding
at the time of calculation, the rate borne by other variable rate debt the interest
rate for which is determined by reference to an index comparable to the index to
be used to determine the interest rate on the Future Parity Bonds proposed to be
issued.
"Term Bond Maturity Year" means any calendar year in which Term Bonds are
scheduled to mature.
"Term Bonds" means those Parity Bonds designated as such in the ordinance
authorizing the issuance and sale of those bonds.
"UUD"means Utility Local Improvement District.
"UUD Assessments" means all assessments levied and collected in UUDs Nos. 1
through 15, inclusive, and 17 and 18, and any UUD of the City created for the acquisition or
construction of additions to and extensions and betterments of the Waterworks Utility if such
assessments are pledged to be paid into the Bond Fund (less any prepaid assessments permitted
by law to be paid into a construction fund or account).UUD Assessments shall include
installments thereof and any interest or penalties that may be due thereon.
"Variable Interest Rate" means a variable interest rate or rates to be borne by a
series of Future Parity Bonds or anyone or more maturities within a series of Future Parity
Bonds. The method of computing such a variable interest rate shall be specified in the ordinance
authorizing such Future Parity Bonds, which ordinance also shall specify either (i) the particular
period or periods of time or manner of determining such period or periods of time for which each
value of such variable interest rate shall remain in effect or (ii) the time or times upon which any
change in such variable interest rate shall become effective.
"Variable Interest Rate Bonds" means, for any period of time, Future Parity
Bonds which bear a Variable Interest Rate during that period, except that Future Parity Bonds the
interest rate or rates on which shall have been fixed for the remainder of the term thereof no
longer shall be deemed to be Variable Interest Rate Bonds.
"Waterworks Utility" means the waterworks utility of the City, including the
sewerage system and surface water utility, and water distribution system as parts thereof, and all
additions thereto and betterments and extensions thereof at any time made.
Section 2. Satisfaction of Parity Conditions. The City Council finds and declares that the
amounts required to have been paid into the Bond Fund for the Outstanding Parity Bonds have
been paid and maintained as required therein, and that all other conditions for the issuance of the
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Bonds as Future Parity Bonds under Section 18 of Ordinance No. 1945 will have been met and
satisfied before the Bonds are delivered to the original purchaser thereof.
Section 3. Authorization and Description of Bonds. For the purpose of paying costs of
carrying out the Plan of Additions, repaying and redeeming the Note and paying costs of
issuance of the Bonds, the City shall issue the Bonds in the principal amount of $48,355,000.
The Bonds shall be designated Water and Sewer Revenue Bonds, 2005; shall be dated their date
of initial delivery; 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 the purpose of identification; shall bear
interest (computed on the basis of a 360-day year of twelve 30-day months), payable
semiannually on each April 1 and October I, commencing October 1,2005, to the maturity or
earlier redemption of the Bonds; and shall mature on April I in years and amounts and bear
interest at the rates per annum as follows:
Maturity Interest
Years Amounts Rates
2013 $ 705,000
4.500%
2013 1,355,000 3.750
2014 2,145,000 4.000
2015 1,315,000 5.250
2015 925,000 4.000
2016 2,350,000 5.000
2017 2,450,000 5.125
2017 25,000 4.000
2018 2,555,000 5.000
2018 45,000 4.000
2019 2,710,000 5.000
2019 25,000 4.000
2020 2,875,000 5.000
2021 3,020,000 5.000
2022 3,175,000 5.000
2023 3,340,000 5.000
2024 3,095,000 5.000
2024 415,000 4.250
2025 3,675,000 4.400
2026 3,855,000 5.000
2027 4,050,000 5.000
2028 2,000,000 5.125
2028 2,250,000 4.375
Section 4. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and recorded on the Bond Register. The Bond
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.
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Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee.
The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal payment or redemption date.
The Bonds initially shall be registered in the name of CEDE &CO., as the nominee of
DIC.The Bonds so registered shall be held in fully immobilized form by DIC as depository in
accordance with the provisions of the Letter of Representations.Neither the City nor the Bond
Registrar shall have any responsibility or obligation to DIC participants or the persons for whom
they act as nominees with respect to the Bonds regarding accuracy of any records maintained by
DIC or DIC participants of any amount in respect of principal of or interest on the Bonds, or
any notice which is permitted or required to be given to registered owners hereunder (except
such notice as is required to be given by the Bond Registrar to DIC).
For so long as any Bonds are held in fully immobilized form,DIC or its successor
depository shall be deemed to be the registered owner for all purposes hereunder and all
references to registered owners, bondowners, bondholders or the like shall mean DIC or its
nominees and shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
any successor of DIC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds
are no longer held in immobilized form.
Upon the resignation of DIC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DIC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i)DIC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 5.Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money ofthe United States of America. Interest on the Bonds shall be paid by
checks or drafts mailed by the Bond Registrar on the interest payment date to the registered
owners at the addresses appearing on the Bond Register on the 15th 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.Notwithstanding the foregoing, as long as the Bonds are
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registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds
shall be made in the manner set forth in the Letter of Representations.
The Bonds shall be payable solely out of the Bond Fund and shall not be general
obligations of the City.
Section 6. Redemption and Open Market Purchase of Bonds. Bonds maturing in the
years 2013 through 2015, 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 Bonds maturing on or after April I, 2016, prior to their stated maturity dates on or after
April I, 2015, as a whole or in part at any time within one or more maturities selected by the City
(and randomly within a maturity in such manner as the Bond Registrar shall determine), at par
plus accrued interest to the date fixed for redemption.
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed.If less than all of the principal amount of any Bond is
redeemed, on 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 resolution in the aggregate principal amount remaining unredeemed.
The City further reserves the right and option to purchase any or all of the Bonds in the
open market at any time at any price acceptable to the City plus accrued interest to the date of
purchase.
All Bonds purchased or redeemed under this section shall be cancelled.
Notwithstanding the foregoing, for so long as the Bonds are registered in the name of
Cede &Co., as nominee of DTC, selection of Bonds for redemption shall be in accordance with
the Letter of Representations (as it may be changed).
Section 7. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be
redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by the owner of any
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 Piper Jaffray &Co., at its principal office in Seattle, Washington, or its successor, to the Bond
Insurer at its principal office in Armonk, New York, or its successor, and to such other persons
and with such additional information as the City shall determine, but these additional mailings
shall not be a condition precedent to the redemption of Bonds.Notwithstanding the foregoing,
for so long as the Bonds are registered in the name of Cede &Co., as nominee of DTC, notice of
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redemption shall be given in accordance with the Letter of Representations (as it may be
changed).
Section 8.Failure to Redeem Bonds.If any Bond is not redeemed when properly
presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at
the same rate provided in the Bond from and after its maturity or caii 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. 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,2005,described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENT
Bond Registrar
By
Authorized Signer
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 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.
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Section 10. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its
principal corporate trust office, sufficient books for the registration and transfer of the Bonds
which shall 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. 1405establishing 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 II.Bond Fund. The Bond Fund previously has been created in the office of the
City Finance Director and is divided into two accounts: the Principal and Interest Account and
the Reserve Account. So long as any Parity Bonds are outstanding against the Bond Fund, the
City shall set aside and pay into the Bond Fund all UUD Assessments on their collection and,
out of the Net Revenue of the Waterworks Utility (in addition to those amounts required for any
Outstanding Parity Bonds), certain fixed amounts without regard to any fixed proportion,
namely:
(a) Into the Principal and Interest Account on the 20th day of June,
2005, and each month thereafter to and including September, 2005, an amount,
together with other money on deposit therein, sufficient to pay the requirement on
the Bonds on October I, 2005, and thereafter, on the 20th day of each succeeding
month, an amount, together with other money on deposit therein, sufficient to pay
1/6 of the next ensuing interest requirement on the Bonds; and
(b)Into the Principal and Interest Account on the 20th day of April,
2012, and each month thereafter to and including March, 2013, 1/12 of the next
ensuing principal requirement on the Bonds; and
(c) Into the Reserve Account, on the date of issue, an amount of Bond
proceeds,if necessary, together with other money on deposit therein, sufficient to
fully fund the Reserve Requirement.
(c) Notwithstanding clauses (a) and (b)above, the deposit to be made
into the Reserve Account, and Reserve Requirement, each may be decreased for
any issue of Future Parity Bonds when and to the extent that the City has provided
for Reserve Insurance or Alternate Security.
Except for withdrawals therefrom as authorized herein, the Reserve Account shall be
maintained at the Reserve Requirement amount for all Parity Bonds at all times so long as any of
such bonds are outstanding. When the total amount in the Bond Fund shall equal the total
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amount of principal and interest for all outstanding Parity Bonds to the last maturity thereof, no
further payment need be made into the Bond Fund. Notwithstanding the first sentence of this
paragraph, the Reserve Requirement may be decreased for the Parity Bonds when and to the
extent the City has provided for an Alternate Security or Reserve Insurance.
If there is 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 UUD Assessment payments and the Net Revenue of the Waterworks Utility first
available after making necessary provisions 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 Parity Bonds, except that if the Reserve Account is fully
funded, any money in excess of the Reserve Requirement may be withdrawn and deposited in the
Principal and Interest Account and spent for the purpose of retiring Parity Bonds or may be
deposited in any other fund and spent for any other lawful Waterworks Utility purpose.
The City may provide for the purchase, redemption or defeasance of Parity Bonds by the
use of money on deposit in any account in the Bond Fund as long as the money remaining in
those accounts is sufficient to satisfy the required deposits in those accounts for the remaining
Parity Bonds.
All money in the Bond Fund may be kept in cash or invested in Legal Investments
maturing not later than the date when the funds are required for the payment of principal of or
interest on the outstanding Parity Bonds (for investments in the Principal and Interest Account)
or having a guaranteed redemption price prior to maturity and, in no event, maturing later than
the last maturity of any remaining outstanding Parity Bonds (for investments in the Reserve
Account). Earnings from investments in the Principal and Interest Account shall be deposited in
that account. Income from investments in the Reserve Account shall be deposited in that account
until the amount therein is equal to the Reserve Requirement for all Parity Bonds and thereafter
shall be deposited in the Principal and Interest Account.
The City may create sinking fund accounts or other accounts in the Bond Fund for the
payment or securing the payment of Parity Bonds as long as the maintenance of such accounts
does not conflict with the rights of the owners of Parity Bonds.
If the City fails to set aside and pay into the Bond Fund the amounts set forth above, the
owner of any of the outstanding Parity Bonds may bring action against the City and compel such
setting aside and payment.
Section 12. Finding as to Sufficiency of Revenue, Pledge of Revenue and Lien Position.
The City Council finds and determines that the Gross Revenue and benefits to be derived from
the operation and maintenance ofthe Waterworks Utility of the City at the rates to be charged for
water and sewer services from the Waterworks Utility will be more than sufficient to meet all
Maintenance and Operation Expense and to permit the setting aside into the Bond Fund out of
the Gross Revenue of amounts sufficient to pay the principal of and interest on the Outstanding
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Parity Bonds and the Bonds when due. The Net Revenue of the Waterworks Utility and UUD
Assessments are pledged to the payment of the Outstanding Parity Bonds, the Bonds and any
Future Parity Bonds, and the Outstanding Parity Bonds, the Bonds and those Future Parity
Bonds,if any, shall constitute a lien and charge upon such Net Revenue and UUD Assessments
prior and superior to any other charges whatsoever.
Section 13.Aoolication of Bond Proceeds. The purchaser shall wire at closing a
sufficient amount of bond proceeds necessary to pay the insurance premium amount to the Bond
Insurer.If necessary,principal proceeds of the Bonds shall be deposited in the Reserve Account
in an amount,together with other money on deposit therein,sufficient to fully fund the Reserve
Requirement. A sufficient amount of the proceeds of the Bonds will be deposited in the City's
Water and Sewer Revenue Bond Anticipation Note Fund, 2004 (Revolving Line of Credit) to
repay and redeem the Note. The Finance Director is authorized and directed to deposit into the
Utility Fund of the City the remaining proceeds of the Bonds to be used to carry out the Projects
and to pay costs of issuance of the Bonds.
Section 14. Covenants. The City covenants and agrees with the owner of each Bond at
any time outstanding,as follows:
(a) Maintenance and Operation.It will at all times maintain,preserve
and keep the properties of the Waterworks Utility in good repair, working order
and condition, will make all necessary and proper additions,betterments,
renewals and repairs thereto, and improvements,replacements and extensions
thereof, and will at all times operate or cause to be operated the properties of the
Waterworks Utility and the business in connection therewith in an efficient
manner and at a reasonable cost.
(b)Establishment and Collection of Rates and Charges.It will
establish,maintain and collect rates and charges for all services and facilities
provided by the Waterworks Utility which will be fair and nondiscriminatory,and
will adjust those rates and charges from time to time so that:
(1)The Gross Revenue of the Waterworks Utility will at all
times be sufficient to (i) pay all Maintenance and Operation Expense on a
current basis,(ii)pay when due all amounts that the City is obligated to
pay into the Bond Fund and the accounts therein, and (iii) pay all taxes,
assessments or other goverrunental charges lawfully imposed on the
Waterworks Utility or the revenue therefrom or payments in lieu thereof
and any and all other amounts which the City may now or hereafter
become obligated to pay from the Gross Revenue of the Waterworks
Utility by law or contract.
(2) The Net Revenue of the Waterworks Utility In each
calendar year will be at least equal to the Coverage Requirement.
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To the extent allowable by law, those to which service of the Waterworks Utility
is available will be charged for that service at the prevailing rate within 30 days of
the availability of that service..
(c) Sale or Disposition of the Waterworks Utility.It will not sell or
otherwise dispose of the Waterworks Utility in its entirety unless, simultaneously
with such sale or other disposition, all Parity Bonds are defeased under Section 18
of this ordinance.
It will not sell, lease, mortgage or in any manner encumber or otherwise
dispose of any part of the Waterworks Utility, including all additions and
improvements thereto and extensions thereof at any time made, that are used,
useful or material in the operation of the Waterworks Utility, unless provision is
made for the replacement thereof or for payment into the Bond Fund of the
greatest of the following:
(l)An amount which will be in the same proportion to the net
amount of Parity Bonds then outstanding (defined as the total amount of
the Parity Bonds less the amount of cash and investments in the Bond
Fund and accounts therein) that the Gross Revenue of the Waterworks
Utility from the portion of the Waterworks Utility sold or disposed of for
the preceding year bears to the total Gross Revenue of the Waterworks
Utility for that period; or
(2) An amount which will be in the same proportion to the net
amount of Parity Bonds then outstanding (as defined above) that the Net
Revenue from the portion of the Waterworks Utility sold or disposed of
for the preceding year bears to the total Net Revenue of the Waterworks
Utility for such period; or
(3) An amount which will be in the same proportion to the net
amount of Parity Bonds then outstanding (as defined above) that the
depreciated cost value of the facilities sold or disposed of bears to the
depreciated cost value of the entire Waterworks Utility immediately prior
to such sale or disposition.
Notwithstanding any other provision of this subsection, the City in its
discretion may sell or otherwise dispose of any of the works, plant, properties or
facilities of the Waterworks Utility or any real or personal property comprising a
part of the same which shall have become unserviceable, inadequate, obsolete or
unfit to be used in the operation of the Waterworks Utility, or no longer
necessary, material to or useful to the operation of the Waterworks Utility,
without making any deposit into the Bond Fund. In no event shall such proceeds
be treated as Gross Revenue of the Waterworks Utility for purposes of this
ordinance.
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(d) Liens Upon the Waterworks Utility.It will not at any time create
or permit to accrue or to exist any lien or other encumbrance or indebtedness upon
the Gross Revenue of the Waterworks Utility, or any part thereof,prior or
superior to the lien thereon for the payment of the Parity Bonds, and will pay and
discharge,or cause to be paid and discharged,any and all lawful claims for labor,
materials or supplies which,if unpaid, might become a lien or charge upon the
Gross Revenue of the Waterworks Utility, or any part thereof,prior to or superior
to the lien of the Parity Bonds, or which might impair the security of the Parity
Bonds.
(e) Books and Accounts.It will keep proper books,records and
accounts with respect to the operations,income and expenditures of the
Waterworks Utility in accordance with proper accounting procedures and any
applicable rules and regulations prescribed by the State of Washington.It will
prepare annual financial and operating statements within 90 days of the close of
each fiscal year showing in reasonable detail the financial condition of the
Waterworks Utility as of the close of the previous year, and the income and
expenses for such year,including the amounts paid into the Bond Fund and into
any and all special funds or accounts created pursuant to the provisions of this
ordinance,the status of all funds and accounts as of the end of such year, and the
amounts expended for maintenance,renewals,replacements and capital additions
to the Waterworks Utility. Such statements shall be sent to the owner of any
Parity Bonds upon written request therefor being made to the City.
(f)No Free Service. Except to aid the poor or infirm, to provide for
resource conservation or to provide for the proper handling of hazardous
materials,it will not furnish or supply or permit the furnishing or supplying of any
service or facility in connection with the operation of the Waterworks Utility free
of charge to any person, firm or corporation, public or private,other than the City,
so long as any Parity Bonds are outstanding.
(g)Collection of Delinquent Accounts. On at least an annual basis, it
will determine all accounts that are delinquent and will take all necessary action
to enforce payment of such accounts against those property owners whose
accounts are delinquent.
(h) Fire and Extended Coverage Insurance.It at all times will carry
fire and extended coverage and such other forms of insurance with responsible
insurers and with policies payable to the City on such of the buildings,equipment,
works,plants,facilities and properties ofthe Waterworks Utility as are ordinarily
carried by municipal or privately owned utilities engaged in the operation of like
systems, or will implement and maintain a self-insurance or an insurance pool
program with reserves adequate, in the reasonable judgment of the City, to protect
the Waterworks Utility and the owners of the Parity Bonds against loss.
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(i) Public Liability and Property Damage Insurance.It at all times
will keep or arrange to keep in full force and effect such policies of public
liability and property damage insurance with responsible insurers and with
policies payable to the City against such claims for damages as are ordinarily .
carried by municipal or privately owned utilities engaged in the operation of like
systems, or will implement and maintain a self-insurance or an insurance pool
program with reserves adequate, in the reasonablejudgment of the City Council,
to protect the Waterworks Utility and the owners of the Parity Bonds against loss.
Section 15. Flow of Funds. All UUD Assessments shall be paid into the Bond Fund as
provided by Section II.The Gross Revenue of the Waterworks Utility shall be used for the
following purposes only and shall be applied in the following order of priority:
(a) To pay the Maintenanceand OperationExpense;
(b) To pay the principal of and interest on the Parity Bonds as they
come due or as the principal is required to be paid and to make all payments
required to be made into any mandatory redemption or sinking fund account
created to provide for the payment ofthe principal of Term Bonds;
(c)
Account;
To make all payments required to be made into the Reserve
(d) To make all payments required to be made into any revenue bond,
note, warrant or other revenue obligation redemption fund, debt service account
or reserve account created to payor secure the payment of the principal of and
interest on any revenue bonds, notes, warrants or other obligations of the City
having a lien upon the revenue of the WaterworksUtilityjunior and inferior to the
lien thereon for the payment of the principal of and interest on the Parity Bonds;
and
(e) To retire by redemption or purchase in the open market any
outstanding revenue bonds or other revenue obligations of the Waterworks
Utility, to make necessary additional betterments, improvements and repairs to or
extensions and replacements of the Waterworks Utility, or for any other lawful
Waterworks Utility purposes.
The City may transfer any money from any funds or accounts of the Waterworks Utility
legally available therefor, except bond redemption funds, refunding escrow funds or defeasance
funds, to meet the required payments to be made intothe Bond Fund.
Section 16. Provisions for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the conditions set forth in Section 18 of Ordinance No. 1945, which
section by this reference is incorporated herein and made a part hereof, are met and complied
with at the time of the issuanceof those Future Parity Bonds.
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Nothing contained herein shall prevent the City from issuing revenue bonds that are a
charge upon the Gross Revenue of the Waterworks Utility of the City subordinate to the
payments required to be made therefrom into the Bond Fund for the payment of Parity Bonds or
from pledging the payment of utility local improvement district assessments into a bond
redemption fund created for the payment of the principal of and interest on those junior lien
bonds as long as such utility local improvement district assessments are levied for improvements
constructed from the proceeds of those junior lien bonds.
Section 17. Preservation of Tax Exemption for Interest on Bonds. The City covenants
that it will take all actions necessary to prevent interest on the Bonds from being included in
gross income for federal income tax purposes, and it will neither take any action nor make or
permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the
Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirement of Section 148 of the Code is applicable to the Bonds,
take all actions necessary to comply (or to be treated as having complied) with that requirement
in connection with the Bonds, including the calculation and payment of any penalties that the
City has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of
any other penalties if required under Section 148 of the Code to prevent interest on the Bonds
from being included in gross income for federal income tax purposes. The City certifies that it
has not been notified of any listing or proposed listing by the Internal Revenue Service to the
effect that it is a bond issuer whose arbitrage certifications may not be relied upon.
Section 18. Refunding or Defeasance of Bonds. The City may issue refunding bonds
pursuant to the laws of the State of Washington or use money available from any other lawful
source to pay when due the principal of and interest on the Bonds, or such portion thereof
included in a refunding or defeasance plan, and to redeem and retire, release, refund or defease
all such then-outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay
the costs of such refunding or defeasance. If money and/or Government Obligations sufficient in
amount, together with known earned income from the investments thereof, to redeem and retire,
release, refund or defease the defeased Bonds in accordance with their terms, are set aside in a
special trust fund or escrow account irrevocably pledged to that redemption, retirement or
defeasance of defeased Bonds (hereinafter called the "trust account"), then all right and interest
of the owners of the defeased Bonds in the covenants of this ordinance and in the Gross Revenue
of the Waterworks Utility,UUD Assessments, funds and accounts obligated to the payment of
the 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. The City shall include
in the refunding or defeasance plan such provisions as the City deems necessary for the random
selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds,
for notice of the defeasance to be given to the owners of the defeased Bonds and to such other
persons as the City shall determine, and for any required replacement of Bond certificates for
defeased Bonds.
After the establishing and full funding of such a trust account, the City then may apply
any money in any other fund or account established for the payment or redemption of the
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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.
If 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 such 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 issuance of Future Parity Bonds
and the annual computation of coverage for determining compliance with the rate covenants.
Notwithstanding anything in this section to the contrary,if the principal of and/or interest
due on the Bonds is paid by the Bond Insurerpursuantto the Financial Guaranty Insurance Policy,
the Bonds shallbetreated asremainingoutstandingforall purposesand shallnot be consideredpaid
bythe City,and the covenants,agreementsand otherobligations ofthe Cityto the registeredowners
of the Bonds shall continueto exist andrun to the benefit of the BondInsurer,and the Bond Insurer
shallbe subrogatedto the rights of the registeredowners.
Section 19. Approval of Bond Purchase Contract. Piper Jaffray 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 finds that entering into the Bond
Purchase Contract is in the City's best interest and therefore accepts the offer contained therein
and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster
Pepper &Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the
Bonds delivered with the Bonds.
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 20. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated May 2, 2005 (the "Preliminary
Official Statement"), prepared in connection with the sale of the Bonds. For the sole purpose of
the Bond purchaser's compliance with Securities and Exchange Commission ("SEC") Rule l5c2-
12(b)(l),the City "deems final" that Preliminary Official Statement as of its date, except for the
omission of information as to offering prices, interest rates, selling compensation, aggregate
principal amount, principal amount per maturity, maturity dates, options of redemption, delivery
dates, ratings and other terms of the Bonds dependent on such matters.
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Section 21.Undertaking to Provide Continuing Disclosure.To meet the requirements of
SEC Rule 15c2-12(b)(5)(the "Rule"),as applicable to a participating underwriter for the Bonds,
the City makes the following written undertaking (the "Undertaking")for the benefit of holders
of the Bonds:
(a)Undertaking to Provide Annual Financial Information and Notice
of Material Events.The City undertakes to provide or cause to be provided,either
directly or through a designated agent:
(i) To each nationally recognized municipal secuntJes
information repository designated by the SEC in accordance with the Rule
("NRMSIR")and to a state information depository,if any,established in
the State of Washington (the "SID")annual financial information and
operating data of the type included in the final official statement for the
Bonds and described in subsection (b)of this section ("annual financial
information");
(ii) To each NRMSIR or the Municipal Securities Rulemaking
Board ("MSRB"),and to the SID,timely notice of the occurrence of any
of the following events with respect to the Bonds,if material:(1)principal
and interest payment delinquencies;(2)non-payment related defaults;(3)
unscheduled draws on debt service reserves reflecting financial
difficulties;(4)unscheduled draws on credit enhancements reflecting
financial difficulties;(5)substitution of credit or liquidity providers,or
their failure to perform;(6)adverse tax opinions or events affecting the
tax-exempt status of the Bonds;(7)modifications to rights of holders of
the Bonds;(8)Bond calls (other than scheduled mandatory redemptions of
Term Bonds);(9)defeasances;(10)release,substitution,or sale of
property securing repayment of the Bonds; and (II)rating changes;and
(iii) To each NRMSIR or to the MSRB,and to the SID,timely
notice of a failure by the City to provide required annual financial
information on or before the date specified in subsection (b)of this
section.
(b) Type of Annual Financial Information Undertaken to be Provided.
The annual financial information that the City undertakes to provide in subsection
(a)of this section:
(i) Shall consist of (I)annual financial statements prepared
(except as noted in the financial statements)in accordance with applicable
generally accepted accounting principles applicable to governmental units, as
such principles may be changed from time to time and in conformity with
state law and regulations pertaining to cities, which statements shall not be
audited except, however, that if and when audited financial statements are
otherwise prepared and available to the City they will be provided;(2) a
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statement of authorized, issued and outstanding bonded debt secured by the
Gross Revenue of the Waterworks Utility, (3) debt service coverage ratios,
and (4) general customer statistics for the Water Utility and the Wastewater
Utility;
(ii) Shall be provided to each NRMSIR and the SID, not later
than the last day of the ninth month after the end of each fiscal year of the
City (currently, a fiscal year ending December 31), as such fiscal year
may be changed as required or permitted by State law,commencing with
the City's fiscal year ending December 31, 2005; and
(iii) May be provided in a single or multiple documents,and
may be incorporated by reference to other documents that have been filed
with each NRMSIR and the SID, or,if the document incorporated by
reference is a "final official statement"with respect to other obligations of
the City, that has been filed with the MSRB.
(c)Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any
holder of any Bond, or of any broker, dealer, municipal securities dealer,
participating underwriter,rating agency,NRMSIR,the SID or the MSRB, under
the circumstances and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID,of
the substance (or provide a copy)of any amendment to the Undertaking and a
brief statement of the reasons for the amendment.If the amendment changes the
type of annual financial information to be provided, the annual financial
information containing the amended financial information will include a narrative
explanation of the effect of that change on the type of information to be provided.
(d)Beneficiaries.The Undertaking evidenced by this section shall
inure to the benefit of the City and any holder of Bonds, and shall not inure to the
benefit of or create any rights in any other person.
(e)Termination of Undertaking.The City's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In
addition,the City's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the City to comply with this Undertaking
become legally inapplicable in respect of the Bonds for any reason, as confirmed
by an opinion of nationally recognized bond counselor other counsel familiar
with federal securities laws delivered to the City, and the City provides timely
notice of such termination to each NRMSIR or the MSRB and the SID.
(f)Remedy for Failure to Comply with Undertaking.As soon as
practicable after the City learns of any failure to comply with the Undertaking,the
City will proceed with due diligence to cause such noncompliance to be corrected.
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No failure by the City or other obligated person to comply with the Undertaking
shall constitute a default in respect of the Bonds. The sole remedy of any holder
of a Bond shall be to take such actions as that holder deems necessary,including
seeking an order of specific performance from an appropriate court, to compel the
City or other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking.
The Finance Director of the City (or such other officer of the City who may in the
future perform the duties of the Finance Director) or his or her designee is
authorized and directed in his or her discretion to take such further actions as may
be necessary, appropriate or convenient to carry out the Undertaking of the City in
respect of the Bonds set forth in this section and in accordance with the Rule,
including, without limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
(ii) Determining whether any event specified in subsection (a)
has occurred, assessing its materiality with respect to the Bonds, and,if
material, preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the
Bonds, and obtaining from such person an undertaking to provide any
annual financial information and notice of material events for that person
in accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents
and consultants, including but not limited to financial advisors and legal
counsel, to assist and advise the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 22. Amendatory and Supplemental Ordinances.
(a) This ordinance shall not be modified or amended in any respect
subsequent to the initial issuance of the Bonds, except as provided in and in accordance with and
subject to the provisions of this section.
(b) The City, from time to time, and at any time, without the consent of or
notice to the registered owners of the Bonds, may pass supplemental or amendatory ordinances
as follows:
(1) To cure any formal defect, omission,inconsistency or ambiguity in
this ordinance in a manner not adverse to the owner of any Outstanding Parity Bonds,Bonds or
Future Parity Bonds;
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50492919.03
(2) To impose upon the Bond Registrar (with its consent)for the
benefit of the registered owners of the Bonds any additional rights, remedies, powers,authority,
security,liabilities or duties which may lawfully be granted,conferred or imposed and which are
not contrary to or inconsistent with this ordinance as theretofore in effect;
(3) To add to the covenants and agreements of, and limitations and
restnctions upon, the City in this ordinance, other covenants,agreements,limitations and
restrictions to be observed by the City which are not contrary or inconsistent with this ordinance
as theretofore in effect;
(4) To confirm, as further assurance, any pledge under, and the
subjection to any claim, lien or pledge created or to be created by this ordinance of any other
money,securities or funds;
(5) To authorize different denominations of the Bonds and to make
correlative amendments and modifications to this ordinance regarding exchangeability of Bonds
of different authorized denominations,redemptions of portions of Bonds of particular authorized
denominations and similar amendments and modifications of a technical nature;
(6) To modify, alter, amend or supplement this ordinance in any other
respect which is not materially adverse to the registered owners of the Bonds and which does not
involve a change described in Subsection (c)of this section; and
(7)Because of change in federal law or rulings, to maintain the
exclusion from gross income of the interest on the Bonds from federal income taxation.
Before the City shall adopt any such supplemental ordinance pursuant to this subsection,
there shall have been delivered to the City and the Bond Registrar an opinion of Foster Pepper &
Shefelman PLLC, bond counsel, or other nationally recognized bond counsel,stating that such
supplemental ordinance is authorized or permitted by this ordinance and, upon the execution and
delivery thereof,will be valid and binding upon the City in accordance with its terms and will
not adversely affect the exclusion from gross income for federal income tax purposes of interest
on the Bonds.
(c) (1) Except for any supplemental ordinance entered into pursuant to
Subsection (b)of this section, subject to the terms and provisions contained in this Subsection (c)
and not otherwise,registered owners of not less than 60% in aggregate principal amount of the
Bonds then outstanding shall have the right from time to time to consent to and approve the
passage by the City Council of any supplemental ordinance deemed necessary or desirable by the
City for the purpose of modifying,altering, amending,supplementing or rescinding,in any
particular,any of the terms or provisions contained in this ordinance;except that, unless
approved in writing by the registered owners of all the Bonds then outstanding,nothing
contained in this section shall permit, or be construed as permitting:
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(i) A change in the times, amounts or currency of payment of the
principal of or interest on any outstanding Bond, or a reduction in the
principal amount of redemption price of any outstanding Bond or a change
in the redemption price of any outstanding Bond or a change in the
method of determining the rate of interest thereon, or
(ii) A preference of priority of any Bond or Bonds or any
other bond or bonds, or
(iii) A reduction in the aggregate principal amount of Bonds, the
consent of the registered owners of Bonds of which is required for any
such supplemental ordinance.
(2) If at any time the City shall pass any supplemental ordinance for
any of the purposes of this Subsection (c), the Bond Registrar shall cause notice of the proposed
supplemental ordinance to be given by first-class United States mail to all registered owners of
the then outstanding Bonds, to the Bond Insurer, and to Moody's Investors Service, Inc., and
Standard &Poor's,if the Bonds are rated by those agencies. Such notice shall briefly set forth
the nature of the proposed supplemental ordinance and shall state that a copy thereof is on file at
the office of the Bond Registrar for inspection by all registered owners of the outstanding Bonds.
(3) Within two years after the date of the mailing of such notice, the
City may adopt such supplemental ordinance in substantially the form described in such notice,
but only if there shall have first been delivered to the Bond Registrar (i) the required consents, in
writing,of the registered owners of the Bonds, and (ii) an opinion of bond counsel stating that
such supplemental ordinance is authorized or permitted by this ordinance and, upon the
execution and delivery thereof, will be valid and binding upon the City in accordance with its
terms and will not adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds.
(4) If registered owners of not less than the percentage of Bonds
required by this Subsection (c) shall have consented to and approved the execution and delivery
thereof as herein provided, no owner of the Bonds shall have any right to object to the passage of
such supplemental ordinance, or to object to any of the terms and provisions contained therein or
the operation thereof, or in any manner to question the propriety of the passage thereof, or to
enjoin or restrain the City or the Bond Registrar from passing the same or from taking any action
pursuant to the provisions thereof.
(d) Upon the execution and delivery of any supplemental ordinance pursuant
to the provisions of this section, this ordinance shall be, and be deemed to be, modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
ordinance of the City, the Bond Registrar and all registered owners of Bonds then outstanding,
shall thereafter be determined, exercised and enforced under this ordinance subject in all respects
to such modifications and amendments.
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50..92929.03
Section 23.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 Financial Guaranty Insurance Policy
for the Bonds. The Mayor or Finance Director is hereby authorized to execute the Bond Insurer's
Commitment to Issue a Financial Guaranty Insurance Policy. The City shall purchase from the
Bond Insurer the Financial Guaranty 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 [the
Bond Registrar] 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,ofthe amount of the deficiency.
"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 Obligations to a
trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such
Bondholder within 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 U.S. Bank Trust National Association, 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
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,--------------------
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 with respect to the
claims for interest so assigned, and (c) disburse the same to such respective
Holders; and
"2.Ifand 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 with the tenor of
the Policy payment therefor from the 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:
"J.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 Indenture 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 tile
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50492929.03
50492929.0J
Insurer as the owner of such rights to the amount of such principal and
interest.
"G. In connection with the issuance of additional Obligations,the Issuer
shall deliverto the Insurera copy of the disclosure docwnent,if any,circulatedwith
respectto such additional Obligations.
"H. Copies of any amendments made to the docwnents executed in
connection with the issuance of the Obligations which are consented to by the
Insurer shallbe sentto Standard &Poor's Corporation.
"I.The Insurer shall receive notice of the resignationor removal of the
PayingAgent and the appointment of a successorthereto.
"1.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
financialstatementsandAnnualBudget.
"Notices: Any notice that is required to be given to a holder of the
Obligationorto the PayingAgentpursuantto the Indentureshall alsobe providedto
the Insurer. All noticesrequiredto be givento the Insurerunder the Indentureshall
be in writing and shall be sent by registered or certified mail addressed to MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention:
Surveillance."
"K.The Issuer/Obligor agrees to reimburse the Insurer immediately
and unconditionally upon demand, to the extent permitted by law, for all
reasonable expenses, including attorneys' fees and expenses, incurred by the
Insurer in connection with (i) the enforcement by the Insurer of the
Issuer's/Obligor's obligations, or the preservation or defense of any rights of the
Insurer, under this ResolutionlIndenture and any other document executed in
connection with the issuance of the Obligations, and (ii) any consent, amendment,
waiver or other action with respect to the ResolutionlIndenture or any related
document, whether or not granted or approved, together with interest on all such
expenses from and including the date incurred to the date of payment at
Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law,
whichever is less. In addition, the Insurer reserves the right to charge a fee in
connection with its review of any such consent, amendment or waiver, whether or
not granted or approved.
"1.The Issuer/Obligor agrees not to use MBIA's name in any public
document including, without limitation, a press release or presentation,
announcement or forum without MBIA's prior consent; provided, however, such
prohibition on the use of the Insurer's name shall not relate to the use of the
Insurer's standard approved form of disclosure in public documents issued in
connection with the current Obligations to be issued in accordance with the terms
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of the Commitment;and provided further such prohibition shall not apply to the
use of the Insurer's name in order to comply with public notice, public meeting or
public reporting requirements.
"M. The Issuer/Obligor shall not enter into any agreement nor shall it
consent to or participate in any arrangement pursuant to which Bonds are tendered
or purchased for any purpose other than the redemption and cancellation or legal
defeasance of such Bonds without the prior written consent of MBIA."
Any notices required to be given under the terms of this resolution shall also be given to the
Bond Insurer, Attn.: Insured Portfolio Management.
Section 24. Effective Date of Ordinance. This ordinance shall take effect and be in force
from and after its passage and five days following its publication as required by law.
PASSED by the City Council of the City of Marysville, Washington, at a special open
public meeting thereof,of which due notice was given as provided by law, and APPROVED by
the Mayor this ,I ri)day of May, 2005.
~LkJ
Dennis 1.Kendall,Mayor
ATTEST:
, City Clerk
APPROVED AS TO FORM:
Foster 'e er &Shefelman PLL
Bond Counsel to the City
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504'1929.03
CERTIFICATION
I,the undersigned, City Clerk of the City of Marysville, Washington (the "City"),hereby
certify as follows:
1.The attached copy of Ordinance No..;l583 (the "Ordinance")is a full, true and
correct copy of an ordinance duly passed at a special meeting ofthe City Council of the City held
at the regular meeting place thereof on May 17, 2005, as that ordinance appears on the minute
book of the City; and the Ordinance will be in full force and effect five days after the title of the
ordinance has been published in the City's official newspaper;
2. Written notice specifying the time and place of the special meeting and noting the
business to be transacted was given to all members of the City Council by mail or by personal
delivery at least 24 hours prior to the special meeting, a true and complete copy of which notice
is attached hereto as Appendix I;
3. No local radio or television stations, or newspapers of general circulation, have on
file with the City a written request to be notified of any special meetings; however, a copy of the
notice of the special meeting was given to certain newspapers of general circulation of which
such notice customarily is given; and
4. A quorum of the members of the City Council was present throughout the meeting
and a majority of those members present voted in the proper manner for the passage of the
Ordinance.
IN WITNESS WHEREOF, I have hereunto set my hand this 17
th day of May, 2005.
CITY OF MARYSVILLE,WASHINGTON
R, City Clerk
50492919.03
Appendix 1
CITY COUNCIL
CITYOF MARYSVILLE,WASIDNGTON
NOTICE OF SPECIAL MEETING
NOTICE IS HEREBY GIVEN that the City Council of the City of Marysville,
Washington (the "City") will hold a special meeting on Tuesday, May 17,2005,at 5:30 p.m., in
the Council Chambers at City Hall, located at 1049 State Avenue in Marysville, Washington.
The purpose of the meeting is to consider and act upon an ordinance authorizing issuance and
sale of an estimated $51,205,000 of Water and Sewer Revenue Bonds, 2005 of the City, which
may be more or less.
GERRY BECKER, City Clerk
5049191MJ